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This appeal is about the burden of proof in actions against a shipowner for loss of or damage to cargo. It may seem strange that a species of litigation which has generated reported decisions over four centuries should not yet have returned a definitive answer to this question. The reason is probably to be found in the fact that the courts very rarely decide issues of fact on the burden of proof. The trial judge is usually able to find some persuasive evidence, however exiguous, to break the impasse. This case is, or may be, different. The six claimants were the owners and bill of lading holders for nine separate consignments of bagged Colombian green coffee beans shipped at Buenaventura in Colombia between 14 January and 6 April 2012 on various vessels owned by the defendant shipowners for carriage to Bremen. They were stowed in a total of 20 unventilated 20 foot containers. These were transhipped at Balboa in Panama and discharged at Rotterdam, Hamburg or Bremerhaven for on carriage to Bremen. Each consignment was covered by a bill of lading covering the entire carriage to Bremen. The bills of lading, which were subject to English law and jurisdiction and incorporated the Hague Rules, were on LCL/FCL (less than full container load/full container load) terms. It is common ground that this means that the carriers were contractually responsible for preparing the containers for carriage and stuffing the bags of coffee into them. They employed two firms of stevedores to perform this function. Coffee is a hygroscopic cargo. It absorbs, stores and emits moisture. It can be carried in ventilated or unventilated containers. In 2012 both types of container were in widespread use for the carriage of bagged coffee, and the shippers had specified unventilated containers for these consignments. The use of unventilated containers is cheaper, but if they are used to carry coffee beans from a warm to a cooler climate, as they were in this case, the beans will inevitably emit moisture which will cause condensation to form on the walls and roof of the container. This makes it necessary to protect the coffee from water damage by dressing the containers, ie lining the roof and walls with an absorbent material such as cardboard, corrugated paper or Kraft paper. The use of Kraft paper was a common commercial practice in 2012, and it was employed in this case. When the containers were opened at Bremen, however, the bags in 18 of them were found to have suffered water damage from condensation. The cargo owners pleaded their case in what has for many years been standard form. Their primary case was that in breach of their duties as bailees the carriers failed to deliver the cargoes in the same good order and condition as that recorded on the bill of lading on shipment. Alternatively, they pleaded that in breach of article III, rule 2 of the Hague Rules they had failed properly and carefully to load, handle, stow, carry, keep, care for and discharge the cargoes. A number of particulars of negligence was pleaded. For present purposes, the only relevant one is that the carriers failed to use adequate or sufficient Kraft paper to protect the cargoes from condensation. The carriers joined issue on all of these points, and pleaded inherent vice on the ground that the coffee beans were unable to withstand the ordinary levels of condensation forming in containers during passages from warm to cool climates. The cargo owners pleaded in reply that any inherent characteristic of the cargo which resulted in damage, did so only because of the carriers negligent failure to take proper measures for its protection. The case was tried in the London Mercantile Court by David Donaldson QC, sitting as a deputy High Court judge. He held that there was no legal burden on the carrier to prove that the damage to the cargo was caused without negligence or by an excepted peril. There was only a factual presumption that damage ascertained on discharge was due to negligence. The critical issues of fact, as they emerged at the trial, concerned the weight of paper and the number of layers that (i) were, and (ii) should have been used. The deputy judges conclusions were as follows: (1) Bagged coffee can be (and at the time routinely was) carried without damage from warm to cooler countries in unventilated containers lined with Kraft paper, provided that a sufficient thickness of paper or number of layers is used. (2) The evidence did not establish what weight of paper was used for these shipments, except that it was more than 80 gsm. Nor did it establish how many layers were used, except that the photographs appeared to the judge to show that there was only one. (3) There was no evidence to show what thickness of paper ought to be used for a given number of layers, in order to avoid condensation damage. (4) There was no generally accepted commercial practice on point (3). It was not suggested that the paper had been improperly fixed by the stevedores. These conclusions were criticised on a number of grounds by the Court of Appeal, which proceeded to make its own findings. I shall return to the Court of Appeals treatment of the facts later in this judgment. But for the moment I shall proceed on the basis of the deputy judges conclusions, for it is those which give rise to the major issue of law on this appeal. On whom was the burden of proving whether the cargoes were damaged by (i) negligent preparation of the containers, or (ii) inherent vice? Bailment at common law The bills of lading in this case incorporated the Hague Rules. It is, however, necessary to examine the common law position apart from the Rules, first, because it is an essential part of the legal background against which they were drafted; and, secondly, because the common law position had been considered in a number of authorities decided before the Rules were promulgated, which have remained influential since and indeed were relied upon on this appeal. The delivery of goods for carriage by sea is a bailment for reward on the terms of the bill of lading. Bailment is a transfer of possession giving rise to a legal relationship between the bailor and the bailee which is independent of contract, although in practice it is commonly contractual and the terms of the contract will commonly modify its incidents. Two principles of the common law of bailment are fundamental. The first is that a bailee of goods is not an insurer. His duty is limited to taking reasonable care of the goods. This has been true of bailees generally for as long as bailment has existed as a recognised source of legal responsibility at common law: see S Stoljar, The early history of bailment, American Journal of Legal History, vol i (1957), p 5, and the landmark decision of Chief Justice Holt in Coggs v Bernard (1703) 2 Ld Raym 909, 917 918. In the 19th century some shipowners, especially in the liner and tariff trades, were common carriers, bearing a more onerous responsibility at common law. The characteristic feature of a common carrier was that he held himself out as accepting for carriage the goods of all comers on a given route, subject to capacity limits. As such, he was strictly liable at common law for loss of or damage to the cargo subject only to exceptions for acts of God and the Queens enemies. The absence of negligence was irrelevant. But although the position of common carriers is commonly referred to by way of background in the case law, as it was in the judgments below, it is no longer a useful paradigm for the common law liability of a shipowner. Common carriers have for many years been an almost extinct category. For all practical legal purposes, the common law liability of a carrier, unless modified by contract, is the same as that of bailees for reward generally. The second principle, which is equally well established, is that although the obligation of the bailee is thus a qualified obligation to take reasonable care, at common law he bears the legal burden of proving the absence of negligence. He need not show exactly how the injury occurred, but he must show either that he took reasonable care of the goods or that any want of reasonable care did not cause the loss or damage sustained. As Cockburn CJ put it in Reeve v Palmer (1858) 5 CBNS 84, 90: The jury have found that he lost it: and I am of opinion that that must be taken to mean, in the absence of any explanation, that he lost it for want of that due and proper care, which it was his duty to apply to the keeping of it, unless it is qualified by circumstances shewing that the loss of the deed could not have been prevented by the application of ordinary care. The law was declared in this sense and applied to carriage by water by the House of Lords in Dollar v Greenfield, The Times, 19 May 1905, and Morison, Pollexfen & Blair v Walton (10 May 1909), which is unreported but the relevant parts of which were set out and adopted by the Court of Appeal in Joseph Travers & Sons Ltd v Cooper [1915] 1 KB 73, 88. Lord Loreburn said in his judgment in that case that once damage was ascertained on outturn, I cannot think it is good law that in such circumstances he should be permitted to saddle upon the parties who have not broken their contract the duty of explaining how things went wrong. It is for him to explain the loss himself, and if he cannot satisfy the court that it occurred from some cause independent of his own wrong doing he must make that loss good. Lord Halsbury said: It appears to me that here there was a bailment made to a particular person, a bailment for hire and reward, and the bailee was bound to shew that he took reasonable and proper care for the due security and proper delivery of that bailment; the proof of that rested upon him. In The RUAPEHU (1925) 21 Ll L Rep 310, 315, Atkin LJ assimilated the law applied to carriers in these cases to the principles applicable generally to bailees, which he summarised as follows: If this were a pure bailment, a delivery of a chattel to a bailee entrusted with the chattel to execute repairs on it and then redeliver it to the owner, I apprehend that the bailee would be under the obligation to exercise reasonable care and skill in preserving the safety of the chattel. If he failed to deliver the chattel at all the onus would be upon him to show that the non delivery was not due to absence of care and skill on his part. Moreover, if he redelivered the chattel in a damaged condition , the onus is on the bailee to show that the damage was not due to the absence of reasonable care and skill on his part. This he may do by showing that he took all reasonable precautions, but if he has to admit or is convicted of some act of negligence then the rule necessarily requires him to show that the loss was not caused by that act of negligence. Three points should be made by way of amplification of these statements. First, it is clear that the burden of proof with which these decisions were concerned was a legal burden. It is quite different from the evidential burden which may arise where the facts give rise to a rebuttable inference of negligence or under the principle res ipsa loquitur. Secondly, while the rule about the burden of proof in English law developed long before any pragmatic justification was advanced for it, its continued importance in the law of bailment has consistently been supported on the ground that because the bailee is in possession of the goods it may be difficult or impossible for anyone else to account for the loss or damage sustained by them: see The RUAPEHU (1925) 2 Ll L Rep 310, 315 (Atkin LJ); British Road Services Ltd v Arthur V Crutchley & Co Ltd (No 1) [1968] 1 All ER 811, 822 (Sachs LJ). Modern scientific techniques of investigation have eased this particular problem to some degree, but have not removed it. Thirdly, although the principle regarding the burden of proof was independently developed by the common law, it is not a peculiarity of the common law. The duty of a depositary to justify his inability to deliver the goods in the condition in which he received them is a basic feature of the civil law. So far as carriers are concerned, it originates in the Roman praetorian edict Nautae, Caupones Stabularii, which in modified form remains the basis of the law of deposit in French and Scots law and other civil law systems: see Pothier, Trait du Contrat de Louage 6th ed (1821), para 199; R Zimmermann, The Law of Obligations: Roman Foundations of the Civilian Tradition (1996), pp 514 526. For the current position in France, see Code Civil, Book III, Title VIII, Chapter III, article 1784 governing carriers by land and water (Ils sont responsables de la perte et des avaries des choses qui leur sont confies, moins qu'ils ne prouvent qu'elles ont t perdues et avaries par cas fortuit ou force majeure); and for Scotland, Gloag on Contract 2nd ed (1929), p 721; McBryde, The Law of Contract in Scotland 3rd ed (2007), paras 9.53 9.57 and The Laws of Scotland, Stair Memorial Encyclopaedia, vol 8 (Deposit), at para 13. There is no significant dispute about these principles on this appeal. The real issue is whether the incidence of the burden of proof is different in a modern contract for carriage by sea incorporating the Hague Rules. I therefore turn to the Rules. The Hague Rules The relevant provisions of the Rules are as follows: Article II Article III Subject to the provisions of article VI, under every contract of carriage of goods by sea the carrier, in relation to the loading, handling, stowage, carriage, custody, care and discharge of such goods, shall be subject to the responsibilities and liabilities, and entitled to the rights and immunities hereinafter set forth. 1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to (a) Make the ship seaworthy. (b) Properly man, equip and supply the ship. (c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation. 2. Subject to the provisions of article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. 8. Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connection with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. Article IV resulting 1. Neither the carrier nor the ship shall be liable for loss or damage arising or from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped and supplied, and to make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and safe for their reception, carriage and preservation in accordance with the provisions of paragraph 1 of article III. Whenever loss or damage has resulted from unseaworthiness the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this article. 2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship. (b) Fire, unless caused by the actual fault or privity of the carrier. (c) Perils, dangers and accidents of the sea or other navigable waters. (d) Act of God. (e) Act of war. (f) Act of public enemies. (g) Arrest or restraint of princes, rulers or people, or seizure under legal process. (h) Quarantine restrictions. (i) Act or omission of the shipper or owner of the goods, his agent or representative. (j) Strikes or lockouts or stoppage or restraint of labour from whatever cause, whether partial or general. (k) Riots and civil commotions. (l) Saving or attempting to save life or property at sea. (m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods. Insufficiency of packing. (n) Insufficiency or inadequacy of marks. (o) (p) Latent defects not discoverable by due diligence. (q) Any other cause arising without the actual fault or privity of the carrier, or without the actual fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. 3. The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising or resulting from any cause without the act, fault or neglect of the shipper, his agents or his servants. The burden of proof arises on this appeal at two stages of the analysis. The first is concerned with article III.2. Does the cargo owner bear the legal burden of proving breach of that article, or is it for the carrier, once loss or damage to the cargo has been ascertained, to prove compliance? The second relates to article IV.2, and particularly to exception (m). The carrier accepts that he must bear the burden of proving facts which bring the case within an exception, but submits that once he has done so it is for the cargo owner to prove that it was the negligence of the carrier which caused the excepted peril (in this case, inherent vice) to operate on the cargo. Burden of proof: Article III.2 Article III.2 imposes on the carrier a general duty to take reasonable care of the cargo during carriage. Mr Rainey QC, who appeared for the carrier, submitted that the burden of proving a breach of it lay upon the cargo owner. His argument proceeded as follows: (i) the Hague Rules constitute a complete code governing the care of the cargo; (ii) an international convention such as the Hague Rules should not be construed in the light of particular features of English law or any other domestic system of law; and (iii) article III.2 of the Hague Rules, by imposing an obligation to take reasonable care of the cargo, displaces the English law rule about the burden of proof, because as a general rule he who asserts must prove. In my judgment, each of these steps in the argument is fallacious. As to proposition (i), the Hague Rules never had statutory application, save to the carriage of goods shipped from a port in the United Kingdom: Carriage of Goods by Sea Act 1924, section 1. That Act has now been repealed by the Carriage of Goods by Sea Act 1971 which gives the force of law to the Hague Visby Rules but does not apply to the shipments in issue on this appeal. Accordingly, the Hague Rules have effect only by virtue of their contractual incorporation into the bill of lading. Subject to the other terms of the contract, the Rules are a complete code on those matters which they cover. But they are not exhaustive of all matters relating to the legal responsibility of carriers for the cargo. As is well known, the background against which they were drafted was the attempt of (mainly British) shipowners in the late 19th century to limit their legal responsibility for cargo, and the attempt of other countries, notably the United States, Canada and Australia, to impose a minimum standard of performance by law. The purpose of the Rules was to standardise the obligations of the carrier and to limit the exceptions on which he should be entitled to rely. They are accordingly concerned almost exclusively with the standard of performance. Apart from certain articles, such as IV.1 and IV.2(q), which deal in terms with the burden of proof for specific purposes, the Rules do not deal with questions of evidence or the mode of proving a breach of the prescribed standard or the application of an exception. These are matters which in accordance with generally recognised principles of private international law are for the law of the forum. They are part of the law of evidence and the rules of procedure, which are liable to vary from one jurisdiction to another. Turning to proposition (ii), it is well established that even in a contract governed by English law, provisions derived from an international convention are intended to have an internationally uniform effect and should not be construed by national courts by reference to principles of purely domestic application: Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328, 350 (Lord MacMillan); James Buchanan & Co Ltd v Babco Forwarding and Shipping (UK) Ltd [1978] AC 141, 152 (Lord Wilberforce). But this principle has no bearing on the present issue. In the first place, as I have explained in the preceding paragraph, the Rules are not concerned with the incidence of the burden of proof save in limited respects. Secondly, it has not been shown that the common law principles regarding the burden of proving negligence or the lack of it in the carriage of goods are principles of purely domestic application, except in the limited sense that their historical origins lie in the common law. As I have pointed out above, the principle that the custodian of goods has a legal responsibility to justify their loss or redelivery in damaged condition is common to civil law jurisdictions as well. One of those jurisdictions is Scotland, to which the Hague Rules were applied by the Carriage of Goods by Sea Act 1924 on the same basis as England. The common law of bailment has no application in Scotland, but the law of Scotland regarding the burden of proof lying on a warehouseman or a carrier is substantially the same. Civil law jurisdictions party to the Hague Convention vary widely in the way that they implement the Rules. In many of them, the occurrence of damage during carriage is treated not just as casting the burden of proving absence of fault on the carrier, but as conclusive of breach of article III.2, unless the carrier can prove that one of the article IV.2 exceptions applies. This is, for example, the effect of the French Code des Transports L 5422 12 and of successive decisions of the Cour de Cassation: see Chambre Commerciale, 27 mai 1975, 74 10388, 10 juillet 2001, 99 12258, 13 dcembre 2016, 14 28332. The researches of counsel have shown that a corresponding principle applies in Belgium, the Netherlands, Italy, Germany, Norway and Spain. The carriers proposition (iii) is based, in my view, on a misconception. Mr Rainey argued that the reason why at common law the bailee had the burden of disproving negligence was that at common law a bailee had a strict obligation to redeliver the goods in the same condition as when received. The position, he submitted, was different where the obligation was a qualified obligation to take reasonable care, as it is in article III.2. However, as I have pointed out, the common law obligation of a bailee is not strict, save in the somewhat theoretical case of common carriers. His obligation is to take reasonable care. The common law has always treated that as consistent with a rule imposing on him the burden of disproving negligence. In the same way, the imposition of a corresponding duty of care on the carrier by article III.2 is consistent with his bearing the burden of disproving negligence. When one examines the scheme of the Hague Rules, it is apparent that they assume that the carrier does indeed have the burden of disproving negligence albeit without imposing that burden on him in terms. This is because of the relationship between articles III and IV. Article III.2 is expressly subject to article IV. A number of the exceptions in article IV cover negligent acts or omissions of the carrier which would otherwise constitute breaches of article III.2: for example articles IV.1 and IV.2(a). It is common ground, and well established, that the carrier has the burden of proving facts which bring him within an exception in article IV, and in the case of articles IV.1 and IV.2(q) this is expressly provided. It would be incoherent for the law to impose the burden of proving the same fact on the carrier for the purposes of article IV but on the cargo owner for the purposes of article III.2. As will be seen below, a rather similar problem arises in relation to the exception for inherent vice. Nothing in the Hague Rules alters the status of a contract of carriage by sea as a species of bailment for reward on terms. As Hobhouse J pointed out in Aktieselskabet de Danske Sukkerfabrikker v Bajamar Compania Naviera SA (The TORENIA) [1983] 2 Lloyds Rep 210, 216: The relationship between the present parties is contractual. It follows that the question of legal burden of proof has ultimately to be decided by construing the contract between them. In ascertaining the effect of the contract one must take into account the nature of the contract. The contract here is a contract in a bill of lading; it is a contract of carriage that is to say, a species of a contract of bailment. For these reasons I consider that in principle where cargo was shipped in apparent good order and condition but is discharged damaged the carrier bears the burden of proving that that was not due to its breach of the obligation in article III.2 to take reasonable care. I say in principle because it is next necessary to consider whether the authorities in cases governed by the Hague Rules point to a different rule. I turn, therefore, to the authorities. The first case to address directly the burden of proof in relation to article III.2 was Gosse Millard v Canadian Government Merchant Marine Ltd [1927] 2 KB 432, a decision of Wright J shortly after the Carriage of Goods by Sea Act came into force. On the footing that the damage ascertained on outturn had not been explained, he held the carrier liable because the burden of disproving negligence lay on him. He gave two reasons. The first was that the words properly discharge in article III.2 of the Hague Rules meant deliver in the same apparent order and condition as on shipment, so that if damage was ascertained on discharge there was a prima facie breach. Wright J did not mean by this that the damage was prima facie evidence of breach of the article. He meant that the carrier was in breach unless he could excuse himself under article IV: see pp 435 436. This reason was bad, as the House of Lords later held in G H Renton & Co Ltd v Palmyra Trading Corpn of Panama [1957] AC 149. Properly in article III.2 did not impose an obligation to achieve a particular outcome, but to load, carry and discharge in accordance with a sound system: see pp 166 (Viscount Kilmuir LC), 169 170 (Lord Morton of Henryton), 174 (Lord Somervell of Harrow), approving the statement of Lord Devlin in Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402, 417 418. That error did not, however, affect Wright Js second reason, which was that the carrier was a bailee. Citing the pre Hague Rules cases on the liability of carriers as bailees, he put the point in this way, at pp 435 436: I do not think that the terms of article III put the preliminary onus on the owner of the goods to give affirmative evidence that the carrier has been negligent. It is enough if the owner of the goods proves either that the goods have not been delivered, or have been delivered damaged. The carrier is a bailee and it is for him to show that he has taken reasonable care of the goods while they have been in his custody (which includes the custody of his servants or agents on his behalf) and to bring himself, if there be loss or damage, within the specified immunities. It is, I think, the general rule applicable in English law to the position of bailees that the bailee is bound to restore the subject of the bailment in the same condition as that in which he received it, and it is for him to explain or to offer valid excuse if he has not done so. It is for him to prove that reasonable care had been exercised. The case ultimately went to the House of Lords, but on another point [1929] AC 223. Wright Js decision was followed by Scrutton LJ, delivering the leading judgment in the Court of Appeal in Silver v Ocean Steamship Co Ltd [1930] 1 KB 416, 424 425. He held, as Wright J had done, that the Hague Rules had made no difference to the incidence of the burden of proof in cases of bailment for carriage. I have already referred to the statement of Hobhouse J in The TORENIA [1983] 2 Lloyds Rep 210, 216 about the importance of the legal characterisation of a contract of carriage as a bailment. Hobhouse J went on to state the law as follows at pp 216 217: It is only because the contract in this case is a contract of bailment that the plaintiff sets up a sustainable cause of action by proving the non delivery of the goods. It was then for the defendants to set up a sustainable defence. I use the word sustainable in preference to prima facie, since prima facie is frequently used to refer to a case which shifts the evidential burden of proof rather than giving rise to a legal burden of proof in the opposite party In the 20th century, a convenient statement of the relevant principle is to be found in the judgment of Denning LJ in Spurling Ltd v Bradshaw [1956] 1 WLR 461, at p 466: A bailor, by pleading and presenting his case properly, can always put on the bailee the burden of proof. In the case of non delivery, for instance, all he need plead is the contract and a failure to deliver on demand. That puts on the bailee the burden of proving either loss without his fault (which, of course, would be a complete answer at common law) or, if it was due to his fault, it was a fault from which he is excused by the exempting clause. Nor do the Hague Rules contradict this conclusion. Lord Hobhouse made the same point in Homburg Houtimport BV v Agrosin Pte Ltd [2003] 1 AC 715, para 138. Scrutton LJ and Lords Wright and Hobhouse (as they later became) were notable authorities in this area of law. Apart from Wright Js error as to the meaning of properly to discharge in article III.2, an error which was not made by either Scrutton LJ or Hobhouse J, their analyses of the burden of proof under contracts of carriage incorporating the Hague Rules are in my view entirely in accordance with principle. This proposition has sometimes been expressed by saying that once it is shown that the cargo was loaded in good condition and discharged in bad, the carrier bears the burden of proving that this was caused by one of the excepted perils in article IV: see, for example, the statement of Viscount Sumner in F C Bradley & Sons Ltd v Federal Steam Navigation Co Ltd (1927) 27 Ll L Rep 395, 396, and of Lord Wright, delivering the advice of the Privy Council in Paterson Steamships Ltd v Canadian Co operative Wheat Producers Ltd [1934] AC 538, 545 546. This formulation is common in codes giving effect to the Hague Rules in civil law jurisdictions, as I have observed. But it is not entirely satisfactory to an English lawyer, because it misses out a stage of the analysis. The true rule is that the carrier must show either that the damage occurred without fault in the various respects covered by article III.2, or that it was caused by an excepted peril. If the carrier can show that the loss or damage to the cargo occurred without a breach of the carriers duty of care under article III.2, he will not need to rely on an exception. So far as that analysis has been doubted, it is because of dicta in the House of Lords in the Scottish case of Albacora SRL v Westcott & Laurence Line Ltd 1966 SC(HL) 19; and in the High Court of Australia in Great China Metal Industries Co Ltd v Malaysian International Shipping Corpn Bhd (The BUNGA SEROJA) [1999] 1 Lloyds Rep 512. The Albacora is important mainly for its analysis of the meaning of inherent vice, and I shall return to it in that context. However, Lord Pearce expressed doubt in that case about the correctness of Wright Js view that the burden of disproving negligence lay upon the carrier, without giving reasons. And Lord Pearson rejected Wright Js view, giving as his reason that Wright J had been wrong about the meaning of properly to discharge. In The BUNGA SEROJA McHugh J dealt briefly with the burden of proof under article III.2 of the Hague Rules in the following terms, at para 98: The delivery of the goods in a damaged state is evidence of a breach of article III and imposes an evidentiary burden on the carrier to show that no breach of article III has occurred. But unlike the common law, failure to deliver the goods in the state received does not cast a legal onus on the carrier to prove that the state of, or non delivery of the goods, was not due to the carriers fault. Any statement from these sources is entitled to respect. But the force of these dicta is diminished by a number of considerations. In the first place, in neither case was the burden of proof in issue, because in both the trial judge had found as a fact that the carrier was not negligent. Secondly, no doubt for that reason, none of the relevant authorities on the burden of proof are cited except, in the case of The Albacora, for Wright Js decision in Gosse Millard. Thirdly, Lord Pearson, while rightly criticising Wright Js construction of the words properly to discharge in article III.2 of the Hague Rules, does not address his second reason, based on the characterisation of the contract as one of bailment. Fourthly, these dicta involve an unexplained departure from the basic principles governing the burden of proof borne by a bailee for carriage by sea, and are out of line with English authority of long standing. In my view, so far as they suggest that the cargo owner has the legal burden of proving a breach of article III.2, they are mistaken. Burden of proof: Article IV.2(m) Article IV.2 of the Hague Rules is a notoriously unsatisfactory provision, because there is no unifying legal principle behind the highly miscellaneous list of excepted causes of loss. Some of them refer to matters which by their nature would otherwise constitute breaches of the carriers duty to care for the cargo. Some refer to matters which may or may not be caused by such a breach. In other cases, such as act of God, the carrier would not be liable even in the absence of an exception. The explanation for this intellectual disorder is historical. The exceptions are generally those which were allowed by the draftsmen of the Rules because their inclusion in bills of lading was sanctioned by long standing practice, or because they were common law exceptions to the liability of a common carrier, or because they were excepted in existing national legislation such as the US Harter Act and corresponding legislation in Canada and Australia. Only one of the article IV.2 exceptions expressly imposes the burden of proof on the carrier, namely (q). It is, however, well established that the carrier bears the burden of bringing himself within any of the exceptions. Mr Rainey does not challenge this. His case is that once he has proved that the cargo suffered from an inherent vice, the cargo owner must positively prove that it was only because of the carriers negligence that the cargos vicious propensities resulted in damage. The starting point in the authorities is the decision of the Exchequer Chamber in Notara v Henderson (1872) LR 7 QB 225. The facts were that a cargo of beans was delivered damaged by seawater. The beans had been wetted when the vessel was involved in a collision. She put into Liverpool for repairs, and it was proved that it would have been reasonable for the master temporarily to discharge the beans there, so that they could be spread out and dried in a warehouse, and then reloaded before the vessel proceeded on her voyage. If that had been done, part of the damage would have been avoided. The bill of lading excepted loss or damage arising from accidents of the seas. The court held that the exception did not protect the carrier from liability for that part of the damage which could have been avoided by the exercise of due care. Willes J, delivering the judgment of the court, stated the law as follows at pp 235 236: In the result it appears to us that the duty of the master, in this respect, is to take reasonable care of the goods intrusted to him, not merely in doing what is necessary to preserve them on board the ship during the ordinary incidents of the voyage, but also in taking reasonable measures to check and arrest their loss, destruction, or deterioration, by reason of accidents, for the necessary effects of which there is, by reason of the exception in the bill of lading, no original liability. [T]he exemption is from liability for loss which could not have been avoided by reasonable care, skill, and diligence, and that it is inapplicable to the case of a loss arising from the want of such care, and the sacrifice of the cargo by reason thereof, which is the subject matter of the present complaint. Willes J did not in terms address the burden of proving absence of fault, but the critical point is that he treated absence of fault as an integral part of the exception. It was an exception only in respect of such loss as could not by the exercise of reasonable care be avoided. It must in principle follow that if the burden of proving the application of the exception is on the carrier, that must extend to proving that the damage could not be avoided by the exercise of reasonable care. The decisions of the House of Lords in Thomas Wilson, Sons & Co v Owners of the Cargo per The XANTHO (1887) 12 App Cas 503 and Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518, were handed down on the same day by differently constituted appellate committees. In both cases, it was held that a bill of lading exception for dangers and accidents of the seas excused the carrier only if the relevant danger or accident happened without his fault. The law on this point can conveniently be taken from The XANTHO. Lord Herschell, delivering the leading speech, put the matter in this way at pp 510 511: If the goods are not carried with reasonable care, and are consequently lost by perils of the sea, it becomes necessary to reconcile the two parts of the instrument, and this is done by holding that if the loss through perils of the sea is caused by the previous default of the shipowner, he is liable for this breach of his covenant. However, Lord Herschell expressly declined (p 512) to say who bore the burden of proving absence of fault on the carriers part. The sheet anchor of the carriers case on this appeal is the decision of the Court of Appeal in The GLENDARROCH [1894] P 226, where the question left open by Lord Herschell was decided. The GLENDARROCH was decided 30 years before the Hague Rules were adopted. It concerned a specific exception assumed to be included in a bill of lading. Like most of the case law on the burden of proving an exception in the contract of carriage, it was about the exception for perils of the sea, which was commonly included in bills of lading before the Hague Rules and was reproduced in article IV.2 of the Rules as exception (c). The facts were that the cargo suffered water damage because the vessel ran aground on St Patricks causeway in Cardigan Bay. During the trial, the judge ruled that the carrier had the burden of proving that the grounding had occurred without negligence in the navigation of the vessel. Thereupon, the carriers counsel declined to call any evidence to explain how the vessel came to be in a place where the action of the wind and waves was liable to put her aground. Accordingly, the judge entered judgment for the cargo owner. The Court of Appeal allowed the appeal, holding that the burden of proving that an excepted peril had been occasioned by the carriers negligence lay on the cargo owner. Today, the result on the same facts would be the same because, assuming that the vessel was initially seaworthy, the carrier would be exempted from liability for negligent navigation under article IV.2(a) as well as perils of the sea under article IV.2(c). But that is by the way. What matters for present purposes is the reasoning of the Court of Appeal on the footing that the only relevant exception was for perils of the sea. Lord Esher MR delivered the leading judgment. He appears to have regarded the shipowner as a common carrier, for he observed (p 230) that but for the contractual exception for perils of the seas, the carrier would have been strictly liable and negligence utterly immaterial. On that footing, any negligent navigation of the vessel could be relevant to the exception for perils of the seas only if one read it as meaning Except the loss is by perils of the sea, unless or except that loss is the result of the negligence of the servants of the owner. Lord Esher proceeded on the assumption that that construction was correct. But he held that on that footing negligent navigation was an exception to an exception. It followed that once the carrier had proved that the wind and waves had deposited the vessel on St Patricks causeway, he had done all that the exception required of him, and the burden of proving that this had happened only because of its negligent navigation by the crew lay upon the cargo owner. He referred in support of this conclusion to the practice of the court regarding the pleading of exceptions upon exceptions. The reasoning of Lopes LJ was the same. As he pointed out (p 235), the result was that where a peril of the sea is set up it is sufficient for the defendant to prove the peril relied on, and he need not go on to shew that that was really not caused by him; but if the plaintiff says that it was, then he must set it up in his replication and must prove it. Davey LJ agreed with Lord Esher. The decision in The GLENDARROCH derives some support from obiter dicta by Lord Sumner in Owners of Steamship MATHEOS v Louis Dreyfus & Co [1925] AC 654, 666, Lord Wright in Joseph Constantine Steamship Line v Imperial Smelting Corpn Ltd [1942] AC 154, 194, Lord Pearson in The Albacora, supra, at p 31, and Mason and Wilson JJ in Shipping Corpn of India Ltd v Gamlen Chemical Co (A/Asian) Pty Ltd (1980) 147 CLR 142, 167 168, although in none of these cases were the authorities examined. None of them, moreover, confronted the practical and conceptual problems about the analysis in The GLENDARROCH. Fundamental to that analysis was a distinction between an exception and an exception to an exception. This distinction is in my view unsatisfactory. This is partly because the attempt to distinguish between the case where absence of fault is part of the test for the exception and the case where it is an exception to the exception seems to me to import a refinement of some subtlety, unrelated to any commercial purpose which the parties can sensibly be thought to have had in mind. But it is mainly because if an exception is subject to an exception for cases where it was avoidable by the exercise of due care, then the issue must ultimately be one of causation. Thus, in The GLENDARROCH itself, the question was whether the effective cause of the loss was the action of the wind and waves, or the conduct of the crew in allowing the action of the wind and waves to damage the cargo when with reasonable diligence on their part both ship and cargo could have withstood the storm. If, as the Court of Appeal rightly accepted in that case, the burden of proving facts bringing the carrier within the exception lay on him, that must extend not just to the question whether the sea conditions were perilous, but also to the question whether that was the effective cause of the damage. That is unquestionably the position of a bailee at common law: Coldman v Hill [1919] 1 KB 443; British Road Services Ltd v Arthur V Crutchley & Co Ltd (No 1) [1968] 1 All ER 811, 822, 824 (Sachs LJ, with whom Danckwerts LJ agreed). It is also, under the express terms of article IV.2 of the Hague Rules an integral part of what must be proved for any of the exceptions to apply (Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (emphasis supplied).) Yet, as Lopes LJ recognised, the reasoning of the Court of Appeal involved a distinction between the existence of the excepted circumstance on the one hand and its causative effect on the other. The GLENDARROCH has stood for a long time. But it has rarely featured in the reasoning of subsequent case law, and the basis on which it was decided is technical, confusing, immaterial to the commercial purpose of the exception and out of place in the context of the Hague Rules. The decision may have been justifiable in the more formal conditions of pleading and trial practice in the 1890s, or as applied to the notional bill of lading terms which the Court of Appeal was considering. But as the source of a general rule governing the burden of proof, it should no longer, in my view, be regarded as good law. I consider that the carrier has the legal burden of disproving negligence for the purpose of invoking an exception under article IV.2, just as he has for the purpose of article III.2. Even if I had thought that The GLENDARROCH was correct as applied to the exception for perils of the sea, I would not have regarded it as applicable to the exception for inherent vice. This is because the distinction between the existence of the peril and the standard of care required of the carrier is impossible to make in that context. A cargo does not suffer from inherent vice in the abstract, but only in relation to some assumed standard of knowledge and diligence on the part of the carrier. Thus the mere fact that coffee beans are hygroscopic and emit moisture as the ambient temperature falls may constitute inherent vice if the effects cannot be countered by reasonable care in the provision of the service contracted for, but not if they can and should be. At the time that The GLENDARROCH was decided, this had already been established by the decision of the Court of Appeal in Nugent v Smith (1876) 1 CPD 423. In that case, a mare carried in the hold died as a result of a combination of more than usually bad weather and the fright of the animal herself which caused her to struggle and injure herself. Cockburn CJ described inherent vice (p 438) as the rule that the carrier is not liable where the thing carried perishes or sustains damage, without any fault of his, by reason of some quality inherent in its nature . (Emphasis supplied) Likewise, Mellish LJ (p 439) thought that if the jury had found that the injury was caused solely by the conduct of the mare herself by reason of fright and consequent struggling, without any negligence on the part of the defendants servants, I am of opinion that a plea that the injury to the mare was caused by the vice of the mare herself would have been proved. (Emphasis supplied) The leading modern case is The Albacora, which I have already mentioned in another context. It is authority for the proposition that the standard of care by reference to which the exception for inherent vice is to be assessed may depend on the nature of the service contracted for. The issue was whether a cargo of fish was capable of withstanding carriage in unrefrigerated spaces, that being the service stipulated in that case. The ratio can conveniently be taken from the speech of Lord Reid, at p 23: Article IV, rule 2(m), provides that the carrier shall not be responsible for damage arising from inherent defect, quality, or vice of the goods. A number of authorities were cited and perhaps the most concise statement is that of Gorell Barnes J in The Barcore [1896] P 294: This cargo was not damaged by reason of the shipowner committing a breach of contract, or omitting to do something which he ought to have done, but it was deteriorated in condition by its own want of power to bear the ordinary transit in a ship. By the ordinary transit I would understand the kind of transit which the contract requires the carrier to afford. I agree with the Lord President when he says: rule 2(m) is in my opinion intended to give effect to the well settled rule in our law that if an article is unfitted owing to some inherent defect or vice for the voyage which is provided for in the contract, then the carrier may escape liability when damage results from the activation of that inherent vice during the voyage. It follows that whether there is inherent defect or vice must depend on the kind of transit required by the contract. If this contract had required refrigeration there would have been no inherent vice. But as it did not, there was inherent vice because the goods could not stand the treatment which the contract authorised or required. The effect of these statements, and others to the same effect, are accurately summarised in Scrutton on Charterparties and Bills of Lading 23rd ed (2015), para 11.055: By inherent vice is meant the unfitness of the goods to withstand the ordinary incidents of the voyage, given the degree of care which the shipowner is required by the contract to exercise in relation to the goods. It follows that if the carrier could and should have taken precautions which would have prevented some inherent characteristic of the cargo from resulting in damage, that characteristic is not inherent vice. Accordingly, in order to be able to rely on the exception for inherent vice, the carrier must show either that he took reasonable care of the cargo but the damage occurred nonetheless; or else that whatever reasonable steps might have been taken to protect the cargo from damage would have failed in the face of its inherent propensities. The judgment of the Court of Appeal The judgment of the Court of Appeal was given by Flaux J, with whom Gloster and King LJJ agreed. Flaux Js analysis of the burden of proof is not entirely clear. He appears to have considered that if damage was ascertained on outturn, the cargo owner had the legal burden of proving that this was due to a breach of article III.2, but that there was an evidential inference from the mere fact of damage that such a breach had occurred. The carrier would have to point to evidence to rebut the inference or fail on that issue. On that footing, there appears to have been little practical difference between a legal and an evidential burden. Once a breach of article III.2 had been established (whether by evidence or inference), Flaux J considered that the carrier had the legal burden of establishing a prima facie case for the application of one of the exceptions in article IV.2. Flaux J cannot have been using the expression prima facie case in its ordinary sense, ie a case on the facts which unless rebutted by further evidence would entitle the carrier to succeed. He must, I think, have meant that the carrier had the legal burden of proving that one of the circumstances listed in article IV.2 existed at the relevant time. It was then, he thought, for the cargo owner to bear the legal burden of showing that it only resulted in damage to the cargo because the carrier had failed to take reasonable care of it. I have already explained why I do not accept this analysis in principle. I also have great difficulty with the way in which Flaux J applied it to the exception for inherent vice. What is a prima facie case for the application of that exception? Flaux J seems to have thought that the carrier need only prove that the cargo had an inherent propensity to deteriorate, but not that he took reasonable care to prevent that propensity from manifesting itself. He criticised the deputy judge for conflating the issues of whether there was some inherent defect, quality or vice in the cargo and whether the carrier properly and carefully cared for and carried the cargo. At the same time, he recognised that there was a degree of overlap, if not of circularity between these two things, in the sense that one is focussing on the ability of the cargo to withstand the ordinary incidents of carriage, pursuant to obligations of the carrier under the contract of carriage. The reason why, in spite of the overlap or circularity, he nevertheless felt it necessary to treat them as discrete questions was that he thought that the burden of proof lay with the carrier on the former issue and the cargo owner on the latter. The problem with this analysis is that, as I have observed, and as Flaux J came close to acknowledging, it is conceptually impossible to define inherent vice except by reference to some assumed standard of care for the cargo. A cargo may have inherent characteristics that make its deterioration inevitable whatever care is taken of it. In that case negligence is irrelevant and inherent vice is proved without more. But inevitable deterioration is rare in cargoes that are habitually carried by sea. In the great majority of cases, the cargos inherent propensity to deteriorate may or may not manifest itself in damage, depending on the ambient conditions of stowage and the way it is handled. If, within the limits of the kind of carriage contracted for, reasonable care would have prevented the cargos inherent propensity from causing damage, then the cargo is fit to withstand the ordinary incidents of the carriage contracted for and there is no inherent vice. This makes it difficult to support Flaux Js analysis of the incidence of the burden of proof. If the existence of inherent vice depends on the appropriate standard of care, the law cannot coherently apply a different burden of proof to one of them from that which applies to the other. Having held that the cargo owner had the burden of proving that the carriers absence of care had caused the exception to operate, the Court of Appeal went on to find that he had failed to discharge it. This was not because of the absence of evidence of matters which it was for the cargo owner to prove. Starting from the proposition that the carriers obligation under article III.2 was to care for and carry the goods in accordance with a sound system, they thought that the deputy judge had misdirected himself that this meant in accordance with a system that would prevent damage, and that inherent vice could be demonstrated only if damage was inevitable. I am not persuaded that the deputy judge made either of these mistakes. He simply observed that at the relevant time bagged coffee was commonly carried in unventilated containers from warm climates to cooler ones without mishap, and there was nothing out of the ordinary about this particular cargo. It therefore seemed probable that with reasonable care the cargo was perfectly capable of withstanding the risks reasonably to be expected during unventilated carriage. But it is unnecessary to examine this point further, because while the Court of Appeals criticisms encouraged them to reopen the facts, the decisive reason why they overruled him was that they disagreed with two of his critical conclusions about the evidence, and made positive findings of their own which he had felt unable to make. In the first place, the deputy judge had found that there was no evidence of any generally accepted industry practice to which the carrier could claim to have conformed. The Court of Appeal found that there was an accepted industry practice in 2012 for lining unventilated containers for the carriage of bagged coffee. It was, they said, to use two layers of paper of at least 80 gsm or one layer of at least 125 gsm. Secondly, the deputy judge had found that apart from a tentative conclusion to be drawn from the photographs, there was no evidence of the number of layers of paper in place at the time of shipment, and no evidence of its weight except that it was more than 80 gsm. The Court of Appeal found by an examination of the photographs and of the pre loading documentation that two layers of paper had been used. It therefore followed from the deputy judges finding that the paper used weighed at least 80 gsm that the containers had been lined in accordance with accepted industry practice. This court has on a number of occasions pointed out that while an appeal to the Court of Appeal is by way of rehearing, a trial judges findings of fact should not be overturned simply because the Court of Appeal would have found them differently. It must be shown that the trial judge was wrong: ie that he fundamentally misunderstood the issue or the evidence, or that he plainly failed to take the evidence into account, or that he arrived at a conclusion which the evidence could not on any view support. Within these broad limits, the weight of the evidence is a matter for the trial judge. There is a world of difference between the impression which evidence makes on a judge who has followed it as it was deployed and the impression that an appellate court derives from cold transcripts. The judgment of Flaux J in the Court of Appeal attaches no intrinsic weight to the deputy judges analysis. It simply substitutes his own. In my judgment, the Court of Appeal was not justified in overturning the deputy judges findings on either of the two critical points which I have identified. On the question of industry practice, the judge had before him a joint memorandum by the expert witnesses, referring to a number of recommendations, none of them more recent than 2004. The issue was addressed by the experts in their oral evidence in terms which were not wholly consistent. Some of it suggested that in 2012 practice in the trade was variable, fluid and developing. The assessment of this evidence was very much a matter for the deputy judge. He found that it fell short of proving any sufficiently uniform or accepted practice to serve as a benchmark against which to measure the carriers care for the cargo. To my mind this was a conclusion which was open to him on the material deployed at trial. Turning to the paper actually used, the Court of Appeal thought that the deputy judges conclusions were against the weight of evidence. There was an issue at trial about what could be deduced from the reports of inspectors who examined the containers on outturn, on which the evidence was inconclusive and the deputy judge made no finding. There was an issue about the weight to be attached to documentary evidence suggesting that before shipment it had been intended to use two layers of paper. The deputy judge discounted this, mainly because of the absence of documentation such as invoices which one would have expected to find if this intention had been carried into execution. That left the inferences to be drawn from photographs taken at the port of loading. The deputy judge thought that they tended to show that single layers of paper had been used, the Court of Appeal that it was doubled. The difference depends on whether certain of the photographs showed double layers or an overlap of sheets laid as single layers. For my part, I think that there is some force in the criticism that the deputy judge too readily discounted the documentary evidence generated before shipment. But this was only part of a larger and more complex body of evidence which, taken as a whole, could have supported either of the competing analyses. This falls well short of what was necessary to show that the deputy judge was wrong. Disposal I would hold that the carrier had the legal burden of proving that he took due care to protect the goods from damage, including due care to protect the cargo from damage arising from inherent characteristics such as its hygroscopic character. I would reinstate the deputy judges conclusions about the practice of the trade in the lining of unventilated containers for the carriage of bagged coffee and the absence of evidence that the containers were dressed with more than one layer of lining paper. In the absence of evidence about the weight of the paper employed, it must follow that the carrier has failed to prove that the containers were properly dressed. For these reasons, I would allow the appeal and restore the order of the deputy judge.
UK-Abs
This appeal is about the burden of proof in actions against a shipowner for loss of or damage to cargo. The six claimants, the appellants, were the owners and holders of the bills of lading for nine separate consignments of bagged Colombian green coffee beans. Those coffee beans were shipped from Colombia between 14 January and 6 April 2012 on various vessels owned by the defendant shipowners, the respondents, to Bremen in Germany. They were stowed in a total of 20 unventilated 20 foot containers (as specified by the cargo owners for these consignments), transhipped in Panama and discharged at Rotterdam, Hamburg or Bremerhaven for oncarriage to Bremen. The bill of lading for each consignment covered the entire carriage. Bagged coffee beans may be and commonly are carried in either ventilated or unventilated containers. Unventilated containers were specified by the shippers of these cargoes. They are, however, hygroscopic, so that if carried in unventilated containers from warmer to cooler climates, they are likely to emit moisture which condenses against the roof and sides of the containers. To prevent this from causing moisture damage to the cargo, it was common commercial practice in 2012 to line the containers with an absorbent material such as Kraft paper. Each bill of lading was governed by English law and subject to English jurisdiction. They each also incorporated the Hague Rules of 1924 and LCG/FCL (less than full container load/full container load) terms applied. This means that the carrier was contractually responsible for preparing the containers for carriage and loading the bags of coffee into them. On outturn at Bremen, condensation damage to the coffee beans was found in 18 out of the 20 containers. The cargo owners brought a claim against the carriers for breach of their duties as bailees to deliver the cargoes in the condition recorded on the bill of lading and, alternatively, breach of article III, rule 2 of the Hague Rules for failure to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. They alleged negligence by the carriers for failing to use adequate or sufficient Kraft paper. The carriers pleaded inherent vice on the ground that the coffee beans were unable to withstand the ordinary levels of condensation forming on such a voyage. In reply, the cargo owners pleaded that any inherent characteristic only led to damage because of the carriers negligence. The judge, David Donaldson QC, held that there was no legal burden on the carrier to prove that the damage to the cargo was caused without negligence or due to an inherent vice, only a factual presumption of negligent damage. He found that: (i) the evidence did not establish what weight or how many layers of paper were used and (ii) there was no evidence, or generally accepted commercial practice, as to what thickness of paper should be used. The Court of Appeal disturbed the factual findings as to commercial practice and the lack of evidence on the number of layers of lining paper in the containers, dismissing the claim by the cargo owners. The questions on appeal to the Supreme Court were: (i) whether the cargo owners (as claimants) bear the legal burden under article III.2 of the Hague Rules and (ii) how, if at all, is the legal burden altered by the article IV.2(m) inherent vice exception? The Supreme Court unanimously allows the appeal, deciding that the legal burden of disproving negligence rests on the carrier, both for the purpose of article III.2 and article IV.2 of the Hague Rules. Lord Sumption gives the sole judgment, with which all members of the Court agree. The judges factual findings are restored and, given the absence of evidence on the weight of the paper used, the Court decides that the carrier has failed to discharge its legal burden. The Hague Rules must be read against the background of the common law rules on bailment [7]. There are two fundamental principles in the law of bailment: (i) a bailee of goods is only under a limited duty to take reasonable care of the goods, but (ii) the bailee nonetheless bears the legal burden of proving the absence of negligence [8 9]. A contract of carriage governed by the Hague Rules is a contract of bailment for reward, to which the same principles apply, unless excluded by the Rules [11]. The Hague Rules do not exclude them. They are only a complete code on matters which they cover and thus not exhaustive [15]. In particular, they do not deal generally with the burden of proof, which in accordance with ordinary principles of private international law are matters for the law of the forum [15]. As with common law bailment, imposing a duty of care on the carrier by article III.2 of the Hague Rules is consistent with his bearing the burden of disproving negligence [17]. That conclusion is reinforced by the relationship between articles III and IV. Article IV covers negligent acts or omissions of the carrier which would otherwise constitute breaches of article III.2. It would be incoherent for the law to impose the burden of proving the same fact on the carrier under article IV, but on the cargo owner under article III.2 [18]. As to article IV, it is well established that the exceptions cannot be relied upon if they were caused to operate by the negligence of the carrier [28, 37]. The carrier must prove facts which show not only that an excepted peril existed, but that it was causative of the damage [37]. This means that the general rule is that the carrier bears the burden of proving that the exception was not caused to operate by the carriers negligence [33, 37]. The Supreme Court considers that The GLENDARROCH [1894] P 226 (CA) is no longer good law [31 33]. In the case of the exception in article IV.2(m) for inherent vice, the test is whether the cargo was fit to withstand the ordinary incidents of the specified service, and its application can be decided only by reference to some assumed standard of care [39]. The mere propensity of the cargo to emit moisture is not inherent vice if reasonable care in lining the containers would have resulted in the cargo being discharged undamaged [39]. The Supreme Court considers that the Court of Appeal was not justified in overturning the judges two material factual findings, since it was not shown that the judge was plainly wrong [40 42].
These appeals arise out of an application for a permanence order under section 80 of the Adoption and Children (Scotland) Act 2007 (the 2007 Act), with authority to adopt, brought by West Lothian Council (the local authority) in December 2014. The application relates to a child, EV, who was born on 30 December 2013, and has been in care since her birth. It is opposed by the childs parents, to whom I shall refer as the mother and father. The application was granted by the Lord Ordinary on 31 March 2016, following a preliminary proof of one day and a further proof of eight days. His decision was upheld by the Second Division, other than in relation to the grant of authority to adopt and a related prohibition on contact by the parents, on 20 July 2016. Permission to appeal to this court was granted to each of the parents by an Extra Division on 14 October 2016. The issues in the appeals The Extra Division identified a single issue which satisfied the criterion in section 40A of the Court of Session Act 1988 for the grant of permission to appeal, namely an arguable point of law of general public importance which ought to be considered by the Supreme Court at this time. That issue was whether the guidance given in the case of In re J (Children) (Care Proceedings: Threshold Criteria) [2013] UKSC 9; [2013] 1 AC 680 is applicable in Scotland, where different legislation applies. The grant of permission was not, however, restricted to that issue, since it was closely interconnected with the other grounds of appeal. In the event, at the hearing of the appeals, there was no issue between the parties in relation to In re J. They agree that the decision of the majority in that case, encapsulated in Lord Hopes golden rule (to which I shall return), applies equally to the legislation with which these appeals are concerned. The point which prompted the grant of permission to appeal does not, therefore, require to be decided. It is nevertheless appropriate, given the uncertainty implicit in the grant of permission, to make some observations about the issue. I shall do so at a later point. Neither the Lord Ordinary nor the Second Division followed the approach laid down in In re J. The first question which arises is whether their decisions can nevertheless be supported. If not, the second question is whether the case should be remitted to the Inner House for it to determine the application on the basis of the evidence led before the Lord Ordinary and such further evidence as may be appropriate, or whether the application should simply be refused. The statutory framework The legislation governing the making of a permanence order is contained in sections 80 to 84 of the 2007 Act. Section 80 permits the granting of a permanence order, defined as an order consisting of the mandatory provision specified in section 81, such of the ancillary provisions specified in section 82 as the court thinks fit, and, if the conditions in section 83 are met, provision granting authority for the child to be adopted. The mandatory provision is a provision vesting in the local authority the parental right to have the child living with them or otherwise to regulate the childs residence, and the parental responsibility to provide guidance to the child. The ancillary provisions are provisions vesting other parental rights and responsibilities in the local authority or in another person, and extinguishing parental rights and responsibilities previously vested in a parent or guardian of the child. The parental right in respect of the childs residence which was previously vested in a parent or guardian is automatically extinguished: section 87. In relation to section 80, it is important to note section 80(3): In making a permanence order in respect of a child, the appropriate court must secure that each parental responsibility and parental right in respect of the child vests in a person. Parental responsibilities and parental rights include the responsibility and the right, respectively, if the child is not living with the parent, to maintain personal relations and direct contact with the child on a regular basis: Children (Scotland) Act 1995, sections 1(1)(c) and 2(1)(c). If, therefore, the court makes a permanence order, it must ensure that there is someone who has the responsibility and right to maintain personal relations and direct contact with the child. That person must be someone other than the local authority: section 82(1)(a) and (b). The conditions laid down in section 83 for the granting of authority for adoption lay down crucial tests, which were discussed in the case of R v Stirling Council [2016] CSIH 36; 2016 SLT 689, paras 16 18. They include a requirement that the court must be satisfied that the child has been, or is likely to be, placed for adoption. Section 84 sets out the conditions and considerations applicable to the making of a permanence order. In relation to these, section 84(1), read with section 84(2), enables the court to make a permanence order without the consent of the child where the child is aged under 12, as was the position in this case. Section 84(3) to (5) is in the following terms: (3) The court may not make a permanence order in respect of a child unless it considers that it would be better for the child that the order be made than that it should not be made. In considering whether to make a permanence order and, (4) if so, what provision the order should make, the court is to regard the need to safeguard and promote the welfare of the child throughout childhood as the paramount consideration. (5) Before making a permanence order, the court must after taking account of the childs age and (a) maturity, so far as is reasonably practicable (i) give the child the opportunity to indicate whether the child wishes to express any views, and (ii) opportunity to express them, if the child does so wish, give the child the (b) have regard to (i) any such views the child may express, (ii) the childs religious persuasion, racial origin and cultural and linguistic background, and (iii) of the order, and (c) be satisfied that the likely effect on the child of the making (i) there is no person who has the right mentioned in subsection (1)(a) of section 2 of the [Children (Scotland) Act 1995] to have the child living with the person or otherwise to regulate the childs residence, or (ii) where there is such a person, the childs residence with the person is, or is likely to be, seriously detrimental to the welfare of the child. These three subsections are of a different character from one another, and are to be applied in different ways. Section 84(5) is particularly complex. Subsections (a) and (b)(i) impose duties in respect of ascertaining and considering the views of the child, so far as is reasonably practicable. In the present case, given the very young age of the child, those duties did not arise. Subsection (b)(ii) and (iii) impose duties to have regard to specified factors. In the present case, two of the factors mentioned in subsection (b)(ii) are relevant, namely the childs racial origin and cultural and linguistic background. Section 84(5)(c) is of a different nature. It lays down a factual test in each of subsections (c)(i) and (ii). One or other of those tests must be satisfied before a permanence order can be made. Section 84(5)(c) therefore imposes a threshold test. It has to be addressed, and satisfied, before any issue requires to be considered under the other provisions of section 84. In the present case, it was paragraph (c)(ii) which was relevant, since both parents had the right mentioned in paragraph (c)(i). It was therefore necessary, before a permanence order could be made, for the court to be satisfied, in relation to each of the parents, that the childs residence with that person was likely to be seriously detrimental to her welfare. Section 84(3) arises only if the test in section 84(5)(c) is met. It imposes a prohibition on the making of a permanence order unless a specified requirement is met, namely that it would be better for the child that the order be made than that it should not be made. Section 84(4) applies when the court is considering whether to make a permanence order and, if so, what provision the order should make. It has no bearing on the test imposed by section 84(5)(c), since (1) that is a factual test which cannot be affected by treating the childs welfare as the paramount consideration, and (2) the test must be satisfied before the court reaches the stage of considering whether to make a permanence order. Once that stage is reached, however, section 84(4) is plainly important. The relevant Scottish case law In TW v Aberdeenshire Council [2012] CSIH 37; 2013 SC 108, the Extra Division correctly rejected an argument that sections 84(3) and (4) had a particular core status. It said that subsections (3), (4) and (5) impose separate requirements, all of which have a bearing on whether a permanence order should be made. Lord Bonomy, giving the opinion of the court, stated at para 13: It is . difficult to envisage circumstances in which a court, faced with an application for a permanence order, would not first of all address the factors that arise under subsection (5)(c), in this case paragraph (c)(ii), and any other matters arising under subsection (5), always bearing in mind the requirement of subsection (4) to regard the need to safeguard and promote the welfare of the child throughout childhood as the paramount consideration, and only then consider the application of the no order principle in subsection (3), again keeping subsection (4) in mind. The statement that section 84(5)(c) raises factors which have to be addressed does not make clear its true significance: it lays down factual tests which must be satisfied before a permanence order can be made. The passage is also mistaken in stating that subsection (4) has to be borne in mind when addressing subsection (5): I have explained why subsection (4) does not affect the test imposed by subsection (5)(c), and it is equally incapable of affecting the duty to have regard to the matters mentioned in subsection (5)(a) and (b). Nevertheless, the passage provides clear guidance as to the need to address the issue arising under subsection (5)(c) before considering subsections (3) and (4). Clearer guidance was provided by Lord Drummond Young, giving the opinion of the Extra Division in R v Stirling Council. At para 13, Lord Drummond Young stated: Thus section 84 imposes two critical conditions if a permanence order is to be made in a case where the natural parent does not consent. First, in terms of subsection (3), the court must consider that it would be better for the child that the order should be made than that it should not be made; that decision must be made in the light of the requirement of subsection (4) that the welfare of the child throughout childhood is to be the paramount consideration. Secondly, in terms of subsection (5)(c)(ii), the court must be satisfied that the childs residence with the parent is, or is likely to be, seriously detrimental to his or her welfare. Of the two conditions, that in subsection (5)(c)(ii) is the more fundamental: it imposes a threshold test, in the sense that, if it is not satisfied, the court is not permitted to dispense with the parents consent. It is only if the test is satisfied that the court requires to go on to consider the welfare of the child . The critical point is that the requirements of subsection (5) set a threshold test, and unless that test is satisfied no permanence order can be made and any further consideration of the other provisions of section 84 is irrelevant. Subject to the observation, in relation to the first sentence, that section 84 applies to all applications for a permanence order, and that no question of parental consent arises unless authority for adoption is sought, I respectfully agree. Lord Drummond Young added at para 15: The threshold test is in our opinion a matter of fundamental importance, and we must express regret at the manner in which section 84 of the Adoption and Children (Scotland) Act 2007 is structured. In that section the fundamental threshold provision comes at the end, after the subsections dealing with the welfare of the child. It would clearly be more sensible to state the threshold test at an earlier point, before the welfare provisions, because the threshold test must be satisfied before any of the other provisions becomes relevant. As matters stand there is an obvious risk that the sheriff will fail to appreciate the fundamental importance of the criterion in subsection (5). That is what appears to have happened in the present case. And also, as will appear, in the present case. The judges function In determining the issue arising under section 84(5)(c)(ii), and indeed the other issues arising under that section, the judge is the primary decision maker. He is wholly responsible for deciding the issues arising under the legislation on the basis of his own findings on the evidence. His role is not that of a judge exercising a supervisory jurisdiction (as, for example, in an application for judicial review), assessing whether the local authority had a reasonable basis for its concerns and its consequent actions. In this regard, guidance can be taken from decisions concerned with the similar judicial function in relation to the corresponding threshold test in England and Wales. Section 31(2) of the Children Act 1989 requires the court to be satisfied that the child concerned is suffering, or is likely to suffer, significant harm, before it can make a care order or supervision order. Such orders place a child in the care or under the supervision of a local authority, and for those purposes the local authority is given parental responsibility for the child. Section 31(2) shares with section 84(5)(c)(ii) of the 2007 Act the fact that it imposes a threshold test for the making of orders concerned with the care of children, the requirement that the court must be satisfied, and the provision that the matter of which the court must be satisfied is a likelihood: in the English provision, a likelihood of significant harm to the child, and in the Scottish provision, a likelihood of serious detriment to the childs welfare. The case of In re B (Children) (Care Proceedings: Standard of Proof) (CAFCASS intervening) [2008] UKHL 35; [2009] AC 11 concerned the question whether the threshold condition in section 31(2) of the 1989 Act was satisfied. Lady Hale emphasised at para 57 the importance of keeping separate the roles of the courts and the local authorities. Having explained the functions of local authorities in the protection of children from harm, her Ladyship continued: The task of the court is to hear the evidence put forward on behalf of all the parties to the case and to decide, first, whether the threshold criteria are met and, second, what order if any will be best for the child. While the local authority may well take preliminary or preventive action based upon reasonable suspicions or beliefs, it is the courts task when authorising permanent intervention in the legal relationship between parent and child to decide whether those suspicions are well founded . To allow the courts to make decisions about the allocation of parental responsibility for children on the basis of unproven allegations and unsubstantiated suspicions would be to deny them their essential role in protecting both children and their families from the intervention of the state, however well intentioned that intervention may be. It is to confuse the role of the local authority, in assessing and managing risk, in planning for the child, and deciding what action to initiate, with the role of the court in deciding where the truth lies and what the legal consequences should be. I do not underestimate the difficulty of deciding where the truth lies but that is what the courts are for. (paras 58 59) In the later case of In re S B (Children) (Care Proceedings: Standard of Proof) [2009] UKSC 17; [2010] 1 AC 678, again concerned with section 31(2) of the 1989 Act, Lady Hale emphasised that the decision whether to make an order interfering with individual rights must be taken by an independent and impartial court. In order to bring home to judges that their role is not merely supervisory, she drew an analogy with criminal proceedings: Social workers are the detectives. They amass a great deal of information about a child and his family. They assess risk factors. They devise plans. They put the evidence which they have assembled before a court and ask for an order. The court subjects the evidence of the local authority to critical scrutiny, finds what the facts are, makes predictions based upon the facts, and balances a range of considerations in deciding what will be best for the child. We should no more expect every case which a local authority brings to court to result in an order than we should expect every prosecution brought by the CPS to result in a conviction. The standard of proof may be different, but the roles of the social workers and the prosecutors are similar. They bring to court those cases where there is a good case to answer. It is for the court to decide whether the case is made out. (paras 18 19) The application of the threshold test It follows that decisions under section 31(2) of the 1989 Act as to a future likelihood of harm cannot be based merely on allegations or suspicions: a conclusion that harm is likely must be based on findings of fact. Lady Hale put the matter in this way in In re J, para 49: Care courts are often told that the best predictor of the future is the past. But prediction is only possible where the past facts are proved. A real possibility that something has happened in the past is not enough to predict that it will happen in the future. It may be the fact that a judge has found that there is a real possibility that something has happened. But that is not Facts have to be established on a balance of probabilities. Lord Hoffmann explained this in In re B, para 2: sufficient for this purpose. A finding of a real possibility that a child has suffered harm does not establish that he has. A finding of a real possibility that the harm which a child has suffered is non accidental does not establish that it was. A finding of a real possibility that this parent harmed a child does not establish that she did. Only a finding that he has, it was, or she did, as the case may be, can be sufficient to found a prediction that because it has happened in the past the same is likely to happen in the future. Care courts need to hear this message loud and clear. If a legal rule requires a fact to be proved (a fact in issue), a judge or jury must decide whether or not it happened. There is no room for a finding that it might have happened. The law operates a binary system in which the only values are zero and one. The fact either happened or it did not. If the tribunal is left in doubt, the doubt is resolved by a rule that one party or the other carries the burden of proof. If the party who bears the burden of proof fails to discharge it, a value of zero is returned and the fact is treated as not having happened. If he does discharge it, a value of one is returned and the fact is treated as having happened. More recently, in In re J, Lord Hope said that the golden rule must surely be that a prediction of future harm has to be based on facts that have been proved on a balance of probabilities (para 84). This does not require the courts to do anything unusual. As Lord Nicholls of Birkenhead remarked in In re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563, 589, to resolve disputed issues of relevant fact in order to reach a conclusion on the issue it has to decide is a commonplace exercise carried out daily by courts. Lady Hale put the point more pithily in the passage cited from In re B: deciding where the truth lies is what the courts are for. The considerations which led to these conclusions in the English cases are equally applicable to the Scottish legislation. Foremost among them is the need to construe the legislation in a way which strikes a proper balance between the need to safeguard children and the need to respect family life: a consideration which applies equally to the making of permanence orders under the Scottish legislation. As Lady Hale said in In re B, para 54: The threshold is there to protect both the children and their parents from unjustified intervention in their lives. It would provide no protection at all if it could be established on the basis of unsubstantiated suspicions: that is, where a judge cannot say that there is no real possibility that abuse took place, so concludes that there is a real possibility that it did. In other words, the alleged perpetrator would have to prove that it did not. A second consideration is the wording of the test itself, and comparison with the wording of other provisions, such as those concerned with orders of an emergency character. In that regard, the most significant terms satisfied and likely are common to both the Scottish and the English provisions. In particular, as Lord Nicholls observed in In re H at pp 585 586, the need for the court to be judicially satisfied is an indication that unresolved doubts and suspicions cannot form the basis of the order, and can be contrasted with the statutory language used where suspicion may be enough (as, for example, in relation to orders under sections 35 and 37 of the Childrens Hearings (Scotland) Act 2011). It also indicates that the burden of proof rests on the party seeking the order. The requirement in the threshold test that residence with the parent should be not merely detrimental to the welfare of the child, but seriously detrimental, is also of crucial importance. In R v Stirling Council, Lord Drummond Young referred at para 14 to several decisions of the House of Lords and of this court concerned with the corresponding issue arising under the English threshold test, namely whether there is a likelihood of significant harm. They included the case of In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, where the English authorities are reviewed. As Lord Drummond Young noted, the fundamental point is that depriving the parents of a child of their parental authority at common law is a most serious matter, and it should only be done if strict criteria are satisfied. It is, emphatically, not enough to show that a child would benefit from being brought up elsewhere. This is made clear in the speech of Lord Templeman in In re KD (A Minor) (Ward: Termination of Access) [1988] AC 806, 812: The best person to bring up a child is the natural parent. It matters not whether the parent is wise or foolish, rich or poor, educated or illiterate, provided the child's moral and physical health are not endangered. The implications of that statement were considered in In re L (Care: Threshold Criteria [2007] 1 FLR 2050, a case which, like the present case, concerned parents with learning difficulties. Hedley J, having quoted Lord Templeman, continued: It follows inexorably from that, that society must be willing to tolerate very diverse standards of parenting, including the eccentric, the barely adequate and the inconsistent. It follows too that children will inevitably have both very different experiences of parenting and very unequal consequences flowing from it. It means that some children will experience disadvantage and harm, while others flourish in atmospheres of loving security and emotional stability. These are the consequences of our fallible humanity and it is not the provenance [semble: province] of the state to spare children all the consequences of defective parenting. (para 50) He concluded that the children were suffering, and likely to suffer, some harm to their intellectual development as a result of their parents inadequacies, but that it was not of a character or significance to justify compulsory intervention. Finally, in relation to the application of the legislation, it is important that the courts reasoning should demonstrate that it has applied the legislation correctly. This requires more than the formulaic repetition of the statutory language. It should be apparent that the court has analysed the arguments for and against making a permanence order (including the various provisions which might realistically be under consideration) and, where appropriate, an order granting authority for adoption. Its reasons for preferring one option to the potential alternatives should be explained. In order to carry out this task, the court requires evidence which addresses all the options which are realistically available and analyses the arguments for and against each option. If the court finds that the threshold test is satisfied, it should be clear (1) what is the nature of the detriment which the court is satisfied is likely if the child resides with the parent, (2) why the court is satisfied that it is likely, and (3) why the court is satisfied that it is serious. The Lord Ordinarys opinion Considered in the light of the foregoing, the Lord Ordinarys opinion is, unfortunately, deficient in a number of respects. In fairness, it should be stressed that, since he gave judgment before the decision of the Inner House in R v Stirling Council, he did not have the benefit of the guidance provided in that case. The Lord Ordinary did not set out in his opinion the material provisions of sections 80 to 84 of the 2007 Act, or identify the separate conditions, each of which has to be satisfied before a permanence order, or an order granting authority for adoption, can be made. He did not distinguish in his opinion between the making of a permanence order and the granting of authority for adoption. He did not refer to the case of In re J, although this court was informed that it had been relied on by counsel for the parents. His general approach was to consider whether the local authoritys actions had been justified, in the sense that they had responded in a reasonable manner to concerns for which an evidential basis existed. As a consequence, he made few findings of fact in relation to the issues in dispute, and none in relation to the threshold issue arising under section 84(5)(c)(ii). It was a matter of agreement before the Lord Ordinary that the childs parents lived together. Both parents had experienced learning difficulties throughout their lives. It was also agreed that on the date of the childs birth, a child protection order was granted by the Sheriff on the ex parte application of the local authority, with a condition that there should be no contact between the father and the child. That condition has remained in place ever since. The Lord Ordinary was provided with reasoned decisions maintaining that condition. The first was taken by a childrens hearing on 10 January 2014, when an interim compulsory supervision order was made. Later decisions were taken during February, March, April and May 2014 when the interim compulsory supervision order was continued, and on 12 June 2014, when a compulsory supervision order was made. None of that reasoning is referred to in the Lord Ordinarys opinion, with the consequence that the decision to deny the father all contact with his child over the entirety of her life to date (with the exception of one hour, for the purposes of these proceedings), is unexplained. It was also agreed that on 10 January 2014 the childrens hearing decided to refer the grounds of referral to the Sheriff for proof, and that on 23 May 2014 amended grounds of referral were held to be established. The Lord Ordinary was provided with the amended grounds of referral, but his opinion does not explain what they were. It was also agreed that a parenting capacity assessment was carried out in relation to the mother. The Lord Ordinary was provided with a copy of the assessment report. No such assessment was carried out in relation to the father. The Lord Ordinarys opinion does not explain why that was. The Lord Ordinary also narrates that he was provided with a copy of a report prepared by a Dr Coupar, but the opinion contains no indication of the subject matter of the report. The Lord Ordinary explains that the primary source of the local authoritys concerns in relation to the child arose as a result of the relationship between her parents. There were three main causes for these concerns, all of them arising out of what the Lord Ordinary described as perceived concerns about the behaviour of [the father]. The first concern, which appears to have been of particular importance to the local authority, related to criminal charges of alleged sexual conduct . brought in England in 2010. The Lord Ordinary does not explain what those charges were. Whatever they may have been, they were dropped within a short period of being made, because the complainant had given inconsistent and contradictory accounts. The police did not pass the case to the Crown Prosecution Service. It appears that the complainant was a vulnerable female person who suffered from learning difficulties. According to the fathers affidavit, she was a friend of his who had wanted to have a sexual relationship with him. He had not been interested. She then made allegations to the police that he had raped her. This court has been informed that they were both aged about 19 at the time. The Lord Ordinary narrates that he heard evidence from a police officer that the father had given a statement in which he accepted that he had had consensual sex with the complainant. The father also gave evidence before the Lord Ordinary. He accepted that he had said what was recorded in the statement, but denied that it was true. Having narrated this evidence, and expressed reservations about the evidence given by the father in relation to this matter, the Lord Ordinary stated: In these circumstances it appears to me to be established on the balance of probabilities that the concerns harboured by the petitioners in relation to the [fathers]s sexual proclivities were justified. In arriving at that conclusion I should make it clear that I am making no finding in relation to whether or not the sexual allegations made in 2010 were true or not. The relevancy or otherwise of these allegations is not a matter for me, nor have I heard any evidence in relation to the relevancy of these matters. My finding is confined to concluding that, notwithstanding the lack of any criminal conviction, there was material available to the petitioners at the time of the child EVs birth relative to the [father]s behaviour towards vulnerable females which they could not ignore and were required to have consideration of when formulating a policy or plan towards the ongoing care of the child EV. (para 20) This passage epitomises the Lord Ordinarys misunderstanding of his function. As previously explained, it was not his function to determine whether the (unexplained) concerns harboured by the local authority about the fathers sexual proclivities (whatever may have been meant by that phrase) were justified. The conclusion stated in the last sentence is irrelevant to the task which he had to perform. The entire discussion of this topic is beside the point unless the allegations are relevant to the issues which the Lord Ordinary had to determine. The allegations concern the fathers sexual behaviour with another adult with learning difficulties, three years before the child was born. The Lord Ordinary does not address the question whether, or how, they might be relevant to the question whether the childs residing with her parents would be seriously detrimental to her welfare. If the allegations are relevant, however, then the Lord Ordinary has to make a finding of fact, on the balance of probabilities, as to whether the allegations are true. If he is unable to make such a finding, then he has to find that the allegations are unproved, and dismiss them from his mind. The Lord Ordinary noted that a subsidiary matter arising out of these allegations concerned the period before the allegations were dropped, when the father was briefly on police bail. The father accepted in his evidence that he had entered the college where the complainant was studying. This was reported to the police, as there was a bail condition not to approach the college. There was also evidence that the father had admitted the complainant to his home. This was regarded by the police as a breach of a bail condition not to approach the complainant. The father accepted in his evidence that these events had occurred. No criminal charges were brought. The Lord Ordinary appears to have accepted that the father had contravened his bail conditions, although the way in which he expressed his conclusion again shied away from making a finding of fact: he said that it appeared to him that there was evidence before the court to support the proposition. He did not address the question whether the breaches were relevant to the issue arising under section 84(5)(c)(ii). It is difficult to see what significance they could have had. The second matter of concern to the local authority was an allegation concerning the mothers daughter from a previous relationship, whom I shall refer to as MP. MP did not live with her mother, but was in care. Evidence was given by the social worker responsible for EV that she (the social worker) had been told that other workers in a homeless unit where the mother had once stayed had been told by the mother that the father had said to her that he would like to have sex with MP, who was aged about eight at the time. The social worker also said that, at a meeting she attended, the father had adopted the position that he should not have said this out loud. The mother, in her evidence, said that she accepted the fathers assurance that the statement was either not said or, if it was, was uttered as a joke. The Lord Ordinary says nothing about whether this matter was addressed in the fathers evidence, or, if it was, what he said about it. Nor does the Lord Ordinary make any finding about this matter, beyond saying that regard required to be had to that remark by the [local authority]. Whether that statement was intended to bear the implication that the remark was actually made is not clear. The Lord Ordinary does not address the significance of this matter in relation to the threshold test. That would depend on what inferences should be drawn from the remark, if it was made: inferences which might not be as straightforward as in the case of a man with normal social skills. Was it meant to be a joke? Or was it a serious expression of sexual desire? The third matter of concern to the local authority was described by the Lord Ordinary as follows: The third concern in relation to the [father] were threats made by him to social workers in August 2013 that he would kill a support worker and social worker in the event that they refused to allow him and the [mother] to have the baby after its birth. In the same vein threats, or a message of a threatening nature, made by the [father] to the [mother] also in August 2013. These threats were reported to the police, were the subject of a criminal prosecution and resulted in [a] conviction. (para 13) In relation to the first of these matters, the Lord Ordinary states that the threats against social workers were spoken to by the two persons against whom the threats were uttered. The father accepted that he made the utterances, but said that they were merely hot air or said in the heat of the moment. Before this court, it was common ground that the Lord Ordinary had misunderstood the evidence in relation to this matter. According to counsel, there was only one incident involving a threat, not two. There was no evidence from social workers who had been threatened. The matter arose out of a telephone call which the father had made to the mother when she was in a car with a social worker in August 2013, four months before the child was born. There were already plans for the child to be removed from the parents as soon as she was born. The father said to the mother over the telephone something to the effect that he would kill social work staff if he and she did not get custody. Evidence that this had occurred was given by a social worker who had not been present. It was agreed that the father pled guilty to a charge under section 127(1) of the Communications Act 2003 in relation to this matter and was fined 135. It is agreed that this is his only criminal conviction. The Lord Ordinary considered the relevance of this matter, as he understood it, only in relation to the actions taken by the local authority. His conclusion was that there being evidence of the threats being uttered . they were factors which the [local authority] required to have regard to. The real question, if it was found that a threatening statement had been made, was how much significance, if any, should be attached to it by the court when considering whether the childs residence with her father was likely to be seriously detrimental to her welfare. Both the court and the local authority should maintain a sense of perspective: if this was merely a momentary expression of anger by a father who had much to be angry about, it should not be given exaggerated importance in determining the childs future. In the light of all this evidence, the Lord Ordinary stated that there was plainly established before the court evidence of the concerns which caused the [local authority] to proceed down the route of permanence which ultimately led to the presentation of this petition to the court. Once again, the Lord Ordinarys focus appears to have been on assessing whether the local authoritys actions had a proper basis. So far as the care of the child was concerned, the Lord Ordinary explained that the local authoritys views were critically dependent on the fact that her parents were a couple. It had been made clear to the mother that, if she left EVs father, the local authority would reassess the case. Although the mother would have difficulties caring for a young child, efforts could be made to assist her and thereafter assess her suitability as a custodian for her child. Her unwillingness to leave the father rendered that course of action impossible, in the view of the local authority. In relation to the parenting skills of the mother, the Lord Ordinary said that there was evidence, which he accepted, of a lack of engagement with social workers, and of an inability to grasp more than basic parenting skills. An expert in social work practice named Helen Stirling, giving evidence on behalf of the mother, said that, even with extensive support from social workers, the mother might only even master physical care tasks, and not manage the more complex tasks of meeting EVs emotional and social needs. In relation to these matters, it is relevant to note that the mother had two children by a previous partner, one of them being the child MP referred to earlier. She and her partner looked after those children (born in 2004 and 2007), without significant support from the local authority, until October 2012, when the couple separated and the children went to live with their father. In 2013 their father died, and the children were accommodated by the local authority, but continued to have regular contact with their mother. The mothers relationship with EVs father was a factor in the local authoritys decision that the children should not be in her care. This court was informed that the mother has now been prevented even from having contact with the children. So far as EVs father is concerned, the Lord Ordinary stated that the social workers were concerned about his ability to acquire parenting skills and to cooperate with them. As mentioned earlier, however, the local authority had carried out no parenting assessment. The father had been permitted to see the child for one hour, for the purpose of allowing observation of his interaction with the child by an expert witness instructed on his behalf. The Lord Ordinary found the witnesss evidence of limited utility, since it was based on a single contact session. The Lord Ordinary noted that it was not suggested on the fathers behalf that he was able to demonstrate the parenting skills required for the care of the child. The Lord Ordinary said very little in his opinion about the child herself, and her particular needs. This court was told that the child may have global developmental delay. It is unclear whether that matter was raised before the Lord Ordinary. If it was, he made no finding about it. If that is correct, however, then it is something which may be relevant to the ability of the parents to care for her, and also to the prospects of her being adopted. It may also bear on the question, which can arise in cases involving parents with learning difficulties, whether the childs residing with them might harm her own intellectual development. Nor did the Lord Ordinary explain whether the alternative to her residing with her parents was, or was not, a permanent placement, with carers who were committed to her safety, welfare and wellbeing, where she would receive a high standard of care until adulthood. In fact, as this court was informed, it is not envisaged that she will continue to reside with the foster carer with whom she has lived since she was three days old, since her foster carer does not intend to adopt her; and the local authority has not found any adoptive placement for her. The Lord Ordinary did not make any finding as to whether she was likely to be placed for adoption. Nor did he say anything said about her racial, cultural and linguistic background. She is of mixed race, her mother being white and her father being a Sri Lankan whose first language is Tamil. As explained earlier, the court is under a statutory duty, under section 84(5)(b)(ii) of the 2007 Act, to have regard to the childs racial origin and cultural and linguistic background. The Lord Ordinary then turned to the issue of contact, noting that there was evidence that the child derived no significant benefit from contact with her mother, and that the father had had contact with the child on only one occasion. Unsurprisingly in the circumstances, it was conceded that there was no existing bond between the child and her father (nor, of course, is she likely to have an existing bond with any potential adoptive parents). The Lord Ordinary made an order prohibiting contact between the child and her parents. The result was that there was no person in whom the parental responsibility and parental right in respect of contact was vested, contrary to the statutory duty of the court, under section 80(3) of the 2007 Act, to secure that each parental responsibility and parental right in respect of the child vests in a person. Finally, the Lord Ordinary said that he should mention that there was some evidence in relation to the parents difficulties in coping with financial matters and in relation to consistent maintenance of appropriate standards of cleanliness and hygiene in their accommodation. He found these matters proved, but said that they were of less significance than the concern with which he had dealt at greater length (ie the concerns about the fathers behaviour). The Lord Ordinary completed his opinion by expressing his conclusion as follows: I am satisfied that both for the safety and welfare of the child throughout her childhood it is necessary that the orders sought should be granted. (para 28) That conclusion dealt with the basic permanence order and the grant of authority for adoption without differentiation. In expressing his conclusion in that way, the Lord Ordinary may have had in mind the paramount consideration mentioned in section 84(4), namely the need to safeguard and promote the welfare of the child throughout childhood. As Lord Drummond Young explained, that issue did not arise unless and until the test in section 84(5)(c)(ii) was satisfied. Or he may have had in mind the test under section 83(2)(d) for dispensing with parental consent to adoption, namely that the welfare of the child requires it. It is impossible to say. What can be said, however, is that the Lord Ordinary did not address the threshold issue arising under section 84(5)(c)(ii). Nor was any reference made to the matters to which section 84(5)(b)(ii) and (iii) required regard to be had. Equally importantly, the Lord Ordinary did not support his conclusion by an analysis of the benefits and detriments of the available options. Although much was said about the local authoritys concerns about the fathers behaviour years earlier, nothing was said, for example, about how the childs current foster care arrangements were working, or about the prospects of a suitable adoptive placement being found. There was no analysis of the merits of her living with a foster carer who has no intention of adopting her, as compared with her living with her parents. At the most basic level, the possibility of her parents being able to offer her a permanent home might have been a relevant factor, particularly if the prospects of her being adopted were poor, to set against the negative factors. The proceedings in the Inner House Before the Extra Division, it was conceded that the Lord Ordinarys decision to grant authority for adoption could not be supported. So far as the permanence order was concerned, the Lord Justice Clerk, giving the opinion of the court, treated the deficiencies of the Lord Ordinarys opinion as more apparent than real. She said that the Lord Ordinary, as the family judge, could safely be taken to have a sound understanding of the relevant law. This was supported by his having recorded counsels agreement that the correct interpretation of the legal test for the making of a permanence order, as he put it, was that set out in TW v Aberdeenshire Council. The Lord Ordinarys conclusion, set out at para 52 above, was glossed as addressing the issue raised by section 84(5)(c)(ii): His reference not only to welfare but to the childs safety indicates that he had the issue of serious detriment at the forefront of his mind. He specifically said that he had concern as to the welfare of the child throughout her childhood. His reference to necessity indicates that he had proper regard to the proportionality of his decision. We are satisfied that the Lord Ordinary both identified and applied the correct test (para 30) With great respect, I am unable to agree. Section 84(5)(c)(ii) does not refer to safety. Nor does it refer to the welfare of the child throughout childhood: that is a phrase which appears in section 84(4). The use of that phrase suggests that the Lord Ordinarys conclusion may have been expressed with section 84(4) in mind, but, notwithstanding his reference to TW v Aberdeenshire Council, there is nothing to indicate that he was addressing the threshold test in section 84(5)(c)(ii). In the absence of any indication in his opinion that he identified and addressed the correct test, he cannot be assumed to have done so merely because he is a specialist judge. The Second Division treated the Lord Ordinarys focus on the local authoritys concerns about the father as being of less importance than it appeared, since this was against a background of accepted deficiencies in the parents ability to provide basic elements of care. In that regard, the Lord Justice Clerk said that it was not disputed that both parents had serious learning difficulties and would require considerable support from the local authority. She said that the Lord Ordinary had accepted the evidence of Helen Stirling to the effect that, even with support, it was likely that the mother would not manage the tasks of meeting the childs emotional and social needs. The Lord Ordinary had noted that it was not suggested that the father was able to show the necessary parenting skills required for the care of the child. Of less significance, but proven nonetheless, was that the parents had difficulties with financial matters, and in consistent maintenance of appropriate standards of cleanliness and hygiene in their accommodation. In relation to these matters, the Lord Ordinary did not find that the threshold test in section 84(5)(c)(ii) was met on the basis of deficiencies in the care which the child might receive if residing with her parents. Ms Stirlings evidence in relation to the mother was that she might not manage the more complex tasks. It also has to be borne in mind that the mother had brought up her two older children with her previous partner. So far as the father is concerned, it was not for him to show that he possessed the necessary parenting skills. The onus lay on the local authority to demonstrate that he did not, and that any resulting risk to the welfare of the child could not be addressed by the provision of support. The local authority was not in a position to adduce evidence on the point, having failed to carry out a parenting assessment. There was no finding as to the level of assistance which the parents might require. The issues relating to financial management and cleanliness were treated by the Lord Ordinary as being of relatively minor significance. Turning to the local authoritys concerns about the fathers behaviour, the Lord Justice Clerk described these as serious concerns, established in evidence. It is true that the Lord Ordinary accepted that the concern relating to a threatening statement had been established in evidence, although he misunderstood the evidence about this, as explained earlier, and did not address the question of its significance in relation to the threshold test. It also appears to be correct to say that the breaches of bail were established. Unlike the Lord Ordinary, the Lord Justice Clerk considered their relevance, and concluded that they suggested a lack of thought as to the consequences of his actions, and an inability to learn from his mistakes. That is a reasonable conclusion, but it is of little apparent significance in relation to the threshold test. In relation to the charges made against the father following a complaint by a woman with learning difficulties, the Lord Justice Clerk stated that the Lord Ordinary was careful to recognise that he was not in a position to determine whether there had been any truth in the criminal charges . and that he should not attempt to do so. As previously explained, however, the Lord Ordinary could only take the fathers alleged behaviour into account if he was satisfied, on a balance of probabilities, that the father had actually behaved as alleged, and that his proved behaviour was relevant to the question in issue. In that regard, the Lord Justice Clerk concluded that the Lord Ordinary considered that the [father] had a relationship with the complainer, contrary to denials made at various stages, including denials made on oath. That way of putting the matter, however, leads to the question: what does it have to do with the making of a permanence order, if a young man with learning difficulties had a relationship with a young woman with similar difficulties several years before his child was born, and lied when asked about it afterwards? The whole point of the concern was the allegation that the fathers behaviour was of a criminal character: indeed, although the nature of the charges is unexplained, it is known that the complaint was of rape. As earlier explained, that could only be relied on as the basis of a finding that the threshold test was satisfied, if, in the first place, the allegation was proved to be true. The Lord Ordinary expressly stated that he was making no finding in relation to whether the sexual allegations made in 2010 were true or not. In relation to the remaining concern, arising from the fathers alleged statement relating to MP, the Lord Justice Clerk inferred from the Lord Ordinarys opinion that he had accepted that the statement had been made. She related this acceptance to the Lord Ordinarys reference, in his conclusion, to EVs safety. It appears, from the Lord Justice Clerks linking the allegation concerning MP to EVs safety, that she understood the Lord Ordinary to be implying that the father might sexually assault his own child. If the Lord Ordinary intended to imply that there was a real possibility that the father would sexually assault his daughter, then it is far from clear from what he wrote in his opinion. Such an important finding should not be left as a matter of inference. The Lord Justice Clerk continued: Even if we had not been satisfied as to the adequacy of the Lord Ordinarys expressed opinion, had the matter been at large for this court, we would have made a permanence order. Set against the background of the [parents] continuing lack of parental skills, the findings in relation to the three areas of concern are sufficient to meet the threshold test. The comments made in respect of the [mothers] eight year old daughter raise grave concerns. It is plain from the Lord Ordinarys account of the way in which the [father] gave evidence and the nature of the evidence given, that the [father] is unreliable and lacks understanding of the significance of his sexual conduct. The parents reside together, and the [mother] has made it clear that there is no prospect of that situation changing. Were the child to reside with her, the child would also be residing with the [father]. Such a situation would run the risk of serious detriment to her welfare. Taking account of all the matters upon which the Lord Ordinary made findings, we are satisfied that not only has the threshold test been met, but also that it would be better for the child that the order be made than that no order be made. (para 41) The only alteration which the court therefore made to the Lord Ordinarys order, other than quashing the grant of authority for adoption, was to remove a prohibition on contact by the parents, which the Lord Ordinary had imposed in anticipation of adoption. It is entirely understandable that the Second Division should have sought to avoid further delay in determining the future of this young child. Nevertheless, with the greatest respect, the Lord Ordinarys opinion did not provide a satisfactory basis for the Inner House to grant the application itself. In relying on the Lord Ordinarys opinion to justify the conclusion that the threshold test had been met and that a permanence order should be made, the Second Division rendered their conclusion vulnerable to some of the same criticisms as his opinion. It involved taking account of unproved allegations of criminal conduct, contrary to the guidance given in In re J, which it is now conceded should be followed when applying the Scottish legislation. It involved finding that the threshold test was satisfied without clearly explaining what exactly the apprehended detriment was, why it was considered serious, and why it was considered likely (a risk of serious detriment not being enough). It involved no consideration of the childs racial origin and cultural and linguistic background, to which the court is required by statute to have regard. It involved the same failure as the Lord Ordinarys opinion to explain satisfactorily why a permanence order should be made, on the basis of a reasoned analysis of the available options and an assessment of their respective pros and cons. What next? It is clear that the appeals must be allowed. Parties were divided as to what should happen next. The local authority wishes the case to be remitted to the Inner House, so that it can re consider the reclaiming motions on the basis of the transcript of the evidence led before the Lord Ordinary, the documentary evidence before him, and such additional evidence as may be necessary and appropriate. The mother and father, on the other hand, would prefer the application for the permanence order to be refused. The prospect of the Inner House having to go through nine days worth of evidence and determine the application on that basis is unattractive, for several reasons. The evidence is now somewhat stale, the proof having been heard over a year ago. Events during the intervening period may be relevant, particularly given that the case concerns a young child. More importantly, as the Lord Ordinary made clear, the case is also one where an assessment of the evidence of the parents is particularly difficult, because of their learning difficulties. In particular, an assessment of the significance of the statement concerning MP, if proved to have been made, may well be influenced by the impression which the court forms of the father. Much may turn on whether, if proved to have been made, it is regarded as signifying a real possibility that KV would sexually abuse his daughter. This is therefore a case where there may be a significant benefit in seeing and hearing the evidence, rather than reading a transcription of it. So far as can be judged from the opinions below, the evidence led may in any event have failed to focus adequately on the child herself and her needs, as distinct from the concerns held by the local authority about what the father may have said or done several years ago (for the most part, in unrelated contexts). It is also apparent that the local authority still considers that adoption is the best option for the child, and will therefore need to make a further application to the court in any event. In these circumstances, the most sensible way forward is for this court to allow the appeals and refuse the petition, leaving it to the local authority to commence fresh proceedings as and when that may be appropriate. That will also allow parties in particular, the local authority an opportunity to ensure that the evidence provided to the court focuses on matters which are truly relevant to the issues which the court has to determine. The local authority will also have an opportunity to reconsider whether to carry out a parenting assessment in respect of the father.
UK-Abs
These appeals arise out of an application by West Lothian Council (the local authority) for a permanence order under s.80 of the Adoption and Children (Scotland) Act 2007 (the 2007 Act), granting it parental responsibilities and rights in relation to a child (EV), including the authority to adopt. EV was born on 30 December 2013 and has been in care since her birth. The application is opposed by EVs parents, both of whom have experienced learning difficulties throughout their lives. Section 84 of the 2007 Act sets out the conditions and considerations applicable to the making of a permanence order. s.84(3) prohibits the making of an order unless the court considers that it would be better for the child that the order be made than that it should not be made. In considering whether to make an order and, if so, what provision the order should make, the need to safeguard and promote the welfare of the child throughout childhood is to be regarded as the paramount consideration (s.84(4)). S.84(5)(b) imposes a duty on the court to have regard to certain factors before making a permanence order. Under s.84(5)(c)(ii), before making a permanence order the court must be satisfied, in relation to each of the parents, that the childs residence with that person is likely to be seriously detrimental to her welfare. The local authoritys concerns in relation to EV primarily related to her father, and arose out of allegations concerning his behaviour before she was born. The Lord Ordinary, after hearing 9 days of evidence, granted the permanence order with authority to adopt. He made few findings of fact in relation to the issues in dispute, and none in relation to whether the threshold test in s.84(5)(c)(ii) was satisfied. Instead of considering whether the allegations were relevant to the threshold test; if so, whether they were true; and if so, whether the test was met, his approach was to consider whether the local authoritys actions had a proper basis. The Lord Ordinarys decision was upheld by the Inner House, except in relation to the grant of authority to adopt and a related prohibition on contact by the parents. The parents now appeal to the Supreme Court. On the parents appeals to the Supreme Court, the local authority argued that if the appeal against the decision of the Inner House were allowed, the application for a permanence order should not be refused, but should be remitted to the Inner House for it to determine the application on the basis of the evidence before the Lord Ordinary (and such further evidence as may be appropriate). The Supreme Court unanimously allows the appeals, and refuses the petition for a permanence order. Lord Reed gives the judgment, with which the rest of the Court agrees. The test under s.84(5)(c)(ii) is a factual threshold test which has to be met before the court reaches the stage of considering whether to make a permanence order under the other provisions of s.84. The judge is the primary decision maker in determining whether the threshold test has been met, and must base his or her determination of that issue on findings of fact. The judge is not exercising a merely supervisory jurisdiction over the approach of the local authority. S.84(5)(c)(ii) is similar to section 31(2) of the Children Act 1989, which requires the court to be satisfied that the child concerned is suffering, or is likely to suffer, significant harm before it can make a care order. Both provisions impose a threshold test, requiring the court to be satisfied of a likelihood. Decisions under s.31(2) of the 1989 Act as to a future likelihood of harm cannot be based merely on allegations or suspicions, but on facts which have been established on a balance of probabilities (In re J (Children) Care Proceedings: Threshold Criteria) [2013] UKSC 9). The approach in In re J is also applicable to the 2007 Act. The legislation needs to be construed in a way which strikes a proper balance between the need to safeguard children and the need to respect family life. The requirement that residence with the parent was likely to be seriously detrimental indicates depriving parents of their parental authority is a serious matter and should only be done if strict criteria are satisfied. The inclusion of the word satisfied as part of the test indicates that suspicions cannot form the basis of the order (and can be contrasted with other statutory language used where suspicion may be enough). If the court finds that the threshold test is satisfied, it must make clear (1) what the nature of the detriment is, which the court is satisfied is likely if the child resides with the parent, (2) why the court is satisfied that it is likely and (3) why the court is satisfied that it is serious. The alleged behaviour about which the local authority was concerned could only be relied on as a basis of a finding that the threshold test was satisfied if the allegations were relevant to that issue and if they were proved on the balance of probabilities to be true [19 29]. The approach of the Lord Ordinary was deficient in a number of respects. He did not determine the threshold issue arising under s.84(5)(c)(ii) but approached the case in a supervisory manner considering whether the local authoritys concerns about EVs father were justified. The correct approach would have been to consider whether the allegations were relevant to the issue arising under s.84(5)(c)(ii). If they were, then the Lord Ordinary should have made a finding of fact on the balance of probabilities as to whether the allegations were true. If he was unable to make such a finding, he should not then take them into account in his consideration of the threshold test. Further, the Lord Ordinary did not refer to the matters which he had a duty to consider under s.84(5)(b). It is not clear whether he had in mind the requirement under s.84(4) that the childs welfare is paramount, but that is not in any event a consideration that would arise until the threshold test under s.84(5)(c)(ii) was satisfied [30 62]. The application should not be remitted to be decided again by the Inner House, but refused. It is open to the local authority to commence fresh proceedings as and when that may be appropriate. Remitting the case would require the Inner House to go through nine days worth of evidence which by now is somewhat stale and which would not take into account intervening events which may be relevant. This is a case where the assessment of the evidence is difficult because of the learning difficulties of the parents and there may be a significant benefit in seeing and hearing the evidence at first instance [63 66].
In this case an estate agent claims that commission became payable to him by the vendor of a number flats on the completion of the sale of those flats to a purchaser which he had introduced to the vendor. It gives rise to two issues. The first, raised on appeal by the agent, concerns the agreement between the agent and the vendor and whether it was complete and enforceable by the agent despite there being no express identification of the event which would trigger the obligation to pay the commission. The second, raised on a cross appeal by the vendor, concerns the application of section 18 of the Estate Agents Act 1979 and whether, by reason of the agents failure to comply with the requirements imposed by the Act, the trial judge ought to have dismissed the claim or discharged the vendors liability to pay the commission. The facts In 2007, the defendant, Mr Wells, a retired stockbrokers office administrator, completed the development of a block of flats in Hackney under the terms of a joint venture agreement with Mr White, a builder. By the beginning of 2008 six of the flats had been sold, one was under offer and seven were still on the market. They were being marketed by a local agency, Shaw & Co, under a contract for a sole agency and a commission of 1.75%, or 3% if the properties were sold through another agent. In late January 2008, Mr Wells mentioned to Mr Nicholson, a neighbour in Andorra, where they both lived, that he was having difficulty selling the remaining flats. Mr Nicholson told Mr Wells that he knew of a property investment company in London that might be interested in purchasing the flats and Mr Wells responded that he would be happy for Mr Nicholson to make some enquiries. On 29 January 2008, Mr Nicholson sent an email to the claimant, Mr Devani, who was trading as an estate agent in Kilburn, informing him of the flats and that seven remained unsold. He also gave him Mr Wells and Mr Whites telephone numbers and explained that Mr Wells would be coming to London very soon. Later that day Mr Devani acknowledged receipt of Mr Nicholsons email, thanked him and told him that the information he had been given might well be of interest. He also made a telephone call to Mr Wells in Andorra. The parties at trial gave strikingly different accounts about what was said in the course of this telephone conversation. It was Mr Devanis evidence that he told Mr Wells that he was an estate agent and that his commission terms would be 2% plus VAT. Mr Wells maintained that Mr Devani made no mention of any commission and gave the impression he was an investor looking to buy on his own account. The judge, HH Judge Moloney QC, preferred the evidence of Mr Devani. He found that Mr Devani thought throughout that he was acting as an agent, that he did not describe himself as a buyer or say anything intended to create the impression that he was, and that Mr Wells asked him about fees and he replied that his standard terms were 2% plus VAT. He also found that since February 2008 Mr Wells and Mr White had sought to take advantage of the absence of a written agreement with Mr Devani to deprive him and Shaw & Co of their commissions, and that they had tailored much of their evidence to reinforce their case. Shortly after this telephone conversation, Mr Devani made contact with Newlon Housing Trust which expressed some interest in purchasing the remaining flats. A meeting at the flats was arranged and attended by a representative of Newlon, Mr Wells and Mr White. On 5 February 2008, Newlon agreed to purchase the flats for 2.1m. Mr Wells thereupon telephoned Mr Devani to inform him of the sale and later that day Mr Devani sent to Mr Wells an email in which he expressed delight that Newlon had agreed to purchase the flats and continued: As per our terms of business our fees are 2% + VAT and I look forward to receiving you[r] solicitors details so that we can invoice them directly as per your instruction. He attached to that email the terms of business which provided in relevant part: I am required by section 18 of the Estate Agents Act 1979, as amended to set out our terms of business prior to you formerly [sic] instructing our company. A commission of 2% + VAT (Multiple Agency) of the eventual sale price of the property. The commission will be due on exchange of contracts with a purchaser, but payable from the proceeds of sale by your conveyance, with your written authority. The transaction proceeded to completion and Mr Devani then claimed his commission. Mr Wells refused to pay and so Mr Devani issued these proceedings in the Central London County Court. The trial Apart from the factual issues which the judge resolved in Mr Devanis favour, Mr Wells disputed Mr Devanis entitlement to any commission on two grounds which are material to this appeal. Mr Wells contended first, that he had never entered into a binding contract to engage Mr Devani as his agent because the terms of any agreement between them were too uncertain; and secondly, that Mr Devanis failure to comply with section 18 of the Estate Agents Act 1979 rendered any agreement unenforceable or that any sum payable to Mr Devani by Mr Wells should be discharged or reduced in light of the prejudice Mr Wells had suffered. The judge dealt with the first ground in concise terms. He accepted that Mr Devani only submitted his written terms to Mr Wells after he had introduced Newlon and that his claim therefore depended on what had been agreed on 29 January 2008. He also recognised that Mr Devani did not reach any express agreement with Mr Wells as to the precise event which would entitle Mr Devani to his commission. Nevertheless, he held that, in the absence of any such express agreement, the law would imply the minimum term necessary to give business efficacy to the parties intentions. Here, the judge continued, the least onerous term for Mr Wells, and the one which nobody would have disputed had it been suggested by a bystander, was that payment of the specified commission was due on the completion of the purchase of the properties by any party which Mr Devani had introduced to Mr Wells. Accordingly, he held that there was at the material time an oral contract between Mr Devani and Mr Wells entitling Mr Devani to a payment of 2% plus VAT if Mr Devani effected an introduction between Mr Wells and a prospective purchaser of the flats and that such introduction led to their sale. The judge turned next to the submissions founded upon section 18 of the 1979 Act. He found that Mr Devani had failed to comply with his obligations under the Act in that he did not expressly inform Mr Wells before their agreement of the circumstances under which he would be entitled to commission, and he did not provide Mr Wells with that information in writing until 5 February 2008. He also found that these failures were culpable but that having regard to the degree of that culpability and the prejudice Mr Wells had suffered, it would be just to permit Mr Devani to enforce the agreement but to compensate Mr Wells for that prejudice by reducing the fee he was required to pay by one third. The appeal to the Court of Appeal The Court of Appeal ([2017] QB 959), by a majority, allowed Mr Wells appeal on the issue of whether there was ever a binding contract. Lewison LJ considered the judges approach could not be justified. His reasoning ran as follows. First, a court can imply terms into a contract, but this assumes there is a concluded contract into which the terms can be implied. It is not legitimate, under the guise of implying terms, to make a contract for the parties. This is to put the cart before the horse. Secondly, the trigger event giving rise to an estate agents entitlement to commission is of critical importance and a variety of events can be specified. The identification of the trigger event is therefore essential to the formation of legally binding relations. Thirdly, it follows that, unless the parties specify that event, their bargain is incomplete, and it is wrong in principle to turn an incomplete bargain into a legally binding contract by adding expressly agreed terms and implied terms together. In his view, that is what the judge did in this case. What was more, it was not possible or permissible to support the judges conclusion in any other way. McCombe LJ agreed that the appeal should be allowed, essentially for the reasons given by Lewison LJ. He did not disagree with the judges finding that the parties intended to reach and did reach an agreement. For him the question was whether what they had agreed amounted to a binding contract. In his view, it did not, for an agreement which did not specify the event which triggered the entitlement to commission was not complete. Arden LJ, dissenting, considered that the bargain between the parties was initially a unilateral contract but that it became a bilateral contract at the latest when Newlon, having been introduced to Mr Wells by Mr Devani, completed the purchase of the flats. As a matter of interpretation of the whole contract, the commission became payable on completion. She acknowledged that the judge had arrived at his conclusion by implying a term, but this was of no matter because the outcome was the same. As for section 18 of the 1979 Act, the Court of Appeal decided unanimously that Mr Wells appeal in relation to this issue should be dismissed. Lewison LJ, with whom McCombe and Arden LJJ agreed, made some criticisms of the way the judge had dealt with the relevant elements of culpability and prejudice but concluded that he could not say the judges overall value judgment was wrong. The Court of Appeal also dismissed Mr Devanis cross appeal against the reduction in his fee. Was there a binding contract? The question whether there was a binding contract between Mr Devani and Mr Wells required a consideration of what was communicated between them by their words and their conduct and whether, objectively assessed, that led to the conclusion that they intended to create a legally binding relationship and that they had agreed all the terms that the law requires as essential for that purpose. Lord Clarke explained the relevant principles in this way in RTS Flexible Systems Ltd v Molkerei Alois Mller GmbH [2010] UKSC 14; [2010] 1 WLR 753, para 45: The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations. Even if certain terms of economic or other significance have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement. It may be the case that the words and conduct relied upon are so vague and lacking in specificity that the court is unable to identify the terms on which the parties have reached agreement or to attribute to the parties any contractual intention. But the courts are reluctant to find an agreement is too vague or uncertain to be enforced where it is found that the parties had the intention of being contractually bound and have acted on their agreement. As Lord Wright said in G Scammel & Nephew Ltd v HC and JG Ouston [1941] AC 251, 268: The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words, considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract. Such a position is not often found. As I have explained, the judge had no doubt that the parties did intend to create legal relations and that they understood that Mr Devanis terms were that he would be entitled to a commission of 2% plus VAT. Mr Devani then introduced Mr Wells to a prospective purchaser, Newlon, and that introduction led directly to the completed sale. It is true that, as the judge found, there was no discussion of the precise event which would give rise to the payment of that commission but, absent a provision to the contrary, I have no doubt it would naturally be understood that payment would become due on completion and made from the proceeds of sale. Indeed, it seems to me that is the only sensible interpretation of what they said to each other in the course of their telephone conversation on 29 January 2008 and the circumstances in which that conversation took place. In short, Mr Devani and Mr Wells agreed that if Mr Devani found a purchaser for the flats he would be paid his commission. He found Newlon and it became the purchaser on completion of the transaction. At that point, Mr Devani became entitled to his commission and it was payable from the proceeds of sale. This interpretation of the parties words and conduct is in my view amply supported by authority. For example, in Fowler v Bratt [1950] KB 96, the plaintiff, a house agent, was instructed by the defendant to find a purchaser of his house and agreed to pay a commission on the price. Subsequently the defendant decided not to go through with the sale and the plaintiff brought proceedings for his commission. The Court of Appeal held that, in order to earn his commission, the plaintiff had at least to find a purchaser who was bound in law to buy, and that he had done. The case is of particular relevance to this appeal in light of this passage in the judgment of Denning LJ (at pp 104 105): I confess that I approach claims by estate agents from the point of view, which I am sure is the common understanding of men, namely, that, in the absence of express terms to the contrary, the commission of the agents is to be paid out of the proceeds of sale. If the sale does not go through, the presumption is that no commission is payable. But in point of law if an agent succeeds in finding a person who actually enters into a binding and enforceable contract to purchase, and if that contract afterwards goes off by the vendors default, the vendor is liable to pay commission. Midgley Estates v Hand [1952] 2 QB 432 concerned an agreement between the plaintiff estate agents and the defendant vendor that the agents commission would be payable as soon as a purchaser had signed a legally binding contract within a certain period of time. The agents did introduce such a purchaser who signed the contract and paid a deposit but was unable to complete. The agents thereupon sought payment of their commission. The Court of Appeal held that the terms of the agreement were clear and the court would give effect to them, and they displaced the prima facie position. Jenkins LJ, with whom Somervell and Morris LJJ agreed, described that prima facie position in these terms (at pp 435 to 436): The question depends on the construction of each particular contract, but prima facie the intention of the parties to a transaction of this type is likely to be that the commission stipulated for should only be payable in the event of an actual sale resulting. The vendor puts his property into the hands of an agent for sale and, generally speaking, contemplates that if a completed sale results, and not otherwise, he will be liable for the commission, which he will then pay out of the purchase price. That is, broadly speaking, the intention which, as a matter of probability, the court should be disposed to impute to the parties. It follows that general or ambiguous expressions, purporting, for instance, to make the commission payable in the event of an agent finding a purchaser, or in the event of the agent selling the property, have been construed as meaning that the commission is only payable in the event of an actual and completed sale resulting, or, at least, in the event of an agent succeeding in introducing a purchaser who is able and willing to purchase the property. That is the broad general principle in the light of which the question of construction should be approached; but this does not mean that the contract, if its terms are clear, should not have effect in accordance with those terms, even if they involve the result that the agents commission is earned and becomes payable although the sale in respect of which it is claimed, for some reason or another, turns out to be abortive. In Dennis Reed Ltd v Goody [1950] 2 QB 277, two home owners instructed the plaintiff agents to find a person ready, willing and able to purchase their property and agreed to pay the agents a commission upon them introducing such a person. The agents found a prospective purchaser but he withdrew before an enforceable agreement for sale had been made. The agents nevertheless claimed they were entitled to their full commission. The Court of Appeal agreed with the trial judge that they were not. Denning LJ explained (at p 284) that when an owner puts his house into the hands of an estate agent, the ordinary understanding is that the agent is only entitled to a commission if he succeeds in effecting a sale; but if he does not, he is entitled to nothing. A little later, he said this about the relationship between owner and agent: All the familiar expressions please find a purchaser, find someone to buy my house, sell my house for me, and so on mean the same thing: they mean that the agent is employed on the usual terms; but none of them gives any precise guide as to what is the event on which the agent is to be paid. The common understanding of men is, however, that the agents commission is payable out of the purchase price. The services rendered by the agent may be merely an introduction. He is entitled to commission if his introduction is the efficient cause in bringing about the sale: Nightingale v Parsons [1914] 2 KB 621. But that does not mean that commission is payable at the moment of the introduction: it is only payable on completion of the sale. The house owner wants to find a man who will actually buy his house and pay for it. All of this reasoning remains as principled and cogent today as it was when expressed and I respectfully endorse it. The case before us is another in which the parties meant by their words and actions that the agent was engaged on the usual terms, that is to say that a commission became payable not upon the introduction by Mr Devani of a prospective purchaser to Mr Wells, nor upon the exchange of contracts, but rather upon completion of the sale and then from its proceeds, for it was at that time that Newlon actually bought and paid for the property and so became its purchaser. It is true that Mr Devanis written terms of engagement made express provision for payment but neither party has suggested they are relevant to the issue before us for they were not supplied until 5 February 2008. In this connection I must also address the decision of House of Lords in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, for it is one upon which Lewison LJ placed particular reliance. An agent, Mr Cooper, sued two companies, Luxor (Eastbourne) Ltd and Regal (Hastings) Ltd, for breach of an agency agreement. The terms of their bargain were that if a party introduced by Mr Cooper were to buy certain property owned by the companies they would pay him a substantial commission. Under the terms of their agreement, the commission would become due on completion of the sale. Mr Cooper contended that he had introduced prospective purchasers who were ready and willing to buy the property. No sale took place, however, because the owners changed their plans. It necessarily followed from the express terms of their agreement that no commission was payable but Mr Cooper argued that he was nevertheless entitled to damages for breach of an implied term that the vendor companies would do nothing to prevent the satisfactory completion of the transaction and so deprive him of his commission (at p 115). The House of Lords held that no such term could be implied. In the course of his speech Viscount Simon LC observed that there was considerable difficulty in formulating general propositions on the subject of estate agents commissions for their contracts did not follow a single pattern and the primary necessity in each case was to ascertain with precision the express terms of the contract in issue, and then to consider whether they necessitated the addition, by implication, of other terms. He continued (at pp 120, 121): It may be useful to point out that contracts under which an agent may be occupied in endeavouring to dispose of the property of a principal fall into several obvious classes. There is the class in which the agent is promised a commission by his principal if he succeeds in introducing to his principal a person who makes an adequate offer, usually an offer of not less than the stipulated amount. If that is all that is needed in order to earn his reward, it is obvious that he is entitled to be paid when this has been done, whether his principal accepts the offer and carries through the bargain or not. No implied term is needed to secure this result. There is another class of case in which the property is put into the hands of the agent to dispose of for the owner, and the agent accepts the employment and, it may be, expends money and time in endeavouring to carry it out. Such a form of contract may well imply the term that the principal will not withdraw the authority he has given after the agent has incurred substantial outlay, or, at any rate, after he has succeeded in finding a possible purchaser. Each case turns on its own facts and the phrase finding a purchaser is itself not without ambiguity. But there is a third class of case (to which the present instance belongs) where, by the express language of the contract, the agent is promised his commission only upon completion of the transaction which he is endeavouring to bring about between the offeror and his principal. As I have already said, there seems to me to be no room for the suggested implied term in such a case. The agent is promised a reward in return for an event, and the event has not happened. He runs the risk of disappointment, but if he is not willing to run the risk he should introduce into the express terms of the contract the clause which protects him. Lord Russell, with whom Lord Thankerton agreed, said this (at pp 124 to 125): A few preliminary observations occur to me. (1) Commission contracts are subject to no peculiar rules or principles of their own; the law which governs them is the law which governs all contracts and all questions of agency. (2) No general rule can be laid down by which the rights of the agent or the liability of the principal under commission contracts are to be determined. In each case these must depend upon the exact terms of the contract in question, and upon the true construction of those terms. And (3) contracts by which owners of property, desiring to dispose of it, put it in the hands of agents on commission terms, are not (in default of specific provisions) contracts of employment in the ordinary meaning of those words. No obligation is imposed on the agent to do anything. The contracts are merely promises binding on the principal to pay a sum of money upon the happening of a specified event, which involves the rendering of some service by the agent. Lewison LJ thought that it was apparent from these passages that the event giving rise to an estate agents entitlement to commission was of critical importance and that a variety of events could be specified. In his view it followed that, unless the parties specified that event, their bargain was incomplete. I agree with Lewison LJ that the event giving rise to the entitlement to commission may be of critical importance but I respectfully disagree that this means that unless this event is expressly identified the bargain is necessarily incomplete. It may be an express term of the bargain that the commission is payable upon the introduction of a prospective purchaser who expresses a willingness to buy at the asking price, or it may be an express term that it is payable upon exchange of contracts. But if, as here, there is no such express term and the bargain is, in substance, find me a purchaser and the agent introduces a prospective purchaser to whom the property is sold, then a reasonable person would understand that the parties intended the commission to be payable on completion and from the proceeds of sale. I do not understand there to be anything in the speeches of Viscount Simon LC or Lord Russell which undermines this conclusion and I note in this regard that this decision preceded and was cited in each of the decisions of the Court of Appeal to which I have referred at paras 20 to 22 above. Implied term For these reasons I do not think the judge needed to imply a term into the agreement between Mr Devani and Mr Wells. However, had it been necessary and for the reasons which follow, I would have had no hesitation in holding that it was an implied term of the agreement that payment would fall due on completion of the purchase of the property by a person whom Mr Devani had introduced. In Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742, the Supreme Court made clear that there has been no dilution of the conditions which have to be satisfied before a term will be implied and the fact that it may be reasonable to imply a term is not sufficient. Lord Neuberger of Abbotsbury PSC, with whom Lord Sumption and Lord Hodge JJSC agreed without qualification, explained (at paras 26 to 31) that (i) construing the words the parties have used in their contract and (ii) implying terms into the contract, involve determining the scope and meaning of the contract; but construing the words used and implying additional words are different processes governed by different rules. In most cases, it is only after the process of construing the express words of an agreement is complete that the issue of whether a term is to be implied falls to be considered. Importantly for present purposes, Lord Neuberger also made clear (at paras 23 and 24) that a term will only be implied where it is necessary to give the contract business efficacy or it would be so obvious that it goes without saying. The approach adopted by the trial judge was entirely consistent with these principles. He found it was necessary to imply a term to give the contract commercial efficacy. Mr Wells was having difficulty selling his flats. An approach was made to Mr Devani and a short while later he telephoned Mr Wells. In the course of their conversation, Mr Devani explained that his terms were 2% plus VAT. Both parties proceeded on that basis. Mr Devani introduced a purchaser, Newlon, which agreed to buy the flats and a short while later completion of the sale took place. In these circumstances I think the judges approach cannot be faulted for if, contrary to my view, the agreement, on its proper interpretation, did not provide for payment of the commission on completion then a term to that effect must be implied to make the contract work and to give it practical and commercial coherence. In carrying out this exercise of implication the court would be reading into the contract that which its nature implicitly requires. Put another way, to leave Mr Wells without any obligation to pay Mr Devani would be completely inconsistent with the nature of their relationship. In my judgment, the obligation to make payment of the commission on completion would be what was required to give the agreement business efficacy, and would not go beyond what was necessary for that purpose. Scancarriers How then did the majority in the Court of Appeal come to a contrary conclusion? I have outlined the steps in the reasoning of Lewison LJ earlier in this judgment. They have at their heart the proposition that, unless the parties themselves specify the event which will trigger the agents entitlement to commission, their bargain is incomplete; and that it is not possible to turn an incomplete bargain into a legally binding contract by adding expressly agreed terms and implied terms together. Lewison LJ relied in support of his reasoning upon the decision of the Judicial Committee of the Privy Council in Scancarriers A/S v Aotearoa International Ltd [1985] 2 Lloyds Rep 419. Lord Roskill, giving the judgment of the Board, said this (at p 422): the first question must always be whether any legally binding contract has been made, for until that issue is decided a court cannot properly decide what extra terms, if any, must be implied into what is ex hypothesi a legally binding bargain, as being both necessary and reasonable to make that bargain work. It is not correct in principle, in order to determine whether there is a legally binding bargain, to add to those terms which alone the parties have expressed further implied terms upon which they have not expressly agreed and then by adding the express terms and the implied terms together thereby create what would not otherwise be a legally binding bargain. Scancarriers was an unusual case. The appellants, Scancarriers, a liner company, had surplus capacity in their vessels sailing from Australasia to Europe. The respondents, Aotearoa, wished to transport waste paper from New Zealand, where they were based, to India at economic freight rates. They met and discussed the possibility of the appellants transporting the respondents waste paper by introducing a new service to Dubai which could be serviced by a short deviation from the normal route to Europe through the Suez Canal. Onward carriage to India would be provided by transhipment from Dubai. The next day the appellants sent a telex to the respondents offering what was described as a promotional rate which would be held for the next six months for the shipping of waste paper stowed in a specified way. The question to which the appeal gave rise was whether the telex, construed against the background of the discussions, gave rise to a binding legal obligation on the appellants towards the respondents. The trial judge in New Zealand held it did not, but the Court of Appeal reversed his decision. The Privy Council had no difficulty finding that the Court of Appeal had fallen into error. As Lord Roskill pointed out, the telex contained no reference to the number of shipments, nor to the dates of any suggested shipments, nor to the intervals between any such shipments. Instead, the Court of Appeal had added implied terms to the few express terms and in that way created a contractual relationship which the parties had not expressed for themselves. This was plainly not permissible. Lord Roskill went on to explain that the suggestion that, following receipt of the telex, the respondents came under any contractual obligation to the appellants involved reading into the telex provisions which were not to be found in its language. The telex was no more than a quote and the parties never intended its transmission would create a legal relationship. Lewison LJ also referred to the decision of the Court of Appeal in Little v Courage Ltd (1995) 70 P & CR 469. In that case Millett LJ, with whom the other members of the court apparently agreed, cited Lord Roskills judgment in Scancarriers as support for the proposition that it is in general impossible to imply terms (that is to say terms which impose legal obligations) into a unilateral contract for this would be to impose, by implication, a contractual obligation on a person who ex hypothesi is not yet a party to any contract and therefore not yet subject to any contractual obligations at all. In my judgment Scancarriers does not support the far reaching proposition which Lewison LJ identified and I think the passage in Lord Roskills judgment upon which he relied must be seen in the context of the particular facts of that case. I recognise that there will be cases where an agreement is so vague and uncertain that it cannot be enforced. So too, there will be cases where the parties have not addressed certain matters which are so fundamental that their agreement is incomplete. Further, an agreement may be so deficient in one or other of these respects that nothing can be done to render it enforceable. But I do not accept that there is any general rule that it is not possible to imply a term into an agreement to render it sufficiently certain or complete to constitute a binding contract. Indeed, it seems to me that it is possible to imply something that is so obvious that it goes without saying into anything, including something the law regards as no more than an offer. If the offer is accepted, the contract is made on the terms of the words used and what those words imply. Moreover, where it is apparent the parties intended to be bound and to create legal relations, it may be permissible to imply a term to give the contract such business efficacy as the parties must have intended. For example, an agreement may be enforceable despite calling for some further agreement between the parties, say as to price, for it may be appropriate to imply a term that, in default of agreement, a reasonable price must be paid. Similarly, I see no reason in principle why a term cannot be implied into an agreement between a property owner and an estate agent that the agreed commission will be payable on completion of the sale of the property to a person introduced by the agent. Indeed, a very similar term was implied in James v Smith [1931] 2 KB 317. The defendant, the owner of a hotel, wrote a letter to the plaintiff, an estate agent, saying that it would sell the property at a specified price and would pay a commission if the property was sold at that price. The plaintiff introduced a purchaser who signed a contract but was unable to complete. The plaintiff nevertheless claimed that he was entitled to his commission. The Court of Appeal, reversing the trial judge, found he was not. Bankes LJ reasoned that it was necessary to imply a term to make the contract complete, that term being that the commission would be payable upon the introduction of a purchaser who agreed to purchase the property and was able to complete; in other words, a purchaser who was not a man of straw or without means. Scrutton and Atkin LJJ agreed. Scrutton LJ construed the wording of the agreement and identified the minimum obligation on the plaintiff. Atkin LJ approached the case in much the same way as Bankes LJ. He too thought the obligation on the plaintiff had to be implied, and it was to introduce a purchaser who was able to complete at the time he signed the contract. Accordingly, where, as here, the parties intended to create legal relations and have acted on that basis, I believe that it may be permissible to imply a term into the agreement between them where it is necessary to do so to give the agreement business efficacy or the term would be so obvious that it goes without saying, and where, without that term, the agreement would be regarded as incomplete or too uncertain to be enforceable. Each case must be considered in light of its own particular circumstances. In this case the judge carried out the assessment the law requires, and he found it necessary to imply a term to give the contract business efficacy. Further, it cannot be said that, with that term, the agreement is too vague or uncertain to be enforceable. Accordingly, had I not arrived at the same conclusion by a process of interpretation, I would have upheld the judge for the reasons he gave. Finally, I must address Little v Courage. It is not clear from Millett LJs judgment whether he thought that Lord Roskills dictum in Scancarriers was only applicable to unilateral contracts. If he did not and considered it of general and unqualified application, as Lewison LJ appears to have done, then I respectfully disagree with him for the reasons I have given. As for its application to unilateral contracts, there is obvious force in Millett LJs reasoning. It cannot be right to impose by implication an obligation on a person who is not yet a party to the agreement. But here too, I think the reasoning needs some qualification because, as I have said, it is permissible to imply into an offer anything which is so obvious that it goes without saying. Nor, so it seems to me, is there any reason why a term imposing an obligation on the promisee cannot be implied if and when the contract becomes bilateral in the course of its performance. The Estate Agents Act 1979 Section 18(1) of the 1979 Act provides that before any person (the client) enters into a contract with another (the agent) under which the agent will engage in estate agency work on behalf of the client, the agent must give the client certain information. That information is of two kinds. First, by section 18(2), the agent is required to give, among other things, particulars of the circumstances in which the client will become liable to pay remuneration to the agent for carrying out estate agency work. Secondly, by section 18(1)(b), the agent is required to give such additional information as the Secretary of State may prescribe by regulations made under section 18(4), and to do so in the time and manner those regulations require. The Estate Agents (Provision of Information) Regulations 1991 (SI 1991/859) were made pursuant to this provision. Regulation 3(1) provides, so far as relevant: The time when an estate agent shall give the information specified in section 18(2) of the Act is the time when communication commences between the estate agent and the client or as soon as is reasonably practicable thereafter provided it is a time before the client is committed to any liability towards the estate agent. Regulation 4 says that the information must be provided in writing. Section 18 continues: (5) If any person (a) fails to comply with the obligation under subsection (1) above with respect to a contract, or with any provision of regulations under subsection (4) above relating to that obligation, or (b) , the contract shall not be enforceable by him except pursuant to an order of the court under subsection (6) below. (6) If, in a case where subsection (5) above applies in relation to a contract , the agent concerned makes an application to the court for the enforcement of the contract (a) the court shall dismiss the application if, but only if, it considers it just to do so having regard to prejudice caused to the client by the agents failure to comply with his obligation and the degree of culpability for the failure; and (b) where the court does not dismiss the application, it may nevertheless order that any sum payable by the client under the contract shall be reduced or discharged so as to compensate the client for prejudice suffered as a result of the agents failure to comply with his obligation. In this case, Mr Devani failed to comply with his section 18 obligation because he did not provide to Mr Wells all of the information required by subsection 2 at the time and in the manner required by regulations 3 and 4. In particular, Mr Devani did not at the outset or as soon as reasonably practicable thereafter expressly inform Mr Wells of the event which would trigger his entitlement to commission; nor did he provide any of that information in writing. The judge was therefore required to apply section 18(6). Under paragraph (a), the default position in such a case is that the contract is unenforceable. As Lewison LJ explained, the contract will only become enforceable if the court makes an order to that effect, and an agent in the position of Mr Devani, who has failed to comply with his obligations, must make an application to the court for that purpose if he wishes to recover any commission. Further, the court must dismiss the application if, but only if, it considers it just to do so having regard to the prejudice caused to the client by the agents failure to comply with his obligation and the degree of culpability for that failure. Lewison LJ held that, for the purposes of paragraph (a), prejudice and culpability have to be considered together and in the round, and the ultimate question is whether it is just to dismiss the estate agents claim to enforce the contract having regard to the prejudice to the client as a result of the failure to comply and the degree of the agents culpability. In my judgment, this is plainly the right approach. If the court does not dismiss the application then, under paragraph (b), it has a discretion whether to reduce or discharge the sum payable by the client under the contract, to compensate the client for the prejudice he has suffered. It is to be noted that, at this stage, culpability forms no part of the assessment; nor does any wider consideration of justice. The judge therefore proceeded to assess the degree of Mr Devanis culpability and the prejudice that Mr Wells had suffered. In relation to the former, he thought that Mr Devani was culpable and the fact that the matter had proceeded very rapidly was only partial mitigation. As for prejudice, the judge thought that the failure to define the event triggering the entitlement to commission was not prejudicial to Mr Wells because the court had implied the term most favourable to him. On the other hand, the failure to provide written terms was prejudicial because their provision would have led Mr Wells to consult his partner and his solicitor before agreeing to them, and, in turn, this would have led to a discussion of Shaws penalty clause. The judge was not much impressed by the possibility of a claim by Shaw, however. He thought it was a matter of speculation whether Mr Wells would be called upon to pay Shaws commission and that it was also a matter of speculation what the outcome of any claim by Shaw would be. He also thought it relevant that Mr Devani had done a good job and secured a sale of the properties, and that, so far, Mr Wells had evaded paying any commission at all. The judge expressed his final conclusion in these terms (at para 4.9): Doing the best I can, the just course balancing all the above factors is: a. enforce his contract; b. but to compensate [Mr Wells] for the prejudice he has sustained as a result of [Mr Devanis] breach of statutory requirements by making an appropriately substantial reduction to [Mr Devanis] fee. That reduction will be of one third of the fee, so that his claim is reduced to 32,900 inc VAT. to grant [Mr Devani] relief and permit him to On appeal, it was contended for Mr Wells that the judge had fallen into error in various respects and, in particular, that he ought to have dismissed Mr Devanis application and so also his claim for commission. In giving the leading judgment on this issue, Lewison LJ found no fault with the judges approach to the task he was required to carry out as a matter of principle but criticised aspects of his assessment. He found that the judge mischaracterised the effect of speed, for this was an aggravating and not a mitigating factor; that there was some force in Mr Wells argument that Mr Devanis success in finding a buyer was of little or no relevance; and that the judge did not take proper account of the uncertainty to which Mr Wells was subjected, and was wrong to brush off the possibility of a claim by Shaw and so his potential exposure to double liability. Despite these criticisms, Lewison LJ did not think it appropriate to interfere with the judges conclusion. His reasoning lies at the heart of this aspect of the appeal to this court and merits recitation: 74. In deciding whether it was just to dismiss Mr Devanis claim the judge was making a value judgment (an expression I prefer to exercising a discretion). It is, moreover, a value judgment based on a number of factors, measured against an imprecise standard. It is exactly the case in which an appeal court should be particularly wary of disturbing the conclusion of the trial judge. Although I have made some criticisms of the way in which the judge approached the question, and although I am far from sure that I would have reached the same conclusion as the judge, I cannot go so far as to say that his value judgment was wrong. Mr Butler QC, for Mr Wells, submits the Court of Appeal fell into error in two respects. He argues, first, that Mr Devanis culpability was so great as to justify dismissal of his application, irrespective of the issue of prejudice. I recognise that section 18 and the regulations are, as Lewison LJ rightly said, a form of consumer protection, and that their purpose is to ensure that a person instructing an estate agent knows what his liabilities to the agent are before he engages him. I also accept that there may be cases where the degree of culpability is so great that it justifies dismissal of the agents application even if the client has suffered no prejudice. But I am not persuaded that this is one of those cases. The judge assessed the extent of Mr Devanis culpability with care. He recognised that Mr Devani could and should have provided his terms of business to Mr Wells at the outset but also had regard to the fact that the job needed to be done urgently, that Mr Wells was abroad, that events moved very quickly and that the effective period of delay was less than one week. I would add that there was no finding that Mr Devani acted improperly in any other way. The judge assessed all of these matters and the issue of prejudice and decided to allow Mr Devani to pursue his claim but with a significant fee reduction. It is true that Lewison LJ thought the judge ought to have regarded the speed of events as an aggravating rather than a mitigating factor when considering culpability, but he was also of the view that this was not an error which justified any interference with the judges conclusion. I agree with him. In all these circumstances, I am satisfied that Mr Devanis culpability was not so great as to justify dismissal of his application, and the judge made no material error in so deciding. The second argument advanced on behalf of Mr Wells is that once the Court of Appeal had found that the judge had made errors in the course of his assessment under section 18(6), it ought to have carried out the evaluation required by that provision afresh, rather than declining to interfere. Had it done so, the argument continued, it is apparent from para 74 of Lewison LJs judgment that it is likely the court would have arrived at a different conclusion. Attractively though this second argument has been presented, I cannot accept it. It assumes, wrongly in my view, that if an appeal court finds that a trial judge has made any error, however insignificant, in the course of an evaluation of the kind required by section 18(6) then it must set that evaluation aside and carry it out again. In my judgment the law does not require such an inflexible approach. If, as here, it is found that the trial judge has made one or more errors of a minor kind which cannot have affected the decision to which he has come then in my view it is neither necessary nor appropriate for the appellate court to set that decision aside and embark on the evaluative exercise for itself. For all of these reasons, I would allow Mr Devanis appeal and dismiss Mr Wells cross appeal. I have also had an opportunity to read the judgment of Lord Briggs and I agree with the further observations he makes. LORD BRIGGS: I agree with the order proposed to be made by Lord Kitchin, and with his reasons for doing so. I add some observations of my own because we are departing from a judgment of Lewison LJ, who has a pre eminent standing in relation to the interpretation of contracts. Lawyers frequently speak of the interpretation of contracts (as a preliminary to the implication of terms) as if it is concerned exclusively with the words used expressly, either orally or in writing, by the parties. And so, very often, it is. But there are occasions, particularly in relation to contracts of a simple, frequently used type, such as contracts of sale, where the context in which the words are used, and the conduct of the parties at the time when the contract is made, tells you as much, or even more, about the essential terms of the bargain than do the words themselves. Take for example, the simple case of the door to door seller of (say) brooms. He rings the doorbell, proffers one of his brooms to the householder, and says one pound 50. The householder takes the broom, nods and reaches for his wallet. Plainly the parties have concluded a contract for the sale of the proffered broom, at a price of 1.50, immediately payable. But the subject matter of the sale, and the date of time at which payment is to be made, are not subject to terms expressed in words. All the essential terms other than price have been agreed by conduct, in the context of the encounter between the parties at the householders front door. So it is with the contract in issue in the present case. All that was proved was that there was a short telephone call initiated by Mr Devani, who introduced himself as an estate agent, and Mr Wells, who Mr Devani knew wanted to sell the outstanding flats. Mr Devani offered his services at an expressly stated commission of 2% plus VAT. It was known to both of them that Mr Wells was looking for a buyer or buyers so that he could sell the flats, and it was plain from the context, and from the conduct of the parties towards each other, that Mr Devani was offering to find one or more buyers for those flats. The express reference by Mr Devani to the 2% commission was, in the context, clearly referable to the price receivable by Mr Wells upon any sale or sales of those flats achieved to a person or persons introduced by Mr Devani. Furthermore it was evident from the fact that nothing further was said before the conversation ended that there was an agreement, intended to create legal relations between them, for which purpose nothing further needed to be negotiated. The judge decided the case by reference to implied terms. But it follows from what I have set out above that I would, like Lord Kitchin, have been prepared to find that a sufficiently certain and complete contract had been concluded between them, as a matter of construction of their words and conduct in their context rather than just by the implication of terms, such that, by introducing a purchaser who did in fact complete and pay the purchase price, Mr Devani had earned his agreed commission. Nor would I have been dissuaded by the analysis of the hypothetical question whether, if the purchase contract had been made but then repudiated by the purchaser, the commission would still have been payable. If a contract plainly creates a liability for payment in the events that have happened, a perception that a difficult issue or uncertainty as to liability might have arisen on other hypothetical facts should not stand in the way of recognising contractual rights as enforceable where, as here, no such issue arises. As Lewison LJ observed, estate agents may wish to bargain for a variety of different events as triggering a liability to pay commission. But it is difficult to imagine an estate agents contract which did not make the client liable to pay after receipt in full of the purchase price, as occurred here. I do not mean by these observations about the common law in any way to under rate the importance of the statutory duty in section 18 of the Estate Agents Act 1979 requiring estate agents to provide their clients with a written statement of the circumstances in which the client will become liable for their commission, or the judges assessment of the culpability of Mr Devani for failing to do so in good time. It is precisely because the common law will recognise an enforceable liability to pay as arising from the briefest and most informal exchange between the parties that statute protects consumers by imposing a more rigorous discipline upon their professional counterparties.
UK-Abs
The appeal concerns an estate agent, Mr Devani, who claims that commission became payable to him by Mr Wells, the vendor of a number flats, on the completion of the sale of the flats to a purchaser Mr Devani had introduced to Mr Wells. In 2007 the vendor, Mr Wells, completed the development of a block of flats. By the beginning of 2008 seven of the flats were still on the market. On 29 January 2008 a neighbour of Mr Wells, Mr Nicholson, sent an email to Mr Devani, who was trading as an estate agent, informing him of the unsold flats. Later that day Mr Devani acknowledged receipt of Mr Nicholsons email and made a telephone call to Mr Wells. Both parties at trial gave different accounts of this telephone conversation. It was Mr Devanis evidence that he told Mr Wells that he was an estate agent and that his commission terms would be 2% plus VAT. Mr Wells maintained that Mr Devani made no mention of any commission. Mr Devani subsequently made contact with Newlon Housing Trust who agreed to purchase the remaining flats for 2.1m. The transaction proceeded to completion and Mr Devani claimed his commission. Mr Wells refused to pay, and so Mr Devani issued proceedings. In the County Court at Central London the judge, His Honour Judge Moloney QC, held that there was a binding contract between the parties. However, as Mr Devani had only submitted his written terms to Mr Wells after he had made the introduction to the Newlon Housing Trust, the final award was subject to a one third deduction to reflect Mr Devanis failure to comply with the requirements of the Estate Agents Act 1979 (the Act). On appeal, the Court of Appeal by a majority, allowed Mr Wells appeal on the issue of whether there was ever a binding contract and unanimously dismissed his appeal in respect of section 18 of the Act. There are two issues for the Supreme Court: (i) the first, raised on appeal by Mr Devani, is whether the agreement was complete and enforceable despite there being no express identification of the event which would trigger the obligation to pay the commission. (ii) The second issue, raised on a cross appeal by Mr Wells, is whether, by reason of Mr Devanis failure to comply with the requirements imposed by section 18 of the Act, the trial judge ought to have dismissed the claim or discharged Mr Wells liability to pay the commission. The Supreme Court unanimously allows Mr Devanis appeal and dismisses Mr Wells cross appeal. Lord Kitchin gives the lead judgment (with whom Lord Wilson, Lord Sumption and Lord Carnwath agree). Lord Briggs gives a concurring judgment. (i) Was there a binding contract? The question is whether, objectively assessed, the parties by their words and their conduct intended to create a legally binding relationship [17]. It may be the case that the words and conduct relied upon are so vague that the court is unable to identify the terms on which the parties have reached agreement. However, the courts are reluctant to find an agreement is too vague or uncertain to be enforced where it is found that the parties had the intention of being contractually bound and have acted on their agreement [18]. In this case it would naturally be understood that payment would become due on completion and made from the proceeds of sale [19]. In short, Mr Devani and Mr Wells agreed that if Mr Devani found a purchaser for the flats he would be paid his commission. Mr Wells found the Newlon Housing Trust and it became the purchaser on completion of the transaction. At that point, Mr Devani became entitled to his commission and it was payable from the proceeds of sale [19]. (ii) Implied term It was therefore unnecessary for the judge to imply a term into the agreement between Mr Devani and Mr Wells. However, had it been necessary, there would be no hesitation in holding that it was an implied term of the agreement that payment would fall due on completion of the purchase of the property by a person whom Mr Devani had introduced [27]. The obligation to make payment of the commission on completion was required to give the agreement business efficacy and would not go beyond what was necessary for that purpose [29]. There will be cases where an agreement is so vague and uncertain that it cannot be enforced [33]. However, each case must be considered in light of its own particular circumstances [35]. (iii) The Estate Agents Act 1979 Section 18(1) of the Act provides that before any person enters into a contract, the agent must give the client certain information [37 39]. In this case, Mr Devani failed to comply with his section 18 obligation because, in particular, Mr Devani did not at the outset, or as soon as reasonably practicable thereafter, expressly inform Mr Wells of the event which would trigger his entitlement to commission; nor did he provide any of that information in writing [43]. However, in the circumstances of this case, Mr Devanis culpability was not so great as to justify dismissal of his application, and the trial judge made no material error in so deciding [54]. As to whether once the Court of Appeal found that the judge had made errors in the course of his assessment under section 18(6), it ought to have carried out the evaluation required by that provision afresh, the law does not require such an inflexible approach where, as here, the errors were of a minor kind and cannot have affected the conclusion to which he came. In these circumstances it is neither necessary nor appropriate for the appellate court to set that decision aside and embark on the evaluative exercise for itself [55 56]. Lord Briggs agrees with Lord Kitchin and with his reasons [58]. Lord Briggs adds that there are occasions, where the context in which the words are used tells you as much, or even more, about the essential terms of the bargain than the words themselves [59]. So it is with the contract in the present case [60]. Lord Briggs agrees that, like Lord Kitchin, he would have been prepared to find that a sufficiently certain and complete contract had been concluded between them, rather than just by the implication of terms [61]. Finally, Lord Briggs adds that none of these observations about the common law in any way under rate the importance of the statutory duty in section 18 of the Act. On the contrary, it is precisely because the common law will recognise an enforceable liability to pay as arising from the briefest and most informal exchange between the parties that statute protects consumers by imposing a more rigorous discipline upon their professional counterparties [63].
The court is asked to decide whether the services provided by a specialised air handling system, used in connection with refrigerated merchandise in the appellants retail store, are manufacturing operations or trade processes for rating purposes. This turns on the construction of the Valuation for Rating (Plant and Machinery) (England) Regulations 2000 (SI 2000/540) (the 2000 Regulations). If they are, then the air handling system falls to be ignored in calculating the rateable value of the premises. The Valuation Tribunal decided this issue in favour of the appellants. That finding was reversed by the Upper Tribunal ([2015] UKUT 0014 (LC)), whose decision was upheld by the Court of Appeal ([2016] EWCA Civ 1150; [2017] Bus LR 766). Facts The facts (as found by the Upper Tribunal) were set out in full in the judgment of the Chancellor (with whom Gloster and Sharp LJJ agreed) in the Court of Appeal. It is sufficient here to note the main points. Iceland is a well-known supermarket operator specialising in the sale of refrigerated foods, with more than 800 stores in the UK and Ireland. The appeal property, at 4 Penketh Drive, Liverpool, is typical. It is a small retail warehouse forming part of a larger retail development known as the Speke Centre. Iceland took occupation in May 2007. The property was let in a shell condition, and the air-handling system was installed by Iceland. Its business is mainly focused on the sale of refrigerated products, which represent roughly 80% of its sales by value, divided evenly between chilled and frozen lines. At the Penketh store, frozen and chilled products are stored and displayed in about 80 refrigerated cabinets, arranged around the perimeter of the sales floor and in four aisles running from front to rear. All but one of the cabinets at the Penketh store are integral rather than remote units. The Upper Tribunal explained the difference: 18. The object of any refrigerator is to maintain the internal temperature (and thus that of the goods stored in it) at the desired level by absorbing heat from within the cabinet and expelling it outside the cabinet by means of a condenser. Integral cabinets achieve this using refrigeration equipment and condensers installed within the body of the cabinet itself, and by expelling heat to the environment immediately surrounding the cabinet. Remote cabinets, in contrast, employ refrigeration equipment at a distance from the cabinets; heat is absorbed by a liquid refrigerant which is conveyed to the cabinet through pipes permanently installed in the store and is expelled remotely through condensers located outside the building. 20. As integral cabinets are designed to operate below a particular ambient temperature (25C in the case of Icelands cabinets) the heat generated by the cabinets themselves must be controlled to ensure that they perform as intended and do not malfunction. Where a large number of integral cabinets is present in a confined space, it is necessary to provide an air handling system with a correspondingly large cooling capacity. If the design parameters of the cabinets are exceeded the permitted product storage temperature within the cabinets may be breached causing a deterioration in the quality of the products stored or displayed in them. The advantages for Iceland of integral cabinets include flexibility, independence of operation, and lower capital cost. It is common ground that the value of the cabinets themselves is to be left out of account for rating purposes. The air handling system was described by the Upper Tribunal as follows: 12. The air handling system provides a ventilating, heating and cooling service to the appeal property, and comprises three main elements. A large air handling unit with a mechanical cooling capacity of approximately 85 kW is located outside and to the rear of the building; this unit serves a network of ducts by which warm or cold air is supplied to and extracted from the retail area through an array of ceiling mounted diffusers and grilles. On our inspection we were able to observe the air handling unit and to contrast it with the very much smaller units on the rear walls of adjoining stores - one of which is considerably larger than the [premises]. Icelands equipment occupies its own fenced compound and in size and shape resembles a very large refuse skip (4.5 metres by 2.35 metres in area) from which rise two vertical supply and return air ducts, each a metre square, which enter the rear wall of the building 4 metres above the ground. A separate but linked mechanical extract system is located at the rear of the retail area, furthest from the entrance, to deal with the removal of excess heat in that area. Finally, the whole system is controlled by means of a computerised control unit located adjacent to the air handling unit. The air handling system functions at all times, day and night. It is designed and programmed to maintain the store temperature during trading hours at an acceptable level for both the functioning of the refrigerated cabinets and the comfort of staff and customers. To achieve the acceptable temperature range during trading periods, Icelands control strategy targets a temperature within the store of 21C which is in the middle of the recommended range of comfortable temperatures for staff and customers. For the majority of the time an acceptable temperature is maintained on the sales floor without the use of mechanical cooling, but at 21C mechanical cooling commences. The aim is to ensure that the maximum temperature at which the cabinets are designed to function is not exceeded. Although a substantial proportion of the heat load is generated by other sources, the cabinets are by far the largest single contributor. Without the integral cabinets, the heavy-duty air handling system installed in the store would not be required and a very much smaller system would be sufficient. The statutory provisions Schedule 6 to the Local Government Finance Act 1988 is headed Non- Domestic rating: Valuation. Paragraph 2(1) provides that the rateable value of a non-domestic hereditament is taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on certain specified assumptions (none of which is now in issue). By paragraph 2(8), the Secretary of State is authorised to make regulations providing that in applying the preceding paragraphs, in relation to a hereditament of a prescribed class, prescribed assumptions (as to the hereditament or otherwise) are to be made. The 2000 Regulations were made under that provision. The present form and content of the regulations are derived from a report by an Expert Advisory Committee under the chairmanship of Mr Derek Wood QC, Rating of Plant and Machinery (Cm 2170) (the Wood Report), published in March 1993. The committee was established to review the law and practice relating to the rating of plant and machinery, with a view to updating and harmonising it throughout the United Kingdom. The report was followed by the Valuation for Rating (Plant and Machinery) Regulations 1994 (SI 1994/2680), which replaced the previous law. They were in turn replaced by the 2000 Regulations (applying to England only, following devolution), but without any change to the provisions material to this appeal. As indicated in the explanatory notes to both sets of regulations, they reflected the recommendations of the Wood Report. (Equivalent Regulations, also said to reflect the Wood recommendations, have been made by the relevant legislatures in Scotland, Wales, and Northern Ireland.) It will be necessary to refer in more detail later to parts of the Wood Report, which is clearly an appropriate aid to construction of the Regulations (see Bennion on Statutory Interpretation 7th ed (2017), para 24.9). plant and machinery. It provides: Paragraph 2 of the 2000 Regulations is headed Prescribed assumptions as to 2. For the purpose of determining the rateable value of a hereditament for any day on or after 1 April 2000, in applying the provisions of sub-paragraphs (1) to (7) of paragraph 2 of Schedule 6 to the Local Government Finance Act 1988 - (a) in relation to a hereditament in or on which there is plant or machinery which belongs to any of the classes set out in the Schedule to these Regulations, the prescribed assumptions are that: any such plant or machinery is part of the (i) hereditament; and (ii) the value of any other plant and machinery has no effect on the rent to be estimated as required by paragraph 2(1); and (b) in relation to any other hereditament, the prescribed assumption is that the value of any plant or machinery has no effect on the rent to be so estimated. It is important to emphasise the significance in the valuation of the Classes set out in the Schedule. Those Classes are the only categories of plant and machinery which are brought into account for valuation purposes. They are in effect exceptions to the general rule (embodied in sub-paragraphs (a)(ii) and (b)) that the value of plant and machinery has no effect on the estimation of value of the hereditament for rating purposes. The Schedule sets out the classes of plant to be assumed to be part of the hereditament (in the words of the title). In broad terms, Class 1 covers plant and machinery used for generation, storage or transmission of power on the hereditament. Class 2 (relevant in this case) covers plant and machinery used in connection with heating, cooling and other services to the hereditament. Class 3 covers such items as railway lines, lifts, cables and other items used for transmission of electricity or communications, pipe-lines and drain or sewers. Class 4 covers a number of bulky items of plant and machinery (listed in Tables 3 and 4) such as blast furnaces, fixed cranes, and turbines and generators, but excludes smaller movable items (not exceeding 400 cubic metres) and those that are not in the nature of a building or structure. Class 2 provides: Plant and machinery specified in Table 2 below which is used or intended to be used in connection with services to the hereditament or part of it, other than any such plant or machinery which is in or on the hereditament and is used or intended to be used in connection with services mainly or exclusively as part of manufacturing operations or trade processes. (emphasis added) Services are defined as meaning - heating, cooling, ventilating, lighting, draining or supplying of water and protection from trespass, criminal damage, theft, fire or other hazard. The plant and machinery specified in Table 2 includes (under the heading Heating, Cooling and Ventilating) ten items of equipment (such as water heaters, and refrigerating machines) and associated accessories. It is not in issue that the disputed air handling system is covered by the Table, nor that it is used in connection with services to the hereditament within the meaning of Class 2. The only issue is whether it is excluded by the italicised words quoted above. For simplicity in this judgment (following earlier usage - see below), I shall refer to those words as the Class 2 proviso or the proviso. References in the judgment to the word plant should be read (where appropriate) as including reference also to machinery. Legislative history In this court, as in the Court of Appeal, both parties sought to draw assistance from the background history of these provisions, dating back to the latter part of the 19th century, and including reports by a number of expert committees. The history is of some value in explaining the genesis of Class 2, and more particularly the background of the law and practice as understood at the time that the Wood Committee made its recommendations. The main problem has been to draw a defensible line between, on the one hand, plant properly treated as part of the hereditament for the purpose of assessing its hypothetical letting value, and plant more fairly attributable to the tenants business within it (the tools of the trade), having regard also to the need to keep up with changes in technology. The search for a coherent legislative solution can be traced back to the much-criticised decision of the House of Lords in Kirby v Hunslet Union Assessment Committee [1906] AC 43. The House there disapproved a distinction based on whether the plant was a fixture, in the traditional land law sense, but failed (so it was said) to put in place a workable alternative. The resulting uncertainty led in due course to the establishment of an inter- departmental committee (the Shortt Committee), to inquire into the law and practice regarding the rating of plant in both England and Scotland. The committee reported in February 1925: Report of the Inter-Departmental Committee on the Rating of Machinery and Plant in England and Wales (Cmd 2340). Its recommendations led in turn to the enactment of the Rating and Valuation Act 1925. Section 24 of that Act, taken with the Third Schedule, can be seen as setting the pattern, albeit in simpler form, for subsequent enactments including the 2000 Regulations. It established the general principle that value of plant on the hereditament was to be left out of account for rating purposes, save for the classes specified in the Schedule, which were deemed to be a part of the hereditament. There is a helpful description of the general effect of the Third Schedule in the judgment of Lord Hewart CJ in Townley Mill Co (1919) Ltd v Oldham Assessment Committee [1936] 1 KB 585 (DC), although the facts (relating to plant in a disused mill) are too different from the present to make it of any direct assistance. In particular he drew a distinction (as had the Shortt Committee, para 15) between motive and process plant, only the former being taken into account for rating purposes. He said: When one turns to the Third Schedule of the Act, it is apparent that it enumerates that type of machinery and plant which is conveniently described in the case as motive machinery; it is the machinery without which the mill could not begin to work, as, for example, the generation of power, heating and cooling, lifts and elevators, railways, tramlines and tracks, and other things, the foundation of that which was to become the work of the mill. When the machinery and plant referred to in the Third Schedule are eliminated, what is left is the kind of machinery which is concisely described in this case as process plant and machinery, operative plant and machinery, working and manufacturing plant and machinery. By section 24(1)(b), no account is to be taken of the value of any plant or machinery of that kind (p 598) He noted that under the previous law the value of plant in a mill, though not rated as such, was taken into account as enhancing the value of the hereditament to be rated (p 599). The effect of the Act, intended as beneficial to those interested in the carrying on of industry, was to get rid of all the doctrine of enhanced value, and to lay it down that process plant must henceforth be disregarded when ascertaining the rateable value of the hereditament (pp 602-603). The decision was upheld by the House of Lords, where can be found statements to similar effect (see [1937] AC 419, pp 428-429 per Lord Russell of Killowen). Turning to the detail of the Third Schedule, Class 1(b) can be seen as the precursor of Class 2 of the current regulations. It covered plant used - mainly or exclusively in connection with - (a) (b) the heating, cooling, ventilating, lighting, draining, or supplying of water to the land or buildings of which the hereditament consists, or the protecting of the hereditament from fire: Provided that, in the case of machinery or plant which is in or on the hereditament for the purpose of manufacturing operations or trade processes, the fact that it is used in connection with those operations or processes for the purpose of heating, cooling, ventilating, lighting, supplying water, or protecting from fire shall not cause it to be treated as falling within the classes of machinery or plant specified in this Schedule. (emphasis added) The other classes were (in very broad terms) similar in scope to what became the classes in the 2000 Regulations (see para 9 above). The italicised words in the proviso to Class 1 seem to have been the first appearance in this context of the expression manufacturing operations or trade processes. The circumstances in which the proviso came to be included are of some historical curiosity, since it was proposed by Mr Neville Chamberlain MP, as the responsible Minister (Hansard Standing Committee A, 4 August 1925, col 1093). He explained the purpose as being to exclude such processes as really belong to the precise work which is being carried on in the shops rather than the general heating or ventilating of the plant. He gave an example: where, for instance, a man is polishing at a buff, and there is a fan drawing off the dust so that it shall not go down his throat, that is to be treated as part of the machinery, and not as part of the heating or ventilating plant which is run. It is unnecessary to decide whether those observations are admissible under the principle in Pepper v Hart [1993] AC 593 (see Bennion op cit para 24.11). The general purpose is clear enough from the wording of the proviso itself, and the example is so far from the present facts as to be of no practical assistance in this appeal. Returning to the 1925 Act itself, section 24(3)-(6) enacted a procedure to provide more precise information about the contents of the specified classes. A special committee was to be established to prepare a statement setting out in detail all the machinery and plant [appearing] to fall within any of the classes specified in the Schedule. The statement (modified if necessary following consultation) was to be embodied in a Ministerial order having effect as though substituted for the Third Schedule. Provision was also made for its subsequent revision at intervals as directed by the Minister. The first such order was made in 1927 (The Plant and Machinery (Valuation for Rating) Order 1927 (SR & O 1927/480)). No further change was made until the setting up of the Ritson Committee, which reported in 1959: Report of the Committee on the Rating of Plant and Machinery. Its report included a revised statement under section 24(4), leading to the Plant and Machinery (Rating) Order 1960 (SI 1960/122). Between 1987 and 1990, section 24 was replaced in similar terms by section 21 of the General Rate Act 1967, which preserved the 1960 regulations (section 117(3)). The first regulations made under the 1988 Act (The Valuation for Rating (Plant and Machinery) Regulations 1989 (SI 1989/441)) were in similar form. There was no material change to the substance of Class 1(b) (or 1B as it became) over this period. Meanwhile, as explained by the Wood Report (chapter 4), the law in Scotland had developed separately. The general rule was established by section 42 of the Lands Valuation Act (Scotland) Act 1854 (17 & 18 Vict, c 91), which included within the definition of lands and heritages subject to rates all machinery fixed or attached to any lands or heritages. The perceived burden was partially relieved by the Lands Valuation (Scotland) Amendment Act 1902 section 1, which added a proviso to section 42, limited to any building occupied for any trade, business or manufacturing process. More recently, in response in part to unfavourable comparisons with the position in England, the Local Government and Planning (Scotland) Act 1982 section 4 gave the Secretary of State power to amend the proviso to section 42. That was done by the Valuation (Plant and Machinery) (Scotland) Order 1983 (SI 1983/120). It included (inter alia) an exception for certain categories of plant used in an industrial or trade process, if located wholly or mainly outwith any building (regulation 3(2)). The Wood Report As already noted, the 2000 Regulations were designed to reflect the recommendations of the Wood Report. The committee included representatives of the professions, and the private sector, and of the Valuation Offices of the three jurisdictions The report itself contains a valuable survey of the development of the law, in the different parts of the United Kingdom, and discussion of its difficulties and inconsistencies. Chapter 8, headed The new scheme - competing principles, outlined the committees general approach. In particular they accepted the validity up to a point of a tools of the trade exemption, but considered that it must be subject to qualification in the interests of fairness as between ratepayers (paras 8.6-7). They commented on the problems of dealing with plant used to provide services to a building but also having a trade purpose. Since this passage is relied on by Mr Morshead QC for the respondent, it is right to quote it in full: 8.8 What we have said so far relates to plant and machinery which is used for the purpose of a trade or industrial process. There is also the problem of plant and machinery which is introduced for the purpose of providing services for the premises, or which forms part of its infrastructure. This type of equipment has never given rise to any difficulty as a matter of principle. In the letting market landlords typically provide the services and infrastructure, and it has been taken for granted that such items should always be deemed to form part of the hereditament, even in the case of property which is not normally found in that market. 8.9 The difficulty arises in the practical application of the principle, again as our predecessors have found, because it is extremely unusual, in the case of large-scale industrial property, to find plant and machinery which is installed exclusively for the purpose of providing general services, such as light, heat and ventilation, and is not also closely bound up with the trade process. In the existing regulations in each of the countries of the United Kingdom it has therefore proved necessary to draw some fairly arbitrary line in order to indicate the point up to which such plant and equipment can fairly be rated, by analogy with commercial hereditaments generally, and beyond which rateability should cease, because at that stage it is impossible in practical terms to disentangle the service from the process function. We have looked at the boundaries which have been drawn in the past, and have re- drawn them in order to simplify the task of valuers, assessors and agents and to reflect some of the technical changes which have taken place in industry since they were last reviewed. The committee concluded, at para 8.10, that the underlying conceptual approach of the existing regulations in each part of the UK was soundly based. They then summarised the principles on which future regulations should be based: Rateability should continue, in our opinion, to be determined in accordance with the following rules: (1) that the land and everything which forms part of it and is attached to it should be assessed; (2) that process plant and machinery which can fairly be described as tools of the trade should be exempt within certain limits; (3) that process plant or machinery (in certain cases exceeding a stated size) which is or is in the nature of a building or structure or performs the function of a building or structure should, however, be deemed to be part of the hereditament or subject; (4) that service plant and machinery, and items forming part of the infrastructure of the property should be rated; and (5) that, in the case of plant and machinery which performs both a service and a process function sensible lines have to be drawn which will indicate exactly how much falls to be rated and how much does not. In chapter 9, the committee commented specifically on Class 1B of the English regulations (paras 9.11-12). They noted the distinction between plant and machinery which services property, and that provided for use in connection with the trade process being undertaken, adding: But many services in non-domestic property, which might be found whatever the use of the property, are also used incidentally for manufacturing operations in some instances. The definition in Class 1B was not free from ambiguity and had given rise to disputes as to when plant should be treated as falling within it. As an example of the problem, they referred to the treatment of an air-conditioning plant, which may have been installed to facilitate a particular process - for instance computer suites or clean rooms, or to enhance the working conditions of employees, but it was impossible to distinguish between the two purposes. They concluded: 9.14 We have considered whether the current definition should be amended or dropped altogether. For example, we discussed whether it might be preferable to exclude from rateability only that service plant which solely supports a process function. However to treat plant as process plant only if it was wholly for process purposes would increase the rateability of this type of plant and machinery. Such plant is rarely met in practice. As an alternative, we considered whether it would be possible to apportion the value of the plant between Classes 1B and 4 reflecting the relative use for service and process activity. But this would run contrary to our desire for cost-effectiveness of valuation effort and could create new opportunities for dispute. 9.15 We therefore conclude that notwithstanding the difficulties which have been encountered in deciding the degree to which plant is used for process purposes the law as we understand it in both England and Scotland should remain unaltered but that the draftsmanship should be improved to eliminate the difficulties inherent in the English Regulations. Although the committee did not include their own draft, these paragraphs can be taken as a useful indication of the thinking behind the Class 2 proviso in its current form. Annex L to the report contained a Summary of worked examples with Wood Committee recommendations. This listed some typical items of plant and machinery, for different categories of Industry, with an indication of their rateability respectively in England (including Wales, and Northern Ireland), Scotland, and under the Wood recommendations. One category, headed Industry - (e) Retail distribution, included the example of refrigeration plant, and gave the answers as no, yes, no; so indicating that, at least in the perception of the Committee, such refrigeration plant was currently exempted from rateability and should continue to be so under their recommendations. It is also of interest that the Committee received written evidence from the Cold Storage and Distribution Federation, and the National Association of Warehousekeepers, and paid a visit to the Safeway Main Distribution Centre. Finally, in anticipation of a submission of Mr Morshead, I should note one feature of the Scottish system on which the Wood Committee commented unfavourably. This was the distinction drawn by the 1902 Act between, on the one hand, premises occupied for any trade, business or manufacturing process, and other types of premises, for example, institutional premises such as hospitals, schools, colleges and universities . They recommended against the perpetuation of this distinction in the harmonised system (paras 5.2(1), 8.21, 13.19). The decisions below and the submissions in the appeal The decisions The Upper Tribunal (paras 64-66) found difficulty in finding a satisfactory line to distinguish between uses which amount to trade processes and those which do not. They thought that the conjunction of the expression with manufacturing operations, and the fact that it was an exception to a general rule, pointed to a less expansive approach to the scope of trade processes. They saw force in Mr Morsheads submission that - the common defining characteristic of manufacturing operations and trade processes is activity bringing about a transition from one state or condition to another, including by the creation, completion, repair or improvement of the subject matter of that activity. They did not think that the display or storage of goods in itself, nor the creation of an environment conducive to the display or storage of goods, could properly be regarded as involving a trade process. The requirement of a particular retailer for more substantial or powerful equipment than is normally found in retail premises did not create a relevant distinction. They added: 66. All retail warehouses require heating, cooling and ventilation to a greater or lesser extent. We do not consider that the plant and machinery installed to provide those services can properly be regarded as being used or intended to be used as part of manufacturing operations or trade processes. We appreciate that the scale of Icelands particular air handling system is dictated by the presence in its store of substantial numbers of integral cabinets, each of which creates heat, and which collectively are essential to Icelands preferred style of trading. A serious malfunction of the air handling system would therefore put its stock at risk. That feature distinguishes Icelands air handling needs from those of other retailers, but we do not regard that difference as critical. Although the particular needs of Iceland create a greater need for those services than the norm, we do not agree that they make its air handling system an exception to the general rule that such plant and machinery is to be assumed to be part of the hereditament and therefore to be rateable. The tribunal went on to consider whether, assuming the air handling system was used as part of a trade process, it was mainly so used. They would have answered this question in favour of Iceland. They accepted Icelands evidence that the main technical and operational reason for Icelands selection of this air handling system is its suitability for the maintenance of an environment in which integral cabinets can operate successfully (para 78). This part of their decision has not been challenged. In the Court of Appeal, the Chancellor (paras 40-46), having found little help in the authorities cited or the legislative history, relied on the usual principles of construction. He agreed substantially with the reasoning of the Upper Tribunal. He thought that, normally at least, manufacturing operations and trade processes would be activities that bring about a transition from one state or condition to another, and would include the creation, completion, repair or improvement of the subject matter of that activity (para 41). He noted also that the relevant sub-clause was an exception, not a proviso, and should be construed quite narrowly (para 42). He thought the display of goods for retail sale was the antithesis of a trade process. He accepted that the process of freezing chickens would probably be a trade process, but not just keeping them frozen to be offered for sale. He also agreed with the tribunal that the fact that the environment appropriate for the methods of a particular retailer requires more substantial and complex equipment than normal does not mean that it is used for a trade process (para 45). The submissions In this court, Mr Kolinsky QC for Iceland submitted that the Court of Appeal misunderstood the underlying purpose of the legislation, as disclosed by a study of the legislative history, and adopted an unduly restrictive reading of the provision. He identified Icelands trade process as the continuous freezing or refrigeration of goods to preserve them in an artificial condition without which they would be worthless. Neither the ordinary use of language nor the case law justified the view that a transition was required from one state to another. He relied (as he did in the Court of Appeal) on three authorities which supported a wider approach: i) Union Cold Storage Co Ltd v Southwark Assessment Committee (1932) 16 R & IT 160, relating to the application of the precursor of Class 4 of the 2000 Regulations to cooling chambers in a warehouse used for storing food. The case proceeded on the basis (recorded at p 164) that the chambers were admittedly plant on the hereditament for the purpose of manufacturing operations or trade processes. ii) Union Cold Storage Co Ltd v Bancroft [1931] AC 446, where the issue was whether, for the purposes of industrial derating, certain refrigeration equipment was for storage purposes or for the purposes of altering or adapting goods for sale. Viscount Dunedin described the plant as used as part of an elaborate process involving the use of machinery for the preservation of goods during storage (pp 492-493). iii) Assessor for Lothian Region v BP Oil Grangemouth Refinery Ltd (1985) SLT 453, where the Lands Valuation Appeal Court proceeded on the basis that a marine terminal at a petrochemical works, used solely for the purpose of loading refined oil, was premises used in an industrial or trade process (p 459, per Lord Ross). As a further illustration of the practice of the Valuation Office at the time of the Wood Report, he referred to Hays Business Services Ltd v Raley (Valuation Officer) [1986] 1 EGLR 226 (LT) (Emlyn Jones FRICS). That concerned a warehouse used for the storage of archival materials including documents, films and audio-magnetic tapes. For some items of a sensitive nature, there had been installed specialist items of plant, including heating plant, humidifiers, and fire-protection equipment which utilised Halon gas so as to extinguish fires without damaging the stored items. The tribunal recorded that the Solicitor for the Inland Revenue, for the Valuation Officer, had conceded that the specialist heating and humidification equipment were non-rateable (p 227J). The tribunal reached the same conclusion in respect of the fire protection plant, which was not rateable because it was on the hereditament primarily to protect the material that is stored there. It added: Even if it were to be found that this could only be done by the protection of the building and therefore that that was the main use of the equipment, it would nevertheless not be included within the schedule because it was there expressly for the purpose of the trade process being carried on. (p 228E) To similar effect, Mr Kolinsky relied also on the Wood Report, which proceeded on the assumption that an air-conditioning plant installed to facilitate a particular process such as a computer suite, was excepted from rating (see the passage quoted at para 23 above). He found more recent support for the same broad approach in Leda Properties Ltd v Howells (Valuation Officer) [2009] RA 165 (LT George Bartlett QC President). Although no issue arose under the proviso as such, it was common ground that the sophisticated air handling system of a computer hall, described in the decision (para 3) as provid[ing] the temperature and humidity control necessary for process purposes, was to be left out of account under the regulations (paras 3, 34). Mr Kolinsky (who coincidentally appeared on that occasion for the respondent Valuation Officer) asked us to note that the Valuation Officer, Mr Howells, was described as having had since 1996 a lead role in the valuation of specialist classes of property, including computer centres (para 32). We were asked to infer that the common ground reflected the Valuation Offices considered and established position at the time. For the Valuation Officer, Mr Morshead supported the reasoning of the Upper Tribunal and the Court of Appeal. Like them he submitted that the Class 2 proviso constitutes an exception to the general principle of rateability, and should be narrowly construed. The composite phrase manufacturing operations or trade processes must be read as a whole. It was not enough that the ratepayers activity could be labelled as a trade and that one or more of its activities could be labelled as a process. This was the error made by the tribunal in the Hays case, the reasoning of which was plainly misconceived. The Union Cold Storage cases, to the extent that the statutory context was the same, were not necessarily comparable on the facts. In so far as they involved the application of a reduction in temperature to turn fresh goods into frozen or chilled ones, it would be uncontentious to describe that activity as a manufacturing operation or trade process. He referred also by way of analogy to the Capital Allowances Act 1968 section 7, which defines industrial building as including (inter alia) a building in use for the purposes of a trade which consists in the subjection of goods to any process (section 7(1)(e)). In Bestway (Holdings) Ltd v Luff [1998] STC 357, 381, Lightman J had summarised, under heads (1) to (7), the effect of the authorities on the meaning of the expression subjection to process (notably Kilmarnock Equitable Co-operative Society Ltd v Inland Revenue Comrs (1966) 42 TC 675, 1966 SLT 224): (3) Subjection to a process means a treatment (or course of operations) involving the application of a method of manufacture or adaptation of goods or materials towards a particular use, purpose or end This showed that process implied some form of adaptation of the goods, not simply their storage in a constant state as in this case. Mr Morshead also went further than the Court of Appeal. He submitted that Icelands retail activities were wholly outside the scope of the Class 2 proviso, which was directed towards plant serving productive activities in industry, rather than commercial activities more generally. He supported that submission by reference to the history, including the reports summarised above, and specifically to the Wood Report (in particular paras 8.8-9 quoted above). He read the report as recognising a wide-ranging general rule applicable to commercial hereditaments generally, distinguished from the activities of industry; and as proposing for the latter (in his words) an exemption only in the narrow case of plant which serves a process function in industry. Discussion It is appropriate to begin by addressing Mr Morsheads broader submission, not in terms adopted by the Upper Tribunal or the Court of Appeal: that is, that the Class 2 proviso was concerned with productive activities in industry and not with other forms of commercial activity, such as the retail activities of Iceland. With respect to him, and to those instructing, I find this an impossible contention, both on the wording of the Regulations and against the background of the Wood Report. As to the first, if the draftsman had wished to limit the proviso to industrial activities, it would have been easy to say so. The inclusion of trade processes, as an alternative to manufacturing operations can only be read as designed to widen the scope of the proviso to include other forms of trade and their processes. Trade is a familiar word which naturally extends to Icelands retail activities. Subject to the interpretation of the word process, there is nothing in the proviso or in its context to justify a narrower approach. Further, far from gaining support from the Wood Report, the submission seems to me wholly inconsistent with it. It is true that there were some references in chapter 8 to particular issues affecting industry, but I cannot read those as intended to limit the scope of the recommendations more generally. On the contrary, the emphasis was on the principle of fairness between ratepayers, which was regarded as of paramount importance for the political credibility of the business rating system (para 8.6). Nor was there any such limitation in the general rules proposed at paragraph 8.10, or the specific discussion of Class 2 (paras 9.14-15) (see above). Rule (2) proposed exemption for plant and machinery that can fairly described as the tools of the trade, without any limitation of the nature of the trade. Similarly rule (5) which dealt with the need to draw lines between the service and process functions was expressed in general terms. The submission is even less easy to reconcile with the Scottish legislation, which referred to any trade, business or manufacturing process. As noted above, the report criticised that, not for extending its scope too far, but for not going far enough. Finally, Mr Morshead was unable to explain why, if his submission were correct, the worked examples extended to retail distribution; nor why from 1986 until as recently as 2009 the practice of the Valuation Office had apparently taken a wider view, so as for example to treat air conditioning plant for a computer centre as within the scope of the proviso. The Hays case (1986) is of course not binding on this court, nor indeed on the Valuation Office. It is unnecessary to decide whether on its facts it was correctly decided. However, if it had been thought in any way controversial at the time of the Wood Report, it would be very surprising for it not to have been addressed. Turning to the reasoning below, the Court of Appeal and the Upper Tribunal both saw the proviso as an exception to a general rule, to be construed narrowly; and as naturally referring to a process designed to bring about a transition from one state to another. The Court of Appeal even saw some significance in the change (between 1925 and 1994) from a proviso to an exception: para 42. In my view this approach pays insufficient regard to the place of the proviso in the scheme of the Regulations as a whole. Whatever word has been used at different times, it is and always was an exception to an exception. As already explained, the classes are themselves exceptions to the general rule of non-rateability; the relevant proviso (or exception) brings items of plant back into the scope of the general rule. The rationale is that, although they may provide a service to the building, they also provide a service to the activities of the trader within it, and the latter is their main or exclusive function. They are therefore more fairly considered for rating purposes as tools of the trade (in the words of the Wood Report) within the general rule of non- rateability. There is certainly nothing in the Wood Report to suggest that the use of the word except or the other changes of language were intended to signal a substantive change. On the contrary, the passages quoted above show that the intention was to retain the law substantially without alteration, while improving the draftsmanship. How this was done (reflecting the language of Wood Report paras 9.11-12) is apparent from a comparison of the wording of the 2000 Regulations with that of its predecessors. An important change was the introduction of the expression services to distinguish the functions of different categories of plant. Thus, it is recognised that plant which is used in connection with services to the hereditament may also be used in connection with services as part of manufacturing operations or trade processes . Viewed in this way, the key distinction lies in the main use to which the services are put: in connection with the hereditament, or with the processes within it. In my view, there is nothing in the word process itself which implies a transition or change. The cases under the Capital Allowances Act 1968 were no doubt coloured by the context, related to industrial buildings, and the need for goods to be subjected to a process. This is apparent in particular from the opinion of Lord Guthrie in the Kilmarnock case (42 TC 675, 681, 1966 SLT 224, 228). He recognised process as a word with various meanings some wider than others, including the widest significance of anything done to the goods or materials; but in conjunction with the word subjection a narrower reading was appropriate. I agree respectfully with that view of the wider meaning of the word process, which is also consistent with the standard dictionary definitions. A trade process is simply a process (in that wide sense) carried on for the purposes of a trade. Mr Kolinsky submits that, in the context of Icelands trade, the word is apt to cover the continuous freezing or refrigeration of goods to preserve them in an artificial condition. I agree. Since the services provided by the relevant plant have been held to be used mainly or exclusively as part of that trade process, they should be left out of account for rating purposes. For these reasons, I would allow the appeal, and, on this issue, restore the decision of the Valuation Tribunal.
UK-Abs
The appellant (Iceland) is a well known supermarket operator, specialising in refrigerated goods. Its premises include a retail warehouse at Penketh Drive, Liverpool (the Property). The issue in the appeal is whether the services provided by an air handling system (AHS), used in connection with refrigerated goods at the Property, are manufacturing operations or trade processes under the Valuation for Rating (Plant and Machinery) (England) Regulations 2000 (the 2000 Regulations). If they are, then the AHS is to be ignored in calculating the rateable value of the Property. The issue arises because Iceland unsuccessfully applied to the Valuation Officer in 2010 to reduce the rateable value of the Property on that basis. Iceland then appealed to Valuation Tribunal, which decided the issue in Icelands favour. That finding was reversed by the Upper Tribunal, whose decision was upheld by the Court of Appeal. Iceland appealed to the Supreme Court on the issue. The Supreme Court unanimously allows the appeal. Lord Carnwath gives the judgment, with which Lord Kerr, Lord Reed, Lord Hughes and Lady Black agree. Under paragraph 2(1) of Schedule 6 to the Local Government Finance Act 1988, the rateable value of a non domestic hereditament is taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on the basis of certain prescribed assumptions. Prescribed assumptions are set out in the 2000 Regulations [6]. The 2000 Regulations are derived from the recommendations of a report by an Expert Advisory Committee under the chairmanship of Mr Derek Wood QC (the Wood Report) published in 1993. The Committee reviewed the law and practice relating to the rating of plant and machinery, with a view to updating and harmonising it throughout the United Kingdom [7]. The prescribed assumptions under paragraph 2 of the 2000 Regulations include the assumption that any plant or machinery, if it belongs to any class listed in the Schedule to the 2000 Regulations, is assumed to be part of the hereditament in or on which it is situated. The classes in the Schedule are in effect exceptions to the general rule that the value of plant and machinery cannot affect the estimated value of the hereditament for rating purposes. [8]. Class 2 in the Schedule consists of: Plant and machinery specified in Table 2 below which is used or intended to be used in connection with services to the hereditament or part of it, other than any such plant or machinery which is in or on the hereditament and is used or intended to be used in connection with services mainly or exclusively as part of manufacturing operations or trade processes. (Emphasis added.) It is common ground that the AHS is covered by Table 2 and that it is used in connection with services to the hereditament. The only issue is whether the AHS is excluded from Class 2 by the wording italicised above (the Proviso) [9 10]. The history of the legislation provides useful background to the law as it stood at the time of the Wood Report. Historically, it has been difficult to draw a defensible line between, on the one hand, plant and machinery properly treated as part of the hereditament when assessing its hypothetical letting value, and plant and machinery more fairly attributable to the tenants business within it (the tools of the trade). Lord Carnwath traces the development of the law on the issue in England and in Scotland, where the law developed differently, up to the time of the review by the Wood Committee [12 19]. The Wood Report accepted the validity up to a point of a tools of the trade exemption, subject to qualification in the interests of fairness between ratepayers. The Committee accepted the underlying conceptual approach of the regulations in each part of the UK as soundly based. It recommended, amongst other things, that future regulations be based on the principle that process plant and machinery which can fairly be described as tools of the trade should be exempt within certain limits [20 22]. The Committee commented specifically on the predecessor in the English regulations to Class 2, describing it as not free from ambiguity. They concluded that, despite such difficulties, the law as we understand it in both England and Scotland should remain unaltered but that the draftsmanship should be improved to eliminate the difficulties inherent in the English Regulations. Annex L to the Report also contained various examples, including that of refrigeration plant. The Committee concluded that this was exempted and should remain so under their recommendations [23 24]. In the Supreme Court the respondent advanced a broader case than that adopted by the lower courts. This broader argument was that the Proviso concerned productive activities in industry only and not other commercial activities, such as Icelands retail activities. This contention was impossible in view of (i) the wording of the 2000 Regulations and (ii) the background of the Wood Report. As to the first, the draftsman could have easily restricted the Proviso to industrial activities, but the inclusion of trade processes, as an alternative to manufacturing operations, instead widens it. The word trade naturally extends to Icelands retail activities. Subject to the meaning of the word process, nothing in the Proviso or its context justifies a narrower approach [34]. As to the second, the respondents broad contention was inconsistent with the Wood Report, which emphasised the principle of fairness between ratepayers. No such limitation was proposed in the discussion of what became Class 2. Its proposed rules included a the tools of the trade exemption, without limiting the nature of that trade. Its proposed rule dealing with the need to draw lines between service and process functions was expressed in general terms [35]. The respondents contention was even harder to reconcile with the Scottish legislation, which referred to any trade, business or manufacturing process and which the Wood Report criticised for not going far enough [36]. Turning to the reasoning of the Court of Appeal and the Upper Tribunal, both saw the Proviso as an exception to be construed narrowly; and as referring to a process designed to bring about a transition from one state to another. That pays insufficient regard to the place of the Proviso within the scheme of the regulations as a whole: it is and always was an exception to an exception. It brings items of plant back into the scope of the general rule. The rationale is that, although they may provide a service to the building, their main or exclusive function is to provide a service to the activities of the trader within it. They are therefore more fairly considered as tools of the trade [37]. Nothing in the Wood Report suggests that changes of language in the relevant provisions over time were intended to signal any substantive change. On the contrary, the intention was to retain the law substantially without alteration, while improving its draftsmanship [38]. There is nothing in the word process itself implying a transition or change. It has various meanings. In its widest sense, it includes anything done to goods and materials. A trade process is simply a process (in that wide sense) carried on for the purposes of a trade [39]. In the context of Icelands trade, the word is apt to cover the continuous freezing or refrigeration of goods to preserve them artificially. Since the services provided by the relevant plant have been held to be used mainly or exclusively as part of that trade process, they should be left out of account for rating purposes [40].
These appeals concern the statutory provisions governing the eligibility for compensation of persons convicted of a criminal offence where their conviction is subsequently quashed (or they are pardoned) because of the impact of fresh evidence. The provisions are contained in section 133 of the Criminal Justice Act 1988 (the 1988 Act) as amended by section 175 of the Anti social Behaviour, Crime and Policing Act 2014 (the 2014 Act). The central issue is whether they are compatible with the presumption of innocence as guaranteed by article 6(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953) (Cmd 8969) (the Convention). The factual background (1) Mr Hallams case Mr Hallam was convicted of murder, conspiracy to commit grievous bodily harm and violent disorder, following a gang fight in which another young man was killed. The case against him at his trial rested on identification evidence provided by two witnesses. The weaknesses in their evidence were such that independent supporting evidence was, in practice, essential. The only support was evidence from a Mr Harrington, denying that he had seen Mr Hallam either on the day of the murder or on the days surrounding it. That evidence was said to suggest that Mr Hallam had concocted a false alibi, since he had stated that he was with Mr Harrington at the time of the murder. Several years after the trial, the case was referred to the Court of Appeal Criminal Division (the CACD) by the Criminal Cases Review Commission on the basis that fresh evidence had been discovered. That evidence included photographs found on Mr Hallams mobile phone, showing him with Mr Harrington on the day after the murder. The phone had been seized from Mr Hallam at the time of his arrest but had not been examined. Hallett LJ, giving the judgment of the CACD, observed that this evidence changed the situation dramatically, in that the evidence relied upon by the prosecution to support the identifying witnesses, namely the evidence as to false alibi, had been significantly undermined ([2012] EWCA Crim 1158, para 75). She went on (para 76): we are now satisfied that any confidence that the appellant had lied and/or asked Harrington to concoct a false alibi was misplaced. Summarising the position (in para 77), the court noted that neither identifying witness had been particularly satisfactory, with their various accounts [containing] numerous inconsistencies and contradictions; and that there was other fresh evidence comprising information provided to the police by a witness named Gary Rees, which had not been disclosed to the defence at the time of the trial, to the effect that another man with the same first name as Mr Hallam was rumoured to be responsible for the murder. The CACD stated (para 77): The new information in relation to the messages from Gary Rees raises the possibility of greater collusion (in the sense of discussion) between the [identification] witnesses than the defence team knew at the time. It also potentially puts paid to [one of those witnesses] assertion that from the outset there were rumours that Sam Hallam was involved. Returning to the alibi, the court noted (para 78) that: We now know there is a real possibility that the appellants failed alibi was consistent with faulty recollection and a dysfunctional lifestyle, and that it was not a deliberate lie. The proper support for the Crowns case has fallen away. The CACD also held (para 79) that, given the terms of the judges direction, there was a possibility that the jury might not have realised that it was entitled to treat the evidence of another witness as potentially exculpatory of Hallam. In paras 80 and 83 it stated the conclusion that it drew from all the factors as follows: 80. In our judgment, the cumulative effect of these factors is enough to undermine the safety of these convictions. 83. Accordingly, the result is that the conviction is unsafe and it must be quashed. Earlier in its judgment, the CACD recorded at para 49 that counsel appearing for Mr Hallam had invited it to state that he was innocent of the offences. The court cited a passage in the judgment of Lord Judge CJ in R (Adams) v Secretary of State for Justice (JUSTICE intervening) [2011] UKSC 18; [2012] 1 AC 48, para 251, as setting out what Hallett LJ described as the courts powers in this respect. The court declined to make such a statement, observing that we were not satisfied it would be appropriate to use that power on the facts of this case. Mr Hallam spent seven years and seven months in prison prior to the quashing of his conviction. He applied for compensation under section 133 as amended. By letter dated 14 August 2014 the Secretary of State refused the application. The letter began by explaining the statutory test: Following the coming into force of section 175 of the Anti social Behaviour, Crime and Policing Act 2014, compensation under section 133 of the Act is only payable where a persons conviction has been reversed on the ground that a new or newly discovered fact shows beyond reasonable doubt that the person did not commit the offence. The letter continued: the Secretary of State does not consider that the new evidence before the court shows beyond reasonable doubt that Mr Hallam did not commit the offence. The Secretary of State explained: The CA [Court of Appeal] view was that the cumulative effect of [the fresh evidence] was enough to undermine the safety of your clients convictions which were quashed on that basis. However, the fresh evidence does not establish positively that your client was not at the murder scene We further note in this regard that, whilst the Court of Appeal quashed Mr Hallams convictions on the basis that they were unsafe, it expressly declined the invitation of Mr Hallams counsel to exercise its discretionary power (as identified by Lord Judge in Adams [2011] UKSC 18) to state that the new evidence demonstrated the factual innocence of the appellant. Two factors were therefore of particular importance: first, that as the CACD had found, the fresh evidence did not establish positively that Mr Hallam was not at the murder scene on the night in question, and secondly, that the CACD had declined to exercise what was described as its discretionary power to state that Mr Hallam was factually innocent. The letter concluded: It is important to emphasise that nothing in this letter is intended to undermine, qualify or cast doubt on the decision of the [Court of Appeal] to quash your clients convictions. Mr Hallam is presumed to be and remains innocent of the charges. His application has been rejected as it does not meet the statutory test for compensation under section 133 of the 1988 Act. (2) Mr Nealons case Mr Nealon was convicted of an attempted rape committed in August 1996. There was identification and description evidence from several witnesses which if accepted placed him in a club where the victim had previously been on the night of the offence, and near the scene of the attack. He denied that he had ever been to the club and gave evidence of an alibi. The victim gave evidence that the man who attacked her mauled her, tried to kiss her and put his hand inside her blouse over her bra. He was pulling at her tights and underwear. No DNA examination of her clothing was then carried out. The case was subsequently referred to the CACD by the Criminal Cases Review Commission on the basis of evidence of DNA found on an examination of her clothing carried out in 2010, nearly 14 years after the offence. A sample taken from the front of her blouse revealed a full male DNA profile from what was probably a saliva stain. It was not from Mr Nealon, but had been deposited by a man who was designated as the unknown male. Further probable saliva stains were detected on both cups of her bra. They too had not been deposited by Mr Nealon, but were consistent with the DNA of the unknown male. An examination of her skirt and tights disclosed a complex mixture of DNA, including DNA from an unknown woman, and was inconclusive. Evidence was adduced on behalf of the Crown that the attacker might not have transferred any DNA to the victims clothing. The victim was re interviewed in connection with the new investigation. She said that she had bought the blouse and bra either on the day of the attack or a day or two before. This was the first time she had worn either garment in public. She had been in a relationship with a male partner at the time, and could not recall any consensual contact with any other man since she bought the blouse and bra. DNA tests excluded the possibility that her partner, any of the officers involved in the investigation, any of the men who arrived at the scene of the attack shortly after it occurred, or any of the scientists involved in the original investigation, was the unknown male. It was argued by the Crown that the DNA might have been deposited on the blouse and bra at the time of their purchase or as a result of re distribution from other items, and might have nothing to do with the attack, particularly in the light of the victims evidence that she had hugged and kissed other men on that date, when she was celebrating her birthday. The CACD (Fulford LJ, Kenneth Parker J and Sir David Calvert Smith) concluded that the effect of the fresh evidence was to render the conviction unsafe, and that it should therefore be quashed: [2014] EWCA Crim 574. The central reasoning of the court is found in para 35 of the judgment delivered by Fulford LJ: the fresh evidence has not demolished the prosecution case. But its effect on the safety of this conviction is substantial. We are clear in our view that if the jury had heard that in addition to the weaknesses in the identification evidence, it was a real possibility that DNA from a single unknown male had been found in some of the key places where the attacker had mauled the victim (in particular, the probable saliva stain on the lower right front of Ms Es blouse and probable saliva stains on the right and left cups of Ms Es brassiere as well as other DNA material ) this could well have led to the appellants acquittal. No application was made for a retrial. Mr Nealon spent 17 years in prison prior to the quashing of his conviction. He applied for compensation under section 133 as amended. By letter dated 12 June 2014 the Secretary of State refused the application. After explaining the statutory test in the same terms as the letter sent to Mr Hallam, the letter continued: Although the new evidence shows that the DNA was from an unknown male, this does not mean that it undoubtedly belonged to the attacker. Expert evidence for the prosecution at the appeal stated it was plausible that the attacker transferred little or no DNA to the victims clothing during the commission of the offence, and that the DNA from the unknown male may not have been crime related. The Court of Appeal said that these arguments required serious consideration. It also found that the original jury had been entitled to convict your client on the basis of the existing identification evidence (which was not at issue in the appeal). Whilst the Court of Appeal decided, ultimately, that the jury may reasonably have reached the conclusion, based on the DNA evidence, that it was a real possibility that the unknown male and not the applicant was the attacker, the court was explicit that the fresh evidence did not demolish the prosecution evidence. In Mr Nealons case, as in Mr Hallams, the decision letter focused on the reasoning of the CACD: that it said that the argument that the DNA material might not have been crime related required serious consideration, that it found that the original jury had been entitled to convict on the basis of the existing identification evidence, and that it said that the fresh evidence did not demolish the prosecution evidence. On that basis, the Secretary of State stated: Having considered the judgment in the Court of Appeal, and your clients own submission, the Justice Secretary is not satisfied that your clients conviction was quashed on the ground that a new or newly discovered fact shows beyond reasonable doubt that your client did not commit the offence. The letter concluded in similar terms to that sent to Mr Hallam: Finally, it is important to emphasise that nothing in this letter is intended to undermine, qualify or cast doubt upon the decision to quash your clients conviction. You client (sic) is presumed to be and remains innocent of the charge brought against him. His application has been rejected because his case does not in the Justice Secretarys view meet the statutory test for compensation under section 133 of the Criminal Justice Act 1988. The statutory provisions Section 133(1) of the 1988 Act provides: (1) Subject to subsection (2) below, when a person has been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice, the Secretary of State shall pay compensation for the miscarriage of justice to the person who has suffered punishment as a result of such conviction or, if he is dead, to his personal representatives, unless the non disclosure of the unknown fact was wholly or partly attributable to the person convicted. Section 133(2) requires an application for compensation under the section to be made within two years of the date on which the persons conviction is reversed or he is pardoned. Section 133(3) provides: (3) The question whether there is a right to compensation under this section shall be determined by the Secretary of State. Under section 133(5), the term reversed is to be construed as referring to a conviction having been quashed, inter alia, on an appeal out of time, or following a reference to the CACD by the Criminal Cases Review Commission. Section 133 was enacted to give effect to the United Kingdoms international obligations under article 14(6) of the International Covenant on Civil and Political Rights 1966 (the ICCPR), ratified by the United Kingdom in 1976. Article 14(6), in its English version, provides: When a person has by a final decision been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice, the person who has suffered punishment as a result of such conviction shall be compensated according to law, unless it is proved that the non disclosure of the unknown fact in time is wholly or partly attributable to him. There is a very similar provision in article 3 of Protocol No 7 to the Convention (A3P7), which the United Kingdom has not ratified. Section 133(1) restricts compensation to cases where a persons conviction has been reversed (or he has been pardoned: for the sake of brevity, I will focus from this point onwards on cases where convictions are reversed) on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. Convictions are not quashed in England and Wales on the ground that there has been a miscarriage of justice, but on the ground that they are unsafe: see further paras 25 et seq below. It was said in Adams, para 36, that the words on the ground that must, if they are to make sense, be read as in circumstances where, and that the Secretary of State must therefore determine whether a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. In deciding that question, the Secretary of State would have regard to the judgment of the CACD, but ultimately had to form his own conclusion. The term miscarriage of justice was not defined when section 133 was originally enacted. This resulted in a series of cases in which the courts sought to interpret the term, culminating in the decision of this court in Adams delivered on 11 May 2011. In that case, the court adopted four categories of case, of progressively wider scope, as a framework for discussion. They were: cases where the fresh evidence shows clearly that the defendant is cases where the fresh evidence so undermines the evidence against the 1) innocent of the crime of which he was convicted; 2) defendant that no conviction could possibly be based upon it; 3) cases where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant; and 4) cases where something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted. By a majority, the court held that the term miscarriage of justice covered all cases falling within category (2). It therefore included, but was not limited to, cases falling within category (1). The minority view was that the term was confined to category (1) cases. Section 133 was then amended, with effect from 13 March 2014, by section 175 of the 2014 Act, so as to confine the term miscarriage of justice to category (1) cases. Section 133(1) remained unaltered: it continued to be necessary for the conviction to be reversed on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. However, section 175 of the 2014 Act inserted section 133(1ZA) into the 1988 Act, providing a statutory definition of the term miscarriage of justice: (1ZA) For the purposes of subsection (1), there has been a miscarriage of justice in relation to a person convicted of a criminal offence in England and Wales or, in a case where subsection (6H) applies, Northern Ireland, if and only if the new or newly discovered fact shows beyond reasonable doubt that the person did not commit the offence (and references in the rest of this Part to a miscarriage of justice are to be construed accordingly). The words did not commit the offence can be read as synonymous in this context with the words is innocent used by this court in category (1) in Adams. The effect of section 133(1ZA) is therefore that there is a miscarriage of justice, for the purposes of section 133(1), only where the new or newly discovered fact shows beyond reasonable doubt that the case falls into category (1) recognised in Adams. As stated already however (para 17 above, and see paras 25 et seq below), the ground on which a conviction is quashed by the CACD is that it is unsafe. Section 133 has therefore to be understood as requiring compensation to be paid only where the Secretary of State determines that the CACD quashed the conviction in circumstances where fresh evidence shows beyond reasonable doubt that the person did not commit the offence. It was under section 133 as so amended that Mr Hallams and Mr Nealons applications for compensation were considered and refused by the Secretary of State. The present proceedings Mr Hallam and Mr Nealon contend that section 133(1ZA) is incompatible with article 6(2) of the Convention, which provides: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. They seek a declaration of incompatibility under section 4 of the Human Rights Act 1998. Their applications were rejected by the Divisional Court, comprising Burnett LJ and Thirlwall J: [2015] EWHC 1565 (Admin). The Divisional Court held that it was bound by Adams, and by the decision of the Court of Appeal in R (Allen) (formerly Harris) v Secretary of State for Justice [2008] EWCA Civ 808; [2009] 1 Cr App R 2, to hold that article 6(2) had no application to section 133, notwithstanding the more recent decision to the contrary by the Grand Chamber of the European Court of Human Rights in Allen v United Kingdom (2013) 63 EHRR 10. It further held that section 133 was in any event compatible with article 6(2), taking the view that the requirement that the Secretary of State be satisfied that the new or newly discovered fact showed beyond reasonable doubt that the person did not commit the offence could be distinguished from a requirement that the Secretary of State be satisfied of the persons innocence in a wider or general sense. On appeal, the Court of Appeal (Lord Dyson MR, Sir Brian Leveson P and Hamblen LJ) considered that it was bound by the decision in Adams to hold that article 6(2) was not applicable to section 133: [2016] EWCA Civ 355; [2017] QB 571. On the other hand, it also considered that the line of Strasbourg jurisprudence including and following the judgment in Allen v United Kingdom (2013) 63 EHRR 10 was so clear and constant that, if not bound by Adams, it would have followed it. The court also agreed with the Divisional Court, for the reasons which it had given, that section 133 was in any event compatible with article 6(2). The issues arising The central issue on this appeal can be split into two broad questions: 1) The first concerns the scope under English law of article 6(2) scheduled to the Human Rights Act 1998: in particular whether and how far it applies at all to decisions on, or the criteria for, the award of compensation under section 133 of the Criminal Justice Act 1988; this question requires us to consider inter alia whether this court should depart from its decision in Adams. 2) The second question, arising if and so far as article 6(2) is applicable in respect to such decisions or criteria, is whether the definition of miscarriage of justice in section 133(1ZA), introduced by section 175 of the Anti Social Behaviour, Crime and Policing Act 2014 is incompatible with article 6(2). Innocence in criminal proceedings Before addressing these questions directly, it is appropriate to discuss an underlying question, namely the place of innocence in criminal proceedings. In English law, as in many other legal systems, it is not the function of criminal proceedings to determine innocence. As Lady Hale stated in Adams, para 116: Innocence as such is not a concept known to our criminal justice system. We distinguish between the guilty and the not guilty. A person is only guilty if the state can prove his guilt beyond reasonable doubt. It is equally not the function of the CACD on an appeal (or on a reference by the Criminal Cases Review Commission, which is by statute treated as an appeal) to determine whether the appellant did or did not commit the offence. The question for the CACD is whether the conviction is unsafe. Section 2(1) of the Criminal Appeal Act 1968 provides that the CACD shall allow an appeal if they think that the conviction is unsafe. The court is then required by section 2(2) to quash the conviction. Section 2(3) provides that an order quashing a conviction shall, except where a retrial is ordered operate as a direction to the court of trial to enter, instead of the record of conviction, a judgment and verdict of acquittal. A successful appellant is therefore in the same position for all purposes as if he had actually been acquitted: R v Barron [1914] 2 KB 570, 574. That it is not the function of the CACD to make findings of innocence was emphasised by Lord Phillips in Adams. In his judgment, he expressed agreement with the position as put in the Canadian case of R v Mullins Johnson (2007) 87 OR (3d) 425, where the Court of Appeal of Ontario said: 23. There are not in Canadian law two kinds of acquittals: those based on the Crown having failed to prove its case beyond a reasonable doubt and those where the accused has been shown to be factually innocent. We adopt the comments of the former Chief Justice of Canada in The Lamer Commission of Inquiry Pertaining to the Cases of: Ronald Dalton, Gregory Parsons, Randy Druken, Annex 3, p 341: [A] criminal trial does not address factual innocence. The criminal trial is to determine whether the Crown has proven its case beyond a reasonable doubt. If so, the accused is guilty. If not, the accused is found not guilty. There is no finding of factual innocence since it would not fall within the ambit or purpose of criminal law. 24. Just as the criminal trial is not a vehicle for declarations of factual innocence, so an appeal court, which obtains its jurisdiction from statute, has no jurisdiction to make a formal legal declaration of factual innocence. The fact that we are hearing this case as a Reference under section 696.3(3)(a)(ii) of the Criminal Code does not expand that jurisdiction. The terms of the Reference to this court are clear: we are hearing this case as if it were an appeal. While we are entitled to express our reasons for the result in clear and strong terms, as we have done, we cannot make a formal legal declaration of the appellants factual innocence. In addition to the jurisdictional issue, there are important 25. policy reasons for not, in effect, recognising a third verdict, other than guilty or not guilty, of factually innocent. The most compelling, and, in our view, conclusive reason is the impact it would have on other persons found not guilty by criminal courts. As Professor Kent Roach observed in a report he prepared for the Commission of Inquiry into Certain Aspects of the Trial and Conviction of James Driskell, there is a genuine concern that determinations and declarations of wrongful convictions could degrade the meaning of the not guilty verdict: see p 39. To recognise a third verdict in the criminal trial process would, in effect, create two classes of people: those found to be factually innocent and those who benefited from the presumption of innocence and the high standard of proof beyond a reasonable doubt. Lord Hope and Lord Kerr spoke to similar effect in paras 95 and 172, while acknowledging that the CACD may in practice occasionally observe that the effect of the material considered in the course of the appeal is demonstrative of innocence, or make an observation to like effect: see per Lord Kerr, para 172. Lord Judge, in a dissenting judgment, agreed (para 250) that innocence is a concept to which the criminal process is not directed. Hence, he also accepted, the word innocent could have no place in section 133. But he went on in para 251 to say that a CACD was entitled to state that a defendant was innocent and that, if the evidence unmistakeably demonstrated that the appellant was in truth innocent the terms of the judgment should conscientiously reflect the true reasons for its decision that the conviction should indeed be quashed as unsafe. In relation to Mr Hallam, the CACD spoke of that passage in Lord Judges judgment as setting out the courts powers, and decided that it would not be appropriate to use that power in Mr Hallams case (see para 5 above). The Secretary of State referred to these statements in his own remarks (para 6 above). It should be made clear that the CACD does not possess any power to make formal findings or declarations of innocence. Nothing in the Lord Chief Justices judgment in Adams suggested that it did. It is not the CACDs role to determine whether the appellant is factually innocent. The question which it determines is whether the conviction is unsafe. When giving its decision on that question, the court will necessarily explain the reasons for its decision. What it is appropriate to say in that regard will depend to a large extent on the circumstances of the case. In practice, it is often necessary to carry out an assessment of the strength of the evidence as a whole, both inculpatory and exculpatory. If the court considers that the evidence plainly exonerates the appellant, then it is entitled to say so when giving its reasons for allowing the appeal. Sometimes the Crown will have accepted that this is so, and in that event the judgment will normally record that stance. In other cases the significance of the fresh evidence is contested, and in that event the court generally confines itself to the issue of safety. It follows that, although there are some cases in which the court may state in its judgment that the appellant has been exonerated, it is not the purpose of the appeal proceedings to determine whether that is the position, and in the great majority of cases the court does not enter into the fact finding exercise which would be necessary before such a statement might be made. The absence of any statement that the appellant has been exonerated does not therefore carry any implication concerning the appellants innocence. It is, therefore, highly undesirable that whether the CACD should say that the appellant is innocent of the crime of which he was convicted should become an issue in an appeal, as it became in Mr Hallams case. This is not only because the issue does not properly arise. As the Canadian court explained in the case of Mullins Johnson, it is also important that the significance of acquittals should not be degraded by the introduction of a practice of distinguishing in a criminal context between those who are factually innocent and those who merely benefit from the legal presumption of innocence: a distinction which section 133, in its amended form, can have the understandable but unfortunate effect of encouraging successful appellants to ask the CACD to draw. Cases in which the CACD expresses the view that an appellant was innocent should remain, as Lord Bingham and others have said, very rare. No adverse inference should be drawn from the courts unwillingness to express such a view. The application of section 133 is for the Secretary of State, not for the CACD quashing the conviction. The scope of article 6(2)? Article 6 is headed right to a fair trial and article 6(2) reads: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. In construing article 6(2), we must under section 2(1)(a) of the Human Rights Act take into account any relevant case law of the European Court of Human Rights (ECtHR). This sharpens what would anyway be our natural approach when construing provisions designed to incorporate domestically the provisions of a Convention binding on the United Kingdom internationally in senses fixed internationally by the decisions of a supra national court. But on any ordinary reading, whether by reference to the principles in the Vienna Convention on the Law of Treaties 1969 (Cmnd 4140) or domestic principles, article 6(2) is limited to the pre trial phases of any criminal accusation or proceedings. What constitutes a criminal charge or proceeding has, not surprisingly, been given an autonomous meaning by the ECtHR, so as to include for example military disciplinary or administrative motor traffic violations: see Engel v The Netherlands (No 1) (1976) 1 EHRR 647, paras 80 81 and zturk v Germany (1983) 6 EHRR 409, paras 46 54. But once any criminal charge or proceeding, read in that sense, has terminated in acquittal or discontinuance, there is, as Lord Wilson points out (para 86(c)), no basis for any mere presumption of innocence. The European Court of Human Rights (the ECtHR) has however taken the view that article 6(2) has a continuing relevance after acquittal or discontinuance. In this connection, it recently stated as its starting point these propositions: Without protection to ensure respect for the acquittal or the discontinuation decision in any other proceedings, the fair trial guarantees of article 6(2) could risk becoming theoretical and illusory. What is also at stake once the criminal proceedings have concluded is the persons reputation and the way in which that person is perceived by the public. See Allen v United Kingdom (2013) 63 EHRR 10, para 94. Nevertheless, analysing the Strasbourg case law up to 2011 in the course of giving the majority judgment in Serious Organised Crime Agency v Gale [2011] UKSC 49; [2011] 1 WLR 2760 on 26 October 2011, Lord Phillips was inclined to the view that all that the cases establish is that article 6(2) prohibits a public authority from suggesting that an acquitted defendant should have been convicted on the application of the criminal standard of proof and that to infringe article 6(2) in this way entitles an applicant to compensation for damage to reputation or injury to feelings. He was of this view, although, he noted, it involves a remarkable extension of a provision that on the face of it is concerned with the fairness of the criminal trial: Gale, para 34, and see also para 58 of his judgment in Adams delivered earlier in 2011. The ECtHR, without referring to the discussion in Gale, indicated in Allen v United Kingdom on 12 July 2013 that it does not view article 6(2) in so clear cut or limited a sense as Lord Phillips suggested. First, it has developed, as an initial test of the application of article 6(2), the theory of a link between, on the one hand, an acquittal or discontinuation of criminal proceedings and, on the other, certain other types of proceedings or claims not involving the pursuit of any criminal charge. A range of cases in which a link has or has not been detected is listed in the ECtHRs judgment in Allen, para 98. The original concept of a link was, presumably, to set some limit on the expansion of article 6(2) beyond its natural sphere. The ECtHR has however gone on to say that the link may exist either because of the perceived closeness of the subject matter or simply because of a choice of words used by a court in the other proceedings. So, ultimately, the question whether article 6(2) applies can simply depend on the words used. Second, where the link is held to exist, the ECtHR has drawn distinctions between (a) claims by a defendant for eg costs or compensation arising out of the termination in his or her favour of the criminal proceedings, and (b) claims by third party victims against a defendant who has been acquitted in criminal proceedings or against whom criminal proceedings have been discontinued. (For the purpose of any such distinction, at least some issues raised by the state would presumably need to be treated as being, in reality, claims by or in the interest of a third party, eg child care proceedings brought by the state.) In the former case, (a), the ECtHR has held that, where there has been an acquittal on the merits in a true sense (rather than a discontinuance or an outcome sharing features associated by the ECtHR with a discontinuance) any voicing of suspicion of guilt by the public authority against whom such a claim is made constitutes a violation of article 6(2): Sekanina v Austria (1994) 17 EHRR 221 and Allen v United Kingdom, paras 122 123. Even in a case of or similar to discontinuance, it appears, however, from para 128 of the ECtHRs judgment in Allen, as Lord Reed notes, that nothing must be said in a civil context which calls into question the innocence of the defendant in the criminal context. The rationale of any distinction between (true) acquittals and discontinuance is not easy to understand. If the presumption of innocence is the key, one would have thought it equally applicable in both situations, or possibly even more so in a situation where the state has not felt able to pursue any criminal charges at all and has therefore discontinued. Be that as it may be, the application of any such distinction is itself fraught with difficulties as is evident by a comparison of Sekanina itself with Allen. In Sekanina, the defendant was acquitted by the jury. The Code of Criminal Procedure required acquittal where the court finds that the alleged offence was not made out or that it has not been established that the accused committed the act of which [she] is accused. In contrast, the statutory condition for awarding costs and compensation in each case depended, in summary, on the absence of suspicion generated by the defendants conduct. The Austrian courts made a careful analysis of the circumstances, including the criminal court file, and concluded that this condition was not satisfied. The Austrian Court of Appeal said: In order to establish whether or not such suspicion subsists, it might be more useful to refer to the record of the jurys deliberations. The content of this record suggests rather that in the jurys opinion all suspicion had not been removed. However, as the court called upon to rule under the [1969] Act is not bound, in its assessment of the position as regards suspicion, by the verdict (of acquittal) at the trial, not even the record of the jurys deliberations is of decisive importance. After setting out a whole range of suspicious circumstances, the Court of Appeal concluded: Having had regard to all these circumstances, the majority of which were not disproved at the trial, the jury took the view that the suspicion was not sufficient to reach a guilty verdict; there was, however, no question of that suspicion being dispelled. The Austrian courts therefore distinguished between the acquittal and any entitlement to compensation. Nevertheless, the ECtHR said that it was of the opinion that Austrian legislation and practice nevertheless link the two questions the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue can be regarded as a consequence and, to some extent, the concomitant of the decision on the former (para 22). Bearing in mind the distinction drawn by the Austrian courts, the suggested consequence and concomitance are both elusive. However, they were only invoked to establish that article 6(2) was engaged, in the sense that it was open to the complainant to assert that it was potentially infringed at all. What was critical is whether it was actually infringed. Here, the ECtHR, after referring to that courts comprehensive list of items of evidence against Mr Sekanina and to the care with which that court had examined the witness statements, and reciting the passage from the Court of Appeals judgment, last set out, went on in the critical part of its judgment (para 30): Such affirmations not corroborated by the judgment acquitting the applicant or by the record of the jurys deliberations left open a doubt both as to the applicants innocence and as to the correctness of the Assize Courts verdict. Despite the fact that there had been a final decision acquitting Mr Sekanina, the courts which had to rule on the claim for compensation undertook an assessment of the applicants guilt on the basis of the contents of the Assize Court file. The voicing of suspicions regarding an accuseds innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits of the accusation. However, it is no longer admissible to rely on such suspicions once an acquittal has become final. It appears that the ECtHR not only disagreed with the Austrian Court of Appeals analysis of the trial and jury record, but also held it to be illegitimate, in terms of the Convention and in the context of compensation, for the Austrian courts to embark in the first place on any consideration whether suspicions remained in the light of the acquittal. Contrast the ECtHRs recent judgment in Allen, where the ECtHR upheld the decision of the Secretary of State and of the courts judicially reviewing his decision that it was legitimate to refuse compensation on the ground that the CACDs setting aside of Ms Allens conviction merely established was that the new evidence might have led the jury to a different result meaning that the conviction was unsafe. The jurys acquittal in Sekanina was evidently analysed as a true acquittal or exoneration, whereas the CACDs was not. But what then would be the position if a criminal judge or court were (as can happen) to acquit a defendant on the basis that the prosecution had not established its case to the requisite criminal standard and/or that the defendant was entitled to the benefit of the doubt? Why should such an outcome at first instance be treated any differently from the outcome before the CACD on appeal in Allen? And, if the two situations are alike, then the potential applicability of Sekanina must, in the light of Allen, be understood as severely limited in scope. Turning to claims by third party victims against a defendant after acquittal or discontinuance (case (b) referred in para 39 above), the ECtHRs position is that: regardless of whether the criminal proceedings ended in discontinuation or acquittal, the court has emphasised that while exoneration from criminal liability ought to be respected in the civil compensation proceedings, it should not preclude the establishment of civil liability to pay compensation arising out of the same facts on the basis of a less strict burden of proof. However, if the national decision on compensation were to contain a statement imputing criminal liability to the respondent party, this would raise an issue falling within the ambit of article 6(2) of the Convention (see Ringvold, cited above, para 38; Y, cited above paras 41 42; Orr, cited above, paras 409 and 51 ). See Allen v United Kingdom (2013) 63 EHRR 10, para 123. So at first sight claims by third party victims fall outside the scope of the approach the ECtHR has developed for issues arising between the state and a defendant against whom the state has unsuccessfully pursued a criminal charge, leading to acquittal or discontinuance. The qualification, contained in the second quoted sentence, may, according to its text, be read as corresponding with the view taken by Lord Phillips and others including myself in Gale, that is to say that a later civil court must not undermine an acquittal by suggesting that a person ought to have been convicted on the criminal onus: see para 37 above. But, if this is the direction in which the ECtHR is, as one would hope, moving, it is unfortunate that it was accompanied by the citation of problematic authorities discussed further in paras 49 53 below. Further, the current upshot, in the ECtHRs own words in Allen, is that: 125. It emerges from the above examination of the courts case law under article 6(2) that there is no single approach to ascertaining the circumstances in which that article will be violated in the context of proceedings which follow the conclusion of criminal proceedings. As illustrated by the courts existing case law, much will depend on the nature and context of the proceedings in which the impugned decision was adopted. 126. In all cases and no matter what the approach applied, the language used by the decision maker will be of critical importance in assessing the compatibility of the decision and its reasoning with article 6(2) . Although context is all in the law, this degree of vagueness about general principles is indicative of the uncertain and shifting ground onto which the ECtHRs expansion of the meaning and application of article 6(2) has led. Like Lord Phillips, with whose judgment in Serious Organised Crime Agency v Gale I concurred, I can however accept that, once criminal proceedings have concluded with acquittal, or, indeed, a discontinuance, no court should in civil or other proceedings express itself in terms which takes issue with the correctness of the criminal acquittal or discontinuance. Such an extension, achieving a degree of harmony with the approach in Strasbourg, seems at least workable and, of course, reflects what one would hope was anyway proper practice. But courts have often in contexts not involving the pursuit of a criminal charge and using tools and language appropriate to such contexts to engage with identical facts to those which have led to a criminal acquittal or discontinuance of criminal proceedings. In such circumstances, it is very commonly the case that the standard of proof will differ in the different contexts of criminal and other proceedings. It is, thus, entirely possible that a court may, in a context not involving the pursuit of any criminal charge, find on the balance of probabilities facts which could not be established beyond reasonable doubt in criminal proceedings. The question whether a link exists between the criminal and, say, civil proceedings then appears as a diversion from the real question. The ECtHR may itself be seen to accept that the concept of a link is not critical, because its statement that the words used may themselves create a sufficient link effectively collapses that concept into a consideration of the nature of the words. However, the question remains what nature of words is it permissible to use? The real test is, or should be, whether the court in addressing the civil claim has suggested that the criminal proceedings should have been determined differently. If it has, it has exceeded its role. If on the other hand, a court has, on the same facts as were in issue in criminal proceedings leading to an acquittal or discontinuance, determined a civil issue (or any issue other than a criminal charge) against the defendant, and has been confined itself to reasoning relevant to that issue, that means, as I see it, that it has applied the law, rather than infringed article 6(2). I do not believe that either the press or the public is wholly ignorant that the criminal standard of proof may on occasions lead to acquittal or discontinuance, in circumstances where the commission of the offence could be established on the balance of probabilities. There have been very well publicised cases both here and across the Atlantic. There is also a legitimate public interest in such cases being publicly decided and clearly, rather than obscurely, reasoned. Unfortunately, as it seems to me, the ECtHR has in a number of judgments condemned courts determining a civil issue for accurate descriptions of the elements of an offence constituting a tort simply because such elements also featured in past criminal proceedings. To require a civil court to tergiversate, by using words designed to obscure the fact that the law may find facts proved on a balance of probabilities which were not proved to the standard necessary for criminal conviction, does not assist either the law or the public or the defendant. Y v Norway (2003) 41 EHRR 87 is an example of a civil court being apparently expected, in the name of article 6(2), to adopt circumlocutions which do no service to transparency. Ringvold v Norway (Application No 34964/97), a judgment issued by the same section in the same constitution on the same day as Orr v Norway (Application No 31283/04), shows to what fine and unsatisfactory distinctions the past case law may lead. Lord Hughes sets out in his para 118 the circumstances in Orr v Norway. The ECtHRs reasoning there was that: although the concept of violence may not have been exclusively criminal in nature, the use made of it by the High Court in the particular context did confer criminal law features on its reasoning overstepping the bonds of the civil forum [sic]. A reading of the reasoning of the High Court, set out very fully, at para 9 in the report of Orr v Norway, shows the care actually taken by the High Court to explain the difference between the criminal proceedings and the civil claim. I will not set it out in full, but will take it as read and quote only the first and the last two paragraphs, where the High Court said: Despite the fact that [the applicant] has been acquitted of having, with intent or gross negligence, raped [Ms C], under Norwegian law, she has not thereby lost her possibility to claim compensation under the civil law on tort for the harmful act that she claims has taken place. Because other and weaker requirements of proof apply for establishing that an act has occurred under the civil law on tort than when there is question of imposing criminal liability for the same act, an award of compensation for pecuniary/non pecuniary damage would not in itself amount to setting aside the acquittal. The majority [. ] finds on the evidence that on the balance of probabilities it was clearly probable that [the applicant] understood that [Ms C] did not want sexual relations with him, but nonetheless forced coitus upon her by exercising such a level of violence [vold] that the act could be accomplished. There was no question of serious use of violence [alvorlig voldsbruk], only of overpowering by holding [Ms C]s arms. Even though the victim had different alternatives for escaping the situation, which she for different reasons did not find that she could use, this does not alter the basic character of the act which was wilful violation by the use of violence [vold]. Against the background of the majoritys finding that it has been established that on the balance of probabilities it was clearly probable that [the applicant], by the use of violence [vold] has gained [tiltvunget seg] sexual intercourse with [Ms C], the conditions for making an award of compensation have been fulfilled. [. ] I am unable to discern what the Norwegian High Court should, while fulfilling its civil role, have said in order to avoid conferring criminal law features on its reasoning and violating article 6(2). The High Court went to great pains to differentiate and so reconcile its treatment of the criminal and civil issues, and the element of violence, although common to both issues, was a critical element in any adjudication of the civil claim, both as to liability and quantum of compensation. The dissenting opinions of Judges Jebens, Nicolaou and Vaji appear unanswerable on these points. Many of the points I have so far made are also encapsulated in Judge De Gaetanos separate opinion in the case of Ashendon and Jones v United Kingdom (Application Nos 35730/07 and 4285/08) and his forceful and pragmatic remarks in his separate judgment in Allen v United Kingdom. I note also that in two more recent cases subsequent to Allen, in which the ECtHR recited the principles in Allen and concluded that a sufficient link existed for article 6(2) to be engaged, the ECtHR went on to accept the reasoning and language of the domestic courts as consistent with that article, although it had examined and relied on the same facts as had led to criminal acquittals. In the first case, Vella v Malta (Application No 69122/10) (11 February 2014) following acquittals on charges of theft and receiving, civil issues had arisen from third party claims to the relevant objects. In the second case, Mller v Germany (Application No 54963/08) (27 March 2014), the issue of the applicants safety for probationary release had led the court to form a view on facts occurring during a prior period of probation in respect of which the applicant had been charged and acquitted. Both these cases suggest that the ECtHR may be moving towards a limited view of any application of article 6(2) after acquittal, broadly consistent with that suggested by Lord Phillips in Gale: see paras 37 and 47 above. For my part, I would refuse to depart from Adams and Gale, or to follow the case law of the ECtHR, if and insofar as the ECtHR may in the past have gone further ie further than to preclude reasoning that suggests that the defendant in criminal proceedings leading to an acquittal or discontinuance should have been convicted of the criminal offence with which he was charged. On that basis alone, in my view, these appeals should be dismissed, since nothing in section 133(1ZA) or in the Secretary of States rejections of the appellants claims to compensation involves any such suggestion. Compatibility of section 133(1A) with article 6(2)? Assuming that I am wrong about that, and article 6(2) can have some wider application to claims not involving the pursuit of any criminal charge, the question still arises whether section 133(1ZA) is incompatible with article 6(2). The ECtHR in Allen v United Kingdom, para 128, identified the criteria for compensation stated in the original section 133 as being: put concisely, that the claimant had previously been convicted; that she had suffered punishment as a result; that an appeal had been allowed out of time; and that the ground for allowing the appeal was that a new fact showed beyond reasonable doubt that there had been a miscarriage of justice. It went on: The criteria reflect, with only minor linguistic changes, the provisions of article 3 of Protocol No 7 to the Convention, which must be capable of being read in a manner which is compatible with article 6(2). The court is accordingly satisfied that there is nothing in these criteria themselves which calls into question the innocence of an acquitted person, and that the legislation itself did not require any assessment of the applicants criminal guilt. The words beyond reasonable doubt appearing in the original section 133 were thus treated as an acceptable equivalent of the word conclusively appearing in A3P7. The Supreme Court in R (Adams) v Secretary of State for Justice [2011] UKSC 18; [2012] 1 AC 48 identified for domestic purposes the four categories of case which might be suggested to fall within section 133 in its original form, and which I have set out in para 18 above. The Supreme Court held in R (Adams) that section 133, as originally enacted, enabled compensation to be claimed in categories (1) and (2), but not categories (3) and (4). Allen v United Kingdom concerned what was, in the English domestic terms used in Adams, a category (3) case, ie a case where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant. The ECtHR also treated the case as having some features more akin to discontinuance than to acquittal on the merits (see para 39 above). However, that seems to have been so simply because the CACD confined itself to the basic test (whether the conviction was safe) which it was required by statute to apply, and because the Administrative Court and Court of Appeal, in the judicial review proceedings relating to the Secretary of States refusal of compensation, proceeded accordingly: see in particular para 134 in Allen, where the ECtHR said: The court does not consider that the language used by the domestic courts [ie the courts considering the judicial review of the Secretary of States refusal to pay compensation], when considered in the context of the exercise which they were required to undertake, can be said to have undermined the applicants acquittal or to have treated her in a manner inconsistent with her innocence. The courts directed themselves, as they were required to do under section 133 [of the 1988 Act], to the need to establish whether there was a miscarriage of justice. In assessing whether a miscarriage of justice had arisen, the courts did not comment on whether, on the basis of the evidence as it stood at the appeal, the applicant should be, or would likely be, acquitted or convicted. Equally, they did not comment on whether the evidence was indicative of the applicants guilt or innocence. They merely acknowledged the conclusions of the CACD, which itself was addressing the historical question whether, had the new evidence been available prior to or during the trial, there would nonetheless have been a case for the applicant to answer. They consistently repeated that it would have been for a jury to assess the new evidence had a retrial been ordered The ECtHR held in Allen that there had in these circumstances been nothing in the English courts treatment of the defendant under section 133 to undermine her acquittal or demonstrate a lack of respect for the presumption of innocence which she enjoyed, and so no violation. The ECtHR approached Allen on the basis of the language used by the English courts, rather than an examination of the meaning of section 133. Thus, it said (para 129), that: It was for the domestic courts to interpret the legislation in order to give effect to the will of the legislature and in doing so they were entitled to conclude that more than an acquittal was required in order for a miscarriage of justice to be established, provided always that they did not call into question the applicants innocence. The court is not therefore concerned with the differing interpretations given to that term by the judges in the House of Lords in R (Mullen) and, after the judgment of the Court of Appeal in the present case, by the judges in the Supreme Court in R (Adams). What the court has to assess is whether, having regard to the nature of the task that the domestic courts were required to carry out, and in the context of the judgment quashing the applicants conviction, the language they employed was compatible with the presumption of innocence guaranteed by article 6(2). Differing views had been expressed in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18; [2005] 1 AC 1 as to whether section 133 as originally enacted confined the right to compensation to category (1) cases, ie cases where the fresh evidence shows clearly that the defendant is innocent of the crime of which he was convicted. That was Lord Steyns view, with which Lord Bingham did not associate himself. The ECtHRs focus in Allen on the language used by the English courts was possible because it was not suggested in Allen that Ms Allens case fell into any category other than category (3): see further paras 67 69 below. The ECtHR did however give a strong clue as to its thinking on the potential consequences under article 6(2) of Lord Steyns construction of section 133, had the English courts relied on and applied that, when in para 133 it said: But what is important above all is that the judgments of the High Court and the Court of Appeal did not require the applicant to satisfy Lord Steyns test of demonstrating her innocence. The High Court in particular emphasised that the facts of R (Mullen) were far removed from those of the applicants case and that the ratio decidendi of the decision in R (Mullen) did not assist in the resolution of her case. The new section 133(1ZA) confines compensation to circumstances where a conviction is reversed by the CACD (or a pardon granted) on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice in the sense that it shows beyond reasonable doubt that the defendant did not commit the offence. It therefore confines compensation to cases within category (1), matching Lord Steyns view of its original meaning. Does this mean that we should declare it to be incompatible with article 6(2)? I readily acknowledge that this might at first sight appear to be the implication of the ECtHRs thinking in the passage cited above from para 133 of the ECtHRs judgment in Allen. But the point has never been directly before or decided by the ECtHR, and I am far from confident that its implications have been worked through in a manner which makes it acceptable, or that the ECtHR would conclude that section 133(1ZA) is incompatible if the question were argued out before it. The first matter that I would address is the clear understanding of the drafters of A3P7, which (although the United Kingdom has not ratified that Protocol) is clearly the origin of section 133: see para 16 above. That understanding appears in the Explanatory Memorandum which was prepared along with the draft Protocol by the Steering Committee for Human Rights, which submitted both documents together to the Council of Ministers on 22 November 1984, the date on which the Protocol was adopted. The Explanatory Memorandum makes clear that A3P7 contemplated just such a provision as now exists under English law in section 133(1ZA). It says: The intention is that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be acknowledgement that the person concerned was clearly innocent. The article is not intended to give a right of compensation where all the preconditions are not satisfied, for example, where an appellate, court had quashed a conviction because it had discovered some fact which introduced a reasonable doubt as to the guilt of the accused and which had been overlooked by the trial judge. The ECtHR in Allen addressed this by saying in para 133: However, the Explanatory Report itself provides that, although intended to facilitate the understanding of the provisions contained in the Protocol, it does not constitute an authoritative interpretation of the text (see para 71 above). Its references to the need to demonstrate innocence must now be considered to have been overtaken by the courts intervening case law on article 6(2). As para 71 sets out, the full text of the Explanatory Memorandum was to the effect that it . does not constitute an instrument providing an authoritative interpretation of the text of the Protocol, although it might be of such a nature as to facilitate the understanding of the provisions contained therein. As a statement of what the drafters actually intended by A3P7, one would have thought that the Explanatory Memorandum could not have been clearer. On what basis subsequent case law could silently overtake this clear original intention is not obvious. In what follows, however, I shall approach the construction of section 133 independently of the Explanatory Memorandum. It might have been thought that, both in its original and in its current form, section 133 (as also A3P7) makes any right to compensation entirely dependent on the ground on which the criminal court (here the CACD) reverses the conviction (or on which a pardon is granted). That would, if correct, have had two consequences. First, it would have marked another distinction from Sekanina, where the award of compensation depended on its face on an independent evaluation of the position by a civil court. Since compensation would then simply have depended on how the criminal court expressed itself, the principle that neither the state nor a later court dealing with a civil claim should say anything different from the criminal court acquitting the defendant could not apply at all. Second, it would have meant that the present appellants had no claim, since a reading of the grounds on which the CACD allowed their appeals indicates that in each case it did so simply because the newly discovered facts made their convictions unsafe. In other words, the CACDs actual decision was, as in Allen, simply that their cases fell domestically within category (3). correct. First, I note that section 133(3) provides that: I am not, however, prepared to accept such a construction of section 133 as The question whether there is a right to compensation under this section shall be determined by the Secretary of State. Second, Lord Phillips in R (Adams) proceeded on an opposite basis, without any contrary reservation being made by any of his fellow judges. On this basis, the Secretary of State is given an adjudicative role (subject of course, where necessary, to judicial review by the ordinary courts) in relation to the question whether a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice. It is clear from Allen v United Kingdom that there is nothing wrong with a criminal court, when setting aside a conviction, confining itself (in accordance with its role explained in paras 26 to 34 above) to indicating that the new evidence, when taken with the evidence given at trial, created the possibility that a jury might properly acquit the defendant; or explaining that the evidence which was now available might, if it had been heard by the jury, have led to a different result; or expressing itself in terms which did not begin to carry the implication that there was no case for the applicant to answer; or indicating that there was no basis for saying on the new evidence that there was no case to go to a jury: see paras 131 132 in Allen. All these are ways of expressing a conclusion that a case falls within category (3). They amount to saying that some ground for suspicion remains. Yet it is clear from Allen that they are acceptable and that Sekanina does not have contrary effect. A central plank of the ECtHRs judgment in Allen is that there is nothing wrong with a refusal of compensation on the ground that the case falls within category (3). That is, as I read both the CACDs judgments, also the ground on which the CACD allowed both the present appellants appeals in the criminal proceedings, as well as the ground on which the Secretary of State disallowed their claims for compensation. It follows, as the other side of the coin from what I have already said, that the right to compensation can legitimately be expressed to depend upon whether (adopting the terminology in Adams) the conviction was set aside on a ground falling within category (1) or (2). Logically, a defendant wishing not merely to have a conviction set aside, but also wishing to recover compensation, must, unless the case is one of the rare cases (see paras 32 to 34 above) in which the CACD expresses its judgment setting aside the conviction in terms going further than a conclusion that the conviction is unsafe, persuade the Secretary of State to go further. In the rare case where the CACD does express itself in terms stating that the defendant is innocent, that will in practice be conclusive. The Secretary of State could not realistically go behind such a statement. But in other cases, where the CACD has merely determined that the conviction is unsafe, it must be open to the state to resist a defendants suggestion that the case falls within a different category that would entitle him to compensation, and for the Secretary of State to reach a conclusion on that basis. Otherwise, as soon as a defendant argues that the Secretary of State should go further than the CACD has gone and should view the circumstances as falling within a category for which the legislature has prescribed compensation, the state would have to accept this, and concede liability to pay compensation. This situation did not of course arise in Allen, because there was no attempt there by Ms Allen to bring her circumstances into any category other than that of category (3) within which the CACD had seen it as falling. A defendant seeking compensation after the setting aside of his or her conviction by the CACD may therefore be required to show that the circumstances were not merely such that his conviction was unsafe. Using the terminology in Adams, the circumstances must be shown to fall within a higher category, which must, necessarily (and using the terminology in Adams), be either category (1) or category (2), or, since the enactment of section 133(1ZA), category (1) alone. Is there, in terms of compliance with the Convention, any sensible distinction between categories (1) and (2)? Category (1) is no more than a subset of category (2). If it is legitimate for the state to require a defendant to show at least that his or her case falls within category (2), on what basis could it be illegitimate for the state to require a defendant to show that it falls within category (1)? Putting the matter the other way around, the ECtHR has in para 133 in Allen implied that there would be an objection to requiring a defendant to show that the case fell within category (1). But it has not (at least in terms) addressed category (2). It may be that the ECtHRs passing reference in para 133 to the inappropriateness of Lord Steyns test should be understood as embracing both categories (1) and (2). If so, then, as the preceding paragraph of this judgment shows, the effect would be largely to undermine the outcome of Allen itself. All that an applicant for compensation would need to do was assert this his or her claim fell into a higher category than category (3), and the state would be precluded from asserting the contrary, because to do so would be to infringe the presumption of innocence. A way out of this impasse might exist if a sensible distinction could in the context of the Convention be drawn between categories (1) and (2). The legislation, or the language of the courts, could then be amended to speak not of proof of innocence, but of proof that the new or newly discovered fact so undermined the case against the applicant that no conviction could possibly be based on it. But could reference to a case as falling within category (2) sensibly be distinguished from whatever may be thought to be the ambit of the ECtHRs implied objection to language bringing a case within category (1)? If, to use the ECtHRs further words in Allen, para 136, it demonstrates a lack of respect for the presumption of innocence which [a defendant] enjoys in respect of the criminal charge of which she has been acquitted to refuse compensation on the ground that the defendant has not shown innocence, it would presumably also demonstrate a lack of respect for the presumption of innocence to refuse it on the ground that the defendant had not shown that she was not only acquitted, but also that there was no evidence upon the basis of which she could possibly have been convicted. The two situations are distinct as a matter of domestic criminal law, and the legislature has distinguished between them for the purposes of compensation. But to distinguish between them in terms of the Convention and in relation to the question of infringement of the presumption of innocence, would seem to do no more than add another fine and unconvincing distinction, in an area where the application of the Convention already appears too full of unsatisfactory and unsatisfying distinctions and uncertainties. I cannot therefore see any logical basis on which section 133(1ZA) can or should be seen as incompatible in terms of article 6(2) of the Convention. As to the relationship between this court and the European Court of Human Rights jurisprudence, I am of course very conscious of what has been said by Lord Neuberger and myself in the passages cited by Lord Reed in his para 172. Like Lord Wilson, I would, however, draw attention to the further words of Lord Hughes and myself in R (Haney, Kaiyam and Massey) v Secretary of State for Justice [2014] UKSC 66; [2015] AC 1344, para 21, where we said that: The degree of constraint imposed or freedom allowed by the phrase must take into account is context specific, and it would be unwise to treat Lord Neuberger MRs reference to decisions whose reasoning does not appear to overlook or misunderstand some argument or point of principle or Lord Mance JSCs reference to some egregious oversight or misunderstanding as more than attempts at general guidelines, or to attach too much weight to his choice of the word egregious, compared with Lord Neuberger MRs omission of such a qualification. Conclusion Speaking for myself, I cannot regard the current state of European Court of Human Rights case law as coherent or settled on the points critical to this appeal. The second point has never been directly addressed; it is at most addressed indirectly by a passing dictum, uttered in a context in Allen where no detailed analysis was necessary because the point did not directly arise. I do not share Lord Wilsons view, in para 94(c) of his judgment, that it is over optimistic to suppose that the ECtHR will not think again in relation to article 6(2), generally or, at the least and critically, in relation to its dictum regarding Lord Steyns approach quoted in para 49 above. But, however that may be, I question whether the area of law currently under discussion is one where uniformity of approach is critical, even if the precise implications of the ECtHR case law were clear. In summary, I am, for the reasons given, persuaded that it would be inappropriate to introduce into English law an interpretation of article 6(2) going beyond that identified by Lord Phillips, as set out in paras 37 and 47 above. But, in any event and even if article 6(2) does have a wider application in respect of claims not involving any criminal charge, I am not persuaded that section 133(1ZA) can or should be regarded as incompatible with article 6(2). For all these reasons a declaration of incompatibility is in my opinion inappropriate. LADY HALE: In general, where it is clear that the European Court of Human Rights would find that the United Kingdom has violated the Convention in respect of an individual, it is wise for this court also to find that his rights have been breached. The object of the Human Rights Act 1998 was to bring rights home so that people whose rights had been violated would no longer have to go to the Strasbourg court to have them vindicated. I was initially disposed to think, for the reasons explained by Lord Reed, that the Strasbourg court would indeed find a violation in this case. However, I am persuaded that this is not as clear as once I thought it was, for several reasons. There are, of course, all the objections in principle to applying the presumption of innocence to any proceedings taking place after the criminal charge has been determined, either by acquittal or discontinuance, so eloquently voiced by Lord Wilson and Lord Hughes. But it is surely too late in the day for the Strasbourg court to revisit that whole question. Furthermore, as Lord Reed has demonstrated, all the arguments deployed by the majority in Adams in holding that article 6(2) was simply not engaged in section 133 cases have been comprehensively rejected by the Strasbourg court. I would therefore agree with him that article 6(2) is engaged in this case. However, it does not follow that the Strasbourg court would automatically find that it has been breached in this case. As Lord Mance explains (para 39), the Strasbourg court has drawn a distinction between (a) claims by a defendant for such things as costs or compensation arising out of the termination of a criminal case against him in his favour, either by acquittal or discontinuance, and (b) civil claims by or on behalf of third party victims against a former defendant in criminal proceedings which have been determined in his favour. In category (b) cases, where the parties are different, the standard of proof is different, the admissible evidence may also be different, and liability is not dependent upon criminal proceedings having been brought at all, the Strasbourg court has clearly accepted that the civil claim may be determined differently from the criminal proceedings without violating article 6(2). The important thing is the language adopted by the court when deciding the civil claim, as illustrated in the contrasting decisions in Ringvold v Norway (Application No 34964/97), and Y v Norway (2003) 41 EHRR 87. Lord Mance suggests that the real test is, or should be, whether the court in addressing the civil claim has suggested that the criminal proceedings should have been determined differently (para 47). I agree, and I share his regret that, in Orr v Norway (Application No 31283/04), judgment of 15 May 2008, the Chamber, by a narrow majority, appear to have asked more of the civil court than this. While accepting that an acquittal in criminal proceedings is no bar to a civil claim for compensation based on the same facts, they appear to have demanded that the court hearing the civil claim phrase its decisions in less than fully transparent language. This is contrary to the rule of law: courts must always be able to explain their decisions fully, clearly and honestly. The one thing they must avoid is suggesting, in civil proceedings, that the defendant should have been convicted of the criminal offence. But I take comfort from the fact that this was the decision of a Chamber of the court, and by the narrow margin of four to three. This is not a category (b) case, but Lord Mance detects signs that the Strasbourg court might also be prepared, despite the breadth of its language in Allen v United Kingdom (2013) 63 EHRR 10, to adopt an approach to category (a) cases which in practice requires merely that the court determining the defendants claim for costs or compensation refrain from any suggestion that he should have been convicted of the offence. There is enough in the evolution of the courts jurisprudence to suggest that, for the most part and with some limited exceptions, that is in fact what they are doing. If that were indeed to be the approach of the Strasbourg court to these cases, it might still be that the insistence on showing beyond reasonable doubt that the claimant did not commit the crime in section 133(1ZA) of the Criminal Justice Act 1988 will lead to a violation of article 6(2) in some cases where compensation is denied. But I am not convinced that it would always do so. An indication is the strong clue in para 133 of Allen in relation to Lord Steyns test (later adopted in section 133(1ZA)), quoted by Lord Mance at para 63. But, as he points out, the court was not addressing such a case in Allen, which was acknowledged to be a case in Adams category (3), where the conviction was quashed because it was unsafe in the sense that the fresh evidence meant that a jury might or might not have convicted. Provided that this is explained without suggesting that the defendant should have been convicted, there is no breach of article 6(2). The cases before us are also cases, like Allen, in which the fresh evidence rendered the conviction unsafe, in the sense that, had it been available at trial, a reasonable jury might or might not have convicted the defendant. The Grand Chamber found no violation in the case of Allen. In my view, the issue of incompatibility would be better addressed in a case which fell clearly within category (2), where it might be difficult to explain the difference between that and a category (1) case without casting doubt on the acquittal. But if it be right that the true question is whether the Secretary of State, or a court in judicial review proceedings, has suggested that the defendant ought to have been convicted, then it does not seem impossible to explain a refusal of compensation without doing this. Furthermore, where a particular statutory provision may or may not lead to a violation, it is not appropriate, in my view, to make a declaration of incompatibility in proceedings brought by an individual in respect of whom the Strasbourg court is unlikely to find a violation, as I believe these to be. I should add that my view of the appropriateness of making a declaration of incompatibility in this case has nothing to do with my view of the merits of the amendment to section 133. LORD WILSON: My view is that the present appeals place the court in a deeply uncomfortable position. We afford profound respect to the decisions of the ECtHR and recognise its unparallelled achievements in raising the standards according to which member states of the Council of Europe, undoubtedly including the UK, must treat their people. I am, however, persuaded that, in its rulings upon the extent of the operation of article 6(2) of the Convention, the ECtHR has, step by step, allowed its analysis to be swept into hopeless and probably irretrievable confusion. An analogy is to a boat which, once severed from its moorings, floats out to sea and is tossed helplessly this way and that. In what follows I seek to summarise my reasons for this grave conclusion: (a) The meaning of an article is to be collected from its terms in their context and in the light of its object and purpose: article 31(1)(c) of the Vienna Convention on the Law of Treaties, 1969 Cmnd 4140. (b) Paragraph 1 of article 6 distinguishes between civil rights and obligations and a criminal charge; and the language of para 3 of the article makes clear that it addresses the rights only of those subject to the latter, namely of [e]veryone charged with a criminal offence. Such is the context of para 2 of the article, which, like para 3, confers a right only on [e]veryone charged with a criminal offence. (c) When article 6(2) provides that everyone charged with a criminal offence shall be presumed innocent until proved guilty, its meaning, if collected in accordance with the Vienna Convention, can only be that everyone shall be presumed to be innocent for the purpose of the criminal law until proved to be so. Following an acquittal, the presumption has no further role. The acquitted defendant has no need for a mere presumption, potentially rebuttable, that he is innocent. For, subject to the remote possibility of a second criminal trial, it has become an irrebuttable fact that he is innocent for the purpose of the criminal law. The apparatus for punishment within the criminal law cannot be applied to him. (d) The trouble is that the ECtHR has divorced the word innocent from its context and, in the words of Judge De Gaetano in para 3 of his separate opinion in the Ashendon case, cited by Lord Mance in para 53 above, has launched article 6(2) into an orbit separate from that of the article. He there proceeded to call for a thorough re examination of its proper place in the article. (e) The entitlement of the ECtHR, referred to by Lord Mance in para 35 above, to give an autonomous meaning to the articles of the Convention is intended to override any distorted meaning ascribed to them contrary to the Vienna Convention by individual states, not to license the ECtHR to ascribe a distorted meaning to them: see paras 80 and 81 of its judgment in the Engel case, to which Lord Mance there refers. (f) As Judge Power said in para 7 of her strong separate opinion in the Bok case, cited by Lord Hughes in para 120 below, a reference to a violation of the presumption of innocence when a person is not or is no longer facing a criminal charge divorces the principle from its purpose. (g) The ECtHR has blurred the crucial distinction between guilt for the purposes of the criminal law and guilt for other purposes, determined on a different basis. (h) Following its removal of the presumption out of the orbit of article 6, the ECtHR has been required to explain its application in two main areas. (i) The first main area is that of civil claims, whether brought against acquitted defendants by their alleged victims or by the state in aid of protecting children or brought against unsuccessful prosecutors by acquitted defendants. A fair hearing of these civil claims, to which the claimants and the defendants (including the former prosecutors) are all entitled under article 6(1), will usually require a determination, by reference to probabilities, of facts not established beyond reasonable doubt in the criminal proceedings. (j) In the Y case, cited by Lord Mance in para 50 above, the applicant had been acquitted on appeal of homicide and sexual assault. The deceaseds parents sued him for compensation. Under Norwegian law they had to show that it was clear on the balance of probabilities that he had killed and sexually assaulted their daughter. In awarding compensation to them the Norwegian court, upheld on appeal, found it clearly probable that [the applicant] has committed the offences. The ECtHR held that the court had cast doubt on the correctness of his acquittal and had therefore violated article 6(2). (k) In the Orr case, also cited by Lord Mance in para 50 above, the ECtHR followed the decision in the Y case. It applied the presumption to a civil judgment in Norway that a man whom a jury had acquitted of raping a woman had nevertheless, on the balance of probabilities, when using a degree of violence, had sex with her without her consent and had thereby committed a tort against her for which he should pay damages. The ECtHR held that the judgment had violated the presumption of innocence because the use made in it of the concept of violence had conferred criminal law features on its reasoning: see the passage there quoted by Lord Mance. So the Norwegian court had apparently violated the presumption by fully explaining its factual findings: it should apparently have diluted its findings by omitting the finding that the man had used a degree of violence. There was a powerful dissenting opinion by Judge Jebens, who disputed that article 6(2) was even applicable to the civil judgment, let alone that it had been violated. (l) Are the conclusions of the ECtHR in the Y case and in the Orr case tenable? (m) The other main area is that of claims for compensation against the state by defendants for their detention in prison, whether on remand or otherwise, prior to their acquittal at trial or on appeal. (n) The Sekanina case, cited by Lord Mance in para 39 above, concerned the Austrian provision for payment of compensation to an acquitted defendant referable to his period in custody on remand if suspicion that he committed the offence was dispelled. The Austrian courts decision that the suspicion was not dispelled was held to be incompatible with the presumption. The problem for the ECtHR was that in the Englert and Nlkenbockhoff cases, cited by Lord Hughes in para 106 below, it had held that refusals of compensation based on suspicions of guilt were not incompatible with the presumption. In the event the court distinguished them on the basis that there the criminal proceedings had ended prior to their final determination on the merits. But why was this distinction relevant to the reach of the presumption? (o) Is the conclusion of the ECtHR in the Sekanina case tenable? (p) The decision in the Sekanina case was followed in the Hammern case, cited by Lord Reed in para 151 below. The significance of the latter lies in the striking assertion, at paras 41 and 42 of the judgment, that, although not even the courts autonomous concept of a criminal charge extended to the compensation proceedings, article 6(2) nevertheless applied to them. (q) The decision of the Grand Chamber in the Allen case, cited by Lord Mance in para 22 above, concerned, as do the present appeals, a different and more circumscribed provision in the UK in section 133(1) of the Criminal Justice Act 1988 for compensation to be paid to certain defendants ultimately acquitted on appeals out of time. As Lord Mance explains in para 16 above, the section was enacted to give effect to the UKs international obligations under article 14(6) of the International Covenant on Civil and Political Rights 1966 (the Covenant). The compensation is for punishment as a result of [a] conviction and the obligation to pay it arises upon the reversal of a conviction on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice. (r) It is noteworthy that article 14(2) of the Covenant provides for what it calls a right to be presumed innocent but is otherwise in precisely the same terms as article 6(2) of the Convention. Evidently the drafters of article 14 did not regard it as inconsistent to provide within it both for a presumption of innocence on the one hand and for an inquiry into whether an ultimately acquitted defendant had or had not been the victim of a miscarriage of justice on the other. Indeed in the WJH case, cited by Lord Hughes in para 121(vi) below, (s) the Human Rights Committee, established under the Covenant to monitor its implementation, decided that the presumption of innocence in article 14(2) applies only to criminal proceedings and not to proceedings for compensation. (t) In 1984 the Council of Europe decided to bring the Convention into line with article 14(6) of the Covenant by providing in article 3 of Protocol 7 a right to compensation for certain ultimately acquitted defendants in almost precisely the same terms. In para 25 of its explanatory report upon the protocol, which it said did not constitute an authoritative interpretation of its articles, the Steering Committee for Human Rights, appointed by the Council, suggested that the intention behind article 3 was to require compensation only in clear cases of miscarriage of justice, in the sense that there would be acknowledgment that the person was clearly innocent. The committees suggestion was inconsistent with any idea that a finding that an acquitted defendant was not clearly innocent would be incompatible with the presumption of innocence. (u) In the Allen case the applicant had ultimately been acquitted on appeal on the basis that fresh evidence might reasonably have affected the jurys decision. She complained that the UK courts had acted incompatibly with the presumption of her innocence by refusing to quash a decision that she had not established a miscarriage of justice and was therefore not entitled to compensation under section 133(1), then unamended, of the 1988 Act. The court at first instance had, for example, observed that there remained powerful evidence against her. The Grand Chamber sought to undertake an exhaustive review of the courts case law on the role of article 6(2) in various types of proceedings which take place after an acquittal; and by implication it approved all of the courts previous decisions. (v) First the Grand Chamber addressed the circumstances in which, after acquittal, article 6(2) applied. It reiterated in para 96 that the article might apply even when its words, given their autonomous meaning, did not apply. It suggested in para 94 that, after acquittal, the articles aim was two fold: to protect an acquitted defendant from being treated by a public authority as in fact guilty of the offence charged and, perhaps overlapping with his rights under article 8, to protect his public reputation. It held in para 103 that the article therefore required that he be treated as someone innocent in the eyes of the law, not just (so I interpolate) in the eyes of the criminal law. It concluded at para 105 that the article applied whenever the applicant demonstrated a link between the criminal proceedings and the subsequent proceedings. It exemplified the necessary link when in para 107 it turned to the facts of the Allen case: the link existed there because the resolution of the criminal proceedings in the appellate court had triggered the right to apply for compensation and because the requirements of section 133 required reference to the judgment of that court. (w) Then the Grand Chamber addressed the circumstances in which, if after an acquittal it applied to a later decision, article 6(2) had been violated. In para 122 it approved the decision in the Sekanina case that the voicing of suspicions of guilt in compensation proceedings would violate the article if the conclusion of the criminal proceedings had been a final determination on the merits, as opposed to their discontinuation; but in para 123 it held, without explanation, that the distinction did not apply to civil claims brought against acquitted defendants by alleged victims. Its conclusion at paras 125 and 126 was that there was no single approach to ascertainment of a violation; that much will depend on the nature and context of the subsequent proceedings; but that in every case the language used by the decision maker will be of critical importance. It proceeded to hold at para 136 that the terms in which the UK courts had rejected the applicants claim had not violated article 6(2). But at para 127 it had observed, without explanation, that the setting aside of her conviction in the appeal court had been more like a discontinuance than an acquittal on the merits, with the result (presumably) that the suspicions of guilt articulated by both domestic courts in the compensation proceedings did not constitute a violation. In the Allen case Judge De Gaetano again entered a separate opinion. (x) In para 3 he described the courts conclusion as being that it all depends on what you say and how you say it and in para 5 he reiterated his belief that article 6(2) had no application to compensation proceedings following acquittal. (y) With acute professional discomfort I ask: in relation to the circumstances in which article 6(2) applies and in which it is violated, are the conclusions of the Grand Chamber in the Allen case tenable? I turn to this courts duty under section 2(1)(a) of the Human Rights Act 1998 [the 1998 Act] to take into account any relevant judgment of the ECtHR. Inevitably there have been a number of observations in this court, and in the appellate committee which preceded it, that the duty to take account of such a judgment should almost always lead our domestic courts to adopt it. Particularly in the early years of the life of the 1998 Act, the UK courts were strikingly loyal to the judgments of the ECtHR notwithstanding the open texture of section 2(1)(a): see Krisch, The Open Architecture of Human Rights Law [2008] 71 MLR 183, 203. In R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23, [2003] 2 AC 295, the appellate committee perceived no need to confront, as problematic, the jurisprudence of the ECtHR in relation to the relevant article of the Convention, which was article 6(1). It applied it without apparent difficulty. But Lord Slynn of Hadley observed at para 26: In the absence of some special circumstances it seems to me that the court should follow any clear and constant jurisprudence of the European Court of Human Rights. If it does not do so there is at least a possibility that the case will go to that court, which is likely in the ordinary case to follow its own constant jurisprudence. What he there said was, of course, no part of the decision of the committee. It was, as he made clear, a purely personal observation, made in passing. No doubt, so far as it went, it was also a helpful observation. But Lord Slynn would no doubt have been surprised to learn that, partly as a result of remarks made by Lord Bingham of Cornhill at para 20 of his judgment in the Ullah case, cited by Lord Hughes in para 125 below, his observation has at times been regarded as part of what the committee had held; and no doubt surprised to learn that his adjectives have at times been treated as if found in a statute. Is the jurisprudence clear? Is the jurisprudence constant? In the present case one might well express doubt, as does Lord Hughes in para 126 below, about whether the jurisprudence is clear; but my view is that such an exercise would be inappropriate. The words with which Lord Slynn chose to describe a reasonable approach in that particular case should not, with respect to him, be subjected to so intimate an examination. On other occasions this court has expressed the proper approach to the jurisprudence of the ECtHR in different terms. In para 173 below Lord Reed quotes in particular from para 48 of the judgment of the court delivered by Lord Neuberger of Abbotsbury MR in the Manchester City Council case and from para 27 of the judgment of Lord Mance in the Chester case. In my view however the weight to be given to both quotations was correctly described by Lord Mance and Lord Hughes in their joint judgment in the Kaiyam case, cited by Lord Mance in para 72 above, as follows: 21. The degree of constraint imposed or freedom allowed by the phrase must take into account is context specific, and it would be unwise to treat Lord Neuberger MRs reference to decisions whose reasoning does not appear to overlook or misunderstand some argument or point of principle or Lord Mance JSCs reference to some egregious oversight or misunderstanding as more than attempts at general guidelines The context of the present appeals, to which the nature of this courts duty under section 2 is therefore specific, is a line of jurisprudence in the ECtHR which in my respectful view is not just wrong but incoherent. Our courts have not, to the best of my knowledge, previously been called upon to address a context of that sort. In In re McKerr [2004] UKHL 12, [2004] 1 WLR 807, Lord Hoffmann said: 63. Although people sometimes speak of the Convention having been incorporated into domestic law, that is a misleading metaphor. What the [1998] Act has done is to create domestic rights expressed in the same terms as those contained in the Convention. But they are domestic rights, not international rights. Their source is the statute, not the Convention. They are available against specific public authorities, not the United Kingdom as a state. And their meaning and application is a matter for domestic courts, not the court in Strasbourg. 64. This last point is demonstrated by the provision in section 2(1) that a court determining a question which has arisen in connection with a Convention right must take into account any judgment of the Strasbourg court. Under the Convention, the United Kingdom is bound to accept a judgment of the Strasbourg court as binding: article 46(1). But a court adjudicating in litigation in the United Kingdom about a domestic Convention right is not bound by a decision of the Strasbourg court. It must take it into account. I reluctantly agree with Lord Reed, for the reasons he gives in paras 183 to 191 below, that, if article 6(2) has the meaning ascribed to it by the ECtHR, in particular in the Allen case, section 133(1ZA) of the 1988 Act is incompatible with it. It follows that I am at present not persuaded by the ingenious suggestions to the contrary made by Lord Mance in paras 61 to 71 above and by Lord Hughes in paras 128 and 129 below. But I have come to the conclusion that this court should not adopt the meaning ascribed to article 6(2) by the ECtHR. I have been driven to the view that it should today dismiss the appeals. I hold in high professional regard our fellow judges in the ECtHR. I appreciate the desirability of a uniform interpretation of article 6(2) (a) (b) throughout the states of the Council of Europe. I regard as over optimistic the suggestion of the Secretary of State that (c) there is room for further constructive dialogue between this court and the ECtHR about the extent of the application of article 6(2). (d) to the ECtHR for a ruling that section 133(1ZA) violates article 6(2). I recognise the likelihood that the appellants could successfully apply (e) But I regard myself as conscientiously unable to subscribe to the ECtHRs analysis of the extent of the operation of article 6(2) and thus to declare to Parliament that its legislation is incompatible with it. LORD HUGHES: Narrowly stated, the question raised by the present appeals is whether the new section 133(1ZA) Criminal Justice Act 1988 is incompatible with article 6(2) of the European Convention on Human Rights (the presumption of innocence). That question can, however, only be answered in the context of the true scope of the presumption of innocence, which arises also in many other legal scenarios. This is a matter with which the Strasbourg court has been obliged to grapple over the past 30 years. The presumption of innocence is also central to the approach of all three UK jurisdictions to the criminal law, as it is to a great many other legal systems. Article 6(2) provides: Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. There is no doubt that this governs the investigation of, and the trial of, criminal charges. Centrally, it means that the burden of proof in a criminal trial lies upon the prosecution to show that the accused is guilty rather than upon the accused to show that he is not. In most if not all European systems that rule is associated with a requirement that proof of a criminal offence must achieve a high standard before a defendant can be convicted usually described as proof beyond reasonable doubt. There is no occasion to examine this central core of article 6(2), which is not in issue in the present case. What is in issue arises, not for the first time, not from the plain meaning of a Convention right, but from the manner in which it has been extended, by way of judicial gloss, beyond the investigation and trial of criminal offences to legal situations where no charge remains pending and no trial is in contemplation. This gloss is referred to in the Strasbourg jurisprudence as the second aspect of article 6(2). Like other judicial glosses, this one has developed piecemeal. That is often the result of iterative consideration of individual cases, but that process needs also to provide the opportunity to stand back and to examine the logical and jurisprudential basis for the steps which have been taken. The second aspect of article 6(2) in the Strasbourg jurisprudence It appears from the Grand Chambers recent formulation of this second aspect of article 6(2) in Allen v United Kingdom (2013) 63 EHRR 10, that it has the features here set out. (a) By the time there is any occasion for this second aspect to arise, no one is, by definition, facing any criminal charge. It follows that although it is well understood that the concept of a criminal charge is, as used in the Convention, an autonomous one, its autonomous meaning has no relevance to the second aspect (para 96). (b) The general aim of the second aspect is to protect individuals who have been acquitted of a criminal charge, or in respect of whom criminal proceedings have been discontinued, from being treated by public officials and authorities as though they are in fact guilty of the offence charged. It is a protection of the reputation of the former accused. This is said to be necessary if the right guaranteed by article 6(2) is not to become theoretical and illusory (para 94). In summary: the presumption of innocence means that where there has been a criminal charge and criminal proceedings have ended in an acquittal, the person who was the subject of the criminal proceedings is innocent in the eyes of the law and must be treated in a manner consistent with that innocence. To this extent, therefore, the presumption of innocence will remain after the conclusion of criminal proceedings in order to ensure that, as regards any charge which was not proven, the innocence of the person in question is respected. (para 103) (c) Article 6(2), in its second aspect, applies and thus governs subsequent proceedings when there is a link between them and the previously concluded criminal proceedings. That link is likely to exist when the subsequent proceedings require examination of the prior criminal proceedings. This in turn is likely to be the case if any of four situations applies: (i) the court is obliged to analyse the criminal judgment; (ii) it has to engage in a review or evaluation of the evidence in the criminal file; (iii) it has to assess the applicants participation in some or all of the events leading to the criminal charge; or (iv) it has to comment on the subsisting indications of the applicants possible guilt (para 104). (d) Where the second aspect of article 6(2) thus applies, there is no single test for whether it has been infringed in the subsequent proceedings (para 125). But the language used by the decision maker will be of critical importance in assessing the compatibility of the decision and its reasoning with article 6(2) (para 126). Issues common to different legal questions The central reality which has to be addressed by any legal test for the scope of article 6(2) is that the same factual issues which have to be decided in a criminal trial or investigation in order to reach a verdict of guilty or not guilty, or a decision as to prosecution, may also have to be decided for other legal purposes. Those other legal purposes may well involve the person who was the accused in the criminal trial or investigation. The other legal purposes may be sequential to the criminal trial or investigation (for example an application for costs) or they may be separately constituted (for example professional disciplinary proceedings against the accused or child care proceedings concerning his children). Some legal systems may adjudicate upon those other legal purposes in combined criminal and civil proceedings, by permitting the complainant in the criminal trial also to make a claim for compensation as a civil party; other systems may adjudicate upon them separately. It is an axiomatic feature of some legal systems that the law recognises that the enhanced standard of proof required to justify conviction of a criminal offence and punishment by the state does not apply except to the verdict of guilty or not guilty. Elsewhere, the standard of proof is lower, often on the balance of probabilities. There is a well understood principled basis for this difference. In criminal proceedings the chief object is the punishment of the guilty. Where the state seeks against an individual a conviction and punishment the individual is entitled to the benefit of a reasonable doubt: thus acquittal may well be in dubio pro reo, rather than involve a positive finding that the act alleged was not performed. That this should be so is a proper reflection of the gravity of a criminal conviction. Where, on the other hand, the issue arises between citizens of equal standing before the law, the object is not punishment but compensation or vindication and it unfairly constrains the rights of the claimant if he can succeed only if all reasonable doubt is eliminated. Likewise, the object of professional disciplinary proceedings differs from that of criminal proceedings; where the objective is the protection of the public from unsuitable practitioners it is legitimate and principled to give that protection where it is demonstrated to be more likely than not that it ought to be provided. A fortiori, where the object of proceedings is the protection of the vulnerable, typically but not only children, the criterion for decision is the best interests of the vulnerable and to limit protective orders to cases where maltreatment has been proved beyond reasonable doubt would be inconsistent with that ruling principle. The three legal systems operating in the United Kingdom all depend upon this marked and principled difference between proof beyond reasonable doubt as a minimum for conviction and punishment and proof on the balance of probabilities in most other areas of adjudication. So do some other European systems, for example Norway: see Reeves v Norway (Application No 4248/02), 8 July 2004 and Orr v Norway (Application No 31283/04), 1 December 2008. The distinction between the two standards of proof may not be as clearly acknowledged in some other European systems (see for example the discussion by Kaplow (2012) 121 Yale Law Journal 738) but it is of course well understood and explained by the Strasbourg court in, for example, Orr v Norway at para 26. Once the difference in standard of proof is recognised, it is plain that those proceedings to which the civil standard apply simply cannot be governed also by the criminal standard, nor thus by the verdict of the criminal court, even if the same factual issues arise, and even if the evidence is the same. Discussions about the scope of article 6(2) must necessarily accommodate this fact. The Strasbourg jurisprudence in more detail The summary of the Strasbourg jurisprudence helpfully set out in Allen v United Kingdom (see para 99 above) might suggest an established and consistent two stage approach. First, that the concept of link is the test for the applicability of article 6(2) to proceedings. Second, that whilst there is no single test for whether, if applicable, that article is infringed, the critical question is whether the unconvicted accused is treated by a court or public body as if guilty and the language used will generally be of critical importance. The history shows that this is not quite how the cases have proceeded. It demonstrates that the court has grappled frequently with the inevitable tension between the desire to protect an unconvicted accused from having his acquittal undermined and the reality that the outcome of the criminal trial cannot govern all adjudication upon the same factual issues. The concept of link was not articulated in the early cases, and certainly not in the detailed terms now enunciated in Allen. That is perhaps because the early cases concerned claims for costs and/or compensation for detention on remand in systems such as Germany and Austria where those claims fell to be determined by the criminal courts, indeed sometimes by the same constitution which returned a verdict of guilty or not guilty. Minelli v Switzerland (1983) (Application No 8660/79) is an example, where the criminal court, in acquitting the accused, on the grounds of expiry of the relevant limitation period, also in the same judgment apportioned costs as between the private prosecutor and the accused. It took the view that both were partially at fault. As to the accused, it expressed the view that although he had a limited justified complaint against the prosecutor, the terms in which he had expressed it would have left him in all probability guilty of the criminal libel alleged, but for the limitation period. It was enough for the Strasbourg court to say that at the time when these conclusions were expressed the accused was still charged with a criminal offence (para 32). The next stage was a trio of German cases, all decided on the same day in 1987: Ltz v Germany (1988) 10 EHRR 182, Nlkenbockhoff v Germany (1988) 10 EHRR 163 and Englert v Germany (1991) 13 EHRR 392. All were cases in which the criminal proceedings had been discontinued, in Ltz because a limitation period had expired, in Nlkenbockhoff because the accused had died whilst appeal against conviction was pending, and in Englert because the much convicted accused was not likely to receive a significant addition to a sentence he was already serving. In each case, the local court, exercising a discretion plainly given to it by domestic legal rules, had declined either in whole or in part to make orders for costs and/or compensation for detention on remand. In each case the court had ruled in making that decision either that the accused would almost certainly have been convicted but for the technical bar which led to discontinuance (Ltz and Nlkenbockhoff) or was clearly more likely to have been convicted and had brought suspicion on himself (Englert). As in Minelli, the Strasbourg court referred to the fact that the decision on discontinuance accompanied that on costs etc, which it described as a consequence and necessary concomitant of the former (eg Ltz para 56). It then held as to infringement that such costs or compensation issues might raise an issue under article 6(2) if supportive reasoning, which cannot be dissociated from the operative provisions, amounts in substance to a determination of the accuseds guilt: Ltz para 60, repeated in the other cases. In all these cases, nevertheless, the court held that the language used had not infringed article 6(2) because it amounted to no more than voicing outstanding suspicion that the accused had committed the offences, rather than amounting to a finding of guilt (Ltz para 62, echoed in the other cases). That would appear to have been a plain recognition of the fact that to say of an accused that he might have committed the offence, or even that he probably did, is not to undermine his acquittal, and does not amount to attributing guilt to him. That is even more clearly the case in systems such as the English where an acquittal means no more than that guilt has not been proved to the high criminal standard, may well leave open the possibility that the accused might have committed the act, but establishes once and for all that he is unconvicted and cannot be punished. The origins of the concept of link, as adumbrated in due course many years later in Allen, may be the two cases of Sekanina v Austria (1993) 17 EHRR 221 and Rushiti v Austria (2001) 33 EHRR 56. Both concerned applications by accused who had been acquitted at trial for compensation for detention on remand. The domestic law provided that compensation was payable if the accused was acquitted and the suspicion that he committed the offence is dispelled. The local courts had held that despite acquittal, suspicion had not been dispelled; there had been a strong case, but the evidence had not been enough to convict. The Strasbourg court held both that article 6(2) applied and that it had been infringed. It held that although the court determining the compensation issue had done so some months after the acquittal, nevertheless Austrian legislation and practice link the two questions to such a degree that the decision on the latter issue can be regarded as a consequence, and to some extent the concomitant of the decision on the former. (Sekanina para 22, repeated in Rushiti). Although, as has been seen, the word concomitant had also appeared in the three German cases, there is nowhere any analysis of why it is appropriate. It may well be that the decision upon those issues could properly be described as sequential to the verdict, in the sense that a verdict of acquittal was a sine qua non of it, but it does not follow that it was a concomitant or had to run with the verdict; on the contrary the fact that the legal test was different surely meant that it did not run with the verdict. To say that article 6(2) made it run with the verdict would be to assume what was sought to be shown. Sekanina and Rushiti also broke new ground on the question of infringement. At paras 27 and 30 of Sekanina the court distinguished the three German cases, where the language used had been rather more forthright than in the instant case; it had spoken of it being nearly certain that the accused would have been convicted, rather than of suspicion not having been dispelled. The court held that the approach of the German cases to what had there been regarded as a recording of suspicion only applied to discontinuance cases and not to acquittals. At para 30 it said this: The voicing of suspicions regarding an accuseds innocence is conceivable as long as the conclusion of criminal proceedings has not resulted in a decision on the merits of the accusation. However it is no longer admissible to rely on such suspicions once an acquittal has become final. It is not immediately obvious why this should be so. There no doubt is a difference between discontinuance and acquittal, especially in systems (such as the English) where the first may sometimes be no bar to resumption of prosecution whereas the second virtually always is. But if the governing principle is the presumption of innocence in article 6(2) there seems no reason why that presumption should apply any the less to a person against whom a prosecution has been discontinued than to one who has been acquitted after trial. Both are equally entitled to claim that they cannot be convicted until proved guilty according to law. The reasoning in Sekanina and Rushiti is thus perhaps rather more pragmatic than dependent on the principle of the presumption of innocence. At all events, it is completely unexplained, either in these cases or later, and accordingly its frequent repetition since adds nothing to it. Since then the link proposition has indeed been oft repeated, generally in identical language, up to and including in Allen. But at no stage has the court gone back to principle to examine what the true scope of article 6(2) is, given the differing legal contexts in which the same facts may be adjudicated upon according to different tests and subject to different standards of proof. Nor are the cases consistent. In Moullet v France (Application No 27521/04), 13 September 2007, the court held that article 6(2) did not apply to disciplinary proceedings taken against a public official for bribery, although he had been acquitted (on limitation grounds) of that offence by the criminal court. It also held that in any event there was no breach, although the act of bribery in question in each set of proceedings was identical and his dismissal was explicitly grounded upon it. But in Vanjak v Croatia (Application No 29889/04), 13 January 2010 and iki v Croatia (Application No 9143/08), 15 July 2010 disciplinary proceedings against policemen were held to be linked to criminal prosecutions which had been abandoned, so that article 6(2) did apply; there is no sign that Moullet was referred to. The test for applicability appears, if anything, to have widened, since as the court recorded in Allen at para 102, these two cases of Vanjak and iki contain the opinion that following discontinuation of criminal proceedings (as well as following acquittal) the presumption of innocence requires that the lack of a persons criminal conviction be preserved in any other proceedings of whatever nature. These very wide words are not further reasoned, nor is the apparent departure from the German and Austrian cases explained, and in neither case was the statement necessary to the decision since the applicant failed in both cases on the grounds that the constituent elements of the disciplinary or employment complaints differed from the legal ingredients of the criminal charges which had been discontinued. There is no doubt that there are relatively recent decisions in the Strasbourg court which, if their approach to article 6(2) were applied to the present case, would result in a finding that section 133(1ZA) is incompatible with that provision. An example is Capeau v Belgium (2008) 46 EHRR 25. The accused had been investigated for suspected arson but discharged by the court on the grounds that there was insufficient evidence to commit him for trial. He claimed compensation for pre trial detention on remand. Under the local law, there was a right to such compensation either if the accused was exculpated by the criminal court (which he had not been) or if he established his innocence. The local law illustrates the variation across Europe of entitlement to compensation for pre trial detention on remand. The Belgian court refused the application for compensation on the grounds that the accused had not established his innocence. The Strasbourg court held that to refuse compensation could not by itself amount to a breach of article 6(2) but that the requirement that the accused prove his innocence did so. It concluded that this provision allowed doubt to attach itself to the correctness of the courts decision. But that last statement is surely not accurate. To say that someone has not proved himself eligible within the rules for compensation for detention is not, in any meaningful sense, the same as doubting the correctness of a decision that there was insufficient evidence to commit him for trial. Like some other general statements appearing in the article 6(2) cases, it demonstrates a reluctance to address the meaning of acquittal. It may be that in some legal systems an acquittal, and a fortiori a decision not to commit for trial, is a finding of positive exoneration, but in most it is not. It is especially unlikely to be so where the verdict is that of a jury which returns a binary verdict but does not deliver a judgment making individual findings of fact. In Mller v Germany (Application No 54963/08), 27 March 2014 the claimant was a life sentence prisoner after shooting his wife. He had sought early conditional release. He had recently been charged with assaulting and injuring another woman with an electric truncheon whilst on home leave, but the local criminal court had dismissed the charge without giving reasons. The execution of sentence court, fulfilling a role similar to that of the Parole Board in England, refused his application for conditional release on the grounds that he remained a serious risk to the public and particularly to women. He had become obsessed both with his wife and with the recently injured woman, and injuries had followed disappointment. The execution of sentence court had additional psychiatric evidence, but it specifically addressed the recent allegation of assault against the second woman, and explicitly disagreed with the criminal court, which it held had not adequately examined the evidence against the accused. It said in terms that the criminal offence which the applicant had committed towards the recent complainant woman, demonstrated the risk of violence. The Strasbourg court faithfully applied the general statement made in Allen and found in consequence that there was a sufficient link between the acquittal and the decision on conditional release. But it held that there was no breach of article 6(2): the execution of sentence court had not, it held, stated that the accused was guilty of a fresh offence. Rather it had based its conclusion on the prognosis of risk for the future. It must be said that this obviously correct outcome was reached in the teeth of the words used by the execution of sentence court. Certainly it had based its conclusion, correctly, on the prognosis of risk for the future, but it had arrived at that prognosis in large part because it expressed itself satisfied that the accused had committed the recent offence of which he had been acquitted. A set of principles which requires such specialised reasoning in order to justify an obviously correct conclusion that the assessment of risk involved no breach of article 6(2) puts in issue the basis of the principles. This case is a remarkable illustration of the consequences of the wide propositions which have developed in the courts jurisprudence as to article 6(2). It might be thought axiomatic that the assessment of the future risk posed by a convicted murderer whose conditional release is under consideration ought to be informed by all relevant information, and that to exclude material because it reveals the possibility of a criminal offence simply because there is not sufficient evidence to prove it beyond reasonable doubt is to court danger to the public. The much more logical basis for the outcome of the case is surely that a presumption of innocence has no place in such risk assessment. Article 6(2) has no application, for conviction and punishment are not in question. This is so even if on a different legal test and applying a different standard of proof, a conclusion is reached which includes a finding that acts amounting to an offence are relevant to that assessment. The accused in this case was not treated by the legal system as convicted of the alleged recent offence, nor was he punished for it. He was simply assessed as to the risk which he presented. The legal scenario which perhaps most plainly exposes the debate about the scope of article 6(2) is the civil claim for compensation made by a person who is or was a complainant in a criminal trial against the person who is or was the accused. It will of course sometimes be true that the legal constituents of the tort alleged are less exacting than those of the criminal offence (compare the disciplinary cases of Vanjak and iki mentioned in para 109 above). In other cases the issue in the criminal trial may be different because a defence is raised, such as mental disorder, which does not apply to a tort claim. But often the issues will be identical, and frequently the evidence relied upon will also be the same. A classic example is the claim by someone who says that she was raped by the accused. His case is either that the intercourse alleged did not take place or, more often, that it was consensual and/or that consent was to be implied from the complainants behaviour. He has been acquitted by the jury so it is known that the criminal standard of proof has not been achieved, but in the civil proceedings the standard is the balance of probabilities. Such cases are by no means unusual. Equally common, if not more so, are cases where a care order is sought by the Local Authority in relation to children (section 31 Children Act 1989). The test for such an order is that the child is at risk of significant harm attributable to inadequate parental care. There may be many different parental inadequacies relied upon, but a very common instance is the case which depends on an alleged risk of abuse, physical or sexual, by a parent or an associate of a parent, and where the risk is said to be proved by past abuse of this or another child. Such an alleged abuser may well also be prosecuted. If he is acquitted, on the criminal standard of proof, it is nevertheless incumbent on the family judge to investigate the allegation of past abuse in order to reach a conclusion about the level of future risk. All experienced care judges are familiar with such cases, and with the duty to find, one way or the other, on the balance of probabilities, whether the past abuse is made out despite acquittal in the criminal court. The treatment of such cases by the Strasbourg court cannot be described as consistent. OL v Finland (Application No 61110/00), 5 July 2005 is indeed a decision that article 6(2) did not apply to child care proceedings in which one of the strands of evidence advanced concerned an allegation against the father of sexual abuse, although the prosecutor had decided not to prosecute, taking the view that the evidence was insufficient. It is perfectly true that this decision contains the proposition that article 6(2) was not applicable and that there was no link between the two sets of proceedings because the care case was not a direct sequel to the criminal decision. But in that case, although the psychiatrists report had concluded that in all likelihood the father had abused his daughter, all that the care court had said was that it is unclear whether [the child] has been subjected to sexual abuse. This possibility cannot be excluded. It had then gone on to record other bases for making the care order, including the disturbed behaviour of the child and the mental illness of her mother which impeded her care. If the decision as to applicability meant that the Strasbourg court took a consistent line that article 6(2) had no application to claims for civil compensation, or to care proceedings, that would be one thing. But it is clear that it does not. In Ringvold v Norway (Application No 34964/97), 11 May 2003, the court held that article 6(2) was not applicable to the civil claim for compensation made by a victim alleging sexual abuse by an erstwhile accused who had been acquitted by the jury. It based that applicability decision in part on an absence of link (para 41) but held that this was because the outcome of the criminal proceedings was not decisive for the civil claim. This was to use link in an entirely different sense from the way in which it is explained in Allen at para 104. The court also based its applicability decision upon the language used in determining the civil claim (para 38). Yet it concluded that there was no applicability notwithstanding that the court had held that on the balance of probabilities it was clear that [the erstwhile accused] was the abuser (para 19). Then a year later in Reeves v Norway (Application No 4248/02), 8 July 2004, the accused had been tried in the criminal courts for arson and the insurers who had paid out after the fire had been joined as civil parties to claim compensation from her. The standard of proof differed between the two decisions required, just as it would in separate proceedings in England. She was convicted at trial but on appeal her conviction for arson was quashed, on the grounds that there was not the specific majority of appeal judges which was required by local law before it could be upheld. The award of damages to the insurers was however upheld, since enough of the judges agreed that arson had been proved against her on the balance of probabilities. The Strasbourg court held that there was no infringement of article 6(2). But this time it made the assumption that article 6(2) applied to the insurers claim. It also found that the judgment of one judge who acquitted the appellant of the crime but found that on the balance of probabilities there was a clear probability that the defendant is guilty of setting the fire as described in the indictment was at risk of infringing article 6(2) and could be saved from doing so only by treating the choice of words as an unfortunate slip rather than as an affirmation imputing criminal liability for arson. So this decision depended not on applicability, as in Ringvold, but on whether there was infringement. The decision appears to be a good example of the unsatisfactory manner in which the language used may be determinative of whether there is a breach of article 6(2), as propounded in Allen. Those decisions can conveniently be considered alongside Orr v Norway (Application No 31283/04), 15 May 2008, where the opposite result ensued. The accused was tried for rape of a work colleague. Her civil claim for compensation for the same rape was heard alongside the criminal trial. The jury acquitted of the crime. Next day the judges gave judgment for the complainant upon her civil claim. The applicable standards of proof differed, as they would in England, and the civil claim demanded a significantly less exacting standard, even if perhaps not a simple balance of probabilities. Giving judgment on the civil claim, the court held that on the relevant standard it was clearly probable that the accused had intercourse with the complainant, that it was without her consent, that he knew that it was, and that he had used sufficient force to overcome her lack of consent. The Strasbourg court did not treat a link between the criminal and civil proceedings as the test of whether article 6(2) applied or not; indeed it held that the fact that the two issues were tried together did not bring the civil part within the article. But it held that the language used did render article 6(2) applicable, and that it involved an infringement. At para 51 it held: 51. However, the court notes that, in its reasoning on compensation, the High Court majority based its finding that the applicant was liable to pay compensation to Ms C on a description of the facts giving details of such matters as the nature of the sexual contact, the applicants awareness of the absence of consent by Ms C, the degree of violence (vold) used by him to accomplish the act and his intent in this respect. In other words, it covered practically all those constitutive elements, objective as well as subjective, that would normally amount to the criminal offence of rape under article 192 of the Penal Code. It is true that, as stated in the case law quoted above, an acquittal from criminal liability does not bar a national court from finding, on the basis of a less strict burden of proof, civil liability to pay compensation in relation to the same facts. However, the court considers that, although the concept of violence may not have been exclusively criminal in nature, the use made of it by the High Court in the particular context did confer criminal law features on its reasoning overstepping the bonds of the civil forum (see Y, cited above, para 46). This is another good indication of the semantic examination which appears to be the basis of Strasbourgs decisions on the ambit of article 6(2). If, now, scenarios of this kind are tested against the Grand Chambers statements of principle in Allen at para 104 for which see para 99(c) above it would seem likely if not inevitable that article 6(2) would now be held to apply to such a civil claim for damages by a rape complainant, whether heard alongside the criminal trial or separately as it would be and is in any of the UK jurisdictions. The same would apply to care proceedings in which the issue was an allegation of abuse made against an acquitted accused. The judge trying such a civil claim, or such a care case, may well have to examine the evidence on the criminal file. He will certainly have to assess the accuseds participation in the events leading to the criminal charge. However, if article 6(2) really does apply to such a claim it is simply impossible for the judge in either kind of proceeding to give judgment after the accused has been acquitted. Semantic adjustment of his judgment is not an option. He has to make findings about the conflicting evidence on what occurred. He has to do so both for civil liability and to assess the level of damages. And the care judge must make findings of fact in order to justify his conclusion as to the risk of significant harm which the child faces. Neither can do other than make findings about whether the rape, or the abuse, took place. It matters not an ounce whether the judge calls it rape, or forced sexual intercourse, or abuse, and he cannot call it something which it is not. In a tort claim the tort about which he must make a finding is co terminous in most cases with the crime; even any plea of implied consent will correlate essentially with the criminal defence of reasonable belief in consent. In a care case, it is facts constituting criminal offences which justifies the making of the care order. If article 6(2) does indeed apply to such proceedings, complainants, or public care authorities, might well consider themselves better served by not making a complaint to the police. Such allegations are notoriously difficult for juries to decide, unless there is some independent evidence beyond the word of the only two people typically present. If article 6(2) applies, an acquittal, always a possibility, will bar a finding of rape in a subsequent civil case, and thus bar the claim for compensation, and similarly with a care decision. In the absence of a prosecution, article 6(2) would presumably become irrelevant. But the public interest is unequivocally in cases of this kind being properly investigated by the police, and, if the evidence offers a reasonable prospect of conviction, in their being brought to trial. The present case is not of course one of a civil claim for damages coming after a criminal prosecution. But consideration of such a case, together with the plain difficulties which have attended the Strasbourg courts conscientious efforts to extend the applicability of article 6(2), demonstrates that article cannot sensibly apply beyond the criminal trial and the investigation which precedes it. The objective of not undermining an acquittal which underlies the suggested gloss on article 6(2) see para 99(b) above can and should properly be maintained but it means that the acquitted accused must be recognised as unconvicted, immune from punishment by the state and from characterisation as a criminal, but not that he escapes all consequences of the ordinary application of his countrys rules as to evidence and the standard of proof outside criminal trials. Powerful pleas to that effect by Judge De Gaetano in both Ashendon and Jones v United Kingdom (2012) 54 EHRR 13 and Allen, and by Judge Power in Bok v The Netherlands (Application No 45482/06), 18 January 2011, properly reflect the correct analysis of article 6(2). This analysis of the scope of article 6(2) is, moreover, consistent with: (i) the wording of the article, which applies it to persons charged with a criminal offence; it is irrelevant that that expression has an autonomous meaning under the Convention since everyone agrees that the suggested second aspect of, or gloss upon, article 6(2) applies it to those who are not charged in any sense with a criminal offence; (ii) the marked and plainly deliberate difference made by the drafters of the Convention between article 6(1) (the determination of civil rights and obligations) on the one hand and articles 6(2) and (3) (rights of those charged with criminal offences); (iii) the co existence in article 14(2) ICCPR of a right in the same terms as article 6(2) of the ECHR with article 14(6) which gives a plainly more restricted right to compensation for certain kinds of miscarriage of justice; (iv) the similar co existence of article 6(2) with the provisions of article 3 Protocol 7, which mirrors article 14(6) ICCPR; (v) the fact that at the time article 6(2) was drafted alternative versions which would have applied it to everyone or would have provided that no one shall be held guilty were rejected in favour of the present formulation; (vi) the considered view of the UNHRC in WJH v The Netherlands (Communication 408/1990 [1992] UNHRC 25) that the presumption (at article 14(2) of the ICCPR) applies only to criminal proceedings and not to proceedings for compensation; the court in Allen referred to this conclusion but did not address it in its reasoning. Compensation for miscarriage of justice These same principles ought properly to govern instances where the erstwhile accused bears, under the local law, an onus of proof in proceedings which are separate from the criminal investigation and trial and in which he is at no risk of conviction or punishment. A simple example is the accused who, following acquittal which may well be in dubio pro reo brings an action for malicious prosecution against the police or other accuser. Of course it may be theoretically possible for a prosecution to be malicious even if the accused is guilty, but in most such cases it is an integral part of the claimants case that he was prosecuted when not guilty and that the defendant knew it. Such a claimant former accused necessarily bears the onus of proving his case, on the balance of probabilities, including his asserted innocence. No breach of article 6(2) is or could be involved, even if a link of the kind contemplated by Allen could be said to exist. Schemes for public compensation for those who are prosecuted but acquitted vary widely from legal system to legal system. Some systems provide for compensation for detention on remand; others, including the English, have no such regime. Where there is provision for compensation, the cases show that it is not unusual for there to be some qualification to universal availability. Sometimes the system gives the court a residual discretion to withhold compensation, as for example did the Dutch scheme considered in Baars v The Netherlands (2004) 39 EHRR 25. Others state the grounds on which it may be refused, as did the German scheme considered in Nlkenbockhoff. The Strasbourg court has been at pains to say in case after case that neither article 6(2) nor any other international rule gives an unqualified right to such compensation. The limited right which is recognised internationally is that stated, in more or less identical terms, in article 3 Protocol 7 to the ECHR, for those states which have acceded to it, and in article 14(6) of the International Covenant on Civil and Political Rights. This right is limited to those whose conviction is reversed or who is pardoned, and of those only where the reversal or pardon is on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice. So there is no right to compensation for those who are acquitted at trial. Nor does the right extend to the common case of a conviction quashed for error of law or of emphasis in the summing up, or for error of law, for example as to the admissibility of evidence, during the trial. Since the right to compensation is thus restricted, the test is plainly entirely different from the test of guilt or innocence at trial, and from the test of safety of the conviction on appeal. It follows, firstly, that proceedings seeking such compensation, although they are predicated upon there having been a conviction which has been quashed, so that a criminal prosecution with that outcome is a sine qua non for an award, are not part of the criminal process but rather are in aid of a distinct and limited civil right. For this reason, even if there existed a workable concept of link as a test for application of article 6(2), such a link would not exist between the quashing (reversal) of the conviction and the claim for compensation under section 133. The latter can only be said to be based on the former in the sense that the first condition of eligibility for compensation is that the conviction has been quashed. But to say that compensation is based on the quashing is to ignore the several other conditions of eligibility which must also be satisfied. Secondly it follows that it is for the claimant to show that he is within the statutory test; to that extent at least it must be common ground that he bears the onus of proof. Thirdly, it should be clear that the presumption of innocence has simply no place in such proceedings, for the simple reason that conviction and punishment are not in issue. It is easy to understand why section 133(1ZA) can at first sight be seen as a reversal of the criminal onus of proof, and thus as inconsistent with article 6(2). In reality, however, it is no such thing. By the time section 133(1ZA) comes into consideration the erstwhile accused is by definition no longer facing any criminal charge in any sense, whether the autonomous one applied in the Strasbourg jurisprudence or any other. His conviction has been quashed. He is in no danger of conviction or punishment. Nor is he in any danger of any official body treating him as if he were still convicted or liable to punishment. All that is happening is that he is seeking to bring himself within the (legitimately) restricted eligibility requirements for compensation. That does not put his guilt or innocence in issue; he remains unconvicted and unpunished whether eligible or not, and no one will be entitled to say, if he cannot prove on the balance of probabilities that he is eligible, that he is guilty; at most all anyone could say is that his exoneration has not conclusively been proved. The terms of article 14(6) of the ICCPR, which section 133 seeks to implement in English law, make plain that eligibility depends on it being conclusively shown that a miscarriage of justice has occurred. A decision that this has not conclusively been shown is not at all the same as a finding of guilt, nor does it in any sense undermine the quashing of the conviction. As the facts of Allen show, a conviction may well be quashed on the grounds that it is not safe, without any implicit or explicit finding as to guilt or innocence: see Allen at paras 127, 131 132 and 134 135. An English lawyer might baulk at the assertion in para 127 that the appellant in that case had not been acquitted on the merits since he or she would say that a decision that the conviction is unsafe is indeed a judgment on the merits, but the sense of the courts judgment is clear: those adjudicating on the question of compensation did not comment on whether, on the basis of the evidence as it stood at the appeal, the applicant should be, or would likely be, acquitted or convicted. Equally, they did not comment on whether the evidence was indicative of the applicants guilt or innocence. (para 134). This will be equally true whenever a claimant, seeking compensation after the enactment by Parliament of section 133(1ZA) fails the eligibility test which it creates. Taking account of the Strasbourg jurisprudence This courts obligation under section 2(1)(a) of the Human Rights Act 1998 is to take into account any judgment, decision, declaration or advisory opinion of the Strasbourg court. Its ultimate responsibility is to arrive at its own decision on those Convention rights which are given domestic legal effect by being incorporated into that statute. The history of the English courts rightly demonstrates a desire if at all possible to maintain consistency of approach with the Strasbourg court. That desire is reflected in the general proposition that an English court should in the absence of some special circumstances, follow any clear and constant jurisprudence of the Strasbourg court: R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323, para 20. I respectfully share that desire and the present judgment sets out to take account of the Strasbourg jurisprudence in some detail. In accordance with its usual practice, the Strasbourg court has often repeated, usually in identical language, the key propositions which are once again propounded in Allen and which are summarised at para 99 above. To the extent that they are oft repeated, they are no doubt constant. To say that they are clear is, on inspection, much more difficult. As appears from the brief survey above they create considerable difficulties in application, frequently leading either to inconsistent outcomes or to over sophisticated semantic analysis in an effort to achieve the right result. It seems to me incumbent on this court to stand back and re assess the a priori assumption that has been made that the presumption of innocence, and the critical requirement to respect acquittals or reversals of convictions, extends to preventing any comment by any court in any other proceedings of whatever nature (Vanjak) which assesses conduct which was in question also in the criminal proceedings. Proper respect for acquittal does not require this. It requires that the erstwhile accused is treated as acquitted, not that his conduct cannot fall for examination in other proceedings where the test is quite different from the criminal standard of proof. Outcome For these reasons, which substantially although not exactly overlap with those of Lords Mance and Wilson, I would dismiss these appeals. The correct analysis is that article 6(2) does not apply to section 133 claims for compensation. It certainly requires that in such claims, as in any other proceedings, the reversal of the conviction is treated as unquestioned. But it does not inject into the quite different section 133 test a presumption that the erstwhile accused did not commit the crime; it holds that he has not been proved to the strict criminal standard to be guilty. Nor therefore does article 6(2) apply so as to strike down the provision in section 133(1ZA) which makes clear that a claimant for compensation must accept the onus of bringing himself within the eligibility criteria laid down by Parliament. If, contrary to that clear view, it be held that this court is duty bound by the Strasbourg jurisprudence to hold that article 6(2) does apply to a section 133 claim, I would conclude with the Court of Appeal and Divisional Court below that to require a claimant to prove his case of eligibility is not a breach of it. That is because what article 6(2) (if it applies) preserves is the presumption of innocence in the sense of being a person who is acquitted, unconvicted and unpunishable. Innocence, in the context of the criminal law and of article 6(2), does not mean exonerated on the facts; it means unconvicted, not proved according to the governing standard of proof, accordingly not liable to punishment, and entitled to be treated as such. The new section 133(1ZA) does not require the claimant to prove that he has this status. This status (which appears to be what the courts below meant by innocence in a general sense) is already a given, once the conviction has been quashed by the Court of Appeal (Criminal Division). What the new section requires is that the claimant prove something different and additional, viz the condition of eligibility for compensation under the scheme established in England and Wales. I agree that the mere fact that the section requires exoneration as a result of a new or newly discovered fact would not prevent it from calling for proof of innocence, or from conflicting with the presumption of innocence, if innocence in the context of the presumption meant exonerated on the facts. But for the reasons explained, it does not and cannot. The difference is clearly stated by Sir Thomas Bingham MR in R v Secretary of State for the Home Department, Ex p Bateman (1994) 7 Admin LR 175, cited by Lord Dyson MR in the Court of Appeal below at para 49. This critical distinction between innocence as used in article 6(2) and exoneration on the facts might in one sense be said to be a semantic one, but if so the Strasbourg court has emphasised time and again that language (ie semantics) is for it the critical test of breach of article 6(2). In reality it is not a mere semantic distinction but reflects a fundamental principle of the criminal law, namely the strict enhanced standard of proof. It is not possible for the law simultaneously to erect a differential and enhanced standard of proof for criminal prosecutions, and then effectively to apply that standard not just to criminal trials but to other (indeed maybe to all) other adjudications upon the facts which led to the prosecution. Neither the suggested test of link nor the suggested test of language will work to determine the scope of article 6(2) in the face of this difficulty. Postscript: judgments in the Court of Appeal (Criminal Division) The form of judgments in the Court of Appeal when dealing with appeals against conviction is not the issue in the present case. It is, however, important that that court is not constrained in giving its reasons either for dismissing an appeal or for allowing it. I do not disagree with what Lord Mance says at paras 25 34. In summary: the test on an appeal against conviction is whether the conviction is (i) safe, not whether the appellant is demonstrated not to have committed the offence; (ii) for this reason, it is not appropriate for the court to regard itself as having a discretionary power to make a legally binding declaration of innocence, nor for argument before it to proceed, as it seems to have done in Hallam on the basis that it ought to consider whether to add such a declaration to its judgment; (iii) but as Lord Judge observed in Adams at para 251 (cited by Lord Mance at para 30), there can be few stronger reasons for concluding that a conviction is unsafe than that fresh evidence demonstrates plainly that the appellant did not commit the offence; such cases are not common but they may occur, as for example where new DNA evidence is agreed to exonerate the appellant; (iv) if such cases do occur, the court ought not to be constrained in giving its reasons for its conclusion in terms which make clear what the new evidence shows; this will on occasions be common ground between prosecution and defence; it would be unfair to the appellant, if this conclusion is clear, not to state it; (v) counsel for an appellant may sometimes submit to the court that not only is the conviction shown to be unsafe, but that indeed fresh evidence shows plainly that the appellant did not commit the offence; if that submission is made, it is for the court to decide what are the true reasons for its conclusion on the safety of the conviction and how to express them; argument geared to a contemplated later application for compensation is not, however, appropriate since that issue is not before the court. LORD LLOYD JONES: I agree with the judgment of Lord Mance and therefore limit myself to some brief observations on the position which has been reached in the Strasbourg jurisprudence in relation to the scope of application of article 6(2) ECHR after acquittal or discontinuance of criminal proceedings. I agree with Lord Mances analysis of the case law of the ECtHR. For the reasons he gives, I too would decline to follow that case law if and to the extent that it may have gone beyond precluding reasoning that suggests that a defendant in criminal proceedings leading to an acquittal or discontinuance should have been convicted of the criminal offence with which he was charged. In any event, I consider that the incompatibility of section 133(1ZA) with article 6(2) is not made out. The objection to the section as amended is, as I understand it, that it requires the Secretary of State to assess whether persons whose convictions are quashed because of fresh evidence have established by that evidence that they are innocent. The Strasbourg case law makes clear that there is nothing objectionable in resisting or refusing compensation on the ground that the case falls within category (3) ie where fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant. See ALF v United Kingdom (Application No 5908/12), 12 November 2013. That is also apparent from Allen, a category (3) case where it was not suggested that the case fell into a higher category. It must also follow from Allen that there is nothing objectionable in requiring a claimant seeking compensation to bring himself or herself within category (2) ie where the fresh evidence so undermines the evidence against the defendant that no conviction could possibly have been based upon it. This is the whole thrust of the decision in Allen. By the same token, there can be nothing objectionable in the state contending against such an outcome in the circumstances of a particular case. Yet it seems that the line is drawn in the Strasbourg case law at requiring a claimant to demonstrate his or her innocence ie to bring himself or herself within category (1), where the fresh evidence shows clearly that he or she is innocent of the crime. This is apparent from the observation in Allen (at para 133) that what is important above all is that the judgments of the High Court and the Court of Appeal did not require the applicant to satisfy Lord Steyns test [in Mullen] of demonstrating her innocence. The difficulty with this approach, as Lord Mance points out, is that category (2) subsumes category (1). It is, no doubt, possible to draw a distinction between category (1) and category (2) but I am, at present, unable to see why this should be significant in the present context. I can see no sensible basis on which it is held objectionable to require evidence which establishes innocence but not objectionable to require evidence which establishes that the claimant could not reasonably have been convicted. Moreover and to this I attach particular importance this specific issue has not yet been directly addressed or decided by the ECtHR. Having regard to the present unsettled state of ECtHR case law, therefore, I am not persuaded that section 133(1ZA) is incompatible with article 6(2). It seems to me that these are matters which require consideration by the ECtHR and which that court will be anxious to address. For these reasons I would refuse declarations of incompatibility and would dismiss the appeals. LORD REED: (dissenting) I am grateful to Lord Mance for setting out the background to these appeals and the issues arising. Issue 1: Is article 6(2) of the Convention applicable to decisions under section 133 of the Criminal Justice Act 1988? The terms of article 6(2) of the European Convention on Human Rights are set out in para 35 above. Read literally, the words charged with a criminal offence might suggest that the guarantee only applies in the context of pending criminal proceedings. But it has never been interpreted so narrowly. In the first place, the European court long ago adopted the position that the character of a procedure under domestic law cannot be decisive of the question whether article 6 is applicable, since the guarantees contained in that provision could otherwise be avoided by the classification of proceedings. The case law on article 6(1) has therefore made it clear that the concept of a criminal charge has an autonomous meaning, with the consequence that article 6(2) is applicable to proceedings which may not be classified as criminal under domestic law, provided that they satisfy the criteria developed in cases such as Engel v The Netherlands (No 1) (1976) 1 EHRR 647 and ztrk v Germany (1984) 6 EHRR 409. Secondly, it has also long been clear from the case law of the European court that the scope of article 6(2) is not limited to pending criminal proceedings as so defined, but extends in some circumstances to decisions taken by the state after a prosecution has been discontinued or after an acquittal. R (Adams) v Secretary of State for Justice The case law of the European court concerning the scope of article 6(2), prior to the judgment of the Grand Chamber in Allen v United Kingdom (2013) 63 EHRR 10, was considered by this court in the case of R (Adams) v Secretary of State for Justice (JUSTICE intervening) [2011] UKSC 18; [2012] 1 AC 48. The implication of the courts decision in that case is that article 6(2) has no application to section 133 of the Criminal Justice Act 1988 (the 1988 Act). The first question which arises in this appeal is whether this court should follow that decision, as the Secretary of State submitted, or should depart from it, as the appellants invited us to do, in the light of the decision in Allen v United Kingdom that article 6(2) applies to decisions taken under section 133. The judgments in Adams did not differentiate clearly between the question whether article 6(2) is applicable and the question whether it has been infringed. As a consequence, it is difficult to be certain which of the arguments accepted by the court were thought to bear on the former question, and which were concerned with the latter. The fullest analysis was carried out by Lord Hope, who based his conclusion at para 111 that article 6(2) had no impact on section 133 on three arguments, which were also advanced on behalf of the Secretary of State in the present proceedings. They can be discussed under the headings (a) lex specialis, (b) separate proceedings, and (c) not undermining the acquittal. It is necessary to consider each of these in turn. (a) Lex specialis Lord Hope considered that article 6(2) and article 3 of Protocol No 7 (A3P7) stood in the relation of lex generalis and lex specialis respectively, so that the maxim lex specialis derogat legi generali applied: that is to say, that where a legal issue falls within the ambit of a provision framed in general terms, but is also specifically addressed by another provision, the specific provision overrides the more general one. This was, with respect, a questionable conclusion, since article 6(2) and A3P7 are concerned with different issues: article 6(2) is concerned with the presumption of innocence, whereas A3P7 is concerned with the payment of compensation to persons whose convictions have been quashed, and is silent about the presumption of innocence. Since they concern different issues, they are capable of applying cumulatively, rather than it being necessary to apply one to the exclusion of the other. Lord Hope found support for the view that the maxim applied in the speech of Lord Steyn in R (Mullen) v Secretary of State for the Home Department [2004] UKHL 18; [2005] 1 AC 1. Referring to article 14(6) of the ICCPR, set out in para 16 above, and to article 14(2) (Everyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty according to law), Lord Steyn cited the report of the UN Human Rights Committee in WJH v The Netherlands (Communication No 408/1990) [1992] UNHRC 25, where the Committee said at para 6.2: With respect to the authors allegation of a violation of the principle of presumption of innocence enshrined in article 14(2), of the Covenant, the Committee observes that this provision applies only to criminal proceedings and not to proceedings for compensation; it accordingly finds that this provision does not apply to the facts as submitted. Lord Steyn took from this that article 14(6) is a lex specialis [which] creates an independent fundamental right governed by its own express limits (para 38). Whatever the merits of that view may be in relation to the ICCPR, it might be doubted whether it is of assistance in deciding the scope of article 6(2) of the Convention, since it depends on the Human Rights Committees statement that article 14(2) of the ICCPR applies only to criminal proceedings and not to proceedings for compensation. Whether that is true of article 6(2) is the very question in issue. In relation to that question, although Lord Steyn cited a number of European cases, such as Sekanina v Austria (1993) 17 EHRR 221, which demonstrated that article 6(2) could apply to proceedings for compensation, he concluded at para 44 that the European jurisprudence cited throws no light on the question, and that article 14(6) of the ICCPR (and therefore section 133 of the 1988 Act), are in the category of lex specialis and the general provision for a presumption of innocence does not have any impact on it. This analysis might be contrasted with that of Lord Bingham, who pointed out at para 10 that the fact that article 6(2) was not confined to criminal proceedings, as illustrated by Sekanina, indicated that the European court took a different approach from that taken by the Human Rights Committee in relation to article 14(2) of the ICCPR. In support of his conclusion, Lord Steyn also referred to the Explanatory Report to Protocol No 7, prepared by the Steering Committee for Human Rights appointed by the Council of Europe. In relation to A3P7, the report stated at para 25: The intention is that states would be obliged to compensate persons only in clear cases of miscarriage of justice, in the sense that there would be acknowledgement that the person concerned was clearly innocent. Lord Bingham, on the other hand, observed at para 9(4) and (5) that the Explanatory Report was prefaced with a statement that it did not constitute an instrument providing an authoritative interpretation of the text of the Protocol; that para 25 did not appear to be consistent with para 23, which suggested that a miscarriage of justice occurred where there was some serious failure in the judicial process involving grave prejudice to the convicted person; that the reference to innocent in para 25 was to be contrasted with the absence of any such word in A3P7; that the expressions used in the French and Spanish versions of A3P7 were not obviously apt to denote proof of innocence; and that a standard textbook on the Convention considered the interpretation of A3P7 put forward in para 25 to be too strict. The question whether section 133 of the 1988 Act fell within the ambit of article 6(2) of the Convention did not, however, have to be decided in Mullen. Lord Hope returned to it in Adams. He accepted Lord Binghams reasons for doubting whether Lord Steyn was right to find support for his view in the French text and in para 25 of the Explanatory Report, and therefore took a fresh look at the issue. His conclusion that section 133 fell outside the ambit of article 6(2) was based, as explained above, on the view that article 6(2) was excluded from applying within the scope of A3P7, since the latter was lex specialis relative to the lex generalis contained in the former. In forming that view, he relied on a passage in the courts judgment in Sekanina, in the section dealing not with applicability but with compliance. After explaining that article 6(2) does not guarantee a person charged with a criminal offence a right to compensation for detention on remand, the European court added at para 25: In addition, despite certain similarities, the situation in the present case is not comparable to that governed by article 3 of Protocol No 7, which applies solely to a person who has suffered punishment as a result of a conviction stemming from a miscarriage of justice. As explained above, A3P7 requires the payment of compensation to a person who has suffered punishment as a result of a conviction which is subsequently reversed on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice. As the court stated in para 25 of Sekanina, the situation of the applicant in that case was not comparable to that governed by A3P7: he was seeking compensation for having been remanded in custody pending a trial at which he was acquitted, whereas A3P7 applies to persons who have suffered punishment as a result of a conviction. That is all that the court said in the relevant passage. Lord Hope, however, read more into it, stating at para 111: the fact that the court was careful to emphasise in Sekanina v Austria, para 25 that the situation in that case was not comparable to that governed by article 3 of the Seventh Protocol is an important pointer to the conclusion that, as Lord Steyn put it in Mullen, para 44, article 14(6) and section 133 of the 1988 Act are in the category of lex specialis and that the general provision for a presumption of innocence does not have any impact on them. That conclusion (with which Lord Clarke disagreed: para 230) did not follow from Sekanina or from any other judgment of the European court, and the subsequent judgment of that court in Allen v United Kingdom has in my opinion demonstrated that it is incorrect. (b) Separate proceedings The second strand in Lord Hopes reasoning concerned the relationship between the determination of a claim under section 133 of the 1988 Act and the antecedent criminal proceedings. He stated at para 109 that the Strasbourg cases show that its jurisprudence is designed to protect the criminal acquittal in proceedings that are closely linked to the criminal process itself, and went on at para 111 to distinguish comments on the underlying facts of the case in subsequent proceedings of a different kind, such as a civil claim for damages. He illustrated the point by reference to Sekanina, noting that in its judgment the court said at para 22 that the Austrian legislation and practice linked the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue can be regarded as a consequence and, to some extent, the concomitant, of the decision on the former. Lord Hope concluded that the system laid down by article 14(6) of the ICCPR, and implemented by section 133, did not cross the forbidden boundary, stating at para 111: The procedure laid down in section 133 provides for a decision to be taken by the executive on the question of entitlement to compensation which is entirely separate from the proceedings in the criminal courts. This reasoning is also questionable. Although procedurally separate, compensation proceedings under section 133 are nevertheless based on the quashing of a conviction by the criminal courts, and are directed towards obtaining compensation for harm inflicted by the state as a direct consequence of that conviction. But for the outcome of the criminal proceedings, there could be no compensation proceedings. In the language used by the European court, the outcome of the criminal proceedings is therefore decisive for the compensation proceedings, since it is a prerequisite of a compensation claim that the conviction has been quashed. The time limit for bringing a claim is also directly linked to the conclusion of the criminal proceedings: a factor which was regarded as relevant in a series of cases concerned with compensation proceedings under Norwegian law, such as Hammern v Norway (Application No 30287/96) (unreported) given 11 February 2003, para 43. Furthermore, the decision whether to award compensation, even before the amendment of section 133, depended on an assessment of the circumstances in which the conviction was quashed, based on an examination and evaluation of the judgment of the Court of Appeal. In these circumstances, even prior to Allen v United Kingdom, the Strasbourg case law clearly indicated that the compensation proceedings were likely to be regarded as a sequel or, as it was put in Sekanina, a consequence and concomitant, of the criminal proceedings, and therefore within the ambit of article 6(2). (c) Not undermining the acquittal Finally, Lord Hope considered that a refusal of compensation under section 133, prior to its amendment, did not have the effect of undermining the acquittal in the criminal proceedings. That conclusion is consistent with that of the European court in Allen v United Kingdom and later cases. However, it goes to the question whether article 6(2) has been violated, not to the question whether it is applicable. Lord Phillips and Lord Kerr agreed with Lord Hope on this topic. Lord Judge CJ, with whom Lord Brown, Lord Rodger and Lord Walker agreed on this topic, also treated A3P7 as a lex specialis which ousted the application of article 6(2) to proceedings under section 133. In the present case, the courts below were therefore correct to take the view that they were bound by Adams to hold that article 6(2) was inapplicable. (2) Serious Organised Crime Agency v Gale Before turning to the more recent Strasbourg jurisprudence, it is also relevant to note the case of Serious Organised Crime Agency v Gale (Secretary of State for the Home Department intervening) [2011] UKSC 49; [2011] 1 WLR 2760, decided by this court a few months after Adams. The case concerned the question whether civil recovery proceedings under the Proceeds of Crime Act 2002, undertaken following the appellants acquittal of criminal charges, were compatible with article 6(2). In the course of his judgment, with which a majority of the court agreed, Lord Phillips was critical of the distinction which he perceived in the case law of the European court between claims for compensation brought by an acquitted defendant against the state under public law, and claims for compensation brought by an alleged victim against an acquitted defendant under the law of tort, commenting at para 32 that this confusing area of Strasbourg law would benefit from consideration by the Grand Chamber. Lord Dyson was less critical of the Strasbourg jurisprudence, and provided an illuminating analysis. As he noted, cases in which article 6(2) was held to apply to proceedings instituted after the discontinuation of criminal proceedings or following an acquittal included, first, cases in which there was a sufficiently close link between the criminal proceedings and the other proceedings to engage article 6(2), even if on an application of the usual Engel criteria the latter proceedings would be characterised as civil. Those cases were described in Ringvold v Norway Reports of Judgments and Decisions 2003 II, p 117, para 36 as concerning proceedings relating to such matters as an accuseds obligation to bear court costs and prosecution expenses, a claim for reimbursement of his (or his heirs) necessary costs, or compensation for detention on remand, matters which were found to constitute a consequence and the concomitant of the criminal proceedings. The focus of the inquiry was on whether the proceedings were the direct sequel or a consequence and the concomitant of the criminal proceedings: ibid, at para 41. As Lord Dyson stated at para 125: Claims by an accused person following a discontinuation or acquittal for costs incurred as a result of the criminal proceedings and claims for compensation for detention are paradigm examples of such proceedings. The link between such claims and the criminal proceedings is so close that article 6(2) applies to both of them. The claims for compensation flow from the criminal proceedings. But for these proceedings, there would be no claims. As Lord Dyson explained, civil claims for compensation, brought against the defendant under the law of tort, are not linked in that way to criminal proceedings. The victim of a civil wrong has a right to claim damages, in order to obtain a remedy for the harm which he or she has suffered, regardless of whether the defendant has been convicted or acquitted of a criminal offence arising out of the same facts. The victims claim is not dependent on the defendant being prosecuted at all. Furthermore, as the court pointed out in Ringvold, para 38, if civil compensation proceedings automatically fell within the ambit of article 6(2), that would have: the undesirable effect of pre empting the victims possibilities of claiming compensation under the civil law of tort, entailing an arbitrary and disproportionate limitation on his or her right of access to a court under article 6(1) of the Convention. A separate basis on which article 6(2) had been held to apply to proceedings instituted after the discontinuation of criminal proceedings or following an acquittal was that a sufficient link with the criminal proceedings was created by the language used by the court in the civil proceedings. An example was the case of Y v Norway (2003) 41 EHRR 87, where the civil court stated in its judgment that it found it clearly probable that the defendant had committed the offences against the claimant with which he was charged. The European court found that there had been a violation of article 6(2). Lord Dyson contrasted that case with Moullet v France (Application No 27521/04) (unreported) given 13 September 2007, where the applicant was a public official who had been charged with accepting bribes. The criminal proceedings were discontinued on the ground that they were time barred. The official was then dismissed on the basis that the evidence showed that he had taken bribes. That decision was challenged under administrative law, but was upheld by the Conseil dEtat on the ground that it had been based on accurate facts and on reasons which were not materially or factually incorrect. A complaint to the European court was unsuccessful. The court considered whether the Conseil dEtat used such language in its reasoning as to create a clear link between the criminal case and the ensuing administrative proceedings and thus to justify extending the scope of article 6(2) to cover the latter. It noted that the applicant was not formally declared guilty of the criminal offence of accepting bribes. The Conseil dEtat had confined itself to determining the facts without suggesting any criminal characterisation whatsoever In other words, the domestic authorities managed in the instant case to keep their decision within a purely administrative sphere, where the presumption of innocence the applicant relied on did not obtain. Similarly in Ringvold v Norway the court found that a domestic decision awarding compensation to a victim of sexual abuse, following the defendants acquittal, did not fall within the scope of article 6(2). Although the domestic court had found that there was evidence establishing that sexual abuse had occurred, and that, on the balance of probabilities, it was clear that the applicant was the abuser (para 19), it did not state, either expressly or in substance, that all the conditions were fulfilled for holding the applicant criminally liable with respect to the charges of which he had been acquitted (para 38). Lord Dyson commented at para 138 that the rationale of cases such as Y v Norway must be that if the domestic court chooses to treat civil proceedings as if the issue of criminal liability falls to be determined, then the fair trial protections afforded by article 6(2) should be respected. But if the decision in the civil proceedings is based on reasoning and language which go no further than is necessary for the purpose of determining the issue before that court and without making imputations of criminal liability, then the necessary link will not have been created. (3) Allen v United Kingdom An opportunity for the Grand Chamber to consider this area of the law arose soon after Gale, in the case of Allen v United Kingdom. The applicant had been convicted of manslaughter. Her conviction was later quashed on the basis that, although the Crown case against her remained strong, a jury which had heard the fresh evidence might have come to a different conclusion. In terms of the categories subsequently adopted in Adams, it was a category 3 case. Her application for compensation under section 133 as originally enacted was unsuccessful, and her application for judicial review of that decision was dismissed. On appeal, the Court of Appeal held that there had been no violation of article 6(2): R (Allen) (formerly Harris) v Secretary of State for Justice [2008] EWCA Civ 808; [2009] 1 Cr App R 2. As was pointed out, article 6(2) could not possibly mean that compensation necessarily followed the quashing of a conviction on the basis of fresh evidence, otherwise A3P7 could not be in the terms it was. More controversially, Hughes LJ, giving the judgment of the court, expressed the view, applying dicta of Lord Steyn in the case of Mullen, that the phrase miscarriage of justice in section 133 of the 1988 Act was restricted to cases where the defendant was demonstrably innocent of the crimes of which he had been convicted: a view which was subsequently disapproved by the majority of this court in Adams. When Allen reached the Grand Chamber of the European court, on a complaint directed not against the Secretary of States decision to refuse the applicants claim for compensation, but against the reasons given by the High Court and the Court of Appeal for dismissing her challenge to that decision, the European court was therefore considering section 133 in its unamended form. The Government contended that the complaint was inadmissible because article 6(2) had no application to decisions taken under section 133, as this court had held in Adams. The question whether section 133 fell within the scope of article 6(2) was therefore directly in issue. In deciding that question, the Grand Chamber court undertook a careful review of the courts case law, and considered the relationship between article 6(2) and A3P7. The Grand Chamber began its assessment by explaining the justification, in accordance with the most fundamental principles of the Convention case law, for giving article 6(2) a wider application than a literal reading of the text would suggest. As it explained at para 92: The object and purpose of the Convention, as an instrument for the protection of human beings, requires that its provisions be interpreted and applied so as to make its safeguards practical and effective. The need to ensure that the right guaranteed by article 6(2) is practical and effective entails that it cannot be viewed solely as a procedural guarantee in the context of a criminal trial, but has a second aspect (para 94): Its general aim, in this second aspect, is to protect individuals who have been acquitted of a criminal charge, or in respect of whom criminal proceedings have been discontinued, from being treated by public officials and authorities as though they are in fact guilty of the offence charged. In these cases, the presumption of innocence has already operated, through the application at trial of the various requirements inherent in the procedural guarantee it affords, to prevent an unfair criminal conviction being imposed. Without protection to ensure respect for the acquittal or the discontinuation decision in any other proceedings, the fair trial guarantees of article 6(2) could risk becoming theoretical and illusory. What is also at stake once the criminal proceedings have concluded is the persons reputation and the way in which that person is perceived by the public. The Grand Chamber reviewed how the courts jurisprudence in relation to the second aspect of article 6(2) had developed over time. In doing so, it did not attempt to justify or reconcile all of the decisions on their particular facts: a task which, in relation to some of the case law, might have been challenging. Instead, it sought to derive from the cases the underlying principles, and to explain how they had evolved. In some early cases in which the court had found article 6(2) to be applicable, despite the absence of a pending criminal charge, it had said that the judicial decisions taken following criminal proceedings, for example with regard to an obligation to bear court and prosecution costs, or compensation for pre trial detention or other adverse consequences, were consequences and necessary concomitants of, or a direct sequel to, the conclusion of the criminal proceedings. Similarly, in a later series of cases, such as Sekanina v Austria, it had concluded that Austrian legislation and practice link[ed] the two questions the criminal responsibility of the accused and the right to compensation to such a degree that the decision on the latter issue could be regarded as a consequence and, to some extent, the concomitant of the decision on the former, so that article 6(2) applied to the compensation proceedings. Developing this idea in subsequent cases, such as Hammern v Norway, the court had found that the applicants compensation claim not only followed the criminal proceedings in time, but was also tied to those proceedings in legislation and practice, with regard to both jurisdiction and subject matter, creating a link between the two sets of proceedings with the result that article 6(2) was applicable. In cases such as Ringvold v Norway and Y v Norway, concerning the victims right to compensation from the applicant, who had previously been found not guilty of the criminal charge, the court had held that where the decision on civil compensation contained a statement imputing criminal liability, this would create a link between the two proceedings such as to engage article 6(2) in respect of the judgment on the compensation claim. The Grand Chamber also cited its decision in OL v Finland (Application No 61110/00) (unreported) given 5 July 2005, in which an appeal was brought against a child care order, made on the basis of a psychiatric report stating that it was highly probable that the child had been sexually abused by her father, after the public prosecutor decided not to bring charges. In dismissing the appeal, the domestic court stated: The public care order was based on the expert opinion resulting from the psychiatric examinations. However, it is unclear whether A has been subjected to sexual abuse. This possibility cannot be excluded, either. According to the examinations it is undisputed that A has become predisposed to sexuality, not suitable for a child of her age. It is also clear that living with a mentally ill mother has had negative effects on As psychical development . The European court dismissed the fathers complaint of a violation of article 6(2) as manifestly ill founded, observing: In this particular case, although the prosecutor did not prefer charges against the applicant, the decision to place A into public care was legally and factually distinct. Regardless of the conclusion reached in the criminal investigation against the applicant, the public care case was thus not a direct sequel to the former. Nor was a sufficient link between the two proceedings created by the language used by the domestic court: the impugned ruling of the Supreme Administrative Court in no way stated that the applicant was criminally liable with regard to the charges which the prosecutor had dropped. More recently, the court had expressed the view that following the discontinuation of criminal proceedings, the presumption of innocence required that the lack of a persons criminal conviction should be preserved in any other proceedings of whatever nature. It had also indicated that the operative part of an acquittal judgment must be respected by any authority referring directly or indirectly to the criminal responsibility of the person in question. The Grand Chamber then considered the specific context of judicial proceedings following the quashing of a conviction, giving rise to an acquittal, and stated at para 104: Whenever the question of the applicability of article 6(2) arises in the context of subsequent proceedings, the applicant must demonstrate the existence of a link, as referred to above [ie in the discussion of the previous case law], between the concluded criminal proceedings and the subsequent proceedings. Such a link is likely to be present, for example, where the subsequent proceedings require examination of the outcome of the prior criminal proceedings and, in particular, where they oblige the court to analyse the criminal judgment; to engage in a review or evaluation of the evidence in the criminal file; to assess the applicants participation in some or all of the events leading to the criminal charge; or to comment on the subsisting indications of the applicants possible guilt. The Grand Chamber next addressed the argument that article 6(2) did not apply to section 133 of the 1988 Act because the latter fell within the scope of A3P7, which was argued to be lex specialis: the argument accepted by a majority of this court in Adams. The Grand Chamber had earlier mentioned the UN Human Rights Committees communication in WJH v The Netherlands, which, as it noted, proceeded on the basis that article 14(2) of the ICCPR applied only to criminal proceedings. It also cited the Explanatory Report on Protocol No 7, including the passages to which Lord Bingham had referred in Mullen, observing at para 133 that the report itself provided that it did not constitute an authoritative interpretation of the text, and adding that the reports reference to the need to demonstrate innocence must now be considered to have been overtaken by the courts intervening case law on article 6(2). It concluded at para 105: Having regard to the nature of the article 6(2) guarantee outlined above, the fact that section 133 of the 1988 Act was enacted to comply with the respondent states obligations under article 14(6) ICCPR, and that it is expressed in terms almost identical to that article and to article 3 of Protocol No 7, does not have the consequence of taking the impugned compensation proceedings outside the scope of applicability of article 6(2), as argued by the Government. The two articles are concerned with entirely different aspects of the criminal process; there is no suggestion that article 3 of Protocol No 7 was intended to extend to a specific situation general guarantees similar to those contained in article 6(2). Indeed, article 7 of Protocol No 7 clarifies that the provisions of the substantive articles of the Protocol are to be regarded as additional articles to the Convention, and that all the provisions of the Convention shall apply accordingly. Article 3 of Protocol No 7 cannot therefore be said to constitute a form of lex specialis excluding the application of article 6(2). The lex specialis argument was therefore roundly rejected. The Grand Chamber then applied the general principles set out earlier in its judgment to the facts of Allen. It identified the relevant question as being whether there was a link between the concluded criminal proceedings and the compensation proceedings, having regard to the relevant considerations set out in para 104 of the judgment. In that regard, it stated at paras 107 108: 107. In this respect, the court observes that proceedings under section 133 of the 1988 Act require that there has been a reversal of a prior conviction. It is the subsequent reversal of the conviction which triggers the right to apply for compensation for a miscarriage of justice. Further, in order to examine whether the cumulative criteria in section 133 are met, the Secretary of State and the courts in judicial review proceedings are required to have regard to the judgment handed down by the CACD [the Court of Appeal Criminal Division]. It is only by examining this judgment that they can identify whether the reversal of the conviction, which resulted in an acquittal in the present applicants case, was based on new evidence and whether it gave rise to a miscarriage of justice. 108. The court is therefore satisfied that the applicant has demonstrated the existence of the necessary link between the criminal proceedings and the subsequent compensation proceedings. As a result, article 6(2) applied in the context of the proceedings under section 133 of the 1988 Act to ensure that the applicant was treated in the latter proceedings in a manner consistent with her innocence. The critical factors in establishing the necessary link between the decision of the Court of Appeal in the criminal proceedings, and the subsequent proceedings under section 133, were therefore that the quashing of the conviction was a prerequisite of proceedings under section 133, and that in order to arrive at a decision on the claim it was necessary for the Secretary of State to examine the judgment of the Court of Appeal so as to determine whether the criteria in section 133 were satisfied. That reasoning applies equally, if not a fortiori, to section 133 in its amended form. The only remaining question, therefore, in relation to the applicability of article 6(2) to decisions taken under section 133 as amended, is whether, as counsel for the Secretary of State submitted, this court should decline to follow the decision of the Grand Chamber. In counsels submission, our doing so would encourage, or stimulate, further dialogue where the issue could be reviewed and addressed in full. This courts approach to judgments of the European Court of Human Rights is well established. Section 2 of the Human Rights Act requires the courts to take into account decisions of the European court, not necessarily to follow them. In taking them into account, this court recognises their particular significance. As Lord Bingham observed in Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465, para 44: The Strasbourg court authoritatively expounds the interpretation of the rights embodied in the Convention and its protocols, as it must if the Convention is to be uniformly understood by all member states. Nevertheless, it can sometimes be inappropriate to follow Strasbourg judgments, as to do so may prevent this court from engaging in the constructive dialogue or collaboration between the European court and national courts on which the effective implementation of the Convention depends. In particular, dialogue has proved valuable on some occasions in relation to chamber decisions of the European court, where this court can be confident that the European court will respond to the reasoned and courteous expression of a diverging national viewpoint by reviewing its position. The circumstances in which constructive dialogue is realistically in prospect are not, however, unlimited. As Lord Neuberger of Abbotsbury MR explained in Manchester City Council v Pinnock (Secretary of State for Communities and Local Government intervening) [2010] UKSC 45; [2011] 2 AC 104, para 48: Where, however, there is a clear and constant line of decisions whose effect is not inconsistent with some fundamental substantive or procedural aspect of our law, and whose reasoning does not appear to overlook or misunderstand some argument or point of principle, we consider that it would be wrong for this court not to follow that line. There is also unlikely to be scope for dialogue where an issue has been authoritatively considered by the Grand Chamber, as Lord Mance indicated in R (Chester) v Secretary of State for Justice [2013] UKSC 63; [2014] AC 271, para 27: It would have then to involve some truly fundamental principle of our law or some most egregious oversight or misunderstanding before it could be appropriate for this court to contemplate an outright refusal to follow Strasbourg authority at the Grand Chamber level. No circumstances of the kind contemplated in those dicta exist in the present case. The Grand Chambers conclusion was carefully considered, and was based on a detailed analysis of the relevant Strasbourg case law. It was consistent with a line of authorities going back decades. It was intended to provide authoritative guidance, and has been followed in numerous subsequent judgments, such as Cleve v Germany (Application No 48144/09) (unreported) given 15 January 2015, Kapetanios v Greece (Application Nos 3453/12, 42941/12 and 9028/13) (unreported) given 30 April 2015 and Dicle and Sadak v Turkey (Application No 48621/07) (unreported) given 16 June 2015. It did not involve any principle of English law, or any oversight or misunderstanding. On the contrary, it is the reasons given in Adams to support the conclusion that article 6(2) has no application to section 133 of the 1988 Act which, with respect, are less than compelling. The lex specialis argument is unpersuasive, for the reasons explained at paras 144 149 above, and those set out by the Grand Chamber at para 105 of its judgment. The separate proceedings argument is equally unpersuasive, as explained at para 151 above, and at para 107 of the Grand Chambers judgment. That is also the implication of Lord Dysons analysis in Gale, where he explained at para 125 (quoted in para 155 above) why claims by a defendant for compensation for detention are a paradigm example of proceedings which are sufficiently closely linked to criminal proceedings for article 6(2) to apply. The not undermining the acquittal argument bears on compliance with article 6(2), not on whether it is applicable. I recognise that the dicta which I have cited from Pinnock and Chester are not to be treated as if they had statutory force. Nevertheless, they are in my view persuasive. I find it difficult to accept that this court should deliberately adopt a construction of the Convention which it knows to be out of step with the approach of the European Court of Human Rights, established by numerous Chamber judgments over the course of decades, and confirmed at the level of the Grand Chamber, in the absence of some compelling justification for taking such an exceptional step. For my part, I can see no such justification. Conclusion on issue 1 For the reasons I have explained, I would hold that decisions taken under section 133 fall within the ambit of article 6(2). I would therefore depart from the decision in Adams in so far as it adopted the contrary view. Issue 2: Is section 133(1ZA) incompatible with article 6(2)? Once it has been established that there is a sufficient link between proceedings under section 133 and the antecedent criminal proceedings, the court must determine whether the presumption of innocence has been respected. The approach to be adopted to this question was the second area of the law which was reviewed by the Grand Chamber in Allen v United Kingdom. As the court observed, there is no single approach to ascertaining the circumstances in which article 6(2) will be violated in the context of proceedings which follow the conclusion of criminal proceedings. In particular, the court explained in para 121 that in cases concerning applications by a former accused for compensation or costs, where the criminal proceedings were discontinued, it had been held that a refusal of compensation or costs might raise an issue under article 6(2) if supporting reasoning which could not be dissociated from the operative provisions amounted in substance to a determination of the accuseds guilt, but that no violation had been found where domestic courts had described a state of suspicion without making any finding of guilt. In Sekanina, however, the court drew a distinction between cases where the criminal proceedings had been discontinued and those where a final acquittal judgment had been handed down clarifying that the voicing of suspicions regarding an accuseds innocence was conceivable as long as the conclusion of criminal proceedings had not resulted in a decision on the merits of the accusation, but that it was no longer admissible to rely on such suspicions once an acquittal had become final. In Sekanina, the domestic court rejected the applicants claim for compensation for detention, saying that, in acquitting him, the jury took the view that the suspicion was not sufficient to reach a guilty verdict, but there was, however, no question of that suspicions being dispelled (para 29). The European court said that this left open a doubt as to the correctness of the acquittal and was incompatible with the presumption of innocence. To give one other example, in cases involving civil compensation claims lodged by victims, regardless of whether the criminal proceedings ended in discontinuation or acquittal, the court had emphasised that while exoneration from criminal liability ought to be respected in the civil compensation proceedings, it should not preclude the establishment of civil liability to pay compensation arising out of the same facts on the basis of a less strict burden of proof. However, if the national decision on compensation were to contain a statement imputing criminal liability to the respondent party, this would raise an issue falling within the ambit of article 6(2). Turning to consider the circumstances in Allen itself, the court observed that the applicants conviction was quashed on the ground that it was unsafe, because new evidence might have affected the jurys decision had it been available at trial. The Court of Appeal did not itself assess all the evidence in order to decide whether guilt had been established beyond reasonable doubt. Nor had it ordered a retrial, since the applicant had already served her sentence. In these circumstances, although the quashing of the conviction resulted in a verdict of acquittal being entered, it was not an acquittal on the merits in a true sense. In that respect, the court contrasted the case with Sekanina and the similar case of Rushiti v Austria (2001) 33 EHRR 56, where the acquittal was based on the principle that any reasonable doubt should be considered in favour of the accused. The court observed, at para 127, that in this sense, although formally an acquittal, the termination of the criminal proceedings against the applicant might be considered to share more of the features present in cases where criminal proceedings have been discontinued. The court next considered whether the criteria laid down by section 133 as originally enacted were themselves incompatible with article 6(2). As it observed, there was nothing in the criteria which called into question the innocence of an acquitted person, and the legislation did not require any assessment of the applicants criminal guilt. The court next considered the approach adopted by the domestic courts in the case before it. They had been entitled under the Convention to conclude that more than an acquittal was required in order to establish a miscarriage of justice, provided always that they did not call into question the applicants innocence. In that regard, the court referred to the view expressed by Lord Steyn in Mullen (subsequently adopted by the minority in Adams) that a miscarriage of justice, within the meaning of section 133(1), would only arise where the person concerned was innocent, and that section 133 therefore required that the new or newly discovered fact must demonstrate the applicants innocence beyond reasonable doubt. The court observed that what is important above all is that the judgments of the High Court and the Court of Appeal did not require the applicant to satisfy Lord Steyns test of demonstrating her innocence. The difference in the present case is that the insertion of section 133(1ZA) into the 1988 Act has had the effect of introducing a test that the fresh evidence has to establish beyond reasonable doubt that the applicant did not commit the offence. In the present proceedings, the Divisional Court and the Court of Appeal considered this test to be compatible with article 6(2), since it did not require the applicant to establish his innocence, but imposed a narrower requirement, namely that he demonstrate that his innocence had been established by a new or newly discovered fact and nothing else, as the Court of Appeal stated at para 48. The refusal of an application under section 133 did not, therefore, in their view cast doubt on the persons innocence generally. The Court of Appeal observed that a focus on the new or newly discovered fact and nothing else was central to limiting eligibility for compensation to a narrower category of cases than the entire corpus of cases where a conviction was quashed. It also considered that the European courts observations about Lord Steyns test in Mullen were directed to the dangers of imposing a general requirement of having to demonstrate innocence, which was not what was required by section 133. I do not find this an easy question, but I have respectfully come to a different conclusion from the courts below. In the context of decisions made under the amended section 133, the distinction between a requirement that innocence be established, and a requirement that innocence be established by a new or newly discovered fact and nothing else, appears to me to be unrealistic. A person who can make a valid application under section 133 is, of necessity, someone whose conviction has been quashed because of the impact of a new or newly discovered fact: that follows from the terms of section 133(1). In most cases which satisfy that criterion, there will not be any other reason for the quashing of the conviction. A decision by the Secretary of State that the new or newly discovered fact does not establish the persons innocence does not, therefore, usually leave open a realistic possibility that he or she has been acquitted for some other reason, which that decision leaves unaffected. On the contrary, the implication of the decision is likely to be that, although the new or newly discovered fact has led to the quashing of the conviction, the persons innocence has not been established. The decision therefore casts doubt on the innocence of the person in question and undermines the acquittal. The idea that there is a meaningful distinction between assessing whether innocence has been established by a new or newly discovered fact, and assessing whether innocence has been established in a more general sense, also appears to me to be unrealistic for another reason. Normally, at least, the significance of a new piece of evidence can only be assessed in the context of the evidence as a whole. That is illustrated by the present cases. The photograph of Mr Hallam in Mr Harringtons company does not in itself tell one anything about his guilt or innocence of the murder. It is only when considered in the context of the alibi evidence that its significance becomes apparent. In Mr Nealons case, the presence of an unknown males DNA on the victims underwear tells one nothing in itself about Mr Nealons guilt or innocence of an attempted rape. It is only in the context of her evidence about the behaviour of her attacker and her contact with other males on the day in question, and the evidence of other witnesses eliminating the most likely alternative explanations of the presence of the DNA, that its significance can be assessed. There is no material difference, in these situations, between asking whether the applicants innocence has been established by the new or newly discovered fact, and asking whether his innocence has been established. The majority of this court have reached the same conclusion as the courts below, but for somewhat different reasons. As I understand their reasoning, they emphasise that, in Allen v United Kingdom, the Grand Chamber found no violation of article 6(2) in the judgment of the Court of Appeal upholding the refusal of compensation under section 133 in its original form to an applicant who, in terms of the domestic categories subsequently adopted in Adams, fell into category 3, and failed to fall into category 2. They consider that it must, or at least may, be equally compatible with article 6(2) to require the applicant to demonstrate that he falls into category 1. I accept that the implication of the decision in Allen v United Kingdom is that it is not necessarily incompatible with article 6(2) to refuse compensation under section 133 in cases falling within the category later described in Adams as category 3: that is to say, cases where the fresh evidence renders the conviction unsafe in that, had it been available at the time of the trial, a reasonable jury might or might not have convicted the defendant. The effect of the decision of this court in Adams, confining compensation to cases in category 2 (where the fresh evidence so undermines the evidence against the defendant that no conviction could possibly be based upon it), has been held in later cases before the European court to be compatible with article 6(2): see, for example, ALF v United Kingdom (Application No 5908/12) (unreported) given 12 November 2013. It is not a violation of the presumption of innocence to say that a case falling within category 3 (or category 4: cases where something has gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of someone who should not have been convicted) does not constitute a miscarriage of justice. Nor is there any objection under article 6(2) to other criteria for the award of compensation that do not require the applicant to establish his or her innocence: for example, criteria precluding compensation where successful appeals are brought within time, or where convictions are quashed because of misdirections. The problem which arises under article 6(2) when compensation is confined to persons in category 1 cases where the fresh evidence shows clearly that the defendant is innocent of the crime of which he was convicted as under section 133 as amended, is quite specific. It is that it effectively requires the Secretary of State to decide whether persons whose convictions are quashed because of fresh evidence have established that they are innocent. In Allen, the Grand Chamber found at para 128 that there was nothing in the criteria set out in section 133 as it then stood which called into question the innocence of an acquitted person, and that the legislation itself did not require any assessment of the applicants criminal guilt. I doubt whether the same could be said of section 133 in its amended form. In cases falling within category 2, the person has received an acquittal on the merits, in the language used by the European court: the Court of Appeal has assessed all the evidence and has concluded that, allowing the defendant the benefit of any reasonable doubt, only a verdict of acquittal could reasonably be arrived at. The principle in Sekanina therefore applies, and it is no longer permissible to rely on suspicions regarding the defendants innocence, as the Secretary of State must do when refusing an application for compensation under the amended section 133 on the ground that the fresh evidence does not demonstrate the applicants innocence. Furthermore, the implication of para 128 of the European courts judgment in Allen a category 3 case is that even in cases where there has not been an acquittal on the merits in that sense, as may be the position in the present cases, it is nevertheless impermissible for the criteria for awarding compensation to [call] into question the innocence of an acquitted person or to require any assessment of the applicants criminal guilt. If the appellants criminal guilt is to be assessed, they are entitled under the Convention to the protections afforded in criminal proceedings, including the benefit of the presumption of innocence. So far as the European courts comments about Lord Steyns speech are concerned, the court appears to me to have understood that Lord Steyn required the applicants innocence to be established by a new or newly discovered fact. Its comments seem to me to provide some support for my conclusion. The critical question does not however turn on how the courts references to Lord Steyns speech are to be construed, but on how the approach to article 6(2) laid down by the court applies to section 133 in its amended form. For the reasons I have explained, the criterion laid down in section 133(1ZA) is in my opinion incompatible with article 6(2). Counsel for the Secretary of State submitted, however, that a violation of article 6(2) was avoided by means of the Secretary of States statement, in each of the decision letters, that nothing in the letter was intended to undermine, qualify or cast doubt upon the decision to quash the conviction, and that the applicant was presumed to be and remained innocent of the charge brought against him. I am unable to agree that this statement ensures that article 6(2) is respected. The application of a test which in substance infringes the presumption of innocence is not rendered acceptable by the addition of words intended to avoid a conflict with article 6(2), if the overall effect is nevertheless to undermine a previous acquittal. The point is illustrated by the case of Hammern v Norway, where the operation of a statutory test which required the applicant to prove that he did not perpetrate the acts forming the basis of the charges was incompatible with article 6(2), notwithstanding a statement in the decision that I should like to stress that the refusal of a compensation claim does not entail that the previous acquittal is undermined or that the acquittal is open to doubt. The European court commented at para 48 that it was not convinced that, even if presented together with such a cautionary statement, the impugned affirmations were not capable of calling into doubt the correctness of the applicants acquittal, in a manner incompatible with the presumption of innocence. That comment is equally apposite in the present case. Finally on this issue, counsel for the Secretary of State submitted that, in order for this court to find that section 133(1ZA) was incompatible with article 6(2), it would have to go significantly further than did the European court in Allen, contrary to the principle expressed in R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323, para 23. That argument cannot be accepted. The conclusion which I have reached is based on principles which were already well established before the case of Allen, and which received the approval of the Grand Chamber in that judgment. Conclusion on Issue 2 For these reasons, I conclude that the definition of a miscarriage of justice introduced by section 133(1ZA) of the 1988 Act is incompatible with article 6(2) of the Convention, and would have made a declaration to that effect. LORD KERR: (dissenting) Introduction I agree with Lord Reed that the appeals in these cases should be allowed and that the declaration of incompatibility which he proposes should be made. It is important to keep clearly in mind that the focus of the case is on the compatibility of section 133(1ZA) of the 1988 Act with article 6(2) of ECHR. The starting point for any discussion of this question must be whether the article is engaged by decisions taken under section 133. For the reasons so compellingly given by Lord Reed, such decisions do fall within the ambit of article 6(2). Inasmuch as the decision in Adams suggested otherwise, it should not be followed. In any event, as Lord Reed has demonstrated, the decision in that case conflated the questions whether article 6(2) was engaged and whether it had been breached. Lady Hale agrees that article 6(2) is engaged see para 77 of her judgment. Lord Mance in paras 35 53 of his judgment discusses whether article 6(2) should be applied to decisions taken under section 133. As he has pointed out, recent case law from the Strasbourg court has focused on the question whether there is a sufficient link between the impugned decision and the second aspect of the article 6(2) obligation. But, on Lord Mances analysis, the focus is not concerned with the question whether the article was engaged but rather on whether it has been violated. I do not construe his judgment, therefore, as suggesting that this species of decision lies outside the ambit of article 6(2). Lord Wilson agrees (albeit with reluctance) with Lord Reed, that, if article 6(2) has the meaning ascribed to it by the ECtHR, in particular in the Allen case, section 133(1ZA) of the 1988 Act is incompatible with it. Although he declines to follow the case law of Strasbourg on the question of the meaning of article 6(2), I detect nothing in his judgment which suggests that he would find that decisions made under section 133 did not fall within its ambit, if interpreted in accordance with that case law. Lord Hughes has said that article 6(2), in its second aspect, applies and thus governs subsequent proceedings when there is a link between them and the previously concluded criminal proceedings. In contrast to Lord Mance, it would appear that Lord Hughes considers that the existence of a link was prerequisite to the engagement of article 6(2). But, Lord Hughes judgment does not appear to me to be inconsistent with acceptance that the link is present where a decision under section 133 requires to be taken. At para 99(c) of his judgment Lord Hughes sets out four considerations said to be indicative of the likelihood of the existence of a link, all of which, apart possibly from the final one, seem to be present in this case. They are present where: (i) an analysis of the criminal judgment must be undertaken; (ii) where a review or evaluation of the evidence in the criminal file must take place; (iii) where there has to be an assessment of the applicants participation in some or all of the events leading to the criminal charge; and (iv) where comment must be made on the subsisting indications of the applicants possible guilt. Plainly, scrutiny of the criminal judgment must underpin any decision under section 133; likewise, a review of the evidence against an applicant is indispensable; and this must include an assessment of his participation in the events which led to the criminal charge. The only possible debate is as to whether comment on subsisting indications of the applicants possible guilt requires that a statement be made by the decision maker or merely that a judgment be reached by him on these questions: does contemporaneous information lead to the conclusion that the applicant has been fully exonerated; or that he could never have been properly convicted; or whether sufficient new material has been adduced which rendered the conviction unsafe on the basis that a jury might or might not have convicted him had such material been produced at his trial. It seems to me that the decision under section 133 will inevitably require a judgment to be made on those issues and, if that is what is required to meet Lord Hughes final criterion, the decision plainly comes within the ambit of article 6(2). Lord Lloyd Jones does not directly address the question of the engagement of article 6(2) as opposed to its possible violation but, as with Lord Wilsons judgment, I detect nothing in his judgment which is counter indicative of acceptance that article 6(2) is at least engaged by decisions made under section 133. In light of all this, it appears to me that there is general agreement among the members of the court or, at least, no overt dissent, that decisions made under section 133 fall within the ambit of article 6(2). The question to be concentrated upon, therefore, is whether the context set by section 133(1ZA) involves an inevitable conflict with the article. Put more simply, if a decision as to whether a person whose conviction has been quashed is to receive compensation only if he shows that he was innocent, is such a requirement compatible with article 6(2)? Innocence There has been much erudite discussion in the judgments of other members of the court about the nature of innocence and the inaptness of the criminal trial to investigate and pronounce upon the question whether a defendant is innocent, as opposed to not being proved to be guilty. I do not propose to add to that discussion beyond observing that, inevitably, there will be many who are charged with or tried on criminal offences who are truly innocent but are unable to establish their innocence as a positive fact. That undeniable circumstance must form part of the backdrop to the proper approach to the application of article 6(2) of ECHR. It seems to me that much of the jurisprudence on the second aspect of the sub article has been influenced, albeit perhaps not explicitly, by the dilemma that this presents. The opportunity to proclaim ones innocence and the right to benefit from the recognition and acceptance of that condition lies at the heart of much of the dispute in this case and much of the case law of the Strasbourg court on the subject. But an inevitable sub text is that establishing innocence as a positive fact can be an impossible task. This is especially so if conventional court proceedings do not provide the occasion to address, much less resolve, the issue. On the other hand, those who have been acquitted simply because the properly high standard for criminal conviction has not been met, but against whom real suspicions as to guilt remain, should not be able to shelter behind the shield of innocence that article 6(2) establishes. In particular, they should not be immune from civil suit from their victims when a less onerous burden of proof as to their involvement in the activity alleged in the criminal proceedings is involved. The Strasbourg jurisprudence It would be idle for me to recapitulate on the extensive examination of the case law of ECtHR that has been undertaken by the other members of the court. I consider that Lord Reed has convincingly demonstrated (in paras 161 175 of his judgment) that there is a clear and constant line of jurisprudence from that court which establishes that the relevant question is whether there was a link between the concluded criminal proceedings and the compensation proceedings, having regard to the relevant considerations set out in para 104 of the judgment in Allen. For the reasons that Lord Reed has given, I consider that such a link is clearly established. The relevant considerations in this context will, of course, include the circumstances of the applicants ultimate acquittal of the charge against him. If this is on the basis of a doubt as to whether he should have been acquitted, he will not be able to avail of the article 6(2) protection; if, on the other hand, he can show that he ought never to have been charged or convicted, he will. I do not agree with Lord Mances proposition that the real test is, or should be, whether the court in addressing the civil claim has suggested that the criminal proceedings should have been determined differently (para 47 of his judgment). There are two fundamental objections to that formulation of the test. The first is that it would cut out a swathe of deserving applicants when they have not been able to prove that they are innocent when they are in fact. The second is that their fate is determined on the phraseology which happened to be chosen by the court. Conclusion For these reasons and those much more fully expressed by Lord Reed, I would make the declaration of incompatibility which the appellants seek.
UK-Abs
The appeals concern the entitlement to compensation of persons whose criminal convictions were subsequently quashed for being unsafe. The Appellants, Mr Hallam and Mr Nealon, spent, respectively, about seven years and 17 years in prison before their convictions were eventually quashed for being unsafe in light of newly discovered evidence. They subsequently applied for compensation under section 133 of the Criminal Justice Act 1988 (as amended by section 175 of the Anti social Behaviour, Crime and Policing Act 2014). The Secretary of State for Justice refused their applications on the ground that the new evidence did not show beyond reasonable doubt that they had not committed the offences. The Appellants argue that the requirement contained in section 133(1ZA) that a new or newly discovered fact must show beyond reasonable doubt that the person did not commit the offence, in the absence of which they are unable to claim compensation, is incompatible with the presumption of innocence contained in Article 6(2) of the European Convention on Human Rights (ECHR). Both the Divisional Court (Burnett LJ and Thirlwall J) and the Court of Appeal (Lord Dyson MR, Sir Brian Leveson P and Hamblen LJ) refused to make the declarations of incompatibility sought. By a majority of five to two, the Supreme Court dismisses the appeals. Lord Mance delivers the leading judgment. Lady Hale, Lord Wilson, Lord Hughes and Lord Lloyd Jones deliver concurring judgments. Lord Reed and Lord Kerr dissent. In the previous case of R (Adams) v Secretary of State for Justice [2011] UKSC 18, the Supreme Court identified four categories of case, of progressively wider scope, as a framework for discussing the meaning of miscarriage of justice for which an applicant could be compensated in accordance with section 133: (i) where the fresh evidence shows clearly that the defendant is innocent of the crime of which he had been convicted; (ii) where the fresh evidence so undermines the evidence against the defendant that no conviction could possibly be based upon it; (iii) where the conviction rendered the conviction unsafe because, had it been available at the time of trial, a reasonable jury might or might not have convicted; (iv) where something had gone seriously wrong in the investigation of the offence or the conduct of the trial, resulting in the conviction of somebody who should not have been convicted. The Court held that categories (i) and (ii) fell within the meaning of the phrase miscarriage of justice, and that section 133 was compatible with Article 6(2), which provides that everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. The appeal thus obliges the Supreme Court to consider whether it should depart from its previous decision in Adams in the light of the decision in Allen v United Kingdom, where the European Court of Human Rights (ECtHR) held that an applicants Article 6(2) right was not violated in a category (iii) case, and in the light of the introduction of section 133(1ZA), which defined miscarriage of justice so as to limit the entitlement to compensation to category (i) cases. Lord Mance holds that whether there exists a link between the criminal charge and, for instance, civil proceedings arising from the same facts is a diversion from the real question, namely whether the court in addressing the other, civil claim has suggested that the criminal proceedings should have been determined differently. If it has, it has exceeded its role. [47] Lord Mance would refuse to depart from Adams or follow the case law of the ECtHR if and insofar as the ECtHR may have, in the past, gone further than this. [48] Even if that is wrong and article 6(2) is in fact engaged, a separate question arises of whether section 133(1ZA) is nevertheless compatible with the Convention because it confines compensation to cases where the newly discovered evidence shows beyond doubt that the defendant did not commit the offence. This question has never been directly before the ECtHR or decided by it, and Lord Mance is far from confident that the Court would conclude that section 133(1ZA) is incompatible if the question were argued before it. [61] Although it is in general wise for the Supreme Court to find that an applicants rights have been breached where it is clear that the ECtHR would find a violation of the Convention, Lady Hale is persuaded that it is not so clear in this case. [76] Her Ladyship agrees with Lord Reed that article 6(2) is engaged, but it does not follow that the ECtHR would automatically find a violation. She also agrees with Lord Mances formulation of the test. [78] Lady Hale also considers the ECtHRs jurisprudence in this area to be evolving [79] and it is not appropriate for the court to make a declaration of incompatibility in proceedings brought by an individual in respect of whom the ECtHR would be unlikely to find a violation (the facts of these cases being equivalent to those in Allen where no violation was found). [81] [82] Lord Wilson would dismiss the appeal on the basis that the ECtHRs case law on article 6(2) has become hopelessly confused. [85] Lord Wilson cannot subscribe to the ECtHRs analysis in this area, despite the high professional regard in which he holds its judges, the desirability of a uniform interpretation of article 6(2) throughout the states of the Council of Europe, his belief that there is no room left for further constructive dialogue between this court and the ECtHR, and his recognition that the appellants are likely to prevail before the ECtHR in establishing a violation of their Convention rights. [94] Lord Hughes would dismiss the appeals for reasons which substantially, although not explicitly, overlap with those of both Lord Mance and Lord Wilson. [127] Different legal systems adopt different compensation schemes for those wrongfully convicted and, in some jurisdictions, even for those who were detained pending their trial. The ECtHR has been at pains to say that neither article 6(2) nor any other rule provides an unqualified right to be compensated in such circumstances. A person who seeks compensation after their conviction has been quashed is merely seeking to bring himself within the legitimate restrictive eligibility requirements for such compensation. Thus, even if there existed a workable test for finding the requisite link between an earlier (eventually quashed) conviction and the later compensation proceedings, such a link would not exist in this case, because the latter can only be said to be based on the former to the extent that the first condition for eligibility for compensation is that a conviction has been quashed. [123] [124] Lord Lloyd Jones agrees with Lord Mance and attaches particular importance to the fact that the ECtHR has not yet directly addressed the issue of why it is objectionable to require evidence establishing innocence but it is not objectionable to require evidence establishing that the claimant could not reasonably have been convicted. Having regard to the unsettled state of the ECtHRs case law, Lord Lloyd Jones is not persuaded that section 133 is incompatible with the Convention. These matters require consideration by the ECtHR. [137] [138] Lord Reed would have allowed the appeal. The critical factors (identified by the ECtHR in Allen) in establishing the necessary link are that the quashing of the conviction is a prerequisite of proceedings under section 133 and that in order to arrive at a decision on the claim it is necessary for the Secretary of State to examine the judgment of the Court of Appeal to determine whether the criteria of section 133 were satisfied. [170] Whilst it may be appropriate for this Court to decline to follow the ECtHR in certain circumstances, no circumstances of that kind exist here: the Grand Chambers judgment in Allen was carefully considered, is based on a detailed analysis of the relevant case law, is consistent with a line of authority going back decades, and has been followed by the ECtHR subsequently. [174] In the absence of some compelling justification, Lord Reed finds it difficult to accept that this court should deliberately adopt a construction of the Convention which it knows to be out of step with the ECtHRs approach, established by numerous judgments, and confirmed at the level of the Grand Chamber. [175] Lord Reed accepts that the implication of the decision in Allen is that it is not necessarily incompatible with article 6(2) to refuse compensation under section 133 in in category (iii) cases, but holds that section 133(1ZA) is not compatible with article 6(2), because it effectively requires the Secretary of State to decide whether persons whose convictions are quashed have established that they are innocent. [187] Lord Kerr agrees with Lord Reed. For the reasons given by Lord Reed, Lord Kerr considers that there exists the requisite link between the concluded criminal proceedings and the compensation proceedings, which is the test articulated in a clear and constant line of Strasbourg jurisprudence. [205] His Lordship also rejects Lord Mances formulation of the relevant test because it would cut out a swathe of deserving applicants who are unable to prove their innocence even though they are, in fact, innocent and the fate of applicants would be determined by the phraseology that happened to be chosen by the court. [206]
This appeal concerns the correctness of two of the most important decisions on the law of limitation of recent times: the decisions of the House of Lords in Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (Kleinwort Benson) and Deutsche Morgan Grenfell Group plc v Inland Revenue Comrs [2006] UKHL 49; [2007] 1 AC 558 (Deutsche Morgan Grenfell). It arises in the course of long running proceedings known as the Franked Investment Income (FII) Group Litigation. explain how it is structured. Matters are dealt with in the following order: In view of the length of this judgment, it may be helpful at the outset to (1) General introduction (paras 3 17) (2) The history of the proceedings (paras 18 56) (3) Res judicata, estoppel and abuse of process (paras 57 101) (4) The background to section 32(1)(c) of the Limitation Act 1980 (paras 102 140) (5) The Limitation Act 1980 (paras 141 142) (6) Kleinwort Benson (paras 143 164) (7) Deutsche Morgan Grenfell (paras 165 171) (8) Discussion of Deutsche Morgan Grenfell (paras 172 212) (9) Deutsche Morgan Grenfell: Summary (paras 213 214) (10) Discussion of Kleinwort Benson (paras 215 241) (11) Kleinwort Benson: Summary (para 242 243) (12) The Practice Statement of 26 July 1966 (paras 244 253) (13) Application to the present proceedings (paras 254 256) (14) Conclusion (para 257) General introduction The FII Group Litigation was established by a Group Litigation Order (GLO) made on 8 October 2003 (the FII GLO). The claimants within the FII GLO are companies which belong to groups which include UK resident companies and non resident subsidiaries. The defendants are Her Majestys Commissioners for Revenue and Customs (the Revenue). The purpose of the FII GLO is to determine a number of common or related questions of law arising out of the tax treatment of dividends received by UK resident companies from non resident subsidiaries, as compared with the treatment of dividends paid and received within wholly UK resident groups of companies. The provisions giving rise to those questions concern, first, the system of advance corporation tax (ACT) and, secondly, the taxation of dividend income from non resident sources under section 18 (Schedule D, Case V) of the Income and Corporation Taxes Act 1988 (ICTA) (the DV provisions). The relevant provisions of ICTA have since been amended. ACT was abolished for distributions made on or after 5 April 1999, and the DV provisions were repealed for dividend income received on or after 1 April 2009. But the problems created by their existence in the past have not gone away. Under the FII GLO, certain claims were selected as test claims, and the remaining claims were stayed. The test claimants case is that the differences between their tax treatment and that of wholly UK resident groups of companies breached the provisions of article 43 (freedom of establishment) and article 56 (free movement of capital) of the EC Treaty and their predecessor articles. They seek the repayment of the tax so far as it was unlawful under EU law, dating back in some cases to the accession of the UK to the EU in January 1973 and the introduction of ACT in April of that year (expressions such as the EU and EU law will be used in this judgment, anachronistically but conveniently, to include earlier incarnations of what is now known as the EU). In the alternative, they seek an award of damages under the principles of EU law established in Francovich v Italy (Case C 479/93) [1995] ECR I 3843, given effect in our domestic law in R v Secretary of State for Transport, Ex p Factortame (No 5) [2000] 1 AC 524. The system of corporate taxation relating to dividends which underlies the FII Group Litigation has also given rise to litigation managed under a number of other GLOs, including the ACT GLO. Whereas the focus of the ACT Group Litigation is on the UK legislation which prevented UK resident subsidiaries of foreign parents from making group income elections, thereby obliging them to pay ACT when paying dividends to their foreign parents, the focus of the FII Group Litigation is on UK parented groups with foreign subsidiaries, and on the tax treatment of dividends coming into the UK from abroad. Although the present litigation is therefore concerned with factual situations which are different from those which have given rise to the ACT Group Litigation, some of the most important legal questions are common to both sets of proceedings. The ACT Group Litigation followed the decision of the Court of Justice of the European Union, as the court is now known (the Court of Justice), in the Hoechst case (Metallgesellschaft Ltd v Inland Revenue Comrs, Hoechst AG v Inland Revenue Comrs (Joined Cases C 397/98 and C 410/98) [2001] ECR I 1727; [2001] Ch 620). The ACT Group Litigation includes the decision in Deutsche Morgan Grenfell. A number of other sets of proceedings have also raised issues which arise in the FII Group Litigation. One is the Controlled Foreign Companies (CFC) and Dividend Group Litigation, which also concerns claims that the tax treatment of dividends paid by foreign subsidiaries to UK resident companies was incompatible with EU law. The principal difference from the FII Group Litigation is that the CFC and Dividend Group Litigation includes claims concerned with portfolio holdings of less than 10% of the shares of the relevant companies. Another is the Foreign Income Dividends (FID) Group Litigation, which concerns claims by pension funds or life companies that the absence of a tax credit in respect of foreign income dividends, in contrast to domestic dividends, was contrary to EU law. Another is the Stamp Taxes Group Litigation, which concerns claims that stamp taxes on issues or transfers of chargeable securities to clearance or depositary services are contrary to EU law. Other relevant proceedings include the Littlewoods proceedings, which concern claims to restitution based on the payment of VAT which was paid under a mistaken understanding of the relevant EU law. Since the payments with which these various proceedings are concerned go back, in most if not all cases, to the UKs entry into the EU in 1973, a central issue in the proceedings has been the limitation of actions. Restitutionary claims for the recovery of money are normally subject under English law to a limitation period of six years from the date when the cause of action accrued, on the basis that they are founded on simple contract within the meaning of section 5 of the Limitation Act 1980 (the 1980 Act). Francovich claims to damages are subject to the same time limit, on the basis that they are founded on tort within the meaning of section 2 of that Act. Far more than six years had passed between the date when much of the tax was paid, and the right to its recovery therefore accrued, and the date when the claims were brought. As a result, a large element of the claims, together with interest on it over a period of decades, was potentially time barred. The only way around that problem was to rely on section 32(1)(c) of the 1980 Act, which applies to an action for relief from the consequences of a mistake, and postpones the commencement of the limitation period until the plaintiff has discovered the mistake or could with reasonable diligence have discovered it. Section 32(1)(c) has therefore been central to all these proceedings. They have all been based on the propositions that (a) a restitutionary claim lies for the recovery of money, including tax, paid under a mistake of law, (b) such a claim falls within the ambit of section 32(1)(c), and (c) the effect of that provision is to postpone the commencement of the limitation period in respect of such a claim until the true state of the law is established by a judicial decision from which there lies no right of appeal. Each of these propositions was novel to English law. However, the colossal amounts of money at stake in these proceedings have made it worthwhile for every arguable point to be taken, not least points which might affect the applicable limitation period. The result has been a very protracted series of related proceedings. During the many years since these various proceedings were begun, the relevant principles of English law have been undergoing development, largely driven by those proceedings themselves. It may be helpful to note at this stage the principal milestones along the road, beginning with two decisions of the House of Lords which preceded the bringing of these claims, but set the scene for what followed. In 1992 the House of Lords held that a taxpayer was entitled to recover tax which was paid in response to an unlawful demand: Woolwich Equitable Building Society v Inland Revenue Comrs [1993] AC 70 (Woolwich). In 1998 the House of Lords held that a claim for restitution lay in respect of money paid under a mistake of law, and that such a claim fell within the scope of section 32(1)(c) of the 1980 Act: Kleinwort Benson [1999] 2 AC 349. On 8 March 2001, in the ACT Group Litigation, the Court of Justice issued its judgment in Hoechst [2001] Ch 620, establishing the incompatibility with EU law of the UK tax treatment of dividends paid by UK resident subsidiaries to foreign parents. In July 2003, at a later stage in the ACT Group Litigation, Park J gave judgment in Deutsche Morgan Grenfell, holding that the principles established in Kleinwort Benson applied to tax paid under a mistake of law, including tax paid in ignorance of the fact that the legislation under which it was charged was incompatible with EU law: [2003] EWHC 1779 (Ch); [2003] 4 All ER 645. In accordance with Kleinwort Benson, he also held that the limitation period applicable to such claims was that laid down by section 32(1) of the 1980 Act, namely six years from the date on which the mistake was or could with reasonable diligence have been discovered. That date, he held, was the date on which the Court of Justice gave judgment in Hoechst, establishing the incompatibility of the legislation in question with EU law. On 8 September 2003 the Government announced proposed legislation to exclude the application of section 32(1)(c) in respect of all mistake claims made on or after that date which related to an Inland Revenue taxation matter. Legislation to that effect was enacted in July 2004, in the form of section 320 of the Finance Act 2004 (FA 2004). In February 2005 the Court of Appeal reversed Park Js decision in Deutsche Morgan Grenfell: [2005] EWCA Civ 78; [2006] Ch 243. In October 2006 the House of Lords gave judgment in Deutsche Morgan Grenfell [2007] 1 AC 558, reversing the judgment of the Court of Appeal and restoring the decision of Park J. It also decided that the fact that the taxpayer might have a concurrent ground of action under the Woolwich principle, which was subject to a limitation period running from the date of the payment, did not prevent it from pursuing its claim on the ground of mistake. The consequence was that claims in the ACT Group Litigation could be brought for the restitution of tax paid as far back as 1973, provided that the claim had been issued prior to the deadline of 8 September 2003 imposed by section 320 of the FA 2004. Following the decision of the House of Lords in Deutsche Morgan Grenfell, the Government applied to the Court of Justice for the reopening of the hearing of the first reference in the FII Group Litigation so that it could argue for a temporal restriction on the effect of the Court of Justices judgment, which had not yet been handed down. On 6 December 2006 the Court of Justice rejected the Governments application: Order (Case C 446/04) EU:C:2006:761. On the same day, the Government announced proposed legislation excluding the application of section 32(1)(c) of the 1980 Act in respect of mistake claims made before 8 September 2003 and relating to an Inland Revenue matter. A few days later, in the first reference in the FII Group Litigation, the Court of Justice held that the UK tax treatment of dividends paid by foreign subsidiaries to UK resident parents was incompatible with EU law: Test Claimants in the FII Group Litigation v Inland Revenue Comrs (Case C 446/04) [2006] ECR I 11753; [2012] 2 AC 436 (FII (CJEU) 1). In 2007, at a further stage of the ACT Group Litigation, the House of Lords decided that compound interest was payable on the amounts awarded, whether in damages or in restitution: Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Comrs [2007] UKHL 34; [2008] 1 AC 561 (Sempra Metals). Taken together with Deutsche Morgan Grenfell, this meant that interest could be compounded for a period stretching back to 1973. The day after judgment was delivered in Sempra Metals, the legislation announced in December 2006 was enacted as section 107 of the Finance Act 2007 (FA 2007). In 2012, in the FII Group Litigation, this court held that a Woolwich claim could lie in the absence of a demand (ACT being self assessed), but that, in order for a claim to fall within the ambit of section 32(1)(c) of the 1980 Act, a mistake must constitute an essential element of the cause of action, and not merely form part of the context: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2012] UKSC 19; [2012] 2 AC 337 (FII (SC) 1). The consequence was that section 32(1)(c) did not apply to the Woolwich ground of restitution. The taxpayer could however seek recovery of tax paid in ignorance of the fact that the legislation under which it was charged was incompatible with EU law, on the basis that it had been paid under a mistake. The case was argued and decided on the assumption that the decisions in Kleinwort Benson and Deutsche Morgan Grenfell were correct. The court also held that section 107 of the FA 2007 was incompatible with EU law. The court referred to the Court of Justice the question whether section 320 of the FA 2004 was also incompatible with EU law in so far as it had retrospective effect. In 2013 the Court of Justice held that it was: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) (Case C 362/12) [2014] AC 1161 (FII (CJEU) 3). These decisions represented a series of defeats for the Revenue. In more recent times, however, they enjoyed greater success. In 2017, in a test case concerned with the restitution of VAT charged incompatibly with EU law, this court reined in the increasingly expansive approach to restitutionary claims which had followed the adoption of the theory of unjust enrichment in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 and Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221: see Investment Trust Companies v Revenue and Customs Comrs [2017] UKSC 29; [2018] AC 275. Later that year, in the Littlewoods proceedings, this court held that common law claims to restitution of VAT, together with any right to compound interest based on Sempra Metals, and the limitation regime imposed by the 1980 Act, had been effectively excluded by the statutory provisions governing the recovery of VAT: Littlewoods Ltd v Revenue and Customs Comrs [2017] UKSC 70; [2018] AC 869. In 2018, in the CFC and Dividend Group Litigation, this court held, having regard to Investment Trust Companies, that Sempra Metals had been incorrectly decided in requiring compound interest to be paid on restitutionary awards, and departed from it: Prudential Assurance Co Ltd v Revenue and Customs Comrs [2018] UKSC 39; [2019] AC 929 (Prudential). The principal question raised by the present appeal is whether, as the Revenue contend (drawing to a considerable extent on Dr Samuel Beswicks articles, The discoverability of mistakes of law (2019) Lloyds Maritime and Commercial Law Quarterly 112, and Discoverability Principles and the Laws Mistakes (2020) 136 Law Quarterly Review 139), this court should now depart from the decision of the House of Lords in Deutsche Morgan Grenfell in relation to section 32(1)(c) of the 1980 Act. The Revenue were also granted permission to appeal on the question whether the decision in Kleinwort Benson, so far as relating to limitation, was correct. Ultimately, we did not understand the Revenue to press that point, but the court received submissions upon it, partly at its own request, in view of the bearing of the decision on that subsequently taken in Deutsche Morgan Grenfell. Before considering the question whether the limitation issues in those two cases were correctly decided, however, the court has first to consider whether, as the test claimants contend, the Revenue are barred in the light of the history of these proceedings, including their failure to raise that question in FII (SC) 1, from now raising the question in these proceedings against the test claimants (whatever impact it might have on the claims of other claimants who are party to the FII GLO), because it is res judicata, or because of an estoppel, or because their doing so amounts to an abuse of process. The history of the proceedings The test claims These proceedings have a long history. That reflects their exceptional complexity and novelty, and the need to make no fewer than three references to the Court of Justice. What follows is not a complete account, but covers the stages in the proceedings which are relevant to the present appeal. The FII GLO was made on 8 October 2003, and has been repeatedly amended since then. It defined the type of claims falling within the scope of the GLO, identified the initial claimants, and provided a procedure enabling further claimants to be added. It set out the common issues of fact or law which arose for determination, without prejudice to the power of the High Court to add to or vary them. It also laid down a procedure for selecting claims to proceed as test cases and for amending, removing and adding to the common issues. Claims not selected as test claims were stayed. The claim on behalf of various members of the British American Tobacco (BAT) group was selected as a test claim in relation to a number of issues set out in the GLO, including Issue P: From what date does the limitation period commence? A claim by members of the Aegis group was chosen as the test claim in relation to Issue Q, which concerned the effect of section 320 of the FA 2004. As explained above, that provision disapplied section 32(1)(c) of the 1980 Act in relation to claims relating to an Inland Revenue taxation matter which were brought on or after 8 September 2003. It did not apply to the BAT claim, which had been issued on 18 June 2003. The BAT claim sought inter alia the restitution of tax payments made between 1973 and the issue of the claim, with compound interest, on the basis that the tax had been paid pursuant to a mistake of law or unlawful demands. In its defence, the Revenue pleaded inter alia that any right to restitution or damages which accrued more than six years before the claim form was issued (ie prior to 18 June 1997) was barred by the 1980 Act. The first reference to the Court of Justice On 28 June 2004 the trial of the BAT claim began, but it was immediately apparent that a preliminary reference to the Court of Justice would be needed on the numerous issues of EU law arising. Without delivering a judgment, Park J directed that a reference be made. It included a number of questions concerning the compatibility of domestic tax provisions with EU law, and also questions concerning the classification under EU law of the claims arising in consequence of any incompatibility. On 12 December 2006 the Court of Justice gave its judgment on the reference (FII (CJEU) 1 [2012] 2 AC 436). It said at para 184 that [i]t is clear from case law that any less favourable treatment of foreign sourced dividends in comparison with nationally sourced dividends must be regarded as a restriction on the free movement of capital in so far as it is liable to make the acquisition of holdings in companies established in other member states less attractive. The cases cited as establishing that proposition were Staatssecretaris van Financin v BGM Verkooijen (Case C 35/98) [2000] ECR I 4071 (Verkooijen), para 35; Lenz v Finanzlandesdirektion fr Tirol (Case C 315/02) [2004] ECR I 7063 (Lenz), para 21 and Proceedings brought by Manninen (Case C 319/02) [2004] ECR I 7477; [2005] Ch 236 (Manninen), para 23. In the absence of EU legislation, it was for the domestic legal system to lay down the relevant procedural rules governing actions for safeguarding EU rights, including the classification of claims, subject to the obligation of national courts and tribunals to ensure that individuals should have an effective legal remedy enabling them to obtain reimbursement of the tax unlawfully levied on them and the amounts paid to the member state or withheld by it directly against that tax. In relation to the Francovich claims for compensation, and the requirement that the breach of EU law by the member state must be sufficiently serious before such a claim will lie, the Court of Justice stated at [2012] 2 AC 436, paras 215 216: 215. in a field such as direct taxation, the consequences arising from the freedoms of movement guaranteed by the Treaty have been only gradually made clear, in particular by the principles identified by the Court of Justice since delivering judgment in Commission of the European Communities v French Republic (Case 270/83) [1986] ECR 273. Moreover, as regards the taxation of dividends received by resident companies from non resident companies, it was only in [Verkooijen, Lenz, and Manninen] that the Court of Justice had the opportunity to clarify the requirements arising from the freedoms of movement, in particular as regards the free movement of capital. 216. Apart from cases to which Directive 90/435/EEC [the Parent/Subsidiary Directive] applied, Community law gave no precise definition of the duty of a member state to ensure that, as regards mechanisms for the prevention or mitigation of the imposition of a series of charges to tax or economic double taxation, dividends paid to residents by resident companies and those paid by non resident companies were treated in the same way. It follows that, until delivery of the judgments in the Verkooijen, Lenz and Manninen cases, the issue raised by the order for reference in the present case had not yet been addressed as such in the case law of the Court of Justice. Procedure following the first reference Following the judgment of the Court of Justice, Rimer J directed that consecutive trials of the BAT and Aegis test claims should proceed. They would try all GLO issues raised by the test claims, including liability for restitution, save in so far as those issues concern causation or quantification (para 12 of Rimer Js order). Directions were also given for the service of amended pleadings and for preparation for trial, including the agreement of a list of questions to be decided by the court. The BAT claimants amended their particulars of claim on 13 December 2007 so as to aver that they had made the ACT payments by reason of their mistaken beliefs (i) that the ACT provisions were lawful and enforceable, and/or (ii) that the claimants were lawfully obliged to make those payments. A similar averment was also made in relation to the DV payments. The BAT claimants also set out detailed averments in support of their reliance on section 32(1)(c) of the 1980 Act. In relation to the ACT payments, the BAT claimants averred that they discovered their mistakes when the Court of Justice gave its judgment in FII (CJEU) 1 on 12 December 2006, and could not with reasonable diligence have discovered their mistakes any earlier than then, or alternatively any earlier than 8 March 2001, when the Court of Justice gave its decision in Hoechst. In relation to the DV payments, they averred that the fact that those payments were made by mistake depended upon the final determination of the issues in the proceedings, and could not with reasonable diligence be known or discovered at any other time or in any other way. In other words, although they were bringing a claim for the repayment of the DV tax on the basis that it had been paid under a mistake, they submitted that they could not discover the mistake until the question whether the DV provisions were enforceable had been determined by the court in those proceedings. They also added averments explaining why, in their submission, the application of section 107 of the FA 2007 to their claim would be contrary to EU law. As part of their argument that section 107 should not be applied to their claim, they also averred that the Revenue were estopped from denying that section 32 of the 1980 Act applied to their claim, stating that until 6 December 2006 at the earliest (the date when the Revenue announced their proposal that Parliament should enact what became section 107 of the FA 2007), the parties had proceeded on the common understanding that section 32 applied. Alternatively, they averred that, in failing to propose that there be a separate issue within the GLO as to whether section 32 applied to claims commenced before 8 September 2003 (ie claims falling outside the ambit of section 320 of the FA 2004), the Revenue represented that section 32 applied to the BAT claim and others issued before that date. In response, the Revenue amended their defence on 21 December 2007. In relation to limitation, they denied that the BAT claimants were entitled to rely on section 32(1)(c) of the 1980 Act, and referred to section 107 of the FA 2007. They averred that any right to restitution which accrued more than six years before the date of issue of the claim form was barred by the 1980 Act. They denied that the parties had proceeded on a common understanding that section 32 applied to the BAT claim, averring that the law in that regard was not fully clarified until 25 October 2006 at the earliest (the date of the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558). In fact, they averred, it was their explicit position at all times prior to that date, as advanced in Deutsche Morgan Grenfell, that section 32 did not apply. In the light of the amended claim and defences, Henderson J amended Issue Q so as to include the effect of section 107 of the FA 2007 as well as section 320 of the FA 2004. Issue P remained unchanged. The BAT claim became an additional test claim in relation to Issue Q so far as relating to section 107 of the FA 2007, as well as remaining a test claim in relation to other issues, including Issue P. Henderson Js first judgment The trial proceeded over 13 days in July 2008, and Henderson Js judgment was delivered in November of that year: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2008] EWHC 2893 (Ch); [2009] STC 254 (FII (HC) 1). The Revenue were recorded as arguing inter alia that the DV claims were excluded by the statutory provisions for recovery of tax overpaid in section 33 of the Taxes Management Act 1970, and that the ACT and DV payments had not in any event been made under any mistake of law. Those arguments were rejected. Henderson J characterised the mistake of law as a mistake as to the lawfulness of the ACT regime or the Case V charge (para 262): a characterisation which was not strictly accurate, since an incompatibility with EU law does not render a United Kingdom statute unlawful under domestic law, but requires the court to disapply the incompatible provision to the extent which is necessary to comply with EU law: R v Secretary of State for Transport, Ex p Factortame Ltd (No 2) [1991] 1 AC 603. The inaccuracy was however immaterial in the present context, since a mistaken belief that the provisions were enforceable, and that the claimants were therefore obliged to make the payments, would equally be a relevant mistake of law for the purposes of a restitutionary claim based on Kleinwort Benson and Deutsche Morgan Grenfell. On the facts, the judge found that a mistake had been made. In relation to the ACT claims, he was satisfied on the evidence that the mistake was not obvious to anybody within the BAT group at the time [when the payments were made], since everybody proceeded on the footing that the tax in question was lawfully due and payable ([2009] STC 254, para 267). The position in relation to the DV claims was said to be similar (para 275). The evidence bearing on this point was discussed at a later point in the judgment. At para 391, the judge said: [I]t is the evidence of the claimants own witnesses that they paid all of the tax in dispute on the footing that they believed it to be lawfully due, and had no reason to suspect the contrary before June 2000 at the earliest. So, for example, Mr Anthony Cohn, who was a Tax Manager with BAT Holdings, said in his first witness statement dated 13 May 2004: The first time we considered that the denial of [FII] treatment of foreign dividends might be a breach of EC law was when we discussed internally the Verkooijen judgment shortly after it was published on 6 June 2000. Following this, we spent a considerable amount of time considering our options and waiting to see how EC law would develop. Following discussions with our tax advisers, PricewaterhouseCoopers and our solicitors, Dorsey & Whitney in the spring and early summer of 2003, we decided to issue the claim. Mr Hardman, who was the head of taxation at BAT Industries, confirmed the accuracy of that evidence. The judge said that he saw no reason to doubt it. He found that nobody within the BAT group questioned the lawfulness of the relevant UK legislation at any time before June 2000 (when the Verkooijen judgment was delivered), and that accordingly [a]ll the disputed tax which was paid up to that date was paid in the firm belief that it was lawfully due (para 393). That evidence was consistent with other evidence adduced in relation to the Francovich claim. In that regard, the judge noted the Report of the Committee of Independent Experts on Company Taxation (the Ruding Committee), established by the European Commission in 1990 to evaluate the need for greater harmonisation of tax. In its Report, published in 1992, the Committee noted the adverse impact on overseas investment caused by discriminatory taxation of dividends from profits earned in another member state. There was, however, no suggestion that the discrimination was contrary to EU law. The same was true of the first draft of a paper by the Adam Smith Institute entitled An Act Against Trade UK Tax Prejudice Against Trading Abroad: The Problem of Surplus ACT and its Solution, which was sent to Mr Etherington, the Head of Tax for the BAT Group, in 1989 by the Director of the Institute. Reference was also made to a number of published articles on the subject by tax lawyers. The last of the articles, published in 1998, was the only one to raise the question whether the difference in treatment constituted a violation of EU law (Lodin, The Imputation Systems and Cross Border Dividends the need for new solutions, EC Tax Review, 1998, p 229). The author concluded that there was very little guidance to be found in earlier decisions of the Court of Justice, and that the outcome of any challenge was difficult to predict. The judge commented that that assessment reflected the uncertainty acknowledged by the Court of Justice in the present proceedings, which continued at least until the decision in Verkooijen in June 2000 (para 391). He concluded that, prior to that date, there was admittedly discrimination between the way in which UK tax law treated domestic dividends and foreign dividends, with domestic dividends receiving the more favourable treatment, but whether this form of discrimination involved a breach of articles 43 and 56 remained unclear until the decision in Verkooijen ([2009] STC 254, para 395). In relation to limitation, the judge considered the effect of section 320 of the FA 2004 and section 107 of the FA 2007, that is to say, Issue Q in the GLO, and concluded that it was not open to the Revenue to rely on either provision as a defence to the test claims. The judge also identified a number of issues on which a further reference to the Court of Justice was necessary. None of those issues concerned limitation. Henderson Js order, dated 12 December 2008, included a declaration (Declaration 17) that [t]o the extent that claimants paid unlawfully levied ACT and/or corporation tax under Schedule D Case V, such ACT and/or corporation tax was paid under a mistake. It also ordered (Order 1) that: The following claims are successful in relation to the GLO issues determined in the trial: (a) claims for repayment of corporation tax paid on or after 1 January 1973 on dividends received from companies resident in other EU member states; (b) claims for the repayment of surplus ACT (including ACT purportedly utilised against unlawful corporation tax on dividends under l(a)), or the time value of ACT utilised against lawful corporation tax or ACT refunded under the FID [foreign income dividends] regime, paid on or after 1 January 1973, by claimants which received dividend income from subsidiaries in other member states in so far as the ACT would not have been payable if dividend income from other EU member states had been treated as franked investment income; (c) claims for the time value of ACT on third country FIDs paid on or after 1 July 1994 and refunded under the FID regime; (d) claims under l(a), (b) or (c). claims for the repayment of interest based on The judge had not, however, addressed in his judgment the question of when the limitation period began to run Issue P in the GLO and said nothing in his judgment about the reasoning in Kleinwort Benson and Deutsche Morgan Grenfell relating to section 32(1)(c) of the 1980 Act. The first appeal to the Court of Appeal Both the test claimants and the Revenue appealed. It was common ground in the appeal that section 32(1)(c) of the 1980 Act applied in principle to the test claims for money paid under a mistake of law, following the decisions of the House of Lords in Kleinwort Benson and Deutsche Morgan Grenfell. The only point arising in relation to limitation was whether the application of section 32(1)(c) was precluded by section 320 of the FA 2004 in relation to the Aegis claim, and by section 107 of the FA 2007 in relation to the BAT claim. The Court of Appeal concluded that EU law did not preclude the application of either provision, since the claimants continued to have Woolwich claims (subject to a six year limitation period), and those claims were sufficient to meet the requirements of EU law: [2010] EWCA Civ 103; [2010] STC 1251 (FII (CA) 1). The court also directed that a further reference should be made to the Court of Justice, in order to seek clarification of its judgment in FII (CJEU) 1 [2012] 2 AC 436. Accordingly, the order of the court, dated 19 March 2010, varied Henderson Js Order 1 so as to exclude claims falling within the scope of the issues to be referred to the Court of Justice. Order 4 was also varied so as to state that all claims made outside the applicable limitation periods were unsuccessful. The first appeal to the Supreme Court In November 2010 this court granted both parties permission to appeal on a number of issues, including the question whether the availability of the Woolwich claims sufficed to meet the requirements of EU law. The second reference was then made to the Court of Justice, and it gave its ruling in 2012: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) (No 3) (Case C 35/11) [2013] Ch 431 (FII (CJEU) 2). In their submissions in the appeal to this court, the Revenue accepted that section 32(1)(c) of the 1980 Act applied to the test claimants claims for restitution on the basis of mistake, subject to the effect of section 320 of the FA 2004 and section 107 of the FA 2007. The argument in relation to limitation was therefore concerned with the effect of those provisions, and with the question whether section 32(1)(c) also applied to the Woolwich claims, as the test claimants submitted. The judgments proceeded on the same basis. As explained earlier, the court held that, in order for a claim to fall within the ambit of section 32(1)(c) of the 1980 Act, a mistake must constitute an essential element of the cause of action, and that the provision did not therefore apply to a Woolwich claim: FII (SC) 1 [2012] 2 AC 337. In so holding, the court upheld the earlier decision of Pearson J in Phillips Higgins v Harper [1954] 1 QB 411 (Phillips Higgins). As Lord Walker of Gestingthorpe pointed out at para 63, if that approach were to be departed from, there would be no principled stopping place for the expansion of the scope of section 32(1)(c) until it overrode the common law rule that ignorance of the existence of a cause of action does not prevent time from running. The consequence would be that the leading case of Cartledge v E Jopling & Sons Ltd [1963] AC 758 would be seen to have missed the point, and the limits and rationale of sections 11 and 14A of the 1980 Act (which extend the limitation period for actions of damages for personal injuries, and other actions of damages for negligence, respectively, until the facts constituting the cause of action are known) would have to be revisited. The court also held that section 107 of the FA 2007 was incompatible with EU law, and referred two questions to the Court of Justice, including a question concerning the compatibility with EU law of section 320 of the FA 2004. The Court of Justice delivered its judgment in December 2013: FII (CJEU) 3 [2014] AC 1161. In the light of that judgment, this court held in April 2014 that neither section 320 of the FA 2004 nor section 107 of the FA 2007 could be applied to the test claims. The quantification trial In the meantime, in May 2013 Henderson J ordered that the trial of the BAT claim be resumed to determine all remaining issues of liability and quantification, apart from a few issues, not relating to limitation, which had been referred to the Court of Justice. Henderson J laid down a timetable for the amendment of the pleadings and the agreement of a list of issues to be decided at the resumed trial. In their amended particulars of claim, the BAT claimants continued to plead mistakes of law as set out at para 26 above, and those averments were admitted by the Revenue. In relation to limitation, the BAT claimants averred: 18. As set out above, the claimants claim relief from the consequences of mistakes within the meaning of section 32(1)(c) of the Limitation Act 1980 (section 32) and, in relation to their claims seeking such relief whether in restitution or as damages or howsoever arising (mistake claims), the claimants are entitled to rely on that provision. l8A. Accordingly, the six year period of limitation does not begin to run until the claimants have discovered their mistake or could with reasonable diligence have discovered it. In this regard: (a) The claimants discovered their mistakes relating to the ACT Payments when the ECJ gave its judgment on 12 December 2006. The claimants could not with reasonable diligence have discovered these mistakes any earlier than they did, alternatively any earlier than when the ECJ gave its decision in Metallgesellschaft Ltd v Inland Revenue Comrs and Hoechst AG v Inland Revenue Comrs (Joined Cases C 397/97 and C 410/98) on 8 March 2001. (b) The claimants discovered their mistakes relating to the FID enhancements when the ECJ gave its judgment on 12 December 2006. The claimants could not with reasonable diligence have discovered these mistakes any earlier than they did. (c) The fact that the DV Corporation Tax Payments, to the extent of their unlawfulness, and the payments connected with DV Corporation Tax and identified in paragraphs 17B(a)(ii) above were made by mistake depends upon the final determination of the issues in these proceedings. In the premises, the claimants could not with reasonable diligence have discovered these mistakes at any other time or in any other way. 18B. In the premises, the claimants mistake claims are not time barred. Following the decisions in FII (SC) 1 and FII (CJEU) 3, those paragraphs were admitted by the Revenue. Nevertheless, the Revenue informed the BAT claimants that they wished to argue at trial that the relevant date was not 12 December 2006 (the date of the judgment in FII (CJEU) 1) but 8 March 2001 (the date of the judgment in Hoechst). Accordingly, the parties agreed that one of the issues to be decided at the trial was Issue 28: When did the claimants discover (or could with reasonable diligence have discovered) their mistake? Accordingly, in respect of which payments and periods do the claimants have valid mistake claims? Henderson Js second judgment Following a 16 day trial, Henderson J delivered his judgment in December 2014: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2014] EWHC 4302 (Ch); [2015] STC 1471 (FII (HC) 2). In relation to Issue 28, he noted that the question as to when the claimants could first have discovered their mistake had been left undecided in FII (HC) 1 [2009] STC 254, and that it was of no practical significance to the BAT claimants, since their claim form was issued on 18 June 2003. That date was within the relevant six year period, whether that period began on 8 March 2001, as the Revenue argued, on 25 October 2006 (the date of the judgment in Deutsche Morgan Grenfell), as the judge was inclined to think, or on 12 December 2006, as the claimants argued. The issue might, however, be relevant to other claims in the FII GLO. He observed at para 454 that there was what might at first sight appear to be an insuperable logical difficulty in the claimants case on this issue: how could it be said that they neither had discovered, nor with reasonable diligence could have discovered, their mistake until 12 December 2006, when they had already started the present action three and a half years earlier? But, he said, that position necessarily followed from the courts jurisprudence. By parity of reasoning with the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558, he considered that it was strongly arguable that it was only when that judgment was delivered, on 25 October 2006, that time began to run against the BAT claimants. That judgment was pertinent, in his view, because it was the first time an appellate court had determined that a restitutionary claim lay for the recovery of tax on the ground that it had been paid under a mistake of law. Although Park J had decided the same point three years earlier, it was only the decision of the House of Lords which achieved finality on the issue. However, in the light of the majority judgments in FII (SC) 1 [2012] 2 AC 33, particularly that of Lord Walker, he concluded that the date when the claimants discovered (or could with reasonable diligence have discovered) their mistake was 8 March 2001, when the Court of Justice delivered its judgment in Hoechst [2001] Ch 620. In that regard, Henderson J referred to Lord Walkers discussion of legitimate expectations, in the course of which he had observed at [2012] 2 AC 337, para 103 that, until the Court of Justice issued its judgment in Hoechst, there was no general appreciation that the UK corporation tax regime was seriously open to challenge as infringing the Treaty, and had stated at para 104 that, after the date of the judgment in Hoechst, a well advised multi national group based in the UK would have had good grounds for supposing that it had a valid claim to recover ACT levied contrary to EU law, with at least a reasonable prospect that the running of time could be postponed until then (but not subsequently). It is relevant to note that, when the parties received the judgment in draft, counsel for the claimants complained to the judge that, if the Revenue wished to argue Issue 28, they must apply to amend their pleadings, and satisfy the court that such an amendment should be permitted. In response, counsel for the Revenue noted that no pleading point had been taken until the draft judgment was released, and stated that the Revenue had not sought to amend their pleadings in the test claim because the issue was of no significance in relation to that claim (ie the BAT claim). Both parties had, however, recognised the significance of the issue for other claims (which had been stayed before being pleaded out), and had agreed that it should be included in the list of issues to be decided at the trial. The judge rejected the complaint, noting that the point was included in the agreed list of issues, and observing that the pleaded position as between the test claimants and the Revenue was not relevant to this issue, since both parties agreed that it made no difference so far as they were concerned. (Declaration 24) in the following terms: In his order, dated 30 January 2015, Henderson J granted a declaration Issue 28 is answered as follows: A. The date when the claimants discovered (or could with reasonable diligence have discovered) their mistake is 8 March 2001 when the ECJ delivered its judgment in Hoechst/Metallgesellschaft. It is common ground that on any view the BAT claimants started their mistake claims within the extended limitation period. As a result, all of the mistake claims of the BAT claimants dating back to 1973 are in time. The test claimants were granted permission to appeal against Declaration 24A. There was no appeal against Declaration 24B. The second appeal to the Court of Appeal In the course of the hearing before the Court of Appeal, in June 2016, counsel for the Revenue observed that the central issue in all of the cases concerned with claims for the restitution of money paid under a mistake was whether section 32(1)(c) does apply to mistakes of law. He also observed that this critical issue might be a matter for this court in the present proceedings. That appears to have been the first indication, in the papers before this court, that the decisions in Kleinwort Benson and Deutsche Morgan Grenfell might be challenged. The hearing proceeded, however, on the basis that the Court of Appeal was bound to follow the decisions of the House of Lords, and the argument focused on the effect of Deutsche Morgan Grenfell. In November 2016 the Court of Appeal allowed the test claimants appeal on Issue 28: Test Claimants in the FII Group Litigation v Revenue and Customs Comrs [2016] EWCA Civ 1180; [2017] STC 696 (FII (CA) 2). Declaration 24A was amended so as to read: The date when the claimants discovered (or could with reasonable diligence have discovered) their mistake is 12 December 2006 [the date of the judgment in FII (CJEU) 1]. In their judgment, delivered in November 2016, the Court of Appeal noted at paras 348 349 the position on the pleadings. After quoting paras 18 and 18B of the amended particulars of claim (para 44 above), they noted that the Revenue had admitted those paragraphs, and observed that [t]hat no doubt reflected the fact that even on the basis of the fall back reasonable discoverability date of 8 March 2001 the BAT claimants claims were comfortably in time since proceedings had been commenced in 2003. As they noted, however, other claimants had not commenced proceedings until much later, and the Revenue had made it plain that, although pleadings had not been required in the cases of those claimants, it would be raising a limitation defence in them. So it had been agreed that Issue 28 should be determined. In relation to that issue, the court noted at para 372 that they were bound by the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558, which in their view established that in the case of a point of law which is being actively disputed in current litigation the true position is only discoverable, for the purpose of section 32(1)(c) of the 1980 Act, when the point has been authoritatively determined by a final court. An authoritative determination of a related point by a final court in earlier proceedings would only start time to run, in their view, if it necessarily meant that the same conclusion would follow in the instant proceedings. The provisions in issue in Hoechst were not the same as those in issue in the FII GLO, and it was not contended that the decision in Hoechst necessarily meant that the latter provisions also infringed EU law. On that basis, the court concluded that the limitation period began to run for the test claimants only on the date when judgment was delivered in FII (CJEU) 1: that is to say, 12 December 2006, three and a half years after they had issued their claims. The second appeal to the Supreme Court Thereafter, the Revenue sought permission to appeal to this court on a multiplicity of grounds, including Issue 28, and invited the court to depart from that decision in Deutsche Morgan Grenfell. That ground of appeal was directed at the test claimants (ie the BAT claimants) as well as other claimants. Further submissions were filed following this courts decision in Prudential [2019] AC 929 (para 15 above), inviting the court also to depart from the decision in Kleinwort Benson as to the scope of section 32(1)(c) of the 1980 Act. Following an oral hearing, permission to appeal on Issue 28 was granted, without prejudice to the test claimants entitlement to argue that, even if the court were to hold that those decisions should be departed from, that decision should not affect the outcome of the present case, whether by reason of res judicata, issue estoppel, abuse of process or otherwise. The court also directed that the appeal on Issue 28 should be heard in advance of the appeal and cross appeal on all remaining grounds. In the event, and partly at the invitation of the court, the arguments at the hearing of the appeal involved a comprehensive consideration of the decisions in Kleinwort Benson and Deutsche Morgan Grenfell, so far as relating to limitation. The Finance (No 2) Act 2015 In 2015 Parliament again responded to restitution claims relating to taxation in the Finance (No 2) Act 2015 (F(No 2)A 2015). In section 38 of that Act Parliament introduced Part 8C of the Corporation Tax Act 2010, which imposed a higher rate of Corporation Tax (45%) on the interest paid on restitution claims for overpaid tax, if the interest was not simple interest at a statutory rate. This measure, which counsel described as a windfall tax, was Parliaments response to the large claims which were being made against the Exchequer. In section 52 of F(No 2)A 2015 Parliament also provided that the rates of interest payable on tax related judgment debts were those set out in tax legislation. Res judicata, estoppel and abuse of process Until June 2016 the Revenue appear to have given no indication that they might seek to challenge the decisions in Kleinwort Benson and Deutsche Morgan Grenfell and argue that section 32(1)(c) does not apply to mistakes of law: para 51 above. Issue 28 itself (para 45 above) assumes that section 32(1)(c) does so apply, and in the courts below that issue was directed to a debate on whether 8 March 2001 or 12 December 2006 is the relevant date under that subsection for the start of the limitation period. The emergence of the challenge to the decisions in both Kleinwort Benson and Deutsche Morgan Grenfell in this court after such extensive and costly legal proceedings has, unsurprisingly, caused the claimants to advance a vigorous case in which they argue that the Revenue cannot and, in any event, should not be allowed to make this challenge. The claimants primary position is that this court should dismiss the appeal in relation to Issue 28 on the grounds of res judicata, estoppel and abuse of process. Alternatively, they submit that the appeal should be limited to the identification of the relevant date under section 32(1)(c), because the wider challenge would contradict the Revenues concessions in the courts below, would amount to an abuse of process and would cause the claimants unfair prejudice. As a fall back, the claimants argue that the court should decline to entertain the appeal on Issue 28 in relation to the test claimants and the other claimants whose claims were issued within six years of 8 March 2001, or order that its determination does not apply to those claimants. The rules or concepts of res judicata, estoppel, and abuse of process support the same legal policies, namely that there should be finality in litigation and that a party should not be twice vexed in the same matter: Johnson v Gore Wood & Co [2002] 2 AC 1, p 31, per Lord Bingham of Cornhill. Lord Bingham went on to state: This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The other members of the Committee, except Lord Millett who delivered a concurring speech, agreed in terms with Lord Bingham on this rationale. Similarly, in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160 (Virgin Atlantic Airways), para 55 Lord Neuberger of Abbotsbury stated: The purpose of res judicata is not to punish a party for failing to take a point, or for failing to take a point properly, any more than to punish a party because the court which tried its case may have gone wrong. It is to support the good administration of justice, in the public interest in general and the parties interest in particular. That common purpose does not alter the fact that each rule or concept has its own rules, and each must be considered in turn. The claimants in their pleadings on this appeal use the term res judicata not as a portmanteau term to describe the different legal principles of which Lord Sumption spoke in Virgin Atlantic Airways Ltd (above), but equate it with cause of action estoppel. Lord Sumption in that case (para 17) described cause of action estoppel thus: The first principle is that once a cause of action has been held to exist or not to exist, that outcome may not be challenged by either party in subsequent proceedings. (Emphasis added) He stated that it is a form of estoppel precluding a party from challenging the same cause of action in subsequent proceedings (emphasis added). In his exposition of the law in relation to res judicata, with which the other Justices agreed, Lord Sumption quoted the speech of Lord Keith of Kinkel in Arnold v National Westminster Bank plc [1991] 2 AC 93 (Arnold) which described this estoppel in these terms (p 104D E): Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be re opened. Cause of action estoppel extends also to points which might have been but were not raised and decided in the earlier proceedings for the purpose of establishing or negativing the existence of a cause of action. Lord Keith quoted from the judgment of Sir James Wigram V C in Henderson v Henderson (1843) 3 Hare 100, 114 115: In trying this question, I believe I state the rule of the court correctly, when I say, that where a given matter becomes the subject of litigation in, and adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. Lord Keith ([1991] 2 AC 93) observed that this passage has frequently been treated as settled law and referred to the advice of the Judicial Committee of the Privy Council in two cases: Hoystead v Commissioner of Taxation [1926] AC 155 and Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581. He stated: It will be seen that this passage appears to have opened the door towards the possibility that cause of action estoppel may not apply in its full rigour where the earlier decision did not in terms decide, because they were not raised, points which might have been vital to the existence or non existence of a cause of action. (Emphasis added) In Virgin Atlantic Airways Ltd (above) Lord Sumption stated ([2014] 160, para 22) that Arnold was authority for the following propositions: (1) Cause of action estoppel is absolute in relation to all points which had to be and were decided in order to establish the existence or non existence of a cause of action. (2) Cause of action estoppel also bars the raising in subsequent proceedings of points essential to the existence or non existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised. (Emphasis added) From these authorities it is clear that cause of action estoppel operates only to prevent the raising of points which were essential to the existence or non existence of a cause of action. The claimants complaint in short is that the Revenue had conceded both in their pleadings and in counsels submissions that section 32(1)(c) applied to mistakes of law and that BAT (and by implication other claimants which had raised proceedings within six years after 8 March 2001) faced no limitation defence. Those concessions relate to the defence of limitation. The effect of limitation is to render an otherwise valid claim unenforceable to the extent that the claim relates to periods beyond the period of limitation. The concessions had and have no bearing on the existence or non existence of the cause of action which is a claim for restitution based on the payment of tax which was paid under a mistaken understanding of the relevant law. The Revenue therefore are not barred from their challenge by cause of action estoppel. The second estoppel which we must consider is issue estoppel. This expression, which appears to have been coined by Higgins J in the Australian case of Hoystead v Federal Taxation Comr (1921) 29 CLR 537, 561 and adopted by Diplock LJ in Thoday v Thoday [1964] P 181, 197 198, concerns the principle which Lord Sumption in Virgin Atlantic Airways Ltd (above), para 17 described as: the principle that even where the cause of action is not the same in the later action as it was in the earlier one, some issue which is necessarily common to both was decided on the earlier occasion and is binding on the parties. In Thoday (above), p 198, Diplock LJ observed that issue estoppel was an extension of the public policy underlying cause of action estoppel and described it in these terms: There are many causes of action which can only be established by proving that two or more conditions are fulfilled. Such causes of action involve as many separate issues between the parties as there are conditions to be fulfilled by the plaintiff in order to establish his cause of action; and there may be cases where the fulfilment of an identical condition is a requirement common to two or more different causes of action. If in litigation upon one such cause of action any of such separate issues as to whether a particular condition has been fulfilled is determined by a court of competent jurisdiction, either upon evidence or upon admission by a party to the litigation, neither party can, in subsequent litigation between one another upon any cause of action which depends upon the fulfilment of the identical condition, assert that the condition was fulfilled if the court has in the first litigation determined that it was not, or deny that it was fulfilled if the court in the first litigation determined that it was. In Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630, 642 Diplock LJ expressed the view that in an action in which certain questions of fact or law are tried and determined before others and an interlocutory judgment is given, the parties are bound by the determination of that issue in subsequent proceedings in the same action and their only remedy is to appeal the interlocutory judgment. He saw this as an example of issue estoppel. In Arnold (above), p 105 Lord Keith said that issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re open that issue. He referred to the passage in Diplock LJs judgment in Thoday which we have quoted above and, by reference to Diplock LJs judgment in Fidelitas Shipping (above), observed that issue estoppel had been extended to cover the case where in subsequent proceedings it is sought to raise a point which might have been but was not raised in the earlier proceedings ([1991] 2 AC 93, p 106). Lord Sumption in Virgin Atlantic Airways (above), para 21, explained Lord Keiths judgment in Arnold (above) in relation to issue estoppel. In the case of that estoppel it was in principle possible to challenge a previous decision on an issue not only by taking a new point which could not reasonably have been taken in the earlier proceedings but also (in contrast to cause of action estoppel) to reargue in materially altered circumstances an old point which had previously been rejected. In para 22 he stated that Arnold was authority for the following proposition: (3) Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised. The claimants did not argue in their written case that there is an issue estoppel, but Mr Daniel Margolin QC raised the possibility in his oral submissions and we must address it. The answer to this challenge lies in the terms of the GLO and the way in which the proceedings developed. The question of limitation was raised in Issue P in the GLO (From what date does the limitation period commence?) and the BAT claim was the test claim in relation to that issue: para 20 above. Issue P was not argued or determined in Henderson Js first judgment (FII (HC) 1 [2009] STC 254) or in the appeals which arose out of that judgment. The only question relating to a limitation defence which was decided in the first trial was Issue Q, which concerned the effect of section 320 of the FA 2004 and section 107 of the FA 2007: paras 29 and 35 above. This is unsurprising, as in the first phase of the litigation the Revenues only limitation defence to BATs mistake of law claims was its reliance on those statutory provisions to exclude the application of section 32(1)(c). In the period leading up to the second trial before Henderson J the BAT claimants asserted in their revised pleadings that the mistake claims were not time barred, and the Revenue admitted those assertions: para 44 above. Notwithstanding that admission in relation to the BAT claimants, the Revenue wished to argue that the relevant date under section 32(1)(c) was 8 March 2001 because that date would support a limitation defence in relation to some of the other claims. As a result, the parties agreed that Issue 28 be decided at the second trial: para 45 above. It would not have been possible for the Revenue to argue at first instance or in the Court of Appeal that either Kleinwort Benson or Deutsche Morgan Grenfell was wrongly decided. But until June 2016 the Revenue gave no indication and made no reservation that they might seek to advance such an argument if the case were to return to the Supreme Court. With the benefit of hindsight, that is unquestionably unfortunate. But it does not give rise to an issue estoppel in circumstances where Issue P had to be determined in the second phase of the proceedings and the argument which the Revenue now wish to advance could be raised only in the Supreme Court. The claimants advance a closely related argument that this court has no jurisdiction to address the challenge which the Revenue now seek to mount. This is because Henderson J in his second judgment (FII (HC) 2 [2015] STC 1471) made the declaration (Declaration 24) which we have set out in para 50 above. That declaration answered Issue 28 by stating two things. First, in Declaration 24A it stated that the date at which the BAT claimants could have discovered their mistake was 8 March 2001. Secondly, in Declaration 24B it stated: It is common ground that on any view the BAT claimants started their mistake claims within the extended limitation period. As a result, all of the mistake claims of the BAT claimants dating back to 1973 are in time. There was no appeal against Declaration 24B. The BAT claimants now argue that by failing to appeal that declaration, the Revenue cannot raise the arguments which they wish to raise against them and the other claimants whose claims were issued within six years of 8 March 2001 because this court has no jurisdiction to consider a challenge to a court order which has not been appealed. We reject this argument. The failure to appeal the declaration in question does not exclude the jurisdiction of this court. The declaration is not a judicial determination but records an agreed position at that time. Such an order is not readily the subject of an appeal. The issue to which the declaration of the common position gives rise is whether the Revenue should be allowed to depart from that common position by withdrawing their concession at this late stage in the proceedings. That is a matter which we address in paras 83 100 below. The claimants alternative argument is that the Revenue, by seeking to extend Issue 28 into an argument that Kleinwort Benson and Deutsche Morgan Grenfell were wrongly decided, are guilty of an abuse of process. The principle of abuse of process was first formulated by Wigram V C in Henderson v Henderson (above) and more recently was analysed by the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1. In that case Lord Bingham (at p 31B E) stated: The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. Lord Bingham then rejected the submission that the rule in Henderson v Henderson did not apply when an action had been settled by compromise. He stated, pp 32 33: An important purpose of the rule is to protect a defendant against the harassment necessarily involved in repeated actions concerning the same subject matter. A second action is not the less harassing because the defendant has been driven or thought it prudent to settle the first; often, that outcome would make a second action the more harassing. Lord Goff of Chieveley, Lord Cooke of Thorndon and Lord Hutton agreed in terms with Lord Binghams analysis. Lord Milletts speech is consistent with Lord Binghams analysis. He described the doctrine of res judicata as a rule of substantive law and contrasted that with the Henderson v Henderson doctrine which he described as a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression ([2002] 2 AC 1, p 59D E). The abuse of process doctrine is not confined to the raising of subsequent proceedings after the completion of an action but can apply to separate stages within one litigation. See, for example, Tannu v Moosajee [2003] EWCA Civ 815. In Virgin Atlantic Airways Ltd (above) Lord Sumption agreed with Lord Milletts analysis of the relationship between on the one hand the estoppels which come within the law of res judicata and on the other the abuse of process doctrine, stating ([2014] AC 160, para 25): Res judicata is a rule of substantive law, while abuse of process is a concept which informs the exercise of the courts procedural powers. In my view, they are distinct although overlapping legal principles with the common underlying purpose of limiting abusive and duplicative litigation. While the concept of abuse of process informs the exercise of the courts procedural powers, it is not a question of the exercise by the court of a discretion: Aldi Stores Ltd v WSP Group plc [2017] EWCA Civ 1260; [2008] 1 WLR 748, para 16 per Thomas LJ, para 38 per Longmore LJ. If the court, on making the broad, merits based judgment of which Lord Bingham spoke, concludes that a claim, a defence, or an amendment of a claim or of a defence involves an abuse of process or oppression of the opposing party, it must exclude that claim, defence or amendment. A finding of abuse of process operates as a bar. Thus, as Lord Wilberforce stated in delivering the judgment of the Judicial Committee of the Privy Council in Brisbane City Council v Attorney General for Queensland [1979] AC 411, 425, the doctrine ought only to be applied when the facts are such as to amount to an abuse: otherwise there is a danger of a party being shut out from bringing forward a genuine subject of litigation. From these authorities it is clear that for the court to uphold a plea of abuse of process as a bar to a claim or a defence it must be satisfied that the party in question is misusing or abusing the process of the court by oppressing the other party by repeated challenges relating to the same subject matter. It is not sufficient to establish abuse of process for a party to show that a challenge could have been raised in a prior litigation or at an earlier stage in the same proceedings. It must be shown both that the challenge should have been raised on that earlier occasion and that the later raising of the challenge is abusive. Applying that test to the circumstances of this appeal, we are not persuaded that it is an abuse of process for the Revenue to challenge the decisions of the House of Lords in Kleinwort Benson and Deutsche Morgan Grenfell at this stage of the GLO proceedings. We have reached this view for the following four reasons. First, the FII Group Litigation has involved novel and developing legal claims raising legal issues of unparalleled complexity, causing the claimants and the Revenue to amend their pleadings in the light of developments of both EU law and domestic law. Henderson J in FII (HC) 2 [2015] STC 1471, para 468) correctly spoke of a complex and evolving legal landscape. The claims were and are located at the interface of two developing systems of law: see paras 9 15 above. In English law the right to claim restitution for money paid under a mistake of law was first recognised only in 1998 and the courts, including this court, have been dealing with the ramifications of that decision since then. This is the second occasion on which the FII claims have reached this court and the claims have been materially affected by the judgment of the House of Lords in Sempra Metals [2008] 1 AC 561 and more recently by the judgments of this court in Littlewoods [2018] AC 869 and Prudential [2019] AC 929. On the European plane, the Court of Justice first recognised the incompatibility of the UK corporation tax legislation with EU law in the ACT Group Litigation in Hoechst in 2001, and the FII claims have since then generated no less than three judgments in references to the Court of Justice in 2006, 2012 and 2013. The claimants in the FII Group Litigation, in the ACT Group litigation, and in similar actions seeking the recovery of tax paid under a mistake of law, have been pursuing their claims at the frontier of legal developments. This in part explains the complexity of the legal proceedings, and why legal questions which are of central importance to those claims have only recently been decided or have not yet been determined. The question whether there has been an abuse of process involves a broad merits based judgment against this very unusual background. Secondly, the FII Group Litigation has been the subject of case management by the court, which has determined the order in which the questions of legal principle which the parties had identified have been addressed. In the first phase of the litigation 20 issues were sent to trial for determination by Henderson J. As Mr Margolin QC forcefully submitted, it was intended at that stage of the litigation that the first trial before Henderson J would determine all GLO issues relating to the test claims, including liability for restitution, except in so far as the issues concerned causation or quantification of the claims. It is also clear that at that stage the Revenue did not dispute that section 32(1)(c) would have applied to the mistake of law claims but for Parliaments intervention by enacting section 320 of the FA 2004 and section 107 of the FA 2007 to exclude the operation of that section in relation to mistake claims relating to Inland Revenue taxation matters. But Issue P (From what date does the limitation period commence?) was not determined in the first phase of the litigation, because, as the parties then presented their cases, it made no difference to the outcome of the BAT claims. The question raised by Issue P remained to be addressed in a later phase of the litigation. Thirdly, it is readily understandable why in the first phase of the litigation the Revenue focused on the statutory provisions which Parliament had enacted, namely section 320 of the FA 2004 and section 107 of the FA 2007. Those provisions would have established in domestic law the Revenues limitation defence that all claims accruing more than six years before the date of issue of the relevant claim forms were barred by the 1980 Act, but the provisions were held to be incompatible with EU law in so far as they had retrospective effect. Had the Revenue succeeded in establishing the legal enforceability of those statutory responses to the legal developments, they would not have needed to mount a challenge to Kleinwort Benson and Deutsche Morgan Grenfell. In the context of these actions in a developing area of law, we are satisfied that the Revenues failure to raise the wider questions relating to section 32(1)(c), while unfortunate, involved no culpability. Fourthly, it is not disputed that until the first phase of the FII Group Litigation reached this court in 2012, the Revenue could not have raised a challenge to the decisions in Kleinwort Benson and Deutsche Morgan Grenfell as only this court could review those judgments. The Revenue did not do so. Indeed, in response to a question from this court at that hearing, their counsel disavowed any intention to do so in those proceedings. But, at that time, the Revenues defence based on the statutory provisions enacted in 2004 and 2007 was still a live issue and Issue P had not been addressed. With the benefit of hindsight, it would have been better if the issue which the Revenue seek to raise in this hearing had been raised before this court in 2012, not least because the BAT claimants estimate that the limitation defence, if successful, would exclude a very large proportion of the value of their claims. But we do not think that it can be said that in the circumstances which prevailed in 2012 the Revenue should have raised the wider issue then. In the context of a very complex group litigation raising many novel questions of law in which the court had left Issue P for a later phase, the Revenue did not act abusively in not mounting the wider challenge then. There is therefore no bar arising from an estoppel, lack of jurisdiction or the doctrine of abuse of process which prevents this court from considering the Revenues challenge to Kleinwort Benson and Deutsche Morgan Grenfell. There remains the difficult question of the exercise of this courts discretion in deciding whether to allow the Revenue to advance the arguments which they now seek to deploy. The claimants argue with no little force that the Revenue in the second phase of the FII Group Litigation never stated that they wished to reserve the right to mount a broader attack in their limitation defence, which included a challenge to the Kleinwort Benson and Deutsche Morgan Grenfell decisions. On the contrary, the Revenue admitted in the pleadings in the BAT test case that BATs mistake claims were not time barred: para 44 above. Issue 28 in the second phase, which we have set out in para 45 above, is sufficiently broad to support one of the arguments which the Revenue have advanced in this court, namely that a taxpayer could with reasonable diligence have discovered a mistake of law at the date when the tax was mistakenly paid. But in the context of the Revenues admissions, which are reflected in Henderson Js statement of the common position of the parties in Declaration 24B (para 50 above), the agreed focus of that issue was on the Revenues argument that 8 March 2001, which is the date on which the CJEU handed down the Hoechst judgment ([2001] Ch 620), was the relevant date under section 32(1)(c), as Henderson J held in Declaration 24A. The claimants also argue that they have suffered very serious unfair prejudice by the emergence of the challenge to the Kleinwort Benson and Deutsche Morgan Grenfell decisions so late in these proceedings. We discuss this in paras 91 100 below. These are matters which the court must consider in the exercise of its discretion, as the Revenues broader challenge involves not only the withdrawal of a concession and a pleaded admission as against the BAT claimants, but also the raising of a new point of law on appeal. Several cases illustrate the established approach of the courts to the exercise of this discretion. In Pittalis v Grant [1989] QB 605 the Court of Appeal addressed an application by the landlord appellants to withdraw a legal concession made at first instance and to amend their grounds of appeal to argue for a different interpretation of a provision in the Rent Act 1977 from that which had been argued at first instance. The Court of Appeal allowed the application. Nourse LJ, who delivered the judgment of the court, stated the rule of procedure which operates as a norm, by quoting from the judgment of Sir George Jessel MR in Ex p Firth, In re Cowburn (1882) 19 Ch D 419, 429: the rule is that, if a point was not taken before the tribunal which hears the evidence, and evidence could have been adduced which by any possibility would prevent the point from succeeding, it cannot be taken afterwards. You are bound to take the point in the first instance, so as to enable the other party to give evidence. Nourse LJ stated that although the court has a discretion to refuse an application to raise on appeal a pure question of law which had not been raised at first instance, the normal practice was to allow the legal point to be taken where the court could be confident that the other party (i) had had an opportunity of meeting it, (ii) had not acted to his detriment by reason of the earlier omission to take the point and (iii) could be adequately compensated in costs: p 611C F per Nourse LJ. In Jones v MBNA International Bank (30 June 2000) [2000] EWCA Civ 514; [2000] Lexis citation 3292, Peter Gibson LJ (para 38) summarised the practice of the Court of Appeal in these terms: It is not in dispute that to withdraw a concession or take a point not argued in the lower court requires the leave of this court. In general the court expects each party to advance his whole case at the trial. In the interests of fairness to the other party this court should be slow to allow new points, which were available to be taken at the trial but were not taken, to be advanced for the first time in this court. That consideration is the weightier if further evidence might have been adduced at the trial, had the point been taken then, or if the decision on the point requires an evaluation of all the evidence and could be affected by the impression which the trial judge receives from seeing and hearing the witnesses. Indeed it is hard to see how, if those circumstances obtained, this court, having regard to the overriding objective of dealing with cases justly, could allow that new point to be taken. That summary, and particularly the reference to the difficulty of allowing a new point to be taken if further evidence would have been adduced at the trial, reflects longstanding practice: see, for example, The Tasmania (1890) 15 App Cas 223, 225 per Lord Herschell; Ex p Firth, In re Cowburn (above) per Sir George Jessel MR. As May LJ also made clear in his concurring judgment in Jones (para 52), the court has established a general procedural principle in the interests of efficiency, expediency and cost and in the interest of substantial justice in the particular case. There is no absolute bar against the raising of a new point of law even if a ruling on a new point of law necessitates the leading of further evidence, but, as the case law reveals, the court will act with great caution. In Grobelaar v News Group Newspapers Ltd [2002] UKHL 40; [2002] 1 WLR 3024, the House of Lords had to interpret the verdict of a jury, and addressed an application by the claimants counsel to withdraw a concession which he had made in the Court of Appeal as to the inferences of fact to be taken from the jurys award of damages for libel in favour of his client. He was allowed to do so for reasons which are not material to this appeal, but in a passage on which the test claimants rely, Lord Bingham stated (para 21): Only rarely, and with extreme caution, will the House permit counsel to withdraw from a concession which has formed the basis of argument and judgment in the Court of Appeal. A similar note of appellate caution was sounded in Singh v Dass [2019] EWCA Civ 360 in which a claimant sought to raise a new argument under the 1980 Act which he had not advanced at first instance. Haddon Cave LJ, who gave the judgment of the court, summarised the relevant principles in these terms: 16. First, an appellate court will be cautious about allowing a new point to be raised on appeal that was not raised before the first instance court. 17. Second, an appellate court will not, generally, permit a new point to be raised on appeal if that point is such that either (a) it would necessitate new evidence or (b) had it been run below, it would have resulted in the trial being conducted differently with regards to the evidence at the trial (Mullarkey v Broad [2009] EWCA Civ 2, paras 30 and 49). 18. Third, even where the point might be considered a pure point of law, the appellate court will only allow it to be raised if three criteria are satisfied: (a) the other party has had adequate time to deal with the point; (b) the other party has not acted to his detriment on the faith of the earlier omission to raise it; and (c) the other party can be adequately protected in costs (R (Humphreys) v Parking and Traffic Appeals Service [2017] EWCA Civ 24; [2017] PTR 22, para 29). Haddon Cave LJs second principle reflects the judgment of the Court of Appeal in Jones (above), paras 38 and 52, and his third principle is a paraphrase of what Nourse LJ stated in Pittalis v Grant (above) p 611. In Notting Hill Finance Ltd v Sheikh [2019] EWCA Civ 1337; [2019] 4 WLR 146 the Court of Appeal, in a judgment delivered by Snowden J, stated that an appellate court has a general discretion whether to allow a new point to be taken on appeal (para 21) and considered and analysed the practice set out in Pittalis and Singh: 26. These authorities show that there is no general rule that a case needs to be exceptional before a new point will be allowed to be taken on appeal. Whilst an appellate court will always be cautious before allowing a new point to be taken, the decision whether it is just to permit the new point will depend upon an analysis of all the relevant factors. These will include, in particular, the nature of the proceedings which have taken place in the lower court, the nature of the new point, and any prejudice that would be caused to the opposing party if the new point is allowed to be taken. The court then spoke of a spectrum of cases. At one end, where there had been a full trial involving live evidence and the new point might have changed the course of the evidence or required further factual enquiry, there was likely to be significant prejudice to the opposing party and the policy arguments in favour of finality would be likely to carry great weight. At the other end, where the point to be taken was a pure point of law which could be argued on the facts as found by the judge, the appeal court was far more likely to permit the point to be taken, provided that the other party had had time to meet the new argument and had not suffered any irremediable prejudice in the meantime (paras 27 and 28). The challenge which the Revenue seek to advance has the potential to affect the quantification of the claims very significantly, and it is raised at a late stage in a complex group litigation. It involves this court making a ruling on a question of law. But the claimants argue that they have acted to their detriment and will suffer serious prejudice if the Revenue were to be allowed to widen Issue 28 into a challenge to the authority of Kleinwort Benson and Deutsche Morgan Grenfell and were to succeed in that challenge. Such an outcome would, as we discuss below, require the parties to amend their pleadings and conduct a further trial on the quantification of the test claimants claim. Counsel argues that if the BAT claimants had known that the Revenue might seek to withdraw their admission that the claims which pre dated 8 March 2007 were not time barred, they would not have appealed Henderson Js Declaration 24A (para 50 above) on behalf of the eight claimants who were adversely affected by the decision that the relevant date for the calculation of the limitation period was 8 March 2001. Secondly, they submit that there was a clear demarcation in the phases between liability and quantification and the question of limitation properly belonged to the first phase. Thirdly, the claimants would suffer enormous prejudice if the Revenues new case on limitation were to succeed, because the test claimants had expended very substantial resources in the past six years in litigating legal issues relating to the quantification of their claims in the second phase of the Group Litigation and also in challenging the windfall tax imposed by the F(No 2)A 2015. Counsel estimated that the claimants had incurred costs of about 9.8m, net of recovery through awards of costs, on the FII Group Litigation and the windfall tax challenge. Fourthly, if the Revenue were to succeed, this might necessitate a retrial of questions of quantification. The test claimants also assert that they have been prejudiced because this court in its judgments in Littlewoods [2018] AC 869 and Prudential [2019] AC 929, which have a materially adverse effect on the quantification of their claims by excluding compound interest on those claims, was influenced by the disruption to public finances which the application of section 32(1)(c) to claims for the repayment of tax would entail. We consider this challenge to be the most difficult to determine of the claimants preliminary challenges to the scope of this appeal. With hindsight, there is no doubt that it would have been better if the Revenue at the start of the second phase of the FII Group Litigation had reserved their right to mount the challenge which they seek to make in this court. It is important that there be discipline in the conduct of actions which are the subject of Group Litigation Orders and it is important that there be finality in the determination of issues raised in such actions. An appellate court, in the interests of justice, will normally seek strenuously to avoid an outcome which results in the parties, who have already gone to trial on the quantification of a claim, having to amend their pleadings and to adduce further evidence to apply its ruling on a new issue of law to the facts of their case. In a normal litigation, the need for a re trial would be a strong and normally determinative pointer against allowing a party to withdraw a concession which had influenced the way in which a litigation had been conducted. There are nonetheless several factors which point in the other direction which make it appropriate not to apply the normal rule. The court is being asked to exercise a discretion not in an individual case but in the context of a group litigation order, a procedural phenomenon which did not exist when Lord Herschell wrote his speech in The Tasmania (1890) 15 App Cas 223. One must also have regard to the nature and subject matter of this group litigation and the manner in which it has been conducted. It is not suggested that the BAT claimants have not had time to deal with the legal challenge. We do not accept that, as the FII Group Litigation progressed, there was a complete demarcation between liability and quantum in the first and second phases: the BAT claimants accept that in the second phase, 19 of the 29 issues related to quantification. The others did not. Issue P, which became Issue 28, remained to be resolved and Issue 17 (namely whether the tax credits given to shareholders for ACT prevented the Revenue from being enriched) raised an issue of principle which could have had a material effect on the quantification of the claims. Because Kleinwort Benson and Deutsche Morgan Grenfell were rulings by the House of Lords, the Revenue could not have mounted the challenge in the courts below in the second phase; the Revenue could only have given notice that such a challenge might be made. If such notice had been given, how far would the BAT claimants have acted differently? We are persuaded that Henderson Js Declaration 24A would have been appealed. In the context of the FII Group Litigation, the starting date of the six year limitation period was of material importance to the claimants who were prejudiced by Henderson Js determination. Any one of those claimants could have applied for permission to appeal that declaration under CPR Part 19, rule 19.12(2). It is important to bear in mind the context of this litigation in which this court is asked to make rulings on issues of legal principle which will affect directly or indirectly other claimants besides the BAT claimants, both within and outside the particular GLO. In that context, the loss of the opportunity for the BAT claimants to secure a procedural advantage to close off the issue so far as it related to their claims and those of the other 18 claimants who were not prejudiced by Henderson Js determination by not appealing against Declaration 24A is a consideration which carries only limited weight. It is possible that the BAT claimants approach to the sequencing of the issues in Phase 2 of the litigation, and in particular the quantification of their claims, would have been different. They might have wished the challenge to Kleinwort Benson and Deutsche Morgan Grenfell to be resolved before they expended time and money on quantification. But the claimants in the FII GLO would still have substantial claims, which the Revenue estimate to be between 80m and 130m, if the limitation challenge which the Revenue now seek to pursue were to succeed; and they needed to complete the litigation to establish those claims. Further, the BAT claimants and the other claimants were prepared to incur the costs in relation to quantification when there was no final determination of issues such as Issue 17 and when the question whether there was an entitlement to compound interest, which was determined adversely to their interest by this court in Littlewoods and Prudential, had yet to be conclusively resolved. It is therefore mere speculation on the information before this court for us to say what the claimants might have done if the Revenue had reserved their position on Kleinwort Benson and Deutsche Morgan Grenfell. Insofar as the BAT claimants are able to persuade the court that they have suffered prejudice by incurring costs which they would not have incurred but for the admission that there was no time bar defence in relation to the BAT claimants and (by implication) the 18 other claimants who commenced proceedings before 8 March 2007, it may be possible to provide a remedy by revising the orders for costs which have been made in the proceedings or by making a further order for costs. We do not consider that the costs which the claimants have incurred in their challenge to the windfall tax in the F(No 2)A 2015 are a relevant consideration as that is a separate litigation relating to different statutory provisions. That legislation was enacted before several decisions which have materially affected the value of the claimants claims had been determined. It predated this courts judgments in Littlewoods and Prudential, which excluded claims for compound interest as a component of a claim for restitution. We cannot know whether Parliament would have acted differently in 2015 if the Revenue had reserved a right to challenge the Kleinwort Benson and Deutsche Morgan Grenfell decisions before this court at a future date. We also consider that the points which we have made in para 78 above in relation to the abuse of process claim are both relevant and of great weight when considering the exercise of this discretion. The nature of the claims, depending as they do on a developing area of law, means that it is important that this court address the legal questions which the Revenue wish to raise. The size of the claims and their impact on the public purse are also relevant considerations, as it would be wrong to uphold such claims if they are based on an incorrect understanding of the law. As we have said, even if the Revenues challenge to the application of section 32(1)(c) succeeds, the claimants will have claims of substantial value. The legal question is also of great importance to other claimants outside the FII Group Litigation, including claimants in the litigations to which we have referred in paras 5 6 above, who also have claims of high value. In the end, the task for the court is to make an evaluation of what justice requires in the circumstances of this group litigation. We are persuaded for the reasons set out above that we should allow the Revenue to withdraw their concession and to amend their pleadings to remove the admission on which the test claimants found. The final preliminary matter which we must consider is the test claimants application that, in the event that the court allows the Revenue to withdraw their concession and mount the challenge, the court should decline to entertain the appeal in relation to the 19 claimants whose claims were issued within six years after 8 March 2001 or, by analogy with CPR rule 19.12, order that any judgment or order which it makes shall not be binding on those claims. For the reasons which we have set out in paras 94 100 above (other than the effect of the determination on claimants outside the FII Group Litigation) and in particular that, if we were to hold that either Kleinwort Benson or Deutsche Morgan Grenfell was wrongly decided in relation to the interpretation of section 32(1)(c) of the 1980 Act, those claims would to that extent be based on an incorrect understanding of the law, we are not persuaded that the interests of justice require this court to make such orders. The background to section 32(1)(c) of the Limitation Act 1980 The 1980 Act is a consolidation statute, designed to consolidate the 1939 Act and a number of subsequent enactments. Section 32(1), in particular, is a re enactment of section 26(b) of the Limitation Act 1939 (the 1939 Act), subject to a minor amendment which appears in section 32(1)(b). Nevertheless, as its interpretation raises questions of substantial difficulty, it is both permissible (Farrell v Alexander [1977] AC 59, 72 73) and necessary to consider the previous law in some detail, as the House of Lords did in Kleinwort Benson and as this court did in FII (SC) 1 [2012] 2 AC 33. The law prior to the Limitation Act 1939 The common law When considering the state of the law prior to the 1939 Act, in so far as it related to action[s] for relief from the consequences of a mistake, and the limitation period applicable to such actions, it is necessary to distinguish between actions at law and claims for equitable relief. So far as common law actions are concerned, there were a number of types of action which might be described as action[s] for relief from the consequences of a mistake. But the mistake was invariably one of fact, rather than law. In particular, it had been established for almost 200 years that no claim lay at common law for the recovery of money paid under a mistake of law: see, for example, Bilbie v Lumley (1802) 2 East 469. That was settled law in 1939, and continued to be so until the decision in Kleinwort Benson. As Atkinson J pointed out in Anglo Scottish Beet Sugar Corpn Ltd v Spalding Urban District Council [1937] 2 KB 607, 615 616, in most cases of payment by mistake the person paying has paid because of a mistake as to his legal right or obligation, and whether the payment can be recovered or not depends upon whether that mistake as to legal right is due to a mistake of fact or a mistake of law. The distinction between these alternatives gave rise to disputes in borderline cases, and was considered in a multitude of authorities, in which fine distinctions were sometimes drawn. There were a number of statutes concerned with limitation in relation to common law actions. The most important for present purposes was the Limitation Act 1623 (21 Jac 1, c 16), as amended by the Administration of Justice Act 1705 (4 & 5 Anne c 16) and the Mercantile Law Amendment Act 1856 (19 & 20 Vict, c 97) (the 1623 Act). It imposed time limits of 20 years on the bringing of real actions and six years, running from the accrual of the cause of action, on the bringing of certain personal actions, including trespass, trover, replevin, actions of account, action on the case and actions of debt. It is apparent from the names of the forms of action to which the statute applied, and from the fact that they were referred to as actions, that the only proceedings barred were actions at law. Actions on the case included actions of indebitatus assumpsit on a count for money had and received, which was the relevant form of action for restitution of money paid under a mistake. In such cases, the cause of action accrued on the date of the payment: Baker v Courage & Co Ltd [1910] 1 KB 56. The limitation period therefore began to run on that date. Equity The position in equity is more complex. As Lord Walker observed in FII (SC) 1 [2012] 2 AC 337, para 62, the authorities are rather short on clear exposition of the relevant principles of equity. It is also necessary to bear in mind that cases which involved a mistake also often involved other factors which formed the justification for equitable relief, such as fraud, misrepresentation or abuse of a fiduciary position. For present purposes, in the light of the decision in FII (SC) 1, it is also necessary to distinguish between cases where mistake was an essential element of the claim for relief, and cases where it was not. The law as it was understood in the 1930s is broadly summarised in Snells Equity, 21st ed (1934), p 428: Mistake may be on a matter either of law or of fact, and it is generally said that whereas relief can be obtained against mistake of fact, no relief can be given against mistake of law. Neither part of this proposition can, however, be accepted without considerable qualification, for not every mistake of fact is the subject of relief, and, on the other hand, relief is sometimes granted even against mistakes of law. Snell listed four kinds of case in which equitable relief could be given from the consequences of a mistake. First, mistake was accepted as being a ground in some circumstances for refusing specific performance of a contract. Secondly, mistake could in some circumstances justify the exercise of an equitable jurisdiction to grant rescission of a contract (it is unnecessary to consider in this appeal whether such a jurisdiction survived the decision in Bell v Lever Bros Ltd [1932] AC 161: a question considered in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407; [2003] QB 679). It is relevant to note that in a leading case of common mistake where equity intervened, a distinction was drawn between ignorance of the general law, which could not justify rescission, and a mistake as to private rights of ownership, which could, but was categorised as a mistake of fact: Cooper v Phibbs (1867) LR 2 HL 149, 170 (where the plaintiff contracted to purchase property from the defendant which, unknown to either of them, the plaintiff already owned in equity). Thirdly, equity could provide relief where a written contract failed to express correctly the parties antecedent agreement, by providing the remedy of rectification. Fourthly, although it was a general rule in equity, as at common law, that money paid under a mistake of law could not be recovered, there were said to be certain exceptions. The general rule was stated in Snells discussion of mistake at pp 439 440: money paid under a mistake of law cannot be recovered, this being perhaps the only type of relief where it can be regarded as absolutely clearly established by way of general rule that ignorantia legis non excusat. The authorities cited in support of that statement included Rogers v Ingham (1876) 3 Ch D 351, which was a case of alleged overpayment by an executor of one legatee at the expense of the other, as the result of an error in the construction of a will. The allegedly underpaid legatee sought to recover the money from the recipient. As is explained at para 116 below, such cases generally fall within the scope of a principle relating to the administration of estates which enables recovery to be obtained, regardless of whether there has been a mistake or not. However, the case fell outside the scope of that principle, because the payment in question had been authorised by the legatee who later sought to challenge it. Consequently, the only basis for recovery was that the payment had been made under a mistake of law. It was held that no claim lay either in equity or in law for recovery on that basis. James LJ, whose every word on a question of equitable principle is weighty (Ministry of Justice v Simpson [1951] AC 251, 272), stated at pp 355 356: I have no doubt that there are some cases which have been relied on, in which this court has not adhered strictly to the rule that a mistake in law is not always incapable of being remedied in this court; but relief has never been given in the case of a simple money demand by one person against another, there being between those two persons no fiduciary relation whatever, and no equity to supervene by reason of the conduct of either of the parties. Snell mentioned a number of supposed exceptions to the general rule. As Snell noted at p 440, the first supposed exception, where the mistake was as to foreign law, was merely apparent, since foreign law was treated as a matter of fact. The second supposed exception was where money was paid to an officer of the court, such as a trustee in bankruptcy, under a mistake of law. It was held that the court could prevent its officer from taking advantage of the mistake: see, for example, Ex p James, In re Condon (1874) LR 9 Ch App 609 and Ex p Simmonds, In re Carnac (1885) 16 QBD 308. In these cases, however, the grant of relief was not based on mistake, but on the courts jurisdiction to enforce high ethical standards on the part of its officers. Vaughan Williams LJ explained this in In re Tyler, Ex p The Official Receiver [1907] 1 KB 865. Referring to Ex p James, he said at p 869: In that case the money had been paid under such a mistake of law that it could not be recovered by any judicial process whatsoever whether in law or equity. When James LJ says [in Ex p James at p 614] that the trustee [in bankruptcy] has in his hands money which in equity belongs to somebody else, he is not referring to an equity which is capable of forensic enforcement in a suit or action, but he is referring to a moral principle which he describes when he says that the Court of Bankruptcy ought to be as honest as other people. In Ex p Simmonds Lord Esher states exactly the same principle [at p 312]. Buckley LJ said at p 873 that James LJ had referred to equity in Ex p James in a popular sense, and not in the sense of money which in a court of equity would belong to someone else. More recent authorities are to the same effect: see, for example, Lehman Bros Australia Ltd v MacNamara [2020] EWCA Civ 321; [2020] 3 WLR 147. The third supposed exception was where the mistake was induced by fraud or by the breach of a fiduciary duty. The authorities cited by Snell (British Workmans and General Insurance Co v Cunliffe (1902) 18 TLR 425, Harse v Pearl Life Assurance Co [1904] 1 KB 558 and Phillips v Royal London Mutual Assurance Co (1911) 105 LT 136) were concerned with claims for the return of premiums, brought by persons who had entered into contracts of insurance which were illegal and void (for want of an insurable interest) as a result of misrepresentations made by or on behalf of the insurance company. Where the misrepresentation was innocent, the money was irrecoverable. Where the misrepresentations were fraudulent, relief was granted, but on the basis of fraud, not mistake: see Harse v Pearl Life Assurance Co at p 563, where Sir Richard Collins MR indicated that relief might also be granted in cases of duress or oppression, or where the defendant stood in a fiduciary relationship towards the plaintiff. Accordingly, the authorities provide examples of equitable relief being given where there had been mistakes of law as well as mistakes of fact. However, Snell provides no example of a money claim for relief from the consequences of a mistake of law, where the occurrence of the mistake was an essential element of the claim. The judgments in cases such as Rogers v Ingham and In re Tyler, Ex p The Official Receiver indicate that a money claim could not be brought on that basis. As was mentioned earlier, it is necessary in the light of FII (SC) 1 to distinguish between cases where mistake is an essential ingredient of the cause of action, and cases where there may have been a mistake but the claim has another legal basis. There were by the 1930s a number of established types of claim in equity which fell into the latter category, in addition to those already mentioned. One was a claim for an account, based on a duty to account arising from the relationship between the parties, but where the claim might have been prompted by the discovery of a mistake. Another example, although not a claim at all, was the correction of errors of account between trustees and beneficiaries: the courts would allow a trustee or personal representative to deduct sums overpaid under a mistake of law from future instalments due to the overpaid beneficiary. On the other hand, there does not appear to be any reported case where a trustee or personal representative recovered money paid under a mistake of law from the recipient, and there are dicta to the effect that such a claim must fail because of the general rule barring such recovery. Another example of a claim which might be brought where a mistake had occurred, but where the mistake was not the justification for the grant of relief, was a claim brought where an executor administering the estate of a deceased person paid out funds to someone other than the person to whom they were properly due, and that person then sought to recover them from the recipient. The remedy available to the person to whom the money was legally due lay in the first instance against the executor, but he could also recover from the recipient any amount which he was unable to recover from the executor. Such a claim was not, however based on mistake: it was, as the Court of Appeal said in In re Diplock [1948] Ch 465 (In re Diplock), p 502, an equitable claim independent of a mistake of fact or of any mistake. It was based, rather, on the fact that the payment had been made by the executor to a person who was not entitled to it, in breach of the rights of the person to whom it was legally due, as Lord Davey explained in Harrison v Kirk [1904] AC 1, 7. So far as limitation is concerned, there was not before 1833 any statute which explicitly barred any suit in equity. In so far as the Court of Chancery applied statutes of limitation, it did so by analogy, as explained below. From 1833 onwards, however, a number of statutes were enacted which imposed limitation periods on the bringing of particular types of suit in equity. For example, the Real Property Limitation Acts of 1833 and 1874 introduced limitation periods in respect of equitable proceedings to recover interests in land, and the Trustee Act 1888 established a limitation period for certain claims against trustees. Many types of equitable proceedings remained subject to no limitation period: for example, there was no provision imposing a time limit on proceedings to rescind transactions induced by undue influence or innocent misrepresentation, and no time limit within which proceedings for rectification must be brought. The statutes did not modify the equitable doctrines of laches and acquiescence. Where equity provided a remedy corresponding to a remedy at law, and the latter was subject to a limitation period, the courts of equity (or after the Judicature Acts, courts asked to give equitable relief) applied the statutes of limitation by analogy, as Lord Westbury explained in Knox v Gye (1872) LR 5 HL 656, 674 675: Where a Court of Equity frames its remedy upon the basis of the Common Law, and supplements the Common Law by extending the remedy to parties who cannot have an action at Common Law, there the Court of Equity acts in analogy to the statute; that is, it adopts the statute as the rule of procedure regulating the remedy it affords. The common law courts were bound to apply the statutes according to their terms, but the Court of Chancery, when it applied them by analogy, developed a principle that a defendant whose unconscionable conduct had denied the plaintiff the opportunity to sue in time should not in conscience be permitted to plead the statute to defeat the plaintiffs claim, provided the claim was brought timeously once the plaintiff discovered or should have discovered the basis of his claim. Accordingly, where the plaintiffs claim in equity was founded on the fraud of the defendant, time did not begin to run against the plaintiff until he discovered the fraud or had a reasonable opportunity of discovering it. This equitable rule received partial recognition in section 26 of the Real Property Limitation Act 1833 (the lineal ancestor of section 26 of the 1939 Act and section 32 of the 1980 Act), under which the right to bring a suit in equity for the recovery of land or rent of which the claimant or his predecessors were deprived by concealed fraud was deemed to have accrued at and not before the time at which such fraud shall or with reasonable diligence might have been first known or discovered. In cases where the claim for equitable relief arose in circumstances where the claimant had been unaware of the matter in question as the result of a mistake, and where equity applied the statutes of limitation by analogy, allowance was similarly made for the period before the mistake was or could with reasonable diligence have been discovered. The point is illustrated by the judgment of Alderson B in Denys v Shuckburgh (1840) 4 Y & C Ex 42, where the profits of a mine had for many years been distributed between the parties under a mistake as to their respective shares. When the mistake was discovered, the plaintiff filed a bill for an account, and the question arose whether more than six years profits could be recovered in equity. The plaintiff relied on Alderson Bs earlier judgment in Brooksbank v Smith (1836) 2 Y & C Ex 58, where the court applied the 1623 Act by analogy but held that time did not run until the mistake was discovered, since it was only then that laches commenced. In Denys v Shuckburgh, on the other hand, Alderson B explained at p 53 that the position was different where the mistake could reasonably have been discovered earlier than it was: But here, it seems to me that the plaintiff had the means, with proper diligence, of removing the misapprehension of fact under which I think he did labour and a court of equity, unless the mistake be clear, and the party be without blame or neglect in not having discovered it earlier, ought, in the exercise of a sound discretion, to adopt the rule given by the statute law as its guide. In this context, a distinction was drawn between a mistake as to the facts supporting a claim for equitable relief, and ignorance that known facts gave rise to a claim. Knight Bruce LJ observed in Stafford v Stafford (1857) 1 De G & J 193, 202 that [g]enerally, when the facts are known from which a right arises, the right is presumed to be known. Similar observations were made by Sir Richard Collins MR in Molloy v Mutual Reserve Life Insurance Co (1906) 94 LT 756, 761, in a judgment which is discussed at paras 204 208 below. The Report of the Law Revision Committee In 1934 the Law Revision Committee was invited to consider various aspects of the law of limitation, including the scope of the rules on concealed fraud. The Committee reported in 1936 (Fifth Interim Report, on Statutes of Limitation, Cmd 5334), and its Report formed the background to the 1939 Act. The passages in the Report which are relevant for present purposes begin with the Committees explanation of the limitation of claims for equitable remedies, at paragraph 13: Equitable claims are in some cases directly governed by a statute of limitations, such as claims to land or rent charges. In other cases, such as specific performance or rescission of contracts on the ground of innocent misrepresentation, or setting aside gifts on the ground of undue influence, no period applies, but the plaintiff must act promptly and may be disqualified by laches. In other cases, where a remedy in equity corresponds to a similar remedy in law, equity follows the analogy of the statute which applies to the corresponding common law remedy (Knox v Gye (1872) LR 5 HL 656), except that in applying equitable remedies to cases of fraud or mistake, the period of limitation is not reckoned until the fraud or mistake is or could, with reasonable diligence, have been discovered. The concluding words in that passage described what the Committee later referred to as the equitable rule. As will be explained, it was the Committees recommendation to extend that rule to common law claims which resulted in the enactment of section 26 of the 1939 Act, effectively re enacted as section 32 of the 1980 Act. In relation to cases of fraud, the Committee noted at paragraph 22 the problem that [a]s a general rule it is no answer to a plea of the Statutes of Limitation to say that the plaintiff was unaware of the existence of his cause of action until after the expiry of the statutory period. Exceptions to that general rule included section 26 of the Real Property Limitation Act 1833, and the equitable doctrine that a plaintiff is not to be affected by the lapse of time where his ignorance is due to the fraud of the defendant, and he has had no reasonable opportunity of discovering such fraud before bringing his action. It also noted that, following the Judicature Act 1873, there were inconsistent decisions as to whether the equitable doctrine applied to actions in which a court of law would previously have had exclusive jurisdiction. The Committee considered that the position should be clarified so as to prevent defendants from relying on a lapse of time which was due to their fraudulent conduct. It also considered that exception created by the equitable rule should be extended so as to apply not only where a cause of action was founded on a concealed fraud, but also where a cause of action unconnected with fraud was fraudulently concealed from the plaintiff or someone through whom he claimed. The Committee then turned to cases of mistake, and stated at paragraph 23: A somewhat similar position arises in cases where relief is sought from the consequences of mistake, eg, when money is paid on property transferred under a mistake. The equitable rule is that the time should only run under the Statutes of Limitation from the time at which the mistake was, or could with reasonable diligence have been, discovered. At present this rule does not apply in cases which formerly fell within the exclusive cognisance of a court of law (Baker v Courage [1910] 1 KB 56). It only applies to cases which were formerly only actionable in a court of equity, or were within the concurrent jurisdiction of the two systems (In re Mason [1928] Ch 385, and [1929] 1 Ch 1; In re Blake [1932] 1 Ch, para 54). It was held in Baker v Courage (supra) that the Judicature Acts had not altered the common law rule. This position appears to us as unsatisfactory as the position with regard to the effect of concealed fraud, and accordingly we recommend that in all cases when relief is sought from the consequences of a mistake, the equitable rule should prevail and time should only run from the moment when the mistake was discovered, or could with reasonable diligence have been discovered. We desire to make it clear, however, that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time. Our recommendation only extends to cases when there is a right to relief from the consequences of a mistake. In such cases it appears to us to be wrong that the right should be defeated by the operation of the Statutes of Limitation. When, in that passage, the Committee stated that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time, it did not have in mind a situation in which a mistake of law gave rise to a cause of action falling within the scope of statutory limitation, directly or by analogy: as we have explained, no such cause of action existed at that time, and therefore the possibility of such a situation did not arise. It was, as we understand it, reaffirming the principle stated in Stafford v Stafford and Molloy v Mutual Reserve Life Insurance Co (para 122 above) that, whereas allowance could be made for a mistake where it formed one of the ingredients of a cause of action, allowance could not be made, where the ingredients of a cause of action were known, for ignorance that those circumstances gave rise to a cause of action. Accordingly, in relation to cases involving fraud or mistake, the Committee recommended at paragraph 37: (18) that in all cases where a cause of action is founded on fraud committed by the defendant or his agent, or where a cause of action is fraudulently concealed by him or his agent, time should only run against the plaintiff from the time when he discovered the fraud or could with reasonable diligence have discovered it (para 22); (19) that in actions for relief in respect of mistake time should only run from the date when the mistake was, or could with reasonable diligence have been, discovered (para 23). It is to be noted that the recommendations in respect of fraud addressed two situations: (a) where the cause of action was founded on fraud, and (b) where a cause of action not founded on fraud was fraudulently concealed. The recommendation in respect of mistake addressed only one situation: where there was an action for relief in respect of mistake. In the light of the authorities as they stood at the time of the Report, this court concluded in FII (SC) 1 [2012] 2 AC 33 that, as Lord Walker stated at para 59, in the cases where the period was or might have been extended the mistake seems to have been an essential ingredient in the cause of action. The Limitation Act 1939 The 1939 Act gave effect to those recommendations, and also made other changes to the law. Part I laid down periods of limitation for different classes of action, subject under section 1 to the provisions of Part II, which provide for the extension of the periods of limitation in the case of disability, acknowledgment, part payment, fraud and mistake. Section 2(1) laid down a six year limitation period, running from the date on which the cause of action accrued, for a number of categories of action, including (a) actions founded on simple contract or on tort. Section 2(7) provided: This section shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief, except in so far as any provision thereof may be applied by the court by analogy in like manner as the corresponding enactment repealed by this Act has heretofore been applied. Other provisions of Part I laid down limitation periods for other types of action, including actions in respect of a claim to the personal estate of a deceased person, which were made subject to a 12 year limitation period (section 20). In Part II, section 26 provided, so far as material: Where, in the case of any action for which a period of limitation is prescribed by this Act, either the action is based upon the fraud of the (a) defendant or his agent or of any person through whom he claims or his agent, or (b) any such person as aforesaid, or (c) a mistake, the action is for relief from the consequences of the right of action is concealed by the fraud of the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it. Part III contained general provisions. Section 29 preserved the equitable jurisdiction to refuse relief on the ground of acquiescence or otherwise. Section 34 repealed all relevant subsisting statutory provisions for limitation. The effect of section 26 of the Limitation Act 1939 It is apparent from the opening words of section 26 of the 1939 Act that it was concerned only with actions for which a period of limitation was prescribed by the Act. Section 26(c), which applied where the action is for relief from the consequences of a mistake, was therefore confined to actions meeting that description for which a period of limitation was prescribed by the Act. It had to be construed in the light of section 2(7), and therefore extended to claims for equitable relief for which a period prescribed in section 2 applied by analogy, in the same way as the earlier statutes of limitation (repealed by section 34) were previously applied. It follows that section 26(c) applied to claims for the recovery of money paid under a mistake of fact. Actions at law of that kind had previously fallen within the ambit of section 3 of the 1623 Act, and were intended by Parliament to fall within the scope of section 2(1) of the 1939 Act, as the Court of Appeal held in In re Diplock at p 514. Equivalent claims in equity (eg where the plaintiff was not the person who made the payment under a mistake) fell within the ambit of section 2(7). However, section 26(c) was not understood to apply to actions for the recovery of money on the ground that it had been paid under a mistake of law, since no action of that description, whether in law or in equity, was recognised until long after the 1939 Act had been repealed. The 1939 Act was considered in two cases which are relevant in the present context. The first was In re Diplock. The proceedings were brought after executors distributed the residue of an estate in accordance with a provision in the will directing them to hold it in trust and divide it between such charitable or benevolent objects as they might think fit, without further specification. The next of kin challenged the validity of the trust, and it was held by the House of Lords to be void for uncertainty. More than six years (but less than 12 years) after the distributions had been made, the next of kin sought a declaration that the recipients of the money were liable to refund it to them. The claims were made on two bases. The first was a claim in personam based on the right of an unpaid beneficiary to recover money wrongly paid to a stranger to the estate. The second was a claim in rem, based on tracing the trust assets into the hands of the defendants. It is unnecessary to consider the latter aspect. At first instance, the judge failed to recognise that the personal claims fell within the ambit of the principle relating to the wrongful distribution of estates, and instead treated them as claims for money had and received. On that basis, he held that no claim was available, either at law or in equity, since the mistake was one of law: In re Diplock [1947] Ch 716. The judges decision on that point was reversed on appeal: [1948] Ch 465. The Court of Appeal correctly held that an equitable claim lay against a recipient who was paid more than he was entitled to receive under a will, regardless of whether the overpayment was made under a mistake, either of fact or of law. As discussed in para 116 above, the court explained that the basis of equitable relief was not mistake, but the receipt of a share or interest in the estate to which the recipient was not entitled, at the expense of the person entitled to it. The primary claim lay however against the executors, and the equitable cause of action was therefore for recoupment of such amounts as were irrecoverable from them. The Court of Appeal further held that limitation was governed in such a case by section 20 of the 1939 Act, and not by section 2(1) or (7). Since section 20 laid down a 12 year period, it followed that the claims were not time barred. However, the court went on to consider, obiter, the position if, contrary to their view, the claims fell within the scope of section 2(7). On that hypothesis, the court considered that section 26(c) would be relevant, on the basis that the claims sought relief from the consequences of a mistake. This obiter dictum preceded the line of authority, culminating in the decision in FII (SC) 1, which entailed that a claim such as that in In re Diplock, for which a mistake was not an essential ingredient of the cause of action, did not fall within the scope of section 26(c) of the 1939 Act or section 32(1)(c) of the 1980 Act. The Court of Appeals decision was affirmed by the House of Lords: Ministry of Health v Simpson [1951] AC 251. In a speech with which the other members of the Appellate Committee expressed agreement, Lord Simonds emphasised at p 265 that the particular branch of the jurisdiction of the Court of Chancery with which we are concerned relates to the administration of assets of a deceased person. Lord Simonds next cited the dictum of Lord Davey in Harrison v Kirk which was mentioned in para 116 above, and stated at p 266: The importance of this statement is manifold. It explains the basis of the jurisdiction, the evil to be avoided and its remedy: its clear implication is that no such remedy existed at common law: it does not suggest that it is relevant whether the wrong payment was made under error of law or of fact: it is immaterial whether those who have been wrongly paid are beneficiaries under the will or next of kin, it is sufficient that they derive title from the deceased. (Emphasis added) The argument that this jurisdiction was limited to payments made under a mistake of fact, rather than law, was rejected by Lord Simonds at pp 269 270, on the basis that the equitable doctrine was not based on the existence of a mistake at all, but on the making of a wrongful payment. As he said at p 270, a legatee does not plead his own mistake or his own ignorance but, having exhausted his remedy against the executor who has made the wrongful payment, seeks to recover money from him who has been wrongfully paid. In relation to limitation, Lord Simonds agreed with the Court of Appeal that the claims were governed by section 20 of the 1939 Act. He added at p 277 that it was unnecessary to say anything about section 26 by way of approval or disapproval of what fell from the Court of Appeal. He observed that it was a section which presented many problems. The other case from this period which should be noted is Phillips Higgins v Harper [1954] 1 QB 411, a decision of Pearson J. The plaintiff brought a claim for an account and payment of money due under a contract over a period of 13 years. The defendant argued that as more than six years had passed since the initial payments were due, it followed that the claim was to that extent time barred, under section 2(2)(a) and (7) of the 1939 Act. In response, the plaintiff relied on section 26(c), arguing that she had not known that the money that had been paid to her was less than was due under the contract, and was therefore seeking relief from the consequences of a mistake. That argument was rejected by the judge. As he noted, section 26 dealt differently with fraud and mistake. In relation to fraud, provision was made for two situations: first, where (a) the action is based upon fraud, and secondly, where (b) the right of action is concealed by fraud. It followed that, in cases falling within (b), the action need not be based upon fraud. In relation to mistake, on the other hand, provision was made for only one situation: where (c) the action is for relief from the consequences of a mistake. In the judges view, that wording was carefully chosen to indicate a class of action where a mistake has been made which has had certain consequences and the plaintiff seeks to be relieved from those consequences (p 418). No provision was made for the situation where the right of action was concealed by a mistake. In the instant case, the plaintiffs claim was to recover money due to her under a contract. The fact that she had been unaware of the right of action by reason of a mistake was insufficient to bring her within the ambit of section 26(c). The judge expressed the opinion at p 419 that [p]robably provision (c) applies only where the mistake is an essential ingredient of the cause of action. He added (ibid) that it was no doubt intended to be a narrow provision, because any wider provision would have opened too wide a door of escape from the general principle of limitation. That reasoning, subsequently approved in FII (SC) 1, entailed that section 26(c) could not apply to a claim of the kind considered in In re Diplock, since such a claim was not based on mistake, as explained in paras 116 and 137 138 above. The Limitation Act 1980 As previously mentioned, the 1980 Act is a consolidation statute, designed to consolidate the 1939 Act and a number of subsequent enactments. Section 5 lays down a six year limitation period for actions founded on simple contract. Like section 2 of the 1939 Act, it has been held to apply to claims for the recovery of money on the ground that it was paid under a mistake: Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 4 All ER 890, 942 943; Aspect Contracts (Asbestos) Ltd v Higgins Construction plc [2015] UKSC 38; [2015] 1 WLR 2961, para 25. Section 32(1) of the 1980 Act corresponds to section 26 of the 1939 Act, subject to the deletion (originally effected by the section 7 of the Limitation Amendment Act 1980) of the reference to concealment by fraud and the substitution in section 32(1)(b) of the concept of deliberate concealment of relevant facts. It provides (so far as material): the action is based upon the fraud of the (1) Subject to subsection (3) below, where in the case of any action for which a period of limitation is prescribed by this Act, either (a) defendant; or (b) any fact relevant to the plaintiffs right of action has been deliberately concealed from him by the defendant; or (c) a mistake; the action is for relief from the consequences of the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. In relation to equitable claims, section 36 corresponds to sections 2(7) and 29 of the 1939 Act (paras 129 and 131 above). Kleinwort Benson The case of Kleinwort Benson [1999] 2 AC 349 concerned claims by a bank for the recovery of sums which it had paid to local authorities under interest rate swap agreements which it had believed to be valid, but which were subsequently held, initially by the Divisional Court and subsequently by the House of Lords, to be ultra vires and therefore void: Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1. The bank then recovered, in a first set of proceedings, such sums as had been paid within the six years preceding the issue of its writ, on the ground that there had been a failure of consideration. In a second set of proceedings, the bank sought to recover the sums which had been paid more than six years previously, by relying on section 32(1)(c) of the 1980 Act to postpone the commencement of the limitation period. A preliminary issue arose as to (1) whether the bank had a cause of action based on mistake, and (2) if so, whether the bank could rely on section 32(1)(c). There was no reasoned judgment at first instance, the judge concluding on issue (1) that he was compelled by authority to deny liability. For the same reason, the leapfrog procedure was employed to bypass the Court of Appeal. Before the House of Lords, the bank sought first to establish that there was a cause of action to recover money paid under a mistake of law, and that its claim could be brought on that basis, on the footing that the payments had been made under the mistaken belief that the contracts were legally valid. In response, the local authorities did not attempt to defend the rule that money paid under a mistake of law was irrecoverable, but argued that recovery should not lie where a payment was made in accordance with a settled understanding of the law which was later changed by a judicial decision. The better course, it was argued, was to leave the law to be altered by Parliament, particularly in view of the problems arising in relation to the law of limitation. Since the Government had accepted the Law Commissions recommendations on the issue, it would be wrong for the courts to pre empt legislative reform. In reply, the bank accepted (as was noted at pp 362 and 391) that a payment made on the basis of a settled understanding of the law would not be made under a mistake, even if the law was later changed by a judicial decision, but argued that the law on the issue in question had not been settled prior to the House of Lords decision in Hazell. By a majority of three to two, the Appellate Committee accepted the banks argument, and went beyond it by holding that the right to recover payments made under a mistake of law applied whether or not the basis on which the payment was made was in accordance with settled law. Lord Goff, in his final speech before his retirement, focused on the retrospective effect of judicial decisions. He accepted that the question whether a payment was made under a mistake was determined as at the time when the payment was made (Baker v Courage at p 66), and observed that when the judges state what the law is, their decisions have a retrospective effect (p 378). It was because of that retrospective effect, he asserted, that it was plain (p 379) that a previous understanding of the law which was overturned by a judicial decision was mistaken as at the time when the payment was made. The cause of action for the recovery of money paid under such a mistake of law therefore accrued on the date when the payment was made (p 386). That was so even though Lord Goff disavowed the declaratory theory of judicial decision making, with the consequence that the previous understanding might be regarded as having been correct as the law stood at the time of the payment: a situation which Lord Hoffmann described as a deemed mistake. It is unnecessary for present purposes to consider the merits of that reasoning. It was disputed by Lord Browne Wilkinson and Lord Lloyd of Berwick, and has been criticised by a number of academic commentators (and approved by others), but is not challenged in these proceedings. On that basis, Lord Goff and the other members of the majority rejected the argument that cases where the court departed from a previous decision, or from a settled practice, should be distinguished from cases where the court determined the law for the first time. In each of those events, the courts decision had a retrospective effect: that was an inevitable attribute of judicial decision making (p 379). In each event, the effect of the courts decision was to falsify the belief or assumption which had caused the claimant to make the payment, and that was sufficient to create a restitutionary claim based on mistake. The next step in the banks argument was to establish that the cause of action for the recovery of money paid under a mistake of law fell within the scope of section 32(1)(c) of the 1980 Act. In that regard, counsel for the bank relied on the obiter dicta of the Court of Appeal in In re Diplock, discussed at paras 136 138 above, and argued that, even if such a claim would not have been recognised at the time when the provision was enacted, it should be construed in accordance with the always speaking principle of statutory interpretation (referring to R v Ireland [1998] AC 147). On that basis, counsel argued that section 32(1)(c) extended to mistakes of law once the law recognised such mistakes as giving rise to a right of action. In response, counsel for the local authorities argued that section 32(1) should be construed as at the moment of its enactment, when it could only have applied to mistakes of fact. Furthermore, the language of section 32(1) was not apt to apply to mistakes of law, since the law could rarely be said to be objectively ascertainable, so as to be capable of being discovered with reasonable diligence. The majority of the Appellate Committee decided this issue in favour of the bank, and the minority concurred, on the hypothesis (contrary to their opinion) that there was an actionable mistake. The reasons the majority gave for reaching that conclusion were brief and rested principally on what appears to us, with respect, to have been an inaccurate understanding of the pre 1939 law. The statutory concept of discoverability was not discussed. The proceedings had not reached the stage at which it was necessary to determine when the mistake of law was discovered, or could with reasonable diligence have been discovered, and only the two judges in the minority considered the question. Lord Goff did not refer to the banks argument based on the always speaking principle, but briefly addressed the local authorities argument concerning the language of section 32(1), stating at pp 388 389: In my opinion, however, this verbal argument founders on the fact that the pre existing equitable rule applied to all mistakes, whether they were mistakes of fact or mistakes of law: see eg Earl Beauchamp v Winn (1873) LR 6 HL 223, 232 235 and the dicta from In re Diplock to which I have already referred [ie at pp 515 516]. By the pre existing equitable rule, Lord Goff meant the rule stated in paragraph 23 of the Report of the Law Reform Commission, which he had mentioned in his speech at p 388. Paragraph 23 was cited at para 126 above. As was explained at paras 118 124 above, the rule was of limited scope, and applied where a remedy in equity corresponded to a similar remedy in law, and the statutes of limitation were applied by analogy. Contrary to Lord Goffs observation, the rule did not apply to all mistakes, whether of fact or law. In particular, it did not apply to claims for the recovery of money on the ground that it had been paid under a mistake of law, since no such claim appears to have been recognised in equity any more than at law: see paras 110 116 above. The first of the authorities which Lord Goff cited, Earl Beauchamp v Winn (1873) LR 6 HL 223, was a similar case to Cooper v Phibbs, mentioned in para 109 above. It concerned a bill seeking the equitable rescission of a contract for the exchange of property, on the ground of common mistake as to the parties respective rights to the properties in question. The principal issues were whether there had been a common mistake, and if so, whether relief was barred either by the impossibility of restitutio in integrum or on the ground that the appellant could readily have discovered the true position before entering into the agreement, having the relevant title deeds in his possession but having failed to read them. The passage in the speech of Lord Chelmsford which Lord Goff cited was concerned with three matters. The first, as Lord Chelmsford put it at p 233, was the principle that where a party is put upon inquiry, and by reasonable diligence he might have obtained knowledge of a fact of which he remained in ignorance, Equity would not relieve him. The second, as it was put at p 234, was the objection, that the mistake (if any) was one of law, and that the rule Ignorantia juris neminem excusat applies. In that regard, Lord Chelmsford followed Cooper v Phibbs in distinguishing between ignorance of a well known rule of law and ignorance of the true construction of a deed. The third issue was the equitable doctrine of acquiescence. In the event, after these objections had been considered and rejected, there was held to have been no mistake. There was no discussion of the statutes of limitation, or of the equitable rule mentioned by the Law Reform Committee, or of the question whether it might have any application to mistakes of law. Lord Goff also cited the obiter dictum of the Court of Appeal in In re Diplock. As was explained in para 136 above, that dictum proceeded on the hypothesis that personal claims against the wrongful recipient of property during the administration of an estate fell within the scope of section 2(7) of the 1939 Act rather than section 20. The Court of Appeal had already rejected that hypothesis, and the House of Lords also rejected it, on appeal, in Ministry of Health v Simpson, as explained at para 138 above. Furthermore, since the right of action with which In re Diplock was concerned was not based on a mistake, as explained in paras 116 and 137 138 above, it followed from the decision in Phillips Higgins v Harper [1954] 1 QB 411, later endorsed in FII (SC) 1 [2012] 2 AC 33, that it could not fall within the ambit of section 26(c) of the 1939 Act, or section 32(1)(c) of the 1980 Act: see paras 41 and 140 above. Lord Goff did not discuss the local authorities argument that the law could rarely be said to be objectively ascertainable, so as to be capable of being discovered with reasonable diligence. As the decision in Kleinwort v Benson itself illustrates, points of law present a problem for a test of discoverability, if discovery requires the ascertainment of the truth. On the assumption that it did, the local authorities argued in Kleinwort Benson that the test of discoverability could not be applied to mistakes of law, and that they therefore fell outside the scope of section 32(1). As will appear, the House of Lords, proceeding on the same assumption, decided in Deutsche Morgan Grenfell that the truth could not be discovered until it had been established by an authoritative judicial decision, and that time could not therefore begin to run under section 32(1) until such a decision had been taken. It will be necessary to consider at a later point whether the underlying assumption, that the test of discoverability requires the ascertainment of the truth, is well founded. Before summarising his conclusions, Lord Goff stated at p 389: I recognise that the effect of section 32(1)(c) is that the cause of action in a case such as the present may be extended for an indefinite period of time. I realise that this consequence may not have been fully appreciated at the time when this provision was enacted, and further that the recognition of the right at common law to recover money on the ground that it was paid under a mistake of law may call for legislative reform to provide for some time limit to the right of recovery in such cases. The Law Commission may think it desirable, as a result of the decision in the present case, to give consideration to this question; indeed they may think it wise to do so as a matter of some urgency. With great respect to an eminent judge, that statement suggests that some important matters were insufficiently considered. The fundamental purpose of limitation statutes is to set a time limit for the bringing of claims. As the Law Reform Committee stated at paragraph 7 of its Report, the purpose of the statutes [of limitation] goes further than the prevention of dilatoriness; they aim at putting a certain end to litigation and at preventing the resurrection of old claims, whether there has been delay or not. Lord Goffs statement accepts that the result of the majoritys decision as to the effect of section 32(1)(c) is that the cause of action in a case such as the present may be extended for an indefinite period of time. That is also a possibility in the case of mistakes of fact, but it may be argued that the risk is potentially higher, and the consequences potentially more serious, in the case of a mistake of law arising retrospectively as a result of a judicial decision. Lord Goffs statement that this consequence may not have been fully appreciated at the time when this provision was enacted lays the responsibility at Parliaments door. But the question which the Appellate Committee should itself have considered was whether the result of its decision would be consistent with Parliaments intention in enacting the 1980 Act. It is the duty of the court, in accordance with ordinary principles of statutory construction, to favour an interpretation of legislation which gives effect to its purpose rather than defeating it. Lord Goff did not, however, undertake any analysis of section 32(1), and made no attempt to give it a purposive interpretation. It will be necessary to return to this issue, after section 32(1) has been examined in the light of the decision in Deutsche Morgan Grenfell [2007] 1 AC 558. Turning to the other majority judgments, Lord Hoffmann, like Lord Goff, rejected the possibility of distinguishing in the law of restitution between cases where a judicial decision changed a settled view of the law, or settled what was previously an unsettled view, on the one hand, and cases where the mistake of law lacked any retrospective element, on the other hand. In Lord Hoffmanns view, there was no basis in principle for drawing such a distinction. In relation to limitation, Lord Hoffmann stated at p 401: I accept that allowing recovery for mistake of law without qualification, even taking into account the defence of change of position, may be thought to tilt the balance too far against the public interest in the security of transactions. The most obvious problem is the Limitation Act, which as presently drafted is inadequate to deal with the problem of retrospective changes in law by judicial decision. But I think that any measures to redress the balance must be a matter for the legislature. This may suggest that your Lordships should leave the whole question of the abrogation of the mistake of law rule to the legislature, so that the change in the law and the necessary qualifications can be introduced at the same time. There is obviously a strong argument for doing so, but I do not think that it should prevail over the desirability of giving in this case what your Lordships consider to be a just and principled decision. Like Lord Goff, Lord Hoffmann therefore construed section 32(1) as applying to claims for the recovery of money paid under a mistake of law, despite considering that the Act was inadequate to deal with the resulting problems. If that was indeed the position, then the correct conclusion to draw, consistently with the Appellate Committees constitutional duty to give effect to Acts of Parliament, purposively construed, was that section 32(1) did not apply to such claims. As Lord Hoffmann himself observed in Johnson v Unisys Ltd [2001] UKHL 13; [2003] AC 518, para 37: [J]udges, in developing the law, must have regard to the policies expressed by Parliament in legislation The development of the common law by the judges plays a subsidiary role. Their traditional function is to adapt and modernise the common law. But such developments must be consistent with legislative policy as expressed in statutes. The courts may proceed in harmony with Parliament but there should be no discord. Lord Hope of Craighead also rejected the possibility of distinguishing between different kinds of mistake of law for the purposes of the law of restitution, because of the difficulty of establishing a clear and principled approach. He identified a number of situations in which there might be said to be a mistake of law. The mistake might be caused by a failure to take advice, by omitting to examine the available information, or by misunderstanding the information which had been obtained. Or it might be due to a failure to predict correctly how the court would determine issues which were unresolved at the time of the payment, or to foresee that there was an issue which would have to be resolved by the court. Within the latter categories, there might be cases where the court overturned an established line of authority, and cases where there was no previous decision on the point. He concluded, at p 411, that it was preferable to avoid being drawn into a discussion as to whether a particular decision changed the law or was merely declaratory, since [i]t would not be possible to lay down any hard and fast rules on this point. In relation to limitation, Lord Hope observed at p 417 that the word mistake appeared in section 32(1) without qualification, and that there was nothing in the words used which restricted the application of the subsection to mistakes of fact. More questionably, he added that the origin of the section, in paragraph 23 of the Report of the Law Revision Committee, suggested that the absence of restriction was intentional. No other member of the Appellate Committee supported that reading of the Report, and we can find no indication of such an intention in paragraph 23 or elsewhere: see in particular para 126 above. Lord Hope also noted that in In re Diplock the Court of Appeal had said that section 26(c) of the 1939 Act would operate to postpone the running of time in the case of an action to recover money paid under a mistake of fact. He continued, at p 417: But the distinction between mistake of fact and mistake of law as a ground for recovery is not absolute. Relief is available where the mistake of law relates to private rights: Earl Beauchamp v Winn, LR 6 HL 223. Private agreements made under a mistake of law may be set aside, and relief will be given in respect of payments made under such agreements. Other examples may be given where a cause of action for relief will be available although the mistake was one of law. In R v Tower Hamlets London Borough Council, Ex p Chetnik Developments Ltd [1988] AC 858, 874H 877C Lord Bridge of Harwich referred to a substantial line of authority showing circumstances in which the court would not permit the mistake of law rule to be invoked. These include payments made under an error of law to or by a trustee in bankruptcy as an officer of the court: Ex p James, In re Condon (1874) LR 9 Ch App 609. It is hard to see why in those cases the equitable rule which allows for the postponement of the limitation period should not apply, to the effect that time will not run until the claimant knew of the mistake or ought with reasonable diligence to have known of it. If the postponement can apply in these examples of mistake of law, I think that it ought to apply to mistakes of law generally. The authorities cited in that passage might be regarded as illustrating the fine distinctions sometimes drawn between mistakes of fact and of law, but they did not dissolve the distinction. They were not, in particular, concerned with claims for the recovery of money on the basis that it had been paid under a mistake of law. Nor were they concerned with limitation. For the reasons explained at paras 150 151 above, Earl Beauchamp v Winn does not in our opinion offer any guidance in relation to the application of section 32(1)(c) of the 1980 Act to claims of the kind with which Kleinwort Benson was concerned. Cases concerned with the recovery of payments made under an error of law to a trustee in bankruptcy as an officer of the court, such as Ex p James, also appear to us to have no bearing on the point. As was explained in paras 111 112 above, claims to recovery in cases of that kind were not based on mistake, and did not question that both the legal and the equitable title had passed. The case of R v Tower Hamlets London Borough Council, Ex p Chetnik Developments Ltd [1988] AC 858 also appears to us to offer no assistance, except in explaining the principle underlying the line of authority including Ex p James. It was a case in public law, concerned with the exercise of a statutory discretion to repay rates which had been paid in the absence of any liability to pay. In relation to the risk that the decision of the majority would result in serious problems, Lord Hope stated at p 417: The objection may be made that time may run on for a very long time before a mistake of law could have been discovered with reasonable diligence, especially where a judicial decision is needed to establish the mistake. It may also be said that in some cases a mistake of law may have affected a very large number of transactions, and that the potential for uncertainty is very great. But I do not think that any concerns which may exist on this ground provide a sound reason for declining to give effect to the section according to its terms. The defence of change of position will be available, and difficulties of proof are likely to increase with the passage of time. I think that the risk of widespread injustice remains to be demonstrated. to the Governments willingness It will be necessary to return to the points made in that passage. Like Lord Goff, Lord Hope considered (p 418) that any need for further restriction of the limitation period was best considered by the Law Commission, evincing a level of optimism about implement Law Commission recommendations which has not been borne out by experience. By contrast, Lord Browne Wilkinson considered that, if the law recognised claims for the recovery of money paid under a mistake of law, including claims arising retrospectively as the result of a judicial decision, then the disruption of legal certainty resulting from the application of section 32(1)(c) would be so great that the Appellate Committee ought not to develop the law so as to recognise such claims. He observed at p 364 that [o]n every occasion in which a higher court changed the law by judicial decision, all those who had made payments on the basis that the old law was correct (however long ago such payments were made) would have six years in which to bring a claim to recover money paid under a mistake of law. Since all the members of the Appellate Committee accepted that this position could not be cured save by primary legislation altering the relevant limitation period, he concluded that the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period applicable to it. Similar views were expressed by Lord Lloyd of Berwick (p 398). The decision in Kleinwort Benson in relation to section 32(1) does not stand or fall on the persuasiveness of the speeches. It will be necessary to return at a later point in this judgment to the question as to whether, on a proper understanding of section 32(1), the decision was correct. First, however, it is necessary to consider the construction of section 32(1), which was one of the matters examined in Deutsche Morgan Grenfell. Deutsche Morgan Grenfell The case of Deutsche Morgan Grenfell concerned legislation under which, where a company paid a dividend, it was liable to pay ACT, calculated as a proportion of the dividend, which could later be set off against its liability to pay mainstream corporation tax on its profits. The Revenue thereby obtained early payment of the tax and, in cases where the ACT exceeded the mainstream corporation tax, the payment of tax which would not otherwise have been due. Where, however, the dividend was paid to a parent company, and both the company paying the dividend and its parent were resident in the UK, a group income election could be made. The result of such an election was that the subsidiary did not pay ACT, but instead paid the appropriate amount of mainstream corporation tax when it became due. Deutsche Morgan Grenfell (DMG) was a UK subsidiary of a German parent and was therefore unable to make an election. As a result, it paid tax, in the form of ACT, earlier than it would have done if an election had been possible. In Hoechst [2001] Ch 620, the Court of Justice held that the legislation was incompatible with EU law in so far as it denied to the subsidiaries of non UK resident parents the ability to make a group income election. That decision endorsed the opinion of the Advocate General, promulgated six months earlier. A month after the Advocate Generals opinion was promulgated, and five months before the decision of the Court of Justice, DMG began proceedings to recover compensation for its early payment of the tax. Its claim was based on the proposition that it paid the tax when it did under a mistake of law, and was therefore entitled to restitution in accordance with the principle established in Kleinwort Benson: a principle which, it argued, applied to payments of tax as it did to other payments, notwithstanding the availability of a right to recover undue tax under the Woolwich principle. On the other hand, the Revenue argued that the reasoning in Kleinwort Benson did not apply to payments of tax, and that the only common law cause of action to recover tax was that based on the decision in Woolwich [1993] AC 70. It is unnecessary for us to consider the Appellate Committees decision on those questions, which is not in issue in the present appeal. DMG also argued that the mistake was not discoverable until the decision in Hoechst (although it had begun its action before then), and that section 32(1) of the 1980 Act postponed the commencement of the limitation period until then. In reply, the Revenue argued that the mistake was discovered when DMG learned in 1995, six years before the decision in Hoechst, that the relevant provisions were the subject of serious legal challenge in the Hoechst proceedings and might not be lawful. DMGs arguments on that question were accepted by the House of Lords ([2007] 1 AC 558), by a majority of three to two. In considering the application of section 32(1)(c), Lord Hoffmann stated at para 31 that the reasonable diligence proviso depended upon the true state of affairs being there to be discovered: In this case, however, the true state of affairs was not discoverable until the Court of Justice pronounced its judgment. One might make guesses or predictions, especially after the opinion of the Advocate General. This gave DMG sufficient confidence to issue proceedings. But they could not have discovered the truth because the truth did not yet exist. In my opinion, therefore, the mistake was not reasonably discoverable until after the judgment had been delivered. This statement is based on a number of premises. One is that a mistake of law is a mistake within the meaning of section 32(1)(c), as had been held in Kleinwort Benson, and therefore falls within the ambit of the discoverability test. It will be necessary to return to that point. Lord Hoffmanns statement also assumes that discovery, within the meaning of section 32(1), means the ascertainment of the truth, and that, as a consequence of the abandonment of the declaratory theory, judicial decisions which establish a point of law thereby bring the truth into existence for the first time. It will be necessary to examine those assumptions in the context of the dissenting speech of Lord Brown of Eaton under Heywood. Lord Hope emphasised at para 71 that DMGs claim was disputed by the Revenue until the matter was finally decided in DMGs favour by the Court of Justice: It is plain, as the judge recognised, that if DMG had submitted a claim for group income relief under section 247(1) the revenue would have pointed to the clear terms of the statute and rejected it. It has never been suggested that they would have conceded in a question with DMG the point which they were resisting so strongly in their litigation with Hoechst The issue, which was one of law, was not capable of being resolved except by litigation. Until the determination was made the mistake could not have been discovered in the sense referred to in section 32(1) of the 1980 Act. Although DMG had learned of Hoechsts challenge to the ACT regime in 1995, six years before the Court of Justice delivered its judgment, it was not then obvious that the payments might not be due. Lord Walker concurred, stating at para 144 that it was the judgment of the Court of Justice in Hoechst that first turned recognition of the possibility of a mistake into knowledge that there had indeed been a mistake. Like Lord Hope, he emphasised that, until that judgment, the Revenue denied that DMG had a cause of action: Perusal of the report in that case suggests that the United Kingdom Government tenaciously defended the ACT regime on every available ground. At no time before the judgment did the Government concede that the ACT regime was (in discriminating between national and multi national groups) contrary to EU law and unlawful. It was the judgment that first turned recognition of the possibility of a mistake into knowledge that there had indeed been a mistake. Lord Walker added, however (ibid) that there may be cases where a party may be held to have discovered a mistake without there being an authoritative pronouncement directly on point on the facts of that case by a court, let alone an appellate court. Lord Brown dissented, on the view that DMG discovered the mistake, within the meaning of section 32, when it first became aware of the Hoechst proceedings. It will be necessary to return to Lord Browns speech. Lord Scott of Foscote also dissented, on the view that DMGs cause of action properly lay in tort, and therefore fell outside the ambit of section 32(1)(c) of the 1980 Act. Discussion of Deutsche Morgan Grenfell We shall begin our discussion of the two decisions placed in question in the present appeal by considering Deutsche Morgan Grenfell, on the hypothesis that the decision in Kleinwort Benson, that mistakes of law fall within the ambit of section 32(1)(c), was correct. We shall then consider Kleinwort Benson [1999] 2 AC 349. We approach the decisions in that order because it was only in Deutsche Morgan Grenfell [2007] 1 AC 558 that the Appellate Committee considered how section 32(1) operated in practice, in relation to discoverability, if mistakes of law fell within its scope. It is best to consider that issue, in the light of the contrasting views of the majority and of Lord Brown, before attempting to answer the question whether such mistakes do fall within the scope of the provision, purposively construed. A logical paradox A paradox results from the approach adopted in Deutsche Morgan Grenfell, most clearly articulated by Lord Hoffmann: a claimant can be unable to discover the existence of his cause of action even after he has brought his claim: he cannot discover it until his claim succeeds. The paradox is well illustrated by the Court of Appeals decision in FII (CA) 2 [2017] STC 696, based on the application of Deutsche Morgan Grenfell. As was explained in para 54 above, the court held that the decision in Deutsche Morgan Grenfell established that in the case of a point of law which is being actively disputed in current litigation the true position is only discoverable, for the purpose of section 32(1)(c) of the 1980 Act, when the point has been authoritatively determined by a final court. On that basis, the court concluded that time began to run for the test claimants only on the date when judgment was delivered in FII (CJEU) 1, three and a half years after they had issued their claims. The paradox is particularly striking because the test claimants were successful before the Court of Justice. Its decision confirmed that they had been correct when they issued their claim form in 2003, asserting that they had paid tax under a mistake of law. It was the Revenue who were mistaken. That result illustrates the illogicality inherent in the reasoning in Deutsche Morgan Grenfell: the test claimants were able to identify correctly a mistake of law for the purpose of pleading a cause of action, while supposedly being unable to discover it for the purpose of the limitation period applicable to that cause of action. That illogicality results from a specific difference between Lord Hoffmanns approach to the accrual of a cause of action based on mistake, on the one hand, and his approach to the limitation period applicable to that cause of action, on the other hand. Where a payment has been made at time T1 on the basis of the law as it stood at that time, and the law is subsequently changed (as Lord Hoffmann would describe it) by a judicial decision taken at time T2, Lord Hoffmann says that the effect of the decision at T2 is that the law at T1 retrospectively becomes what it was decided to be at T2. The consequence is that the payment at T1 is retrospectively deemed to have been made under a mistake. A cause of action is therefore retrospectively deemed to have accrued at T1. However, when it comes to limitation, a different approach is adopted. The change in the law which is said to have been brought about by the decision at T2 is treated as occurring at T2, and therefore as being discoverable only at that time. Thus the mistake of law which, for the purpose of the accrual of a cause of action, is deemed to have occurred at T1, is simultaneously deemed not to have occurred at TI, but at T2, for the purpose of the law governing the discoverability of the mistake. It is because T2 occurs after the claim has been brought, and at the point when it is finally decided, that the paradox arises, that the mistake which forms the basis of the claim is not discoverable unless and until the claim succeeds. It is for the same reason that there arises the equally paradoxical result, that a limitation period applicable to the commencement of proceedings cannot begin to run until the proceedings have been completed. Paradoxical is indeed a generous term. One might say more candidly that this approach has consequences which are illogical and which frustrate the purpose of the legislation. One possible response, arguably consistent with the abandonment of the declaratory theory, would be to argue that a deemed mistake is in reality no mistake at all. That is not, however, being argued in the present case. In any event, any attempt to draw a clear and principled distinction between deemed and actual mistakes faces real difficulties. As Lord Hope, in particular, indicated in his speech in Kleinwort Benson [1999] 2 AC 349, determining whether a particular decision changed the law or was merely declaratory would be a difficult exercise, not merely evidentially, but at a much deeper level. For example, when the House of Lords held in Murphy v Brentwood District Council [1991] 1 AC 398 that the case of Anns v Merton London Borough Council [1978] AC 728 had been wrongly decided (per Lord Keith of Kinkel at p 472), was the law changed, or was there a non fictional sense in which the law at the time of Anns was other than the House of Lords had then declared it to be? Ultimately, the drawing of a line between deemed and actual mistakes, and even the question whether such a distinction can be drawn, depends on a theory of the nature of judicial decision making, and indeed of the nature of law. The resultant scope for argument as to where the line should be drawn in any particular case would undermine one of the basic objectives of limitation statutes, namely to produce certainty as to the time limit for the bringing of a claim. In any event, the issue raised by Lord Hoffmanns reasoning is not confined to deemed mistakes, or conditional on his rejection of the declaratory theory. Judges cannot avoid having to decide at T2 what the law was at T1, and if their decision does not reflect how the law was understood by the claimant at T1, then it will ordinarily be uncontroversial to say that the claimant was mistaken at T1. The consequence, following the decision on the law of restitution in Kleinwort Benson, is that a cause of action accrued at T1 if a payment was made then on the basis of the mistaken understanding, regardless of the date of T2. On the limitation side of the analysis, on the other hand, the concept of discoverability is designed to protect claimants who could not reasonably be expected to know of the existence of the circumstances giving rise to their cause of action until sometime after it accrued. It must therefore be concerned with discoverability in reality, at a date which may be later than T1. It does not, however, follow that the discoverability of a mistake of law, within the meaning of section 32(1), must necessarily be tied to the date of a judicial decision, ie T2. The problems identified in para 174 above suggest that tying discoverability to the date of a judicial decision is a mistake. It will be necessary to return to that point in the context of Lord Browns dissenting speech in Deutsche Morgan Grenfell [2007] 1 AC 558. 2. Judicial decisions and the development of the law That thought is reinforced by other considerations. Section 32(1) applies where the claimant does not know and cannot reasonably be expected to discover a mistake which forms an essential ingredient of his cause of action. Its effect is that the limitation period commences not on the date when the cause of action accrues, but on the date when the claimant discovers, or could with reasonable diligence discover, the mistake in question. The result of that postponement of the commencement date of the limitation period is to postpone the deadline for the bringing of a claim, so that the time during which the claimant was disadvantaged by the mistake does not count against him. Lord Hoffmanns approach, whereby the limitation period does not begin until the truth has been established by a final judicial decision, does not merely extend the limitation period to the extent necessary to overcome the disadvantage arising from the mistake, but has the remarkable consequence of excusing the claimant from the necessity of bringing a claim until he can be certain that it will succeed: indeed, until it has in fact succeeded. This places the claimant in a case based on a mistake of law in a uniquely privileged position, since other claimants are required to bring their claims at a time when they have no such guarantee: the limitation period runs alike for claims which fail as for claims which succeed. If the limitation period can begin to run at a time when a claim is uncertain of success, then, in addition to the logical problem discussed earlier, there is also a lack of realism in treating the date of a judicial decision authoritatively establishing the true state of the law as the earliest date when the claimant discovers, or could with reasonable diligence discover, the mistake in question. In the first place, the courts do not act on their own initiative, but only when their jurisdiction is invoked: normally, by the issuing of a claim. A point of law could often have been decided earlier, if a claim had been brought at an earlier time. Secondly, thinking about the law evolves over time. Developments in judicial thinking, in particular, do not take place in a vacuum. Judgments are the culmination of an evolution of opinion within a wider legal community, to which practitioners, universities, legal journals and the judiciary all contribute. And it is not only judges who are influenced by that evolving body of opinion. Claimants and their advisers respond to the same developments in their understanding of the state of the law, and their decisions as to whether or not worthwhile claims may exist. It is therefore possible to investigate how legal thinking on a particular question (for example, in the present case, whether the UK tax treatment of dividends received by UK resident companies from non resident subsidiaries was compatible with EU law) developed over time, and to ascertain, by means of evidence, the time by which a reasonably diligent person in the position of the claimant (such as, in the present case, a UK based multi national company) could have known of a previous mistake of law, to the extent of knowing that there was a real possibility that such a mistake had been made, and that a worthwhile claim could therefore be made on that basis. This line of thought suggests that the focus of attention under section 32(1) of the 1980 Act should not be on judicial decisions, but on the claimants ability to discover that he had a worthwhile claim. Giving effect to the intention of Parliament Finally, in relation to Lord Hoffmanns reasoning, it is also, with great respect, susceptible to the criticism that it pays insufficient regard to the principle of statutory construction that legislation should be given a purposive interpretation. If section 32(1) is interpreted in accordance with Kleinwort Benson as applying to mistakes of law, and if those mistakes of law are not considered to be discoverable within the meaning of the provision until after a final judgment has been delivered, as was held in Deutsche Morgan Grenfell [2007] 1 AC 558, then the object of the limitation statute is defeated. That object is to set a time limit for the bringing of claims. That object is frustrated if the limitation period does not begin to run until the proceedings have been completed. It is true that the limitation period so set will not be completely pointless in a situation where other people have identical claims which are not being pursued in the same proceedings, since time will begin to run for the bringing of those other claims. But in more usual situations, where an individual claim is brought, or where multiple claims are brought together in a group litigation (as in Deutsche Morgan Grenfell itself, which was a test case in the ACT Group Litigation), this approach to limitation defeats Parliaments purpose in enacting limitation periods. It is therefore a result which Parliament cannot have intended when it enacted the 1980 Act. 4. Consistency with the treatment of fraud under section 32(1) As we have explained, Lord Brown dissented in Deutsche Morgan Grenfell [2007] 1 AC 558 on the view that DMG discovered the mistake, within the meaning of section 32, when it first became aware of the Hoechst proceedings and recognised that there was a serious challenge to the legality of the ACT regime under EU law. He stated at para 165: I would hold that as soon as a paying party recognises that a worthwhile claim arises that he should not after all have made the payment and accordingly is entitled to recover it (or, as here, to compensation for the loss of its use), he has discovered the mistake within the meaning of section 32; and, by the same token, I would hold that if he makes any further payments thereafter, they are not to be regarded as payments made under a mistake of law. Lord Brown thus challenged the fundamental assumption underlying the approach adopted by the majority in Deutsche Morgan Grenfell: that discovery, within the meaning of section 32(1), means the ascertainment of the truth, and that a mistake of law is therefore only discoverable when the point of law in question has been authoritatively decided by a final court. On the approach which he adopted, a mistake is discovered when the claimant recognises that a worthwhile claim arises. Lord Brown noted that DMG had continued to make payments of ACT after July 1995, when they learned that Hoechst had issued proceedings, and that they had issued their own claim five months prior to the decision of the Court of Justice in Hoechst [2001] Ch 620. Referring to Lord Hopes statement that, when DMG paid the ACT, it was not then obvious that the payments might not be due, Lord Brown commented at para 172 that he had some difficulty with that conclusion: Surely, when DMG learned in July 1995 that there was a serious legal challenge to the legality of the ACT regime, it must then have been obvious to them that these payments might not after all be due. Of course they could not be sure and of course nothing short of a final judgment from the European Court of Justice would have persuaded the revenue to accept any claim by DMG here for group income relief. But it does not seem to me to follow that DMG paid under a mistake of law. In support of his views, Lord Brown pointed first, at para 167, to the parallel treatment in section 32 of fraud, deliberate concealment and mistake: Once a plaintiff recognises that he has a worthwhile case on the facts to pursue a claim in fraud or to extend the limitation period for a particular claim because of the defendants deliberate concealment of a fact relevant to his cause of action, time surely then starts to run against him under section 32: he could not successfully argue that time starts running only when the court eventually comes to reject the defendants denial of wrongdoing and to find fraud (or, as the case may be, deliberate concealment) established. The view expressed in that passage is supported by a number of authorities concerned with the application of section 32(1) in cases of fraud. The first which might be mentioned is the judgment of Arden LJ, with which Aldous and Robert Walker LJJ agreed, in Biggs v Sottnicks [2002] EWCA Civ 272. In deciding when the appellants could with reasonable diligence have discovered a fraud, for the purposes of section 32(1) of the 1980 Act, her Ladyship treated the relevant date as the correct date when the appellants solicitors had sufficient information in their hands for the purposes of this deceit claim (para 62), that is to say, the date when the appellants were in a position to plead their own case (para 64). A similar approach was adopted in Law Society v Sephton & Co [2004] EWHC 544 (Ch); [2004] PNLR 27, para 44, where the court proceeded on the basis of the parties agreement that a claimant did not discover a fraud until he had material sufficient to enable him properly to plead it. Reference should also be made to the judgment of Lord Hoffmann NPJ, with which the other members of the Hong Kong Court of Final Appeal agreed, in Peconic Industrial Development Ltd v Lau Kwok Fai [2009] HKCFA 16; [2009] WTLR 999. The case raised the question, under a legislative provision in the same terms as section 32(1) of the 1980 Act, whether the claimants could with reasonable diligence have discovered a fraud committed more than six years before proceedings were issued. Lord Hoffmann stated at para 56: In any case, it is not necessary that [the claimants] should have known facts which put [the fraudsters] participation in the fraud beyond all reasonable doubt. The purpose of the inquiry into whether [the claimants] could with reasonable diligence have discovered his fraud is to establish when they could reasonably have been expected to commence proceedings. For that purpose, they needed only to know facts which amounted to a prima facie case. The approach adopted in those cases differs from that proposed by Lord Brown only in its focus on the date when the claimant (or his lawyers) had sufficient material properly to plead a claim in fraud. Lord Brown put the matter differently in paras 165 and 167 of his judgment in Deutsche Morgan Grenfell [2007] 1 AC 558, when he treated the mistake as being discovered as soon as the claimant recognises that a worthwhile claim arises, or that he has a worthwhile case to pursue a claim. It will be necessary to return to this point. As will be explained, Lord Browns approach is consistent with that adopted authoritatively in analogous contexts where fraud was not in issue, and is also in accordance with principle. What is more important for present purposes, however, is that the approach adopted in these cases of fraud, like that proposed by Lord Brown for cases of mistake, treats the relevant date, for the purposes of the commencement of the limitation period, not as the date when the claimant knows or can establish the truth, but as the date when he can recognise that a worthwhile claim arises, in Lord Browns formulation, or can plead a statement of claim, in the formulation preferred in the fraud cases. 5. Consistency with other analogous provisions of the 1980 Act Lord Brown also found support for his position in Deutsche Morgan Grenfell in authorities concerned with the interpretation of other provisions of the 1980 Act which postpone the commencement of the limitation period until the claimant knows or could reasonably have known the facts forming the basis of his cause of action. That approach is applied, for example, to actions for damages in respect of torts causing personal injuries, by section 11 of the 1980 Act. Under section 11(4), read together with section 14(1), the limitation period generally runs from the date on which the cause of action accrued, or, if later, the date on which the person injured had knowledge that the injury was significant and was attributable to the act or omission relied on, and knowledge of the identity of the defendant. For these purposes, knowledge is defined as including knowledge which he might reasonably have been expected to acquire (section 14(3)). The language of these provisions differs from section 32(1) in that they refer to having knowledge, rather than discovering. But that is on its face an insubstantial difference, since discovery ordinarily refers to the acquisition of knowledge. And sections 11, 14 and 32 have the same rationale, namely that the limitation period should only run from the time when the claimant knows or could reasonably have known of the existence of his cause of action. Sections 11 and 14 are explicitly concerned with knowledge of the facts forming the cause of action, and not with their legal consequences. But the same is true of section 32(1), even in its application to mistakes of law. As is explained below, the relevant fact that has to be discovered, in that context, is the fact that the claimant made a mistake, that being an essential ingredient of his cause of action. A claimants ignorance of the legal consequences of the facts forming his cause of action is not something with which section 32(1) is concerned, as Lord Walker made clear in FII (SC) 1 [2012] 2 AC 33, para 63 (para 41 above). That is consistent with the intention of the Law Revision Committee, as was explained at para 127 above. Sections 11 and 14 were considered by this court in AB v Ministry of Defence [2012] UKSC 9; [2013] 1 AC 78, where proceedings were begun by the claimants at a time when they believed that their injuries had been caused by their exposure to radiation by the defendant, but had no objective basis for their belief. Their contention that they did not then have knowledge of the facts forming the basis of their cause of action was rejected. The court held, by a majority, that knowledge did not mean knowing for certain and beyond possibility of contradiction, but that mere suspicion was not enough; that in order to amount to knowledge a belief had to be held with sufficient confidence to justify embarking on the preliminaries to issuing proceedings; and that it was, therefore, a legal impossibility for a claimant to lack knowledge for the purposes of section 14(1) at a time after he had issued his claim. In relation to the last of those points, Lord Wilson, Lord Walker, Lord Brown and Lord Mance all made it clear that, in deciding whether a claim was statute barred, the court had to assume that, when the claimant issued his claim, he had knowledge of the facts necessary to support his pleaded cause of action. Lord Wilson stated at para 6 that it was heretical that a claimant could escape the requirement to assert his cause of action for personal injuries within three years of its accrual by establishing that, even after his claim was brought, he remained in a state of ignorance entirely inconsistent with it. Lord Walker said at para 67 that he did not see how a claimant who had issued a claim form could be heard to suggest that he did not, when it was issued, have the requisite knowledge for the purposes of the 1980 Act. Lord Brown said at para 71 that once a claimant issues his claim, it is no longer open to him to say that he still lacks the knowledge necessary to set time running. Lord Mance agreed, observing at para 84 that a claimant bringing proceedings necessarily asserts that he or she has a properly arguable claim. Considering more precisely the point in time at which a claimant acquires knowledge for the purposes of sections 11(4) and 14(1) of the 1980 Act, the majority of the court in AB v Ministry of Defence endorsed the test earlier approved by the House of Lords in relation to claims falling under section 14A (inserted by the Latent Damage Act 1977), which applies to actions for damages for negligence, other than those involving personal injuries. In Haward v Fawcetts [2006] UKHL 9; [2006] 1 WLR 682, para 9, Lord Nicholls of Birkenhead stated: Lord Donaldson of Lymington MR gave valuable guidance in Halford v Brookes [1991] 1 WLR 428, 443. He noted that knowledge does not mean knowing for certain and beyond the possibility of contradiction. It means knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence: Suspicion, particularly if it is vague and unsupported, will indeed not be enough, but reasonable belief will normally suffice. In other words, the claimant must know enough for it to be reasonable to begin to investigate further. The formulation adopted in Halford v Brookes [1991] 1 WLR 428, Haward v Fawcetts and AB v Ministry of Defence places the commencement of the limitation period slightly earlier than the fraud cases discussed earlier. The relevant time is when the claimant knows with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, rather than the point in time when he could plead a statement of claim. This is not the occasion on which to review the formulation used in the fraud cases, which reflects the special standards applicable to the pleading of fraud. The formulation used in Halford v Brookes, Haward v Fawcetts and AB v Ministry of Defence is, however, consistent with the way in which the point was expressed by Lord Brown in Deutsche Morgan Grenfell (para 180 above) and by Lord Walker in FII (SC) 1 [2012] 2 AC 33 (para 48 above). It is also consistent with principle. The limitation period normally begins to run on the date when the cause of action accrues. It is not postponed until the claimant has consulted a solicitor, carried out investigations, and is in a position to plead a statement of claim. For example, a pedestrian who is knocked down and injured by a car while using a zebra crossing has a cause of action against the driver, which accrues on the date of the accident. It will take time before he can issue a claim: he will need to consult solicitors, and counsel may have to be instructed to draft the claim. There may be many matters which have to be investigated, and that may take time. And it may be that his claim will fail in the end, if, for example, it is found that he suddenly ran into the path of the car, or that the driver had a heart attack and lost control of the vehicle. Nevertheless, the limitation period begins to run on the date of the accident. It is not postponed until he has completed his investigations, or until he knows that his claim is guaranteed to succeed. The purpose of the postponement effected by section 32(1) is to ensure that a claimant is not disadvantaged, so far as limitation is concerned, by reason of being unaware of the circumstances giving rise to his cause of action as a result of fraud, concealment or mistake. That purpose is achieved, where the ingredients of the cause of action include his having made a mistake of law, if time runs from the point in time when he knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell [2007] 1 AC 558, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises. We do not believe that there is any difference of substance between these formulations, each of which is helpful and casts light on the other. It is true that Haward v Fawcetts [2006] 1 WLR 682 and AB v Ministry of Defence [2013] 1 AC 78 were not concerned with section 32, but with other provisions of the 1980 Act, expressed in different language: sections 14(3) and 14A(10) are concerned with knowledge which [the claimant] might reasonably have been expected to acquire, whereas section 32(1) is concerned with what he could with reasonable diligence have discovered. It is also true that sections 14 and 14A explicitly provide that knowledge that any acts or omissions did or did not, as a matter of law, involve negligence, is irrelevant. They are, however, concerned with the same problem as section 32(1), namely that a cause of action can accrue before the claimant comes to know of it, and they address that problem in a similar way, by postponing the commencement of the limitation period until the claimant knew, actually or constructively, the facts on which the cause of action is based. The close connection between sections 11, 14, 14A and 32 of the 1980 Act was made clear by Lord Walkers reasoning in FII (SC) 1, para 63 (para 41 above). In those circumstances, it appears to us to be impossible to reconcile the reasoning in Haward v Fawcetts and AB v Ministry of Defence with that in Deutsche Morgan Grenfell and the cases which have followed it. The former line of authority proceeds on the basis that the commencement of the limitation period is postponed until the claimant knows, actually or constructively, the essential facts on which the cause of action is based, with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence. The dissenting judgment of Lord Brown in Deutsche Morgan Grenfell is consistent with that approach: time does not begin to run until the claimant knows, actually or constructively, that he made a mistake (that being an essential ingredient of the cause of action), to the standard that a worthwhile claim arises. The latter line of authority, on the other hand, proceeds on the basis that the limitation period does not run until a court has authoritatively established that the claimants assertion that he made a mistake of law is true. Mistakes of law are thus treated differently from mistakes of fact, and the difficult and much criticised distinction between the two remains of crucial importance. Furthermore, only the former line of authority is consistent with the rationale of limitation periods. It is in the nature of litigation that facts and law are commonly disputed. It is the function of courts to resolve those disputes. Until the court has done so, the parties can, at best, have only a reasonable belief that their assertions are correct. If a limitation period is to serve its purpose, in fixing a time within which claims must be brought, it can therefore only be concerned with beliefs, and not with the truth established by judicial decisions, whether in the proceedings in question, or in other proceedings. That is reflected in Lord Donaldsons statement in Halford v Brookes [1991] 1 WLR 428, endorsed by Lord Nicholls in Haward v Fawcetts [2006] 1 WLR 682 (para 190 above) and by Lord Wilson in AB v Ministry of Defence [2013] 1 AC 78, para 11, that reasonable belief will normally suffice. 6. Consistency with discovery in another statutory context Returning to Deutsche Morgan Grenfell [2007] 1 AC 558, Lord Brown found further support for his argument in an authority concerned with the meaning of discover in the context of tax legislation. The Income Tax Act 1918 (and later tax statutes) contained a provision enabling additional assessments to be issued where it was discovered that profits chargeable to tax had been omitted from an initial assessment. In Earl Beatty v Inland Revenue Comrs [1953] 1 WLR 1090, the assessments under appeal were made under that provision, at a time when the Commissioners had a strong suspicion that there had been an undeclared transfer of assets by the appellant or his wife. It subsequently transpired that there had indeed been undeclared transfers, not by the appellant or his wife, but by his brother acting on his behalf. The assessments were challenged on the ground that they were not based on a discovery within the meaning of the legislation, since a suspicion, especially if inaccurate, did not amount to a discovery. The argument was rejected, the judge observing at p 1095: I think that the discovery need not be a complete and detailed or accurate discovery and that when the Commissioners find out, or think that they have found out, the existence of an omission or other error it is not necessary for them to have probed the matter to its depths or to define precisely the ground upon which they have made the assessments. Like a claim form, an assessment is not a statement of established verities. It is a formal statement of a claim made by the Commissioners and forms the basis of an inquiry into the facts in the event that it is challenged. In those circumstances, the test of discovery could not sensibly require that the truth had already been established. The same is true in the present context. Discovery and ascertainment of the truth 7. The approach adopted in the fraud cases discussed in paras 180 186 above, and in the cases concerned with analogous provisions of the 1980 Act, discussed in paras 187 196 above, is consistent with the nature of a plea of limitation: it is legally distinct from the merits of the claim in question, and is often conveniently dealt with as a preliminary issue. The 1980 Act proceeds on the basis that a cause of action has accrued, without concerning itself with the question whether or not the action is well founded. Section 32(1)(a) applies where the action is based upon the fraud of the defendant, and section 32(1)(c) applies where the action is for relief from the consequences of a mistake. If the action runs its full course, it may transpire that there was no fraud or mistake, indeed no cause of action at all. But where, at the stage of an inquiry into the defendants plea that the action is time barred, the claimant relies on section 32(1)(a) or (c), the question is not whether there was in reality any fraud or mistake: that will not be established unless and until the court issues a judgment on the merits of the case. The question under section 32(1)(a) and (c) of the 1980 Act is whether, upon the assumption that there was fraud or mistake, as identified by the claimant in the way in which he pleads his case, it was discovered or could with reasonable diligence have been discovered at such a time as would render the claim time barred. One might compare the approach adopted to the issue of laches in Earl Beauchamp v Winn (1873) LR 6 HL 223, where Lord Chelmsford stated at p 233 that in considering this part of the case it has been assumed, for the purpose of the argument, that the late Earl was under a mistake as to his interest Mr Winn, upon this assumption, was also under a mistake The case must be dealt with, therefore, as one of mutual mistake. Once the issue of laches had been disposed of on that basis, the House of Lords went on to hold that there had in fact been no mistake. Hence the situation which may seem paradoxical, but sometimes arises in practice (as, for example, in Law Society v Sephton & Co [2004] EWHC 544 (Ch); [2004] PNLR 27), where in a trial on limitation the defendant disputes the claimants assertion that he could not have known or discovered a fact which, in relation to the merits of the claim, the defendant denies is a fact at all. There is in reality no paradox, because at the stage of an inquiry into limitation the existence of the cause of action, and therefore the truth of the facts relied on by the claimant to establish it, is not the relevant issue. Put in general terms, the question is not whether the claimant could have established his cause of action more than six years (or whatever other limitation period might be relevant) before he issued his claim, but whether he could have commenced proceedings more than six years before he issued his claim. The existence of the constituents of the cause of action such as fraud or mistake as verified facts is not the issue. That point emerges clearly from the majority judgments in AB v Ministry of Defence [2013] 1 AC 78. Lord Wilson, for example, stated at para 2, in relation to section 11(4) of the 1980 Act: The subsection refers, at (a), to the cause of action notwithstanding that, if the action is to continue, it may well transpire that the claimant has no cause of action. When the subsection turns, at (b), to the date of knowledge (if later) and so requires the court to appraise the claimants knowledge of the four facts specified in section 14(1), which relate to, although do not comprise all elements of, his cause of action, the assumption that indeed he has a cause of action remains In the decision of the Court of Appeal in Halford v Brookes [1991] 1 WLR 428 the trial judge, Schiemann J, is quoted, at p 442H, as having referred to the bizarre situation when a defendant asserts that the plaintiff had knowledge of a fact which the plaintiff asserts as a fact but which the defendant denies is a fact. The situation may indeed seem bizarre until one remembers that, at the stage of an inquiry under section 11, the exercise requires the existence of the fact to be assumed. Were the action to continue, the defendant might well deny it; but he does not do so at that stage. It is for that reason that, contrary to the views seemingly held by Lord Hope and Lord Walker in Deutsche Morgan Grenfell [2007] 1 AC 558 (paras 169 and 170 above), the fact that the defendant disputes an element of the cause of action does not mean that the commencement of the limitation period is postponed until that dispute has been resolved. 8. Reasonable diligence That approach is also consistent with the well established test for determining whether, for the purposes of section 32(1), the claimant could with reasonable diligence have discovered a fraud. Authoritative guidance on that topic was given by Millett LJ in Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400, 418: The question is not whether the plaintiffs should have discovered the fraud sooner; but whether they could with reasonable diligence have done so. The burden of proof is on them. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take. In this context the length of the applicable period of limitation is irrelevant. In the course of argument May LJ observed that reasonable diligence must be measured against some standard, but that the six year limitation period did not provide the relevant standard. He suggested that the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and were motivated by a reasonable but not excessive sense of urgency. I respectfully agree. Neuberger LJ added in Law Society v Sephton & Co [2004] EWCA Civ 1627; [2005] QB 1013, para 116, that it is inherent in section 32(1) that there must be an assumption that the claimant desires to discover whether or not there has been a fraud: Not making any such assumption would rob the effect of the word could, as emphasised by Millett LJ, of much of its significance. Further, the concept of reasonable diligence carries with it the notion of a desire to know, and, indeed, to investigate. The test explained in those dicta has nothing to do with judicial decisions establishing disputed truths after trial. It is concerned with the steps which a person in the position of the claimant could reasonably have been expected to take before issuing a claim. 9. The pre 1939 equitable rule The foregoing approach is also supported by the pre 1939 principle of equity on which section 26 of the 1939 Act and section 32(1) of the 1980 Act were modelled. In that regard, the decision of the Court of Appeal in Molloy v Mutual Reserve Life Insurance Co (1906) 94 LT 756 is particularly helpful. The plaintiff took out a life assurance policy after being told by the insurers agent that, under the policy, the premiums would remain at a fixed rate. When the insurer later increased the premiums, the plaintiff brought proceedings in the County Court to recover the overpayments. The County Court held, however, that the insurer was entitled under the policy to charge the increased premiums. Several years later, another policy holder brought similar proceedings in the High Court, in which he succeeded. That decision was overturned on appeal, but the Court of Appeal, and ultimately the House of Lords, held that the contract should be rescinded, and the premiums returned, on the ground of fraudulent misrepresentation. The plaintiff (in the Molloy case) was by then out of time to bring a common law claim for the return of his premiums, but instead brought proceedings in equity for rescission, an account of the premiums paid (as a consequence of the setting aside of the contract), and payment of the amount found due on the account. Since the claim to an account was subject by analogy to the statutory limitation period, the plaintiff sought to rely on the equitable principle allowing for its extension in a case of fraud, and argued that he had been unable to discover that he had a cause of action prior to the decision of the House of Lords. That argument was accepted by Swinfen Eady J, who considered that time did not begin to run while the plaintiff waited to be fully informed as to what his legal rights were, and [until] the position was definitely and finally ascertained: (1906) 94 LT 756, 759. The Court of Appeal (Sir Richard Collins MR, Romer and Cozens Hardy LJJ) disagreed. The Master of the Rolls gave several reasons at p 761 for rejecting the argument. First, he pointed out that the plaintiff had known the facts which were essential to his cause of action long before the House of Lords gave its decision. The limitation period ran from the time when the plaintiff discovered the facts essential to his cause of action. It was immaterial that he did not understand their legal significance, or that it was only the decision of the House of Lords as to the construction of the policy that put that element of the cause of action beyond dispute: First of all, it rather assumes that the point of time at which the Statute of Limitations is to run is not the time at which the plaintiff ascertains the facts, but the time when he put the true legal construction upon them. Now, I dispute that. I do not think that the policy of the Statute of Limitations is that it is not to begin to run until a person has satisfied himself as to the exact legal inferences to be drawn from a number of facts which he has perfectly ascertained. The policy of the Statute of Limitations is based on the old maxim, Expedit reipublica ut sit finis litium. Therefore the object of it was really to put an end to actions after a lapse of time. [T]he plaintiff knew the facts, and, even although he was not able from his education and attainments to draw the proper legal inferences from them, the Statute of Limitations was not prevented from running That is equally true in a situation where one of the facts essential to the cause of action is that the claimant has made a mistake, whether of fact or of law. The fact that he has made a mistake needs to be discoverable (in the relevant sense) with reasonable diligence, but he does not need to know that he is consequently entitled to bring a claim. As the Law Revision Committee stated, the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time (para 126 above). That is why, on the facts of Kleinwort Benson [1999] 2 AC 349, the relevant matter which needed to be discoverable was that the swaps contracts were ultra vires, as had been established in Hazell, and not that a cause of action lay for payments made under a mistake of law, as was established in Kleinwort Benson itself. For the same reason, Henderson J was in error in FII (HC) 2 [2015] STC 1471, in favouring the view (para 47 above) that it was only when the House of Lords gave judgment in Deutsche Morgan Grenfell [2007] 1 AC 558 that time began to run against the BAT claimants, since that was the first time an appellate court had held that a restitutionary claim lay for the recovery of tax on the ground that it had been paid under a mistake of law. The relevant fact was that the belief that the tax was payable had been mistaken; not that there was a right to restitution. The second reason given by the Master of the Rolls for rejecting the plaintiffs argument is also relevant to these proceedings: On that argument it would follow logically that the Statute of Limitations had not begun to run until such time within six years as anybody might, in any proceedings raising the same question, get a decision from the House of Lords on the matter [H]e gives himself the right of beginning to count the running of the Statute of Limitations from the time when he ascertains not by the result of anything done by himself at all, but by some chance proceedings taken by somebody else, aliunde what his true position is in point of law. Then, and not until then, according to his contention, the Statute of Limitations begins to run. I think that it would be quite against the policy of the Statute of Limitations altogether to allow such considerations to come in. One might contrast that reasoning with the decision of the majority in Deutsche Morgan Grenfell, according to which time did not begin to run for DMG until Hoechst [2001] Ch 620 had established the same point of law in a final decision in other proceedings. The practicality of the suggested approach It remains to consider whether the test of discoverability suggested at para 193 above, taken together with the standard of reasonable diligence discussed at para 203, provides an approach to the application of section 32(1) to mistakes of law which is likely to be reasonably practical and certain in its operation. To recap: (1) As was explained, the suggested test of discoverability is that a mistake of law is discoverable when the claimant knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises. We do not believe that there is any difference of substance between these formulations, each of which is helpful and casts light on the other. (2) The standard of reasonable diligence is how a person carrying on a business of the relevant kind would act, on the assumption that he desired to know whether or not he had made a mistake, if he had adequate but not unlimited staff and resources and was motivated by a reasonable but not excessive sense of urgency. The question is not whether the claimant should have discovered the mistake sooner, but whether he could with reasonable diligence have done so. The burden of proof is on the claimant. He must establish on the balance of probabilities that he could not have discovered the mistake without exceptional measures which he could not reasonably have been expected to take. In practice, the application of that approach will depend on the circumstances of the case. For example, in cases where the claimant has made a payment on the basis of a mistaken understanding of the law which has resulted from ignorance, the mistake will normally have been discoverable immediately, by seeking legal advice. Section 32(1) only has effect where a mistake could not have been discovered at the time of the payment with the exercise of reasonable diligence. On the other hand, where the payment was made in reliance on a precedent that was subsequently overruled, or an understanding of the law that was later altered by a judicial decision, the question will be whether the claim was brought within the prescribed period beginning on the date when it was discoverable by the exercise of reasonable diligence that the basis of the payment was legally questionable, so as to give rise to a worthwhile claim to restitution. Depending on the circumstances, it may be difficult to identify a specific date, but doubtful cases can be resolved by bearing in mind that the burden of proof lies on the claimant to prove that his claim was brought within the prescribed limitation period. Clearly, where a payment was made in accordance with the law as it was then understood to be, the point in time at which the claimant could, with reasonable diligence, have discovered that the basis of the payment was legally questionable, so as to give rise to a worthwhile claim to restitution, will have to be established by evidence. The focus of that evidence is likely to be upon developments in legal understanding within the relevant category of claimants and their advisers, as explained in para 178 above. Thus, in the circumstances of the present case, Lord Walker referred in FII (SC) 1 [2012] 2 AC 33 (para 48 above) to there being a reasonable prospect that the limitation period could be deferred until the time when a well advised multi national group based in the UK would have had good grounds for supposing that it had a valid claim to recover ACT levied contrary to EU law. This point is considered in greater detail in para 255 below. Evidence in relation to matters of this kind may well include expert evidence concerning the state of understanding of the law within the relevant categories of professional advisers during the relevant period. It is true that this approach involves a more nuanced inquiry than a mechanical test based on the date on which an authoritative appellate judgment determined the point in issue. But it would be unduly pessimistic to conclude at this stage that it will prove to be unworkable in practice, or too uncertain in its operation to be acceptable. Deutsche Morgan Grenfell: Summary Taking stock of the discussion so far, the position can be summarised as follows: (1) Limitation periods set a time limit for issuing a claim, which normally begins to run when the cause of action accrues. They apply whether the substance of the claim is disputed or not. They apply to claims regardless of whether there is in truth a well founded cause of action. (2) Section 32(1) of the 1980 Act postpones the running of time beyond the date when the cause of action accrues, in cases where the claimant cannot reasonably be expected to know at that time the circumstances giving rise to the cause of action, by reason of fraud, concealment or mistake. Its effect is that the limitation period commences not on the date when the cause of action accrues, but on the date when the claimant discovers, or could with reasonable diligence discover, the fraud, concealment or mistake. (3) Consistently with (1) above, section 32(1) cannot be intended to postpone the commencement of the limitation period until the claimant discovers, or could discover, that his claim is certain to succeed. (4) Consistently with (1) above, section 32(1) cannot be intended to postpone the commencement of the limitation period until the proceedings have been completed. (5) In tying the date of discoverability of a mistake of law in section 32(1) to the date when the truth as to whether the claimant has a well founded cause of action is established by a judicial decision, the decision in Deutsche Morgan Grenfell [2007] 1 AC 558 contravenes (3) above, and is therefore inconsistent also with (1) above. (6) In tying the date of discoverability to the date of a judicial decision, with the consequence that the limitation period for issuing a claim may not begin to run until the proceedings have been completed, the decision in Deutsche Morgan Grenfell also contravenes (4) above, and is for that reason also inconsistent with (1) above. (7) Tying the date of discoverability to the date of a decision by a court of final jurisdiction, as the House of Lords appear to have done in Deutsche Morgan Grenfell, and as the Court of Appeal held in FII (CA) 2, compounds the mistake (para 54 above). (8) In tying the date of the discoverability of a mistake of law to the date of a judicial decision which establishes that a mistake was made, the decision in Deutsche Morgan Grenfell also has the illogical consequence that mistakes are not discoverable by a claimant until after he has issued a claim on the basis of the mistake: (paras 173 174 above). (9) The decision in Deutsche Morgan Grenfell therefore frustrates Parliaments intention in enacting section 32(1) (para 179 above). (10) The decision in Deutsche Morgan Grenfell is also inconsistent with authorities concerned with section 32(1) in relation to fraud (paras 180 186 above). (11) The decision in Deutsche Morgan Grenfell is also inconsistent with authorities at the highest level concerned with analogous provisions of the 1980 Act (paras 187 196 above). (12) The decision in Deutsche Morgan Grenfell is also inconsistent with the meaning given by the courts to discovery in another statutory context (paras 197 198 above). (13) The purpose of the postponement effected by section 32(1) is to ensure that the claimant is not disadvantaged, so far as limitation is concerned, by reason of being unaware of the circumstances giving rise to his cause of action as a result of fraud, concealment or mistake. That purpose is achieved, where the ingredients of the cause of action include his having made a mistake of law, if time runs from the point in time when he knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises (paras 193 and 209). (14) By tying the concept of discovery to the ascertainment of the truth, the decision in Deutsche Morgan Grenfell contradicts the principle that limitation periods apply to claims regardless of whether they are ill or well founded. The claimant cannot be required to have ascertained the truth, in order for a limitation period to apply. Consistently with authorities concerned with analogous provisions of the 1980 Act, a reasonable belief will normally suffice (para 196). (15) Tying the concept of discovery to the ascertainment of the truth is also inconsistent with the nature of a plea of limitation. The question under section 32(1) is not whether there was in reality any fraud, concealment or mistake as the claimant has pleaded, but whether, upon the assumption that there was, it was discovered, or could with reasonable diligence have been discovered, at such a time as would render the proceedings time barred. The existence of a mistake as a verified fact is not the issue (paras 199 202). (16) Authorities concerned with the meaning of reasonable diligence in section 32(1) also indicate that it is concerned with the steps which a person could reasonably be expected to take before issuing a claim (para 203 above). The standard of reasonable diligence is how a person carrying on a business of the relevant kind would act, on the assumption that he desired to know whether or not he had made a mistake, if he had adequate but not unlimited staff and resources and was motivated by a reasonable but not excessive sense of urgency. The question is not whether the claimant should have discovered the mistake sooner, but whether he could with reasonable diligence have done so. The burden of proof is on the claimant. He must establish on the balance of probabilities that he could not have discovered the mistake without exceptional measures which he could not reasonably have been expected to take (para 209). (17) Authorities concerned with the pre 1939 equitable rule on which section 32(1) is based also support the view that the limitation period runs from the time when the claimant discovers the facts essential to his cause of action, and not from the date of a judicial decision supportive of his claim (paras 204 208 above). (18) In adopting a different approach to the discoverability of mistakes of law from that which applies to mistakes of fact, the decision in Deutsche Morgan Grenfell perpetuates the problem of distinguishing between the two, contrary to the intended effect of the decision in Kleinwort Benson (para 195 above). It follows, for all these reasons, that even if it is accepted that Kleinwort Benson was correctly decided, Deutsche Morgan Grenfell [2007] 1 AC 558, so far as it concerned limitation, was not. Discussion of Kleinwort Benson We have not yet considered a more fundamental issue: the argument that an action for the recovery of money paid under a mistake of law, unlike an action for the recovery of money paid under a mistake of fact, is not an action for relief from the consequences of a mistake within the meaning of section 32(1)(c), and therefore falls outside the ambit of the discoverability test. This argument challenges the correctness of the decision in Kleinwort Benson [1999] 2 AC 349, so far as it related to limitation. As we have explained, at the time when section 26(c) of the 1939 Act was enacted, and equally at the time when section 32(1)(c) of the 1980 Act was enacted, the only recognised actions for which a period of limitation was prescribed, and which fitted the description of an action for relief from the consequences of a mistake, were common law actions based on mistakes of fact, such as actions for the recovery of money paid under a mistake of fact, and analogous equitable claims also based on mistakes of fact. In our opinion, that is the effect of the pre 1939 authorities, notwithstanding the contrary views expressed in Kleinwort v Benson and discussed at paras 149 152 and 159 161 above. Although there were some recognised forms of equitable relief from the consequences of mistakes of law, such as rectification, they were not subject to statutory limitation either directly or by analogy prior to 1939; and that position was preserved by the 1939 and 1980 Acts: see paras 117 118, 123, 129, 131 and 142 above. When the House of Lords recognised in Kleinwort Benson [1999] 2 AC 349 the existence of an action for the recovery of money paid under a mistake of law, it recognised another action which fitted the description of an action for relief from the consequences of a mistake, if those words are construed according to their ordinary meaning. The question nevertheless arises whether that construction is in accordance with the purpose of the provision. It is debatable, but ultimately does not matter, whether this question should be approached by focusing specifically on the always speaking principle, as counsel for the bank did in Kleinwort Benson. That somewhat vague expression is commonly used in connection with statutory terms which change in their connotations over time, such as family (Fitzpatrick v Sterling Housing Association Ltd [2001] 1 AC 27). The case of R v Ireland [1998] AC 147, cited by counsel in Kleinwort Benson, was of a similar kind. The question was whether the words bodily harm, in the Offences Against the Person Act 1861, should be interpreted in the light of contemporary knowledge as applying to psychiatric injury. The always speaking principle is also invoked where the question arises whether a statutory expression should be interpreted as including a novel invention or activity which does not naturally fall within its meaning, and was not envisaged at the time of its enactment, but which may nevertheless fall within the scope of its original intention. Examples of the latter kind of case include Victor Chandler International Ltd v Customs and Excise Comrs [2000] 1 WLR 1296, which concerned the question whether a teletext fell within the scope of the statutory term document, and R (Quintavalle) v Secretary of State for Health [2003] UKHL 13; [2003] 2 AC 687, which concerned the question whether an embryo created by the novel technique of cloning, rather than by the traditional method of fertilisation, fell within the scope of the statutory expression embryo where fertilisation is complete. Another well known example is the case of Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800, where the question was whether the statutory expression a pregnancy terminated by a registered medical practitioner should be interpreted as including a novel technique of termination which was carried out by a nurse acting on the instructions of a medical practitioner. The question in the present case is not of precisely the same kind. The cause of action recognised in Kleinwort Benson undoubtedly falls within the scope of the language used in section 32(1)(c), if that language is given its ordinary meaning. A mistake of law was understood to be a mistake in 1939, and in 1980, just as much as it is today. Nevertheless, the decision taken in Kleinwort Benson to recognise a cause of action for the recovery of money paid under a mistake of law could not have been foreseen in 1939 or 1980. The question therefore arises whether section 32(1)(c) applies to those unforeseen circumstances: a question which ultimately boils down to the same issue as arises when considering the always speaking principle, and indeed in all cases concerned with statutory interpretation: what is the construction of the provision which best gives effect to the policy of the statute as enacted? A number of points can be made in support of a construction which would accommodate mistakes of law. First, and most importantly, the purpose of section 32(1)(c) is to postpone the commencement of the limitation period in respect of a claim for relief from the consequences of a mistake where, as a result of the mistake, the claimant could not reasonably have known of the circumstances giving rise to his cause of action at the time when it accrued. The effect of section 32(1)(c) is that the time when the claimant could not reasonably have known about those circumstances does not count towards the limitation period. Those were also the rationale and effect of the equitable rule applicable prior to 1939, and of the recommendation made in the Report of the Law Reform Committee. The equitable rule did not apply where the claimant had been aware of all the relevant circumstances at the time when his cause of action accrued and had merely been ignorant that those circumstances gave rise to a cause of action: see para 122 above. That aspect was also reflected in the Committees Report: see paras 126 and 127 above. As we have explained, when section 32(1) was enacted, it could only have applied to claims in respect of mistakes of fact, since those were the only mistakes which gave rise to an action for relief from the consequences of a mistake. However, the law subsequently developed in Kleinwort Benson so as to allow claims to be brought for relief from the consequences of mistakes of law. That development has to be addressed in the law of limitation in a way which is consistent with the legislative policy of the 1980 Act and avoids discord in the law, as Lord Hoffmann explained in Johnson v Unisys [2003] AC 518 (para 157 above). In principle, it is consistent with the purpose of section 32(1)(c) for it to apply to claims brought on that basis. The rationale of section 32(1) to postpone the commencement of the limitation period in respect of a claim for relief from the consequences of a mistake where, as a result of the mistake, the claimant could not reasonably have known of the circumstances giving rise to his cause of action at the time when it accrued applies with equal force to a mistake of law as to a mistake of fact. To construe the provision in a sense which excluded such claims would not be consistent with Parliaments intention to relieve claimants from the necessity of complying with the time bar which would apply in the absence of section 32(1), at a time when they could not reasonably be expected to do so. Nor would such a construction reflect the ordinary meaning of the language which Parliament used: a mistake of law is, and always was, a mistake in the ordinary sense of the word. For similar reasons, it would not be consistent with the intention of Parliament to exclude deemed mistakes from the ambit of section 32(1)(c), even assuming (contrary to the conclusion reached at paras 175 176 above) that a principled and workable distinction could be drawn between deemed and actual mistakes. There would, in the first place, be no warrant in the language of the provision for drawing such a distinction; and the court cannot effectively amend the legislation under the guise of interpretation. Furthermore, to draw such a distinction would undermine the purpose of the provision: a provision which, as explained earlier, has its origins in equity. The person who has made a deemed mistake is no less deserving of an extension of the time permitted for bringing a claim, until he could have discovered his mistake, than a person who has made a mistake in circumstances where, on any view, the law has remained unchanged. In the latter situation, the person could at least have discovered his mistake at the time if he had consulted a lawyer. It is also relevant to note that there is some authority in other jurisdictions accepting that provisions equivalent to section 32(1)(c) apply to restitutionary claims based on mistakes of law. The question arose in an Australian case in relation to section 27(c) of the Limitation of Actions Act (Vic), which is materially identical to section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act. In the case of Paciocco v Australia and New Zealand Banking Group Ltd [2014] FCA 35; (2014) 309 ALR 249, Gordon J held at para 365 that the concept of a mistake, within the meaning of section 27(c), included a mistake of law. On appeal, the Full Court expressed their agreement with that conclusion, obiter: [2015] FCAFC 50; (2015) 236 FCR 199, paras 192, 396 and 398. In particular, Besanko J considered the question whether the provision should be construed as what is sometimes termed a fixed time provision, which must be construed in the sense in which it would have been applied at the time of its enactment, or as a provision which is always speaking and can be given an ambulatory construction. He concluded that the latter view was to be preferred. On a further appeal to the High Court of Australia, only Nettle J considered the point, again obiter, and agreed with the views expressed in the courts below: [2016] HCA 28; (2016) 90 ALJR 835, para 374. Although the point does not appear to have been specifically considered elsewhere, that conclusion is consistent with the application, in a number of other jurisdictions, of provisions materially identical to section 32(1)(c) of the 1980 Act to claims based on a mistake of law. That can be seen, for example, in the Hong Kong case of Ho Kin Man v Comr of Police [2012] HKCFI 1064; [2013] 1 HKC 13, and in a number of decisions of the Supreme Court of India, including Assistant Engineer (D1) Ajmer Vidyut Vitran Nigam Ltd v Rahamatullah Khan Alias Rahamjulla [2020] INSC 188. Nevertheless, it is necessary to consider whether construing section 32(1)(c) in that way would have other consequences which would be contrary to Parliaments intention. As we have explained, the reasoning in Deutsche Morgan Grenfell would indeed have that effect, since the mistake of law was, according to that reasoning, undiscoverable until it had been established by an authoritative judicial decision, which might not occur until the proceedings in question had been completed: a result which defeats the object of limitation. That is not, however, the effect of section 32(1)(c) if it is construed in accordance with the test proposed in Deutsche Morgan Grenfell [2007] 1 AC 558 by Lord Brown, and consistently with the approach established in Haward v Fawcetts [2006] 1 WLR 682, AB v Ministry of Defence [2013] 1 AC 78 and Paragon Finance plc v DB Thakerar & Co. Even so, there are a number of arguments which need to be considered: notably, that to construe section 32(1)(c) as applying to mistakes of law would be destructive of legal certainty, and therefore contrary to the policy of Parliament; that previous decisions have indicated that section 32(1) should be restrictively construed; and that to treat mistakes of law as falling within the scope of section 32(1)(c) would undermine this courts ability to reverse decisions of the Court of Appeal and to depart from its own decisions in accordance with the 1966 Practice Statement (Practice Statement (Judicial Precedent) [1966] 1 WLR 1234). In relation to legal certainty, Lord Goff was correct in stating in Kleinwort Benson [1999] 2 AC 349 at p 389 that the cause of action in a case such as the present may be extended for an indefinite period of time; and Lord Hope was right to acknowledge at p 417 that [t]he objection may be made that time may run on for a very long time before a mistake of law could have been discovered, and that [i]t may also be said that in some cases a mistake of law may have affected a very large number of transactions, and that the potential for uncertainty is very great. In that regard, it is relevant to note that mistakes of law differ from mistakes of fact in that the facts are fixed at the relevant point in time, even if they may remain undiscovered until much later, whereas the law can be altered from time to time by judicial decisions. For these reasons, it can be argued with force that to apply section 32(1)(c) to mistakes of law undermines the basic purpose of limitation statutes, namely putting a certain end to litigation and preventing the resurrection of old claims, as the Law Reform Committee stated at paragraph 7 of its Report. A number of points can be made in response. First, section 32(1)(c), like the equitable rule which preceded it, necessarily qualifies the certainty otherwise provided by limitation periods. It means that the 1980 Act does not pursue an unqualified goal of barring stale claims: its pursuit of that objective is tempered by an acceptance that it would be unfair for time to run against a claimant before he could reasonably be aware of the circumstances giving rise to his right of action. Even as it applies to mistakes of fact, section 32(1)(c) (like sections 14 and 14A) has the consequence that the cause of action may be extended for an indefinite period of time. The point can be illustrated by the facts of In re Baronetcy of Pringle of Stichill [2016] UKPC 16; [2016] 1 WLR 2870, where DNA evidence established in 2016 that a person born in 1903 had wrongly succeeded to a title in 1919, with the effect of impugning the title inherited by successive generations of his descendants. The position would have been the same if he had been born centuries earlier. Secondly, the uncertainty which is liable to result from the application of section 32(1)(c) to mistakes of law should not be exaggerated. In most cases where a mistake of law is made, the application of section 32(1)(c) will not produce disruptive consequences. That is because the mistake will normally have been discoverable at the time of the transaction in question by the exercise of reasonable diligence, by obtaining legal advice. The commencement of the limitation period will not, therefore, be postponed. Cases where advice as to the correct state of the law was not reasonably available at the time of the transaction, and where a right to restitution might in principle be available, are likely to be unusual. One example is the class of cases where the mistake of law is the retrospective result of a judicial decision which upsets an established rule of law on the basis of which payments have been made: what Lord Hoffmann described as a deemed mistake. Cases of that kind should, however, be highly unusual, as courts do not often overturn established rules of law, and in considering whether to do so they attach particular importance to the security of settled transactions. The present proceedings, and the other proceedings mentioned in paras 5 and 6 above, are not however concerned with deemed mistakes but with actual mistakes arising from a unique set of circumstances: the UKs entry into the EU, with supranational laws which had to be given priority over domestic statutes, resulting in the gradual application of the EU principles of freedom of establishment and free movement of capital in the field of taxation, and the eventual realisation that UK tax legislation might be incompatible with those principles. Such circumstances are of a wholly exceptional nature. Thirdly, to the extent that this objection to the result of Kleinwort Benson is based on policies attributed to Parliament, we would refer to the discussion of the intention of Parliament at paras 219 222 above. Furthermore, it is reasonable, 22 years after the decision in Kleinwort Benson [1999] 2 AC 349, to note that Parliament has evinced no concern about its consequences, except in relation to tax. Recommendations for reform were made by the Law Commission in a Report published almost 20 years ago (Limitation of Actions (2001) (Law Com No 270), HC 23), and were accepted in principle by the Government in 2002 (Hansard, HL Deb, 16 July 2002, col 127 WA), but in 2009 the Government announced that reform of the law of limitation would not after all be taken forward (Hansard, HC Deb, 19 November 2009, col 13 WS). In relation to tax, the legislative measures introduced in section 320 of the FA 2004 have succeeded in protecting public revenues prospectively with effect from 8 September 2003. In relation to tax levied before that date, Parliament acted to mitigate the impact on public revenues in the F(No 2)A 2015 (para 56 above). That impact was further reduced, dramatically, by the decision in Prudential [2019] AC 929, and will be reduced further if this court departs from Deutsche Morgan Grenfell and adopts instead the interpretation of section 32(1) which was explained in para 209 above. With the exception of claims in relation to tax that was unlawful under EU law, there has been no noticeable surge of claims for restitution of money paid under mistakes of law. Were such claims to be made after a long lapse of time, the defence of change of position might well be available, as it has been held to be in the present proceedings (FII (CA) 1 [2010] STC 1251), albeit not made out on the facts because of the absence of a clear relationship between tax receipts and public expenditure (FII (CA) 2 [2017] STC 696). Another argument for holding that section 32(1) should not be interpreted as applying to mistakes of law is that the courts have made clear the risks involved in giving the provision a broad interpretation, in Phillips Higgins [1954] 1 QB 411 and FII (SC) 1 [2012] 2 AC 33: see paras 41 and 139 above. In those cases, however, what was being rejected was an attempt to extend section 32(1)(c) to cases where mistake was not an essential ingredient of the cause of action, but where the claimant had merely been ignorant that he had a cause of action: an extension which is not being suggested in this judgment, and which would be inconsistent with the Law Reform Committees intention that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time (para 126 above). That is not, however, a reason for excluding from the scope of section 32(1) cases where a mistake of law is an essential ingredient of the cause of action. That is because, in such cases, ignorance that he made a mistake renders the claimant unaware of one of the facts giving rise to his cause of action, just as a claimant who is ignorant that he made a mistake of fact is unaware of one of the facts giving rise to a cause of action based on a mistake of fact. In neither case is the limitation period postponed merely because the claimant is ignorant of his rights. Were matters otherwise, FII (SC) 1 could hardly have been decided as it was, since the claim based on Kleinwort Benson would then have been struck at just as much as the claim based on Woolwich [1993] AC 70. A closely related argument is that discoverability is concerned with the facts which are essential to a cause of action, and not with their legal consequences. The principle is well illustrated by Knight Bruce LJs statement in Stafford v Stafford (1857) 1 De G & J 193, 202 that [g]enerally, when the facts are known from which a right arises, the right is presumed to be known, and by Sir Richard Collins MRs judgment in Molloy 94 LT 756 (para 206 above). As we have explained, the reforms recommended by the Law Revision Committee were not intended to impinge upon that principle. The principle is reflected in the terms of sections 14(1)(d) and 14A(9) of the 1980 Act, which specifically provide that knowledge that the relevant acts or omissions involved negligence or other breaches of duty is irrelevant. Although Parliament did not set out a corresponding provision in section 32(1), the same principle nevertheless permeates section 32(1) just as much as it does the remainder of the 1980 Act. It might be argued, on that basis, that mistakes of law fall outside the ambit of section 32(1)(c). The cause of action created by Kleinwort Benson depends on the claimant having had a mistaken understanding of the law at the time when the payment was made, and on a causal relationship between that mistaken understanding and the making of the payment. Those are the relevant facts, as discussed in para 207 above. Once those facts are or could with reasonable diligence be discovered, the limitation period begins to run. It is not postponed because the claimant, with actual or constructive knowledge of those facts, is ignorant that they give rise to an entitlement to restitution. In those circumstances, to treat the cause of action recognised in Kleinwort Benson as falling within the scope of section 32(1) involves no breach of the general principle that when the facts are known from which a right arises, the right is presumed to be known. Nor, recalling Sir Richard Collins MRs judgment in Molloy, is there any inconsistency with his statement that: I do not think that the policy of the Statute of Limitations is that it is not to begin to run until a person has satisfied himself as to the exact legal inferences to be drawn from a number of facts which he has perfectly ascertained. Nor is there any contradiction of the Law Revision Committees statement that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time. The limitation period is not postponed until the claimant has discovered his rights. It is postponed until he has discovered (or could with reasonable diligence have discovered) that he made a payment at some point in the past because of a mistaken understanding of the law as it then stood. A further argument is that to treat mistakes of law as falling within the scope of section 32(1)(c) would undermine this courts ability to reverse decisions of the Court of Appeal or to depart from its own decisions in accordance with the 1966 Practice Statement, since to do so might trigger widespread liabilities under the law of restitution. The first point to be made in response is that Parliament cannot have had the Practice Statement in mind in 1939. Nor can it bear on the interpretation of a 1939 provision which is re enacted in a consolidation statute in 1980, since no change in meaning is taken to have been intended. The Practice Statement has to be operated within a framework established by statute, including the 1939 and 1980 Acts, rather than the Practice Statement affording guidance as to how those statutes should be interpreted. Secondly, as we have indicated, courts, including this court, do not often overturn settled rules of law, and in considering whether to do so they attach particular importance to the security of settled transactions. The decisions in Kleinwort Benson and Sempra Metals [2008] 1 AC 561 were exceptional in their readiness to overturn centuries of authority, as the House of Lords enthusiastically adopted the theory of unjust enrichment. Those decisions were criticised by this court in Prudential [2019] AC 929 at para 63 because of their disregard of the need for judicial development of the law to be justifiable by reference to existing legal principles. Normally, as was stated in a recent judgment of this court, [i]n order to preserve legal certainty, judicial developments of the common law must be based on established principles, building on them incrementally rather than making the more dramatic changes which are the prerogative of the legislature: R (Elgizouli) v Secretary of State for the Home Department [2020] UKSC 10; [2020] 2 WLR 857, para 170. Considering the Practice Statement in particular, it states specifically that the court will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property, and fiscal arrangements have been entered into. This court, like the House of Lords before it, has followed that practice. Thirdly, the potential problem which concerned the minority in Kleinwort Benson is significantly alleviated if the approach to discoverability which was adopted in Deutsche Morgan Grenfell is departed from, as suggested above. For example, Lord Browne Wilkinson posited at p 358 a case where the law was established by a decision of the Court of Appeal in 1930. In 1990 the claimant made a payment which was only due if the Court of Appeal decision was good law. In 1997 the House of Lords overruled the decision of the Court of Appeal. Lord Browne Wilkinson commented at p 359: [A]t that date [the date of the payment] there could be no question of any mistake. It would not have been possible to issue a writ claiming restitution on the grounds of mistake of law until the 1997 decision had overruled the 1930 Court of Appeal decision. Therefore a payment which, when made, and for several years thereafter, was entirely valid and irrecoverable would subsequently become recoverable. This result would be subversive of the great public interest in the security of receipts and the closure of transactions. Applying the approach to discoverability discussed above, however, it does not follow from the fact that the Court of Appeal decision was overruled in 1997 that it was only then that a writ could have been issued claiming restitution. The proceedings before the House of Lords, in which the decision of the Court of Appeal was challenged, must themselves have been commenced by issuing a writ some years earlier. Why could Lord Browne Wilkinsons hypothetical claimant not have done the same? It does not follow from the fact that the House of Lords reached its decision in 1997 that the hypothetical claimant could not have discovered his mistake before then. Furthermore, as was explained at para 232 above, in considering whether the overturning of a precedent might result in restitutionary claims going back for long periods of time, it is necessary to bear in mind the defence of change of position. The circumstances which led to the rejection of that defence in the present case the absence of any demonstrable connection between the tax paid and public expenditure were unusual. In the event, such claims have not been a notable feature of the period since Kleinwort Benson was decided. Kleinwort Benson: Summary Taking stock of the discussion of Kleinwort Benson [1999] 2 AC 349, the position can be summarised as follows: (1) The decision in Kleinwort Benson, that claims for the restitution of money paid under a mistake of law fall within the ambit of section 32(1)(c) of the 1980 Act, was not supported by convincing reasoning (paras 148 161 above). (2) When section 32(1)(c) was enacted, it was not contemplated that it might extend to actions for the restitution of money paid under a mistake of law: no such action was recognised at that time. (3) Nevertheless, giving the words used in section 32(1)(c) their ordinary meaning, they include such actions. That is not, however, conclusive. The provision has to be construed consistently with its purpose. (4) The purpose of section 32(1)(c) is to postpone the commencement of the limitation period in respect of a claim for relief from the consequences of a mistake where, as a result of the mistake, the claimant could not reasonably have known of the circumstances giving rise to his cause of action at the time when it accrued (para 220 above). (5) If, after the enactment of section 32(1)(c), the law developed so as to allow actions to be brought for relief from the consequences of a mistake of law, then in principle it would be consistent with that purpose for section 32(1)(c) to apply to such claims. To construe the provision in a sense which excluded such claims would not be consistent with Parliaments intention to relieve claimants from the necessity of complying with the time bar which would apply in the absence of section 32(1), at a time when they could not reasonably be expected to do so (para 221 above). (6) That argument applies equally to deemed mistakes of law as to actual mistakes, even assuming that a principled and workable distinction can be drawn between the two (para 222 above). (7) The construction of section 32(1)(c) as applying to mistakes of law as well as of fact also gains some support from the case law of other jurisdictions (paras 223 224 above). (8) On the other hand, it can be argued that such a construction of section 32(1)(c) undermines the primary policy of the 1980 Act as a whole, namely to put a certain end to litigation (para 227 above). (9) A number of points can be made in answer to that argument: (i) Section 32(1)(c) necessarily qualifies the certainty otherwise provided by limitation periods, in recognition of the unfairness of allowing time to run against a claimant before he could reasonably be aware of the circumstances giving rise to his right of action (para 228 above). (ii) Nevertheless, in most cases where a mistake of law is made, the application of section 32(1)(c) will not produce disruptive consequences. The correct state of the law is normally ascertainable at the time of a transaction. Cases where it is not, and where a right to restitution might in principle be available, are likely to be unusual. In particular, cases where the courts upset an established rule of law with retrospective effect, so as to affect settled transactions, should be highly unusual. The present proceedings arise from a unique set of circumstances (para 229 above). (iii) The policy consequences have not prompted legislation, except in relation to tax. On the contrary, the Government has declined to implement reforms recommended by the Law Commission (para 230 above). (iv) In relation to tax, the consequences of Kleinwort Benson have been addressed by Parliament, and have also been mitigated by subsequent judicial decisions. They will be mitigated further if this court departs from Deutsche Morgan Grenfell (para 231 above). (v) Other than in relation to tax, the decision in Kleinwort Benson has not resulted in a surge of stale claims. Were such claims to be made, a defence of change of position might well be available (para 232 above). (10) It can also be argued that section 32(1)(c) should be restrictively construed, consistently with dicta in Phillips Higgins and FII (SC) 1. However, those cases were concerned with attempts to extend section 32(1)(c) to cases where mistake was not an essential ingredient of the cause of action, but where the claimant had merely been ignorant that he had a cause of action. Claims for the restitution of money paid under a mistake of law do not fall into that category. On the contrary, such a claim was regarded as unobjectionable in FII (SC) 1 (para 233 234 above). (11) It can also be argued that to apply section 32(1)(c) to claims for restitution of money paid under a mistake of law contravenes the principle that ignorance of the law is not a ground for the extension of the limitation period. However, that is a mistaken view. The commencement of the limitation period is postponed while the claimant is unaware of the fact that he had a defective understanding of the law at the time when he made the payment. It is not postponed because he is ignorant that, in those circumstances, he has a right to restitution (paras 234 237 above). (12) It can also be argued that to treat mistakes of law as falling within the scope of section 32(1)(c) would undermine this courts ability to reverse decisions of the Court of Appeal or to depart from its own decisions. The force of that argument appears to us to be diminished, however, when regard is had (a) to the importance which this court attaches in any event to legal certainty and to the security of settled transactions, (b) to the significance of adopting the approach to discoverability discussed above, and (c) to the importance of the defence of change of position (paras 239 241 above). (13) The claimant seeking restitution of money paid under a mistake of law does not, therefore, come within the scope of section 32(1) because he is unaware of his rights. He comes within it where, and during the period that, he is unaware that his understanding of the law at some point in the past was defective (the mistake in question being one which forms an essential element of a cause of action). He ceases to come within it at the point when he knows, or could with reasonable diligence know, that he made such a mistake with sufficient confidence to justify embarking on the preliminaries to the issue of a writ, such as submitting a claim to the proposed defendant, taking advice and collecting evidence; or, as Lord Brown put it in Deutsche Morgan Grenfell, he discovers or could with reasonable diligence discover his mistake in the sense of recognising that a worthwhile claim arises. For these reasons, although there is undeniable force in the argument that section 32(1)(c) should be construed as being confined to mistakes of fact, the balance of the arguments in our view favours giving the language of section 32(1)(c) its ordinary meaning, so that it is applicable also to actions for relief from the consequences of a mistake of law. That approach to the construction of the provision best gives effect to Parliaments intention to relieve claimants from the necessity of complying with a time limit at a time when they cannot reasonably be expected to do so, and does not have unacceptable consequences for the legal certainty which the 1980 Act is primarily designed to protect. That is only so, however, if the court departs from the reasoning in Deutsche Morgan Grenfell [2007] 1 AC 558, since that reasoning would defeat Parliaments intention. On that basis, we consider that this court should adhere to the decision in Kleinwort Benson, so far as relating to limitation. The Practice Statement of 26 July 1966 We must also give due weight to the importance of maintaining legal certainty by the preservation of precedent. The use of precedent, as the 1966 Practice Statement acknowledges, is an indispensable foundation upon which judges decide what the law is and apply the law in individual cases. It is, in Lord Goffs words in Kleinwort Benson (p 379), the cement of legal principle providing stability to the common law. As is well known, this court has held that the Practice Statement has effect as much as it did before the Appellate Committee in the House of Lords: Austin v Southwark London Borough Council [2010] UKSC 28; [2011] 1 AC 355, para 25 per Lord Hope. It is necessary therefore to consider with care whether it is appropriate for this court to depart from prior decisions of the House of Lords. It is unquestionable that there is a general public interest in certainty in the law. It is not a sufficient basis for this court to reverse a previous decision which it or the House of Lords has made that this court considers that a previous decision was wrong. As Lord Reid stated in R v Knuller (Publishing, Printing and Promotions) Ltd [1973] AC 435, 455, In the general interest of certainty in the law we must be sure that there is some very good reason before we so act. Lord Reid explained his understanding of the rationale of the Practice Statement in R v National Insurance Comr, Ex p Hudson [1972] AC 944, 966 when he stated that there were a number of reported decisions which were impeding the proper development of the law or which led to results which were unjust or contrary to public policy. Some situations, such as a fundamental change in circumstances, or where a decision has resulted in unforeseen serious injustice, have been recognised as permitting a departure from precedent: Rees v Darlington Memorial NHS Trust [2003] UKHL 52; [2004] 1 AC 309, para 31 per Lord Steyn. In Horton v Sadler [2006] UKHL 27; [2007] 1 AC 307, para 29, Lord Bingham considered that too rigid adherence to precedent might cause injustice in a particular case and unduly restrict the development of the law. But, in the same paragraph, he acknowledged that the power had been exercised rarely and sparingly. In view of this well established approach to precedent, would it be right for this court to depart from Kleinwort Benson or Deutsche Morgan Grenfell in relation to the law of limitation on this appeal? Kleinwort Benson effected a radical change in the law of restitution by opening up claims for the recovery of money paid under a mistake of law. By applying section 32(1)(c) of the 1980 Act to such claims it created the potential that a cause of action may be extended for an indefinite period of time and thereby undermine security of transactions, as each of the majority, Lord Goff, Lord Hoffmann and Lord Hope, expressly recognised (paras 154, 157 and 162 above). The minority, Lord Browne Wilkinson and Lord Lloyd, saw this potential as a basis for leaving the proposed change of law to Parliament (para 163 above). But there has been little evidence of any surge of claims for restitution of money paid under mistakes of law. The most significant claims have been in the field of taxation, such as the various group litigations which we have mentioned in paras 5 and 6 above. Those challenges have exposed the Exchequer to claims which go back many years and involve very large sums of money. But Parliament has intervened, as we have explained, by enacting section 320 of the FA 2004 which, while ineffective to undermine claims under EU law retrospectively, has protected public revenues prospectively with effect from 8 September 2003 (paras 10 and 14 above). There is therefore no apparent danger of similarly large claims arising in future in the field of taxation which have the potential to disrupt the fiscal planning of the executive. In paras 242 and 243 above, we have summarised our position in relation to Kleinwort Benson. The considerations stated there and those in para 248 above suggest to us that preserving the authority of Kleinwort Benson would not be contrary to principle or give rise to serious uncertainty in the law. Upholding Kleinwort Benson would be unlikely to give rise to serious injustice in individual cases in the future, and it would not impede the proper development of the law. On the other hand, from our discussion which we have summarised in para 213 above, it is clear that the decision in Deutsche Morgan Grenfell [2007] 1 AC 558 on the question of discoverability in section 32(1)(c) has very unfortunate consequences. Several matters are of particular relevance to the application of the Practice Statement. The decision defeats the purpose of limitation, and in so doing appears to be contrary to the intention of Parliament in enacting the 1939 and 1980 Acts. It creates incoherence in interpretation both within section 32(1) and between that section and analogous provisions of the 1980 Act. It creates the legal paradox to which we have referred (paras 173 174 above). It also perpetuates the problem of distinguishing between matters of fact and matters of law, a result which, as we have discussed, is contrary to the intended effect of Kleinwort Benson [1999] 2 AC 349. In so doing, it impedes the coherent development of the law. It is necessary to balance against those considerations the possibility that a departure from Deutsche Morgan Grenfell, in relation to discoverability, will itself result in some claims to restitution. Such claims may be made on the basis that payments have been made under a mistake of law, because the claims for restitution, which that decision supported and which led to those payments, were, on a proper understanding of the law, already subject to a limitation defence on the interpretation of section 32(1)(c) which we favour. That would be unfortunate. But we would not expect the number of claims to be significant for two reasons. First, there has not been a surge of claims for restitution of money paid under mistakes of law, following the Kleinwort Benson decision, outside the tax litigation to which we have referred. Secondly, the recipients of such payments made in restitution may have a defence of change of position if the payer, such as the Revenue, were to seek to recover them. We are not persuaded that the possibility of such claims should deter us from departing from Deutsche Morgan Grenfell in relation to discoverability if that is the only way in which to promote coherence in the law of limitation. When the Appellate Committee determined the appeal in Deutsche Morgan Grenfell [2007] 1 AC 558 in 2006, Lord Hope (para 68) suggested that the legislature could intervene to stop time running indefinitely in all mistake cases, if there was a problem. There was then some prospect that Parliament would consider a reform of the law of limitation of actions. As we have explained (para 230 above), the Government initially accepted the Law Commissions recommendations to reform the law of limitation and proposed to legislate, but by 2009 it had announced that it would not take forward those reforms. There is therefore now no prospect that Parliament will enact a legislative solution to remove the anomalies which the Deutsche Morgan Grenfell judgment has created. In these circumstances, we are persuaded that this is an appropriate case in which to depart from the decision in Deutsche Morgan Grenfell in relation to discoverability in section 32(1)(c) of the 1980 Act. Application to the present proceedings This appeal is brought against the decision of the Court of Appeal in FII (CA) 2 [2017] STC 696, and this judgment is concerned with the appeal only in so far as it relates to Issue 28: the issue of limitation. As was explained at para 54 above, the decision of the Court of Appeal on Issue 28 was based on the application of the approach established in Deutsche Morgan Grenfell. For the reasons we have explained, that approach cannot be upheld, and the appeal on Issue 28 must therefore be allowed. This court cannot, however, determine in the abstract the point in time when the test claimants could with reasonable diligence have discovered, to the standard of knowing that they had a worthwhile claim, that they had paid tax under a mistaken understanding that they were liable to do so. That depends on an examination of the evidence. As we have explained, EU law, in relation to tax regimes which discriminated between companies based in one member state and companies based in another, developed through a series of judgments of the Court of Justice, including Verkooijen [2000] ECR I 4071 (2000), Lenz [2004] ECR I 7063 (2004) and Manninen [2005] Ch 236 (2004), discussed at paras 24 and 33 34 above, Hoechst [2001] Ch 620 (2006) and FII (CJEU) 1 [2012] 2 AC 436 (2006). Each of those judgments was itself the result of a claim made some years earlier. In Hoechst, for example, the claim was filed in 1995, 11 years before the judgment of the Court of Justice. DMG was aware of the claim almost immediately, and it was for that reason that, in Deutsche Morgan Grenfell, Lord Brown considered that time began running for DMG in July 1995. But the date when the claimant became aware of another claim, and appreciated its potential implications for its own situation, is not conclusive, if a claimant acting with reasonable diligence could have discovered that it had a worthwhile claim at an earlier time. Equally, the answer to the question arising under section 32(1) does not depend upon the characteristics of the particular claimant: whether, for example, it was inclined to await further developments, and to allow other taxpayers to make the running. The standard is could, as Millett LJ emphasised in Paragon Finance (para 203 above). And the test is objective, as Millett LJ explained in the same passage of his judgment, and as Lord Walker made clear in FII (SC) 1 [2012] 2 AC 33, when he referred (para 48 above) to the time when a well advised multi national group based in the UK would have had good grounds for supposing that it had a valid claim to recover ACT levied contrary to EU law. In the circumstances of the present proceedings, if the date of commencement of the limitation period requires to be judicially determined, that matter will have to be decided by the High Court, after the parties have had an opportunity to amend their pleadings. Conclusion We would allow the appeal on Issue 28 and would make an order remitting that issue to the High Court to allow the parties to amend their pleadings on discoverability of the mistake and to determine the date of commencement of the limitation period. LORD BRIGGS AND LORD SALES: (dissenting) (with whom Lord Carnwath agrees) In large measure we agree with the judgment of Lord Reed and Lord Hodge, which sets out the issues and explains this litigation and the course of the previous litigation in this area with such admirable clarity. The issue on which we find ourselves in respectful disagreement is whether this court should overrule Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 as regards the interpretation of section 32(1)(c) of the Limitation Act 1980 and hold that it does not apply in relation to payments made on the basis of a mistake of law. In our view, we should do so. In outline, we have reached that view for three main reasons. First, we are convinced that the House of Lords was plainly wrong in Kleinwort Benson to interpret section 32(1)(c) as extending to mistakes of law. Secondly, we do not consider that the large inroads upon the overall purpose of the Limitation Act in undermining legal certainty in relation to settled transactions, recognised by all their lordships in that case, are sufficiently addressed by the limited departure from Deutsche Morgan Grenfell Group plc v Inland Revenue Comrs [2006] UKHL 49; [2007] 1 AC 558 which the majority propose. The outcome will, we fear, place a serious brake upon judicial modernisation of the common law which we are sure Parliament cannot have intended. This issue has to be confronted in this court, because the hopes of their lordships in Kleinwort Benson that Parliament would legislate to deal with the problem have not been fulfilled. Thirdly, we have serious reservations about whether the test proposed by the majority, based upon Lord Browns dissenting speech in Deutsche Morgan Grenfell, will prove to be workable in practice. It is not in our view plausible to infer that Parliament intended that section 32(1)(c) should be read as being subject to such a test. Although the 1980 Act is a consolidation statute, in construing section 32(1)(c) the House of Lords in Kleinwort Benson and this court in Test Claimants in the FII Group Litigation v Revenue and Customs Comrs (formerly Inland Revenue Comrs) [2012] UKSC 19; [2012] 2 AC 337 (FII (SC) 1) found it necessary to look at the background and intended effect of the predecessor provision in the Limitation Act 1939, section 26(c). As was made clear in Farrell v Alexander [1977] AC 59, where there is significant doubt about the meaning and effect of a provision in a consolidation statute it is appropriate to investigate the meaning and effect of the earlier legislation from which it is derived. Lord Reed and Lord Hodge set out the law as regards limitation of actions as it stood prior to 1939 at paras 103 to 122 above. In summary, statute set out periods of limitation for claims arising at common law while generally equity applied the doctrines of laches (which included reference to statutory limitation periods in relation to equitable claims which were analogous to claims at law) and acquiescence. For the purposes of those doctrines, in certain circumstances time did not run where a claimant was labouring under a mistake until the mistake was discovered, or could with reasonable diligence have been discovered. A claim would arise at common law where money was paid to another by reason of a mistake of fact by way of an action for money had and received, which had historically been vindicated using the old form of action known as indebitatus assumpsit. The time limit for bringing such a claim was six years from the date of the payment: Baker v Courage & Co Ltd [1910] 1 KB 56. It had been established by the case of Bilbie v Lumley (1802) 2 East 469 that this form of action was not available, and hence this type of claim did not arise, to claim back money paid under a mistake of law. By 1939 this was a well established rule of law. On the other hand, equity never provided relief in relation to money paid away by reason of a simple mistake, whether of law or fact, without more. Equity granted relief to vindicate certain underlying property rights, or rights arising under a trust or in relation to the execution of a will. Mistake, including in some cases a mistake of law, was just a relevant factor to be taken into account in deciding whether equity would intervene to vindicate those rights in a particular case. As Lord Reed and Lord Hodge observe (para 119), in cases of fraud the equitable rule was that time would not run by analogy with statute until the claimant could with reasonable diligence have discovered the fraud, since it would be unconscionable for a defendant in such a case to rely on the statute to defeat the claim. Clearly, that reasoning does not apply in a case where a claimant labours under a mistake which the defendant has done nothing to induce. But in Brooksbank v Smith (1836) 2 Y & C Ex 58 Alderson B expressed the view that the rule in cases of fraud should apply in cases of mistake as well, without explaining why. In 1936 the Law Revision Committee (the LR Committee) produced its Fifth Interim Report on the law of limitation: see paras 123 128 above. Its recommendations were enacted in the 1939 Act. The LR Committee rejected the idea of a general power of extension of limitation periods, on the grounds that it might be impossible to predict how such a power would be exercised, in which case the fundamental benefit conferred by statutes of limitation, namely the elimination of uncertainty, would be prejudiced (para 7). At paragraph 13 the LR Committee recommended leaving the equitable doctrines of laches and acquiescence in place. At paragraphs 22 and 23 the LR Committee examined the merits of applying equitable principles to common law claims; in doing so, it discussed fraud claims and mistake claims separately. The inference from the way in which the LR Committee separated its discussion of fraud and mistake for common law claims is that it recognised that the equities between the parties and the policy issues arising in the two cases are very different. In FII (SC) 1 Lord Walker (para 63) and Lord Sumption (paras 183 185) explain the contrasting policy issues and the risks of uncertainty attendant on an over broad extension of limitation periods in cases of mistake as distinct from fraud. At paragraph 22 the LR Committee recommended adopting the equitable rule regarding extension of time for the purposes of common law claims based on fraud. It identified two ways in which fraud might have an impact (Either the cause of action may spring from the fraud of the defendant or else the existence of a cause of action untainted in its origin by fraud may have been concealed from the plaintiff by the fraudulent conduct of the defendant) and observed, [i]t is obviously unjust that a defendant should be permitted to rely upon a lapse of time created by his own misconduct. Its recommendation was that time should not start to run in either case until the fraud was or could with reasonable diligence be discovered. This recommendation was followed in section 26(a) and (b) of the 1939 Act (re enacted as section 32(1)(a) and (b) of the 1980 Act), reflecting the two ways in which fraud could operate, respectively: see FII (SC) 1, paras 179 180 (Lord Sumption). The equities are, of course, entirely different in cases of ordinary mistake where the defendant has done nothing unconscionable to create the delay before the claimant seeks to litigate. At para 23 the LR Committee recommended adopting the equitable rule regarding extension of time in relation to the common law action for relief from the consequences of a mistake. This recommendation was carried into the 1939 Act at section 26(c). As explained in FII (SC) 1, at paras 42 63 (Lord Walker) and paras 177 185 (Lord Sumption), the LR Committees recommendation was limited to cases where the mistake itself gave rise to a cause of action. Given the established state of the law in 1936, this meant that the recommendation was confined to cases where a payment was made by reason of a mistake of fact. As Pearson J said in the leading case on the ambit of section 26(c), No doubt it was intended to be a narrow provision, because any wider provision would have opened too wide a door of escape from the general principle of limitation (Phillips Higgins v Harper [1954] 1 QB 411, 419, cited with approval by Lord Sumption in FII (SC) 1, para 183). The LR Committee did not recommend any change in the substantive law regarding claims at common law based on mistake and did not make any recommendation which addressed the very different policy issues which would arise in respect of a claim to recover a payment based on a mistake of law. That such a claim might be recognised was something entirely outside its contemplation. Further, the LR Committee was at pains to state that the mere fact that a plaintiff is ignorant of his rights is not to be a ground for the extension of time. Our recommendation only extends to cases when there is a right to relief from the consequences of a mistake. A mistake of law occurs where a claimant is ignorant of his rights. The only right to relief from the consequences of a mistake which was in the contemplation of the LR Committee was where there was a mistake of fact. It was fundamental to the approach of the LR Committee that it regarded the need to protect past payments from claims for repayment many years later by persons alleging ignorance of their rights as being satisfied by the absence of any cause of action, either in law or in equity, for repayment on the ground of mistake of law. In terms of the policy issues which arise, we consider that no sensible distinction can realistically be drawn between ignorance of the right to restitution on the ground of mistake of law and ignorance of the underlying rights which constitutes the mistake of law on which that right depends: cf para 220 above. Accordingly, with respect, we do not agree that cases of mistake of fact and cases of mistake of law can be equiparated (see para 236 above) so far as concerns the policy and effect of either the equitable rule or the recommendation of the LR Committee. It follows that, where, implementing the recommendation of the LR Committee, section 26(c) was enacted referring to an action for relief from the consequences of a mistake, Parliament meant by that phrase an action for relief from the consequences of a mistake of fact: see para 133 above. In neither the 1939 Act nor the 1980 Act, when section 26(c) was re enacted as section 32(1)(c), did Parliament attempt to address the distinct policy issues regarding limitation which arise when a claim is recognised for recovery of money paid under a mistake of law, as happened in Kleinwort Benson [1999] 2 AC 349. With that change in the law, the question arose for the first time whether the phrase action for relief from the consequences of a mistake in section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act covered not only claims for recovery based on mistake of fact but also claims based on mistake of law. The Appellate Committee in Kleinwort Benson held that it did, but proceeded on a mistaken understanding as to the state of the law prior to the enactment of the 1939 Act: paras 148 163 above. The only substantive reasoning in support of construing section 32(1)(c) as extending to claims for recovery of money paid under a mistake of law was by Lord Goff and Lord Hope. It is a remarkable feature of the case that the reasoning of all members of the Appellate Committee implicitly recognised that the effect of reading section 32(1)(c) as including claims for recovery based on mistake of law as well as mistake of fact would dramatically undermine the intention of Parliament in the 1939 Act and the 1980 Act to set out clear and readily applicable periods of limitation. We consider that the House of Lords erred in Kleinwort Benson in giving section 32(1)(c) this interpretation. Lord Reed and Lord Hodge question whether it is appropriate to consider this issue through the prism of the doctrine that statutes are to be taken to be always speaking. We think that it is helpful and appropriate to do so but, as they observe, nothing really turns on this. The guidance regarding the ambit of the always speaking doctrine is in fact concerned with the fundamental underlying issue of whether Parliament can be taken to have intended by a statutory provision passed at one point in time, using language directed to the circumstances at that time, to cover a new set of circumstances which has come into existence since then. As we understand it, Lord Reed and Lord Hodge agree that this is the fundamental issue raised by the decision in Kleinwort Benson regarding the application of section 32(1)(c): see paras 155 and 157 above. The issue of how broadly one should construe the language of the statutory provision to cover new matters arising after its enactment necessarily involves consideration of what inferences can be drawn from the language used and the circumstances of the enactment as to Parliaments policy intention in promulgating the provision. If the inference can be drawn that Parliaments policy intention was broad and the new matters are aligned with that broad intention and are covered by it, a court will be justified in concluding that the provision applies; conversely, if there is not sufficient congruence between the policy issues raised by the new matters and Parliaments intention as expressed when it enacted the provision, the provision does not apply. Since the case law on the always speaking doctrine addresses this question, we will make reference to it. In our view, the question to be posed is whether the phrase using the term mistake in section 26(c) of the 1939 Act (and re enacted in section 32(1)(c) of the 1980 Act), where in the legal context in 1939 and 1980 the word could only refer to a mistake of fact, should in the light of the change in legal doctrine made in Kleinwort Benson now be taken to include also a mistake of law. The ambit of the always speaking doctrine was explained by Lord Wilberforce in Royal College of Nursing of the United Kingdom v Department of Health and Social Security [1981] AC 800, 822: In interpreting an Act of Parliament it is proper, and indeed necessary, to have regard to the state of affairs existing, and known by Parliament to be existing, at the time. It is a fair presumption that Parliaments policy or intention is directed to that state of affairs. Leaving aside cases of omission by inadvertence, this being not such a case, when a new state of affairs, or a fresh set of facts bearing on policy, comes into existence, the courts have to consider whether they fall within the Parliamentary intention. They may be held to do so, if they fall within the same genus of facts as those to which the expressed policy has been formulated. They may also be held to do so if there can be detected a clear purpose in the legislation which can only be fulfilled if the extension is made. How liberally these principles may be applied must depend upon the nature of the enactment, and the strictness or otherwise of the words in which it has been expressed. The courts should be less willing to extend expressed meanings if it is clear that the Act in question was designed to be restrictive or circumscribed in its operation rather than liberal or permissive. They will be much less willing to do so where the subject matter is different in kind or dimension from that for which the legislation was passed. In any event there is one course which the courts cannot take, under the law of this country; they cannot fill gaps; they cannot by asking the question What would Parliament have done in this current case not being one in contemplation if the facts had been before it? attempt themselves to supply the answer, if the answer is not to be found in the terms of the Act itself. See also R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687. In certain contexts it may be improper to give an extended interpretation to a word or phrase to treat it as applying to something outside Parliaments contemplation at the time of enactment. As Lord Steyn pointed out in R v Ireland [1998] AC 147, 158 with reference to The Longford (1889) 14 PD 34, [s]tatutes dealing with a particular grievance or problem may sometimes require to be historically interpreted. As read in light of the LR Committees Report on limitation periods on which the 1939 Act was based, the Act had two features which are relevant for present purposes. First, as a matter of general policy, in the interests of predictability, certainty and security of transactions, it re enacted the previous six year time limit for actions at common law for the recovery of money paid under a mistake. This was a continuation of the established policy of the Statute of Limitations of 1623 to promote finality, certainty and security of receipt of money, as emphasised by Sir Richard Collins MR in Molloy v Mutual Reserve Life Insurance Co (1906) 94 LT 756, 761 (see para 206 above). It also represents the principal policy to which effect was given in the 1939 Act, in light of which any derogation falls to be interpreted on a restrictive basis: see paras 263 266 above. It was in line with the general policy of the 1939 Act to enact and regulate limitation periods on a comprehensive and coherent basis. This policy objective was recognised in In re Diplock [1948] Ch 465, 514, where the Court of Appeal noted that the wording of section 2(1)(a) of the 1939 Act, which enacts a six year limitation period for claims in contract, was not entirely apt to cover claims in quasi contract to recover money paid under a mistake (or in unjust enrichment, as it would be categorised today), but nonetheless concluded that it should be so interpreted. In other words, the court considered that the policy of the 1939 Act to introduce certainty in relation to limitation was so strong that such claims were to be treated as falling within the scope of this provision. Secondly, section 26(c) of the 1939 Act was directed to addressing a very specific issue, ie modifying the ruling in Baker v Courage & Co Ltd regarding the time limit for an action at law to claim recovery of money paid under a mistake of fact, but on a narrow basis. The restriction of that common law action to recovery of money paid under a mistake of fact was well established in 1939; there was no equivalent claim in equity; and there was no call at the time for the ambit of the common law action to be expanded to cover recovery of money paid under a mistake of law. Even in equity, the courts were at pains to emphasise the difference between the sort of error of law which might be relevant to a claim for equitable relief (ie error of law as to private rights, where the analogy with mistake of fact was very close: see Cooper v Phibbs (1867) LR 2 HL 149, 170 per Lord Westbury; Earl Beauchamp v Winn (1873) LR 6 HL 223, 234 per Lord Chelmsford; and Ministry of Health v Simpson [1951] AC 251, 268 270), and error regarding general law. At paragraph 23 of its Report, the LR Committee made it clear that it was not recommending that limitation should be extended where a party had made a mistake about his rights. Therefore, it was not in Parliaments contemplation that the common law could be changed in the direction taken in Kleinwort Benson [1999] 2 AC 349. Moreover, the policy issues which would arise in relation to limitation if section 26(c) applied in respect of recovery of money paid under a mistake of law are of a wholly different scale and character from those which were confronted and debated by the LR Committee in its Report, focused as it was on the existing common law claim for recovery of money paid under a mistake of fact. The speeches in Kleinwort Benson itself make the difference plain. It flows from the process by which the common law develops and changes over time while at the same time adhering to a declaratory theory of the law according to which decisions have retrospective effect (see in particular [1999] 2 AC 349, 377 379 and 381 382 per Lord Goff). In our view, the House of Lords in Kleinwort Benson [1999] 2 AC 349, by changing the law to bring a new type of legal claim into existence, created a new state of affairs which did not fall within the intention or purpose of Parliament in enacting section 26(c) of the 1939 Act: (i) The new state of affairs did not fall within the same genus of facts as those by reference to which the expressed policy had been formulated. Mistake of law is something very different from mistake of fact. Mistake of law is a concept liable to change over time as the common law develops and changes, and to do so with retrospective effect, thereby wholly undermining the central policy of the 1939 Act and other Limitation Acts of achieving certainty after a fixed period of time. By contrast, mistake of fact is something fixed in time by reference to the facts which really were in existence at the time when the cause of action arose. As Lord Lloyd put it in Kleinwort Benson [1999] 2 AC 349 (p 393), [f]acts are immutable, law is not. The scale of disruption to the central policy of the Limitation Acts is completely different in the two cases; It is not possible to detect a clear purpose in the legislation which can (ii) only be fulfilled if the extension is made. On the contrary, interpreting mistake in the phrase the action is for relief from the consequences of a mistake as it applies to the common law action for recovery of money paid under a mistake to cover a mistake of law as well as a mistake of fact would defeat the clear primary purpose of the legislation, to produce certain time limits within which claims may be brought. It would also undermine the policy intention expressed in paragraph 23 of the LR Committees Report that time should not be extended in cases of ignorance of rights; (iii) The nature of the 1939 Act, to produce a comprehensive and effective limitation regime, as its principal policy, and the narrow and precise phraseology employed in section 26(c) (see paras 265 266 above), are both strong indications that the word mistake cannot, on a purposive construction, be construed to apply to a common law claim for recovery of money paid under a mistake of law. It is clear that this particular provision was designed to be restrictive and circumscribed in its operation rather than liberal or permissive, and much more circumscribed than the equitable doctrine of laches, which did not depend upon the claim in equity being founded upon mistake, in the sense of it being an integral part of the cause of action. Further, the language in section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act of a mistake being discovered, or discovered with reasonable diligence, in the context of a common law claim, is not apt to cover a mistake of law of a general kind, to which the common law claim now extends, pursuant to Kleinwort Benson. That is also true in relation to mistake of law in equity, where the emphasis was always on the analogy between mistake as to private rights and mistake of fact. Contrary to the observation of Lord Goff in Kleinwort Benson [1999] 2 AC 349, 388H 389A, the pre existing equitable rule did not apply to all mistakes, whether of fact or law. Equity was more nuanced than that, and it did not include a claim for simple recovery of money paid under a mistake of law: see Rogers v Ingham (1876) 3 Ch D 351, 355 per James LJ; (iv) The subject matter, an action at common law for money paid under a mistake of law, is different in kind and in the dimension of its implications from that for which the legislative provision was passed, to cover an action at common law for money paid under a mistake of fact. The debate regarding the merits of a change in the substantive law to allow recovery for mistake of law, reviewed in Kleinwort Benson, itself reveals the different issues of principle which arise in the two cases: see [1999] 2 AC 349, 371E 372A per Lord Goff ( as the majority judgments in Brisbane v Dacres [5 Taunt 143] show, the rule [in Bilbie v Lumley] was perceived, after due deliberation, to rest on sound legal policy the difficulties now faced in formulating satisfactory limits to a right to recover money paid under a mistake of law reveal that there was more sense in the rule than its more strident critics have been prepared to admit). Lord Reed and Lord Hodge have explained how Lord Goff and Lord Hope misunderstood the legal position as it existed when Parliament legislated in 1939. This had the effect that their reasoning in Kleinwort Benson regarding the interpretation of section 26(c) in relation to the new claim to recover money paid under a mistake of law was flawed, because they did not properly understand the limited object which Parliament sought to achieve in 1939 in enacting that provision: see para 272 above. Kleinwort Benson provides no other basis for applying section 26(c) of the 1939 Act and then section 32(1)(c) of the 1980 Act to mistakes of law. This flaw was compounded by their failure to appreciate that the major degree of uncertainty in the law which would be introduced by interpreting section 32(1)(c) of the 1980 Act and its predecessor section 26(c) of the 1939 Act as covering the new type of claim, which all members of the Appellate Committee identified would be the consequence, showed that such an interpretation was completely at odds with the policy and intent of both statutes. This latter point deserves emphasis. In Kleinwort Benson [1999] 2 AC 349, Lord Browne Wilkinson considered (p 364) that, on the footing that Lord Goff was correct in holding that section 32(1)(c) of the 1980 Act applies to actions for recovery of money paid under a mistake of law, the disruption to settled entitlements every time the law was changed or developed by judicial decision would be so great that the House of Lords ought not to make the change to the substantive law which the majority decided upon, to allow recovery of money paid under a mistake of law. He took that view even though he thought that would be a desirable reform of substantive law. As he said, the consequence would be that [o]n every occasion in which a higher court changed the law by judicial decision, all those who had made payments on the basis that the old law was correct (however long ago such payments were made) would have six years in which to bring a claim to recover money paid under a mistake of law; as a result, in his judgment the correct course would be for the House to indicate that an alteration in the law is desirable but leave it to the Law Commission and Parliament to produce a satisfactory statutory change in the law which, at one and the same time, both introduces the new cause of action and also properly regulates the limitation period applicable to it. In other words, Lord Browne Wilkinson recognised that the change in the substantive law, if the limitation position was as stated by Lord Goff, would be massively disruptive of settled transactions and would unduly undermine security of receipt of money on a very wide scale. Lord Lloyd of Berwick agreed with him. He emphasised the intense uncertainty which would follow from the conclusion of the majority in the case to change the substantive law, with transactions unsettled and liable to be reopened, a consequence which he viewed with alarm: [1999] 2 AC 349, 397 398. In our view, however, the logical conclusion should have been that the change in the substantive law was of such a character as fell outside the policy and intent of the 1939 Act and the 1980 Act and outside the meaning of section 26(c) and section 32(1)(c) respectively, on a purposive, always speaking, construction. Lord Reed and Lord Hodge challenge Lord Browne Wilkinsons reasoning on this point, on the footing that if their view that section 32(1)(c) is subject to a test of the discoverability of a mistake of law is accepted, the extent of disruption contemplated by him is reduced: para 240 above. But if, as we think, that test cannot plausibly be said to be part of the meaning which Parliament intended section 32(1)(c) to have, we fear that their challenge is misplaced. Indeed, it is in our view revealing that such an interpretation of section 32(1)(c) did not occur to any member of the Appellate Committee, who were addressing the meaning of the provision for the first time and without any preconceptions. In any event, it does not seem to us that their proposed reading of section 32(1)(c) does adequately deal with the points made by Lord Browne Wilkinson and Lord Lloyd. Clearly, there may be many cases where there is a long period of time, far exceeding the usual six year limitation period, between a payment being made on the basis of some settled common law rule and some later development in legal opinion which calls that rule into question to the threshold standard of discoverability which Lord Reed and Lord Hodge endorse. We consider that Lord Browne Wilkinsons point remains a good one. In our view, to apply section 32(1)(c) to payments made under mistake of law would give rise to levels of uncertainty which conflict with the policy objective stated by the LR Committee (see paragraph 7 of its Report) and the underlying policy of the 1939 Act and the 1980 Act as limitation statutes, and could not have been regarded by Parliament as acceptable. Lord Goff made the statement set out at para 154 above in which he recognised that great uncertainty in the law would arise from the application of section 32(1)(c) to claims for recovery of money paid under a mistake of law. We agree with the criticism of this passage by Lord Reed and Lord Hodge at para 155. With respect to Lord Goff, he omitted to consider the question of the application of section 32(1)(c) in terms of the object of the 1980 Act and to adopt a purposive construction in the light of that. In our view, if that had been done, he would have been constrained to accept that the points he himself made showed that to treat that provision as applicable would clearly undermine the policy of the 1980 Act, with the result that section 32(1)(c) could not bear the interpretation he sought to place on it. As he said, the dramatic consequences produced by a combination of the recognition of the new cause of action in Kleinwort Benson and an extended interpretation of section 32(1)(c) had not been appreciated at the time of the enactment (indeed, they were completely outside what was in Parliaments contemplation when it passed both the 1939 Act and the 1980 Act), and were of such a profound character as to call for legislative reform to provide for some time limit, as opposed to (in practice) a wholly indefinite limit. But this serves only to emphasise that his proposed reading of that provision was contrary to the policy of the enactments. Lord Hoffmann made similar points at p 401, in the passage set out at para 157 above. He noted that the combination of the change in substantive law to allow claims for recovery of payments made under a mistake of law and the application of section 32(1)(c) might be said to go too far in undermining security of transactions, and observed in that regard that [t]he most obvious problem is the Limitation Act, which as presently drafted is inadequate to deal with the problem of retrospective changes in law by judicial decision. We agree with the comment about this by Lord Reed and Lord Hodge at para 157. Thus, faced with the same dilemma as Lord Browne Wilkinson, Lord Hoffmann favoured changing the law on recovery of payments made under a mistake of law, notwithstanding that he recognised that the Limitation Act was inadequate to deal with retrospective changes of the law by judicial decision. But in our view this was a false dilemma. The proper conclusion to be drawn from this assessment was that section 32(1)(c) should not be construed to cover the new form of claim. It clearly fell outside the policy of the Act in relation to that provision, which was addressed specifically to claims for recovery of payments made under mistake of fact. Construing the provision as referring only to such claims, and not claims for recovery of money paid under mistake of law, would serve to maintain a proper balance of the public interest in the security of transactions, which would be assured after a limitation period of six years from the date of payment. Lord Hope indicated (p 417) that he thought the LR Committee intended the word mistake to extend to all mistakes of law, but this is not correct: see para 159 above. A proper reading of the Report leads to the opposite conclusion. Later in his speech (pp 417 418) he made the statement set out at para 162 above. Although he accepted that time may run on for a very long time before a mistake of law could have been discovered with reasonable diligence and there was potential for uncertainty, in his view this was a problem for the legislature to resolve. He observed that the problem did not arise under the statutory limitation regime for Scotland, since the relevant prescriptive period of five years could be extended only where the creditor was induced to refrain from making a claim by fraud or error induced by the debtors words or conduct or was under a legal disability. Similar points may be made about this part of Lord Hopes reasoning as in relation to Lord Goffs speech. In our view, Lord Hopes own account indicates why his interpretation of section 32(1)(c) is contrary to the policy of the 1980 Act, read as a whole and also specifically in relation to the provision itself. As he acknowledged, his interpretation of the provision creates very long periods before limitation could apply (and, of course, since there will be new judicial decisions in future, any of which might effect a relevant change in the law, any limitation period which appears to be closed could always be reopened to run again). The potential for uncertainty thereby created was indeed very great. The conclusion from this ought to be that mistake of law as a ground of recovery of money paid, in an action at common law, was never contemplated by Parliament to be capable of falling within section 32(1)(c) and that a purposive interpretation of that provision, in its statutory context, means that it cannot be construed in that way. The comparison with the position in Scotland underlines this point, for it is difficult to see why Parliament would have wished to produce such a radical difference of limitation outcome in the two jurisdictions in relation to a cause of action of a character which is equally viable and capable of vindication on both sides of the border (unlike purely equitable claims in English law). Moreover, in our view, when the context of the 1939 Act and the 1980 Act as limitation statutes designed to produce reasonably determinate limits for the bringing of claims and the specific purpose of section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act are brought into account, the argument based on the language of those provisions and the use of the word discovered, although dismissed by Lord Goff, acquires particular force as indicating that the provisions were not intended to apply to cases of payment under mistake of law. It can readily be seen that the language of discovery is apt in the context of a limitation statute when speaking of discovery of a mistake of fact. It is far more difficult to square it with a deemed mistake of law produced by the retrospective effect of a later judicial decision. This is indeed what led to the conundrums debated in Deutsche Morgan Grenfell [2007] 1 AC 558 and then again in the judgment of Lord Reed and Lord Hodge. In our judgment, therefore, there was a clear misstep by the House of Lords in Kleinwort Benson [1999] 2 AC 349 when it construed section 32(1)(c) as it did. In our view, the decision that section 32(1)(c) applies to common law claims based upon mistake of law was wrong, as a matter of construction of the provision. This is where, with respect, we part company with Lord Reed and Lord Hodge. In the next part of their judgment (paras 165 and following) they consider the decision of the House of Lords in Deutsche Morgan Grenfell [2007] 1 AC 558. Since no one in that case raised the issue of whether the House of Lords in Kleinwort Benson was right to construe section 32(1)(c) as applying to payments under a mistake of law, the members of the Appellate Committee all proceeded on the footing that it did so apply. The question therefore was when such a mistake, as produced by the retrospective effect of a court decision delivered after the payment was made, could be regarded as being capable of discovery for the purposes of the section. The majority view in Deutsche Morgan Grenfell was that the mistake could only be discovered when the later court decision was made. Lord Brown dissented, saying that the possibility of a mistake (ie the possibility of the reversal of the rule of law on the basis of which the claimant made a payment) would be capable of being identified before the reversal by the later court decision actually occurred and it was from when it could be discovered that the prospect of this occurring was sufficiently developed that the limitation period would run. Upon reconsideration of this point, Lord Reed and Lord Hodge prefer the solution proposed by Lord Brown. They conclude that this reflects the proper interpretation of section 32(1)(c) on a purposive approach in line with Parliaments intention in enacting section 26(c) of the 1939 Act. That is to say, section 32(1)(c) does apply to claims for recovery of payments made under a mistake of law, but on the basis that where the mistake arises from the retrospective effect of a later court decision the mistake is to be taken to have been capable of discovery when the prospect that the law would be changed was sufficiently well developed. In this way, Lord Reed and Lord Hodge seek to develop a new argument, not set out in Kleinwort Benson, why the word mistake in the critical phrase in section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act should be interpreted to cover claims based on mistake of law as well those based on mistake of fact, albeit that was the only type of claim to which these provisions were directed when enacted. We do not agree that this is the correct interpretation of section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act. Ingenious though the reasoning is to square the concept of discoverability of a mistake with the effect produced by the retrospective effect of a change in the law, in our opinion it still produces a result which is seriously at odds with the policy and intent of those provisions. Further, it seems to us, with respect, that the argument presented in support of this interpretation (see para 236(3) above) is excessively linguistic. The ordinary meaning of words, to which Lord Reed and Lord Hodge make appeal, is an inadequate tool for this process of construction, when the words in question cannot possibly have had the meaning now contended for when enacted. Instead, as set out above, the focus should be on purposive construction of the provision, arrived at in light of consideration of the policy of the limitation statutes in which it appeared and the object Parliament sought to pursue in enacting the particular provision in that context. Although in Kleinwort Benson [1999] 2 AC 349 the House of Lords decided that for the purposes of the law of unjust enrichment there was no sufficient difference between mistake of fact and mistake of law to justify distinguishing them as the basis for recovery of money paid, that was a matter of judicial policy in the development of the common law. It did not reflect any legislative policy adopted by or attributable to Parliament relating to the Limitation Acts. When Parliament enacted section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act it addressed the law as it stood at the time, in which the only cases in which recovery was possible was where the payment had been made on the basis of a mistake of fact. Parliament has never addressed the distinct and difficult policy issues which arise in the context of these provisions when one moves from recovery in the case of mistake of fact to recovery in the case of mistake of law, and in our view it is not possible to assume that its policy in enacting those provisions covered the latter type of case. There are three striking features of the latter class of case to which, in our view, Lord Reed and Lord Hodge do not give sufficient weight. First, any application of section 32(1)(c) to mistakes of law which include judicial rewriting of the law is bound to risk opening up very old claims indeed. This was not possible prior to Kleinwort Benson, because the claim would have had to have been based on mistake of fact. Although section 32(1)(c) involves some departure from a clear and certain limitation cut off of six years in that sort of case, this is a very modest extension the potential for application of which is likely to narrow considerably as time goes by and the underlying true facts come to light. The opposite is true in the case of mistakes of law identified by retrospective application of later judicial decisions which change the law. Particularly in the field of the common law, the scope for the law to be changed by judicial decision increases as time goes by and the law is perceived as no longer reflecting social values or legal policy, a gradual head of steam builds up among judges and commentators calling for it to be changed and then the courts eventually respond. No purposive interpretation of section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act or application of the always speaking doctrine could lead to the conclusion that Parliament intended, by a new provision in a Limitation Act, to open up such stale claims. One example serves to illustrate the point. In 2018, in Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24; [2019] AC 119, this court was asked to depart from the much criticised decision of the House of Lords in Foakes v Beer (1884) 9 App Cas 605. The doctrine from which the court was asked to depart had only reluctantly been affirmed out of loyalty to the Court of Appeal in Pinnels case (1602) 5 Co Rep 117a. If the court had departed from Foakes v Beer, this would have undermined settled payments made for over 130 years, or 416 years if Pinnels case had also been overruled. But claimants for repayment (or their estates if individuals) would have had until 2024 to bring their claims, with no limitation defence to impede them. In Kleinwort Benson [1999] 2 AC 349 Lord Lloyd gave a number of other examples (p 393). The decision in that case to depart from the rule of law laid down in 1802 in Bilbie v Lumley is itself a further example. Lord Reed and Lord Hodge seek to meet this point by saying that mistakes of fact might emerge after a long period of time, and give the example (at para 228) of In re Baronetcy of Pringle of Stichill [2016] UKPC 16; [2016] 1 WLR 2870. It was not a case about a common law claim in mistake nor about the interpretation of section 32(1)(c). We would make three points about this example. (i) The case arose in unusual circumstances and is one of the most extreme forms of mistake of fact case one can imagine. The more usual type of mistake of fact case is one where the mistake is liable to emerge after a much shorter period, by contrast with what happens in relation to mistake of law: para 290 above. (ii) It seems to us that the reasoning of Lord Hodge for the Board of the Privy Council in this case tends to demonstrate that Parliament cannot have intended section 32(1)(c) to apply in the case of mistakes of law. It involved a very late challenge to entitlement to the honour of a baronetcy in which the modern discovery of DNA and the use of DNA testing to determine parentage had the effect of unsettling the operation of various rules of law which previously would have made such a challenge very difficult indeed after the baronetcy had been held by an individual for a very long period. The particular form of claim was not one to which any limitation period had been enacted by Parliament, either in English law (para 39) or Scots law (paras 50 61). The policy concern at potential disruption of property transactions in other cases was so obvious that the Board felt that it should call attention to the lacuna in the limitation statutes (para 85). Yet the reasoning of Lord Reed and Lord Hodge in the present case would have the effect of exacerbating this problem by extending the application of section 32(1)(c) to cover mistakes of law. (iii) Most importantly, if one imagined a relevant common law claim arising from facts similar to those in the Stichill Baronetcy case, although it would be an unusual case it would fall squarely within the meaning which Parliament intended section 32(1)(c) to have, as involving a mistake of fact. But the question in the current case is different. It is whether a mistake of law, which has arisen only because of a change in the law long after a relevant payment was made, falls within the intention of Parliament in the legislation it enacted, even though Parliament could never have contemplated that it did. In our view, for the reasons we have given, it is not possible to draw such an inference. The unusual circumstances of the Stichill Baronetcy case were such as to unsettle only one transaction, the inheritance of the baronetcy, and one small set of people were interested in that question. But the extension of section 32(1)(c) to cover payments made under mistake of law will tend to unsettle whole classes of transactions, such as were governed by rules of law of general application. Secondly, the phenomenon of judicial decisions changing the law occurs across a wide range of cases. As was pointed out by Lord Browne Wilkinson and Lord Lloyd in Kleinwort Benson [1999] 2 AC 349 (at pp 363 364 and 393 394, respectively), it extends from situations in which rules of the common law are derived from practice and the understanding of lawyers skilled in the field, through decisions of lower courts being overturned by superior courts (a very common feature of the legal system), to this court deciding in comparatively rare cases to re open and overturn previous decisions of itself or the House of Lords. The law is often settled by a decision of the Court of Appeal, or even at first instance, as was thought to have happened in relation to floating charges in Siebe Gorman & Co Ltd v Barclays Bank Ltd [1979] 2 Lloyds Rep 142: see In re Spectrum Plus Ltd (in liquidation) [2005] 2 AC 680, paras 1 17 per Lord Nicholls. If this court (or the Court of Appeal, in the case of a first instance decision) concludes that the earlier decision is wrong, then it will overrule it, and with retrospective effect, with little scope for considering the risks to the security of settled transactions. In Kleinwort Benson the House of Lords departed from law which had been settled by a lower court in Bilbie v Lumley. Again, it seems to us that neither a purposive interpretation of the relevant provisions nor the application of the always speaking doctrine could lead to the conclusion that Parliament intended that such uncertainty and potential for undermining the security of transactions should be introduced into the law across such a wide range of cases, least of all in a Limitation Act, the general object of which is to achieve the opposite effect: see para 271 above. The extent of the contradiction between the uncertainty created by alterations in the law made by the courts and the policy of the Limitation Acts was already great in 1939, since common law rules established by professional practice or decisions of courts up to and including the Court of Appeal could always be changed. The extent of the contradiction has been greatly increased with the 1966 Practice Statement (Practice Statement (Judicial Precedent) [1966] 1 WLR 1234), which has the effect that even rules established by the House of Lords or the Supreme Court can now be changed with retrospective effect. Therefore, in our view, the reasons why section 26(c) of the 1939 Act and section 32(1)(c) of the 1980 Act cannot be construed as applying to mistakes of law have become even stronger than they were in 1939. Lord Reed and Lord Hodge say that the 1966 Practice Statement was not in the mind of Parliament in 1939 and suggest that reference to it is therefore inapposite: para 238. We respectfully doubt that. The court has to infer what should be regarded as the true intention of Parliament in enacting section 26(c) of the 1939 Act (and then re enacting that provision in section 32(1)(c) of the 1980 Act) as to whether it should apply in new circumstances which Parliament did not have in its contemplation in 1939. To do that, the court has to take account of the entire impact of the new circumstances on the policy underlying Parliaments choice to enact section 26(c) in the terms it did. It seems to us that the major transformation of the legal landscape produced by the 1966 Practice Statement and the major change in doctrine in Kleinwort Benson both have to be brought into consideration to address that question. We note that Lord Reed and Lord Hodge at para 241 refer in similar fashion (correctly in our view, as a matter of principle) to the change of position defence, which also developed after 1939. So far as that defence is concerned, we do not consider that it provides an adequate answer to the policy objections to treating section 32(1)(c) as covering mistake of law. We cannot see how the merits of an alleged change of position could be examined over intervening decades or centuries. Moreover, many public authority defendants, including the Revenue, may be unlikely in practice to be able to rely on it. The majority in Kleinwort Benson likewise referred to the new defence of change of position as a possible answer to, or at least amelioration of, the problems of injustice and uncertainty to which their interpretation of section 32(1)(c) gave rise. However, experience, including claims in the field of tax as affected by EU law for recovery of payments made under mistakes of law dating back to 1973, has shown that this hope has not been realised. Thirdly, as is clear from the LR Committees Report, section 26(c) of the 1939 Act (and now section 32(1)(c) of the 1980 Act) enacts what was previously largely an equitable principle, namely that relief should be available in the occasional case where the particular circumstances of the claimant would otherwise render the rigid application of the law unconscionable. Thus it would be unconscionable for claimants to have time running against them when, either because they were labouring under a fraud or, because of a mistake as to the facts, they were unaware of their cause of action. The occasional claimant thus disadvantaged could rely upon the exceptional extension of the running of time. But if section 32 is applied to extend time where there has been a retrospective judicial change in the law, then every potential claimant is benefitted by the exception. By definition every potential claimant was suffering from the same deemed mistake when making the relevant payment. In the make believe world view necessitated by the need to give retrospective effect to judicial law making, no one knew what the law then really was on the point in issue. It seems to us that to extend the application of these provisions to this class of case goes well beyond the narrow equitable principle which was intended to apply. As we have noted, the equitable principle grew from the idea of the unconscionability of a defendant relying on his own fraud and was given a modest extension to cover individual cases of mistake of fact. By contrast, a claim based on a deemed mistake which has arisen only because of a retrospective change in the law and which affects all cases within the purview of the rule of law which is overruled lies very far indeed from any concept which could be grounded in the equitable principle which the LR Committee identified and which Parliament intended to apply to common law claims. In our view, the approach of Lord Brown in Deutsche Morgan Grenfell [2007] 1 AC 558, which Lord Reed and Lord Hodge endorse, does not provide an answer to these objections. Plainly, there may be a very long period when a rule of law is taken to be established by professional practice or judicial decisions before the threshold of discoverability proposed by Lord Brown to suggest it might be wrong is crossed. Accordingly, even though Lord Browns approach ameliorates to some degree the conflict between section 32(1)(c) and the basic object of the Limitation Acts which arises when that provision is taken to apply to mistakes of law, it does so only to a very limited and inadequate extent. There are several additional reasons which reinforce our view that it is not plausible to identify Lord Browns interpretation of section 32(1)(c) as representing the intention of Parliament in any genuine sense, including the extended sense to which the always speaking doctrine refers: (i) The meaning which Parliament intended section 26(c) of the 1939 Act and then section 32(1)(c) of the 1980 Act to bear is clear from consideration of the context in which they were enacted. Having identified that the House of Lords in Kleinwort Benson [1999] 2 AC 349 erred in departing from that meaning, it seems to us that the proper course is to correct the error by reinstating the meaning Parliament intended. In our opinion it is not appropriate for this court to devise a half way house position which falls short of fidelity to Parliaments intention, and which only nibbles at the edge of the problems of unlocking very stale claims to which the mistaken interpretation gives rise; (ii) Section 32(1)(c) is an exception to the general object of the Limitation Act, and as such should be given a restrictive construction; (iii) The test of discoverability proposed by Lord Brown is itself very uncertain, in a way that the test for discoverability of whether there has been a mistake as a matter of fact is not. The identification of a point in time, earlier than when the relevant claim was actually launched, when such a claim became worth pursuing requires a deeply speculative process of hypothetical fact finding. It is not plausible to suppose that Parliament intended to adopt this as the criterion to be applied in a Limitation Act, ie in a statute which has the object of producing certainty by application of simple rules which also offer the prospect of resolution of disputes without the need for litigation. In any given case it may be very difficult to say whether Lord Browns threshold of discoverability has been crossed or not. The application of his test will often require a wide ranging investigation at trial of something as inherently vague and intangible as the state of professional opinion as it changes year by year over what may be a very long period. It is unclear whether expert evidence would be of much assistance for such a speculative investigation into legal history. Moreover, the more one focuses on what was reasonable to expect of one claimant or particular type of claimant, as distinct from the general understanding of the legal profession, the greater the range of cases in which the court will have to produce speculative and uncertain judgments as to whether the relevant threshold of discoverability has been passed. Again, therefore, this tends to undermine the principle of certainty which Parliament and the LR Committee intended should be upheld; (iv) As the discussions in Kleinwort Benson, Deutsche Morgan Grenfell and FII (SC) 1 demonstrate, the concept of discoverability becomes very strained when applied in relation to mistake of law produced by the retrospective application of a later judicial decision which changes the law. It has to be taken to a very rarefied and abstract level to adapt it to apply in such a case. It is an odd kind of discoverability when the thing being discovered, or revealing the supposed mistake, has not yet happened when the relevant payment is made. It is not plausible to suppose that Parliament intended the Limitation Act to operate on this basis. The analogy with mistake of fact is not at all persuasive: see para 274(i) above. In the case of an alleged mistake of fact, the fact either has or has not occurred; its occurrence does not depend upon retrospective effects of judicial acts in the future; (v) It is no comfort that in those cases where the law has not changed section 32(1)(c) is unlikely to cause limitation difficulties, because the true law will usually have been reasonably discoverable by taking legal advice. This just indicates that the reality is that there is only practical scope for section 32(1)(c) to have an effect when the law is changed retrospectively by judicial decision, so Parliaments intention as to its meaning and effect should properly be tested by reference to that class of case; (vi) The interpretation of section 32(1)(c) proposed by Lord Brown produces arbitrary and unfair distinctions which we do not consider Parliament can have intended to be drawn. Claimants who are by a retrospective change in the law enabled for the first time to make a claim in contract or in tort get no benefit at all from the provision. They must bring their claim within the primary limitation period running from the date when they first had a cause of action. This is because their claim will not be based upon mistake of law, as an essential element in the cause of action, which is all that section 32(1)(c) applies to. Nonetheless a deemed mistake of law occurring in this way may well be the reason why they did not claim sooner. Our conclusion regarding the proper interpretation of section 32(1)(c) would open the door to a departure from Kleinwort Benson [1999] 2 AC 349 on that issue under the 1966 Practice Statement. In our view, it would be appropriate for the Practice Statement to be applied to restore the proper interpretation of section 32(1)(c) which we consider Parliament intended, as set out above. We express our views shortly, as we are in a minority so far as concerns reversing Kleinwort Benson by construing mistake in section 32(1)(c) to mean only a mistake of fact, in accordance with the law as it stood in 1939 and 1980. In our judgment, for the reasons we have set out, the decision in Kleinwort Benson that section 32(1)(c) applies to mistakes of law was wrong for reasons of much greater solidity and significance than a mere intellectual difference of opinion. The reasoning in Kleinwort Benson is in our respectful view gravely undermined by an underlying view of the equitable antecedents to what is now section 32(1) which cannot be squared with previous authority and by an apparent failure to weigh in the balance how serious a departure from the overall policy of the 1980 Act is involved in a conclusion that section 32(1)(c) does apply to claims based upon a mistake of law. Furthermore the readiness of the House of Lords in both Kleinwort Benson and Deutsche Morgan Grenfell to acknowledge common law claims based on mistake of law where settled law had been changed with retrospective effect, and that section 32(1)(c) applied to such claims, was heavily based upon a hope that Parliament would remedy the unsatisfactory consequences, a hope which has now clearly been shown to have been misplaced, save to a limited degree in relation to tax. An important consideration underlying the Practice Statement is that where possible past transactions should not be rendered uncertain or insecure. As the Practice Statement says, in deciding whether it is right to depart from a previous decision of the House of Lords (or, now, this court) the court will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into . The greater the degree of such disruption, the less will it be regarded as acceptable for the court to change the law for the future. It is possible that some past transactions might be unsettled by changing the interpretation of section 32(1)(c) adopted in Kleinwort Benson; however, for the reasons we have explained, the application of section 32(1)(c) to cases of mistake of law will unsettle past transactions and will generate such uncertainty to a very much greater degree. Changes in the law produced by higher courts reversing decisions of lower courts or correcting professional practice are commonplace. The period of time before such a decision is produced, and in which parties will have entered transactions on the basis of the previous understanding of the law, may be very long. Further, this open ended prospect of unravelling past transactions without limit of time is likely to act as a very serious and chilling constraint upon any departure from an earlier decision by the House of Lords or this court under the 1966 Practice Statement. The older the decision from which departure is being considered, the greater the peril to settled transactions, and the greater the difficulty which this court will face in assessing whether that peril is sufficient to prohibit an otherwise worthwhile change. The speeches of Lord Browne Wilkinson and Lord Lloyd in Kleinwort Benson [1999] 2 AC 349 illustrate this point. Absent their concerns about the absence of an effective limitation cut off, they would both have wished to support the substantive change in the law of unjust enrichment produced by the majority. The new circumstances in which the proper interpretation of section 32(1)(c) falls to be assessed as a statutory provision which is always speaking include not just the change in the law in Kleinwort Benson but the change in the practice of the House of Lords effected by the 1966 Practice Statement. Parliament cannot have intended that section 32(1)(c) should have the practical effect of acting as a serious impediment to desirable judicial modernisation of the common law pursuant to the 1966 Practice Statement. Accordingly, it is our view that correction of the wrong turn taken in Kleinwort Benson regarding the true interpretation of section 32(1)(c) is justified pursuant to the Practice Statement. It would tend to reduce, rather than promote, insecurity of transactions across time. It would also secure the ability of this court to review and amend substantive legal doctrine in the interests of promoting doctrinal coherence and keeping the law broadly in line with changing social expectations and values. Finally, since our view regarding the proper interpretation of section 32(1)(c) is not accepted by Lord Reed and Lord Hodge and the majority in the court, we address the position which arises under the Practice Statement if their interpretation of section 32(1)(c) prevails, as it does. On their interpretation, there is still considerable scope for uncertainty in the law to arise and unsettle transactions dating far back in time. Their interpretation, following Lord Browns approach in Deutsche Morgan Grenfell [2007] 1 AC 558, is also productive of a degree of uncertainty because of the test of discoverability of a mistake which they say should apply. To that extent, therefore, it seems to us that the argument for applying the Practice Statement in relation to both Kleinwort Benson and Deutsche Morgan Grenfell is weakened. Nonetheless, we consider that their interpretative approach better reflects the legislative purpose in the context of the Limitation Act of securing a degree of certainty in relation to past transactions than does that of the majority in Deutsche Morgan Grenfell [2007] 1 AC 558 and the approach which the Appellate Committee in Kleinwort Benson assumed would apply. Therefore, on the footing that the interpretation of section 32(1)(c) preferred by Lord Reed and Lord Hodge must be accepted, we agree that it is appropriate to apply the Practice Statement in relation to those decisions and in favour of now adopting their interpretation.
UK-Abs
This appeal arises in the course of long running proceedings known as the Franked Investment Income (FII) Group Litigation. The FII Group Litigation brings together many claims concerning the way in which advance corporation tax and corporation tax used to be charged on dividends received by UK resident companies from non resident subsidiaries. The Respondents to this appeal are claimants within the FII Group Litigation whose cases have been selected to proceed as test claims on certain common issues (the Test Claimants). These issues are being determined in phases, with the courts decisions affecting not just the other claims within the FII Group Litigation, but potentially also a number of other sets of proceedings brought by corporate taxpayers against the Commissioners for Her Majestys Revenue and Customs (HMRC). The Test Claimants case is that the differences between their tax treatment and that of wholly UK resident groups of companies breached the EU Treaty provisions which guarantee freedom of establishment and free movement of capital. They seek repayment by HMRC of the tax wrongly paid, together with interest, dating back to the UKs entry to the EU in 1973. Restitutionary claims for the recovery of money must normally be brought within six years from the date on which the money was paid. As an exception to that general rule, section 32(1)(c) of the Limitation Act 1980 provides that, in respect of an action for relief from the consequences of a mistake, the limitation period only begins to run when the claimant has discovered the mistake or could with reasonable diligence have discovered it. Before the Court of Appeal, the Test Claimants argued that, where a claimant is seeking to recover money paid under a mistake of law, the effect of section 32(1)(c) is to postpone the commencement of the limitation period until such time as the true state of the law is established by a judicial decision from which there lies no right of appeal. In their cases, the Test Claimants said that this was when, in 2006, the Court of Justice of the European Union decided that relevant aspects of the UK tax regime were incompatible with EU law. HMRC argued that time instead began to run in 2001, when the Court of Justice decided that other aspects of the UK tax regime breached EU law. The Court of Appeal found in favour of the Test Claimants on this issue. On appeal to the Supreme Court, HMRC argued that section 32(1)(c) of the Limitation Act 1980 applies only to mistakes of fact and not to mistakes of law, or alternatively that the Test Claimants could reasonably have discovered their mistake more than six years before they issued their claims in 2003. On either approach, a proportion of the claims would be time barred. The Supreme Court unanimously allows the appeal, but for differing reasons. The majority (Lord Reed, Lord Hodge, Lord Lloyd Jones and Lord Hamblen) hold that section 32(1)(c) of the Limitation Act 1980 applies to claims for the restitution of money paid under a mistake of law, with time beginning to run when the claimant discovers or could with reasonable diligence have discovered their mistake in the sense of recognising that they have a worthwhile claim. It leaves the application of that test to the facts of this case for the High Court, after the parties have had an opportunity to amend their pleadings. The minority (Lord Carnwath, Lord Briggs and Lord Sales) would have held that section 32(1)(c) has no application to mistakes of law. Lord Reed and Lord Hodge give the main judgment, with which Lord Lloyd Jones and Lord Hamblen agree. Lord Briggs and Lord Sales give a partially dissenting judgment, with which Lord Carnwath agrees. Should HMRC be allowed to argue that section 32(1)(c) does not apply to mistakes of law? The Court rejects the Test Claimants various objections to HMRC arguing at this stage of the proceedings that section 32(1)(c) of the Limitation Act 1980 does not apply to mistakes of law. Cause of action estoppel is a legal doctrine which stops a party from raising points which might have been but were not raised and decided in earlier proceedings [61] [62]. As it operates only to prevent the raising of points which were essential to the existence or non existence of a cause of action, and the effect of limitation instead is to render an otherwise valid claim unenforceable, this doctrine does not prevent HMRC from making their current challenge [63]. Issue estoppel is a related legal doctrine which stops a party from raising points which were not raised in earlier proceedings or were raised unsuccessfully [64] [68]. As the question of when the limitation period commenced was not argued or determined in the first phase of the FII Group Litigation, and as it would not have been possible for HMRC to make their current limitation challenge before the lower courts, this doctrine does not prevent HMRC from making that challenge now [69]. Further, HMRCs challenge does not amount to an abuse of process, when seen in the context of group litigation which raises novel issues of unparalleled complexity, and which was the subject of case management decisions as to the order in which these issues were to be addressed [78] [79]. It is readily understandable why in the first phase of the litigation HMRC focused on arguments which, if successful, would have made it unnecessary to mount this wider challenge [80]. On the basis of those factors, as well as the substantial value of the claims, the importance of the issue to other claimants both within and outside the FII Group Litigation, and the potential to remedy any prejudice through an order for costs, the Supreme Court allows HMRC to withdraw their concession that section 32(1)(c) applies to mistakes of law, and now to make the contrary case [94] [100]. That case places in question two of the most important decisions on the law of limitation of recent times: Deutsche Morgan Grenfell Group Plc v Inland Revenue Comrs [2006] UKHL 49 (Deutsche Morgan Grenfell) and Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 (Kleinwort Benson) [1], [172]. What is the test for the discoverability of a mistake under section 32(1)(c)? In Deutsche Morgan Grenfell, the House of Lords tied the date of discoverability of a mistake of law to the date when the truth as to whether the claimant has a well founded cause of action is established by a decision of a court of final jurisdiction [167] [170], [213]. Section 32(1)(c) cannot be intended to have that effect, as limitation periods apply regardless of whether the substance of the claim is disputed, and regardless of whether there is in truth a well founded cause of action [177] [179], [199] [202], [213]. Such an approach also has the illogical consequence that mistakes are not discoverable by a claimant until after he has issued a claim on the basis of the mistake [173] [174], and perpetuates the problems associated with distinguishing between matters of fact and matters of law [195], [213], [250]. Given those very unfortunate consequences, for which there is currently no prospect of Parliament enacting a legislative solution, it is appropriate for the Supreme Court to depart from the decision in Deutsche Morgan Grenfell in relation to discoverability [250] [253]. The correct approach is that time begins to run under section 32(1)(c) when the claimant discovers, or could with reasonable diligence discover, his mistake in the sense of recognising that a worthwhile claim arises [193], [209]. That approach brings section 32(1)(c) into line with section 32(1)(a), and with other analogous provisions of the 1980 Act [180] [196], [213]. Does section 32(1)(c) apply to mistakes of law? Section 32(1)(c) applies to mistakes of law, as the House of Lords decided in Kleinwort Benson. Although that decision was not supported by convincing reasoning [148] [161], and although when section 32(1)(c) was enacted it was not contemplated that it might extend to actions for the restitution of money paid under a mistake of law, the ordinary meaning of the words of that provision include such actions [220] [221], [242] [243]. Excluding claims based on a mistake of law would frustrate the purpose of section 32(1)(c), which is to relieve claimants from the necessity of complying with a time limit at a time when they cannot reasonably be expected to do so [220] [221], [242] [243]. Including such claims does not have unacceptable consequences for legal certainty, particularly now that the approach to discoverability in Deutsche Morgan Grenfell is departed from [225] [229], [242] [243]. How should the test for discoverability of a mistake under section 32(1)(c) be applied to the facts of this case? The Court of Appeal applied the approach to discoverability wrongly established in Deutsche Morgan Grenfell, such that HMRCs appeal must be allowed [254]. The Supreme Court cannot, however, determine in the abstract the point in time when the Test Claimants could with reasonable diligence have discovered their mistake. That question is left for the High Court to determine, after the parties have had an opportunity to amend their pleadings [255]. Dissenting judgment In their partially dissenting judgment, Lord Briggs and Lord Sales conclude that section 32(1)(c) does not apply to payments made on the basis of a mistake of law [258]. They consider that the House of Lords was wrong to decide otherwise in Kleinwort Benson [274] [285] and that the proper course now is to overrule that decision [298], [303]. Any application of section 32(1)(c) to mistakes of law which include judicial rewriting of the law is bound to risk opening up very old claims [289] across a wide range of cases [293], going well beyond the narrow equitable principle which was intended to apply [296]. This introduces large inroads into the overall purpose of the legislation by undermining legal certainty [259]. The approach taken by the majority to the issue of discoverability does not provide an adequate answer to these objections [278], [297] and could prove unfair and unworkable in practice [259], [298]. On the footing that the majoritys interpretation of section 32(1)(c) has prevailed, however, Lord Briggs and Lord Sales agree that it is appropriate to depart from the decision in Deutsche Morgan Grenfell in relation to discoverability [304].
This appeal raises the question whether the Commissioner of Police of the Metropolis (the Commissioner) owes a duty to her officers, in the conduct of proceedings against her based on their alleged misconduct, to take reasonable care to protect them from economic and reputational harm. Background facts The pleaded facts may be summarised as follows. On 2 December 2003 the respondents, four police officers serving in the Metropolitan Police Service, (the officers) took part in the arrest of a suspected terrorist, BA. BA subsequently made allegations that the officers had seriously assaulted and injured him during the arrest. The complaints were investigated by the Metropolitan Police Services Directorate of Professional Standards and the Crown Prosecution Service who concluded that there was no case to answer. However, the Independent Police Complaints Commission decided in October 2004 that one charge relating to the use of excessive force should be brought against the first respondent. That charge was dismissed by the disciplinary panel in April 2005. Between 14 January 2005 and 2 February 2005 the Independent Police Complaints Commission released the officers identities into the public domain. This led to threats of serious violence to the officers and their families on a website which supported BA. On 18 October 2007 BA issued civil proceedings against the Commissioner in which he alleged that the Commissioner was vicariously liable under section 88 of the Police Act 1996 for the serious assaults which he alleged the officers had inflicted on him. His claim included claims for aggravated and exemplary damages. The officers were not defendants in the action nor were contribution proceedings brought against them by the Commissioner. The defence of the claim on behalf of the Commissioner was undertaken by the Metropolitan Police Directorate of Legal Services (DLS). A defence denying liability was entered. On 10 January 2008 an offer of settlement was rejected by BA. On 18 March 2008 the officers attended a conference with Mr Jeremy Johnson of counsel, instructed by the DLS on behalf of the Commissioner. The officers subsequently alleged that counsel and the DLS solicitor assured them on that occasion that they were also acting for them and in their interests and told them that BAs claims would be vigorously defended. On 13 February 2009 an application by the Commissioner that the officers be permitted to give evidence from behind screens was dismissed at the pre trial review. On 10 March 2009 BA rejected a further offer of settlement because he wanted an apology or a finding in open court. The officers attended a second conference with Mr Johnson and the DLS on 11 March 2009. On this occasion the officers were accompanied by a solicitor from Russell Jones and Walker who attended only in relation to matters arising from a special measures application which had been made in respect of the evidence to be given by the respondents. At that conference the officers said that they would be reluctant to give evidence without special measures being in place. They allege that Mr Johnson informed them that he was no longer representing their interests but only the interests of the Commissioner. The officers allege that Mr Johnson indicated that the claim would be lost due to BAs medical evidence and they complained to him that they were unable to raise points on various aspects of the defence including medical evidence, expert evidence, CCTV footage and notes of arrest. The trial of BAs claim commenced on 16 March 2009. The officers declined to give evidence voluntarily without special measures being in place. On the third day of the trial, 18 March 2009, the Commissioner settled the claim on the basis of agreed damages of 60,000 and agreed costs of 240,000 with an admission of liability and an apology for gratuitous violence to which BA had been subjected by the officers. Paragraph 82 of the Particulars of Claim in the present proceedings alleges that the Commissioners office issued a press release stating: The Commissioner has demanded an immediate investigation into the circumstances surrounding the officers refusal to give evidence relating to this arrest in 2003. Whilst the arrest and subsequent events are historic this is a serious matter which has been referred to the IPCC. In the present proceedings the officers maintain that this was tantamount to endorsing their culpability. On 12 August 2010 the officers were each charged with one count of an assault occasioning actual bodily harm arising out of the arrest of BA. In June 2011, following a trial lasting five weeks, the officers were all acquitted. The current proceedings On 23 September 2013 the officers commenced the present proceedings against the Commissioner alleging breach of contract, negligence and misfeasance in public office arising from the manner in which the Commissioner had defended BAs claim. They sought compensation for reputational, economic and psychiatric damage. In the particulars of claim the officers put forward three bases on which it was alleged that the Commissioner owed them a duty of care. (1) A retainer had arisen between them and the Commissioners legal team because of the assurances given to them by counsel and the DLS solicitor. (2) The Commissioner had assumed a duty of care to the officers by reason of those same assurances. (3) The Commissioner owed the officers a duty of care in tort and concurrently in contract as employer or quasi employer to take reasonable care to safeguard their safety, health, welfare (including economic and professional welfare) and reputational interests, in the preparation and conduct of the defence to BAs claim and when considering and effecting any settlement of it. This third head of claim was said to include the following specific obligations to take reasonable care. (a) To keep the officers informed of the progress of the case. (b) To keep them and their families safe from threats by BAs supporters against their homes and physical safety. (c) To explain and provide reasons in the event that the Commissioner believed that BAs civil claim could no longer be defended or that a conflict had arisen between the officers and the Commissioner. (d) To consult the officers in sufficient time prior to the trial for them to obtain alternative and independent legal advice in the event that the Commissioner had decided to admit liability and make a public apology. (e) To warn the officers in sufficient time (to enable them to take independent legal advice or any other necessary steps to protect their own interests) prior to the opening of the trial that the application for special measures had failed, that the Commissioners lawyers were no longer acting for the officers or protecting their interests and that the Commissioner was considering admitting liability and making a public apology. The particulars of claim then provided detailed particulars of the alleged breaches of the duties. The officers do not allege that entering into an agreement on the terms of the settlement between the Commissioner and BA was in itself negligent. Their complaint is about the antecedent conduct of the defence by the Commissioner. In particular it is alleged that the Commissioner failed to conduct and prepare a competent defence to BAs claim. (See Jay J at para 23) Here complaint is made of the failure to proof or call as witnesses a list of named persons or to ascertain the availability of covert recordings. Complaint is made that evidence was lost, not located or not disclosed as a result of a systems failure. Complaint is also made of failure to take account of a list of miscellaneous evidential concerns raised by the respondents which, it is said, were either ignored or not adequately addressed. More generally, it is said that the Commissioner failed to keep the officers informed of the progress of the litigation and the preparation of the defence and failed to advise the officers within a reasonable time of the alleged conflict of interests. Complaint is made of the failure to obtain expert medical evidence to challenge the expert evidence called on behalf of BA and of a failure to apply for an adjournment of the trial. By notice dated 28 April 2014 the Commissioner applied to strike out the claims pursuant to CPR Part 3.4(2) on the grounds that they disclosed no reasonable grounds for the making of a claim, alternatively for summary judgment pursuant to CPR Part 24 on the grounds that the claims had no real prospect of success. On 1 May 2015 Jay J struck out the claims and entered summary judgment for the Commissioner. He considered that, in the absence of an express contract of retainer with the DLS, no retainer existed. Furthermore, the officers had no direct interest in the prior litigation and the possibility of consequential impact on their reputations was insufficient to create such an interest to which the Commissioner would be legally required to have regard or to promote or safeguard. The focus of the claim founded on the more general duty of care to protect the health, economic or reputational interests of the officers shifted during the hearing before Jay J. The judge seems to have been under the impression that the duty relied on by the officers was a duty to avoid psychiatric injury and that the claims for reputational damage and economic loss were entirely consequential on that head of damage. The judge considered that the officers had no real prospect of proving at trial that it was reasonably foreseeable that any breaches of duty by the Commissioner might cause psychiatric injury. However, the judge also observed that this basis of claim faced an insuperable difficulty under Caparo Industries plc v Dickman [1990] 2 AC 605 in that, given that the officers were not parties to BAs civil proceedings, the Commissioners lawyers owed duties solely to the Commissioner and the Commissioner was free to protect his own interests as he saw fit. He stated: The principled objection to this claim is that the postulated duty of care cuts right across the rights and obligations of the defendant itself, and those advising the defendant, in circumstances where no implied retainer existed. It would not be fair, just and reasonable to impose a concurrent conflicting duty of care in these circumstances: (at para 36) The claim for misfeasance was struck out as inadequately pleaded. The officers appealed to the Court of Appeal, save in respect of the claim in misfeasance. The Court of Appeal (Moore Bick, Longmore and Patten LJJ) dismissed the appeal in relation to the existence of a retainer and in relation to the assumption of responsibility. In addition, it dismissed the appeal in relation to psychiatric injury on the ground that such injury was not reasonably foreseeable. However, it allowed the appeal on the remaining issue, holding that it was arguable that the Commissioner owed a duty of care to the officers to safeguard their economic and reputational interests and that this extended to the conduct of litigation by the Commissioner. Moore Bick LJ, with whom the other members of the court agreed, accepted that the Commissioners primary duty was to protect the interests of the Metropolitan Police Service, but he did not consider that a duty of the kind alleged by the officers necessarily cut across this. In his view it was in the interest of the Commissioner and the officers for the defence to be conducted as effectively as possible and a duty of care in that regard would not inevitably give rise to any conflict of interest. Accordingly, he considered it arguable that the Commissioner owed to the officers (1) a duty to defend the litigation as effectively as possible and (2) a duty, when deciding whether to compromise the claim and if so on what terms, to take reasonable care not to sacrifice their interests and professional reputation without good reason and without giving them reasonable warning of what he intended to do. So far as breach of duty giving rise to actionable losses was concerned, Moore Bick LJ noted that there was no allegation that the Commissioners decision to compromise the claim was negligent in all the circumstances. However, the Commissioners forensic difficulties were alleged to have been a consequence of failures on the part of the MPS to identify or make available certain important pieces of evidence. In his view the essential elements of the claim for breach of a duty of care in relation to the conduct of the proceedings were present. The Court of Appeal came to a different conclusion, however, in respect of the allegation that the Commissioner was in breach of duty by failing to warn the officers in good time that he intended to pursue the interest of the MPS, if necessary at their expense. Moore Bick LJ agreed with the judge in dismissing as fanciful the suggestion that, had they been warned, the officers would have applied to be joined as defendants and would have instructed solicitors to conduct their defence independently. The Commissioner now appeals to the Supreme Court. The sole remaining allegation in the proceedings is that the Commissioner owed a duty of care to the officers to conduct the defence of the proceedings brought against her as effectively as possible in order to protect the officers from economic or reputational harm. There is no cross appeal by the officers in relation to the alleged retainer, the alleged assumption of responsibility or the head of claim alleging psychiatric injury. Nevertheless, the subject matter of those heads of claim which have fallen by the wayside forms an important part of the context in which the central issue now falls to be decided. The implied duty of trust and confidence Both before the Court of Appeal and before this court Mr Nicholas Bowen QC on behalf of the officers has placed at the forefront of his submissions the duty of trust and confidence which exists between an employer and his employees. He submits that the duty of care for which he contends is simply a manifestation of the long established term of trust and confidence which is implied into contracts of employment and that, accordingly, there is no scope or need for the court to conduct an assessment of whether the ingredients identified in Caparo v Dickman criteria are present and, in particular, whether the imposition of such a duty would be fair, just and reasonable. Police officers hold the public office of constable and are not employees. They have no contract of employment and the terms on which they hold their office are governed principally by the Police Regulations 2003 (SI 2003/527). Nevertheless, the relationship of Commissioner and officer is closely analogous to that of employer and employee (White v Chief Constable of South Yorkshire Police [1999] 2 AC 455, per Lord Steyn at p 497E F; per Lord Hoffmann at p 505C). In Mullaney v Chief Constable of West Midlands Police [2001] EWCA Civ 700 Clarke LJ, with whom Potter LJ and Bodey J agreed, considered (at para 52) that the relationship is so closely analogous as to make it just in principle to hold that a Chief Constable owes the same duties to his officers as an employer does to his employees. At this point of the discussion I am content to proceed on the basis that the Commissioner and these officers should be treated as if they were employer and employee, while recognising that, in the absence of any actual contract, any duty derived by analogy with the standard terms implied in an employment contract must necessarily sound as a duty of care, rather than be absolute. The mutual obligation of employer and employee not, without reasonable and proper cause, to engage in conduct likely to destroy or seriously damage the relationship of trust and confidence required between employer and employee is a standardised term implied by law into all contracts of employment rather than a term implied from the particular provisions of a particular employment contract (Malik v Bank of Credit and Commerce International SA [1998] AC 20, per Lord Steyn at p 45D). It was described by Lord Nicholls in Malik at p 35A, as a portmanteau concept. In that case the House of Lords considered it the source of a more specific implied obligation on the part of the employer bank not to conduct its business in a dishonest and corrupt manner, the breach of which gave rise to a cause of action for damage to the economic and reputational interests of its employees. Similarly, in Eastwood v Magnox Electric plc [2004] UKHL 35; [2005] 1 AC 503 the House of Lords recognised an obligation on an employer, in the conduct of his business and in the treatment of his employees, to act responsibly and in good faith (per Lord Nicholls at para 11). The implied term has been held to give rise to an obligation on the part of an employer to act fairly when taking positive action directed at the very continuance of the employment relationship (Gogay v Hertfordshire County Council [2000] IRLR 703; McCabe v Cornwall County Council [2004] UKHL 35; [2005] 1 AC 503; Bristol City Council v Deadman [2007] EWCA Civ 822; [2007] IRLR 888; Yapp v Foreign and Commonwealth Office [2014] EWCA Civ 1512; [2015] IRLR 112; Stevens v University of Birmingham [2015] EWHC 2300 (QB); [2016] 4 All ER 258). Furthermore, any decision making function entrusted to an employer must be exercised in accordance with the implied obligation of trust and confidence (Braganza v BP Shipping Ltd [2015] UKSC 17; [2015] 1 WLR 1661). If the present case is approached on the basis of implied contractual terms, the issue becomes whether, in unpacking this particular portmanteau implied term of trust and confidence, it is possible to extract a duty of care owed by an employer to its employees to conduct litigation in a manner which protects them from economic or reputational harm. It is significant that, despite the researches of counsel, we have not been referred to any decided case in any jurisdiction which holds that an employer owes such a duty of care to his employees. To derive such an obligation from the implied term of trust and confidence would be to move substantially beyond the specific derivative duties established to date. Although in Malik the House of Lords derived from the mutual implied contractual obligations of trust and confidence an implied obligation owed by the bank to its employees not to conduct a dishonest or corrupt business and held that damage to reputation resulting from breach sounded in damages, this is at a considerable remove from a duty to exercise care in the conduct of business so as to avoid economic or reputational damage to employees. This point was, in fact, emphasised by Lord Nicholls in a cautionary footnote: , [T]here are many circumstances in which an employees reputation may suffer from his having been associated with an unsuccessful business, or an unsuccessful department within a business. In the ordinary way this will not found a claim of the nature made in the present case, even if the business or department was run with gross incompetence. A key feature in the present case is the assumed fact that the business was dishonest or corrupt. (at p 42C D). In Scally v Southern Health and Social Services Board [1992] 1 AC 294 doctors sued their employer claiming damages, inter alia, in breach of contract and negligence, in respect of the failure of the employer to notify them of their entitlement under their contracts of employment to purchase, during a limited period of time, additional years of pension entitlement. The House of Lords held that the claimants common law claims were to be determined by reference to the contractual relationship and not in tort. The doctors claim succeeded but it is noteworthy that it did so on the narrow ground that where a contract negotiated between an employer and a representative body contains a term conferring on an employee a valuable benefit contingent upon his acting to obtain it, of which he could not be expected to be otherwise aware, there was an implied obligation on the employer to take reasonable steps to publicise that term. It is significant that the House of Lords did not base its decision on a more general duty of care owed by an employer to protect the economic interests of employees. Similarly, in Crossley v Faithful & Gould Holdings Ltd [2004] ICR 1615 the Court of Appeal refused to derive from the mutual duty of trust and confidence a standard obligation, implied by law as a term of all contracts of employment, which requires an employer to take reasonable care for the economic well being of his employees. The claimant, a senior employee and director of the defendant company, retired on grounds of ill health. He later brought an action for damages for breach of contract alleging that in failing to warn him of the effect which resigning from his employment would have on his entitlements under its insurance scheme, the defendant company had acted in breach of an implied term of the contract of employment requiring it to take reasonable care for his economic well being. Dyson LJ, with whom Thomas LJ and Sir Andrew Morritt V C agreed, rejected the proposed implied term. Having observed (at para 42) that it was not for that court to take a big leap to introduce a major extension of the law in this area when the House of Lords had declined to do so in Scally v Southern Health and Social Services Board [1992] 1 AC 294 and Spring v Guardian Assurance plc [1995] 2 AC 296, he developed (at para 43) the more fundamental objection that such an implied term would impose an unfair and unreasonable burden on employers. While an employer might assume responsibility under the Hedley Byrne principle, it was a quite different matter to impose on an employer the duty to give his employee financial advice or generally to safeguard his economic well being. Furthermore, I have difficulty in understanding how this principal argument on behalf of the officers can circumvent the requirement adverted to by Lord Bridge in Caparo v Dickman that the imposition of the duty must be fair, just and reasonable. In order to establish such a duty of care, the officers rely here upon a class of implied terms which are implied in law as a necessary incident of a particular class of contractual relationship. In Crossley Dyson LJ observed at para 36: [R]ather than focus on the elusive concept of necessity, it is better to recognise that, to some extent at least, the existence and scope of standardised implied terms raise questions of reasonableness, fairness and the balancing of competing policy considerations. This approach was commended by Lady Hale in Geys v Societe Generale, London Branch [2013] 1 AC 523 at paras 55, 56. The argument that such an implied term should extend to the conduct of litigation raises, therefore, precisely the same question as to whether the proposed term is fair and reasonable as arises if the claim is put in tort. Such an implied term, implied by law as an incident of a standardised contract, could not, to my mind, be wider in scope than the duty imposed by the law of tort. (White v Chief Constable of South Yorkshire Police, per Lord Griffiths at p 464C G; per Lord Goff at p 483C E; per Lord Steyn at p 498A B; per Lord Hoffmann at pp 505B 506B. See also the observations of Underhill LJ in Yapp v Foreign and Commonwealth Office at para 120.) It is difficult to see why such an implied term should extend further than a concurrent duty in negligence. Accordingly, it seems to me that the battlefield on which the conflicting contentions as to the existence of such a duty must be fought out is the scope of the duty of care in tort. In the present case the courts below have proceeded on the basis that, with the exception of the claim in respect of psychiatric injury which is no longer pursued, harm was arguably foreseeable. Furthermore, it was clearly arguable that by virtue of their relationship, akin to that of employer and employee, the parties were in a sufficiently proximate relationship to give rise to a duty of care. The argument therefore focussed on whether the imposition of a duty of care was fair, just and reasonable as indicated in Caparo. In Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4; [2018] 2 WLR 595 this court recently held, with regard to this aspect of Caparo, that it is normally only in a novel type of case, where established principles do not provide an answer, that the courts need to go beyond those principles in order to decide whether a duty of care should be recognised. Since the police generally owe a duty of care not to inflict physical injury by their actions when such a duty arises under the ordinary principles of the law of negligence, unless statute or other common law principle provides otherwise, there was no requirement in that case to examine whether the recognition of the claimed duty would be fair, just and reasonable. However, this ingredient will be of critical importance in a situation where it is proposed that a duty of care should be imposed in novel circumstances. Thus Lord Reed observed (at para 29): Properly understood, Caparo thus achieves a balance between legal certainty and justice. In the ordinary run of cases, courts consider what has been decided previously and follow the precedents (unless it is necessary to consider whether the precedents should be departed from). In cases where the question whether a duty of care arises has not previously been decided, the courts will consider the closest analogies in the existing law, with a view to maintaining the coherence of the law and the avoidance of inappropriate distinctions. They will also weigh up the reasons for and against imposing liability, in order to decide whether the existence of a duty of care would be just and reasonable. Contrary to the submission of Mr Bowen on behalf of the officers, the present case is very clearly one in which it is sought to extend a duty of care to a new situation. As Lord Reed explained in Robinson, in determining whether such a duty should be recognised the law will proceed incrementally and by analogy with previous decisions. He referred, in particular, to the following passage in the judgment of Brennan J in Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43 44, which was approved by Lord Bridge in Caparo at p 618: It is preferable, in my view, that the law should develop novel categories of negligence incrementally and by analogy with established categories, rather than by a massive extension of a prima facie duty of care restrained only by indefinable considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed. The theme was developed by Lord Bingham in Customs and Excise Comrs v Barclays Bank plc [2007] 1 AC 181 where he observed at para 7: I incline to agree with the view that the incremental test is of little value as a test in itself, and is only helpful when used in combination with a test or principle which identifies the legally significant features of a situation. The closer the facts of the case in issue to those of a case in which a duty of care has been held to exist, the readier a court will be, on the approach of Brennan J adopted in Caparo Industries plc v Dickman, to find that there has been an assumption of responsibility or that the proximity and policy conditions of the threefold test are satisfied. The converse is also true. In addition, the proposed duty will be tested against considerations of legal policy and judgement will have to be exercised with particular regard to both the achievement of justice in the particular case and the coherent development of the law. The law protects reputation in a variety of ways in different circumstances. Causes of action such as libel, slander, malicious falsehood and passing off are designed to protect reputation. Moreover, a variety of other causes of action including breach of confidence, misuse of private information and causes of action in relation to data protection and intellectual property may often indirectly achieve this result. The common law does not usually recognise a duty of care in the tort of negligence to protect reputational interests. However, there are exceptions. In Spring v Guardian Assurance plc [1995] 2 AC 296 a majority of the House of Lords held that an employer who gave a reference in respect of a former employee owed that employee a duty to take reasonable care in its preparation and would be liable to him in negligence for a breach of duty which caused him economic loss. Lord Lowry, Lord Slynn and Lord Woolf reached this conclusion on the basis of the three ingredients identified by Lord Bridge in Caparo. Lord Goff (at p 316E F) concluded that a duty of care was owed to the former employee on a narrower ground. In his view the source of the duty of care was the principle in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 ie an assumption of responsibility by the authors of the reference to the plaintiff in respect of the reference, and reliance by the plaintiff upon the exercise by them of due care and skill in respect of its preparation. This case was essentially concerned with negligent mis statement and it may be that assumption of responsibility is the better rationalisation of the recognition of a duty in these circumstances. (See NRAM Ltd (formerly NRAM plc) v Steel [2018] UKSC 13; [2018] 1 WLR 1190 per Lord Wilson at para 24 referring also to Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 per Lord Goff at p 181 and Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 per Lord Steyn at p 837.) This decision should be contrasted with Calveley v Chief Constable of the Merseyside Police [1989] 1 AC 1228. Following their reinstatement, police officers, against whom disciplinary proceedings had been taken, brought actions in negligence against their Chief Constables on the basis that they were vicariously liable for the investigating officers. The claimants alleged that the investigating officers had failed to conduct the proceedings properly or expeditiously and claimed, inter alia, damages in respect of loss of overtime earnings during their suspension and damages for injury to reputation. The House of Lords considered the submission that a duty of care was owed to the claimants to be unsustainable. First, Lord Bridge explained (at p 1238B G), anxiety, vexation and injury to reputation did not constitute reasonably foreseeable damage capable of sustaining an action in negligence within Donoghue v Stevenson [1932] AC 562. Secondly, it was not reasonably foreseeable that the negligent conduct of a criminal investigation would cause injury to the health of the suspect, whether in the form of depressive illness or otherwise. Thirdly, while it is reasonably foreseeable that a suspect may suffer some economic loss which might have been avoided had more careful investigation established his innocence at an earlier stage, such a claim would encounter the formidable obstacles in the path of liability in negligence for purely economic loss. Fourthly, it would be contrary to public policy to prejudice the discharge by police officers of their public duty of investigating crime by requiring them to act under the shadow of a potential action for damages for negligence by the suspect. To my mind Calveley has an important bearing on the present case. If a Chief Constable does not, in principle, owe a duty of care to protect the economic and reputational interests of his officers in respect of the prosecution of an investigation or disciplinary proceedings, it is difficult to see why he should owe a duty to his officers as to the manner in which he defends a claim brought against him by a third party. In the former situation the Chief Constable has himself initiated the investigation or proceedings over which he has at least a substantial measure of control and he is responsible for making allegations against officers. In the latter situation his role is essentially responsive to allegations made by third parties. In these circumstances it is necessary to test the proposed duty of care against relevant policy considerations and to consider the coherence of the resulting state of the law if such a duty is recognised. Conflicting interests The fact that a duty of care may give rise to conflicting interests will often be a weighty consideration against its imposition. In D v East Berkshire Community Health NHS Trust [2005] 2 AC 373 a majority of the House of Lords held that health care and childcare professionals investigating allegations of child abuse did not owe a duty of care to the parents of the children concerned. Lord Nicholls explained (at para 85) that conflict of interest was a persuasive factor here. When considering whether a child has been abused, a doctor should be able to act single mindedly in the interests of the child and he ought not to have at the back of his mind an awareness that if his doubts about intentional injury or sexual abuse were to prove unfounded he might be exposed to claims by a distressed parent. At that time [when a doctor is carrying out his investigation] the doctor does not know whether there has been abuse by the parent. But he knows that when he is considering this possibility the interests of parent and child are diametrically opposed. The interests of the child are that the doctor should report any suspicions he may have and that he should carry out further investigation in consultation with other child care professionals. The interests of the parent do not favour either of these steps. This difference of interest in the outcome is an unsatisfactory basis for imposing a duty of care on a doctor in favour of a parent. (at para 88) Similarly, in SXH v Crown Prosecution Service [2017] UKSC 30; [2017] 1 WLR 1401 Lord Toulson, with whom Lord Mance, Lord Reed and Lord Hughes agreed, considered (at para 38) that the duty of the Crown Prosecution Service (CPS) is to the public and not to the victim or the suspect, who have separate interests, and that to recognise a duty of care towards victims or suspects or both would put the CPS in positions of potential conflict. Yet, the fact that the recognition of a duty of care may potentially subject an individual to conflicting duties is not, of itself, necessarily conclusive against its recognition in all situations. Clearly, there will be many situations in which an individual will owe potentially conflicting duties to different persons. In Gogay v Hertfordshire County Council the managers of a childrens home owed both a duty of care to the resident children and an implied contractual duty of trust and confidence to its staff, notwithstanding the fact that in the case of an actual conflict the interests of the child should prevail. (See Hale LJ at para 59) Similarly, in D v East Berkshire Lord Nicholls referred (at para 86) to the fact that a doctor often owes duties to more than one person. He may owe duties, for example, to his employer and to his patient. (See also ABC v St Georges Healthcare NHS Trust [2017] EWCA Civ 336; [2017] PIQR P15.) However, in D the House concluded that the seriousness of child abuse as a social problem demanded that health professionals, acting in good faith in what they believe are the best interests of the child, should not be subject to potentially conflicting duties when deciding whether a child may have been abused or in deciding what action should be taken. It is necessary, therefore, to have regard to the competing underlying policy considerations, when determining whether a duty of care may be imposed notwithstanding that it may give rise to a conflict of interests. The interests of an employer who is sued on the basis that he is vicariously liable for the tortious conduct of his employees differ fundamentally from the interests of those employees. The financial, commercial and reputational standing of the employer may be at stake. It is the employer who will incur the cost of defending the proceedings which, however successful the defence may be, is most unlikely to be recovered in full, and who, if unsuccessful, will bear the liability to the claimant. The employer must be able to make his own investigation into the claim and to assess its strength based on the conduct of his employee and the prospects of a successful defence. In this regard, he will need to form his own view as to the reliability and veracity of his employee and as to how the employee is likely to perform as a witness. The interests of insurers may have to be taken into account. The employer will have to decide what degree of importance he attaches to successfully defending the claim and what financial and other resources should be devoted to its defence. He may consider that, however strong the prospects of a successful defence, he cannot justify the cost and effort of defending the claim and that it should, therefore, be settled. The predominant interest of the employee, by contrast, will be that his reputation should be vindicated. The position will often be complicated further by the existence of inconsistent views or interests between different employees or groups of employees. (See, for example, Mohidin v Comr of Police of the Metropolis [2016] EWHC 105 (QB) (Gilbart J) [2016] 1 Costs LR 71, para 14) In cases where an employer is alleged to be vicariously liable for the tortious conduct of his employee, the possibility of contribution proceedings between employer and employee highlights this potential conflict of interests. It is particularly relevant here that claims under the Civil Liability (Contribution) Act 1978 may be brought up to two years after judgment in the original claim or settlement of that claim (Limitation Act 1980, section 10). That the possibility of bringing such a claim is not fanciful, at least in cases where deliberate misconduct is alleged, is demonstrated by Mohidin v Comr of Police of the Metropolis where such a claim succeeded. These stark differences between the interests of employer and employee strongly suggest that it would not be fair, just or reasonable to impose on an employer a duty of care to defend legal proceedings so as to protect the economic or reputational interests of his employee. Nor do I consider it realistic to suggest, as do the respondents in the present case, that this potential for conflict can be overcome by the recognition of a duty of care up to the time at which an actual conflict of interests arises, at which point timeous notification by the Commissioner could result in the duty of care ceasing to apply. Where an employer defends a claim against him founded on his vicarious liability for his employees, the potential for conflict is too great to permit such a compromise. Moreover, it would often be totally impracticable. A civil claim and its defence, as they proceed, often develop in unexpected ways. There could be no justification for imposing on an employer the burden of keeping under review at each stage of the proceedings the question whether an actual conflict has arisen. Furthermore, steps taken by the employee as a result of such timeous notification of the emergence of an actual conflict may well be disruptive of the litigation. In the present case, moreover, the Commissioner is not merely in a position analogous to that of an employer. She also holds public office and has responsibility for the Metropolitan Police Service. This adds a further dimension to this appeal because in the conduct of the proceedings against her she must be free to act as she considers appropriate in accordance with her public duty. This duty is, to my mind, totally inconsistent with her owing a duty of care to protect the reputational interests of her employees when defending litigation based on vicarious liability for their alleged misconduct. As we have seen, in Calveley the House concluded that it would be contrary to public policy to prejudice the discharge by the police of their public duty to investigate alleged misconduct by officers by imposing a conflicting duty of care to protect the reputational interests of those officers. In the same way in SXH this court considered (at para 38) that to recognise a duty of care owed by the CPS to victims or suspects would not be conducive to the best interests of the criminal justice system. These considerations apply with equal force to the present case. Policy considerations relating to the conduct of litigation Considerations relating to legal policy and the practical conduct of proceedings also weigh heavily against the duty for which the officers contend. First, there is an important public policy that parties in dispute should, in general, be able to avail themselves of the processes of litigation in order to resolve their disputes, without fear of incurring liability to third parties if they do so. This policy was expressed by Wilde CJ (with whom Maule J, Cresswell J, Williams J, Parke B and Rolfe B agreed) in De Medina v Grove (1847) 10 QB 172 at p 176: The law allows every person to employ its process for the purpose of trying his rights, without subjecting him to any liability, unless he acts maliciously and without probable cause. This policy underlies a number of legal principles including the general immunity which attaches to things said and done in court by witnesses and litigants and the principle that a duty of care is not owed by one litigant to an opposing litigant. (See, generally, Willers v Joyce [2016] UKSC 43; [2016] 3 WLR 477 per Lord Mance at para 135.) An employer who wishes to defend a claim based on vicarious liability for the alleged conduct of his employees should be entitled to defend the claim in the way he sees fit, notwithstanding that his employees will or may as a result be subjected to public criticism during the trial process. He should be free to do so without having constantly to look over his shoulder for fear that his conduct of the defence may expose him to a claim by his employees. Decisions in the conduct of the defence, such as which inquiries to undertake, which experts to instruct, which witnesses to call or which resources to devote to resisting the claim, are essentially matters for the employer as defendant and should be taken free of anxiety as to possible future claims by the employees on the basis that the case should have been run differently. The proposed duty would, to my mind, inevitably inhibit the conduct of the defence. An employer would, understandably, be less likely to make admissions in circumstances where they are objectively justified or to make use of evidence which reflects unfavourably on an employee, for fear of the subsequent repercussions. I have no doubt that the imposition of the duty of care contended for in the present case would, as the Commissioner submits, have a chilling effect on the defence of civil proceedings. Secondly, the recognition of a duty owed by an employer to his employees to defend a claim effectively would be inconsistent with the important legal policy which encourages the settlement of civil claims and seeks to promote out of court settlement. The resulting risk of exposure to consequential claims would, in many situations, operate as a powerful disincentive to settlement. Thirdly, the duty contended for could result in delay or disruption of civil proceedings. Disputes between employers and employees as to the appropriate way in which the defence should be conducted could well paralyse the defence. Resort to some form of dispute resolution procedure could be expensive and time consuming. In many instances the employer may well feel compelled to make a contribution claim against his employees in order to negative the imposition of a duty of care owed to them. Moreover, the existence of such a duty may result in an employer needlessly prolonging proceedings against him in an attempt to establish that he has taken care to protect the interests of his employees. (See N McBride, PN 2017 (33) 3, 216 at p 219.) Fourthly, the recognition of such a duty of care would be a fruitful source of satellite litigation. While there are some situations in which litigation about the conduct of prior litigation is unavoidable, it is generally to be discouraged. The acknowledgement of a duty owed by employers to their employees to protect their economic or reputational interests in the conduct of litigation would be likely to result in a proliferation of consequential claims which would often amount to a collateral challenge to the outcome of earlier proceedings. Legal professional privilege It is also necessary to say something about the issue of legal professional privilege. At first instance, it was submitted on behalf of the Commissioner that legal professional privilege was a further policy consideration for not imposing a duty of care in these circumstances. It was submitted that if such a duty of care existed an employer would in effect be compelled to waive privilege in circumstances where he would otherwise be entitled to assert privilege, because the correctness or reasonableness of his conduct of the underlying litigation could not be properly examined without relevant legal advice being properly exposed to judicial scrutiny. The response on behalf of the officers was that the relationship between the parties gave rise to a joint or common interest with the result that the Commissioner would, in any event, be unable to rely on legal professional privilege against the officers to the extent that common interest privilege applied. In his judgment Jay J expressly stated that he did not rely on legal professional privilege in coming to the conclusion that there was no arguable duty of care. The Court of Appeal did not address this point in its judgments. The judgments below have established that the legal advisers who defended the claim brought by BA were instructed on behalf of the Commissioner only and that neither those lawyers nor the Commissioner undertook responsibility to the officers for the conduct of the litigation. The officers attended conferences with counsel in the capacity of witnesses not clients. The officers do not seek to appeal those conclusions. Accordingly, there can be no question of legal professional privilege belonging jointly to the Commissioner and the officers. However, the officers rely on common interest privilege and seek to employ it as a sword in asserting an entitlement to disclosure of material in the possession of the Commissioner which is privileged against disclosure to others. Whether the officers have such an entitlement will depend on whether such a claim is consistent with the underlying relationship of the Commissioner and the officers. (See Phipson on Evidence, 19th ed (2017), para 24 11.) In my view it is not. If one sets to one side the decided cases which turn on contractual access rights, the cases show that something more than a shared interest in the outcome of litigation is required before common interest privilege can be used as a sword in the manner proposed here. For example, in Dennis & Sons Ltd v West Norfolk Farmers Manure and Chemical Co operative Co Ltd [1943] Ch 220 Simonds J held that shareholders were entitled to disclosure of an accountants report concerning the rights and duties of the board commissioned by the directors, notwithstanding that by the time the report was received the shareholders had commenced proceedings against the company in relation to the conduct of the companys affairs. The report had been commissioned by the directors on behalf of all the shareholders and not for the purpose of defending themselves against hostile litigation. The judge observed (at p 222) that the general rule applied equally as between a company and its shareholders and as between a trustee and his beneficiaries. A claim to privilege between the company and its shareholders would have been inconsistent with the nature of the relationship. Similarly, in CIA Barca de Panama SA v George Wimpey & Co Ltd [1980] 1 Lloyds Rep 598, Barca and Wimpey each held half the shares in a joint venture company, DLW, which had claims against Aramco. Wimpey settled the claims without authority from Barca. In the resulting proceedings brought by Barca against Wimpey the Court of Appeal held that Barca was entitled to disclosure of privileged documents of Wimpey generated in the original litigation as the Aramco claims had been made by Wimpey on behalf of itself and Barca (per Stephenson LJ at p 614). In Commercial Union Assurance Co plc v Mander [1996] 2 Lloyds Rep 640, at 647 648, Moore Bick J provided the following example: Although in many cases a relationship between two parties which supports common interest privilege will be one which also gives each of them a right to obtain disclosure of confidential documents relating to the matter in which they are both interested, one can readily think of situations in which that would not be so. Take the example given by Donaldson LJ in Buttes v Hammer (No 3) of tenants in a block of flats. One tenant, acting entirely for his own benefit, obtains legal advice concerning a dispute with the landlord over a provision in the lease which affects other tenants in a similar way. If he chooses to give a copy of the document containing that advice in confidence to another tenant who is willing to cooperate with him in pursuing a claim their common interest would be sufficient for the document to remain privileged in the latters hands. I do not, however, see any basis upon which the second tenant could have insisted on seeing the advice if the first tenant did not wish to show it to him, even though they had a common interest in the subject matter. Both as a matter of principle and authority it is not enough that the person seeking disclosure of confidential documents can show that he has an interest in the subject matter which would be sufficient to give rise to common interest privilege if the documents had been disclosed to him; he must be able to establish a right to obtain access to them by reason of a common interest in their subject matter which existed at the time the advice was sought or the documents were obtained. In the present case the Commissioner and the officers are likely to have had a shared interest in successfully defending the claim brought by BA against the Commissioner, at least initially. It may well be that, had privileged documents been disclosed in confidence by the Commissioner to the officers at that stage, that shared interest would have enabled the officers to defeat an application for disclosure by a third party on grounds of common interest privilege. However, before the officers could compel disclosure of privileged material in the hands of the Commissioner, considerably more would be required. Although the relationship between the Commissioner and the officers is closely analogous to that of employer and employees, there is nothing in the present situation which resembles the relationship between a company and its shareholders, or between a trustee and his beneficiaries, or between parties to a joint venture agreement. Here the relationship between the Commissioner and the officers does not require or justify such an entitlement of access to legally privileged material. Considered against this background, there is force in the Commissioners submission as to the practical consequences in this regard of the recognition of the duty of care for which the officers contend. Although employees would normally have no entitlement to disclosure of privileged material in the possession of their employer relating to the defence of the original proceedings, the effective defence of proceedings by the employees against the employer brought on the basis that the earlier proceedings were conducted in breach of duty may well require waiver of privilege in order to demonstrate the contrary. This has the potential to undermine the effective conduct of the defence of the original claim against the employer in that the possibility of such a claim in negligence and the likelihood of having to waive privilege may well inhibit frank discussion between the employer and his legal advisers. This is, therefore, a further consideration which weighs against the recognition of the duty of care for which the officers contend. Conclusion For these reasons I would allow the appeal. The imposition of the claimed duty would not be fair, just or reasonable.
UK-Abs
On 2 December 2003 the Respondents, four police officers serving in the Metropolitan Police Service (the officers), took part in the arrest of a suspected terrorist, BA. BA subsequently made allegations that the officers had seriously assaulted and injured him during the arrest. In October 2004, the Independent Police Complaints Commission (IPCC) decided that one charge should be brought against the First Respondent. That charge was dismissed in April 2005. Between 14 January and 2 February 2005 the IPCC released the officers identities into the public domain. This led to threats of serious violence to the officers and their families on a website that supported BA. On 18 October 2007 BA commenced civil proceedings against the Appellant Commissioner in which he alleged that the Commissioner was vicariously liable for the serious assaults that he alleged the officers had inflicted on him. The officers were not parties to these proceedings. On 18 March 2008 the officers attended a meeting with legal advisers instructed on behalf of the Commissioner. The officers subsequently alleged that they were assured at this meeting that the Commissioners legal advisers were also acting for them. The officers maintain that at a second meeting with legal advisers instructed on behalf of the Commissioner on 11 March 2009 they were told that the legal team was no longer representing their interests but only those of the Commissioner. The trial of BAs claim commenced on 16 March 2009. The officers declined to give evidence voluntarily without special measures to protect their identity being put in place. On the third day of the trial, the claim was settled with an admission of liability by the Commissioner and an apology for the gratuitous violence to which BA had been subjected by the officers. The officers maintain that a press release issued by the Commissioner after trial was tantamount to endorsing their culpability. In June 2011, the officers were all acquitted in the Crown Court of charges of assault occasioning actual bodily harm arising out of the arrest of BA. On 23 September 2013, the officers commenced the present proceedings against the Commissioner seeking compensation for reputational, economic and psychiatric damage. They advanced three claims: (i) a retainer had arisen between them and the Commissioners legal team, (ii) the Commissioner had assumed a duty of care by reason of the assurances, and (iii) the Commissioner owed them a duty to take reasonable care to safeguard their safety, health, welfare (including economic and professional welfare) and reputational interests in the preparation and conduct of the defence of BAs claim. On 1 May 2015 the judge struck out these claims. The judge found, amongst other things, that the officers had no direct interest in the litigation between the Commissioner and BA and the possibility of consequential impact on their reputations was insufficient to create such an interest to which the Commissioner would be legally required to have regard. The officers appeal to the Court of Appeal was successful in part. The Court of Appeal held that it was arguable that the Commissioner owed a duty of care to the officers to safeguard their economic and reputational interests and that this extended to the Commissioners conduct of the litigation. The Commissioner now appeals to the Supreme Court solely on this issue. The Supreme Court unanimously allows the appeal. Lord Lloyd Jones gives the judgment with which the other Justices agree. Although police officers have no contract of employment, the officers relied heavily on the analogy of the implied term in employment contracts of mutual trust and confidence between employer and employee [16]. However, the Court was not referred to any decided case in any jurisdiction which holds that the duty of care for which the officers contend can be derived from this mutual implied term [17]. To derive such an obligation would be to move substantially beyond the specific derivative duties established in previous cases [18 20]. The existence of the proposed duty must be established in the tort of negligence [21]. This is clearly a case in which it is sought to extend a duty of care to a new situation. In determining whether such a duty should be recognised the law will proceed incrementally and by analogy with previous decisions (Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4). The proposed duty will also be tested against considerations of legal policy and the coherent development of the law [22 23] The common law does not usually recognise a duty of care in the tort of negligence to protect reputational interests [23]. The decision in Calveley v Chief Constable of Merseyside Police [1989] 1 AC 1228 has an important bearing on the present case. There it was held that a Chief Constable does not, in principle, owe a duty of care to protect the economic and reputational interests of his officers in respect of the prosecution of an investigation or disciplinary proceedings against them. It is therefore difficult to see why a Chief Constable should owe a duty to his officers as to the manner in which he defends a claim brought against him by a third party, especially considering that, in such a claim, the Chief Constables role is essentially responsive to allegations made by the third party [25 26]. The fact that the recognition of a duty of care may potentially subject an individual to conflicting duties does not necessarily preclude its imposition but in such cases it is necessary to have regard to the competing underlying policy considerations [28 29]. The interests of an employer who is sued on the basis that he is vicariously liable for the tortious conduct of his employees differ fundamentally from the interest of those employees [30]. The possibility of contribution proceedings between employer and employee highlights the potential for conflicts of interests [31]. These stark differences in interests strongly suggest that it would not be fair, just or reasonable to impose on an employer a duty of care to defend legal proceedings so as to protect the economic or reputational interests of his employees. It is not realistic to suggest that this potential for conflict can be overcome by recognition of a duty of care up to the time at which an actual conflict arises [32]. Moreover, in the context of the present case, the Commissioners public duties are inconsistent with the imposition of such a duty of care [33]. Considerations relating to legal policy and the practical conduct of proceedings also weigh heavily against the duty for which the officers contend. For instance, parties to a dispute should be able to conduct litigation in order to resolve their disputes without fear of incurring liability to third parties [34 38]. Finally, the officers argue that, because both they and the Commissioner had a common interest in the outcome of BAs claim, they would have been able to rely on common interest privilege in asserting an entitlement to the disclosure of material in the possession of the Commissioner which is privileged against disclosure to others. However, the cases show that something more than a shared interest in the outcome of litigation is required before common interest privilege can be used in this manner. Legal professional privilege is, therefore, a further policy consideration that weighs against the recognition of the duty of care for which the officers contend [39 46].
This appeal raises a short question on the operation by the respondent Commissioners (HMRC) of the Construction Industry Scheme under the Finance Act 2004 (the Act). The appellant company (the company) was registered for gross payment under the scheme. As is now accepted, it failed to comply with the requirements of the scheme without reasonable excuse. In consequence, on 30 May 2011, HMRC exercised their power under the Act to revoke its registration. In doing so, they took no account of the likely effect of their action on the companys business. The company contends that this represented a failure to take account of a material consideration, in breach of both domestic public law, and of the European Convention on Human Rights (the Convention). Factual background The facts are set out in detail in the judgment of Henderson LJ in the Court of Appeal: [2016] EWCA Civ 1160. A summary is sufficient for present purposes. The company is a family run business of water well engineers, started in 1972. In 2011 it had about 25 employees, and an annual turnover of about 4.4m, much of it derived from contracts with a small number of major customers. It was first registered for gross payment in about 1984, and its registration was regularly reviewed thereafter. It first failed a review in July 2009, when its registration was cancelled, and the same occurred in June the following year; but on both occasions the registration was reinstated by HMRC following an appeal. Between August 2010 and March 2011 the company was late in making PAYE payments on seven occasions, the delays being generally of a few days, but on one occasion of at least 118 days. This led to a further review and to the cancellation which is the subject of the present proceedings. The companys appeal succeeded before the First tier Tribunal (FTT) ([2012] UKFTT 639 (TC)), but that decision was not upheld by the Upper Tribunal ([2015] UKUT 0392 (TCC)) or the Court of Appeal ([2016] EWCA Civ 1160). It now appeals to this court with permission given by the court itself. By section 67(5) of the Act, the cancellation does not take effect until the final determination of the appeal. The FTT accepted the companys evidence that major customers would be likely to withdraw work if it lost its gross payment status. It found that at the time of HMRCs decision cancellation would have been likely to lead to the loss of around 60% of the companys turnover, and the dismissal of about 80% of its employees, and that recovery would be expected to take about ten years. The FTT also recorded that in July 2011 significant changes were made to the companys PAYE systems, with the result that payments thereafter were always made on time. We have no information as to what has happened to the business in the period since 2011, nor as to the likely effect of the loss of its status if this appeal fails, and the cancellation now takes effect. In that event, the company would not be able to re apply for one year after the cancellation takes effect: section 66(8). The legislation As Henderson LJ noted, the overall structure and purpose of the legislation has remained broadly the same since the inception of the statutory scheme some 45 years ago. He cited Ferris Js description of the background in Shaw v Vicky Construction Ltd [2002] EWHC 2659 (Ch); [2002] STC 1544: in 3. In the absence of the statutory provision with which this appeal is concerned Vicky would be entitled, like any other sub contractor, to be paid the contract price in accordance with its contract with the contractor without any deduction in respect of its own tax liability. However it became notorious that many sub contractors engaged industry the construction disappeared without settling their tax liabilities, with a consequential loss of revenue to the exchequer. 4. In order to remedy this abuse Parliament has enacted legislation, which goes back to the early 1970s, under which a contractor is obliged, except in the case of a sub contractor who holds a relevant certificate, to deduct and pay over to the Revenue a proportion of all payments made to the sub contractor in respect of the labour content of any sub contract. The amount so deducted and paid over is, in due course, allowed as a credit against the sub contractor's liability to the Revenue The relevant provisions in the present case are contained in the Finance Act 2004, Part 3 Chapter 3 Construction Industry Scheme. The main operative provisions are section 61, which provides for deductions on account of tax from contract payments as defined; and section 60 which excludes from the definition payments made to a person registered for gross payment when the payment is made. Registration of sub contractors is governed by sections 63 and 64. Section 63 provides that if HMRC are satisfied that the relevant requirements of sections 63 and 64 are satisfied in respect of a company, it must be registered for gross payment; but, if not, it must be registered for payment under deduction. Henderson LJ rightly observed (para 23) that the registration provisions are highly prescriptive, HMRC having no discretion at this stage; and that payment under deduction is the default position. The detailed requirements for registration of a company are set out in Part 3 of Schedule 11. Again these requirements were rightly described by Henderson LJ as highly prescriptive (paras 27 28). Relevant in the present case is para 12 which sets out The compliance test. This generally requires the company to have complied, in the qualifying period of 12 months preceding the application, with all obligations imposed on it under the Tax Acts or the Taxes Management Act 1970. This is subject to certain exceptions prescribed by regulations for failures to be treated as satisfying the relevant condition (prescribed minor failures, as Henderson LJ described them) (para 12(2)). Also a company that has failed to comply is treated as satisfying the condition if HMRC are of the opinion that the company had a reasonable excuse for the failure to comply and that it complied without unreasonable delay after the excuse had ceased (para 12(3)). The company must also have paid required social security contributions during the qualifying period (para 12(4)); and have complied with specified obligations under the Companies Act 1985 (para 12(5)). Paragraph 13 enables the Treasury by order, subject to approval in draft by the House of Commons, to vary the conditions for registration for gross payment. Section 66 provides for cancellation of registration for gross payment: (1) The Board of Inland Revenue may at any time make a determination cancelling a persons registration for gross payment if it appears to them that if an application to register the person for gross (a) payment were to be made at that time, the Board would refuse so to register him, (b) he has made an incorrect return or provided incorrect information (whether as a contractor or as a sub contractor) under any provision of this Chapter or of regulations made under it, or (c) he has failed to comply (whether as a contractor or as a sub contractor) with any such provision As is common ground, the use of the word may in section 66(1) imports an element of discretion, by contrast with the mandatory words of section 63. The dispute is as to its scope. Where registration for gross payment is cancelled under section 66(1), the person must be registered for payment under deduction (section 66(6)). As already noted, he may not reapply for registration for gross payment for one year after the cancellation takes effect (section 66(8)), but the effect of the cancellation is suspended pending determination of an appeal (section 67(5)). By section 67 a person aggrieved by cancellation of registration may appeal by notice given to HMRC within 30 days. Provision for HMRC review or determination by the tribunal are set out in sections 49Aff of the Taxes Management Act 1970. A favourable conclusion on HMRC review is treated as if it were an agreement for settlement under section 54, and so equivalent to a determination of the appeal (section 49F(2)). As already seen, the first two cancellations were disposed of in this way. However, on the third occasion, HMRC maintained its position and the appeal accordingly was referred to the tribunal. Section 102 of the 1970 Act gives HMRC a general power in their discretion [to] mitigate any penalty. It is not however suggested that cancellation of registration can be treated as a penalty within this provision. under Article 1 of the First Protocol to the Convention (A1P1): In the alternative, the company relies on its right to protection of property Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. The decisions below As already noted, the FTT allowed the appeal, holding that HMRC had been wrong not to take account of the likely impact on the companys business. The tribunal described section 66 as giving a general unfettered discretion to take account of the impact on a business of cancellation. It thought that HMRC must have itself have taken some account of such factors in its decisions on the two reviews, even though no specific reasons were given. It saw good reasons for the distinction between registration and cancellation, because of the serious implications of cancellation for an existing business (paras 60 62). As already noted, the Upper Tribunal and the Court of Appeal took a different view. It is unnecessary to repeat their detailed reasoning. Henderson LJ approach is encapsulated in the following passage: 60. As a matter of first impression, I cannot find any indication in this tightly constructed statutory scheme that Parliament intended HMRC to have the power, and still less a duty, to take into account matters extraneous to the CIS regime, when deciding whether or not to exercise the power of cancellation in section 66(1). By matters extraneous to the CIS regime I mean in particular, in the present context, matters which do not relate, directly or indirectly, to the requirements for registration for gross payment, and to the objective of securing compliance with those requirements. My preliminary view, therefore, is that consideration of the financial impact on the taxpayer of cancellation would fall well outside the intended scope of the power. He found nothing in the submissions to displace that first impression. In particular, he saw no difficulty in explaining the discretion given by section 66, as compared with the registration provisions, given the highly prescriptive nature of the regime: It seems to me entirely appropriate, and a substantial protection for the registered person, that HMRC should then be given a discretion whether or not to exercise the power of cancellation, even in cases where the condition in section 66(1)(a) is satisfied. The Upper Tribunal gave two examples, in para 64 of the UT Decision, quoted above, of cases where HMRC might properly exercise such discretion in the taxpayers favour, without travelling outside what I would regard as the proper scope of the power. It needs to be remembered, in this connection, that the reasonable excuse exception does not apply to all the requirements of the compliance test, and in the absence of any discretion even a single minor failure to pay national insurance contributions on the due date, or a minor failure to comply with one of the Companies Act requirements, would be fatal, even if there were a reasonable excuse for the non compliance. Similarly, the rigid structure of Regulation 32 itself leaves no scope for the exercise of any discretion, even if the relevant test was failed by a narrow margin, the amount involved was relatively small, and although (when viewed in isolation) there was no reasonable excuse for the non compliance, there was nevertheless good reason to suppose that it would not be repeated. I therefore remain unpersuaded that there is any need to broaden the scope of the discretion conferred by section 66(1) in order to provide it with any worthwhile content. (para 63) In respect of the alternative argument under the Convention, Henderson LJ noted (para 37) that it was common ground before the Court of Appeal that both registration for gross payment, and the contractual right to payment of the contract price, constituted possessions for the purposes of A1/P1. However, he did not accept that any interference with those possessions was disproportionate: Given the practical and cash flow advantages of registration for gross payment, it is always probable that cancellation of the registration will seriously affect the taxpayer's business. Far from being exceptional, such consequences are likely to be the norm, and taxpayers must be taken to be well aware of the risks to their business which cancellation will bring. In individual cases, of which this may perhaps be one, the result may seem harsh; but a degree of harshness in a regime which is designed to counter tax evasion, and where continued compliance is within the power of the sub contractor, cannot in my view be characterised as disproportionate. Both deterrence, and ease of compliance, are important factors which help to make the CIS scheme as a whole clearly compliant with A1P1 (para 80) The submissions in this court The company (by Mr Chacko and Miss Boyd of Counsel) argue that the discretion given by section 66 should be taken at face value. It is in terms unfettered, and there is nothing to indicate an intention to exclude consideration of the practical effect of cancellation. Absent a contrary indication, they submit, the consequences of the exercise of a power must be assumed to be a relevant consideration. They contrast, for example, Schedule 56, para 9 to the Finance Act 2009, which provides for mitigation of certain penalties in special circumstances, but specifically excludes consideration of the taxpayers ability to pay. If Parliament had wished to limit the scope of the discretion under section 66 it would have used express words. There was no logical dividing line between the scope of the discretion accepted as permissible by the Court of Appeal, and that argued for by the company. Nor was a broader discretion inconsistent with the proper exercise of HMRCs statutory functions, as illustrated for example by the wide discretion accepted as appropriate in the context of customs penalties: see Denley v Revenue and Customs Comrs [2017] UKUT 340 (TCC), paras 13 14. Such a discretion also reflects the well established proposition that removal of an advantageous trading status has a more serious impact on a business than refusal to grant the status in the first place. They cite the common law principle of proportionality as applied in the well known case of R v Barnsley Metropolitan Borough Council, Ex p Hook [1976] 1 WLR 1052, 1057, where Lord Denning MR said: [T]here are old cases which show that the court can interfere by certiorari if a punishment is altogether excessive and out of proportion to the occasion It is quite wrong that the Barnsley Corporation should inflict upon [Mr Hook] the grave penalty of depriving him of his livelihood. That is a far more serious penalty than anything the magistrates could inflict. He is a man of good character, and ought not to be penalised thus In the alternative, as in the courts below, they rely on A1/P1. As was accepted before the Court of Appeal, they submit that cancellation clearly involves an interference with the possessions represented by (at least) the sub contractors entitlement to the full contract price or the bundle of rights inherent in registration. Although the article preserves the right of the state to enforce such laws as it deems necessary to secure the payment of tax, that is still subject to the requirement of proportionality. They rely on the words of Lord Phillips MR in Lindsay v Customs and Excise Comrs [2002] EWCA Civ 267; [2002] 1 WLR 1766, para 52: Under Article 1 of the First Protocol to the Convention such deprivation will only be justified if it is in the public interest. More specifically, the deprivation can be justified if it is to secure the payment of taxes or other contributions or penalties. The action taken must, however, strike a fair balance between the rights of the individual and the public interest. There must be a reasonable relationship of proportionality between the means employed and the aim pursued I would accept [counsels] submission that one must consider the individual case to ensure that the penalty imposed is fair. However strong the public interest, it cannot justify subjecting an individual to an interference with his fundamental rights that is unconscionable. They rely to the same effect on the necessary balance as described by Lord Reed in Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700, para 74: whether, balancing the severity of the measures effects on the rights of the persons to whom it applies against the importance of the objective, to the extent that the measure will contribute to its achievement, the former outweighs the latter. This it is submitted can only be done by assessing the severity of the consequences for the particular individual in question, even if the legislative scheme taken as a whole is proportionate. For HMRC Mr Eadie QC generally supports the reasoning of the Court of Appeal. In respect of the Convention, he does not accept that cancellation involves an interference with a possession for the purposes of A1P1. The subcontractors right to payment of the contract price is in law subject to the limits imposed by the statutory scheme. Similarly, any benefits from registration flow from the statutory scheme and are subject to its conditions, including the risk of cancellation. He relies on the distinction drawn by the Strasbourg court in JA Pye (Oxford) Ltd v United Kingdom (2006) 43 EHRR 3 (the same point did not arise in the Grand Chamber: (2008) 46 EHRR 45). At para 51 the court considered the circumstances in which a legislative provision is to be regarded as an incident of, or limitation on, the applicants property right at the time of its acquisition. It explained: Article 1 does not cease to be engaged merely because a person acquires property subject to the provisions of the general law, the effect of which is in certain specified events to bring the property right to an end, and because those events have in fact occurred. Whether it does so will depend on whether the law in question is properly to be seen as qualifying or limiting the property right at the moment of acquisition or, whether it is rather to be seen as depriving the owner of an existing right at the point when the events occur and the law takes effect. It is only in the former case that article 1 may be held to have no application. (Emphasis added) The present case, Mr Eadie submits, comes clearly into the former category. The power of cancellation for non compliance is an intrinsic part of the possession from the moment of acquisition; its exercise cannot engage the article. In any event, he submits, it is clearly within the wide margin allowed by the Convention in fiscal matters: see Gasus Dosier und Frdentechnik GmbH v Netherlands (1995) 20 EHRR 403, para 59. National & Provincial Building Society v United Kingdom (1997) 25 EHRR 127, para 80. The Strasbourg court has also made clear that the margin may extend to the adoption by the state of general measures which apply to pre defined situations regardless of the individual facts of each case even if this might result in individual hard cases: Animal Defenders International v United Kingdom (2013) 57 EHRR 21, para 106. Discussion Attractively though the appeal has been argued, I have no doubt that the Court of Appeal reached the right conclusion, substantially for the reasons they gave. Apart from the Convention, the companys submission comes down to a short point: that is, given the existence of a discretion in section 66, it must in the absence of any specific restriction be treated as an unfettered discretion. That to my mind overlooks the basic principle that any statutory discretion must be exercised consistently with the objects and scope of the statutory scheme. Like Henderson LJ, I cannot read the power as extending to matters which do not relate, directly or indirectly, to the requirements for registration for gross payment, and to the objective of securing compliance with those requirements (para 60). He rightly emphasised the highly prescriptive nature of the scheme. This starts with the narrowly defined conditions for registration in the first place, among which the record of compliance with the tax and other statutory requirements is a mandatory element, allowing no element of discretion. The same conditions are brought into the cancellation procedure by section 66. The mere fact that the cancellation power is not itself mandatory is unsurprising. Some element of flexibility may be desirable in any enforcement regime to allow for cases where the failure is limited and temporary (even if not within the prescribed classes) and poses no practical threat to the objectives of the scheme. It is wholly inconsistent with that tightly drawn scheme for there to be implied a general dispensing power such as implied by the companys submissions. Turning to A1/P1 I see force in Mr Eadies submission that, even accepting that rights conferred by registration amount to possessions, they cannot extend beyond the limits set by the legislation by which they are created. However, I find it unnecessary to rest my decision on that point, since I have no doubt that the Court of Appeal were right to hold that any interference was proportionate. Once it is accepted that the statute does not in itself require the consideration of the impact on the individual taxpayer, there is nothing in A1/P1 which would justify the court in reading in such a requirement. Registration is a privilege conferred by the legislation, which has significant economic advantages, but it is subject to stringent conditions and the risk of cancellation. The impact on the company is no different in kind from that which is inherent in the legislation. I agree entirely with Henderson LJ that the exercise of the power within the scope of the statutory framework comes well within the wide margin of appreciation allowed to the state for the enforcement of tax. For these reasons, I would dismiss the appeal.
UK-Abs
This appeal concerns the legislation which governs the Construction Industry Scheme (the CIS), which was introduced in order to counter widespread tax evasion by sub contractors in the construction industry. It requires certain contractors to deduct and pay over to Her Majestys Revenue and Customs (HMRC) a proportion of all payments made to the sub contractor in respect of labour under a sub contract. The amount deducted and paid over is, in due course, allowed as a credit against the sub contractors liability to HMRC. However, sub contractors with statutory certificates of gross payment registration are exempt from those requirements. That tends to make any sub contractor holding a certificate a more attractive party for a contractor to deal with. It also improves the sub contractors cash flow by enabling the sub contractor to receive the contract price without deduction. The appellant company (the company) is a family run business of water well engineers, started in 1972. In around 1984 the company registered for gross payment under the CIS. It then underwent regular reviews to determine whether it ought to retain its registration certificate. It first failed a review in July 2009, when its registration was cancelled. The same occurred in June 2010. On both occasions the registration was reinstated by HMRC following an appeal. Between August 2010 and March 2011 the company was late in making PAYE payments on seven occasions. The delays were generally of a few days, but on one occasion of at least 118 days. It is accepted that the company failed to comply with the requirements of the CIS without reasonable excuse. At that time the company had about 25 employees and an annual turnover of about 4.4m, much of it derived from contracts with a small number of major customers. A further review followed. On 30 May 2011 HMRC, acting under section 66(1) of the Finance Act 2004, cancelled the companys registration. In doing so, HMRC took no account of the consequences for the companys business. The companys appealed to the First tier Tribunal (FTT) which accepted the companys evidence that the cancellation, once it took effect, would have had a seriously detrimental impact on the company. The FTT allowed the companys appeal, holding that HMRC had been wrong not to take account of the likely impact on the companys business. However, that decision was overturned by the Upper Tribunal with which the Court of Appeal agreed. The company now appeals to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Carnwath gives the judgment, with which Lord Mance, Lord Sumption, Lord Lloyd Jones and Lord Briggs agree. The statutory requirements for registration for gross payment are highly prescriptive. They are contained in the Finance Act 2004. They include a requirement that the applicant for registration complied, within the previous 12 months, with various tax obligations subject to an exception for non compliance with reasonable excuse. Section 66(1) of the Act provides that the Board of Inland Revenue may at any time make a determination cancelling a persons registration for gross payment where certain conditions are satisfied. The word may imports an element of discretion. The dispute is as to the scope of that discretion [5 8]. The company makes two arguments. First, that the discretion under section 66 is unfettered in its terms, which do not exclude consideration of the consequences of cancellation for the company. The company argues that, without any indication to the contrary, the impact on the company must be a relevant consideration [16 17]. Second, the company relies on right to protection of property under Article 1 of the First Protocol to the European Convention on Human Rights (A1/P1). It argues that cancellation clearly involves an interference with the possessions represented by (at least) the sub contractors entitlement to the full contract price or the bundle of rights inherent in registration [18]. A1/P1 provides: Every natural or legal person is entitled to the peaceful enjoyment of his possessions No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. HMRC generally adopt the reasoning of the Court of Appeal and do not accept that cancellation involves an interference with a possession for the purposes of A1/P1. Alternatively, HMRC rely on the wide margin afforded to Member States under the Convention in fiscal matters [19 20]. The Supreme Court holds that the Court of Appeal was correct. Apart from the Convention, the companys first argument, that the discretion under section 66 is unfettered, overlooks the basic principle that any statutory discretion must be exercised consistently with the objects and scope of the statutory scheme. The discretion does not extend to consideration of matters which relate neither to the requirements for registration for gross payment, nor to the objective of securing compliance with those requirements. The scheme is highly prescriptive, setting out narrowly defined conditions for registration in the first place, including a record of tax compliance. The same conditions are brought into the cancellation procedure by section 66. The mere fact that the cancellation power is discretionary rather than mandatory is unsurprising. Some element of flexibility allows for cases where the failure is limited, temporary and poses no practical threat to the objectives of the CIS. It is wholly inconsistent with that tightly drawn scheme for there to be implied a general dispensing power [21 22]. Turning to A1/P1, there is force in the argument of HMRC that, even if the rights conferred by registration amount to possessions, they cannot extend beyond the limits set by the legislation by which they are created. However, it is unnecessary to decide the appeal on that basis, since the Court of Appeal correctly held that any interference with A1/P1 rights was proportionate. Once it is accepted that the statute does not in itself require the consideration of the impact on the individual taxpayer, there is nothing in A1/P1 which would justify the court in reading in such a requirement [23].
The substantive question in this case is whether it is unlawful discrimination, either on grounds of sexual orientation, or on grounds of religious belief or political opinion, for a bakery to refuse to supply a cake iced with the message support gay marriage because of the sincere religious belief of its owners that gay marriage is inconsistent with Biblical teaching and therefore unacceptable to God. If the prima facie answer to either question is yes, then questions arise as to the rights of the bakery and its owners to freedom of religion and freedom of expression, under articles 9 and 10 of the European Convention on Human Rights, and what difference, if any, those rights might make to that prima facie answer. At first instance in the county court, the district judge held that there was direct discrimination, both on grounds of sexual orientation and on grounds of religious belief or political opinion, and that it was not necessary to read down the relevant legislation to make it compatible with the bakery owners rights under articles 9 and 10 of the Convention. The bakery and its owners appealed by way of case stated, raising seven questions, to the Northern Ireland Court of Appeal. The Court of Appeal only found it necessary to answer two questions, holding that there was direct discrimination on grounds of sexual orientation and that it was not necessary to read down the legislation to take account of the bakery owners beliefs. The bakery and its owners wish to appeal to this court. The Attorney General for Northern Ireland intervened in the proceedings in the Court of Appeal in order to challenge the validity of the relevant legislation. In Northern Ireland, discrimination in the provision of goods, facilities or services on the ground of religious belief or political opinion is prohibited by the Fair Employment and Treatment (Northern Ireland) Order 1998 (SI 1998/3162 (NI 21)) (FETO), made by Her Majesty in Council under the Northern Ireland Act 1974. Discrimination in the provision of goods, facilities or services on grounds of sexual orientation is prohibited by the Equality Act (Sexual Orientation) Regulations (Northern Ireland) 2006 (SI 2006/439) (SOR), made by the Office of the First Minister and deputy First Minister of Northern Ireland under the Equality Act 2006, an Act of the United Kingdom Parliament. The Attorney General for Northern Ireland questions the validity of both of those prohibitions, insofar as they impose civil liability for the refusal to express a political opinion or express a view on a matter of public policy contrary to the religious belief of the person refusing to express that view. However, this court can only answer the substantive questions if it has jurisdiction to entertain them, either by way of an appeal from the Northern Ireland Court of Appeal or by way of a reference made by the Attorney General for Northern Ireland. Issues arise in relation to both. Appeals from the county court to the Court of Appeal are governed by the County Courts (Northern Ireland) Order 1980 (SI 1980/397 (NI 3)) and appeals from the Court of Appeal to this court in civil cases are governed by section 42 of the Judicature (Northern Ireland) Act 1978. Put shortly, article 61(7) of the Order provides that the decision of the Court of Appeal on an appeal by way of case stated shall be final and section 42(6) of the 1978 Act precludes an appeal to this court in such cases; but section 42(6) contains an exception for cases which involve any question as to the validity of a provision made by or under an Act of the Northern Ireland Parliament or Assembly. FETO is such a provision but the SORs, having been made under an Act of the United Kingdom Parliament, are not. Under paragraph 33 of Schedule 10 to the Northern Ireland Act 1998, the Attorney General has power to require any court or tribunal to refer to this court any devolution issue which has arisen in proceedings before it to which he is a party. The Attorney General gave such a notice after judgment had been handed down by the Court of Appeal but before its order had been drawn up. The Court of Appeal declined to make the reference on the ground that the proceedings were at an end. Under paragraph 34 of Schedule 10, the Attorney General also has power to refer to this court any devolution issue which is not the subject of proceedings. Accordingly, by his first reference, he has referred to us the questions outlined in para 3 above. However, by his second reference, he has also referred to us the question whether the Court of Appeal should have made the reference under paragraph 33 when required by him to do so. No problem arises as to the validity of the references under paragraph 34, but the answers given by this court would have no effect upon the outcome of the proceedings in Northern Ireland. The matter may be different, however, if the Court of Appeal should have made the reference but failed to do so, because this raises questions as to validity of that courts decision in the case. For the reasons given in a judgment prepared by Lord Mance we have concluded that this Court does have jurisdiction to determine an appeal brought by the bakery and its owners, as well as the Attorney Generals two references. Accordingly we give them permission to appeal as the substantive questions raised are undoubtedly of general public importance, not only in Northern Ireland but also in the rest of the United Kingdom. This judgment is arranged as follows. Part I gives an account of the facts and the outcome of the proceedings so far. Part II discusses the claim for discrimination on grounds of sexual orientation under the SORs. Part III discusses the claim for The facts discrimination on grounds of political opinion under FETO. Part IV discusses the impact of the Convention rights on such a claim. Mr and Mrs McArthur have run a bakery business since 1992. Their son Daniel is now the general manager. They have six shops, a staff of about 65 people, and they also offer their products on line throughout the UK and the Republic of Ireland. Since 2004, the business has been run through Ashers Baking Company Ltd. The name was derived from Genesis 49:20: Bread from Asher shall be rich and he shall yield royal dainties. The McArthurs are Christians, who hold the religious beliefs that: the only form of full sexual expression which is consistent with (a) Biblical teaching (and therefore acceptable to God) is that between a man and a woman within marriage; and (b) therefore acceptable to God) is that between a man and a woman. the only form of marriage consistent with Biblical teaching (and They have sought to run Ashers in accordance with their beliefs, but this, and the biblical connection of the name, has not been advertised or otherwise made known to the public. Mr Lee is a gay man who volunteers with QueerSpace, an organisation for the LGBT community in Belfast. QueerSpace is not a campaigning organisation, but it supports the campaign in Northern Ireland to enable same sex couples to get married. A motion supporting this was narrowly rejected by the Northern Ireland Assembly on 29 April 2014. Mr Lee was invited to attend a private event organised by QueerSpace at Bangor Castle on Friday 17 May 2014 to mark the end of Northern Ireland anti homophobia week and the political momentum towards same sex marriage. He decided to take a cake to the party. He had previously bought cakes from Ashers shop in Royal Avenue, Belfast, but he was not personally known to the staff or to Mr and Mrs McArthur. He did not know anything about the McArthurs beliefs about marriage and neither they nor their staff knew of his sexual orientation. Ashers offered a Build a Cake service to customers. Customers could request particular images or inscriptions to be iced onto a cake. There was a leaflet advertising this service, with various examples of what could be done, but no religious or political restrictions were mentioned. On 8 or 9 May 2014, Mr Lee went into the shop and placed an order for a cake to be iced with his design, a coloured picture of cartoon like characters Bert and Ernie, the QueerSpace logo, and the headline Support Gay Marriage. Mrs McArthur took the order but raised no objection at the time because she wished to consider how to explain her objection and to spare Mr Lee any embarrassment. Mr Lee paid for the cake. Over the following weekend, the McArthurs decided that they could not in conscience produce a cake with that slogan and so should not fulfil the order. On Monday 12 May 2014, Mrs McArthur telephoned Mr Lee and explained that his order could not be fulfilled because they were a Christian business and could not print the slogan requested. She apologised to Mr Lee and he was later given a full refund and the image was returned to him. The district judge found that, when they refused to carry out the order, the defendants did perceive that Mr Lee was gay and/or associated with others who were gay; but one of the questions raised in the case stated was whether she was correct as a matter of law to make that finding. The Court of Appeal found it unnecessary to answer that question as the District Judge had made no finding that the order was cancelled because Mr Lee was perceived as being gay. Mr Lee made arrangements with another cake provider for a similar cake which he was able to take with him to the party on 17 May. He complained to the Equality Commission for Northern Ireland (the ECNI) about the cancellation of his order. The ECNI have supported him in bringing this claim for direct and indirect discrimination on grounds of sexual orientation, religious belief or political opinion. The Court of Appeal expressed some concern that the correspondence between the ECNI and the bakery may have created the impression that the ECNI was not interested in assisting members of the faith community when they found themselves in difficulties as a result of their deeply held religious beliefs (para 106). It is obviously necessary for a body such as the ECNI to offer its services to all people who may need them because of a protected characteristic and not to give the impression of favouring one such characteristic over others. On 19 May 2015, the Presiding District Judge held that refusing to complete the order was direct discrimination on all three grounds. She also held that the legislation (both the SORs and FETO) was compatible with the Convention rights. She made a declaration to that effect and awarded Mr Lee damages in the agreed sum of 500: [2015] NICty 2. The defendants appealed by way of case stated to the Court of Appeal. The Court of Appeal served a devolution notice and a notice of incompatibility upon the Attorney General, who then became a party to the proceedings. On 24 October 2016, the Court of Appeal handed down judgment dismissing the appeal: [2016] NICA 39. It held that this was a case of associative direct discrimination on grounds of sexual orientation (paras 57 and 58) and that it was not necessary to read down the SORs to take account of the McArthurs Convention rights (para 72). The court did not therefore decide, although it did discuss, the questions arising under political and religious discrimination (para 72). On 28 October 2016, the Attorney General gave notice to the Court of Appeal requiring it to make a reference to this court. The Court of Appeal, in its separate judgment dealing with an appeal to this court, concluded that he had no power to do so because the proceedings had ended. The principal judgment was sealed and filed on 31 October in the form of an order. Hence there are before this court: (i) an application by the defendants for permission to appeal against the order of the Court of Appeal dismissing their appeal from the county court; (ii) a reference by the Attorney General raising the issues relating to the power to make the SORs and the validity of the FETO referred to in para 3 above; and (iii) a further reference by the Attorney General raising the issue of whether he was entitled to require the Court of Appeal to make a reference to this court on 28 October 2016. II The sexual orientation claim The SORs were made by the Office of the First Minister and deputy First Minister under powers given to them by section 82(1), (3), (4) and (5) of the Equality Act 2006 (an Act of the UK Parliament). Regulation 3(1) defines direct discrimination thus: a person (A) discriminates against another person (B) if (a) on grounds of sexual orientation, A treats B less favourably than he treats or would treat other persons; . By regulation 2(2), sexual orientation means a sexual orientation towards (a) persons of the same sex; (b) persons of the opposite sex; (c) persons of the same sex and of the opposite sex. By regulation 5(1), It is unlawful for any person concerned with the provision (for payment or not) of goods, facilities or services to the public or a section of the public to discriminate against a person who seeks to obtain or use those goods, facilities or services (a) by refusing or deliberately omitting to provide him with any of them; Regulation 3(1)(b) and (c) provide definitions of indirect discrimination against persons of a particular sexual orientation. The District Judge held that, if she had not reached a finding of direct discrimination, but found that there was indirect discrimination, she would have concluded that there was no justification for it (para 46). She did not however find that there was indirect discrimination, and it is not easy to see how she could have done so. It is now common ground that this is a case of direct discrimination or nothing. The District Judge did not find that the bakery refused to fulfil the order because of Mr Lees actual or perceived sexual orientation. She found that they cancelled this order because they oppose same sex marriage for the reason that they regard it as sinful and contrary to their genuinely held religious beliefs (para 43). As the Court of Appeal pointed out, she did not take issue with the submission that the bakery would have supplied Mr Lee with a cake without the message support gay marriage and that they would also have refused to supply a cake with the message requested to a hetero sexual customer (para 11). The objection was to the message, not the messenger. Not surprisingly, therefore, Mr Scoffield QC, who appears for the appellants, argues that it was not open to the judge to find that there was direct discrimination on grounds of sexual orientation. The reason for treating Mr Lee less favourably than other would be customers was not his sexual orientation but the message he wanted to be iced on the cake. Anyone who wanted that message would have been treated in the same way. In Islington Borough Council v Ladele [2009] EWCA Civ 1357; [2010] 1 WLR 955, para 29, Lord Neuberger of Abbotsbury MR adopted the words of Elias J in the EAT: It cannot constitute direct discrimination to treat all employees in precisely the same way. By definition, direct discrimination is treating people differently. Mr Scoffield also criticises the comparator chosen by the District Judge. She compared the treatment of Mr Lee, not with a person of different sexual orientation who wanted the same cake, but with a person of different sexual orientation who wanted a different message: support hetero sexual marriage. This, he argues, is inconsistent with regulation 3(1)(a), which requires a comparison with the treatment of other persons, not messages; and with regulation 3(2), which requires that the relevant circumstances in each case must be the same, or not materially different. The District Judge also considered at length the question of whether the criterion used by the bakery was indissociable from the protected characteristic and held that support for same sex marriage was indissociable from sexual orientation (para 42). This is, however, to misunderstand the role that indissociability plays in direct discrimination. It comes into play when the express or overt criterion used as the reason for less favourable treatment is not the protected characteristic itself but some proxy for it. Thus, in the classic case of James v Eastleigh Borough Council [1990] 2 AC 751, the criterion used for allowing free entry to the councils swimming pool was not sex but statutory retirement age. There was, however, an exact correspondence between the criterion of statutory retirement age and sex, because the retirement age for women was 60 and the retirement age for men was 65. Hence any woman aged 60 to 64 could enter free but no man aged 60 to 64 could do so. Again, in Preddy v Bull [2013] UKSC 73; [2013] 1 WLR 3741, letting double bedded rooms to married couples but not to civil partners was directly discriminatory because marriage was (at that time) indissociable from hetero sexual orientation. There is no need to consider that question in this case, as the criterion was quite clear. But even if there was, there is no such identity between the criterion and sexual orientation of the customer. People of all sexual orientations, gay, straight or bi sexual, can and do support gay marriage. Support for gay marriage is not a proxy for any particular sexual orientation. Against these powerful points, it is argued that this is a case of associative discrimination. In most direct discrimination cases, the argument is that a person has been less favourably treated because of his own protected characteristic. Indeed, the Explanatory Memorandum to the Northern Ireland SORs, at para 7.2, states that The regulations will protect people from direct discrimination, ie where a person treats another person less favourably because of his sexual orientation. However, regulation 3(1)(a) is not limited to less favourable treatment on the grounds of the sexual orientation of that person (see para 20 above). There is no his or her in the definition. This leaves open the possibility that a person may be less favourably treated because of another persons sexual orientation. The question is how far that possibility extends. The Court of Appeal held that this was a case of association with the gay and bisexual community and the protected personal characteristic was the sexual orientation of that community (para 58). This suggests that the reason for refusing to supply the cake was that Mr Lee was likely to associate with the gay community of which the McArthurs disapproved. But there was no evidence that the bakery had discriminated on that or any other prohibited ground in the past. The evidence was that they both employed and served gay people and treated them in a non discriminatory way. Nor was there any finding that the reason for refusing to supply the cake was that Mr Lee was thought to associate with gay people. The reason was their religious objection to gay marriage. The classic example of associative discrimination is the case of Coleman v Attridge Law (Case C 303/06) [2008] ICR 1128, in the European Court of Justice. The claimant had a disabled son and was treated less favourably than others because her son was disabled. In that case, there was a specific identified person whose disability, the protected characteristic, was the reason for the less favourable treatment. In English v Thomas Sanderson Blinds Ltd [2009] ICR 543, the applicant complained of harassment at work, because he was repeatedly taunted as if he were gay when in fact he was not. The Court of Appeal held, by a majority, that this was harassment on grounds of sexual orientation. The fact that he was not in fact gay made no difference. As Sedley LJ put it, at para 38: If, as is common ground, tormenting a man who is believed to be gay but is not amounts to unlawful harassment, the distance from there to tormenting a man who is being treated as if he were gay when he is not is barely perceptible. In both cases the mans sexual orientation, in both cases imaginary, is the basis that is to say, the ground of the harassment. There was, however, a powerful dissenting judgment from Laws LJ, who said this at para 21: In my judgment, harassment is perpetrated on grounds of sexual orientation only where some person or persons actual, perceived, or assumed sexual orientation gives rise to it, that is, is a substantial cause of it. [Counsels] case confuses the reason for the conduct complained of with the nature of that conduct. On the facts the reason for the harassment was nothing to do with anyones actual, perceived, or assumed sexual orientation. It happened to take the form of homophobic banter so called, which was thus the vehicle for teasing or tormenting the claimant. It is of some interest, although not a guide to interpretation, that the Explanatory Notes to the Equality Act (Sexual Orientation) Regulations 2007 (SI 2007/1263), which applied in Great Britain, go further than the Memorandum to the Northern Ireland SORs. Para 7.3 states that direct discrimination is when a person treats another person less favourably on the grounds of his/her sexual orientation, or what is believed to be his/her sexual orientation, or the sexual orientation/perceived sexual orientation of another person with whom they associate. That is very far from saying that, because the reason for the less favourable treatment has something to do with the sexual orientation of some people, the less favourable treatment is on grounds of sexual orientation. There must, in my view, be a closer connection than that. Nor would I agree with the Court of Appeal that the benefit from the message or slogan on the cake could only accrue to gay or bisexual people (para 58). It could also accrue to the benefit of the children, the parents, the families and friends of gay people who wished to show their commitment to one another in marriage, as well as to the wider community who recognise the social benefits which such commitment can bring. This was a case of associative discrimination or it was nothing. It would be unwise in the context of this particular case to attempt to define the closeness of the association which justifies such a finding. Not only did the District Judge not make such a finding in this case, the association would not have been close enough for her to do so. In a nutshell, the objection was to the message and not to any particular person or persons. In reaching the conclusion that there was no discrimination on grounds of sexual orientation in this case, I do not seek to minimise or disparage the very real problem of discrimination against gay people. Nor do I ignore the very full and careful consideration which was given to the development of the law in this area, to which Mr Allen QC drew our attention at considerable length. Everyone, as article 1 of the Universal Declaration of Human Rights put it 70 years ago is born free and equal in dignity and rights. Experience has shown that the providers of employment, education, accommodation, goods, facilities and services do not always treat people with equal dignity and respect, especially if they have certain personal characteristics which are now protected by the law. It is deeply humiliating, and an affront to human dignity, to deny someone a service because of that persons race, gender, disability, sexual orientation or any of the other protected personal characteristics. But that is not what happened in this case and it does the project of equal treatment no favours to seek to extend it beyond its proper scope. It follows that there is no need to consider whether it is necessary to read down the SORs to take account of the appellants Convention rights or indeed to consider whether there was power to make them. The SORs do not, at least in the circumstances of this case, impose civil liability for the refusal to express a political opinion or express a view on a matter of public policy contrary to the religious belief of the person refusing to express that view. III The political beliefs claim Protection against direct discrimination on grounds of religious belief or political opinion has constitutional status in Northern Ireland. The Government of Ireland Act 1920, which established the Parliaments of Northern and Southern Ireland, prohibited both Parliaments from making any law which prohibited the free exercise of religion, gave preference, privilege or advantage, or imposed disability or disadvantage on account of religious belief and provided that any such law would be void (section 5). This was to protect the Protestant minority in the South and the Roman Catholic minority in the North. The Northern Ireland Constitution Act 1973 provided that certain types of legislation applicable in Northern Ireland should be void, to the extent that it discriminated against any person or class of persons on the ground of religious belief or political opinion (section 17(1)). This was principally designed for the legislation of the Northern Ireland Assembly, established under the Northern Ireland Assembly Act 1973, but also applied retrospectively to Acts of the Northern Ireland Parliament and prospectively to the power to legislate for Northern Ireland by Order in Council under the Northern Ireland Act 1974, while direct rule was in force (paragraph 1(1)(b) of Schedule 1 to the 1974 Act). This limitation is recognised and expressly preserved in the Northern Ireland Act 1998 (paragraph 21 of Schedule 14 to that Act). The 1998 Act also prohibits the Northern Ireland Assembly, established under that Act, and a Minister or Northern Ireland department, from making any legislation or doing any act which discriminates on the ground of religious belief or political opinion (sections 6(2)(e) and 24(1)(c)). The discrimination thus prohibited is direct. The Northern Ireland Constitution Act 1973 provides that legislation discriminates against any person or class of persons if it treats that person or that class less favourably in any circumstances than other persons are treated in those circumstances by the law for the time being in force in Northern Ireland (1973 Act, section 23(1)). The 1998 Act adopts the same definition of a discriminatory law (section 98(4)). FETO was made by Her Majesty under powers conferred by paragraph 1 of Schedule 1 to the Northern Ireland Act 1974, having been approved in draft by both Houses of Parliament. Article 3(1), so far as relevant, defines direct discrimination: (a) discrimination on the ground of religious belief or political opinion. By article 28(1), It is unlawful for any person concerned with the provision (for payment or not) of goods, facilities or services to the public or a section of the public to discriminate against a person who seeks to obtain or use those goods, facilities or services (a) by refusing or deliberately omitting to provide him with any of them; . Article 3(2) and 3(2A) (as inserted by regulation 4 of the Fair Employment and Treatment Order (Amendment) Regulations (Northern Ireland) 2003 (SR 2003/520) define indirect discrimination on the ground of religious belief or political opinion, but as with the sexual orientation claim, it is not now argued that this is a case of indirect discrimination. Three questions therefore rise on this aspect of the claim: (i) Did the bakery discriminate against Mr Lee on the grounds of his political opinions by refusing to supply him with a cake iced with this particular message? If it did, is FETO invalid, or should it be read down under section 3(1) (ii) of the Human Rights Act 1998, as incompatible with the rights of freedom of religion and freedom of expression protected by articles 9 and 10 of the European Convention? (iii) If the answer to (i) is yes and the answer to (ii) is no, is FETO invalid under section 17(1) of the Northern Ireland Constitution Act 1974 to the extent that it imposes civil liability for refusing to express a political opinion contrary to the religious belief of the person refusing to express that view? As already mentioned, the Court of Appeal did not find it necessary to answer these questions. The District Judge held that support for gay marriage was a political opinion for this purpose (para 54). There was a political debate going on in Northern Ireland at the time about whether same sex couples should be allowed to marry in Northern Ireland as they are in the rest of the United Kingdom. The Assembly had debated a motion calling for same sex marriage three times over a period of 18 months and had rejected it for a third time only the week before. Political opinion is not defined in the legislation, but in McKay v Northern Ireland Public Service Alliance [1994] NI 103, it was defined as an opinion relating to the policy of government and matters touching the government of the state (Kelly LJ at p 117) and in Ryder v Northern Ireland Policing Board [2007] NICA 43, it was said that the type of political opinion must be one relating to the conduct of the government of the state or matters of public policy (Kerr LCJ, at para 15). There is no need for an association with a particular political party or ideology, although no doubt that would also count. I see no reason to doubt that support for gay marriage is indeed a political opinion for this purpose. However, it is not entirely clear on what basis the District Judge upheld this aspect of the claim. She clearly held, in two places, that the reason why the order had not been fulfilled was the McArthurs religious belief (paras 43 and 57). Among the arguments presented to her on behalf of Mr Lee was that it was immaterial whether the bakery knew of Mr Lees religious belief or political opinion, because under the 1998 Order, discrimination can take place on the grounds of the discriminators religious belief and political opinion (para 47(7)). Not surprisingly, Mr Scoffield, for the bakery, argues that this cannot be right. The purpose of discrimination law is to protect a person (or a person or persons with whom he is associated) who has a protected characteristic from being treated less favourably because of that characteristic. The purpose is not to protect people without such a characteristic from being treated les favourably because of the protected characteristic of the alleged discriminator. This was reflected, for example, in section 45(1) of the Equality Act 2006 which made it clear that the discrimination has to be on the ground of the religion or belief of someone other than the alleged discriminator. It is also a well established principle of equality law that the motive of the alleged discriminator is irrelevant: see, R (E) v Governing Body of JFS [2009] UKSC 15; [2010] 2 AC 728, eg at paras 13 20, citing R v Birmingham City Council, Ex p Equal Opportunities Commission [1989] AC 1155 and James v Eastleigh Borough Council [1990] 2 AC 751. In In re Northern Ireland Electricity Services Application [1987] NI 271, Nicholson J did observe obiter that the words of section 16(2) of the Fair Employment (Northern Ireland) Act 1976, which are essentially the same as those in article 3(2)(a) of FETO, were capable of being read widely enough to encompass acts done based on the religious belief or political opinion of the person doing the act. There are similar dicta in In re ONeills Application [1995] NI 274, at 279 280, and in Ryder v Northern Ireland Policing Board [2007] NICA 43, para 11. However, such a reading would be inconsistent with article 3(2)(a) which requires a comparison between the person receiving the less favourable treatment and other persons: this would not be possible if the treatment were on the grounds of the discriminators beliefs because everyone would be treated alike. It would also be inconsistent with the definition of indirect discrimination, which requires, in article 3(2)(b)(ii), that the discriminator cannot show that the requirement or condition with which the person to whom it is applied cannot comply is justifiable irrespective of the religious belief or political opinion of the person to whom it is applied. Another pointer are the exemptions in article 31(3)(a) and (4)(a) for goods, facilities and services provided by a religious denomination or political party, the essential nature of which requires them to be provided only to persons holding or not holding a particular belief or opinion. For all those reasons, of policy, principle and language, in my view the less favourable treatment prohibited by FETO must be on the grounds of religious belief or political opinion of someone other than the person meting out that treatment. To the extent that the District Judge held that the bakery had discriminated unlawfully because of its owners religious beliefs she was wrong to do so. However, that may not be an entirely fair reading of her judgment. She rejected the submission that the bakery had no reason to know about Mr Lees political opinions (paras 59, 60). They clearly did know that he supported gay marriage, because of the message he wanted on the cake. The [McArthurs] disagreed with the religious belief and political opinion held by [Mr Lee] with regard to a change in the law to permit gay marriage and, accordingly, by their refusal to provide the services sought, treated [him] less favourably contrary to the law (para 66). It was only if she had been persuaded by the submission that the defendants were not aware of Mr Lees religious belief and/or political opinion or the religious belief and political opinions of those with whom he associated, that she would have found that there had been discrimination on the ground of the McArthurs own beliefs (para 67). It is unfortunate that she referred to both religious beliefs and political opinions in making these findings, because there appears to have been no evidence of Mr Lees religious beliefs. Once a claim based on the McArthurs religious beliefs is dismissed, the claim must be made, if at all, on the basis of his political opinion. But those passages do suggest that the District Judge was holding that Mr Lee was treated less favourably because of his political opinion as well as because of the McArthurs religious beliefs. It may well be that the answer to this question is the same as the answer to the claim based on sexual orientation. There was no less favourable treatment on this ground because anyone else would have been treated in the same way. The objection was not to Mr Lee because he, or anyone with whom he associated, held a political opinion supporting gay marriage. The objection was to being required to promote the message on the cake. The less favourable treatment was afforded to the message not to the man. It was not as if he were being refused a job, or accommodation, or baked goods in general, because of his political opinion, as for example, was alleged to have happened in Ryder v Northern Ireland Policing Board. The evidence was that they were quite prepared to serve him in other ways. The situation is not comparable to people being refused jobs, accommodation or business simply because of their religious faith. It is more akin to a Christian printing business being required to print leaflets promoting an atheist message. However, there is here a much closer association between the political opinions of the man and the message that he wishes to promote, such that it could be argued that they are indissociable for the purpose of direct discrimination on the ground of political opinion. This would not always be the case, because the person ordering a particular message may in fact be indifferent to it. But in this case Mr Lee was perceived as holding the opinion in question. It becomes appropriate, therefore, to consider the impact of the McArthurs Convention rights upon the meaning and effect of FETO. IV The Convention Rights The Convention rights to freedom of thought, conscience and religion and freedom of expression are clearly engaged by this case. Article 9(1) provides that Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief and freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance. Article 9(2) permits limitations on the freedom to manifest ones religion or beliefs but not on the freedom to hold them. In its first case dealing with article 9, Kokkinakis v Greece (1993) 17 EHRR 397, para 31, the European Court of Human Rights expressed the importance of the right in a passage which has been much cited since: As enshrined in article 9, freedom of thought, conscience and religion is one of the foundations of a democratic society within the meaning of the Convention. It is, in its religious dimension, one of the most vital elements that go to make up the identity of believers and their conception of life, but it is also a precious asset for atheists, agnostics, sceptics and the unconcerned. The pluralism indissociable from a democratic society, which has been dearly won over the centuries, depends on it. One is free both to believe and not to believe. Furthermore, obliging a person to manifest a belief which he does not hold has been held to be a limitation on his article 9(1) rights. In Buscarini v San Marino (1999) 30 EHRR 208, the Grand Chamber held that it was a violation of article 9 to oblige non believers to swear a Christian oath as a condition of remaining members of Parliament. The court reiterated that freedom of thought, conscience and religion entails, inter alia, freedom to hold or not to hold religious beliefs and to practise or not to practise a religion (para 34). The Judicial Committee of the Privy Council took the same view in Commodore of the Royal Bahamas Defence Force v Laramore [2017] UKPC 13; [2017] 1 WLR 2752. The Board held that a Muslim petty officer had been hindered in the exercise of his constitutional right to freedom of conscience when he was obliged, on pain of disciplinary action, to remain present and doff his cap during Christian prayers at ceremonial parades and at morning and evening colours. This was a sufficiently active participation to hinder the claimant in the enjoyment of his conscientious beliefs. Nor had any justification been shown for it. The freedom not to be obliged to hold or to manifest beliefs that one does not hold is also protected by article 10 of the Convention. Article 10(1) provides that 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. The right to freedom of expression does not in terms include the right not to express an opinion but it has long been held that it does. A recent example in this jurisdiction is RT (Zimbabwe) v Secretary of State for the Home Department [2012] UKSC 38; [2013] 1 AC 152. The issue was whether asylum seekers should be sent back to Zimbabwe where they would face a real risk of persecution if they refused to demonstrate positive support for the then regime in that country. Citing, among other cases, both Kokkinakis and Buscarini, Lord Dyson held that the principle applied as much to political opinions as it did to religious belief: Nobody should be forced to have or express a political opinion in which he does not believe (para 42). The respondent suggests that the jurisprudence in relation to compelled speech has been developed principally in the United States as a result of the First Amendment. There is indeed longstanding Supreme Court authority for the proposition that the right to freedom of thought protected by the First Amendment against state action includes both the right to speak freely and the right to refrain from speaking at all: see Wooley v Maynard 430 US 705, 714, per Burger CJ, citing Board of Education v Barnette (1943) 319 US 624, 633 634. But in the light of Laramore and RT (Zimbabwe), and the Strasbourg case law on which they are based, it cannot seriously be suggested that the same principles do not apply in the context of articles 9 and 10 of the Convention. The District Judge did not accept that the defendants were being required to promote and support a campaign for a change in the law to enable same sex marriage (paras 40 and 62). The Court of Appeal, while not deciding the point, appears to have agreed with this: the fact that a baker provides a cake for a particular team or portrays witches on a Halloween cake does not indicate any support for either (para 67). These are, in fact, two separate matters: being required to promote a campaign and being associated with it. As to the first, the bakery was required, on pain of liability in damages, to supply a product which actively promoted the cause, a cause in which many believe, but a cause in which the owners most definitely and sincerely did not. As to the second, there is no requirement that the person who is compelled to speak can only complain if he is thought by others to support the message. Mrs McArthur may have been worried that others would see the Ashers logo on the cake box and think that they supported the campaign. But that is by the way: what matters is that by being required to produce the cake they were being required to express a message with which they deeply disagreed. Articles 9 and 10 are, of course, qualified rights which may be limited or restricted in accordance with the law and insofar as this is necessary in a democratic society in pursuit of a legitimate aim. It is, of course, the case that businesses offering services to the public are not entitled to discriminate on certain grounds. The bakery could not refuse to provide a cake or any other of their products to Mr Lee because he was a gay man or because he supported gay marriage. But that important fact does not amount to a justification for something completely different obliging them to supply a cake iced with a message with which they profoundly disagreed. In my view they would be entitled to refuse to do that whatever the message conveyed by the icing on the cake support for living in sin, support for a particular political party, support for a particular religious denomination. The fact that this particular message had to do with sexual orientation is irrelevant to the FETO claim. Under section 3(1) of the Human Rights Act 1998, all legislation is, so far as it is possible to do so, to be read and given effect in a way which is compatible with the Convention rights. I have already indicated my doubts about whether this was discrimination against Mr Lee on the grounds of his political opinions, but have acknowledged the possibility that it might be. But in my view, FETO should not be read or given effect in such a way as to compel providers of goods, facilities and services to express a message with which they disagree, unless justification is shown for doing so. As the courts below reached a different conclusion on this issue, they did not have to consider the position of the company separately from that of Mr and Mrs McArthur. It is the case that in X v Switzerland (Application No 7865/77), Decision of 27 February 1979, and in Kustannus Oy Vapaa Ajattelija Ab v Finland (Application No 20471/92), Decision of 15 April 1996, the European Commission of Human Rights held that limited companies could not rely upon article 9(1) to resist paying church taxes. In this case, however, to hold the company liable when the McArthurs are not would effectively negate their convention rights. In holding that the company is not liable, this court is not holding that the company has rights under article 9; rather, it is upholding the rights of the McArthurs under that article. Had the conclusion been otherwise, it would of course have raised the constitutional question referred to us by the Attorney General. In the event, it is not necessary to address that question. Postscript After the hearing in this case, while this judgment was being prepared, the Supreme Court of the United States handed down judgment in Masterpiece Cakeshop Ltd v Colorado Civil Rights Commission (unreported) 4 June 2018. The facts are not the same. A Christian baker refused to create a wedding cake for a gay couple because of his opposition to same sex marriage. There is nothing in the reported facts to suggest that the couple wanted a particular message or decoration on their cake. The Colorado Civil Rights Commission, upheld by the Colorado courts, held that the baker had violated the Colorado law prohibiting businesses which offered sales or services to the public from discrimination based on sexual orientation. The baker complained that this violated his First Amendment rights to freedom of speech and the free exercise of his religion. The majority held that the delicate question of when the free exercise of his religion must yield to an otherwise valid exercise of state power needed to be determined in an adjudication in which religious hostility on the part of the state itself would not be a factor in the balance the state sought to reach. When the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires. The majority recognised that businesses could not generally refuse to supply products and services for gay weddings; but they acknowledged that the baker saw creating a wedding cake as an expressive statement involving his First Amendment rights; and contrasted the treatment that he had received, which they perceived as hostile, from the favourable treatment given to three bakers who had refused to produce cakes with messages demeaning gay persons and gay marriages. Justices Ginsburg and Sotomayor, in dissent, drew a clear distinction between an objection to the message on the cake and an objection to the customer who wanted the cake. The other bakery cases had been clear examples of an objection to the message rather than an objection to the customer. In their view the objection in this case was to the customer and therefore a violation. Justices Kagan and Breyer, who voted with the majority on the lack of neutrality point, also accepted that the Commission could have based its reasoning on that distinction the other bakers would have refused to make cakes with the demeaning messages for anyone, whereas this baker had refused to make this cake because it was a gay couple who wanted it. Justices Thomas and Alito, on the other hand, considered that to make a cake for a gay wedding was expressive in itself and thus compelling it required strict scrutiny. Justice Gorsuch would also not have distinguished between a cake with words and a cake without. The important message from the Masterpiece Bakery case is that there is a clear distinction between refusing to produce a cake conveying a particular message, for any customer who wants such a cake, and refusing to produce a cake for the particular customer who wants it because of that customers characteristics. One can debate which side of the line particular factual scenarios fall. But in our case there can be no doubt. The bakery would have refused to supply this particular cake to anyone, whatever their personal characteristics. So there was no discrimination on grounds of sexual orientation. If and to the extent that there was discrimination on grounds of political opinion, no justification has been shown for the compelled speech which would be entailed for imposing civil liability for refusing to fulfil the order. LORD MANCE: (with whom Lady Hale, Lord Kerr, Lord Hodge and Lady Black agree) On behalf of the respondent, Mr Lee, and the notice party, the Commission, Mr Allen submits that no appeal lies against the decision of the Northern Ireland Court of Appeal. The Court of Appeal decided the issues before it on a case stated by the District Judge pursuant to article 61(1) of the County Courts (Northern Ireland) Order 1980. Article 61(1) provides: Except where any statutory provision provides that the decision of the county court shall be final, any party dissatisfied with the decision of a county court judge upon any point of law may question that decision by applying to the judge to state a case for the opinion of the Court of Appeal on the point of law involved, and, subject to this article, it shall be the duty of the judge to state the case. Article 61(7) of the Order goes on to impose a restriction on an appeal from such a decision. It provides: Except as provided by section 41 of the Judicature (Northern Ireland) Act 1978, the decision of the Court of Appeal on any case stated under this article shall be final. Although not referred to expressly in article 61(1), it is common ground that a further exception to finality exists under section 42(6) of the Judicature (Northern Ireland) Act 1978, which reads: No appeal from an order or judgment of the Court of Appeal shall, unless it involves a decision of any question as to the validity of any provision made by or under an Act of the Parliament of Northern Ireland or a Measure of the Northern Ireland Assembly, lie under this section in a case where by any statutory provision, including a provision of this Act, it is expressly provided (whatever form of words is used) that that order or judgment is to be final. It is also common ground that the Fair Employment and Treatment (Northern Ireland) Order 1998 (FETO) falls to be considered as a Measure of the Northern Ireland Assembly, but that the Equality Act (Sexual Orientation) Regulations (Northern Ireland) 2006 (SORs) do not. FETO was made as an Order in Council under powers conferred by section 1(3), read with Schedule 1 paragraph 1, of the Northern Ireland Act 1974. The Assembly, which it was intended would be set up in accordance with the Northern Ireland Assembly Act 1973, was at the time prorogued pending dissolution. Following the Belfast Agreement, the Northern Ireland Act 1998 completed that process of dissolution. By section 95(5), read with Schedule 12 paragraph 3(4), the 1998 Act provided for references to Orders in Council, such as FETO, made under its provisions to be considered as Measures of the Assembly which was then prorogued pending dissolution. SORs in contrast were made under powers in the Equality Act 2006, and there is no basis for regarding them as made by or under an Act of the Parliament of Northern Ireland or a Measure of the Northern Ireland Assembly within section 42(6). In these circumstances, it is necessary to consider first whether the proposed appeal involves a decision of any question as to the validity of any provision of FETO. Mr Allen, on behalf of Mr Lee and the Commission, relies on FETO as valid. He points out, correctly, that the appellants primary case is also that FETO is valid and that their conduct was not in breach of any of its provisions, properly understood. In this connection, the appellants contend that, pursuant to the interpretive obligation contained in section 83 of the Northern Ireland Act 1998 (the Northern Irish homologue of section 3 of the Human Rights Act 1998) FETO can and should, if necessary, be read compatibly with their rights under the European Convention on Human Rights. However, all else failing, the appellants also contend that, if the effect of FETO is that their conduct in the present case was unlawful, then FETO is to that extent invalidated by section 24(1)(a) and/or (c) of the Northern Ireland Act 1998. Section 24 reads: (1) A Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the Convention rights; (a) (b) (c) discriminates against a person or class of person on the ground of religious belief or political opinion; Mr Allen submits that this fall back submission does not mean that the appeal involves a decision of any question as to the validity of any provision of FETO within section 42(6) of the Judicature (Northern Ireland) Act 1978. Further, the wording of that section must, he submits, be understood in context against the background of 1978; it cannot cover such invalidity as may arguably arise pro tanto to the extent of any incompatibility with provisions introduced in 1998. I do not accept those submissions. Statutes are generally always speaking and there is no reason why section 42(6) of the 1978 Act should not embrace invalidity arising pro tanto under a subsequent provision such as section 24(1) of the 1998 Act. Further, I consider that, even if a question of invalidity only arises on the prospective appellants case if all other aspects of their case fail, that must be sufficient to bring all issues within the scope of an appeal under section 42(6) of the 1978 Act. It is impossible to know whether the other aspects of the appellants case fail, so that the question of validity directly arises, without hearing and determining an appeal on them. In response to Mr Allens observation that section 42(6) is an exception and should therefore be understood narrowly, I observe that, while that is so, it is also the case that section 42(6) is an exception to an exception introduced by article 61(7) of the County Courts (Northern Ireland) Order 1980 to the general rule that an appeal lies from the Court of Appeal to the Supreme Court. I see no reason to give it other than its ordinary meaning. I also note at this point a submission first raised before the Court of Appeal by the Attorney General as a notice party and intervener. By skeleton argument dated 11 April 2016, supported by the appellants in their skeleton in response dated 18 April 2016, the Attorney General submitted that, if article 28 of FETO has the effect for which Mr Allen submits, it is invalidated pro tanto by section 17 of the Northern Ireland Constitution Act 1973. That section reads: (1) Any Measure, any Act of the Parliament of Northern Ireland and any relevant subordinate instrument shall, to the extent that it discriminates against any person or class of persons on the ground of religious belief or political opinion, be void. The Court of Appeal, pursuant to Order 120 rule 3 of the Rules of the Court of Judicature (Northern Ireland) 1980, issued devolution notices which included this issue. Before the Supreme Court, the Attorney General has by his reference remained the primary protagonist of the same submission. But the appellants, by their written case as interveners in the reference, have again endorsed the Attorney Generals submission regarding section 17. There was therefore before the Court of Appeal and there is before the Supreme Court a question of invalidity, the answer to which could directly affect the appellants case. Once again, even though invalidity could only arise upon all other submissions failing, that in my opinion is sufficient to enable an appeal in respect of FETO. Having established a right of appeal in respect of FETO, the appellants submit that their proposed appeal in respect of SORs can also be maintained. The issue under FETO is discrimination on grounds of religious belief or political opinion, while the issue under SORs is one discrimination on grounds of sexual orientation. But there is, as the appellants point out, a considerable overlap in the circumstances relevant in this case to these different kinds of discrimination. The appellants therefore submit that, once an appeal is admissible in respect of one claim, then any other claim determined in the same proceedings may be appealed either generally or at least where there is an overlap of the relevant factual circumstances such as here exists. The Court of Appeal rejected this submission in its separate judgment dated 22 December 2016 on the appellants application for permission to appeal to the Supreme Court [2016] NICA 55. In the further alternative, the appellants now invoke before the Supreme Court section 40(5) of the Constitutional Reform Act 2005, which provides that: The [Supreme] Court has power to determine any question necessary to be determined for the purposes of doing justice in an appeal to it under any enactment. As will appear, it is unnecessary to consider the appellants case on these points further, in the light of my conclusions with regard to the Attorney Generals References, to which I next therefore turn. The Attorney General has power to require or make a reference in circumstances defined by paragraphs 33 and 34 of Schedule 10 to the Northern Ireland Act 1998 (as amended by paragraph 2 of Schedule 7 to the Justice (Northern Ireland) Act 2002 and paragraph 118 of Schedule 9 to the Constitutional Reform Act 2005), as follows: 33. The Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland or the Advocate General for Scotland may require any court or tribunal to refer to the Supreme Court any devolution issue which has arisen in proceedings before it to which he is or they are a party. 34. The Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland or the Advocate General for Scotland may refer to the Supreme Court any devolution issue which is not the subject of proceedings. The Court of Appeal handed down its judgment on the substantive issues on 24 October 2016. Order 42 rule 8 of the Rules of the Court of Judicature (Northern Ireland) 1980 (SR 1980/346) provides that: (1) A judgment of the Court takes effect from the day of its date. (2) Such a judgment shall be dated as of the day on which it is given, unless the Court orders it to be dated as of some other earlier or later day Rule 2 of the same Order provides that, unless the court otherwise orders and subject to certain other presently inapplicable exceptions, every judgment shall: (a) be drawn up and signed by an officer of the appropriate office; and (b) be sealed and filed by an officer of that office and such officer shall at the time of filing enter such judgment in the record kept for the purpose and the date of filing shall be deemed to be the date of such entry. The Court of Appeals substantive judgment was not drawn up or filed in the form of an order until 31 October 2016. Before this occurred, the Attorney General lodged on 28 October 2016 a notice dated 27 October 2016, purporting to require the Court of Appeal under paragraph 33 of Schedule 10 to the 1998 Act to refer to the Supreme Court issues as to whether, in the light of section 24(1)(a), (c) and (d) of the Northern Ireland Act 1998, there was power to make regulation 5 of SORs and whether, in the light of section 17 of the Northern Ireland Constitution Act 1973, article 28 of FETO was void. The Court of Appeal declined to make such a reference. Its reasons were given in a separate judgment, dated as delivered on 22 December 2016, by which the Court, firstly, refused the appellants permission to appeal in respect of the issues under FETO, held that there was no jurisdiction to permit any appeal in respect of the issues under SORs and, secondly, concluded that the Attorney Generals request for a reference under paragraph 33 came too late, because the proceedings ended with the giving of judgment and have not been reopened (para 10) and that, at the date at which he purported to require a reference, there were no longer proceedings before it (para 11). The Attorney Generals response to the Court of Appeals rejection of his request under paragraph 33 has been to make two references, dated respectively 31 January 2017 and 27 March 2017 to the Supreme Court under paragraph 34. There are no jurisdictional objections to these references. The reference dated 31 January 2017 raises in abstract form three substantive issues all directly inspired by the main proceedings. The first such issue is whether there was, in the light of sections 24(1)(c), power to make regulation 5 of SORs, insofar as that regulation imposes civil liability for the refusal to express a political opinion or to express a view on a matter of public policy contrary to the religious belief of the person refusing to express the view. The second is whether, in the light of section 24(1)(a), there was power to make regulation 5 insofar as it imposes civil liability for the refusal to express a particular political opinion that is inconsistent with the religious belief of the person refusing to express that opinion. The third issue (touched on in para 70 above) is whether article 28 of FETO is void, in the light of section 17 of the Northern Ireland Constitution Act 1973, insofar as article 28 imposes civil liability for the refusal to express a political opinion or to express a view on a matter of public policy contrary to the religious belief of the person refusing to express the view. The second reference dated 27 March 2017 raises the procedural question whether, in effect, the Attorney General was, under paragraph 33, entitled to require the Court of Appeal to make a reference to the Supreme Court on 28 October 2016. I start with the second reference. The Court of Appeal in its judgment dated 22 December 2016 noted correctly (para 9) that a court can always recall and vary an order before it is perfected (in this case by drawing up, sealing and filing). But the Court of Appeal found support in Deighton v Cockle [1912] 1 KB 206 for a conclusion that the proceedings were at an end as from 24 October 2016. The issue in that case was whether, having obtained leave on 28 May 1904 to sign summary judgment (under the old Order XIV), the plaintiff was by the actual signing of judgment, which it did not undertake until 3 July 1905, taking a proceeding, so as require a months notice to proceed to be given in advance. The Court of Appeal held that it was not. Vaughan Williams LJ concluded that the rule requiring a months notice to proceed only applied to proceedings towards judgment or interlocutory proceedings, and did not apply to proceedings after judgment obtained or after an end of the litigation had been arrived at (pp 209 and 211). Buckley LJ took a similar view, while Kennedy LJ considered that the rule referred to some proceeding while the matter is still in controversy, or there is still some further step to be taken before judgment is obtained (p 213). The present context is different. Paragraph 33 confers a power to require a reference of any devolution issue which has arisen in proceedings which have not yet been concluded, while paragraph 34 confers a power to refer any devolution issue which is not the subject of proceedings. Appeals are in principle against orders, not judgments. Following the handing down of a judgment, there are frequently contentious issues about the form of order appropriate to give it effect and about other matters such as costs. It is natural to see the proceedings as being on foot, until such matters are resolved, and a final order is issued. The references to the existence or non existence of relevant proceedings in paragraphs 33 and 34 are readily capable of being understood in a sense whereby such proceedings exist until their finalisation by an order which can be made the subject of an appeal. There is no incongruity in a conclusion that a reference can be required in the light of a judgment handed down, but not yet conclusively formalised. Indeed, there are strong reasons why that should be possible. The need for a reference may only have become obvious as a result of the way in which the judgment handed down has been expressed. The reference will then still serve an important purpose in enabling the Court of Appeal to revise and, if necessary, alter its judgment before it is finally drawn up, sealed and filed. A reference of similar nature is not unfamiliar in the context of the procedure for references by national courts to the Court of Justice of the European Union. The alternative, that the Court of Appeal cannot refer but must formalise its judgment, leaves it open to the Attorney General thereafter to make a reference under paragraph 34, such as his first reference here but to do so too late to affect the outcome of the proceedings to which the reference in substance relates. It is true that the court has no discretion to refuse to make a reference under paragraph 33, if it applies in a situation such as the present. It could in some cases be regrettable and waste costs, if the Attorney General were to delay requesting a reference until after the hand down of a judgment. But the legislation should not be construed on the basis that it will be abused or mishandled. The Attorney General can be relied upon to act sensibly, and, if necessary, the court also retains control over costs, which it can exercise whatever the outcome or success of the Attorney Generals reference under paragraph 33. I therefore conclude that the Attorney Generals request to the Court of Appeal to make a reference fell within the terms of paragraph 33, and the Court of Appeal erred in refusing to give effect to it. That means that the Court of Appeal and the parties to the main proceedings were deprived, by misconstruction of paragraph 33 and consequent procedural error, of the benefit of the answers on the substantive issues which the Supreme Court would have given and of the inevitably different judgment which would have followed. So far as concerns article 28 of FETO, the finding of violation in the courts below can, in the light of my conclusions above, be resolved by an appeal. So far as concerns regulation 5 of SORs, the reference sought related to the power to make that regulation. However, as is confirmed by the form of the first reference actually made, the premise to the reference would have been that regulation 5 imposes civil liability for the refusal to express a political opinion or view contrary to or inconsistent with the religious belief of the person refusing to express the view. The Supreme Court could not have answered the reference which the Attorney General was requiring under paragraph 33, without first considering this premise. In short, the Supreme Court would have had to consider and address the question whether and to what, if any extent, regulation 5 does impose civil liability for conduct such as the appellants in refusing to bake the cake. The Supreme Court would thus have arrived then at the conclusions which it has now reached, namely that (contrary to the District Judges ruling) regulation 5 does not impose liability for such conduct. It would have been bound to express that conclusion, and, on that basis, to decline to go further into what would have been established to be the hypothetical constitutional issues otherwise raised by the reference. In that light it would also have been impossible for the Court of Appeal to maintain its judgment in the form initially handed down. The Court of Appeal would have been bound to reach the opposite conclusions on the issues of sexual discrimination under regulation 5 of SORs, as well as discrimination under FETO, to those which it did in fact reach. That leads to the question what, if any, recourse is open to the appellants in circumstances where the Court of Appeals error in refusing to give effect to the Attorney Generals request under paragraph 33 can now be seen to have led the Court of Appeal to finalise a judgment and order reflecting a result which is the opposite of what should have followed. Does article 61(7) of the County Courts (Northern Ireland) Order 1980, providing that the decision of the Court of Appeal on any case stated under this article shall be final, apply, in this context also, to preclude any appeal? The answer in my opinion is that it does not. I start by noting that the present situation does not fall within the scope of the principle applied in Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147. In Anisminic the House was concerned with errors made by an inferior tribunal, the Foreign Compensation Commission. Anisminic Ltd was claiming compensation for property sequestered by the Egyptian authorities in 1956. The Commission had ruled against this claim on the ground that an Egyptian company, to which it had sold the sequestered property in 1957, was its successor in title for the purposes of a provision requiring any claimant and any successor in title of such claimant to be British. The Foreign Compensation Act 1950 provided that The determination by the commission of any application made to them under this Act shall not be called in question in any court of law. The House held that this provision did not preclude judicial review of a determination involving a misconstruction by the commission of the scope of its jurisdiction. Acting in bad faith, making a decision which a tribunal had no power to make, failing to give effect to the requirements of natural justice, taking into account something required to be left out of account and refusing to take into account something required to be taken into account were in this context all mentioned as matters outside the scope of such a finality provision: see p 171C E per Lord Reid, pp 195B C and 198F G per Lord Pearce, p 210E F per Lord Wilberforce and p 215A per Lord Pearson (agreeing with Lord Reid, Lord Pearce and Lord Wilberforce). In the later authority of In re Racal Communications Ltd [1981] AC 374, Lord Diplock said (p 383): There is however The break through made by Anisminic was that, as respects administrative tribunals and authorities, the old distinction between errors of law that went to jurisdiction and errors of law that did not, was for practical purposes abolished. Any error of law that could be shown to have been made by them in the course of reaching their decision on matters of fact or of administrative policy would result in their having asked themselves the wrong question with the result that the decision they reached would be a nullity. no similar presumption that where a decision making power is conferred by statute upon a court of law, Parliament did not intend to confer upon it power to decide questions of law as well as questions of fact. Whether it did or not and, in the case of inferior courts, what limits are imposed on the kinds of questions of law they are empowered to decide, depends upon the construction of the statute unencumbered by any such presumption. In the case of inferior courts where the decision of the court is made final and conclusive by the statute, this may involve the survival of those subtle distinctions formerly drawn between errors of law which go to jurisdiction and errors of law which do not that did so much to confuse English administrative law before Anisminic ; but upon any application for judicial review of a decision of an inferior court in a matter which involves, as so many do, interrelated questions of law, fact and degree the superior court conducting the review should not be astute to hold that Parliament did not intend the inferior court to have jurisdiction to decide for itself the meaning of ordinary words used in the statute to define the question which it has to decide. See In re Racal Communications Ltd, per Lord Diplock, at p 383. The Northern Ireland Court of Appeal is a superior court, but the underlying question of construction remains, whether the legislature has by article 61(7) of the 1980 Order, set out in para 62 above, excluded any right of appeal in circumstances such as the present. Article 61(1) and (7), read together, provide for the decision of the Court of Appeal on a case stated relating to the correctness of the decision of a county court judge upon any point of law to be final. They contemplate the finality of the Court of Appeals decision with regard to the correctness of the county court judges decision on the point of law raised by the case stated. The finality provision in article 61(7) is therefore focused on the decision on the point of law, not on the regularity of the proceedings leading to it. It would require much clearer words and they would, clearly, be unusual and surprising words to conclude that a focused provision like article 61(7) was intended to exclude a challenge to the fairness or regularity of the process by which the Court of Appeal had reached its decision on the point of law. Suppose the Court of Appeal had refused to hear one side, or the situation was one where some apparent bias affected one of its members. This sort of situation cannot have been contemplated by or fall within article 61(7). Likewise, I consider that a failure to admit the Attorney Generals request for a reference and to await its disposition, before ruling on a case stated, constitutes a procedural error, in respect of which an appeal must still be possible, if significant injustice would otherwise follow, notwithstanding the finality provision in article 61(7). Does it matter that, in this case, the error identified consisted in failing to admit the Attorney Generals reference and to await its determination, rather than in giving effect to any application made by the appellants? The appellants had no right to require, or to insist that the Attorney General require, a reference. It can be argued therefore that any error by the Court of Appeal, in failing to make a reference and to await its outcome, is collateral to the litigation between the appellants and Mr Lee and the Commission, and cannot afford the appellants any basis for complaint or appeal. In my view, that would be to take an overly technical view of the issues. The appellants had expressly adopted the Attorney Generals case and submissions during the Court of Appeal proceedings. They and the Attorney General were ad idem in arguing that, by one route or another, the complaint made against the appellants was ill founded. The appellants would have appeared and advanced their supportive position on the reference, had one been made under paragraph 33. They had, in relation to their appeal against the decision of the county court judge on the point of law stated, a direct interest in the content and outcome of the reference, and in its proper handling. In summary, what occurred was an error in the proper conduct of the proceedings, which can now be seen to have precluded the Court of Appeal from deciding the case on a correct basis and from reaching the right outcome. Such an error takes the case outside any provision that the decision of the Court of Appeal on any case stated under this article shall be final. An appeal is therefore competent to the Supreme Court against all aspects of the Court of Appeals judgment, including its decision in respect of sexual discrimination under SORs as well as its decision in respect of political opinion or religious belief under FETO. The appellants should be given permission to appeal accordingly in the light of the undoubted importance of the substantive issues; and, in the light of my conclusions on the substantive issues, the Supreme Court can and should allow the appeal in respect of both SORs and FETO.
UK-Abs
Mr and Mrs McArthur are Christians who hold the religious belief that the only form of marriage consistent with Biblical teaching and acceptable to God is that between a man and a woman. They are the owners of a bakery business (Ashers). Ashers offered a Build a cake service by which customers could request images or inscriptions to be iced onto a cake. In May 2014 Mr Lee, a gay man, wished to take a cake to an event organised by campaigners for same sex marriage in Northern Ireland. He placed an order with Ashers for a cake iced with a depiction of the cartoon characters Bert and Ernie and the words Support Gay Marriage. Mrs McArthur initially took the order but later advised Mr Lee that she could not in conscience produce such a cake and gave him a refund. Mr Lee brought a claim against the McArthurs and Ashers (the appellants) for direct and indirect discrimination on grounds of sexual orientation, contrary to the Equality Act (Sexual Orientation) Regulations (Northern Ireland) 2006 (the SORs) and/or on grounds of religious belief or political opinion, contrary to the Fair Employment and Treatment (Northern Ireland) Order 1998 (FETO). His claim was supported by the Equality Commission for Northern Ireland. The district judge in the county court held that refusing to complete his order was direct discrimination on all three grounds. The appellants appealed by way of case stated to the Court of Appeal, arguing that FETO and the SORs were incompatible with the McArthurs rights under the European Convention on Human Rights (ECHR). The Court of Appeal served a devolution notice and notice of incompatibility on the Attorney General, who then became a party to the proceedings. On 24 October 2016 the Court of Appeal dismissed the appeal, holding that Mr Lee had suffered direct discrimination on grounds of sexual orientation and that it was not necessary to interpret the SORs to take account of the McArthurs ECHR rights. On 28 October 2016, before the order dismissing the appeal had been drawn up, the Attorney General gave notice to the Court of Appeal, requiring it to make a reference to the Supreme Court under paragraph 33 of Schedule 10 to the Northern Ireland Act 1998. The Court of Appeal concluded that he had no power to do so as the proceedings had ended. The Attorney General therefore made two references to the Supreme Court of devolution issues under paragraph 34, the first on the validity of FETO and the SORs and the second on whether the Court of Appeal should have made a reference. The appellants applied for permission to appeal against the order of the Court of Appeal, and this application was heard together with the Attorney Generals references. The Supreme Court unanimously holds that it has jurisdiction to hear an appeal against all aspects of the Court of Appeals judgment, finding that the Court of Appeal erred in refusing to make a reference pursuant to the Attorney Generals notice under paragraph 33. It grants the appellants permission to appeal and allows their appeal. The Court concludes that neither the SORs nor FETO imposes civil liability on the appellants for the refusal to express a political opinion contrary to their religious beliefs. Lady Hale gives the judgment on the discrimination issues, and Lord Mance that on the jurisdiction issues. The sexual orientation claim The district judge found that the appellants did not refuse to fulfil Mr Lees order because of his actual or perceived sexual orientation. The objection was to the message on the cake, not any personal characteristics of the messenger [22], or anyone with whom he was associated [33 34]. The message was not indissociable from the sexual orientation of the customer, as support for gay marriage was not a proxy for any particular sexual orientation [25]. The benefit of the message accrues not only to gay or bisexual people, but to their families and friends and to the wider community who recognise the social benefits which such commitment can bring [33]. Thus, there was no discrimination on grounds of sexual orientation in this case. The political beliefs claim Protection against direct discrimination on grounds of religious belief or political opinion has constitutional status in Northern Ireland [37]. The discrimination has to be on the ground of the religion or belief of someone other than the alleged discriminator [43 45]. As the appellants objection was not to Mr Lee, but to being required to promote the message on the cake, the situation was not comparable with people being refused jobs or services simply because of their religious faith, but it was arguable that the message was indissociable from Mr Lees political opinion. It was therefore necessary to consider the impact of the McArthurs ECHR rights on the meaning and effect of FETO [48]. Impact of ECHR rights The rights to freedom of thought, conscience and religion (article 9) and to freedom of expression (article 10) were clearly engaged by this case [49]. They include the right not to be obliged to manifest beliefs one does not hold [52]. The McArthurs could not refuse to provide their products to Mr Lee because he was a gay man or because he supported gay marriage, but that was different from obliging them to supply a cake iced with a message with which they profoundly disagreed [55]. FETO should not be read or given effect in such a way as to compel them to do so unless justification was shown, and it had not been in this case [56, 62]. Jurisdiction The appellants were entitled to appeal to the Supreme Court in relation to FETO notwithstanding their election to appeal to the Court of Appeal by way of case stated. Although such appeals are usually final under article 61(6) of the County Courts (Northern Ireland) Order 1980 (article 61(6)), there is an exception in section 42(6) Judicature (Northern Ireland) Act 1978 in respect of decisions involving any question as to the validity of measures of the Northern Ireland Assembly. FETO was equivalent to such a measure and the appellants did challenge its validity if it failed to protect their rights. It was not necessary to decide whether this also permitted the SORs appeal, given the overlap in the circumstances, because of the Supreme Courts conclusions on the Attorney Generals references [63 71]. The Court of Appeal had been wrong to reject the reference requested by the Attorney General under paragraph 33 on the ground the proceedings were concluded. In principle, appeals are against orders not judgments and, in this context, it is natural to regard the proceedings as live until a final order is issued. This error had deprived the appellants of the inevitably different judgment on the question of whether the SORs imposed civil liability on them for their refusal to express a political opinion contrary to their religious beliefs, which would have eventually followed. An appeal to the Supreme Court following such a procedural error was not precluded by article 61(6), which was focused on the point of law not on a challenge to the fairness or regularity of the Court of Appeals process. Even though the error was collateral to the litigation between the appellants and Mr Lee, it would be overly technical to deny the appellants the benefit of the proper handling of the reference. An appeal therefore lay to the Supreme Court against all aspects of the Court of Appeals judgment, including its decision in respect of the alleged discrimination under the SORs as well as under FETO [76 90].
Traders who wish to appeal against assessments to Value Added Tax (VAT) in the United Kingdom are required, by section 84 of the Value Added Tax Act 1994, first to pay or deposit the tax notified by the assessment with HMRC, unless they can demonstrate that to do so would cause them to suffer hardship. Otherwise, their appeal will not be entertained. This pay first requirement is a feature of the procedural regime for appealing assessments to a number of other types of tax, including Insurance Premium Tax, Landfill Tax, Climate Change Levy and Aggregates Levy. But it is not a condition for appealing assessments to Income Tax, Capital Gains Tax (CGT), Corporation Tax or Stamp Duty Land Tax (SDLT). VAT is, in the UK and elsewhere in the European Union, regulated by the provisions of EU Directives, currently of VAT Directive 2006/112. An appeal against an assessment to VAT is therefore a claim based on EU law. All the other taxes and levies referred to above are regulated by domestic law, so that appeals against assessments to any of them are based on domestic law. The appellant Totel Ltd (Totel) seeks to appeal a number of assessments to VAT but has been unable to demonstrate that a requirement to pay or deposit the tax in dispute would cause it hardship. But Totel claims that the requirement to pay or deposit the disputed tax as a condition for its appeals being entertained offends against the EU law principle of equivalence. In outline, this principle requires that the procedural rules of member states applicable to claims based on EU law are not less favourable than those governing similar domestic claims. It is submitted that appeals against assessment to Income Tax, CGT and SDLT are claims which are similar to appeals against assessment to VAT and that, because a VAT appeal is subjected to the pay first requirement whereas those other appeals are not, then the UKs procedural rules for VAT appeals are less favourable than those governing similar domestic claims. In the course of a convoluted but irrelevant procedural history Totel first raised its challenge based upon the principle of equivalence when (successfully) seeking permission to appeal from the Upper Tribunal (Tax and Chancery Chamber) to the Court of Appeal. In December 2016 the Court of Appeal rejected that challenge on two grounds. Logically the first (although the second to be dealt with in the leading judgment of Arden LJ) was that none of the domestic taxes (Income Tax, CGT and SDLT) relied upon by Totel were true comparators with VAT for the purpose of the application of the principle of equivalence. The second ground was that, even if they were, there were other domestic taxes (namely those described in para 1 above) which subjected appeals against assessments to the same pay first requirement, so that it could not be said that EU derived VAT appeals had been picked out for the worst procedural treatment. Accordingly, what is commonly called the no most favourable treatment proviso (the Proviso) applied so as to prevent infringement of the principle of equivalence. In this court Totel challenges both those conclusions of the Court of Appeal. For their part, HMRC challenge (for the first time) the underlying assumption that, when viewed in the round, the procedure for appeals against tax assessments is rendered less favourable to the taxpayer by the imposition of the pay first requirement in relation to only some of them. The principle of equivalence and its qualifying Proviso are creatures of the jurisprudence of the CJEU (and its predecessors), and take effect within the general context that it is for each member state to establish its own national procedures for the vindication of rights conferred by EU law: see EDIS v Ministero delle Finanze (Case C 231/96) at paras 19 and 34 of the judgment. Further, it has been repeatedly stated by the CJEU that it is for the courts of each member state to determine whether its national procedures for claims based on EU law fall foul of the principle of equivalence, both by identifying what if any procedures for domestic law claims are true comparators for that purpose, and in order to decide whether the procedure for the EU law claim is less favourable than that available in relation to a truly comparable domestic claim. This is because the national court is best placed, from its experience and supervision of those national procedures, to carry out the requisite analysis: see Palmisani v Istituto Nazionale della Previdenza Sociale (Case C 261/95) at para 38, and Levez v TH Jennings (Harlow Pools) Ltd (Case C 326/96) [1999] ICR 521, para 43. The search for a true comparator The principle of equivalence works hand in hand with the principle of effectiveness. That principle imposes a purely qualitative test, which invalidates a national procedure if it renders the enforcement of a right conferred by EU law either virtually impossible or excessively difficult. By contrast, the principle of equivalence is essentially comparative. The identification of one or more similar procedures for the enforcement of claims arising in domestic law is an essential pre requisite for its operation. If there is no true comparator, then the principle of equivalence can have no operation at all: see the Palmisani case, at para 39. The identification of one or more true comparators is therefore the essential first step in any examination of an assertion that the principle of equivalence has been infringed. Plainly, the question whether any, and if so which, procedures for the pursuit of domestic law claims are to be regarded as true comparators with a procedure relating to an EU law claim will depend critically upon the level of generality at which the process of comparison is conducted. Is it sufficient that both claims are tax appeals, or (as Totel submits) appeals against the assessment of tax, or that they must both be made to the same tribunal? Or is it necessary to conduct some more granular analysis of the different claims, and the economic structures in which they arise? Or is there some simple yardstick which would prevent claims from being truly comparable, such as, in the present case, the difference between claims arising out of the assessment of liability to direct and indirect taxes, (as HMRC submits)? Decisions of the CJEU provide considerable assistance in identifying the correct approach to this task, although the guidance to be gained from some of them is not always that which springs from an over simplistic analysis of particular phraseology. First, the question whether any proposed domestic claim is a true comparator with an EU law claim is context specific. As Lord Neuberger put it in Revenue and Customs Comrs v Stringer [2009] UKHL 31; [2009] ICR 985 at para 88: It seems to me that the question of similarity, in the context of the principle of equivalence, has to be considered by reference to the context in which the principle is being invoked. This proposition was not in dispute between counsel, and it is therefore unnecessary to cite decisions of the CJEU in support of it, although most of those to which reference is made below illustrate or mandate the conduct of a context specific enquiry. The domestic court must focus on the purpose and essential characteristics of allegedly similar claims: see the Levez case, at para 43 of the judgment: In order to determine whether the principle of equivalence has been complied with in the present case the national court which alone has direct knowledge of the procedural rules governing actions in the field of employment law must consider both the purpose and essential characteristics of allegedly similar domestic actions. To the same effect is para 35 of the judgment of the Grand Chamber in Transportes Urbanos y Servicios Generales SAL v Administracin del Estado (Case C 118/08). In Littlewoods Retail Ltd v Revenue and Customs Comrs (Case C 591/10) [2012] STC 1714, the Court at para 31 used the phrase similar purpose and cause of action, without in my view thereby intending to change the underlying meaning from that described in the earlier cases. Of particular importance within the relevant context is the specific procedural provision which is alleged to constitute less favourable treatment of the EU law claim. This is really a matter of common sense. Differences in the procedural rules applicable to different types of civil claim are legion, and are frequently attributable to, or at least connected with, differences in the underlying claim. A common example is to be found in different limitation periods. Thus, in England and Wales, the primary limitation period for personal injury claims is three years, whereas the primary limitation period for most other claims is six years. There is a 20 year prescription period for property claims in Scotland. To treat personal injury and, for example, property claims as true comparators for the purpose of deciding whether the shorter limitation period for personal injury claims constituted less favourable treatment would make no sense. This is because it is no part of the purpose of the principle of equivalence to prevent member states from applying different procedural requirements to different types of claim, where the differences in those procedural requirements are attributable to, or connected with, differences in the underlying claims. Mr Michael Firth for Totel drew the courts attention to some passages in European authorities which, he submitted, justified addressing the similarity question at a very high level of generality, in support of his broad submission that all UK appeals against tax assessments are true comparators with an appeal against a VAT assessment. He relied, for example, on the following passage in the courts judgment in the Transportes Urbanos case, at para 36: As regards the purpose of the two actions for damages referred to in the previous paragraph, the Court notes that they have exactly the same purpose, namely compensation for the loss suffered by a person harmed as a result of an act or omission of the State. Accordingly, he submitted, all claims against the state for compensation for loss were, at least in principle, capably of being truly comparable for the purposes of the principle of equivalence. Taken out of context, that citation might appear at first sight to support Mr Firths submission, but a closer analysis of that case shows that it does nothing of the kind. The claimant complained that it had been over charged to VAT, and its consequential loss could be remedied if either the charge in question was contrary to European law, or if it was contrary to the Spanish Constitution. In the former case Spanish procedural law imposed a condition requiring prior exhaustion of remedies, whereas it did not for the latter. The alternative claims were held to be true comparables for the purposes of the principle of equivalence not because they were both, viewed in the abstract, claims against the state for compensation for loss, but because they were alternative legal bases for claiming compensation for precisely the same loss. This is, in particular, apparent from para 43 of the Courts judgment. Alternative types of claim for compensation for exactly the same loss are a common example of true comparators: see eg Preston v Wolverhampton Healthcare NHS Trust (No 2) [2001] 2 AC 455. For his part, Mr Jonathan Swift QC for HMRC submitted that dicta in European and domestic authority justified a conclusion that there could never be a true comparator with an appeal against a VAT assessment, apart from some other assessment to VAT. In short, he submitted that VAT, and all claims relating to it, were sui generis, with no true comparator arising from any other type of tax. He began with the following dictum of Moses J in Marks & Spencer plc v Comrs of Customs and Excise [1999] 1 CMLR 1152, a case in which a limitation period for the recovery of overpaid VAT was alleged to offend the principle of equivalence. At paras 61 62 he said: In my judgment no comparison can be made with other types of tax such as income tax payable in respect of an individuals profits or the tax on a document imposed by stamp duty. Other forms of indirect taxation, such as excise duty, are wholly different types of tax. It seems to me that the jurisprudence of the European Court of Justice, exemplified in EDILIZIA, requires a comparison between the approach of a member state to the recovery of tax charged in breach of Community rules and the recovery of the same tax in breach of domestic rules. Any wider enquiry would invite unnecessary argument as to whether there is a true comparison. (My emphasis) Referring to the principle of equivalence, he concluded: The principle is designed to protect Community law rights: adequate protection is afforded by focusing upon the way a member state deals with the same tax in a domestic as opposed to Community context. The difficulty with this analysis, as Mr Firth pointed out, is that (as Mr Swift agreed) all claims to recover overpaid VAT are necessarily based on EU law, because VAT is a tax regulated by EU law. Moses Js analysis was approved by the Court of Appeal in Littlewoods Ltd v Revenue & Customs Comrs (CA) [2015] EWCA Civ 515; [2016] Ch 373, paras 133 134 in the judgment of Arden LJ. But it appears that her analysis was based on the same concession, namely that there could be purely domestic claims for recovery of overpaid VAT. Mr Swift obtained more persuasive assistance from Reemtsma Cigarettenfabriken GmbH v Ministero delle Finanze (Case C 35/05) [2007] ECR I 2452. It was alleged in that case that a provision limiting the identity of those who could claim a VAT repayment offended against the principle of equivalence because there was no comparable restriction in relation to the recovery of overpaid direct tax. At paras 94 and 95 of her opinion, Advocate General Sharpston agreed with the following submission of the Commission: In general a situation in that (direct tax) field is unlikely to be comparable to that in the field of VAT. In the latter it is in principle only the supplier who is in a direct legal relationship with the tax authority. Indeed, the whole system of direct taxation is unrelated to that of VAT. Since the principle of non discrimination concerns only comparable situations, it is thus not relevant here. In its judgment, the Court adopted the more general part of the Commissions argument at para 45: In the present case, the system of direct taxation, as a whole, is not related to the VAT system. Accordingly, the Court concluded that none of the EU anti discriminatory principles, including the principle of equivalence, were engaged by the comparison between VAT and direct taxation. Compass Contract Services Ltd v Comrs for Her Majestys Revenue and Customs (Case C 38/16) EU:C:2017:454 involved a comparison between different limitation periods applicable to claims to recover overpaid VAT, and claims to deduct input tax from VAT otherwise due, for the purposes of the equal treatment principle. The Fourth Chamber of the CJEU concluded that, even within the confines of the VAT regime, the two claims were not truly comparable: see paras 36 39 of the judgment. Taken together, these authorities certainly justify the exercise of very considerable caution by a national court when faced with the assertion that a VAT claim should be treated as truly comparable, for the purposes of the principle of equivalence, with a claim relating to some domestic tax, and in particular with any direct tax. But I do not consider it necessary or appropriate to go so far as to conclude that, for all purposes connected with the principle of equivalence, VAT claims must be treated as sui generis, with no possibility of there being a true comparator in a claim arising out of some other tax. My reasons follow. First, the identification of any such general rule would run counter to the context specific basis upon which it is clear that the examination of comparators for the purposes of the principle of equivalence must be conducted. It would, in particular, rule out any analysis of the question whether the particular procedural provision alleged to amount to less favourable treatment had any connection with underlying differences between VAT and some different domestic tax. Secondly, although the courts ruling in the Reemtsma case appears to come quite close to such a general conclusion, the principle of equivalence lay only at the fringe of the issues there being considered by the CJEU, with the result that, unsurprisingly, the point was addressed with what may fairly be described as extreme brevity. The case was mainly about the related principles of neutrality, effectiveness and non discrimination. Thirdly, if the Reemtsma case had established such a general rule in 2007, namely that VAT is for this purpose sui generis, with no true comparators, it is difficult to understand why this did not constitute a simple solution to the question referred to the CJEU in the Littlewoods case (Case C 591/10) [2012] STC 1714, which included the question whether the restriction of a successful claimant to a VAT repayment to simple interest offended the principle of equivalence, when compared with interest payable on other types of claim for repayment of tax under domestic law. It is evident from paras 42 to 48 of the opinion of Advocate General Trstenjak that there was a wide range of submissions as to potential comparators, including a concession from the UK government that, in principle, repayment claims under domestic indirect taxation were comparable for the purposes of the principle of equivalence, in the context of different entitlement to interest. In accordance with the Advocate Generals advice, the Court of Justice referred the comparability question to the UK courts. This must have been on the basis either that there was no rule of general application for all purposes that VAT claims could in no circumstances be treated as truly comparable with claims for repayment of domestic tax, or that the CJEU regarded claims for restitution against the state as falling within a separate category. Nevertheless, applying the context specific analysis called for by the European jurisprudence which I have described, the Court of Appeal was in my judgment correct to conclude that none of the domestic taxes (namely Income Tax, CGT and SDLT) proposed by Totel constituted true comparators with VAT for the purpose of deciding whether the imposition in the VAT context of a pay first requirement constituted less favourable treatment contrary to the principle of equivalence. This is because a trader seeking to appeal a VAT assessment is typically in a significantly different position from a taxpayer seeking to appeal an assessment to any of those other taxes, and in a manner which is properly to be regarded as sufficiently connected with the imposition of a pay first requirement. In that respect my reasoning is closely aligned with that of the Court of Appeal, as explained in para 54 of Arden LJs judgment. Subject to certain exceptions to which I refer below, VAT is a tax of which the economic burden falls upon the ultimate consumer, but which is collected by the trader from the consumer, and accounted for by the trader to HMRC. By contrast, taxpayers seeking to appeal an assessment to Income Tax, CGT and SDLT are being required to pay, from their own resources, something of which the economic burden falls on them, and which they have not collected, for the benefit of the Revenue, from anyone else. It is therefore no less than appropriate that traders assessed to VAT should be required (in the absence of proof of hardship) to pay or deposit the tax in dispute, which they have, or should have, collected, while no similar requirement is imposed upon the taxpayers in those other, and different, contexts. I do not by reference to this connection between the pay first requirement and the traders paradigm status as a tax collector rather than a taxpayer mean to suggest that it is a condition of the recognition of this important difference separating VAT from other taxes that the pay first requirement was devised for that specific reason. The evidence before the court did not show what, in fact, the reason was. The existence of a logical rather than causal connection is sufficient to justify the conclusion that VAT is different from those other taxes in this context, rather than a true comparator, regardless of the reason for the imposition of the pay first requirement. Mr Firth sought to challenge this distinction between VAT and those other taxes. First, he submitted that the portrayal of the VAT registered trader as a collector rather than a payer of tax was true only for one of the three types of liability for VAT, the other two being acquisition from other member states and imports from outside the EU. That is, I agree, true of those heads of liability, but they arise only in a cross border context, and for the purpose of making the VAT scheme work as a whole. The paradigm remains that of the trader who collects VAT from his customers and accounts for it to the Revenue. Secondly, Mr Firth submitted that by no means in every case would a trader seeking to appeal a VAT assessment already have collected the relevant tax from his customer. The appeal might be about whether his supply was subject to VAT, in circumstances where he had not charged VAT at all. That is, again, true as far as it goes, but it does not significantly impact on the paradigm. More typical are those appeals where the underlying dispute is whether the trader is entitled to deduct from tax collected on his supplies the VAT paid by him on his inputs. Thirdly, Mr Firth submitted that even if the VAT trader could generally be regarded as a collector rather than payer of tax, the same was equally true of an employer deducting and accounting for employees Income Tax under the PAYE scheme so that Income Tax was, nonetheless, a true comparator with VAT. I would, again, acknowledge that there is an element of similarity between the two, but there are important differences. First, in circumstances of wilful failure to deduct by the employer the employee remains liable to the Revenue for Income Tax whereas, in the VAT context, the only recourse of HMRC is to the trader rather than the consumer. This distinction is closely connected with the existence of a pay first condition for a VAT appeal but not in a PAYE context. Secondly, the employer has not charged and received a payment from employees creating a fund for which the employer is accountable. Thirdly, the PAYE scheme is only a sub set of the Income Tax scheme viewed as a whole, and lies nowhere near so close to the essential nature of the relevant tax structure as does the quasi collector status of the VAT trader. Finally, it was no part of Totels case that, for the purposes of the principle of equivalence, the PAYE part of the Income Tax scheme was the sole true comparator with VAT for the purpose of testing whether the pay first requirement represented less favourable treatment. Rather, Totels case was that, simply because all appeals against assessments to tax are made for the same general purpose, and to the same tribunal, they could all properly be regarded as true comparators with appeals of assessments to VAT. That requires the similarity question to be addressed at a level of generality which is so high as to place it outside the entirety of the relevant jurisprudence about the principle of equivalence. It must therefore be rejected. My conclusion on this issue is sufficient to dispose of this appeal. The issue as to the meaning and application of the Proviso has content only against the hypothetical assumption that appeals against assessment to all kinds of direct and indirect domestic tax are true comparators with VAT appeals, and the unreality of that hypothesis makes it difficult to conduct a reliable analysis of the second issue. But it has been fully argued, and it was the first plank upon which the Court of Appeal dealt with the case. I shall therefore make some limited observations about it although, had it been necessary to decide this issue for the resolution of this appeal, I might have regarded it as deserving of a reference to the CJEU. But first it is convenient to deal with the new submission of HMRC that the imposition of the pay first requirement does not in any event amount to less favourable treatment. Does the pay first requirement amount to less favourable treatment? This issue would arise if, contrary to my conclusion, there had been a truly comparable domestic tax in relation to which an appeal against an assessment was not subjected to the pay first requirement which affects VAT appeals. It is an issue which would therefore arise if any of Income Tax, CGT or SDLT had been a true comparator for the purposes of the principle of equivalence. Less favourable treatment is not, of course, established merely because the procedure for one type of claim contains a restriction or condition which is absent from the procedure for another type of claim. It is common to find that different claims are subjected to a package of procedural requirements, such that some of those affecting claim A are less favourable, but others more favourable, than those affecting claim B. A good example is to be found in Preston v Wolverhampton NHS Trust (No 2) [2001] 2 AC 455, illustrated in paras 29 to 31 in the speech of Lord Slynn. In the present case, for the first time in this court, HMRC point out that appeals against assessment to Income Tax, CGT and SDLT are subject to a procedural regime such that the tax in dispute may still be collected pending the outcome of the appeal, by processes of enforcement which may include the presentation of a winding up petition against the taxpaying company, unless the taxpayer can obtain postponement of payment, by demonstrating that there are reasonable grounds for believing that the tax in dispute has been overcharged: see, in relation to Income Tax, section 55 of the Taxes Management Act 1970 and, in relation to SDLT: paragraph 39 of Schedule 10 to the Finance Act 2003. If the taxpayer faces a winding up petition on the basis of the tax in dispute, then it may defend that petition by showing that the amount in dispute is bona fide disputed on substantial grounds. HMRC concedes that the same principles about postponement, and the defence of a winding up petition, apply also to the collection of VAT pending an appeal: see Revenue and Customs Comrs v Changtel Solutions UK Ltd [2015] EWCA Civ 29; [2015] 1 WLR 3911. Nonetheless Mr Swift submits that, in practice, a trader who has obtained disapplication of the pay first requirement by demonstrating hardship would not thereafter be subjected to any process of enforced collection of the disputed tax, pending the outcome of the appeal. Mr Swifts point is not so much that the pay first requirement in relation to VAT is balanced out by the provisions about collection and postponement pending appeal in relation to Income Tax, CGT and SDLT. Rather, he submits that, looked at in the round, the two regimes have broadly the same effect, so that the VAT regime cannot be described as less favourable. Viewed from the perspective of a trader with a good case for proving hardship, together with a reasonable prospect of success on appeal, that might in practice be so, although I would not accept that in no circumstances could a tax demand be enforced against a VAT trader who had established hardship. The two statutory tests are not the same. Nonetheless, from the perspective of a trader who cannot demonstrate hardship, the position seems to me to be rather different. Such a trader would have to raise and lodge the tax in dispute up front, before commencing an appeal. By contrast a taxpayer under Income Tax, CGT or SDLT is at liberty to initiate an appeal against an assessment, and may or may not be faced with an application for collection by HMRC. More generally, there is in my view no escape from the fact that the pay first requirement is additional to, rather than a substitute for, the regime for collection and postponement so that, in principle, it constitutes less favourable treatment for VAT appellants even if, in certain types of supposedly comparable cases, it may make no difference to the outcome, in terms of the ability to prosecute an appeal without paying the tax in dispute. The no most favourable treatment Proviso This issue arises if the search for true comparators with the EU claim discloses more than one comparable domestic claim with, viewed in the round, different levels of favourableness in procedural treatment. On almost every occasion when it has referred to the principle of equivalence the CJEU has added the proviso that the principle does not require the EU claim to be treated as favourably as the most favourably treated comparable domestic claim. In the earliest of the cases cited to this court, the EDIS case, the proviso is explained thus, at para 36: That principle (the principle of equivalence) cannot, however, be interpreted as obliging a member state to extend its most favourable rules governing recovery under national law to all actions for repayment of charges or dues levied in breach of Community law. Similar statements appear in the Levez case at para 45, in Pontin v T Comalux SA (Case C 63/08) [2009] ECR I 10467, at para 45, in the Transportes Urbanos case, at para 34 and in the Littlewoods case, at para 31. But none of these cases provide any more comprehensive explanation of how the Proviso is to be applied in practice. This may be because its detailed operation is a matter for national courts, and the CJEU considers that the Proviso as described above is sufficiently self explanatory for that purpose. The issue of interpretation of the Proviso arises in the present case on the assumption that truly comparable domestic tax claims may include appeals against assessment not only to domestic taxes like Income Tax, where the procedure does not include a pay first requirement, but also to other taxes like Insurance Premium Tax and Landfill Tax, which do. Thus VAT claims are treated less favourably than one or more true comparators, but equally favourably with others. There are only two levels of differently favourable treatment on this particular domestic spectrum of supposedly comparable claims, but it is easy to imagine a spectrum with several levels, with treatment of the comparable EU claim lying at the top, in the middle, or at (or below) the bottom of that spectrum. In Revenue and Customs Comrs v Stringer [2009] ICR 985, probably thinking of a spectrum of the latter kind, Lord Neuberger said this (obiter) about the Proviso: This is therefore not a case where it could be said that the appellants are seeking to benefit from the most favourable rules of limitation, which I understand to mean exceptional or unusually beneficial rules (as mentioned by the Court of Justice in Levez v TH Jennings (Harlow Pools) Ltd, at para 42). In para 42 of the Levez case the CJEU merely repeated the Proviso as enunciated in the EDIS case and set out above, slightly adjusting the language to suit the facts, but without any underlying change in meaning. In the present case Mr Swift submitted that the Proviso should be treated as a reflection of the underlying purpose of the principle of equivalence, namely that national procedural rules should not single out EU claims for worse treatment, and specifically not discriminate against them by reason of their EU, rather than national, origin. If therefore the procedure for any true domestic comparator gave treatment to its claimant no more favourable than given to the EU claim, then the principle of equivalence was satisfied. If in the present case Insurance Premium Tax and Landfill Tax are true comparators, then the treatment of VAT appeals does not infringe the principle of equivalence. By contrast Mr Firth submitted that once any true comparator was identified the procedure for which treated its claimants better than did the procedure for the EU claim, then the principle of equivalence was infringed, unless the better domestic treatment fell into that exceptional category identified by Lord Neuberger in the Stringer case as excluded by the Proviso. Income Tax, CGT and SDLT could not be excluded as conferring exceptionally favourable treatment, and the fact that there were other domestic tax appeals treated equally favourably with VAT was neither here or there. The fact that domestic appellants in Insurance Premium Tax cases also received less favourable treatment than Income Tax appellants did not mean that the EU based claims by VAT registered traders were not less favourably treated. One example of discrimination does not, so it is said, justify another. Both sides sought to squeeze out of the language of the CJEU decisions some titbits favourable to their sharply opposing cases on this point. For example, in the paragraph of the judgment in the EDIS case following the statement of the Proviso (para 37) is it stated: Thus, Community law does not preclude the legislation of a member state from laying down, alongside a limitation period applicable under the ordinary law to actions between private individuals for the recovery of sums paid but not due, special detailed rules, which are less favourable, governing claims and legal proceedings to challenge the imposition of charges and other levies. The position would be different only if those detailed rules applied solely to actions based on Community law for the repayment of such charges or levies. That last sentence, said Mr Swift, clearly allowed a member state to resist an allegation of breach of the principle of equivalence if any similar domestic procedure included a pay first requirement. follows: In the present case the Court of Appeal applied that dictum, at para 47, as The jurisprudence of the CJEU shows that it is open to a member state to apply any available set of rules, which are already applied to similar claims, to an EU derived claim, provided that an EU derived claim is not selected for the worst treatment. No one suggests that that is the position here. Mr Firth relied by contrast first upon dicta from the Levez case, at paras 39 to 45 of the judgment. In my view, taken in context, they are neutral on the point. The high water mark of his citations was this passage from the Pontin case, at para 56 of the judgment: If it emerges that one or more of the actions referred to in the order for reference, or even other national remedies that have not been put before the Court, are similar to an action for nullity and reinstatement, it would also be for the referring court to consider whether such actions involve more favourable procedural rules. The implication was, he said, that the discovery of any comparable domestic claim with more favourable treatment that the EU claim would offend the principle of equivalence. I do not consider that any reliable answer to this question can be found by the minute textual analysis of the CJEU authorities. Nor was Lord Neubergers instinctive conclusion about the limited meaning of the Proviso in the Stringer case intended to be a fully reasoned or comprehensive explanation of its full purpose and effect. I need reach no final conclusion in this case, but would tentatively suggest the following analysis. First, the Proviso should not be regarded as some free standing rule, separate from the principle of equivalence. Rather it is part of the Court of Justices expression of the principle of equivalence itself, directed to explaining the standard of treatment which that principle imposes upon member states when providing procedures for the vindication of rights based in EU law. What is required is that the procedure should be broadly as favourable as that available for truly comparable domestic claims, rather than the very best available. Secondly, the Proviso is, like the principle of equivalence of which it forms part, best understood in the light of its purpose. Although nowhere expressly stated, I consider that HMRC were correct to submit that it is to prevent member states from discriminating against claims based upon EU law by affording them inferior procedural treatment from that afforded to comparable domestic claims. On that basis I consider that the conclusion of the Court of Appeal on this issue, set out in the passage quoted above from the judgment of Arden LJ, is broadly correct. I would only add that this would not justify the choice of some exceptionally tough set of procedural rules already applied to some domestic claim for reasons particular to that type of claim. But such a claim would be most unlikely to be a true comparator in any event. Conclusion I would therefore dismiss this appeal, on the ground that there has not been shown to be any true comparator among domestic claims sufficient to engage the principle of equivalence in relation to the imposition of a pay first requirement upon traders seeking to appeal assessments to VAT.
UK-Abs
Traders who wish to appeal against assessments to Value Added Tax (VAT) in the United Kingdom are required, by section 84 of the Value Added Tax Act 1994, first to pay or deposit the tax notified by the assessment with HMRC, unless they can demonstrate that to do so would cause them to suffer hardship. This pay first requirement is a feature of the procedural regime for appealing assessments to a number of other types of tax including Insurance Premium Tax and Landfill Tax. It is not a condition for appealing assessments to Income Tax, Capital Gains Tax, Corporation Tax or Stamp Duty Land Tax. VAT is regulated by the EU VAT Directive 2016/112. An appeal against a VAT assessment is therefore a claim based on EU law. The appellant, Totel Ltd (Totel), seeks to appeal a number of assessments to VAT but has been unable to demonstrate that a requirement to pay or deposit the tax in dispute would cause the company hardship. Totel claims the requirement to pay or deposit the disputed tax, as a pre condition for an appeal, offends against the EU law principle of equivalence. Totel first raised its challenge based upon the principle of equivalence when it successfully sought permission to appeal to the Court of Appeal. The Court of Appeal dismissed Totels appeal. The Supreme Court unanimously dismisses the appeal. Lord Briggs gives the lead judgment with which the other Justices agree. The principle of equivalence requires that the procedural rules of member states applicable to claims based on EU law are no less favourable than those governing similar domestic claims [3]. The principle of equivalence and its qualifying no most favourable treatment proviso (the Proviso) are creations of the Court of Justice of the European Union (CJEU) jurisprudence and take effect within the general context that it is for each member state to establish its own national procedures for the vindication of rights conferred by EU law [6]. The principle of equivalence requires a true comparator for it to be able to operate at all. Identification of one or more true comparators is therefore the essential first step [7]. Whether any proposed domestic claim is a true comparator with an EU law claim is context specific [9]. The domestic court must focus on the purpose and essential characteristics of allegedly similar claims [10]. Of particular importance is the specific procedural provision that is alleged to constitute less favourable treatment of the EU law claim. Differences in procedural rules are frequently attributable to differences in the underlying claim [11]. It is not necessary or appropriate to treat VAT claims as unique with no possibility of having a true comparator. Such a general rule would run counter to the context specific basis which underpins the principle of equivalence. In Reemsta Cigarettenfabriken GmbH v Ministero delle Finanze (Case C 35/05) [2007] ECR1 2452, the CJEU considered equivalence as a mere fringe issue and, had Reemsta actually established such a rule, this would have provided a simple solution for the question before the CJEU in the Littlewoods Retail Ltd v Revenue & Customs Comrs (Case C 591/10) [2012] STC 1714 [18 21]. Applying the context specific analysis, the Court of Appeal was correct to conclude that none of the domestic taxes constituted true comparators with VAT. A trader seeking to appeal a VAT assessment is typically in a significantly different position from a taxpayer seeking to appeal an assessment to any of those other taxes [22]. VATs economic burden falls upon the consumer, but it is collected by the trader from the consumer and accounted for by the trader to HMRC. Taxpayers appealing Income Tax, for example, are being required to pay something of which the economic burden falls on them and which they have not collected from anyone else. Therefore, it is no less than appropriate that traders assessed to VAT should be required to pay or deposit the tax in dispute, which they have or should have collected [23]. This logical connection is sufficient to justify the conclusion that VAT is different to those other taxes in this context regardless of the actual legislative reason for the imposition of the pay first requirement [24]. Lord Briggs considered what the position would have been had any of Income Tax, Capital Gains Tax or Stamp Duty Land Tax been a true comparator for the purposes of the principle of equivalence. The Proviso is not a free standing rule but part of the expression of the principle of equivalence and is directed to the standard of treatment which that principle imposes. Procedures should be broadly as favourable as that available for truly comparable domestic claims, rather than the very best available [45]. The Provisos purpose is to prevent member states from discriminating against claims based upon EU law by affording them inferior procedural treatment than comparable domestic claims [46]. While reaching no final decision on this point, Lord Briggs concluded that the Court of Appeals conclusion on this issue is therefore broadly correct [47].
The Scottish Parliament has determined to address health and social consequences which can arise from the consumption of cheap alcohol. The mechanism chosen is minimum pricing. The Alcohol (Minimum Pricing) (Scotland) Act 2012 (the 2012 Act) will, when in effect, amend Schedule 3 of the Licensing (Scotland) Act 2005 by inserting in the licence which any retail seller of alcohol in Scotland must hold, an additional condition, to the effect that an alcohol product must not be sold at a price below a statutorily determined minimum price per unit of alcohol. The minimum price is to be set by the Scottish Ministers by secondary legislation. The current proposal is that it should be 50 pence per unit of alcohol. The Scottish Ministers have undertaken not to bring the 2012 Act into force or to make any order setting a minimum price until final determination of the present proceedings. The 2012 Act contains a requirement for the Scottish Ministers to evaluate and report to the Scottish Parliament on the operation and effect of the minimum pricing provisions after five years, and a provision terminating the operation of those provisions automatically after six years, unless the Scottish Ministers by order affirmed by the Scottish Parliament determine that the minimum pricing rgime should continue. The proceedings are brought by three petitioners: The Scotch Whisky Association and two Belgian organisations which I can for economy call the European Spirits Organisation and the Comit Europen des Entreprises Vins. Their case has been presented by Mr Aidan ONeill QC. The respondents are the Lord Advocate representing the Scottish Ministers and the Advocate General for Scotland representing the United Kingdom government. In the petitioners submission, the 2012 Act and the proposed system of minimum pricing are contrary to European Union law, and so outside the competence of the Scottish Parliament and the Scottish Ministers by virtue of sections 29(2)(d) and 57(2) of the Scotland Act 1998. This (with other objections not now pursued) was rejected by Lord Doherty in the Outer House: [2013] CSOH 70; 2013 SLT 776. On appeal to the Inner House, the Extra Division on 3 July 2014 referred six questions to the Court of Justice. In response, Advocate General Bot delivered his opinion on 3 September 2015, and the Court of Justice gave its judgment on 23 December 2015: (Case C- 333/14) [2016] 1 WLR 2283. On the matter returning to the First Division for determination, the appeal was on 21 October 2016 dismissed for reasons given in a single judgment of the court given by the Lord President, Lord Carloway: [2016] CSIH 77; [2017] 1 CMLR 41. The matter now comes to the Supreme Court with permission granted by the First Division. There are two limbs to the petitioners challenge under EU law to the 2012 Act and to the principle of minimum pricing. First, it is submitted that they conflict with article 34 of the Treaty on the Functioning of the European Union (TFEU), providing that: Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between member states. It is accepted that the proposed minimum pricing is a measure which would have equivalent effect to a quantitative restriction on imports, in that it will have an effect on, for example, actual or potential wine or beer imports from a number of other EU States. The respondents response is reliance on article 36 TFEU, providing: The provisions of articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of the protection of health and life of humans Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between member states. The second limb concerns wine only, and arises from Regulation (EU) No 1308/2013 (the Single CMO Regulation) establishing a common organisation of markets in agricultural products including wine. The objectives of the common agricultural policy (CAP) as set out in article 39 TFEU, include increasing agricultural productivity, stabilising markets, assuring the availability of supplies and ensuring that supplies reach consumers at reasonable prices. Common market organisations (CMOs) are based on the concept of an open market to which every producer has free access under conditions of effective competition: so the Court of Justice said in its judgment in this case at para 22. The Advocate General and Court of Justice both also accepted that a member state may adopt measures pursuing the objective of protection of human life and health, although they undermine the system, on which the Single CMO Regulation is founded, of free formation of prices in conditions of effective competition: paras 25-27 of the Court of Justices judgment. But the petitioners submit that this involves a different exercise to that arising under articles 34 and 36, in particular a different and potentially more onerous weighing of the proportionality of the measure. The Court of Justices judgment Both limbs have to be examined on the basis of the guidance given by the Court of Justice. The Advocate General was clear in his advice. He took first the position under the Single CMO Regulation. He said: 44. I consider that the existence of a CMO covering the wine sector does not prevent the national authorities from taking action in the exercise of their competence in order to adopt measures to protect health and, in particular, to combat alcohol abuse. However, where the national measure constitutes a breach of the principle of the free formation of selling prices that constitutes a component of the single CMO Regulation, the principle of proportionality requires that the national measure must actually meet the objective of the protection of human health and must not go beyond what is necessary in order to attain that objective. 45. As the commission suggests, I consider that the examination of the proportionality of the measure must be undertaken in the context of the analysis that must be carried out by reference to article 36 TFEU. 46. Consequently, I propose that the answer to the first question should be that the single CMO Regulation must be interpreted as meaning that it does not preclude national rules, such as those at issue, which prescribe a minimum retail price for wines according to the quantity of alcohol in the product sold, provided that those rules are justified by the objectives of the protection of human health, and in particular the objective of combating alcohol abuse, and do not go beyond what is necessary in order to achieve that objective. Turning to articles 34 and 36, he noted that the proposed minimum pricing appeared to be contrary to article 34, on which basis the next step was to consider whether this was justified under article 36. As to this, he said: 71. A barrier to the free movement of goods may be justified on one of the public interest grounds set out in article 36 TFEU or in order to meet overriding requirements. In either case, the restrictions imposed by the member states must none the less satisfy the conditions laid down in the courts case law as regards their proportionality. 72. In that regard, in order for national rules to comply with the principle of proportionality, it is necessary to ascertain not only whether the means which they implement are appropriate to ensure attainment of the objective pursued, but also that those means do not go beyond what is necessary to attain that objective: Berlington Hungary Tancsad s Szolgltat kft v Magyar llam (Case C-98/14) [2015] 3 CMLR 45, para 64. 73. Although the words generally used by the court seem most frequently to result in only two different stages of the control of proportionality being distinguished, the intellectual exercise followed in order to determine whether a national measure is proportionate is generally broken down into three successive stages. 74. The first stage, corresponding to the test of suitability or appropriateness, consists in ascertaining that the act adopted is suitable for attaining the aim sought. 75. The second stage, relating to the test of necessity, sometimes also known as the minimum interference test, entails a comparison between the national measure at issue and the alternative solutions that would allow the same objective as that pursued by the national measure to be attained but would impose fewer restrictions on trade. 76. The third stage, corresponding to the test of proportionality in the strict sense, assumes the balancing of the interests involved. More precisely, it consists in comparing the extent of the interference which the national measure causes to the freedom under consideration and the contribution which that measure could secure for the protection of the objective pursued. He went on to make the important point that judicial review of the proportionality of the measure should be marked by a certain degree of restraint (para 82). This was for two reasons: 83. First, account should be taken of the fact that it is for the member states to decide on the degree of protection which they wish to afford to public health and on the way in which that degree of protection is to be achieved. Since the level of protection may vary from one member state to another, member states must be allowed discretion in that area That discretion is necessarily represented by a certain relaxation of control, representing the national courts concern not to substitute its own assessment for that of the national authorities. 84. Second, it is necessary to take into account the complexity of the assessments to be carried out and the degree of uncertainty which exists as to the effects of measures such as those at issue. He added that a third relevant consideration in the present case was the provision for a re-evaluation and report by the Scottish Ministers after five years, coupled with the provision for automatic termination after six years unless otherwise ordered and affirmed by the Scottish Parliament (para 85). However, he added this caution: 86. [T]he discretion left to the member states cannot have the effect of allowing them to render the principle of free movement of goods devoid of substance. In so far as article 36 TFEU includes an exception to that principle, it is for the national authorities, even where they have a discretion, to show that the measure satisfies the principle of proportionality. 87. Furthermore, whatever the extent of that discretion, the fact none the less remains that the reasons that may be invoked by a member state by way of justification must be accompanied by an analysis of the suitability and proportionality of the restrictive measure adopted by that state and of the precise evidence on which its argument is based ... The Court of Justice did not either repeat or endorse the Advocate Generals above advice, but spoke in terms which give some room for argument, both as to the relationship between the principles applicable to the two limbs of the petitioners case, and as to the nature of any proportionality exercise which it envisaged fell to be performed under either or both of these limbs. Addressing the significance of the Single CMO Regulation, the Court (in its paras 28 and 29) adhered firmly to what Advocate General Bot had described (in his para 73: see para 6 above) as its previous general usage, distinguishing only two different stages of the proportionality test. The difficulty this raises is to know what, if any, scope there is for a more general third stage proportionality question, of the nature described by Advocate General Bot in his paras 76 and 82 to 84: see paras 6 and 7 above). The Courts guidance in this respect is oblique, as appears from the last sentence of para 28 and from the summary in para 29 of its judgment. No doubt deliberately, the Court there suggests that the third stage, rather than involving any independent balancing of interests, can be subsumed within the second stage, that is consideration of what is necessary to achieve the desired protection of human life and health. The material parts of paras 28 and 29 of the Courts judgment read as follows: 28. A restrictive measure such as that provided for by the national legislation at issue must, however, satisfy the conditions set out in the courts case law with respect to proportionality, that is, the measure must be appropriate for attaining the objective pursued, and must not go beyond what is necessary to attain that objective (see, by analogy, Berlington Hungary (Case C-98/14) [2015] 3 CMLR 45, para 64), which the Court will consider in its examination of the second to sixth questions, which specifically concern the analysis of the proportionality of that legislation. It must be observed that, in any event, the issue of proportionality must be examined by taking into consideration, in particular, the objectives of the CAP and the proper functioning of the CMO, which necessitates that those objectives be weighed against the objective pursued by that legislation, namely the protection of public health. 29. Consequently, the answer to the first question is that the Single CMO Regulation must be interpreted as not precluding a national measure, such as that at issue, which imposes an MUP for the retail selling of wines, provided that that measure is in fact an appropriate means of securing the objective of the protection of human life and health and that, taking into consideration the objectives of the CAP and the proper functioning of the CMO, it does not go beyond what is necessary to attain that objective of the protection of human life and health. Turning to articles 34 and 36 TFEU, the Court was satisfied that the proposed minimum pricing regime appeared to be an appropriate means of attaining the objective it pursued (identified as increasing the price of cheap alcoholic drinks, so reducing the consumption of alcohol, in general, and the hazardous and harmful consumption, of alcohol, in particular): paras 36 and 39. It went on (para 40): As regards whether that national legislation does not go beyond what is necessary in order effectively to protect human life and health, it must be borne in mind that, in this case, that analysis must be undertaken, as stated in para 28 of this judgment, with regard to the objectives of the CAP and the proper functioning of the CMO. However, given the issue to be examined in this case, that analysis will have to be undertaken with reference to proportionality in the context of article 36 TFEU and will therefore not have to be carried out separately. Again, this appears to subsume any third stage within the context of the second stage enquiry relating to necessity. It also indicates that the requirement, in that context, to refer to the objectives of the CAP and the proper functioning of the CMO adds nothing to the criteria which fall to be taken into account when deciding whether article 36 is satisfied. The petitioners case, that there is some important difference between the exercise to be undertaken under articles 34 and 36 and the exercise to be undertaken in relation to wine in the light of the Single CMO Regulation does not appear consistent with the Court of Justices guidance. The remaining paragraphs of the Court of Justices judgment are also noticeable for their focus on the issue now before the Supreme Court in terms of the first and second stages of the proportionality test which Advocate General Bot described. The Court thus stated: 53. [I]t is for the national authorities to demonstrate that that legislation is consistent with the principle of proportionality, that is to say, that it is necessary in order to achieve the declared objective, and that that objective could not be achieved by prohibitions or restrictions that are less extensive, or that are less disruptive of trade within the European Union: Criminal proceedings against Franzn (Case C-189/95) [1997] ECR I-5909, paras 75 and 76 and Rosengren v Riksklagaren, para 50. 54. In that regard, the reasons which may be invoked by a member state by way of justification must be accompanied by appropriate evidence or by an analysis of the appropriateness and proportionality of the restrictive measure adopted by that state, and specific evidence substantiating its arguments 55. It must however be stated that that burden of proof cannot extend to creating the requirement that, where the competent national authorities adopt national legislation imposing a measure such as the MUP, they must prove, positively, that no other conceivable measure could enable the legitimate objective pursued to be attained under the same conditions: Commission v Italian Republic [2009] All ER (EC) 796, para 66. 56. In that context, it is for the national court called on to review the legality of the national legislation concerned to determine the relevance of the evidence adduced by the competent national authorities in order to determine whether that legislation is compatible with the principle of proportionality. On the basis of that evidence, that court must, in particular, examine objectively whether it may reasonably be concluded from the evidence submitted by the member state concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods. 57. In this case, in the course of such a review, the referring court may take into consideration the possible existence of scientific uncertainty as to the actual and specific effects on the consumption of alcohol of a measure such as the MUP for the purposes of attaining the objective pursued. As Advocate General Bot stated in point 85 of his opinion, the fact that the national legislation provides that the setting of an MUP will expire six years after the entry into force of the 2013 Order, unless the Scottish Parliament decides that it is to continue, is a factor that the referring court may also take into consideration. 58. That court must also assess the nature and scale of the restriction on the free movement of goods resulting from a measure such as the MUP, by comparison with other possible measures which are less disruptive of trade within the European Union, and the effect of such a measure on the proper functioning of the CMO, that assessment being intrinsic to the examination of proportionality. 59. It follows from the foregoing that article 36 TFEU must be interpreted as meaning that, where a national court examines national legislation in the light of the justification relating to the protection of the health and life of humans, under that article, it is bound to examine objectively whether it may reasonably be concluded from the evidence submitted by the member state concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods and of the CMO. Paragraph 59 was in substance repeated as para 3 of the Courts ruling. Paragraph 59 echoes the two-stage approach to proportionality stated in para 56. The explanation that the court is bound to or must examine objectively whether it may reasonably be concluded from the evidence submitted that the means are appropriate and cannot be attained by less restrictive measures can be seen as recognising the fact that the national court is a reviewing body, not the primary decision-maker. Paragraph 57, with its reference back to para 85 of the Advocate Generals opinion, enables the reviewing court to bear in mind the uncertainties and experimental nature of the proposed minimum pricing system. Paragraph 58 might be read as suggesting a third stage proportionality issue. But the injunction to assess the nature and scale of the restriction is in terms only in order to compare them with the effects of other possible measures, and so to determine whether there are other measures less destructive of EU trade. Once it is accepted, as found here by the Lord Ordinary, that an approach based on increased taxation would be less destructive of EU trade, para 58 is on the face of it exhausted. The Court of Justices approach to exceptions (such as article 36) to a general principle (such as article 34) gives rise, in these circumstances, to some difficulty. The first two stages of the proportionality exercise address, respectively, the legitimacy of the aim which the legislature had in mind, and the necessity for the measures adopted if such aim is to be achieved (or, putting the latter aspect the other way round, the question whether the aim could be achieved by less extensive or restrictive measures). Neither in terms nor in logic is either stage concerned with the further question whether, on an overall balance, it is worthwhile to achieve the aim, bearing in mind the detriment that achieving it would necessarily cause to the general principle. By suppressing Advocate General Bots third stage, one may surmise that the Court of Justice intended at the very least to signal the appropriateness of an even greater level of restraint and respect for national authorities choice of measures to protect health than that which Advocate General Bot himself recognised under the third stage test which he identified (see paras 7 and 8 above). Yet one may also infer from the Court of Justices references in paras 28, 29 and 40 that it intended more general objectives (in particular, those of the CAP and the CMO) to play some role, at least in relation to wine, and perhaps also other commodities. What is unclear is quite what that role might be, and how it really fits within the second stage enquiry into which the Court of Justice has inserted it. As it happens, the Supreme Court touched on the Court of Justices reticence about any third stage enquiry in a judgment given some six months prior to the Court of Justices present judgment: R (Lumsdon) v Legal Services Board [2015] UKSC 41; [2016] AC 697. In a joint judgment by Lord Reed and Lord Toulson, it said (para 33): 33. Proportionality as a general principle of EU law involves a consideration of two questions: first, whether the measure in question is suitable or appropriate to achieve the objective pursued; and secondly, whether the measure is necessary to achieve that objective, or whether it could be attained by a less onerous method. There is some debate as to whether there is a third question, sometimes referred to as proportionality stricto sensu: namely, whether the burden imposed by the measure is disproportionate to the benefits secured. In practice, the court usually omits this question from its formulation of the proportionality principle. Where the question has been argued, however, the court has often included it in its formulation and addressed it separately, as in R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C-331/88) [1990] ECR I-4023. The Supreme Courts approach thus corresponded closely with Advocate General Bots approach. But this does not help now to explain the Court of Justices evidently deliberate suppression of the third stage in the present case, coupled with the insertion of one aspect of it in the limited context of the second stage test of necessity. I will have to consider how far this is significant on this appeal at a later stage in this judgment. The issues in more detail It is common ground on this appeal that the role of a domestic court, evaluating the consistency with European law of a measure such as the 2012 Act, is not to examine or adjudicate upon the legislative process and reasoning which led to the measure, but to examine the legislation itself in its context (see per Lord Thomas of Cwmgiedd in In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3; [2015] AC 1016, para 126). The Court of Justice held (paras 63 to 65) that this examination fell to be carried out in the light of all the material available on the date when the court gives its ruling. That was the position when the matter came before the Outer House. The position on an appeal depends, as the First Division held (para 109), upon the domestic rules applicable upon appeals. In the present context of judicial review, the First Division went on to hold, and this is not now controversial, that an appellate court is entitled to have regard to new material where it considers, in its discretion, that the interests of justice require that it be taken into account (para 109). On this basis, a considerable amount of new material was considered by the First Division and is before the Supreme Court. The issues The actual issues have narrowed. There is no suggestion that the proposed minimum pricing system will constitute a means of arbitrary discrimination or a disguised restriction on trade between member states within the last sentence of article 36 FTEU. But the respondents accept that it will affect the market in alcohol generally, including wine, and (although they maintain that the greater effect will be domestic) they also accept that imports and trade between EU member states will be impacted. The position is, therefore, that it is for the respondents to justify the EU market interference under article 36 TFEU and under the parallel principles governing wine under the CAP and Single CMO Regulation. There is also common ground, reflected in the agreed statement of facts and issues, that the 2012 Act had and has a two-fold objective. The petitioners accept the legitimacy of this objective, and they accept that minimum pricing at a rate of 50 pence per unit is an appropriate means of attaining that legitimate objective. However, the precise implications or qualifications of the agreed objective are important and, are not necessarily matters on which the parties are ad idem, and they still require examination. The objective(s) pursued by minimum pricing The two-fold objective was, as put to the Court of Justice, reducing, in a targeted way, both the consumption of alcohol by consumers whose consumption is hazardous or harmful, and also, generally, the populations consumption of alcohol: Court of Justice, para 34. Hazardous drinkers are in this context defined as males consuming more than 21 units and women consuming more than 14 units of alcohol a week, while harmful drinkers are defined as males drinking more than 50 units and women drinking more than 35 units a week. Both the Lord Ordinary (para 53) and the First Division (paras 171 to 172) proceeded on the basis of this agreed aim. However, the petitioners suggested to the First Division and suggest before the Supreme Court that the respondents justification for minimum pricing has deviated from this agreed aim, and, in particular, that they have in reality advanced a more limited aim, relating to extreme drinkers and/or the elimination of health inequality, in order to justify the 2012 Act. Even if one confines attention to the initiation of the 2012 Act, the agreed two-fold objective is more refined than might at first sight appear. The key word in the Court of Justices description is in this context the word targeted. The Scottish Government had since 2009 been aiming to address alcohol-related harm by a whole variety of measures set out in Changing Scotlands Relationship with Alcohol (2009). The 2012 Act aimed at the particular problems created by low price alcohol. It followed a study entitled Final Business and Regulatory Impact Assessment for Minimum Price per Unit of Alcohol as contained in Alcohol (Minimum Pricing) (Scotland) Bill (the BRIA). The BRIA drew on a very wide range of other expert studies, including work commissioned by the Scottish Government from the University of Sheffield, Model-based Appraisal of Alcohol Minimum Pricing and Off-Licensed Trade Discount Bans in Scotland (2009, version 2: April 2010 and second update: January 2012), analysing (amongst many other aspects) the price elasticities of alcohol demand and the impact of minimum pricing as against increased taxation. The BRIA noted that Scottish per capita alcohol sales were almost a quarter higher than in England (para 2.14) and that the average consumption of alcohol in a population was directly linked to the amount of harm, in terms of illness, violence and injury and other forms of social harm (paras 2.18 to 2.29). Alcohol-related general hospital discharges and mortality rates have risen substantially over thirty years, and chronic liver disease and cirrhosis mortality rates in Scotland are way above those in England and Wales or other European countries (figures 3, 4 and 5). Paragraph 2.18 of the BRIA put the general point simply, with footnote references to prior studies: The average consumption of alcohol in a population is directly linked to the amount of harm as evidenced in a number of systematic reviews. The more we drink, the greater the risk of harm. As overall consumption has increased in Scotland so have the resultant harms. However, the BRIA also recognised that the true relationship between consumption and harm was more complex, and involved other factors (particularly poverty and deprivation) of potential relevance to minimum pricing. It said, significantly, in this connection (para 2.29) that: Whilst alcohol-related issues impact on all socio-economic groups, it is important to recognise the greatest harm is experienced by those who live in the most deprived areas. The reasons why alcohol has a more harmful effect on people living in deprived communities are complex and not fully understood. Risky and harmful alcohol use is likely to be both a cause and effect of social deprivation. What is clear is that the level of alcohol-related harm in deprived communities is substantial, with alcohol-related general hospital discharge rates in the 20% most deprived communities (as measured by the Scottish Index of Multiple Deprivation, SIMD) around 7.5 times higher than in the most affluent fifth. Similarly, alcohol-related mortality rates are 6 times higher in the most deprived areas. Tackling alcohol-related harm has the potential to help address Scotlands wider health inequalities. Paragraph 2.29 of the study was taken up in a later section of the study identifying various benefits envisaged from minimum pricing. Under the heading Health Benefits for those on low incomes, para 5.24 noted that there were (at that time) insufficient data to enable the reduction in health harms across different income groups to be modelled, but that a NHS Health Scotland report (Monitoring and Evaluating Scotlands Alcohol Strategy. Setting the Scene: Theory of change and baseline picture by Beeston, Robinson, Craig and Graham) had confirmed strong income/deprivation patterns to alcohol-related health harm. Para 5.24 went on to repeat the ratios quoted in para 2.29 for alcohol-related hospital discharges and mortality rates in the most deprived and most affluent communities (7.5 times and 6 times respectively). It added that: significantly, average weekly consumption among low income harmful drinkers was much higher than among other harmful drinkers (93 units for men and 69 for women compared to 69 and 52 units respectively for harmful drinkers in the highest income group). This helps to explain the differential harm patterns described above. In addition those on low incomes are likely to be more responsive to minimum pricing. Given this, it is therefore likely that those in lower income/more deprived groups will benefit from the greatest reduction in health harms. The 2012 Bill, leading to the 2012 Act, was accompanied by Explanatory Notes and a Policy Memorandum, both of which identified a range of health and social and economic benefits envisaged as resulting from minimum pricing. The Policy Memorandum specifically picked up the alcohol-related hospital discharge and mortality ratios referred to in the BRIA, noting that the Scottish Government believes alcohol plays a significant part in these inequalities (para 10). It is therefore clear that, from the outset, concern about the health and social harms resulting from extremely heavy drinking in deprived communities was an element of targeted thinking behind the 2012 Act. The Policy Memorandum also discounted a straightforward increase in excise tax as it would impact on high price products as well as cheap ones and so would have a proportionately greater effect on moderate drinkers than a minimum price (para 29). The 2012 Act was, in this respect, envisaged as a balanced measure which would not target the cost of drinking generally without regard for the extra costs which this would impose on drinkers. Its aims were, as Lord Doherty found, directed principally towards the protection of health and life, though other consequential (largely public order and economic) benefits [were] also anticipated (para 53), and it was clear that it was not an aim that alcohol consumption be either eradicated or that its costs should be made prohibitive for all drinkers (para 54). It was intended to strike at alcohol misuse and overconsumption, in which connection the major problem was excessive consumption of cheap alcohol, which the proposed measures sought to address by increasing the price of such alcohol (para 54). Even in 2013, Lord Doherty was also able to find (para 59) that: the harmful drinkers in the lowest income quintile consume far more alcohol per head, and are the source of much greater health related and other harm, than harmful drinkers in the higher income quintiles. There is also clear evidence that the greatest alcohol-related harm is experienced by those who live in the most deprived areas (see the evidence summarised in para 2.29 of the Final BRIA). And he went on to conclude, at para 60, that there was objective evidence that the proposed minimum pricing measures are appropriate to achieve their aims. Since the BRIA study, more work has been done to fill the lacuna to which para 5.24 referred. This consists in a University of Sheffield report Model-based appraisal of the comparative impact of Minimum Unit Pricing and taxation policies in Scotland of April 2016. This identified a number of facts not previously evident. One was that, applying the definitions mentioned above, the great majority of both hazardous and harmful drinkers were not in poverty - 20% and 6% respectively of the whole drinker population as opposed to 2% and 1% of the whole drinker population who were in poverty: table 4.3. But another side of this coin is that hazardous and harmful drinkers in poverty drink more than those not in poverty: 1,456 as against 1,396 units per annum on average in the case of hazardous drinkers and 4,499 as against 3,348 units in the case of harmful drinkers; and the link between those in poverty and cheap alcohol is clear from the fact that, although they drink noticeably more, hazardous drinkers in poverty spend less, and harmful drinkers in poverty spend only very slightly more, than those not in poverty. This corresponds with the evident likelihood, which had been accepted by Lord Doherty in the Outer House (para 57), that poorer drinkers tend to drink cheaper alcoholic drinks than better off drinkers. A further study by the University of Sheffield shortly after the passing of the 2012 Act revealed (as recorded by the Extra Division in its reference to the Court of Justice, para17) a marked difference in the average number of cheaper priced alcoholic drinks purchased by lowest and highest income quintile drinkers. The study revealed that harmful and hazardous drinkers in the lowest income quintile purchased respectively 30.8 and 7.8 units of such alcohol weekly, an average decreasing with each quintile, with harmful and hazardous drinkers in the highest quintile only purchasing respectively 13.6 and 2.7 of such units weekly. Although directed to drinks priced at less than 45 pence, rather than 50 pence, per unit of alcohol, the position in relation to drinks priced at less than 50 pence is unlikely to differ fundamentally. Still more strikingly and sadly, hazardous and harmful drinkers in poverty are involved in far more alcohol-related deaths and hospital admissions than those not in poverty. Relevant deaths and hospital admissions were for hazardous drinkers in poverty 206 and 4,563 per 100,000 drinkers as against only 83 and 1,539 respectively for hazardous drinkers not in poverty. Relevant deaths and hospital admissions for harmful drinkers in poverty were 781 and 11,555 per 100,000 drinkers as against only 371 and 6,454 respectively for harmful drinkers not in poverty. The University of Sheffield study went on to model the effect of a 50 pence per unit of alcohol minimum price on drinkers in poverty and not in poverty. It concluded that annual consumption by harmful drinkers in poverty would experience a fall of 681 units (as compared with nearly 181 units for such drinkers not in poverty), while consumption by hazardous drinkers in poverty would experience a fall of just under 88 units (as compared with a fall of only 30 units for such drinkers not in poverty). There would be 2,036 fewer deaths and 38,859 fewer hospitalisations during the first 20 years of the policy, after which when the policy had achieved its full impact, there would be an estimated 121 fewer deaths and 2,042 fewer hospital admissions each year. The 2012 Act is not yet in force, but is the subject of the present on-going proceedings in which the petitioners challenge, while the respondents seek to establish the validity of its introduction under European law. All the above material is now before the court, and is admissible on the issue of justification and proportionality. Under these conditions, it would seem artificial, and even unfair, to allow the petitioners to rely on the new material to try to undermine the justification for any aims originally advanced, but not to allow the respondents to refine the aims advanced and to demonstrate that, on the material now available, the proposed measure is justified, even if it only meets an aim which is narrower than, but still falls within the scope of those originally advanced. Accordingly, even if it is right that some of the broader assumptions about correlations between hazardous and harmful drinking and health and other social problems are not sustainable, it seems to me open to the respondents to rely on the new material as reinforcing an entirely valid correlation, developed from the outset, between the health and social problems arising from extreme drinking by those in poverty in deprived communities. The respondents are in this respect doing no more than explaining how the 2012 Act will target the particular health and social problems arising from such drinking which the new material has demonstrated. Less restrictive measures to achieve the same aim? The focus of submissions on this appeal has been directed not to the question whether a system of minimum pricing per unit of alcohol is capable of meeting the agreed aims, including that relating to social deprivation which I have been discussing. The submissions have rather focused on the issue whether such aims could be attained by less restrictive measures. As I have indicated, but contrary to the petitioners case, this appears in the light of the Court of Justices judgment to be the same issue as whether, taking into account the objectives of the CAP and Single CMO Regulation, the proposed system is necessary to attain such aims. The petitioners object that the respondents have failed to produce appropriate and/or specific evidence or analysis to satisfy the onus on them to justify the prima facie infringement of the European legal prohibition on measures with equivalent effect to quantitative restrictions on imports and measures inhibiting free trade and effective competition. They also submit that, even on the material available, the respondents cannot show the proposed minimum pricing to be necessary to achieve the intended aims and cannot, in particular, show that there are no other ways of achieving those aims without infringing the above European legal prohibition. The core comparison here is between minimum pricing and some form of excise or tax. The comparison falls to be made on the basis that an excise or tax charge would involve less of an obstacle to free movement of goods between EU member states and competition. This is because Lord Doherty held that the respondents had not made out any case to the contrary. It is worth noting that, although it is for the domestic court to form its own conclusions as to the existence of any alternative measure(s) which would achieve the same objective(s) as minimum pricing, this is a question which was from the outset at the forefront of the Scottish Governments mind when determining to adopt a system of minimum pricing. It is a question which was addressed in detail in para 4.3 of the BRIA and in paras 28 to 35 of the Policy Memorandum which accompanied the Bill leading to the 2012 Act. Those paragraphs are still very largely relevant to the current issues. The petitioners basic proposition is that an increased excise duty could achieve a similar improvement in mortality and hospital admission statistics to that envisaged by the minimum pricing system currently proposed, as set out in para 27 above. Mr ONeill referred to a February 2016 paper by the same authors as the University of Sheffields later April 2016 study. That paper reported the results of a study based on an econometric epidemiological model constructed by reference to English conditions in 2014/2015. The study was to assess the differential effects of four policies on population sub-groups defined by drinking level and income or socioeconomic group. In this context, it equated the effects on health of a 13.4% increase in excise duty with those of a 50 pence per unit minimum pricing approach. Bearing in mind acknowledged differences between the scale and pattern of drinking in England and Scotland, the comparison and equation are, as the Lord Advocate submitted, not illuminating. What is worth noting is the authors observation that, although the predicted outcomes were overall similar, they were achieved in different ways: While all policies were estimated to reduce health inequalities because drinking is associated with substantially higher absolute health risks in lower socioeconomic groups than in higher socioeconomic groups, the scale of the inequality reduction varied across the policies. A 0.50 minimum unit price and a 0.22 per unit volumetric tax were estimated to reduce inequalities the most because heavy drinkers in lower socioeconomic groups buy proportionately more of the cheap alcohol most affected by these policies. Estimated impacts on health inequalities were smaller for a 4.0% alcohol ad valorem tax and a 13.4% current duty increase as price increases were more evenly distributed across the alcohol consumed by different socioeconomic groups. The relevant study for present purposes is the University of Sheffields April 2016 study. It was designed with specific reference to Scottish conditions, and the conclusions it reached on the modelled effect of alcohol tax increases were as follows: M14 At full effect, a 50p MUP is estimated to lead to 117 fewer alcohol-related deaths per year among hazardous and harmful drinkers. To achieve the same reduction in deaths among hazardous and harmful drinkers, an estimated 28% increase in alcohol taxes is required. M15 If reductions in alcohol-related harm in specific population groups are sought, then larger tax increases would be required; for example, a 36% tax increase would be required to achieve the same reductions in deaths among harmful drinkers as a 50p MUP. This is because MUP targets large price increases on those at greatest risk from their drinking while tax increases affect all drinkers. M16 Although achieving the same reduction in deaths among hazardous and harmful drinkers as a 50p MUP, a 28% tax increase would lead to slightly larger reductions in alcohol consumption among moderate and hazardous drinkers but smaller reductions in alcohol consumption among harmful drinkers and, particularly, harmful drinkers in poverty. M17 Similarly, at full effect, the reductions in deaths under a 28% tax increase would be larger among hazardous drinkers and smaller among harmful drinkers, particularly harmful drinkers in poverty, than under a 50p MUP price. M18 These differences in how death reductions are distributed across the population mean a 50p MUP is more effective than a 28% tax increase in reducing alcohol-related health inequalities. This is because a 50p MUP better targets the alcohol consumed by harmful drinkers on low incomes who are the group at greatest risk from their drinking. M19 Increases in consumer spending on alcohol are estimated to be substantially greater under a 28% tax increase than a 50p MUP. For example, among moderate drinkers annual per capita spending would increase by 2 or 0.5% under a 50p MUP and by 17 or 4.7% under a 28% tax increase. For harmful drinkers the annual increases in spending per capita are 6 or 0.2% for a 50p MUP and 152 or 6.4% under a 28% tax increase. On the basis of all the material before him, the Lord Ordinary considered (in paras 67 to 81 of his judgment) whether a minimum pricing system was necessary to achieve the agreed aims, or whether alternative means involving increased excise or tax would be just as effective. The whole of the Lord Ordinarys discussion of the point is valuable, but I shall highlight three principal themes. First, he noted (para 67) that minimum pricing targets cheap alcohol products by reference to their alcohol content, whereas the effect of an increased excise or VAT charge is felt across the board on the whole category of goods to which it applies. In this connection, he rejected the argument that an effective price rise across the board would reduce consumption generally in accordance with the agreed aims (para 77), because the legitimate aims of the measure had not been to reduce consumption, including consumption by hazardous and harmful drinkers, to the maximum extent possible regardless of possible economic or social consequences. Rather, they were those he had identified in paras 53 to 54 of his judgment, set out in para 24 above. There was a relevant judgment as to which it was for the Scottish legislature and Ministers to make, what level of protection for health and life to achieve, by striking a balance between health and other interests: para 79. Second, the relevant EU directives meant that excise duty could not be used to achieve the same outcomes as minimum pricing: paras 68 and 71. Third, he said that minimum pricing was easier to understand and simpler to enforce: see para 68. It was not open to absorption, eg by off-trade outlets such as supermarkets selling alcohol drinks below cost in order to attract other business onto or on their premises. The petitioners challenge these propositions. As the Lord Ordinary noted, the petitioners seek to make a virtue out of the first proposition, by arguing that higher retail prices across the board can only promote the stated aim of the 2012 to reduce alcohol consumption generally. The Reference made by the Inner House to the Court of Justice was framed in terms which give some encouragement to such an argument, asking as question 5 whether it is a legitimate ground for discarding an alternative measure (in casu, an excise duty increase) that its effects may not be precisely equivalent to the measure impugned under article 34 TFEU but may bring further, additional benefits and respond to a wider, general aim. Not perhaps surprisingly in the light of this formulation, Advocate General Bot, in response, saw the fact that the alternative measure entailing increased taxation is capable of procuring additional advantages by contributing to the general objective of combating alcohol abuse as no justification for discarding that measure: para 152. However, it is right to add that he had also recognised, at paras 149 and 150, that the Lord Advocates case was that the additional advantages could only be achieved at a cost, in terms of the across the board rises in prices (for the whole market of suppliers and consumers), which it was the respondents case that they considered disproportionate and inappropriate to impose. Advocate General Bot expressed himself as unable to see how that collateral effect might be seen as negative in the context of combating hazardous or harmful consumption. The Court of Justice endorsed Advocate General Bots approach to the fifth question (paras 47 and 58), whilst emphasising that the ultimate decision whether increased taxation would be capable of protecting human life and health as effectively as minimum pricing is for the United Kingdom courts (paras 49 and 50). Its answer to question 5 (at the end of para 50 and in para 2 of its ultimate ruling) was simply that The fact that the latter measure may bring additional benefits and be a broader response to the objective of combating alcohol misuse cannot, in itself, justify the rejection of the measure. The words in itself are here significant, because it leaves open the respondents case that their general objective of combating alcohol abuse was not one which they intended to pursue at all costs. The Lord Ordinary accepted the respondents case on this point (in para 77 of his judgment, cited in para 34 above). The First Division also accepted it, saying (para 200) that: Furthermore, assuming that any practical tax increase within the EU setting would involve across the board increases, albeit perhaps on different types of product, such increases would have a disproportionate, undesirable and unnecessary effect on moderate drinkers, who do not generally represent a significant problem in societal terms, at least of the type requiring to be addressed. The First Division also said (at para 181) that: The fact that minimum pricing may not, to the same extent, affect those who are more affluent, is of peripheral significance. These richer persons tend not to suffer to the same extent as harmful and hazardous drinkers in the lower quintile of affluence, whose health and life is at greatest risk. Mr ONeill submits that a desire not to impose a tax burden on moderate or other drinkers not at serious health risk cannot itself constitute or justify a measure taken for the protection of health or human life within article 36. That can readily be accepted. But it misses the point, which is that it was never, and is not now, the aim or target of the Scottish Parliament and Ministers to reduce consumption, even by hazardous and harmful drinkers, and still less by moderate drinkers, to the maximum extent possible regardless of possible economic or social consequences: see para 34 above. The more recently available information from the University of Sheffield study of April 2016 merely underlines the appropriateness of a more targeted approach in this connection. It follows that it is legitimate to balance any possible health advantages across the board against the unwanted burden which increased taxation across the board would impose on drinkers falling within the hazardous and harmful categories who are not (for reasons of affluence or whatever) at extreme risk and on moderate drinkers who are at no risk at all. Further, the April 2016 study makes clear that even the level of tax increases which would achieve similar overall reductions in mortality and hospitalisations would not have the same effect in targeting those in poverty, who, as the statistics tellingly show, are the group by far the most heavily affected by extreme drinking and consequent health and social problems. I consider therefore that there is no basis on which the Supreme Court should depart from the Lord Ordinarys conclusions on this point. The second point raises for consideration how far the framework of the EU Directives allows a member state, if it wishes, to assimilate by reference to alcoholic content the excise rates applicable to different categories of alcoholic beverage. In Commission of the European Communities v French Republic (Case C-434/97) [2000] ECR I-1129, para 244, the Court of Justice summarised the difference between VAT and excise as being that the former is levied on price, whereas excise duty is primarily calculated on the volume of the product. The position under Council Directive 92/83/EEC on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages (also known as the structures Directive) is, on examination, more nuanced. This Directive identifies five categories of alcoholic beverage to which member states must apply an excise duty in accordance with the Directive. These are beer (article 2); i) ii) wine, still and sparkling with an alcoholic strength between either 1.2% and 15% or 15% and 18% (still wine) or 1.2% and 15% (sparkling wine) (article 8); iii) other fermented beverages, still and sparkling (article 12); iv) with an alcoholic strength between 1.2% and 22% (article 17); and v) ethyl alcohol, defined to cover (a) products falling within CN codes 2207 and 2208 or (b) products within CN codes 2204, 2205 and 2206 which have an actual alcoholic strength by volume exceeding 22% or (c) potable spirits containing products, whether in solution or not (article 20). intermediate products (other products not within articles 2, 8 or 12) Subject to Directive 92/84/EEC (which sets minimum rates for beer and intermediate products but effectively no minimum rate for wine, since the rate stated is ECU 0 per hectolitre), Directive 92/83/EEC allows different categories to carry different rates. In the case of beer and ethyl alcohol products, the rate stated is, broadly, chargeable according to alcoholic content (articles 3(1) and 21). In the case of fermented beverages and intermediate products, it is to be fixed by reference to the number of hectolitres of finished product (articles 13(1) and 18(1)). Within each category, there are requirements to fix the same rate in respect of the whole category, or in respect of each of certain defined sub-categories. Thus, in relation to wine, article 9(2) requires member states, first, to levy the same rate of excise duty on all products chargeable with the duty on still wine, and, second, to levy the same rate of excise duty on products chargeable with the duty on sparkling wine (article 9(2)), with the member state being free to decide whether or not the rates for still and sparkling wines should be equated with each other. There are however exceptions to the requirement to have a single rate for each category or sub-category, in the case of lower alcoholic strength beverages; that is: beer with an alcoholic strength not exceeding 2.8% by volume (article 5(1); wine or fermented beverages not exceeding 8.5% (articles 9(3) and 13(3)); intermediate products not exceeding 15%, subject to certain conditions (article 18(3)); and ethyl alcohol products within code 2208 with an alcohol strength not exceeding 10% (article 22(5)). Hence, the low rates applied in the United Kingdom (under article 9(3)) to various defined categories of cider with alcohol content not exceeding 8.5%. There are also exceptions allowing reduced rates under certain conditions for beer brewed by independent small breweries (article 4(1)) and for ethyl alcohol products produced by small distilleries (article 22(1)). However, it is clear that this framework precludes any complete assimilation by reference to alcoholic strength. A single rate must be levied on all still or sparkling wines with an alcohol content between 8.5% and 15%. Further, a single rate must be levied on each category or sub-category of alcoholic beverage, whatever its retail price. To ensure that the cheapest drinks were sold at a price, inclusive of excise duty and VAT, equivalent of 50 pence per unit of alcohol, the excise rate would have to be set high. But this would mean a correspondingly high excise rate for more expensive drinks which were already being priced at more than 50 pence per unit of alcohol. Before the Lord Ordinary and the Inner House, the fact that the Scottish Parliament and Ministers had no power to raise taxation on alcoholic drinks was (although referred to at one point as the elephant in the room: Inner House, para 192) disregarded on the basis that it arose from the internal division of powers within the United Kingdom. But two assumptions were evidently made, first, that legislation could (by cooperation between the relevant United Kingdom and Scottish Parliaments and/or Governments) be enacted to impose additional excise duty in Scotland alone, but, second, that any such legislation would have to fit within the framework of Directive 92/83/EEC. The Lord Advocate, for the first time, sought in his written case to challenge the first assumption, by arguing that any increase in excise duty could not be restricted to Scotland, under either United Kingdom or EU law. During his oral submissions, he, however, conceded, in the light of article 1(2) of Directive 2008/118/EC and Court of Justice caselaw, that this particular challenge must fail. Article 1(2) of Directive 2008/118/EC provides: Member states may levy other indirect taxes on excise goods for specific purposes, provided that those taxes comply with the Community tax rules applicable for excise duty or value added tax as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned, but not including the provisions on exemptions. Article 1(2) was in materially the same terms and has materially the same effect as article 3(2) of the predecessor Directive 92/12/EEC: Tallinna Ettevtlusamet v Statoil Fuel & Retail Eeesti AS (Case C-553/13) EU:C:2015:149. In that case, as in the previous case Transportes Jordi Besora SL v Generalitat de Catalunya (Case C- 82/12) EU:C:2014:108, the Court of Justice proceeded on the basis that article 3(2) or 1(2) was available for use by a city or region. The Court also considered more generally the preconditions for use of the article. It stated both that, where alternative interpretations of the meaning of the article are possible, preference must be given to that interpretation which ensures that the provision retains its effectiveness: Commission of the European Communities v French Republic (Case C-434/97), para 21; and that a derogating provision such as article 1(2) must be interpreted strictly: Tallinna, para 39. The basic, and cumulative, preconditions are that, first, the tax must be levied for one or more specific purposes and, second, it must comply with the EU tax rules applicable to excise duty and VAT as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned, not including the provisions on exemptions: Tallinna, para 35.The purpose must be a purpose which is not merely budgetary: Commission of the European Communities v French Republic (Case C-434/97), para 19, Transportes, para 23 and Tallinna, para 37. It is not therefore sufficient that the tax will be used, or is hypothecated, to promote an activity which the taxing authority is anyway obliged to undertake and to fund: Tallinna, paras 38-40. What article 1(2) does permit is a tax with the specific purpose to guide the behaviour of taxpayers in a direction which facilitates the achievement of the stated specific purpose, for example by way of taxing the goods in question heavily in order to discourage their consumption: Tallinna, para 42. That is precisely the basis on which the petitioners submit that an additional excise tax or VAT could be imposed by the Scottish Parliament and Ministers under article 1(2). The tax would still however have to satisfy the second precondition. What that means, and whether and how far any such tax would have to reflect or respect the categorisation or banding provided by Directive 92/83/EEC, is, as Mr ONeill accepts, much less clear. Commission of the European Communities v French Republic, on which he relies in this context, stands for the proposition (para 27) that article 3(2) (or now article 1(2)) does not require member states to comply with all rules applicable for excise duty or VAT purposes as far as determination of the tax base, calculation of the tax, and chargeability and monitoring of the tax are concerned. It is sufficient that the indirect taxes pursuing specific objectives should, on these points, accord with the general scheme of one or other of these taxation techniques as structured by the Community legislation. The Court observed that, bearing in mind the different bases on which excise tax and VAT are imposed (see inter alia para 31 above), it would commonly be impossible to comply with the tax rules relating to both simultaneously (para 24) and said that the general aim was to prevent additional indirect taxes from improperly obstructing trade: para 26). The tax in issue in the case itself was imposed on beverages with an alcoholic strength exceeding 25% alcohol by volume. The Commission challenged this tax on the basis that the threshold of 25% did not correspond with the threshold of 22% provided in Directive 92/83/EEC (see para 38(v) above). That complaint was summarily rejected by the Court, on the basis that it related to the substantive scope of that Directive, and that article 3(2) of Directive 92/12/EEC (or now article 1(2) of Directive 2008/118/EC) does not, on this point, demand compliance with the tax rules applicable for excise duty or VAT purposes: para 30. Mr ONeill relies on this decision in submitting that an excise tax or VAT could, under article 1(2), be levied by reference to bands of alcoholic strength quite different from and much more refined than those specified in Directive 92/83/EEC. Each band of alcoholic strength could, for example, attract a different rate - the greater the strength, the higher the rate. Since the Lord Advocate did not address any detailed submissions to this point, as discussed in Commission of the European Communities v French Republic, or submit that the second precondition would preclude additional excise duties or VAT rates by reference to narrowly defined bands alcoholic strength, I am prepared for present purposes to accept the correctness of Mr ONeills analysis of the likely effect of the case law. Had the point been critical, it might have been necessary to make a further reference to the Court of Justice, for clarification of the second precondition. But, as will appear, I do not consider it is critical. It follows that, for present purposes, the second point on which Lord Ordinary relied (paras 34 and 38 above) is no longer available to the respondents. The third point made by the Lord Ordinary (para 68) is that minimum pricing is easier to understand and simpler to enforce. It would not be open to absorption, eg by off-trade outlets such as supermarkets selling alcohol drinks below cost in order to attract other business onto their premises. That remains a valid point, if one considers an excise duty or VAT charge by itself and without more. However, Mr ONeill counters it by submitting that a combination of measures could achieve the same result as a minimum price. Retailers could be prohibited from making sales below cost, with excise duty or VAT being levied at a rate which would be bound, on that basis, to ensure the desired minimum retail sales price. A prohibition on sales at a loss, or giving rise to an artificially low profit margin, applying to all traders within a particular member state, is consistent with European law: Criminal Proceedings against Bernard Keck and Daniel Mithouard (Joined Cases C-267/91 and C-268/91) [1993] ECR I-6097 and Groupement National des Ngociants en Pommes de Terre de Belgique (Belgapom) v ITM Belgium SA and Vocarex SA (Case C-63/94) [1995] ECR I-2467. The practical difficulties of operating and enforcing any such system are however evident. Alternatively, an excise duty or VAT charge could be levied at a rate which would, by itself, ensure that, even the cheapest, or at least the great majority of the cheapest, drinks were sold at whatever minimum price per unit of alcohol was intended, and retailers could be prohibited from themselves carrying or subsidising all or any part of an excise duty or VAT charge. Both these suggestions are however open to the fundamental objection that they would in practice be bound to lead to a generalised increase in prices across the board, which brings one back to the Lord Ordinarys first and basic point. The lack of market impact analysis and proportionality stricto sensu As I have indicated in para 14, it is not easy to know or to understand the conceptual framework within which to address these topics. It is in particular unclear how the EU market impact of the proposed minimum pricing fits into the exercise which a domestic court must undertake. Assuming (as the Court of Justices judgment indicates) that it is to be considered as an aspect of the issue of necessity arising at the second stage identified by both Advocate General Bot and the Court of Justice, it is unclear how it bears on necessity. It is clear that the Court of Justice refrained deliberately from endorsing the Advocate Generals analysis of a three- stage approach. While that is so, and whether or wherever it fits into the legal analysis, it is nonetheless appropriate to address the basic point, that an appreciation of the likely EU market impact seems on the face of it a sensible precondition to action interfering with EU cross-border trade and competition. Put rhetorically, can it be that, provided an objective is reasonable and can only be achieved in one way, it is irrelevant how much damage results to the ordinary operation of the EU market? The first response that can be made to this rhetorical question is that the proposed comparison is, in the present case, between two essentially incomparable values. One is the value of health, in terms of mortality and hospitalisation, coupled moreover with the evident desirability of reducing socioeconomic inequalities in their incidence. The other is the market and economic impact on producers, wholesalers and retailers of alcoholic drinks across the European Union. A second observation is that this comparison is yet further complicated by the fact that it is not for any court to second-guess the value which a domestic legislator may decide to put on health. It is for the member states, within the limits imposed by the Treaty, to decide what degree of protection they wish to assure: as the Court of Justice reiterated in the present case, para 35, with reference to prior case law. The circularity deriving from the qualification within the limits imposed by the Treaty does not help resolve the question what limits there may be on the value that may be placed on life. Would or should a court intervene because it formed the view that the number of deaths or hospitalisations which the member state sought to avoid did not merit or was not proportionate to the degree of EU market interference which would be involved? I very much doubt it. Any individual life or well-being is invaluable, and I strongly suspect that this is why the Court of Justice did not endorse the Advocate Generals third stage enquiry, and treated the issue very lightly indeed. But it follows that I see very limited scope for the sort of criticism that the petitioners make about the absence of EU market evidence. As a matter of fact, it appears that the petitioners case on this aspect was not prominent before the Lord Ordinary. It was however clearly raised before the First Division (paras 165 and 201-205). The First Division approached this case on two bases. First, it concluded on the material before it (para 203) that In EU market terms the effect [of minimum pricing at 50 pence per unit] might be described as relatively minor. The on- trade is unlikely to be adversely affected at all. No doubt some wine from Bulgaria, Romania and Portugal may lose a competitive edge. Their share of the market too is very small, but there will be an effect on the competitive nature of some wines and beers from other EU states. Cheap French brandy may be affected, even if, so far as spirits are concerned, the greater impact will be on domestically produced vodka, whisky and cider. As a broad conclusion on the information available, this does not appear to be challenged. Second, the First Division went on to reject the petitioners case that the information on which it was based was inadequate, taking the view that the detailed exercise of market prediction based on the production of models, for which the petitioners were contending, was neither necessary nor practicable. This leads to a third observation. Whatever the position as to the first two observations, there are also strong reasons for thinking that any attempt to assess the EU market impact in the present area would itself have involved incalculables, which cannot presently be further or more precisely assessed in any way which would be relevant. That conclusion is foreshadowed both in material available at the outset and further material produced to date. At the outset, prior to the 2012 Act, the Scottish Government did not attempt itself or commission any analysis focusing specifically on the EU market. But the BRIA noted under the heading Effect on Market (para 5.114) that: There is no consensus from industry on what will happen to pricing of products and hence the effect on the market in relation to the introduction of a minimum price per unit of alcohol. Some consider all prices will be affected ie those above a minimum price will also be adjusted, others believe it will only be those below the minimum price that will be affected, and others consider it will be somewhere in between. The BRIA continued by recording various possibilities, including switching between categories of alcoholic drink, switching to premium brands once the price differential became small, decimation of own label brands and concentration by retailers on particular products, though which these might be was unknown (paras 5.114-118). Similarly after noting that minimum alcohol pricing would apply to all products, irrespective of which country produces them (para 5.119), the BRIA said that: It has proved extremely difficult to access the level of data required to analyse which individual products are likely to be most affected, and the country of origin of such products. Again, at para 6.7 the BRIA recorded that the Scottish Government is not able to predict how individual companies and retailers will react to the introduction of a minimum price per unit. A survey had shown no consensus. As regards the effect on producers, again, there was no consistent view among (it appears, Scottish) industry representatives. The BRIA did summarise material indicating that spirits were predominantly, though not exclusively, of domestic origin (paras 5.120-123) and that beer, cider and other alcoholic drinks were both domestically produced and imported. The vast majority of wine was, in contrast, imported from a large number of countries retailing across the range of prices (para 5.124), with the top ten countries of origin of wines selling on the UK market being (in descending order of market share) Australia (21.5% of the market), the USA (14.3%), Italy (14.2%), France (13.9%), South Africa (9.1%), Chile (8.6%), Spain (7.5%), New Zealand (5.3%), Germany (2.3%) and Argentina (1.2%). The BRIA observed that a 50 pence per unit minimum price regime would require an uplift in the average bottle price of wines from each of these countries, except France and New Zealand (the average uplift being 49p for Australia, 60p for the USA, 58p for Italy, 85p for South Africa, 69p for Chile, 60p for Spain, 45p for Germany and 24p for Argentina). Annex A to the BRIA was a Competition Assessment, which identified markets and sectors potentially affected by minimum pricing, including indirectly affected sectors upstream, in the form of drinks manufacturers and distributors/wholesalers (para 4). Under the heading International Competition, it noted (para 30) that: The legislation would apply equally to international producers, wholesalers and retailers trying to enter the Scottish market. Any firms wanting to import high strength, low price products would have to raise their retail prices to comply with the minimum price per unit legislation. This could impact on a foreign companys ability to compete in the domestic market if the company was currently selling at very low margins in order to be competitive with domestic products. The Competition Assessment noted that the initial change effected by minimum pricing would be a reduction in the quantities sold of products whose original price lay below the minimum, though the extent would depend on the elasticity of demand (para 36). Retailers would however benefit by the higher prices of the quantities actually sold and might, as in British Columbian experience, benefit by a general raising of the price of higher value products to maintain a differential with those now affected by minimum pricing (paras 36 and 38). The likely distribution of the increased revenues across the supply chain was not known (para 42). In August 2013 and in an updated version in December 2014, NHS Scotland produced for the Scottish Government, and the Court of Justice had before it, a table analysing the price distribution of wine from various countries of origin sold in Scotlands off-trade (where the great bulk of cheap wine is sold). This demonstrates that the majority of the impact of minimum pricing will fall on wine imported from outside the EU, though Italy (with 14.6% of off-trade wine sales), Spain (with 11.5%) and France (with 10.6%) would be affected, selling respectively 31%, 56% and 25% of their wine in Scotland at below 50 pence per unit of alcohol. Germany, Portugal, Bulgaria and Romania had respectively 1.3%, 0.7%, 0.3% and 0.1% of the market, with respectively 2%, 39%, 97% and 84% of their wines being sold at below 50 pence per unit. Another table, which was before the First Division on the reference back from the Court of Justice, showed that none of the 15 wines with the largest off-trade sales values was produced in an EU country. In response to the Court of Justices request, the Scottish Government also produced a table stating in general terms which other alcoholic drinks imported into Scotland would be, or be likely to be, affected. Those thought likely to be affected were all brandy and cognac, about 15% of the branded lager sales market in Scotland, part of the stout market, 87% of which was produced in Ireland, but most of which sold at below 50 pence per unit, part of the cider market, 36% of which comes from EU countries and part of the fortified wine market (sherry and port), though most of this sells at more than 50 pence per unit. Some effect on other products was thought possible, but unlikely. The petitioners have referred to general statements by the Commission about the wine market and the balance of supply and demand and increased competitiveness reached after many years of structural surpluses. They have also referred to statistical information on wine production within the EU and intra- and extra-EU trade. It is not, however, suggested that this material gives answers to the questions which the petitioners submit that the respondents must answer if they are to satisfy the evidential onus on them. The petitioners suggest that it was incumbent on the respondents to analyse the structure of the wine industries in, say, Romania, Spain, Portugal and Italy, and/or assess how much of the total wine exports of each member state are sold in Scotland, and therefore get some idea of how much MUP [minimum unit pricing] in Scotland might impact upon the wine producers in those countries (written case, para 4.65). Bearing in mind the impossibility of obtaining information about or analysing even the effect on the Scottish retail market and on the relationship between retailers and their suppliers, this appears an unrealistic counsel of perfection. This is to my mind confirmed by reports received in October 2012 and May 2016 by the petitioners from Professor George Yarrow and Dr Christopher Decker entitled Economic Analysis of the impact of minimum pricing on alcoholic beverages in Scotland. These set out in broad economic terms various possible outcomes of a minimum pricing regime, and they advance some firm views about the desirability of a taxation, rather than a minimum pricing, approach. But the reports also suggest that the petitioners criticisms about lack of specificity are misguided. To my mind, they confirm that lack of specificity is essentially inherent in the present situation. Paragraph 2 of the first report states: The detailed analysis is necessarily non-exhaustive, not only because of the time constraints for delivery of this opinion but also because, for reasons to be explained, regulatory policies with the types of characteristics possessed by the MUP scheme are liable to lead to chains of unintended consequences. Whilst it is possible to identify and analyse the tendencies involved in these chains of consequences, they are impossible to pin down with anything approximating total precision, because in part they are governed by future adaptations and innovations to changed incentive structures, knowledge of which is today necessarily limited. I note that, even when examining differences between studies by HMRC in 2010 and 2014 of price elasticities in the alcohol market, the authors in their second report identified a problem of uncertainty, arising from lack of sufficient evidence to make it possible to know on what assumptions the available data should be analysed (underdetermination) (para 13). The authors also stated in their first report (para 6) that, because taxation is, in their view, an obvious and more effective alternative to minimum pricing: [T]here is no need in this case to consider balancing trade-offs between health policy goals and other aspects of economic policy, such as the promotion of unimpeded trade flows and the promotion of competition. Paragraph 6 of this report means that the authors did not attempt an exercise in comparison of opposing considerations. Those considerations are not only incommensurate on their face; their comparison would, in the light of para 2 of the report, involve weighing inherently unknowable uncertainties regarding the nature and impact of minimum pricing on EU trade against the value which it is for national legislatures and governments to place on health policy goals: see para 48 above. The Yarrow and Decker reports explain as a matter of general economic theory why and how minimum pricing will be likely to distort the market, by, in effect, suppressing competition or cartelising a part of the market, formerly occupied by lower priced alcoholic drinks, and precluding new entrants into it. This can also be expected to reduce imports. The economic results to this effect are almost self- evident, as the first report states (para 51). But the first report also contains material checking the general theory by reference to a First Brand Ltd survey using retail prices in Scotland, Italy and Spain, with a lesser contribution from Portugal and some limited imports from Bulgaria and Cyprus. That distortion of this nature is likely to occur is not however in issue. What is notable throughout the reports is the repeated caveat that the precise nature and effects of minimum pricing on the market cannot at this stage be assessed. It remains uncertain whether it will lead to destocking or, because of the greater retail profit margin, to retailer concentration on the brands whose price has to be increased to the minimum price. As to this paras 63 and 65 of the first report contain the following passages: 63. [T]he purpose of this analysis [by reference to the First Brands Ltd survey] was principally to capture a more general point that, whilst the MUP will, by definition, lead to a change in prices for those products which are currently priced below the relevant threshold, it is also possible that products currently priced above the MUP may also be affected by such a policy in the longer term 65. Indeed, although predicting retailer strategies is a somewhat speculative exercise, we think economic logic points to the de-stocking of higher-priced products as a likely outcome. Section 4 of the report entitled The Economic Impacts of MUP in more detail starts with two introductory paragraphs, which include the following: 96. The general conclusion to which economic analysis leads in this case is that it is possible to be very confident that distortionary/discriminatory effects will eventuate, but that it is not possible to evaluate those effects in a comprehensive and precise way. The second report examines new evidence available from a Cardinal Research survey of off-trade prices, and concludes that this does not materially affect the general conclusions reached in the first report, regarding the distorting or discriminating effects of minimum pricing on the market and EU trade. While accepting that the benefits of adherence to Single Market principles (alternatively the costs of setting them aside) are manifestly unquantifiable in any precise way (para 65) and that it would be for the courts, not economists or other experts, to determine what relative weight should be attached to such principles (paras 53 and 67), the authors repeat their view (see para 6 of their first report, above) that the present case is not one where there is any trade-off to resolve (para 68). Among the factors to which the authors refer is the fact that taxation would increase the Scottish Governments general revenues, enabling it to devote more funding to promote health, while minimum pricing will increase retailers and, it may be others, profit margins. It is however essentially for the Scottish Government to decide what burden by way of taxation it wishes to impose or, looking at the matter another way, what taxation it requires to raise. It was well aware of the difference in this respect between increased excise or VAT and minimum pricing. Both the BRIA (para 4.3) and the Policy Memorandum (para 29) mentioned it. The BRIA noted that the Scottish Government already had power in other legislation to impose a social responsibility levy on retailers of alcohol on social and health grounds, the proceeds of which would then be available to tackle health issues. In any assessment which is appropriate of the general proportionality of the proposed system of minimum pricing, due weight must be given to the requirement under the 2012 Act that the system be reviewed after five years, and the sunset provision that it will expire after six years unless renewed by a ministerial decision receiving the positive approval of the Scottish Parliament. The proposed system was therefore explicitly provisional, requiring the authorities to take stock of its effectiveness after a period of years and placing the onus of justifying its continuation in the light of experience firmly on the Scottish Parliament at the end of that period. Both the Advocate General (para 85) and the Court (para 57: para 13 above) regarded these provisions as relevant on the issue of proportionality. The Advocate General, at para 85, described the proposed system as somewhat experimental. The Court referred, at para 57, to the possible existence of scientific uncertainty as to the actual and specific effects on the consumption of alcohol of a measure such as the MUP for the purposes of attaining the objectives pursued. When using the word scientific, it cannot have been referring to chemistry or physics. It was clearly referring to the uncertainties experienced even by experts in predicting the precise reactions of markets and consumers to minimum pricing. As the examination above of the available material shows, this applies as much to the effect on EU trade as to any other aspect. The logic of paras 85 and 57 applies as much to the issue presently under discussion as to any other aspect of the proposed system. Conclusion The Lord Ordinary and First Division decided that it could reasonably be concluded, on an objective examination of the differing material put before them and now before the Supreme Court, that the proposed system of minimum pricing was proportionate in the sense required by European Union law and now explained by the Court of Justice. It is for the Supreme Court to determine whether this was a judgment that they were entitled to reach. Despite the forceful and very well presented submissions of Mr ONeill, I consider that they were. A critical issue is, as the Lord Ordinary indicated, whether taxation would achieve the same objectives as minimum pricing. Although not all of the points on which he relied for his conclusion on this issue can still stand, the main point stands, that taxation would impose an unintended and unacceptable burden on sectors of the drinking population, whose drinking habits and health do not represent a significant problem in societal terms in the same way as the drinking habits and health of in particular the deprived, whose use and abuse of cheap alcohol the Scottish Parliament and Government wish to target. In contrast, minimum alcohol pricing will much better target the really problematic drinking to which the Governments objectives were always directed and the nature of which has become even more clearly identified by the material more recently available, particularly the University of Sheffields April 2016 study. As to the general advantages and values of minimum pricing for health in relation to the benefits of free EU trade and competition, the Scottish Parliament and Government have as a matter of general policy decided to put very great weight on combatting alcohol-related mortality and hospitalisation and other forms of alcohol-related harm. That was a judgment which it was for them to make, and their right to make it militates strongly against intrusive review by a domestic court. That minimum pricing will involve a market distortion, including of EU trade and competition, is accepted. However, I find it impossible, even if it is appropriate to undertake the exercise at all in this context, to conclude that this can or should be regarded as outweighing the health benefits which are intended by minimum pricing. In the overall context of the Scottish or, on the face of it, any other market, it appears that it will be minor, though it will hit some producers and exporters to the Scottish market more than others. Beyond that, the position is essentially unpredictable. Submissions that the Scottish Government should have gone further to predict the unpredictable are not realistic. The system will be experimental, but that is a factor catered for by its provisions for review and sunset clause. It is a significant factor in favour of upholding the proposed minimum pricing rgime. For these reasons, I consider that the appeal should be dismissed.
UK-Abs
The Scottish Parliament decided to address the health and social consequences arising from the consumption of cheap alcohol by a minimum pricing regime (the Regime). The Alcohol (Minimum Pricing) (Scotland) Act 2012 (the 2012 Act) amends schedule 3 to the Licensing (Scotland) Act 2005 by inserting in the licence which any retail seller of alcohol in Scotland must hold, an additional condition that an alcohol product must not be sold at a price below a statutorily determined minimum price per unit of alcohol. The minimum price is to be set by secondary legislation. The current proposal is 50 pence per unit of alcohol. The Scottish Ministers have undertaken not to bring the 2012 Act into force or to make any order setting a minimum price until determination of these proceedings. The 2012 Act contains a requirement for Scottish Ministers to evaluate and report to the Scottish Parliament on its operation after five years, and a provision terminating its operation automatically after six years, unless the Scottish Ministers by order affirmed by the Scottish Parliament determine that it should continue (the Sunset Clause). The appellants presented a petition for judicial review challenging the lawfulness of the 2012 Act. The remaining ground of challenge is that minimum unit pricing is disproportionate under EU law, namely: article 34 of the Treaty on the Functioning of the European Union (TFEU) and Regulation (EU) No 1308/2013 establishing a Common Organisation of the Markets in agricultural products (including wine) (the Single CMO Regulation) and the Common Agricultural Policy set out in article 39 TFEU (CAP). The claim was rejected at first instance. The Extra Division of the Inner House hearing the appellants reclaiming motion made a preliminary reference to the Court of Justice of the EU (CJEU). Following a ruling from the CJEU, the First Division of the Inner House refused the reclaiming motion. The Supreme Court unanimously dismisses the appeal. Lord Mance gives the judgment with whom the remaining six Justices agree. The 2012 Act does not breach EU law. Minimum pricing is a proportionate means of achieving a legitimate aim. The CJEUs Judgment The issues have to be examined in light of the guidance given by the CJEU: [5]. Advocate General Bot (the AG) and the CJEU both assimilated the analysis of proportionality under articles 34 and 36 TFEU and under the Single CMO Regulation. The AG conducted a three stage proportionality analysis: (i) appropriateness, (ii) necessity and (iii) a balancing of interests. The CJEU, in contrast, conducted a two stage analysis: (i) appropriateness and (ii) necessity, but appears to have subsumed an element involving a balancing of interests into the second stage of analysis: [9] and [15]. The CJEU concluded that where a national court examines national legislation in the light of the justification relating to the protection of health under article 36 TFEU it is bound to examine objectively whether it may reasonably be concluded from the evidence submitted by the Member State concerned that the means chosen are appropriate for the attainment of the objectives pursued and whether it is possible to attain those objectives by measures that are less restrictive of the free movement of goods and of the CMO: [13] [14]. The issues The respondents accept that minimum pricing will affect the market and EU trade in alcohol. The issue is therefore whether the respondents can justify the EU market interference under article 36 TFEU and the parallel principles governing wine under the CAP and Single CMO Regulation: [3] [4] and [18]. The appellants accept the legitimacy and appropriateness of the objective pursued by the respondents. The parties were not however agreed as to the precise implications or qualifications of the objective: [18]. The objectives pursued by minimum pricing The objective as it was put before the CJEU was two fold: reducing, in a targeted way, both the consumption of alcohol by consumers whose consumption is hazardous or harmful, and also, generally, the populations consumption of alcohol: [19]. However, the objective is more refined than might appear [20]. The aim is not that alcohol consumption be eradicated or that its costs should be made prohibitive for drinkers. The aim is to strike at alcohol misuse and overconsumption manifesting themselves in particular in the health and social problems suffered by those in poverty in deprived communities: [20] [28]. Less restrictive measures to achieve the same aim The appellants submission that an excise or tax would be a less restrictive and equally effective way of achieving the governments objectives is rejected. The Supreme Court is ready to accept, contrary to the view on which the courts below proceeded, that the relevant EU directives (Council Directive 92/83/EEC, Council Directive 92/84/EEC and Council Directive 2008/118/EC) would permit additional excise duties or VAT levied at different rates by references to narrowly defined bands of alcoholic strength: [38] [45]. Nevertheless and in agreement with the Lord Ordinary, minimum pricing targets the health hazards of cheap alcohol and the groups most affected in a way that an increase in excise or VAT does not. The latter would be felt across the board in relation to the whole category of goods to which it applied and unnecessarily affect groups which are not the focus of the legislation: [34] [37]. Second, in agreement with the Lord Ordinary, minimum pricing is easier to understand and simpler to enforce. It would not be open to absorption (e.g. by selling alcohol below cost in order to attract other business onto their premises): [46]. The lack of market impact analysis and balancing under proportionality It is unclear how far an objective, which is reasonable and can only be achieved in one way, can or should be measured against an assessment of any damage which giving it effect might cause to the ordinary operation of the EU market. [47]. But the CJEUs refusal to endorse the AGs third stage enquiry is an indication that the matter should be treated very lightly [48]. The comparison to be undertaken is between two incomparable values: (i) health and (ii) the market and economic impact on producers, wholesalers and retailers of alcoholic drinks across the EU. The courts should not second guess the value which a domestic legislator puts on health. As such, there is limited scope for the criticism made by the appellants about the lack of EU market impact evidence [48]. An analysis of the market and competition impact material that is available demonstrates that the impact will be minor: [50] [62]. The Sunset Clause indicating the provisional nature of the Regime is a significant factor in favour of upholding it: [63]. The submission that the Scottish Government should have gone further than it did to assess market impact is not realistic: [63].
This appeal concerns an application made by the appellant, Professor Shanks OBE FRS FREng, for compensation under section 40 of the Patents Act 1977 (the 1977 Act) on the basis that the patents for an invention which he made in 1982 have been of outstanding benefit to his employer, the third respondent, Unilever UK Central Resources Ltd (CRL), and that he is entitled to a fair share of that benefit. The appeal raises important issues concerning the circumstances in which such compensation may be awarded and how the amount of that compensation is to be determined. The facts Professor Shanks was employed by CRL from May 1982 to October 1986 and was assigned to its Colworth research laboratories in Bedfordshire. He initially received a salary of 18,000 per annum and a Volvo car. His brief was to develop biosensors for use in process control and process engineering. In July 1982 Professor Shanks visited Professor Anthony Turner and Professor John Higgins at Cranfield University and there he learned of the work they were carrying out into the use of biosensors for monitoring diabetes. As a result of this visit Professor Shanks became interested in the possibility of using re-usable or disposable devices incorporating biosensors for diagnostic applications and in a report dated 1 August 1982 entitled Report on new opportunities afforded by electronic sensors he identified a number of new product opportunities, one of which was a limited re-use or disposable sensor for monitoring glucose, insulin or immunoglobulin levels in diabetics. It was at about this time that Professor Shanks conceived his invention. He had often observed how a droplet of liquid placed on the edge of the glass plates of a liquid crystal display (LCD) was drawn by capillary action into the 10-micron gap between them, and he realised the same phenomenon would occur with other liquids such as blood or urine. He also appreciated how it could be used with etched or printed planar electrodes and enzyme electrochemical techniques he had seen at Cranfield, and in this way provide a system for measuring the glucose concentration in blood, serum or urine. In October 1982 Professor Shanks built the first prototype of his invention at home using Mylar film and slides from his daughters toy microscope kit, and bulldog clips to hold the assembly together. It has since become known as the Electrochemical Capillary Fill Device or ECFD. He also developed a similar system which uses fluorescence rather than conductivity and this has become known as the Fluorescent Capillary Fill Device or FCFD. CRL at that time employed all of the Unilever groups UK-based research staff. It was not a trading company and was a wholly owned subsidiary of Unilever plc. Unilever plc and Unilever NV were parallel parent companies of the Unilever group and were listed on the London and Amsterdam stock exchanges respectively, but the business of the group was run as a single entity. Save where from the context otherwise appears, I will refer to the Unilever group as Unilever. It is accepted by Professor Shanks that the rights to his inventions belonged to CRL from the outset pursuant to section 39(1) of the 1977 Act. CRL assigned all these rights to Unilever plc for 100. Unilever plc retained the rights for the UK, Australia and Canada but assigned the rights for elsewhere in Europe, Japan and the USA to Unilever NV, again for 100. Unilever NV later assigned the rights for the USA to a company which later became Unilever Patent Holdings BV. On 13 June 1984 Unilever plc filed UK patent application 8415018 (the priority application). It was entitled Devices for Use in Chemical Test Procedures and was directed to both the ECFD and the FCFD technologies. Professor Shanks was named as inventor. On 12 June 1985 European patent application 0170375 was filed claiming priority from the priority application. It related only to the ECFD technology and was filed by Unilever plc for the UK and by Unilever NV for various other contracting states. Corresponding patent applications were filed in Australia, Canada, Japan and the USA. It was in relation to the patents which were granted on all of these applications (the Shanks patents) that Professor Shanks made the application for compensation which is the subject of these proceedings. Unilever was not itself interested in developing a business in the field of glucose testing for this would have required it to compete with companies which were established in this therapeutic sector. Consequently, relatively little was done to develop the ECFD technology after the end of 1984. Indeed, it was regarded by Unilever as far from a key technology. Instead, until 1986, Unilever and Professor Shanks focused on the FCFD technology which had potential application in areas of relevance to Unilevers existing businesses. Professor Shanks left Unilever in October 1986 and in October 1987 Unilever sold the FCFD technology, and the patents it held relating to it, to Ares-Serono Inc. Ares-Serono also took an option on the ECFD technology but did not exercise it. In the years that followed Unilever carried out a good deal of work in the field of pregnancy and fertility testing where it developed commercially successful products. Nevertheless, some research into glucose testing was carried out from 1987 to 1994 and, based primarily upon the work of Professor Brian Birch, Unilever applied for and was granted further patents (the Birch patents). It also maintained the Shanks patents. The glucose testing market expanded considerably in the late 1990s and 2000s, however; and biosensors incorporating the ECFD technology played an important role in this. Indeed, the ECFD technology eventually appeared in most glucose testing products. It also became apparent that, although not vital, it was a technology that most of the significant companies in the field were willing to pay millions of pounds to use. Unilever never considered licensing of patent rights to be a key part of its business. Its main purpose in having patents was to use them to protect its existing commercial activities. Cross-licensing of unexploited patents was of secondary importance and out-licensing was of even less interest. Consequently, the resources it devoted to the activity of out-licensing were relatively limited and, in most cases, the prospective licensees of the Shanks patents contacted Unilever and initiated licensing discussions themselves. However, as I have mentioned, Unilever did keep the Shanks patents in force and it needed significant effort and skill to conduct the licensing negotiations, albeit not to the extent a dedicated licensing team would have provided. In the end seven licences (or sets of licences) of the Shanks patents were granted by Unilever for a total consideration of about 20.3m. The hearing officer thought this figure should be discounted to reflect the inclusion of the Birch patents in all but one of the licences, producing a net figure attributable to the Shanks patents of about 19.55m. In 1994 management responsibility for the Shanks and Birch patents (and various other patents) was transferred to Unipath, another Unilever company. In addition, Unipath took on the bulk of Unilevers medical diagnostics business, including its commercially successful products in the fields of pregnancy and fertility testing. In 2001 Unipath and the Shanks and the Birch patents (and the benefit of the licences under these patents) were sold to Inverness Medical Innovations, Inc (IMI). The hearing officer found that, of the price paid by IMI, about 5m was attributable to the Shanks patents. Unilevers total earnings from the Shanks patents therefore amounted to around 24.55m. The hearing officer estimated that Unilever had incurred costs in prosecuting, maintaining and licensing the patents of about 250,000. It followed that Unilevers net benefit from the patents was about 24.3m which the hearing officer rounded down to 24m. The history of the proceedings Professor Shanks made his application for compensation on 9 June 2006. It came on for hearing before Mr Julyan Elbro, the hearing officer acting for the Comptroller General of Patents (the Comptroller), in March 2012. The hearing lasted for nine days between March and May of that year. On 21 June 2013 the hearing officer issued his decision: BL O/259/13. He found that, having regard to the size and nature of Unilevers business, the benefit provided by the Shanks patents fell short of being outstanding. The hearing officer went on to consider what a fair share of the benefit would have been had he considered it to be outstanding. He had regard to the various matters set out in section 41 of the 1977 Act and concluded that 5% would have been appropriate, amounting to about 1.2m. He declined to increase this figure to take into account the time value of money. Professor Shanks appealed to the High Court against the hearing officers decision. The appeal was heard by Arnold J and he gave judgment on 23 May 2014: [2014] EWHC 1647 (Pat); [2014] RPC 29. He dismissed the appeal, holding that the hearing officer had made no error of principle in finding that the Shanks patents were not of outstanding benefit to Unilever. However, he continued, had he come to the opposite conclusion, he would have found that a fair share of the benefit would have been only 3%. He also held that it was not appropriate to take into account the time value of money and that in assessing the benefit of the Shanks patents to Unilever, the sums it had received should be discounted to reflect the payment of corporation tax. An appeal to the Court of Appeal was also dismissed: Shanks v Unilever plc (No 2) [2017] EWCA Civ 2; [2017] Bus LR 883; [2017] RPC 15. The court (Patten, Briggs and Sales LJJ) agreed with Arnold J that the hearing officer had made no error of principle in considering the issue of outstanding benefit. However, the court unanimously overturned Arnold Js finding in relation to the deduction of corporation tax and, by a majority (Briggs and Sales LJJ), held that there would be cases where the change in the value of money over time would have to be recognised in determining whether the benefit was outstanding, and that it was likely to be relevant in assessing what amounted to a fair share of that benefit. The issues This further appeal now gives rise to the following issues: i) What are the principles governing the assessment of outstanding benefit to an employer and did the hearing officer apply them correctly? ii) How should a fair share of an outstanding benefit be assessed and were the hearing officer and Arnold J wrong in their assessment? I must also consider whether, in assessing what amounts to a fair share of an outstanding benefit, it is appropriate to take into account the time value of money and any liability of the employer for tax. The legal framework Employees inventions are addressed in sections 39 to 43 of the 1977 Act. These provisions have been amended by the Patents Act 2004 but only in relation to patents applied for after 1 January 2005. We are therefore concerned in this appeal with these sections in their form prior to their amendment by the Patents Act 2004. Section 39 deals with the right to an invention made by an employee: 39(1) Notwithstanding anything in any rule of law, an invention made by an employee shall, as between him and his employer, be taken to belong to his employer for the purposes of this Act and all other purposes if - (a) it was made in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties; or (b) the invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of his duties and the particular responsibilities arising from the nature of his duties he had a special obligation to further the interests of the employers undertaking. (2) Any other invention made by an employee shall, as between him and his employer, be taken for those purposes to belong to the employee. There have been cases where it has been difficult to decide whether an invention belongs to an inventor or his employer, but this is not one of them. As I have mentioned, there has never been any dispute between the parties that the invention described in European patent application 0170375 belonged to CRL, as Professor Shanks employer, from the outset, whether under paragraph (a) or (b) of subsection (1) of section 39. He was, as the hearing officer held, employed to invent. Section 40 then makes provision for the payment of compensation to an employee in particular circumstances. In its unamended form it reads, so far as relevant: 40(1) Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that the employee has made an invention belonging to the employer for which a patent has been granted, that the patent is (having regard among other things to the size and nature of the employers undertaking) of outstanding benefit to the employer and that by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer, the court or the comptroller may award him such compensation of an amount determined under section 41 below. (2) Where it appears to the court or the comptroller on an application made by an employee within the prescribed period that - a patent has been granted for an invention made (a) by and belonging to the employee; (b) his rights in the invention, or in any patent or application for a patent for the invention, have since the appointed day been assigned to the employer or an exclusive licence under the patent or application has since the appointed day been granted to the employer; (c) the benefit derived by the employee from the contract of assignment, assignation or grant or any ancillary contract (the relevant contract) is inadequate in relation to the benefit derived by the employer from the patent; and (d) by reason of those facts it is just that the employee should be awarded compensation to be paid by the employer in addition to the benefit derived from the relevant contract; the court or the comptroller may award him such compensation of an amount determined under section 41 below. Section 40 therefore deals with two different cases. In the first, the invention belongs to the employer from the outset. In the second, the invention belongs initially to the employee but his or her rights in the invention or any patent or patent application for the invention are subsequently assigned or exclusively licensed to the employer. In this appeal we are concerned with the first and so section 40(1). In such a case the employee may be awarded compensation if the invention is of outstanding benefit to the employer. Of relevance to both cases are section 43(4) which provides that references to a patent and to a patent being granted are references to a patent and its being granted whether under the law of the United Kingdom or the law in force in any other country or under any treaty or international convention; and section 43(7) which provides that benefit means benefit in money or moneys worth. The key amendment introduced by the Patents Act 2004 makes compensation payable when the invention (and not just the patent) has been of outstanding benefit. The amount of compensation is to be determined in accordance with section 41. In its unamended form this reads, so far as relevant: 41(1) An award of compensation to an employee under section 40(1) or (2) above in relation to a patent for an invention shall be such as will secure for the employee a fair share (having regard to all the circumstances) of the benefit which the employer has derived, or may reasonably be expected to derive, from the patent or from the assignment, assignation or grant to a person connected with the employer of the property or any right in the invention or the property in, or any right in or under, an application for that patent. (2) For the purposes of subsection (1) above the amount of any benefit derived or expected to be derived by an employer from the assignment, assignation or grant of - (a) the property in, or any right in or under, a patent for the invention or an application for such a patent; or (b) the property or any right in the invention; to a person connected with him shall be taken to be the amount which could reasonably be expected to be so derived by the employer if that person had not been connected with him. (4) In determining the fair share of the benefit to be secured for an employee in respect of a patent for an invention which has always belonged to an employer, the court or the comptroller shall, among other things, take the following matters into account, that is to say - (a) the nature of the employees duties, his remuneration and the other advantages he derives or has derived from his employment or has derived in relation to the invention under this Act; (b) devoted to making the invention; the effort and skill which the employee has (c) the effort and skill which any other person has devoted to making the invention jointly with the employee concerned, and the advice and other assistance contributed by any other employee who is not a joint inventor of the invention; and (d) the contribution made by the employer to the making, developing and working of the invention by the provision of advice, facilities and other assistance, by the provision of opportunities and by his managerial and commercial skill and activities. Section 43(8) provides that section 533 of the Income and Corporation Taxes Act 1970 is to apply for determining for the purpose of section 41(2) whether one person is connected with another. Entitlement to compensation An employee who makes an invention which belongs to his employer from the outset and for which a patent has been granted is therefore entitled to compensation if he or she establishes: first, that the patent is, having regard among other things to the size and nature of the employers undertaking, of outstanding benefit to the employer; and secondly, that, by reason of these matters, it is just that he or she be awarded compensation. Who is the employer? The starting point for the assessment of whether an employee is entitled to compensation is therefore the identification of the employer. There can be no doubt that, at least in the ordinary case, Parliament intended the term employer to mean the inventors actual employer. Section 39 deals with the ownership of the invention as between the inventor and his or her employer and requires a consideration of the employees duties; section 40 provides for the compensation of employees for certain inventions which may belong initially either to the employer or to the employee and, in an appropriate case, the payment of that compensation by the employer to the employee; and section 41 deals with the assessment of the compensation. In all three cases the employer is the inventors actual employer. What is the benefit? The next task is to identify the benefit in the hands of the employer. This is not explained in section 40(1) which deals with an invention which has always belonged to the employer; nor is it explained in section 40(2) which deals with an invention which initially belonged to the employee. But section 41(1) makes clear that in both cases it is the benefit which the inventors actual employer has derived or may reasonably be expected to derive from the patent, or from the assignment or grant to a person connected with him of any right in the invention or patent or patent application for the invention. Section 41(1) is complemented by section 41(2) which deals further with a disposal to a connected person. This was considered by the Court of Appeal at an earlier stage of these proceedings on an appeal from a decision of Mann J: [2009] EWHC 3164 (Ch); [2010] RPC 11. The Court of Appeal (Longmore LJ, Jacob LJ and Kitchin J) held ([2010] EWCA Civ 1283; [2011] RPC 12) that, in assessing the benefit derived or expected to be derived by an employer from an assignment of the patent to a person connected with him, the court must consider the position of the actual employer and the benefit which the assignee has in fact gained or is expected to gain. There is also one curious feature of section 41(2) which it is convenient to mention at this point. It says it has effect for the purposes of section 41(1) but makes no mention of section 40. Nevertheless, for the legislative scheme to operate effectively, section 41(2) must also have effect for the purposes of section 40 and, in my opinion, it is to be interpreted in that way. As for the assessment of the benefit of the patent, there is no dispute that it means the benefit in the hands of the employer after deduction of any costs to the employer of securing that benefit. Is the benefit outstanding? I now turn to the meaning of the word outstanding in the expression outstanding benefit. In GEC Avionics Ltds Patent [1992] RPC 107, 115, Mr Vivian, for the Comptroller, noted that the statute did not use words such as significant or substantial and said the benefit must be something out of the ordinary and not such as one would normally expect to arise from the results of the duties that the employee is paid for. The employee failed to establish the patent was of outstanding benefit because the employer had received substantial orders for equipment not employing the invention well after its merits were known. In British Steel PLCs Patent [1992] RPC 117, 122, Dr Ferdinando, for the Comptroller, thought the word outstanding implied a superlative. The patent related to an improved valve for controlling the flow of molten metal which was used by the employer at only one site and on one machine. The claim for compensation was rejected because the employee failed to establish a number of the benefits for which he contended, and because the hearing officer felt constrained by the way the case was presented to assess the proven benefit against all of the profits and the whole turnover of the employer, of which it represented only a very small percentage. In Memco-Med Ltds Patent [1992] RPC 403, 414, Aldous J indicated that he did not disagree with the approaches of these hearing officers and said that the word outstanding denoted something special and required the benefit to be more than substantial or good. The case concerned a patent relating to an improved unit for preventing the doors from closing on a person getting into or out of a lift. Sales of the improved unit were of great importance but were all made to one customer and the evidence suggested that the business relationship between the employer and that customer would have been the same whether or not a patent had been granted. So, once again, the claim failed. In Kelly and Chiu v GE Healthcare Ltd [2009] EWHC 181 (Pat); [2009] RPC 12 Floyd J reviewed all of these authorities and, at para 60(iv), summarised the position as he saw it in these terms: Outstanding means something special or out of the ordinary and more than substantial, significant or good. The benefit must be something more than one would normally expect to arise from the duties for which the employee is paid. The Kelly case is of particular interest because the patents in issue were found to be of outstanding benefit to the claimants employer, Amersham, which was subsequently taken over by GE Healthcare Ltd, the defendant. The facts were striking in that, had the patents not existed, Amersham would have faced a financial crisis whereas, with the patents, its business was transformed. The commercial embodiment of the invention of the patents was an imaging agent which cost a little under 2.5m to develop but, with the protection afforded by the patents, achieved sales between 1993 and 2007 having a total value in excess of 1.3 billion. In my view these cases are all helpful to a point as illustrations of circumstances which were found to fall each side of the line. But at the end of the day they provide no substitute for the statutory test which requires the benefit to be outstanding. This is an ordinary English word meaning exceptional or such as to stand out and it refers here to the benefit (in terms of money or moneys worth) of the patent to the employer rather than the degree of inventiveness of the employee. It is, however, both a relative and qualitative term and so I must now consider the context in which the question is to be asked and answered. Put another way, in relation to what must the benefit from the patent be outstanding? Which factors may be taken into account in making that assessment? Here the 1977 Act provides some guidance. It says that the court must have regard among other things to the size and nature of the employers undertaking. But this gives rise to two further questions which were the subject of a good deal of argument before us. What is the employers undertaking for this purpose? And what is the relevance of that undertakings size and nature? The employers undertaking In this context I understand the word undertaking to mean simply a unit or entity which carries on a business activity, and here the undertaking of interest is that of the company or other entity which employs the inventor. In many cases the identification of that undertaking will be comparatively straightforward. It will be the whole or, if it is divided into economic units, the relevant unit of the employers business. So, as Aldous J observed in Memco-Med at p 414 and I agree, the undertaking may be the whole or a division of the employers business. We are concerned in this appeal with a different and more difficult case, however. It is one in which CRL is part of a larger group of companies and where the work carried out by CRLs researchers was exploited by that larger group as a whole. This gives rise to the question whether the relevant undertaking is CRL or the whole or a part of the larger group of which it forms a part, Unilever. The hearing officer rejected the submission made on behalf of Professor Shanks that the employers undertaking was CRL. He said at para 196: In the event, on the facts of this case I find that the reality of the situation is that described by the defendants: regardless of how the various companies in the Unilever group have been structured, researchers at Colworth (employed by CRL) were doing work which was going to be exploited by the group as a whole. Indeed, it is notable that the whole benefit from the Shanks patents was generated by licensing activity operated out of the central Unilever companies. Having regard to the size and nature of the employers undertaking therefore requires me to have regard to whether the benefit from the patents is outstanding in the context of the Unilever group as a whole. Arnold J and the Court of Appeal agreed with the hearing officer. Patten LJ explained at paras 33 and 34 that an assessment of what constituted the undertaking based upon the economic and business realities of the employers organisation was the correct approach. He continued that if one took what he described as a strictly legal approach to the interpretation of the statute it could be said that the employer was CRL but he rejected this as a possible conclusion for two reasons: first, that if what he called the strict legal approach were to govern section 40(1) then it must also apply to section 41(1) with the consequence that the benefit derived from the patents would be limited to the nominal payments CRL received upon their assignment and would not include the sums subsequently received by other companies in the group from licence fees and the sale of Unipath. Secondly, the earlier decision of the Court of Appeal in this case was, in his opinion, only consistent with treating CRLs undertaking as including the other group companies that received these payments. He pointed out that the work carried out by the employees of CRL was intended to enure for the benefit of Unilever as a whole and that he could see no answer to the reasoning of the hearing officer and his conclusion that the relevant undertaking in this case was or included Unilever plc and Unilever NV. Upon this further appeal Mr Patrick Green QC, for Professor Shanks, submits that the hearing officer and the courts below lost sight of the fact that CRL was Professor Shanks employer and that the entire Unilever group could not sensibly be described as CRLs undertaking. Mr Daniel Alexander QC, for Unilever, commends the hearing officers reasoning. He submits that it is unreal to treat CRL as the relevant undertaking because it never generated any material revenues, was not the beneficiary of the royalties in question and is and was simply a service company for the Unilever group. Neither of these interpretations is without difficulty. The submission for Professor Shanks faces the problem that CRL has in reality received no more than a nominal benefit from the patents and certainly nothing that could be described as outstanding. As Mr Alexander fairly says, the real benefits have been received by other Unilever companies. A partial answer to this is provided by section 41(2) which deems the benefit derived from the assignment of a patent to a connected person to be the benefit which could reasonably be expected to be derived if that person had not been connected. True it is that section 41(2) does not in terms apply to section 40(1) but, as I have said, I think it must be interpreted in that way. This is still not a complete answer, however, for the deeming provision does not, on the face of it, apply to the benefit from other patents arising from the work at CRL against which the benefits from the patents in issue may be judged. Mr Green embraces this result, arguing that CRLs actual profits were at most about 2m per year and that judged against this figure, the 24.3m earned from the Shanks patents is plainly outstanding. But that, so it seems to me, is not comparing like with like. It would artificially and unfairly elevate the benefit to CRL from the Shanks patents in relation to any benefit it derived in other ways. The interpretation for which Unilever contends and which was accepted by the hearing officer and on appeal focuses on the phrase the employers undertaking in section 40(1). This, so it is said, is perfectly apt to describe the larger entity of which CRL is a part, that is to say, the whole Unilever group. But the problem with this interpretation is that it strips the phrase from its context. The subsection as a whole is concerned with the benefit of the patent to the employer and the assessment of whether that benefit is, in the hands of the employer, outstanding. Consideration of the size and nature of the employers undertaking is therefore tethered to this assessment. It is not, on the face of it, an inquiry into the value of the benefit to the group of which the employer is a part relative to other unrelated aspects of the groups business. In my judgement the correct approach to the application of section 40 and the one that does least violence to its language lies between these extremes. It is to look at the commercial reality of the situation but to do so, in a case such as the present, from the perspective of the inventors employer. Where, as here, a group company operates a research facility for the benefit of the whole group and the work results in patents which are assigned to other group members for their benefit, the focus of the inquiry into whether any one of those patents is of outstanding benefit to the company must be the extent of the benefit of that patent to the group and how that compares with the benefits derived by the group from other patents for inventions arising from the research carried out by that company. This gives practical and commercial effect to the language of section 41 and involves a comparison of like with like. Furthermore, it is, in my opinion, the approach which sits most comfortably with the next aspect of the analysis, namely the relevance of the size and nature of the employers undertaking. The relevance of size and nature of the employers undertaking Before the Court of Appeal, Unilevers central argument on the issue of outstanding benefit was that 24.3m, though not inconsiderable, was dwarfed by the turnover and profits of Unilever as a whole. As Patten LJ recorded at para 26 of his judgment, Unilever makes a wide range of products from Viennetta ice-cream to deodorants which generate billions of pounds in sales and hundreds of millions of pounds in profits over the life of the patents which relate to them. It was accepted that the rate of return on many if not most of these patents was much lower than on the Shanks patents but that was said not to be enough to make the benefit of the Shanks patents outstanding when regard was had to the size and nature of Unilevers business. This submission found an echo in Mr Alexanders submissions to this court for he took us to a graph of Unilevers profits between 1984 and 2004 against which a plot of the royalty income from the Shanks and Birch patents, displayed on the same scale, was so close to the base line as to be indistinguishable from it. Mr Green characterised this submission before the courts below and in this court as too big to pay. He argued that, were it to be accepted, it would be all but impossible for an employee to establish that the benefit from a patent to a business such as that of Unilever was outstanding and this would be manifestly unjust to employee inventors. This found favour with the Court of Appeal to a point. As Patten LJ explained at para 28, outstanding benefit cannot be determined simply by comparing the income derived from a patent with the overall turnover and profitability of the employers undertaking. But it raises the more fundamental question as to the relevance of the size and nature of an undertaking to the assessment of whether the benefit to it from a patent is outstanding and how these factors should be taken into account. In my judgement there is no single answer to this question. Many different aspects of the size and nature of the employers business may be relevant to the enquiry. For example, the benefit may be more than would normally have been expected to arise from the duties for which the employee was paid; it may have been arrived at without any risk to the business; it may represent an extraordinarily high rate of return; or it may have been the opportunity to develop a new line of business or to engage in unforeseen licensing opportunities. In the circumstances of this case and for the reasons I have given, a highly material consideration must be the extent of the benefit of the Shanks patents to the Unilever group and how that compares with the benefits the group derived from other patents resulting from the work carried out at CRL. In some cases it may be possible to see that a patent has been of outstanding benefit to an employer by looking at the size and profitability of the whole business. In the Kelly case (see paras 37-38 above), for example, the benefits of patent protection went far beyond anything which one would normally expect to arise from the sort of work the employees were doing. The patents protected Amershams business from generic competition and allowed it to make major deals; and sales of the patented product accounted for a large proportion of its profits. In short, the patents transformed its business. Similarly, as Patten LJ explained at para 28, a straightforward comparison of profitability may be sufficient, in the case of a smaller company, to show an outstanding benefit without recourse to wider considerations of the scope of an employees duties or the expectations the employer may have had about the anticipated level of return. I also recognise that a large undertaking may be able to exert greater leverage than a smaller undertaking when negotiating licence fees. This was a matter to which the hearing officer referred in para 207 of his judgment. There he explained and I agree that a particular sum might represent an excellent return for a small undertaking but might not be so regarded by a large undertaking which was in a position to spend substantial sums on litigation to enforce its rights. Much the same might apply to sales of a patented product. A large undertaking might be able to harness its goodwill and sales force in a way that a smaller undertaking could not do. These would be appropriate matters to take into account. On the other hand, I think a tribunal should be very cautious before accepting a submission that a patent has not been of outstanding benefit to an employer simply because it has had no significant impact on its overall profitability or the value of all of its sales. Those profits and sales may have been generated by a range of different products which have nothing to do with the technology the subject of the patent; the parts of the business responsible for them may not have contributed to any commercial success of the patented invention; and they may be a very poor guide to whether the benefit the employer has derived from the patent is out of the ordinary. Indeed, I find it very hard to see how a failure materially to affect the aggregated sales value or overall profitability of the business could, in and of itself, justify a finding that the benefit of a patent has not been outstanding. Tax and the assessment of benefit Arnold J accepted a submission by Unilever that in assessing the benefit it received from the Shanks patents, it was necessary to take into account the amount of tax which it had to pay, and in doing so he placed some reliance on the decision in Celanese International Corpn v BP Chemicals Ltd [1999] RPC 203. There Laddie J held that, in the context of an account of profits derived by a defendant from infringement of a patent, the defendant could only be required to pay over its net profits after payment of corporation tax. The Court of Appeal disagreed with Arnold Js approach and so do I. Section 40(1) is concerned with the assessment of the benefit of the patent to the employer and whether that benefit is outstanding. This exercise is quite different from an assessment of the profits which a defendant has made from its infringing activities and which it has been ordered to disgorge. In this case Dr Osborn, Unilevers expert on this issue, quantified the appropriate reduction to be applied to the benefit Unilever had derived from the patents at 30% on the basis that this was the average rate of corporation tax which it had to pay in the relevant period, as calculated from its accounts. Mr Alexander, for Unilever, submitted that Dr Osborns analysis was reasonable and proportionate and that revenues which had to be paid over in tax, such that they could not be enjoyed by Unilever, could not count as a benefit. I find myself unable to accept Mr Alexanders submission for it seems to me artificially to reduce the size of the benefit before deciding how much compensation should be paid to the employee. In my judgement the first step is to quantify the benefit and the next is to decide how much compensation would secure for the employee a fair share of it. The employee must account for any tax due on that share and the employer must account for any tax due on the balance. The approach for which Mr Alexander contends, on the other hand, would mean that the employer has only to pay to the employee a share of the benefit net of tax but can take the benefit of any available relief from tax in respect of the moneys he has paid, whilst the employee will be liable to account for tax on the moneys that he or she has received. In my judgement the former approach is both fairer and consonant with the legislative purpose of these provisions. It follows that Patten LJ was right to say at para 43 of his judgment that the incidence of tax is a consequence of the benefit rather than a part of it. Assessment of the benefit net of tax would require in every case an investigation of the employers tax position including, among other things, any losses rolled forward. The time value of money Unilever received payments of licence fees under the Shanks patents over the period from 1996 to 2004 and it received the part of the purchase price of Unipath attributable to the Shanks patents in 2001. Professor Shanks made his application for compensation on 9 June 2006. Professor Shanks contends and, indeed, has always contended that Unilever has had the use of the moneys it derived from the Shanks patents ever since it received them and that this should be taken into account. As Arnold J noted, Professor Shanks did not rely upon this contention before him as a basis for challenging the hearing officers decision as to whether the benefit was outstanding. In my judgement he was right to take that course. The mere passage of time cannot turn a patent which was not an outstanding benefit into one which was. However, he did rely on it to increase the size of the benefit of which he should receive a fair share or, to put it another way, to increase the size of his share if he was successful in overturning the hearing officers decision on the issue of outstanding benefit. That remains the position on this appeal and it is convenient to address it now. The hearing officer rejected Professor Shanks argument on the basis that there was not enough evidence before him to justify an increase. The evidence was in his view too speculative. On appeal, Arnold J held that the time value of the money which Unilever had received was not a benefit derived from the Shanks patents within the meaning of section 41(1). He reasoned that the definition of benefit in section 43(7) coupled with the terms of section 41(1) pointed to the assessment being made as of the date the money was received; that the time value of money was not a benefit Unilever derived from the Shanks patents; that if the time value of money were treated as a relevant benefit the enquiry would have no temporal end; that Professor Shanks could have brought the claim earlier than he did; and that, it being common ground that the Comptroller could not award interest, an award reflecting the time value of money would be inconsistent with the statutory scheme. On further appeal to the Court of Appeal, Patten LJ held, like Arnold J, that the benefit under section 41(1) was limited to direct receipts from the exploitation of the patent rights and did not include any allowance for the fact that the employer had had the benefit of those receipts for a period of time prior to an award under that section. However, Briggs LJ, with whom Sales LJ agreed on this issue, came to the contrary conclusion. He explained, at para 73, that he would expect the time value of money (or its change in real value over time due to inflation) to be relevant in the quantification of the inventors fair share under section 41(1) because of the deleterious effect on the real value of money of the likely substantial time between the employers receipt of the benefit and the making of the order for payment at the end of the proceedings. Mr Alexander, for Unilever, now submits that the approach taken by Patten LJ and Arnold J is the correct one for the reasons they gave and because it is clear, simple and practical, and that the alternative, though theoretically attractive in some respects, would introduce disproportionate complexity, would drive up the costs of proceedings and would actively reward an inventor who delays in bringing a claim, just as Professor Shanks did in this case. In my judgement Mr Alexander was correct to describe the approach contended for by Professor Shanks as attractive, though I would not for my part characterise that attraction as theoretical. To the contrary, it seems to me to be the approach which accords with justice and common sense. Professor Shanks seeks an award which reflects the fact that, on the assumption he prevails on the other limbs of his appeal, he has for many years been kept out of a fair share of the benefit Unilever has derived from the Shanks patents. Nor, with great respect, am I persuaded by the reasoning of Arnold J or that of Patten LJ on appeal. That reasoning has at its heart the proposition that the time value of the money that Unilever has received is neither a benefit nor derived from the Shanks patents. I disagree. I see no reason why the time value of money cannot be a benefit derived from a patent within the meaning of section 41(1). Unilever has had the benefit of the licence fees and other moneys derived from the Shanks patents ever since they were paid. Another legitimate approach, which amounts to the same thing, is that of the majority in the Court of Appeal. On the assumption that he wins on the issue of outstanding benefit, Professor Shanks is entitled to an uplift because the fair share of the benefit should in this case reflect the deleterious effect on the real value of money of the substantial time between Unilevers receipt of the licence fees and other moneys and its making of any payment of compensation. Turning now to Arnold Js other reasons for rejecting this part of Professor Shanks case, the inquiry under section 41(1) will in this case end at the time the order for payment is made. In other cases, in assessing benefit, it may be necessary to look forward. But that is specifically contemplated by section 41(1) which makes clear that, in an appropriate case, an award must be such as to secure for the employee a fair share of the benefit which the employer may reasonably be expected to derive from the patent. I also reject the suggestion that the approach Professor Shanks contends for would cut across the statutory scheme. It is true that the Comptroller has no power to award interest. But that is not what Professor Shanks seeks and in my opinion there is nothing in the scheme which bars the Comptroller from having regard to the impact of inflation in assessing the benefit or what amounts to a fair share of it. As for complexity and delay, there is nothing unduly complex about an assessment of the impact of time on the real value of money; nor should the possibility of an uplift encourage delay, for if in any case the employee has delayed unduly, the Comptroller would no doubt take that into account in carrying out his assessment. In this case there is no finding by the hearing officer that Professor Shanks was unreasonably slow to make his application; nor can he be criticised for his conduct of the proceedings. In my judgement, and on the assumption he is otherwise successful on his appeal, fairness demands that his award of compensation should reflect the detrimental effect of time on the value of money. Was the benefit outstanding? The hearing officer carried out his assessment of the appropriate characterisation of the benefit of the Shanks patents to Unilever by considering that benefit in a number of ways. He looked at it in the light of Unilevers overall profits and turnover, by reference to patents in general, in the context of Unilevers licensing activities, in the light of Unilevers patent activities and finally, as compared to Unilevers activities in general. In the course of this analysis the hearing officer made a series of findings and observations which are to my mind rather striking. He held that there was an extreme disparity in numerical terms between the benefit Unilever received and the regular salary and 100 assignment fee that Professor Shanks was paid. He observed that there was scant evidence before him of Unilevers other licensing activities and that he had been provided with no example of another licensing deal which had provided Unilever with an income at or above the level of the Shanks patents. He found that the Shanks patents had produced a very high rate of return; that Unilever had made a very small effort to commercialise Professor Shanks invention; that Unilevers licensing efforts were serious but not exceptional; and that Unilever had generated the benefit it derived from the Shanks patents at no significant risk. In drawing his conclusions, he held that the benefit was a substantial and significant one in monetary terms, and that in comparison with the benefit to Unilever of other patents, it did stand out. In my opinion all of these matters point strongly to the conclusion that the Shanks patents were an outstanding benefit to CRL having regard to the size and nature of its undertaking as I would hold these features must be understood. How then did the hearing officer arrive at his conclusion that they were not? I think the key aspects of his reasoning may be summarised as follows. Looking first at Unilevers profits and turnover, the hearing officer agreed with Professor Shanks that it was simplistic to look simply at the figures for the overall turnover or profits of the undertaking and to say that a given benefit was only a small percentage of that. He explained that a relatively modest sum might represent an excellent return for a small company but would not do so for a larger entity, such as Unilever, which by its nature, for example being able to contemplate greater expenditure on litigation, could secure a higher return in a negotiation. Ultimately, he continued, it was a matter of considering the benefit in the overall context and making an assessment as to whether it was outstanding. Turning next to the benefit of the Shanks patents in relation to patents in general, the hearing officer explained that there was expert evidence before him on this issue but he found none of it of much assistance. Instead he reasoned that the assessment had to be carried out in the context of the employers undertaking and that he found it hard to see how a benefit of a relatively modest sum of, say, 50,000 could be considered an outstanding benefit in the context of Unilevers overall budget. This was followed by a consideration of the benefit to Unilever of the Shanks patents in the context of its licensing activities. Here the hearing officer recognised that the Shanks patents did stand out in terms of the licensing income they generated but thought that it did not follow that the benefit was outstanding. How the benefit was obtained was, in his view, irrelevant. What mattered was whether the benefit was outstanding in the context of the undertaking as a whole. The hearing officer then considered the benefit to Unilever of the Shanks patents in light of Unilevers broader patent activities. Here he referred to the evidence of Dr Mulder who held the position of Vice President Patents at Unilever. Some years earlier Dr Mulder had attempted to value Unilevers patents but he accepted in the course of his cross examination that his analysis did not produce a value of the patents in monetary terms but rather in terms of the value of product sales to which they related. He was therefore unable to identify any other patent which was more beneficial to Unilever than the Shanks patents. Finally, the hearing officer compared the benefits from the Shanks patents with the benefits generated by its other activities and referred in this connection to the unchallenged evidence of Dr Mulder that Unilever had a number of highly successful products, such as Viennetta ice cream, spreads and deodorants, and that these generated an income of many billions of pounds and many hundreds of millions of pounds of profit over the lifetime of the patents which protected them. He said this gave some indication of the sorts of sums that could be of great benefit to Unilever and they were an order of magnitude greater than the benefit derived from the Shanks patents. The hearing officer expressed his conclusions in these terms: 222. Considering the totality of the evidence, I was left with a clear impression. The benefit provided by the Shanks patents was a substantial and significant one in money terms - the sort of sum that Unilever would, on the evidence, worry about Furthermore, in comparison to the benefit from other patents to Unilever, from the evidence before me it does, in Mr Emanuels words stand out. But Unilever makes profits at an order of magnitude greater on other inventions - albeit primarily by manufacture and at a much lower rate of return than was provided by the Shanks patents. Further, this is not such a case as Kelly, where Floyd J held that without the patents in that case, Amersham would have faced a crisis. There was no suggestion from either party that the Shanks patents were crucial to Unilevers success. 223. In my view, taking account of the size and nature of Unilevers business, the benefit provided by the Shanks patents falls short of being outstanding. Did the hearing officer make an error of principle in assessing the benefit? It is apparent from the summary in the immediately foregoing section that a central and essential part of the hearing officers reasoning was that Unilever generated a vast income and commensurate profits from the manufacture and sale of products such as ice cream, spreads and deodorants which had the benefit of patent protection, and that this income and these profits were an order of magnitude greater than the benefits Unilever derived from the Shanks patents. The hearing officer clearly thought that this was highly relevant because he said in terms that it gave an indication of the sorts of benefits generated by highly successful products and so the sorts of sums which could be considered of great benefit to Unilever. This is also apparent from his conclusion, for in referring to profits an order of magnitude greater on other inventions, the hearing officer was referring to the overall profits made by Unilever from the manufacture and sale of these products. There are in my view a number of problems with these aspects of the hearing officers analysis. First, he adopted the wrong starting point. Professor Shanks was employed by CRL, and CRL operated a research facility for the Unilever group. CRLs undertaking for the purposes of section 40 of the 1977 Act was the business of generating inventions and providing those inventions and the patents which protected them to Unilever for use in connection with its business. It was to the size and nature of this undertaking, among other things, that the hearing officer was required by section 40 to have regard in assessing the nature of the benefit to CRL and Unilever of any such patent. Instead the hearing officer took CRLs undertaking to be the whole of the Unilever group and this pervaded the whole of his evaluation. In my judgement that was wrong in principle. Secondly and irrespective of his starting point and the extent of CRLs undertaking, the hearing officers particular focus upon the overall turnover and profits generated by Unilever, as illustrated by the size of its business in making and selling ice cream, spreads and deodorants, was in my view misdirected. The success of these products could no doubt be attributed to a range of factors including quality, branding and pricing. It is also true that they were protected at least to some degree by patent families which related to the processes by which they were made or aspects of the technology which they contained. But, as the hearing officer himself acknowledged, only a proportion of the sale price of any product could be attributed to any patent protection, and Unilevers attempts to assess the value of these other patents failed. Indeed, the hearing officer recognised that, in terms of the benefit which Unilevers patents had generated, the Shanks patents stood out. Thirdly, it cannot be said that the size and success of Unilevers business as a whole played any material part in securing the benefit it has enjoyed from the Shanks patents. That benefit was generated by licensing or selling its patent rights, not by harnessing its manufacturing capacity, its sales and distribution facilities or its goodwill. The licence fees, which constituted the main part of the benefit, were paid by licensees who, with one exception, approached Unilever. It is true that Unilevers licensing personnel negotiated those licences with skill and serious effort but its costs of doing so were modest and taken into account, and the hearing officer made no finding to the effect that the royalty rates were boosted by the application of Unilevers financial muscle or the threat of legal proceedings. These were matters he failed properly to take into account. Fourthly, the hearing officer appeared rightly to disavow an approach which involved assessing the extent and nature of the benefit derived from a patent simply by comparing it to the patent owners overall turnover or profits. But he also indicated these matters might be relevant if, for example, an undertakings size enabled it to exert greater leverage. Yet, having apparently rejected such an approach, he then adopted it. There was no justification here for simply weighing the sums Unilever generated from the Shanks patents against the size of its turnover and overall profitability in products such as Viennetta ice cream, spreads and deodorants and yet this formed an important part of his assessment. I am conscious that the decision of the hearing officer on this issue necessarily involved an evaluation and it is of course well established that an appellate court should be very cautious in differing from such an evaluation unless it involves an error of principle: see, for example, Biogen Inc v Medeva plc [1997] RPC 1, 45 per Lord Hoffmann. That is particularly so where the decision is that of a specialist tribunal. What constitutes an error of principle was considered most recently by Lord Hodge in Actavis Group PTC EHF v ICOS Corpn [2019] UKSC 15; [2019] Bus LR 1318, paras 80-81. As he there explained, such an error is not confined to an error as to the law but extends to certain types of error in the application of a legal standard to the facts in an evaluation of those facts. A legal error might involve asking the wrong question, failing to take into account relevant matters or taking into account irrelevant matters. In the absence of such an error, the appeal court would be justified in differing from a tribunals assessment if it were to reach the view that the tribunals conclusion was outside the bounds within which reasonable disagreement was possible. I am satisfied that, for the reasons given in paras 79-82 above, the hearing officer was wrong in principle and that Arnold J on appeal and the Court of Appeal on further appeal wrongly failed so to hold. Further, having regard to the fundamental nature of these errors, the decision of the hearing officer must be set aside. I have considered whether it is necessary to remit this appeal for a rehearing but I have concluded it is not, for it seems to me to be clear how the hearing officer would or ought to have decided this issue had he directed himself correctly. I would add that this is a conclusion at which I am relieved to arrive in the light of the time these proceedings have taken and the costs that must have been incurred. In summary and as I have foreshadowed, Professor Shanks made his invention using his own initiative for his brief was to work in the area of biosensors for process control and process engineering and he was made to understand that he should not stray too far from it. He built the first prototype of his invention in October 1982, some five months after he had joined CRL. This would have been a new product area for Unilever but it was a development which the group did not, in the hearing officers terminology, get behind and push. It was regarded as far from a key technology and it was one into which Unilever made only a modest investment. It is true that Unilever patented and maintained a patent portfolio which protected it and in due course expended significant effort and skill in the licensing negotiations. But the rewards it enjoyed were substantial and significant, were generated at no significant risk, reflected a very high rate of return, and stood out in comparison with the benefit Unilever derived from other patents. What was more, they could not be attributed to the deployment or application of Unilevers wider business assets or infrastructure; nor were they found to be the consequence of any leverage Unilever could exert because of its size. In short, the benefit Unilever enjoyed from the Shanks patents was outstanding within the meaning of section 40 of the 1977 Act. Fair share Section 41 of the 1977 Act says that an award of compensation to an employee under section 40(1) or (2) shall be such as will secure for the employee a fair share, having regard to all the circumstances, of the benefit which the employer has derived or may be reasonably expected to derive from the patent. Section 41(4) then specifies that various matters must be taken into account. In assessing what would have been a fair share of the benefit Unilever had derived from the Shanks patents, the hearing officer duly addressed each of the matters set out in section 41(4). In so doing he had regard to the nature of Professor Shanks duties and that he was employed to invent; Professor Shanks remuneration, which was commensurate with his level of responsibility; the effort and skill Professor Shanks expended in making the invention; the contribution made by Unilever to the making, developing and working of the invention; and Unilevers licensing effort which, the hearing officer observed, was serious but not exceptional. The hearing officer also had regard to the evidence before him about the percentage award rates in company and university employee compensation schemes. Having regard to all of these matters, the results of a literature review and the parties submissions, he held that 5% would have been the appropriate fair share of the benefit, had it been outstanding. On appeal, Arnold J came to the conclusion that an important factor in Unilevers ability to extract licence fees was the fact that it could afford to bring proceedings for patent infringement and pursue them to a conclusion, and that the hearing officer had wrongly failed to take this into account. In these circumstances he thought that it would not be right to award to Professor Shanks a percentage of the benefit which was higher than the 3% awarded to the inventors in the Kelly case, and that this would have been the fair share of the benefit to award to Professor Shanks, had that benefit been outstanding. On further appeal, the Court of Appeal did not need to address this issue and did not do so. Professor Shanks now contends that Arnold J had no proper basis for reducing the share of the benefit to 3% and that even 5% is too low, for it fails properly to take into account that he conceived the invention outside and in addition to his assigned role; that the licence fees generated by the patent represented an entirely new income stream for Unilever; and that he made the invention and the patent was exploited at no risk to Unilever. He argues that between 10% and 20% of the benefit would represent a fair share. In my judgement Arnold J was wrong to find that 3% represented a fair share of the benefit Unilever enjoyed from the Shanks patents. The hearing officer had well in mind the size of Unilevers business and the nature of the licensing negotiations yet he did not make a finding that it secured the licence rates it did because it could afford to bring and pursue infringement proceedings against the prospective licensees. The absence of such a finding is not at all surprising. Unilever had no manufacturing business it needed to protect and, with one exception, the discussions were initiated by the prospective licensees. In substance, these were negotiations between willing licensors and willing licensees. Arnold J therefore had no basis for reducing the percentage from 5% to 3%. I am not persuaded by Professor Shanks other arguments, however. The hearing officer found that the invention was made in the course of his contractual duties, although its subject matter was not the main focus of his work. Moreover, as the hearing officer also found, Professor Shanks was employed to invent and, in making the invention, did what he was employed to do. I accept that the patent generated a new stream of income for Unilever, but it did not do so without its input. To the contrary, it was brought to fruition by Unilevers negotiation of the licences, and that is something in which Professor Shanks played no part. Finally, it is true that Unilever made only a relatively small effort to commercialise the invention and exploited the Shanks patents at no real risk to itself, but these were matters which the hearing officer took into account in arriving at his figure of 5%. I am satisfied that the hearing officer made no error in the way he approached this issue and it would not be appropriate to interfere with the conclusion to which he came. It only remains to apply to the 5% share of the 24m an uplift to reflect the impact of time on the value of money. Professor Shanks invites us to take 1999 as the median year in which Unilever received the benefit and then to take into account the effect of inflation using the Bank of England calculator. I did not detect any substantive objection from Unilever to this methodology and I think it is a reasonable and fair way to proceed. This produces a figure of about 2m at an average inflation rate of 2.8%. In my judgement the fair share of that benefit to which Professor Shanks is entitled is therefore 2m. Conclusion For these reasons I would allow Professor Shanks appeal. In my judgement the Shanks patents were of outstanding benefit to Unilever and CRL and Professor Shanks is entitled to a fair share of that benefit amounting to 2m.
UK-Abs
From 1982 to 1986, Professor Shanks (the appellant) was employed by Unilever UK Central Resources Ltd (CRL). CRL employed the UK based research staff of the Unilever group of companies (Unilever). It was not a trading company and was a wholly owned subsidiary of Unilever plc. While employed by CRL, Professor Shanks conceived an invention, the rights to which belonged to CRL from the outset under the Patents Act 1977 (the 1977 Act). CRL assigned those rights to Unilever plc for 100. Unilever was later granted various patents relating to the invention (the Shanks patents). Over time, Unilever derived a net benefit from the Shanks patents of approximately 24.3 million. On 9 June 2006, Professor Shanks applied for compensation under section 40 of the 1977 Act on the basis that the Shanks patents had been of outstanding benefit to CRL and that he was entitled to a fair share of that benefit. On 21 June 2013, the hearing officer acting for the Comptroller General of Patents (the Comptroller) found that, having regard to the size and nature of Unilevers business, the benefit provided by the Shanks patents fell short of being outstanding. Professor Shanks appealed to the High Court and Mr Justice Arnold dismissed the appeal. Professor Shanks then appealed to the Court of Appeal. That appeal succeeded in part, but the Court of Appeal found that Professor Shanks was not entitled to compensation. Professor Shanks now appeals to the Supreme Court. The Supreme Court allows the appeal. Lord Kitchin gives the sole judgment, with which the other Justices agree. An employee who makes an invention which belongs to his or her employer from the outset and for which a patent has been granted is entitled to compensation if he or she establishes: first, that the patent is, having regard among other things to the size and nature of the employers undertaking, of outstanding benefit to the employer; and secondly, that, by reason of these matters, it is just that he or she be awarded compensation [30]. At least in the ordinary case, Parliament intended the term employer to mean the inventors actual employer [31]. The relevant benefit is the benefit the inventors actual employer has derived or may reasonably be expected to derive from the patent, or from the assignment or grant to a person connected with him of any right in the invention, patent or patent application [32]. In assessing the benefit derived or expected to be derived by an employer from an assignment of the patent to a person connected with the employer (the circumstances of this case), the court must consider the position of the actual employer and the benefit which the assignee has in fact gained or is expected to gain [33]. Previous cases on applications for inventor compensation are helpful to a point, but they provide no substitute for the statutory test, which requires the benefit to be outstanding. That is an ordinary English word meaning exceptional or such as to stand out and it refers to the benefit (in terms of money or moneys worth) of the patent to the employer rather than the degree of inventiveness of the employee. It is, however, both a relative and qualitative term and the context must be considered [39]. An undertaking is a unit or entity which carries on a business activity, and here the undertaking to be considered is that of the company or other entity which employs the inventor [41]. The correct approach in identifying the relevant undertaking is to look at the commercial reality of the situation. Where a group company operates a research facility for the benefit of the whole group and the work results in patents which are assigned to other group members for their benefit, the focus of the inquiry into whether any one of those patents is of outstanding benefit to the company must be the extent of the benefit of that patent to the group and how that compares with the benefits derived by the group from other patents for inventions arising from the research carried out by that company [48]. A highly material consideration is the extent of the benefit of the Shanks patents to the Unilever group and how that compares with the benefits the group derived from other patents resulting from the work carried out at CRL [51]. The court should take into account matters such as the fact that a large undertaking might be able to harness its goodwill and sales force in a way that a smaller undertaking could not do [53]. However, a tribunal should be very cautious before accepting a submission that a patent has not been of outstanding benefit to an employer simply because it has had no significant impact on its overall profitability or the value of all of its sales [54]. As to the relevance of tax, the employee must account for any tax due on his or her fair share and the employer must account for any tax due on the balance. This approach is consonant with the legislative purpose of the provisions of the 1977 Act and is fairer than an approach which requires the employer to pay the employee a share of the benefit net of tax [58]. Separately, if the benefit is outstanding, then the fair share of the benefit should reflect the deleterious effect on the real value of money of the substantial time between Unilevers receipt of the licence fees and other moneys and its making of any payment of compensation [66]. The 1977 Act does not bar the Comptroller from having regard to the impact of inflation. This approach is not unduly complex and should not encourage delay [67]. The hearing officers assessment of the benefit of the Shanks patents was flawed. First, he adopted the wrong starting point. CRLs undertaking for the purposes of section 40 was the business of generating inventions and providing those inventions and the patents which protected them to Unilever for use in connection with its business [79]. Secondly, the hearing officers particular focus upon the overall turnover and profits generated by Unilever was misdirected [80]. Thirdly, it cannot be said that the size and success of Unilevers business as a whole played any material part in securing the benefit it has enjoyed from the Shanks patents, and the hearing officer failed to take into account relevant matters [81]. Fourthly, the hearing officer wrongly adopted an approach which involved assessing the extent and nature of the benefit derived from a patent simply by comparing it to the patent owners overall turnover or profits [82]. The hearing officers decision must be set aside [84]. The benefit Unilever enjoyed from the Shanks patents was outstanding within the meaning of section 40 [85]. Mr Justice Arnold was wrong to find that 3% would have represented a fair share of the benefit Unilever enjoyed from the Shanks patents [90]. It would not be appropriate to interfere with the hearing officers conclusion that 5% would have been a fair share [91]. The fair share to which Professor Shanks is entitled is 2m and the appeal is allowed [92 93].
Widowed parents allowance is a contributory social security benefit payable to men and women who are widowed with dependent children. It is non-means- tested, so it is particularly valuable to parents who are in work, although it is taxable. The widowed parents entitlement depends upon the contribution record of the deceased partner. Currently, the widowed parent can only claim the allowance if he or she was married to, or the civil partner of, the deceased. The issue in this case is whether this requirement unjustifiably discriminates against the survivor and/or the children on the basis of their marital or birth status, contrary to article 14 of the European Convention on Human Rights (ECHR) when read with either article 8 of the Convention or Article 1 of the First Protocol to the Convention (A1P1). The facts Ms McLaughlin and her partner, John Adams, lived together (apart from two short periods of separation) for 23 years until he died on 28 January 2014. They did not marry because Mr Adams had promised his first wife that he would never remarry. They had four children, aged 19 years, 17 years, 13 years and 11 years when their father died. He had made sufficient National Insurance contributions for Ms McLaughlin to be able to claim a bereavement payment and widowed parents allowance had she been married to him. Ms McLaughlins claims for both bereavement payment and widowed parents allowance were refused by the Northern Ireland Department for Communities. She applied for judicial review of that decision on the ground that the relevant legislation was incompatible with the ECHR. That claim succeeded in part before Treacy J in the High Court: In the matter of an application by Siobhan McLaughlin for Judicial Review: [2016] NIQB 11. He made a declaration of incompatibility under section 4(2) of the Human Rights Act 1998, that section 39A(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 is incompatible with article 8 of the ECHR in conjunction with article 14 insofar as it restricts eligibility for Widowed Parents Allowance by reference to the marital status of the applicant and the deceased. He rejected the claim in relation to the bereavement payment. The Court of Appeal unanimously held that the legislation was not incompatible with article 14, read either with article 8 or with A1P1: [2016] NICA 53. Ms McLaughlin now appeals to this Court. The Evolution of Bereavement Benefits National Insurance pensions for widows were first introduced under the Widows, Orphans and Old Age Contributory Pensions Act 1925. They provided a pension for all widows whose husbands fulfilled the contribution conditions, at a very modest flat rate with extra allowances for children. It was part of the piece- meal development of a National Insurance scheme, whereby people in work would pay into a National Insurance fund which would provide benefits if they were deprived of earnings through the ordinary vicissitudes of life: old age, invalidity, unemployment and, in the social conditions of the time, widowhood. The assumption - and at least among the middle classes the reality - was that women would not work after marriage, so that for them the loss of a breadwinning husband was the equivalent of the loss of a job through old age, invalidity or unemployment for people in work. The National Insurance scheme was quite separate from the relief of the destitute under the old Poor Law and its later replacements, beginning with the National Assistance Act 1948. Those were strictly means-tested benefits, whereas National Insurance benefits, having been paid for by contributions, were not. The National Insurance scheme was systematised and rationalised as a result of the Beveridge Report on Social Insurance and Allied Services (Cmd 6404, 1942). Beveridge proposed the replacement of unconditional inadequate widows pensions by a short-term widows benefit, payable for 13 weeks, to allow time for readjustment and a longer term guardian benefit for those with dependent children. Childless widows should be expected to work (para 153). However, the Report acknowledged the difficulties of women who were widowed, or whose children grew up, when they had reached an age at which it would be difficult to find work (para 156). This concern was reflected in the eventual legislation, the National Insurance Act 1946, which introduced three benefits: a widows allowance, a widowed mothers allowance and a widows pension where the claimant was widowed over 50 or over 40 when widowed mothers allowance ceased. In 1954, the United Kingdom ratified the ILO Social Security (Minimum Standards) Convention 1952 (No 102), which provided that The contingency covered shall include the loss of support suffered by the widow or child as the result of the death of the breadwinner (article 60). This structure remained broadly unchanged until the Social Security Act 1986, which replaced the short-term widows allowance with a one-off lump sum widows payment. It also increased the age threshold for full widows pension to 55 (a reduced rate pension was payable to those widowed, or whose widowed mothers allowance had ended, between 45 and 54). But the numbers of recipients had fallen, from an average of almost 600,000 in the 1960s to an average of around 500,000 in the 1970s. Social trends, including falling marriage rates, rising divorce rates and increased male life expectancy, reduced the numbers of widows under pensionable age, from over 600,000 in 1951 to under 300,000 in 1995 (ONS/OPCS Marriage and Divorce Statistics, FM2, nos 16, 23). By then, of course, there had been many other profound social changes. Women were no longer required or expected to give up work on marriage. Married womens participation in the labour force had grown dramatically, although their working patterns were not identical to those of men, with many more leaving the workforce or working part time, especially while children were young. Thus it is not surprising that by the next wave of reform, most widows eligible for the benefits were in work, although those with young children were far less likely than married or cohabiting women to be working at all and less likely than other types of lone mother to be working full-time (ONS, Living in Britain: Results from the General Household Survey 1996, tables 5.23, 5.24). The availability of a non-means-tested benefit may have played a part in this; but so may the greatly increased prevalence of survivors benefits in occupational pension schemes in both the public and private sectors. The next wave of reform came about as part of a general package of welfare and pension reforms introduced by the 1997 Labour Government. But a major spur to their changes to bereavement benefits was that it had become inevitable that widows benefits would be successfully challenged for discriminating against men. Mr Willis had already begun his case in the European Court of Human Rights; although judgment was not given until 2002, it was a reasonable prediction that he would succeed in challenging his non-entitlement to both widows payment and widowed mothers allowance as incompatible with article 14 taken with A1P1: see Willis v United Kingdom (2002) 35 EHRR 21 (he failed in relation to widows pension because he did not then and might not ever meet the eligibility requirements). One solution might have been to abolish widows benefits altogether, save perhaps for the one-off payment, as being based on anachronistic assumptions about the major vicissitudes in life, but to do so was seen as removing help for many people in real need. Instead, there was a major re-focus, based on the defects identified in the governments green paper, A new contract for welfare: Support in Bereavement (Cm 4104, November 1998): the then scheme did not give enough help at the point of bereavement; gave most help to people who did not need widows benefits because they were earning a decent living or had large occupational pensions or life insurance; gave least help to the poorest widows on income support, who saw nothing of their widows benefits; and discriminated against men (para 4). The essential features of the new scheme were: first, it would apply equally to widows and widowers; second, the one-off bereavement payment would be increased from 1,000 to 2,000; third, there would be a widowed parents allowance equivalent to the current widowed mothers allowance; and fourth, there would no longer be a widows pension, but a short-term bereavement allowance for six months, for widows and widowers aged 45 or over with no dependent children. A disregard of 10 of the widowed parents allowance would be introduced into means-tested benefits. That was the scheme inserted into the Social Security Contributions and Benefits Act 1992 for Great Britain by the Welfare Reform and Pensions Act 1999. It was also the scheme inserted by statutory instrument (1999/3147 (NI 11)) into the Social Security Contributions and Benefits (Northern Ireland) Act 1992, with which this case is concerned. It was amended to take account of civil partnerships by the Civil Partnerships Act 2004. Since then, the scheme has been radically changed yet again, by the Pensions Act 2014 and the Pensions Act (Northern Ireland) 2015, in respect of deaths taking place after their implementation in March 2017. Bereavement payment and widowed parents allowance have been abolished and replaced with a single bereavement support payment available to all bereaved spouses and civil partners irrespective of age. This is paid as an initial lump sum followed by monthly instalments for up to 18 months. The rates are higher if the bereaved person is pregnant or entitled to child benefit. The object is to focus support on the period immediately after bereavement, it being very common for bereavement to have a large short-term impact on the finances of the surviving partner (Government Response to the public consultation: Bereavement Benefit for the 21st Century, Cm 8371, July 2012, p 16). As before, entitlement depends on the (simplified) contribution record of the deceased and is not means-tested. Longer term impacts are left to means-tested benefits with some transitional cushioning. In essence, therefore, what began as a long-term replacement of a wifes and childrens loss of a breadwinning husbands income, moved to a long-term replacement of a breadwinners income while children were growing up, and is now a transitional compensation for the immediate financial loss suffered by the survivor and children on bereavement. The contribution conditions are now less onerous. In none of these waves of reform was consideration given to extending the scheme to unmarried partners. The Beveridge Report did briefly discuss Unmarried person living as a Wife, pointing out that treatment of the problem was complicated by the possibility that either or both parties might have a legal spouse. It recommended that Widows and guardian benefits should not be paid except to a woman who was the legal wife of the dead man. Retirement pension should not be paid in respect of contributions other than the womans own contributions, except to the legal wife of the retired man (para 348(ii)). That principle has not been officially questioned since. The most recent government publication, on Bereavement Benefit for the 21st Century (above), simply reports that some consultation respondents took the opportunity to raise wider issues outside the scope of the consultation, including the extension of bereavement benefit entitlement to cohabitees (p 15). The legislation in question We need only consider section 39A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, in the version in force when Mr Adams died: Widowed parents allowance. (1) This section applies where - a person whose spouse or civil partner dies on or (a) after the appointed day is under pensionable age at the time of the spouses or civil partners death, or (b) - a man whose wife died before the appointed day (i) (ii) has not remarried before that day, and is under pensionable age on that day. (2) The surviving spouse or civil partner shall be entitled to a widowed parents allowance at the rate determined in accordance with section 39C below if the deceased spouse or civil partner satisfied the contribution conditions for a widowed parents allowance specified in Schedule 3, Part I, paragraph 5 and - (a) the surviving spouse or civil partner is entitled to child benefit in respect of a child or qualifying young person falling within subsection (3) below; or (b) the surviving spouse is a woman who either - is pregnant by her late husband, or (i) (ii) if she and he were residing together immediately before the time of his death, is (c) pregnant in circumstances falling within section 37(1)(c) above; or the surviving civil partner is a woman who - (i) was residing together with the deceased civil partner immediately before the time of the death, and (ii) is pregnant as the result of being artificially inseminated before that time with the semen of some person, or as a result of the placing in her before that time of an embryo, of an egg in the process of fertilisation, or of sperm and eggs. (3) A child or qualifying young person falls within this subsection if the child or qualifying young person is either - (a) a son or daughter of the surviving spouse or civil partner and the deceased spouse or civil partner; or (b) a child or qualifying young person in respect of whom the deceased spouse or civil partner was immediately before his or her death entitled to child benefit; or (c) if the surviving spouse or civil partner and the deceased spouse or civil partner were residing together immediately before his or her death, a child or qualifying young person in respect of whom the surviving spouse or civil partner was then entitled to child benefit. (4) The surviving spouse shall not be entitled to the allowance for any period after she or he remarries or forms a civil partnership, but, subject to that, the surviving spouse shall continue to be entitled to it for any period throughout which she or he - satisfies the requirements of subsection (2)(a) or (a) (b) above; and (b) is under pensionable age. (4A) The surviving civil partner shall not be entitled to the allowance for any period after she or he forms a subsequent civil partnership or marries, but, subject to that, the surviving civil partner shall continue to be entitled to it for any period throughout which she or he - satisfies the requirements of subsection (2)(a) or (b) (a) above; and (b) is under pensionable age. (5) A widowed parents allowance shall not be payable - (a) for any period falling before the day on which the surviving spouses or civil partners entitlement is to be regarded as commencing by virtue of section 5(1)(1) of the Administration Act; or (b) for any period during which the surviving spouse or civil partner and a person of the opposite sex to whom she or he is not married are living together as husband and wife; or (c) for any period during which the surviving spouse or civil partner and a person of the same sex who is not his or her civil partner are living together as if they were civil partners. Thus the key features are: the claimant must be under pensionable age at the date of death and the allowance ceases once he or she reaches that age; the deceased spouse or civil partner must have satisfied the prescribed contribution conditions (the details need not concern us); the surviving spouse or civil partner must either be pregnant (in the prescribed circumstances) or be entitled to child benefit in respect of at least one child or qualifying young person who is either (a) the son or daughter of them both, or (b) a child or qualifying young person in respect of whom the deceased was entitled to child benefit immediately before his or her death, or (c) a child or qualifying young person in respect of whom the survivor was entitled to child benefit, provided that the deceased and the survivor were living together immediately before the death; and entitlement is lost if the survivor marries, forms a civil partnership or when he or she cohabits as if married or in a civil partnership. The ECHR Article 14 of the ECHR provides that: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. As is now well-known, this raises four questions, although these are not rigidly compartmentalised: (1) Do the circumstances fall within the ambit of one or more of the Convention rights? (2) Has there been a difference of treatment between two persons who are in an analogous situation? (3) characteristics listed or other status? (4) Is that difference of treatment on the ground of one of the Is there an objective justification for that difference in treatment? Within the ambit? Article 14 does not presuppose that there has been a breach of one of the substantive Convention rights, for otherwise it would add nothing to their protection, but it is necessary that the facts fall within the ambit of one or more of those: see eg Inze v Austria (1987) 10 EHRR 394, para 36. In this case, it is clear that the denial of a contributory social security benefit falls within the ambit of the protection of property in A1P1: see Willis v United Kingdom (2002) 35 EHRR 21, in relation to the denial of widows payment and widowed mothers allowance to widowers. The Court did not there find it necessary to consider whether the facts also fell within the ambit of the right to respect for family life protected by article 8 of the Convention. But this could matter, in relation both to whether the claimant and her children are in an analogous situation to a surviving spouse or civil partner and their children and to the justification for the difference in treatment between them. Another way of putting the relationship between article 14 and the substantive Convention rights is that article 14 comes into play whenever the subject matter of the disadvantage constitutes one of the modalities of the exercise of the right guaranteed: see eg Petrovic v Austria (1998) 33 EHRR 307, para 28. In that case a father complained that a non-contributory parental leave allowance was only available to mothers and not to fathers. At that date, it had not yet been decided that non-contributory state benefits were covered by A1P1, so the question was whether the allowance fell within the ambit of article 8. There was no violation of article 8, because the state is under no obligation to provide such an allowance. But this allowance paid by the state is intended to promote family life and necessarily affects the way in which the latter is organised as, in conjunction with parental leave, it enables one of the parents to stay at home to look after the children (para 27). By granting such an allowance states are able to demonstrate their respect for family life within the meaning of article 8 (para 29). Thus article 14 was applicable (although not violated in that case). It could be said that the connection between the organisation of family life and the parental leave allowance was closer in Petrovic than the connection between the organisation of family life and the widowed parents allowance. However, to the same effect is Okpisz v Germany (2005) 42 EHRR 32, where the refusal of child benefit to certain migrants was held to violate article 14 taken with article 8: By granting child benefit, states are able to demonstrate their respect for family life within the meaning of article 8; the benefits therefore come within the scope of that provision. (para 32). Most recently, in Aldeguer Toms v Spain (2017) 65 EHRR 24, the court considered a claim for survivors benefits, brought by an unmarried same sex partner before the introduction of same sex marriage in Spain, under article 14 read with both article 8 and A1P1: it reiterated that the notion of family life not only includes dimensions of a purely social, moral or cultural nature but also encompasses material interests (para 72). Judge Keller, the Swiss Judge, considered that the claim should only have been considered under A1P1, because financial support from the state primarily falls within A1P1; only some additional element, such as a clear legislative intent to provide an incentive for the organisation of family life, could bring it within article 8 (para O-I2). In this case, as in Petrovic and Okpisz, such an element clearly exists. In M v Secretary of State for Work and Pensions [2006] 2 AC 91, Lord Nicholls of Birkenhead accepted that the Child Support Act 1991 was one of the ways the United Kingdom evinces respect for children and the life of the family of which the child is part (para 17). Widowed parents allowance is only payable if there are children or young people for whose care and support either the deceased or the survivor or both were responsible: it is conditional on the survivor receiving child benefit and thus being a primary carer for such a child. It is, as Lord Bingham put it, one of the ways in which the state evinces respect for children and the life of the family of which they are part. Indeed, it is a stronger case than child support, which is simply a mechanism for enforcing the parents obligation to maintain ones children (and interestingly, when M got to Strasbourg, the court found a violation of article 14 read with A1P1 and did not find it necessary to consider article 8: JM v United Kingdom [2011] 1 FLR 491). It is fair to say that the English courts have made rather heavy weather of the ambit point, particularly in connection with article 8, because of its broad and ill- defined scope. In M v Secretary of State for Work and Pensions, Lord Bingham also said this (para 4): It is not difficult, when considering any provision of the Convention, including article 8 and article 1 of the First Protocol (article 1P1), to identify the core values which the provision is intended to protect. But the further a situation is removed from one infringing those core values, the weaker the connection becomes, until a point is reached when there is no meaningful connection at all. At the inner extremity a situation may properly be said to be within the ambit or scope of the right, nebulous though those expressions necessarily are. At the outer extremity, it may not. This is a difficult passage, because it is accepted that there is no need for the substantive article to be infringed in order for article 14 to be engaged. But it does suggest that the closer the facts come to the protection of the core values of the substantive article, the more likely it is that they fall within its ambit. Our attention was drawn to a number of other English authorities in which the connection of article 14 with article 8 is discussed, but most of those are under appeal and so it would be unwise to comment upon them. In Smith v Lancashire Teaching Hospitals NHS Foundation Trust [2017] EWCA Civ 1916; [2018] 2 WLR 1063, Sir Terence Etherton MR agreed with counsel that the only sure common thread running through the various descriptions of the ambit test, for the purposes of article 14, in the several speeches in M [2006] 2 AC 91 is that the connection or link between the facts and the provisions of the Convention conferring substantive rights must be more than merely tenuous (para 48). Having quoted the relevant paragraphs from Petrovic and reviewed the domestic authorities, including M, he summarised the position thus (para 55): The claim is capable of falling within article 14 even though there has been no infringement of article 8. If the state has brought into existence a positive measure which, even though not required by article 8, is a modality of the exercise of the rights guaranteed by article 8, the state will be in breach of article 14 if the measure has more than a tenuous connection with the core values protected by article 8 and is discriminatory and not justified. It is not necessary that the measure has any adverse impact on the complainant in a positive modality case other than the fact that the complainant is not entitled to the benefit of the positive measure in question. It may turn out that this is too restrictive a test: for example, core values is a concept derived from the domestic rather than the Strasbourg jurisprudence. But there is no problem applying it to the facts of this case. Widowed parents allowance is a positive measure which, though not required by article 8, is a modality of the exercise of the rights guaranteed by article 8. It has a more than tenuous connection with the core values protected by article 8: securing the life of children within their families is among the principal values contained in respect for family life. There is no need for any adverse impact other than the denial of the benefit in question. The fact that it also falls within the ambit of A1P1 is not a problem. The two articles are safeguarding different rights - respect for family life and respect for property. There is no reason to regard the latter as a lex specialis excluding the former in those cases, such as this, where it applies. I therefore conclude that the facts fall within the ambit, not only of A1P1, but also of article 8. Analogous situation? Unlike domestic anti-discrimination law, article 14 does not require the identification of an exact comparator, real or hypothetical, with whom the complainant has been treated less favourably. Instead it requires a difference in treatment between two persons in an analogous situation. However, as Lord Nicholls explained in R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 37; [2006] AC 173, the essential question for the court is whether the alleged discrimination, that is, the difference in treatment of which complaint is made, can withstand scrutiny. Sometimes the answer to this question will be plain. There may be such an obvious, relevant difference between the claimant and those with whom he seeks to compare himself that their situations cannot be regarded as analogous. Sometimes, where the position is not so clear, a different approach is called for. Then the courts scrutiny may best be directed at considering whether the differentiation has a legitimate aim and whether the means chosen to achieve the aim is appropriate and not disproportionate in its adverse impact. (para 3) As was pointed out in AL (Serbia) v Secretary of State for the Home Department [2008] UKHL 42; [2008] 1 WLR 1434, there are few Strasbourg cases which have been decided on the basis that the situations are not analogous, rather than on the basis that the difference was justifiable. Often the two cannot be disentangled. However, in Shackell v United Kingdom (Application No 45851/99, decision of 27 April 2000), the European Court of Human Rights declared inadmissible a complaint that denying widows benefits to unmarried surviving partners discriminated against the survivor and her children on the ground of her unmarried status and the childrens illegitimacy. The court accepted that this fell within the ambit of A1P1, so found it unnecessary to consider whether it also fell within the ambit of article 8. However, relying on the Commissions view in Lindsay v United Kingdom (1987) 9 EHRR CD 555, that marriage is different from cohabitation, it held that the applicants situation was not comparable to that of a widow, although it also went on to hold that in any event the difference in treatment was justified, and hence by a majority that the application was inadmissible. In Burden v United Kingdom (2008) 47 EHRR 38 the Grand Chamber agreed with Shackell that marriage conferred a special status, but that was for the purpose of holding that sisters who had lived together all their adult lives were not in an analogous situation to married couples or civil partners for the purpose of inheritance tax relief (paras 62, 63). It is always necessary to look at the question of comparability in the context of the measure in question and its purpose, in order to ask whether there is such an obvious difference between the two persons that they are not in an analogous situation. The factors linking the claim to article 8 are also relevant to this question. It was for this reason that Treacy J was able to distinguish between Ms McLaughlins claim for the bereavement payment and her claim for widowed parents allowance. In the case of the former, he held that the lack of a public contract between Ms McLaughlin and Mr Adams meant that her situation was not comparable with that of a widow and her claim must fail (paras 66, 67). That decision has not been appealed. In the case of the latter, he held that the relevant facet of the relationship was not their public commitment but the co-raising of children. For that purpose marriage and cohabitation were analogous (para 68). In my view, that analysis is correct. Widowed parents allowance is only paid because the survivor is responsible for the care of children who were at the date of death the responsibility of one or both of them. Its purpose must be to benefit the children. The situation of the children is thus an essential part of the comparison. And that situation is the same whether or not the couple were married to one another. It makes no difference to the children. But had the couple been married, their treatment would be very different: their household would have significantly more to live on while their carer is in work. I cannot regard Shackell as conclusively against the conclusion that for this purpose the situations are analogous. Unlike Treacy J, the court did not examine the purpose of each benefit separately and ask whether they should be distinguished when it came to the justification for excluding unmarried parents and their children. It is also worth noting that in Sahin v Germany [2003] 2 FLR 671, the Grand Chamber concluded that, because children of married and unmarried parents should not be treated differently, neither should the unmarried parents - in that case an unmarried father for the purpose of contact with his children. It is also instructive that in Yiit v Turkey (2011) 53 EHRR 25, the Grand Chamber was faced with a difference in treatment for the purpose of survivors benefits between people who had only religious marriages and people who had civil marriages. The court began its discussion by pointing out that According to the courts settled case law, discrimination means treating differently, without an objective and reasonable justification, persons in relevantly similar situations (para 67, citing DH v Czech Republic (2007) 47 EHRR 3, para 175). It noted the Governments argument that civil and religious marriages were not similar for this purpose (para 75). But it did not answer this question directly. Rather, it considered whether religious marriage was a status within the meaning of article 14 and concluded that it was (paras 79, 80). It then went straight on to consider whether the difference in treatment was justified, thus implying that the situations were relevantly similar, and held that it was (paras 82, 87). Notably, Yiit involved only the mother. It did not involve any of her children, who were entitled to bereavement benefits in their own right. As shown by the helpful intervention of the National Childrens Bureau, which hosts the Childhood Bereavement Network, in the great majority of Council of Europe states children of the deceased are directly eligible for bereavement benefits up to a certain age. The United Kingdom is unusual in channelling benefits for children through their parents. Other status? It is well established both in Strasbourg and domestically that not being married can be a status just as being married can be. In Yiit v Turkey, for example, the Grand Chamber held that the absence of a marriage tie between two parents is one of the aspects of personal status which may be a source of discrimination prohibited by article 14 (para 79). In In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] 1 AC 173, the House of Lords held that being unmarried was a status for the purpose of deciding whether their inability to adopt was unjustified discrimination under article 14. Justification? It follows, therefore, that the situation in this case is sufficiently comparable to that of a widow or widower with children for the difference in treatment based on the lack of a marriage tie to require justification. This in turn depends upon whether it pursues a legitimate aim and whether there is a reasonable relationship of proportionality between the means employed and the aim sought to be realised: see, eg, Yiit v Turkey, para 67, citing Larkos v Cyprus (1999) 30 EHRR 597, para 29). Further, to quote Yiit again, at para 70: The contracting states enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment in law. The margin of appreciation is the latitude which the Strasbourg court will allow to member states, which is wider in some contexts and narrower in others. As the Grand Chamber explained, in a much-quoted passage in Stec v United Kingdom (2006) 43 EHRR 47, para 52: The scope of this margin will vary according to the circumstances, the subject matter and the background. As a general rule, very weighty reasons would have to be put forward before the court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. On the other hand, a wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy. Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds, and the court will generally respect the legislatures policy choice unless it is manifestly without reasonable foundation. In Willis v United Kingdom, although it concerned social security benefits where normally a wide measure would be allowed, the court held, at para 39, that very weighty reasons were required to justify a difference of treatment based exclusively on the ground of sex, and no such reasons existed. On the other hand, in Stec, which also concerned the benefits system, although the difference in treatment was based on sex, it was inextricably linked to the difference in retirement ages between men and women, which had historically been justified. It was a matter for member states to determine when and how to phase that out. Strictly speaking, the margin of appreciation has no application in domestic law. Nevertheless, when considering whether a measure does fall within the margin, it is necessary to consider what test would be applied in Strasbourg - that is why the manifestly without reasonable foundation test has generally been applied domestically in benefit cases. In cases which do fall within the margin which Strasbourg will allow to member states, the domestic courts will then have to consider which among the domestic institutions is most competent and appropriate to strike the necessary balance between the individual and the public interest. In a discrimination case such as In re G, it may be the courts. In other cases, it may be the Government or Parliament. The appellant, supported by the Child Poverty Action Group, argues that the difference in treatment is based, or largely based, on the birth status of the children, which is a suspect ground, requiring particularly careful scrutiny. Thus, it is argued, the marriage condition has the effect that all, or almost all, the children adversely affected are illegitimate - ie born to parents who are not married to each other - and all, or almost all, the children positively affected will be legitimate - ie born to parents who are married to one another. In fact, this will be so in a situation like this case, when the parents cohabited for a long period and all the children who fall within section 39A(3) are the children of both the deceased and the survivor. It may very well not be so in other situations, where there are children of either the deceased or the survivor from other relationships, marital or non-marital. It is therefore only the situation covered by section 39A(3)(a) which deserves particularly careful scrutiny. The legitimate aim put forward by the respondent is to promote the institutions of marriage and civil partnership by conferring eligibility to claim only on the spouse or civil partner of the person who made the contributions. There is no doubt that the promotion of marriage, and now civil partnership, is a legitimate aim: this was the reason why the denial of widows benefits to an unmarried partner was held justified in Shackell; and why the preference given to civil over religious marriage was held justified in Yiit. The mere existence of a legitimate aim is not enough: there has to be a rational connection between the aim pursued and the means employed. Although this is not spelled out in the Strasbourg case law, it follows from the fact that the measure must pursue a legitimate aim. Whether there is a rational connection between the aim in this case and the measure in question is more debateable. It seems doubtful in the extreme that any couple is prompted to marry - save perhaps when death is very near - by the prospect of bereavement benefits. But they are part of a (small) package of social security measures in which it pays to be married rather than to cohabit. Ms McLaughlin, like many cohabitants, complains that the social security system is happy to recognise their relationship for some purposes but not for this one. We have not gone into the detail of this. But the general picture is that unmarried cohabitants are treated as a couple for the purpose of means-tested benefits: they will get the benefits applicable to a couple rather than the benefits applicable to two single people. This may sometimes be to their advantage: the benefit cap is higher for couples and lone parents than it is for single adult households. But it is often to their disadvantage, as the system assumes that two can live together more cheaply than can two single households. The fact remains that the social security system does privilege marriage and civil partnership in a few ways: principally by permitting one partner to benefit from the contributions made by the other, not only for bereavement but also for retirement pension purposes. This, as it seems to me, is the nub of the matter. Where means-tested benefits are concerned, it is difficult indeed to see the justification for denying people and their children benefits, or paying them a lower rate of benefit, simply because the adults are not married to one another. Their needs, and more importantly their childrens needs, are the same. But we are concerned here with a non-means-tested benefit earned by way of the deceaseds contributions. And the allowance is a valuable addition to the household income if the survivor is in work. Is it a proportionate means of achieving the legitimate aim of privileging marriage to deny Ms McLaughlin and her children the benefit of Mr Adams contributions because they were not married to one another? In my view, the answer to that question is manifestly no, at least on the facts of this case. The allowance exists because of the responsibilities of the deceased and the survivor towards their children. Those responsibilities are the same whether or not they are married to or in a civil partnership with one another. The purpose of the allowance is to diminish the financial loss caused to families with children by the death of a parent. That loss is the same whether or not the parents are married to or in a civil partnership with one another. That view is reinforced by the international obligations to which the United Kingdom is party and which inform the interpretation of the guarantees contained in the ECHR even though they have not been directly incorporated into United Kingdom law: see eg ZH (Tanzania) v Secretary of State for the Home Department [2011] UKSC 4; [2011] 2 AC 166. Principal amongst these is article 3 of the United Nations Convention on the Rights of the Child (UNCRC), which states that in all actions concerning children the best interests of the child shall be a primary consideration. Given the direct link with children, there cannot be much doubt that the provision of widowed parents allowance is an action concerning children. Article 26 requires State parties to recognise for every child the right to benefit from social security, including social insurance . Article 2 of the UNCRC requires state parties to respect and ensure the rights set forth in the present Convention to each child within their jurisdiction without discrimination of any kind, irrespective of the childs or his or her parents birth or other status. To like effect is article 10 of the International Covenant on Economic Social and Cultural Rights 1966. Denying children the benefit of social insurance simply because their parents were not married to one another is inconsistent with that obligation. It is also noteworthy that the great majority of member states of the Council of Europe provide survivors pensions directly to the children irrespective of birth status and in every other member state for which evidence is available, apart from Malta, where a pension is not paid directly to the child a pension can be paid to the surviving parent whether or not they were married to the deceased parent. This is evidence of a European consensus which is always relevant to the width of the margin of appreciation which Strasbourg will allow. This is not a difficult conclusion to reach on the facts of this case, where the couple lived together for many years, were recognised as doing so for other purposes by the Department for Communities and were parents of all the children involved. Their children should not suffer this disadvantage because their parents chose not to marry - as it happens for a commendable reason, but it might not always be so. This unjustified discrimination in the enjoyment of a Convention right is enough to ground a declaration of incompatibility under section 4(2) of the Human Rights Act. It does not follow that the operation of the exclusion of all unmarried couples will always be incompatible. It is not easy to imagine all the possible permutations of parentage which might result in an entitlement to widowed parents allowance. The recent introduction into the household of a child for whom only the surviving spouse is responsible is one example. Whether it would be disproportionate to deny that child the benefit of the deceaseds contributions would be a fact specific question. But the test is not that the legislation must operate incompatibly in all or even nearly all cases. It is enough that it will inevitably operate incompatibly in a legally significant number of cases: see Christian Institute v Lord Advocate [2016] UKSC 51; 2016 SLT 805, para 88. A declaration of incompatibility does not change the law: it is then for the relevant legislature to decide whether or how it should be changed. It also does not follow that the new law is incompatible. Although we have been advised of its existence, we have not heard argument about it, and the argument would no doubt be very different from the argument we have heard in this case. But I do not see the fact that the law has now changed as a reason for not making a declaration of incompatibility: the old law will remain relevant for deaths taking place before March 2017 for a very long time. I would therefore allow the appeal and make a declaration that section 39A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 is incompatible with article 14 of the ECHR, read with article 8, insofar as it precludes any entitlement to widowed parents allowance by a surviving unmarried partner of the deceased. LORD MANCE: (with whom Lady Hale, Lord Kerr and Lady Black agree) This appeal had led to disagreement between a majority view contained in the judgment prepared by Lady Hale and a minority view expressed by Lord Hodge. While I come down in favour of the former view, I recognise the force of a number of points made by Lord Hodge. The majority view faces the difficulty that the European Court of Human Rights declared inadmissible all aspects of the complaint made by Joanna Shackell in Shackell v United Kingdom (Application No 45851/99). That complaint included as one element the refusal to an unmarried mother of a widowed mothers allowance following the death of her partner in 1995. The Welfare Reform and Pensions Act 1999 replaced that allowance with widowed parents allowance, to cater for the death of either member of a married couple, but nothing in that change affects the reasoning in Shackell. Equally, I do not think that it is possible to treat Shackell as a case where the court failed to distinguish between the benefits there claimed or to ask whether they should be treated separately or to focus on the children. Ms Shackell, represented by a welfare rights worker, made a distinct claim that her children were discriminated against by reason of their illegitimate status, arguing that the refusal to pay her widows benefits in respect of her children had a direct financial consequence on her family life: violation of article 8 taken in conjunction with article 14 of the Convention. The court dealt with this specifically as a complaint about non-payment of widowed mothers allowance, to which it gave a distinct response as follows: whilst it is true that the applicant does not receive Widowed Mothers Allowance, the reason for her not being eligible is that she and her late partner were not married. It is not related to the status of the children The court added that it followed that the applicants ineligibility for widowed mothers allowance was compatible with the Convention for the same reasons as those which it had already set out in rejecting the claim so far as it related to widows benefits simpliciter. We are therefore squarely confronted with a need to consider whether the Courts approach in Shackell, set out in para 48 above, should now be regarded as wrong or should not be followed, at least domestically. In my opinion, that is indeed the position. The existence of marriage was of course a condition of eligibility for widowed mothers allowance in Shackell; that was the very basis of complaint there - just as the requirement of marriage or a civil partnership is on this appeal the basis of complaint in relation to widowed parents allowance. But the reasoning in Shackell fails to address what I regard as the clear purpose of this allowance, namely to continue to cater, however broadly, for the interests of any relevant child. Refusal of the allowance to the survivor of a couple who are neither married nor civil partners cannot simply be regarded as a detriment to the survivor of the couple. Refusal would inevitably operate in a significant number of cases to the detriment of the child. There is common ground between the majority and the minority that the widowed parents allowance falls within the ambit of article 8 (see Lord Hodge, para 70). In my opinion, its refusal was and is prima facie a violation of article 14 read with article 8, as well as of article 14 read with A1P1. Bearing in mind that the main purpose of widowed parent allowance is to secure the continuing well-being of any child of a survivor, there seems in this context to be no tenable distinction, and indeed manifest incongruity in the difference in treatment, between a child of a couple who are married or civil partners and the child of a couple who are not. In a large number of cases the effect would also be to discriminate against a child who was illegitimate. Indirect discrimination does not depend on the reason for or purpose of the conduct complained of, but on its effect. The European Court of Human Rights does not appear to have addressed this aspect in its brief reasoning set out in para 48 above. And legitimacy or illegitimacy is a status. As Lady Hale points out in paras 42-43, we do not need to consider other situations on this appeal. A policy in favour of marriage or civil partnership may constitute justification for differential treatment, when children are not involved. But it cannot do so in relation to a benefit targeted at the needs and well-being of children. The fact that the widowed parents allowance may cease or be suspended in some situations is no answer to this. The underlying thinking is no doubt that adequate support will be or is likely to be derived from another source in such situations. The provisions for cessation or suspension may not be entirely logical or reflect entirely accurately the circumstances in which adequate alternative support may be expected. But, if so, that does not appear to me to affect the analysis that widowed parents allowance is fundamentally aimed at securing the needs and well-being of children. I take the points made by Lord Hodge (paras 85-87) that it is not always easy to judge how different benefits interact and how easy they may be to administer. But the position of couples who are neither married nor civil partners is already catered for in other situations known to the law. The starting point is surely that, where children are for relevant purposes in a similar situation, the law would be expected to deal with them in the same way. I am not persuaded that any substantial grounds exist for thinking that this was not and is not feasible, as well as just, in the present context. For these reasons, and for the additional reasoning on further points mentioned in Lady Hales judgment, I join with the majority in allowing this appeal relating to widowed parents allowance. LORD HODGE: (dissenting) I regret that I find myself in disagreement with the majority on this appeal. In my view the widowed parents allowance (the WPA) is not incompatible with article 14 of the European Convention on Human Rights (the ECHR) when taken with either article 8 of the ECHR or article 1 of the First Protocol to the ECHR (A1P1). I am very grateful to Lady Hale for setting out the facts, the evolution of bereavement benefits and the legislation, which I do not have to repeat. In explaining my disagreement, I will draw attention to certain features of the legislation which are to my mind of greater importance than the majority acknowledges. We are concerned with the version of section 39A of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (the 1992 Act) which was in force when Mr Adams died on 28 January 2014 and which Lady Hale has set out in para 13 of her judgment. The discrimination which the majority sees as incompatible with the ECHR is the exclusion of the survivor of a couple who were not married or in a civil partnership from the benefit of the WPA because, it is reasoned, the discrimination, which that exclusion entails, has not been justified and so is contrary to article 14 when read with article 8 of the ECHR. The legislation There are a number of features of the WPA which are material to my analysis. First, the WPA is a contributory benefit. The deceased spouse or civil partner (the Deceased) must have satisfied the prescribed contribution conditions (section 39A(2) and Schedule 3 Part I, paragraph 5). The benefit which becomes available to the surviving spouse or civil partner (the Survivor) is thus the result of the Deceaseds contributions. Secondly, the WPA is not means-tested but is payable even if the Survivor earns a substantial income through work, and it is subject to income tax as part of the Survivors income (formerly under section 617 of the Income and Corporation Taxes Act 1988 (ICTA) and now under Part 9, chapter 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)). As discussed below, the WPA is treated as pension income of the Survivor. Thirdly, the WPA is payable not only when the Survivor has a responsibility for children (section 39A(3)) but also if the Survivor is a woman and is pregnant in specified circumstances (section 39A(2)(b) & (c)). Fourthly, the WPA ceases to be payable (a) when the Survivor reaches pensionable age (section 39A(4A)(ii)) and (b) if the Survivor marries or enters into a civil partnership (section 39A(4) and (4A)), and is not payable so long as the Survivor cohabits with a person of the opposite sex as if they were married or with a person of the same sex as if they were civil partners (section 39A(5)(b) & (c)). The first and second features - that the Survivors entitlement is dependent on the Deceaseds contributions and is not means-tested - point to the importance of the nexus between the Survivor and the Deceased. It is the nature of that relationship which gives the Survivor the right to benefit from the deceaseds contributions. The WPA is payable not only if there is a child of the Deceased and the Survivor or a child in respect of whom the Deceased had been entitled to child benefit immediately before his or her death (section 39A(3)(a) & (b)) but also if the Deceased and the Survivor had been living together immediately before the death and there was a child in respect of whom the Survivor was then entitled to child benefit (section 39A(3)(c)). Thus, the WPA is made available to the Survivor if he or she is responsible for a child for whom the Deceased was not responsible. The third and fourth features - the availability of the WPA to a pregnant woman and especially the circumstances in which WPA ceases to be payable or is suspended, point to the focus of the benefit on the provision of assistance to the bereaved Survivor: WPA, by replacing income earned by the Deceased, gives the Survivor the options of not working or of working for less hours after bereavement, notwithstanding his or her current or future financial responsibility for children. That replacement income is ended or suspended when the Survivor enters into a relationship with another which may be expected to yield alternative financial support. In the public consultation document, Bereavement Benefit for the 21st century, (Cm 8221) which the Secretary of State for Work and Pensions presented to Parliament in December 2011, it was recognised that the bereavement benefits were not affected by paid employment and that the majority of people who applied for those benefits were likely to be in work. In that document the WPA was described as providing support towards the additional costs of raising children (p 14) and the function of it and other bereavement benefits was described in these terms: a key function of bereavement benefits is to provide some financial security in the period immediately after spousal bereavement to allow people to take time away from work should they need this. (p 16) This latter description is not wholly accurate as the WPA, unlike the short-term bereavement allowance, is not confined to the 52 weeks immediately after the bereavement. But the focus on the financial security of the Survivor applies to each of the bereavement benefits. This focus on the position and welfare of the Survivor is consistent with the evolution of bereavement benefits which Lady Hale has summarised in paras 4 to 12 of her judgment. The initial aim of bereavement benefits was to relieve the plight of the widow under pensionable age who lost the support of a bread-winning husband at a time when many married women did not work. Social change, including the increase in the number of married women and widows who engage in paid work, led to the demise of the widows pension, which was payable to a widow aged over 45 when widowed and continued to be paid until she drew her retirement pension, and its replacement with a bereavement allowance for up to 52 weeks, while the WPA provided longer-term income substitution to the Survivor, in recognition of her responsibility for children. The WPA, as a contributory benefit, stands in contrast to means-tested benefits for the support of children such a child tax credit, which now is being replaced by universal credit. Such means-tested benefits do not require a nexus between a deceased contributor and a surviving claimant but are payable because of the need to provide for the welfare of children. The WPA counts as income in relation to means-tested benefits but 10 of the WPA is disregarded when calculating entitlement to means-tested benefits: Regulation 104 of and paragraph 16 of Schedule 8 to the Employment and Support Allowance Regulations (Northern Ireland) 2008 (SI 2008/280). Accordingly, a person in receipt of means tested benefits will often obtain only limited assistance from an entitlement to WPA. Securing ECHR rights without discrimination Lady Hale has set out article 14 of the ECHR and the four questions which it raises in para 15 of her judgment. In relation to the first question (do the circumstances fall within the ambit of one or more of the Convention rights?), it has been established in Willis v United Kingdom (2002) 35 EHRR 21 that the denial of a contributory social security benefit falls within the ambit of the A1P1 right. I therefore postpone my consideration of the concept of the ambit of a Convention right until I consider article 14 taken with article 8 below. In Willis the challenge to the denial of a widows payment and a widowed mothers allowance (the precursor of the WPA) to widowers succeeded under article 14 taken in conjunction with A1P1 and the Strasbourg court (the ECtHR) did not have to consider the complaint under article 14 in conjunction with article 8. A similar challenge under article 14 taken in conjunction with A1P1 was made by an unmarried mother of three children who had had a long-term relationship with a man who was the childrens father in the case of Shackell v United Kingdom (Application No 45851/99) decision of 27 April 2000. She complained that the United Kingdoms social security legislation discriminated against her because she was an unmarried surviving partner by denying her a right to the widows benefits available to married women (including the widowed mothers allowance). The ECtHR treated the right to widows benefits as a pecuniary right for the purposes of A1P1 and saw no need to determine whether the facts also fell within the ambit of article 8. The court by majority declared the application inadmissible because it was manifestly ill-founded within the meaning of article 35 of the ECHR. In reaching that conclusion the ECtHR considered not only the applicants claim to widows benefits generally but also the childrens claim that they were discriminated against in relation to widowed mothers allowance. The ECtHR referred to the decision of the European Commission of Human Rights in Lindsay v United Kingdom (1987) 9 EHRR CD 555 in which the Commission rejected a comparison between unmarried cohabitees and a married couple in relation to the incidence of income tax on the basis that they were not in analogous situations. The Commission stated: Though in some fields the de facto relationship of cohabitees is now recognised, there still exist differences between married and unmarried couples, in particular, differences in legal status and legal effects. Marriage continues to be characterised by a corpus of rights and obligations which differentiate it markedly from the situation of a man and woman who cohabit. The court, while recognising that since 1986 there had been increased social acceptance of stable personal relationships outside marriage, stated: However, marriage remains an institution which is widely accepted as conferring a particular status on those who enter into it. The situation of the applicant is therefore not comparable to that of a widow. Recognising that the ECHR gives States a certain margin of appreciation in the assessment of the extent to which differences in otherwise similar situations justify a different treatment in law, the court held that the promotion of marriage, by conferring limited benefits for surviving spouses, could not be said to exceed the margin of appreciation afforded to the UK Government. Shackell was decided in 2000; and in 2008 the Grand Chamber of the ECtHR confirmed that approach in Burden v United Kingdom (2008) 47 EHRR 38. In that case two unmarried sisters, who had lived together all their lives and who for 31 years had jointly owned the house in which they lived, complained under article 14 taken with A1P1 that it was unjustified discrimination for the UK tax system to deny them the exemption from inheritance tax which was available to property passing between spouses or civil partners. In holding that there was no discrimination and therefore no violation of article 14 taken with A1P1, the Grand Chamber stated (para 63): Moreover, the Grand Chamber notes that it has already held that marriage confers a special status on those who enter into it. The exercise of the right to marry is protected by article 12 of the Convention and gives rise to social, personal and legal consequences. In Shackell, the court found that the situations of married and unmarried heterosexual cohabiting couples were not analogous for the purposes of survivors benefits, since marriage remains an institution which is widely accepted as conferring a particular status on those who enter it. The Grand Chamber considers that this view still holds true. (Emphasis added) The Grand Chamber went on to state (para 65) that what set marriage and civil partnership apart from other forms of cohabitation was the express public undertaking of a body of rights and obligations of a contractual nature. The legally binding agreement which marriage or civil partnership entailed rendered those relationships fundamentally different from the relationship of cohabitation, regardless of its long duration. See also, more recently albeit in the different context of testimonial privilege, Van der Heijden v Netherlands (2012) 57 EHRR 13, paras 69 and 84. Thus in Yiit v Turkey (2011) 53 EHRR 25, the Grand Chamber expressed the view (in para 72) that marriage is characterised by a corpus of rights and obligations that differentiated it materially from other situations of a man and a woman who cohabit and stated: States have a certain margin of appreciation to treat differently married and unmarried couples, particularly in matters falling within the realm of social and fiscal policy such as taxation, pensions and social security. I am not persuaded that this court has grounds for departing from this consistent line of authority from the ECtHR which the Grand Chamber has recently endorsed in Burden and Yiit. It provides a clear answer to a complaint based on article 14 taken with A1P1. There is no suggestion that Strasbourg jurisprudence is evolving on this issue in the context with which this appeal is concerned, namely the entitlement of a surviving partner to state benefits arising out of the deceaseds contributions. Further, the ECtHR has not suggested that an analysis of those complaints in the context of article 14 taken with article 8 would have caused it to have reached a different decision in Shackell. In my view, the ECtHRs treatment of marriage and civil partnership as conferring a status which distinguishes them from cohabitation, while not binding on this court, is a very important component of any analysis of a challenge under article 14 taken together with article 8, to which I will turn. But it is necessary to consider first whether the present case falls within the ambit of article 8. The ambit of article 8 It has long been established in the jurisprudence of the ECtHR that article 14, which seeks to secure without discrimination the enjoyment of the rights and freedoms contained in the substantive provisions of the ECHR and its protocols, does not require any breach of those substantive provisions. It is sufficient for article 14 to apply that the facts of the case fall within the ambit of one or more of those substantive provisions: Abdulaziz Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, para 71; Inze v Austria (1987) 10 EHRR 394, para 36; Petrovic v Austria (1998) 33 EHRR 357, para 22; and, more recently, Aldeguer Toms v Spain (2017) 65 EHRR 24, para 74. In the latter case (para 74) the ECtHR continued: The prohibition of discrimination enshrined in article 14 applies to those additional rights, falling within the general scope of any Convention article, for which the state has voluntarily decided to provide. While article 8 does not require the state to provide financial support to a family in the form of state benefits, such support as the state choses to provide must be provided without discrimination. For the ECtHR has held that family life in article 8 includes not only dimensions of a purely social, moral or cultural nature but also encompasses material interests: Merger v France (2004) 43 EHRR 51, para 46; Aldeguer Toms (above) para 72. Thus, for example, the provision of child benefits to the parents of a child has been characterised as a way by which states are able to demonstrate their respect for family life: Okpisz v Germany (2005) 42 EHRR 32, para 32. Article 8 confers a right that the state will show respect for private and family life. The provision of financial support is one of the modalities of the exercise of a right guaranteed: Petrovic (above), para 28. I interpret modality as a particular mode in which something is done or expressed; in relation to article 8, it is a way in which the state expresses its support for family life. position thus: In our domestic jurisprudence, Lord Nicholls of Birkenhead summarised the Article 14 is engaged whenever the subject matter of the disadvantage comprises one of the ways a state gives effect to a Convention right (one of the modalities of the exercise of a right guaranteed). For instance, article 8 does not require a state to grant a parental leave allowance. But if a state chooses to grant a parental leave allowance it thereby demonstrates its respect for family life. The allowance is intended to promote family life. Accordingly the allowance comes within the scope of article 8, and article 14 read with article 8 is engaged: Petrovic v Austria (2001) 33 EHRR 307, paras 27-30. (M v Secretary of State for Work and Pensions [2006] 2 AC 91, para 16) More recently, in R (Steinfield) v Secretary of State for International Development [2018] UKSC 32; [2018] 3 WLR 415, in which the appellants successfully challenged as discriminatory the Civil Partnership Act 2004 because it did not make civil partnerships available to different-sex couples, Lord Kerr of Tonaghmore said this (para 18): Before Andrews J and the Court of Appeal it had been submitted that an adverse effect in relation to article 8 had to be demonstrated in order for an avowed infringement to come within its scope or ambit. Counsel for the respondent did not seek so to argue before this court. They were right not to do so. Recent case law from the European Court of Human Rights (ECtHR) makes it clear that no detrimental effect need be established. In particular, in Vallianatos [v Greece (2013) 59 EHRR 12] ECtHR found that the introduction of registered partnerships only for different sex couples, to exist alongside marriage which was also only open to different sex couples, constituted a breach of article 14 read with article 8 of the Convention: paras 80-92. As a result, in order to avoid a finding of an infringement of article 14, the Secretary of State had to show the unequal treatment of different sex couples was justified. Like Lady Hale, I see no basis for the assertion that A1P1 is a lex specialis which excludes consideration of article 8. When the ECtHR has decided cases under article 14 taken with A1P1 and found it unnecessary to consider a claim relating to the same facts under article 14 taken with article 8, it has not suggested that A1P1 has excluded consideration of article 8. When the ECtHR has dismissed a challenge under article 14 taken with A1P1 and has then declined to consider article 14 taken with article 8 (as it did in Shackell), one may readily infer that the ECtHR does not see a different result arising from the latter assessment. Indeed, it is questionable whether one can avoid such an inference. But I see no justification for inferring more than that. In my view A1P1 is a more natural home for social security benefits such as the WPA than article 8 because it is a benefit which is directed to assist the bereaved widow/widower or civil partner who has lost the financial support of the deceased. But it is payable if and only if the Survivor has responsibility for children and it thereby can be seen as a means, albeit indirectly, by which the state shows respect for family life. I agree therefore that the WPA falls within the ambit of article 8. It is the positive act of providing the WPA, which provides assistance to the Survivor who is responsible for children and thereby promotes family life, that brings the benefit within the ambit of article 8. The remaining questions As a result, it is necessary to consider the other three questions which Lady Hale has set out in para 15 of her judgment. They are: Is that difference of treatment on the ground of one of the (1) Has there been a difference of treatment between two persons who are in an analogous situation? (2) characteristics listed or other status? (3) Is there an objective justification for that difference in treatment? I agree with Lady Hale that not being married can be a status: Yiit v Turkey (2011) 53 EHRR 25, paras 79-80; In re G (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] AC 173, paras 8 (Lord Hoffmann), 107 (Lady Hale) and 132-133 (Lord Mance). Different treatment in the field of state benefits based on a person not being married would not however be a suspect ground which requires the court to exercise closer scrutiny: see, by analogy, Swift v Secretary of State for Justice [2013] EWCA Civ 193; [2014] QB 373, Lord Dyson MR at paras 24-25. Where I differ from the majority is on the first and third questions above, to which I now turn. Those questions are not rigidly compartmentalised. The ECtHR often addresses the third question without conducting a separate analysis of the first question. This is unsurprising because there is a considerable overlap between the two questions in the assessment as to whether there has been unjustifiable discrimination. Was there unjustifiable discrimination? The first question is whether an unmarried bereaved cohabitee is in an analogous situation to a bereaved survivor who had been married to or in a civil partnership with the deceased. In my view he or she is not. As the appellant is a woman, I will refer to the survivor as she in the discussion which follows. The majority suggests that they are in an analogous situation because it accepts Treacy Js analysis that the relevant facet of the relationship between the deceased and the survivor was the co-raising of children (emphasis added). It is stated that the WPA is payable only if the survivor is responsible for the care of children who were at the date of death the responsibility of one or both of them (para 27). That statement is correct. But it does not follow, as the majority asserts, that the purpose of the WPA is to benefit the children. There are a number of important characteristics of the WPA which show that it is a benefit to assist the bereaved Survivor rather than a benefit for bereaved children, although I recognise that it would benefit the children by providing additional income to the family unit. First, as I have said, the WPA is a benefit which replaces the lost income of the deceased and thereby gives the Survivor the opportunity not to work or to work reduced hours while she is responsible for children. Unlike benefits which are paid to meet a specific need of the claimant, the WPA, as an income replacing benefit, is taxable as pensions income in the hands of the Survivor: see formerly section 617 of ICTA and now sections 565, 566 and 577 of ITEPA. Secondly, the WPA ceases to be payable while the Survivor remains responsible for relevant children in several circumstances which are the personal circumstances of the Survivor. If she reaches retirement age, if she remarries or enters into a civil partnership, so long as she cohabits with a partner of either gender, or if she dies, the WPA ceases to be payable. It is to my mind striking that the WPA ceases to be paid as soon as the Survivor enters into one of the specified relationships, regardless of whether the Survivors new partner undertakes any responsibility for the children. If the WPA were properly characterised as a benefit for the bereaved children, it might be difficult to defend the rationality of these rules. Thirdly, the WPA is a contributory benefit. In most circumstances it is payable only if the Deceased has made sufficient National Insurance contributions. The Survivors benefits, which are treated in UK tax law as a pension, are the product of the Deceaseds contributions. Thus the nature of the nexus between the Deceased and the Survivor takes on a particular importance. Fourthly, the sums payable to the Survivor are not related to the childrens needs or increased by reference to the number of children for whom she is responsible. Instead, the rate of the WPA is calculated in a way similar to that of a Category A retirement pension. The Survivor receives a basic pension at a weekly rate and an additional pension calculated by reference to a surplus created by the Deceaseds earnings or deemed earnings during his working life: the 1992 Act sections 39C, 44-45A and 46(2) and Schedule 4A. It is unsurprising that the rules governing the WPA focus on the nature of the relationship between the Deceased and the Survivor in determining the Survivors entitlement to this contributory pension. When one pays due regard to these characteristics of the WPA, the reasoning of the ECtHR in Shackell, which recognises the importance of the status of the Survivor, is directly relevant and strongly supports the conclusion that the cohabiting survivor is not analogous to the Survivor who was married to or in a civil partnership with the Deceased. I see no basis for reaching a different view in relation to article 14 taken with article 8 than that which the ECtHR has reached in relation to article 14 taken with A1P1. On a strict analysis the question whether discrimination is objectively justified does not need to be addressed if one concludes, as I have, that the persons are not in an analogous situation. Nonetheless, in view of my disagreement with my colleagues, it is appropriate to address this question. In so doing, I observe that considerations which point against the persons being in an analogous situation also have a bearing on the justification of their being treated differently by the state. It is usual, when addressing justification, to ask whether the difference in treatment pursues a legitimate aim and whether, in relation to the difference in treatment, there is a reasonable relationship of proportionality between the means employed and the aim sought to be realised: see for example Yiit v Turkey (above) para 67, Stec v United Kingdom (2006) 43 EHRR 47, para 51. The contracting states are given a certain margin of appreciation in their assessment of whether differences in otherwise similar situations justify a different treatment in law. In Stec at para 52, which Lady Hale quotes more fully at para 33, the Grand Chamber stated: The scope of this margin will vary according to the circumstances, the subject matter and the background. It is not disputed that the promotion of marriage or civil partnerships, by means of which parties undertake binding legal obligations which may tend to support the long-term stability of their relationships, is a legitimate aim for the state to pursue. In the United Kingdom there are a range of measures in the fields of taxation and social security benefits which promote such legal relationships. These include the marriage allowance in the context of income tax, the ability of a couple to transfer assets between each other without a charge to tax in order to take advantage of income tax and capital gains tax allowances, and the ability of spouses and civil partners to transfer assets to each other free of inheritance tax and the entitlement of the surviving spouse or civil partner to inherit the deceased partners inheritance tax allowance if it has not been used. In the field of social security benefits, entitlement to a survivors retirement pension and entitlement to the WPA depend on the existence of a marriage or a civil partnership. There is thus a range of rules which confer financial benefits on persons who are or were married or in a civil partnership. In this context it is of no real significance that the average informed citizen may not have been aware of the WPA when entering into the legal obligations which marriage or civil partnership entails. Such a person is likely to have been aware that there were fiscal and other benefits to such relationships even if unaware of their details. I am unpersuaded that any ignorance of the WPA calls into question the rational connection between the measure in question and the undisputed legitimate aim or the proportionality of the difference of treatment. In this appeal the majority has referred to the test which the ECtHR applies in social security benefit cases and asked whether the difference in treatment is manifestly without reasonable foundation. I agree that that is the test which should be applied: R (MA) v Secretary of State for Work and Pensions [2016] UKSC 58; [2016] 1 WLR 4550. The majority concludes that the difference in treatment is manifestly disproportionate. I cannot agree. In considering, as did the Grand Chamber in Stec, the circumstances, the subject matter and background, the matters which I have discussed in paras 65-70 above demonstrate that the target of the contributory benefit, which is the WPA, is the Survivor, if she has responsibility for children, and if she has not obtained access to an alternative source of income by marriage, civil partnership or cohabitation, or by means of a retirement pension. The children benefit only indirectly from the WPA which may terminate while the Survivor remains responsible for them. The appellant and the Child Poverty Action Group seek to shift the focus from the Survivor onto the children and argue that the difference in treatment is largely based on the birth status of the children. This is not so: the WPA is the Survivors benefit. It is of note that the ECtHR rejected a similar argument in Shackell (in para 2), in which the applicant had argued that her lack of an entitlement to the WPA discriminated against children because of their illegitimate status. While there may be good policy reasons for a benefit which is directed at bereaved children, as the Child Poverty Group submits and commentators in the press have argued when this appeal was heard, that is not the nature of the WPA. Such questions of social and economic policy fall within the remit of the democratically elected legislature and are beyond the remit of the courts. The references to the international obligations of the United Kingdom in relation to children (para 40 of the majority judgment) lose their force when attention is paid to the characteristics of the WPA. In my opinion there is no disproportionality in treating a cohabitee survivor differently from a surviving spouse or civil partner. The WPA falls clearly within the ambit of A1P1. It falls within the ambit of article 8 only indirectly: by giving the Survivor a pension, to which the Deceased and not she has contributed, it enables her not to work or to work fewer hours than she might otherwise have to. The WPA should not be equated with means-tested benefits which are directed to peoples needs and are not entitlements resulting from contributions. It does not address hardship. If the Survivor is in work, the WPA gives her additional income, albeit subject to taxation. If she is in receipt of means-tested benefits, the payment of the WPA provides only limited extra income. It will be set against her entitlement to such benefits, except for the disregard of 10 to which I referred in para 51 above. The provision of the WPA should be seen in the wider context of the United Kingdom social security system which gives benefits, which, unlike the WPA, are directed at children. Should the children be in need, there are benefits to support them. Thus, if the survivor died, the person who took responsibility for the child would be entitled to child benefit, guardians allowance and, depending on his or her means, child tax credit. The respondent also founds on the difficulty of administering the WPA if the officials charged with its administration had to investigate whether or not the deceased and the survivor had been cohabiting. This, it was suggested, could also involve intrusive questioning of a survivor shortly after a bereavement. By contrast marriage or civil partnership can readily be established by certificates from a public register. Problems in the administration of the WPA may also arise if a parent, who has made the necessary contributions, dies leaving children in the care of more than one former partner. Such difficulty in administration as there may be is a relevant consideration which can be placed in the balance when the court assesses proportionality. But the respondent does not need to rely on this additional consideration as I am satisfied that without it the difference in treatment about which the appellant complains is proportionate and thus objectively justified. Conclusion
UK-Abs
Widowed parents allowance (WPA) is a contributory, non means tested, social security benefit payable to men and women with dependent children, who were widowed before March 2017. Under s 39A Social Security Contributions and Benefits (Northern Ireland) Act 1992 (s 39A) the widowed parent can only claim the allowance if he or she was married to or the civil partner of the deceased. The issue in this appeal is whether this requirement unjustifiably discriminates against the survivor and/or the children on the basis of their marital or birth status, contrary to article 14 of the European Convention on Human Rights (ECHR) when read with either the right to respect for family life under article 8, or the protection of property rights in Article 1 of the First Protocol (A1P1). Ms McLaughlins partner, John Adams, died on 28 January 2014. They were not married but had lived together for 23 years. They had four children, aged 19, 17, 13 and 11 years when their father died. He had made sufficient contributions for Ms McLaughlin to be able to claim WPA, had she been married to him. Her claims were refused by the Northern Ireland Department of Communities. She applied for judicial review of that decision on the ground that s 39A was incompatible with the ECHR. The judge in the High Court agreed and made a declaration that s 39A was incompatible with article 14 read with article 8. The Court of Appeal, however, unanimously held that the legislation was not incompatible with article 14, read with either article 8 or A1P1. Ms McLaughlin therefore appealed to the Supreme Court. The Supreme Court by a majority of 4 to 1 (Lord Hodge dissenting) allows the appeal and makes a declaration that s 39A is incompatible with article 14 of the ECHR read with article 8, insofar as it precludes any entitlement to WPA by a surviving unmarried partner of the deceased. Lady Hale, with whom Lord Mance, Lord Kerr and Lady Black agree, gives the substantive judgment of the majority. Lord Mance, with whom Lady Hale, Lord Kerr and Lady Black agree, gives a short concurring judgment. Lord Hodge gives a dissenting judgment. Article 14 secures the rights and freedoms of the ECHR without discrimination. It raises four, somewhat overlapping, questions: Do the circumstances fall within the ambit of one or more of the Convention rights? A breach of a right is not necessary, but the facts must fall within the ambit of one or more of them. It is clear that denial of social security benefits falls within the ambit of A1P1 [16]. WPA also falls within article 8 as it is a positive measure by the state demonstrating its respect for family life [19]. Has there been a difference in treatment between two persons in analogous situations? In a decision in 2000, Shackell v United Kingdom (App 45851/99), the European Court of Human Rights (ECtHR) ruled inadmissible a complaint that a denial of widows benefits to unmarried surviving partners was discriminatory, holding that marriage conferred a special status and was different from cohabitation. In the present case, however the relevant facet of the relationship is not the public commitment but the co raising of children [26]. The purpose of WPA is to benefit the children. It makes no difference to the children whether or not the couple were married to one another, but their treatment is very different [27]. Lord Mance considers that the reasoning of the ECtHR in Shackell failed to address the clear purpose of the widows benefits in that case, namely to cater for the interests of any relevant child, and Shackell should not therefore be followed by the Supreme Court [49]. Is that difference of treatment on the ground of a relevant status? It is well established that being unmarried is a status for the purpose of Article 14, just as being married can be [31]. Is there objective justification for that difference in treatment? This question depends on whether it pursues a legitimate aim and whether there is a reasonable relationship of proportionality between the means employed and the aim sought to be achieved [32]. The promotion of marriage and civil partnership is a legitimate aim [36], and WPA is part of a (small) package of social security measures which privileges marriage and civil partnership [37]. However, it was not a proportionate means of achieving this legitimate aim to deny Ms McLaughlin and her children the benefit of Mr Adams contributions because they were not married to each other. WPA exists because of the responsibilities of the deceased and the survivor towards the children, and its purpose is to diminish the financial loss caused to families with children by the death of a parent [39]. This conclusion is reinforced by the international obligations to safeguard childrens rights, to which the UK is party, which inform the interpretation of the ECHR rights; and it is noteworthy that in most other member states survivors pensions are paid directly to the children irrespective of birth status [41]. Remedy The exclusion of all unmarried couples from receipt of WPA will not always amount to unjustified discrimination, but it will inevitably do so in a legally significant number of cases, which is sufficient to require the court to make a declaration of incompatibility under s 4(2) of the Human Rights Act 1998. It will be for the relevant legislature to decide whether or how the law should be changed [43]. Lord Hodge, dissenting, would have held that the purpose of the provision of WPA is to assist the survivor rather than a benefit for bereaved children [58, 73 78]. The circumstances did not justify departing from the consistent line of authority from the ECtHR confirming the difference of status between marriage/civil partnership and cohabitation [64], so the situations were not analogous [79]. Even had they been, the difference in treatment in the provision of a contributory rather than means tested benefit, not directed to need, was not manifestly disproportionate, but objectively justified [85 87].
In March 2017 local authorities in England were looking after 72,670 children, a figure which has been rising steadily for the past nine years. They do so either as part of a range of services provided for children in need or under a variety of powers to intervene compulsorily in the family to protect children from harm. 50,470 of those 72,670 children were the subject of care orders, up 10% from the previous year; 16,470 were accommodated without any court order; the balance were subject to various other compulsory powers. In practice, the distinction between these categories is not always clear cut. Some accommodated children in need may also be at risk of harm if they are left at or returned home. In law, however, the distinction is clear. Compulsory intervention in the lives of children and their families requires the sanction of a court process. Providing them with a service does not. This case is about the limits of a local authoritys powers and duties to provide accommodation for children in need under section 20 of the Children Act 1989 (the 1989 Act) without the sanction of a court order. Specifically, what is the local authority to do if the parents ask for their accommodated children to be returned to them but the local authority perceive that there are obstacles to doing so? the outset: It may be helpful to set out the relevant parts of section 20, as amended, at Provision of accommodation for children: general (1) Every local authority shall provide accommodation for any child in need within their area who appears to them to require accommodation as a result of there being no person who has parental (a) responsibility for him; (b) his being lost or having been abandoned; or the person who has been caring for him being (c) prevented (whether or not permanently, and for whatever reason) from providing him with suitable accommodation or care. (3) Every local authority shall provide accommodation for any child in need within their area who has reached the age of 16 and whose welfare the authority consider is likely to be seriously prejudiced if they do not provide him with accommodation. (4) A local authority may provide accommodation for any child within their area (even though a person who has parental responsibility for him is able to provide him with accommodation) if they consider that to do so would safeguard or promote the childs welfare. (5) A local authority may provide accommodation for any person who has reached the age of 16 but is under 21 in any community home which takes children who have reached the age of 16 if they consider that to do so would safeguard or promote his welfare. (7) A local authority may not provide accommodation under this section for any child if any person who (a) has parental responsibility for him; and (b) is willing and able to provide accommodation for him; or (i) (ii) arrange for accommodation to be provided for him, objects. (8) Any person who has parental responsibility for a child may at any time remove the child from accommodation provided by or on behalf of the local authority under this section. (9) Subsections (7) and (8) do not apply while any person (a) who is named in a child arrangements order as a person with whom the child is to live; (aa) who is a special guardian of the child; or (b) who has care of the child by virtue of an order made in the exercise of the High Courts inherent jurisdiction with respect to children, agrees to the child being looked after in accommodation provided by or on behalf of the local authority. (10) Where there is more than one such person as is mentioned in subsection (9), all of them must agree. (11) Subsections (7) and (8) do not apply where a child who has reached the age of 16 agrees to being provided with accommodation under this section. (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. Also relevant are the rights of both parents and children under article 8 of the European Convention on Human Rights (ECHR): If the use of section 20 amounts to an interference with a parents or a childs exercise of their right to respect for their family life, it will violate article 8 unless it is in accordance with the law and a proportionate means of achieving one of the legitimate aims listed in article 8(2). In that event, it will be unlawful under section 6(1) of the Human Rights Act 1998 and the parent or child may seek a remedy, which could be an award of damages, under section 7(1) of that Act. The facts The appellants are the mother and father of eight children, at the time aged 14, 12, 11, 9, 7, 5, 2 and 8 months. The eight month old was still being breast fed. On 5 July 2007, their 12 year old son was caught shop lifting. He told the police that he had no money for lunch. He also complained that his father had hit him with a belt. He was taken to a police station and a social worker was called. The police then went to the familys home and found it in an unhygienic and dangerous state unfit for habitation by children. The police exercised their powers under section 46 of the 1989 Act in respect of all eight children. Section 46 enables a police officer who has reasonable cause to believe that a child would otherwise be likely to suffer significant harm to remove the child to suitable accommodation and keep him there for a maximum of 72 hours (section 46(1) and (6)). The suitable accommodation must be either provided by a local authority or in a certificated refuge (section 46(3)(f)). These children were provided with foster placements by the respondent local authority (the Council) the two oldest boys together, the others in separate (and changing) foster placements. Both the mother and the father were arrested and interviewed during the night of 5 July. They were released in the early hours of 6 July, on police bail to return to the police station on 30 July. The conditions of their bail were that neither was allowed to have unsupervised contact with any of their children. The reason given for the condition was to prevent interference with possible victims of crime. The parents then went to the Council offices and spoke to two social workers. They were asked to return later in the day and when they did they were asked to sign a Safeguarding Agreement. It is worthwhile quoting this in full. After listing the eight children, it provides: This Safeguarding Agreement was drawn up in relation to all of the children. Although the agreement is not legally binding, it may have significance, should there be any court procedures in the future. We, Mr & Mrs Williams parents to all the above children agree to the following: 1. That all the children will remain in their Foster placements for the present time. 2. When contact takes place we will encourage the children to return to their placements and ensure them that this is a safe place. 3. That we will behave appropriately whilst contact is taking place, ie assure the children that we love and care for them, show them affection. 4. That we will not discuss with any of the children what has happened. 5. To continue to comply with Hackney Childrens Social Care. In conclusion Hackney Childrens Social Care will seek legal advice with a view to protecting the children if it is found that parents are not complying with the contents of this Safeguarding Agreement. It is apparent that this agreement does not inform the parents of the power under which the Council were purporting to act or of their rights under section 20 and, while stating that it is not legally binding but may have significance should there be any court procedures in future, it does not explain its potential relevance in any legal proceedings and the circumstances in which these might be brought. However, the parents also signed consents to medical treatment and to accommodation (albeit without the children being named) that same day. The trial judge found that they had not been informed of their right to object to the childrens continued accommodation under section 20(7) or of their right to remove the children at any time under section 20(8) and that their consent was not informed or fairly obtained (para 65). The 72 hours of police protection expired on 8 July. On 9 July the parents went to the Councils offices and requested the return of their children. They were told by a social worker that they could not take their children home. The parents consulted Sternberg Reed, a firm of solicitors who are skilled and experienced in child care cases. On 13 July the solicitors wrote two letters to the Council. The first asked for information about the current and future plans in this matter. It stated that the parents are very keen to have their children returned to their care as soon as that is thought possible, and indicated that they would co operate with any further assessments required. It raised concerns that the children were in separate foster placements and one had reverted to wearing nappies. It asked for copies of the medical and school reports which they believed were positive. And it asked whether the Council would be initiating care proceedings. The second letter was more definite. It stated that: Mr Williams wishes us to give you formal notice of his intention to withdraw consent to the accommodation of his children under section 20 of the Children Act 1989. He wishes to continue to work co operatively with the local authority and will therefore agree to their continued accommodation for a further ten days, to Monday 23 July 2007, in order that the local authority can make any further investigations necessary to plan for the stable rehabilitation of the children to their parents care. In the event that the local authority feel unable to arrange for all the children to return home within this time frame, then we ask for details of the proposed timescales for returning each child currently being accommodated and the basis for those timescales. At a meeting of the Councils childrens resources panel on 16 July, it was decided that the children should be returned home as soon as possible. The allocated social worker visited the home on 18 July and reported that it was clean and improvements had been made. Another meeting of the panel on 23 July decided that the bail conditions needed to be resolved or changed so that the children could return home. On 24 July the Council wrote to the solicitors notifying them that it had been decided not to bring care proceedings, but that they could not provide a date for the children to be returned because of the bail conditions. A child protection case conference was scheduled for 31 July. The police refused to vary the bail conditions, at first because the relevant officer was on leave and then because of the impending case conference. Bail was continued until 17 August on the same conditions. The solicitors asked the Council to supply a letter supporting an application to discharge the bail conditions but this was refused. The Council took the view that it was for the parents to apply to the police to lift the bail conditions but no such application was made. Eventually, however, in a telephone conversation with the police on 6 September, a senior officer of the Council arranged with the police for the bail conditions to be varied with a view to the children being returned [home] on Tuesday. The police agreed. All eight children were returned to their parents on 11 September 2007 after more than two months in foster homes. These proceedings were not begun until July 2013. After criminal proceedings against the parents had been discontinued, they had pursued complaints (rather different from those now before this court) through the Councils internal complaints procedure and thereafter to the local government ombudsman. These were not finally resolved until April 2013. In these proceedings, the parents claimed damages for negligent breach of statutory duty, misfeasance in public office, religious discrimination and breach of their rights under article 8 of the ECHR. The claims were tried by Sir Robert Francis QC, sitting as a deputy High Court Judge, in July 2015. He dismissed the claims for negligence, misfeasance in public office and religious discrimination. But he upheld the claim for breach of the parents Convention rights on the ground that the Councils interference in the family life of the parents and their children was not in accordance with the law because there was no lawful basis for the accommodation of the children. He awarded each of the parents 10,000 damages: [2015] EWHC 2629 (QB); [2015] All ER (D) 99 (Sep). The Council appealed, contending that there was a lawful basis for the childrens accommodation; also that the judge had been wrong to extend the time limit for bringing a human rights claim; and wrong to award each parent 10,000 damages. The Court of Appeal held that there was a lawful basis for the childrens accommodation and so allowed the appeal; they also observed that they would not have reached the same conclusions as the judge on the limitation and quantum of damages issues but they did not need to decide these given their finding on the main issue: [2017] EWCA Civ 26; [2017] 3 WLR 59. The parents now appeal to this court on the main issue was there or was there not a lawful basis for the childrens accommodation under section 20 of the 1989 Act once the 72 hours of police protection under section 46 had expired? The scheme of the Children Act 1989 The 1989 Act was the outcome of two projects a review by the Law Commission of England and Wales of the private law relating to the guardianship and upbringing of children (culminating in Law Com No 172, Review of Child Law: Guardianship and Custody, 1988) and an interdepartmental review, led by the Department of Health and Social Security, into the public law relating to child care and childrens services (Review of Child Care Law: Report to ministers of an interdepartmental working party, 1985, HMSO). The latter Review had been recommended by the House of Commons Social Services Select Committee, with the aim of replacing a complicated and incoherent system with a simplified and coherent body of law comprehensible not only to those operating it but also to those affected by its operation (Second Report, Session 1983 84, Children in Care, HC 360). The 1985 Review pointed out that an examination of child care law needs to go well beyond the legal framework under which courts make decisions on the care of children. Local authorities provided a spectrum of support and care to children in need, and their families (para 2.2). The Review saw a need for what was then called care to distinguish more sharply between voluntary arrangements made in partnership with parents, which might be called shared care, and compulsory arrangements under a court order (para 2.3). Hence the various statutory powers to provide support for children living with their families should be brought together and include disabled children along with children who were in need for other reasons. And what was then called voluntary care should be differentiated more clearly from compulsory care, by removing the then power of local authorities to assume parental rights simply by passing a resolution to that effect (para 7.35) and by providing that the then power to insist on 28 days notice before removing a child who had been in voluntary care for six months or more should only be used for the purpose of a phased return home to the family (para 7.32). The Review was followed by a Government White Paper, The Law on Child Care and Family Services (1987) (Cm 62). This emphasised that: the provision of a service by the local authority to enable a child who is not under a care order to be cared for away from home should be seen in a wider context and as part of the range of services a local authority can offer to parents and families in need of help with the care of their children. Such a service should, in appropriate circumstances, be seen as a positive response to the needs of families and not as a mark of failure either on the part of the family or those professionals and others working to support them. An essential characteristic of this service should be its voluntary character, that is it should be based clearly on continuing parental agreement and operate as far as possible on a basis of partnership and co operation between the local authority and parents. (para 21) Hence the Government went further than the Review and decided that the power to require 28 days notice before removing a child who had been in voluntary care for six months or more should be abolished (para 22.b). If action to delay or prevent a return home was thought essential to protect the child from harm, the authority would be able to apply for an emergency protection order or ask the police to exercise their emergency protection powers (para 23). It should no longer be possible for an authority to assume parental rights and duties by administrative resolution; instead the authority would be expected to seek a court order in care proceedings (para 24). The White Paper did, however, acknowledge that it would not always be possible to enter into agreement with parents before beginning to look after a child, for example if the child had been abandoned or the parents were incapable of making an agreement because of mental illness (para 25). The Review had also considered whether to provide for formal care agreements where children were voluntarily admitted to local authority care. It did not recommend their introduction as a means of defining the legal powers and responsibilities of parents, children and local authorities, but did recommend that clear information on these matters should be given to parents, which might provide a useful basis on which to build informal agreements (paras 7.14 7.17). The White Paper also envisaged agreements, but emphasised that Where a child is looked after away from home by a local authority under a voluntary arrangement the parents retain all parental powers and responsibilities except in so far as they are delegated to the local authority to enable them to look after the child (para 27). These conclusions were reflected in the 1989 Act, which brought together the two review processes in a single piece of legislation covering all aspects of the care and upbringing of children. Part 1, Introductory, is derived from the Law Commissions proposals. The concept of parental rights and duties, parental powers and authority and similar phrases used in statute and common law are replaced with parental responsibility, defined in section 3(1) as all the rights, duties, powers, responsibilities and authority which by law a parent of a child has in relation to the child and his property. Under section 2(1), Where a childs father and mother were married to each other at the time of his birth a phrase which has an extended meaning by virtue of section 1 of the Family Law Reform Act 1987 they shall each have parental responsibility for the child. Under section 2(9), A person who has parental responsibility for a child may not surrender or transfer any part of that responsibility to another but may arrange for some or all of it to be met by one or more persons acting on his behalf. Further, under section 3(5): A person who (a) does not have parental responsibility for a particular child; but (b) has care of the child, may (subject to the provisions of this Act) do what is reasonable in all the circumstances of the case for the purpose of safeguarding or promoting the childs welfare. Part 2 of the 1989 Act deals with the orders which may be made in private law proceedings between parents and others about the upbringing of children. Part 3 deals with local authority support for children and families, and includes the accommodation service provided for in section 20 (set out in para 2 above). It may be worth noting that clause 17 of the Bill, which became section 20, was amended in standing committee B in the House of Commons. As originally drafted, subsection (7) provided thus: A local authority may not provide accommodation for any child if any person who has parental responsibility for the child objects. That would have had the effect that, even if the parent with whom a child was living wished for him to be accommodated by the local authority, for example to provide a short period of respite for a disabled child, the other parent, who was not looking after the child and was not willing or able to do so, could object to the child being accommodated. Hence it was amended so that only a parent who was willing and able either to provide or arrange for the childs accommodation could object to the local authority doing so (Hansard, Standing Committee B, 18 May 1989, col 156). The relationship between subsection (7) and a parents right to remove the child under subsection (8) is one of the issues in this appeal. Parts 4 and 5 of the 1989 Act provide a range of compulsory powers designed to protect children who are suffering or at risk of suffering significant harm. Part 5 contains short term powers to make child assessment orders (section 43) and emergency protection orders (section 44) and provides for police protection (section 46). In general, these powers can only be exercised where there is a reasonable belief that the child is suffering or likely to suffer significant harm. Part 4 provides for care and supervision orders, including interim orders. An interim order requires reasonable belief that the child is suffering or likely to suffer significant harm attributable to a lack of reasonable parental care (section 38). A full care order requires that the court be satisfied that that is so (section 31(2)). A local authority does not acquire parental responsibility for a child unless and until a care order is made under section 31(1) or an interim care order is made under section 38(2): then under section 33(3) and (4) the authority acquires parental responsibility. That parental responsibility is shared with the parents, but the authority also has power, if satisfied that it is necessary in order to safeguard or promote the childs welfare, to determine the extent to which the parents may meet their responsibility. The case law on section 20 Section 20 contains no express requirement of parental consent to a child being accommodated. Indeed, it envisages circumstances in which no such consent could be obtained, such as where the child is abandoned or lost or appears to have no person with parental responsibility for him. However, the judge had before him several authorities which not only held that informed consent to section 20 accommodation was required but also gave detailed guidance about how it should be obtained. These began with two judgments of Munby J (as he then was) in R (G) v Nottingham City Council [2008] EWHC 152 (Admin); [2008] 1 FLR 1660 and [2008] EWHC 400; [2008] 1 FLR 1668. The context was the removal of a new born baby from his mother three hours after birth and their separation in the hospital. Judicial review proceedings that same day led to an order that they be reunited immediately. In his first judgment, Munby J said this (para 15): The law is perfectly clear but perhaps requires re emphasis. Whatever the impression a casual reader might gain from reading some newspaper reports, no local authority and no social worker has any power to remove a child from its parent or, without the agreement of the parent, to take a child into care, unless they have first obtained an order from a family court authorising that step: He pointed out that there were two qualifications to this. First, a social worker, or indeed anyone else could intervene where necessary to protect a baby from immediate violence at the hands of a parent, not because of any special power or privilege, but because anyone was entitled to intervene in order to prevent an actual or threatened criminal assault (para 21). Second, section 3(5) of the 1989 Act (see above, para 18) allows a person actually caring for a child to do what is reasonable for the purpose of safeguarding or promoting the childs welfare, for example, when medical intervention is urgently needed (paras 23 26). Mother and child were reunited but care proceedings were immediately brought before the local county court and an interim care order made within days. The care proceedings were then transferred to the High Court and came before Munby J, along with the resumed judicial review proceedings, when the baby was still less than three weeks old. In the judicial review proceedings, a declaration was made that the separation of the new born baby from his mother was a breach of the mothers rights under article 8 of the ECHR in that the local authority had neither lawful authority nor any consent from the mother for doing so ([2008] 1 FLR 1668, para 77). In his judgment, Munby J roundly rejected the suggestion (not in fact persisted in) that the local authority had lawfully arranged to accommodate the baby under section 20, because the mother had not objected to the pre birth plan or to the actual removal (which she denied) (paras 54 55): [The local authority] seemed to be conflating absence of objection with actual consent a doctrine which at least in this context is, in my judgment, entirely contrary to principle To equate helpless acquiescence with consent when a parent is confronted in circumstances such as this with the misuse (or perhaps on another occasion the misrepresentation) of non existent authority by an agent of the State is, in my judgment, both unprincipled and, indeed, fraught with potential danger. The next case was Coventry City Council v C, B, CA and CH [2012] EWHC 2190 (Fam); [2013] 2 FLR 987. This also concerned the removal of a baby from her mother on the day of her birth, but this time the mother, having at first refused to do so, had given her consent to the baby being accommodated. The local authority accepted that they should not have sought her consent so soon after the birth, when she had not only undergone surgery but also been given morphine. They therefore conceded that they had acted in breach of her article 8 rights, in that removing the baby was not only unlawful but also not a proportionate response to the risks as they were at that time. In the course of a judgment which approved the settlement of that claim, Hedley J gave detailed guidance about the use of section 20 agreements, guidance which had been seen and presumably approved by Sir James Munby P (para 2). Hedley J emphasised three points at the outset: (i) that the use of section 20 must not be compulsion in disguise; (ii) that In order for such an agreement to be lawful, the parent must have the requisite capacity to make that agreement; and (iii) even where there is capacity, it is essential that any consent so obtained is properly informed and, at least where it results in detriment to the givers personal interest, is fairly obtained (paras 27 and 28). These three points were fleshed out in the detailed guidance which followed (para 46). These principles were approved by the Court of Appeal, albeit obiter, in In re W (Parental Agreement with Local Authority) [2014] EWCA Civ 1065; [2015] 1 FLR 949, para 34. This was an extraordinary case in which the mother had placed her three children with their paternal grandmother in response to local authority concerns which the authority indicated might otherwise lead to care proceedings. A written agreement was made between the local authority, the mother and the grandmother to ensure that [the mother] agrees for the children to remain in the care of [the paternal grandmother] whilst further assessments are completed. Thereafter the authority decided what contact the mother might have with the children but no further assessments were completed. The mother asked for her children back and, when this was refused, applied for a residence order. The trial judge refused an adjournment in order for the mother to be properly assessed and made a residence order in favour of the grandmother. The mothers appeal was allowed on the ground that the judge should have directed an assessment. But Munby P expressed his considerable concern that the local authority had treated the agreement as authorising them to control the mother and her children without bringing care proceedings or undertaking the obligations entailed in section 20 accommodation indeed nobody knew whether the authority did or (more probably) did not regard themselves as accommodating the children under section 20 (para 32). Tomlinson LJ entertained grave reservations about the manner in which section 20 has here been used, if it has (para 39). The agreement, which began by proclaiming that it was not a legal agreement but then said that it might be used in court as evidence if needed, was in his view almost comical in the manner in which it apparently proclaims that it has been entered into under something approaching duress (para 41). The same three authorities were referred to by Munby P, again in the course of obiter observations, in In re N (Children) (Adoption: Jurisdiction) [2015] EWCA Civ 1112; [2017] AC 167. The case was about the power to transfer care proceedings to another member state of the European Union under article 15 of Council Regulation (EC) No 2201/2003 (Brussels IIA). But the children in question had been accommodated under section 20 for many months before care proceedings were eventually issued. So the President took the opportunity of drawing attention to the misuse of section 20 by local authorities, citing a number of first instance examples, of which the decision of the judge in this case was one, where damages had been awarded against the local authority. The President clearly considered those cases to have been rightly decided. He explained (para 163) that A local authority cannot use its powers under section 20 if a parent objects: see section 20(7). So where, as here, the childs parent is known and in contact with the local authority, the local authority requires the consent of the parent. He also pointed out (para 169) that section 20(8): means what it says. A local authority which fails to permit a parent to remove a child in circumstances within section 20(8) acts unlawfully, exposes itself to proceedings at the suit of the parent and may even be guilty of a criminal offence. The criminal offence he presumably had in mind was that contained in section 2 of the Child Abduction Act 1984 (see para 46 below). Four cases, apart from this one, in which damages were awarded under the Human Rights Act because of the misuse of section 20 accommodation, are illustrative of the situations which can arise. Chronologically, the first is In re H (A Child: Breach of Convention Rights: Damages) [2014] EWFC 38 (29 October 2014). This too involved the placement of a new born baby with foster carers on discharge from hospital. Both parents had learning difficulties and agreed to the baby being placed with a particular couple. At that stage the local authority considered this an informal arrangement rather than section 20 accommodation. Only five months later did they decide to seek the parents retrospective consent to section 20 accommodation. Care proceedings were not issued until the child was nearly a year old. The local authority accepted that they had breached the rights of both parents under articles 6 and 8 of the ECHR in a variety of ways mainly by failing to involve them properly in the decision making process, by seeking consent in the way that they did, by placing insufficient weight on the parents clearly expressed wish to care for the child, and by delaying both the assessment of the parents and the issue of proceedings. Next came Northamptonshire County Council v S [2015] EWHC 199 (Fam), in which the mother agreed to the accommodation of her two week old baby and care proceedings were issued nearly four months later. The local authority accepted that they had acted in breach of the rights of both mother and child under article 6 and 8, largely because of the delays both before and after proceedings were issued, which were seriously prejudicial to the childs welfare and the ability of both to enjoy family life with members of the family the child was eventually placed with the maternal grandmother in Latvia. Damages were agreed of 12,000 to the child and 4,000 to the mother and a payment of 1,000 was made to the grandmother. In In re AS, London Borough of Brent v MS, RS and AS [2015] EWFC B150, 7 August 2015, the local authority argued that what they had done was not unlawful. The case concerned a boy aged eight at the material time, both of whose parents had severe mental health problems. Very shortly after he had been returned to his mothers care when she came out of hospital, she suffered a relapse and called an ambulance, leaving the child with a neighbour. A social worker was called and decided that neither the neighbour nor the paternal grandparents were suitable and so the child should be accommodated. The following day the mother was compulsorily admitted (sectioned) under section 2 of the Mental Health Act 1983. There were doubts about her capacity, which fluctuated, and her consent to the accommodation was never obtained. Care proceedings were not issued until a month later. Judge Rowe QC cited the requirement in both the G and the Coventry cases that, in the absence of parental agreement, a child could only be removed under an interim care order, emergency protection order or into police protection. She commented, at para 29: Section 20(1)(c) contains no requirement for the threshold criteria under section 31(2) of the Children Act 1989 to be satisfied on any basis, even reasonable cause. If [counsel] were correct, then a local authority could, on its own assessment of whether a parent was prevented from providing a child with suitable care, remove that child without any reference at all to the threshold criteria. The parents would have no forum in which to contest that assessment, and there is no application open to them under the provisions of the 1989 Act to challenge the local authority and seek the return of their child. The child would have no childrens guardian. There would be no parameters for the position after removal, there would be no requirement for the local authority to apply to court and there would be no time limit on the duration of the removal. In short there would be no safeguards to mirror those that are expressly included in sections 38, 44 and 46. It would seem perverse if a local authority could more easily remove children from their parents in cases where the threshold criteria were not necessarily met than in cases where there were reasonable grounds to conclude that they were met. Damages of 3,000 were awarded to the mother on the ground, as in this case, that the removal was not in accordance with the law. The last in the series cited was Medway Council v M and T [2015] EWFC B164. This too concerned a child (aged five) who was placed in emergency foster care after his mother was detained in hospital under the Mental Health Act. The mother was then too unwell to discuss section 20. The local authority thought that there was no need to issue care proceedings as there was no one to exercise parental responsibility and the mother was not requesting the childs return. Consent was eventually obtained six months later after the mother had left hospital but there were doubts about whether it had been validly obtained. Care proceedings were not issued until the child had been accommodated for more than two years. Rejecting the argument that the accommodation was lawful, Judge Lazarus commented (in similar vein to Judge Rowe QC) at para 53: It cannot have been intended by Parliament that provision for accommodation under section 20 would have given powers to a local authority that would avoid and subvert those careful provisions of Parts IV and V of the Children Act 1989 that safeguard families from unregulated unilateral actions of local authorities that interfere with their family life. Damages of 20,000 were awarded both to the mother and to the child. Also cited in In re N were a number of other decisions where judges had been highly critical of the use of section 20 made by local authorities, but in the context of care proceedings rather than a claim for damages under the Human Rights Act: In re P (A Child) (Use of section 20 Children Act 1989) [2014] EWFC 775; Medway Council v A (Learning Disability: Foster Placement) [2015] EWFC B66; Gloucestershire County Council v S and C1 and C2 [2015] EWFC B149; and In re A (Application for Care and Placement Order: Local Authority Failings) [2015] EWFC 11; [2016] 1 FLR 1. In these, the main focus of the courts criticism was that the local authority had delayed for a long time after accommodating the child under section 20 before issuing proceedings for a care order. In re A is also a decision of Munby P. It concerned a little boy who was born while his mother was in prison and accommodated by the local authority. Care proceedings were not issued until he was eight months old. They were dismissed by the President, who described the local authoritys case against the father as a tottering edifice built on inadequate foundations (para 28) and proceeded comprehensively to demolish it in a judgment which should be an object lesson to all family judges trying these difficult cases. He ordered that the child, now one year old, be returned to his father. Among his criticisms of the local authority is that they failed adequately to address the very changed landscape once the fathers relationships with the mother, and with a later partner, had ended and he was putting himself forward as sole carer for his son (para 33). It is not clear whether or not the father had parental responsibility. If he had, there must be question marks over the legality of continued accommodation of a child under section 20 in such circumstances. No doubt there have been other similar cases since then. A recent example is the judgment of Keehan J in Herefordshire Council v AB and CD; Herefordshire Council v EF and GH [2018] EWFC 10. His criticism was directed at delays of eight years (between the ages of eight and 16) in the case of CD and nine years (from leaving the special care baby unit at the age of five months until the age of nine) before care proceedings were issued in the case of GH. In CDs case, the mother had written to the local authority formally withdrawing her consent to his accommodation when he was about nine and had only been accommodated for five months. But instead of returning him to his mothers care, the authority advised her to seek legal advice. Nor, despite having been advised that the threshold for a care order was met, did they initiate care proceedings until it was almost too late to do so, because CD was nearing the upper age limit for making a care order. These cases illustrate a number of problems with the use of section 20: separation of a baby from the mother at or shortly after birth without police protection or a court order, where she has not delegated the exercise of her parental responsibility to the local authority or been given in circumstances where it is questionable whether the delegation was truly voluntary; retention of a child in local authority accommodation after one or both parents have indicated a desire to care for the child or even formally asked for his return; and a lack of action where the perception is that the parents do not object to the accommodation, even though this means that no constructive planning for the childs future takes place. They also illustrate the dilemma posed to the local authority: something has to be done to look after the child but there are serious doubts about whether the parent can validly delegate the exercise of her responsibility. Equally, they illustrate the dangers if the local authority proceed without such delegation or obtain it in circumstances where the parents feel that they have little choice. There are none of the safeguards and protections for both the child and the parents which attend the compulsory procedures under the Act. Yet, rushing unnecessarily into compulsory procedures when there is still scope for a partnership approach may escalate matters in a way which makes reuniting the family more rather than less difficult. As Hedley J pointed out in Coventry City Council (para 24 above), at paras 25 and 26, the emphasis in Part III is on partnership any attempt to restrict the use of section 20 runs the risk both of undermining the partnership element in Part III and of encroaching on a parents right to exercise parental responsibility in any way they see fit to promote the welfare of their child. In this present case, the Council were attempting to do just that to work in partnership with the parents in an effort to get the children home as soon as possible and to avoid escalating matters by bringing proceedings unnecessarily. The judgments below The judge pointed out that at first sight section 20 might be thought not to require the active agreement of those with parental responsibility. However, it was common ground between counsel that the positive and informed consent of a parent must be obtained (para 55). He quoted at length from G (paras 22 23 above), W (para 26 above) and Coventry City Council (para 24 above), including Munby Js statement in the second G report (at para 61) that Submission in the face of asserted State authority is not the same as consent. In this context, as in that, nothing short of consent will suffice (para 56). He concluded that the parents were not fully informed of the matters of which they should have been informed (para 65). Hence there was no valid consent on 6 July, but had there been such consent the interference on that date would have been a proportionate response (para 66). Furthermore, the letters of 13 July amounted to an express withdrawal of any consent that might have been signified at the time of signing the agreement (para 84). It followed that, while the initial removal of the children from home was lawful and indeed a proportionate and necessary response to the need to safeguard them from harm, the actions of the defendants in retaining the children away from their parents after the expiry of the 72 hour period were unlawful, and therefore the interference with the parents article 8 rights was also unlawful (para 111). He did not therefore have to consider whether, if in accordance with the law, it was nonetheless not a proportionate response to a legitimate aim. The Court of Appeal reviewed the G, Coventry City Council, W and N (para 27 above) cases, pointing out that they all post dated the events in this case, and asked what, as a matter of law, as opposed to subsequently identified good practice, was required before the local authority were permitted to accommodate the Williams children under section 20 of the 1989 Act? (para 62). They focussed on subsection (7), about which they made three points. First, if it applies, it operated as a bar to the local authority providing accommodation under section 20 (para 65). Second, for it to apply, the person with parental responsibility had to be willing and able to provide accommodation. In this case the bail conditions both prevented the parents from providing suitable accommodation to the children (section 20(1)(c)) and meant that they were not able to do so (section 20(7)) (paras 66, 67 and 76). Third, the word used was objects: there is no express statutory requirement of consent, let alone any requirement for such consent to be in writing and subject to any of the various refinements that have been described in the case law. This was not meant to detract from the obvious wisdom and good sense of the good practice guidance given principally by Munby P and Hedley J, but failure to comply did not give rise to a claim for damages for breach of statutory duty or Convention rights (para 68). The rulings were not binding on the Court (paras 69 to 70). In the cases Sir James was then considering it may well have been appropriate for him to equate the obligation on a local authority not to use its powers under section 20 if a parent objects as meaning, effectively, that when the parent is known and in contact with the authority, consent is required. But it would be wrong to elevate the requirement of consent into a rule of law that operates in all circumstances (para 74). In this case, on the basis of the lawfully imposed bail conditions, the interference was in accordance with the law and necessary for the protection of the health or the rights and freedoms of others (para 76). Nevertheless, The guidance given in the family court identifies clear, co operative and sensible ways in which a voluntary arrangement can be made between a parent and a local authority when a child may need to be accommodated; it is, in short, good practice guidance and a description of the process that the family court expects to be followed. For reasons of good administration, the practice guidance should continue to be followed but a failure to follow it does not, of itself, give rise to an actionable wrong, or found a claim for judicial review. (para 77) Although section 20(8) is mentioned earlier in the judgment, it does not feature in the courts discussion of the lawfulness of the childrens continued accommodation, nor is the relationship between subsections (7) and (8), or with the concept of parental responsibility, explored. Unsurprisingly, the focus is on the judges decision that the interference with family life was not in accordance with the law and there is no discussion of whether, if it was lawful, it was nevertheless a disproportionate response to the situation. Discussion: section 20 generally The starting point must be parental responsibility. All mothers and (now) most fathers have it automatically. It encompasses all the rights of a parent. The most obvious and fundamental of these is the right to look after and bring up ones own children. A person with parental responsibility may arrange, of his or her own accord, for some or all of his or her parental responsibility to be met by others acting on his or her behalf (section 2(9), para 18 above) and the exercise of parental responsibility may be circumscribed by court order. But a local authority cannot interfere with a persons exercise of their parental responsibility, against their will, unless they have first obtained a court order. Accordingly, no local authority have the right or the power to remove a child from a parent who is looking after the child and wants to go on doing so without a court order. Only the police can do that under section 46 of the 1989 Act. It follows that the decision in R (G) v Nottingham City Council (paras 22 23 above) was absolutely right. The mother had just given birth. She wanted to look after her baby. The local authority had no power to prevent her and neither did the hospital. Helpless submission to asserted power does not amount to a delegation of parental responsibility or its exercise. Secondly, it may be confusing to talk of parental consent to the removal (or accommodation) of her child. If a parent does agree to this, she is simply delegating the exercise of her parental responsibility for the time being to the local authority. Any such delegation must be real and voluntary. Otherwise the local authority have no power to interfere with her parental responsibility by taking the child away. At the very least, therefore, it should not occur in the sort of circumstances in which consent was obtained in Coventry City Council v C, B, CA and CH (para 24 above); nor should any impression be given that the parent has no choice in the matter, as happened in In re W (Parental Agreement with Local Authority) (para 26 above). Obviously, the best way to avoid this is by informing the parent fully of her rights under section 20, but a delegation can be real and voluntary without being fully informed. Thirdly, removing a child from the care of a parent is very different from stepping into the breach when a parent is not looking after the child. That is what happened in In re AS, London Borough of Brent v MS, RS and AS (para 30 above) and section 20 is designed to give the local authority the power, and indeed the duty, to do that. The active consent or delegation of a parent who is not in fact looking after or offering to look after the child is not required, any more than it is when there is no one with parental responsibility or the child is abandoned or lost. But the local authoritys duty and power are subject to the later provisions of the section, in particular, to subsections (7) to (11). In such cases, as a matter of good practice, local authorities should give parents clear information about what they have done and what the parents rights are. This should include, not only their rights under subsections (7) and (8), but also their rights under other provisions of the 1989 Act, such as that in paragraph 15 of Schedule 2 to know the whereabouts of their child. Parents should also be informed of the local authoritys own responsibilities. In appropriate cases, this may include information about the local authoritys power (and duty) to bring proceedings if they have reasonable grounds to believe that the child is at risk of significant harm if they do not. Fourthly, parents may ask the local authority to accommodate a child, as part of the services they provide for children in need. If the circumstances fall within section 20(1), there is a duty to accommodate the child. If they fall within section 20(4), there is power to do so. Once again, this operates as a delegation of the exercise of parental responsibility for the time being. The section does not expressly require that such delegation be with informed consent, but the duty and the power are subject to subsections (7) to (11). Once again, as a matter of good practice, parents should be given clear information about their rights and the local authoritys responsibilities. Fifthly, subsection (7) operates as a restriction on the powers and duties of the local authority under subsections (1) to (5). The authority cannot accommodate a child if a parent with parental responsibility who is willing and able either to accommodate the child herself or to arrange for someone else to do so objects to the local authority doing so. It says nothing about the suitability of the parent or of the accommodation which the parent wishes to arrange. As Black LJ explained in In re B (Looked After Child) [2013] EWCA Civ 964; [2014] 1 FLR 277, para 34: I raised the question during the appeal hearing as to whether a parent who is inadequate is in fact willing and able to provide accommodation but it did not excite much argument. That is explained, I think, by there being a common understanding that where parents in fact object to a local authority providing accommodation, a local authority will have to have recourse to care proceedings if they seek to accommodate a child and any debate as to whether the parents are able to provide accommodation is to be had in that context, not in the context of section 20. I agree. The words interpolated by amendment into subsection (7) (see para 19 above) serve a different purpose. Thus, for example, a father who is separated from the mother and is not offering the child a home or offering to arrange an alternative, cannot object to the local authority accommodating the child at the mothers request; or, for example, the mothers in In re AS (para 30 above) or in Medway Council v M and T (para 31 above) who were compulsorily detained in hospital could not object to the local authority accommodating the child unless they were able to arrange alternative accommodation. But that is all that subsection (7) does. It means that the local authority have neither the power nor the duty to accommodate the child if a parent with parental responsibility proposes to accommodate the child herself or to arrange for someone else to do so. If the local authority consider the proposed arrangements, not merely unsuitable, but likely to cause the child significant harm, they should apply for an emergency protection order. Sixthly, subsection (8) makes it absolutely clear that a parent with parental responsibility may remove the child from accommodation provided or arranged by a local authority at any time. There is no need to give notice, in writing or otherwise. The only caveat, as Munby J said in R (G) v Nottingham City Council (para 22 above), is the right of anyone to take necessary steps to protect a person, including a child, from being physically harmed by another: for example, if a parent turned up drunk demanding to drive the child home. In such circumstances the people caring for the child would have the power (under section 3(5) of the 1989 Act) to do what is reasonable in all the circumstances for the purpose of safeguarding or promoting the childs welfare (see para 18 above). It follows that, if a parent unequivocally requires the return of the child, the local authority have neither the power nor the duty to continue to accommodate the child and must either return the child in accordance with that requirement or obtain the power to continue to look after the child, either by way of police protection or an emergency protection order. These can, of course, only be obtained if there is reasonable cause to believe that the child will otherwise suffer significant harm. Thus, in Herefordshire Council v AB and CD (para 33 above), the Council should have acted upon the mothers formal withdrawal of her consent to CDs being accommodated which would be better framed in terms of a request for the immediate (or timed) return of the child rather than advising her to seek legal advice. A parent whose unequivocal request for the immediate (or timed) return of an accommodated child is refused could take a variety of steps to enforce her rights. The simplest step would be to remove the child. At common law there were torts of depriving a parent of the services of a child and harbouring a child, but these were abolished by section 5 of the Law Reform (Miscellaneous Provisions) Act 1970 (and see F v Wirral Metropolitan Borough Council [1991] Fam 69). The traditional method of securing the release of a child through habeas corpus proceedings remains, subject of course to any court orders to the contrary. It is also an offence for a person, without lawful authority or excuse, to take or detain a child under the age of 16 so as to remove him from the lawful control of any person having lawful control of the child or so as to keep him out of the lawful control of any person entitled to lawful control of the child: Child Abduction Act 1984, section 2. But far preferable to any of these is for the local authority promptly to honour an unequivocal request from the parent for the childs immediate (or timed) return. Seventhly, the right to object in subsection (7) and the right to remove in subsection (8) are qualified by subsections (9) and (10). These cater for court orders which have determined with whom a child is to live. Thus if there is a child arrangements order under section 8 of the 1989 Act or an order under the inherent jurisdiction of the High Court, providing for the child to live with a particular person or persons, or if there is a special guardianship order, then that parent cannot object or remove the child if the person or persons with whom the child is to live, or the special guardian or guardians, agree to the child being accommodated. These orders restrict that parents exercise of parental responsibility; but without such an order it is not restricted. Eighthly, section 20 makes special provision for children who have reached 16. In addition to the general duty in subsection (1), there is a duty in subsection (3) to provide accommodation for any child in need who has reached 16 and whose welfare will be seriously prejudiced if this is not done; and in addition to the general power in subsection (4), there is power in subsection (5) to accommodate anyone who has reached 16 but is under 21 in a community home which caters for over 16 year olds. Subsection (11) makes it clear that once an accommodated child reaches 16, a parent has no right to object or to remove the child if she is willing to be accommodated by the local authority. Finally, there is nothing in section 20 to place a limit on the length of time for which a child may be accommodated. However, local authorities have a variety of duties towards the children whom they are accommodating. Their general duties towards looked after children in section 22 of the 1989 Act include a duty to safeguard and promote their welfare, in consultation with both the children and their parents. This is reinforced by the Care Planning, Placement and Case Review (England) Regulations 2010, SI 2010/959, which require local authorities to assess a childs needs for services to achieve or maintain a reasonable standard of health or development and prepare a care plan for her, to be agreed with the parents if practicable (regulation 4(1), (4)). The care plan has to record, inter alia, the arrangements made to meet the childs needs and the long term plan for her upbringing (the plan for permanence) (regulation 5(a) and (b)). Thus, although the object of section 20 accommodation is partnership with the parents, the local authority have also to be thinking of the longer term. There are bound to be cases where that should include consideration of whether or not the authority should seek to take parental responsibility for an accommodated child by applying for a care order. Good examples are Medway Council v M and T (para 31 above), where the mother suffered from long term mental health problems and was not meeting her parental responsibility, so it was necessary for someone to do so; and Herefordshire Council v EF and GH (above, para 33), where it was recognised as soon as the mother and baby foster placement of GH and his 14 year old mother broke down that care proceedings should be brought, but this did not happen until he was nine years old. Care proceedings have obvious advantages for the child. They involve a rigorous scrutiny of the risk of harm to her health and development if an order is not made, of the assessment of her needs and of the plans for her future. Her interests are safeguarded by an expert childrens guardian. If an order is made, it means that the local authority have parental responsibility for her and can put their plans into effect. But, as pointed out by Judge Rowe QC in In re AS (para 30 above) there are also advantages for the parents and for the wider family. The parents are entitled to legal aid. Their rights are safeguarded in the proceedings. Even if a care order is made, the court may make orders about their continued contact with the child. Hence it is scarcely surprising that the President and other judges have deplored the delay in bringing care proceedings in cases where it was obvious that they should have been brought. Section 20 must not be used in a coercive way: if the state is to intervene compulsorily in family life, it must seek legal authority to do so. Thus although it is not a breach of section 20 to keep a child in accommodation for a long period without bringing care proceedings, it may well be a breach of other duties under the Act and Regulations or unreasonable in public law terms to do so. In some cases there may also be breaches of the childs or the parents rights under article 8 of ECHR. Application in this case In applying section 20 to the facts of this case, it is important to bear in mind that the local authority began looking after the children because they had been taken into police protection. This was not a case in which a local authority used their powers under section 20 to take charge of children who were then in the care of their parents. Here, the section 20 arrangements replaced the compulsory arrangements under section 46, without the children returning home in the meantime. Whereas, where children move from the care of their parents into section 20 accommodation, the focus is upon whether there has been a truly voluntary delegation of the exercise of parental responsibility, the focus in a case such as this is upon subsections (7) and (8). Here, when the police protection expired on 8 July, the circumstances clearly fell within section 20(1)(c): prevented has been given a wide interpretation and the parents were prevented from providing their children with suitable accommodation, not least because of the condition in which their home had been found on 5 July. The starting point, therefore, is that the Council had a duty under section 20(1) to accommodate the children. They would not have been entitled to carry out that duty, however, if the circumstances existed fell within section 20(7), or if a parent sought to remove the children pursuant to section 20(8). It is therefore necessary to look carefully to see whether either of these circumstances existed. The parents had signed the safeguarding agreement and section 20 agreements on 6 July which were open ended in length. It is a matter of good practice that such agreements be made, even in cases where the accommodation has begun with compulsory emergency measures, because of the rights that the parents will have when the compulsory measures expire, to object or to remove the children at will. But it is important that such agreements do not give the impression that the parents have no right to object or to remove the children. The judge held that the parents had the capacity to give a real consent on 6 July, despite their distress that day or, putting that finding in terms which reflect the analysis set out earlier in this judgment, they had the capacity to delegate to the local authority the exercise of their parental responsibility for accommodating the children. However, the judge viewed their consent as invalid because of the case law which imposed a requirement for real and informed parental consent. From that finding, followed his conclusion that the local authority had no lawful basis to keep the children away from the parents. It is worth observing that there can be a delegation of the exercise of parental authority even without the parent being fully informed, provided that the parents action is voluntary (see para 39 above). But, as these children were already lawfully accommodated by the local authority when the police protection order expired, the situation at that point ought, more properly, to be viewed through the lens of section 20(7) and (8), rather than as if it were an initial delegation of the exercise of parental authority. Whether the local authority had a lawful basis to continue to accommodate the children all depends, therefore, on whether the parents actions after the expiry of the police protection order amounted to an unequivocal request for the children to be returned. The judge did not see the bail conditions as an insuperable impediment to their making such a request (para 65.b). There could have been a number of solutions, including the parents or the Council persuading the police to vary bail to allow alternative accommodation with family and friends, if there were any to help, or with the parents themselves. Breaking police bail conditions is not a criminal offence and there was no evidence of what would have happened if the children had returned home. The bail conditions did not operate to give the Council any greater powers than they had under the 1989 Act. The ostensible reason for the conditions was not a good reason for keeping all eight of the children particularly the baby apart from their parents. It is not surprising that they were lifted soon after contact from a senior Council officer, even though there was still the prospect of criminal proceedings against the parents. But it is difficult to know how to construe the events of 9 July, when the parents went to the Councils offices and, according to them, asked for the return of their children. The judge accepted the social workers denial that she had told them that the children would never be returned. But he found it probable that they were told that the document they had signed authorised the children to be kept, because that is what she believed at the time. However, he went on to say that it is difficult to determine whether, and if so on what terms, the claimants asked for their children to be returned. Given his earlier finding about the events of 6 July, he made no finding about it (para 68). It is therefore difficult for us to construe these events, either as a clear objection to the childrens accommodation under section 20(7) or as an unequivocal request for their immediate return under section 20(8). There would be little point in our sending the case back to the judge for him to make findings on this matter. It is fairly clear that, on that date, he would have regarded the continued interference in the familys life as a proportionate means of protecting the children from harm. In those circumstances, even if the events of 9 July had removed the lawful basis for the local authoritys actions for a matter of days, which must be doubtful, no damages would be payable. Next came the solicitors letters of 13 July. These cannot be construed as an unequivocal request for the childrens immediate return. The judge construed them as the withdrawal of any consent that might have been signified at the time of the agreement (para 84). However, they do not read as an objection or as a request for immediate return. In fact, the parents were fortunate enough to have the advice and assistance of some experienced and very sensible solicitors and wise enough to offer their complete co operation to improve matters in the home and allay the Councils concerns. The solicitors were obviously trying to achieve the return of all eight children as quickly as possible on a collaborative basis, rather than to push the Council into issuing care proceedings which would probably have delayed matters much longer. As part of that collaborative approach, it is clear from the letters that the parents were prepared, albeit no doubt with some reluctance, to delegate the exercise of their parental responsibility for accommodating the children to the local authority until the Council felt able to return them, and that delegation was never unequivocally withdrawn. The result was a happy outcome for all concerned. I was for a while concerned at the delay in assuring the police that in the Councils view the bail conditions could safely be lifted so that the children could return home. It was not the Councils job to apply for the conditions to be varied or lifted but they could have provided earlier support for an application by the parents. However, as the judge found, the police had their own concerns, independent of those of the Council, which later led to multiple charges being preferred against the parents, so that it was not possible to say what effect an earlier positive report from the Council would have had (para 91). It follows that, the parents not having objected or unequivocally requested the childrens immediate return, there was a lawful basis for the childrens continued accommodation under section 20. This means that the ground on which the judge held their accommodation to have been in breach of the parents article 8 rights is not made out. There would remain the questions (a) whether the Councils actions, albeit in accordance with the law, amounted to an interference in the right to respect for family life and (b) if so, whether this was a proportionate means of achieving a legitimate aim the aim of protecting the children from harm or preventing crime. This issue was not fully explored, either by the judge or by the Court of Appeal, nor has it been raised before this court. I would accept that keeping children away from their parents in circumstances where the parents feel that they have no choice in the matter or have indicated that they want their children back is an interference by a public authority in their family life. The judge found that the interference was proportionate at the outset of the childrens accommodation (para 66). It is also implicit in the judges finding that the Council might have sought Emergency Protection Orders in response to the solicitors letters in July (para 86) that the interference continued to be a proportionate response at that stage. The persistence of the bail conditions was clearly relevant to the proportionality of the continued interference. It may very well be that, had the issue been explored, the court would have found that the interference was proportionate. In any event, as the issue has not been raised before us, it is not for this court to say that it was not. It follows that the parents Human Rights Act claims should have been dismissed, albeit for reasons which are rather different from those of the Court of Appeal. In sum, there are circumstances in which a real and voluntary delegation of the exercise of parental responsibility is required for a local authority to accommodate a child under section 20, albeit not in every case (see para 40 above). Parents with parental responsibility always have a qualified right to object and an unqualified right to remove their children at will (subject to any court orders about where the child is to live). Section 20 gives local authorities no compulsory powers over parents or their children and must not be used in such a way as to give the impression that it does. It is obviously good practice in every case that parents should be given clear and accurate information, both orally and in writing, both as to their own rights and as to the responsibilities of the local authority, before a child is accommodated under section 20 or as soon as practicable thereafter.
UK-Abs
This appeal concerns the limits of a local authoritys powers and duties to provide accommodation for children in need under section 20 of the Children Act 1989 (CA). The appellants are the parents of eight children, at the relevant time aged 14, 12, 11, 9, 7, 5, 2 and 8 months. On 5 July 2007 their 12 year old son was caught shoplifting. He told the police that he had no money for lunch and that his father had hit him with a belt. The police visited the familys home and found it in an unhygienic and dangerous state unfit for habitation by children. The police exercised their powers under s 46 CA to remove the children to suitable accommodation for a maximum of 72 hours. The children were provided with foster placements by the respondent local authority (the Council). The appellants were arrested and interviewed by the police, then released on police bail on condition that they could not have unsupervised contact with any of their children. The appellants were asked to sign a Safeguarding Agreement by the Council on 6 July 2007 by which they agreed that all the children would remain in their foster placements for the present time. They were not informed of their right, under s 20(7) CA to object to the childrens continued accommodation after the expiry of 72 hours, nor of their right, under s 20(8), to remove them at any time. On 13 July, solicitors instructed on their behalf gave formal notice of the appellants intention to withdraw consent. On 16 July the Council decided that the children should be returned home as soon as possible. However, it took until 6 September for the Council to arrange with the police for the bail conditions to be varied, whereupon the children returned home on 11 September 2007. Criminal proceedings against the appellants were later discontinued. In July 2013 the appellants issued proceedings claiming damages, amongst other things, for breach of their rights under article 8 of the European Convention on Human Rights. The High Court dismissed all the claims except for the article 8 claim, which was upheld on the basis that, because the parents had not given their informed consent, there had been no lawful basis for the accommodation of the children after 72 hours, so that the interference with family life was not in accordance with the law. The judge awarded each of the appellants damages of 10,000. The Court of Appeal allowed the Councils appeal, holding that consent was not required and that there had been a lawful basis for the childrens accommodation under s 20 CA, and the interference with their article 8 rights had been proportionate. The Supreme Court unanimously dismisses the appeal. It holds that the appellants did not object or unequivocally request the immediate return of the children, so there had been a lawful basis for the childrens continued accommodation under s 20 CA. Lady Hale gives the only substantive judgment. Local authorities in England look after a substantial number of children (over 70,000 in March 2017), either as part of a range of services provided for children in need, or under powers to intervene compulsorily to protect children from harm. Compulsory intervention by a local authority requires the sanction of a court process. No court order is required for the authority to provide accommodation for children in need under s 20 CA. However, it is subject to the right under s 20(7) for a person with parental responsibility for the child, who is willing and able to provide accommodation for him or arrange for accommodation for him, to object, and to the provision in s 20(8) that any person who has parental responsibility for a child may at any time remove the child from accommodation provided by or on behalf of the local authority under this section [1 2]. In short, it is a voluntary service. If a parent delegates the exercise of his or her parental responsibility for a child to the local authority under s 20 CA, such delegation must be real and voluntary. The best way to ensure this is to inform the parent fully of their rights under s 20, although delegation can be real and voluntary without being informed [39]. No such delegation is required where the local authority steps into the breach to exercise its powers under s 20 where there is no one with parental responsibility for the child, the child is lost or abandoned, or the parent is not offering to look after the child. In those circumstances active delegation is not required [40]. If a parent with unrestricted parental responsibility objects at any time pursuant to s 20(7), the local authority may not accommodate the child under s 20, regardless of the suitability of the parent or of the accommodation which the parent wishes to arrange [42 43, 47]. It is not a breach of s 20 to keep a child in accommodation for a long period but a local authority must also think of the longer term and consider initiating care proceedings in order to fulfil its other duties under the CA, and to avoid breaches of the childs or the parents rights under article 8 [49 52]. In the present case, where the s 20 arrangements replaced the compulsory police protection under s 46 without the children returning home in the meantime, the focus was not on the appellants delegation of parental responsibility to the Council, but on their rights under subsections 20(7) and 20(8) [53]. Entering into a safeguarding agreement was a matter of good practice, although it was important that it did not give the impression that the parents had no right to object or to remove the children [55]. The lawfulness of the s 20 accommodation depended on whether the appellants actions amounted to an unequivocal request for the children to be returned. The bail conditions were not an insuperable impediment to the request and were not a reason to refuse [57]. However, the letters from the appellants solicitors could not be read as an objection or as a request for immediate return: the solicitors were sensibly trying to achieve the return of the children as quickly as possible on a collaborative basis rather than push the Council into issuing care proceedings [59]. Although the Council could have provided earlier support for an application to lift the bail conditions, it was not possible to say what effect this would have had, given the independent concerns of the police [60]. Accordingly, there was a lawful basis for the childrens continued accommodation under s 20 and the ground relied on by the judge for finding a breach of the appellants article 8 rights was not made out [61]. The question of whether the Councils actions were a proportionate interference with the right to respect for family life throughout the time the children were accommodated was not fully explored in the lower courts and was not raised as an issue before the Supreme Court [62]. The appeal is therefore dismissed, albeit for reasons which differ from those of the Court of Appeal [63].
This is litigation on a large scale. Between May 2005 and February 2009, Mr Mukhtar Ablyazov was the chairman and controlling shareholder of the claimant, a bank incorporated in Kazakhstan. It is alleged that during this period, he embezzled some US$6 billion of the Banks funds. In February 2009, the Bank was nationalised and Mr Ablyazov was removed from office. He fled to England, where he ultimately obtained asylum. In August 2009, the Bank began proceedings against him in the Commercial Court, alleging misappropriation of its funds. Other proceedings followed, in the Commercial Court and the Chancery Division. Mr Ablyazov was ultimately the defendant in eleven actions brought by the Bank against him, either alone or in conjunction with alleged associates. At the outset of the litigation, the Bank obtained a disclosure order requiring Mr Ablyazov to identify and disclose the whereabouts of his assets and a worldwide freezing order preventing him from dealing with them. Subsequently, in August 2010, the High Court appointed receivers over all of Mr Ablyazovs assets. Later that year, the Bank obtained a number of search and disclosure orders. These yielded a haul of documents revealing a large number of undisclosed assets and a network of undisclosed companies through which Mr Ablyazov had sought to put them out of the reach of the Bank. In 2011, the Bank applied for an order committing Mr Ablyazov for contempt of court. Teare J gave judgment on that application on 16 February 2012. He held that Mr Ablyazov had failed to disclose his assets in breach of the disclosure order, that he had disposed of certain of them in breach of the freezing order and the receivership order, and that he had given false evidence and forged documents in an attempt to cover his tracks. Teare J sentenced him to 22 months imprisonment. However, by the time that the judgment was handed down, the bird had flown. Mr Ablyazov fled the country on receipt of the judges draft judgment. He spent some time in prison in France pending the resolution of an application by Russia for his extradition, which ultimately failed. His present whereabouts are unknown. On 29 February 2012, Teare J ordered that Mr Ablyazovs defences in the Commercial Court actions should be struck out unless he gave full disclosure of his assets and surrendered himself to the tipstaff. He did neither of these things, and default judgments were subsequently obtained against him in four of the actions for sums exceeding US$4.6 billion and in a fifth for damages to be assessed. Very little has been recovered. The present proceedings were commenced in July 2015. The defendants are Mr Ablyazov and his son in law Mr Khrapunov, who is domiciled in Switzerland. Mr Ablyazov has taken no part in these proceedings, and the present appeal is concerned only with the position of Mr Khrapunov. The Banks case against him is that he has at all times been aware of the freezing order and the receivership order, and that in about 2009 he entered into a combination or understanding with Mr Ablyazov to assist him in dissipating and concealing his assets. For present purposes, it may be assumed that they entered into it in England where Mr Ablyazov was then living. Teare J found that there was sufficient evidence to that effect, and the point has not been contested before us. It is alleged that both before and after Mr Ablyazovs flight abroad Mr Khrapunov actively participated in the agreed scheme, both on Mr Ablyazovs instructions and from time to time on his own initiative. He is said to have been instrumental in extensive dealings in the assets of Swiss, Belizean and Russian companies controlled by Mr Ablyazov and in laying a trail of false documents to conceal what had become of them. This is relied upon as constituting the tort of conspiracy to cause financial loss to the Bank by unlawful means, namely serial breaches of the freezing order and the receivership order. The present appeal arises out of an application by Mr Khrapunov contesting the jurisdiction of the English court. The application is made on two grounds. The first is that there is no such tort as the Bank asserts, because contempt of court cannot constitute unlawful means for the purpose of the tort of conspiracy. This, Mr Samek QC submits on his behalf, is because means are unlawful for this purpose only if they would be actionable at the suit of the claimant apart from any combination. Contempt of court, he submits, is not actionable as such. There is therefore no good arguable case on which to found jurisdiction. The second ground is that, Mr Khrapunov being domiciled in Switzerland, there is no jurisdiction under the Lugano Convention unless the claim falls within the special jurisdiction conferred by article 5(3) on the courts of the place where the harmful event occurred. The only event said to have happened in England is the conspiratorial agreement. Mr Khrapunov contends that the event that was harmful was not the conspiratorial agreement but the acts done pursuant to it. They were done outside England. The cause of action Conspiracy is one of a group of torts which tend to be loosely lumped together as economic torts, the others being intimidation, procuring a breach of contract and unlawful interference with economic and other interests (sometimes called the intentional harm tort). Along with tortious misrepresentation (fraudulent or negligent), passing off, slander of title and infringement of intellectual property rights, the economic torts are a major exception to the general rule that there is no duty in tort to avoid causing a purely economic loss unless it is parasitic upon some injury to person or property. The reason for the general rule is that, contract apart, common law duties to avoid causing pure economic loss tend to cut across the ordinary incidents of competitive business, one of which is that one mans gain may be another mans loss. The successful pursuit of commercial self interest necessarily entails the risk of damaging the commercial interests of others. Identifying the point at which it transgresses legitimate bounds is therefore a task of exceptional delicacy. The elements of the four established economic torts are carefully defined so as to avoid trespassing on legitimate business activities or imposing any wider liability than can be justified in principle. Some of the elements of the torts, notably intention and unlawful means are common to more than one of them. But it is dangerous to assume that they have the same content in each context. In OBG Ltd v Allan [2008] AC 1, Lord Hoffmann drew attention to some of the confusions and category errors which have resulted from attempts by judges and scholars to formulate a unified theory on which these causes of action can be explained. Lord Hoffmann was not directly concerned with the tort of conspiracy, but of all the economic torts it is the one whose boundaries are perhaps the hardest to define in principled terms. The modern tort of conspiracy was developed in the late 19th and early 20th century, as a device for imposing civil liability on the organisers of strikes and other industrial action, once the Conspiracy and Protection of Property Act 1875 had provided that combinations in furtherance of trade disputes should no longer be indictable as crimes. It is an anomalous tort because it may make actionable acts which would be lawful apart from the element of combination. The ostensible rationale, that acts done in combination are inherently more coercive than those done by a single actor, has not always been found persuasive, least of all when the single actor may be a powerful corporation. There is much to be said for the view expressed by Lord Walker in Revenue and Customs Comrs v Total Network SL [2008] 1 AC 1174, para 78, that an unarticulated factor in the development of the tort was the conviction of late Victorian judges that large scale collective action in the political and economic sphere by those outside the traditional governing class was a potential threat to the constitution and the framework of society. Nonetheless, the tort of conspiracy has an established place in the law of tort and its essential elements have been clarified by a series of modern decisions of high authority, most of them in contexts far removed from the modern torts origin in the law relating to industrial disputes. It has been recognised since the decision of the House of Lords in Quinn v Leathem [1901] AC 495 that the tort takes two forms: (i) conspiracy to injure, where the overt acts done pursuant to the conspiracy may be lawful but the predominant purpose is to injure the claimant; and (ii) conspiracy to do by unlawful means an act which may be lawful in itself, albeit that injury to the claimant is not the predominant purpose. In Lonrho Plc v Fayed [1992] 1 AC 448, Lord Bridge, with whom the rest of the Appellate Committee agreed, reviewed the earlier authorities and summarised the position as follows, at pp 465 466: Where conspirators act with the predominant purpose of injuring the plaintiff and in fact inflict damage on him, but do nothing which would have been actionable if done by an individual acting alone, it is in the fact of their concerted action for that illegitimate purpose that the law, however anomalous it may now seem, finds a sufficient ground to condemn their action as illegal and tortious. But when conspirators intentionally injure the plaintiff and use unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests; it is sufficient to make their action tortious that the means used were unlawful. We shall call these two forms of conspiracy a lawful means and an unlawful means conspiracy respectively. The terminology is not exact, because a cause of action in conspiracy may be based on a predominant intention to injure the claimant whether the means are lawful or unlawful. But it seems to us to be more satisfactory than using terms which appear to distinguish between conspiracies to injure and other conspiracies. As we shall show, all actionable conspiracies are conspiracies to injure, although the intent required may take a variety of different forms. Conspiracy is both a crime, now of limited ambit, and a tort. The essence of the crime is the agreement or understanding that the parties will act unlawfully, whether or not it is implemented. The overt acts done pursuant to it are relevant, if at all, only as evidence of the agreement or understanding. It is sometimes suggested that the position in tort is different. Lord Diplock, for example, thought that the tort, unlike the crime, consists not of agreement but of concerted action taken pursuant to agreement: Lonrho Ltd v Shell Petroleum Co Ltd [1982] AC 173, 188. This is true in the obvious sense that a tortious conspiracy, like most other tortious acts, must have caused loss to the claimant, or the cause of action will be incomplete. It follows that a conspiracy must necessarily have been acted on. But there is no more to it than that. The critical point is that the tort of conspiracy is not simply a particular form of joint tortfeasance. In the first place, once it is established that a conspiracy has caused loss, it is actionable as a distinct tort. Secondly, it is clear that it is not a form of secondary liability, but a primary liability. This point had been made by Lord Wright in Crofter Hand Woven Harris Tweed Ltd v Veitch [1942] AC 435, 462: the plaintiffs right is that he should not be damnified by a conspiracy to injure him, and it is in the fact of the conspiracy that the unlawfulness resides. It was reaffirmed by the House of Lords in Revenue and Customs Comrs v Total Network SL [2008] AC 1174, paras 102 (Lord Walker), 116 (Lord Mance), 225 (Lord Neuberger). Third, the fact of combination may alter the legal character and consequences of the overt acts. In particular, it may give rise to liability which would not attach to the overt acts in the absence of combination. This latter feature of the tort was what led Lord Wright in Crofter, loc cit, to say that it was in the fact of the conspiracy that the unlawfulness resides. He was speaking of a lawful means conspiracy, but as Lord Hope pointed out in Revenue and Customs Comrs v Total Network SL at para 44, the same applies to an unlawful means conspiracy, at any rate where the means used, while not predominantly intended to injure the claimant, were directed against him. There is clearly much force in his observation at para 41 that if a lawful means conspiracy is actionable on proof of a predominant intention to injure, harm caused by a conspiracy where the means used were unlawful would seem no less in need of a remedy. What is it that makes the conspiracy actionable as such? To say that a predominant purpose of injuring the claimant in the one case and the use of unlawful means in the other supply the element of unlawfulness required to make a conspiracy tortious simply restates the proposition in other words. A more useful concept is the absence of just cause or excuse, which was invoked by Bowen LJ in Mogul Steamship Co v McGregor Gow & Co (1889) 23 QBD 598, 614, by Viscount Cave LC in Sorrell v Smith [1925] AC 700, 711 712, and by Viscount Simon LC with the support of his colleagues in Crofter Hand Woven Harris Tweed Ltd v Veitch [1942] AC 435, 441 444 (cf Viscount Maugham at pp 448, 449 450, Lord Wright at pp 469 470, and Lord Porter at p 492). A person has a right to advance his own interests by lawful means even if the foreseeable consequence is to damage the interests of others. The existence of that right affords a just cause or excuse. Where, on the other hand, he seeks to advance his interests by unlawful means he has no such right. The position is the same where the means used are lawful but the predominant intention of the defendant was to injure the claimant rather than to further some legitimate interest of his own. This is because in that case it cannot be an answer to say that he was simply exercising a legal right. He had no interest recognised by the law in exercising his legal right for the predominant purpose not of advancing his own interests but of injuring the claimant. In either case, there is no just cause or excuse for the combination. Conspiracy being a tort of primary liability, the question what constitute unlawful means cannot depend on whether their use would give rise to a different cause of action independent of conspiracy. The real test is whether there is a just cause or excuse for combining to use unlawful means. That depends on (i) the nature of the unlawfulness, and (ii) its relationship with the resultant damage to the claimant. This was the position reached by the House of Lords in Revenue and Customs Comrs v Total Network SL [2008] AC 1174. The Appellate Committee held that a criminal offence could be a sufficient unlawful means for the purpose of the law of conspiracy, provided that it was objectively directed against the claimant, even if the predominant purpose was not to injure him. The facts of Total Network were that the Commissioners had sued Total for participating in a number of VAT frauds. They alleged an unlawful means conspiracy, the unlawful means consisting of the commission by some of the other conspirators of the common law offence of cheating the revenue. The question whether such a cause of action existed was considered on the assumption that there was no predominant intention to injure the Commissioners and that the commission of the offence gave rise to no cause of action at the suit of the Commissioners independently of the alleged conspiracy. In the result, the House declined to apply to unlawful means conspiracies the condition which it had held in OBG Ltd v Allan [2008] AC 1 to apply to the tort of intentionally harming the claimant by unlawful acts against third parties, namely that those acts should be actionable at the suit of the third party. They held that the means were unlawful for the purpose of founding an action in conspiracy, whether they were actionable or not. The leading speech was delivered by Lord Walker, with whom Lord Scott, Lord Mance and Lord Neuberger agreed. Lord Hope, without agreeing so in terms, proposed an analysis of this point which was consistent with Lord Walkers. The first point to be derived from the speeches concerns intention. The distinction between cases where there is and cases where there is not a predominant intention to injure the claimant, is an inadequate tool for determining liability because it does not exhaust the possibilities. The emphasis in the authorities on cases in which the predominant purpose was to injure the claimant has diverted attention from the fact that both lawful means and unlawful means conspiracies are torts of intent. But the nature of the intent required differs as between the two. This is because a conspiracy may be directed against the claimant notwithstanding that its predominant purpose is not to injure him but to further some commercial objective of the defendant. This point had been made, some years earlier, by the Supreme Court of Canada in Canada Cement LaFarge Ltd v British Columbia Lightweight Aggregate Ltd [1983] 1 SCR 452. After a careful analysis of the (mainly English) authorities, Estey J, delivering the judgment of the Court, concluded at pp 471 472 that whereas the law of tort does not permit an action against an individual defendant who has caused injury to the plaintiff, the law of torts does recognize a claim against them in combination as the tort of conspiracy if: (1) whether the means used by the defendants are lawful or unlawful, the predominant purpose of the defendants conduct is to cause injury to the plaintiff; or, (2) where the conduct of the defendants is unlawful, the conduct is directed towards the plaintiff (alone or together with others), and the defendants should know in the circumstances that injury to the plaintiff is likely to and does result. In situation (2) it is not necessary that the pre dominant purpose of the defendants conduct be to cause injury to the plaintiff but, in the prevailing circumstances, it must be a constructive intent derived from the fact that the defendants should have known that injury to the plaintiff would ensue. In both situations, however, there must be actual damage suffered by the plaintiff. Likewise, in Total Network, Lord Walker, at para 82, recognised the clear distinction between the requirement of predominant purpose under one variety of the tort of conspiracy and the lower requirement of intentional injury needed for the other variety. These two varieties of intention were to be contrasted with a situation in which the harm to the claimant was purely incidental because the unlawful means were not the means by which the defendant intended the harm to the claimant: see paras 93, 95. As an example of the latter situation, Lord Walker cited Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173. The defendants in that case were alleged to have acted in breach of the statutory order imposing sanctions on Southern Rhodesia, but the order was not the instrument for the intentional infliction of harm (para 95). Lord Mance in Total Network (para 119) was, we think, making the same point, by reference to the example of a pizza delivery business which obtains more custom, to the detriment of its competitors, by instructing its drivers to ignore speed limits and jump red lights. Addressing the character of the unlawfulness required, Lord Walker derived from the authorities the proposition that unlawful means, both in the intentional harm tort and in the tort of conspiracy, include both crimes and torts (whether or not they include conduct lower on the scale of blameworthiness) provided that they are indeed the means by which harm is intentionally inflicted on the claimant (rather than being merely incidental to it). (para 93, and cf para 95) He concluded, at paras 94 95: From these and other authorities I derive a general assumption, too obvious to need discussion, that criminal conduct engaged in by conspirators as a means of inflicting harm on the claimant is actionable as the tort of conspiracy, whether or not that conduct, on the part of a single individual, would be actionable as some other tort In my opinion your Lordships should clarify the law by holding that criminal conduct (at common law or by statute) can constitute unlawful means, provided that it is indeed the means (what Lord Nicholls of Birkenhead in OBG Ltd v Allen [2008] AC 1, para 159 called instrumentality) of intentionally inflicting harm. Lord Hope arrived at the same conclusion, at paras 43 and 44, where addressing the facts of the case before him, he observed that although there was no predominant intention to injure the Commissioners, the means used by the conspirators were directed at the claimants themselves: a conspiracy is tortious if an intention of the conspirators was to harm the claimant by using unlawful means to persuade him to act to his own detriment, even if those means were not in themselves tortious. The reasoning in Total Network leaves open the question how far the same considerations apply to non criminal acts, such as breaches of civil statutory duties, or torts actionable at the suit of third parties, or breaches of contract or fiduciary duty. These are liable to raise more complex problems. Compliance with the criminal law is a universal obligation. By comparison, legal duties in tort or equity will commonly and contractual duties will always be specific to particular relationships. The character of these relationships may vary widely from case to case. They do not lend themselves so readily to the formulation of a general rule. Breaches of civil statutory duties give rise to yet other difficulties. Their relevance may depend on the purpose of the relevant statutory provision, which may or may not be consistent with its deployment as an element in the tort of conspiracy. For present purposes it is unnecessary to say anything more about unlawful means of these kinds. The unlawful means relied upon in this case are criminal contempt of court albeit that the offence is punishable in civil proceedings. The Bank does not of course contend that the defendants predominant purpose in hiding Mr Ablyazovs assets was to injure it. Their predominant purpose was clearly to further Mr Ablyazovs financial interests as they conceived them to be. At the same time, damage to the Bank was not just incidental to what they conspired to do. It was necessarily intended. The freezing order and the receivership order had been made on the application of the Bank for the purpose of protecting its right of recovery in the event of the claims succeeding. The object of the conspiracy and the overt acts done pursuant to it was to prevent the Bank from enforcing its judgments against Mr Ablyazov, and the benefit to him was exactly concomitant with the detriment to the Bank as both defendants must have appreciated. In principle, therefore, we conclude the cause of action in conspiracy to injure the Bank by unlawful means is made out. We say in principle, because there remains an issue as to whether an action for conspiracy to commit a contempt of court is consistent with public policy. To that question we now turn. The alleged preclusionary rule The Bank argued that contempt of court, at least where it arises from breach of a court order made at the instance of the claimant, is actionable as such, even apart from any element of combination. It relies exclusively on conspiracy, presumably for jurisdictional reasons. The only thing said to have happened in England is the conspiratorial agreement. The overt acts all occurred abroad. But the Bank submits that because contempt of court is actionable as such, it necessarily constitutes unlawful means for the purposes of the tort of conspiracy. The courts below described this submission as extreme and rejected it. We do not propose to address it, because it follows from the above analysis that it is irrelevant. The unlawfulness of the means to be used to carry out the conspiracy does not depend on its actionability as an independent tort. However, Mr Samek, who appeared for Mr Khrapunov, raised the issue in support of his own case. He submitted that not only is there no right of action for contempt of court as such, but the absence of such a cause of action reflects a principle of public policy that persons in contempt of court should not be exposed to anything other than criminal penalties at the discretion of the court. He called this the preclusionary rule. It follows, he says, that even if a non actionable crime can in principle constitute unlawful means for the purpose of the law of conspiracy, a claim for civil damages founded on a contempt of court is contrary to public policy, however the cause of action may be framed. There is a certain amount of authority to support the existence of a right to recover civil damages for contempt of court. The early cases, which go back to the 14th century, are summarised in Arlidge, Eady and Smith on Contempt, 5th ed (2017), paras 14.171 175. However, decisions made before the development of the action on the case are unlikely to be of much assistance in elucidating the modern law. More germane are Couling v Coxe (1848) 6 CB 703, where damages were awarded against a witness who declined to comply with a subpoena as a result of which the plaintiff lost his case; Fairclough & Sons v The Manchester Ship Canal (1897) 41 SJ 225, where Lord Russell CJ held that there had been no breach of the injunction relied upon in that case, but considered that an inquiry as to damages might have been ordered had there been one; and In re Mileage Conference Group of the Tyre Manufacturers Conference Ltds Agreement [1966] 1 WLR 1137, 1162, where Megaw J suggested, obiter, that a penal order against a contemnor might include a direction for the payment of damages. The point was left open in the majority judgments of the Court of Appeal in Chapman v Honig [1963] 2 QB 502, and was held to be sufficiently arguable to preclude a striking out order by Mustill J in The MESSINIAKI TOLMI [1983] 1 Lloyds Rep 666, 671. The authorities against the existence of a right to damages are In re Hudson [1966] 1 Ch 209, N v Agrawal [1999] PNLR 939 and Customs and Excise Comrs v Barclays Bank plc [2007] 1 AC 181. In In re Hudson a wife claimed against the estate of her ex husband an account of sums due pursuant to an undertaking given by him in previous divorce proceedings to pay her a third of his income. There was no evidence that the undertaking gave effect to any underlying contractual settlement. Buckley J refused to order an account because there was no enforceable right. The reason, he held, at p 214, was that the only sanction for breach of an undertaking would be the imprisonment of the culprit or sequestration of his assets or a fine on the ground of his contempt of court. An undertaking given to the court, unless the circumstances are such that it has some collateral contractual operation between the parties concerned, confers no personal right or remedy upon any other party. The giver of the undertaking assumes thereby an obligation to the court but to nobody else. N v Agrawal was a claim for damages against a medical practitioner by a woman who claimed to have been raped. Her case was that the defendant had failed to appear to give evidence against the alleged rapist at his trial, as a result of which the judge held that there was no case to answer and she suffered psychological injury. The Court of Appeal held that there was no duty of care. In the course of his judgment, Stuart Smith LJ briefly observed that contempt of court does not itself give rise to a cause of action. He cited Chapman v Honig in support of this statement, although the point had in fact been expressly left open in that case. Much the most significant judicial statements, however, are those made by the Appellate Committee of the House of Lords in Customs and Excise Comrs v Barclays Bank plc. Barclays Bank had negligently allowed a payment to be made out of an account in respect of which a freezing order had been made on the application of the Commissioners. The Bank was not in contempt of the order because the payment was inadvertent. The issue was whether, having been notified of the order, it owed the Commissioners a duty of care. The House held that it did not. Although the point does not appear to have been argued and there was only limited citation of the relevant authorities, three members of the committee drew an analogy with contempt of court, which they considered not to be actionable as a tort. Lord Bingham said, at para 17: the Mareva jurisdiction has developed as one exercised by court order enforceable only by the courts power to punish those who break its orders. The documentation issued by the court does not hint at the existence of any other remedy. This regime makes perfect sense on the assumption that the only duty owed by a notified party is to the court. Lord Hoffmann said, at para 39: There is, in my opinion, a compelling analogy with the general principle that, for the reasons which I discussed in Stovin v Wise [1996] AC 923, 943 944, the law of negligence does not impose liability for mere omissions. It is true that the complaint is that the bank did something: it paid away the money. But the payment is alleged to be the breach of the duty and not the conduct which generated the duty. The duty was generated ab extra, by service of the order. The question of whether the order can have generated a duty of care is comparable with the question of whether a statutory duty can generate a common law duty of care. The answer is that it cannot: see Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057. The statute either creates a statutory duty or it does not. (That is not to say, as I have already mentioned, that conduct undertaken pursuant to a statutory duty cannot generate a duty of care in the same way as the same conduct undertaken voluntarily.) But you cannot derive a common law duty of care directly from a statutory duty. Likewise, as it seems to me, you cannot derive one from an order of court. The order carries its own remedies and its reach does not extend any further. Lord Rodger said, at para 62: Punishment for contempt of court is the remedy which the law provides for the addressees failure to comply with an injunction such as a freezing order. Finally, at para 101 Lord Mance, expressing himself in more guarded terms in the context of the Banks argument that the law of contempt provided sufficient protection for the Commissioners, said this: But contempt requires proof to a standard commensurate with the seriousness of the offence, and the sanctions available to the court are not directed primarily at compensation, but at the imposition of a penalty. It is true that, with sensible ingenuity, a sanction can sometimes be tailored in such a way as to encourage the restoration of an asset which has been improperly released from a freezing order or perhaps even compensation: see eg the order made by Colman J in Z Bank v D1 [1994] 1 Lloyds Rep 656, 668. But a civil remedy for breach of a duty of care would be a much more satisfactory and complete protection than potential contempt proceedings for a claimant like the commissioners. These are powerful dicta, but we do not think that the last word has necessarily been said on this subject in this court. It is unnecessary to resolve the question now, because we consider that the case against a right of action for breach of a court order cannot be based on any preclusionary rule of public policy. When judges like Buckley J and Lord Bingham, Lord Hoffmann and Lord Rodger say that the sole remedy for contempt is a criminal penalty, they are not stating a principle of public policy let alone a preclusionary rule. They are simply asserting that no private law right is engaged by a contempt. There is a world of difference between the mere absence of a relevant right and a rule of law precluding such a right even if the elements to support it otherwise exist. There are rules of law relating to the conduct of legal proceedings which clearly are based on a public policy precluding claims. A witness, for example, is absolutely immune from civil liability for things said in evidence or in circumstances directly preparatory to giving evidence. An action against him for negligence or defamation would fail. If it were framed in conspiracy, it would still fail, as it did in Marrinan v Vibart [1963] 1 QB 234. This is because the objection to such an action is not the absence of the necessary elements of a cause of action, but a special immunity based on a public policy that a witness should be able to give evidence without fear of adverse legal consequences other than prosecution for perjury or perverting the course of justice. The public policy is engaged by any attempt to found a claim on what the defendant did as a witness, irrespective of the legal label applied to it. Mr Samek made a valiant but ultimately unconvincing attempt to bring the present case within these principles. His submission, in summary, was that the principles on which the law of contempt was founded required the Court to have control over the consequences of a contempt, which it would not have if a right of action existed. That was because a right of action would make damages for contempt a matter of right, and might even lead to a claim for them being heard in a foreign court. We are unmoved by these concerns. It is a commonplace of the law that the same act may give rise to criminal and civil liability. It necessarily follows that in such cases the sentence for the crime will be discretionary but the civil consequences will not. Thus a person may be given immunity in a criminal trial for burglary, for example because he agrees to give evidence against others involved, but that will not protect him against civil liability to the owner of the goods stolen. There is ample authority for the proposition, which is perhaps obvious, that breach of an order of the court is actionable where it gives effect to an underlying private law obligation which is itself actionable, although the result is to produce exactly the result that Mr Samek finds objectionable: see Midland Marts Ltd v Hobday [1989] 1 WLR 1148, Parker v Rasalingham (Lawrence Collins QC, unreported, 3 July 2000); and Independiente Ltd v Music Trading On line (HK) Ltd [2008] 1 WLR 608. It is conceivable, although not very likely, that if there were a cause of action for contempt of court, it might fall to be heard in a foreign court, but we do not regard that as problematical and even if it were we cannot conceive that the appropriate response is that such a claim should not be entertained even in England. At first sight, there is more to be said for the argument that a right of action for conspiring to breach a freezing order injunction would expose foreigners to liability notwithstanding the standard proviso in such orders that their terms do not affect or concern anyone outside the jurisdiction of this court. But the proviso is irrelevant to the position of a party in contempt, such as Mr Ablyazov, who is by definition subject to the jurisdiction of the court. A claim in conspiracy will normally allege conspiracy with the respondent to a court order to breach his obligations under the order, as it does in this case. We conclude that the Banks pleaded allegations disclose a good cause of action for conspiracy to injure it by unlawful means. Jurisdiction The Lugano Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters 2007, by which both Switzerland and the United Kingdom are bound, lays down a general rule (article 2) that a person should be sued in his or her state of domicile. However, it provides for special jurisdiction in further provisions including articles 5 and 6. Before Teare J, the Bank sought to rely on article 6 which provides that a person domiciled in a state bound by the Convention 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 resulting from separate proceedings. The judge rejected a submission on behalf of the Bank that it could rely on article 6 against Mr Khrapunov on the basis that at the relevant date in July 2015 Mr Ablyazov was domiciled in England. The judge held that once Mr Ablyazov had fled this jurisdiction he had no intention of returning and was not domiciled here. There was no appeal against that conclusion. The judge also rejected a submission on behalf of the Bank, founded on R v Barnet London Borough Council, Ex p Nilish Shah [1983] 2 AC 309, that Mr Ablyazov should, nevertheless, be taken still to be domiciled in England because he was in breach of an obligation under the worldwide freezing order prohibiting him from leaving the jurisdiction. The Court of Appeal rejected an appeal against that ruling and there is no appeal to this court on this point. It follows that we are concerned only with article 5. Article 5 of the Lugano Convention provides so far as relevant: A person domiciled in a state bound by this Convention may, in another state bound by this Convention, be sued: (3) in matters relating to tort, delict or quasi delict, in the courts for the place where the harmful event occurred or may occur. This provision is substantially identical to those in article 5(3) of the Brussels Convention, article 5(3) of the Brussels Regulation (Council Regulation (EC) No 44/2001) and article 7(2) of the Brussels I Regulation (Regulation (EU) No 1215/2012). In Handelskwekerij G J Bier BV v Mines de Potasse dAlsace SA (Bier) (Case C 21/76) [1978] QB 708 the Court of Justice held that article 5(3) of the Brussels Convention must be understood as intended to cover both (a) the place where the damage occurred and (b) the place of the event giving rise to it, with the result that the defendant may be sued at the option of the claimant either in the courts for the place where the damage occurred or in the courts for the place of the event which gives rise to and is at the origin of that damage (p 731F G). Before Teare J and in the Court of Appeal the Bank relied on both limbs of article 5(3). The Banks argument that the damage occurred in England was based on the contention that its worldwide freezing order and its judgments against Mr Ablyazov were located here and had been reduced in value by the alleged conduct in relation to assets in other jurisdictions. The judge rejected this argument. He considered that the element of damage proximate to the harmful event was the Banks inability or reduced ability to execute against those assets in the places where they were located. This conclusion was upheld by the Court of Appeal. The Bank did not initially seek to challenge this decision by a cross appeal. However, following a ruling by Lord Mance on 20 December 2017 that the Bank needed permission to cross appeal in order to raise arguments based on limb (a) of article 5(3), the Bank sought permission to cross appeal out of time on 21 December 2017. Mr Khrapunov filed a notice of objection on 3 January 2018. Permission to cross appeal on this point was refused on 18 January 2018. The Bank submitted that the event giving rise to the damage was the conspiracy itself, which was hatched in England. Teare J rejected this submission, because he considered that the cause of the damage was not the conspiracy but its implementation. He considered that it was likely to have been implemented by the decisions that Mr Ablyazov took and the instructions that he gave. These things occurred in England until 16 February 2012 when Mr Ablyazov fled the jurisdiction, but not thereafter. The Court of Appeal disagreed. They held that the event giving rise to the damage was the conspiratorial agreement in England. It is well established that the special jurisdiction provisions in Brussels/Lugano scheme are derogations from the general rule conferring jurisdiction on the courts of the place of the defendants domicile. As a result, they must be strictly interpreted. As Lord Hodge recognised in AMT Futures Ltd v Marzillier mbH [2017] 2 WLR 853 (at para 13), these heads of special jurisdiction can be justified because they reflect a close connection between the dispute and the courts of a contracting State, other than that in which the defendant is domiciled, and thereby promote the efficient administration of justice and proper organisation of the action: see, generally, Dumez France SA and Tracoba Sarl v Hessische Landesbank (Helaba) (Case C 220/88) [1990] ECR I 49, para 17; Marinari v Lloyds Bank plc (Case C 364/93) [1996] QB 217, para 16; Kronhofer v Maier (Case C 168/02) [2004] 2 All ER (Comm) 759; [2005] 1 Lloyds Rep 284; [2004] ECR I 6009, para 15. Moreover, the special jurisdictions, and article 5(3) in particular, have of necessity been the subject of a series of decisions by the Court of Justice, which has developed and illuminated the underlying principles in a way which assists in their application. However, before turning to consider these authorities in relation to article 5(3) it is necessary to say something about the respective roles of the Convention regime and the relevant domestic law. The expression place where the harmful event occurred in article 5(3) requires an autonomous interpretation in order to ensure its effectiveness and uniform application (Coty Germany GmbH v First Note Perfumes NV (Case C 360/12) [2014] Bus LR 1294, paras 43 45). There is no basis for interpreting article 5(3) by reference to national rules of non contractual liability, for such an approach would be incompatible with the object of the Convention which is to provide a clear and certain attribution of jurisdiction (Rosler v Rottwinkel GmbH (Case C 241/83) [1986] QB 33, para 23; Marinari v Lloyds Bank plc at paras 18, 19. See also Melzer v MF Global UK Ltd (Case C 228/11) [2013] QB 1112.). It is against this background that the appellant criticises the Court of Appeal for having focused on acts giving rise to liability as opposed to damage. However, the requirement of an autonomous interpretation does not mean that the component elements of the cause of action in domestic law are irrelevant. On the contrary they have a vital role in defining the legally relevant conduct and thus identifying the acts which fall to be located for the purposes of article 5(3). In particular, whether an event is harmful is determined by national law. To take an example raised during the hearing of the appeal, if a firearm is manufactured in State A and fired in State B the place of the event giving rise to the damage within article 5(3) is likely to differ depending on whether the basis of the complaint in national law is negligent manufacture of the firearm, or its negligent handling by the gunman. In the same way, the place of the event giving rise to the damage may vary depending on whether the cause of action is an unlawful means conspiracy or a free standing tortious act. Thus in Shevill v Presse Alliance SA (Case C 68/93) [1995] 2 AC 18 the Court of Justice emphasised (at paras 34 41) that the sole object of article 5(3) of the Brussels Convention is to allocate jurisdiction by reference to the place or places where an event considered harmful occurred. It does not specify the circumstances in which the event giving rise to the harm may be considered harmful to the victim or the evidence which the claimant must adduce to enable the court seised to rule on the merits of the case. This is because these are matters for the national court applying the substantive law determined by its own rules of private international law, national conflict of laws rules, provided that the effectiveness of the Convention is not thereby impaired. Accordingly, in Shevill, the fact that damage was presumed in libel actions under the applicable national law, so that the claimant did not have to adduce evidence of the existence and extent of that damage, did not preclude the application of article 5(3) in determining which courts had jurisdiction. From an early stage in the development of the jurisprudence on article 5(3) of the Brussels Convention, the Court of Justice in applying the second limb of the Bier test, has emphasised the notion of the originating event. In Bier itself the Court observed that liability in tort, delict or quasi delict can only arise if a causal connection can be established between the damage and the event in which that damage originates (at para 16) and went on to formulate the two limbs as permitting the exercise of jurisdiction either in the courts for the place where the damage occurred or in the courts for the place of the event which gives rise to and is at the origin of that damage (at para 25). In Shevill the Court, having repeated that paragraph from Bier, concluded (at para 24) that in the case of a libel by a newspaper article distributed in several contracting states, the place of the event giving rise to the damage can only be the place where the publisher of the newspaper in question is established, since that is the place where the harmful event originated and from which the libel was issued and put into circulation. Similarly, in Wintersteiger AG v Products 4U Sondermaschinenbau GmbH (Case C 523/10) [2013] Bus LR 150, the Court of Justice held that where a display on a search engine website of an advertisement used a keyword identical to a national trade mark which it was alleged to infringe, it was the activation by the advertiser of the technical process displaying the advertisement and not the display of the advertisement itself which should be considered to be the event giving rise to the alleged infringement of trade mark. In Hejduk v EnergieAngentur NRW GmbH (Case C 441/13) [2015] Bus LR 560, the claimant, a professional photographer domiciled in Austria, brought proceedings in Austria against the defendant, a company registered in Germany, alleging infringement of copyright in that it had placed some of her photographs on its website without her consent. The Court of Justice held (at paras 24 25) that where the alleged tort consists in the infringement of copyright by placing photographs online on a website, the activation of the process for the technical display of the photographs on that website must be regarded as the causal event and that, accordingly, the acts or omissions giving rise to the damage were localised where the defendant had its seat, since that is where the company took and carried out the decision to place photographs online on a particular website. Kolassa v Barclays Bank plc (Case C 375/13) [2016] 1 All ER (Comm) 733 concerned proceedings in Austria, where the claimant was domiciled, against Barclays bank alleging breach of obligations relating to a prospectus and information for investors. The Court of Justice observed with regard to limb (b) of article 5(3) that there was nothing to show that the decisions regarding the arrangements for the investments proposed by the bank and the contents of the relevant prospectuses were taken in Austria or that those prospectuses were originally drafted and distributed anywhere other than the member state in which the bank had its seat. Turning to the decisions of domestic tribunals on the point, in Domicrest Ltd v Swiss Bank Corpn [1999] QB 548 the claimant, an English company, alleged negligent mis statement as to the effect of a payment order, made by the defendant bank in Switzerland to the claimant in England. Rix J held that the place of the event giving rise to the damage for the purpose of limb (b) of article 5(3) was Switzerland where the statement originated. Having referred to Dumez, Shevill and Marinari, Rix J observed that each in its own way emphasised that to look to the later consequences would be to run the risk of favouring the forum actoris, contrary to the objectives of the Brussels Convention. He considered that he was not free to apply the broad test involving identifying where the substance of the cause of action in tort arose, which had been adopted by Steyn J in Minster Investments Ltd v Hyundai Precision & Industry Co Ltd [1988] 2 Lloyds Rep 621 at p 624, prior to those three decisions of the Court of Justice, but was required to limit himself to the more structured formula adopted and applied in those decisions. He continued (at p 567H): Applying that formula, it seems to me that the place where the harmful event giving rise to the damage occurs in a case of negligent mis statement is, by analogy with the tort of defamation, where the mis statement originates. It is there that the negligence, even if not every element of the tort, is likely to take place; and for that and other reasons the place from which the mis statement is put into circulation is as good a place in which to found jurisdiction as the place where the mis statement is acted on, even if receipt and reliance are essential parts of the tort. For these purposes it seems to me that there is no difference between a written document and an oral or other instantaneous communication sufficient to distinguish between such cases. Although it may be argued that in the case of instantaneous communications and perhaps especially in the case of telephone conversations the mis statement occurs as much where it is heard as where it is spoken, nevertheless it remains true as it seems to me that it is the representors negligent speech rather than the hearers receipt of it which best identifies the harmful event which sets the tort in motion. To prefer receipt and reliance as epitomising the harmful event giving rise to the damage in the case of negligent mis statement is, I think, to ignore the fact that the plaintiff also has the option of suing in the courts of the place where the damage occurs which is quite likely to be at the place of receipt and reliance. This reasoning and conclusion have been expressly approved by the Court of Appeal in ABCI v Banque Franco Tunisienne [2003] 2 Lloyds Rep 146, per Mance LJ at para 41. They have also been applied in a series of first instance decisions. (Alfred Dunhill Ltd v Diffusion Internationale Maroquinerie de Prestige SARL [2002] 1 All ER (Comm) 950, at p 957; Newsat Holdings Ltd v Zani [2006] 1 All ER (Comm) 607 , at paras 41 44; and London Helicopters Ltd v Heliportugal LDA INAC [2006] 1 All ER (Comm) 595 , at paras 28 35). In our opinion, this approach accords with the principles to be derived from the decisions of the Court of Justice. Although the precise terminology employed by Rix J is not derived from the decisions of the Court of Justice, it is an accurate statement of the law. We do not accept that it detracts from the need to consider the causative impact of the candidate events by improperly focussing on the acts which were first in time. This criticism misrepresents the effect of the decisions of the Court of Justice considered above, which does not require a comparative consideration of the causative impact of different events. On the contrary, the Court of Justice emphasises the relevant harmful event which sets the tort in motion, thereby providing a greater degree of certainty in the application of the Convention. This gives effect to an important policy of the Brussels/Lugano scheme, recognised in Bier at para 21, by promoting a helpful connecting factor with the jurisdiction of a court particularly near to the cause of the damage. In Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Akzo Nobel NV (Case C 352/13) [2015] QB 906, the European Commission had decided that several companies had participated in a single and continuous infringement of the prohibition of cartel agreements. It was not possible to point to a single jurisdiction in which the cartel had been formed since it consisted of a number of collusive agreements which had been concluded during meetings at various places throughout Europe. Several customers of these companies alleged that they had suffered loss by reason of the cartel and they assigned their potential claims to the applicant, a Belgian company. The applicant brought proceedings in Germany for damages and disclosure against six of the companies which were incorporated in various member states. The German court referred to the Court of Justice a series of questions, including one relating to jurisdiction under article 5(3), Brussels Regulation. Having observed (at para 39) that the rule of special jurisdiction is based on the existence of a close link between the dispute and the courts of the place where the harmful event occurred or may occur, the Court continued: 43. With regard to the place of the causal event, it must be pointed out at the outset that, in circumstances such as those in the present case, the buyers were supplied by various participants in the cartel within the scope of their contractual relations. However, the event giving rise to the alleged loss did not consist in a potential breach of contractual obligations, but in a restriction of the buyers freedom of contract as a result of that cartel in the sense that that restriction prevented the buyer from being supplied at a price determined by the rules of supply and demand. 44. In those circumstances, the place of a causal event of loss consisting in additional costs that a buyer had to pay because a cartel has distorted market prices can be identified, in the abstract, as the place of the conclusion of the cartel. Once concluded, the participants in a cartel ensure through action or forbearance that there is no competition and that prices are distorted. Where the place of a cartels conclusion is known, it would be consistent with the aims outlined in para 39 above for the courts of that place to have jurisdiction. The Court concluded that this reasoning was impossible to apply to a cartel which could not be located in a single jurisdiction. It then stated its conclusion in the following terms. 50. It follows that jurisdiction by virtue of article 5(3) of Regulation No 44/2001 to adjudicate, on the basis of the causal event and with regard to all of the perpetrators of an unlawful cartel which allegedly resulted in loss, depends upon the identification, in the jurisdiction of the court seised of the matter, of a specific event during which either that cartel was definitively concluded or one agreement in particular was made which was the sole causal event giving rise to the loss allegedly inflicted on a buyer. In other words, the Court concluded that it was the formation of the cartel and not its implementation which was the event giving rise to the damage. We consider that the Court of Appeal correctly identified the place where the conspiratorial agreement was made as the place of the event which gives rise to and is at the origin of the damage. As Sales LJ explained (at para 76), in entering into the agreement Mr Khrapunov would have encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyazov to carry the scheme into effect. Thereafter, Mr Khrapunovs alleged dealing with assets the subject of the freezing and receivership orders would have been undertaken pursuant to and in implementation of that agreement, whether or not he was acting on instructions from Mr Ablyazov. The making of the agreement in England should, in our view, be regarded as the harmful event which set the tort in motion. Disposal For these reasons, we would dismiss Mr Khrapunovs appeal.
UK-Abs
From 2005 to 2009 Mr Mukhtar Ablyazov was the chairman and controlling shareholder of the respondent, a bank incorporated in Kazakhstan. He was removed from office when the bank was nationalised in 2009. He fled to England where he obtained asylum. The bank brought various claims against him in the High Court. The bank alleged that he had embezzled some US$6 billion of its funds. At the outset of the litigation, the bank obtained an order requiring Mr Ablyazov to identify and disclose the whereabouts of his assets and a worldwide freezing order preventing him from dealing with them. In 2010 the High Court appointed receivers over his assets. It later transpired that Mr Ablyazov had failed to disclose large numbers of undisclosed assets, which he had sought to place beyond the reach of the claimants through a network of undisclosed companies. In 2011 the bank consequently obtained an order committing Mr Ablyazov for contempt of court. He was sentenced to 22 months imprisonment. By the time the judgment had been handed down, however, Mr Ablyazov had fled the country. His whereabouts are unknown. Default judgments in the sum of US$4.6 billion have been obtained against him, but very little has been recovered. In 2015 the bank brought the present claim against Mr Ablyazov and his son in law, Mr Khrapunov, who lives in Switzerland. The bank alleged that Mr Khrapunov, being aware of the freezing and receivership orders, entered into a combination or understanding with Mr Ablyazov to help dissipate and conceal his assets. The judge found that it was sufficiently established for the purposes of this application that they entered into it in England. Mr Khrapunov is said to have been instrumental in the dealings of assets held by foreign companies and in concealing what became of those assets. His actions are said to constitute the tort of conspiracy to cause financial loss to the bank by unlawful means, namely serial breaches of the freezing and receivership orders in contempt of court. This appeal concerns only the position of Mr Khrapunov, who unsuccessfully applied to contest the jurisdiction of the High Court. The Court of Appeal dismissed his appeal. The Supreme Court unanimously dismisses the appeal. Lord Sumption and Lord Lloyd Jones give the lead judgment, with which Lord Mance, Lord Hodge and Lord Briggs agree. Mr Khrapunovs first argument was that contempt of court cannot constitute the required unlawful means for the tort of conspiracy to cause loss by unlawful means, because contempt is not a wrong which by itself entitles a claimant to sue the contemnor: it is not actionable. Therefore, he argued, there was no good, arguable case against him on which to found jurisdiction [5]. The tort of conspiracy can be divided into lawful means conspiracy and unlawful means conspiracy, although that terminology is inexact. A person has a right to advance his own interests by lawful means, even if the foreseeable consequence is damage to the interests of others. Where he seeks to do so by unlawful means, he has no such right. The same is true where the means are lawful but the predominant intention of the defendant is to injure the claimant, rather than to further some legitimate interest of his own. In either case, there is no just cause or excuse for the combination with others. Conspiracy being a tort of primary liability, rather than simply a form of joint liability, the question what constitutes unlawful means cannot depend on whether their use would give rise to a different cause of action independent of conspiracy. The correct test is whether there is a just cause or excuse for the defendants combining with each other to use unlawful means. That depends on (i) the nature of the unlawfulness; and (ii) its relationship with the resultant damage to the claimant [8 11]. Unlike various other legal duties, compliance with the criminal law is a universal obligation. The unlawful means relied on in this case are contempt of court, which is a criminal offence. For that purpose, the defendant must have intended to damage the bank. The damage to the bank need not have been the predominant purpose, but it must be more than incidental. The defendants predominant purpose in this case was to further Mr Ablyazovs financial interests as they conceived them to be. But the damage to the bank was necessarily intended. Their aim was to prevent the bank from enforcing its claims against Mr Ablyazov, and both defendants must have appreciated that the benefit to him was exactly concomitant with the detriment to the bank. The damage was not just incidental [15 16]. It was argued on behalf of Mr Khrapunov that the existence of a claim for conspiracy to commit contempt of court would be inconsistent with public policy because it would substitute a remedy as of right for one which depended on the discretion of the court. The Court is satisfied that there is no such public policy [18 23]. The matters alleged by the bank, if proved, would amount to the tort of conspiracy to injure by unlawful means [24]. Mr Khrapunovs second argument was that the English courts lacked jurisdiction by reason of the general rule, in article 2 of the Lugano Convention to which both the UK and Switzerland are parties, that a person should be sued in the Convention state in which he or she is domiciled. The sole currently relevant exception to that rule is article 5(3), which allows a claim in tort in the Convention state where the harmful event occurred or may occur. Article 5(3) is substantially identical to article 5(3) of the Brussels Regulation (Council Regulation (EC) No 44/2001). The Court of Justice of the European Union (CJEU) has interpreted the latter to cover both: (a) the place where the damage occurred and (b) the place of the event giving rise to it [26 28]. As an exception to the general rule, article 5(3) must be interpreted strictly. Although there is no basis for interpreting it by reference to national rules of non contractual liability, those national rules are relevant. They define the legally relevant conduct and whether an event is harmful. The CJEU has repeatedly focused on the relevant harmful event which sets the tort in motion. This gives effect to an important policy of the Brussels/Lugano scheme by promoting a connecting factor with the jurisdiction of a court which is particularly close to the cause of the damage. In Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Akzo Nobel NV (Case C 352/13) [2015] QB 906 the CJEU identified the formation of a cartel, not its implementation, as the event giving rise to the damage [31 40]. The Court of Appeal correctly identified the place where the conspiratorial agreement was made as the place of the event which gives rise to and is at the origin of the damage. In entering into the agreement, Mr Khrapunov would have encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyazov to carry the scheme into effect. Thereafter, Mr Khrapunovs alleged dealing with the assets the subject of the court order would have been undertaken pursuant to and in implementation of that agreement. The making of the agreement should be regarded as the harmful event which set the tort in motion [41].
Between August 2005 and April 2011 Mr Smith, the respondent, who is by trade a plumbing and heating engineer, did work for Pimlico Plumbers Ltd (Pimlico), the first appellant, which conducts a substantial plumbing business in London. Mr Mullins, the second appellant, owns Pimlico. in an employment tribunal (the tribunal). He alleged In August 2011 Mr Smith issued proceedings against Pimlico and Mr Mullins (a) that he had been an employee of Pimlico under a contract of service within the meaning of section 230(1) of the Employment Rights Act 1996 (the Act) and as such he complained, among other things, that Pimlico had dismissed him unfairly contrary to section 94(1) of it; and/or (b) that he had been a worker for Pimlico within the meaning of section 230(3) of the Act and as such he complained that Pimlico had made an unlawful deduction from his wages contrary to section 13(1) of it; and (c) that he had been a worker for Pimlico within the meaning of regulation 2(1) of the Working Time Regulations 1998 (SI 1998/1833) (the Regulations) and as such he complained that Pimlico had failed to pay him for the period of his statutory annual leave contrary to regulation 16 of them; and (d) that he had been in Pimlicos employment within the meaning of section 83(2)(a) of the Equality Act 2010 (the Equality Act) and as such he complained that both Pimlico and Mr Mullins had discriminated against him by reference to disability contrary to section 39(2) of it and had failed to make reasonable adjustments in that regard contrary to section 39(5) of it. By a judgment dated 16 April 2012 delivered by Employment Judge Corrigan (the judge), the tribunal decided that Mr Smith had not been an employee of Pimlico under a contract of service; and, by a judgment dated 21 November 2014 delivered by Judge Serota QC, the Employment Appeal Tribunal (the appeal tribunal) dismissed Mr Smiths cross appeal against that decision. He has not sought further to challenge it. The result is that he cannot proceed with the complaints referred to in para 2(a) above. Nevertheless, by that same judgment dated 16 April 2012, the tribunal made three further decisions: (a) that Mr Smith had been a worker for Pimlico within the meaning of section 230(3) of the Act; (b) that he had been a worker for Pimlico within the meaning of regulation 2(1) of the Regulations; and (c) that he had been in Pimlicos employment within the meaning of section 83(2)(a) of the Equality Act. Were the decisions on these three threshold issues to be upheld, the result would be that Mr Smith could proceed with the complaints referred to in para 2(b), (c) and (d) above. Indeed the tribunal made directions for their substantive consideration. Pimlico brought an appeal against the tribunals three further decisions to the appeal tribunal, which dismissed it by that same judgment dated 21 November 2014. Pimlico thereupon brought an appeal against the appeal tribunals decision to the Court of Appeal, which on 10 February 2017, by substantive judgments delivered by Sir Terence Etherton MR and Underhill LJ and by a judgment of Davis LJ which agreed with both of them, dismissed it ([2017] ICR 657). Today this court determines Pimlicos yet further appeal, which is in form a challenge to the decision of the Court of Appeal but which is in substance a further inquiry into the entitlement of the tribunal to have made the three decisions referred to in para 4 above. Pimlico argues that the tribunals reasoning in support of them was inadequate and it asks the court to set them aside and to direct the tribunal to reconsider the three threshold issues. It follows that the tribunal held that, although Mr Smith was not an employee under a contract of service, he was an employee within the meaning of section 83(2)(a) of the Equality Act. It is regrettable that in this branch of the law the same word can have different meanings in different contexts. But it gets worse. For, as I will explain, different words can have the same meaning. As long ago as 1875 Parliament identified an intermediate category of working people falling between those who worked as employees under a contract of service and those who worked for others as independent contractors. For in that year it passed the Employers and Workmen Act, designed to give the county court an enlarged and flexible jurisdiction in disputes between an employer and a workman; and, by section 10, it defined a workman as, in effect, a manual labourer working for an employer under a contract of service or a contract personally to execute any work or labour. From 1970 onwards Parliament has taken the view that, while only employees under a contract of service should have full statutory protection against various forms of abuse by employers of their stronger economic position in the relationship, there were self employed people whose services were so largely encompassed within the business of others that they should also have limited protection, in particular against discrimination but also against certain forms of exploitation on the part of those others; and for that purpose Parliament has borrowed and developed the extended definition of a workman first adopted in 1875. Thus in 1970 Parliament passed the Equal Pay Act which obliged employers to offer to any woman whom they employed terms equal to those upon which they employed men for the same or equivalent work; and, by section 1(6)(a), it defined the word employed as being under a contract of service or of apprenticeship or a contract personally to execute any work or labour. Then, in section 167(1) of the Industrial Relations Act 1971, we find the birth of the modern worker, defined there as a person who works (a) under a contract of employment, or (b) under any other contract whereby he undertakes to perform personally any work or services for another party to the contract who is not a professional client of his . Now we have section 230(3) of the Act, in which a worker is defined to include not only, at (a), an employee under a contract of service but also, at (b), an individual who has entered into or works under any other contract whereby the individual undertakes to perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual Other subsections of section 230, to which thankfully it will be unnecessary to refer, proceed to extend the words employee, employment and employed to the situation of a worker falling within subsection (3)(b) and conveniently described as a limb (b) worker. Regulation 2(1) of the Regulations defines a worker in terms identical to those in section 230(3) of the Act. On its face section 83(2)(a) of the Equality Act defines employment in terms different from those descriptive of the concept of a worker under section 230(3) of the Act and under regulation 2(1) of the Regulations. For it defines it as being either under a contract of employment or of apprenticeship or under a contract personally to do work. Comparison of the quoted words with the definition of a limb (b) worker in section 230(3) of the Act demonstrates that, while the obligation to do the work personally is common to both, the Equality Act does not expressly exclude from the concept a contract in which the other party has the status of a client or customer. As it happens, however, this distinction has been held to be one without a difference. Part 5 of the Equality Act, which includes section 83, primarily gives effect to EU law. Article 157(1) of the Treaty on the Functioning of the European Union requires member states to ensure application of the principle of equal pay for male and female workers for equal work or work of equal value. In Allonby v Accrington and Rossendale College (Case C 256/01) [2004] ICR 1328 the Court of Justice of the European Communities, at paras 67 and 68, interpreted the word workers in what is now article 157(1) as persons who perform services for and under the direction of another person in return for which [they receive] remuneration but excluding independent providers of services who are not in a relationship of subordination with the person who receives the services. In Hashwani v Jivraj [2011] UKSC 40, [2011] 1 WLR 1872, the Supreme Court applied the concepts of direction and subordination identified in the Allonby case to its interpretation of a contract personally to do work in the predecessor to section 83(2)(a). In Bates van Winkelhof v Clyde & Co LLP [2014] UKSC 32, [2014] 1 WLR 2047, Lady Hale observed at paras 31 and 32 that this interpretation of the section yielded a result similar to the exclusion of work for those with the status of a client or customer in section 230(3) of the Act and in regulation 2(1) of the Regulations. She added, however, at para 39 that, while the concept of subordination might assist in distinguishing workers from other self employed people, the Court of Appeal in that case had been wrong to regard it as a universal characteristic of workers. Notwithstanding murmurs of discontent in the submissions on behalf of Mr Smith, this court is not invited to review its equation in the Bates van Winkelhof case of the definition of a worker in section 230(3) of the Act with that of employment in section 83(2)(a) of the Equality Act. I therefore proceed on the basis that the three decisions of the tribunal referred to at para 4 above stand or fall together; and that it is conceptually legitimate as well as convenient to treat all three of them as having been founded upon a conclusion that Mr Smith was a limb (b) worker within the meaning of section 230(3) of the Act. MR SMITHS AGREEMENTS WITH PIMLICO Mr. Smith made two written agreements with Pimlico, the first dated 25 August 2005 and the second (which replaced the first) made on 21 September 2009 and wrongly dated 21 September 2010. No one has argued that, for the purposes of these proceedings, the agreements have different legal consequences. In places they are puzzling. In his judgment in the appeal tribunal Judge Serota QC concluded that, on the one hand, Pimlico wanted to present their operatives to the public as part of its workforce but that, on the other, it wanted to render them self employed in business on their own account; and that the contractual documents had been carefully choreographed to serve these inconsistent objectives. But the judge rightly proceeded to identify a third objective, linked to the first, namely to enable Pimlico to exert a substantial measure of control over its operatives; and this clearly made development of the choreography even more of a challenge. The first agreement was on a printed form but there were manuscript amendments. The print described it as a contract; but the manuscript substituted the word agreement. Against Mr Smiths name the print explained that it was name of contracted employee; but the manuscript added the prefix sub to the word contracted. Against the date of 25 August 2005 the print explained that it was date of commencement of employment; but the manuscript deleted the word employment. The agreement provided that its terms were as set out in a manual entitled Company Procedures & Working Practices (the manual) but since, as I will explain, the manual was again incorporated into the second agreement, it is convenient to address it in that context. In the second agreement, drafted so as to refer to Pimlico as the Company and to address Mr Smith as you, the terms material to the issue before the court were as follows: You shall provide such building trade services as are within your (a) the Company may terminate [the agreement immediately] if you commit an act of gross misconduct or do anything which brings the Company into disrepute (b) skills in a proper and efficient manner . (c) You shall provide the Services for such periods as may be agreed with the Company from time to time. The actual days on which you will provide the Services will be agreed between you and the Company from time to time. For the avoidance of doubt, the Company shall be under no obligation to offer you work and you shall be under no obligation to accept such work from the Company. However, you agree to notify the Company in good time of days on which you will be unavailable for work. (d) You warrant that you will be competent to perform the work which you agree to carry out [and] you will promptly correct, free of charge, any errors in your work which are notified to you by the Company . (e) If you are unable to work due to illness or injury on any day on which it was agreed that you would provide the Services, you shall notify the Company (f) You acknowledge that you will represent the Company in the provision of the Services and that a high standard of conduct and appearance is required at all times. While providing the Services, you also agree to comply with all reasonable rules and policies of the Company from time to time and as notified to you, including those contained in the Company Manual. (g) . you shall be paid a fee in respect of the Services equal to 50% of the cost charged by the Company to the client in relation to labour content only, provided that the Company shall have received clear funds from the client . (h) If an invoice remains unpaid [by the client] for more than one month, the fee payable to you will be reduced by 50%. If an invoice remains unpaid for more than six months, you will not receive a fee for the work. (i) security contributions to the appropriate authorities. You will provide all your own tools, equipment, materials and other (j) items as shall be required for the performance of the Services, except where it has been agreed that equipment or materials will be provided through the Company. The Company may, at a rental price to be agreed with you, provide a vehicle for use in providing the Services If you provide your own materials , you will be entitled to up to 20% trade mark up (pre VAT) on such materials provided [their] cost is at least 3,000 (pre VAT) [and otherwise] up to 12.5% . (k) You will have personal liability for the consequences of your services to the Company and will maintain suitable professional indemnity cover to a limit of 2m You will account for your income tax, value added tax and social (l) You shall at all times keep the Company informed of your other activities which could give rise to a direct or indirect conflict of interest with the interests of the Company, provided that you shall not be permitted at any time to provide services to any Customer other than under this Agreement. (m) you will not for three months following [termination of the agreement] be engaged in any Capacity with any business which is in competition with [the business of the Company nor] for 12 months solicit the business of [any customer of the Company nor] be involved with the provision of goods or services to [him] in the course of any business which is in competition with [that of the Company]. You are an independent contractor of the Company, in business on (n) your own account. Nothing in this Agreement shall render you an employee, agent or partner of the Company and the termination of this Agreement shall not constitute a dismissal for any purpose. (o) This Agreement contains the entire agreement between the parties The manual was incorporated into the second agreement by virtue of the term recited at para 18(f) above. It obliged him to comply with the manual [w]hile providing the Services. My view is that the quoted words are apt to have made the manual govern all aspects of Mr Smiths operations in relation to Pimlico; in any event, however, the case proceeded before the tribunal on the basis that even after 2009 the manual remained as much a part of the contract as, on any view, it had previously been. Its relevant provisions are as follows: (a) [Y]our appearance must be clean and smart at all times The Company logo ed uniform must always be clean and worn at all times. (b) Normal Working Hours consist of a five day week, in which you should complete a minimum of 40 hours. (c) required, time off or period of unavailability. Adequate notice must be given to Control Room for any annual leave (d) Engineers on call between 12.00pm (midnight) 6.00am will qualify for the 100% rate, providing the office has not taken the job booking [or] for the 50% rate if the office takes the job booking. (e) On Call Operatives will be given preference for: Overtime. Better jobs. Newer vans. (f) Any Operative requiring assistance on any job must inform the customer of the additional charges involved . and obtain the customers approval for such charges. (g) Callbacks [for remedial work] must be treated as a matter of absolute priority by all Operatives. No further work will be allocated to any Operative until his Callbacks are attended to Until all issues have been settled and all callbacks resolved any outstanding money will be held back for the last month . No payment will be made to that Operative, unless the customer is completely satisfied Any claim made against the Company as a result of the Operatives incompetence/negligence will be passed on to the Operative and his Insurers. (h) No payment will be made to the Operative until payment in full has been received by the office A 50% deduction will be made from the Operatives percentage if payment is received by the office later than one month from the job date Invoices which remain unpaid after six months from the date of the job will be written off. (i) ID card must be carried when working for the Company. (j) Operatives will be issued with a mobile telephone system The mobile telephone charges, plus VAT, will be deducted from wages on a monthly basis. Pimlico Plumbers ID Cards are issued to every Operative Your (k) Any individual undertaking private work for or as a result of contacts gained during your working week and contravening the signed contract will be dismissed immediately (l) Operatives who fail to observe the rules outlined in this working practice manual in respect of procedures or conduct, will be given a warning and may thereafter be subject to instant dismissal. (m) Wages will be paid directly into the Operatives designated bank or building society account (n) The following standard rate of Van Rental Charges, payable monthly in advance, allows Operatives to work on a Self employed basis: 120.00 + VAT. This figure will increase if the Operative is involved in consistent vehicle damage. PERSONAL PERFORMANCE? If he was to qualify as a limb (b) worker, it was necessary for Mr Smith to have undertaken to perform personally his work or services for Pimlico. An obligation of personal performance is also a necessary constituent of a contract of service; so decisions in that field can legitimately be mined for guidance as to what, more precisely, personal performance means in the case of a limb (b) worker. Express & Echo Publications Ltd v Tanton [1999] ICR 693 was a clear case. Mr Tanton contracted with the company to deliver its newspapers around Devon. A term of the contract provided: In the event that the contractor is unable or unwilling to perform the services personally he shall arrange at his own expense entirely for another suitable person to perform the services. The Court of Appeal held that the term defeated Mr Tantons claim to have been employed under a contract of service. Nevertheless, in his classic exposition of the ingredients of a contract of service in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, Mackenna J added an important qualification. He said at p 515: Freedom to do a job either by ones own hands or by anothers is inconsistent with a contract of service, though a limited or occasional power of delegation may not be He cited Atiyahs Vicarious Liability in the Law of Torts (1967), in which it was stated at p 59 that it seems reasonably clear that an essential feature of a contract of service is the performance of at least part of the work by the servant himself. Where, then, lie the boundaries of a right to substitute consistent with personal performance? Mr Smiths contracts with Pimlico, including the manual, gave him no express right to appoint a substitute to do his work. There were three passing references in the manual to his engagement of other people, of which the most explicit was the reference, quoted at para 19(f) above, to his requiring assistance. The evidence was indeed that some of Pimlicos operatives were accompanied by an apprentice or that they brought a mate to assist them. But assistance in performance is not the substitution of performance. Equally the tribunal found that, where a Pimlico operative lacked a specialist skill which a job required, he had a right to bring in an external contractor with the requisite specialism. But again, since in those circumstances the operative continued to do the basic work, he is not to be regarded as having substituted the specialist to perform it. But the tribunal found that Mr Smith did have a limited facility to substitute. For he had accepted that, if he had quoted for work but another more lucrative job had subsequently arisen, he would be allowed to arrange for the work to be done by another Pimlico operative. The tribunal rejected Pimlicos contention that there was a wider facility to substitute and concluded that there was no unfettered right to substitute at will. The Court of Appeal interpreted the tribunals findings to be that Mr Smiths facility to substitute another Pimlico operative to perform his work arose not from any contractual right to do so but by informal concession on the part of Pimlico. In circumstances in which the contract provided no express right to substitute and included a clause that it contained the entire agreement between the parties, there is much to be said for such an analysis. In the absence of escape from it by the construction of a collateral contract, an entire agreement clause is likely to be effective in preventing extraneous contractual terms from arising: MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24, para 14. But the Court of Appeals analysis does not sit easily with some of the words chosen by the tribunal to describe the facility; and in what follows, I will assume (without deciding) that it is the product of a contractual right. Having found that Mr Smith had the right to substitute another Pimlico operative to perform his work, the tribunal unfortunately saw fit to turn its attention to the terms of a revised contract between Pimlico and its operatives which was introduced following the termination of Mr Smiths contract. The tribunal quoted two of the new terms. One of them gave the operative a right to assign or subcontract his duties subject to the prior consent of the Company. The other obliged him either to perform his duties personally or to engage another Pimlico contractor to do it. The two terms appear to be inconsistent, unless they can be reconciled on the basis that Pimlicos prior consent would always be necessary but would not be given unless the assignee of the duties were to be another Pimlico operative. At all events the two new terms led the judge to comment: In my view this clarifies that [Mr Smith] was contracted to provide work personally with, at most, only a limited power to substitute either to other internal operatives or with the prior consent of [Pimlico]. My view, with respect, is that the two new terms did not clarify anything at all. The judges qualification reflected in the words at most seems to indicate an element of uncertainty on her part about their meaning. At all events her comment leads Pimlico to argue either that the judge found Mr Smith to have been entitled to substitute not only another Pimlico operative but also, with its consent, any other plumber or that her findings are so confused that the exercise should be directed to be conducted again. So Pimlico there put before the tribunal an irrelevant contract, cast in highly confusing terms, and now complains that the tribunals interpretation of them was highly confused. Irrespective of whether a wider right of substitution would have been fatal to Mr Smiths claim, this court can in my view be confident that the tribunal found, and was entitled to find, that Mr Smiths only right of substitution was of another Pimlico operative. Such is the judges express finding both in the central part of her judgment and again in her conclusion. Ambiguous terms of a contract to which Mr Smith was not a party cannot widen it. So the question becomes: was Mr Smiths right to substitute another Pimlico operative inconsistent with an obligation of personal performance? It is important to note that the right was not limited to days when, by reason of illness or otherwise, Mr Smith was unable to do the work. His own example of an opportunity to accept a more lucrative assignment elsewhere demonstrates its wider reach. The judge concluded that the right to substitute another Pimlico operative did not negative Mr Smiths obligation of personal performance. She held that it was a means of work distribution between the operatives and akin to the swapping of shifts within a workforce. In challenging the tribunals conclusion Pimlico relies heavily on the decision of the Court of Appeal in Halawi v WDFG UK Ltd (t/a World Duty Free) [2014] EWCA Civ 1387, [2015] 3 All ER 543. Mrs Halawi had been working as a beauty consultant in a duty free outlet at Heathrow airport, managed by World Duty Free. It was the latters practice to grant space in the outlet to cosmetic companies, in which consultants in the uniform of the companies would sell their products. Shiseido, a Japanese cosmetic company, took space in the outlet; and Mrs Halawis role was to sell Shiseidos products there. But her contract was not with Shiseido, still less with World Duty Free. Her contract, or rather her service companys contract, was with a management services company which sold her services on to Shiseido; and then there was a contract between Shiseido and World Duty Free for an accounting between them referable to sales. Notwithstanding the absence of a contract between it and Mrs Halawi, World Duty Free controlled the outlet and in a handbook purported to impose certain rules upon those who worked there. One was that, instead of working personally, a consultant could appoint a substitute provided that she had both an airside pass and the approval of World Duty Free to work in an outlet. In due course World Duty Free withdrew its approval of Mrs Halawi to work in the outlet and thereby prevented her from continuing to do so; but she was held not to be entitled to bring a claim of unlawful discrimination against World Duty Free in that regard. The primary answer to Mrs Halawis claim, most clearly given by the appeal tribunal but apparently adopted by the Court of Appeal, was that she had no contract with World Duty Free of any sort. But the Court of Appeal saw fit also to hold, secondly, that the necessary degree of subordination of Mrs Halawi to World Duty Free was absent: and, thirdly, that her power of substitution (which Pimlico suggests to be analogous to Mr Smiths right to substitute another operative) negatived any obligation of personal performance. But her so called power of substitution was not a contractual right at all. World Duty Frees declaration that Mrs Halawi might appoint a substitute reflected its understandable lack of interest in personal performance on her part under her contract with her own service company and/or under its contract with the management services company. Its interest was only that someone sufficiently presentable and competent to have secured its approval to work in an outlet, and of course in possession of an airside pass, should attend on behalf of Shiseido each day. In my view Mrs Halawis case is of no assistance in perceiving the boundaries of a right to substitute consistent with personal performance. The case of Mirror Group Newspapers Ltd v Gunning [1986] ICR 145 concerned the right to distribute that companys Sunday newspapers around Sheffield. Mrs Gunnings father had held the distributorship but, on his retirement, the company refused to renew it in her favour. She alleged that its refusal was discriminatory and to that end she needed to establish that her fathers contract had required personal performance of it on his part. In allowing the companys appeal the Court of Appeal held at pp 151 and 156 that Mrs Gunning had failed to show that the dominant purpose of her fathers contract had been that he should perform it personally; instead the purpose had been that the companys Sunday newspapers should be efficiently distributed around Sheffield. But in James v Redcats (Brands) Ltd [2007] ICR 1006 Elias J, as president of the appeal tribunal, convincingly suggested at paras 65 to 67 that an inquiry into the dominant purpose of a contract had its difficulties; that, even when a company was insistent on personal performance, its dominant purpose in entering into the contract was probably to advance its business; and that the better search might be for the dominant feature of the contract. In the Hashwani case, cited in para 14 above, Lord Clarke of Stone cum Ebony, at paras 37 to 39, referred to the suggestions of Elias J in the James case with approval but stressed that, although it might be relevant to identify the dominant feature of a contract, it could not be the sole test. The sole test is, of course, the obligation of personal performance; any other so called sole test would be an inappropriate usurpation of the sole test. But there are cases, of which the present case is one, in which it is helpful to assess the significance of Mr Smiths right to substitute another Pimlico operative by reference to whether the dominant feature of the contract remained personal performance on his part. The terms of the contract made in 2009 are clearly directed to performance by Mr Smith personally. The right to substitute appears to have been regarded as so insignificant as not to be worthy of recognition in the terms deployed. Pimlico accepts that it would not be usual for an operative to estimate for a job and thereby to take responsibility for performing it but then to substitute another of its operatives to effect the performance. Indeed the terms of the contract quoted in para 18 above focus on personal performance: they refer to your skills, to a warranty that you will be competent to perform the work which you agree to carry out and to a requirement of a high standard of conduct and appearance; and the terms of the manual quoted in para 19 above include requirements that your appearance must be clean and smart, that the Pimlico uniform should be clean and worn at all times and that [y]our [Pimlico] ID card must be carried when working for the Company. The vocative words clearly show that these requirements are addressed to Mr Smith personally; and Pimlicos contention that the requirements are capable also of applying to anyone who substitutes for him stretches their natural meaning beyond breaking point. The tribunal was clearly entitled to hold, albeit in different words, that the dominant feature of Mr Smiths contracts with Pimlico was an obligation of personal performance. To the extent that his facility to appoint a substitute was the product of a contractual right, the limitation of it was significant: the substitute had to come from the ranks of Pimlico operatives, in other words from those bound to Pimlico by an identical suite of heavy obligations. It was the converse of a situation in which the other party is uninterested in the identity of the substitute, provided only that the work gets done. The tribunal was entitled to conclude that Mr Smith had established that he was a limb (b) worker unless the status of Pimlico by virtue of the contract was that of a client or customer of his. CLIENT OR CUSTOMER? It is unusual for the law to define a category of people by reference to a negative in this case to another persons lack of a particular status. It usually attempts to define positively what the attributes of the category should be. In Byrne Bros (Formwork) Ltd v Baird [2002] ICR 667 at para 16 Mr Recorder Underhill QC (as Underhill LJ then was) described as clumsily worded the requirement that the other party be neither a client nor a customer. It is hard to disagree. In determining whether Pimlico should be regarded as a client or customer of Mr Smith, how relevant was it to discern the extent of Pimlicos contractual obligation to offer him work and the extent of his obligation to accept such work as it offered to him? The answer is not easy. Clearly the foundation of his claim to be a limb (b) worker was that he had bound himself contractually to perform work for Pimlico. No one has denied that, while he was working on assignments for Pimlico, he was doing so pursuant to a contractual obligation to Pimlico. Does that not suffice? Is it necessary, or even relevant, to ask whether Mr Smiths contract with Pimlico cast obligations on him during the periods between his work on its assignments? In the event both of the specialist tribunals and the Court of Appeal all chose, albeit with difficulty, to wrestle with whether Mr Smiths contract with Pimlico was an umbrella contract, in other words was one which cast obligations on him during the periods between his work on assignments for Pimlico; or whether it was a contract which cast obligations on him only during his performance of such successive assignments as were offered to him by Pimlico and accepted by him. The difficulty arose again from Pimlicos apparently inconsistent contractual provisions. The 2009 contract provided (see para 18(c) above): the Company shall be under no obligation to offer you work and you shall be under no obligation to accept such work from the Company. But the manual stated (see para 19(b) above): Normal Working Hours consist of a five day week, in which you should complete a minimum of 40 hours. Pimlico suggests that, to the extent that its contract and its manual are inconsistent, the former should prevail. But the tribunal found that a purposive construction of the two provisions enabled them to be reconciled. It found, in accordance with Mr Smiths evidence, that Pimlico had no obligation to provide him with work on any particular day and if there was not enough work [it] would not have to provide him with work and he would not be paid. The Court of Appeal construed this finding, in my view legitimately, as being that, if by contrast it did have enough work to offer to Mr Smith, Pimlico would be obliged to offer it to him. In other words Pimlicos contractual obligation was to offer work to Mr Smith but only if it was available; indeed, if the work was available, it would seem hard to understand why in the normal course of events Pimlico would not be content to be obliged to offer it to him. Mr Smiths contractual obligation by contrast was in principle to keep himself available to work for up to 40 hours on five days each week on such assignments as Pimlico might offer to him. But his contractual obligation was without prejudice to his entitlement to decline a particular assignment in the light (for example) of its location; and of course it did not preclude Pimlico from electing, as seems to have occurred, not to insist on his compliance with the obligation in any event. So the tribunal found, legitimately, that there was an umbrella contract between Mr Smith and Pimlico. It is therefore unnecessary to consider the relevance to limb (b) status of a finding that contractual obligations subsisted only during assignments. The leading authority in this respect is now Windle v Secretary of State for Justice [2016] ICR 721, in which Underhill LJ suggested at para 23 that a persons lack of contractual obligation between assignments might indicate a lack of subordination consistent with the other party being no more than his client or customer. The energetic submission of Ms Monaghan QC on behalf of Mr Smith that, on the contrary, it might indicate a greater degree of subordination to that other party must await appraisal on another occasion. Mr Smith correctly presented himself as self employed for the purposes of income tax and VAT. His accounts for the six years ending on 5 April 2011 were put in evidence. Mr Smith clearly took advantage of the facility to purchase materials himself for use on each assignment and to charge the customer, albeit funnelled through Pimlico, 20% more than he had paid for them. His accounts for the year ended 5 April 2011 showed turnover of about 131,000, cost of materials of about 53,000 and, following deduction of motor and other expenses, a net pre tax profit of about 48,000. These accounts are the starting point for Pimlicos submission that the tribunal fell into appealable error in holding that its status was not that of a client or customer of Mr Smith. By reference to what considerations should an inquiry into the existence or otherwise of this status be conducted? In Hospital Medical Group Ltd v Westwood [2012] EWCA Civ 1005, [2013] ICR 415, Maurice Kay LJ observed at para 20 that there was no single key with which to unlock the words of the statute in every case. How could there be? If there was a single key, it would amount to a gloss. But there are in particular two authorities which may prove to be of some assistance in the conduct of the inquiry. The first is the judgment of Langstaff J, sitting with others in the appeal tribunal in Cotswold Developments Construction Ltd v Williams [2006] IRLR 181. At para 53 he said a focus upon whether the purported worker actively markets his services as an independent person to the world in general (a person who will thus have a client or customer) on the one hand, or whether he is recruited by the principal to work for that principal as an integral part of the principals operations, will in most cases demonstrate on which side of the line a given person falls. The second is the judgment of Lord Clarke in the Hashwani case cited at para 14 above. A contractual provision for disputes to be resolved by arbitration provided that all the arbitrators should be members of the Ismaili community. One party proposed to appoint Sir Anthony Colman, a retired High Court judge, as one of the arbitrators. He was not a member of the Ismaili community. Would an arbitrator be a worker, entitled to protection from discrimination on religious grounds? There was no doubt that an arbitrator would be obliged to perform his work personally. But there was a further question, which we in the present case are casting as an inquiry into the status of Pimlico as a client or customer. In para 34 Lord Clarke, with whom the other members of the court agreed, identified the question (already summarised in para 14 above) as being whether, on the one hand, the person concerned performs services for and under the direction of another person in return for which he or she receives remuneration or, on the other hand, he or she is an independent provider of services who is not in a relationship of subordination with the person who receives the services. At para 40 Lord Clarke proceeded to address that question in relation to the obligations of an arbitrator. He concluded that an arbitrator would not be subject to the direction of, nor be subordinate to, those with whom he contracted and so would not be a worker entitled to protection against discrimination. To these two authorities, Pimlico would add a third, namely the decision of the Court of Justice of the European Union (the CJEU) in FNV Kunsten Informatie en Media v Staat der Nederlanden (Case C 413/13) [2015] All ER (EC) 387. A Dutch union negotiated terms for the minimum remuneration of self employed musicians when engaged as substitutes to play in Dutch orchestras. But were the terms anti competitive under EU law? Not (so held the CJEU) if the musicians were false self employed, being a concept which seems to equate to that of a limb (b) worker. The court held: 33. a service provider can lose his status of an independent trader if he does not determine independently his own conduct on the market, but is entirely dependent on his principal, because he does not bear any of the commercial risks arising out of the latters activity and operates as an auxiliary within the principals undertaking It follows that the status of worker within the meaning 36. of EU law is not affected by the fact that a person has been hired as a self employed person under national law, for tax, administrative or organisational reasons, as long as that person acts under the direction of his employer as regards, in particular, his freedom to choose the time, place and content of his work , does not share in the employers commercial risks and, for the duration of that relationship, forms an integral part of that employers undertaking, so forming an economic unit with that undertaking The CJEUs examples of relevant considerations are helpful but should be applied cautiously. In Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC 28, the question was whether Ms Percy, a former minister of the Church of Scotland, was entitled to claim that the Church had unlawfully discriminated against her on grounds of sex. The appellate committee held that she was a worker so was entitled to present her claim. Lady Hale observed at para 146 that [t]he fact that the worker has very considerable freedom and independence in how she performs the duties of her office does not take her outside the definition. In support of its contention that it was a client or customer of Mr Smith, Pimlico makes four substantial points: (a) Without prejudice to his overall obligation (which Pimlico has to accept for this purpose) to make himself available to accept work, if offered, for up to 40 hours each week, Mr Smith was entitled to reject any particular offer of work, whether because of the location or timing of it or for any other reason. (b) Subject to that overall obligation, Mr Smith was free to take outside work albeit not if offered by Pimlicos clients. In a concluding paragraph the tribunal observed that he did not elect to take outside work; but, as Pimlico rightly objects, the analysis must be of his contractual entitlement rather than of his election not to exercise it. (c) Pimlico reserved no right to supervise, or otherwise interfere with, the manner in which Mr Smith did his work. (d) There were financial risks, as well as advantages, consequent upon Mr Smiths work for Pimlico. He was bound by the estimate for the price of the work which he had given to the client. Pimlico did not pay him, not even for any materials which he had supplied, until the client had paid it; if a client paid more than one month late, its payment to him was halved; and, if a client failed to pay within six months, it paid him nothing, not even for his materials, and irrespective of whether the client made payment thereafter. If a client complained about his work, even about work done by another Pimlico operative whom he had substituted to do it, it was Mr Smith who was responsible for remedying it and who received no payment referable to it until he had done so. On the other hand, there were features of the contract which strongly militated against recognition of Pimlico as a client or customer of Mr Smith. Its tight control over him was reflected in its requirements that he should wear the branded Pimlico uniform; drive its branded van, to which Pimlico applied a tracker; carry its identity card; and closely follow the administrative instructions of its control room. The severe terms as to when and how much it was obliged to pay him, on which it relied, betrayed a grip on his economy inconsistent with his being a truly independent contractor. The contract made references to wages, gross misconduct and dismissal. Were these terms ill considered lapses which shed light on its true nature? And then there was a suite of covenants restrictive of his working activities following termination. Accurate though it would be, it would not be a proper disposal of this issue to describe this courts own conclusion to be that Pimlico cannot be regarded as a client or customer of Mr Smith. The proper disposal is, of course, for it to declare that, on the evidence before it, the tribunal was, by a reasonable margin, entitled so to conclude. At the end of its submissions Pimlico appends a thin point, into which not even Mr Linden QC on its behalf has proved able to inject substance, namely that the tribunal had failed to address the factors upon which, in relation to this second issue, Pimlico had in particular relied. The complaint turns out to be little more than that the judge had not in her conclusion repeated references to factors which she had addressed earlier. I will not lengthen this judgment by elaborating upon the poverty of this particular complaint. CONCLUSION I would dismiss Pimlicos appeal. The result of doing so would be that the substantive claims of Mr Smith as a limb (b) worker could proceed to be heard in the tribunal.
UK-Abs
The Respondent, Mr Gary Smith, is a plumbing and heating engineer. Between August 2005 and April 2011 Mr Smith worked for the First Appellant Pimlico Plumbers Ltd a substantial plumbing business in London which is owned by the Second Appellant, Mr Charlie Mullins. Mr Smith had worked for the company under two written agreements (the second of which replaced the first in 2009). These agreements were drafted in quite confusing terms. In August 2011 Mr Smith issued proceedings against the Appellants before the employment tribunal alleging that he had been unfairly dismissed, that an unlawful deduction had been made from his wages, that he had not been paid for a period of statutory annual leave and that he had been discriminated against by virtue of his disability. The employment tribunal decided that Mr Smith had not been an employee under a contract of employment, and therefore that he was not entitled to complain of unfair dismissal (a finding that Mr Smith does not now challenge), but that Mr Smith (i) was a worker within the meaning of s.230(3) of the Employment Rights Act 1996, (ii) was a worker within the meaning of regulation 2(1) of the Working Time Regulations 1998, and (iii) had been in employment for the purposes of s.83(2) of the Equality Act 2010. These findings meant that Mr Smith could legitimately proceed with his latter three complaints and directions were made for their substantive consideration at a later date. The Appellants appealed this decision to an appeal tribunal and then to the Court of Appeal, but were unsuccessful. They consequently appealed to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Wilson gives the judgment with which Lady Hale, Lord Hughes, Lady Black and Lord Lloyd Jones agree. The tribunal was entitled to conclude that Mr Smith qualified as a worker under s.230(3)(b) of the Employment Rights Act 1996 (and by analogy the relevant provisions of the Working Time Regulations 1998 and the Equality Act 2010), and his substantive claims can proceed to be heard. Conceptually, it is both legitimate and convenient to treat the three positive findings of the tribunal as having been founded upon a conclusion that Mr Smith was a worker within the meaning of s.230(3)(b) of the Employment Rights Act 1996 (otherwise known as a limb (b) worker) [15]. This was because regulation 2(1) of the Working Time Regulations defines worker in identical terms to s.230(3)(b), and case law has suggested that the meaning of employment in s.83(2) of the Equality Act is also essentially the same [12 15]. Proceeding on that basis, if Mr Smith was to qualify as a limb (b) worker under s.230(3)(b) then it was necessary for him to have undertaken to personally perform his work or services for Pimlico Plumbers, and that the company be neither his client nor his customer. When considering whether Mr Smith had undertaken to provide a personal service, it was relevant that when working for Pimlico Mr Smith had a limited facility (not found in his written contracts) to appoint another Pimlico operative to do a job he had previously quoted for but no longer wished to undertake [24 5]. However, it is helpful to assess the significance of this right to substitute by considering whether the dominant feature of the contract remained personal performance on his part. In this case the terms of the contract (which referred to your skills etc.) are clearly directed to performance by Mr Smith personally, and any right to substitute was significantly limited by the fact that the substitute had to come from the ranks of those bound to Pimlico in similar terms. Consequently, the tribunal was entitled to hold that the dominant feature of Mr Smiths contract with the company was an obligation of personal performance [32 34]. On the issue of whether Pimlico Plumbers was a client or customer of Mr Smith, the tribunal had legitimately found that there was an umbrella contract between the parties, i.e. one which cast obligations on Mr Smith even when he was between assignments for Pimlico. It was therefore not necessary to consider what impact a finding that there was no umbrella contract (and therefore that the contractual obligations subsisted only during the actual assignments) would have had on the limb (b) analysis [37, 41]. Instead, one had to look at the wording of the written contractual documents to determine whether Pimlico was a client or customer of Mr Smith. On the one hand, Mr Smith was free to reject a particular offer of work, and was free to accept outside work if no work was offered by any of Pimlicos clients. He also bore some of the financial risk of the work, and the manner in which he undertook it was not supervised by Pimlico. However, there were also features of the contract which strongly militated against recognition of Pimlico as a client or customer of Mr Smith. These included Pimlicos tight control over Mr Smiths attire and the administrative aspects of any job, the severe terms as to when and how much it was obliged to pay him, and the suite of covenants restricting his working activities following termination [47 48]. Accordingly, the tribunal was entitled to conclude that Pimlico cannot be regarded as a client or customer of Mr Smith [49].
On the evening of 12 February 1989, gunmen burst into the North Belfast home of Patrick Finucane, a solicitor. He was having supper with his wife and three children. In their presence he was brutally murdered. He was shot 14 times. Mrs Finucane was injured by a ricocheting bullet which struck her on the ankle. This shocking and dreadful event still ranks, almost 30 years later, as one of the most notorious of what are euphemistically called the Northern Ireland troubles. Mrs Finucane and her children have waged a relentless campaign since Patricks killing to have a proper investigation conducted into the circumstances in which he was murdered. It became clear at an early stage that those responsible were soi disant loyalists. Before long, it also emerged that there was collusion between Mr Finucanes murderers and members of the security forces. Various investigations about the murder and the nature of the collusion have been conducted. None of these has uncovered the identity of those members of the security services who engaged in the collusion nor the precise nature of the assistance which they gave to the murderers. (i) The police investigation An investigation into Mr Finucanes death was launched by the Royal Ulster Constabulary (RUC), then the police force in Northern Ireland. A number of suspects were arrested and interviewed in the days following the murder. None was charged with a criminal offence. The initial RUC investigation did not consider the possibility of collusion between the security services and the loyalists who killed Mr Finucane. On 4 July 1989 a gun was found during a police search in the Shankill Road area of Belfast. It proved to be one of the weapons used to murder Mr Finucane. It had been stolen by a Colour Sergeant of the Ulster Defence Regiment (UDR) in 1987. In April 1990 three people were convicted of possession of the gun and of membership of the banned paramilitary organisation, the Ulster Freedom Fighters, but they could not be linked to Mr Finucanes murder. The Colour Sergeant who had stolen the weapon sold it to a man called Ken Barrett. In 2004 Barrett pleaded guilty to the murder of Mr Finucane. (ii) The inquest When an inquest into Mr Finucanes death was held on 6 September 1990, his widow, Geraldine, was stopped from giving evidence about threats to her husbands life which, it is claimed, had been made to some of his clients by police officers who were interviewing them at Castlereagh Holding Centre, a police detention centre where suspects were interviewed. The coroner conducting the inquest ruled that, as the law then stood, his inquiry was confined to the cause and immediate circumstances of the death. (The inquest was held, obviously, before the decision of the House of Lords in R (Middleton) v West Somerset Coroner [2004] 2 AC 182.) (iii) The Stevens and Langdon Inquiries In September 1989, John Stevens (then the deputy chief constable of the Cambridgeshire constabulary, later Sir John, and yet later Lord Stevens) was appointed by the chief constable of the RUC to investigate allegations of collusion between the security forces and loyalist paramilitaries. This investigation did not specifically examine the murder of Patrick Finucane. Sir John Stevens reported to the chief constable in April 1990. On 17 May 1990, the Right Honourable Peter Brooke MP, the then Secretary of State for Northern Ireland, made a statement to the House of Commons relating to Sir John Stevens investigation. He said that as a result of that inquiry, 94 people had been arrested and that 59 had been reported for or charged with offences. As a consequence of the investigation 45 individuals were later convicted of terrorist related offences mostly for possession of materials likely to be of use to terrorists. Those convicted included 32 members of the Ulster Defence Association (UDA), a loyalist paramilitary group, and 11 members of the UDR. The report of Sir John Stevens which led to these events has never been published. It has later been established that Sir John Stevens was seriously obstructed in his investigations. Instructions were given to deny him access to intelligence information. Material about advance warnings to UDA members in relation to pending arrests was deliberately withheld. The first Stevens Inquiry did lead to the identification of Brian Nelson, however. He was an informer for the security services, in particular, an organisation within the British army known as the Force Research Unit (FRU). Although the army had denied running any agents in Northern Ireland, the discovery of Nelsons fingerprints on intelligence documents put paid to that particular denial. Nelson had been recruited by FRU. On their instigation, he infiltrated the UDA and became its chief intelligence officer. His role involved the gathering of information about possible targets for assassination. Nelson was arrested by the Stevens team on 12 January 1990. He made statements to the investigators about his activities. In due course, he was charged with a number of terrorist crimes and in January 1992 he pleaded guilty to five charges of conspiracy to murder, two of collecting information likely to be useful to terrorists, 12 charges of aiding and abetting others to possess or collect information likely to be useful to terrorists and one charge of possession of a firearm with intent. He was sentenced to ten years imprisonment. None of his convictions related to the murder of Patrick Finucane. At Nelsons sentencing hearing, the commanding officer of FRU, identified as Colonel J, gave evidence on his behalf. He claimed that Nelson had given information to FRU which had been instrumental in saving many lives. This evidence is highly controversial. It has been the subject of examination in a number of reports concerning Mr Finucanes murder. These shall be discussed later in this judgment. On 11 February 1992, Mrs Finucane began a civil action against the Ministry of Defence and Brian Nelson. She later commenced proceedings against the police. These proceedings remain outstanding. On 8 June 1992 a second Stevens Inquiry was instituted. This followed the broadcast on the BBC of a programme entitled, Dirty War, in which it was claimed that Nelson had been involved in a number of murders and that he had been responsible for targeting Patrick Finucane. It was also reported that he had passed Mr Finucanes photograph to the UDA. Interim reports from the second Stevens Inquiry were submitted to the Director of Public Prosecutions in April and October 1994 and a final report was delivered on 24 January 1995. No prosecutions were instituted on foot of those reports. Again, this inquiry did not address directly the killing of Mr Finucane. In 1999, a non governmental organisation, British Irish Rights Watch, provided the Secretary of State for Northern Ireland with a paper entitled, Deadly Intelligence: State Collusion with Loyalist Violence in Northern Ireland. This made a number of claims including that there had been state collusion in the murder of Patrick Finucane. This, the paper asserted, had taken place as a result of contact and exchanges between Brian Nelson, his FRU handlers and the RUC Special Branch. Shortly after this, the Secretary of State asked a Home Office civil servant, Anthony Langdon, to conduct an inquiry into whether a fresh investigation of these claims was warranted. Among the conclusions reached by Mr Langdon were these: (1) There were grounds for believing that one of his army handlers had assisted Nelson in the targeting of a murder victim; (2) The same handler knew nothing about the threat to Patrick Finucane before his murder; (3) But the handler had refused to answer police questions about these matters; (4) Colonel Js evidence at Nelsons trial had misled the trial judge; (5) The FRU gave Nelson intelligence information in some instances; (6) Nelsons handlers were well aware of his efforts to support the UDA in targeting republicans; (7) Finucane to his handler before the murder. It was probable that Nelson had mentioned something about Patrick A third Stevens Inquiry was set up in May 1999. This focused on the murder of Mr Finucane and another man and the question of collusion between members of the security services and loyalist paramilitaries. The following month a man called William Stobie was charged with the murder of Mr Finucane. During a court hearing, Stobies solicitor stated that he had twice given information about the intended attack on Mr Finucane and that on neither occasion had this information been acted on. The case against Stobie collapsed when a vital witness refused to give evidence and all charges against him were dismissed in November 2001. A short time later, on 12 December 2001, he was murdered by, it is believed, loyalist paramilitaries. On 19 June 2002 the BBC broadcast a programme called, A licence to murder. In the course of this, a reporter, John Ware, interviewed Sir John Stevens and asked, Was what was done in the name of the state defensible? He replied . the activities of the so called double agent Nelson of course [were] inexcusable. Detective Sergeant Nicholas Benwell, a member of the Stevens Inquiry team from 1989 to 1994, was also interviewed and asked did . the Stevens Inquiry come to the conclusion that military intelligence was colluding with their agent . to ensure that the loyalists shot the right people? He replied, Yes, that was the conclusion we came to . there was certainly an agreement between his handlers and Nelson that the targeting should concentrate on what they described as the right people. On 17 April 2003 Sir John Stevens published a report which contained what was described as an overview of his investigation into the murder of Patrick Finucane. In it he said, at para 4.6, that he had . uncovered enough evidence to lead me to believe that the murder . of Patrick Finucane could have been prevented. He also concluded that . the RUC investigation of Patrick Finucanes murder should have resulted in the early arrest and detection of his killers. He found, at para 4.9, there had been collusion in the murder and said, . the co ordination, dissemination and sharing of intelligence were poor. Informants and agents were allowed to operate without effective control and to participate in terrorist crimes. Nationalists were known to be targeted but were not properly warned or protected. Crucial information was withheld from senior investigating officers. Important evidence was neither exploited nor preserved. As to William Stobie, Sir John said, at para 2.7: It has now been established that before the murder of Patrick Finucane, Stobie supplied information of a murder being planned. He also provided significant information to his Special Branch handlers in the days after the murder. This principally concerned the collection of a firearm. However, this vital information did not reach the original murder inquiry team and remains a significant issue under investigation by my Inquiry team. The third Stevens Inquiry also examined the role of Brian Nelson in the murder of Patrick Finucane. The overview report stated, at para 2.12: . Nelson was aware [of] and contributed materially to the intended attack on Finucane. It is not clear whether his role in the murder extended beyond passing a photograph, which showed Finucane and another person, to one of the other suspects. Nelson was rearrested and interviewed. There was no new evidence and he was not charged with any further offences. While the third Stevens Inquiry was taking place, in the summer of 2001, political talks between the United Kingdom and Irish governments were held at Weston Park, Staffordshire. It was decided that a judge of international standing would be appointed to undertake a thorough investigation of allegations of collusion in a number of cases including that of Patrick Finucane. The statement about the appointment of this judge contained the following: If the appointed judge considers that in any case [the inquiry is not provided with a] sufficient basis on which to establish the facts, he or she can report to this effect with recommendations as to what further action should be taken. In the event that a Public Inquiry is recommended in any case, the relevant Government will implement that recommendation. (Emphasis supplied) (iv) The Strasbourg case Mrs Finucane applied to the European Court of Human Rights (ECtHR) for a declaration that the United Kingdom government had failed to carry out a proper investigation into her husbands death and for an order requiring the government to conduct a full public inquiry into its circumstances. On 1 July 2003, ECtHR held that there had not been an inquiry into the death of Patrick Finucane which complied with article 2 of the European Convention on Human Rights and Fundamental Freedoms (ECHR). The first two Stevens inquiries, it held, since they did not involve an investigation of the killing of Mr Finucane, could not meet the requirements of article 2. Quite apart from this, the reports had not been made public and Mrs Finucane had not been informed of their findings. The necessary elements of public scrutiny and accessibility by the family of Mr Finucane to information about the circumstances in which he came to be killed were therefore absent. As to the third inquiry, which was concerned with the Finucane murder, ECtHR held that, since it had begun ten years after the event, it could not meet the requirement that effective investigations be commenced promptly and conducted with due expedition. The court also held that the absence of reasons for decisions not to prosecute in controversial cases was not conducive to public confidence and could deny the victims family access to information about a matter of crucial importance to them and prevent any legal challenge of the decision. The court observed that, despite the suspicions of collusion, no reasons had been given at the time for the various decisions not to prosecute. No information was made available to Mrs Finucane or to the public that might have provided reassurance that the rule of law had been respected. In these circumstances, the requirements of article 2 could not be met, unless the information was forthcoming in some other way. That had not happened. In sum, the court held that the proceedings for investigating the death of Patrick Finucane had failed to provide a prompt and effective investigation into the allegations of collusion by security personnel. ECtHR did not find it necessary to address further allegations of a lack of accessibility by the family to the Stevens 3 investigations or of a lack of independence between that inquiry and the Police Service of Northern Ireland (PSNI) (which had replaced the RUC). The court found that there had been a failure to comply with the procedural obligation imposed by article 2. ECtHR referred to the circumstance that it had not previously indicated that a government should hold a fresh investigation in response to a finding of a breach of the procedural obligation under article 2. On that account, it decided that it was not appropriate to do so in this case. It stated that it could not be assumed that a future investigation could usefully be carried out or that such an investigation would provide any redress, either to the victims family or by way of providing transparency and accountability to the wider public. The lapse of time, the effect on evidence and the availability of witnesses might make such an investigation an unsatisfactory or inconclusive exercise. The court stated that it fell to the Committee of Ministers acting under article 46 to consider what might practicably be required by way of the governments obligation to comply with its article 2 obligations. (v) The Committee of Ministers consideration of the case Article 46.2 of ECHR provides that the final judgment of ECtHR shall be transmitted to the Committee of Ministers, which shall supervise its execution. The Committee of Ministers is the Council of Europes statutory decision making body. It is made up of the ministers for foreign affairs of member states or their permanent diplomatic representatives in Strasbourg. The Secretariat of the Commission published its assessment of the case on 19 November 2008. It suggested that the requirements of public scrutiny and accessibility by the family to information about Mr Finucanes death had been met. Crucially, this decision was based on a detailed statement by the Public Prosecution Service (PPS) of the reasons that it had decided not to institute further prosecutions and the absence of challenge to those reasons. (The Director of Public Prosecutions had issued a statement on 25 June 2007, having taken the advice of independent senior counsel. The statement recorded that, following his examination of the third Stevens Inquiry report, the Director had concluded that the test for prosecution was not met in relation to any other possible criminal proceedings relating to Mr Finucanes murder, apart from those which had already been taken against Stobie and Barrett. In particular, the Directors statement continued, the available evidence was insufficient to establish that any member of the FRU had agreed with Nelson or anyone else that the murder was to take place; that any RUC officer had agreed with Stobie or Barrett that Mr Finucane was to be murdered; or that there was misfeasance in public office by members of the FRU in the handling of Nelson as an agent). In the assessment report of 19 November 2008, it was also stated that the Committee of Ministers might strongly consider encouraging the UK authorities to continue discussion with Mrs Finucane on the terms of a possible inquiry into her husbands murder. That recommendation was accepted by the Committee of Ministers on 17 March 2009 and it was decided that the examination of the specific measures taken by the UK on foot of the decision of ECtHR should be closed. Importantly, however, this decision was made on the basis that the UK was actively working on proposals for establishing a statutory public inquiry. (vi) Judge Corys inquiry Several years before the Committee of Ministers consideration of the case, on foot of the agreement made at Weston Park (see para 23 above), Judge Peter Cory, a retired justice of the Supreme Court of Canada, was appointed in June 2002 to conduct an inquiry into the murders of a number of people, including that of Mr Finucane. His letter of appointment contained an assurance that, in the event that he recommended a public inquiry into any of the deaths, the government would abide by that recommendation. in relation to the killing of Patrick Finucane, were these: (i) A public inquiry into his murder was required; (ii) The weight to be attached to Brian Nelsons statement to the Stevens Inquiry could only be determined at a hearing where the evidence was tested by examination and cross examination in a public forum; Judge Corys report was published on 1 April 2004. Among his conclusions, (iii) The documentary evidence which Judge Cory had considered was contradictory regarding the extent to which FRU had advance knowledge of the targeting of Mr Finucane; (iv) While the inference could be drawn that FRU did indeed have prior information that Mr Finucane had been targeted, a decision on whether that was so could only be properly dealt with at a public inquiry; (v) In 1981 the security services had been prepared to disregard warnings that Mr Finucane was in imminent and serious danger. They had chosen this path in order to protect the identity of one of their agents; (vi) The failure of the security services in June 1985 and December 1988 to warn Mr Finucane that he was in danger was significant and might well be sufficient in [itself] to warrant a public inquiry. In any event [it] must be taken into account in considering the overall or cumulative effect of all the relevant documents. That cumulative effect leads to a conclusion that a public inquiry should be held to examine the issues raised in this case; (vii) There was evidence of a persisting attitude within the RUC special branch and the FRU that they were not bound by the law and were above its reach. The relevance and significance of this should be considered at a public inquiry. By any standard, these amounted to compelling reasons for the holding of a public inquiry. Since prosecutions in the Finucane case were pending at the time that Judge Cory reported, however, an inquiry into his death could not be instituted immediately. But the Secretary of State for Northern Ireland made a statement that the government would set out the way ahead for the inquiry when the prosecutions ended. Following Barretts conviction, the Secretary of State wrote to Mrs Finucane, outlining a statement which he intended to make to the House of Commons on 23 September 2004. That letter stated that, in the inquiry into Mr Finucanes killing, the tribunal would be tasked with uncovering the full facts of what happened and will be given all of the powers and resources necessary to fulfil that task. In order that the inquiry can take place speedily and effectively and in a way that takes into account the public interest, including the requirements of national security, it would be necessary to hold the inquiry on the basis of new legislation which will be introduced shortly. The new legislation referred to here was to be the Inquiries Act 2005. Before its introduction (on 7 June 2005), public inquiries were held under the Tribunals of Inquiry (Evidence) Act 1921. It is the governments case that this would have provided a wholly unsuitable vehicle for an inquiry into the death of someone such as Mr Finucane. Since national security issues were bound to arise, applications for public interest immunity (whereby certain matters that had to remain confidential would be excluded from evidence) would be an inevitable feature. This, the government suggested, would restrict the ambit of an inquiry such as was proposed into Mr Finucanes murder. The new legislation was intended to remove the need for a public interest immunity procedure in public inquires. All relevant information could be considered, subject to restrictions on further publication. It had been argued on behalf of Mrs Finucane that the 2005 Act had been enacted specifically to deal with the proposed public inquiry into her husbands death. This was refuted by the government. It was pointed out that the 2005 Act had been preceded by a public consultation exercise conducted by the Department of Constitutional Affairs and a parliamentary inquiry carried out by the administration committee of the House of Commons. Moreover, the Act had been subject to post legislative scrutiny on two occasions. In a note submitted to this court after the hearing of the appeal, the appellant explained that she had understood from correspondence that she had received from the government and the terms of the Secretary of States statement to the House of Commons that the 2005 Act had to be introduced to allow the inquiry into her husbands death to proceed. She now accepts that all that the government had intended to convey was that the inquiry could not take place until the legislation had been enacted. Mrs Finucane objected strenuously to the proposal that the inquiry into her husbands death be conducted under the terms of the 2005 Act. Section 19 of that Act allows ministers to impose restrictions on (i) attendance at an inquiry or any particular part of an inquiry; and (ii) disclosure of any evidence or documents given, produced or provided to an inquiry. The case made by Mrs Finucane was that, at least potentially, this removed substantial control of the inquiry process from the person chairing the inquiry and transferred it to ministerial edict. Various discussions and efforts to obtain agreement and compromise took place over the years that followed. These proved unavailing. In May 2010, following the general election, a new coalition government was formed and discussions about the inquiry into Patrick Finucanes murder took a different turn indeed, a series of different turns. These have been well and fully described in the judgment of Gillen LJ in the Court of Appeal in Northern Ireland (Gillen LJ, Deeny J and Horner J [2017] NICA 7) in paras 41 61 and need not be repeated extensively here. In broad summary, these include: (i) The openly stated views of the Secretary of State for Northern Ireland, the Rt Hon Owen Paterson MP, and the Prime Minister, the Rt Hon David Cameron MP, that, generally, there should not be long running, open ended and costly inquiries into the past in Northern Ireland. Indeed, a statement to that effect had appeared in the Conservative partys manifesto for the 2010 election; (ii) On 3 November 2010, Mr Paterson wrote to the Prime Minister, outlining the process which he intended to follow in relation to deciding whether it was in the public interest to establish a public inquiry into the death of Patrick Finucane. He referred to the policy that, in general, there should not be expensive, lengthy inquiries. He also provided information about the cost of recent inquiries. He made it clear, however, that the policy would not necessarily dictate the outcome each case would be considered on an individual basis; (iii) Following a meeting between the Prime Minister, the Attorney General and Mr Paterson, the last named made a statement to Parliament on 11 November 2010, in which he said that he intended to embark on a two month consultation period on the question of whether it was in the public interest to establish a public inquiry into the death of Patrick Finucane. This would involve discussions with the family. The views of public authorities and the public in general would be sought. Six particular factors would be taken into account: The commitment given in 2004; Public concern arising from the reviews and investigations that The experience of other inquiries established after the Weston had occurred; Park Commitments; The delay which had occurred since the 2004 announcement Political developments that have taken place in Northern and the potential length of the inquiry; Ireland since 2004; government finances. The potential costs of any inquiry and the current pressure on (iv) Meetings between Mrs Finucanes legal representatives and the government occurred in January and February 2011. These centred on whether a Baha Mousa type inquiry would be acceptable to the family. (The Baha Mousa inquiry, conducted by the Rt Hon Sir William Gage under the 2005 Act (2011) (HC 1452) had devised a protocol which provided that questions of disclosure should be decided by Sir William, using the restriction order procedure but that this did not prevent the use of a restriction notice by a minister). Some time after the meetings had taken place, representatives of the family indicated that, of the various formats for an inquiry that had been discussed, the Baha Mousa format would be the most appropriate. The government contends, however, that the Finucane family did not respond to the question of whether a restriction notice could, if necessary, continue to be issued by a minister, something which was possible under the Baha Mousa protocol; (v) Various briefing papers were submitted to ministers and a succession of meetings between civil servants and ministers took place between April and July 2011. In one significant email of 9 July 2011, Sir Jeremy Heywood, later the cabinet secretary, stated: Does the PM seriously think that it is right to renege on the previous Governments clear commitment to hold a full judicial inquiry? This was a dark moment in the countrys history far worse than anything that was alleged in Iraq/Afghan. I cannot really think of any argument to defend not having a proper inquiry. As Gillen LJ observed in para 59 of his judgment, Sir Jeremy moderated that opinion somewhat in later correspondence, but it nevertheless remains a striking expression of view from a senior civil servant; (vi) The decision not to hold a public inquiry was made at a meeting of relevant ministers and civil servants on 11 July 2011. The prime minister chaired the meeting. Minutes of the meeting recorded him as having made the following points: The primary objective was to find the truth. There were strong reasons to conclude that the public interest in securing this objective would be better served by a process other than a potentially lengthy, costly and procedurally difficult public inquiry which might be unworkable in light of national security issues. His preference was for a speedier, paper based review of all existing material by an independent person. any announcement. There would be discussion with Mrs Finucane in advance of On 12 October 2011, the Secretary of State for Northern Ireland made a statement to the House of Commons that the former United Nations war crimes prosecutor, Sir Desmond de Silva, had been asked to conduct an independent review of any state involvement in Mr Finucanes murder. He was to have unrestricted access to documents and was free to meet anyone whom he felt could help with his inquiry. The de Silva Review (2012) (HC 802 I) The terms of reference for Sir Desmonds review were these: To draw, as required, from the extensive investigations that had already taken place; To carry out a non statutory, document based review without oral hearings and produce a full account of any involvement by the army, the RUC, the security service or other UK government body in the murder of Patrick Finucane; To have full access to the archives of the various Stevens inquiries and to all government papers; His work was to be carried out independently of government; He was not asked to, nor was he given the power to, hold oral hearings although, if he wished to meet people who could assist with the work, that was a matter for him. The manner in which Sir Desmond carried out his review, the people he met, the documents which he considered and the conclusions which he reached are comprehensively summarised in paras 64 67 of Gillen LJs judgment in the Court of Appeal and need not be repeated verbatim here. The salient points are these: (i) Mrs Finucane did not participate in Sir Desmonds review and did not meet him despite having been invited to do so; (ii) He sought and obtained a wide range of documents from government departments and other sources. All relevant government agencies had co operated fully with him. In consequence, he saw and considered many more documents than those which had been made available to Sir John Stevens and Judge Cory. He had had access to sensitive intelligence files. The reason that Sir John Stevens and Judge Cory had not received many of the documents which had been made available to Sir Desmond was not explained; (iii) He met a number of individuals who had served in the army, the RUC and other security services. He also received a number of written submissions; (iv) He found that there was a clear and wilful failure on the part of successive governments in the 1980s to establish and enforce a proper framework for the running of agents; (v) He found that Brian Nelsons desire to target republicans was well known to the FRU. His handlers had supplied him with information which had been used by him in the selection of targets and there was inadequate supervision by the security service of the contact between FRU and Nelson; What Sir Desmond described as his most serious finding was the failure of RUC special branch to react to the intelligence which Nelson had supplied. FRU claimed to have supplied this information to special branch but they insisted that they had not received it. Sir Desmond considered that FRUs version was more likely to be accurate. (vi) The RUC, the security service and the secret intelligence service failed to warn Patrick Finucane of known and imminent threats to his life in 1981 and 1985; (vii) One or more officers in the RUC probably did propose Mr Finucane as a target for loyalist terrorists in December 1988; (viii) Barrett received intelligence about Patrick Finucane from a police source; (ix) Security service propaganda initiatives may have caused Mr Finucane to be identified as a legitimate target for loyalist terrorists; (x) RUC officers, RUC special branch and army officers obstructed the Stevens investigations and lied to his investigation team. Sir Desmonds overall conclusion about Patrick Finucanes murder was expressed in this passage of his report: 115. I am left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA in February 1989 had it not been for the different strands of involvement by elements of the state. The significance is not so much, as Sir John Stevens concluded in 2003, that the murder could have been prevented, though I entirely concur with this finding. The real importance, in my view, is that a series of positive actions by employees of the state actively furthered and facilitated his murder and that, in the aftermath of the murder, there was a relentless attempt to defeat the ends of justice. 116. My Review of the evidence relating to Patrick Finucanes case has left me in no doubt that agents of the state were involved in carrying out serious violations of human rights up to and including murder. However, despite the different strands of involvement by elements of the state, I am satisfied that they were not linked to an over arching state conspiracy to murder Patrick Finucane. Nevertheless, each of the facets of the collusion that were manifest in his case the passage of information from members of the security forces to the UDA, the failure to act on threat intelligence, the participation of state agents in the murder and the subsequent failure to investigate and arrest key members of the West Belfast UDA can each be explained by the wider thematic issues which I have examined as part of this Review. Another discrete aspect of Sir Desmond de Silvas review requires particular attention. In the course of his review, Sir Desmond expressed a wish to speak to one of Brian Nelsons former handlers. She has been referred to as A/13. Sir Desmond dealt with this somewhat cryptically at the end of the passage in his report dealing with those persons from whom he had received oral evidence, para 1.48. He merely observed, I also sought to meet with one of Brian Nelsons former handlers (A/13), though in the event this was not to be possible due to medical reasons pertaining to the handler. In the course of the hearing of the appeal before this court, the question arose as to whether any medical evidence had been supplied to support the claim that this individuals medical condition made it impossible for her to meet Sir Desmond. This sparked an exchange of post hearing submissions from the parties. The respondent made the following reply: Following consultation with the solicitor to the Review and also the Review archive, it has been ascertained that the availability of the handler for interview was the subject of an exchange of correspondence between the Review and the MOD and also internal consideration by the Review team. In late 2011/early 2012, the Review made a request, via the MOD, to interview the handler in order both to provide information to the review and also to comment upon the evidence of others. An indication was also given by the Review that adverse inferences may be drawn if an interview was declined without good reason. In response, the Review was advised by the MOD (following communication with the witness) that the handler has been suffering from stress for some time and is very frail. The MOD also advised that the handler recognised the In response to this information, the appellant has made the following written submissions: Reviews desire for an interview but had expressed a belief that an interview would be seriously detrimental to their health. In April 2012 the Review advised the MOD that it looked increasingly unlikely that Sir Desmond would wish to interview the handler, but that if he decided that he would be assisted by such a meeting he would ordinarily need to be satisfied by medical evidence that such an interview would indeed be seriously detrimental to their health. The clear impression given by the report is that Sir Desmond did wish to meet with the handler but that such a meeting was not possible for medical reasons. However, it now appears (from the note provided [by the respondent] to the court) that in fact Sir Desmond did not consider it necessary to meet with this individual (although the reason for his apparent change of mind and the wording of the report are not explained). In any event, the note clarifies that the medical reasons which prevented the meeting were self reported and indeed came to Sir Desmond, not from A/13 herself, but from the MOD. Those reasons were not, at any stage, checked or verified by reference to a medical professional. The importance of this handlers evidence lies in the question that was central to Sir Desmonds review ie whether members of the Armys Force Research Unit (by whom Mr Nelson was engaged) had advance knowledge of the plan to murder Patrick Finucane and the extent of that knowledge. FRUs advance knowledge is one of the most important unanswered questions about the murder. Judge Cory addressed this issue at para 1.134 and following of his report His interpretation of the material led him to say it does seem reasonable to infer both that: Nelson would have been aware of the targeting of Patrick Finucane and that he would have given that information to his handlers. Mr Langdon concluded There are grounds for thinking that one of the Army handlers assisted Nelson in the targeting of one murder victim (McDaid) and also that the same handler knew something about the threat to Patrick Finucane before his murder (despite the absence of any reference to such knowledge in the contemporary Army records). The handler concerned has refused to answer police questions about these matters. [Sir Desmond] admitted that the issue of what Nelson had told his handlers in advance of the murder was a complex and challenging [question] to answer However he then went on to disagree with the inferences and (provisional) conclusions drawn by Judge Cory (and Mr Langdon) by reference to the same material the judge had seen and with additional material comprising of (sic) submissions by the MOD and A/05 and an interview with A/05, which material, unsurprisingly, denied that Nelson had provided advance information about the murder. In these circumstances, and on any analysis, the state of knowledge of Nelsons surviving handler was crucial. She was clearly an important potential witness for Sir Desmonds review. The grounds of challenge The appellant claims that she had a legitimate expectation that a public inquiry into her husbands death would be held. This, she says, is based on the unequivocal assurance given to her by the then Secretary of State for Northern Ireland and his statement to the House of Commons on 23 September 2004. It was for the government to show that there were valid grounds for reneging on the promise made to Mrs Finucane. It had failed to do that. On the contrary, all the relevant evidence pointed to the decision not to hold the inquiry being a sham. The basis on which it had been suggested that this was a decision taken in the public interest was spurious, the appellant claims. Moreover, the process of consultation and discussions (outlined in paras 41 43 above) was entirely cosmetic. The outcome had been predetermined. The process which the government announced was not followed, the appellant contends. Although it had been stated that the decision whether to establish a public inquiry was primarily a matter for the Secretary of State for Northern Ireland, in the event, the process was driven by the Prime Minister, the appellant claims. The Secretary of State, after the various consultations and discussions that he had undertaken, had identified two possible courses: to have a statutory inquiry with clear time and cost controls or not to hold an inquiry at all. Although these options had been described as the only two viable potential ways forward . , a third option emerged during a meeting between the Secretary of State and the Prime Minister on 5 May 2011. This was a reiteration of the suggestion made by the Prime Minister on 5 November 2010, namely, that an independent person [should] carry out a rapid examination of the details of the case . but stopping short of a full public inquiry. This, the appellant argues, demonstrates that there was no genuine adherence to the process which the government had announced would take place. It is further argued that the failure to establish a public inquiry constitutes a violation of the appellants rights under article 2 of the ECHR and section 6 of the Human Rights Act 1998 (HRA). This was not advanced as a freestanding argument for a declaration that the investigations into Mr Finucanes death which have so far taken place are not sufficient to constitute an article 2 compliant inquiry. Rather, the argument was made in support of the appellants claim that the government should be held to its promise of a public inquiry. Finally, the appellant sought to introduce in the hearing before this court a further ground which had not been advanced in the courts below. It was suggested that the practice of accepting affidavit evidence from government officials in proceedings challenging ministerial decisions should be amended. The affidavit evidence of civil servants as to the circumstances in which the decision not to hold a public inquiry should not be accepted, the appellant claimed. Legitimate expectation In R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1568 1569, Bingham LJ described the concept of legitimate expectation in this way: So if, in a case involving no breach of statutory duty, the [public authority] makes an agreement or representation from which it cannot withdraw without substantial unfairness to the [citizen] who has relied on it, that may found a successful application for judicial review If a public authority so conducts itself as to create a legitimate expectation that a certain course will be followed it would often be unfair if the authority were permitted to follow a different course to the detriment of one who entertained the expectation, particularly if he acted on it. In what has subsequently come to be regarded as the leading case on substantive legitimate expectations, the concept was considered by the Court of Appeal in R v North and East Devon Health Authority, Ex p Coughlan [2001] QB 213. Acknowledging a contemporary controversy surrounding the courts role in legitimate expectations cases, Lord Woolf MR described three categories of case, at para 57: (a) The court may decide that the public authority is only required to bear in mind its previous policy or other representation, giving it the weight it thinks right, but no more, before deciding whether to change course. Here the court is confined to reviewing the decision on Wednesbury grounds (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). This has been held to be the effect of changes of policy in cases involving the early release of prisoners: see In re Findlay [1985] AC 318; R v Secretary of State for the Home Department, Ex p Hargreaves [1997] 1 WLR 906. (b) On the other hand the court may decide that the promise or practice induces a legitimate expectation of, for example, being consulted before a particular decision is taken. Here it is uncontentious that the court itself will require the opportunity for consultation to be given unless there is an overriding reason to resile from it (see Attorney General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629) in which case the court will itself judge the adequacy of the reason advanced for the change of policy, taking into account what fairness requires. (c) Where the court considers that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural, authority now establishes that here too the court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will amount to an abuse of power. Here, once the legitimacy of the expectation is established, the court will have the task of weighing the requirements of fairness against any overriding interest relied upon for the change of policy. (Emphasis added) Shortly after the decision in Coughlan, the Court of Appeal had occasion to again consider the reach of substantive legitimate expectation in R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115. At p 1130 Laws LJ said: As it seems to me the first and third categories explained in the Coughlan case [2000] 2 WLR 622 are not hermetically sealed. The facts of the case, viewed always in their statutory context, will steer the court to a more or less intrusive quality of review. The key factor in Coughlan was, Laws LJ said, the limited number of individuals affected by the promise in question. Significantly, so far as concerns the present appeal, he also said at p 1131: The more the decision challenged lies in what may inelegantly be called the macro political field, the less intrusive will be the courts supervision. More than this: in that field, true abuse of power is less likely to be found, since within it changes of policy, fuelled by broad conceptions of the public interest, may more readily be accepted as taking precedence over the interests of groups which enjoyed expectations generated by an earlier policy. Laws LJ considered the evolving case law in this field in Nadarajah v Secretary of State for the Home Department [2005] EWCA Civ 1363, albeit on an expressly obiter basis see para 67. In explaining the basis for substantive legitimate expectations, he made these observations at para 68: It is said to be grounded in fairness, and no doubt in general terms that is so. I would prefer to express it rather more broadly as a requirement of good administration, by which public bodies ought to deal straightforwardly and consistently with the public. In my judgment this is a legal standard which, although not found in terms in the European Convention on Human Rights, takes its place alongside such rights as fair trial, and no punishment without law. That being so there is every reason to articulate the limits of this requirement to describe what may count as good reason to depart from it as we have come to articulate the limits of other constitutional principles overtly found in the European Convention. Accordingly a public bodys promise or practice as to future conduct may only be denied, and thus the standard I have expressed may only be departed from, in circumstances where to do so is the public bodys legal duty, or is otherwise, to use a now familiar vocabulary, a proportionate response (of which the court is the judge, or the last judge) having regard to a legitimate aim pursued by the public body in the public interest. The principle that good administration requires public authorities to be held to their promises would be undermined if the law did not insist that any failure or refusal to comply is objectively justified as a proportionate measure in the circumstances. Laws LJ also returned in para 69 to the theme of decisions not to fulfil an undertaking for policy reasons falling within the macro political field. I will consider his remarks on this subject in the next section of this judgment. The subject of substantive legitimate expectation arose again in R (Bhatt Murphy) v Independent Assessor [2008] EWCA Civ 755. At para 35, Laws LJ said: the notion of a promise or practice of present and future substantive policy risks proving too much. The doctrine of substantive legitimate expectation plainly cannot apply to every case where a public authority operates a policy over an appreciable period. That would expand the doctrine far beyond its proper limits. The establishment of any policy, new or substitute, by a public body is in principle subject to Wednesbury review. But a claim that a substitute policy has been established in breach of a substantive legitimate expectation engages a much more rigorous standard. It will be adjudged, as I have foreshadowed, by the courts own view of what fairness requires. This is a principal outcome of this courts decision in Ex p Coughlan (see in particular paras 74, 78, 81 and 82). It demonstrates the importance of finding the reach of substantive legitimate expectation. (Emphasis added) At para 68 of the same case, Sedley LJ made these observations: A duty to consult before modifying policy may arise from an explicit promise to do so. But there is no equivalent expectation that policy itself, and with it any substantive benefits it confers, will not change. It follows that the most that the beneficiary of a current policy can legitimately expect in substantive terms is, first, that the policy will be fairly applied or disapplied in his particular case, and secondly that if the policy is altered to his disadvantage, the alteration must not be effected in a way which unfairly frustrates any reliance he has legitimately placed on it. From these authorities it can be deduced that where a clear and unambiguous undertaking has been made, the authority giving the undertaking will not be allowed to depart from it unless it is shown that it is fair to do so. The court is the arbiter of fairness in this context. And a matter sounding on the question of fairness is whether the alteration in policy frustrates any reliance which the person or group has placed on it. This is quite different, in my opinion, from saying that it is a prerequisite of a substantive legitimate expectation claim that the person relying on it must show that he or she has suffered a detriment. In this case, it was argued for the respondent that it was incumbent on Mrs Finucane to show that she had suffered a detriment. That argument simply does not avail in this instance, since the question of detriment can only arise, if it arises at all, in the context of a substantive legitimate expectation. Here the promise made did not partake of a substantive benefit to a limited class of individuals (as, for instance, in Ex p Coughlan); it was a policy statement about procedure, made not just to Mrs Finucane but to the world at large. The onus of establishing that a sufficiently clear and unambiguous promise or undertaking, sufficient to give rise to a legitimate expectation, is cast on the party claiming it see, for instance, In re Loreto Grammar Schools Application for Judicial Review [2012] NICA 1; [2013] NI 41, para 42 et seq. In Paponette v Attorney General of Trinidad and Tobago [2012] 1 AC 1, para 37, Lord Dyson said: The initial burden lies on an applicant to prove the legitimacy of his expectation. This means that in a claim based on a promise, the applicant must prove the promise and that it was clear and unambiguous and devoid of relevant qualification. If he wishes to reinforce his case by saying that he relied on the promise to his detriment, then obviously he must prove that too. The respondent in the present case sought faintly to argue that the statements made by the government were not sufficiently unconditional and devoid of qualification to give rise to a legitimate expectation. Stephens J and the Court of Appeal rejected that argument, and, in my judgment, they were right to do so. At para 64, Stephens J said: . there was a promise which was a clear and unambiguous representation devoid of relevant qualifications that a public inquiry into the death of Patrick Finucane would be held . The only relevant qualification to that promise was that the public inquiry had to be recommended by Judge Cory. As soon as that recommendation was made then there was a substantive legitimate expectation that a public inquiry would be held. In the Court of Appeal Gillen LJ at para 76 said: We are satisfied that the Government made to the appellant a promise to hold a public inquiry that was clear, unambiguous and devoid of relevant condition subject only to the qualification that it required to be recommended by Judge Cory. In the printed case for the appellant, at para 74, the various undertakings given by government ministers and the Prime Minister between 3 March 2004 and 7 May 2008 are set out. They need not be repeated here. It is quite clear that, individually and cumulatively, they amount to an unequivocal undertaking to hold a public inquiry into Mr Finucanes death. As pointed out in para 35 above, the critical undertaking given by the government was that the public inquiry would have to be conducted under new legislation in due course the 2005 Act. That there was a plain and explicit undertaking that a public inquiry would take place cannot be doubted, however. In R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, at para 60, Lord Hoffmann summarised the relevant principles: The relevant principles of administrative law were not in dispute between the parties and I do not think that this is an occasion on which to re examine the jurisprudence. It is clear that in a case such as the present, a claim to a legitimate expectation can be based only upon a promise which is clear, unambiguous and devoid of relevant qualification: see Bingham LJ in R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1569. It is not essential that the applicant should have relied upon the promise to his detriment, although this is a relevant consideration in deciding whether the adoption of a policy in conflict with the promise would be an abuse of power and such a change of policy may be justified in the public interest, particularly in the area of what Laws LJ called the macro political field: see R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115, 1131. (Emphasis added) For reasons that will shortly appear and for those given at para 63 above, it is unnecessary for me in this case to decide whether it is a requirement that there be a reciprocal undertaking by the person or group to whom the promise is made or that they should suffer a detriment in order to sustain a claim for substantive legitimate expectation. But, if it had been necessary to decide that point, I would have concluded that it was not. Lord Carnwath has provided, in his judgment in this case, an explanation of his remarks in United Policyholders Group v Attorney General of Trinidad and Tobago [2016] UKPC 17; [2016] 1 WLR 3383. It is clear that those remarks were obiter see the leading judgment of Lord Neuberger of Abbotsbury in the same case at para 40, where he said that, for present purposes it is unnecessary for the Board to consider the law on this difficult and important topic more fully. I would disagree with any suggestion that it must be shown that the applicant suffered a detriment before maintaining a claim for frustration of legitimate expectation for a fundamental reason. A recurring theme of many of the judgments in this field is that the substantive legitimate expectation principle is underpinned by the requirements of good administration. It cannot conduce to good standards of administration to permit public authorities to resile at whim from undertakings which they give simply because the person or group to whom such promises were made are unable to demonstrate a tangible disadvantage. Since the matter does not arise, however, it is better that the point be addressed in a future case when it is truly in issue. I turn now, therefore, to consider the circumstances in which it is open to a public authority to decide not to comply with a previously given undertaking. Resiling from the undertaking Stephens J found that the considerations outlined in the Secretary of States statement to Parliament on 11 November 2010 (set out in para 42(iii) above) were overriding interests which, as far as the decision maker was concerned, justified the frustration of the expectation. para 166. He held that the decision to resile from the undertaking was clearly concerned with macro political issues of policy. para 167. The reference to macro political issues derived from the judgment of Laws LJ in Nadarajah. At para 69 of the judgment in that case, Laws LJ said: where the representation relied on amounts to an unambiguous promise; where there is detrimental reliance; where the promise is made to an individual or specific group; these are instances where denial of the expectation is likely to be harder to justify as a proportionate measure. On the other hand where the government decision maker is concerned to raise wide ranging or macro political issues of policy, the expectations enforcement in the courts will encounter a steeper climb. All these considerations, whatever their direction, are pointers not rules. The balance between an individuals fair treatment in particular circumstances, and the vindication of other ends having a proper claim on the public interest (which is the essential dilemma posed by the law of legitimate expectation) is not precisely calculable, its measurement not exact. Where political issues overtake a promise or undertaking given by government, and where contemporary considerations impel a different course, provided a bona fide decision is taken on genuine policy grounds not to adhere to the original undertaking, it will be difficult for a person who holds a legitimate expectation to enforce compliance with it. The circumstances in which the change of heart on the part of the government as to holding a public inquiry occurred have been described in paras 41 to 43 above. The appellant has argued that the vaunted investigation as to the need for the public inquiry which had been promised was a sham; that the outcome was fixed; that the proposal that the Secretary of State for Northern Ireland be in overall charge of the inquiries was ignored; and that the Prime Minister effectively took over those discussions and drove them to a conclusion which he personally wanted to achieve. These are serious charges and would require clear evidence before they could be accepted see Richards LJ in R (N) v Mental Health Review Tribunal (Northern Region) [2005] EWCA Civ 1605; [2006] QB 468, para 62. There is no reason to doubt the genuineness of the conviction of the appellant as to the reasons which she believes prompted the government to renege on the promise that she had been given. But, however strongly held is her belief as to the circumstances in which the decision not to hold the inquiry was taken, this cannot be a substitute for the unambiguous evidence that is needed to vindicate it. On the question of the implementation of a predetermined conclusion Gillen LJ set out the unanimous view of the members of the Court of Appeal at para 134(i) of his judgment: We found no evidence of a pre determined adherence to a view that there would be no more open and costly inquiries into the past which therefore dictated the outcome of this matter. On the contrary, it was clear from the statements made by the Prime Minister, the briefing papers provided to him and the statements made by the [Secretary of State for Northern Ireland] that the policy was that whilst generally against open ended, long running and costly public inquiries into the past in Northern Ireland these decisions should be made on a case by case basis. We find that there was not a fixed policy which excluded the possibility of variations on a case by case basis. Stephens J had made similar findings in para 195 of his judgment. As to the argument that the process had been taken over by the Prime Minister and driven by him to a conclusion which he particularly favoured, Gillen LJ said at para 134(ii): We do not find evidence that the process was driven by the Prime Minister. The fact of the matter is that the Ministerial Code emanating from the Cabinet Office of May 2010 at para 1.10 makes it clear that the Prime Minister must be consulted in good time about any proposal to set up major public inquiries under the Inquiries Act 2005. Apart from all the accepted conventions of collective Cabinet decisions, it would have been extraordinary if the Prime Minister had not been consulted on this matter. Once he was consulted, it would be contrary to all the promptings of reason and good sense if he was deprived of the right to forthrightly state a view on the outcome of the process or to make a suggestion. He is required neither to adopt a traceless presence nor a state of remote unavailability as the final decision is taken. The officials clearly played an important role in advising both the Prime Minister and the [Secretary of State for Northern Ireland] as to the various options and indeed to provide advice as to eventual outcomes. Again, Stephens J had reached a similar conclusion in paras 197 202 of his judgment. For my part, I consider that these findings cannot be faulted. There is simply no sustainable evidence that the process by which the decision was taken was a sham or that the outcome was predetermined. As to the role played by the Prime Minister, there are indications that he was strongly convinced that a costly, open ended inquiry would ensue if the promise made to Mrs Finucane was kept. And it appears that he played an important, if not indeed a controlling, role in the discussions which led to the establishing of the de Silva review. He was prepared to disregard (or, at least, not accept) the strongly worded recommendation of Sir Jeremy Heywood. But there is nothing untoward about any of this. The decision as to whether a public inquiry into Mr Finucanes death should take place was a matter of considerable political importance. As Gillen LJ said, it would be extraordinary if the Prime Minister had not been consulted. Having been consulted, the part that he played and the influence which he exerted were matters for his political judgment. This part of the appellants appeal fails, in my view. Article 2 of ECHR Article 2 of ECHR provides: 1. Everyones right to life shall be protected by law. No one shall be deprived of his life intentionally save in the execution of a sentence of a court following his conviction of a crime for which this penalty is provided by law. It is well settled that article 2 gives rise to two species of obligation on the part of the state, one substantive, the other procedural. Lord Phillips of Worth Matravers PSC in In re McCaugheys application for judicial review [2012] 1 AC 725, in a pithy description of the nature of the obligations, referred, at para 2, to ECtHRs decision in McCann v United Kingdom (1995) 21 EHRR 97 and said, article 2 by implication [gives] rise not merely to a substantive obligation on the state not to kill people but, where there was an issue as to whether the state had broken this obligation, a procedural obligation on the state to carry out an effective official investigation into the circumstances of the deaths (the procedural obligation). (Evolving human rights jurisprudence, both from Strasbourg and domestically, has, of course, established that the procedural obligation to investigate deaths can extend beyond those deaths in which state authorities are alleged to be implicated see, for instance (Application No 32967/96) Calvelii and Ciglio v Italy, January 17, 2001 at para 53; (Application No 53749/00), Lazzarini and Ghiacci v Italy, November 7, 2002; Angelova and Iliev v Bulgaria (2007) 47 EHRR 236; and Byrzykowski v Poland (2006) 46 EHRR 32, para 117.) Patrick Finucanes death occurred 11 years and eight months before the coming into force of the HRA in October 2000. Section 6 of HRA provides that it is unlawful for a public authority (such as a court) to act in a way which is incompatible with a Convention right. Could Mrs Finucane maintain an action in the domestic courts under the HRA when it was not in force at the time of her husbands murder? To answer that question, one must turn to cases which have dealt with that subject from 2004 onwards. The principal issue before the House of Lords in In re McKerr [2004] 1 WLR 807 was whether, on the proper interpretation of HRA, section 6 gave rise to a continuing procedural obligation, notwithstanding that the death had occurred before the coming into force of HRA. The House unanimously held that it did not. Following this decision, ECtHR, in a series of cases, examined the question whether the procedural obligation under article 2 was indissociable from the substantive obligation, and whether it might in certain circumstances endure beyond the date on which the rights under article 2 became available to an applicant. That examination focused on two principal, but overlapping, areas: first, whether, although the death occurred before the relevant date (usually the date of accession of the member state to the ECHR), there were circumstances which continued to animate the right; and secondly, whether events occurring after the relevant date were sufficient to inspire its revival. In a different context from article 2, the Grand Chamber addressed the question of its temporal jurisdiction in Blei v Croatia (2006) 43 EHRR 48. The claimant complained of violation of article 8 as a result of being deprived of a protected tenancy. The Supreme Court of Croatia dismissed her claim on 15 February 1996. She then lodged a constitutional complaint with the Constitutional Court, which was dismissed on 8 November 1999. Croatia had acceded to the Convention on 5 November 1997. Before ECtHR, the state objected that the Strasbourg court had no jurisdiction to hear the applicants complaint. The Grand Chamber held, at para 82, that it was essential to identify, in each specific case, the exact time of the alleged interference. Since the complaint to the Constitutional Court did not constitute part of the alleged interference (because it was an attempt to obtain a remedy) the Strasbourg court had no jurisdiction. This was because all the matters complained of had occurred before the date of accession. This decision provides an example of the impossibility of breathing new life into a right whose currency had passed, when all the circumstances constitutive of the interference with the right had occurred before the relevant date. But, as will be seen, this is but part of the story. Brecknell v United Kingdom (2007) 46 EHRR 42 provides a contrast to Blei. In that case the applicant was the widow of a man killed in Northern Ireland by loyalist gunmen in 1975. Investigations took place but were concluded in 1981. In 1999 and thereafter further evidence came to light. This indicated that there might have been collusion between the police force, the Ulster Defence Regiment (then part of the security forces in Northern Ireland) and loyalist paramilitaries. The applicant contended that this new evidence should give rise to the procedural obligation to conduct an article 2 compliant inquiry into her husbands death. In McCaughey Lord Phillips portrayed this as a claim that the article 2 obligation was revived see para 39 of that case. In fact, the applicant is not recorded in the Grand Chambers judgment as having sought a revival of the obligation see paras 54 59 of the Brecknell judgment, outlining the applicants arguments. The government resisted the claim, inter alia, on the ground that the obligation should not be revived see paras 61 and 63. The Grand Chamber in Brecknell identified the principal issue as to whether, and in what form, the procedural issue to investigate is revived para 66. So, the fact that this was not how the applicant framed her case may not be of critical importance in this instance. I would merely observe that if the notion of revival suggests that the right had gone into abeyance and required some special circumstance to disinter it, whereas the question whether it remained in existence suggests a state of suspended animation merely requiring some newly discovered evidence to animate it, these concepts might, in certain circumstances, give rise to different approaches. But this may be of academic interest only in the present appeal. The Grand Chambers decision is explicable on either basis. It said at para 71: the court takes the view that where there is a plausible, or credible, allegation, piece of evidence or item of information relevant to the identification, and eventual prosecution or punishment of the perpetrator of an unlawful killing, the authorities are under an obligation to take further investigative measures In due course it will be necessary to consider whether, following Sir Desmond de Silvas review and the various inquiries which succeeded it, there remained a need further to investigate the circumstances of Mr Finucanes murder. The Court of Appeal divided on this issue, Deeny and Horner JJ agreeing with Stephens J that the Brecknell test was satisfied, Gillen LJ believing that it was not. Discussion of that issue must naturally take place in the next section of this judgment, but it is worth observing here that in para 70 of the Grand Chambers judgment, the court, while pointing out that the revival of the duty to investigate would not be prompted by any allegation, however inconsequential, said that given the fundamental importance of [article 2], the state authorities must be sensitive to any information or material which has the potential either to undermine the conclusions of an earlier investigation or to allow an earlier inconclusive investigation to be pursued further. In an important decision in this field, ilih v Slovenia (2009) 49 EHRR 37, the Grand Chamber ruled that article 2 imposed, in certain circumstances, a freestanding obligation in relation to the investigation of a death which applied even where the death had occurred before the member state ratified the Convention. In that case the applicants were the parents of a young man who died as a result of medical negligence on 19 May 1993. They made a number of attempts to bring criminal proceedings, all of which were unsuccessful, the final disposal coming in July 2003. Civil proceedings were also dismissed in July 2008. They then lodged a constitutional appeal with the Constitutional Court. The outcome of that appeal was still pending when the Grand Chamber gave its judgment. Slovenia acceded to ECHR on 28 June 1994. The task that the Grand Chamber faced, therefore, was described in para 152 of its judgment as being to: determine whether the procedural obligations arising under article 2 can be seen as being detachable from the substantive act and capable of coming into play in respect of deaths which occurred prior to the critical date [the date of accession to the Convention] or alternatively whether they are so inextricably linked to the substantive obligation that an issue may only arise in respect of deaths which occur after that date. That question was emphatically answered in para 159 where the Grand Chamber said that: the procedural obligation to carry out an effective investigation under article 2 has evolved into a separate and autonomous duty. Although it is triggered by the acts concerning the substantive aspects of article 2 it can give rise to a finding of a separate and independent interference within the meaning of the Blei judgment. In this sense it can be considered to be a detachable obligation arising out of article 2 capable of binding the state even when the death took place before the critical date. In para 163, the Grand Chamber was at pains to point out that there had to be, a genuine connection between the death and the entry into force of the Convention in the member state. On that account, a significant proportion of the procedural steps required will have been or ought to have been carried out after the critical date. A caveat to that requirement was entered. The Grand Chamber said (again at para 163) that it did not exclude the possibility that, in certain circumstances, the connection could also be based on the need to ensure that the guarantees and the underlying values of the Convention are protected in a real and effective manner. The Grand Chambers judgment in ilih was of pivotal importance in McCaughey. At para 50 of his judgment in the latter case, Lord Phillips said: The obligation to comply with the procedural requirements of article 2 is to apply where a significant proportion of the procedural steps that article 2 requires in fact take place after the Convention has come into force. This appears to be a free standing obligation. There is no temporal restriction on the obligation other than that the procedural steps take place after the Convention has come into force. Thus if a state decides to carry out those procedural steps long after the date of the death, they must have the attributes that article 2 requires. In the McCaughey case it was decided to hold an inquest into the deaths of Mr McCaughey and another man 20 years after their deaths. Lord Phillips decided that that decision gave rise to an international obligation to ensure that the inquest complied with article 2 of ECHR (para 51). At para 61 he said: . In so far as article 2 imposes any obligation, this is a new, free standing obligation that arises by reason of current events. The relevant event in these appeals is the fact that the coroner is to hold an inquest into Martin McCaugheys and Dessie Grews deaths. ilih v Slovenia establishes that this event gives rise to a free standing obligation to ensure that the inquest satisfies the procedural requirements of article 2. That obligation is not premised on the need to explore the possibility of unlawful state involvement in the death. The development of the law by the Strasbourg court has accorded to the procedural obligation a more general objective than this, albeit that in the circumstances of these appeals state involvement is likely to be a critical area of investigation. At para 93, to like effect, Lady Hale said that, if there is now to be an inquiry into a death for which the state may bear some responsibility under article 2, it should be conducted in an article 2 compliant way. The inquiries into the circumstances of Mr Finucanes death have taken place, (for the most part, and certainly for the most important part of the inquiries) well after 2 October 2000. The respondent submitted, however, that the observations in McCaughey must be viewed in light of the later decision of the ECtHR in Janowiec v Russia (2013) 58 EHRR 30. In that case, the respondent claimed, the Grand Chamber identified three limitations on the jurisdiction to examine pre ratification (and, by analogy, in the United Kingdom, pre October 2000) claims. The first of these was that the duty arose only in relation to procedural acts in other words, the steps which may be undertaken within the domestic legal system which are capable of discharging the investigative duty. It did not extend to other types of inquiries that may be carried out for other purposes, such as establishing a historical truth para 143 of Janowiec. The second limitation in Janowiec, the respondent claimed, was that the need for a genuine connection between the death and the critical date was primarily a temporal one. At para 146 of Janowiec the Grand Chamber said: . the lapse of time between the triggering event and the critical date must remain reasonably short if it is to comply with the genuine connection standard. Although there are no apparent legal criteria by which the absolute limit on the duration of that period may be defined, it should not exceed ten years Even if, in exceptional circumstances, it may be justified to extend the time limit further into the past, it should be done on condition that the requirements of the Convention values test have been met. Accordingly, the respondent argued, even if the period of time was less than ten years, but the majority of investigative steps or the most important of these took place prior to ratification, (or in the case of the United Kingdom, the coming into force of HRA), the ECtHR would not be in a position to scrutinise them (and, by corollary, UK courts would not be able to give effect to rights under HRA) since neither could examine acts or omissions occurring prior to ratification or the coming into force of the 1998 Act. In this regard, the respondent relied on the following passages from Janowiec: 147. This is a corollary of the principle that the courts jurisdiction extends only to the procedural acts and omissions occurring after the entry into force. If, however, a major part of the proceedings or the most important procedural steps took place before the entry into force, this may irretrievably undermine the courts ability to make a global assessment of the effectiveness of the investigation from the standpoint of the procedural requirements of article 2 of the Convention. 148. Having regard to the above, the court finds that, for a genuine connection to be established, both criteria must be satisfied: the period of time between the death as the triggering event and the entry into force of the Convention must have been reasonably short, and a major part of the investigation must have been carried out, or ought to have been carried out, after the entry into force. The third limitation identified by the respondent is the Convention values test, referred to by the Grand Chamber in Janowiec in paras 149 and 150: 149. The court further accepts that there may be extraordinary situations which do not satisfy the genuine connection standard as outlined above, but where the need to ensure the real and effective protection of the guarantees and the underlying values of the Convention would constitute a sufficient basis for recognising the existence of a connection. The last sentence of para 163 of the ilih judgment does not exclude such an eventuality, which would operate as an exception to the general rule of the genuine connection test. In all the cases outlined above the court accepted the existence of a genuine connection as the lapse of time between the death and the critical date was reasonably short and a considerable part of the proceedings had taken place after the critical date. Against this background, the present case is the first one which may arguably fall into this other, exceptional, category. Accordingly, the court must clarify the criteria for the application of the Convention values test. 150. Like the Chamber, the Grand Chamber considers the reference to the underlying values of the Convention to mean that the required connection may be found to exist if the triggering event was of a larger dimension than an ordinary criminal offence and amounted to the negation of the very foundations of the Convention. This would be the case with serious crimes under international law, such as war crimes, genocide or crimes against humanity, in accordance with the definitions given to them in the relevant international instruments. The respondent submitted that the Convention values test was not relevant in this case. The appellant had to succeed on the genuine connection test. This contained, the respondent argued, two elements: the lapse of time between the triggering event and the critical date had to be reasonably short and the majority of investigative steps or the most important of these had to have taken place after the coming into force of HRA. I consider that a genuine connection has been established between the triggering event and the critical date in this case. As Stephens J pointed out in para 34 of his judgment, ECtHR in Mocanu v Romania (2015) 60 EHRR 19, para 206 referred to a reasonably short lapse of time that should not normally exceed ten years (emphasis added). And in Mladenovi v Serbia (Application No 1099/08) judgment of 22 May 2012 the court considered it could examine the procedural aspect of article 2 (and found a violation) in relation to a death that had occurred in 1991 when Serbias ratification of the Convention took place some 13 years later in 2004. A period of ten years or less between the triggering event (the murder of Mr Finucane) and the critical date (the coming into force of the HRA) is not an immutable requirement. The time which elapsed between the two dates is a factor of importance but, when taken into account with the circumstance that the vast bulk of noteworthy inquiry into his death has taken place since the HRA came into force (Stevens III, the Cory inquiry and the de Silva review), the significance of the time lapse diminishes. Nothing in Janowiec detracts from the proposition in ilih that the decision as to whether there is a genuine connection involves a multi factorial exercise and the weight to be attached to each factor will vary according to the circumstances of the case. Moreover, in McCaughey it was made clear that an inflexible ten year limit was not essential and the consideration that most of the investigation took place after the critical date could compensate for the length of the time lapse see paras 118, 119 and, in particular, 139 where Lord Dyson said: The deaths were ten years before the HRA came into force. That is a relevant factor to be taken into account when considering whether there is a sufficient connection between the deaths and the coming into force of the Act. But ilih v Slovenia 49 EHRR 996 shows that it is not the only factor. In particular, of considerable importance is the fact that at that date the investigation had been initiated, but a significant proportion of the procedural steps required to be taken had not yet been taken. In that respect, the facts of the case are similar to the facts in ilih v Slovenia. This is the feature of ilih v Slovenia which is emphasised by the majority at para 165 and by Judge Lorenzen at para O I4 of the EHRR report. Significantly, we were not invited to depart from the decision in McCaughey. It was argued for the Secretary of State that the principles in ilih and Janowiec relate to the ECtHRs temporal jurisdiction for deaths that have occurred before a states ratification of the Convention and that the question of their application to domestic law remains undecided. I do not accept that proposition. It is quite clear from the judgments of the majority in McCaughey that the reasoning in ilih was adopted in order to inform the approach to the question of the availability of the procedural right to an article 2 inquiry under HRA, where the triggering event preceded its coming into force. References to this abound in the judgments of the majority see, for instance, para 61, per Lord Phillips, para 77, per Lord Hope of Craighead, paras 89 and 93, per Lady Hale, para 119 of my judgment and paras 131 and 139, per Lord Dyson. Sir James Eadie QC for the respondent, founded his argument that the applicability of the principles in ilih and Janowiec to domestic law remains undecided, on the decision of this court in the case of R (Keyu)v Secretary of State for Foreign and Commonwealth Affairs [2016] AC 1355. In particular, he fastened on statements made by Lord Neuberger of Abbotsbury at paras 98 and 99 of his judgment. It is unnecessary to set out Lord Neubergers observations in those paras. It is quite clear that he was there examining the question of whether it had been decided by the court in McCaughey that the decision in McKerr remained good law. The remarks of Lord Neuberger, attributing to Lord Phillips, Lord Dyson and me the view that McKerr was no longer good law were not without controversy see my comment on them at paras 247 248. But that is nothing to the point. The plain and inescapable fact is that this court in McCaughey unequivocally adopted the decision in ilih as indicating the principled approach in domestic law to the question of genuine connection. Stephens J found that, in the event that a genuine connection was not established, the appellant could have recourse to the Convention values test see para 35 of his judgment. The Court of Appeal, per Gillen LJ, at para 167, observed that this test set an extremely high hurdle but that the court would not go so far as to say that Stephens Js finding was necessarily unreasonable. The issue of what constitutes, as said in Janowiec 58 EHRR 30, para 149, a need to ensure the real and effective protection of the guarantees and the underlying values of the Convention is not an uncomplicated one. It did not occupy much of the oral submissions that were made in this case. In light of that and of my conclusion in relation to the existence of a genuine connection, I propose to say nothing more about it. Brecknell v United Kingdom As I have said before, (para 93 above) the Grand Chamber in Brecknell was careful to point out that not every allegation, however trivial, would revive the duty to investigate. But it was equally emphatic that it behoved state authorities to be sensitive to any information or material which might cast doubt on conclusions reached on foot of earlier investigations. Significantly moreover, it said that an earlier inconclusive investigation should be pursued further in order to meet the procedural obligation under article 2. It is to be recalled that the Grand Chamber stated (at para 71 of its judgment see para 92 above) that where there was a plausible, or credible, allegation, piece of evidence or item of information relevant to the identification, and eventual prosecution or punishment of the perpetrator of an unlawful killing, the authorities were under an obligation to take further investigative measures. In the Court of Appeal Gillen LJ decided that what he described as the Brecknell test was not satisfied. He referred to the discussion by Stephens J of the meetings that Sir Desmond de Silva had had with a number of individuals including Colonel J and to the judges finding that the evidence that emerged from those meetings was sufficient to revive the article 2 procedural obligation. Gillen LJ disagreed with this finding for a number of reasons. In the first place, he considered, at para 171, that the new and significant information which had emerged from these meetings might not avail the purposes of further criminal investigations. One can accept that this might be so, but it is to be remembered that what the Grand Chamber said in Brecknell was that any information or material which has the potential to undermine the conclusions of an earlier investigation or to allow an earlier inconclusive investigation to be pursued further would prompt a revival of the procedural obligation. In the report on his review Sir Desmond had said that he was left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA in February 1989 had it not been for the different strands of involvement by elements of the state see para 46 above. This sentence should not be isolated from the overall context of Sir Desmonds report. He had firmly concluded that state agents were involved in the targeting of Mr Finucane. But it matters not as to the precise nature of the doubt entertained by him. The doubt that he expressed must therefore be as to the precise role that state agents played. That was sufficient to warrant further investigation. The doubt, whatever its nature or source, required to be dispelled. The strands of involvement by elements of the state needed to be recognised and explained. These were necessary ingredients of an article 2 compliant inquiry. These conclusions are not impelled by the notion that the outcome of the investigation into Mr Finucanes death is unsatisfactory, although it plainly is. They speak to the shortcomings of the procedures that have beset the inquiries that have so far taken place. Those shortcomings have hampered, if not indeed prevented, the uncovering of the truth about this murder. They are discussed in paras 139 141 below. The second reason given by Gillen LJ for his disagreement with Stephens J on the applicability of the Brecknell principle was that the new material had been reviewed by PSNI and it has not afforded any basis for further investigation or prosecution. The investigations carried out by PSNI into the new material uncovered by Sir Desmond were described by Detective Superintendent Jason Murphy in three affidavits. In the first of these, in June 2016, he said that the Chief Constable had decided that that material should be examined to see whether it provided any opportunities to progress the investigation into Mr Finucanes murder. An investigating officer was appointed to carry out that task. He concluded that there was no reason to review the decision of the PPS in 2007 (see para 30 above). In his first affidavit, Detective Superintendent Murphy had also described various investigations that were continuing by way of reconsideration of all the material that had been examined in the course of the de Silva review. This included the archive of documents generated by the various Stevens inquiries, material that had been provided by government departments and agencies, the security service, the Northern Ireland Office, the Cabinet Office, the Ministry of Defence, the Home Office, the office of the Attorney General of England and Wales, and PSNI. At the time of swearing the first affidavit, the detective superintendent felt unable to say whether this further review might lead to progress in the investigation into Mr Finucanes death. In his second affidavit (31 October 2016) the detective superintendent said that the review had been completed. All of the material described by Sir Desmond de Silva as new and significant had been assimilated and investigations into this material had been conducted. Detective Superintendent Murphy was then in the process of preparing a report for the PPS. In a final affidavit the officer said that the new material did not relate to individuals alleged to have any direct role in Mr Finucanes murder. He also considered whether the material provided any opportunities to pursue criminal investigations for other offences such as conspiracy or incitement to murder and misconduct in public office. He then submitted reports to the PPS on his conclusions. The deputy director of public prosecutions, in a cryptic affidavit of 13 June 2018, deposed that, because of the absence of any further investigations by PSNI, no new prosecutorial decisions had been made. It is important to note that the police and the prosecuting authorities have been concerned to decide whether the opportunity for further prosecutions in relation to Mr Finucanes murder had arisen. This is understandable, for it is the principal purpose of both agencies to determine whether criminal offences have been committed and, if so, whether evidence is available that would justify embarking on a criminal prosecution. But, although decisions by the police and the prosecuting authorities are relevant to the question whether the states procedural obligation under article 2 of ECHR to investigate the circumstances of a death has been met, they cannot alone be determinative of that issue. In a series of cases ECtHR has made it clear that the obligation to protect the right to life under article 2 of the Convention requires that there should be some form of effective official investigation when individuals have been killed as a result of the use of force see, among many others, Branko Tomai v Croatia (Application No 46598/06), para 62, (15 January 2009); Our v Turkey [GC], (Application No 21594/93), para 88, ECHR 1999 III); Mladenovi v Serbia (Application No 1099/08) (22 May 2012). The opportunity to prosecute as a result of evidence uncovered by Sir Desmond de Silvas review does not foreclose on the question whether an effective investigation into Mr Finucanes death, compliant with article 2, has taken place. The need for an effective investigation into a death goes well beyond facilitating a prosecution. In Ramsahai v The Netherlands (Application No 52391/99) ECHR 2007 II, 191 ECtHR considered what effectiveness in this context means. At para 324, the court said: In order to be effective as this expression is to be understood in the context of article 2 of the Convention, an investigation into a death that engages the responsibility of a contracting party under that article must firstly be adequate. That is, it must be capable of leading to the identification and punishment of those responsible. This is not an obligation of result, but one of means. The authorities must have taken the reasonable steps available to them to secure the evidence concerning the incident. Any deficiency in the investigation which undermines its ability to identify the perpetrator or perpetrators will risk falling foul of this standard. (Emphasis added) See also in this context Nachova v Bulgaria [GC], (Application Nos 43577/98 and 43579/98), paras 110 113, ECHR 2005 VII, 1. It was pointed out by the respondent that the dissenting judges in Ramsahai had said that a lacuna or deficiency in an investigation will give rise to a breach of the procedural obligation only if it is such as to undermine its capability of establishing the facts surrounding the killing or the liability of the persons responsible. Whether it does so must be assessed in the light of the particular circumstances of each case. joint partly dissenting opinion of Judges Costa, Sir Nicolas Bratza, Lorenzen and Thomassen at para 3. In so far as it might be suggested that the majority in Ramsahai had implied that any deficiency in the investigation might give rise to a breach of the article 2 procedural obligation, that is of no relevance in the present case. It is precisely because of the constraints placed on Sir Desmond de Silvas inquiry that the capability of his review establishing vital facts such as the identity of those involved was undermined. The reasons for this are given in para 134 below. Being capable of identifying those responsible must involve having the means to identify those implicated in the death. It should also include the will and the opportunity to expose them. The important issue in this case is whether Sir Desmond de Silvas review had these critical attributes. Much of what he says in his conclusions is qualified or expressed in terms of generality. For instance, he said that the RUC, the security service and the secret intelligence service failed to warn Patrick Finucane of known and imminent threats to his life in 1981 and 1985. Those officers who were in a position to give that warning (and whose plain duty it was to do so) are not identified. The circumstances in which they failed in their duty are not explained. Sir Desmond concluded that one or more officers in the RUC probably did propose Mr Finucane as a target for loyalist terrorists in December 1988 see para 45(vii) above. No officers have been identified. If it is true that they did propose Mr Finucane as a target, this was a serious criminal offence. It bears directly on the proper investigation of his murder. But, at present, the issue remains entirely unresolved. It was concluded that Ken Barrett had received intelligence about Patrick Finucane from a police source (para 45(viii) above). That police source has not been identified. The circumstances in which the information was imparted have not been disclosed. So far as one can tell, the police source has escaped any sanction; has not been made accountable; and has avoided all the legal consequences which should have flowed from his or her activity. In deciding whether an article 2 compliant inquiry into Mr Finucanes death has taken place, it is important to start with a clear understanding of the limits of Sir Desmond de Silvas review. His was not an in depth, probing investigation with all the tools that would normally be available to someone tasked with uncovering the truth of what had actually happened. Sir Desmond did not have power to compel the attendance of witnesses. Those who did meet him were not subject to testing by way of challenging probes as to the veracity and accuracy of their evidence. A potentially critical witness was excused attendance for questioning by Sir Desmond. All of these features attest to the shortcomings of Sir Desmonds review as an effective article 2 compliant inquiry. This is not to criticise the thoroughness or rigour of Sir Desmonds review. To the contrary, it is clear that it was conducted with commendable scrupulousness. But the very care with which he carried out his review and the tentative and qualified way in which he has felt it necessary to express many of his critical findings bear witness to the inability of his review to deliver an article 2 compliant inquiry. It is therefore unsurprising that on 17 May 2011, in a memorandum prepared by the Northern Ireland Office, it was accepted that Sir Desmonds review would not be article 2 compliant. Sir James Eadie claimed that, although it was not necessary to do so, if the review by Sir Desmond was taken with what had gone before, it did fulfil the requirements of article 2. For the reasons that I have given, I do not accept that submission. I cannot therefore agree with Gillen LJs second reason for suggesting that the present case did not meet the Brecknell test. As already observed, the Grand Chamber in Brecknell had made it clear that earlier inconclusive investigations should be pursued further in order to meet the procedural obligation under article 2. Sir Desmond de Silvas review is, unmistakably, an instance of inconclusiveness. Gillen LJs third reason for concluding that the Brecknell test was not met was, at para 171, that it was not possible to make any meaningful assessment of the value of the [new and significant] information to the overall investigation. This, with respect, misses the critical point. That is whether an effective investigation has taken place. For the reasons that I have given, that has not occurred. It is unnecessary and, indeed, misconceived to speculate on what assessment one might make of the new material. It is on the deficiencies of the inquiries that have been conducted to date that one must focus. Likewise, it is wrong to be distracted from that essential task by the decision not to undertake further prosecutions. The requirements of an article 2 compliant inquiry An article 2 compliant inquiry involves providing the means where, if they can be, suspects are identified, and, if possible, brought to account. It should also provide the opportunity to recognise, if possible, the lessons to be learned so that a similar event can be avoided in the future. In Jordan v United Kingdom (2001) 37 EHRR 2, a case which concerned the shooting of Pearse Jordan in 1992 in Belfast by an RUC officer, ECtHR found a violation of article 2 in respect of failings in the investigative procedures after Mr Jordans death. At para 107 the court said: The investigation must also be effective in the sense that it is capable of leading to a determination of whether the force used in such cases was or was not justified in the circumstances and to the identification and punishment of those responsible. This is not an obligation of result, but of means. Any deficiency in the investigation which undermines its ability to establish the cause of death or the person or persons responsible will risk falling foul of this standard. (Emphasis added) Sir Desmond de Silvas conclusion that he was left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA in February 1989 had it not been for the different strands of involvement by elements of the state is, in itself, an eloquent statement about the inadequacy of the inquiries into Mr Finucanes murder and the incapacity of those inquiries to fulfil the requirements of article 2, for the reasons discussed at paras 118 and 119 above. It has proved to be incapable of establishing the identity of the persons implicated in the murder of Mr Finucane. A proper, inquiry along the lines described in preceding paras was the means by which an article 2 compliant inquiry would have been achieved. The proposition that the procedural obligation was not one of result but of means does not, therefore, signify in this instance. Sir Desmonds conclusions are not criticised for their failure to identify the people involved in bringing about Mr Finucanes murder. Rather, the means by which he might have done so had been denied him. I have dealt with these in para 134 above. If he had been able to compel witnesses; if he had had the opportunity to probe their accounts; if he had been given the chance to press those whose testimony might have led to the identification of those involved in targeting Mr Finucane; if the evidence of the handler had been obtained, or alternatively, objective, medical evidence of her incapacity to provide it had been forthcoming, one might have concluded that all means possible to identify those involved had been deployed. Absent those vital steps the conclusion that an article 2 compliant inquiry into Mr Finucanes death has not yet taken place is inescapable. I reach that opinion notwithstanding the decision of the Committee of Ministers. As I have observed (at para 31 above), the decision of that body to close the examination of the specific measures taken by the UK on foot of the decision of ECtHR was made on the basis that the government was actively working on proposals for establishing a statutory public inquiry. Quite apart from that consideration, however, the most significant inquiry into Mr Finucanes death took place after the Committee of Ministers had reached its decision. It is to the nature of the investigation which came after the Committees decision that the closest attention must be paid, in order to decide if an inquiry sufficient to meet the procedural requirement of article 2 has been held. Section 2(1)(d) of HRA requires a court which is determining a question which has arisen in connection with a Convention right to take into account a decision of the Committee of Ministers. The respondent submits that this is a paradigm example of where this court should not only take into account the decision of the Committee but abide by it. I do not accept that submission. The context in which the Committee took its decision is different from that in which this court is asked to decide the question. And it is different in two material and important respects. At the time that the Committee was considering the matter, there was still in distinct prospect a public inquiry in which the full examination of all the circumstances of Mr Finucanes murder would take place. That is no longer the position. Indeed, the scene has shifted significantly since the time that the Committee considered the matter. As a result of Sir Desmond de Silvas review, it is now clear that many important questions remain unanswered. It would be simply wrong to fail to acknowledge the significant change in circumstances which has occurred since the Committee considered the issue fully ten years ago. This does not involve, as the respondent argued, a finding that the article 2 obligations of the United Kingdom are more extensive in the domestic legal order than in Strasbourg. It is no more than a contemporaneous judgment on circumstances which differ widely from those which the Committee had to confront. There is no warrant for concluding that the Committee, if faced with those change of circumstances today, would reach the same conclusion as it did in 2008. The second difference between the Committees decision and that which the court is required to reach is that the formers conclusion partakes at least to some extent of a political judgment. By contrast, the courts decision must be guided solely by its perception of the correct legal principles to be applied. The respondent suggested that a failure to follow the Committee of Ministers decision would be the antithesis of the mirror principle and cannot have been the intention of Parliament when enacting the HRA. This argument can be dispatched in short order. The mirror principle (developed in such cases as R (Alconbury Developments Ltd) v Secretary of State for the Environment, Transport and the Regions [2001] UKHL 23; [2003] 2 AC 295 and R (Ullah) v Special Adjudicator [2004] UKHL 26; [2004] 2 AC 323 is concerned with the need for national courts to follow a clear and constant line of jurisprudence from the Strasbourg court. The philosophy underlying the principle is that it would be anomalous if a national courts decision as to the content of a particular Convention right should be at odds with a judicial pronouncement from ECtHR. That is a world away from saying that a decision by the Committee of Ministers pre empts a decision by this court as to whether the current requirements of article 2 in relation to a particular death have been fulfilled. This is not to say that the decision of the Committee of Ministers can or should be ignored. Of course, it must be considered. But the context and circumstances in which the decision was reached and the change in circumstances which have occurred since that time cannot be left out of account. Disposal of the appeal Stephens J decided that a limited declaration should be made to the effect that an article 2 compliant inquiry into Mr Finucanes murder had not, at the time his judgment was delivered, taken place. The decision to make the declaration was reached, of course, against the background that, as Stephens J put it, at para 212, documentary material either directly or indirectly available to the authorities which was received by Sir Desmond de Silva was not available to Sir John Stevens, Judge Cory or the DPP (NI). That material has now been made available and has been considered by PSNI. It is not deemed sufficient to warrant prosecution of any individual. For the reasons that I have given earlier, however, this does not cure the article 2 deficit. The Court of Appeal did not agree that a declaration should be made. Gillen LJ said at para 192 of his judgment that the new information referred to by Sir Desmond de Silva was something of an unknown quantity. There was no evidence, he said, that it constituted an article 2 violation as yet. This seems to me to be looking at the question from the wrong end of the telescope. As I have said, the proper focus should be on the inquiries that have been conducted to date and on an examination of whether they constitute an article 2 compliant inquiry, not on whether material yet to be disclosed and considered established that the inquiries were or were not susceptible of meeting the procedural obligation of article 2. Deeny J had a somewhat different perspective on the propriety of making a declaration, although he did agree with Gillen LJ as to the reasons given by him for allowing the cross appeal against the declaration made by Stephens J. Deeny J said (in para 11 of his judgment) that it was wrong to make the declaration because the government had offered an inquiry in 2009 (to be conducted under the 2005 Act) and the appellant had declined it. But this has nothing to say about the respondents responsibility to observe its procedural obligation under article 2. That obligation arises and endures quite independently of any reaction on the part of the appellant. Deeny J also adverted (in para 14 of his judgment) to the fact that counsel for the appellant, Mr Macdonald QC, had declined an invitation to amend the application for judicial review to plead, as a freestanding issue, that the state was in breach of its article 2 obligation. It is to be remembered, however, that both before the Court of Appeal and this court it was argued that the failure of the state to hold an article 2 inquiry meant that the government was required to adhere to its promise to have a public inquiry cf Gillen LJs judgment at para 136. The issue of whether there was a breach of the procedural obligation under article 2 is therefore clearly before this court and that issue cannot be shelved simply because the appellant elected not to formulate it as an independent ground of challenge. It appears to me, in any event, that we, as a Supreme Court, cannot ignore the question. The confines of our deliberations in this case are not necessarily to be determined by the manner in which the parties choose to make their presentations to us. If we detect that a violation of a Convention right has taken place, it would surely be wrong for that to go unremarked upon. It would be, at least arguably, a failure on our part to comply with the enjoinder contained in section 6 of HRA which requires any public authority, including a court, not to act in a way which is in contravention of a Convention right. To fail to acknowledge that there has been a breach of article 2 where that has been established would be in breach of the spirit, if not the literal requirement, of that provision. This is particularly so because of section 6(6) of HRA. It stipulates that an act includes a failure to act. The failure of the Supreme Court to declare that there has been a violation of article 2 of ECHR where one has been detected in a case before it, however incidentally, would not keep faith with that enjoinder. But, it is not necessary to decide that point for the reasons given earlier and I refrain from expressing a final view on it. I would therefore make a declaration that there has not been an article 2 compliant inquiry into the death of Patrick Finucane. It does not follow that a public inquiry of the type which the appellant seeks must be ordered. It is for the state to decide, in light of the incapacity of Sir Desmond de Silvas review and the inquiries which preceded it to meet the procedural requirement of article 2, what form of investigation, if indeed any is now feasible, is required in order to meet that requirement. The appeal should otherwise be dismissed. The new argument For the first time in this court, objection was raised to the fact that affidavits were not sworn by the relevant ministers, but by two officials, one in the Northern Ireland Office and the other a private secretary to the Prime Minister. The appellants purpose, in raising the issue, was not as an additional ground of challenge, but because it was said to be objectionable that the ministers views and reasons should be conveyed by a second hand means. This argument was not raised in the courts below. As the respondent has submitted, had it been, there was much material that could have been marshalled to counter it. On that account alone, I do not consider that the argument may be entertained. LORD CARNWATH: I agree with the reasoning and conclusions of Lord Kerr on the principal issues in the appeal. I add a comment on the issue of legitimate expectation which was raised in argument and is discussed briefly in his judgment at paras 55ff. I do so only because of the reliance placed by the Secretary of State in argument on a judgment of my own in United Policyholders Group v Attorney General of Trinidad and Tobago [2016] UKPC 17; [2016] 1 WLR 3383, and in particular on the concluding paragraph (para 121): the trend of modern authority, judicial and academic, favours a narrow interpretation of the Coughlan principle, which can be simply stated. Where a promise or representation, which is clear, unambiguous and devoid of relevant qualification, has been given to an identifiable defined person or group by a public authority for its own purposes, either in return for action by the person or group, or on the basis of which the person or group has acted to its detriment, the court will require it to be honoured, unless the authority is able to show good reasons, judged by the court to be proportionate, to resile from it. In judging proportionality the court will take into account any conflict with wider policy issues, particularly those of a macro economic or macro political kind. (para 121, emphasis added) It was submitted for the Secretary of State (inter alia) that, in so far as a relevant promise had been made by the Secretary of State, there had been no detrimental reliance by Mrs Finucane. I agree with Lord Kerr (para 63) that the issues raised in that paragraph, including in particular that of detriment, have no application to this case, which concerns as he says a policy statement about procedure, made not just to Mrs Finucane but to the world at large. As I hoped I had made sufficiently clear, my reference in that concluding paragraph to the Coughlan principle was directed to the particular case of a promise made to an identifiable person or group relating to a substantive benefit (such as in Ex p Coughlan [2001] QB 213 the right to stay in a home, or in Paponette [2012] 1 AC 1 the use of a taxi stand). Earlier in the judgment I had sought to explain why such cases were to be distinguished from other categories of legitimate expectation in the wider sense: on the one hand, promises relating to procedure, in relation to which the law was well settled (my para 82); and, on the other, policy statements made to the public in general (para 116; as to which see also Mandalia v Secretary of State for the Home Department [2015] UKSC 59; [2015] 1 WLR 4546, paras 29 31 per Lord Wilson). My reference in the same paragraph to the need for some form of action by, or detriment to, the person relying on the promise was intended to apply in the same limited context. It has attracted some critical academic comment (Joanna Bell The Privy Council and the doctrine of legitimate expectation meet again (2016) 75 CLJ 449; for a more general academic commentary on the judgment, see Joe Tomlinson The narrow approach to substantive legitimate expectations and the trend of modern authority (2017) 17 Oxford University Commonwealth Law Journal, 75 84). Although I may not have made this sufficiently clear, my reference in that paragraph was based on the analogy with breach of contract or estoppel in private law, noted in the passages cited earlier in my judgment (paras 94 95): see R v Inland Revenue Comrs, Ex p Preston [1985] AC 835, 886 887 per Lord Templeman; Ex p MFK [1990] 1 WLR 1545, 1569 1570 per Bingham LJ. On reflection, however, I accept that, even in that limited context the proposition may have been too narrowly stated. The alternative approach was that adopted (without argument) by Lord Hoffmann in R (Bancoult) v Secretary of State for Foreign and Commonwealth Affairs (No 2) [2009] AC 453, para 60: It is not essential that the applicant should have relied upon the promise to his detriment, although this is a relevant consideration in deciding whether the adoption of a policy in conflict with the promise would be an abuse of power (citing Laws LJ in R v Secretary of State for Education and Employment, Ex p Begbie [2000] 1 WLR 1115, 1131). That is consistent also with other authorities in the Court of Appeal, and the passage from Paponette (para 37 per Lord Dyson) cited by Lord Kerr at para 64. It is also more consistent with the modern approach which has tended to sever any direct link between public and private law, recognising that: public law has already absorbed whatever is useful from the moral values which underlie the private law concept of estoppel and the time has come for it to stand upon its own two feet. (R (Reprotech (Pebsham) Ltd) v East Sussex County Council [2002] UKHL 8, [2003] 1 WLR 348, para 35 per Lord Hoffmann.) I note that there was a difference in the Court of Appeal in the present case. Gillen LJ (para 73) followed Bancoult, referring to proof of detriment as not essential, but as a relevant consideration in respect of proportionality. Deeny J (para 4) by contrast thought that that it would be unconstitutional for courts to say that a new Government cannot depart from a representation given by a previous Government unless a defined group had acted to their detriment on the basis of the representation. He saw that requirement as analogous to consideration in the law of contract . For the reasons given above, I am inclined now to prefer the former view. However, since the issue does not arise in the present case, it is unnecessary for us to propose a precise formulation of the test. Indeed the distinction may be little more than one of emphasis, and unlikely to make much practical difference in most cases.
UK-Abs
Patrick Finucane was a solicitor in Belfast. On 12 February 1989, gunmen burst into his home and brutally murdered him in the presence of his wife and three children. Those responsible were so called loyalists. It has emerged that there was collusion between the murderers and members of the security forces. Despite various investigations into Mr Finucanes death, none of these has uncovered either the identity of the members of the security forces who engaged in the collusion or the precise nature of the assistance which they gave to the murderers. Following an inquiry into allegations of collusion between the security forces and loyalist paramilitaries, Brian Nelson was identified. Nelson was an informer for the security services and in particular for an organisation within the British army known as the Force Research Unit (FRU). His role had included the gathering of information about potential targets for assassination. In 2001, political talks were held between the UK and Irish governments. It was decided that a judge would be appointed to investigate allegations of collusion in a number of cases, including that of Mr Finucane. It was said that if the judge recommended a public inquiry in any case, the relevant government would implement that recommendation. Judge Cory was appointed in June 2002. Meanwhile, on 1 July 2003, following a case brought by Mrs Finucane, the European Court of Human Rights (ECtHR) decided that there had not been an inquiry into the death of Mr Finucane which complied with Article 2 of the European Convention on Human Rights (ECHR). Judge Cory published his report on 1 April 2004. He concluded that a public inquiry into Mr Finucanes murder was required. In September 2004, the Secretary of State for Northern Ireland (SSNI) wrote to Mrs Finucane and made a statement in the House of Commons to the effect that the inquiry would be held on the basis of new legislation which was to be introduced shortly. This new legislation was the Inquiries Act 2005. Mrs Finucane objected strenuously to the proposal that the inquiry would take place under the new legislation and various discussions as to the terms of the inquiry took place over the years that followed. In May 2010, there was a general election and a new government was formed. Following a consultation on the form which an inquiry into the murder of Mr Finucane should take, the decision was made on 11 July 2011 that a public inquiry would not be conducted. Instead, Sir Desmond de Silva was appointed to conduct an independent review into any state involvement in Mr Finucanes murder. Sir Desmond was given unrestricted access to documents and was free to meet anyone whom he felt could help with his inquiry. He was not given the power to hold oral hearings, however. Although, initially Sir Desmond wished to meet with one of Nelsons former handlers, this meeting did not take place and Sir Desmond explained in his report that the reason that the meeting did not take place was that he had been informed that the handler felt unable to attend for medical reasons. It has become apparent that this information was given to Sir Desmond by the Ministry of Defence. No medical evidence to support the claim of ill health was provided. In the event, Sir Desmond subsequently decided that he did not need to meet the handler, but did not explain why he had changed his view. Sir Desmond stated as part of the conclusion to his report: I am left in significant doubt as to whether Patrick Finucane would have been murdered by the UDA in February 1989 had it not been for the different strands of involvement by elements of the state. Mrs Finucanes case is brought in judicial review. She claims that she had a legitimate expectation that a public inquiry would be held because of the unequivocal assurance given to her in September 2004. She says the government have failed to show valid grounds for failing to fulfil this promise and that the evidence suggests that the decision not to hold the inquiry was a sham with a predetermined outcome. Mrs Finucane supports her case by arguing that the failure to establish a public inquiry constitutes a violation of her rights under Article 2 of the ECHR and section 6 of the Human Rights Act 1998 (HRA) which requires any public authority (including a Court) not to act in a way which is in contravention of an ECHR right. Mr Justice Stephens dismissed Mrs Finucanes application for judicial review but made a limited declaration that an Article 2 compliant inquiry into Mr Finucanes murder had not yet taken place. The Court of Appeal upheld this decision, save that it set aside the declaration. The Supreme Court holds that Mrs Finucane did have a legitimate expectation that there would be a public inquiry into Mr Finucanes death, but that Mrs Finucane has not shown that the governments decision not to fulfil this promise was made in bad faith or that it was not based on genuine policy grounds. The Supreme Court makes a declaration that there has not been an Article 2 compliant inquiry into the death of Mr Finucane. Lord Kerr gives a judgment with which all members of the Court agree. Lord Carnwath delivers a concurring judgment. Legitimate Expectation: Where a clear and unambiguous undertaking is made, the authority giving the undertaking will not be allowed to depart from it unless it is shown that it is fair to do so [62]. The undertakings given by the various ministers amount, individually and cumulatively, to an unequivocal undertaking to hold a public inquiry into Mr Finucanes death [68]. This promise was not of a substantive benefit to a limited class of individuals. Instead, it was a policy statement about procedure. That policy procedure applied not only to Mrs Finucane but also to the world at large [63]. If political issues overtake a promise given by the government and a decision is taken in good faith and on genuine policy grounds not to adhere to the original promise, it will be difficult for a person who holds a legitimate expectation to enforce compliance with it [76]. Mrs Finucanes argument that the process was a sham and the outcome was fixed is a serious charge which would require clear evidence before this could be accepted [77 78]. There is no sustainable evidence to this effect, so this part of Mrs Finucanes appeal fails [81]. Whilst this issue did not arise on the facts of the present case, Lord Carnwath delivers a concurring judgment addressing the issue of detriment in substantive legitimate expectation cases [156 160]. Article 2 of the ECHR: Article 2 gives rise not merely to a duty not to kill people but, where there is an issue as to whether the state had broken this obligation, an obligation on the part of the state to carry out an effective official investigation into the deaths [83]. Mr Finucane died prior to 2 October 2000, which is the date when the HRA (which gives effect to the ECHR in domestic law) came into force [84]. The procedural obligation to investigate can be considered a detachable obligation, however. In that role, it is capable of binding the state even where the death took place before the critical date when these laws came into force [96]. The SSNI argued that there must be a genuine connection between the death and the critical date, and that this had not been established in this case [106 107]. It was suggested that the period between the death and the critical date should not exceed ten years. It was held that there was not an absolute rule that the period between the death and the critical date should be ten years or less. The period between the dates is important but the significance of this diminishes where, as in this case, most of the significant inquiries into the death took place after the HRA came into force [108]. It has been established by the ECtHR that any information or material which has the potential to undermine the conclusions of an earlier investigation or to allow an earlier inconclusive investigation to be pursued further would prompt a revival of the procedural obligation [117]. The need for an effective investigation goes well beyond facilitating a prosecution [127]. In order to be compliant, an investigation must be capable of leading to the identification and punishment of those responsible [128]. This must involve having the means to identify those implicated in the death [131]. Various features show that Sir Desmonds review fell short of being an effective Article 2 compliant inquiry: Sir Desmond did not have the power to compel the attendance of witnesses, those who met him were not subject to testing as to the accuracy of their evidence, and a potentially critical witness was excused attendance for questioning. The review by Sir Desmond, even when taken with earlier inquiries, was not sufficient to fulfil the requirements of Article 2 [134]. Mrs Finucanes representative had declined an invitation made by the Court of Appeal to amend her application and plead, as a freestanding issue, that the state was in breach of its Article 2 obligations. Notwithstanding this, the issue of whether there was a breach of the procedural obligation under Article 2 was before this Court and called for determination [151]. In any event, the confines of the deliberations of the Supreme Court are not necessarily determined by the manner in which the parties choose to make their presentations. Whilst it is unnecessary to decide this point in the present appeal, to allow a violation of an ECHR right to go unremarked upon may well be in breach of the spirit, if not the literal requirement, of section 6 of the HRA [152].
Section 1(1) of the Civil Partnership Act (CPA) 2004 defines a civil partnership as a relationship between two people of the same sex (a) which is formed when they register as civil partners of each other - (i) in England or Wales Under section 2(1) of CPA two people are to be regarded as having registered as civil partners when they have signed the civil partnership register in the presence of each other, a civil partnership registrar and two witnesses. By section 3(1) of CPA, two people are not eligible to register as civil partners if they are not of the same sex. CPA was therefore explicitly and emphatically designed for same sex couples only. The obvious reason for this was that, at the time of the enactment of CPA, the government and Parliament did not consider it appropriate to extend the institution of marriage to same sex couples but recognised that access to responsibilities and rights akin to those which arise on marriage should be available to same sex couples who wished to commit to each other in the way married couples do. All of that changed with the enactment of the Marriage (Same Sex Couples) Act 2013 (MSSCA). This made the marriage of same sex couples lawful from the date of coming into force of the legislation - 13 March 2014. From that date onwards, same sex couples who marry enjoy the same rights, benefits and entitlements as do married heterosexual couples. They also share the responsibilities that marriage brings. CPA was not repealed when MSSCA was enacted. Consequently, same sex couples have a choice. They can decide to have a civil partnership or to marry. That choice was not - and is not - available to heterosexual couples. Under the law as it currently stands, they can only gain access to the rights, responsibilities, benefits and entitlements that marriage brings by getting married. This circumstance, it is now agreed, brought about an inequality of treatment between same sex and heterosexual couples. It is also now accepted by the respondent that this manifest inequality of treatment engages article 14 - prohibition of discrimination - read in conjunction with article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (hereafter the Convention or ECHR) - the right to respect for private life. It is also accepted by the respondent Secretary of State that the inequality of treatment of heterosexual couples requires to be justified from the date of its inception, ie the coming into force of MSSCA. The principal issue in this appeal, therefore, is whether justification of that inequality includes consideration of the period of time during which, the government claims, it is necessary to investigate how best to eliminate the inequality or whether the justification must be directed exclusively to the very existence of the discrimination. The respondent claims that justification does include an evaluation of the time needed to decide how the inequality of treatment can best be removed. The appellants argue that this relates solely to remedy, and is not relevant to the question of justification. Alternatively, they submit that, on the facts of this case, it is not proportionate to continue to deny civil partnerships to them in order to achieve the aim proffered by the government viz affording time thoroughly to investigate whether to abolish civil partnerships altogether; to extend them to different sex couples; or to phase them out. The appellants therefore seek a declaration that sections 1 and 3 of CPA (to the extent that they preclude a different sex couple from entering into a civil partnership) infringe their rights under article 14 taken with article 8 of the Convention. They also seek a declaration of incompatibility under section 4 of the Human Rights Act 1998 (HRA). Factual background The appellants are a different sex couple who wish to enter into a legally recognised relationship. They have a conscientious objection to marriage. They want to have a civil partnership with one another. They have been in a long-term relationship and have had two children together. It is not disputed that their unwillingness to marry is based on genuine conviction. Nor is it disputed that their wish to have their relationship legally recognised is other than entirely authentic. When Parliament enacted MSSCA it consciously decided not to abolish same sex civil partnerships or to extend them to different sex couples, even though, we were told, it was recognised at that time that this would bring about an inequality of treatment between same sex partners and those of different sexes and that this inequality was based on the difference of sexual orientation of the two groups. Rather, it was decided that further investigations were required. Some investigations had been carried out in 2012 and further inquiries were made in 2014. In the governments estimation the investigations did not indicate that significant numbers of different sex couples wished to enter civil partnerships. It was judged, however, that the review and consultation which comprised the investigations in 2014 were inconclusive as to how to proceed. The government therefore concluded that it should not take a final decision on the future of civil partnerships until societal attitudes to them became clearer after same sex marriages had taken root. On 21 October 2015 Tim Loughton MP introduced a Private Members Bill which proposed extension of civil partnerships to different sex couples. That Bill did not receive the requisite support and did not progress. A second Bill met the same fate in 2016. Mr Loughton introduced another Bill, entitled Civil Partnership, Marriages and Deaths Registration etc Bill in the 2017-2019 session. The Bill received its First Reading on 19 July 2017 and its Second Reading on 2 February 2018. It proposed that different sex couples should be permitted to enter civil partnerships. The government felt unable to support that proposal but in advance of the Second Reading it agreed the terms of an amendment with Mr Loughton and a joint amendment was submitted to Parliamentary authorities immediately after the Second Reading. The amendment is in these terms: (1) The Secretary of State must make arrangements for a report to be prepared - (a) assessing how the law ought to be changed to bring about equality between same sex couples and other couples in terms of their future ability or otherwise to form civil partnerships, and (b) aim. setting out the Government's plans for achieving that (2) The arrangements must provide for public consultation. (3) The Secretary of State must lay the report before Parliament. In May 2018, the government published a command paper in which it recorded that the consultations in 2012 and 2014 had failed to produce a consensus as to how, or indeed if, the legal position as to civil partnerships should change. Those consultations had posited three possibilities: that civil partnerships should be abolished; that they should be closed to new entrants; or that they should be extended to allow different sex couples to register a civil partnership. The command paper stated that, because of the lack of consensus, the government decided not to make any changes to civil partnerships at the time. This is significant. The government knew that it was perpetrating unequal treatment by the introduction of MSSCA but it decided to take no action because of what it perceived to be equivocal results from its consultations. In the 2018 command paper the government announced that it was looking at available data on the take-up of civil partnerships and marriage amongst same sex couples. It suggested that if demand for civil partnerships was low, the government might consider abolishing or phasing them out. If, on the other hand, there remained a significant demand for civil partnerships, this might indicate that the institution still has relevance. It concluded, therefore, that it was proportionate to obtain more data in order to decide that there was a need to preserve civil partnerships. It considered that by September 2019 it should have sufficient evidence to make a judgment about the demand for the institution. Thereafter, consultation on the future implementation of proposals for civil partnerships would take place. This would happen at the earliest in 2020. No indication was given as to how long the consultation period would last nor as to the likely date of any legislation that might be considered necessary. The proceedings The appellants sought judicial review of the governments failure to extend civil partnerships to different sex couples, arguing that the introduction of MSSCA rendered the provisions of CPA which confined the availability of civil partnerships to same sex couples (sections 1 and 3) incompatible with article 8 of ECHR, when read in conjunction with article 14. That application was dismissed by Andrews J in a judgment delivered on 29 January 2016 ([2016] EWHC 128 (Admin)). The respondent had argued that article 8 was not engaged and that argument was accepted by the judge. At para 84 of her judgment she said that, The difference in treatment complained of does not infringe a personal interest close to the core of the right to family life, still less the right to private life protected by article 8.The judge held, however, that even if article 8 was engaged, there was sufficient objective justification for maintaining the disparity [between same sex and different sex couples] in the short term whilst the Government takes stock of the impact of the 2013 Act on civil partnerships - para 71 of the judgment. Before the Court of Appeal (Arden LJ, Beatson LJ and Briggs LJ - [2017] EWCA Civ 81; [2018] QB 519) the argument that the appellants case did not come within the ambit of article 8 was again advanced by the respondent. It was unanimously rejected (and has not been renewed before this court). By a majority (Beatson and Briggs LJJ), the Court of Appeal held that the interference with the appellants rights under article 8, read together with article 14 was, at least for the time being, justified. At para 158, Beatson LJ said: In my view, at present, the Secretary of States position is objectively justified. The future of the legal status of civil partnerships is an important matter of social policy that government is entitled to consider carefully. At the hearing the Secretary of States approach was described as a wait and see approach, although it would be more accurate to describe it as a wait and evaluate approach. Whatever term is used to describe the approach, it would not have been available to the Secretary of State prior to the enactment and coming into force of the 2013 Act. This is because it would not have been possible at that time to determine how many people would continue to enter into civil partnerships or want to do so because they share the appellants sincere objections to marriage. The relevant start date for consideration is thus 13 March 2014 when the provisions extending marriage to same sex couples came into force. At para 173, Briggs LJ said: I can well understand the frustration which must be felt by the appellants and those different sex couples who share their view about marriage, about what they regard as the Governments slow progress on this issue. Some couples in their position may suffer serious fiscal disadvantage if, for example, one of them dies before they can form a civil partnership. This is a factor in the proportionality balance, and because this is a case of differential treatment on the basis of sexual orientation, that balance must command anxious scrutiny. But against the background of a serious but unresolved difficulty which affects the public as a whole, and the practicable impossibility of some interim measure, such as temporarily opening civil partnership to different sex couples when the eventual decision may be to abolish it, I am unable to regard the Secretary of States current policy of wait and evaluate as a disproportionate response. Although she found that the interference with the appellants article 8 and article 14 rights was not justified (because it was not proportionate), Arden LJ considered that it pursued a legitimate aim - para 105, where she said that the state had the option to eliminate the discrimination in any way it sees fit and therefore must be entitled to some time to make its choice. The question whether the legislation pursued a legitimate aim occupied centre field on the hearing of the appeal before this court. In particular, the argument focused on the question whether the legitimate aim required to be intrinsically connected to the unequal treatment or whether it was enough that the governments aim was to take the time necessary to decide which form of removal of the discrimination was most appropriate. The Convention rights Article 14 of ECHR provides that the enjoyment of the rights and freedoms set forth in the Convention shall be secured without discrimination on any of a number of specified grounds (including sex, race or colour) and other status. It is accepted that sexual orientation qualifies as a ground on which discrimination under article 14 is forbidden - Salgueiro Da Silva Mouta v Portugal (1999) 31 EHRR 47 at para 28. Article 14 does not enshrine a freestanding right to freedom from discrimination - see Petrovic v Austria (1998) 33 EHRR 14. It prohibits discrimination in the enjoyment of the Convention rights. It is now well settled, therefore, that, to have recourse to article 14, the complained of discrimination must come within the ambit of another Convention right. The ECHR right within whose ambit the appellants claim to come is article 8 which provides: Right to respect for private and family life 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. Before Andrews J and the Court of Appeal it had been submitted that an adverse effect in relation to article 8 had to be demonstrated in order for an avowed infringement to come within its scope or ambit. Counsel for the respondent did not seek so to argue before this court. They were right not to do so. Recent case law from the European Court of Human Rights (ECtHR) makes it clear that no detrimental effect need be established - see, for instance, Schalk and Kopf v Austria (2010) 53 EHRR 20; Vallianatos v Greece (2013) 59 EHRR 12; and Oliari v Italy (2015) 65 EHRR 26. In particular, in Vallianatos ECtHR found that the introduction of registered partnerships only for different sex couples, to exist alongside marriage which was also only open to different sex couples, constituted a breach of article 14 read with article 8 of the Convention (paras 80-92). It is therefore now accepted that access to civil partnerships falls within the ambit of article 8; that there is a difference in treatment between same sex couples and different sex couples in relation to the availability of civil partnerships; that this difference in treatment is on the ground of sexual orientation, a ground falling within article 14; and that the appellants are in an analogous position to a same sex couple who wish to enter into a civil partnership. In these circumstances, the only basis on which the respondent can escape a finding that there has been an infringement of the appellants article 14 rights is by showing that the unequal treatment is justified - Ghaidan v Godin-Mendoza [2004] 2 AC 557, per Baroness Hale at para 130. Justification - the arguments On the question of justification, Ms Monaghan QC for the appellants advanced five propositions: 1. The burden of proving justification is on the respondent: R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, per Lord Wilson at para 44 and Lady Hale at para 61; 2. It is not the scheme as a whole which must be justified but its discriminatory effect: A v Secretary of State for the Home Department [2005] 2 AC 68 per Lord Bingham at para 68 and AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434 per Baroness Hale at para 38; 3. Where the difference in treatment is based on sexual orientation, a court must apply strict scrutiny to the assessment of any asserted justification: particularly convincing and weighty reasons to justify it are required - EB v France (2008) 47 EHRR 21, at para 91 and Karner v Austria (2003) 38 EHRR 24 at para 37; 4. The conventional four-stage test of proportionality (as outlined in cases such as Bank Mellat v HM Treasury (No 2) [2014] AC 700 and R (Tigere) v Secretary of State for Business, Innovation and Skills (Just For Kids Law intervening) [2015] 1 WLR 3820, at para 33) should be applied; and 5. In cases involving discrimination on the grounds of sexual orientation, to be proportionate, the measure must not only be suitable in principle to achieve the avowed aim, it must also be shown that it was necessary to exclude those of the specific sexual orientation from the scope of the application of the provision (Vallianatos at para 85). For the respondent, Mr Eadie QC did not take particular issue with any of these propositions. He submitted, however, that the government wanted to have a better sense of how civil partnerships would come to be regarded after same sex marriage became possible, before taking a final decision on their future. This was, he claimed, a legitimate aim. Moreover, it required to be considered in its historical context. Between 2005 (on the coming into force of CPA) and 2014 (when MSSCA came into force) there was no question of discrimination between same sex and different sex couples. Both had access to all the rights, entitlements and responsibilities that marriage entailed. The only difference was that the gateways to those entitlements etc were differently labelled (although that is not quite how Mr Eadie put it). Counsel emphasised that the various items of legislation were the product of evolution in societal values and standards; the executives and Parliaments consideration of those changes; and the measured response of the legislature to the conclusions that they had reached about them. (Again, I acknowledge that this is a paraphrase, rather than a verbatim rendition, of Mr Eadies formulation of the argument). The respondents defence of the appeal therefore proceeded principally on two related but distinct strands. The first was that changes in the law in this sensitive area of social policy had been incremental. CPA had been introduced as a reaction to perceived changes in social attitudes and to address the increasingly recognised anomaly that same sex couples did not have the opportunity which different sex couples had of legal recognition of their commitment to each other, with all the benefits that flowed from such commitment. At the time CPA was enacted, it was judged by the government and Parliament that society as a whole in the United Kingdom was not ready to contemplate extending the institution of marriage to same sex couples. It is not disputed that this was a judgment that they were entitled to make. The second strand of the respondents argument can be described in the following way: when in 2013 it was decided that same sex couples should be allowed to marry, the government and Parliament were presented with a choice. Should they do away with civil partnerships for same sex couples or should they be retained? On one view, they should be abolished. After all, same sex couples were being placed in precisely the equivalent position as different sex couples. And, incidentally, in none of the countries of the Council of Europe where civil partnerships for same sex couples were transformed to marriage entitlement, had the civil partnership institution been maintained. Rather than take that step, so says the respondent, the government and Parliament chose a sensible course of investigating whether there was a case for preserving the institution of civil partnership. After all, some same sex couples might not wish to marry but to remain, or become, civil partners. And, incidentally, a period of reflection and inquiry would allow a decision to be made on whether different sex couples should be allowed to avail of civil partnerships. Momentous decisions of this type need, the respondent says, time for proper inquiry and consideration. Requiring that time to be available while assessment of the options was taking place is a legitimate aim, it is claimed. It is legitimate, therefore, to perpetuate the acknowledged inequality of treatment between the two groups, since that inequality is going to be eliminated one way or another in due course. That course also fulfils, the respondent argues, the other requirements of proportionality. Discussion of justification generally In Schalk and Kopf the applicants were a same sex couple. They complained that Austrian law, which prescribed that the institution of marriage was available only to different sex couples, discriminated against them. ECtHR held (by four votes to three) that there had been no violation of article 14, taken together with article 8. The court held, however, that same sex couples were in a relevantly similar situation to a different sex couple as regards their need for legal recognition and protection of their relationship - para 99. At the time that they lodged their application, there was no possibility of recognition of their relationship under Austrian law. That changed with the coming into force of the Registered Partnership Act on 1 January 2010. The court had to examine whether Austria should have provided a means of legal recognition of their partnership before that Act came into force. In para 105 of its judgment the court noted that there was a growing European consensus about the recognition of same sex couples but that there was not yet a majority of states providing for legal recognition of same sex partnerships. It concluded, therefore, that the area in question must be regarded as one of the evolving rights with no established consensus, where states must enjoy a margin of appreciation in the timing of the introduction of legislative changes. The respondent relied on this decision as being an example of the many occasions on which the ECtHR has held that, in terms of timing of legislative change to recognise different forms of relationship, a wide margin of appreciation is appropriate. That was so, Mr Eadie argued, even where there had been differential treatment on grounds of sexual orientation for some time. He sought to draw an analogy between the Schalk and Kopf case and that of the appellants, by suggesting that a significant measure of discretion should be accorded to Parliament in its decision as to when the timing of legislative change in the field of civil partnerships should occur. I do not accept that argument. In the first place, the approach of the ECtHR to the question of what margin of appreciation member states should be accorded is not mirrored by the exercise which a national court is required to carry out in deciding whether an interference with a Convention right is justified. As Lady Hale said In re G (Adoption: Unmarried Couple) [2009] 1 AC 173, para 118: it is clear that the doctrine of the margin of appreciation as applied in Strasbourg has no application in domestic law. The Strasbourg court will allow a certain freedom of action to member states, which may mean that the same case will be answered differently in different states (or even in different legal systems within the same state). This is particularly so when dealing with questions of justification, whether for interference in one of the qualified rights, or for a difference in treatment under article 14. National authorities are better able than Strasbourg to assess what restrictions are necessary in the democratic societies they serve. So to that extent the judgment must be one for the national authorities. It follows that a national court must confront the interference with a Convention right and decide whether the justification claimed for it has been made out. It cannot avoid that obligation by reference to a margin of appreciation to be allowed the government or Parliament, (at least not in the sense that the expression has been used by ECtHR). The court may, of course, decide that a measure of latitude should be permitted in appropriate cases. Before Andrews J the respondent had relied on the well-known statement of Lord Hope in R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326 at 381B where he said: difficult choices may have to be made by the executive or the legislature between the rights of the individual and the needs of society. In some circumstances it will be appropriate for the courts to recognise that there is an area of judgment within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose act or decision is said to be incompatible with the Convention. It was therefore suggested to Andrews J that since the decision on the timing of legislation to extend or abolish civil partnerships lay firmly in the field of social policy, the court should show an appropriate degree of reticence in deciding whether the unequal treatment between same- and different sex couples was justified. That argument was repeated in this court. Mr Eadie relied on the decision of the House of Lords in M v Secretary of State for Work and Pensions [2006] 2 AC 91. In that case M was the divorced mother of two children who spent most of the week with their father, Ms former husband. She contributed to their maintenance under the Child Support Act 1991. She lived with a partner of the same sex. In calculating the amount of her child support contribution according to regulations made under the 1991 Act, Ms partners contribution to their joint housing costs was treated as reducing Ms deductible housing costs whereas if she had been living with a man his contribution to the mortgage would have been treated as part of hers so that her weekly child support payment would have been smaller. She argued that the assessment of her child support contributions engaged her rights under article 8 and Article 1 of the First Protocol to ECHR, and that she had suffered discrimination in her enjoyment of those rights contrary to article 14. By a majority, the House of Lords rejected Ms arguments. Mr Eadie placed particular emphasis on the statement of Lord Mance at para 153, where he said: Because of the front-line importance of a home, the Strasbourg and United Kingdom courts have been active at a relatively early stage to eliminate differences in treatment which were evidently unfair. The area of law with which the House is concerned is not so front-line. It is one where there are swings and roundabouts, advantages and disadvantages, for same sex couples in achieving complete equality of treatment. There are many allied areas of legislation that used similar terminology and required close attention, to achieve coherent, comprehensive reform. It is an area in relation to which Parliament and the democratically elected government should be recognised as enjoying a limited margin of discretion, regarding the stage of development of social attitudes, when and how fast to act, how far consultation was required and what form any appropriate legislative changes should take. In as much as it can be suggested that what Lord Mance described as a margin of discretion is analogous to the margin of appreciation applied by the Strasbourg court, it must be noted that, even on the supranational plane, the margin in cases where distinctions are made on the ground of sexual orientation is narrow - Vallianatos at paras 84 and 85; and Paji v Croatia (2016) (Application no 68453/13) para 59. The margin of discretion available to the government and Parliament in this instance, if it exists at all, must be commensurately narrow. Moreover, as Ms Monaghan has submitted (see para 20.3 above), where the difference in treatment is based on sexual orientation, a court must apply strict scrutiny to the assessment of any asserted justification and particularly convincing and weighty reasons to justify it are required. In this context, it is significant that the government consciously decided that it would not extend civil partnerships to different sex couples, at the time that it introduced MSSCA. And, as Andrews J observed in para 65 of her judgment, quoting Mr Squires (who then appeared on behalf of the respondent), the government had not only reached that definite conclusion, it elected to carry out a review before deciding what, if anything, it should do. Indeed, when, in its estimation, that review proved inconclusive, the government decided to wait for a time until further hard evidence was available to enable it to take a considered view as to what to do. In light of what we were told was the governments awareness that the effect of introducing MSSCA was inequality between same- and different sex couples, this displayed, at best, an attitude of some insouciance. Andrews J rejected the suggestion that the present case was analogous to Vallianatos, stating, at para 71 of her judgment that it is far closer to Schalk, in which there was recognition by the ECtHR that a member state should be afforded a relatively generous leeway as to the timing of introducing legislative changes in areas of social policy where there is no clear consensus among member states. I do not agree that the situation of the appellants is close to that of Schalk and Kopf or that some analogies with Vallianatos cannot be drawn. Indeed, in my view, the case of Schalk and Kopf provides an obvious contrast to the circumstances of the present appeal. In that case the enactment of the Registered Partnership Act was the product of evolving societal acceptance of the need to provide some legal recognition of same sex partnerships. Here the inequality between same sex and different sex couples is the creature of Parliament. In one instance (the Registered Partnership Act in the Schalk and Kopf case), one can understand that the timing by the legislature of a measure to reflect the developing changes in attitude should be considered to fall within the governments margin of appreciation. In the case of MSSCA, however, it was Parliament itself that brought about an inequality immediately on the coming into force of the Act, where none had previously existed. The redressing by the legislature of an imbalance which it has come to recognise is one thing; the creation of inequality quite another. To be allowed time to reflect on what should be done when one is considering how to deal with an evolving societal attitude is reasonable and understandable. But to create a situation of inequality and then ask for the indulgence of time - in this case several years - as to how that inequality is to be cured is, to say the least, less obviously deserving of a margin of discretion. In Vallianatos, most of the applicants were in established same sex relationships. In November 2008 the Civil Unions Law came into force in Greece. It created civil unions as an official form of partnership other than marriage. Such unions could only be entered by two adults of different sex. The applicants claimed that the failure to make civil unions available to same sex couples breached their rights under article 14, taken in conjunction with article 8. The government claimed that the restriction of civil unions to different sex couples was to enhance the legal protection of children born outside marriage and indirectly to strengthen the institution of marriage. At para 85 of its judgment the court said: In cases in which the margin of appreciation afforded to states is narrow, as is the position where there is a difference in treatment based on sex or sexual orientation, the principle of proportionality does not merely require the measure chosen to be suitable in principle for achievement of the aim sought. It must also be shown that it was necessary, in order to achieve that aim, to exclude certain categories of people - in this instance persons living in a homosexual relationship Applying that approach to the present case, it is for the government and Parliament to show that it was necessary, in order to achieve the aim of having time to consider what to do about the difference in treatment between same sex and different sex couples brought about by MSSCA, to exclude different sex couples from CPA. One can understand why the government might have wished to maintain the status quo while considering various options. But that is a far cry from saying that it was necessary to exclude different sex couples from the institution of civil partnership. It appears to me, therefore, that some, albeit not perfect, analogy can be drawn between Vallianatos and the present case. In Vallianatos same sex couples were excluded from civil unions. In this instance, different sex couples are being denied the range of choice available to same sex couples. In the present case, of course, as the respondent has been at pains to point out, the inequality of treatment arose because of the enlarging of options for same sex couples. It is also observed that the appellants do not suggest that before the coming into force of MSSCA, there was an interference with their article 8 rights, when read together with article 14. But this is nothing to the point. The government and Parliament must be taken to have realised that, when MSSCA came into force, an inequality of treatment would inevitably arise. For the reasons given earlier, one must assume that they did not recognise that that inequality would engage article 8. But, again, that is not relevant. What must now be shown is that it was necessary to exclude different sex couples from civil partnerships for an indefinite period, while inquiries, consultations and surveys were conducted and a decision based on these could be made. I consider that that necessity has not been established. Legitimate aim The four-stage test designed to establish whether an interference with a qualified Convention right can be justified is now well-established. The test and its four stages were conveniently summarised by Lord Wilson in R (Aguilar Quila) v Secretary of State for the Home Department [2011] UKSC 45; [2012] 1 AC 621, para 45. They are (a) is the legislative objective (legitimate aim) sufficiently important to justify limiting a fundamental right; (b) are the measures which have been designed to meet it rationally connected to it; (c) are they no more than are necessary to accomplish it; and (d) do they strike a fair balance between the rights of the individual and the interests of the community? (See also Lord Reed at para 75 of Bank Mellat v HM Treasury (No 2) [2014] AC 700 and Lord Sumption in the same case at para 20). The legitimate aim articulated by the respondent in the present appeal is the need to have time to assemble sufficient information to allow a confident decision to be made about the future of civil partnerships. But, as Lord Bingham stated in para 68 of A v Secretary of State for the Home Department (para 20.2 above), [w]hat has to be justified is not the measure in issue but the difference in treatment between one person or group and another. To be legitimate, therefore, the aim must address the perpetration of the unequal treatment, or, as Ms Monaghan put it, the aim must be intrinsically linked to the discriminatory treatment. In this case it does not and is not. The respondent does not seek to justify the difference in treatment between same sex and different sex couples. To the contrary, it accepts that that difference cannot be justified. What it seeks is tolerance of the discrimination while it sorts out how to deal with it. That cannot be characterised as a legitimate aim. In reaching its conclusion that a wait and see (or, as Beatson LJ called it, a wait and evaluate) policy amounted to a legitimate aim, the Court of Appeal relied on the decision of ECtHR in Walden v Liechtenstein (Application No 33916/96) (unreported, 16 March 2000). In that case the applicant was a pensioner who complained that calculation of the joint pension due to himself and his wife by reference only to his own contribution record discriminated unfairly against couples where the wife had a better contribution record than the husband. A new law, correcting this imbalance was introduced on 1 January 1997. (In May 1996 the State (Constitutional) Court had found the law to be unconstitutional but refused to set it aside as it would have been disruptive and contrary to good administration.) The applicant complained that, until the new law had come into force, his Convention rights had been violated. The Strasbourg court agreed with the domestic court that the previous law had infringed the applicants rights under article 14 taken with Article 1 of Protocol 1, but that the refusal to quash the discriminatory law was equivalent to a stay. The temporary preservation of the offending law served the legitimate aim of maintaining legal certainty, and the period of just over six months to rectify the position was proportionate. This decision was described by Lord Hoffmann in R (Hooper) v Secretary of State for Work and Pensions [2005] UKHL 29; [2005] 1 WLR 1681 as puzzling - para 62. Hooper concerned benefits under the Social Security Contributions and Benefits Act 1992 which were payable to widows, but not to widowers. The Welfare Reform and Pensions Act 1999 amended the 1992 Act so as to provide survivors benefits payable to both sexes on the death of their spouses with effect from 9 April 2001, whilst preserving existing rights. The widower claimants alleged a breach of article 14 taken with article 8 for the period between the coming into force of the Human Rights Act 1998 in October 2000 and the coming into effect of the 1999 Act during which period they did not receive survivors benefits. Although the claimants appeal was dismissed on other grounds, the House of Lords rejected the argument based on the Walden decision, Lord Hoffmann observing at para 62: I can quite understand that if one has a form of discrimination which was historically justified but, with changes in society, has gradually lost its justification, a period of consultation, drafting and debate must be included in the time which the legislature may reasonably consider appropriate for making a change. Up to the point at which that time is exceeded, there is no violation of a Convention right. But there is no suggestion in the report of Walden v Liechtenstein that the discrimination between married couples was ever justified and I find it hard to see why there was no violation of Convention rights as long as the old law remained in place. It is clear from this passage that Lord Hoffmann rejected the notion that an otherwise unjustified discriminatory measure can be justified by a need for a period to change the law. The present case does not involve a form of discrimination that was historically justified but has gradually lost its justification. The exact reverse is the case here. A new form of discrimination was introduced by the coming into force of MSSCA. There was, therefore, in the words of Lord Hoffmann, no reason to conclude that this discrimination was ever justified. Rational connection If the aim of the government and Parliament could properly be described as legitimate, I accept that there would be a rational connection between the aim and the delay in addressing the discrimination. Less intrusive means It is accepted by all that, before MSSCA came into force, there was no discrimination against same sex or different sex groups. Since Parliament and the government are to be taken as having realised that discrimination would begin with the Act taking effect, it seems to me that at least two options were available. First, its introduction could have been deferred until the researches which are now deemed necessary had been conducted. Secondly, the government could have extended the institution of civil partnerships to different sex couples until those researches had been completed. (A third, but admittedly less palatable, option would have been to suspend the availability of civil partnerships to same sex couples, while the inquiries were carried out.) Each of these options would have allowed the aim to be pursued with less, indeed no, discriminatory impact. In the Court of Appeal, Briggs LJ suggested that the second of the options outlined above was a practicable impossibility but it is not clear on what material this conclusion was based. One can certainly recognise that it would not be a particularly attractive proposition to introduce civil partnerships for different sex couples as an interim measure, if ultimately, they were to be abolished altogether but that does not make that course impossible as a matter of practicability. I should make it unequivocally clear that the government had to eliminate the inequality of treatment immediately. This could have been done either by abolishing civil partnerships or by instantaneously extending them to different sex couples. If the government had chosen one of these options, it might have been theoretically possible to then assemble information which could have influenced its longer term decision as to what to do with the institution of civil partnerships. But this does not derogate from the central finding that taking time to evaluate whether to abolish or extend could never amount to a legitimate aim for the continuance of the discrimination. The legitimate aim must be connected to the justification for discrimination and, plainly, time for evaluation does not sound on that. It cannot be a legitimate aim for continuing to discriminate. Since the less intrusive means stage of the proportionality exercise did not feature to any significant extent in oral argument and as it is unnecessary for me to reach a final view in order to dispose of the appeal, I say nothing more on the subject. A fair balance If the interference with the appellants rights could be regarded as being in pursuit of a legitimate aim, I would have no hesitation in concluding that a fair balance between their rights and the interests of the community has not been struck. The point at which the now admitted discrimination will come to an end is still not in sight. The interests of the community in denying those different sex couples who have a genuine objection to being married the opportunity to enter a civil partnership are unspecified and not easy to envisage. In contrast, the denial of those rights for an indefinite period may have far-reaching consequences for those who wish to avail of them - and who are entitled to assert them - now. As Briggs LJ observed in the Court of Appeal, some couples in the appellants position may suffer serious fiscal disadvantage if, for example, one of them dies before they can form a civil partnership. Moreover, undertaking research with people who are current civil partners to understand their views on civil partnership and marriage, and their future intentions and preferences - (command paper para 20) is, at best, of dubious relevance to the question of whether the continuing discrimination against different sex couples can be defended. Given that further inquiries are said to be necessary in order to decide how to eliminate the unequal treatment suffered by different sex couples, the governments investigations should surely have been geared to determining the extent of demand for civil partnerships among those of different genders who had a settled and authentic objection to being married. Institutional competence This court was encouraged to refrain from making a declaration of incompatibility because, it was said, the decision not to take action about extending or abolishing civil partnerships was one which fell squarely within the field of sensitive social policy which the democratically-elected legislature was pre- eminently suited to make. That argument has significantly less force if the decision not to take action at present does not pursue a legitimate aim but it must nevertheless be considered for what principled basis it may have. The starting point is that the court is not obliged to make a declaration of incompatibility when it finds that a particular provision is not compatible with a Convention right. Section 4(2) of HRA provides that if the court is satisfied that the provision is incompatible with a Convention right, it may make a declaration of that incompatibility. The provision clearly contemplates that there will be circumstances in which the court considers that an item of primary legislation is not compatible with a Convention right but that it is not appropriate to have recourse to the section 4(2) power. The circumstances in which such self-restraint should be exercised have not been comprehensively catalogued. This is understandable. Different considerations may favour reticence. Others may call for a declaration to be made. An obvious example where reticence was considered appropriate was the case of R (Nicklinson) v Ministry of Justice (CNK Alliance Ltd intervening) [2015] AC 657 where what was at stake was the compatibility of section 2 of the Suicide Act 1961 (which makes encouraging or assisting a suicide a criminal offence) with article 8 of the Convention. At the time of this courts decision, Parliament was due to debate the issues arising in the appeal in the context of the Assisted Dying Bill introduced by Lord Falconer into the House of Lords on 5 June 2014. It was argued that the court should defer expressing any final view of its own regarding the compatibility of section 2 with article 8 until Parliament had first considered that Bill. A clear majority of the nine-member panel concluded that the issue was one that lay within the institutional competence of the Court, but, of that majority, only two considered that a declaration of incompatibility should be made. The others decided that, as Parliament was on the point of considering Lord Falconers Bill it would be premature for the court to consider making a declaration of incompatibility. Parliament should first have the opportunity to consider the issues for itself. I do not consider that Nicklinson sets a precedent for reticence in this case. The amendment to Mr Loughtons Bill which the government has agreed does no more than formalise the consultation process to which it was already committed. It does not herald any imminent change in the law to remove the admitted inequality of treatment. Even if it did, this would not constitute an inevitable contraindication to a declaration of incompatibility. In Bellinger v Bellinger (Lord Chancellor intervening) [2003] 2 AC 467 it was said that where the court finds an incompatibility, it should formally record that the present state of statute law is incompatible with the Convention - para 55. Observations by Lord Hobhouse at para 79 are especially pertinent: The Government cannot yet give any assurance about the introduction of compliant legislation. There will be political costs in both the drafting and enactment of new legislation and the legislative time it will occupy. The incompatibility having been established, the declaration under section 4 should be made. In this context, it is salutary to recall that a declaration of incompatibility does not oblige the government or Parliament to do anything. This point was made in para 343 of Nicklinson: An essential element of the structure of the Human Rights Act 1998 is the call which Parliament has made on the courts to review the legislation which it passes in order to tell it whether the provisions contained in that legislation comply with the Convention. By responding to that call and sending the message to Parliament that a particular provision is incompatible with the Convention, the courts do not usurp the role of Parliament, much less offend the separation of powers. A declaration of incompatibility is merely an expression of the courts conclusion as to whether, as enacted, a particular item of legislation cannot be considered compatible with a Convention right. In other words, the courts say to Parliament, This particular piece of legislation is incompatible, now it is for you to decide what to do about it. And under the scheme of the Human Rights Act 1998 it is open to Parliament to decide to do nothing. In my view, there is no reason that this court should feel in any way reticent about the making of a declaration of incompatibility. To the contrary, I consider that we have been given the power under section 4 of HRA to do so and that, in the circumstances of this case, it would be wrong not to have recourse to that power. Conclusion I would allow the appeal and make a declaration that sections 1 and 3 of CPA (to the extent that they preclude a different sex couple from entering into a civil partnership) are incompatible with article 14 of ECHR taken in conjunction with article 8 of the Convention.
UK-Abs
Under the Civil Partnership Act 2004 (CPA), only two people of the same sex may enter into a civil partnership. The Marriage (Same Sex couples) Act 2013 (MSSCA) made marriage of same sex couples lawful. The CPA was not repealed when the MSSCA was enacted. Consequently, same sex couples wishing to formalise their relationship have a choice as to whether to enter into a civil partnership or to marry. This choice is not available to different sex couples. The appellants are a different sex couple in a committed long term relationship, which they wish to formalise. They have genuine ideological objections to marriage based upon what they consider to be its historically patriarchal nature. They wish instead to enter into a civil partnership, which they consider would reflect their values and give due recognition to the equal nature of their relationship. They sought judicial review of the respondents continuing decision not to make changes to the CPA to allow different sex couples to enter into civil partnerships. The issue was whether the bar on different sex couples entering into civil partnerships breaches the appellants rights under article 14 (the prohibition on discrimination) together with article 8 (the right to respect for private life) of the European Convention on Human Rights (ECHR). The High Court and Court of Appeal dismissed their claim. It is now accepted by the respondent that there is an inequality of treatment between same sex and heterosexual couples, and that this inequality engages article 14 read in conjunction with article 8 of the ECHR. The respondent also accepts that the inequality therefore requires justification from the date it first began (ie. on the coming into force of the MSSCA). The principal issue before the Supreme Court was therefore whether justification of the inequality includes consideration of the period of time during which the respondent could investigate how best to eliminate the inequality or whether the justification must be directed exclusively to the very existence of the discrimination. The Supreme Court allows the appeal. Lord Kerr gives the judgment with which all the other Justices agree. When Parliament enacted the MSSCA, it consciously decided not to abolish same sex civil partnerships or to extend them to different sex couples, even though it was recognised at the time that this would bring about an inequality of treatment between same sex partners and those of different sexes, and that this inequality would be based on the sexual orientation of the two groups. It was decided that further investigations were required, and the government concluded that it should not take a final decision on the future of civil partnerships until societal attitudes to them became clearer after same sex marriages had taken root [7]. Government consultations since the introduction of the MSSCA have failed to produce a consensus as to how, or if, the legal position relating to civil partnerships should change. The respondent concluded that it was proportionate to obtain more data in order to decide whether there was a need to preserve civil partnerships [9]. The court rejects the respondents argument that European Court of Human Rights (ECtHR) case law requires a wide margin of appreciation in relation to the timing of legislative change to recognise different forms of relationship, and that a significant measure of discretion should be accorded to Parliament in its decision as to when the timing of legislative change in the field of civil partnerships should occur. Although a measure of latitude should be permitted to Parliament, the concept of a margin of appreciation as applied by the ECtHR has no application in domestic law a national court must confront the interference with an ECHR right and decide whether it is justified [27 28]. In as much as there is a margin of discretion analogous to that applied by the ECtHR, in cases of unequal treatment on grounds of sexual orientation, the margin is narrow [32]. It is reasonable that the legislature should be allowed time to reflect on what should be done when dealing with an inequality that it has come to recognise due to evolving societal attitudes. By contrast, to create a situation of inequality and then ask for time in this case several years to determine how that inequality is to be cured is less obviously deserving of a margin of discretion. [36] There is a well established four stage test to determine whether interference with a qualified ECHR right can be justified: (a) is the legislative objective (legitimate aim) sufficiently important to justify limiting a fundamental right; (b) are the measures which have been designed to meet it rationally connected to it; (c) are they no more than are necessary to accomplish it; and (d) do they strike a fair balance between the rights of the individual and the interests of the community? [41]. To be legitimate, the aim must be intrinsically linked to the discriminatory treatment. In this case, it is not. Tolerance of discrimination while the respondent determines how best to remedy it cannot be characterised as a legitimate aim [42]. The government had to eliminate the inequality of treatment immediately when the MSSCA came into force. This could have been done either by abolishing civil partnerships or by instantaneously extending them to different sex couples. If the government had chosen one of these options, it might have been theoretically possible to then conduct research which could have influenced its longer term decision as to what to do with civil partnerships. Taking time to evaluate whether to abolish or extend could never, however, amount to a legitimate aim for the continuance of the discrimination as it is not connected to the justification for discrimination [50]. Even if the interference with the appellants rights in this case could be regarded as a legitimate aim, a fair balance between their rights and the interests of the community has not been struck. The interests of the community in denying civil partnerships to different sex couples who do not wish to marry are unspecified, whereas the consequences of this denial for such couples may be far reaching. A couple may, for example, suffer serious fiscal disadvantage if one of them dies before their relationship is formalised. There is no end point in sight for the present inequality of treatment [52]. The court has discretion as to whether to make a declaration of incompatibility and must decide whether it is appropriate to do so in a particular case. It should be noted that a declaration of incompatibility does not oblige the government or Parliament to do anything, and in this case, the court should not feel reticent about making such a declaration. The court therefore makes a declaration that sections 1 and 3 of the CPA, to the extent that they preclude a different sex couple from entering into a civil partnership, are incompatible with article 14 taken in conjunction with article 8 of the ECHR [54 62].
The appellant, Michael Mark Junior Darnley, who was then aged 26, was assaulted in the late afternoon of 17 May 2010 when he was struck on the head by an unknown assailant in south London. He later telephoned his friend Robert Tubman. The appellant told Mr Tubman about the assault and complained that he had a headache and that it was getting worse. Mr Tubman was sufficiently concerned that he drove the appellant to the Accident and Emergency Department (A & E department) at Mayday Hospital, Croydon which was managed by the respondent NHS Trust. It was noted in the clerking record that the appellant attended at 20:26 on 17 May 2010. Mr Tubman accompanied the appellant at the A & E department and was a witness to the conversation with the female A & E receptionist. The trial judge accepted Mr Tubmans account of the conversation which took place. The appellant provided his personal details. He informed the receptionist that he had been assaulted by being struck over the back of the head and he thought that he had a head injury, that he was feeling very unwell and that his head was hurting. The receptionist did not have a helpful attitude and was more concerned about how the injury occurred. She asked the appellant if the Police were involved. The appellant and Mr Tubman both told the receptionist that the appellant was really unwell and they were worried that he had a head injury and needed urgent attention. The receptionist told the appellant that he would have to go and sit down and that he would have to wait up to four to five hours before somebody looked at him. The appellant told the receptionist that he could not wait that long as he felt as if he was about to collapse. The receptionist replied that if the appellant did collapse he would be treated as an emergency. The identity of the A & E receptionist who spoke to the appellant and Mr Tubman is not known, save that it must have been one of the two receptionists on duty at that time, namely Valerie Ashley or Susan Reeves Bristow. Neither had any recollection of the conversation that took place and each was able to give evidence only of her usual practice. The appellant sat down with Mr Tubman in the waiting area of the A & E department. However, the appellant decided to leave because he felt too unwell to remain and he wanted to go home to take some paracetamol. The judge found that the appellant and Mr Tubman left after 19 minutes at 20:45. Neither informed the receptionist or told anyone else that they were leaving. However, Mrs Reeves Bristow and Mrs Ashley noticed that they had left and they told the receptionist taking over on the next shift to look out for the appellant because they were concerned that a patient with a reported head injury had left the A & E department. Mrs Ashley and Mrs Reeves Bristow gave evidence as to their usual practice when a person with a head injury asked about waiting times. Mrs Ashley said that she would tell them that they could expect to be seen by a triage nurse within 30 minutes of arrival and it would be quite incorrect to tell them that they would have to wait up to four to five hours before being seen. Mrs Reeves Bristow stated that she would tell them that the triage nurse would be informed and they would be seen as soon as possible. Mr Tubman drove the appellant to his mothers house, some 13 minutes drive away, arriving shortly after 21:10. The appellant went to bed. At about 21:30 that evening the appellant became distressed and attracted the attention of his sister by banging on the wall of his bedroom. An ambulance was called at 21:44. The ambulance was re routed and a second ambulance was called arriving at his mothers home at 22:05. The appellant was taken by ambulance back to the A & E department at Mayday Hospital. During the journey he became hypertensive, his GCS was recorded as 9/15 and he projectile vomited. He arrived at the Mayday Hospital A & E department at 22:38. A CT scan (reported at 00:15 on 18 May 2010) identified a large extra dural haematoma overlying the left temporal lobe and inferior parietal lobe with a marked midline shift. The appellant was intubated and ventilated and transferred from Mayday Hospital by ambulance into the care of neurosurgeons at St Georges Hospital, Tooting arriving at 00:55. He was transferred to the operating theatre at 01:00 and underwent an operation for the evacuation of the haematoma. Unfortunately, the appellant has suffered permanent brain damage in the form of a severe and very disabling left hemiplegia. The appellant brought proceedings against the respondent NHS Trust. His pleaded case included an allegation of breach of duty by the non clinical reception staff concerning the information he was given about the time he would have to wait before being seen by a clinician and also a failure to assess the appellant for priority triage. The trial took place on 25 27 April 2015 before HHJ Robinson, sitting as a judge of the High Court. He gave judgment on 31 July 2015: [2015] EWHC 2301 (QB). The judge made the following findings of fact and came to the following conclusions of law. (1) The appellant did not fall into the category of patients who should have been fast tracked under the priority triage system. His presentation was not such as to have alerted the reception staff to the presence of a condition so serious that it was immediately necessary to bring it to the attention of the nurse. (2) The fact that the appellant was not seen by a triage nurse during the 19 minutes he was present at the hospital did not amount to a breach of duty or cause any loss. (3) If the appellant had been told that he would be seen within 30 minutes he would have stayed and would have been seen before he left. He would have been admitted or told to wait. He would have waited and his later collapse would have occurred within a hospital setting. (4) The appellants decision to leave the A & E department was, in part at least, made on the basis of information provided by the receptionist which was inaccurate or incomplete. (5) It was reasonably foreseeable that some patients do leave A & E departments without being seen or treated and that, in such cases, harm may result. It is reasonably foreseeable that someone who believes it may be four or five hours before they will be seen by a doctor may decide to leave, in circumstances where they would have stayed if they believed they would be seen much sooner by a triage nurse. (6) Had the appellant suffered the collapse at around 21:30 whilst at the Mayday Hospital he would have been transferred to St Georges Hospital and would have undergone the surgery earlier. In those circumstances he would have made a very near full recovery. (7) Receptionists in A & E departments are not under a duty to guard patients against harm caused by failure to wait to be seen, even if such harm could, as a matter of fact in the individual case, be prevented by the provision of full and accurate information about waiting times. (8) The harm suffered in this case was outside the scope of any duty or obligation owed by the respondent by its reception staff. (9) It would not be fair, just and reasonable to impose liability upon the respondent for harm arising as a result of the failure by the receptionist staff to inform the appellant of the likely waiting time to be seen by a triage nurse. (10) The connection between the alleged inadequacies of the information provided and the harm suffered was broken because the decision to leave was one that was ultimately the decision of the appellant. Court of Appeal The appellant appealed to the Court of Appeal (Jackson, McCombe and Sales LJJ): [2018] QB 783. The appeal was dismissed by a majority (McCombe LJ dissenting) on the ground that neither the receptionist nor the health trust acting by the receptionist owed any duty to advise about waiting times, alternatively the damage was outside the scope of any duty owed, alternatively there was no causal link between any breach of duty and the injury. Jackson LJ considered that the giving of incorrect information by the receptionist was not an actionable mis statement. When she told the appellant that he would have to wait for up to four or five hours, she was not assuming responsibility to the appellant for the catastrophic consequences which he might suffer if he simply walked out of the hospital. Nor did he consider that it was fair, just and reasonable to impose upon the receptionist, or the trust acting by the receptionist, a duty not to provide inaccurate information about waiting times. To do so would add a new layer of responsibility to clerical staff and a new head of liability for NHS health trusts (at para 53). Moreover, even if the receptionist were in breach of duty by giving incorrect information to the appellant, the scope of that duty could not extend to liability for the consequences of a patient walking out without telling staff that he was about to leave (at paras 56 57). The appellant should accept responsibility for his own actions. In a concurring judgment, Sales LJ considered that, whether what had occurred was a failure to provide information or the provision of inaccurate information, no relevant duty of care would arise (at para 83). In his view, the fair, just and reasonable view was that information as to likely waiting times was provided as a matter of courtesy and out of a general spirit of trying to be helpful to the public (at para 88). Both judges in the majority pointed to undesirable social I consider that the approach of the majority in the Court of Appeal to the issue consequences which would follow if such a duty of care were imposed (at paras 55, 84, 87, 88). In his dissenting judgment, McCombe LJ considered that, on the particular facts found by the judge, the respondent was in breach of a duty of care owed to the appellant. The information provided could only have given the false impression that the appellant would not be seen or assessed by anyone sooner than the indicated period of up to four or five hours, short of something like a collapse (at para 68). Moreover, he rejected the suggestion that the functions of a hospital can be divided into those of receptionists and those of medical staff; it is the duty of the hospital not to provide misinformation to patients, whether it is provided by reception staff or medical staff (at para 71). Incomplete and inaccurate information had been provided negligently. The failure to impart the reality of the triage system to the appellant on his arrival was, on the facts of this case, a breach of duty by the hospital (at para 77). Furthermore, that breach of duty was causative of the appellants injury (at para 79). Duty of care of duty of care is flawed in a number of respects. First, we are not here concerned with the imposition of a duty of care in a novel situation. The common law in this jurisdiction has abandoned the search for a general principle capable of providing a practical test applicable in every situation in order to determine whether a duty of care is owed and, if so, what is its scope. (Caparo Industries plc v Dickman [1990] 2 AC 605 per Lord Bridge at p 617; Michael v Chief Constable of South Wales Police (Refuge intervening) [2015] AC 1732 per Lord Toulson at para 106; Robinson v Chief Constable of West Yorkshire Police [2018] 2 WLR 595 per Lord Reed at para 24). In the absence of such a universal touchstone, it has taken as a starting point established categories of specific situations where a duty of care is recognised and it has been willing to move beyond those situations on an incremental basis, accepting or rejecting a duty of care in novel situations by analogy with established categories (Caparo per Lord Bridge at p 618 citing Brennan J in the High Court of Australia in Sutherland Shire Council v Heyman (1985) 60 ALR 1, at pp 43 44). The familiar statement of principle by Lord Bridge in Caparo at pp 617 618 in which he refers to the ingredients of foreseeability of damage, proximity and fairness does not require a re evaluation of whether those criteria are satisfied on every occasion on which an established category of duty is applied. In particular, as Lord Reed demonstrated in his judgment in Robinson (at paras 26, 27), where the existence of a duty of care has previously been established, a consideration of justice and reasonableness has already been taken into account in arriving at the relevant principles and it is, normally, only in cases where the court is asked to go beyond the established categories of duty of care that it will be necessary to consider whether it would be fair, just and reasonable to impose such a duty. The recent decision of the Supreme Court in James Bowen v Comr of Police of the Metropolis [2018] 1 WLR 402 was such a case and it was necessary for the court on that occasion to consider whether extension by analogy of established categories of duty was justified and the policy implications of such an extension. By contrast, Robinson itself involved no more than the application of a well established category of duty of care and all that was required was the application to particular circumstances of established principles. In the present case Jackson LJ observed (at para 53) that to hold the respondent responsible would create a new head of liability for NHS health trusts. To my mind, however, the present case falls squarely within an established category of duty of care. It has long been established that such a duty is owed by those who provide and run a casualty department to persons presenting themselves complaining of illness or injury and before they are treated or received into care in the hospitals wards. The duty is one to take reasonable care not to cause physical injury to the patient (Barnett v Chelsea and Kensington Hospital Management Committee [1969] 1 QB 428, per Nield J at pp 435 436). In the present case, as soon as the appellant had attended at the respondents A & E department seeking medical attention for the injury he had sustained, had provided the information requested by the receptionist and had been booked in, he was accepted into the system and entered into a relationship with the respondent of patient and health care provider. The damage complained of is physical injury and not economic loss. This is a distinct and recognisable situation in which the law imposes a duty of care. Moreover, the scope of the duty to take reasonable care not to act in such a way as foreseeably to cause such a patient to sustain physical injury clearly extends to a duty to take reasonable care not to provide misleading information which may foreseeably cause physical injury. While it is correct that no authority has been cited in these proceedings which deals specifically with misleading information provided by a receptionist in an A & E department causing physical injury, it is not necessary to address, in every instance where the precise factual situation has not previously been the subject of a reported judicial decision, whether it would be fair, just and reasonable to impose a duty of care. It is sufficient that the case falls within an established category in which the law imposes a duty of care. Secondly, this duty of care is owed by the hospital trust and it is not appropriate to distinguish, in this regard, between medical and non medical staff. In the specific context of this case, where misleading information was provided as to the time within which medical attention might be available, it is not appropriate to distinguish between medically qualified professionals and administrative staff in determining whether there was a duty of care. That distinction may well be highly relevant in deciding whether there was a negligent breach of duty; there the degree of skill which can reasonably be expected of a person will be likely to depend on the responsibility with which he or she is charged. In the present circumstances, however, questions as to the existence and scope of a duty of care owed by the trust should not depend on whether the misleading information was provided by a person who was or was not medically qualified. The respondent had charged its non medically qualified staff with the role of being the first point of contact with persons seeking medical assistance and, as a result, with the responsibility for providing accurate information as to its availability. In Kent v Griffiths [2001] QB 36 the London Ambulance Service was held liable in negligence for its delay in responding to an emergency call as a result of which the claimant suffered brain damage. The Court of Appeal upheld the judges decision on the ground that the ambulance had not arrived in a reasonable time. However, it also founded liability on the alternative basis that the call handler had given misleading assurances that an ambulance would be arriving shortly. (See the reference to Kent v Griffiths by Lord Toulson in Michael v Chief Constable of South Wales Police at para 138.) In Kent v Griffiths Lord Woolf MR, with whom Aldous and Laws LJJ agreed, observed with regard to the existence of a duty of care (at para 45) that what was being provided was a health service and he asked rhetorically why the position of the ambulance staff should be different from that of doctors or nurses. More specifically, he stated (at para 49) that the acceptance of the emergency call established a duty of care and that, if wrong information had not been given about the arrival of the ambulance, other means of transport could have been used. On this point, therefore, I find myself in total agreement with the observations of McCombe LJ in his dissenting judgment. The duty of the respondent trust must be considered in the round. While it is not the function of reception staff to give wider advice or information in general to patients, it is the duty of the NHS Trust to take care not to provide misinformation to patients and that duty is not avoided by the misinformation having been provided by reception staff as opposed to medical staff. In this regard, it is simply not appropriate to distinguish between medical and non medical staff in the manner proposed by the respondent. It is convenient to observe at this point that Kent v Griffiths is also relevant in another sense. For the reasons explained earlier in this judgment, in deciding whether a duty of care is owed in the present circumstances it is not necessary to proceed incrementally by analogy with decided cases because no extension of an established category of duty is called for here. Nevertheless, I note the close analogy between the present case and the alternative basis of decision in Kent v Griffiths. In both cases, as a result of the provision of inaccurate information by non medically qualified staff, there was a delay in the provision of urgently required medical attention with the result that serious physical injury was suffered. Thirdly, I consider that the judgments of the majority in the Court of Appeal elide issues of the existence of a duty of care and negligent breach of duty. They place emphasis on what a reasonable person would have done and could reasonably be expected to have done in the context of a busy A & E department. Thus Jackson LJ draws attention to the difficult conditions in which staff at such departments often have to work, observing (at para 54) that A & E department waiting areas are not always havens of tranquillity. Similarly, Sales LJ considers (at paras 84 87) that if there is a duty to provide precise and accurate information about the length of time before a patient might be seen by a triage nurse, it is difficult to see why it does not extend to an obligation to correct such information as changing pressures on resources arise. He observes (at paras 85, 87) that it would not be fair, just or reasonable to impose a duty of fine grained perfection regarding the information provided and that it is not as a matter of legal duty incumbent on a receptionist and the employing NHS trust to provide minute perfect or hour perfect information about how long the wait might be. These observations seem to me to be directed at false targets; it is not suggested that receptionists in an A & E department should act in this way. The question under consideration is whether the respondent owes a duty to take reasonable care when providing, by its receptionists, information as to the period of time within which medical attention is likely to be available. More fundamentally, however, these observations are really concerned not with the existence of a duty of care but with the question whether there has been a negligent breach of duty as a result of a failure to meet the standard reasonably expected. For these reasons, I consider that the submissions of Mr Havers QC on behalf of the respondent and the observations by the majority in the Court of Appeal (at paras 55 and 88) on the social cost of imposing such a duty of care are misplaced. This is not a new head of liability for NHS health trusts. In any event, I consider that what are said to be the undesirable consequences of imposing the duty in question are considerably over stated. Jackson LJ considered (at para 55) that litigation about who said what to whom in the waiting rooms of A & E departments could become a fertile area for claimants and their representatives. Alternatively, in his view, health care providers could close down this area of risk altogether by instructing reception staff to say nothing to patients apart from asking for their details. In the same way, Sales LJ considered (at para 88) that the imposition of such a duty could lead to defensive practices on the part of NHS Trusts resulting in the withdrawal of information which is generally helpful to the public. There is no reason to suppose that the factual context of an A & E department is likely to give rise to any unusual evidential difficulties. The burden of proof of the provision of misleading information will be on the claimant. Hospital staff will be able to give evidence as to their usual practice. So far as substantive liability is concerned, the requirements of negligence and causation will remain effective control factors. It is undoubtedly the fact that Hospital A & E departments operate in very difficult circumstances and under colossal pressure. This is a consideration which may well prove highly influential in many cases when assessing whether there has been a negligent breach of duty. Finally in this regard, I should record that in considering the issue of duty of care I have been greatly assisted by a case note on the decision of the Court of Appeal in the present case by Professor James Goudkamp ([2017] CLJ 481). He considers that the parties were within an established duty category and that the only question, relevantly, was whether the defendant breached that duty. He observes that discussion as to what the reasonable person would have done in the circumstances in question indicates that the dispute is about the breach element, that being the only element of the cause of action in negligence that is concerned with the satisfactoriness of the defendants conduct. He concludes: Accordingly, on traditional principles, Darnley is not, in fact, a duty of care case at all. Rather, properly understood, the issue was whether the defendant had breached its duty in giving, by its receptionist, inaccurate information to the claimant. (at p 482) I agree with his analysis. It is to that question of negligent breach of duty that I now turn. Negligent breach of duty The reception desk at the A & E department was the first point of contact between the respondent trust and members of the public seeking medical assistance. It has not been suggested that the respondent was in any way at fault in allocating this responsibility to receptionists who were not medically qualified. Moreover, it has not been suggested that the receptionists should have provided accurate information to each patient on arrival as to precisely when he or she would be seen by a medically qualified member of staff. Anyone who has any experience of A & E departments will know that this would be impossible. The pressures on medical staff are enormous, the demand for attention is constantly fluctuating and priorities are likely to change. However, it is not unreasonable to require receptionists to take reasonable care not to provide misleading information as to the likely availability of medical assistance. The particular role performed by the individual concerned will be likely to have an important bearing on the question of breach of the duty of care. As Mustill LJ explained in Wilsher v Essex Area Health Authority [1987] QB 730, 750 751, the legitimate expectation of the patient is that he will receive from each person concerned with his care a degree of skill appropriate to the task which he or she undertakes. A receptionist in an A & E department cannot, of course, be expected to give medical advice or information but he or she can be expected to take reasonable care not to provide misleading advice as to the availability of medical assistance. The standard required is that of an averagely competent and well informed person performing the function of a receptionist at a department providing emergency medical care. Responding to requests for information as to the usual system of operation of the A & E department was well within the area of responsibility of the receptionists. The two receptionists on duty at the material time were both aware that the standard procedure was that anyone complaining of a head injury would be seen by a triage nurse and they accepted that the usual practice was that such a patient would be told that they would be seen by a triage nurse within 30 minutes of arrival (Mrs Ashley) or as soon as possible (Mrs Reeves Bristow). No reason has been suggested as to why the appellant was not told of the standard procedure. The hospital was operating within the acceptable range of triage timing agreed by the experts and the actual position was that the appellant, had he remained, would have been seen by a triage nurse within 30 minutes because he was complaining of a head injury. It is not unreasonable to require that patients in the position of the appellant should be provided on arrival, whether orally by a receptionist, by leaflet or prominent notice, with accurate information that they would normally be seen by a triage nurse within 30 minutes. However, instead the appellant was simply told that he would have to wait for up to four or five hours to see a doctor. That information was incomplete and misleading. The Chief Executive of the respondent described it in his letter to the appellant dated 23 March 2011 as completely incorrect. The appellant was misinformed as to the true position and, as a result, misled as to the availability of medical assistance. The trial judge made the critical finding that it was reasonably foreseeable that a person who believes that it may be four or five hours before he will be seen by a doctor may decide to leave. In the light of that finding I have no doubt that the provision of such misleading information by a receptionist as to the time within which medical assistance might be available was negligent. Causation The appellant remained in the waiting area of the A & E department for only 19 minutes before deciding to leave because he felt too unwell to remain. He failed to tell any member of staff of his departure. In the Court of Appeal Jackson LJ concluded, in the alternative, (at para 56) that if he was wrong in his view that the receptionist or the respondent acting by the receptionist was in breach of a duty of care owed to the appellant by giving incorrect information, the claim could still not succeed because the scope of that duty could not extend to liability for the consequences of a patient walking out without telling the staff that he was about to leave. In his view, echoing that of the trial judge, the appellant should accept responsibility for his own actions. Sales LJ agreed with this alternative reason for dismissing the appeal. This reasoning, however, fails to take account of the effect of the misleading information with which the appellant was provided and of three critical findings of fact made by the trial judge. First, the judge found that, if the appellant had been told that he would be seen within 30 minutes, he would have stayed in the waiting area and would have been seen before he left. He would then have been admitted or told to wait. He would have waited and his later collapse would have occurred within a hospital setting. Secondly, the judge found that the appellants decision to leave was made, in part at least, on the basis of information provided to him by the receptionist which was inaccurate or incomplete. Thirdly, the judge found that it was reasonably foreseeable that a person who believes that it may be four or five hours before he will be seen by a doctor may decide to leave, in circumstances where that person would have stayed if he believed he would be seen much sooner by a triage nurse. The conclusion of the majority of the Court of Appeal on this point seems to me to be inconsistent with these findings of fact. Far from constituting a break in the chain of causation, the appellants decision to leave was reasonably foreseeable and was made, at least in part, on the basis of the misleading information that he would have to wait for up to four or five hours before being seen by a doctor. In this regard it is also relevant that the appellant had just sustained what was later discovered to be a very grave head injury. Both the appellant and Mr Tubman had told the receptionist that the appellant was really unwell and needed urgent attention. The appellant told her that he felt as if he was about to collapse. He was in a particularly vulnerable condition and did, in fact, collapse as a result of his injury within an hour of leaving the hospital. In these circumstances, one can readily appreciate how the judge came to his conclusion that the appellants departure was reasonably foreseeable. The trial judge made a further finding of fact that had the appellant suffered the collapse at around 21:30 whilst at the Mayday Hospital, he would have been transferred to St Georges Hospital and would have undergone surgery earlier with the result that he would have made a very near full recovery. In these circumstances, the case that the appellants unannounced departure from the A & E department broke the chain of causation is simply not made out. Conclusion For these reasons I would allow the appeal and remit the case to the Queens Bench Division for the assessment of damages. Finally, the court would like to express its appreciation of the clarity and economy of the written and oral submissions of both parties in this case. They were a model of what can be achieved and without any loss of depth or substance.
UK-Abs
The appellant, Michael Mark Junior Darnley, was struck on the head on 17 May 2010. A friend, Robert Tubman, drove the appellant to the Accident and Emergency (A&E) Department at Mayday Hospital, Croydon which was managed by the respondent, NHS Trust. He attended at 20:26. The trial judge found that at the A&E reception, the appellant informed the receptionist that he thought he had a head injury and that he was feeling very unwell. The appellant and Mr Tubman both told the receptionist that the appellant was really unwell and needed urgent attention. The receptionist told the appellant that he would have to wait up to four to five hours before he could be seen by a clinician. The appellant told the receptionist he could not wait that long as he felt he was about to collapse. The receptionist replied that if he did collapse then he would be treated as an emergency. The identity of the A&E receptionist is unknown, save that it must have been one of the two receptionists on duty, neither of which had any recollection of the conversation. However, each described her usual practice when a person with a head injury asked about waiting times. One would say that they could expect to be seen by a triage nurse within 30 minutes of arrival. The other would say that the triage nurse would be informed and that they would be seen as soon as possible. The appellant left after 19 minutes because he felt too unwell to remain and went to his mothers home. The appellant became distressed at 21:30 and an ambulance was called. He was taken back to Mayday Hospital and a CT scan identified a large extradural haematoma with a marked midline shift. He was transferred to St Georges Hospital and underwent an operation at 01:00. Unfortunately, the appellant suffered permanent brain damage in the form of a severe and very disabling left hemiplegia. The appellant brought proceedings against the respondent alleging a breach of duty by the reception staff concerning the information he was given about the time he would have to wait and the failure to assess the appellant for priority triage. The High Court dismissed the claim. The appellant appealed to the Court of Appeal. The appeal was dismissed by a majority on the grounds that neither the receptionist nor the health trust acting by the receptionist owed any duty to advise about waiting times, the damage was outside the scope of any duty owed, and there was no causal link between any breach of duty and the injury. The appellant appealed to the Supreme Court. The Supreme Court unanimously allows the appeal and remits the case to the Queens Bench Division for assessment of damages. Lord Lloyd Jones gives the sole judgment with which the other Justices agree. Duty of care First, the present case falls squarely within an established category of duty of care: it has long been established that such a duty is owed by those who provide and run a casualty department to persons presenting themselves complaining of illness or injury and before they are treated or received into care in the hospitals wards. The duty is to take reasonable care not to cause physical injury to the patient. In the present case, as soon as the appellant was booked in at reception he entered into a relationship with the respondent of patient and health care provider. The scope of this duty of care extends to a duty to take reasonable care not to provide misleading information which may foreseeably cause physical injury [16]. Secondly, the duty of care is owed by the respondent and it is not appropriate to distinguish, in this regard, between medical and non medical staff. The respondent had charged its non medically qualified staff with the role of being the first point of contact for persons seeking medical assistance and, as a result, with the responsibility for providing accurate information as to its availability [17]. Thirdly, the judgments of the majority in the Court of Appeal elide issues of the existence of a duty of care and negligent breach of duty. [21] Fourthly, observations on the social cost of imposing such a duty of care are misplaced as this is not a new head of liability for NHS health trusts and, in any event, the undesirable consequences of imposing the duty in question were considerably overstated. The Court did, however, acknowledge that the very difficult circumstances under which A&E departments operate may well prove highly influential in many cases when assessing whether there has been a negligent breach of duty [22]. Negligent breach of duty A receptionist in an A&E department is expected to take reasonable care not to provide misleading advice as to the availability of medical assistance. The standard required is that of an averagely competent and well informed person performing the function of a receptionist at a department providing emergency medical care [25]. Moreover, responding to requests for information as to the usual system of operation of the A&E department is well within the area of responsibility of receptionists [26]. The two receptionists on duty were aware of the standard procedure, but the appellant was told to sit down to wait for up to four to five hours. That information was incomplete and misleading. The trial judge made the finding that it was reasonably foreseeable that a person who believes it may be four to five hours before he will be seen may decide to leave. In light of that finding, the provision of such misleading information by a receptionist as to the time within which medical assistance might be available was negligent [27]. Causation The appellants decision to leave was reasonably foreseeable and was made, at least in part, on the basis of the misleading information [29]. The trial judge made further findings of fact that, (1) had the appellant been told he would be seen within 30 minutes he would have waited, been seen by a doctor and admitted, and (2) had the appellant suffered the collapse at 21:30 whilst at the Mayday Hospital, he would have undergone surgery earlier and he would have made a nearly full recovery [30]. Thus, the appellants departure did not break the chain of causation.
Balber Kaur Takhar, the appellant, is the cousin of the third respondent, Parkash Kaur Krishan. For many years before 2004, they had not seen each other. In that year they became reacquainted. At the time, Mrs Takhar was suffering personal and financial problems. She had separated from her husband some five years previously. As part of the arrangements made between Mrs Takhar and her husband, she had acquired a number of properties in Coventry. When Mrs Takhar and Mrs Krishan met again, according to Mrs Takhar, she confided in her cousin and grew increasingly to depend upon her. Mrs Takhar claims that Mrs Krishan exerted considerable influence over her. The financial problems of Mrs Takhar arose mainly from the condition of the properties which she had acquired from her husband. Some were in a dilapidated condition. Payment for rates were in arrears. Bankruptcy for Mrs Takhar was in prospect. The Krishans provided financial help to Mrs Takhar. Dr Krishan, the second respondent and the third respondents husband, took on responsibility for negotiating with Coventry City Council over the rates arrears and the dilapidated state of some of the buildings. Then, in November 2005 it was agreed that the legal title to the properties would be transferred to Gracefield Developments Ltd, a newly formed company, of which Mrs Takhar and the Krishans were to be the shareholders and directors. Mrs Takhar claims that it had been agreed between her and the Krishans that the properties would be renovated and then let. The rent would be used to defray the cost of the renovation, which, in the short term, would be met by the Krishans. Mrs Takhar would remain the beneficial owner of the properties. The Krishans present a very different account. They claim that Gracefield was set up as a joint venture company. The properties were to be sold after they had been renovated. They were to be given an agreed value and this would be paid to Mrs Takhar after they had been sold. Any profit over would be divided equally between Mrs Takhar and the Krishans. They explain that Mrs Takhar agreed to these arrangements because planning permission for development had to be obtained in order to realise the value of the properties and this was an area in which Dr Krishan had experience, having already successfully developed his own medical centre. The proceedings On 24 October 2008, Mrs Takhar, issued proceedings in the Birmingham District Registry of the Chancery Division. She claimed that the properties had been transferred to Gracefield as a result of undue influence or other unconscionable conduct on the part of Dr and Mrs Krishan. In a judgment delivered on 28 July 2010 [2010] EWHC 2872 (Ch), His Honour Judge Purle QC rejected that claim. A significant item of evidence in the hearing before Judge Purle was a written profit share agreement dated 1 April 2006. It provided for an initial purchase price of 100,000 for the properties. This was to be placed on a loan account with Gracefield. Further sums totalling 200,000 as deferred consideration were also provided for. The total of 300,000 was to be paid to Mrs Takhar on completion of the sale of the properties. She was also to receive 50% of the profits on the sale of each property. The circumstances in which this written agreement was discovered and Mrs Takhars evidence about it were described by Judge Purle in paras 21 and 22 of his judgment: no case of forgery is advanced. Only the last page of the version of the agreement signed by Mrs Takhar appears to have survived and that is in the form of a scanned copy, which has emerged in the files of Sue Bowdlers firm [the Krishans solicitors]. It was misfiled, apparently. Sue Bowdler had not seen the copy with Mrs Takhars signature on it before until it was found, misfiled. However, there is no doubt that the agreement was prepared for signature. There is no doubt also that the agreement was prepared for signature in or around April 2006 and there is no doubt, in my mind, that it faithfully reflects the oral agreement that had been made. In the absence of Mrs Takhar giving a coherent 22. explanation as to how her signature came to be on the scanned copy, I conclude that the Krishans evidence, which I believe anyway, should be accepted and that Mrs Takhar took the copy of the agreement that she was to sign away, which was returned, probably by her in some way, duly executed to Sue Bowdlers firm, which then ended up misfiled. At all events, I am satisfied that that was the agreement that was made. The properties were transferred by Mrs Takhar in to Gracefields name before the written joint venture agreement was prepared, and the only credible explanation that I have heard is that they were so transferred on the terms subsequently set out in the joint venture agreement, which were previously agreed orally. This was, therefore, powerful evidence in support of the Krishans case. And it is unsurprising that it was heavily relied on by the judge. As the quoted passage shows, he found that the written agreement represented what had earlier been agreed orally between Mrs Takhar and the Krishans. The judge therefore held that Mrs Takhar had transferred the properties to Gracefield for the sum of 300,000 and that she was to receive 50% of the profits when the properties were sold. He dismissed Mrs Takhars claim based on undue influence or unconscionable bargain and held that the properties had been transferred to Gracefield both legally and beneficially. That transfer was, he held, subject to the terms of the oral agreement made between the parties, as reflected in the written profit share agreement. The original of the profit share agreement said to have been signed by Mrs Takhar has not been found. The Krishans claim that it was prepared by accountants at a time when Mrs Takhar was in India and then handed to her when she returned. She was asked to consider it and return it to the accountants. Mrs Takhars case is that she did not sign the document and had never seen it until the dispute arose. The authenticity of the document and whether it had been signed by Mrs Takhar are central issues in the dispute between the parties, therefore. In advance of the trial before Judge Purle, Mrs Takhar had sought permission to obtain evidence from a handwriting expert to examine the signature on the profit share agreement which had been attributed to her. That application was refused because it had not been made until the trial was imminent. On the trial, Mrs Takhar gave evidence that she could not say that the signature on the profit share agreement was not hers, but she was unable to explain how it had got there. After the trial Mrs Takhar instructed new solicitors and asked them to obtain a report from a handwriting expert. Robert Radley is such an expert and he was engaged to inspect and report on various documents. His subsequent report stated conclusively that the signature on the profit share agreement which purported to be that of Mrs Takhar had been transposed from a letter of 24 March 2006 which she had sent to the Krishans solicitors. He was also of the opinion that there was strong evidence that Mrs Takhar did not sign a 2006 bank inquiry form and that the signatures of both the Krishans and Mrs Takhar on later 2011 bank inquiry forms had also been transposed from previous forms. On foot of this report, Mrs Takhar claims that she can now advance a case of fraud against the Krishans. She also claims that she was not in a position to do so until she had received Mr Radleys report. The Krishans dispute both claims. After receiving Mr Radleys report, Mrs Takhar issued proceedings in which she sought to have Judge Purles judgment and order set aside. She claimed that she was entitled to this relief on the ground that it was obtained by fraud, the principal forgery relied upon being that of the copy of the profit share agreement. (Later Mrs Takhar applied for permission to amend her claim to allege an unlawful means conspiracy and deceit. That application was refused and no longer features in the appeal.) The respondents served defences in which they pleaded that Mrs Takhars claim is an abuse of process, inter alia because the documents on which Mr Radleys report was based were available to Mrs Takhar and her legal team since at least 12 July 2009 (approximately 12 months earlier than the trial before Judge Purle). It was ordered that the question whether Mrs Takhars claim amounted to an abuse of process be tried as a preliminary issue. That trial took place before Newey J in February 2015. In his judgment, ([2015] EWHC 1276 (Ch)), Newey J held that a party who seeks to set aside a judgment on the basis that it was obtained by fraud did not have to demonstrate that he could not have discovered the fraud by the exercise of reasonable diligence. The present claim was therefore not an abuse of process. The respondents appealed. The Court of Appeal (Patten, King and Simon LJJ) allowed the appeal in its judgment delivered on 21 March 2017 ([2018] Ch 1; [2017] 3 WLR 853; [2017] CP Rep 23). Patten LJ, delivering the leading judgment, said at para 30 that the appeal turned on whether Newey J was correct in holding that a due diligence condition did not need to be satisfied. Patten LJ began his examination of that issue by a reference to the judgment of Wigram V C in Henderson v Henderson (1843) 3 Hare 100. In that case the Vice Chancellor had said that where a matter had been the subject of litigation and adjudication by a court, it was required of the parties that they bring forward their whole case (at p 115). When litigation had taken place, it would only be in exceptional circumstances that parties could open the same subject of litigation in respect of matter[s] which might have been brought forward as part of the subject in contest, but which [had not been] brought forward because of negligence, inadvertence, or even accident. This applied to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. Henderson is certainly authority for the general principle that parties must normally advance the totality of their case on the first bout of litigation. It is not open to them, save in exceptional circumstances, to bring up a point which should have been raised in that litigation and which could, with reasonable diligence, have been discovered and canvassed on the first trial. Henderson does not speak, however, on two subjects which are critical in the present case. The first of these is whether the rule applies where the new point was not in issue between the parties on the first trial and where, if it had been and evidence on the point had been led, a different outcome might have ensued. The second subject concerns the question whether the rule in Henderson requires modification or disapplication where the new issue raises an allegation of fraud by which, it is claimed, the original judgment was obtained. The second case on this subject referred to by Patten LJ was Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd) [2014] AC 160. In his judgment in that case, Lord Sumption rejected the suggestion that the principle propounded in Henderson should be treated as applying only to the law governing abuse of process and not as an application of the doctrine of res judicata. At para 26, Lord Sumption had said that, [w]here the existence or non existence of a cause of action has been decided in earlier proceedings, to allow a direct challenge to the outcome, even in changed circumstances and with material not available before, offends the core policy against the re litigation of identical claims. I do not consider that Lord Sumptions statement in this passage has any bearing on the issues which arise on this appeal. The existence or non existence of fraud has not been decided in the proceedings before Judge Purle. It is a new issue. It does not involve the re litigation of an identical claim. In the Virgin Atlantic case, Lord Sumption had considered the House of Lords decision in Arnold v National Westminster Bank plc [1991] 2 AC 93. In that case, Lord Keith had drawn a distinction between cause of action estoppel and issue estoppel. At p 104, Lord Keith had described cause of action estoppel in this way: Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. He considered that a distinction between this and issue estoppel should be recognised and said, at p 109: In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. At para 35 of the judgment in the present appeal, Patten LJ said this about Lord Keiths speech in Arnold: These passages in Lord Keiths speech in Arnold were affirmed by the Supreme Court in Virgin Atlantic and have to be treated as settled law so far as this court is concerned. It is therefore clear that even in a case of issue estoppel the point cannot be re litigated unless the new material could not with due diligence have been produced at the earlier hearing: see Lord Sumption at para 22. It follows that Mrs Takhar would not be able to re litigate the issue of the terms of the November 2005 agreement unless she can rely on evidence that she could not with due diligence have produced at the trial. It is important to note that Lord Keith, in the first passage quoted, at para 22 above, (dealing with cause of action estoppel), does not suggest that there is a reasonable diligence requirement in cases of fraud or collusion. And in the second passage, at para 23 above, (which concerns issue estoppel) he does not mention fraud at all. In my opinion, it is not to be assumed that Lord Keith was suggesting that due diligence was a prerequisite in cases of fraud. Patten LJ had referred to Lord Sumptions judgment in Virgin Atlantic, para 22, as supporting the proposition that a fresh point could not be relitigated unless the new material could not with reasonable diligence have been produced at the earlier hearing. It is important to note exactly what Lord Sumption said at para 22 in Virgin Atlantic: Arnold v National Westminster Bank plc [1991] 2 AC 93 is accordingly authority for the following propositions. (1) Cause of action estoppel is absolute in relation to all points which had to be and were decided in order to establish the existence or non existence of a cause of action. (2) Cause of action estoppel also bars the raising in subsequent proceedings of points essential to the existence or non existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised. (3) Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised. The significance of this paragraph, so far as concerns the present case, lies in what it does not assert and the qualifications which it contains. It does not address the question of fraud at all. Moreover, the first proposition which Lord Sumption makes, that cause of action estoppel is an absolute bar in relation to such points as had to be and were decided in order to establish the existence or non existence of a cause of action, is of no relevance at all in the present appeal. The case before Judge Purle did not involve an allegation of fraud on the part of the Krishans. The points which had to be or were decided in Mrs Takhars case before Judge Purle were not concerned with possible fraud. The second proposition in Lord Sumptions para 22, that cause of action estoppel prohibits the raising of points in subsequent proceedings which had not been decided because they were not raised in the earlier proceedings, must be read in context. Again, the issue of fraud is not mentioned. And Lord Sumption has expressly espoused the reasoning of Lord Keith in Arnold where reasonable diligence is not said to be a requirement in cases of fraud or collusion. Given that, I do not consider that the second proposition in para 22 of Virgin Atlantic should be interpreted as covering cases of fraud. As to issue estoppel and the third proposition in para 22, it is clear that Lord Sumption did not prescribe a universally applicable rule. He was careful to qualify his statement (that issue estoppel bars the raising in subsequent proceedings of points which were not raised in the earlier proceedings or were raised but unsuccessfully), by saying that the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised. And, of course, there is again no mention of fraud in this context. I do not consider, therefore, that Virgin Atlantic is authority for the proposition expressed by Patten LJ. In any event, at para 37, Patten LJ accepted the submission of Mr Wardell QC (who appeared on behalf of Mrs Takhar before the Court of Appeal and this court) that the obstacle faced by Mrs Takhar was not one of issue estoppel. He also accepted that she was not challenging an earlier decision of the judge about the authenticity of the profit share agreement. As Patten LJ observed, [t]he allegation about her signature being forged was not raised or decided at the trial of the 2008 action. But the Court of Appeal considered that, although it was not concerned with a question of res judicata in the strict sense of issue or cause of action estoppel, it had to deal with what it described, at para 37, as the wider policy considerations embodied in the rule in Henderson v Henderson. Those policy considerations were engaged, Patten LJ said, whenever a litigant seeks to challenge an earlier decision of a competent court, whether directly or indirectly, by commencing new proceedings in which the same issues arise or seeks directly by way of appeal to challenge the judges decision on the basis of new evidence. On that account, Patten LJ concluded, If the challenge is by way of an action seeking to set the judges order aside on the ground that it was obtained by fraud the real question is whether this amounts to an abuse of process if the success of the action depends upon evidence which could with reasonable diligence have been produced at the earlier trial. I do not agree with this conclusion. In the first instance, this is not a case of commencing new proceedings where the same issues arise. As Patten LJ had earlier said, the question of Mrs Takhars signature having been forged had not been raised or decided in the trial before Judge Purle. The appellant does not seek to set aside Judge Purles decision on any of the issues decided by him. Secondly, for the reasons that I have given, I do not consider that in Arnold or Virgin Atlantic there has been an unequivocal judicial statement that seeking to set aside a judgment on the basis that it was obtained by fraud constitutes an abuse of process, if evidence of the fraud could, with reasonable diligence, have been obtained and produced at the earlier trial. I accept, however, that the question whether fraud should unravel all even where discovery of its existence was possible before the original trial does give rise to intensely relevant policy considerations. These are considered in the next section of this judgment. In para 38 Patten LJ referred to the case of Phosphate Sewage Co Ltd v Molleson (1879) 4 App Cas 801. It had been argued in that case that evidence of fraud other than that presented at the original trial should be allowed to enable a company to claim repayment of a sum which it had paid to a bankrupt. The company had subsequently obtained further evidence of the fraud. It sought to advance a new case founded on that evidence. The House of Lords held that the new allegations of fraud were based on facts within the companys knowledge at the time of the first trial. The plea of res judicata succeeded, therefore. Importantly, Earl Cairns LC said, at p 814, that it would be intolerable if a party who had been unsuccessful in litigation could re open it merely because, since the former litigation there is another fact going exactly in the same direction with the facts stated before, leading up to the same relief [as had been] asked for before, but it being in addition to the facts [in the previous litigation], it ought now to be allowed to be the foundation of a new litigation, and [he] should be allowed to commence a new litigation merely upon the allegation of this additional fact. The contrast with the present case is immediately obvious. This is not an instance of the appellant seeking to adduce evidence of facts going in the same direction as facts previously stated, because Mrs Takhar had not asserted that the Krishans had been guilty of fraud, merely that she had no recollection of having signed the profit share agreement. The relief that she seeks now is quite different from that which she had earlier claimed. Previously, she sought to avoid the effect of the agreement because of undue influence and unconscionability on the part of the Krishans. Now she claims that the agreement on which they rely was, in its written form, a forgery. Now, it is true that Earl Cairns had also said in the Phosphate Sewage case, at p 814, that the only way in which [new evidence] could possibly be admitted would be if the litigant were prepared to say, I will shew you that this is a fact which entirely changes the aspect of the case, and I will shew you further that it was not, and could not by reasonable diligence have been, ascertained by me before. But the essential context of this observation is set by the earlier passage quoted above. It is where precisely the same relief as had previously been claimed is sought again. In my view, it is not appropriate to lift the requirement of reasonable diligence out of the context in which it appears and to import it into a different scenario, namely, where a changed basis for success for the appellant is advanced. Patten LJ acknowledged that Earl Cairns statement of principle was expressed in relation to a plea of res judicata and that that was how it had been treated by Lord Keith in Arnold (para 39, per Patten LJ). But he suggested that the rule expressed by Earl Cairns was said by Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 to be relevant more generally as a statement of the conditions which must be satisfied to justify a departure from the policy of not permitting a party to challenge prior decisions by a court of competent jurisdiction in which case it is relevant to whether it would be an abuse of process to seek to set a judgment aside without satisfying the reasonable diligence condition. (Patten LJ, also at para 39.) Again, it is important to recognise the context in which Lord Diplock made his remarks about the application of the rule. Hunter was a case in which those who had been convicted of planting bombs in Birmingham sought to establish, by civil action, that they had been subjected to ill treatment before they confessed to involvement in the bombings. This was described as a collateral attack on the correctness of their convictions. At p 545 Lord Diplock said: There remains to be considered the circumstances in which the existence at the commencement of the civil action of fresh evidence obtained since the criminal trial and the probative weight of such evidence justify making an exception to the general rule of public policy that the use of civil actions to initiate collateral attacks on final decisions against the intending plaintiff by criminal courts of competent jurisdiction should be treated as an abuse of the process of the court. The context of the issue in Hunter is therefore firmly set. It is whether a challenge to the correctness of a criminal conviction amounts to an abuse of process. This is, self evidently, an entirely different situation from that which arises in the present case. And it immediately gives rise to concern about whether it is acceptable to apply a test fashioned for the circumstances of collateral challenge to a criminal conviction to the markedly dissimilar setting of seeking to set aside a civil judgment because it was obtained by a fraud which had not been alleged or adjudicated on at the original trial. Patten LJ referred to the decision of the Privy Council in Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44, (Etoile) where Lord Templeman had said: An English judgment is impeachable in an English court on the ground that the first judgment was obtained by fraud but only by the production and establishment of evidence newly discovered since the trial and not reasonably discoverable before the trial: see Boswell v Coaks (No 2) (1894) 86 LT 365n. As Newey J observed in his judgment in the present case, the reasonable diligence test is not to be found in Boswell v Coaks (which Lord Templeman had cited as authority that it was required). Moreover, the Etoile case involved a decision by the Court of Appeal of St Vincent and the Grenadines that an action claiming damages for fraud should be struck out as an abuse of process in circumstances where in earlier proceedings in France it had been alleged that the date on a critical document had been forged in effect, an allegation of fraud. That case had been rejected by the French court, so that the position in the Etoile case was that the bank sought to rely for a second time on fraud. This distinguishes it from the present appeal. In any event, the Board dismissed the appeal on the basis that it was for the St Vincent courts to control their own process and to decide whether the banks attempt to re open the issue of fraud was an abuse of it. Lord Templemans remarks were therefore obiter. Newey Js criticism of Lord Templemans statement of principle was rejected by Patten LJ. He suggested that this was consistent with the earlier decision of the House of Lords in Owens Bank Ltd v Bracco [1992] 2 AC 443 (Bracco). In that case Lord Bridge, at p 483, had articulated the common law rule in this area as being: that the unsuccessful party who has been sued to judgment is not permitted to challenge that judgment on the ground that it was obtained by fraud unless he is able to prove that fraud by fresh evidence which was not available to him and could not have been discovered with reasonable diligence before the judgment was delivered. It is important to be mindful of the rider which Lord Bridge added to this exposition, however. Later, in the same passage he said: The rule rests on the principle that there must be finality in litigation which would be defeated if it were open to the unsuccessful party in one action to bring a second action to relitigate the issue determined against him simply on the ground that the opposing party had obtained judgment in the first action by perjured evidence. (Emphasis added) The rule is therefore expressed to apply when there is a proposed re litigation of the issue of fraud which had been determined in the earlier litigation. That is not the position here. Mrs Takhar seeks to raise the fraud of the Krishans for the first time. It should be noted that Lord Bridge referred to re litigation of the issue which had been determined against the party seeking to reopen the case. The issue of the Krishans alleged fraud has not been determined. I do not consider, therefore, that Bracco forbids a challenge to a judgment which, it is claimed, was obtained by fraud, where that issue was not canvassed at the first trial. Likewise, it does not prohibit Mrs Takhar from pursuing her present action. Is fraud a thing apart; does it unravel all? 2 Lloyds Rep 61, para 15, Lord Bingham of Cornhill said that: In HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] fraud is a thing apart. This is not a mere slogan. It also reflects an old legal rule that fraud unravels all once fraud is proved, it vitiates judgments, contracts and all transactions whatsoever: Lazarus Estates Ltd v Beasley [1956] 1 All ER 341 at 345, [1956] 1 QB 702 at 712 per Denning LJ. Parties entering into a commercial contract will no doubt recognise and accept the risk of errors and omissions in the preceding negotiations, even negligent errors and omissions. But each party will assume the honesty and good faith of the other; absent such an assumption they would not deal. This reflects the basic principle that the law does not expect people to arrange their affairs on the basis that others may commit fraud. It also carries echoes of what Lord Wilberforce said in The Ampthill Peerage [1977] AC 547, 569: any determination of disputable fact may, the law recognises, be imperfect: the law aims at providing the best and safest solution . and having reached that solution it closes the book . in the interest of peace, certainty and security it prevents further inquiry . there are cases where the certainty of justice prevails over the possibility of truth . and these are cases where the law insists on finality. For a policy of closure to be compatible with justice, it must be attended with safeguards: so the law allows appeals: so the law, exceptionally, allows appeals out of time: so the law still more exceptionally allows judgments to be attacked on the ground of fraud. This passage from Lord Wilberforces speech resonates with earlier authority. In Hip Foong Hong v H Neotia & Co [1918] AC 888, 894, Lord Buckmaster said: In all applications for a new trial the fundamental ground must be that there has been a miscarriage of justice. If no charge of fraud or surprise is brought forward, it is not sufficient to show that there was further evidence that could have been adduced to support the claim of the losing parties; the applicant must go further and show that the evidence was of such a character that it would, so far as can be foreseen, have formed a determining factor in the result. Such considerations do not apply to questions of surprise, and still less to questions of fraud. A judgment that is tainted and affected by fraudulent conduct is tainted throughout, and the whole must fail The clear implication from this statement is that in cases of fraud, unlike other instances of claimed miscarriages of justice, it is not necessary to show that the further evidence would have been a determining factor in the result. And, if it was not necessary to show that, it could hardly be said that it would have to be shown that evidence of the fraud could not have been obtained before the first trial by the exercise of reasonable diligence (a more rigorous requirement, by any standard). A need to show reasonable diligence did not feature in Jonesco v Beard [1930] AC 298, where an application was made to set aside a judgment obtained by fraud. At p 300, Lord Buckmaster said the proper method of impeaching a completed judgment on the ground of fraud is by action in which, as in any other action based on fraud, the particulars of the fraud must be exactly given and the allegations established by the strict proof such a charge requires. No mention was made of a need to show that evidence of the fraud could not have been uncovered by reasonable diligence. If that was deemed to be a requirement, it would surely have been mentioned at this point. This is particularly so because affidavits relating to evidence other than fraud, which had not been produced at the trial, were said by Lord Buckmaster not to be capable of sustaining the case for setting aside the judgment because there was no sufficient explanation of why the evidence had not been made available at the trial (at p 300). The same stricture was not applied to the argument in relation to fraud. The special place occupied by fraud in the setting aside of judgments obtained by its use has been recognised in Australia and Canada. In McDonald v McDonald (1965) 113 CLR 529 the High Court of Australia applied Hip Foong Hong and Jonesco v Beard and rejected the notion that, to set aside a judgment obtained by fraud, it had to be shown that evidence of the fraud could not have been obtained by reasonable diligence before the trial which led to the judgment sought to be set aside. Barwick CJ contrasted the position where a verdict was impeached on the basis of fresh evidence with that where it was obtained by fraud. At p 533 he said: But if the fresh evidence does not satisfy all these requirements so that a new trial could not be ordered on the basis of the discovery of fresh evidence, but does tend to establish that the verdict was obtained by fraud . the court may grant a new trial . if the court . finds the fact of the fraud . to be proved At p 542, Menzies J discussed the grounds on which a new trial can be ordered on the basis of fresh evidence and then observed, [t]his leaves untouched the rule that, if by any means it be proved affirmatively that the earlier judgment was tainted by fraud, it will, without more, be set aside. (Emphasis added) This decision was followed in Toubia v Schwenke [2002] NSWCA 34; (2002) 54 NSWLR 46. As Newey J stated in para 33 of his judgment in this case, in Toubia Handley JA, with whom Heydon JA and Hodgson JA agreed, concluded (in para 41) that [i]n an action for fraud, a plaintiff must prove that he was deceived but need not prove that he was diligent. Handley JA continued: Where the action seeks the judicial rescission of a judgment, the plaintiff must prove that he and the court were deceived and he can only do this by showing that he has discovered the truth since the trial. Where this is done, and the fresh facts are material, fraud is established. Lord Buckmaster [in Hip Foong Hong v H Neotia and Co [1918] AC 888] said that if fraud was proved the judgment was vitiated, and he can only have meant that nothing else had to be proved apart from fraud. That means there is no need to prove due diligence as well. Handley JA, in an earlier passage of his judgment, gave a powerful defence of this principle. Referring to the argument that the dicta in Owens Bank Ltd v Bracco [1992] AC 443 were to the effect that, if fraud was alleged (even for the first time) in an application to set aside a judgment, it had to be shown that it could not have been discovered with reasonable diligence, at paras 37 and 38 he said: 37. I would not follow the dicta in Owens Bank Ltd v Bracco, Owens Bank Ltd v Etoile Commerciale SA, even if there was no High Court decision [in McDonald v McDonald] on the point because, with respect, the dicta are contrary to principle and earlier authority. The assumption is that the court and the losing party were successfully imposed on by the fraud of the successful party, but relief should nevertheless be denied and the judgment allowed to stand because the defrauded party was careless or lacked diligence in the preparation of his case. Contributory negligence is not a defence to an action for fraud whether the relief claimed is rescission or damages. As Brennan J said in Gould v Vaggelas (1985) 157 CLR 215, 252: A knave does not escape liability because he is dealing with a fool. 38. Means of knowledge of the falsity of the representation without actual knowledge is no defence and a representee has no duty to make inquiries to ascertain the truth. In Canada v Granitile Inc (2008) 302 DLR (4th) 40, the Ontario Superior Court of Justice reached the same conclusion. At para 299, Lederer J said: A failure to exercise due diligence, where fraud might otherwise have been discovered, is not enough to sustain a judgment which resulted from that fraud. He developed that theme at para 303 where he said: All of this is consistent with and in furtherance of the fundamental proposition that Fraud unravels everything . We are not required to be perpetually on guard so that we are looking to discover the fraud of another party . Where fraud is present, finality will give way to the responsibility of the court to protect its process so as to ensure that litigants do not profit from their improper conduct . Newey J found the reasoning in the Australian and Canadian cases compelling. I also. The idea that a fraudulent individual should profit from passivity or lack of reasonable diligence on the part of his or her opponent seems antithetical to any notion of justice. Quite apart from this, the defrauder, in obtaining a judgment, has perpetrated a deception not only on their opponent and the court but on the rule of law. Newey J put it well when he said, at para 37 of his judgment: Supposing that a party to a case in which judgment had been given against him could show that his opponent had obtained the judgment entirely on the strength of, say, concocted documentation and perjured evidence, it would strike me as wrong if he could not challenge the judgment even if the fraud could reasonably have been discovered. Were it impossible to impugn the judgment, the winner could presumably have been sent to prison for his fraudulent conduct and yet able to enforce the judgment he had procured by means of it: the judgment could still, in effect, be used to further the fraud. I agree with all of that. It appears to me that the policy arguments for permitting a litigant to apply to have judgment set aside where it can be shown that it has been obtained by fraud are overwhelming. Conclusion For the reasons that I have given, I do not consider that the Etoile and Bracco cases are authority for the proposition that, in cases where it is alleged that a judgment was obtained by fraud, it may only be set aside where the party who makes that application can demonstrate that the fraud could not have been uncovered with reasonable diligence in advance of the obtaining of the judgment. If, however, they have that effect, I consider that they should not be followed. In my view, it ought now to be recognised that where it can be shown that a judgment has been obtained by fraud, and where no allegation of fraud had been raised at the trial which led to that judgment, a requirement of reasonable diligence should not be imposed on the party seeking to set aside the judgment. Two qualifications to that general conclusion should be made. Where fraud has been raised at the original trial and new evidence as to the existence of the fraud is prayed in aid to advance a case for setting aside the judgment, it seems to me that it can be argued that the court having to deal with that application should have a discretion as to whether to entertain the application. Since that question does not arise in the present appeal, I do not express any final view on it. The second relates to the possibility that, in some circumstances, a deliberate decision may have been taken not to investigate the possibility of fraud in advance of the first trial, even if that had been suspected. If that could be established, again, I believe that a discretion whether to allow an application to set aside the judgment would be appropriate but, once more, I express no final view on the question. In Mrs Takhars case, she did suspect that there may have been fraud but it is clear that she did not make a conscious decision not to investigate it. To the contrary, she sought permission to engage an expert but, as already explained, this application was refused. At para 26 of his judgment, Newey J said that the principles which govern applications to set aside judgments for fraud had been summarised by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners lp [2013] 1 CLC 596, para 106. There, Aikens LJ said: The principles are, briefly: first, there has to be a conscious and deliberate dishonesty in relation to the relevant evidence given, or action taken, statement made or matter concealed, which is relevant to the judgment now sought to be impugned. Secondly, the relevant evidence, action, statement or concealment (performed with conscious and deliberate dishonesty) must be material. Material means that the fresh evidence that is adduced after the first judgment has been given is such that it demonstrates that the previous relevant evidence, action, statement or concealment was an operative cause of the courts decision to give judgment in the way it did. Put another way, it must be shown that the fresh evidence would have entirely changed the way in which the first court approached and came to its decision. Thus the relevant conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was. Thirdly, the question of materiality of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence. I agree that these are the relevant principles to be applied. I also agree with Newey Js view (expressed at para 47 of his judgment) that Mrs Takhars application to set aside the judgment of Judge Purle has the potential to meet the requirements which Aikens LJ outlined. She should not be fixed with a further obligation to show that the fraud which she now alleges could not have been discovered before the original trial by reasonable diligence on her part. Takhars case should be allowed to proceed to trial. I would therefore allow the appeal and restore the order of Newey J that Mrs LORD SUMPTION: (with whom Lord Hodge, Lord Lloyd Jones and Lord Kitchin agree) Subject to what follows, I agree with the judgment of Lord Kerr. I add some observations of my own only because the disorderly state of the authorities is apt to make the question before us appear more complicated than it really is. In my view, the basic principles on which this case falls to be decided are reasonably straightforward. An action to set aside an earlier judgment for fraud is not a procedural application but a cause of action. As applied to judgments obtained by fraud, the historical background was explained by Sir George Jessell MR in Flower v Lloyd (1877) 6 Ch D 297, 299 300. Equity has always exercised a special jurisdiction to reverse transactions procured by fraud. A party to earlier litigation was entitled to bring an original bill in equity to set aside the judgment given in that litigation on the ground that it was obtained by fraud. Such a bill could be brought without leave, because it was brought in support of a substantive right. If the fact and materiality of the fraud were established, the party bringing the bill was absolutely entitled to have the earlier judgment set aside. In this respect, an original bill differed from a bill of review on the basis of further evidence, which was essentially procedural and did require leave. After the fusion of law and equity in the 1870, the procedure by way of original bill was superseded by a procedure by action on the same juridical basis. The cause of action to set aside a judgment in earlier proceedings for fraud is independent of the cause of action asserted in the earlier proceedings. It relates to the conduct of the earlier proceedings, and not to the underlying dispute. There can therefore be no question of cause of action estoppel. Nor can there be any question of issue estoppel, because the basis of the action is that the decision of the issue in the earlier proceedings is vitiated by the fraud and cannot bind the parties: Director of Public Prosecutions v Humphrys [1977] AC 1, 21 (Viscount Dilhorne). If the claimant establishes his right to have the earlier judgment set aside, it will be of no further legal relevance qua judgment. It follows that res judicata cannot therefore arise in either of its classic forms. The rule, originally stated by Wigram V C in Henderson v Henderson (1843) 3 Hare 100, 115, that a party is precluded from raising in subsequent proceedings matters which were not, but could and should have been raised in the earlier ones, is commonly treated as a branch of the law of res judicata. It has the same policy objective and the same preclusive effect. But, it is better analysed as part of the juridically distinct but overlapping principle which empowers the court to restrain abuses of its process. The relationship between the two concepts was examined by this court in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160, paras 22 25. Whereas res judicata is a rule of substantive law, abuse of process is a concept which informs the exercise of the courts procedural powers. These are part of the wider jurisdiction of the court to protect its process from wasteful and potentially oppressive duplicative litigation even in cases where the relevant question was not raised or decided on the earlier occasion. Since the decisions of the House of Lords in Arnold v National Westminster Bank plc [1991] 2 AC 93 and Johnson v Gore Wood & Co [2002] 2 AC 1 it has been recognised that where a question was not raised or decided in the earlier proceedings but could have been, the jurisdiction to restrain abusive re litigation is subject to a degree of flexibility which reflects its procedural character. This allows the court to give effect to the wider interests of justice raised by the circumstances of each case. It is this flexibility which supplies the sole juridical basis on which the respondents can argue that the evidence of fraud must not only be new but such as could not with reasonable diligence have been deployed in the earlier proceedings. It is also the basis on which Lord Briggs, in his judgment on the present appeal, suggests a less absolute rule than that proposed by Lord Kerr. I cannot accept either the respondents argument, or Lord Briggs more moderate variant of it. The reason is that proceedings of this kind are abusive only where the point at issue and the evidence deployed in support of it not only could have been raised in the earlier proceedings but should have been: see Johnson v Gore Wood & Co, at p 31 (Lord Bingham of Cornhill) and Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd, para 22 (Lord Sumption). As Lord Bingham observed in the former case, it is wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. The should in this formulation refers to something which the law would expect a reasonable person to do in his own interest and in that of the efficient conduct of litigation. However, the basis on which the law unmakes transactions, including judgments, which have been procured by fraud is that a reasonable person is entitled to assume honesty in those with whom he deals. He is not expected to conduct himself or his affairs on the footing that other persons are dishonest unless he knows that they are. That is why it is not a defence to an action in deceit to say that the victim of the deceit was foolish or negligent to allow himself to be taken in: Central Railway Company of Venezuela v Kisch (1867) LR 2 HL 99, 120 (Lord Chelmsford); Redgrave v Hurd (1881) 20 Ch D 1, 13 17 (Jessell MR). It follows that unless on the earlier occasion the claimant deliberately decided not to investigate a suspected fraud or rely on a known one, it cannot be said that he should have raised it. Nor do I accept Lord Briggs view that a more flexible and fact sensitive approach may be required in order to distinguish between degrees of dishonesty. I think that this would introduce an unacceptable element of discretion into the enforcement of a substantive right. The standard of proof for fraud is high, and rightly so. But once it is satisfied, there are no degrees of fraud which can affect the right to have the judgment set aside. Dicta apart, the only direct authority for a requirement that the new evidence should be such as could not with reasonable diligence have been deployed in the earlier proceedings is McIlkenny v Chief Constable of the West Midlands [1980] 1 QB 283, affirmed sub nom. Hunter v Chief Constable of the West Midlands Police [1982] AC 529. This was an action for damages for assault committed in the course of a police investigation into the Birmingham bombing of November 1974, which had ultimately led to the plaintiffs prosecution and conviction for murder. The same allegation of assault had been made at the criminal trial as an objection to the admission of a confession. The trial judge had rejected it on a voir dire. The subsequent civil action was struck out as an abuse of process, because it was a collateral attack on the trial judges ruling on the admissibility of the confession and thus on the conviction. The actual decision is distinguishable on a number of counts. The earlier proceedings were criminal. Moreover, the result of the civil action, if it had succeeded, would have been to discredit a subsisting conviction without setting it aside. The reasoning, however, is not so readily distinguishable. In the Court of Appeal Goff LJ, at pp 333 335, relied on the authorities on setting aside civil judgments for fraud. These supported the proposition that decisive new evidence must be available in the later proceedings, but in summarising them Goff LJ added a requirement, which they did not support, that the evidence could not with reasonable diligence have been deployed in the earlier proceedings. The sole authority for that refinement was Goff LJ himself. His formulation of the test was endorsed by Lord Diplock, delivering the only reasoned speech in the House of Lords, [1982] AC 529, 545. There are dicta to the same effect in cases arising out of actions to set aside judgments in civil proceedings: see Lord Bridge in Owens Bank Ltd v Bracco [1992] 2 AC 443, 483 and Lord Templeman in Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44, 48. It may well be that policy considerations justify such a principle where a collateral attack is mounted on a criminal conviction following a trial in which the same issue was decided. There are other procedures for reopening unsafe criminal convictions in such cases. As is well known, these were ultimately invoked and resulted in the convictions of the plaintiffs and McIlkenny and Hunter being quashed. I would respectfully decline to treat the statements in those cases as applying to proceedings to set aside a civil judgment and would hold that the dicta in the two Owens Bank cases were mistaken. None of these judicial statements sufficiently distinguishes between (i) the proposition that an action to set aside a civil judgment must be based on new evidence not before the court in the earlier proceedings, and (ii) the proposition that that evidence must not have been obtainable by reasonable diligence for the earlier proceedings. The first proposition is well established. The second is not supported by any authority earlier than McIlkenny and appears to me to be an insufficient answer to an allegation that a civil judgment has been obtained against the claimant by the deliberate fraud of another party. This is the effect of the decision of the High Court of Australia in McDonald v McDonald (1965) 13 CLR 529, in which the two propositions were carefully and separately considered. It was also the reason why in Toubia v Schwenke (2002) NSWLR 46 the New South Wales Court of Appeal observed that even in the absence of binding Australian authority they would have regarded the dicta in the two Owens Bank cases as being contrary to principle and declined to follow them. In my opinion the Australian cases on this point are correct. I would leave open the question whether the position as I have summarised it is any different where the fraud was raised in the earlier proceedings but unsuccessfully. My provisional view is that the position is the same, for the same reasons. If decisive new evidence is deployed to establish the fraud, an action to set aside the judgment will lie irrespective of whether it could reasonably have been deployed on the earlier occasion unless a deliberate decision was then taken not to investigate or rely on the material. I recognise the risk of frivolous or extravagant litigation to set aside judgments on the ground of fraud, but like other members of the court, I think that the stringent conditions set out by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners lp [2013] 1 CLC 596, para 106, combined with the professional duties of counsel, are enough keep it within acceptable limits. I do not think that the imposition of further conditions would be consistent with the long standing policy of equity of reversing transactions procured by fraud. LORD BRIGGS: This appeal turns on the outcome of a bare knuckle fight between two important and long established principles of public policy. The first is that fraud unravels all. The second is that there must come an end to litigation. I will call them the fraud principle and the finality principle. On the facts of this case I agree with Lord Kerr that the fraud principle should prevail. As will appear I also agree with most of his reasoning. But I have been unable to follow him all the way down a path which seeks to erect a reliable bright line boundary between types of case where one principle or the other should clearly prevail. There will be too many cases where that supposed bright line is either invisible, or so technical that it fails to afford a basis for choosing between the two principles which accords with justice, common sense or the duty of the court to retain control over its own process, and thereby protect it from abuse. I would have preferred a more flexible basis upon which, recognising that many cases will straddle any bright line, the court can apply a fact intensive evaluative approach to the question whether lack of diligence in pursuing a case in fraud during the first proceedings ought to render a particular claim to set aside the judgment in those proceedings for fraud an abuse of process. This approach would in particular seek to weigh the gravity of the alleged fraud against the seriousness of the lack of due diligence, always mindful of the principle that victims of a fraud should not be deprived of a remedy merely because they are careless. The problems with a bright line rule Basing himself on that obvious principle of justice, Lord Kerr proposes a clear rule that a judgment may always be set aside for fraud without regard either to the gravity of the fraud or to any lack of reasonable diligence by the alleged victim, unless either (i) fraud was actually alleged in the earlier proceedings, or (ii) there was a deliberate decision not to investigate a suspected fraud. Only in those cases should the finality principle either prevail, or at least give rise to a judicial discretion to apply it. As will appear I agree that there should be such a power (although I doubt whether discretion is the right word) in those two types of case, but there will be numerous other types where the absence of any such power will in my view be an unacceptable fetter upon the courts duty to control its own process, and to protect itself and the parties from abuse. The problems arise mainly from the wide range in the gravity of the alleged frauds, the low threshold of the summary judgment test which the fraud allegation must pass to enable the allegation to be tried, and the almost infinite levels of seriousness of the shortfall in the victims application of reasonable diligence. It makes no sense to me either that a serious, pre meditated, skilfully executed and successful fraud should go without remedy merely because the victim fell short of reasonable diligence by a narrow margin (as the rule propounded by the Court of Appeal would ensure) or that something falling just on the wrong side of honesty should expose the successful litigant to the full rigour of a second trial, where the fraud allegation itself was only just arguable, and the alleged victim was guilty of the most basic failure to test the other partys case (as I fear that Lord Kerrs proposed rule would permit). The allegation of fraud in the present case is a telling example of a grave fraud, at the most serious end of the range. I emphasise that it is at this stage only an untested allegation. It is said that the Krishans planned and implemented a clever forgery of a document vital (if genuine) to their case, and that it was instrumental in their victory. By using a genuine signature of Mrs Takhar, superimposing it on the joint venture agreement, disposing of the original and using a copy to conceal the superimposition, they made it as hard as they possibly could to prevent Mrs Takhar from dealing with it. On looking at the copy document it appeared to her to be, and indeed it was, her signature. Furthermore the alleged forgery was designed from the outset to deceive not only Mrs Takhar but also the court, in litigation which must have been pending when the forgery was planned and committed. By contrast the failure in reasonable diligence may be said to have been at the less serious end of the range. Although the relevant facts have not yet been investigated, it appears likely that Mrs Takhar and her then legal team did take steps to investigate a forgery which they suspected, but they left it too late. A much more familiar example might go like this. Party A tells a spur of the moment deliberate half truth (ie a lie) about a fact in issue when cornered during cross examination at trial, and the advocate for party B fails to put it to A that the statement was a lie (ie dishonest) rather than merely a mistaken recollection, when there were disclosed documents which plainly justified putting it as a lie, absent from the trial bundle due to a serious failure in preparation for trial. Let it be supposed that the deliberate concealment of the whole truth was just on the wrong side of honesty. The trial judge gives credit to As evidence, in particular because the offending half truth was not challenged as a deliberate lie, and this materially contributed to As success. A new legal team then does the necessary work on the disclosed documents and B seeks to set aside the judgment for fraud. Neither of Lord Kerrs exceptions would apply. B would be able to seek a retrial of substantially the same case, if successful in getting the judgment set aside. The court would be powerless to stop the process as an abuse. Strictly B would be entitled to say that the judgment had been obtained by fraud, but a retrial in such circumstances would strike at the heart of the finality principle. On the other hand, if Bs advocate had just said thats a lie Mr A, the court would, on Lord Kerrs analysis, although not on Lord Sumptions, have the requisite discretion because fraud would have been put in issue at the trial. I would suggest that, standing back from the legal technicalities, the real reason why most reasonable observers would say that the application to set aside the judgment in the first example should not be stayed as an abuse, but that in the second example it should, is not because of the brief putting of fraud in issue (if it had been) in the second, but because of the obvious disparity between them, when weighing the gravity of the fraud against the extent of the failure in due diligence. Both examples plainly engage both the fraud and the finality principles. In both of them judgment is alleged to have been obtained by fraud but, equally, in both examples the applicant is seeking, as the overall objective, completely to re litigate the first case, albeit as the second stage in a two stage process. The low level of the summary judgment threshold contributes to the problem in this way. Applications to set aside a judgment for fraud present a potential double whammy to the finality principle. Subject of course to appeals, the first judgment should ordinarily be the end of the matter. But an application to set it aside for fraud will itself involve a trial which, because of the seriousness of the allegation, will be likely to be litigated with bell, book and candle, no stone being left unturned. If the application succeeds, there will then be a third trial, namely the re trial of the original claim. Of course the third trial will be avoided if the application to set aside fails on the merits, but the only protection against the multiple litigation constituted by the trial of the fraud allegation will be if it fails to raise a triable issue. Nor therefore is it appropriate to address the extent to which the fraud principle should prevail as against the finality principle on the basis that the fraud has actually occurred. In particular cases the fraud allegation may be a weak one, just passing the summary judgment test, whereas the invasion of the finality principle in such a case will not merely be a risk but an expensive and time consuming actuality. If these considerations can be weighed in an evaluative balance wherever the two principles are at loggerheads, well and good, but they would only feature in the regime proposed by Lord Kerr if one or the other of his two exceptions applied. I agree that the dicta of Aikens LJ in in Royal Bank of Scotland plc v Highland Financial Partners lp [2013] 1 CLC 596, para 106, cited by Lord Kerr, provide some protection against the abusive use of fraud allegations as a way of re opening decided cases. But they would be unlikely to prevent the AB example from withstanding an application for defendants summary judgment. A deliberate lie in the witness box is no less fraudulent because it is committed on the spur of the moment. If it contributed materially to the outcome, then the requirement for causation is likely to be satisfied, at least at the level necessary to give rise to a triable issue. But those dicta are concerned with delimiting the cause of action, not the varied circumstances in which its pursuit may amount to an abuse. I have already described by example the way in which there can be a wide range of seriousness in a failure to conduct litigation with reasonable diligence. An important part of the finality principle is that a party is expected to bring his whole case about the relevant dispute to bear when it is first litigated. That is the foundation of what used to be called the rule in Henderson v Henderson (1843) 3 Hare 100. If a matter relevant to a dispute could have been raised in the earlier case, then it should have been, and to litigate it even for the first time in a second case used automatically to be prohibited. But the rigour and inflexibility of the old rule has been completely transformed by its re evaluation in Johnson v Gore Wood & Co [2002] 2 AC 1. Now, even if the new matter could have been raised in the earlier proceedings, it no longer follows that it necessarily should have been. Rather, the court conducts an open ended fact intensive evaluation of the question whether to raise the new matter in a second claim is or is not an abuse. Lord Bingham said, at p 31: It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. As will appear, although neither of those cases was concerned with fraud, or with setting aside an earlier judgment, I consider that the sea change which was introduced by the House of Lords in Johnson v Gore Wood presents the correct way out of the problems thrown up by this appeal. The authorities Like Lord Kerr I do not consider that these problems are satisfactorily resolved by the existing authorities. My main reason is that the question whether the making of a particular type of application to a court does or does not involve an abuse of process is not one which is to be regarded as set in stone for all time, once resolved (if it has been) by the highest court. The abuse of process doctrine is one which both needs to be, and has conspicuously been, adaptive to changes in litigation culture over time, during which the pressures upon the courts and the readiness of the courts to conduct evaluative assessments in place of the mechanical application of bright line rules is constantly changing. Johnson v Gore Wood is a prime but not sole example of the courts capacity to adapt to changing circumstances, in an area which is at least in part concerned with procedure. In any event I agree with Lord Kerr, Lady Arden and Newey J that the existing authorities do not upon analysis provide a reliable guide, even though there are statements in some of them which, taken on their own, do appear to suggest that it is settled law that a lack of reasonable diligence will always be fatal to an application to set aside a judgment for fraud, as the Court of Appeal held. They do not, either because the foundations of earlier authority upon which they are expressed to be based prove upon minute analysis to be much less clear than the later dicta which rely upon them suggest, or because there are factors about the context in which the statements are made which are clearly distinguishable from the present context. Owens Bank v Etoile is an example of the first, while Hunter v Chief Constable is a clear example of the second. To the extent that the English authorities do appear at least superficially to espouse the rule that lack of reasonable diligence will always defeat an application to set aside a judgment for fraud, they simply fail to face up to the invasion thereby caused into the principle that a knave should not escape liability because he is dealing with a fool, as powerfully explained in the Australian and Canadian cases referred to by Lord Kerr. This is, therefore, an opportunity for this court to put upon a proper modern basis the principles which ought to regulate the courts power to give full effect to the right of victims of fraud to obtain relief while at the same time exercising an evaluative power to recognise the abuse of that right, and to deal with it where it occurs. This would have enabled the courts to maintain supervision of a type of claim which, if uncontrolled, could turn into a flood of attempts by dissatisfied court users aimed at re litigation of their disputes, based upon merely arguable assertions that they lost because an opposing party lied in the witness box, or even encouraged a witness to do so. The principles The starting point is clearly to recognise that the right to have a judgment set aside for fraud is a distinct cause of action recognised by the common law, like a right to set aside a contract obtained by fraud, which is not inherently conditional upon any requirement for the exercise of reasonable diligence in the proceedings leading to the impugned judgment or, for that matter, the making of the impugned contract. In short, the exercise of reasonable diligence is not in any way part of the cause of action. It is for example fully applicable to a case in which judgment followed upon a defendant simply letting the case go by default, if fraud was involved in the obtaining of the judgment. It is a claim for relief obtainable as of right (ex debito justitiae), rather than only by the invocation of a judicial discretion. Nor does the right depend upon the seriousness of the fraud. Two consequences flow from that starting point. The first is that, if no allegation of fraud was made in the proceedings leading to the impugned judgment, there is no question of cause of action or issue estoppel, for the reasons given by Lord Kerr and Lord Sumption. The second is that the absence of reasonable diligence is not of itself a reason for staying the claim to set aside the judgment. This would be to deny relief to foolish victims of a knave, merely because of their foolishness. The only reason to stay the application to set aside is if the lack of reasonable diligence is so serious, in the context of all other relevant factors, that the application can really be categorised as abusive. But by contrast with claims to set aside agreements for fraud, applications to set aside a judgment for fraud will usually engage the finality principle, because of the re litigation objective which normally lies at the heart of them. Leaving aside default judgments (where there has as yet been little real litigation), the objective of the applicant is not merely to have the impugned judgment set aside, but also to clear the way to have the original dispute relitigated. This may be thought to be obvious where the applicant is (like Mrs Takhar) the unsuccessful claimant in the earlier case, but it is in substance also true of a defendants application. Defendants will not of course wish thereby to bring the same claim again, but their objective is to keep the fraudulent claimant away from their door unless the claimant undertakes the burden of a completely new case, all the way to trial. It is in my view no answer to this analysis to say that the application to set aside a judgment for a fraud not previously alleged will not of itself re litigate anything, so that the finality principle is not thereby really engaged at all. The overall objective is re litigation. The forensic pursuit and defence of the fraud allegation may well travel over, or at least overlap with, ground trampled on in the original proceedings. The present case is an obvious example, since the question whether Mrs Takhar made the agreement in issue was central to the original trial, and would plainly be relevant to the issue whether the document apparently recording the agreement was a forgery. Even if it does not, the application will inevitably involve at least the risk of further expensive and time consuming proceedings about the entitlement of the opposing party to relief already obtained by a judgment which, subject to appeal, ought (in the public interest) to have put an end to the underlying dispute. To that extent I respectfully disagree with the thrust of this part of Lord Kerrs analysis about the separateness of the original proceedings and the application to set aside. In my view the contest between the fraud and finality principles is inherent in applications of this kind, rather than only in Lord Kerrs two exceptions, where fraud was either alleged, or suspected but deliberately not investigated, although it is of course present a fortiori in such cases. That being so, it is in my view wrong in principle to say that the generality of applications to set aside judgments for fraud are entirely unaffected by questions about lack of reasonable diligence (or other factors pointing towards abuse) subject only to the identification of specific exceptional types where a judicial discretion may be engaged. The true principle should be to recognise that such applications constitute the assertion of a legal right with which the court will only interfere if satisfied that the exercise of the right is abusive, but that all such applications by their nature give rise to a risk of abuse with which the court is duty bound to engage, because they undermine finality by their mere pursuit, regardless of outcome. Re litigation is always unfortunate, but it by no means follows that the reason for it is an abuse of process by the applicant. It may well be the respondent who is the real culprit. I would not describe the courts exercise of this duty to guard against abuse as a discretion. There should be no judicial interference with the exercise of the right to set aside a judgment for fraud unless the court is satisfied that it involves an abuse of process. If it does, then the proceedings should be stayed. That will not be discretionary, but it will involve the evaluation of a potentially wide range of factors. I have already mentioned the gravity of the fraud and the extent of the shortfall from the exercise of reasonable diligence. Those would almost always be relevant. But the categories of potentially relevant factors are in principle unlimited. They might include, in particular cases, the centrality (or otherwise) of the fraudulent conduct to the outcome of the case, the extent to which (as here) the alleged fraud was specifically aimed at taking advantage of a lack of care in the preparation of the case by the alleged victim, the resources of the alleged victim during the first proceedings, the amount of toil, treasure and court time which would be thrown away by the setting aside of the judgment, the amount of the same which would be likely to be consumed by the trial of the fraud allegation and, if successful, the re trial of the original claim, and even the apparent strength (or otherwise) of the allegation of fraud. But from start to finish, the question is whether the application really is an abuse of process. Nor would I expect this evaluative approach frequently to come down in favour of a stay. The principle that fraud unravels all is deeply rooted in the common law, and its continued application is an important contributor to honesty within society, to the rule of law and to the ability of the courts to adjudicate disputes justly. Fraud of this kind is all the more serious because it is aimed at deceiving the court itself. But the court must arm itself against always having to allow re litigation, and potentially two further trials between the same parties, wherever the unsuccessful party wants to allege, for the first time, that the case was lost because an opposing party was lying about, rather than just mis recalling, the facts in issue, and can demonstrate an arguable case that this is what happened at trial. Lord Sumption equates the setting aside a judgment for fraud with the setting aside of any transaction for fraud on the basis that a reasonable person is entitled to assume honesty in those with whom he deals, and is not expected to conduct himself or his affairs on the footing that other persons are dishonest unless he knows that they are. I fully agree with that approach to ordinary transactions out of court such as the making of a contract. But I cannot agree that it is reasonable for a litigant always to assume that an opponents case (and evidence in support of it) is honest, with a concomitant right to conduct litigation on that basis, and to re litigate the same dispute whenever he can show, after judgment, an arguable case that his assumption was wrong. Application of the principles to this case It will be apparent from the foregoing why I regard the present case as lying very clearly on the non abusive side of the line, without forming any view at all about whether the allegation of this fraud will in fact be proved. If proven it was a very serious, pre meditated, carefully planned and executed fraud which was instrumental in the defeat of Mrs Takhars claim, and plainly aimed from start to finish at deceiving the court about the central issue in the case. For the reasons given Mrs Takhars failure to use reasonable diligence was by no means at the more serious end of the scale. The expert evidence which she has now obtained, although thus far untested or opposed, plainly gives her a real (rather than merely arguable) prospect of success. Her application comes nowhere near being categorised as an abuse. I would therefore allow the appeal. LADY ARDEN: This appeal concerns Mrs Takhar, who has brought an action (a rescission action) to rescind a judgment against her and made available to the court fresh evidence which, if proved at the trial of the rescission action, will demonstrate that the winning party obtained judgment against her by fraud. Preventing a person from prosecuting a rescission action in these circumstances amounts to restricting her right to pursue her cause of action in fraud, and to have access to justice for that cause of action. Therefore, the law should only impose a restriction on such a claimant in a rescission action where there is justification for doing so. I agree with Lord Kerr that there is no authority which binds this court to hold that failure to act diligently in searching for this evidence before the original trial is, of itself, a bar. It is easy to see how it came to be thought that reasonable diligence in this regard had to be shown as in Boswell v Coaks (No 2) (1894) 86 LT 356n (using the fuller report in the footnotes to Birch v Birch (1902) 86 LT 364, which is also the report used by Lord Templeman in the passage cited by Lord Kerr at para 40 above), the Earl of Selborne, giving the judgment of the House of Lords, held obiter, having emphasised the importance of the finality of judgments, that the rules which applied to a bill of review before 1875 should continue to apply in their full force, and even with greater freedom than before. Those rules included a threshold condition in a rescission action that the fresh evidence could not possibly have been used when the decree was made (see Thomas v Rawlings (1865) 11 LT NS 721, 722, a decision of the Court of Appeal in Chancery). Moreover, the Court of Appeal in Birch v Birch appears obiter to have concluded that this earlier rule continued to apply (see (1902) 86 LT 367). This may have been the reason why Goff LJ held in McIlkenny v Chief Constable of the West Midlands [1980] QB 283, 335 that there was such a rule. In the House of Lords, in the same case but under the name of Hunter v Chief Constable of the West Midlands Police [1982] AC 529, Lord Diplock approved Goff LJs holding, but, as Lord Kerr has explained, in a different context. Furthermore, it may be, as the Federal Court of Australia suggested in Monroe Schneider Associates Inc v No 1 Raberem Pty Ltd (No 2) (1992) 37 FCR 234, 239, that prior to 1875 the Chancery Court had to be somewhat circumspect when asked to rescind a judgment given in a common law court: this might explain such threshold conditions. It is only right that in the generality of cases a judgment obtained by the fraud of the winning party should be rescinded because it is wrong in principle that a person who is proved to be a fraudster should obtain and retain the fruits of his fraud. Clearly, however, a restriction can be justified in some special situations. In other words, there are occasionally exceptions to the principle that fraud unravels all. There are cases where both parties have colluded to deceive the court in those cases it would be an abuse of process to ask the court later to rescind the judgment. As Lord Mansfield held in Montefiori v Montefiori (1762) 1 Black W 363, 96 ER 203 no man shall set up his own iniquity as a defence, any more than as a cause of action. There are other situations: for instance, where the fraud is not material to the outcome: see, for example, Boswell v Coaks. Likewise, a claim to set aside a decree absolute made on divorce, which is equivalent to an order in rem, was not set aside in Callaghan v Hanson Fox [1992] Fam 1 because the parties knew about the evidence and its significance. There must be actual fraud: constructive fraud is not enough. The fraud must be one for which the defendant is responsible. There may well be other situations which I have not mentioned. There may for instance (I express no view) be exceptions where the judgment in the original action was obtained by perjury during the trial or where the fraud was in fact pleaded in the first action. Greater difficulty lies in situations where at the time of the original action a party suspects a fraud but does not investigate it or decides not to investigate it. The justice in this situation may not be so easily answered by allowing an unfettered right to bring a rescission action. I would treat this as a case where the Ashingdane principles found in the jurisprudence of the European Court of Human Rights apply (see Ashingdane v United Kingdom (1985) 7 EHRR 528). Any restriction would have to be derived from a rule which serves the legitimate aim of proving a just solution, thus striking a fair balance between the relevant considerations and going no further than necessary, and which does not defeat the core right of access to court. There are factors which favour some restriction on the victims right in this situation. The judgment in the original action will be final and conclusive (subject to any appeal, and it is to be noted that on any appeal lack of reasonable diligence in obtaining the new evidence for the trial would be relevant). Finality in judgments leads to certainty, and hopefully to the social benefits of dispute resolution. Where property is in issue (eg the ownership of a business), the owner following a final judgment can develop it, invest in it and use it as security to raise money to develop other businesses free from the risk that it might be claimed by someone else. That also is for the economic and social benefit of the community, and there is a social and economic cost if that process is delayed. Furthermore, a litigant has plenty of opportunities to challenge the other partys case under the Civil Procedure Rules (CPR). Mrs Takhar could have served notice on the respondents to prove the disputed agreement, sought further information about it from the respondents and appealed from the denial of permission to adduce expert handwriting evidence. A party is expected to co operate with the court and the other parties in ensuring that so far as possible all issues are dealt with efficiently at a single trial. Under the overriding objective in CPR rule 1.1(1), the court must deal with cases just and proportionately and this includes allotting to each case an appropriate share of the courts resources, while taking into account the need to allot resources to other cases. Litigation resulting in rescission actions may involve not just one but three actions in all. There is also always the risk that the defendant if successful will incur costs which he cannot recover. In assessing reasonable diligence, however, it must be recalled that some litigants do not have legal representation and also that a party is entitled to conduct herself on the basis that the other side is not fraudulent, and that no investigations are needed, until she has real grounds for suspecting fraud. It is of course important for the efficient despatch of litigation that a court insists on compliance with its procedural rules: failure to do so in appropriate cases would provide an incentive to non compliance. The rule in contention on this appeal, however, held by the Court of Appeal to be derived from case law, selects just one consideration and one based on the victims conduct. It is illogical to the extent that it automatically imposes a sanction (a ban on bringing the second action) that may be wholly disproportionate to the lack of diligence. Moreover, it would leave all other factors out of account, including the defendants allegedly fraudulent conduct. In any event, a restriction on a person pursuing a cause of action should in principle only be imposed where it is necessary to do so to protect the rights and freedoms of others. In addition, such a rule would take no account of the protections that can be provided to the defendant in appropriate cases by the exercise of other procedural powers, such as the power to strike out actions which had no real prospect of success. Where the defendant to the rescission action considers that it is clearly not well founded, he can apply to strike out the action on the grounds of abuse of process or obtain summary judgment in his favour. He can be protected in costs and also by the strict rule of procedure that a fraud must be particularised with exactitude: see Jonesco v Beard [1930] AC 298. Where the defendant is prejudiced, and his position cannot for some reason be safeguarded, or the rights of innocent third parties have intervened, it may be relevant to take into account any remedies that the victim may have against her professional advisers in the original action. Where innocent third parties have obtained rights, there may indeed be no point in rescission of the original judgment and the victim may have to resort to other remedies. Too robust a rule favouring finality might encourage litigants to attempt to deceive the other parties or the court. Where deceit is practised on the court, the integrity of the legal system is put at risk and that is an important consideration against the rule contended for. But the short point is that there is as of now at least no procedural rule about any restriction on a person bringing a rescission action in the CPR. The drafters of those rules may wish to consider whether the position should be changed following these judgments. The jurisprudence of the courts of Australia and Canada cited by Lord Kerr is instructive. It is worth noting that in Clone Pty Ltd v Players Pty Ltd (in liquidation) (Receivers & Managers Appointed) [2018] HCA 12 the High Court of Australia was only dealing with lack of reasonable diligence before the fraud was discovered, but the position reached in these cases is not universal in common law jurisdictions. For instance, a rule requiring the claimant in the rescission action to show that he made a reasonable effort in the original trial to ascertain the truth of the matter can be found in the Restatement of Judgments (Second) (1982), para 70 (American Law Institute). There is also legislative precedent for the loss of a right of action as a result of a failure to exercise reasonable diligence in discovering fraud in Limitation Act 1980, section 32. It might be salutary if the CPR were to require a party bringing a rescission action to provide an explanation as to his state of knowledge at the time of the first action in his pleading in the second action, or if they enabled the court to award some security for costs or impose other conditions if reasonable diligence was not taken in the first action. I agree with much that Lord Sumption has said in his judgment, but the question whether conditions should be imposed in this context may involve considerations apart from the imperative of reopening judgments procured by fraud and fall well short of preventing actions for that purpose being brought. The Civil Procedure Rule Committee is empowered to introduce changes to the CPR, and importantly the process involves consultation. The statement of principles set out by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners lp [2013] 1 CLC 596 at para 106 approved by Lord Kerr deals with the position at the trial of a rescission action, not with threshold conditions on bringing such an action. In the absence of any special provision in the CPR, and assuming the claim is properly pleaded, the only remedy available to the defendant in a rescission action is to apply to the court for an order barring the claim as an abuse of process. It must be a matter for the respondents in this case whether to pursue that course. They may wish to bring an application or even to contend that some exception to the general rule which this court has found applies. There are matters which cause me some concern on the limited evidence before this court: the fact that Mrs Takhar had concerns about the authenticity of her signature on the agreement from 2008 (two years before the trial), the fact that she had no other explanation in the original trial for the fact that the agreement appeared to bear her signature, her failure to challenge the authenticity of the agreement or to appeal the judges order denying permission to adduce handwriting evidence, the fact that she has received a settlement already from her solicitors suggesting that there was a lack of reasonable diligence (and clearly it cannot matter that it was the solicitors and not the client who showed lack of diligence), and the fact that two years passed between obtaining the report of the handwriting expert and bringing these proceedings. I do not consider that it is for this court to determine the precise state of knowledge at any time of Mrs Takhar or those representing her. It is enough to say that in my judgment, there is not, and should not be, a rule that want of reasonable diligence in the first action of itself leads to a blanket ban on bringing an action to rescind a judgment which the claimant can properly allege the respondents obtained by fraud. This appeal should be allowed and the order of Newey J restored.
UK-Abs
The appellant (Mrs Takhar) and the third respondent (Mrs Krishan) are cousins. The second respondent (Dr Krishan) is Mrs Krishans husband. Mrs Takhar and Mrs Krishan became reacquainted in 2004. At this time, Mrs Takhar was suffering from some personal and financial problems, arising mainly from the condition of a number of properties which she owned. In November 2005, it was agreed that the legal title to the properties would be transferred to Gracefield Developments Limited (Gracefield). This was a newly formed company, of which Mrs Takhar and the Krishans were to be the shareholders and directors. Mrs Takhar claims that it was agreed that the properties would be renovated, initially at the cost of the Krishans, and then let. She says that the rent would be used to meet the costs of the renovations but that she was to remain the beneficial owner of the properties. The Krishans case is that Gracefield was set up as a joint venture company and the properties were to be sold after they had been renovated. They say Mrs Takhar was to receive an agreed value for the properties and that any additional profit would be divided equally between Mrs Takhar and the Krishans. On 24 October 2008, Mrs Takhar issued proceedings claiming that the properties had been transferred as a result of undue influence or other unconscionable conduct on the part of the Krishans. At a trial before His Honour Judge Purle QC (HHJ Purle), a significant item of evidence was a scanned copy of a written profit share agreement, apparently signed by Mrs Takhar, which supported the Krishans case. In advance of the trial, Mrs Takhar applied for leave to obtain evidence from a handwriting expert. That application was refused. At the trial, she said that she was unable to assert that the signature was not hers but that she was unable to say how it had come to appear on the document. In the absence of an explanation from Mrs Takhar, HHJ Purle accepted the Krishans evidence and rejected Mrs Takhars claim. Following the trial, Mrs Takhar engaged a handwriting expert, who stated conclusively that the signature on the agreement had been transposed from an earlier document. On receipt of this report, Mrs Takhar sought to have HHJ Purles judgment and order set aside on the ground that it had been obtained by fraud. The respondents claimed that this application was an abuse of process because the documents on which the expert report was based were available to Mrs Takhar before the trial before HHJ Purle. This matter was tried as a preliminary issue. Mr Justice Newey did not agree that the claim was an abuse of process. The Court of Appeal allowed the respondents appeal, holding that a person who seeks to have a judgment set aside on account of fraud had to show that the fraud could not have been discovered by reasonable diligence. Mrs Takhar now appeals to the Supreme Court. The Supreme Court unanimously allows the appeal. It decides that a person who applies to set aside an earlier judgment on the basis of fraud does not have to demonstrate that the evidence of this fraud could not have been obtained with reasonable diligence in advance of the earlier trial. Lord Kerr, Lord Sumption, Lord Briggs and Lady Arden all write judgments. Lord Kerr (with whom Lord Hodge, Lord Lloyd Jones and Lord Kitchin agree): The existence or non existence of fraud had not been decided by HHJ Purle. It is therefore a new issue which does not involve the re litigation of an identical claim [21]. The former House of Lords and Privy Council authorities on which the respondent relied are not authority for the proposition that, in cases where it is alleged that a judgment was obtained by fraud, it may only be set aside where the party who makes that application can demonstrate that the fraud could not have been uncovered with reasonable diligence in advance of the judgment [54]. It is a basic principle that the law does not expect people to arrange their affairs on the basis that others may commit fraud [44]. Australian and Canadian courts have both recognised a special place occupied by fraud in the setting aside of judgments and the reasoning in these cases is compelling [48 52]. It is contrary to justice that a fraudulent individual should profit because their opponent fails to act with reasonable diligence. A person who obtains a judgment through fraud deceives not only their opponent but also the court and the rule of law. It would also seem wrong if a person could be sent to prison for fraudulent conduct and yet remain able to enforce a judgment they obtained because of that fraud [52]. Lord Sumption (with whom Lord Hodge, Lord Lloyd Jones and Lord Kitchin agree): An action to set aside an earlier judgment for fraud is not a procedural application but a cause of action [60]. This cause of action is independent of the cause of action asserted in the earlier proceedings and there can therefore be no question of cause of action estoppel. There is also no question of issue estoppel, because the basis of the action is that the earlier decision is vitiated by fraud and cannot bind the parties [61]. Abuse of process is a concept relating to the courts procedural powers. Previous House of Lords cases have established that where a question could have been but was not raised in earlier proceedings, the courts power to restrain abusive re litigation is subject to a degree of flexibility [62]. Re litigation is abusive not only where the point could have been argued previously but where it should have been. A person is entitled to assume honesty on the part of others, so an application would only be abusive if a claimant deliberately decided not to investigate a suspected fraud or rely on a known one [63]. A more flexible and fact sensitive approach to these cases would introduce an unacceptable element of discretion into the enforcement of a substantive right. The standard of proof for fraud is high but, once it is satisfied, there are no degrees of fraud which can affect the right to have a judgment set aside [64]. Lord Briggs: This case involves a conflict between two important and long established principles of public policy. Firstly, the principle that fraud unravels all and, secondly, the principle that there must come an end to litigation. In this case, the fraud principle should prevail. However, instead of a bright line rule, the court should apply a fact intensive approach to the question of whether a lack of diligence in earlier proceedings really does render a future claim to set aside a judgment on the basis of fraud an abuse of process. This should start from the position that a litigant has a legal right to have set aside a judgment obtained by fraud which is not dependant upon having exercised reasonable diligence in the earlier proceedings. [68]. Lady Arden: There is no reasonable diligence rule barring fresh actions based on fraud [91]. Usually, a judgment obtained by fraud should be set aside. It is wrong in principle that a fraudster should retain the fruits of his fraud but there are some exceptions to this rule [92 93]. If a party suspected a fraud and did not investigate it, any restriction on access to court would have to be compliant with the European Convention on Human Rights, so any restriction on the claimants rights could go no further than necessary [94]. There are factors on both sides. However, the reasonable diligence rule is illogical as it automatically imposes a sanction which could be wholly disproportionate to the lack of diligence [98]. There are already safeguards for the defendant and the Civil Procedure Rules Committee could consider whether further safeguards are needed [99 103].
If an employee is dismissed on written notice posted to his home address, when does the notice period begin to run? Is it when the letter would have been delivered in the ordinary course of post? Or when it was in fact delivered to that address? Or when the letter comes to the attention of the employee and he has either read it or had a reasonable opportunity of doing so? Given the vast numbers of working people who might be affected by this issue, it is perhaps surprising that it has not previously come before the higher courts. This Court, in Gisda Cyf v Barratt [2010] UKSC 41; [2010] ICR 1475, held that the effective date of termination for the purpose of unfair dismissal claims under the Employment Rights Act 1996 was the date on which the employee opened and read the letter summarily dismissing her or had a reasonable opportunity of doing so. But the Court was careful to limit that decision to the interpretation of the statutory provisions in question. The common law contractual position might be quite different, as indeed the Court of Appeal had said that it was: [2009] EWCA Civ 648; [2009] ICR 1408. There is nothing to prevent the parties to a contract of employment from making express provision, both as to how notice may or must be given and for when it takes effect, as happened in Geys v Socit Gnrale, London Branch [2012] UKSC 63; [2013] 1 AC 523, but that was not done in this case. We are considering, therefore, the content of a term which must be implied into the contract of employment. The employer contends that notice is given when the dismissal letter is delivered to the employees address (which by statute is deemed to be when the letter would be delivered in the ordinary course of post unless the contrary is shown). The employee contends that notice is not given until the letter comes to the attention of the employee and she has had a reasonable opportunity of reading it. The facts The essential facts are very simple. Mrs Haywood was continuously employed by various bodies in the NHS for many years. On 1 November 2008, she began employment with the Newcastle and North Tyneside Community Health PCT. On 1 April 2011, her employment transferred to the Newcastle upon Tyne NHS Foundation Trust (the Trust) on the same terms and conditions as before. Section 19 of her contract of employment with the PCT provided that Unless there is mutual agreement that a different period should apply, this employment may be terminated by you or NPCT by the notice period as set out in section 1 . Section 1 gave the Minimum notice period from you or NPCT as 12 weeks. Very shortly after the transfer, the Trust identified Mrs Haywoods post as redundant. As both parties knew, if her employment terminated by reason of redundancy on or after her 50th birthday on 20 July 2011, she would be entitled to claim a non actuarially reduced early retirement pension. If it terminated before that date, she would not. At a meeting to discuss her possible redundancy on 13 April 2011, Mrs Haywood informed the Trust that she had booked two weeks annual leave from Monday 18 April, was going to Egypt, and would be due back at work after the extended bank holiday weekend on 3 May 2011. The period of leave had been recorded on the Trusts records. Mrs Haywood asked that no decision be taken while she was away, but the Trust did not agree to that. On 20 April 2011, it issued written notice (in fact dated 21 April) of termination of her employment on the ground of redundancy. The Trust maintained that the letter was sent by three methods: by email to her husbands email address; by recorded delivery; and by ordinary first class post. However, the Trust sought (unsuccessfully) to recall the notice sent by email that same day. The trial judge was satisfied that only two notices had been sent by email and by recorded delivery (para 37(xii)). The email is not relied on by the Trust. Hence the letter which is relevant in this appeal is the one sent by recorded delivery. The crucial date was 27 April. Notice given on or after that date would expire on or after Mrs Haywoods 50th birthday. Notice given before that date would expire earlier. Mrs Haywood and her husband were away on holiday in Egypt from 19 to 27 April. They asked Mr Haywoods father, Mr Crabtree, to look after the house while they were away. He went daily to check that it was secure, remove mail from the doormat to the hall table and water the plants. A recorded delivery slip was left at their home on 21 April. On 26 April, Mr Crabtree found the recorded delivery slip, collected the letter from the local sorting office and left it at their home. Mr and Mrs Haywood arrived back there in the early hours of 27 April. Mrs Haywood opened and read the letter later that morning. Mrs Haywood made various Employment Tribunal claims in respect of her dismissal, which were not pursued. In these High Court proceedings, she claims that her 12 weeks notice did not begin until 27 April, when she received and read the letter, and therefore expired on 20 July, her 50th birthday, and accordingly that she is entitled to the early retirement pension. The claim was tried by His Honour Judge Raeside QC, sitting as a High Court Judge, in January 2014. He handed down a partial judgment on 27 May 2015: Case No 3BM30070. He held that it was necessary to imply a term that Mrs Haywood had a right actually to be informed, either orally or in writing, of her dismissal; she had to have a reasonable opportunity actually to look at the letter (paras 70, 71). He declared that Mrs Haywood was still employed by the Trust on 20 July 2011 and made various orders relating to the payment of her pension, both in the future and in arrears. But he granted a stay of those provisions pending a possible appeal and they have remained stayed ever since. The Trusts appeal to the Court of Appeal was dismissed by a majority: [2017] EWCA Civ 153. Proudman J held that the contents of the letter had to be communicated to the employee (para 57). Arden LJ held that the letter had to be received (para 130(2)); where it has been delivered to the partys address, there is a rebuttable presumption that it has been received (para 136); but that presumption had been rebutted by the judges finding that Mrs Haywood did not receive the letter until 27 April there was no need for her to have read the letter but she had to have received it (para 149). Lewison LJ dissented: notice is validly given under the contract when a letter containing the notice actually arrives at the correct destination, whether the recipient is there to open it or not (para 124). The agency point Before turning to the major issue of principle, which divided the Court of Appeal and also divides this Court, it is convenient to mention a point which was raised for the first time in the Court of Appeal by Lewison LJ. This is that Mr Crabtree, By taking it upon himself to collect and sign for the letter, must, in my judgment, be taken to have been acting as Mrs Haywoods agent (para 84). Arden LJ disagreed: There was no argument on this at the hearing or finding by the judge. [Mr Crabtrees] witness statement is consistent with his having acted on his own initiative (para 134). In their Grounds of Appeal, the Trust argued that Lewison LJ was right to hold that Mr Crabtree was acting as Mrs Haywoods agent and that delivery to him was therefore delivery to her. It is fair to say that very little time was devoted to this ground in the hearing before us. On its own, it does not raise a point of law of general public importance for which permission to appeal would be granted and arguably would require a finding of fact by the trial judge. At all events, in my judgment (with which I understand that all my fellow Justices hearing this case agree), on the evidence that was available to the court, Arden LJ was correct to hold that, in acting as he did, Mr Crabtree was not acting at Mrs Haywoods agent for the receipt of the letter. The issue of law The Trust argues that there is a common law rule, principally derived from some historic landlord and tenant cases, which supports its case that notice is given when the letter is delivered to its address. Mrs Haywood argues that the common law rule is not as clear cut as the Trust says that it is. Furthermore, there is a consistent line of Employment Appeal Tribunal (EAT) authority which supports her case that, in the absence of an express contractual provision to the contrary, there is an implied term that a notice served by an employer upon an employee takes effect only when it has actually been received by the employee and the employee has either read or had a reasonable opportunity of reading it. It is convenient, therefore, to look first at the non employment cases principally relied upon by the Trust and then at the employment cases principally relied upon by Mrs Haywood. The non employment cases The Trust relies on a line of cases dating back to the 18th century, almost all in the landlord and tenant context, holding that delivery of a notice to the tenants (or landlords) address is sufficient, even though it has not actually been read by the addressee. Some of these are in the context of an express statutory or contractual provision that service may be effected by post. In Jones d Griffiths v Marsh (1791) 4 TR 464; 100 ER 1121, it was held that delivering a notice to quit to the tenants maidservant at his house (which was not the demised premises) was sufficient. Personal service was not necessary in every case, although it was in some. Kenyon CJ remarked that in every case of the service of a notice, leaving it at the dwelling house of the party has always been deemed sufficient. Doe d Neville v Dunbar (1826) Moot M 9; 173 ER 1062 was to the same effect. Abbott CJ had no doubt as to the sufficiency of a notice served at the tenants home, even though the tenant was away: were it otherwise, a landlord would have no means of determining a tenancy, if his tenant happened to be absent from his house at the time when it was necessary to serve the notice. In Papillon v Brunton (1860) 5 H & N 518; 157 ER 1285, a tenant served notice to quit by posting it to his landlords agent. The jury found that it arrived that same day, after the agent had left, but there ought to have been someone there to receive it. The judges agreed that this was good service. In Tanham v Nicholson (1872) LR 5 HL 561, delivery to the tenants adult children at the property was held sufficient. But Lord Westbury pointed out that, in Jones, Lord Kenyon had limited his remarks to notices affecting property, such as notices to quit, and not those notices which are intended to bring an individual into personal contempt (p 573). As Lady Blacks much fuller treatment demonstrates, each of these cases could be seen as service upon an agent authorised to accept it. The other landlord and tenant cases relied on by the Trust are less helpful, because they involved express statutory and/or contractual terms. Stidolph v American School in London Educational Trust Ltd [1969] 2 P & CR 802 concerned the requirements for terminating a lease of business premises under the Landlord and Tenant Act 1954 and the Landlord and Tenant (Notices) Regulations 1954. The Act expressly provided that notice could be served by registered post in a letter addressed to the tenants last known place of abode. The landlords solicitors had sent, by registered post, an unsigned notice to quit accompanied by a letter signed by them. This was held sufficient. But Lord Denning observed that I do not think that a tenant can avoid the effects of a notice like this which is properly sent by registered post to him by saying that he did not take it out of the envelope or read it (p 805). And Edmund Davies LJ said this (pp 805 806): Based upon considerations mainly of business efficacy, there is a long standing presumption in our law that a letter, duly addressed, pre paid and posted, which is not returned to the sender has in fact been received by the addressee unless he can establish the contrary. The usefulness of a presumption of this kind would be destroyed if the addressee could nevertheless be heard to say: Although I received the postal packet quite safely, I did not read the contents, or I did not examine the postal packet to see that I had extracted all that it contained. Both observations are as consistent with Mrs Haywoods case as they are with the Trusts. In Stephenson & Son v Orca Properties Ltd [1989] 2 EGLR 129, the deadline for giving notice of a rent review to the tenant was 30 June. The notice was posted recorded delivery on 28 June, but it was not received and signed for until 1 July. The issue was whether it was deemed, under section 196(4) of the Law of Property Act 1925 (see para 34(2) below), to have been delivered in the ordinary course of post on 29 June. Scott J held that that would have been the case with an ordinary registered letter, but a recorded delivery letter was not received until signed for. So the notice was out of time. Wilderbrook Ltd v Olowu [2005] EWCA Civ 1361; [2006] 2 P & CR 4, also concerned a rent review notice sent by recorded delivery, received and signed for at the demised premises. The lease incorporated the statutory presumption as to service in section 196(4) of the Law of Property Act 1925 (see para 34(2) below). The Court of Appeal rejected the argument that it was not received in accordance with the contract until the tenant had actually seen it. Carnwath LJ quoted Lord Salmon in Sun Alliance & London Assurance Co Ltd v Hayman [1975] 1 WLR 177, at p 185: Statutes and contracts often contain a provision [that] notice may be served upon a person by leaving it at his last known place of abode or by sending it to him there through the post. The effect of such a provision is that if notice is served by any of the prescribed methods of service it is, by law, treated as having been given and received. Once again, this does not help us to determine what term as to service is to be implied into an employment contract, to which section 196(4) does not apply. With the exception of the employment case of London Transport Executive v Clarke (dealt with below at para 29), the only case outside landlord and tenant law relied on by the Trust is The Brimnes, Tenax Steamship Co Ltd v The Brimnes (Owners) [1975] QB 929, CA. One issue was when the owners notice withdrawing the vessel from hire, sent by telex, had been received by the charterers. It was held effective when it arrived at the charterers machine during business hours and not when it was actually read. Megaw LJ said this, at pp 966 967: With all respect, I think that the principle which is relevant is this: if a notice arrives at the address of the person to be notified at such a time and by such a means of communication that it would in the normal course of business come to the attention of that person on its arrival, that person cannot rely on some failure himself or his servants to act in a normal business like manner in respect of taking cognisance of the communication so as to postpone the effective time of the notice until some later time when it in fact came to his attention. Cairns LJ made this general observation, at pp 969 970: In my opinion, the general rule is that notice must reach the mind of the charterer or of some responsible person on his behalf. There must clearly be exceptions to this rule: for example, if the charterer or his agent deliberately keeps out of the way, or refrains from opening a letter with a view to avoiding the receipt of notice. How much further than this do exceptions go? I feel little doubt that if an office were closed all day on an ordinary working day, though without any thought of a notice of withdrawal arriving, such a notice delivered by post on that day must be regarded as then received. These statements can scarcely be seen as a ringing endorsement of the Trusts case, as their starting point is receipt. Notices delivered during normal working hours to an office which can reasonably be expected to be staffed to receive and deal with them properly may be in a different category from notices delivered to a private home. The employment cases Mrs Haywood relies upon a line of EAT cases dating back to 1980, holding in a variety of contexts which do not all depend upon the construction of the employment protection legislation, that written notice does not take effect until the employee has read it or had a reasonable opportunity of doing so. In Brown v Southall & Knight [1980] ICR 617, the issue was whether the employee had the 26 weeks continuous employment, ending with the effective date of termination, then required to bring an unfair dismissal claim. The letter summarily dismissing him was sent by post after he had left to go on holiday. His period of employment was less than 26 weeks on the date that it would have been delivered to his home but more than that on the date when he arrived back and read the letter. The EAT (Slynn J presiding) held that he had the necessary 26 weeks employment, for the reasons given at p 628: It seems to us that it is not enough to establish that the employer has decided to dismiss a man or, indeed, has posted a letter saying so. That does not itself, in our view, terminate the contract. Nor, in our view, is it right, in looking at the matters as the industrial tribunal did in considering the reasonable steps taken by the employer, to look solely at what the employer does and to ask whether that constitutes the taking of reasonable steps. In our judgment, the employer who sends a letter terminating a mans employment summarily must show that the employee has actually read the letter or, at any rate, had a reasonable opportunity of reading it. If the addressee of the letter, the employee, deliberately does not open it or goes away to avoid reading it he might well be debarred from saying that notice of his dismissal had not been given to him. That, however, did not happen in this case. The same approach was adopted by the EAT (Morison J presiding) in McMaster v Manchester Airport plc [1998] IRLR 112, another case of a dismissal letter arriving while the employee was away from home. This too was a case about the effective date of termination, but for the purpose of the time limit for making a complaint of unfair dismissal. It was common ground that any dismissal had to be communicated, whether it was summary or on notice. The tribunal commented, at para 9: It seems to us that, as a matter of principle, unless compelled to take a different view, the doctrine of constructive or presumed knowledge has no place in the private rights of parties to contracts of employment, and questions as to whether a dismissal has been communicated or not, save in an evidential sense only. When the Gisda Cyf case, referred to in para 2 above, which concerned a summary dismissal by letter, came before Bean J sitting alone in the EAT ((UKEAT 0173/08, unreported), he agreed with all that Morison J had said it was laying down a clear and workable principle. He drew a distinction between delivery to a large commercial concern during business hours and delivery to a persons home. Edwards v Surrey Police [1999] IRLR 456 also concerned the effective date of termination for the purpose of the time limit for bringing an unfair dismissal complaint. But the issue was whether the employees resignation took effect when the employee decided that she could not continue working for the employer or when that decision was communicated to the employer. The EAT (Morison J presiding) held that before a contract of employment can be terminated there must have been communication by words, or by conduct, such as to inform the other party to the contract that it is indeed at an end (para 14). In George v Luton Borough Council (EAT 0311/03, unreported) the EAT (Judge Serota QC presiding), agreed that the acceptance of the employers repudiatory breach had to be communicated, but held that there might be a distinction between cases of an employee giving notice and cases where an employer is seeking to terminate the employment, in which case the employee must know and actually have the termination communicated to him. Receipt of the employees letter accepting the breach by the Council was sufficient (para 14). To the same effect was Potter v RJ Temple plc (2003) UKEAT/0478/03/LA), where the EAT (Judge Richardson presiding) held that an employees notice was effective when received by his employers even if it had not been read. Brown v Southall & Knight was followed in an entirely different context in Hindle Gears Ltd v McGinty [1985] ICR 111, and this time to the employees disadvantage. During a strike, employers were exempt from unfair dismissal claims only if they dismissed an entire striking workforce. They were not entitled to dismiss only those strikers who were unwanted elements. So if there were striking employees who were not dismissed, or who were re engaged within three months, those who were dismissed could bring claims. The employer sent out letters dismissing all the strikers, but two of them had left home to report for work early in the morning of the day after the letters were posted, before the letters were actually received. The Industrial Tribunal held that the two employees had been dismissed but then re engaged that morning, with the result that the 39 striking employees could bring complaints of unfair dismissal. The EAT (Waite J presiding) held that the two employees had not been dismissed before they returned to work; therefore they had not been re engaged that morning; and they were not part of the striking workforce on the relevant date. This was because, at p 117: Communication of the decision in terms which either bring it expressly to the attention of the employee or give him at least a reasonable opportunity of learning of it is in our view essential. Most recently, in Sandle v Adecco UK Ltd [2016] IRLR 941, the EAT (Judge Eady QC presiding) upheld the employment tribunals decision that an agency worker had not been dismissed because, although the firm to which the agency had assigned her had terminated the assignment, the agency had done nothing to communicate her dismissal: dismissal does have to be communicated. Communication might be by conduct and the conduct in question might be capable of being construed as a direct dismissal or as a repudiatory breach, but it has to be something of which the employee was aware. (para 41) Two other employment cases were relied upon by the Trust. In London Transport Executive v Clarke [1981] ICR 355, the employee had taken unauthorised leave to go to Jamaica. After sending two letters to his home address asking for an explanation and giving an ultimatum, the employers wrote on 26 March saying that his name had been permanently removed from their books on that day. When he returned they refused to reinstate him. The majority of the Court of Appeal held that a contract of employment was not terminated until the employers had accepted the employees repudiatory breach, which they did when he was dismissed on 26 March. The issue was whether his dismissal was unfair. There was no issue as to the precise timing, or as to when the employee became aware of the contents of the letter. The most that can be said on behalf of the Trust is that the majority assumed that posting the letter was sufficient. The other case is the decision of the Court of Appeal in the Gisda Cyf case: [2009] EWCA Civ 648; [2009] ICR 1408. The majority, Mummery LJ with whom Sir Paul Kennedy agreed, approved the decisions in Brown v Southall & Knight and McMaster v Manchester Airport plc, but expressly on the basis that they were construing the statutory definition of the effective date of termination in section 97(1) the Employment Rights Act 1996 or its predecessor, for the purpose of unfair dismissal claims, rather than applying the law of contract; it did not follow that the correct construction of the statute was controlled by contractual considerations: para 33. Lloyd LJ dissented: in his view resort should first be had to the general law on contracts of employment. The EAT cases cited above had distinguished between those where the employee had given notice to the employer and those where the employer had given notice to the employee. In the first category were George v Luton Borough Council and Potter v RJ Temple plc (see para 26 above), where it was held that an employees notice was effective when received by his employers even if it had not been read. In the second category were all those cases where an employers notice had been held only to take effect when the employee had received and read, or had a reasonable opportunity to read, them. He took the view that the latter category of cases was wrongly decided and the same rule should apply to both. In the Supreme Court, the approach of the majority was upheld. The Court emphasised that it was interpreting a statutory provision in legislation designed to protect employees rights, so that the general law of contract should not even provide a preliminary guide, let alone be determinative (para 37). However, Lord Kerr (giving the judgment of the Court) was careful to say that the judgment should not be seen as an endorsement of the employers argument as to the effect of common law contractual principles (para 38). The case was an unusual one, in that the employee was not represented before the Supreme Court and so there had been no argument to the contrary. For that reason, although this case is determinative of the meaning of the effective date of termination in section 97(1) of the Employment Rights Act 1996, it is of no assistance in the determination of the issue in this case. The last employment case to mention is Geys v Socit Gnrale, London Branch (see para 3 above). The Bank purported to exercise its contractual right to terminate the employees employment by making a payment in lieu of notice. The severance payment due depended on the date of termination: was it when the Bank repudiated the contract of employment, or when it made a payment in lieu of notice into the employees bank account, or when, in accordance with an express term in the contract, the employee was deemed to have received the Banks letter telling him that it had exercised its right to terminate with immediate effect and made a payment in lieu of notice? The Supreme Court held that the repudiation was not effective unless and until accepted by the employee (which it was not); that the mere payment of money into a bank account was not sufficient notification to the employee that he was being dismissed with immediate effect; so that the date of termination was the date on which he was deemed to have received the letter. Apart from the repudiation point, most of the case depended upon the express terms of the contract, which included a term as to when a written notice sent by post was deemed to have been received. For present purposes the case is relevant only insofar as it stresses the need for notification of dismissal (or resignation) in clear and unambiguous terms, so that both parties know where they stand whether or not the employee is still employed and when he ceased to be employed (paras 57 58). Baroness Hale of Richmond (with whom Lord Hope of Craighead, Lord Wilson and Lord Carnwath agreed) cited with approval, at para 56, the following passage from Crossley v Faithful & Gould Holdings Ltd [2004] ICR 1615, per Dyson LJ, at para 36: It seems to me that, rather than focus on the elusive concept of necessity, it is better to recognise that, to some extent at least, the existence and scope of standardised implied terms raise questions of reasonableness, fairness and the balancing of competing policy considerations. Policy Both parties have placed great weight on what they see as the policy considerations favouring their solution. Mr Cavanagh QC, for the Trust, points out that, as there was no express term stating how notice was to be given and when it was to be taken to have effect, some term has to be implied into this contract. That being so, as stated in Crossley, policy questions are relevant. There should be no special rule for employment cases. There should be as much certainty and clarity as possible. The Trusts approach is more certain than the employees. Under the employees approach, it would not be possible for a letter giving notice to state with certainty the date on which the employment would end. It is also fairer to give the benefit of the doubt to the sender of the letter, because there will usually be more objective evidence of when it was sent. If there are several dismissals, all will take effect on the same day, and not on different days depending on when the letter was received. The employees approach does not necessarily work for the benefit of employees, who might be keen for the employment to end. There must be the same rule for employers and employees. He also argues that the Trusts approach delivery to the home address is consistent with or more favourable than many statutory provisions about notice. He cites, in ascending order of severity, the following examples: (1) By the Interpretation Act 1978, section 7 (replacing a provision to like effect in the Interpretation Act 1870), service of a document by post, where authorised or required, is deemed to be effected by properly addressing, pre paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. However, in Freetown Ltd v Assethold Ltd [2012] EWCA Civ 1657; [2013] 1 WLR 701, at para 37, Rix LJ pointed out that this changed the common law, which required receipt; it introduced a rebuttable presumption; and required the sender to prove that the letter had been properly addressed, prepaid and posted. (2) By the Law of Property Act 1925, section 196(4), notices required to be served on a lessee or mortgagor are sufficiently served if sent by post in a registered letter addressed to the person to be served by name, at his place of abode or business, and the letter is not returned undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered. (3) By the Misuse of Drugs Act 1971, section 29(4) certain notices sent by registered post or recorded delivery shall be deemed to have been effected at the time when the letter containing it would be delivered in the ordinary course of post and section 7 of the 1978 Act is disapplied. (4) By the Public Health Act 1875, section 267, notices and other documents served by post shall be deemed to have been served at the time when the letter containing the same would be delivered in the ordinary course of post, and in proving such service it shall be sufficient to prove that the notice order or other document was properly addressed and put into the post. However, as Mr Glyn QC for Mrs Haywood points out, it does not follow that any of these differing statutory provisions reflects the common law as to the term to be implied into an employment contract. Their purpose was to lay down a rule which might well be different from what would otherwise be the common law position. He also cites the judgment of the Supreme Court in Gisda Cyf, at para 43: There is no reason to suppose that the rule in its present form will provoke uncertainty as to its application nor is there evidence that this has been the position hitherto. The inquiry as to whether an employee read a letter of dismissal within the three months prior to making the complaint or as to the reasons for failing to do so should in most cases be capable of being contained within a short compass. It should not, as a matter of generality, occupy a significantly greater time than that required to investigate the time of posting a letter and when it was delivered. Furthermore, if an employer wants greater certainty, he can either make express provision in the contract, or tell the employer face to face, handing over a letter at the same time if the contract stipulates notice in writing. Large numbers of employees are not sacked on a whim. The employer knows when employees are going on leave and can make arrangements to ensure that they are notified beforehand. All the notices can be stated to expire on the same specified date. There is no prohibition on giving more than the prescribed minimum period of notice. Nor is it usually necessary to give a prescribed period of notice before a particular date, as it is with notices to quit. The rule established in the EAT from 1980 onwards has survived the replacement, by the Employment Rights Act 1996, of the legislation which applied in Brown and there have been several other Parliamentary opportunities to correct it should it be thought to have caused significant difficulty. It has not been confined to the interpretation of the effective date of termination for the purpose of Part X of the 1996 Act and has been applied in several different contexts. It was only in Gisda Cyf that the possibility was raised that the common law and statutory rules might be different. But it makes obvious sense for the same rule to apply to all notices given by employers to employees. Conclusion reasons: In my view the approach consistently taken by the EAT is correct, for several (1) The above survey of non employment cases does not suggest that the common law rule was as clear and universal as the Trust suggests. Receipt in some form or other was always required, and arguably by a person authorised to receive it. In all the cases there was, or should have been, someone at the address to receive the letter and pass it on to the addressee. Even when statute intervened in the shape of the Interpretation Act, the presumption of receipt at the address was rebuttable. There are also passages to the effect that the notice must have been communicated or come to the mind of the addressee, albeit with some exceptions. (2) The EAT has been consistent in its approach to notices given to employers since 1980. The EAT is an expert tribunal which must be taken to be familiar with employment practices, as well as the general merits in employment cases. (3) This particular contract was, of course, concluded when those cases were thought to represent the general law. (4) There is no reason to believe that that approach has caused any real difficulties in practice. For example, if large numbers of employees are being dismissed at the same time, the employer can arrange matters so that all the notices expire on the same day, even if they are received on different days. (5) If an employer does consider that this implied term would cause problems, it is always open to the employer to make express provision in the contract, both as to the methods of giving notice and as to the time at which such notices are (rebuttably or irrebuttably) deemed to be received. Statute lays down the minimum periods which must be given but not the methods. (6) For all the reasons given in Geys, it is very important for both the employer and the employee to know whether or not the employee still has a job. A great many things may depend upon it. This means that the employee needs to know whether and when he has been summarily dismissed or dismissed with immediate effect by a payment in lieu of notice (as was the case in Geys). This consideration is not quite as powerful in dismissals on notice, but the rule should be the same for both. I would therefore dismiss this appeal. It was only on 27 April 2011 that the letter came to the attention of Mrs Haywood and she had a reasonable opportunity of reading it. LADY BLACK: The foundation of the Trusts argument is that there is a common law rule that written notice of termination of a contract is given when the notice document is delivered to the recipients address, and that there is no need for the recipient to have sight of the document or the envelope containing it, or even to be present at the time. Mrs Haywood disputes that such a common law rule exists. In order to decide who is right, it is necessary to look in some detail at a line of old authorities on the giving of notice. Lord Briggs, like Lord Justice Lewison in the Court of Appeal, concludes from it that there has been, for over two centuries, a term generally implied by law into relationship contracts terminable on notice, that written notice is given when the relevant document is duly delivered by hand or post to the address of the recipient, irrespective of whether/when the recipient actually gets the notice. Lady Hale does not consider that the old authorities establish this proposition. I agree with Lady Hales judgment, and, in the light of the disagreement between her and Lord Briggs, merely wish to set out here, in a little more detail, the reasons why, in my view, the old line of authorities are not to the effect that the Trust suggests. I am indebted to Lady Hale and Lord Briggs for having introduced and analysed the authorities, albeit that their analyses differ, as I am able to build on what they have already said (see paras 13 and 14 of Lady Hales judgment, and paras 84 et seq of Lord Briggs judgment). In considering the authorities, I have found it helpful to keep in mind that there are different sorts of service, increasingly personal in nature. Putting a notice document into a post box might be said to be at one end of the spectrum. This is the point at which, where the postal rule applies, an acceptance of a contractual offer would take effect, for example. However, no one has contended in this case that notice could have been given at such an early stage. At the other end of the spectrum is the communication of the contents of the document to the mind of the recipient. In between, various possibilities exist, from which I would pick out service of the notice on an agent of the intended recipient who is authorised to receive such communications, and personal service. When I speak of personal service in this context, I mean, following what it seems to me is the practice of the older authorities, ensuring that the notice actually reaches the recipients hands. It is also helpful to keep in mind when approaching the authorities that presumptions feature prominently in them and that presumptions come in various guises too, the most obvious distinction being between the rebuttable presumption and the irrebuttable presumption. The starting point for an examination of the old authorities is Jones d Griffiths v Marsh (1791) 4 TR 464. This is the case in which a notice to quit was served on the tenants maidservant at the tenants house, the contents being explained to her at the time, but (as the report puts it) there was no evidence that it ever came to the defendants hands, except as above. The tenant argued that this was not sufficient for a notice to determine an interest in land, especially as the service had been at a house which was not the demised premises. The summary of the decision of Lord Kenyon CJ, and Buller J reads: Where the tenant of an estate holden by the year has a dwelling house at another place, the delivery of a notice to quit to his servant at the dwelling house is strong presumptive evidence that the master received the notice. In deciding that the tenant had been served with due notice to quit, Lord Kenyon and Buller J expressed their decisions in rather different ways. The reports of their judgments are so short that it is worth setting them out in full. Lord Kenyon said at p 465: This is different from the cases of personal process: but even in the case alluded to of service on the wife [of a declaration in ejectment], I do not know that it is confined to a service on her on the premises; I believe that if it be served on her in the house, it is sufficient. But in every case of the service of a notice, leaving it at the dwelling house of the party has always been deemed sufficient. So wherever the Legislature has enacted, that before a party shall be affected by any act, notice shall be given to him, and leaving that notice at his house is sufficient. So also in the case of an attorneys bill, or notice of a declaration being filed: and indeed in some instances of process, leaving it at the house is sufficient; as a subpoena out of the Court of Chancery, or a quo minus out of the Exchequer. In general, the difference is between process to bring the party into contempt, and a notice of this kind; the former of which only need be personally served on him. Buller J said at pp 465 466: Ex concessis personal service is not necessary in all cases. Then what were the facts of this case? It was proved that this notice was delivered to the tenants servant at the dwelling house of the tenant, and its contents were explained at the time; and that servant who was in the power of the defendant was not called to prove that she did not communicate the notice to her master; this was ample evidence, on which the jury would have presumed that the notice reached the tenant. Lord Briggs takes this case as a clear statement of already settled law to the effect that a notice left at the intended recipients dwelling house is valid from the point of delivery. He would reject the argument that this was a decision about service on the maidservant as the tenants agent, taking the view that the judgments turn on the leaving of the document at the house rather than it being given to anyone there. I do not share his confidence about this, but before explaining why, I will look at the whole line of authority up to and including the important case of Tanham v Nicholson (1872) LR 5 HL 561, because later cases shed light on the issue, in my view. Lady Hale says of the main authorities in this line that they could be seen as cases concerning service upon an agent authorised to accept it (para 14). I agree that that is a fair reading of them, although all is not perfectly clear and uniform, not least because the old reports are sparing in detail, and not all the cases address specifically the issues that are of interest to us, with our 21st century perspective. Although not cited to us, the next relevant case chronologically seems to me to be Doe d Buross v Lucas (1804) 5 Esp 153. The action was one of ejectment, to recover possession of premises. The brevity of the report makes it difficult to be sure of the precise facts. The tenant had died, leaving his widow as his executrix. The notice to quit was given by leaving it at the house where he had lived during his lifetime, but there was no evidence of it having come into his widows hands. It was argued that this was not a legal notice to quit, that service at the house where the tenant lived was never sufficient, and that there had to be delivery to the tenant, his wife or a servant, with (in the case of a servant) evidence that the notice came into the tenants hands. The plaintiff asserted, relying on Jones d Griffiths v Marsh, that the mere service of the notice at the house was sufficient. Rejecting the plaintiffs argument, the Lord Chief Justice, Lord Ellenborough, said: that case was different from this; in that case, the notice was delivered at the tenants dwelling house, and explained to the servant. The objection was then taken, that the servant was not called, who might have accounted for the notice, and stated whether it had been delivered or not; and that not being called, it was strong presumptive evidence, that her master had received the notice, and should be left to the jury: but here there was no such evidence offered. The tenant might be turned out of possession by a trick. From this, it seems that Lord Ellenborough considered that mere delivery at the house was not enough, and that he saw Jones v Marsh as a case of notice received by the tenant himself, because there had been no evidence to rebut the presumption that arose from the delivery of the notice to his servant. Next in time is Walter v Haynes (1824) Ry & Mood 149 which is one of the few examples we were given from outside the field of residential property. An action of assumpsit was brought upon a bill of exchange. A notice of dishonour had been posted in a letter addressed to Mr Haynes, Bristol. This was held not to be sufficient proof of notice. Setting out why, Lord Abbott CJ spoke in terms which made it plain that what was required was that the letter did in fact come into the hands of the person for whom it was intended. Normally, the post was sufficiently reliable for posting a letter to be tantamount to delivery into that persons hands, but the address on this communication was not sufficiently precise for that to be presumed. Lord Abbott said at pp 149 150: It is, therefore, always necessary, in the latter case [of a letter addressed generally to AB at a large town], to give some further evidence to shew that the letter did in fact come to the hands of the person for whom it was intended. I come then to Doe d Neville v Dunbar (1826) M & M 9. This was another notice to quit case. Two copies of the notice to quit were served at the defendants house, one on the servant and the other on a lady at the house. The defendant complained that this was not good enough. His argument can be gleaned from the following summary in the report at p 11: It was attempted to shew that both the lady and the servant on whom notices were served were dead; and it was argued that in that case, as the defendant would be unable to call them to prove that they did not communicate the notice to him by the [relevant date], according to the course suggested by Buller J in Jones d Griffiths v Marsh, 4 TR 464, and as the sufficiency of the notice was treated, both in that case and in Doe d Buross v Lucas, 5 Esp 153, and in Doe d Lord Bradford v Watkins, 7 East, 553, as depending on the presumption that it came to the tenants hands, there would be no sufficient evidence that it did so, to entitle the plaintiff to a verdict. An interesting feature of this passage is the assertion that the sufficiency of the notice in Jones d Griffiths v Marsh depended on the presumption that it came to the tenants hands. This is in line with Lord Ellenboroughs view of it in Buross v Lucas and, to my mind, might be taken to indicate that Jones d Griffiths v Marsh was not treated, in the 30 years or so after it was decided, to be clear and established authority that mere delivery at the address constituted notice. Lord Abbott CJ, had no doubt, however, that the notice in Neville v Dunbar was sufficient. The brevity of the report makes it difficult to gain a full understanding of the reasoning. It could be read as endorsing mere delivery to the house as sufficient (as Lord Briggs reads it), but the decision might equally have been based upon the proposition that service on the servant was sufficient whether or not the notice reached the master, or upon the proposition that service on the servant raised a presumption (not rebutted on the evidence) that the master had received the notice. In order to make sense of what Lord Abbott said, it is necessary to note that, immediately after the passage I have just quoted from the argument, there is the statement: The proof however failed as to the servant. It seems, therefore, that it was not established that the servant was in fact dead, from which it followed that the defendant could have called him or her to give evidence that he or she had not communicated the notice to him, but had not done so. In that context, Lord Abbott said: I have no doubt that the service of the notice was sufficient. The question does not arise here, for the servant might be called: but I have no doubt of the absolute sufficiency of the notice; were it to be held otherwise, a landlord would have no means of determining a tenancy, if his tenant happened to be absent from his house at the time when it was necessary to serve the notice. Doe d Lord Bradford v Watkins, the third of the three cases referred to in the argument in Neville v Dunbar, seems to have concerned a notice to quit served on one of two tenants holding under a joint demise of premises. It seems that it was left to the jury to determine whether the notice had reached the other defendant, but it is not easy to get a great deal of assistance from the report. Papillon v Brunton (1860) 5 H & N 518 is the next case requiring consideration. Lord Briggs takes the view that this makes it even clearer that the principle in play is not dependent upon personal delivery to an agent. It is the case in which a notice to quit was posted by the tenant to the landlords agents place of business, that is to say the landlords solicitors chambers. It should have arrived the same day, but the solicitor only found it when he went in the next day. It was held to be good notice on the day of posting. In attempting to arrive at a proper understanding of Papillon v Brunton, it must be noted that the trial judge had left it to the jury to say whether the letter arrived at the solicitors chambers on the day of posting or on the morning of the next day, and the jury found that it arrived on the day of posting after the solicitor left, and said that they thought he ought to have had somebody there to receive it. Pollock CBs judgment includes the following passage at p 521: we think that in the case of a notice to quit the putting it into the post office is sufficient, and that the party sending it is not responsible for its miscarriage. As this letter was posted in London between nine and ten oclock in the morning, the probability is that it arrived immediately after the agent left his chambers. Indeed it is possible that it may have arrived in the due course of post, but by some accident. was overlooked either not delivered by the servant to the clerk or in some way mislaid. Besides it did not appear that it was not delivered before seven oclock in the evening; and the jury considered that the agent ought to have had some one in his chambers at that time. A notice so sent must be considered as having reached the agent in due time, and the same consequences must result as if he had actually been there and received it. In my opinion the finding of the jury was right, and the notice was delivered at the agent's place of business in sufficient time to inform him, if he had been there, that the tenancy was to be determined at the time specified. For these reasons I think there ought to be no rule. Whilst this passage commences with a rather general observation, suggesting that mere posting of a notice is sufficient, that thought is not continued throughout the remainder of it. As the reasoning develops, it seems to turn, at least to some extent, not on the mere fact of the notice arriving at the agents chambers, but on the fact that it probably arrived on the day of posting and the solicitor ought to have had someone at the chambers to receive it. In highlighting the opportunity for the agent to have had the information had he arranged matters as he should have done, the approach bears some resemblance to the approach taken to termination of employment in the statutory context in cases such as Gisda Cyf, namely that the effective date of termination is when the employee reads the letter or has had a reasonable opportunity of reading it. Martin B simply concurred with Pollock CB, but Bramwell B and Wilde B provided short judgments agreeing there should be no rule. It is difficult to ascertain precisely what was of most importance to Bramwell B, although the jurys finding that the agent should have had someone at his chambers when the notice arrived had clearly impressed itself upon him. Wilde B said he took the same view as Bramwell B, and expressed himself in one further sentence, which might be supposed to encapsulate what had weighed particularly with him, and was as follows: The jury have found that the notice arrived at the agents place of business at a time when someone ought to have been there to receive it. So we come to the decision of the House of Lords in the Irish case of Tanham v Nicholson (1872), which I see as important. There is nothing to suggest that the fact that it was an Irish case makes any difference to the law applicable in relation to notices to quit, and the cases cited included familiar ones such as Jones d Griffiths v Marsh, Neville v Dunbar and Papillon v Brunton. The notice was delivered by hand to the tenants house where it was given to his daughter. It was sufficient to entitle the landlord to maintain ejectment against the father. Lord Briggs interprets the case as one about agency, rather than about service by post at the recipients home, but considers it to contain relevant dicta supporting the existence of a common law rule that delivery of an ordinary civil notice to the home of the intended recipient operates to transfer the risk to the recipient at that point, with the necessary corollary, I think, that it is at that point of physical delivery that the notice is given. I see the case rather differently. A little background is required as to the history of the case and the arguments being advanced by the parties. The trial judge had left to the jury the question, Whether, in fact, the notice to quit ever reached [the tenant], or became known to him? The jury found it did not. The judge considered that there had still been sufficient service in law and directed that a verdict be entered for the landlord. The matter proceeded through various levels of court to the House of Lords. The tenant conceded that he was living in the house where the notice was served and that the house was part of the demised premises, but he argued that to be sufficient, the notice had to be received by the tenant himself or by his duly appointed agent, which his daughter was not. The landlord argued that there was no rule that required personal service of a notice to sustain an ejectment and that service at the house was sufficient. In any event, said the landlord, the tenants daughter and sons were agents of the tenant and service on them was amply sufficient. Although all arriving at the same result, that there had been sufficient service of the notice, their Lordships differed in their reasoning. For the Lord Chancellor, Lord Hathersley, the solution lay in agency. He introduced the problem as follows (p 567): The sole question in the case is an extremely short one, and it is simply this, whether or not the delivery of a notice to quit on one who, undoubtedly, according to the evidence, was a servant of the tenant, at the house of the tenant, that house being on the demised property, is to be taken as a good and effectual service of that notice, so as to subject the person to whom it is addressed to the consequence of being ejected upon the termination of the notice. At p 568, in a passage which is worth quoting in full, he set out his view that if the servant is constituted an agent for receiving service of the document in question, service on the agent is service on the principal: I apprehend that the real point in the case, when you come to consider it, is this; not whether or not the person you have constituted your agent, by your line of conduct, to receive any document that may be left at your house, has performed that which is his or her duty, but whether or not you have constituted that person your agent. Because, if once you have constituted your servant your agent for the purpose of receiving such a notice, the question of fact as to whether that servant has performed his duty or not, is not one which is any longer in controversy. When once you constitute your servant your agent for that general purpose, service on that agent is service on you he represents you for that purpose he is your alter ego, and service upon him becomes an effective service upon yourself. So, said the Lord Chancellor, when the law has said in repeated cases that the effective service of notice on a servant at the dwelling house situated upon the demised property is a service upon the tenant, it has proceeded upon the basis that the law considers that servant to be an implied agent of the tenant for that particular purpose. The tenant could rebut that by showing that the agency was not correctly implied on the facts, but there could be no inquiry as to whether the agent did his duty by the tenant in dealing with the notice. Having brought [the notice] home to the agent of the person . you have brought it home to the tenant himself (p 571). By the conclusion of his speech, the Lord Chancellor had refined the case to one question, namely, whether this woman was an agent of the tenant or not. As she was an agent qualified to receive a notice, that was an end of it. Lord Westbury thought the law on the service of notices to quit to be in an unsatisfactory state. Lord Briggs has quoted (at para 91) what he said about the undue burden on a landlord deprived of the benefit of due service by things beyond his control. Lord Westbury noted the suggestion, which he said was to be found in the judgments given by some other Judges, that receipt of the notice by the tenants servant at his dwelling house was not absolutely sufficient, but only prima facie evidence of delivery to the master, rebuttable by evidence proving that the notice never reached him. He contrasted this with Jones d Griffiths v Marsh, where he said that Lord Kenyon CJ had laid down that in every case the service of a notice to quit by leaving it at the dwelling house of the tenant is sufficient, and with what Lord Abbott CJ had said (possibly in Neville v Dunbar, although Lord Westbury does not specify). Although it is possible to interpret Lord Westburys apparently approving reference to Lord Kenyon in Jones d Griffiths v Marsh as endorsing a principle that mere delivery at the tenants house was sufficient, I do not think that that interpretation withstands a reading of Lord Westburys speech as a whole. It will be recalled that in Jones d Griffiths v Marsh, the notice had not just been left at the premises, but had been served on the tenants maidservant, and this would have been in Lord Westburys mind. Apart from anything else, the employment of a domestic servant was commonplace in those days. Furthermore, it is noteworthy that Lord Westburys examples of the things that might unfairly deprive the landlord of the benefit of service commence with the wilful act of the servant or the servants incapacity, although they do of course include also any accident that might befall the notice after it has been received in the dwelling house of the tenant. When Lord Westbury spoke of the uncertainty and doubt that had come into the law (see the passage quoted at para 93 of Lord Briggs judgment), I do not think that he was complaining that there had been a principle (whether or not derived from Lord Kenyon) that mere physical delivery to the tenants address was sufficient, which had now been put in doubt. I think what he had in mind was what he saw as a clash between, on the one hand, Lord Kenyon and Lord Abbott, who considered service on the tenants servant was conclusively sufficient, and, on the other, some other Judges who held that it simply gave rise to a rebuttable presumption that the notice had been served. It is noteworthy that, having expressed the hope that the uncertainty and doubt could be cleared up, he did not then return to Jones d Griffiths v Marsh and declare the principle to be that mere delivery to the premises was enough, even though that would have been a simple way through on the facts of the case, the notice undoubtedly having arrived at the tenants address. Instead, he went on to consider what was to be made of receipt by a servant. Even then, he did not go so far as to say that delivery to the tenants servant would be conclusively sufficient. What he in fact went on to do, in the very next paragraph following his lament about the uncertainty, was to deal with the case on the assumption that delivery to the servant was only prima facie evidence of delivery to the master (the lower ground, see p 574). He found there to be no evidence to contradict this prima facie evidence and, indeed, all the evidence pointed to the father having knowledge of the notice. The jurys conclusion that the father did not know was so utterly unwarranted by the facts, in Lord Westburys view, that it ought not to have prevented judgment being entered for the landlord. Accordingly, he did not need to resolve the clash of authority between Lord Kenyon and some other Judges, if clash it was. Lord Westbury introduced his final paragraph with the view that the matter is left, by certain expressions used in former decisions, in a state of some embarrassment. Whilst he expressed the hope that the judgment in the case may tend to relieve cases of this kind in future, I do not think that his own speech provided any such relief, as he then summarised his conclusion in terms which left open whether or not delivery to the servant was conclusive or merely gave rise to a rebuttable presumption, saying: if it were open to contradiction, on the ground that it might be proved that the tenant had no knowledge of the notice, that proof has not been given, but the contrary conclusion has been in fact established. (Emphasis supplied) No relief came from Lord Colonsay either. His speech revolves around agency. He began it by observing (p 576) that, [i]t is held in law that notice given to the servant of the party residing in the house is a service of notice on the master. He then went on to consider whether evidence had been adduced to rebut that rule or presumption of law, if the question was in a condition in which it could be rebutted. He found no circumstances sufficient to rebut the legal inference that the person to whom the notice was given, standing to the party in the relation of servant, was not a legal agent to receive that notice (sic, but I think the not is an error). He too concluded that the judge was right to hold the notice was sufficient. Two features of Tanham v Nicholson strike me as particularly significant. First, none of their Lordships resolved the case by the simple route of holding that delivery of the document at the tenants address was sufficient notice, even though that seems to have been argued by the landlord. There was no dispute about the arrival of the notice at the premises, so that solution would have been open to them if delivery was all that was required and, if they had thought Jones d Griffiths v Marsh was properly to be interpreted in that way, they could have drawn support from what Lord Kenyon said there. But instead of taking that approach, each looked at the implications of delivering the notice to the daughter. The Lord Chancellor was satisfied that that was service on the tenant, because service on his agent was tantamount to service on him. Lord Westbury and Lord Colonsay were perhaps more generous to the tenant, allowing for the possibility that service on the servant gave rise only to a rebuttable presumption of service on the tenant. None of the speeches provides support for the proposition that agency is simply irrelevant in connection with a service of a notice. Secondly, it is clear from the speeches that the law on the service of notices to quit was thought to be in a rather unsatisfactory state, a state which gave rise to different reasoning from each of their Lordships. This is hardly a promising foundation for a submission that the common law has long been settled in relation to the requirements for service of a notice and requires only that it be duly delivered to the home of the intended recipient. I need only refer to one further Victorian case, and then only for completeness. This is the decision of the Court of Appeal in Hogg v Brooks (1885) 15 QBD 256. A lease of a shop contained a provision for the landlord to terminate the demise by delivering written notice to the tenant or his assigns. The lessee mortgaged the premises by way of underlease and disappeared. Written notice to determine the tenancy was sent to him at his last known address but returned without having reached him and he could not be found. Notice was also given to the mortgagee and the occupier of the premises. The Court of Appeal held that the landlord was not entitled to recover possession of the premises. The termination clause in the lease had to be construed according to the ordinary meaning of the English language. There were no assigns of the tenant, so notice could only be given by serving it on the tenant himself and it had not been served on him. I need not add to what Lady Hale has said about the other non employment cases upon which the Trust relies (commencing at para 15 of her judgment). I share her view of them and of what is said in the employment cases about the common law position. In short, I do not think that it has been shown that there is a clear and long standing common law rule that service of what Lord Briggs describes as an ordinary civil notice occurs when the notice is delivered to the recipients address. In so far as any clear principle emerges at all from the older cases, it seems to me, particularly in the light of Tanham v Nicholson, to revolve around delivery to the recipients agent, who might be the recipients household servant, professional agent, or (in certain circumstances, such as those in Tanham v Nicholson) family member. In each case, the agent appears to have been someone who, as part of their role, would be expected to take in communications of the type concerned for the intended recipient. For the purposes of service, the agent was (to quote the Lord Chancellor in Tanham v Nicholson, in the passage set out at para 64 above) the alter ego of the intended recipient so that, as he said, service on that agent is service on you. What the courts might have said had they been called upon to consider the same questions in the modern world in which there are no longer domestic servants, is unknown, and irrelevant. For present purposes, what matters is that the clear common law rule for which the Trust contends does not, in my view, emerge from the old cases. My unease about the suggested general common law rule is compounded by the concentration within a narrow field of the cases upon which the Trust relies. It may be that a great deal of research has been done into other areas with no relevant result, and we have been spared the trouble of trawling through the underlying material. However, I would have been interested to know, for example, what the position is, and was before the Partnership Act 1890, about the service of notices terminating a partnership, and to have seen some other examples drawn from contractual situations other than notices relating to property. As Lord Briggs says, relationship contracts come in many varieties. Absent a common law rule of the type for which the Trust contends, I see no reason for a term to that effect to be implied into an employment contract. Indeed, as Lady Hale explains, there is every reason why the term implied into an employment contract should reflect the position consistently taken by the EAT from 1980 onwards. LORD BRIGGS: (dissenting) (with whom Lord Lloyd Jones agrees) I would have allowed this appeal. The question is whether the term which must be implied into a contract of employment terminable on notice so as to identify, where necessary, the time of the giving of postal notice of termination, is that notice is given at the time when the document is duly delivered to the employees home address, or at some later time, such as the time when it actually comes to the attention of the employee, or when the employee has had a reasonable opportunity to read it. The question arises in this case in relation to termination on notice, by which I mean termination by a document which brings the relationship to an end at a specified date in the future, rather than immediately or, to use the jargon of the law of employment contracts, summarily. The essence of termination on notice is that there is a period, usually called the notice period, between the giving of the document, also confusingly called the notice, and its taking effect. The precise identification of the time when notice is given is not invariably, or even usually, necessary in order to determine when the employment actually terminated. This will usually be the time (almost always the date) specified in the document. But sometimes a notice is expressed to take effect a specified number of days or weeks after it is given, so that the date of its giving is a vital element in determining the date of termination. Sometimes notice is given for a specified date, but with only the contractual (or statutory) minimum notice period allowed before it takes effect, and issues then arise as to whether notice was given in sufficient time before it is expressed to take effect. The notice in the present case was an amalgam of both those types, because it was expressed both to give a specific period of notice (12 weeks), and to take effect upon a specified day in the future (15 July 2011). The question is not whether any term as to the time of the giving of notice should be implied, but rather what that term is. It is common ground that the term is one which the law implies into a whole class of contract, rather than one which is context specific. Nor is the question what that term should be. The task of this court is not to fashion, for the first time, a new implied term to fit a new situation, with a free rein to choose between available alternatives on modern policy grounds. Rather it is to examine the common law authorities to find out what that implied term already is. Contracts of employment determinable on notice have been around for hundreds of years, and there must be many millions extant in the common law world at this moment which must be taken to have had such an implied term embedded in them from the moment when they were made. The use of the post to give such notice has been an accepted method for well over a century, even if recent advances in information technology may well mean that it has only a few more years of useful life. It has not been suggested that any recent changes in the modes or efficiency of the postal service call for some revision of the implied term, by comparison with the term which the law has implied since Victorian times. Contracts of employment are only a sub species of a much larger group of what may be described as relationship contracts terminable on notice. They include contracts between landlord and tenant, licensor and licensee, contracts of partnership, service contracts not constituting employment, and many kinds of business contract such as commercial agencies, distributorship agreements and franchises. In most of them there will be provision for termination on notice, which permits notice by post to a partys home or business address, and the need to be able, when the occasion requires, to ascertain the time when notice is given calls for the law to imply a term for that purpose. Nor do the particular facts of this case call for an anxious re examination or development of the previous law, even though the financial consequences for the parties are, because of an unusual fact (the approach of the pension threshold on the employees 50th birthday), large indeed. The essential (and sufficient) facts which give rise to the question before the court are only that the letter containing the notice was only duly delivered on the last available day (from the employers perspective) but the employee was not at home until the following day. Absence of the recipient from home (or from the office) on the day of delivery is a common feature of the cases in which this question has already been addressed. In my judgment there has been for over two centuries a term generally implied by law into relationship contracts terminable on notice, namely that written notice of termination is given when the document containing it is duly delivered, by hand or by post, to the home (or, if appropriate, business) address of the intended recipient, rather than, if later, when it actually comes to the recipients attention, or when the recipient, absent at the time of delivery, has returned home and has had a reasonable opportunity to read it. That term is clearly identified by the common law authorities as the correct one. Although there has been a different approach taken to the identification of the effective date of termination of employment for statutory purposes connected mainly with the running of time for bringing proceedings for unfair dismissal, contracts of employment are not otherwise an exception to the legal principle applicable generally to relationship contracts, as the courts dealing with the statutory question have been at pains to emphasise. True it is that many of the old cases in which the common law rule has been laid down have concerned the landlord and tenant relationship, but the reasoning in those cases is not specific to that relationship. Nor are the consequences of the loss of a home or place of business necessarily of a lesser order than those following from the loss of a job. I would add that there are in my view sound reasons of policy why the implied term should be as I have described, to some of which I will refer in due course. But these do not amount even collectively to a ground for my conclusion, save in the negative sense that the existing law is not so defective in policy terms that it needs now to be changed. Rather, my conclusion is based simply upon an analysis of what the reported cases show that the law already is on this question. My analysis accords closely with the reasoning to be found in the dissenting judgment of Lewison LJ in the Court of Appeal. I gratefully adopt Lady Hales summary of the facts. Although the date upon which the termination notice was duly delivered was postponed because of the absence of anyone at Mrs Haywoods home to sign for recorded delivery, the helpful intervention of Mr Crabtree in going to the sorting office and collecting it meant that, for present purposes, it was duly delivered on 26 April, just in time for it to expire before Mrs Haywoods 50th birthday if giving notice is effective at the time of due delivery. But Mrs Haywood did not return home from her holiday abroad until the following morning, so it did not come to her attention until then, nor did she have a reasonable opportunity of reading it before her return. The Common Law Cases on Notices I am also content largely to follow my Ladys summary of the authorities, although I will need to say a little more about the reasoning in some of them. The earliest is Jones d Griffiths v Marsh (1791) 100 ER 1121. The issue in that case was as to the validity of service of a notice to quit premises let to a tenant on a periodic tenancy. The notice was hand delivered to the tenants home (not the premises demised by the lease) and given to the tenants servant, with an explanation of its contents. Lady Hale has cited the relevant dictum of Kenyon CJ: in every case of the service of a notice, leaving it at the dwelling house of the party has always been deemed sufficient. The context shows that he was speaking in the widest possible terms, about the services of notices generally, rather than just about notice to quit. He gave, as examples, notices of any kind required to be served by statute, service of an attorneys bill, service of a declaration, service of legal process and even service of a sub poena. The only exception was what we would now call a penal notice, where non compliance might expose the recipient to imprisonment for contempt of court, which required personal service. That was not a case about timing, because there was no evidence that the notice to quit ever reached the tenant himself, although Buller J was prepared to infer that it had done. Nonetheless it is inherent in a conclusion that the notice was valid upon due delivery to the tenants home that it was given then, and not at the time when it might have come to the tenants attention. It is to be noted that Kenyon CJ was not purporting to decide the point for the first time. He took it to be settled law, of the widest application to notices required to be served. I would not agree with the submission for Mrs Haywood that the case was one about service upon an agent of the tenant, although it was given to a servant. The judgments make no mention of agency, and service was said to be effected by leaving the notice at the tenants house, rather than by giving it to anyone. In 1791 it may be doubted whether houses generally had letter boxes, so there may have been no alternative than to knock on the door and give the notice to someone. The very short report of Doe d Buross v Lucas (1804) 5 esp 153 does seem to suggest a different analysis from that laid down by Kenyon CJ in Griffiths v Marsh, for the reasons set out by Lady Black in her judgment. But it is important to bear in mind that in that case the tenant had died before the notice to quit was given, and the tenancy had by then become vested in the deceased tenants widow. The report does not indicate whether she was living at the property when the notice was served. I would for my part be reluctant to treat the common law rule as validating the giving of notice by delivery only to the home of a deceased former tenant. With respect to Lady Black I do not consider that Walter v Haynes (1824) Ry & M 149 is of any real assistance. That was a case in which the plaintiff sought to prove service of a notice of dishonour of a bill of exchange by evidence only that she had posted it, addressed to Mr Haynes, Bristol. It was rejected as sufficient evidence because Bristol was a large town, which might contain any number of residents by the name of Haynes. It is true that Abbott CJ used language about proving that the notice had come into the hands of the intended recipient, but this was not a case about the distinction between delivery to the persons home, and personal delivery into his hands. On the contrary, had there been a sufficiently detailed address on the letter, so that it appeared to be directed to his home, proof of posting would have been sufficient. Doe d Neville v Dunbar (1826) Moot M 9; 173 ER 1062 is the earliest case cited to us about the timing of service, again of a notice to quit. The relevant lease required two quarters notice to quit. Notice to quit on the September quarter day needed to be given by 25 March. Two copies were hand delivered to the tenants home (again, not the demised premises) on 22 March by the landlords attorney and given to a servant and an otherwise unidentified lady there. But the attorney was told that the tenant was absent and would not return home until 26 March. Nonetheless the notice was held to have been given in good time. This case has an interesting similarity with the present case, since Mrs Haywood had informed the Trust that she was going abroad for a holiday, and was still away when the termination letter was duly delivered. The very short judgment of Abbott CJ, following the Griffiths v Marsh case, included the dictum: were it otherwise, a landlord would have no means of determining a tenancy, if his tenant happened to be absent from his house at the time when it was necessary to serve the notice. Again, there is no indication that the court was treating this as a case of personal service upon an agent of the tenant. The emphasis is all on delivery to the home of the person to be served. The underlying theme of the judgment is to recognise that where a contract is terminable by a period of notice, it must be interpreted in a way which makes it possible for the person seeking to terminate to give that notice at the appropriate time, even if the other party is absent. Lady Black notes in her judgment that both counsel and the judge referred to a presumption of due delivery where the recipients agent is given the notice, and is not called to prove that she did not inform her master in good time. But it is hard to see how such a presumption could have operated to save the notice in that case, because the landlords attorney was told that the tenant was away and would not be returning until the day after the last available date for service. In the absence of telephones, it is hard to see how the tenant could have been informed in good time. However that may be, I consider that Abbott CJ was seeking to make it clear that, regardless of any such presumption, notice was duly given, by being delivered to the tenants house in good time. Papillon v Brunton (1860) 5 H & N 518; 157 ER 1285 makes it even clearer that the principle is not dependent upon personal delivery to an agent. It is also the earliest case about postal service. Again, service of the notice to quit had to be given by the tenant by the March quarter day, and it was proved that it had been duly delivered by post to the landlords agents business premises late on that day, between six and seven oclock in the evening, after the agent had left for the day. It only came to his attention on the following morning. Pollock CB said that the notice was duly delivered on the quarter day. He said: the notice was delivered at the agents place of business in sufficient time to inform him, if he had been there, that the tenancy was to be determined at the time specified. It is implicit in that finding that it was not necessary for the notice actually to have come to the agents attention on that day, or for him to have been at the address at all on the date of due delivery. In one sense this is a case about service on an agent, but the ratio is that timely service at the business address of the agent is sufficient, regardless whether it comes to the attention of the agent in good time. The case is therefore on all fours with those described above, save that it related to business premises rather than to the home of the person to be served. Furthermore Pollock CB said (during argument) that leaving a notice at the landlords dwelling while he was away abroad would have been good and therefore timely service. Baron Bramwell said that: if a person tells others that a particular place is his place of business where all communications will reach him, he has no right to impose on them the obligation of finding out whether he sleeps at his place of business or elsewhere. I doubt whether, in the absence of any express limitation by the agent, it is necessary that the notice should be given within the hours of business. The message to be taken from that observation, (with which Baron Martin agreed) coupled with Baron Pollocks observation during argument is that, if a person nominates an address (home or business) for delivery of notices under a contract, without limiting the time when a notice may be delivered there, they take the risk that it arrives when they (or their agent) are not actually there. That which is true about the time of day is in my judgment equally applicable to any longer period of time. For as long as the intended recipient holds out an address as the place to which to deliver a notice, then that person takes the risk that, at the time of delivery, there will be no one there to read it. Applied to the present case, Mrs Haywood knew that she planned to be away from home on a holiday at a time when her employers might wish to terminate her employment by notice. She could have supplied them with an alternative means (or place) of delivery of notice to her while away, such as the address of her hotel or her email address, but she did not. Her notice period was a long one, and it is not therefore at all surprising that she did not do so, and certainly not a matter for criticism. However long her holiday, she would be back home to read her incoming mail long before her employment actually ended. But her address remained the place at which such a notice could be delivered, even if she might not be there to receive it. The question reached the House of Lords in Tanham v Nicholson (1872) LR 5 HL 561 on an Irish appeal. It was about personal service of a landlords notice to quit upon an agent of the tenant at the tenants home, which formed part of the demised premises. The agent then destroyed it, so that the tenant never received it. It was therefore a case about agency, rather than merely service by post at the recipients home. Nonetheless there are some relevant dicta. Lord Westbury said: If the landlord has once done that which the law throws upon him the obligation to do, his rights consequent upon having performed that legal duty ought not to be affected in any manner whatever by that which is done by his antagonist, upon whom the notice has been served. It would be an idle thing to say that a landlord serving a notice in due manner according to law, is to be deprived of the benefit of what he has done by the wilful act of the servant of the tenant, or by the incapacity of that servant, or by any accident that may befall the notice after it has been received in the dwelling house of the tenant on whom it was served. (my emphasis) Later, commenting on the Jones v Marsh case, he continued: Lord Kenyon lays it down as beyond the possibility of dispute that in every case the service of a notice by leaving it at the dwelling house of the tenant has always been deemed sufficient. But he qualifies that by explaining that he speaks of notices affecting property, as notices to quit, and not those notices which are intended to bring an individual within personal contempt. Those may require personal service. The other, the ordinary civil notice (if I may so call it) is abundantly satisfied if it be left at the dwelling house of the party. Again, the generality of this dictum, as applicable to the ordinary civil notice is significant. It is apparent that neither Kenyon CJ nor Lord Westbury were confining their analysis to landlord and tenant cases. In their view, every kind of notice not requiring personal service such as contempt proceedings, falls within the principle that due delivery to the recipients home is sufficient. I have no doubt that they would have regarded a notice to terminate an employment as an ordinary civil notice. Lord Westbury concluded: I shall be glad, therefore, if we can relieve the law from a degree of uncertainty and doubt brought into it, contrary to all principle, and if we can, in justice to the landlord, relieve him from having an act done by him, which act satisfies the obligation of the law, nullified and rendered of no effect by circumstances which have happened altogether after the delivery of his notice, and in the house of the tenant or under the control of the tenant, with which the landlord has no concern whatever. In my judgment these dicta reinforce what appears from the earlier cases, namely that from the moment when an ordinary civil notice is duly delivered to the home (or office) of the intended recipient, the law allocates the risk of mishap thereafter to the recipient. Those risks include destruction of the notice before it comes to the attention of the recipient, but also the risk (exemplified by the Neville v Dunbar and Papillon v Brunton cases) that it will not come to the attention of the intended recipient until after the due date for service because he or she is away from home. This is because the obligation on a person to give such a notice must be one which can be effectively discharged by taking steps available to that person, without the effectiveness of those steps being undermined by matters within the control of the intended recipient. A recurrent theme in the speeches of both the Lord Chancellor and Lord Westbury is that, to the extent that the dicta originating with Buller J in Jones v Marsh and Lord Ellenborough in Buross v Lucas might suggest that delivery to the recipients home or agent might only raise a rebuttable presumption of due delivery, they were wrong. In respectful disagreement with Lady Black, I do not read their concentration upon agency, or any part of what Lord Westbury said about what he called the lower ground to represent a stepping back from their firm adherence to what Kenyon CJ said in Jones v Marsh, or what Abbott CJ said in Neville v Dunbar as representing the high ground of principle which they sought trenchantly to affirm. They focussed upon agency, and upon the lower ground only because that was the way in which the case had mainly been argued. I agree that with Lady Black that Lord Colonsay appears to have confined himself to the lower ground. Lady Black refers to Hogg v Brooks (1885) 15 QBD 256. The case may have turned upon an unusually drafted break clause in a lease. In any event none of the authorities cited to us are referred to in the brief judgment of Brett MR. His conclusion appears to have been that, for as long as the tenant remained untraceable, the break clause in the lease simply could not be activated at all. I venture to doubt whether that very uncommercial result, derived from a literalist reading of the clause, so as to exclude service either upon the demised premises, or upon the last known residence of the tenant, would be followed today. I agree with Lady Hale that Stidolph v American School in London Educational Trust Ltd [1969] 2 P & CR 802 is not of decisive force, because it was not suggested that the intended recipient was not at home when the relevant statutory notice arrived by post. But I do not regard the fact that, in that and other cases, the requisite formalities for giving notice are statutory, means that the cases can be ignored. In every case the question is: what duty or obligation by way of service or delivery is imposed upon the person required to give notice? Once that duty has been performed, matters which then affect the question whether or when the notice actually comes to the attention of the intended recipient are for the risk of the recipient. In the present case Mrs Haywood does not suggest that postal delivery to her home was not a permitted method of giving notice of termination. The Brimnes, Tenax Steamship Co Ltd v The Brimnes (Owners) [1975] 1 QB 929, CA was a case about the summary termination, by telex, of a charterparty by the owner upon breach by the charterer. It was not about termination on notice. The dicta cited by Lady Hale recognise the impracticability in that context of an implied term that the communication of termination be timed to take effect only upon the telex actually being read, or coming to the attention of a responsible employee. Beyond that the case offers little assistance. In my judgment the Trust was right to place emphasis in its submissions upon the wide range of statutory provisions which appear to be formulated upon an assumption that service of what may loosely be described as ordinary civil notices is completed upon delivery to the intended recipients address, regardless when, or even whether, the contents thereafter come to the attention of the recipient. They include section 7 of the Interpretation Act 1978, section 196 of the Law of Property Act 1925, section 1147 of the Companies Act 2006, section 29 of the Misuse of Drugs Act 1971, section 267 of the Public Health Act 1875 and Part 6 of the Civil Procedure Rules. All of them provide for the service or giving of notices by post to the intended recipients address. None of them require the notices to be brought to the attention of the recipient, or postpone the effective date of service or delivery until an absent intended recipient has returned home. Some of them provide for a rebuttable presumption that the notice is deemed to be delivered on a specified date after posting, but the presumption is as to the date of due delivery (sometimes described as receipt), not the date when the notice comes to the attention of the intended recipient. That is why, in the Stidolph case, Edmund Davies LJ said that the relevant statutory presumption of due receipt would be undermined if the recipient could, while admitting receipt, still challenge the notice on the basis that its contents had not actually come to his attention. To much the same effect is the dictum of Carnwath LJ in Wilderbrook Ltd v Olowu [2005] EWCA Civ 1361; [2006] 2 P & CR 4, cited by Lady Hale. While I agree that cases about statutory provisions for service of notices by post do not directly impinge upon the construction of an employment contract to which no such provision applies, they are of such wide application to ordinary civil notices that they can fairly be said to reflect settled common law, from the earlier cases which I have described, to the effect that if postal or other delivery to the recipients home is an authorised method of giving notice, it is achieved once the notice is actually delivered, regardless of whether the intended recipient is actually at home, and regardless of what may thereafter happen to it when it gets there, such as being burned by an agent or eaten by the dog. Like Lewison LJ, and in respectful disagreement with Arden LJ, I do not read Freetown Ltd v Assethold Ltd [2012] EWCA Civ 1657; [2013] 1 WLR 701 as an authority to the contrary. At para 37, Rix LJ speaks of the common law as requiring proof of receipt, whereas the Interpretation Act deemed receipt from proof of posting. But he did not thereby mean that the common law required it to be shown that the document had actually come to the attention of the recipient, merely that it had been duly delivered at the recipients address. This is apparent from his description of the facts, at para 3. It was a case where the answer to the question whether a statutory appeal had been issued in time turned upon the time lag between when it was posted and when it arrived, not between when it arrived and when its contents first came to a persons attention. The essential difference between my analysis of the common law cases and that of Lady Hale and Lady Black is that they treat them all as at least consistent with the theory that delivery to an agent is as good as delivery to the principal, in the eyes of the law. I agree that this theory is capable of being identified as one of the strands by which those cases where delivery was made on time to an agent of the intended recipient at the principals home can be analysed. But it does not address the cases, such as Papillon v Brunton, where there was no one at the specified (business) address at the relevant time. Furthermore, if the underlying principle is that delivery is complete only when there is actual communication to the intended recipient or a reasonable opportunity to read the contents of the notice, the agency theory fails to explain those cases, such as Neville v Dunbar, where the agent could not possibly have communicated the contents of the notice to the intended recipient in sufficient time, or those where, on the facts found, there was no such communication, such as Tanham v Nicholson. The agency theory is simply not supportive of the supposed principle. Rather, it supports the concept of the allocation of risk, where delivery either to the address supplied by the intended recipient, or to the recipients agent, transfers to the recipient the risk as to the consequences which then ensue, including the consequences of any delay before it reaches the hands of the recipient. Nor does the theory that the agency analysis was what mattered address the trenchant wording of the senior judges, which constantly asserts that delivery to the relevant home or business address is sufficient. In days when homes were (at least among the moneyed classes who could afford to litigate) usually staffed even where their resident owners were away, there may not have appeared to be much practical difference between the transfer of risk when the notice was delivered to the intended recipients home (or business) address, and when it was put into the hands of an agent. But the leading judgments are careful to state that either will do, and the typical modern case where a home address is empty when the owner is away makes the delivery to the address alternative more important than it may once have been. The Employment Cases Turning to cases about employment there is, as Lady Hale observes, very little about the common law as to termination on notice. There is however a significant amount of authority about the requirements for summary termination. In my judgment, they say almost nothing about the requirements for termination on notice. Summary termination means that the employment relationship comes to an abrupt end, with immediate consequences including but not limited to the running of a short limitation period for the bringing of unfair dismissal proceedings. It is an exceptional process, whereas termination on notice is the normal agreed way in which (subject to statutory consequences about unfairness or discrimination) the contract may be terminated, usually by either side. Summary termination may be a right conferred upon the employer by express contractual term, in specified circumstances usually involving serious breach of contract by the employee. It may just consist of the acceptance by one party of a repudiatory breach by the other as putting an immediate end to the contract. It is therefore no surprise to find dicta in some (although not all) of the authorities on summary termination (usually called dismissal) to the effect that actual communication to the employee is necessary. By contrast termination on notice always involves a period thereafter while the employment relationship continues. That period may be short or long, but will usually include sufficient time for a delay between the date of delivery of the notice and the date when it comes to the attention of the employee to be accommodated, so that the employee still knows about the termination well before it happens, even if that period may be shorter than the full contractual or statutory notice period. The rules which the common law has developed over centuries about the giving of ordinary civil notices represent a compromise between the reasonable need for the givers of the notice to be able to exercise the right triggered by the notice, at a time of their choosing, without being hindered by uncertainties about what happens to the document containing the notice after they have parted with it, and the need of the recipients to receive the contents of the notice at a place where it is likely to come to their attention within a reasonable time. Thus the common law has not (as it did in relation to acceptance of a contractual offer) treated mere posting as sufficient. Although posting raises a presumption of due delivery, it remains open to the intended recipient to prove that the notice document never arrived. Due delivery to the recipients home (or office) marks the point where the risk of mishap passes from the sender to the recipient. There is no reason why the law should automatically apply this time honoured compromise to the more draconian and immediate process of summary termination. Nor by the same token is there any basis to read the cases about summary termination as saying anything about the requirements for valid termination on notice. Brown v Southall & Knight [1980] ICR 617 was a case about summary dismissal. The question was whether the date of delivery of the letter summarily dismissing the employee was the effective date of termination for statutory purposes connected with the period of his continuous employment, or the slightly later date when the employee returned home and read it. None of the cases about the requirements of a notice were cited to the EAT. This is hardly surprising, because it was simply not a case about termination on notice. Had it been, the time lag between delivery and reading the notice would not have mattered, because neither event would have terminated the employment there and then. The passage in the judgment of Slynn J cited by Lady Hale confines his analysis to summary termination in express terms. He says: In our judgment, the employer who sends a letter terminating a mans employment summarily must show that the employee has actually read the letter The next in time is London Transport Executive v Clarke [1981] ICR 355, which was about the requirements for the effective communication by the employer of its election to treat a repudiatory breach by the employee as having terminated the contract; ie summary termination. This was held to have been achieved on the date when a letter to that effect was delivered by post to the employees home address, even though he was not at home. The employee, who had been abroad without leave, returned home and read the letter about three weeks later. It is fair comment that the date issue was not critical to the outcome, but the Court of Appeal appear to have regarded it as axiomatic that the communication of the acceptance of the repudiation was effectively achieved by, and at the time of, the delivery of the letter to the employees home when he was not there. The Brown case was cited, but not referred to in the judgments. The EAT applied a slightly more nuanced approach to the requirements for communication of summary termination in Hindle Gears v McGinty [1985] ICR 111, which was a case about the attempted summary dismissal of an entire group of striking workers, by letters to all their homes. Two workers decided to return to work before the letters arrived, so they had no opportunity to read them before they arrived for work. The question was whether they had been dismissed and then re engaged on arrival at work, or not dismissed before they resumed work. Following and developing the decision in the Brown case, Waite J said that the requirement in a summary termination case for the communication of the dismissal to the employee meant that the letter had either to have been read by the employee, or that the employee had had a reasonable opportunity to read it. Again, it was not a case about termination by notice, and none of the cases about the requisites of an ordinary civil notice were, or needed to be, cited. McMaster v Manchester Airport plc [1998] IRLR 112 was also a case about summary dismissal. That much was common ground. It is true that the requirement for communication to the employee, for the purpose of determining the effective date of communication, was treated as applying both to summary dismissal and dismissal on notice, but this was again common ground. The only case referred to in the judgment was Brown v Southall & Knight. The report does not show whether any other cases were cited, but it looks most unlikely (bearing in mind the common ground) that the cases on the requirements of an ordinary civil notice were cited. The dictum of Morison J (at para 9) that constructive or presumed knowledge has no place in private rights under employment contracts may be right or wrong, but it has nothing to do with the requirements of a valid notice. Validity upon due delivery does not depend on any kind of knowledge on the part of the intended recipient. It is simply a good notice upon due delivery, just as is a posted acceptance of an offer, even if never delivered or received. Edwards v Surrey Police [1999] IRLR 456 was not (save in a statutory sense about constructive unfair dismissal) about a dismissal at all. Rather, it was about summary resignation. The issue was whether the employees employment had an effective date of termination when she decided to resign and wrote a letter to her employer saying so, (as had been held at first instance), or when the letter of resignation reached the employer (as the EAT held). There neither was, nor needed to be, consideration of the requirements of a valid notice, as between the due delivery and the reading of the letter. On either basis, the effective date was within the period for the bringing of her claim for constructive unfair dismissal. The next case, George v Luton Borough Council (2003) EAT/0311/03 is also about summary termination by resignation. The employee gave notice by letter dated 30 July 2002 that she was resigning with effect from 31 July, complaining of constructive dismissal. It reached the offices of the employer on 1 August, but was not read by anyone in authority there until 2 August. She commenced proceedings for constructive unfair dismissal only on 1 November. The EAT held that the letter was to be construed as an acceptance of repudiation by the employer, not as a 28 day contractual notice of termination. The case offers no assistance therefore on the question as to the requirements or effective date of a notice of termination. The Brown, McMaster and Edwards cases were all cited, and it was accepted that summary termination by the employer required communication to the employee. But the EAT held that a summary resignation letter from the employee took effect upon delivery to a corporate employer, rather than upon its being read by someone in authority. None of the cases about ordinary civil notices were cited, or relevant. Potter v RJ Temple plc (2003) UKEAT/0478/03 was yet another case about an employees acceptance of repudiation by the employer as putting an immediate end to the contract. The acceptance was faxed to the employer, and arrived at 8.21 pm on 13 September 2002, but was read only on the following day at the earliest. The employees application for constructive unfair dismissal was out of time if the faxed letter took effect upon due delivery. Although it was not a case about termination by notice, both the facts and the outcome bear a real similarity with Papillon v Brunton, although neither that case or any of the others on ordinary civil notices were cited. HHJ Richardson took it as read that termination by the acceptance of a repudiation needed to be communicated, but concluded that the need for certainty as to the effective date of termination for statutory purposes meant that communication should be taken to be achieved upon due delivery of the letter, rather than upon its being read, even though the letter arrived after office hours. The developing jurisprudence in the EAT about the effective date of termination by an employer was approved in the Court of Appeal by majority and by this court unanimously in Gisda Cyf v Barratt [2009] ICR 1408 and [2010] 4 All ER 851. It was again a case about summary dismissal rather than dismissal on notice. Once effective, it brought about the immediate termination of the contract. The dismissal followed disciplinary proceedings against the employee. The letter was posted on 29 November 2006, delivered to the employees home, while she was away visiting a relative, on 30 November, and read by her on the day after her return, on 4 December. The timeliness of her subsequent proceedings for unfair dismissal depended upon the effective date of termination being on or after 2 December. It was held that the effective date of termination was 4 December, when the employee read the letter. Both the majority in the Court of Appeal and this court were at pains to limit their reasoning to the statutory meaning of the effective date of termination, rather than, if different, to the ordinary common law of contract as applied to employment contracts which, it had been argued, pointed to the date of due delivery, even in cases of summary termination. The essential reasoning was that it would be wrong, in construing a statutory term in legislation for employee protection, to conclude that a short limitation period for bringing a claim should start running before the employee had learned, or had a reasonable opportunity to find out, that her employment had been terminated: see per Lord Kerr, giving the judgment of the Supreme Court, at paras 34 37. The phrase effective date of termination defined in section 97(1) of the Employment Rights Act 1996 contains separate formulae, in separate sub sections, for termination on notice, and termination without notice. For termination on notice it is the day upon which the notice expires. For termination without notice it is the date upon which the termination takes effect. The Gisda Cyf, Brown and McMaster cases were all about the second of those formulae. The only considered judicial view in Gisda Cyf about what was the relevant law of contract for the purpose of determining when summary dismissal by letter to the employees home took effect is to be found in the dissenting judgment of Lloyd LJ in the Court of Appeal. He considered that it was the date of due delivery rather than the date (if later) when the letter was or reasonably could have been read. The majority in the Court of Appeal did not express a view on the point, and nor did this court, not least because, by then, the employee was unrepresented. In both courts, the contractual analysis was, in the end, held to be irrelevant. But the case does make clear that the Brown and McMaster line of cases in the EAT about the effective date of termination are about statutory construction, not the common law about the termination of contracts. They are not even about the statutory meaning of effective date of termination when the contract is terminated on notice, rather than summarily. Bearing in mind that the effective date in a notice case is not until the notice expires, which may be weeks after it is delivered or read, it is by no means obvious that the same answer to the question about delivery or reading of the notice would follow from the analysis of the courts reasoning in relation to summary termination. I am content to leave that question to be answered on an occasion when it needs to be (if it ever arises). I agree with Lady Hales reasons for not finding this courts decision in Geys v Socit Gnrale, London Branch [2012] UKSC 63; [2013] 1 AC 523 of significant assistance. It was about the ordinary common law of contract, but it was specifically about two types of alleged summary termination, one by repudiatory breach and the other by the making of a payment in lieu of notice. Any issue about a time lag between the due delivery and reading of a notice of dismissal was dealt with by express term. Likewise I have not found significant assistance from the latest dismissal case in the EAT, namely Sandle v Adecco UK Ltd [2016] IRLR 941. The question was whether the employee had been summarily dismissed by inaction on the part of the employer. The EAT held that there had been no dismissal at all, because nothing relevant had been communicated to the employee. The requirement in the passage cited by Lady Hale that there be something of which the employee was made aware does not (and was not intended to) resolve the question whether communication by written notice is effective upon due delivery. Standing back and reviewing the employment cases as a whole, the following points stand out. First, none of them was about termination on notice, by the employer or the employee. They were all about summary termination. Secondly, and unsurprisingly, none of the long standing common law authorities about the requisites of an ordinary civil notice, reviewed at the beginning of this judgment, were even cited, although there was some, inconclusive, consideration of the common law principles in the Gisda Cyf case in the Court of Appeal, broadly supportive of due delivery as the relevant date. Thirdly, the only authoritative guidance that a summary termination document is not effective upon due delivery, but only when read, or after a reasonable opportunity for reading, relates to the statutory context about the effective date of termination, in which the potential for a different answer under the common law is treated as irrelevant. In the non statutory summary termination context, the cases go either way. Fourthly, the policy reasons for rejecting due delivery in the statutory context are firmly linked to the fact that summary termination has immediate effect, in particular by starting the running of a short limitation period, which is simply not a consequence of the due delivery of a notice of termination taking effect at a future date. Finally, the only statement in all the employment cases (in McMaster) that a termination on notice is given only when it is read, rather than when delivered, merely recorded the parties agreement about the matter, rather than even an obiter dictum by the court. Policy I have already expressed my view that policy plays a subordinate role where there is already an established common law principle which supplies the standard implied term. I have described the common law principle that an ordinary notice takes effect when it is duly delivered to the recipients address as a compromise which strikes a fair balance in relation to the risks to both parties of the notice not immediately reaching the recipient, and which preserves as far as possible the reasonable requirements of both the giver and the recipient. The time honoured implied term therefore has a sensible and even handed policy objective behind it. Some of its advantages benefit both parties equally. The foremost is certainty. Both the employer and the employee need to know when the employment will actually terminate, even where (as often happens) the notice expresses an expiry date by reference to a stated period from receipt. The employee needs to know from what future date to seek to put in place alternative employment, or state assistance in lieu of wages. An employee giving the notice to their employer may well wish to fix precisely the date from which he or she is free to begin employment, for example, with a competitor, free from restrictions under the current contract. The employer giving or receiving notice will wish to know precisely from which date to recruit, train and put in place a replacement employee. Neither will wish to be subject to uncertainties about matters known only to the other party, such as when after due delivery the notice came to the attention of the intended recipient. Neither will wish to have to become embroiled in a dispute about whether the other party deliberately absented themselves from home or office in order to make the giving of timely notice more difficult or even impossible. Counsel for Mrs Haywood submitted that it was a policy advantage to treat both the statutory test for effective date of termination and the common law rule about the taking effect of a notice of termination in the same way. I disagree. First, it ignores the fact that all the cases on effective date relate to summary termination rather than termination on notice, and that the policy considerations applicable to each are not the same. Secondly, to treat the statute as amending what I consider to be settled common law about termination on notice is to give it an effect well beyond that which it has been held to have, and beyond that which is needed to preserve to the employee the full benefit of the short limitation period. It was submitted further that the employment world has been proceeding since the decision in the Brown on the assumption that it reflects the common law, so that parties to employment contracts currently in force must be taken as making that assumption. Again, I disagree. In my judgment the absence from the Gisda Cyf case of any judicial challenge to Lloyd LJs analysis of the position at common law makes this submission untenable. Where, as here, the development of a standard implied term at common law may be perceived to be based upon a compromise about the fair allocation of risk, as I have described, it is inherently unlikely that all policy considerations will point in the same direction. There will always be reasons for, and against, drawing the compromise line there, or elsewhere. In the present circumstances I am satisfied that there is a sufficient basis in policy for drawing the line where it has for so long been drawn, unless matters have so changed over time to require it now to be moved. True it is that, in the modern world, few private homes are staffed in the way in which a few were in the 18th and 19th centuries. It may be that people now travel away from home, and certainly abroad, more than they used to. It may be that the post is a little less reliable than it may once have been. But it has not been submitted that these changes make a critical difference. Even if they are significant in relation to post, this will be a passing phase. Before long it is likely that most notices of this type will be sent electronically, accessible by the intended recipient anywhere in the world with a wi fi signal, via mobile phone or tablet. The Judgments in the Court of Appeal It will already be apparent that I find myself in broad agreement with the reasoning of Lewison LJ in his dissenting judgment. As for the majority, Proudman J held that nothing less than actual communication to the employee would suffice: see para 70(a). Arden LJ held that the essential requirement was receipt by the employee (regardless whether she opened it and read its contents) but that due delivery to the employees home was not sufficient for receipt, until at least she actually saw the envelope containing the letter: see para 149. These are but crude summaries of two carefully reasoned judgments, but those conclusions are in my judgment each inconsistent with the common law principles applicable to the delivery of ordinary civil notices, including employment notices, as I have sought to explain. Lady Hales formulation is slightly different again. She prefers the formula that notice is given at the earlier of the times when it is read, or when the employee has had sufficient time to do so. It is to be noted that, if departure is to be made from the long established principle that notice is given when it is duly delivered, no precise consensus has emerged as to the alternative, for the foundation of what we all recognise should be a standard implied term.
UK-Abs
The issue in this appeal is when the notice period begins to run, if an employee is dismissed on written notice posted to his home address. If the answer is not specified in the contract of employment, is it (i) when the letter would have been delivered in the ordinary course of post; (ii) when it was in fact delivered to that address; or (iii) when the letter comes to the attention of the employee and he has either read it or had a reasonable opportunity to do so? The respondent, Mrs Haywood, was dismissed by reason of redundancy by her employer, the appellant NHS Trust (the Trust). Her contract of employment provided for termination on a minimum period of notice of 12 weeks but not how such notice should be given. On 20 April 2011, the Trust sent a letter giving written notice of termination by recorded delivery to Mrs Haywoods home address. The Trust was aware that she was away on holiday. The letter was collected from the local sorting office by her father in law on 26 April 2011 and left by him in her house that day. She returned from holiday abroad on 27 April 2011 and read the letter. On the unusual facts of this case, the date on which the 12 week notice period started to run was highly material. If it commenced on 27 April 2011, it expired on 20 July 2011, the date of Mrs Haywoods 50th birthday, and Mrs Haywood would be entitled to claim a non actuarially reduced early retirement pension. The High Court and the Court of Appeal (by a majority) upheld Mrs Haywoods case that the notice period only commenced on 27 April 2011. The Supreme Court by a majority of three to two (Lord Lloyd Jones and Lord Briggs dissenting) dismisses the Trusts appeal. Lady Hale, with whom Lord Wilson and Lady Black agree, gives the main judgment and Lady Black adds a further analysis of the case law. The dissenting judgment is given by Lord Briggs, with whom Lord Lloyd Jones agrees. In the absence of an express contractual provision, the court had to determine the implied contractual term as to when a notice takes effect. The Trust argued that there was a common law rule, principally derived from landlord and tenant cases, which provided that notice was given when the letter was delivered to its address. Mrs Haywood relied on the approach of the Employment Appeal Tribunal (EAT) in employment cases to support her case that notice only took effect when it had actually been received by the employee and the employee had either read or had a reasonable opportunity of reading it [12]. Having reviewed the cases relied on by the parties, the majority held that the approach which had been consistently taken by the EAT was correct because: The common law rule in non employment cases was not as clear and universal as suggested. Receipt of the notice was always required, and arguably by a person authorised to receive it. Even after a statutory presumption of receipt at the address was introduced, this was rebuttable. The EAT was an expert tribunal familiar with employment practices, and with the general merits in employment cases. Mrs Haywoods contract with the Trust was concluded when the EAT cases were thought to represent the general law. There was no reason to suppose that this approach had caused any real difficulties in practice. An employer could either make express alternative provision in the contract or ensure notice of termination was received in sufficient time to allow the employment to terminate on a specified day. It was important for both employer and employee, even in dismissal on notice cases, to know whether and when the employment had come to an end. The rule should be the same as for summary dismissal cases [39]. Lady Black, agreeing with this conclusion, reviewed the common law cases in further detail to support the finding that that these cases did not have the effect contended for by the Trust [41 75]. Insofar as any clear principle emerged, it revolved around delivery to the recipients agent, who might be a household servant, professional agent or family member, who would be expected to take in communications for the intended recipient as part of their role [73]. Lord Briggs, dissenting, would have found that the common law cases had long established a rule embedding an implied term into contracts of employment determinable on notice [78]. Such contracts were only a sub species of relationship contracts [79]. The rule for relationship contracts was that written notice of termination was given when the document containing it was duly delivered by hand or post to the address of the intended recipient, regardless of whether either the intended recipient or his agent was there to receive it [81, 100]. The rule had a sensible and even handed policy objective behind it, creating certainty for both parties and representing a fair allocation of risk [118 121].
Mrs Owens appeals against an order of the Court of Appeal dated 24 March 2017 (Sir James Munby, the President of the Family Division, and Hallett and Macur LJJ), [2017] EWCA Civ 182, [2017] 4 WLR 74, by which it dismissed her appeal against the dismissal of her petition for divorce by Judge Tolson QC (the judge) on 25 January 2016 in the Central Family Court in London. The petition of Mrs Owens was based upon section 1(2)(b) (the subsection) of the Matrimonial Causes Act 1973 (the 1973 Act), which extends only to England and Wales: she alleged that her marriage to Mr Owens had broken down irretrievably and that he has behaved in such a way that [she] cannot reasonably be expected to live with [him]. It was in the belief that the appeal of Mrs Owens would raise a novel issue about the interpretation of the subsection that this court gave permission for it to be brought. Her principal ground of appeal had been that the subsection should now be interpreted as requiring not that the behaviour of Mr Owens had been such that she could not reasonably be expected to live with him but that the effect of it on her had been of that character. But, important though the effect on the petitioner of the respondents behaviour is under the subsection, Mr Marshall QC on her behalf conceded at the hearing that the principal ground went too far. So issues about the interpretation of the subsection, at any rate as between Mr and Mrs Owens, have narrowed substantially. But our judgments may nevertheless remain of some value to those who in the future wish to invoke, or need to apply, the subsection. Resolution, the name by which the Solicitors Family Law Association is now known, intervenes in the appeal. It commends, by contrast, a re interpretation of the subsection along the lines of that principal ground of appeal. The court is grateful for its presentation but in the circumstances will refer only briefly to it. Mrs Owens is aged 68. Mr Owens is aged 80. They were married in 1978 and have two children, now adult. During the marriage, with the support of Mrs Owens, Mr Owens built a successful business and they each now have significant wealth. The matrimonial home, in which Mr Owens continues to live, is a substantial manor house in a village in Gloucestershire. Mrs Owens now lives next door, in a property which they also own. It was in June 2012 that Mrs Owens first consulted her solicitors about a divorce. In about November 2012 she began an affair. It ended in August 2013, which was when (as Mrs Owens later discovered) Mr Owens learnt of it. Mrs Owens told the judge that the affair was the result of a bad marriage, not the cause for divorce. The judge did not say whether he accepted what she said: he could not do so because, as I will explain, he did not receive evidence about the quality of the marriage prior to 2013. In February 2015 Mrs Owens left the matrimonial home and, following five months in rented accommodation, began to occupy the property next door to the home. They have not lived together since her departure. The judge found as facts that the marriage had broken down; that Mrs Owens could not continue to live with Mr Owens; and that, in so far as he believed otherwise, Mr Owens was deluding himself. Back in December 2012 Mrs Owens had handed to Mr Owens a letter written by her solicitors, with which was enclosed a draft petition for divorce based upon the subsection; and in the letter the solicitors had enquired of Mr Owens whether, if a petition were to be issued in the terms of the draft, he would defend it. As he accepts, Mr Owens then told Mrs Owens that, if she filed the petition, he would never speak to her again. The judge remarked that, like the petition which she filed much later, this initial draft lacked beef. That should have been a compliment, not a criticism. Family lawyers are well aware of the damage caused by the requirement under the current law that, at the very start of proceedings based on the subsection, one spouse must make allegations of behaviour against the other. Such allegations often inflame their relationship, to the prejudice of any amicable resolution of the ensuing financial issues and to the disadvantage of any children. Thus for many years the advice of the Law Society, now contained in the second guideline of para 9.3.1 of the fourth edition (2015) of the Family Law Protocol, has been: Where the divorce proceedings are issued on the basis of unreasonable behaviour, petitioners should be encouraged only to include brief details in the statement of case, sufficient to satisfy the court In his judgment the judge observed that the draft petition was delivered to Mr Owens at the time when Mrs Owens had begun the affair. The strong implication, he said, is that there was no substance in the draft petition. Indeed at the hearing he had suggested that the existence of the affair knocks out the allegations made in it and provides an ulterior motive for the proposed petition. With respect, I suggest that it is wrong to infer that a spouse who aspires to present a petition while conducting an affair has no case under the subsection. In the event the draft petition was never issued. Mr and Mrs Owens continued to live in the matrimonial home, and to a substantial extent to live together, for a further two years. But Mrs Owens continued to keep a diary of incidents between herself and Mr Owens of which she might later wish to complain. In May 2015 Mrs Owens issued the petition which is the subject of the proceedings. Like the earlier draft, it was based on the subsection and was cast in appropriately anodyne terms. The statement of case comprised five paragraphs. In them Mrs Owens alleged only that Mr Owens had prioritised his work over their life at home; that his treatment of her had lacked love or affection; that he had often been moody and argumentative; that he had disparaged her in front of others; and that as a result she had felt unhappy, unappreciated, upset and embarrassed and had over many years grown apart from him. For some reason Mr Owens declined to instruct the solicitors who had been corresponding on his behalf with Mrs Owens solicitors to accept service of the petition; so it was served upon him personally. He indicated an intention to defend the suit. By his answer, he denied that the marriage had broken down irretrievably and alleged, in the event incorrectly, that in bringing the suit Mrs Owens was motivated by a wish to continue the affair and that the other man was exercising a malign influence over her. At that stage Mr Owens largely denied the allegations about his behaviour and said that, although never emotionally intense, the marriage had been successful and that he and Mrs Owens had learnt how to rub along. In October 2015 a recorder conducted a case management hearing pursuant to rule 7.22(2) of the Family Procedure Rules 2010 (the FPR). In the light of Mr Owens defence of the suit, Mrs Owens was granted permission to amend the petition so as to expand her allegations of behaviour. The recorder also directed that the parties should file short witness statements, which were to stand as their evidence in chief. The recorder made two further significant directions. The first was that there should be no witness other than the parties themselves. It appears that, by counsel, Mrs Owens agreed to that direction. The second related to the requirement under the rule for the recorder to give directions for the conduct of the final hearing of the suit. The court is told that, by their respective counsel, the wife suggested that a hearing of one half day would suffice whereas the husband suggested that three days were required. In the event the recorders direction was for a hearing of one day. Why did the experienced legal advisers to Mrs Owens consider that the court would need only one half day in which to determine the issues raised by her petition and that she would not need to call any witness to corroborate, for example, her allegation of disparaging comments on the part of Mr Owens in front of others? The answer to this question is not in dispute. It lies in an understanding of the practical operation of the family court nowadays when determining a defended suit for divorce. Defended suits are exceedingly rare. In his judgment the President noted that, in relation to the 114,000 petitions for divorce which were filed in England and Wales in 2016, fewer than 800 answers were filed; and he estimated that the number of suits which proceeded to a final, contested hearing was 0.015% of the petitions filed, which amounts to about 17 in that whole year. The degree of conflict between the parties which is evident in a fully defended suit will of itself suggest to the family court that in all likelihood their marriage has broken down. While it recognises that, unless and until repealed by Parliament, section 1 of the 1973 Act must conscientiously be applied, the family court takes no satisfaction when obliged to rule that a marriage which has broken down must nevertheless continue in being. In No Contest: Defended Divorce in England and Wales, published in 2018 by the Nuffield Foundation, Professor Trinder and Mark Sefton make a report on their detailed study of recently defended suits. In an admirable summary of the approach of the family court at pp 7 8, they say: While respondents are typically focused on defence as a means to establish their truth of why the marriage broke down, the family justice system is predicated on settlement and compromise. That settlement orientation applies even in cases where a formal defence has been issued, with encouragement to settle at each stage of proceedings, up to and including, contested hearings. The very active promotion of settlement at each stage, with lawyers and judges working in concert, reflects the dominant family justice perspective that agreed outcomes are less costly and damaging, that trying to apportion blame is a fruitless and inherently non justiciable task and that defence is futile where one party has decided that the marriage is over. For reasons which I will explain, the subsection nowadays sets at a low level the bar for the grant of a decree. The expectations therefore are that, even when defended to the bitter end, almost every petition under the subsection will succeed; that, in the interests again of minimising acrimony, the petitioner will be encouraged at the hearing to give no more than brief evidence in relation only to a few allegations of behaviour; and that then, after an equally short riposte on behalf of the respondent by cross examination, oral evidence and submission, the court will deliver a brief judgment, almost certainly culminating in the pronouncement of a decree. As Mr Owens himself acknowledged when recounting the advice given to him, Courts rarely stand in the way of a party seeking a divorce. Indeed the authors of the No Contest report discovered no recent example, other than Mr Owens himself, of a respondent to a defended suit who successfully opposed the grant of a decree on some basis or other. Mrs Owens duly amended her petition. By alleged reference to her diary, she gave 27 individual examples of the third and fourth allegations in her petition that Mr Owens had been moody and argumentative and had disparaged her in front of others. She cannot have thought that the time allowed for the hearing would enable her to give evidence of more than a few of them. The earliest of her examples was said to have occurred in 2013. So she chose not to give any specific example of Mr Owens behaviour during the first 35 years of the marriage or prior to the date of the initial draft petition. Perhaps there was no such example which she could honestly give; or perhaps, on advice, she did not regard it as necessary to do so. In his amended answer Mr Owens admitted some of the alleged examples but sought to place them in a different context; described some as exaggerated; and professed not to remember others. He entered very few denials. At the outset of the hearing before the judge, which took place ten days before he handed down his judgment, Mr Marshall QC, on behalf of Mrs Owens, said that, although in her witness statement she had confirmed the veracity of all 27 of the examples given in the amended petition, he proposed to focus only on a very few of them. Mr Marshall did so; and, at the judges invitation, Mr Dunlop, on behalf of Mr Owens, did likewise. Indeed, during his final submission Mr Marshall, at the request of the judge, identified the four examples on which he most relied. The result was that no evidence was put before the judge in relation to most of the 27 examples, apart from the written confirmation of their veracity on the part of Mrs Owens and from the mixture of responses to them which Mr Owens had given in his amended answer and confirmed to be true in his witness statement. It also follows that, although at one point Mrs Owens told Mr Dunlop that Mr Owens had been making hurtful and disparaging remarks to her long before 2012, in effect no evidence was given in relation to the marriage prior to its two final years. In a short judgment written on six pages, to which I will refer in more detail below, the judge announced at the outset that the petition was hopeless. Having concluded that the marriage had broken down, he found that: a) all 27 of the pleaded examples of behaviour were at best flimsy; b) Mrs Owens had significantly exaggerated their context and seriousness; c) Mr Owens was somewhat old school; d) Mrs Owens was more sensitive than most wives; e) three of the examples on which Mr Marshall had in particular relied (the judge making no reference to the fourth) were isolated incidents, not part of a persistent course of conduct on the part of Mr Owens; f) Mrs Owens had cherry picked one of those examples, which illustrated her approach; the three examples scarcely merited criticism of Mr Owens; and g) h) much the same could be said of the other 24 examples. The Law This court, like the appellate committee of the House of Lords which preceded it, has never had occasion to consider what the law requires a petitioner to establish under the subsection. Its words largely speak for themselves. But there are six judgments delivered in the lower courts which helpfully illumine their effect. They are old authorities which date from a period when controversy surrounding the establishment of a case under the subsection was slightly less rare. First, Pheasant v Pheasant [1972] Fam 202. A husband petitioned for divorce pursuant to section 2(1)(b) of the Divorce Reform Act 1969 (the 1969 Act), which came into force on 1 January 1971 and which was repealed when the 1973 Act came into force on 1 January 1974. Section 1(2)(b) of the 1973 Act is in the same terms as was section 2(1)(b) of the 1969 Act. The husbands case was that the wife had been unable to give him the demonstrative affection which he needed. Ormrod J dismissed the petition. At p 206 he observed that Parliament had not yet assimilated the law relating to marriage with the law of partnership, which made different provisions both for dissolution and for the resolution of financial issues consequent upon it. At pp 207 208 he construed section 2(1)(b) as placing primary emphasis on the respondents behaviour rather than on the petitioners personal idiosyncrasies. And at p 208 he asked himself whether it was: reasonable to expect this petitioner to put up with the behaviour of this respondent, bearing in mind the characters and the difficulties of each of them, trying to be fair to both of them, and expecting [of them] neither heroic virtue nor selfless abnegation Second, Livingstone Stallard v Livingstone Stallard [1974] Fam 47. Dunn J upheld a wifes petition based on the subsection. At p 54 he suggested that it was unhelpful to analyse the conduct required by the subsection in terms of its gravity. While purporting to distance himself from the question posed in the Pheasant case, Dunn J seems there to have asked himself a closely similar question, namely: Would any right thinking person come to the conclusion that this husband has behaved in such a way that this wife cannot reasonably be expected to live with him, taking into account the whole of the circumstances and the characters and personalities of the parties? This question was approved and applied by the Court of Appeal in ONeill v ONeill [1975] 1 WLR 1118 at 1125. Third, Thurlow v Thurlow [1976] Fam 32. A husbands petition under the subsection was based on the wifes failure to contribute to the running of the home and on her increasingly erratic behaviour, both of which were the result of a severe neurological condition. At p 41 Rees J noted that, before approving the form of words in section 2(1)(b) of the 1969 Act, Parliament had considered and rejected a form of words that the conduct of the respondent has been so intolerable that the petitioner could not reasonably be expected to continue or resume cohabitation. At pp 41 43 he held that a respondents failure to act could amount to behaviour for the purposes of the subsection. Even more significantly, he held at p 46 that behaviour caused by illness could fall within the subsection; and, in granting a decree to the husband, he added that no blame of any kind can be nor is attributed to the wife. Fourth, Stevens v Stevens [1979] 1 WLR 885. The facts were unusual and, for present purposes, of interest. In March 1976 a judge had dismissed the wifes petition under the subsection. He had held that the marriage had irretrievably broken down; that the wife had not established her case of behaviour against the husband; and that the cause of the breakdown had been her own behaviour. Thereupon the parties had continued to live under the same roof. In due course the wife presented a second petition, again under the subsection but relying only on the husbands behaviour occurring after March 1976. Sheldon J granted her a decree. He adhered at p 887 to the earlier findings that the marriage had irretrievably broken down prior to March 1976 and that the wifes behaviour had caused it to do so. He held that he had to consider the totality of the evidence of the matrimonial history and the cumulative conduct of the husband. He found that following March 1976 the husband had behaved in such a way that the wife could not reasonably be expected to live with him; and he held that it was irrelevant that the husbands behaviour was not the cause of the breakdown of the marriage. Fifth, Balraj v Balraj (1981) 11 Fam Law 110. The husbands petition was based not on the subsection but on section 1(2)(e) of the 1973 Act, namely that he and the wife had lived apart for at least five years. The Court of Appeal upheld the judges rejection of the wifes opposition to the grant of a decree, which was that it would result in grave hardship to her within the meaning of section 5 of the 1973 Act. She had argued that the judge had failed to pay sufficient regard to her subjective reaction, as a Hindu wife, to the grant of a decree. In giving the leading judgment Cumming Bruce LJ at p 112 offered an analogy: In behaviour cases the court has to decide the single question whether the husband (for example) has so behaved that it is unreasonable to expect the wife to live with him. In order to decide that, it is necessary to make findings of fact of what the husband actually did and then findings of fact upon the impact of his conduct on that particular lady. As has been said again and again between a particular husband and a particular lady whose conduct and suffering are under scrutiny, there is of course a subjective element in the totality of the facts that are relevant to the solution but, when that subjective element has been evaluated, at the end of the day the question falls to be determined on an objective test. And sixth, Buffery v Buffery [1988] 2 FLR 365. A recorder had dismissed a wifes petition under the subsection on the basis that she had failed to establish either that the husbands behaviour had been grave and weighty or that it had caused the breakdown of the marriage. The Court of Appeal held that behaviour under the subsection did not have to be grave or weighty. At p 367 May LJ said that the gravity or otherwise of the conduct complained of is of itself immaterial. The court also reiterated what Sheldon J had held in the Stevens case, namely that the 1973 Act did not require the respondents behaviour to have caused the breakdown of the marriage. The wifes appeal was nevertheless dismissed on the basis that, even when judged by reference to correct principles, her petition failed. As in effect the Court of Appeal in the present case has held, and as Mrs Owens now concedes, these six old authorities continue to provide a correct interpretation of the subsection. The inquiry has three stages: first (a), by reference to the allegations of behaviour in the petition, to determine what the respondent did or did not do; second (b), to assess the effect which the behaviour had upon this particular petitioner in the light of the latters personality and disposition and of all the circumstances in which it occurred; and third (c), to make an evaluation whether, as a result of the respondents behaviour and in the light of its effect on the petitioner, an expectation that the petitioner should continue to live with the respondent would be unreasonable. Resolution explains that its members are gravely concerned about the continued existence of a law which in substantial part links entitlement to divorce to the making of allegations by one spouse against the other. It argues that the State thereby actively precipitates dispute. Pending wholesale reform of section 1 of the 1973 Act, it clearly wishes to mitigate what it regards as the malign effect of the subsection. It therefore submits that historically the lower courts have placed a flawed construction on it. It contends, as in effect Mrs Owens contended in her grounds of appeal but no longer contends, that the entire focus should be on the reaction of the petitioner to the respondents behaviour; and that, if the petitioner genuinely cannot continue to live with the respondent, it might well be thought that the petitioner cannot reasonably be expected to live with the respondent. But the question posed by the subsection is more narrow than whether the petitioner cannot reasonably be expected to live with the respondent; it is whether the respondents behaviour has been such that the petitioner cannot reasonably be expected to do so. In determining whether a continuation of life with the respondent cannot reasonably be expected of the petitioner, it is therefore impossible to avoid focus on the respondents behaviour, albeit assessed in the light of its effect on the petitioner. With respect to Resolution, its suggested interpretation of the subsection is incorrect. So also, for the reasons given by the President in paras 76 to 81 of his judgment, is its suggestion (not further maintained by Mrs Owens in her grounds of appeal to this court) that either the subsection if taken alone or section 1 of the 1973 Act if taken as a whole might be incompatible with the rights of petitioners under article 8 of the European Convention on Human Rights. But, although its interpretation by these courts remains correct even after 40 years, the application of the subsection to the facts of an individual case is likely to change with the passage of the years. In R (Quintavalle) v Secretary of State for Health [2003] UKHL 13, [2003] 2 AC 687, Lord Bingham of Cornhill said: 9. There is, I think, no inconsistency between the rule that statutory language retains the meaning it had when Parliament used it and the rule that a statute is always speaking. If Parliament, however long ago, passed an Act applicable to dogs, it could not properly be interpreted to apply to cats; but it could properly be held to apply to animals which were not regarded as dogs when the Act was passed but are so regarded now. The meaning of cruel and unusual punishments has not changed over the years since 1689, but many punishments which were not then thought to fall within that category would now be held to do so. In Miller v Miller, McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618, the appellate committee developed a new approach to the exercise of the discretionary jurisdiction under the 1973 Act to make financial orders following divorce. It was in that context, somewhat similar to the present, that both Lord Nicholls of Birkenhead at para 4 and Lord Hope of Craighead at para 115 justified the new approach by reference to the change in social and moral values from one generation to the next. I cannot readily think of a decision which more obviously requires to be informed by changing social norms than an evaluation whether, as a result of the respondents behaviour and in the light of its effect on the petitioner, an expectation of continued life together would be unreasonable. In Ash v Ash [1972] Fam 135 Bagnall J suggested at p 140: that a violent petitioner can reasonably be expected to live with a violent respondent; a petitioner who is addicted to drink can reasonably be expected to live with a respondent similarly addicted; and if each is equally bad, at any rate in similar respects, each can reasonably be expected to live with the other. The judges suggestion now seems almost comical. In the two specific examples quoted, surely each spouse would nowadays be entitled to a decree against the other under the subsection. But the relevant social norm which has changed most obviously during the last 40 years has, I suggest, related to our societys insistence upon equality between the sexes; to its recognition that marriage is a partnership of equals; and, specifically, to its assessment of the moment when a husbands behaviour, in the light of its effect on his wife, begins to make it unreasonable to expect her to continue to live with him. For a wife that moment now arrives earlier than it did before; it now arrives at the same time for both sexes in equivalent situations. In Priday v Priday [1970] 3 All ER 554, which was decided months before section 2(1)(b) of the 1969 Act came into force, Cumming Bruce J dismissed a husbands petition for divorce on the ground of the wifes cruelty under section 1(1)(a)(iii) of the Matrimonial Causes Act 1965. But, in recounting the history of the marriage, the judge also commented at p 557 on the conduct of the husband towards the wife: Up to 1968 [the husband] sometimes attempted intercourse by force in the hope that if he succeeded in intercourse, even by such method, that . might stimulate her again emotionally to return to reality, but that was unsuccessful and he naturally abstained from such attempts. I am satisfied that his recourse to force in intercourse was not in any sense culpable but was a desperate attempt on his part to re establish what might have been an important element in matrimonial consortium. Today such an assessment would be inconceivable. Eight years ago, in Miller Smith v Miller Smith in the Court of Appeal, [2009] EWCA Civ 1297, [2010] 1 FLR 1402, I observed at para 15: Our society in England and Wales now urgently demands a second attempt by Parliament, better than in the ill fated Part II of the [Family Law Act 1996], to reform the five ancient bases of divorce; meanwhile, in default, the courts have set the unreasonableness of the behaviour required to secure the success of a petition on the second basis, namely pursuant to section 1(2)(b) of the Act of 1973, even when defended, at an increasingly low level. The ease with which a petitioner can nowadays establish a case under the subsection, if undefended, led the President in his judgment to speak of its widespread dishonest and collusive manipulation. If the allegations of behaviour are not true, there is indeed dishonesty and, by not challenging them, a respondent might loosely be said to collude with it; and unfortunately such dishonesty is unlikely to be uncovered when, by reference only to the papers filed, the court decides pursuant to rule 7.20(2)(a) of the FPR whether to certify that the petitioner is entitled to a decree. But my reference in the Miller Smith case to the greater availability of a decree under the subsection was intended to recognise not its abuse in some cases but a legitimate enlargement of its application reflective of changing social norms in other cases. Nevertheless, in making that reference, I used a phrase which I regret: for I referred to the unreasonableness of the behaviour. Unreasonable behaviour has always been the family lawyers shorthand description for the content of the subsection. But it is wrong. The subsection requires not that the behaviour should have been unreasonable but that the expectation of continued life together should be unreasonable. Within about a year of the advent of the 1969 Act, the error inherent in the shorthand description was exposed: Katz v Katz [1972] 1 WLR 955, 960. Indeed, in Bannister v Bannister (1980) 10 Fam Law 240, in which the Court of Appeal allowed a wifes appeal against the dismissal of her petition for divorce, Ormrod LJ observed at p 240: The learned judge, I am afraid, fell into the linguistic trap which is waiting for all of us when we speak of unreasonable behaviour in relation to section 1(2)(b) cases. The basis of this subsection is not unreasonable behaviour but behaving in such a way that the petitioner cannot reasonably be expected to live with the respondent, a significantly different concept. It is difficult to find an alternative shorthand expression for this subsection, so we all talk, inaccurately, of unreasonable behaviour. The Judgment In the course of his short judgment in the present case the judge referred five times to unreasonable behaviour. Questions arise. Was he looking for behaviour objectively worse than what the law requires? What lay behind his search for beef? Was he looking for behaviour for which he might blame Mr Owens, contrary to the decision in the Thurlow case cited at para 24 above? Was he looking for behaviour of gravity, contrary to the decision in the Buffery case cited at para 27 above? No doubt blameworthy or grave behaviour often makes it more likely that the third stage evaluation under the subsection will be that an expectation of continued life together would be unreasonable. But such is not a pre requisite of a successful petition under the subsection. as it went. He said: It seems, however, that the judge gave himself a correct self direction, so far In determining the question whether this respondent has behaved in such a way I apply an objective test what would the hypothetical reasonable observer make of the allegations but with subjective elements. I have to take into account the individual circumstances of the spouses and the marriage The judge then proceeded to repeat the question which Dunn J had asked himself in the Livingstone Stallard case, set out at para 23 above. The President described the judges self direction as entirely adequate. But did it go far enough? Did he remind himself of the need, noted in the Stevens case cited at para 25 above, to consider the behaviour of Mr Owens as a whole? Or equally, of the need to consider the effect of all of it on Mrs Owens cumulatively? In Jamieson v Jamieson [1952] AC 525 the appellate committee reversed the decision of the Court of Session that a wifes allegations of cruelty should be struck out as irrelevant and insufficient. Lord Normand suggested at pp 535 536: that it does not do justice to the averments to take up each alleged incident one by one and hold that it is trivial or that it is not hurtful or cruel The relationship of marriage is not just the sum of a number of incidents Equally, as Hallett LJ pointed out in the present case, behaviour which the other spouse may consider trivial in the context of a happy marriage may bear more heavily upon a spouse trapped in an unhappy marriage. In his judgment the President noted that the judge had failed to make explicit reference to the cumulative effect of Mr Owens behaviour on Mrs Owens, of which indeed she had given copious evidence. He said, however, that once he had surveyed the whole of the judges judgment, including in particular the reference to the whole of the circumstances in the question first articulated by Dunn J, he had become satisfied that the judge had paid sufficient regard to the cumulative effect of it on Mrs Owens, whom he had acknowledged to be more sensitive than most wives. But had the judge heard enough evidence to be able to appraise the cumulative effect on Mrs Owens of the conduct, taken as a whole, upon which she relied? How could he find the three examples of behaviour to which he made specific reference to be no more than isolated incidents, not part of a persistent course of conduct, in circumstances in which it had been agreed to be convenient to place so many other pleaded examples, albeit verified in writing by Mrs Owens, to one side? This, says Mrs Owens, represents appealable error even in this court. It was this court itself which, at the hearing, raised with counsel another possible cause for concern about the judgment. It is clear from the cases of Stevens and Buffery, cited in paras 25 and 27 above, that section 1 of the 1973 Act does not require the behaviour under the subsection to have caused the breakdown of the marriage. Nevertheless Mr Owens and his advisers energetically denied that any behaviour on his part had caused the breakdown of the marriage. In his witness statement Mr Owens twice averred that if, which he did not accept, the marriage had broken down, the breakdown had not been the result of his behaviour; and his counsels skeleton argument before the judge spoke of the possibility that the marriage was at an end but not due to [Mr Owens] fault. This courts question to counsel was whether these no doubt innocent misrepresentations of the nature of the inquiry under the subsection had misled the judge into considering that Mrs Owens needed to establish that the alleged behaviour of Mr Owens had caused the marriage to break down. For, in adverting briefly to the allegation in the petition, never particularised, that Mr Owens had prioritised his work over life at home, the judge first pointed out that Mr Owens had in effect been retired for many years; and then, in a passage which Mr Dyer QC on behalf of Mr Owens acknowledged to be unfortunate and difficult for him to interpret, continued: The idea that the lifestyle, whatever it may have been, now contributes to the breakdown of the marriage is fanciful. The ground is no more than a conventional form of words with no application to the present or the breakdown of the marriage at all. Moreover, at the end of his judgment, the judge explained his crucial conclusion in the following few words: I find no behaviour such that the wife cannot reasonably be expected to live with the husband. The fact that she does not live with the husband has other causes. The petition will be dismissed. (italics supplied) The facts remain, however, that Mr Marshall on behalf of Mrs Owens never argued in the Court of Appeal that the judge had fallen into this possible error; that the Court of Appeal did not see fit to raise it of its own motion; and that, even after it was raised at the hearing in this court, Mr Marshall did not squarely rely on it. The judge has long experience of family law (albeit, as he said, that he had previously tried only one defended suit for divorce) and the view must have been taken that the quoted passages represent too weak a foundation for a conclusion that he had fallen into elementary error. In such circumstances it is inappropriate for this court further to consider the point. There is no denying that the appeal of Mrs Owens generates uneasy feelings: an uneasy feeling that the procedure now conventionally adopted for the almost summary despatch of a defended suit for divorce was inapt for a case which was said to depend on a remorseless course of authoritarian conduct and which was acknowledged to appear unconvincing if analysed only in terms of a few individual incidents; an uneasy feeling about the judges finding that the three incidents which he analysed were isolated in circumstances in which he had not received oral evidence of so many other pleaded incidents; and an uneasy feeling about his finding that Mrs Owens had significantly exaggerated her entire case in circumstances in which Mr Owens had not disputed much of what she said. But uneasy feelings are of no consequence in this court, nor indeed in any other appellate court. The advantages of the judge in reaching the relevant conclusions need no rehearsal. The complaints of Mrs Owens about his judgment have already been analysed and dismissed by members of the Court of Appeal who have unrivalled authority in this sphere. Permission for her further appeal to this court was founded upon a novel interpretation of the subsection which at the hearing and in the event correctly she abandoned. As the above paragraphs testify, this court is not precluded from proceeding to address her remaining complaints, in particular in relation to the judges evaluation at the third stage of the inquiry; but in the above circumstances it is most unlikely to be appropriate for it to intervene. The Conclusion The appeal of Mrs Owens must be dismissed. She must remain married to Mr Owens for the time being. Were she to continue to live apart from Mr Owens until 2020, he would surely have no defence to a petition then brought under section 1(2)(e) of the 1973 Act on the basis that they had lived apart for a continuous period of five years. Parliament may wish to consider whether to replace a law which denies to Mrs Owens any present entitlement to a divorce in the above circumstances. LADY HALE: I have found this a very troubling case. It is not for us to change the law laid down by Parliament our role is only to interpret and apply the law that Parliament has given us. Lord Wilson has explained very clearly what that law requires. He sets out the three stages of the inquiry at para 28. He explains at para 30 that the application of that inquiry to the facts of an individual case is likely to change with the passage of the years. Expectations of whether it is reasonable to expect one spouse to continue to live with the other, in the light of the way the latter has behaved and its effect upon the former, have indeed changed over the 47 years since the Divorce Reform Act 1969 came into force. As Lord Wilson observes at para 34, the social norm which has changed most obviously over that time is the recognition that marriage is a partnership of equals. Indeed, the equality of the sexes is now also a legal norm, reflected in developments not only in family law but also in equality and anti discrimination law. With that statement of the law in mind, I have several misgivings about the trial judges judgment in this case. The first is his repeated reference to unreasonable behaviour. This is a convenient but deeply misleading shorthand for a very different concept. And it can so easily lead into error. In particular, it can lead to a search for blame, which is not required. Indeed, those of us who have made or supported proposals for reform of the law over the years may not have helped by referring to no fault divorce when the current law does not require fault. Worse still, referring to unreasonable behaviour can also lead to a search for who is the more to blame, which is also irrelevant. The Divorce Reform Act 1969 swept away the concepts in the old law relating to matrimonial offences which did make an attempt, however crude, to work out who was the more to blame. The current law simply does not do this. It is, for example, no answer to a petition based on adultery that the petitioner had been unfaithful and unloving for years or that the couple had not lived together for a long time. We should be referring to the facts in section 1(2)(a) and (b) as conduct based rather than fault based. My second misgiving is that the judge appears, at least from the passages quoted by Lord Wilson in para 41, to have thought that the behaviour complained of had to be the cause of the breakdown of the marriage. That is, as Lord Wilson has explained, simply not the law. The marriage has to have broken down irretrievably. One of the five facts prescribed in section 1(2)(a) to (e) of the 1973 Act has to be proved. But the Act does not require that there be a causal connection between them. It is, for example, most unlikely that the fact that a couple have been living apart for five years (fact (e)) is the cause of the breakdown of their marriage: it will have broken down for other reasons often attributable to the petitioner and long ago. But my third misgiving is the most troubling of all. This was a case which depended upon the cumulative effect of a great many small incidents said to be indicative of authoritarian, demeaning and humiliating conduct over a period of time. Those who have never experienced such humiliation may find it difficult to understand how destructive such conduct can be of the trust and confidence which should exist in any marriage. There is an analogy here with constructive dismissal cases in employment law. As Langstaff J (President) in the Employment Appeal Tribunal has put it (in Ukegheson v London Borough of Haringey, UKEAT/0312/14/RN, at paras 30 31): The meaning that correspondence or observations have when they are directed by one person to another may often depend very much on the context of the relationship between the two . [Looking at incidents in isolation] is perhaps to fail to see the eloquence of the story painted by the whole of the series of events and to focus instead upon events taken individually as though they were in silos. In a constructive dismissal case arising out of a poisoned relationship between parties, what matters is the totality of the picture rather than any individual point along the way. The problem, as Lord Wilson has shown, is that this hearing was not set up or conducted in a way which would enable the full flavour of such conduct to be properly evaluated. But what are we to do about it? This court is not a court of error. If the law is clear, permission to appeal is not normally given, either by this court or the court below, simply because the law may have been misapplied in the individual case. In this case, as Lord Wilson has explained, permission to appeal was given because it was argued that it was the effect of the respondents behaviour, rather than the behaviour itself, which should make it unreasonable to expect the petitioner to live with the respondent. That argument is no longer pursued. However, permission having been given to come to this court, we would in my view be failing in our duty if we were not to correct any error into which we found that the courts below had fallen. I am concerned that the trial court did indeed fall into error in the three respects identified earlier. Are we then to do nothing? Or are we to allow the appeal? And if so can we decide it ourselves or should we send it back to be heard again? Given that the principal problem is that the hearing did not enable the court to evaluate the petition as a whole and in context, it seems to me that the case would have to go back for a rehearing. We cannot assume that a properly instructed and constructed hearing would inevitably lead to a decree being granted. In my view therefore, the correct disposal of this appeal would be to allow the appeal and send the case back to be tried again. However, in the appellants written case, it was argued that it cannot be in the interests of the parties or in accordance with the overriding objective for there to be a further contested hearing (para 94). Orally, counsel viewed such a prospect with dread. It would place the appellant in an unenviable dilemma, given that, in February 2020, five years will have elapsed from their separation and, should the petitioner still wish to be divorced, it is difficult to see that there would be any obstacle standing in her way. I am therefore reluctantly persuaded that this appeal should be dismissed. LORD MANCE: I agree that this appeal should be dismissed. As to the law, I agree with paras 21 37 of Lord Wilsons judgment. As to its application to the facts, my reasons can be put in like terms to those contained in Lord Wilsons summary in para 43. I also agree with his conclusions and observations in paras 44 45. The judge stated and explained the legal test correctly in his para 10. His references, when summarising or referring to the evidence, to allegations of unreasonable behaviour adopted an inaccurate shorthand which is evidently, though regrettably, common in the profession. But there is no reason to think that the judge did not ultimately apply the correct test to the allegations. He expressly applied it when reaching his conclusions in his para 15. The judge, in the course of explaining the correct test in para 10, identified the need to take into account the individual circumstances of the spouses and the marriage the whole of the circumstances and the characters and personalities of the parties. He went on find that all of the allegations were at best flimsy, and, having heard both parties give evidence, that Mrs Owens had exaggerated their context and seriousness to a significant extent. He then considered various batches of allegations and three allegations which counsel for Mrs Owens ranked foremost in terms of seriousness. He concluded that these were all insignificant and that much the same could be said of all the other allegations and of Mrs Owens case generally. It appears fanciful to suppose that it would have made any difference to the judges assessment if he had also expressly put and answered the question whether, even if the allegations were individually insignificant, they were cumulatively significant. The judge clearly formed the view that there was nothing in the case overall. I share Lord Wilsons unease in paras 13 19 and 42 about an apparently conventional procedure, whereby this defended divorce petition was listed for what, in common law terms, might be regarded as a relatively short period in this case one day. But it was Mrs Owens who through counsel submitted that even that period was not required, and that only half a day would suffice, while Mr Owens case was that three days were required. The case was conducted, and the judge was invited to decide it, on the basis of his direction for a hearing of one day, not appealed as such. I do not think that we can now interfere to say that it was not possible in the circumstances to have a fair determination or for the judge to reach the overall conclusions which he did. Finally, I do not think that the judges judgment is open to the construction (raised with counsel by the Supreme Court) that he thought that the husbands conduct had to cause the breakdown. Considering the allegation that the husbands working lifestyle had caused Mrs Owens much unhappiness and made her feel unloved, the judge said (para 7) that: The idea that the lifestyle, whatever it may have been, now contributes to the breakdown of the marriage is fanciful. In his conclusions in para 15, he said: I find no behaviour such that the wife cannot reasonably be expected to live with the husband. The fact that she does not live with the husband has other causes. The judges use of the word contributes in the first passage is consistent with his recognising that, even though the actual breakdown may have had some other cause, the husbands behaviour may still have been such that the petitioner could not be expected to live with him. After expressly rejecting, in the first sentence quoted above from para 15, Mrs Owens case that the husbands behaviour had been such, the judge was in my view doing no more in the second quoted sentence than responding to the obvious factual or evidential question: if the husbands conduct was not such as the wife could not reasonably be expected to put up with, why is she living apart from him? There is to my mind no inference that he thought that the husbands behaviour must not only be such that the wife could not reasonably be expected to live with him as a matter of fact, but also that it must as a matter of law be the actual reason why she had determined to live, or was living, apart from him.
UK-Abs
The Appellant, Mrs Owens, and the Respondent, Mr Owens, were married in 1978 and have two adult children. Mrs Owens had been contemplating a divorce since 2012 (when she consulted solicitors who prepared a draft divorce petition for her) but it was not until February 2015 that she left the matrimonial home. The parties have not lived together since her departure. In May 2015 Mrs Owens issued the divorce petition which is the subject of the current proceedings. It was based on s.1(2)(b) of the Matrimonial Causes Act 1973, and alleged that the marriage had broken down irretrievably and that Mr Owens had behaved in such a way that Mrs Owens could not reasonably be expected to live with him. It was drafted in anodyne terms but when it was served on Mr Owens he nevertheless indicated an intention to defend the suit, arguing that the marriage had largely been successful. In October 2015 the matter came before a recorder for a case management hearing. In light of Mr Owens defence, the recorder granted Mrs Owens permission to amend her petition so as to expand her allegations of behaviour. The recorder also directed that the substantive hearing of the dispute would take place over the course of a day (Mrs Owens had originally suggested a half day would suffice) and that there would be no witnesses other than the parties themselves. Mrs Owens duly amended her petition so as to include 27 individual examples of Mr Owens being moody, argumentative, and disparaging her in front of others, but at the one day hearing her counsel ultimately focussed on only a very few of these. The judge found that the marriage had broken down, but that Mrs Owens 27 examples were flimsy and exaggerated, and that those relied on at the hearing were isolated incidents. Accordingly, the test under s.1(2)(b) was not met and Mrs Owens petition for divorce was dismissed. Mrs Owens appealed against this decision to the Court of Appeal, but her appeal was also dismissed. She now appeals against the Court of Appeals decision to the Supreme Court. The Supreme Court unanimously dismisses the appeal, with the result that Mrs Owens must remain married to Mr Owens for the time being. Lord Wilson gives the majority judgment, with whom Lord Hodge and Lady Black agree. Lady Hale and Lord Mance each give a concurring judgment. It is important to bear in mind the legal context to this dispute, namely that defended suits for divorce are exceedingly rare. While the family court recognises that s.1 of the Matrimonial Causes Act 1973 must be conscientiously applied, it takes no satisfaction when obliged to rule that a marriage which has broken down must nevertheless continue in being [15]. The expectations are that almost every petition under section 1(2)(b) will succeed, that the evidence before any contested hearing will be brief, and that the judgment of the court in such a hearing will almost certainly result in the pronouncement of a decree [17]. This is the background to the contested hearing in this case, and explains why Mrs Owens advisors agreed to a short hearing with no external witnesses to corroborate her evidence [14 15]. When applying section 1(2)(b) the correct inquiry is: (i) by reference to the allegations of behaviour in the petition, to determine what the respondent did or did not do; (ii) to assess the effect which the behaviour had upon this particular petitioner in light of all the circumstances in which it occurred; and (iii) to make an evaluation as to whether, as a result of the respondents behaviour and in the light of its effect on the petitioner, an expectation that the petitioner should continue to live with the respondent would be unreasonable [28]. This test has been applied for many years but the application of the test to the facts of an individual case is likely to change over time, in line with changes in wider social and moral values [30 32]. The most relevant change over the past forty years is the recognition of equality between the sexes, and of marriage as a partnership of equals [34]. At the hearing, the judge gave himself the correct self direction; he understood he was applying an objective test, but with subjective elements [39]. The majority nevertheless have concerns about other aspects of the judges analysis. In particular, they have an uneasy feeling about the summary despatch of a suit which was said to depend on an authoritarian course of conduct, when the judge had scrutinised only a few individual incidents of Mr Owens behaviour [42]. However, uneasy feelings are of no consequence in an appellate court. A first instance judge has many advantages in reaching the relevant conclusions, and Mrs Owens complaints about the judgment have already been rehearsed and dismissed by the Court of Appeal. In such circumstances it is most unlikely for it to be appropriate for the Supreme Court to intervene [43]. However, the majority invite Parliament to consider replacing a law which denies Mrs Owens a divorce in the present circumstances [44 45]. Concurring judgments Lady Hale agrees with Lord Wilson as to the legal analysis, but has several misgivings about the judges judgment [47 48]. Her gravest misgiving relates to the fact that this was a case which depended upon the cumulative effect of a great many small incidents (which were said to be indicative of authoritarian and demeaning conduct over a period of time), yet the hearing before the judge was not set up or conducted in a way which would enable the full flavour of such conduct to be properly evaluated [50]. In light of her misgivings, she considers that the proper disposal is to allow the appeal, and send the case back to the first instance court to be tried again. However, this is not a disposal which Mrs Owens is actually seeking, and Lady Hale is therefore reluctantly persuaded that the appeal should be dismissed [53 54]. Lord Mance also agrees with Lord Wilson as to the wider legal analysis, however he does not share the concerns expressed by Lord Wilson and Lady Hale about the judges judgment. Lord Mance considers that the judge did not misdirect himself at any stage, and that the judge properly concluded that there was nothing in the case overall [57, 59]. Moreover, although the hearing of the defended divorce petition was listed for a relatively short period, this was how the judge was invited to decide the matter. It would be inappropriate for the Supreme Court to interfere at this stage and say it was not possible in the circumstances for the judge to have reached a fair determination [58].
The ruling under challenge in this case was made by the Crown Court judge at a preparatory hearing, held in anticipation of a criminal trial. That means that as yet no evidence has been heard and it cannot be known what the facts of the case may turn out to be. Such rulings are occasionally necessary in order to establish the basis on which the trial will be conducted. But it needs to be remembered that a point raised at that early stage may turn out to be at the centre of the trial, or to be merely peripheral, or indeed sometimes not to arise at all, depending on what evidence emerges, and which parts of it are in dispute. For this reason, reporting restrictions apply to this hearing: see para 26 below. The two appellants are charged with the offence of entering into funding arrangements connected with terrorism, contrary to section 17 of the Terrorism Act 2000 (the Act). Because it is not yet known what course the trial will take, as little as possible should be said now about the allegations, which may or may not be proved. It is enough to say that the appellants are charged with sending money overseas, or arranging to do so, when they knew or had reasonable cause to suspect that it would, or might, be used for the purposes of terrorism. The section of the Act which creates this offence says as follows: 17. Funding arrangements. A person commits an offence if (a) he enters into or becomes concerned in an arrangement as a result of which money or other property is made available or is to be made available to another, and (b) he knows or has reasonable cause to suspect that it will or may be used for the purposes of terrorism. The question which arises on this appeal concerns the correct meaning of the expression has reasonable cause to suspect in section 17(b). Does it mean that the accused must actually suspect, and for reasonable cause, that the money may be used for the purposes of terrorism? Or is it sufficient that on the information known to him there exists, assessed objectively, reasonable cause to suspect that that may be the use to which it is put? Of course, it may well be that at any trial under this section it will be the Crown case that a defendant actually did suspect, and for reasonable cause, that the money might be used in this way, and it may well be that an important issue at the trial will be whether that allegation is proved or not. But the judge in the present case addressed the question posed in the previous paragraph in case it were to arise at the trial. The question posed above has been addressed by counsel on both sides with commendable accuracy and lucidity. Both the trial judge and the Court of Appeal (Criminal Division) concluded that the correct answer was that the words used in the statute plainly mean that it is sufficient that on the information known to the accused, there exists, assessed objectively, reasonable cause to suspect that the money may be used for the purposes of terrorism. The appellants contend that this conclusion is wrong. They say that: the words used are capable of either meaning; (i) (ii) given that, the well established presumption that an offence creating provision ought to be construed as requiring an element of a guilty mind (mens rea) operates to accord to the section the meaning that an accused must actually suspect that the money may be put to terrorist use; (iii) this is particularly so since the offence here created is a serious one, to be contrasted with the kind of regulatory contexts where a legislative intention to create an offence of strict liability may more easily be divined; (iv) the Court of Appeal erred in starting by asking the natural meaning of the words, and then whether that meaning had been displaced; it is said that it ought to have begun with the presumption of mens rea and asked whether that presumption had been displaced by the words of the section; and (v) the Court of Appeal erred in giving too much emphasis to the fact that the statute was designed to protect the public against the grave threat of terrorism; whilst this is so, it is not a reason to dilute the presumption. The presumption as to mens rea The presumption on which the appellants rely is indeed well established and has often been applied to the construction of statutes creating offences where the meaning is in doubt. The conventionally authoritative statement of the presumption is found in the speech of Lord Reid in Sweet v Parsley [1970] AC 132, 148, 149: our first duty is to consider the words of the Act: if they show a clear intention to create an absolute offence that is an end of the matter. But such cases are very rare. Sometimes the words of the section which creates a particular offence make it clear that mens rea is required in one form or another. Such cases are quite frequent. But in a very large number of cases there is no clear indication either way. In such cases there has for centuries been a presumption that Parliament did not intend to make criminals of persons who were in no way blameworthy in what they did. That means that whenever a section is silent as to mens rea there is a presumption that, in order to give effect to the will of Parliament, we must read in words appropriate to require mens rea. it is firmly established by a host of authorities that mens rea is an essential ingredient of every offence unless some reason can be found for holding that that is not necessary. It is also firmly established that the fact that other sections of the Act expressly require mens rea, for example because they contain the word knowingly is not in itself sufficient to justify a decision that a section which is silent as to mens rea creates an absolute offence. In the absence of a clear indication in the Act that an offence is intended to be an absolute offence, it is necessary to go outside the Act and examine all relevant circumstances in order to establish that this must have been the intention of Parliament. I say must have been because it is a universal principle that if a penal provision is reasonably capable of two interpretations, that interpretation which is most favourable to the accused must be adopted. This statement of the principle was described by Lord Nicholls in B (A minor) v Director of Public Prosecutions [2000] 2 AC 428, 460 as magisterial. It has often been applied, and it is unnecessary to multiply examples. They include recent cases in this court, such as R v Brown (Richard) [2013] UKSC 43; [2013] 4 All ER 860, R v Hughes (Michael) [2013] UKSC 56; [2013] 1 WLR 2461, and R v Taylor (Jack) [2016] UKSC 5; [2016] 1 WLR 500. Whilst the principle is not in doubt, and is of great importance in the approach to the construction of criminal statutes, it remains a principle of statutory construction. Its importance lies in ensuring that a need for mens rea is not inadvertently, silently, or ambiguously removed from the ingredients of a statutory offence. But it is not a power in the court to substitute for the plain words used by Parliament a different provision, on the grounds that it would, if itself drafting the definition of the offence, have done so differently by providing for an element, or a greater element, of mens rea. The principle of Parliamentary sovereignty demands no less. Lord Reid was at pains to observe that the presumption applies where the statute is silent as to mens rea, and that the first duty of the court is to consider the words of the statute. Hughes (Michael) and Taylor (Jack), mentioned above, concerned offences of causing death by driving. They were cases where the language of the statutes was ambiguous and the presumption assisted the court to reach the conclusion that they imported an element of fault (although not necessarily of subjective mens rea rather than of error of driving). The words used by Parliament were words of causation of death. This court construed those words as importing an element of fault, principally because there were ample unambiguous alternative expressions which could and would have been used if the intention had been to create an offence of homicide which could be committed simply by being present on the road to be run into by someone else. By contrast, Brown (Richard) was a case in which this court had no doubt that the statutory offence of unlawful carnal knowledge of a girl under 14 did not contain a requirement that the accused know that the girl was under age. This conclusion was mandated despite the fact that the offence creating section was silent as to whether such knowledge was required or not. It was a conclusion compelled by the prior common law and statutory context, against which the offence had been created, by other provisions in the legislation, which had to be construed as a whole, and by the social mischief which the Act had been passed to meet. Thus these three recent cases are good illustrations of the truism that the presumption on which the appellants here rely is a principle of statutory construction, which must give way to either the plain meaning of the words, or to other relevant pointers to meaning which clearly demonstrate what was intended. It follows that the Court of Appeal in the present case did not fall into the error suggested, of wrongly starting with the words of the Act. On the contrary, that is the inevitable first port of call for any issue of construction, as Lord Reids statement of the principle in Sweet v Parsley expressly stated. The language of the statute Mr Moloney QC, for the appellants, was characteristically realistic, and correct, to recognise that the words of section 17(b) are such as, at first sight, suggest an objective test. The section makes it an offence where the defendant either knows or has reasonable cause to suspect. It does not say what one would expect it to say if it meant that the defendant must be proved actually to have suspected, that is: if he knows or suspects Nor, for that matter, does it say: if he knows or reasonably suspects It is thus very difficult to see this statutory provision as one of the kind which Lord Reid was describing in Sweet v Parsley, that is to say one which is silent as to the state of mind required for commission of the offence. Saik and OHara The appellants nevertheless contend that, if not silent, the provision is ambiguous, and thus that the presumption should operate to resolve the doubt in favour of the construction which favours an accused by requiring a greater degree of mens rea. This argument is founded largely upon the House of Lords decision in R v Saik [2006] UKHL 18; [2007] 1 AC 18 and particularly on some passages in the speech of Lord Hope in that case and in OHara v Chief Constable of the Royal Ulster Constabulary [1997] AC 286. In Saik the substantive offence under consideration was one of the now repealed offences of money laundering contained in section 93A C of the Criminal Justice Act 1988. The relevant one was section 93C(2): (2) A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another persons proceeds of criminal conduct, he conceals or disguises that property; or converts or transfers that property or removes it (a) (b) from the jurisdiction, for the purpose of assisting any person to avoid prosecution for an offence to which this Part of this Act applies or the making or enforcement in his case of a confiscation order. It is certainly true that in Saik the House of Lords concluded that this section imported a requirement that the defendant actually suspect, as well as that he did so on reasonable grounds. Whilst the section under discussion in the present case speaks not of reasonable grounds but of reasonable cause for suspicion, it is not necessary to contemplate any distinction between the two for the purposes of the present argument. The appellants rely particularly on what Lord Hope said at paras 51 53, where he concluded that to stipulate for reasonable grounds for suspicion assumed the existence of actual suspicion. Lord Hope drew an analogy with statutory powers of arrest, including that considered in OHara which was section 12(1) of the Prevention of Terrorism (Temporary Provisions) Act 1984. There a constable was given powers to arrest without a warrant if he had reason to suspect the person arrested was concerned in terrorism. As Lord Hope remarked in both cases, such a power of arrest plainly assumes an actual suspicion and adds the requirement that it be held on reasonable grounds. It plainly does not contemplate a constable arresting someone whom he might have grounds to suspect, but of whom he has no suspicion, still less someone about whom he has not thought at all, but of whom it could be said that objectively there existed reasonable grounds to suspect him. The existence or otherwise of reasonable grounds for suspicion was not an issue in Saik. The defendant there concerned had made no bones about admitting that he suspected that the property which he had dealt with was the proceeds of crime; his contention was that he suspected but did not know. The charge he faced was not brought under section 93C(2). It was a charge of conspiracy to commit that statutory offence, and the point at issue related to the terms of section 1(2) of the Criminal Law Act 1977 which mandates proof of knowledge or intent when conspiracy is charged, even if the substantive offence is one which can be committed without such a state of mind. Accordingly, the construction of section 93C(2) arose only en route to the real question, which was the meaning of the requirement for knowledge if the charge is conspiracy. As all their Lordships, including Lord Hope at para 51, made clear, section 93C(2) contained within its own terms the answer to any issue about its construction. Since the statutory offence which it created could be committed only if the defendant acted with the purpose of assisting someone else to avoid either prosecution or a confiscation order, the section necessarily meant, or assumed, that the defendant had actual suspicion. As Lady Hale succinctly put it at para 102: Without that actual suspicion, he cannot act with the purpose required. For these reasons it is not possible to read either Saik or OHara as laying down a universal proposition that if a statute speaks of a person having reasonable cause to suspect, that will always assume that he has to have actual suspicion. The statutory context An offence of providing funding towards terrorism first appeared in the Prevention of Terrorism (Temporary Provisions) Act 1976. Section 10(2) of that Act provided: If any person gives, lends or otherwise makes available to any other person, whether for consideration or not, any money or other property, knowing or suspecting that the money or other property will or may be applied or used for or in connection with the commission, preparation or institution of acts of terrorism to which this section applies, he shall be guilty of an offence. [Emphasis supplied] That subsection was re enacted in essentially identical form in section 10(2) of the replacement statute, the Prevention of Terrorism (Temporary Provisions) Act 1984. These sections thus provided for an offence which required proof either of knowledge or of actual suspicion. However, when the 1984 Act was in turn replaced by the Prevention of Terrorism Act 1989 a change was made. Section 9(2) said: (2) A person is guilty of an offence if he (a) gives, lends or otherwise makes available to any other person, (b) whether for consideration or not, any money or other property; or enters into or is otherwise concerned in an arrangement whereby money or other property is or is to be made available to another person, knowing or having reasonable cause to suspect that it will or maybe applied or used as mentioned in subsection (1) above. [Emphasis supplied] A similar formulation (intending or having reasonable cause to suspect) was applied by the 1989 Act to the related offence contrary to section 9(1) of soliciting or receiving contributions; this offence had, in previous statutes, required proof of intention rather than of any form of suspicion. These changes can only have been deliberate. They are inexplicable unless it was the Parliamentary intention to widen the scope of the offences to include those who had, objectively assessed, reasonable cause to suspect that the money might be put to terrorist use, as well as those who intended that it should be, or knew that it would be. In particular, the change in the definition of the offence which is now section 17 of the Terrorism Act 2000, and here under question, is a change from knows or suspects to knows or has reasonable cause to suspect. That change can only have been intended to remove the requirement for proof of actual suspicion. It is not open to the court to ignore this kind of clear Parliamentary decision. That inevitable conclusion is reinforced by the presence in the 2000 Act of section 19. This creates an offence for specified groups of people of failing to disclose to a police officer a belief or suspicion, which has come to their attention in the course of their work, that another person has committed one of a number of specified terrorist offences. The offence is committed, according to section 19, where a person believes or suspects Thus the 2000 Act, here in question, demonstrates the currency, in the context of terrorist offences, of a reference to actual suspicion, at the same time as turning its back on such a reference section 17, with which this court is now concerned. The contrast is clearly a relevant pointer to the meaning of section 17. Similarly, section 18 of the same Act creates an offence of money laundering in relation to terrorist property. The offence contains no requirement of a mental element as a definition of the offence. Rather, by subsection (2), it provides that it is a defence for a person charged to prove that he did not know and had no reasonable cause to suspect that he was dealing with terrorist property. Thus the mental element provided for is consistent with that in the adjacent section 17, namely objectively assessed reasonable cause to suspect, although the onus of proof is reversed. This section also compellingly reinforces the construction of section 17 arrived at by the judge and the Court of Appeal. The contention of the appellants that section 18 can be read as providing a defence to a defendant who shows that he did not in fact suspect the terrorist nature of the property with which he was dealing is simply not consistent with the words used. If that is what had been the intention, section 18 would no doubt have provided a defence for an accused who did not know or suspect, using the juxtaposition of knowledge and suspicion which appears in the next following section 19. Although it is derived from a subsequent legislative amendment, section 21A is perhaps a further indication, if one were required, that the difference between actual suspicion and objectively assessed reasonable cause for suspicion remains one which is observed by Parliament. Section 21A (inserted into the Act by the Anti terrorism, Crime and Security Act 2001) creates an offence, for those operating within the regulated sector, of non disclosure of information suggesting an offence by another. By subsection (2) the first element of the definition of this offence is in the alternative: (2) The first condition is that he (a) knows or suspects, or (b) has reasonable grounds for knowing or suspecting, that another person has committed or attempted to commit an offence under any of sections 15 to 18. In that section, or any other similarly constructed, it is plain beyond argument that the expression has reasonable grounds for suspicion cannot mean actually suspects. Strict liability? The presumption of which Lord Reid spoke in Sweet v Parsley, and which has been invoked since where consistent with the principles of statutory construction, is a presumption that Parliament did not intend to make criminals of persons who were in no way blameworthy in what they did: see para 8 above. The magistrates had found specifically that Miss Sweet, who did not live in the house which she owned but let out had no knowledge whatever that the house was being used by her tenants for the purpose of consuming prohibited drugs. The question posed for the House of Lords by the Divisional Court was whether the relevant section of the Dangerous Drugs Act created an absolute offence. Lord Reid adverted at p 150B to the fact that Parliament could have dealt with the social problem involved either by inverting the onus of proof so as to require an accused to demonstrate lack of knowledge, or by providing that the offence could be committed by negligence. It had not, however, in that case done so. In the present case it would be an error to suppose that the form of offence creating words adopted by Parliament result in an offence of strict liability. It is certainly true that because objectively assessed reasonable cause for suspicion is sufficient, an accused can commit this offence without knowledge or actual suspicion that the money might be used for terrorist purposes. But the accuseds state of mind is not, as it is in offences which are truly of strict liability, irrelevant. The requirement that there exist objectively assessed cause for suspicion focuses attention on what information the accused had. As the Crown agreed before this court, that requirement is satisfied when, on the information available to the accused, a reasonable person would (not might or could) suspect that the money might be used for terrorism. The state of mind of such a person is, whilst clearly less culpable than that of a person who knows that the money may be used for that purpose, not accurately described as in no way blameworthy. It was for Parliament to decide whether the gravity of the threat of terrorism justified attaching criminal responsibility to such a person, but it was clearly entitled to conclude that it did. It is normal, not unusual, for a single offence to be committed by persons exhibiting different levels of culpability. The difference in culpability can, absent other aggravating features of the case, be expected to be reflected in any sentence imposed if conviction results. Conclusion For these reasons it is clear that the conclusions arrived at by the trial judge and the Court of Appeal were correct. The appeal must be dismissed. Reporting restrictions the offences charged, as summarised in this judgment; the names of counsel and solicitors engaged in the appeal; the identity of the court(s) and the name of the judge(s); the names, ages, home addresses and occupations of the accused and (a) (b) witnesses; (c) (d) (e) whether for the purposes of the appeal representation was provided to either of the accused under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012; and (f) this judgment. Section 37 of the Criminal Procedure and Investigations Act 1996 imposes statutory reporting restrictions in relation to the hearing of interlocutory appeals such as the present. The objective is to ensure that the jurys consideration of the evidence and issues put before it is not at risk of being affected by prior reporting, for example of the details of the allegations or of discussion of possible issues. Those restrictions apply to the hearing of this appeal. Until the conclusion of the trial, nothing may be reported except the following:
UK-Abs
This is a pre trial appeal in a criminal case. The appellants are charged with the offence of entering into funding arrangements connected with terrorism, contrary to section 17 of the Terrorism Act 2000. The charges allege that the appellants sent money overseas, or arranged to do so, when they knew or had reasonable cause to suspect that it would, or might, be used for the purposes of terrorism. The question which arises on this appeal concerns the correct meaning of the expression has reasonable grounds to suspect in section 17(b) of the Act. The appellants argued that it means that the accused must actually suspect, and for reasonable cause, that the money may be used for the purposes of terrorism. The Crown, in response, argued that the sections wording means it is sufficient that on the information known to the accused there exists, assessed objectively, reasonable cause to suspect that the money will be put to that use. The Court of Appeal accepted the Crowns contention. The Supreme Court unanimously dismisses the appeal. Lord Hughes gives the sole judgment with which the other justices agree. The appellants relied on the well established principle that whenever a statutory section creates a criminal offence but does not refer to the offenders state of mind (mens rea), there is a presumption that to give effect to the will of Parliament, the court must read in words requiring mens rea [8]. While it is an important principle, it is a principle of statutory construction. It does not empower the court to substitute the plain words used by Parliament for a different provision on the grounds that the court would have done so differently by providing for an element, or a greater element, of mens rea [9]. The presumption must give way to either the plain meaning of the words of the statute, or to other relevant pointers to meaning which clearly demonstrate what was intended. The first port of call for any issue of construction is the words of the Act [12]. The words of section 17(b) of the Act suggest an objective test for mens rea at first sight. Thus, it is very difficult to see this statutory provision as one which is silent as to the intent required for the commission of the offence [13]. An offence of providing funding towards terrorism first appeared on the statute books in 1976 and was re enacted in identical form in 1984. Those sections required proof either of knowledge or of actual suspicion. However, the Prevention of Terrorism Act 1989 made a change and introduced the words knowing or having reasonable cause to suspect in place of knowing or suspecting. These changes were deliberate. They are inexplicable unless it was the Parliamentary intention to widen the scope of the offences to include those who had, objectively assessed, reasonable cause to suspect that the money might be put to terrorist use. The change can only have been intended to remove the requirement for proof of actual suspicion. The court cannot ignore this clear Parliamentary decision [18 19]. It would be an error to suppose that the form of offence creating words in section 17(b) create an offence of strict liability. Unlike an offence of strict liability, the accuseds state of mind is relevant for section 17(b). The requirement of an objectively assessed cause for suspicion focuses attention on what information the accused had. The requirement is satisfied when, on the information available to the accused, a reasonable person would suspect that the money might be used for terrorism [24].
The respondent Mr Frank Perry is a retired miner. Like very many of his colleagues he had, by the time he ceased working underground in 1994, been afflicted with a condition known as Vibration White Finger (VWF) , which is a particular type of a wider species of condition affecting the hand and the upper limbs collectively known as Hand Arm Vibration Syndrome (HAVS), caused by excessive exposure to the effects of using vibratory tools. One symptom of these conditions can be a reduction in grip strength and manual dexterity in the fingers. A common although not invariable consequence is that the sufferer from these conditions becomes unable, without assistance, to carry out routine domestic tasks such as gardening, DIY or car maintenance. A group of test cases, representative of some 25,000 similar claims, established that there had been negligence on the part of the National Coal Board, later British Coal, in failing to take reasonable steps to limit the exposure of employed miners to VWF from the excessive use of vibratory tools: see Armstrong v British Coal Corpn [1998] EWCA Civ1359 [1998] CLY 975. As a result, the Department for Trade and Industry (which had by then assumed responsibility for British Coals relevant liabilities) set up a scheme (the Scheme) in 1999 to provide tariff based compensation to miners who had been exposed to excessive vibration and had therefore suffered from VWF. The Scheme was administered pursuant to a Claims Handling Arrangement (CHA) dated 22 January 1999, and made between the DTI and a group of solicitors firms representing claimant miners suffering from VWF. The central objective of the CHA was to enable very large numbers of similar claims, having a common originating cause in British Coals systemic negligence, to be presented, examined and resolved both effectively and at proportionate cost. The Scheme contemplated the making of two main types of compensatory award to miners suffering from VWF, corresponding broadly with general and special damages for personal injuries. Pursuant to a Services Agreement dated 9 May 2000, the special damages could include a Services Award to qualifying miners. This depended upon the claimant establishing what has come to be known as the factual matrix, namely: That before he developed VWF he undertook one or more of six i) routine domestic tasks (the six tasks), without assistance; ii) That he could no longer undertake those tasks without assistance by reason of his VWF; and iii) That he had received the necessary assistance with those tasks from others. The six tasks may be summarised as: 1) Gardening 2) Window cleaning 3) DIY 4) Decorating 5) Car washing 6) Car maintenance Qualification for a general damages award required the claimant miner to undertake a medical interview and examination designed to establish, against an internationally recognised scale, the severity of his VWF. Those shown to be sufferers at certain high levels of severity were then also entitled to a rebuttable presumption, in their favour, that they satisfied the qualifying requirements for a Services Award, but they were required nonetheless to demonstrate, by completion of a standard form questionnaire, which of the six tasks they had undertaken without assistance before developing the VWF, and which of the tasks they were no longer able to undertake without assistance. The Scheme provided for a relatively light touch system of checking claims for Services Awards by the claims handlers, which included questionnaires to be filled in by those assisting the claimant in performing the six tasks and short telephone interviews, usually with one or more of the assistants, rather than with the claimant himself. Compensation was then payable to qualifying claimants in accordance with a detailed index linked tariff. Proportionate deductions from the tariff amounts were also liable to be made if the claimants reduced ability to perform the six tasks unaided was caused in part by other contributory medical conditions. For this purpose, claimants were required to undertake a further medical examination for the purpose of the assessment of co morbidity, as it was described. Again, the amount of the reductions (if any) from the full Services Award was determined in accordance with a tariff based upon the medical examiners certification of relevant co morbid conditions on a scale ranging between nil, material, moderate, serious and complete. Mr Perrys claim Mr Perry retained the appellant solicitors firm Raleys to pursue a VWF claim on his behalf in October 1996, before the setting up of the Scheme. Following the making of the CHA, his claim continued under the Scheme. In October 1997 Professor Kester reported, after an interview and examination of Mr Perry, that he suffered from VWF, with ratings (or stagings in the jargon of the Scheme) of 3V and 3Sn bilaterally (that is, in both hands). Those stagings were sufficient both for Mr Perry to obtain general damages and to have entitled him to a presumption in his favour, of the type described above, in the event that he chose to seek a Services Award. In the event however, Mr Perry settled his claim in November 1999 for payment of general damages only, in the sum of 11,600, and made no claim for a Services Award within the available time frame. Much later, in February 2009, he issued professional negligence proceedings against Raleys, claiming that by reason of their negligent failure to give him appropriate advice, he had lost the opportunity to claim a Services Award, in respect of all of the six tasks, which he quantified in the sum of 17,300.17 plus interest. He asserted that he had performed all the six tasks without assistance before developing VWF, and that he had needed assistance with all those tasks thereafter, which had been provided by his two sons and his wife. In response, Raleys denied a breach of duty and separately denied that any breach (if proved) would have caused Mr Perry any loss. They alleged also that Mr Perrys claim against them was statute barred. Breach of duty was admitted shortly before the trial. The trial judge, Judge Saffman, rejected the limitation defence on its merits. After a two day trial, which included cross examination of Mr Perry, his wife and his two sons, the judge concluded that Mr Perry had failed to prove that Raleys admitted negligent advice had caused him any loss. This was because, in summary, the judge found that the VWF from which Mr Perry was suffering when he settled his claim had not caused him any significant disability in performing any of the six tasks without assistance, sufficient to have enabled him to make an honest claim for a Services Award. He therefore dismissed Mr Perrys claim with costs. In his detailed and lucid reserved judgment (circulated to the parties within ten days of the trial) Judge Saffman explained that it was Mr Perrys complete lack of credibility as a witness that had led to his finding that he would not have been able to make an honest claim for a Services Award. His evidence that he was unable to perform the six domestic tasks without assistance was undermined by his medical records, which showed that he had made no complaint of lack of manual dexterity at the relevant time, by evidence (including photographs) of him engaging in fishing at a time when he said he had given it up due to his manual disability, and by his failure to offer any credible explanation of those disparities between his case and that evidence, when cross examined about them at length. The judge found that the evidence from his family lacked sufficient credibility to rescue Mr Perry from his difficulties, and that the medical evidence, while supportive of his case, was insufficient to swing the balance in Mr Perrys favour. The judge nonetheless thought it appropriate to assist by setting out the findings which he would have made as to the quantum of Mr Perrys claim, if he had been wrong in rejecting his case on causation. He did so, no doubt, with a view to minimising the risk that an expensive re trial would be necessary if an appellate court concluded that causation had been established. A main plank in Raleys defence had been that, even if Mr Perry was to a significant extent incapacitated in performing the six domestic tasks without assistance at the relevant time, this was the result of a chronic back problem, rather than VWF. A single joint medical expert, Mr Tennant, had advised that in his view the contribution made to Mr Perrys relevant disability by back troubles lay between moderate and mild, on the co morbidity scale adopted by the Scheme. On the assumption that he had been wrong in his primary finding that Mr Perry was not hindered by VWF in performing the six tasks unaided, he held that he would not depart from Mr Tennants co morbidity assessment. Finally, and again on the same assumption that he had been wrong about causation, the judge assessed the prospects of success in a Services Award claim, after being discounted by co morbidity in accordance with the Schemes tariff, at 80%. On Mr Perrys appeal the Court of Appeal reversed the trial judge on causation, and concluded that his alternative findings as to quantum were sufficiently reliable to make it unnecessary to direct a re trial: [2017] EWCA Civ 314. Accordingly, they assessed Mr Perrys damages in the same amount as the judge would have assessed them, had he been wrong about causation, namely 14,556.15 plus interest, plus additional amounts pursuant to CPR Part 36. The Court of Appeal reversed the judge on four grounds, two of which amounted in their view to errors of law, and the remaining two to shortcomings in his appraisal of, and conclusions based upon, the evidence. It is convenient to take the errors of law first. The Court of Appeal held first that the judge had, in addressing the issue of causation, wrongly conducted a trial within a trial of the very question which would have arisen if Mr Perry had made a claim for a Services Award, namely whether in fact (after he ceased work as a miner) he needed assistance, due to his VWF, in carrying out the six domestic tasks which he had previously been able to carry out unaided. Secondly, the Court of Appeal concluded that the judge wrongly imposed the burden upon Mr Perry to prove that fact on the balance of probabilities. This approach was, in the view of the Court of Appeal, contrary to well settled authority about the burden upon a claimant in relation to causation, following a breach by a professional person of a duty of care. The Law about Causation in Professional Negligence cases The assessment of causation and loss in cases of professional negligence has given rise to difficult conceptual and practical issues which have troubled the courts on many occasions. The most recent example at the level of this court is Gregg v Scott [2005] UKHL 2; [2005] 2 AC 176 in which the House of Lords had to wrestle with the intractable question whether negligent medical advice, which reduced the patients prospects of long term survival from cancer from 42% to 25%, sounded in damages when, probably, he would have died anyway, even if competently treated. Commonly, the main difficulty arises from the fact that the court is required to assess what if any financial or other benefit the client would have obtained in a counter factual world, the doorway into which assumes that the professional person had complied with, rather than committed a breach of, his duty of care. The everyday task of the court is to determine what, in fact, happened in the real world rather than what probably would have happened in a what if scenario generally labelled the counter factual. Similar difficulties arise where the question of causation or assessment of damage depends upon the court forming a view about the likelihood of a future rather than past event. In both those types of situation (that is the future and the counter factual) the court occasionally departs from the ordinary burden on a claimant to prove facts on the balance or probabilities by having recourse to the concept of loss of opportunity or loss of a chance. Sometimes the court makes such a departure where the strict application of the balance of probability test would produce an absurd result, for example where what has been lost through negligence is a claim with substantial but uncertain prospects of success, where it would be absurd to decide the negligence claim on an all or nothing basis, giving nothing if the prospects of success were 49%, but full damages if they were 51%: see Hanif v Middleweeks (a firm) [2000] Lloyds Rep PN 920 per Mance LJ at para 17. A further reason why this is a generally unrealistic approach is that most claims with evenly balanced prospects of success or failure are turned into money by being settled, rather than pursued to an all or nothing trial. Sometimes it is simply unfair to visit upon the client the same burden of proving the facts in the underlying (lost) claim as part of his claim against the negligent professional. This may be because of the passage of time following the occasion when, with competent advice, the underlying claim would have been pursued. Sometimes it is because it is simply impracticable to prove, in proceedings against the professional, facts which would ordinarily be provable in proceedings against the third party who would be the defendant to the underlying claim. Disclosure and production of relevant documents might be impossible, and the obtaining of relevant evidence from witnesses might be impracticable. The same departure from the practicable likelihood that the underlying claim would have been settled rather than tried is inherent in any such process of trial within a trial. But none of this means that the common law has simply abandoned the basic requirement that a claim in negligence requires proof that loss has been caused by the breach of duty, still less erected as a self standing principle that it is always wrong in a professional negligence claim to investigate, with all the adversarial rigour of a trial, facts relevant to the claim that the client has been caused loss by the breach, which it is fair that the client should have to prove. For present purposes the courts have developed a clear and common sense dividing line between those matters which the client must prove, and those which may better be assessed upon the basis of the evaluation of a lost chance. To the extent (if at all) that the question whether the client would have been better off depends upon what the client would have done upon receipt of competent advice, this must be proved by the claimant upon the balance of probabilities. To the extent that the supposed beneficial outcome depends upon what others would have done, this depends upon a loss of chance evaluation. This sensible, fair and practicable dividing line was laid down by the Court of Appeal in Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 1 WLR 1602, a decision which received surprisingly little attention in either of the courts below (although, in fairness, the trial judge cited another authority to similar effect: namely Brown v KMR Services [1995] 4 All ER 598). Allied Maples had made a corporate takeover of assets and businesses within the Gillow group of companies, during which it was negligently advised by the defendant solicitors in relation to seeking protection against contingent liabilities of subsidiaries within the vendors group. Allied Maples would have been better off, competently advised, if, but only if: (a) it had raised the matter with Gillow and sought improved warranties and (b) Gillow had responded by providing them. The Court of Appeal held that Allied Maples had to prove point (a) on a balance of probabilities, but that point (b) should be assessed upon the basis of loss of the chance that Gillow would have responded favourably. The Court of Appeal (Stuart Smith, Hobhouse and Millett LJJ) were unanimous in that statement of legal principle, although they differed as to the outcome of its application to the facts. It was later approved by the House of Lords in Gregg v Scott, at para 11 by Lord Nicholls and para 83 by Lord Hoffmann. The Allied Maples case was about the loss, due to negligence, of the opportunity to achieve a more favourable outcome in a negotiated transaction, rather than about the loss of an opportunity to institute a legal claim. But there is no sensible basis in principle for distinguishing between the two, and none was suggested in argument. In both cases the taking of some positive step by the client, once in receipt of competent advice, is an essential (although not necessarily sufficient) element in the chain of causation. In both cases the client will be best placed to assist the court with the question whether he would have taken the requisite initiating steps. He will not by the defendants breach of duty be unfairly inhibited in proving at a trial against his advisor that he would have done so, save perhaps where there is an unusual combination of passage of time and scarcity of other probative material, beyond his own unaided recollection. Two important consequences flow from the application of this balance of probabilities test to the question what the client would have done, in receipt of competent advice. The first is that it gives rise to an all or nothing outcome, in the usual way. If he proves upon the narrowest balance that he would have brought the relevant claim within time, the client suffers no discount in the value of the claim by reason of the substantial possibility that he might not have done so: see Stuart Smith LJ in the Allied Maples case at [1995] 1 WLR 1602, 1610G H. By the same token, if he fails, however narrowly, to prove that he would have taken the requisite initiating action, the client gets nothing on account of the less than 50% chance that he might have done so. The second consequence flows directly from the first. Since success or failure in proving on the balance of probabilities that he would have taken the necessary initiating step is of such fundamental importance to the clients claim against his advisor, there is no reason in principle or in justice why either party to the negligence proceedings should be deprived of the full benefit of an adversarial trial of that issue. If it can be fairly tried (which this principle assumes) then it must be properly tried. And if (as in this case) the answer to the question whether the client would, properly advised, have taken the requisite initiating step may be illuminated by reference to facts which, if disputed, would have fallen to be investigated in the underlying claim, this cannot of itself be a good reason not to subject them to the forensic rigour of a trial. As will appear, this has an important bearing on the extent of the general rule that, for the purpose of evaluating the loss of a chance, the court does not undertake a trial within a trial. Applied to the present case, the principle that the client must prove on the balance of probabilities that he would have taken any necessary steps required of him to convert the receipt of competent advice into some financial (or financially measurable) advantage to him means that Mr Perry needed to prove that, properly advised by Raleys, he would have made a claim to a Services Award under the Scheme within time. To this the judge added that it would have to have been an honest claim. He made this addition upon the basis of a concession to that effect by counsel on Mr Perrys behalf, from which Mr Watt Pringle QC for Mr Perry (who did not appear at the trial) invited this court to permit him to resile, so that the question whether the honesty of the claim was a requirement of Mr Perrys cause of action could be properly argued. Having heard commendably concise argument on the point, I consider that the concession was rightly and properly made. In Kitchen v Royal Air Force Association [1958] 1 WLR 563 the plaintiffs husband, a member of the RAF, was electrocuted and killed in the kitchen of his house. His widow lost the opportunity to bring a claim under the Fatal Accidents Act in time due to the negligence of the defendant solicitors. In a leading judgment on the evaluation of the loss of a chance, Lord Evershed MR said this, at p 575: I would add, as was conceded by Mr Neil Lawson, that in such a case it is not enough for the plaintiff to say: Though I had no claim in law, still, I had a nuisance value which I could have so utilised as to extract something from the other side and they would have had to pay something to me in order to persuade me to go away. If nuisance value claims fall outside the category of lost claims for which damages may be claimed in negligence against professional advisors, then so, a fortiori, must dishonest claims. That simple conclusion might be thought by many to be too obvious to need further explanation, but it may be fortified in any of the following ways. First, a client honestly describing his condition to his solicitor when considering whether to make a personal injuries claim would not be advised to do so if the facts described did not give rise to a claim. On the contrary, he would be advised not to waste his own money and time upon the pursuit of pointless litigation. Secondly, the court when appraising the assertion that the client would, if properly advised, have made a personal injuries claim, may fairly presume that the client would only make honest claims, and the client would not be permitted to rebut that presumption by a bald assertion of his own propensity for dishonesty. Thirdly, the court simply has no business rewarding dishonest claimants. The extent of dishonest claims for minor personal injuries such as whiplash (which are difficult to disprove) in road traffic accident cases is already such a blot upon civil litigation that Parliament has considered it necessary to intervene to limit that abuse. Applied to the present case, Mr Perry could only have brought an honest claim for a Services Award if he believed that: a) He had, prior to developing VWF, carried out the six tasks, or some of them, without assistance, b) After developing VWF, he needed assistance in carrying out all or some of those tasks, and c) The reason for his need for that assistance was a lack of grip or manual dexterity in his hands, brought on by VWF. While the question whether a perceived lack of grip or manual dexterity on his part was caused by VWF might be said to be a matter of expert medical opinion, the presence or absence of all the other elements necessary for making an honest claim to a Services Award fell squarely within Mr Perrys own knowledge. He would not, for example, need a doctor to tell him whether he needed assistance in changing the sparking plugs on his car engine and, if he did, whether his difficulty arose from lack of ability to grip or manipulate the requisite spanner, or rather from chronic back pain. Simple facts of that kind, plainly relevant to the question whether Mr Perry could have brought an honest claim if competently advised, do not in themselves fall within either of those categories of futurity or counter factuality which have traditionally inclined the court to adopt a loss of a chance type of assessment. They are facts about Mr Perrys actual physical condition at the relevant time (that is when he could have made a claim for a Services Award under the Scheme if properly advised), and about his habitual patterns in going about the six types of domestic task. Furthermore, it is the common understanding of medical experts that VWF, once developed, is a relatively stable condition. It gets neither worse nor better once the miner ceases to use vibrating machinery. If one asks without reference to authority whether there would be any unfairness subjecting his assertion that he would have made a claim for a Services Award to forensic analysis including questions about his then manual grip and dexterity and about the extent to which he was assisted in the performance of the relevant domestic tasks, the answer would be no. Nor would it be, on the face of it, unfair to subject his oral evidence about those matters, and that of his alleged family assistants, to a searching comparison with other evidence about his own concerns about his medical condition at the relevant time, to be derived from GP records. The question remains however whether any of the authorities relied upon by counsel for Mr Perry on this appeal, or by the Court of Appeal in its conclusion that a forensic investigation of that kind at a trial was contrary to principle, really establish any such proposition, where the facts being investigated are relevant to the issue, to be proved by the claimant on the balance of probabilities, whether he would have taken the essential step of bringing an honest claim, upon receipt of competent advice. On analysis, they establish no such proposition. All they do show is that, where the question for the court is one which turns upon the assessment of a lost chance, rather than upon proof upon the balance of probabilities, it is generally inappropriate to conduct a trial within a trial. Taking the cases in chronological order, the earliest relevant decision is the Kitchen case already mentioned. There, the plaintiffs husband had been killed by electrocution and the claim which the solicitors negligence disabled her from making was against the electricity company. It was never suggested that, if properly advised, she could not have made an honest claim. It was clearly more than a nuisance value claim. The precise circumstances which led to the husbands electrocution were, as the Court of Appeal said, shrouded in mystery, and were not within the plaintiffs knowledge. Accordingly, the well known advice of the Court of Appeal, that in those circumstances the court should focus upon the chose in action constituted by the lost claim and determine its value as best it can, without necessarily conducting a trial within a trial, was not directed to the question whether the plaintiff would have brought a claim. Nor indeed had it by then been established, in the Allied Maples case, that such a question required proof on the balance of probabilities. Mount v Barker Austin [1998] PNLR 493 is the first of a series of cases in which the Court of Appeal sought to extract from the Kitchen and Allied Maples cases principles applicable to the determination of negligence claims against solicitors who had through their negligence allowed their clients pending claim to be struck out, either for failure to comply in time with a procedural step, or more generally for want of prosecution. They may all be distinguished from the present case because, by the time when the negligent conduct occurred, the client already had a pending claim which could be treated as something of potential value, thereafter lost because of the solicitors negligence. By contrast with the Allied Maples case and indeed this case, there was nothing which the client had to prove, on the balance of probabilities, that he would have done, had his solicitors acted competently, to bring such a pending claim into existence. Simon Brown LJ sought to lay out the relevant principles at pp 510 511, in four propositions which have been frequently followed and applied. In summary, they require the claimant only to prove that the lost claim had a real and substantial, rather than merely negligible, prospect of success, following which the court was obliged to conduct an evaluation of the prospect of success, rather than a trial within a trial of the underlying claim. But those principles all fall on that side of the dividing line established in the Allied Maples case in which the court is concerned to value the loss of a chance, rather than to enquire whether the client has proved, on the balance of probabilities, that he would have done something relevant to the existence of a chain of causation between the solicitors negligence and the clients loss. The Court of Appeal, and counsel for Mr Perry in his submissions to this court, placed Hanif v Middleweeks (supra) squarely in the forefront of their criticism of the judge in conducting what they described as a trial within a trial. It was a professional negligence action in which the client was the co owner of a nightclub which had been destroyed by fire. The insurers had issued proceedings for a declaration of non liability, on the ground (among others) that the fire had been started deliberately by Mr Hanifs co owner. Mr Hanif counterclaimed for an indemnity under the insurance policy, but his counterclaim was struck out for want of prosecution because of the negligence of the defendant solicitors. The trial judge had assessed the prospects of Mr Hanif resisting the insurers allegation of arson by his co owner at 25% and the Court of Appeal, applying both the Allied Maples and Kitchen cases, held that he had been right to adopt a loss of chance approach, rather than to decide, in a trial within a trial, whether or not the fire had been started deliberately. A submission that, in the light of the 25% finding, the fire probably had been deliberate, so that the claim should have been dismissed as being contrary to public policy was rejected, not least because it had been neither pleaded nor argued in the court below. The Hanif case did not, therefore, involve any question about what the client would have done had he obtained competent advice. He had already given instructions for the making of the counterclaim, and it would have gone to trial but for the solicitors negligence in allowing it to be struck out for want of prosecution. There was, therefore, nothing which Mr Hanif had to prove, on the balance of probabilities, that he would have done in order to have benefitted from a competent discharge by the solicitors of their duty of care. The questions relevant to the lost counterclaim therefore fell squarely within the category identified in the Allied Maples case as calling for an evaluation of a lost chance, rather than proof upon the balance of probabilities. Furthermore, there was no suggestion, at trial or in the Court of Appeal, that Mr Hanif could not honestly have brought or pursued his counterclaim, even though the judge found that he had only a 25% prospect of resisting the allegation of arson by his co owner. In sharp contrast with Mr Perrys knowledge of his own manual grip and dexterity, it was not suggested that Mr Hanif had personal knowledge of the facts relevant to the question whether the fire had been started deliberately. The case is therefore a conventional example of the correct application of the dividing line established in the Allied Maples case between those matters to be proved by the client on the balance of probabilities, and those to be addressed by reference to the assessment of the value of the lost opportunity. But it does not begin to establish some principle that it is always wrong for the court to try an issue relevant to causation in a professional negligence case, merely because that same issue would have fallen for determination in the trial of the underlying claim, lost due to the solicitors negligence. The question whether any given issue should or should not be tried in the negligence proceedings depends upon whether it is one upon which the client must prove his case on the balance of probabilities, or only one which should be subjected to the valuation of a lost chance. Treating the question as determined by asking whether the same issue would fall to be tried in the lost claim puts the cart before the horse. Sharif v Garrett & Co [2001] EWCA Civ 1269; [2002] 1 WLR 3118 is another case in which the negligence in question consisted of solicitors allowing a pending claim to be struck out for want of prosecution. The underlying claim (which had been struck out) was a negligence claim against insurance brokers, following the destruction of the claimants business premises by fire. There was no suggestion that it was a dishonest claim, or indeed a hopeless claim, although there was a wide disagreement about its value. It was also a case in which the reason why the underlying claim had been struck out for want of prosecution was that, because of the inordinate delay, it could no longer be fairly tried. The criticism of the trial judges approach which prevailed in the Court of Appeal was that he should not have conducted a trial of issues which would have arisen in the underlying claim in circumstances where the court had already concluded that no fair trial of that claim was possible, as a result of the solicitors negligence in its prosecution. But the case is, like the Hanif case, another conventional application of the dividing line established in the Allied Maples case. The client had started his claim and needed to prove nothing about what he would have done, on the balance of probabilities, in order to have benefited from his solicitors careful conduct of the proceedings. In Dixon v Clement Jones [2005] PNLR 6, the underlying claim was a negligence action against accountants for failing to advise the claimant against what turned out to be a disastrous transaction, which her solicitors allowed to be struck out for failure to serve Particulars of Claim in time. The solicitors alleged that, even if their client had received competent advice from the accountants, she would still have entered into the disastrous transaction so that she would, applying principles from the Allied Maples case, have failed to prove a necessary element in her case on causation, on the balance of probabilities. The question for the Court of Appeal was whether, in those circumstances, the client was obliged in the negligence claim against the solicitors also to prove, on the balance of probabilities, that aspect of her case on causation in the underlying claim. In agreement with the trial judge, they concluded that she did not, because causation issues in the underlying claim fell to be evaluated on a loss of chance basis in the same way as all other issues in the underlying claim, when considering the value of that claim which had been lost by reason of the solicitors negligence. It is unnecessary to express a concluded view about that analysis. A rigid application of the Allied Maples test, namely whether the fact in issue was something that the claimant rather than a third party would have done, might lead to the opposite conclusion. But the client had already given instructions for the bringing of the underlying claim, so there was nothing which she needed to prove that she would have done, had the solicitors acted competently and served the Particulars of Claim in time, in order to bring into existence a chose in action which the court could value. Nor, unsurprisingly, was it suggested that the underlying claim had not itself been honestly brought. It is sufficient to say that it does not address the question for decision in the present case, namely whether the client must prove, on the balance of probabilities that, competently advised, he would have brought an honest claim so as to establish causation between the solicitors negligence and his alleged loss. The Judges Approach to the Law It was not, therefore, wrong in law or in principle for Judge Saffman to have conducted a trial of the question whether Mr Perry would (or indeed could) have brought an honest claim for a Services Award, if given competent advice by Raleys. That was something which Mr Perry had to prove on the balance of probabilities, and which Raleys were entitled to test with all the forensic tools available at an ordinary civil trial, and by proof or challenge of alleged facts relevant to that question, even if the same facts would have formed part of the matters in issue, either at a trial of the underlying claim, or upon its adjudication or settlement pursuant to the Scheme. But the Court of Appeals criticism of the judges approach to the issue of causation went further. They held that his reserved judgment disclosed that he wrongly imposed upon Mr Perry the burden of proving not merely that he would, properly advised, have brought an honest claim, but also a successful claim. Viewed across the generality of claims that may never be pursued because of a solicitors negligent advice, it may well be that the burden of proving that the claim would have succeeded is higher than the burden of proving that it could or would have been honestly made. That is because, in the ordinary case, success will depend upon a raft of factual and legal matters, all of which are liable to be subjected to full adversarial examination at a trial, or at least to the disclosure and examination by an opponent of the claimants documents before an attempt at settlement. By contrast, claims for Services Awards under the Scheme by persons already in possession of a medical opinion that they suffered from VWF, at a level sufficient to entitle them to general damages, would not under the claims handling processes provided for by the CHA be subject to any such adversarial procedures. As already described, the claimant miner would only have to complete a questionnaire, identify his alleged assistants, and have one or more of them subjected to a short, non adversarial interview on the telephone by a claims handler, and undergo medical examination limited to the question of co morbidity, before his claim would be assessed and, in all probability, made the subject of an offer of an amount sufficient for the claim to be treated as having been successful. As an experienced judge in this specialised field, Judge Saffman may be assumed to have been well aware of this, and the expression in his reserved judgment of the burden which Mr Perry needed to surmount for the purposes of establishing causation needs to the read in that light, in the context of a long and careful reserved judgment, considered as a whole. There are four occasions in the judges judgment where he directly addressed the causation hurdle facing Mr Perry. First, when dealing with the issues for trial, he said, at para 15: In short therefore the issues for determination are; a. Whether the claim is statute barred, b. If not, whether the admitted breach of duty caused or materially contributed to the claimants alleged loss. In the context of this case did the breach cause the claimant to settle his claim at an undervalue because, on balance, if properly advised, and on the assumption that he acted honestly, he would have made a claim for a Services Award? . c. Has the claimant lost something of value in the sense that his prospects of success in a claim for a Services Award were more than negligible? d. If the claimant has lost a claim with more than a negligible prospect of success what is a realistic assessment of what the prospects of success were? e. What is an appropriate assessment of the likely value of the claim having taken account of the prospects of success? Then, at para 88, under the heading Causation: he continued: The onus is on the claimant to establish causation on the balance of probabilities. The claimant therefore must establish on balance that he would have acted differently if properly advised and a lack of opportunity to do so has caused him loss. In other words the claimant must establish that the breach of duty actually caused him loss. Under the heading Other aspects of Causation he continued at para 114: I therefore now turn to the issue of whether the breach caused the claimant to settle his claim at an undervalue because, on balance, if properly advised and on the assumption that he was acting honestly he would have acted differently and made a successful claim for a Services Award. At para 119 the judge said: That is a question of credibility. Am I satisfied that the claimant originally undertook the services but could no longer do so without assistance? As Mr Quiney put it, has the claimant succeeded in persuading the court that he actually suffered sufficient disability that he could honestly say I cannot carry out these services? Finally, he expressed his conclusion at para 133, as follows: I am not satisfied that the evidence of Mrs Perry or Scott Perry is sufficiently cogent to dissuade me from my conclusion that the claimant has not established that he honestly met the factual matrix by reason of his VWF either in respect of what tasks he used to do and those which he could not do without assistance at the time of settlement of his original claim. Indeed I go further, I am satisfied that in so far as the burden is on the defendant to establish its assertion that the claimant did not meet the matrix, it has discharged that burden. The judge was using the phrase the factual matrix in the way described above, namely having a sufficient disability in his hands, caused by VWF, that he could no longer carry out, without assistance, tasks that he had previously carried out on his own. While it is true that, at para 114, the judge did use language which, read on its own, might appear to suggest that he imposed upon Mr Perry the additional burden, beyond proving that he would have made an honest claim, that it would have been successful, his analysis of causation, derived from all the passages quoted above, taken together, and in the context of the judgment as a whole, makes it clear that he was not thereby imposing some additional burden upon Mr Perry, beyond proof, on the balance of probabilities, that he would have brought an honest claim. His reference to a successful claim may have been no more than shorthand for his earlier reference to the requirement upon Mr Perry to show that his claim had a more than negligible prospect of success. Accordingly, and contrary to the view of the Court of Appeal, the judges determination of the case was not vitiated by any error of law. The Judges Determination of the Facts It is necessary therefore also to address the question whether the Court of Appeal was right to conclude that, quite separately from supposed errors of law, the judge went sufficiently wrong in his determination of the facts to enable an appellate court to intervene. The Court of Appeal expressed its positive conclusion on that issue under two headings, at para 26, namely: iii) he demonstrably failed to consider, or misunderstood, relevant evidence, and iv) his decision (that Mr Perry could not honestly have claimed in 1999 and thereafter that he was unable to perform the relevant tasks without assistance) cannot reasonably be explained or justified. Those are strong conclusions about a fact finding exercise at trial by an experienced judge, but the Court of Appeal made them after reminding themselves of the very real constraints facing an appellate court when invited to overturn a judges findings of fact at trial. For that purpose they referred to Grizzly Business Ltd v Stena Drilling Ltd [2017] EWCA Civ 94, Henderson v Foxworth Investments Ltd [2014] UKSC 41; [2014] 1 WLR 2600 and McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477. In the Henderson case the Supreme Court had said, at para 62: It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached. In the McGraddie case Lord Reed said this, at paras 3 4: The reasons justifying that approach are not limited to the fact, emphasised in Clarkes case and Thomas v Thomas, that the trial judge is in a privileged position to assess the credibility of witnesses evidence. Other relevant considerations were explained by the United States Supreme Court in Anderson v City of Bessemer (1985) 470 US 564 (1985), 574 575: The rationale for deference to the original finder of fact is not limited to the superiority of the trial judges position to make determinations of credibility. The trial judges major role is the determination of fact, and with experience in fulfilling that role comes expertise. Duplication of the trial judges efforts in the court of appeals would very likely contribute only negligibly to the accuracy of fact determination at a huge cost in diversion of judicial resources. In addition, the parties to a case on appeal have already been forced to concentrate their energies and resources on persuading the trial judge that their account of the facts is the correct one: requiring them to persuade three more judges at the appellate level is requiring too much. As the court has stated in a different context, the trial on the merits should be the main event rather than a try out on the road. For these reasons, review of factual findings under the clearly erroneous standard with its deference to the trier of fact is the rule, not the exception. Similar observations were made by Lord Wilson in In re B (a Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, para 53. 4. Furthermore, as was stated in observations adopted by the majority of the Canadian Supreme Court in Housen v Nikolaisen [2002] 2 SCR 235, para 14: The trial judge has sat through the entire case and his ultimate judgment reflects this total familiarity with the evidence. The insight gained by the trial judge who has lived with the case for several days, weeks or even months may be far deeper than that of the Court of Appeal whose view of the case is much more limited and narrow, often being shaped and distorted by the various orders or rulings being challenged. The Court of Appeal, at para 24, also reminded themselves of the following dicta of Lewison LJ in Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5: (iv) In making his decisions the trial judge will have regard to the whole of the sea of evidence presented to him, whereas an appellate court will only be island hopping. (v) The atmosphere of the courtroom cannot, in any event, be recreated by reference to documents (including transcripts of evidence). (vi) Thus even if it were possible to duplicate the role of the trial judge, it cannot in practice be done. The question in the present case is not whether the Court of Appeal misstated those constraints. They may be summarised as requiring a conclusion either that there was no evidence to support a challenged finding of fact, or that the trial judges finding was one that no reasonable judge could have reached. Rather, the question is whether the Court of Appeal were correct in concluding, as they did, that there were errors in the judges factual determination which satisfied those very stringent requirements. For that purpose it is necessary to address each of the Court of Appeals criticisms in turn, but with the caveat that it is not possible entirely to disentangle some of them from what, for reasons already given, was the Court of Appeals incorrect approach to the burden imposed by the common law upon Mr Perry to prove causation. The Court of Appeals first conclusion was that the judge had failed to appreciate that, on the question whether Mr Perry could have made an honest claim for a Services Award, the burden of proof in relation to any question of dishonesty lay squarely upon Raleys. More importantly, the Court of Appeal concluded that it had not been fairly put to Mr Perry in cross examination at trial that, for him to have instructed Raleys to pursue a claim for a Services Award would have involved dishonesty on his part, in suggesting that he suffered from the requisite underlying manual disability. As to that, for the reasons already given, the burden lay on Mr Perry to prove that he would have made an honest claim. Since his written evidence was that he would indeed have made a claim for a Services Award, it was incumbent upon counsel for Raleys to bring home to Mr Perry in cross examination and by any other relevant means that his honesty in making that assertion was being challenged, and to do so in a way which took properly into account Mr Perrys relative lack of sophistication. The judge reminded himself at some length of the need to take account of Mr Perrys relatively unsophisticated background, at paras 16 18 and 136 of his judgment. He satisfied himself, at paras 74 75, that Mr Perry and his advisors were in no doubt that Raleys were alleging that he was promoting a dishonest claim. At para 133 the judge made it clear that his conclusion that, in asserting that he suffered from the requisite manual disability in carrying out the relevant tasks unaided, Mr Perry was not telling the truth was one which he reached regardless of the incidence of a burden of proof. The question whether it had been sufficiently brought home to Mr Perry, by cross examination or otherwise, that the court was being invited to conclude that he was lying in his evidence about his inability to carry out the domestic tasks without assistance was pre eminently a matter for the trial judge, and it is clear, as noted above, that he concluded, after hearing submissions from counsel on the point, that it had been. The question for an appellate court is therefore whether there was material upon which the judge could reasonably reached that affirmative conclusion. Having read those parts of the cross examination to which this court was directed by counsel, there clearly was such material. It consisted, in the main, of counsel for Raleys putting in considerable detail to Mr Perry aspects of his documented medical history, and evidence (including photographic evidence) of fishing and gardening activities after his retirement as a miner which were, as the judge held, wholly inconsistent with his evidence about his disability in carrying out the relevant tasks. The judge was entitled to conclude that this sufficiently brought home to Mr Perry that he was being accused of lying about it. The fact that an appellate judge might, if trying the case at first instance, have preferred or required the matter to be put to Mr Perry differently or more directly, is, with respect, neither here nor there. Linked to this criticism was the conclusion, at para 46 of the judgment of Gloster LJ, that the judge placed far too much weight on the detail of the inadequate answers which were given by the appellant in this respect . But again, the weight to be given to evidential material in forming a conclusion whether Mr Perrys evidence lacked all credibility (as the judge found) was a matter for the trial judge. The second and main criticism by the Court of Appeal was that the judge had disregarded, without giving proper reasons, the evidence, broadly supportive of Mr Perrys case, from Professor Kester and from the single joint expert Mr Tennant, in particular because the latter was not called to be cross examined. Professor Kesters task, under the Scheme, was to advise whether, and with what degree of severity, Mr Perry suffered from VWF. He noted that Mr Perry reported a loss of manual dexterity and clumsiness of an intermittent nature, but his detailed examination of Mr Perry was directed to the presence or absence of the VWF in his hands rather than to their grip or dexterity. By contrast, Mr Tennants opinion was directed towards Mr Perrys ability to carry out the relevant domestic tasks unaided. Again however, much of his reasoning was based upon information provided to him by Mr Perry during interview, in particular in relation to each of the six relevant tasks, although Mr Tennant appears to have carried out a grip strength test and some simple tests of manual dexterity. The judge did, at paras 116 118 and 122 123 of his judgment, remind himself of the opinions of Professor Kester and Mr Tennant, of their findings as to the severity of Mr Perrys VWF, of the presumption thereby arising in favour of a Services Award, and accepted that Mr Perry suffered from VWF to a high degree. At para 118, he said: I acknowledge that the staging of two doctors supports the view that he has a significant loss of function, but I repeat that the question is whether the claimant has established that in reality any loss of function manifested itself in an inability to carry out the tasks. This was what, in the passage already quoted above, the judge described as a question of credibility. The trial judge was not merely entitled but obliged to weigh in the evidential balance his perception that Mr Perry was lying about his ability to perform, unaided, the relevant tasks against the opinion, in particular of Mr Tennant, that he suffered from shortcomings in manual dexterity which made it likely that he suffered from such a disability. Corroborative expert evidence not infrequently transforms testimony which on its own appears most unlikely into something credible. The judges conclusion that Mr Tennants opinion did not prevail over Mr Perrys thoroughgoing lack of credibility cannot be described as either lacking in reasoning or trespassing beyond the range of reasonable conclusions available to a trial judge. While it might have been better if Mr Tennant had been called for cross examination, the judge was not obliged to prefer the experts opinion, based as it was to a significant extent upon what Mr Perry had told him, to that which the judge was entitled to form, on the basis of the evidence as a whole, about whether Mr Perry was telling the truth about his supposed disability. In the end, the Court of Appeals criticism amounted to a supposed failure to give sufficient weight to the medical evidence: see per Gloster LJ at para 52. But questions as to the weight of competing evidence are pre eminently a matter for the trial judge. The next criticism was that the judge had misunderstood, or failed to apply, a principle fundamental to the Scheme, namely that a claimant did not have to be disabled entirely from carrying out a task in order to be entitled to a Services Award: see per Gloster LJ at para 54. She said that the impression given by the judge was that he wrongly considered that unless Mr Perry could not carry out any aspects of a task without assistance, he was not entitled to claim in respect of that task. No such error appears from perusal of the judges careful judgment. In particular, at para 132, he acknowledged that inability or reduced ability to carry out the services tasks would be sufficient to support a claim to a Services Award. The final criticism made by the Court of Appeal was that the judge could not rationally have reached the conclusion that Mr Perry, his wife and two sons had all given false evidence: see per Gloster LJ at para 55. It is a very strong thing for an appellate court to say, from a review of the paper records of a trial , that the trial judge was irrational in concluding that witnesses were not telling the truth, all the more so when the trial judge gives detailed reasons for that conclusion in a lengthy reserved judgment, and those reasons do not disclose any failure by him to consider relevant materials, or any disabling failure properly to understand them. The credibility (including honesty) of oral testimony is, of all things, a matter for the trial judge. It is unnecessary to address in detail the reasons given by Gloster LJ for that finding of irrationality against the judge. It is sufficient to say that, while they constitute persuasive and forcefully expressed views about why she and her colleagues in the Court of Appeal, faced with the same materials, would have come to a different conclusion, they do not, separately or in conjunction, support a conclusion of irrationality as the only explanation for the judges contrary view. As the judge said, the question whether Mr Perry needed assistance in the performance of the relevant tasks following his retirement from mining was pre eminently a matter to be proved, or not proved, by his oral evidence, with such support as he could muster from the oral evidence of his wife and two sons. It was, as the judge put it, a question of credibility. While there undoubtedly are cases where surviving documents point so clearly to the correct answer to issues of fact that the oral testimony of relevant witnesses is of subordinate importance, this is not one of them. Furthermore the surviving documents were, as was demonstrated during cross examination, generally hostile to Mr Perrys case. Mr Watt Pringle sought to support the Court of Appeals criticisms of the judges findings with specific submissions about aspects of the detail. They did not, separately or together, amount to a case sufficient to support either a conclusion that there was no evidence to support the judges adverse findings about credibility or a conclusion that no reasonable judge could have decided as he did. In particular Mr Watt Pringle pointed to the relative brevity of the cross examination of Mr Perrys wife and two sons, being, he submitted, insufficient to justify the conclusion that any of them was lying. But it is impossible to tell, without having been present at the trial, whether a short or a long cross examination of a witness was necessary in order to undermine his or her credibility. Mr Watt Pringle also pointed to the fact that the central thrust of Raleys case at trial was not so much that Mr Perry suffered from no disability in performing the relevant tasks unaided, (although that was part of Raleys case) but rather that his back problem was the only significant cause of such disability as in fact affected him. He pointed to the fact that, in the concluding part of his judgment, the judge rejected Raleys case that Mr Perrys back problems were of that degree of significance, preferring in that respect the evidence to the contrary of Mr Tennant. But he did so expressly on the conditional basis that he might be wrong in his primary conclusion that Mr Perry was lying about having any relevant inability to perform those tasks unaided: see para 137 of his judgment. In conclusion therefore, none of the grounds upon which the Court of Appeal considered that this was one of those rare cases where it was appropriate to reverse the trial judges findings on issues of fact is established, to the requisite high degree. Accordingly, this appeal should be allowed, and the judges order restored.
UK-Abs
The respondent, Mr Perry, is a retired miner. By the time he stopped working, he was suffering from a condition known as Vibration White Finger (VWF). Common symptoms include a reduction in grip strength and manual dexterity, often leading to an inability to carry out routine domestic tasks unaided. In the late 1990s, a group of test cases established that the National Coal Board (later British Coal) had been negligent in failing to take reasonable steps to limit the exposure of its miners to VWF from the excessive use of vibratory tools. In 1999, the Department for Trade and Industry (DTI) set up a scheme (the Scheme) to provide tariff based compensation (i.e. based on the severity of the injury) to miners suffering from VWF following exposure to excessive vibration. The Scheme was administered under a Claims Handling Arrangement dated 22 January 1999 made between the DTI and solicitors firms representing miners. The Scheme contemplated the making of two main types of compensatory award to such miners, which broadly reflected general and special damages for personal injuries. Pursuant to a Services Agreement dated 9 May 2000, special damages could include a Services Award to qualifying miners. This depended on establishing what became known as the factual matrix. In summary: (1) prior ability to undertake one or more of six defined routine domestic tasks (the six tasks) without assistance; (2) current inability to undertake those tasks without assistance because of VWF; and (3) current receipt of the necessary assistance with those tasks from others. The six tasks were gardening, window cleaning, DIY, decorating, car washing, and car maintenance. Qualification for a general damages award required affected miners to undertake a medical interview and examination designed to assess the severity of their VWF. Sufferers at certain high levels of severity also became entitled to a rebuttable presumption that they qualified for a Services Award. The Scheme provided for relatively light touch checks of Services Award claims. Compensation was payable to qualifying claimants according to an index linked tariff. Proportionate deductions could be made if a further medical examination showed that there were other contributing medical conditions. Mr Perry engaged the appellant law firm, Raleys, to pursue a VWF claim in October 1996. His claim ultimately fell within the Scheme. In October 1997, he was given medical ratings (stagings) sufficient both for him to obtain general damages and for a Services Award to be presumed. However, Mr Perry settled his claim in November 1999 for the payment of general damages only (11,600) and made no claim for a Services Award within the specified time. He made a professional negligence claim against Raleys in February 2009, claiming that the firms negligent failure to give him competent legal advice deprived him of the chance to claim a Services Award. His estimated loss was 17,300.17 plus interest. At trial in the County Court, Raleys ultimately admitted breach of duty, but denied causation of loss. It also alleged that his claim was time barred. The trial judge, Judge Saffman, rejected the limitation defence, but held that Mr Perry had not proved that Raleys breach of duty had caused him any loss. This conclusion was based on the finding that Mr Perrys VWF had not caused him any significant disability in performing any of the six tasks without assistance, such that he could not have been able to make an honest claim for a Services Award. The judge dismissed the claim, but nonetheless proceeded to make findings on the assessment of damages. The Court of Appeal reversed the finding on causation and concluded that the alternative findings on quantum meant a re trial was unnecessary. It granted Mr Perry loss of chance damages of 14,556.15 plus interest. Raleys appealed to the Supreme Court, seeking restoration of Judge Saffmans order. The Supreme Court allows the appeal and restores the order of the County Court judge. Lord Briggs gives the sole judgment, with which all members of the Court agree. Loss of chance damages have been developed by the courts to deal with the difficulties arising from the assessment of counter factual and future events [16]. In both types of situation, the courts at times depart from the ordinary burden on a claimant to prove the facts required for a successful claim on the balance of probabilities (i.e. more likely than not) standard [17 18]. However, this does not mean that the basic requirement that a negligence claim requires proof that loss has been caused by the breach of duty is abandoned [19]. The correct approach, following Allied Maples Group Ltd v Simmons & Simmons [1995] 1 WLR 1602 (CA), is to require a claimant to prove what he or she would have done on the balance of probabilities, while what others would have done (if relevant) depends on a loss of chance evaluation [20 21]. These principles apply equally to negligence claims based on loss of the opportunity to achieve a better outcome in a negotiated transaction and ones, as in this case, based on loss of the chance to bring a legal claim [22]. It is not unfair to subject medical and oral evidence as to facts within the claimants own knowledge to forensic analysis on the balance of probabilities standard [30]. The case law only establishes that, where the question for the court is one which turns on the assessment of a lost chance, it is generally inappropriate to conduct a trial within a trial [31]. It does not establish a principle that it is always wrong to try an issue relevant to causation in a professional negligence case, merely because that issue would have fallen for determination in the underlying claim (lost due to alleged negligence) [35 37]. Whether an issue should be tried to the usual standard depends on whether it concerns the claimants conduct (where it should be) or third party conduct (only requiring a real and substantial chance) [37]. Applying this approach, Mr Perry needed to prove that, properly advised by Raleys, he would have made a claim to a Services Award under the Scheme within time [25]. Further, the judge was correct to impose the additional requirement of the claim having to be an honest claim [25]. A concession in the courts below had been rightly made as to the honest claim requirement, because: (1) a claimant giving an honest description of his or her condition to a solicitor would not be advised to bring a claim if the facts were insufficient; (2) a court may fairly presume that the client would only make honest claims; and (3) it is not the proper role of the courts to reward dishonest claimants [25 27]. On the facts, Mr Perry had to believe the following to bring an honest claim: (1) before developing VWF, he had carried out all or some of the six tasks without assistance; (2) after developing VWF, he needed assistance in carrying out all or some of those tasks; and (3) the need for assistance was due to complications from VWF [28]. Question (3) might require expert medical opinion, but all the other necessary elements fell within his own knowledge [29]. Such facts do not raise issues of counter factuality or futurity which engage loss of chance principles [30]. Accordingly, Judge Saffman had made no legal error in conducting a trial of the issue whether Mr Perry would (or could) have brought an honest claim for a Services Award [41]. Further, the judge did not (wrongly) apply a second causation hurdle requiring Mr Perry to prove that his claim would have been successful (not merely honest) [42 48]. In addition, the Court of Appeal wrongly interfered with the judges factual determination the very stringent test for appellate court interference was not met in this case [49 66].
Extended determinate sentences were imposed on Frank Stott in May 2013, pursuant to section 226A of the Criminal Justice Act 2003 (the 2003 Act) for sexual offences. This appeal concerns the provisions of section 246A of the 2003 Act which deal with early release from prison of those serving extended determinate sentences. The effect of the provisions is that Mr Stott will not be eligible to apply for release until he has served two thirds of his custodial term, in contrast to other categories of prisoner who can apply for release at an earlier point in their custodial term. He contends that the provisions of section 246A are discriminatory and in violation of article 14 of the Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR or the Convention) taken together with article 5 of the Convention. The facts The appellant was convicted at trial of 20 offences, including multiple offences of raping an eight year old child. Prior to the trial, he had pleaded guilty to other counts relating to indecent photography of a child. On 23 May 2013, he was sentenced to an extended determinate sentence (EDS) in respect of ten counts of rape. An EDS comprises two elements, namely an appropriate custodial term, and a further period for which the offender is to be subject to a licence (the extension period), see section 226A(5) at para 85 below. Mr Stotts appropriate custodial term has been fixed at 21 years, with an extension period of four years. He was also sentenced to various determinate sentences of imprisonment to be served concurrently. He was refused permission to appeal against his sentence, see R v Stott [2016] EWCA Crim 172. A prisoner serving an EDS can be released before the end of his term of imprisonment. It will be necessary to look further at the statutory provisions governing release later but, in broad outline, section 246A of the 2003 Act requires, in most cases, that the EDS prisoner be released on licence as soon as he has served the requisite custodial period and the Parole Board has directed his release. The requisite custodial period is two thirds of the appropriate custodial term specified by the sentencing court, so Mr Stott would have to serve 14 years before becoming eligible for parole. Other categories of prisoner are, in contrast, eligible for parole at the half way point in their sentences. If these rules had applied to Mr Stott, he would have been eligible for parole once he had served ten and a half years. He complained that there was no justification for this difference in treatment in relation to eligibility for parole, and that it was unlawful discrimination within article 14. He brought judicial review proceedings. In February 2017, a Divisional Court of the Queens Bench Division dismissed his claim [2017] EWHC 214 (Admin). However, it granted a certificate pursuant to section 12 of the Administration of Justice Act 1969 to permit Mr Stott to appeal directly to the Supreme Court, should permission to appeal be granted by the Supreme Court, which in due course it was. Article 5 and article 14 of the ECHR As the focus in this case is upon articles 5 and 14 of the ECHR, it will be convenient to set them out immediately. Article 5 of the ECHR secures the right to liberty and security of person. So far as is material to the present case, it provides: 1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law: the lawful detention of a person after conviction (a) by a competent court; 4. Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. Article 14 prohibits discrimination, providing: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The approach to an article 14 claim In order to establish that different treatment amounts to a violation of article 14, it is necessary to establish four elements. First, the circumstances must fall within the ambit of a Convention right. Secondly, the difference in treatment must have been on the ground of one of the characteristics listed in article 14 or other status. Thirdly, the claimant and the person who has been treated differently must be in analogous situations. Fourthly, objective justification for the different treatment will be lacking. It is not always easy to keep the third and the fourth elements entirely separate, and it is not uncommon to see judgments concentrate upon the question of justification, rather than upon whether the people in question are in analogous situations. Lord Nicholls of Birkenhead captured the point at para 3 of R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 37; [2006] 1 AC 173. He observed that once the first two elements are satisfied: the essential question for the court is whether the alleged discrimination, that is, the difference in treatment of which complaint is made, can withstand scrutiny. Sometimes the answer to this question will be plain. There may be such an obvious, relevant difference between the claimant and those with whom he seeks to compare himself that their situations cannot be regarded as analogous. Sometimes, where the position is not so clear, a different approach is called for. Then the courts scrutiny may best be directed at considering whether the differentiation has a legitimate aim and whether the means chosen to achieve the aim is appropriate and not disproportionate in its adverse impact. The issues In this case, it is accepted that the right to apply for early release, upon which Mr Stott relies, falls within the ambit of article 5. The debate is about the application of article 14. Two issues have been identified. The first issue (Issue 1 or the status issue) is whether the different treatment of Mr Stott is on a ground within the meaning of other status in article 14. The second issue (Issue 2) requires determination only if Issue 1 is answered in the affirmative. It has two parts: (a) Are EDS prisoners in an analogous situation to either indeterminate sentence prisoners or other determinate sentence prisoners, these being the two categories of prisoner with which Mr Stott seeks to compare his own position? If so, is there an objective justification for the difference in treatment (b) between the categories of prisoner? Mr Stott argues that his differential treatment was on the ground of other status, that he was in an analogous situation to other prisoners who were treated differently, and that there was no objective justification for the different treatment. The Secretary of State argues that Mr Stott fails on the status issue, so Issue 2 does not arise. However, if that is wrong, the Secretary of State argues that Mr Stotts sentence is not analogous to the other sentences under consideration, and that there is in any event an objective justification for treating the different categories of prisoner differently. The central importance of R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484 (R (Clift)) and Clift v United Kingdom (Application No 7205/07) At the heart of the appeal are the decisions of the House of Lords and of the European Court of Human Rights (ECtHR) concerning Mr Clift, a prisoner who was serving a sentence of 18 years imprisonment for very serious crimes, including attempted murder, and complained that the early release provisions in respect of his sentence gave rise to a violation of article 14. In 2006, in R (Clift), the House of Lords held that Mr Clifts classification, as a long term prisoner serving a determinate sentence of 15 years or more, did not amount to an other status, and accordingly there was no infringement of article 14. In 2010, in Clift v United Kingdom (Application No 7205/07), the ECtHR took the contrary view, holding that Mr Clift did come within article 14 and that there was no objective justification for the different release provisions applied to prisoners in his category. The decision of the House of Lords in R (Clift) dictated the Divisional Courts decision in the present case. The Divisional Court only rejected Mr Stotts argument that his differential treatment was on the ground of other status, because it was constrained to do so by R (Clift). Had it not been so bound, it would have found that other status was established, and would then have gone on to find section 246A of the 2003 Act incompatible with article 14. It now falls to this court to determine whether the decision of the House of Lords in R (Clift) should continue to be followed, in the light of the subsequent ECtHR decision in Clift v United Kingdom, and of the article 14 jurisprudence as a whole. Issue 1: the status issue Before turning to look at R (Clift) and Clift v United Kingdom in some detail, the decision of the ECtHR in Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711 (Kjeldsen) needs to be introduced, because one paragraph from the courts judgment features regularly in decisions of the ECtHR, and the domestic courts, when the question of status in article 14 is being considered. Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711 Kjeldsen concerned sex education in Danish schools. The applicants were parents who objected to sex education being compulsory in state primary schools and complained that, whereas parents could have their children exempted from religious instruction classes, they could not do so in relation to sex education classes. They claimed, unsuccessfully, that this was discriminatory treatment contrary to article 14 taken with article 2 of First Protocol (right to education). The passage about status to which courts return repeatedly is at para 56: The court first points out that article 14 prohibits, within the ambit of the rights and freedoms guaranteed, discriminatory treatment having as its basis or reason a personal characteristic (status) by which persons or groups of persons are distinguishable from each other. Regina (Clift) v Secretary of State for the Home Department (above) As I have said, Mr Clift was a prisoner serving a sentence of 18 years imprisonment. Some way into his period of imprisonment, the Parole Board recommended his release on parole. Had Mr Clift been serving a term of less than 15 years, or life imprisonment, the Secretary of State would have had a statutory obligation to comply with the recommendation of the Parole Board. However, by virtue of various statutory provisions and the Parole Board (Transfer of Functions) Order 1998 (SI 1998/3218), the final decision in relation to prisoners serving determinate terms of 15 years or more lay with the Secretary of State, who rejected the recommendation. Mr Clift contended that the early release provisions discriminated against him in breach of his rights under articles 5 and 14 of the ECHR by denying him the right, that other long term prisoners enjoyed, to be released if the Parole Board recommended it. Mr Clift was able to establish that his rights in relation to early release were within the ambit of article 5. Although there is no issue about article 5 in the present case, a brief resum of how the House of Lords approached it will set the article 14 issues in a proper context. As Lord Bingham of Cornhill said at para 17, the ECHR does not require member states to establish a scheme for early release, and prisoners may, consistently with the Convention, be required to serve the entirety of the sentence passed, if that is what the domestic law provides. However, where the domestic law in fact provides for a right to seek early release, that right is within the ambit of article 5. In relation to long term prisoners serving determinate terms, the law of England and Wales did confer a right to seek early release, setting a time at which a prisoner must be released as of right, and an earlier time at which he might be released if it was judged safe to do so. Accordingly, as Lord Bingham said at para 18, differential treatment, in relation to early release, of one prisoner as compared with another, otherwise than on the merits of their respective cases, gave rise to a potential complaint under article 14. However, the discrimination which article 14 prohibits is discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. Not falling within any of the named grounds, Mr Clift could only bring himself within the protection of article 14 if his differential treatment could be said to be on the ground of other status. He argued that this requirement was satisfied on the basis that his treatment was on the ground that he was a prisoner sentenced to a determinate term of 15 years or more. Lord Bingham (with whom there was general agreement, although some other members of the House added reasons of their own) rejected this argument, but he did so not without hesitation, and influenced by the fact that the Strasbourg jurisprudence had not endorsed a status of this kind as falling within article 14. Lord Hope of Craighead too, having put the arguments for and against Mr Clift being able to lay claim to status, was mindful of the need for a measure of self restraint, so as not to outstrip Strasbourg. What each would have said, had they known what the ECtHR was going to decide in Clift v United Kingdom in 2010, is unknown, although one cannot avoid the sense that the outcome might well have been different. However, in order to give proper consideration to what, if any, continuing influence R (Clift) should have, it is necessary to isolate the strands of reasoning which went to make up the conclusion of the House: i) There was agreement that the words or other status in article 14 (in French toute autre situation) are far from precise, but that they are not intended to cover differential treatment on any ground whatever, because in that case, the list of grounds which precede them would be otiose (paras 27, 43, and 56). ii) Reliance was placed on the passage quoted above from para 56 of Kjeldsen, and the search was for something in the nature of a personal characteristic by which persons or groups of persons are distinguishable from each other (paras 27, 28, 42, and 56 for example). iii) It was accepted that, as the specific grounds of discrimination listed in article 14 show, protection is extended not only to characteristics over which a person has no control, such as race or birth, but also to acquired characteristics, such as religion or political opinion (paras 28 and 45). iv) Lord Bingham and Lord Hope both advanced the proposition that, to qualify, the personal characteristic in question must exist independently of the treatment of which complaint is made. Lord Bingham said, at para 28, that he did not think that a personal characteristic can be defined by the differential treatment of which a person complains, without giving any explanation, or authority, for this view. He did not appear to consider that Mr Clift would fall foul of this, as he was not complaining of the sentence passed on him, but of being denied a definitive Parole Board recommendation. Lord Hope agreed, at para 47, that [i]t must be accepted, as Lord Bingham points out, that a personal characteristic cannot be defined by the differential treatment of which a person complains. Although he similarly did not spell out the foundation for his view, it may lie in his observation, at para 45, that each of the specific grounds shared a feature in common, namely that they exist independently of the treatment of which complaint is made and [i]n that sense, they are personal to the complainant. The remainder of para 47 is not entirely easy to understand, but might indicate that Lord Hope shared Lord Binghams opinion that this was not an area of difficulty for Mr Clift. It reads: It is plain too that the category of long term prisoner into which Mr Clifts case falls would not have been recognised as a separate category had it not been for the Order which treats prisoners in his group differently from others in the enjoyment of their fundamental right to liberty. But he had already been sentenced, and he had already acquired the status which that sentence gave him before the Order was made that denied prisoners in his group the right to release on the recommendation of the Parole Board. The question which his case raises is whether the distinguishing feature or characteristic which enables persons or a group of persons to be singled out for separate treatment must have been identified as a personal characteristic before it is used for this purpose by the discriminator. v) There was an examination of the ambit of article 14 as demonstrated by decisions of the ECtHR and the domestic courts in various factual contexts. Baroness Hale included a particularly detailed list of authorities at para 58, which led her to make the observation that in the vast majority of Strasbourg cases where violations of article 14 have been found, the real basis for the distinction was clearly one of the proscribed grounds or something very close. Examples were given of cases in which the grounds for the discrimination were not within article 14 (see, for example, paras 27, 45, 59 61), including prisoners who were treated differently because of the legislatures view of the gravity of their offences (Gerger v Turkey 8 July 1999, para 69, and see also Budak v Turkey (Application No 57345/00) (unreported)). And there was discussion of R (S) v Chief Constable of the South Yorkshire Police [2004] 1 WLR 2196 where the House of Lords held that article 14 did not cover differential treatment on the basis that a person had previously been investigated by the police and provided fingerprints; the possession of fingerprints and DNA samples by the police in that situation was simply a matter of historical fact, not attributable to the personal characteristics of those who had provided them. Having referred earlier to the rather qualified terms in which Lord Bingham and Lord Hope expressed their conclusions, I should set out rather more fully what they actually said. Baroness Hale also dealt with the topic, but Lord Carswell and Lord Brown of Eaton under Heywood simply agreed with Lord Bingham on the issue without adding anything. Lord Binghams conclusions are to be found in para 28: 28. Is his classification as a prisoner serving a determinate sentence of 15 years or more (but less than life) a personal characteristic? I find it difficult to apply so elusive a test. But I would incline to regard a life sentence as an acquired personal characteristic and a lifer as having an other status, and it is hard to see why the classification of Mr Clift, based on the length of his sentence and not the nature of his offences, should be differently regarded. I think, however, that a domestic court should hesitate to apply the Convention in a manner not, as I understand, explicitly or impliedly authorised by the Strasbourg jurisprudence, and I would accordingly, not without hesitation, resolve this question in favour of the Secretary of State and against Mr Clift. As for Lord Hope, he also acknowledged the case for the length of Mr Clifts sentence conferring a status on him which can be regarded as a personal characteristic. From para 46 onwards, he can be seen considering the arguments, beginning thus: 46. It could be said in Mr Clifts case that the length of his sentence did confer a status on him which can be regarded as a personal characteristic. This is because prisoners are divided by the domestic system into broadly defined categories, or groups of people, according to the nature or the length of their sentences. These categories affect the way they are then dealt with throughout the period of their sentences. As a result they are regarded as having acquired a distinctive status which attaches itself to them personally for the purposes of the regime in which they are required to serve their sentences. This is most obviously so in the case of prisoners serving life sentences and where distinctions are drawn between short term and long term prisoners serving determinate sentences. It is less obviously so in the case of long term prisoners serving determinate sentences of different lengths. He thought that, given that the function of article 14 was to secure Convention rights and freedoms without discrimination on grounds which, having regard to the underlying values of the Convention, must be regarded as unacceptable, a generous meaning should be given to or other status (para 48). In his view, the protection of article 14 ought not to be denied just because the distinguishing feature which enabled the discriminator to treat persons or groups of persons differently in the enjoyment of their Convention rights had not previously been recognised, by which he seems, I think, to have meant previously recognised by the ECtHR. But, ultimately, two factors seem to have influenced his rejection of Mr Clifts case. The first was that he accepted that it was possible to regard what he has done, rather than who or what he is, as the true reason for the difference of treatment. The second was caution about outstripping Convention jurisprudence. So, he said, I am persuaded, with some reluctance, that it is not open to us to resolve the [other status point] in Mr Clifts favour (para 49). Baroness Hale did not express hesitation or reluctance in concluding that the difference of treatment between Mr Clift and people sentenced to shorter determinate sentences or to life sentences was a difference in treatment based on the seriousness of the offences concerned, and therefore outside article 14. As she put it, [t]he real reason for the distinction is not a personal characteristic of the offender but what the offender has done (para 62). Clift v United Kingdom (above) It is necessary to look in similar detail at the ECtHRs reasons for concluding that the differential treatment of Mr Clift was on the ground of other status for the purposes of article 14. The court began its assessment, at para 55, by observing that article 14 does not prohibit all differences in treatment, but only those differences based on an identifiable, objective or personal characteristic, or status, by which persons or groups of persons are distinguishable from one another, citing para 56 of Kjeldsen, Busk Madsen and Pedersen (above), Berezovskiy v Ukraine (dec) (Application No 70908/01), 15 June 2004, and paras 61 and 70 of Carson v United Kingdom (2010) 51 EHRR 13. But, equally, it confirmed (para 55) that the list of specific grounds in article 14 is illustrative and not exhaustive, and recalled (para 56) that the words other status (and a fortiori the French toute autre situation) have generally been given a wide meaning. Noting the Governments argument that other status should be more narrowly construed, ejusdem generis with the specific examples in article 14, it demonstrated (paras 56 to 59) that not all the listed grounds could be said to be personal in the sense of being innate characteristics or inherently linked to the identity or personality of the individual. It commented on the inclusion of property as one of the grounds, and observed that it was a ground which had been construed broadly by the court as demonstrated by James v United Kingdom (1986) 8 EHRR 123 (difference in treatment between different categories of property owners) and Chassagnou v France (1999) 29 EHRR 615, paras 90 and 95, (distinction between large and small landowners). It went on, at para 58, to give a list of other cases in which a violation of article 14 had been found because of different treatment based on characteristics which were not personal in the sense of being innate or inherent, namely: Engel v The Netherlands (1976) 1 EHRR 647 (distinction based on military rank), Pine Valley Developments Ltd v Ireland (1991) 14 EHRR 319 (distinction between those who held outline planning permission and benefited from new legislation and those who held outline planning permission but did not), Larkos v Cyprus (1999) 30 EHRR 597, para 21 (distinction between tenants of the State and tenants of private landlords), Shelley v United Kingdom (2008) 46 EHRR SE16 (being a convicted prisoner could be an other status), Sidabras and Dziautas v Lithuania (2004) 42 EHRR 104 (implicitly accepted that status as a former KGB officer fell within article 14), and Paulk v Slovakia (2006) 46 EHRR 10 (a father whose paternity had been established by judicial determination had a status which could be compared to putative fathers and mothers in situations where paternity was legally presumed but not judicially determined). Accordingly, the court concluded (para 59), even if the Governments ejusdem generis argument was correct (upon which no pronouncement was made either way), it would not necessarily preclude Mr Clifts claim. The argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based was advanced, but the court rejected it, citing Paulk (2008) 46 EHRR 10 as undermining it. It said: 60. Further, the court is not persuaded that the Governments argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based finds any clear support in its case law. In Paulk, cited above, there was no suggestion that the distinction relied upon had any relevance outside the applicants complaint but this did not prevent the court from finding a violation of article 14. The question whether there is a difference of treatment based on a personal or identifiable characteristic in any given case is a matter to be assessed taking into consideration all of the circumstances of the case and bearing in mind that the aim of the Convention is to guarantee not rights that are theoretical or illusory but rights that are practical and effective (see Artico v Italy, 13 May 1980, para 33, Series A no 37; and Cudak v Lithuania [GC], no 15869/02, para 36, 23 March 2010). It should be recalled in this regards that the general purpose of article 14 is to ensure that where a state provides for rights falling within the ambit of the Convention which go beyond the minimum guarantees set out therein, those supplementary rights are applied fairly and consistently to all those within its jurisdiction unless a difference of treatment is objectively justified. The court was not impressed, either, with the Governments argument that, as in Gerger (above), the distinction was between different types of offence, according to the legislatures view of their gravity, observing that the cases in which the approach in Gerger had been followed all concerned special court procedures or provisions on early release for those accused or convicted of terrorism offences in Turkey. It continued (para 61): Thus while Gerger made it clear that there may be circumstances in which it is not appropriate to categorise an impugned difference of treatment as one made between groups of people, any exception to the protection offered by article 14 of the Convention should be narrowly construed. In the present case the applicant does not allege a difference of treatment based on the gravity of the offence he committed, but one based on his position as a prisoner serving a determinate sentence of more than 15 years. While sentence length bears some relationship to the perceived gravity of the offence, a number of other factors may also be relevant, including the sentencing judges assessment of the risk posed by the applicant to the public. At para 62, the court said: The court has frequently emphasised the fundamental importance of the guarantees contained in article 5 for securing the right of individuals in a democracy to be free from arbitrary detention at the hands of the authorities (see, for example, akc v Turkey [GC], no 23657/94, para 104, ECHR 1999 IV). Where an early release scheme applies differently to prisoners depending on the length of their sentences, there is a risk that, unless the difference in treatment is objectively justified, it will run counter to the very purpose of article 5, namely to protect the individual from arbitrary detention. Accordingly, there is a need for careful scrutiny of differences of treatment in this field. It concluded that in the light of all the considerations it had set out, Mr Clift did enjoy other status for the purposes of article 14. At paras 66 and 67, the court addressed the issue of whether Mr Clift was in an analogous position to the other prisoners with whom he compared himself, observing that what is required is that the applicant should demonstrate that, having regard to the particular nature of the complaint, his situation was analogous, or relevantly similar; it need not be identical. Mr Clift was in an analogous position to long term prisoners serving less than 15 years and life prisoners, as the methods of assessing the risk posed by a prisoner eligible for early release, and the means of addressing any risk identified, were in principle the same for all categories of prisoner. The court went on to find that the differential treatment of prisoners in Mr Clifts position lacked objective justification. The Government had argued that it was justified on the basis of the risk posed by the category of prisoners in question, and by the need to maintain public confidence in the justice system. As to the first basis, the court accepted in principle that more stringent early release provisions could be justified on the basis that a group of prisoners posed a higher risk, but there had not been shown to be higher risk here. As to the second basis, it had not been demonstrated that requiring the approval of the Secretary of State would address concerns about risk on release, given that the assessment of the risk posed by an individual prisoner was a task without political content and one to which the Secretary of State could bring no superior expertise. There is much in the ECtHRs decision which is in harmony with the approach taken by the House of Lords in R (Clift). But it can be seen that there are respects in which the ECtHR either went further than the House of Lords or differed from its approach. It differed in that it was not persuaded that there was any support for the argument that the treatment of which the applicant complains must exist independently of the other status; on the contrary, the matter had to be assessed taking into consideration all of the circumstances of the case and bearing in mind that the aim of the Convention was to guarantee rights which are practical and effective. It also differed from the House of Lords in rejecting the idea that Mr Clifts complaint was about a difference in treatment based on the gravity of his offence, observing that a number of factors may be relevant to sentence length, as well as the perceived gravity of the offence. It also emphasised the particular context for the decision in Gerger and other cases in which the Gerger approach had been taken. And it stressed that any exception to the protection offered by article 14 should be narrowly construed, and that there needed to be careful scrutiny of differences of treatment where an early release scheme applied differently to prisoners depending on the length of their sentence, given that there was a risk that unless the difference was objectively justified it would run counter to the very purpose of article 5. It possibly went further than the House of Lords in relation to the nature of the characteristics which would be recognised, in that it observed that not all the grounds could be said to be inherently linked to the identity or personality of the individual, highlighting the inclusion of property as a specified ground, and giving examples of characteristics which had sufficed, but were not innate or inherent. ECtHR decisions other than Clift v United Kingdom There have been many decisions of the ECtHR in relation to article 14 and it is unnecessary to refer to more than a few of them. The way in which that court is presently approaching the question of other status can be seen from three recent decisions, one in 2016 and two in 2017. They demonstrate, I think, that the approach has been relatively consistent over the years, and that there has been little change to the approach exhibited in Clift v United Kingdom. The 2016 decision is Biao v Denmark (2016) 64 EHRR 1 (Biao). This concerned the Danish provisions for family reunion which treated Danish born nationals differently from those who acquired Danish nationality later in life, a majority of whom were of foreign ethnic origin. This was said to amount to a violation of article 14 read with article 8. Citing earlier decisions of its own, including Kjeldsen, Carson v United Kingdom 51 EHRR 13, and Clift v United Kingdom, the court said: 89. The court has established in its case law that only differences in treatment based on an identifiable characteristic, or status, are capable of amounting to discrimination within the meaning of article 14. Moreover, in order for an issue to arise under article 14 there must be a difference in the treatment of persons in analogous, or relevantly similar, situations. Article 14 lists specific grounds which constitute status including, inter alia, race, national or social origin and birth. However, the list is illustrative and not exhaustive, as is shown by the words any ground such as and the inclusion in the list of the phrase any other status. The words other status have generally been given a wide meaning and their interpretation has not been limited to characteristics which are personal in the sense that they are innate or inherent. The first of the 2017 decisions is Khamtokhu and Aksenchik v Russia (Applications Nos 60367/08 and 961/11) (Khamtokhu), which concerned applicants who were sentenced to life imprisonment. They complained of discriminatory treatment, in violation of article 14 taken in conjunction with article 5, because they were treated less favourably than other categories of convicted offenders (women, juveniles, and men over 65) who were exempt from life imprisonment. The court said: 61. Article 14 does not prohibit all differences in treatment, but only those differences based on an identifiable, objective or personal characteristic, or status, by which individuals or groups are distinguishable from one another. It lists specific grounds which constitute status including, inter alia, sex, race and property. However, the list set out in article 14 is illustrative and not exhaustive, as is shown by the words any ground such as (in French notamment) and the inclusion in the list of the phrase any other status (in French toute autre situation). The words other status have generally been given a wide meaning, and their interpretation has not been limited to characteristics which are personal in the sense that they are innate or inherent (see Clift, cited above, paras 56 58; Carson v United Kingdom [GC], no 42184/05, paras 61 and 70, ECHR 2010; and Kjeldsen, Busk Madsen and Pedersen v Denmark, 7 December 1976, para 56, Series A no 23). There was no need, in Khamtokhu to labour over the question of status, as sex is explicitly mentioned in article 14 as a prohibited ground of discrimination, and the court had accepted in an earlier case that age was a concept also covered by the provision. Article 14, taken with article 5, was accordingly applicable. The applicants were in an analogous situation to other offenders convicted of the same or comparable offences, but their complaint failed because the governments sentencing provisions had a legitimate aim and were proportionate. The second 2017 case is Minter v United Kingdom (2017) 65 EHRR SE6 (Minter). Mr Minter was sentenced to an extended sentence for sexual offences. This meant that he was subject to an extended licence period, and thus to a requirement to notify the police of various personal details indefinitely. Mr Minter complained that the application of the indefinite notification period was in breach of article 8 of the ECHR, either read alone or in conjunction with article 14. Although the notification requirement was an interference with his article 8 rights, it was not disproportionate, and the article 8 claim was manifestly ill founded. However, Mr Minter argued that, by virtue of a change in the law, if he had been sentenced later, he would not have received an extended sentence and would not therefore have been subject to the indefinite notification period at all. That, he submitted, amounted to an unjustified difference in treatment based on other status, and to a violation of article 14 taken with article 8. The court rejected the article 14 complaint as manifestly ill founded too. On the facts, it considered Mr Minters assertion that no indefinite notification requirement would have been imposed if he had been sentenced later to be entirely speculative. But even had there not been that obstacle, his claim would have failed. The court began its assessment of the issue in this way: 66. In order for an issue to arise under article 14 there must be a difference in the treatment of persons in analogous, or relevantly similar, situations (see Khamtokhu and Aksenchik v Russia (60367/08 and 961/11) 24 January 2017 at para 64). As established in the courts case law, only differences in treatment based on an identifiable characteristic, or status, are capable of amounting to discrimination within the meaning of article 14 (see Khamtokhu and Aksenchik (60367/08 and 961/11) 24 January 2017 at para 61). Such a difference in treatment is discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised (Khamtokhu and Aksenchik (60367/08 and 961/11) 24 January 2017 at para 64). The court was not persuaded by the applicants reliance on the Clift v United Kingdom decision. In a passage which exhibits, to my mind, the tendency (also seen elsewhere in the Strasbourg jurisprudence on article 14) for consideration of the issue of whether a difference in treatment is on the ground of other status to convert, almost seamlessly, into consideration of whether the applicant is in an analogous situation and/or whether the difference is justified, it distinguished the situation in Clift v United Kingdom: 68. Furthermore, the court does not consider that Clift (7205/07) 13 July 2010 supports the applicants claim. It is true that in Clift the court accepted that the different treatment of different categories of prisoners depending on the sentences imposed was based on other status within the meaning of article 14 of the Convention. However, in the present case the different treatment complained of did not concern the length of the applicants sentence but rather the different sentencing regime applied to him as a consequence of a new legislation. As such, his article 14 complaint is indistinguishable from that which was declared inadmissible as manifestly ill founded in Massey. Although Massey (14399/02) 8 April 2003 pre dated Clift (7205/07) 13 July 2010, in Zammit and Attard Cassar (1046/12) 30 July 2015, a case which post dated Clift by some four and a half years, that no discrimination was disclosed by the selection of a particular date for the commencement of a new legislative regime. the court reaffirmed Although the approach taken in the three cases can properly be described as consistent, in my view, it is interesting to note that Biao and Minter refer to identifiable characteristic, or status, whereas Khamtokhu is slightly more expansive, speaking of identifiable, objective or personal characteristic, or status, by which individuals or groups are distinguishable from one another. Biao and Khamtokhu both stress that the list in article 14 is illustrative and not exhaustive, and that the words other status have generally been given a wide meaning and their interpretation has not been limited to characteristics which are personal in the sense that they are innate or inherent. The domestic case law on article 14 and status Article 14 has regularly been the subject of consideration in the Supreme Court and, before that, in the House of Lords. The House of Lords decisions pre date the ECtHRs decision in Clift v United Kingdom, of course, but are important in understanding how the approach to article 14 has evolved. After a review of them, I summarise, at para 56 below, the position that the domestic case law seems to have reached on other status by the time of the ECtHRs Clift decision. R (S) v Chief Constable of the South Yorkshire Police (2004, above) was the case concerning fingerprints and DNA samples. Lord Steyn, with whom I do not think there was significant disagreement on this point, worked on the basis that the proscribed grounds in article 14 were not unlimited and was guided by Kjeldsen. Perhaps foreshadowing the ejusdem generis argument advanced in Clift, in summarising his conclusion that the requisite status had not been established, he observed (para 51) that the difference in treatment is not analogous to any of the expressly proscribed grounds. R (Hooper) v Secretary of State for Work and Pensions [2005] UKHL 29; [2005] 1 WLR 1681 concerned widowers who claimed that, in denying them benefits which would have been payable to widows, the Secretary of State had acted incompatibly with their rights under article 14 read with article 1 of Protocol 1 and article 8 of the ECHR. The decision is of interest for Lord Hoffmanns treatment of the question of whether article 14 was infringed. He considered whether being a person who has started legal proceedings qualified as a status, and was not persuaded that it did. In explaining why, at para 65, he appeared to adopt and develop Lord Steyns analogous approach which he described as being that article 14 required discrimination to be by reference to some status analogous with those expressly mentioned, such as sex, race or colour. R (Carson) v Secretary of State for Work and Pensions (above), is an often cited House of Lords decision. Each of the two claimants complained of a violation of their rights under article 14, read with article 1 of the First Protocol to the ECHR. One claimant complained of discrimination on the basis of country of residence, and the other on the basis of age. The first was entitled to a retirement pension, but, because she was resident in South Africa, was precluded from receiving the normal annual cost of living increase. The second received state benefits at a lower rate because she was under 25. Their claims failed because the differential treatment of them was rationally justified. However, they did manage to establish that they came within the scope of other status in article 14. In the case of the claimant who was resident in South Africa, this is of note because she succeeded in establishing that this was a personal characteristic, notwithstanding that it was in principle a matter of choice and was not immutable. This result was reached through the application of what Lord Walker of Gestingthorpe described as the Kjeldsen test of looking for a personal characteristic (para 54). In AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434, Baroness Hale described Carson as unusual, commenting (para 26) that: In general, the list concentrates on personal characteristics which the complainant did not choose and either cannot or should not be expected to change. The Carson case is therefore unusual, because it concerned discrimination on the ground of habitual residence, which is a matter of personal choice and can be changed. But the ECtHR subsequently confirmed, in Carson v the United Kingdom (2008) 48 EHRR 41, that ordinary residence should be seen as an aspect of personal status. R (RJM) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2009] AC 311 might also be considered to take a more expansive view of status. It merits rather more detailed review because there was considerable discussion of the subject. The claimants disability premium in his income support, which he received by reason of his incapacity for work through mental health problems, was stopped because he had become homeless. He claimed that the premium was a possession within article 1 of the First Protocol to the ECHR and that he had been discriminated against contrary to article 14. One of the questions for determination was whether homelessness fell within other status for the purposes of article 14. There was an argument as to whether it was necessary to show that it was a personal characteristic at all, and, if so, whether it was properly so described. It was held that it was indeed a personal characteristic and within the article, even if adopted by choice, although the claim failed because the regulation in question was justified. Lord Neuberger of Abbotsbury discussed whether other status must necessarily be based upon a personal characteristic. He said (para 36) that there was no doubt that the House of Lords had consistently proceeded upon the assumption that that was required, basing that approach primarily on the Kjeldsen case. There was also, in his view, a strong case for saying that as a matter of language, article 14 (or at least the English version of it) appears to envisage precisely this, given the specific grounds on which unjustifiable discrimination is prohibited (para 37). No case to which the court had been taken supported an argument to the contrary. However, before ultimately adopting that approach himself, Lord Neuberger did acknowledge that there may be a case for another interpretation, saying: 39. None the less, it is fair to refer to the fact that the French version of article 14 (which has equal status with the English version see article 59) ends with the words ou toute autre situation, which may suggest a rather wider scope than or other status. Further, while the ECtHR judgments relied on by RJM do not establish that no consideration need be given in an article 14 case to the issue of whether the discrimination is by reference to a status which can be characterised as a personal characteristic, some of those judgments could be read as suggesting a rather less structured approach than that which has been adopted by this House. In particular, in an allegation of article 14 infringement, the ECtHR may not always consider whether the alleged discrimination is on the ground of other status as an entirely free standing question: it sometimes appears to approach the overall allegation of infringement on a more holistic or broad brush basis: see, for instance, the reasoning in Kjeldsen 1 EHRR 711, para 56, and Kafkaris 12 February 2008, paras 163 165, as well as Stubbings v United Kingdom (1996) 23 EHRR 213, paras 70 73. In deciding that homelessness could fairly be described as a personal characteristic, Lord Neuberger proceeded upon the basis that a generous meaning should be given to or other status, as would be expected in enforcing anti discrimination legislation in a democratic state (para 42), and that other status should not be too closely limited by the grounds which are specifically prohibited by the article (para 43). He said (para 45) that while reformulations are dangerous, he considered that the concept of personal characteristics generally requires one to concentrate on what somebody is, rather than what he is doing or what is being done to him, and that, on that approach, homelessness was an other status. He considered (para 46) that this characterisation also fitted with Lord Binghams view in Clift that the personal characteristic could not be defined by the differential treatment of which the person complains. He considered (para 47) that the fact that homelessness was a voluntary choice (if it was) was not of much, if any, significance in determining whether it was a status for article 14; some of the specified grounds in the article were matters of choice too. Nor was it telling that homelessness was not a legal status. Lord Walkers observations about personal characteristics are also instructive: 5. The other point on which I would comment is the expression personal characteristics used by the European Court of Human Rights in Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, and repeated in some later cases. Personal characteristics is not a precise expression and to my mind a binary approach to its meaning is unhelpful. Personal characteristics are more like a series of concentric circles. The most personal characteristics are those which are innate, largely immutable, and closely connected with an individuals personality: gender, sexual orientation, pigmentation of skin, hair and eyes, congenital disabilities. Nationality, language, religion and politics may be almost innate (depending on a persons family circumstances at birth) or may be acquired (though some religions do not countenance either apostates or converts); but all are regarded as important to the development of an individuals personality (they reflect, it might be said, important values protected by articles 8, 9 and 10 of the Convention). Other acquired characteristics are further out in the concentric circles; they are more concerned with what people do, or with what happens to them, than with who they are; but they may still come within article 14 (Lord Neuberger instances military status, residence or domicile, and past employment in the KGB). Like him, I would include homelessness as falling within that range, whether or not it is regarded as a matter of choice (it is often the culmination of a series of misfortunes that overwhelm an individual so that he or she can no longer cope). The more peripheral or debateable any suggested personal characteristic is, the less likely it is to come within the most sensitive area where discrimination is particularly difficult to justify. There is an illuminating discussion of (contrasting Strasbourg jurisprudence with the American approach to the Fourteenth Amendment) in the speech of Baroness Hale of Richmond in AL (Serbia) v Secretary of State for the Home Department [2008] 1 WLR 1434, paras 20 35. these points It looks from this passage as if Lord Walker was perhaps slightly more ready than Lord Neuberger to accept that what someone was doing, or what was being done to him, could be a personal characteristic, although observing that the more peripheral or debateable the characteristic, the easier it would be to justify differential treatment. Reviewing these decisions, together with R (Clift), I think it can be said (although acknowledging the danger of over simplification) that prior to the decision in Clift v United Kingdom in 2010, the House of Lords had adopted the following position on other status. The possible grounds for discrimination under article 14 were not i) unlimited but a generous meaning ought to be given to other status; ii) The Kjeldsen test of looking for a personal characteristic by which persons or groups of persons were distinguishable from each other was to be applied; iii) Personal characteristics need not be innate, and the fact that a characteristic was a matter of personal choice did not rule it out as a possible other status; iv) There was support for the view that the personal characteristic could not be defined by the differential treatment of which the person complained; v) There was a hint of a requirement that to qualify the characteristic needed to be analogous to those listed in article 14, but it was not consistent (see, for example, Lord Neubergers comment at para 43 of R (RJM)) and it was not really borne out by the substance of the decisions; vi) There was some support for the idea that if the real reason for differential treatment was what someone had done, rather than who or what he was, that would not be a personal characteristic, but it was not universal; vii) The more personal the characteristic in question, the more closely connected with the individuals personality, the more difficult it would be to justify discrimination, with justification becoming increasingly less difficult as the characteristic became more peripheral. Following the decision of the ECtHR in Clift v United Kingdom, there has been further consideration, in the Supreme Court, of the issue of status in article 14. The issue of how R (Clift) should be viewed in the light of the ECtHRs different view has not been directly confronted, although the court made some comment on the ECtHR decision in R (Kaiyam) v Secretary of State for Justice [2014] UKSC 66; [2015] AC 1344. Apart from that case, of the cases singled out for mention below, it could be said that Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47; [2015] 1 WLR 3250 is the one which deals most fully with the question of status. In R (Kaiyam) v Secretary of State for Justice, the issue was what duty the Secretary of State had to provide prisoners serving indeterminate sentences with opportunities for rehabilitation in order to facilitate their release. As part of his claim, one of the appellants, Mr Haney, invoked article 14, claiming that he had been discriminated against by the prison authorities in that they prioritised the movement to open prisons of prisoners whose tariff periods had already expired, whereas his had not. The Supreme Court had to decide whether it should recognise the difference between those whose tariff periods had and had not expired as a difference of status for the purposes of article 14. At para 52, Lord Mance and Lord Hughes, with whom there was unanimous agreement, noted the decision of the House of Lords in R (Clift), and the different view taken by the ECtHR in that case. They observed: 53. In the light of the European courts decision, we see some force in the submission that the difference between pre and post tariff prisoners should now be taken to represent a relevant difference in status. But they did not need to determine the question of Mr Haneys status finally because the difference in treatment was clearly justified. Para 52 suggests that they might have felt a degree of caution about Clift v United Kingdom (see para 26 above for the passage from para 60 of Clift v United Kingdom to which reference is made): 52. The question of law is whether the Supreme Court should recognise the difference between those whose tariff periods had and had not expired as a difference of status for the purposes of article 14 of the Convention. The House in R (Clift) v Secretary of State of the Home Department [2007] 1 AC 484 was, in the absence of clear Strasbourg authority, not prepared to accept the difference between prisoners serving determinate sentences over 15 years and life prisoners or prisoners serving determinate sentences of less than 15 years as a difference in status. The European court in Clift v United Kingdom (Application No 7205/07) given 13 July 2010 took a different view, and expressed itself at one point (at the end of para 60) in terms which might, literally read, eliminate any consideration of status. Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47; [2015] 1 WLR 3250 concerned a child with disabilities whose parents received disability living allowance until he had been an in patient in a National Health Service hospital for more than 84 days. He appealed against the suspension of the benefit on the ground that it was in breach of his right not to be discriminated against under article 14 read with article 1 of the First Protocol to the ECHR. One of the arguments in the Supreme Court was as to whether, if there was discrimination in the treatment of him, it was on the ground of other status. It was held that this ground was applicable either by virtue of his status as a severely disabled child in need of lengthy in patient hospital treatment (para 23), or by virtue of his status as a child hospitalised free of charge in a NHS hospital for a period longer than 84 days (para 60). At para 21, Lord Wilson said that the prohibited grounds in article 14 extend well beyond innate characteristics, as demonstrated by R (RJM) v Secretary of State for Work and Pensions [2009] AC 311. Looking at the approach of the ECtHR in Clift, Lord Wilson considered it clear that, if the alleged discrimination falls within the scope of a Convention right, the Court of Human Rights is reluctant to conclude that nevertheless the applicant has no relevant status (para 22). In R (Tigere) v Secretary of State for Business, Innovation and Skills (Just for Kids Law intervening) [2015] 1 WLR 3820, immigration status was recognised as an other status within article 14, (consistently with the decision of the ECtHR in Bah v United Kingdom (2011) 54 EHRR 773), but as the point was conceded, there was no discussion about it in the judgments. R v Docherty (Shaun) [2016] UKSC 62; [2017] 1 WLR 181 concerned a prisoner who was sentenced on 20 December 2012 to imprisonment for public protection for offences to which he had pleaded guilty in November 2012. Imprisonment for public protection had been abolished prior to him being sentenced, but not for those convicted before 3 December 2012. Amongst other things, he claimed that the differentiation between him and a person convicted of an identical offence on 4 December 2012 was unlawful under article 14. At para 63, Lord Hughes dealt with the question of status and, as will be seen, returned to the idea that it will not be possible to bring oneself within article 14 unless the proposed status exists independently of the treatment about which complaint is made: The appellant submits that this discriminates objectionably against him on grounds of other status, namely either (i) his status as a convicted person prior to 3 December or (ii) his status as a prisoner who is subject to an indeterminate sentence. Assuming for the sake of argument that status as a prisoner subject to a particular regime can in some circumstances amount to sufficient status to bring article 14 into question (Clift v United Kingdom (Application No 7205/07) The Times, 21 July 2005), it cannot do so if the suggested status is defined entirely by the alleged discrimination; that was not the case in Clift. For that reason, the second suggested status cannot suffice. As to the first, even if it be assumed in the appellants favour that the mere date of conviction can amount to a sufficient status, which is doubtful, the differential in treatment is clearly justified. All changes in sentencing law have to start somewhere. It will inevitably be possible in every case of such a change to find a difference in treatment as between a defendant sentenced on the day before the change is effective and a defendant sentenced on the day after it. The difference of treatment is inherent in the change in the law. If it were to be objectionable discrimination, it would be impossible to change the law. There are any number of points which may be taken as triggering the change of regime. The point of conviction is clearly one, and the point of sentence is another. Neither is, by itself, irrational or unjustified. Returning to the list of propositions derived from the House of Lords decisions which is to be found at para 56 above, it seems to me that the subsequent authorities in the Supreme Court could be said to have continued to proceed upon the basis of propositions (i) to (iii), which have also continued to be reflected in the jurisprudence of the ECtHR. Proposition (iv) lives on, in R v Docherty, but perhaps needs to be considered further, in the light of its rejection in Clift v United Kingdom (see further, below). The analogous point, which features at proposition (v), is reminiscent of the ejiusdem generis argument advanced in Clift v United Kingdom, but not addressed head on by the ECtHR. That courts answer to the argument was, it will be recalled, to give quite wide ranging examples of situations in which a violation of article 14 had been found. With the continued expansion of the range of cases in which other status has been found, in domestic and Strasbourg decisions, the search for analogy with the grounds expressly set out in article 14 might be thought to be becoming both more difficult and less profitable. However, that should not, of course, undermine the assistance that can be gained from reference to the listed grounds, taken with examples of other status derived from the case law. It may not be helpful to pursue proposition (vi) abstract; whether it assists will depend upon the facts of a particular case. Proposition (vii) comes into play when considering whether differential treatment is justified, rather than in considering the other status question, and need not be further considered at this stage. Submissions in relation to status Mr Southey QC and Mr Bunting for the appellant submit that the decision of the House of Lords in Clift can no longer be considered a reliable guide to the meaning of other status in article 14. The words should be given a generous meaning, they submit. They invite attention to the range of situations which have been held, either by the ECtHR or by the domestic courts, to be within the category. Legally acquired statuses have been accepted as sufficient, as demonstrated, for example, by Larkos v Cyprus and Pine Valley Developments Ltd v Ireland, Bah v United Kingdom (all above) and Krajisnik v United Kingdom (2012) 56 EHRR SE7 (status as a prisoner convicted by the International Criminal Tribunal for former Yugoslavia). They also invite attention to the fact that homelessness has been held to be covered, even if it is a matter of choice, (R (RJM) v Secretary of State for Work and Pensions above), and to the status recognised in Mathieson v Secretary of State Work & Pensions (above). And, of course, they rely on the ECtHRs decision in Clift itself. It is submitted that there has been nothing in the decisions of the Supreme Court post dating the ECtHRs decision in Clift (particularly R (Kaiyam) v Secretary of State for Justice, R v Docherty, and Mathieson) which has undermined the authority of that judgment, and the approach which is there set out should be followed. Thus, life sentences, extended sentences and determinate sentences can all be considered to give rise to other status. For the Secretary of State, Sir James Eadie QC, Ms Davidson and Mr Pobjoy recognise that the court is bound to take into account the ECtHRs decision in Clift and to consider whether to depart from the House of Lords decision in that case. However, this should not, in their submission, lead to the conclusion that Mr Stott can lay claim to other status. They invite the court to consider the scope of Clift against the background of the other cases in which the other status category has been considered by the ECtHR, the House of Lords and the Supreme Court. Whilst this collection of authority establishes that a generous meaning should be given to the words, it also establishes that other status is not a catch all category, see most recently para 61 of Khamtokhu. The central question, so the Secretary of State submits, is whether the basis or reason for the differential treatment is a personal characteristic by which persons or groups of persons are distinguishable from each other. In the Secretary of States submission, article 14 protects personal characteristics which are analogous to those expressly mentioned in the article, see para 65 of R (Hooper) v Secretary of State for Work and Pensions and para 51 of R (S) v Chief Constable of the South Yorkshire Police. And, it is said, although the concept of a personal characteristic is not a precise one, and is not limited to something innate or inherent, it will typically be more concerned with who a person is, than with what he or she does, see paras 5 and 45 of RJM. Furthermore, the personal characteristic must be independent of the treatment about which complaint is made (para 28 and 45 of Clift in the House of Lords, and para 63 of R v Docherty). It is further submitted, on behalf of the Secretary of State, that Clift is distinguishable from the present case. The classification of Mr Clift was based upon the length of his sentence, not the nature or gravity of his offence. That set his case apart from cases such as Gerger v Turkey and Budak v Turkey. Mr Stotts case is different, it is said, because he is not relying on the length of his sentence but on the fact that he is subject to a particular sentencing regime in light of the gravity of his crime and the risk he poses to the community. It is said that the importance of this distinction was affirmed in Minter. Furthermore, unlike with Mr Clift, the treatment of which Mr Stott complains does not exist independently of the characteristic on which he bases his complaint of discrimination, because the release conditions about which he complains flow from his status as a prisoner serving an extended determinate sentence. Mr Clift had already been sentenced, and had thus already acquired his status, before the order was made which led to the different treatment of his group for the purposes of release. Furthermore, the Secretary of State submits that there is no authority for the proposition that any form of sentencing regime constitutes an other status for the purposes of article 14 and says that the implication of such a finding would be that every convicted prisoner would automatically fall within the scope of article 14, and authority establishes that that is not the case. Conclusions in relation to status The different view taken by the ECtHR in Clift v United Kingdom has to be taken into account when considering whether R (Clift) should continue to influence the approach to article 14 status in cases such as the present. For my part, I would now depart from the determination, in R (Clift), that different treatment on the basis that a prisoner was serving imprisonment of 15 years or more could not be said to be on the ground of other status. I am influenced by the ECtHRs reasoned decision to the contrary, notwithstanding that it was not a decision of the Grand Chamber, but of a section of the court. I am also influenced by the hesitation apparent in the speeches of the House of Lords in R (Clift), which disclose the constraint that was felt in the absence of any recognition by the ECtHR of a status such as that for which Mr Clift contended. Although one can only speculate as to how the decision would have gone if the ECtHR had already led the way, it is clear that the House could see the force of arguments advanced in Mr Clifts favour. If R (Clift) is left to one side, at least as to its result, that does not mean that the question of how to approach other status is free of domestic authority. In considering the decisions of the House of Lords which pre date Clift v United Kingdom, it is necessary to keep in mind the ways in which the ECtHR ultimately differed from the House, which I have attempted to set out, commencing at para 33 above. The Supreme Court authorities can be taken to have been decided with Clift v United Kingdom in mind. Perhaps the clearest difference between R (Clift) and Clift v United Kingdom was in relation to whether the treatment of which the applicant complains must exist independently of the other status. Counsel for the Secretary of State continue to rely upon this as part of their argument, and they are correct to point out that it features as part of Lord Hughes analysis in R v Docherty. The first difficulty about the independent existence condition is the uncompromising rejection of it by the ECtHR, which went on to say that, on the contrary, the matter had to be assessed taking into consideration all the circumstances of the case and bearing in mind that the aim of the Convention was to guarantee practical and effective rights. It cited Paulk in support of its stance. The applicant in Paulk was a man who, in 1970, was found by a court to be the father of a girl, paternity then being disproved by a DNA test in 2004. He wanted the finding of paternity overturned, but, unlike fathers whose paternity had been established otherwise than through a court, and mothers, he had no means to achieve this under domestic law. He complained of various breaches of the ECHR, including that he had been discriminated against in the enjoyment of his article 8 and article 6 rights. There was found to be a violation of article 14 taken with article 8. It seems there was no dispute as to the applicability of article 14 (para 51), the dispute having centred on whether the various categories of people were in analogous situations, and whether the difference was justified. Nonetheless, in light of the specific endorsement, in Clift v United Kingdom, of Paulk on the question of status, it is clear that the ECtHR saw the case as an example of a characteristic which did not exist independently of the treatment complained of and yet approved of its categorisation as an other status. The second difficulty with the independent existence condition is that it made its appearance in R (Clift) unsupported by much, if anything, by way of explanation or supportive authority. Lord Hope might have been building upon his observation, at para 45, that the specific grounds all existed independently of the treatment of which complaint was made. However, whilst some of the grounds named in article 14 clearly will always exist independently of the complaint, I am not at all sure that the same can be said of all of them. Property might be a ground which would not always exist independently, and I think there are probably other examples. The third difficulty is that the independent existence condition is not at all easy to grasp. Mr Clift satisfied it, because he relied upon being a prisoner serving a determinate term of 15 years or more, and his complaint was about the fact that, by virtue of a subsequent Order, he required the Secretary of States approval for his release, rather than automatically being released if the Parole Board recommended it. The homeless person in RJM, who complained about losing his benefits, also satisfied it. However, it was not satisfied, according to Docherty, where the prisoner was relying upon being a prisoner subject to an indeterminate sentence, and complained that he had been discriminated against by virtue of the fact that he could not have been given that sentence had he been convicted after 3 December 2012. Even with these practical examples, it is a challenge to make general sense of the concept, and things do not improve when one takes into account the width of the approach taken in Strasbourg to the ambit of article 14. In all these circumstances, I would be cautious about spending too much time on an analysis of whether the proposed status has an independent existence, as opposed to considering the situation as a whole, as encouraged by the ECtHR in Clift v United Kingdom. In any event, it can properly be said that the status upon which Mr Stott relies exists independently of his complaint, which is about the provisions concerning his early release. By way of example, his extended determinate term of imprisonment does not only dictate the point at which he is eligible for release on parole; it dictates the period he will spend in prison if parole is not granted, and it brings with it also a licence extension. A second respect in which the ECtHR differed from the House of Lords was as to whether Mr Clifts complaint was based upon the gravity of his offence; it said not. The Secretary of State argues that Mr Stotts case is not the same as Mr Clifts, as Mr Stotts complaint is not based on length of sentence, as in Mr Clifts case, but on his particular sentencing regime, which is dictated by the seriousness of what he did and the risk he poses. I am not persuaded by the Secretary of States attempt to liken the case to Gerger and Budak, rather than Clift v United Kingdom, and to exclude the extended determinate term prisoner on the basis that the differential treatment in his case is because of what he has done and the risk he poses. The ECtHR dealt with the Gerger cases in para 61 of Clift v United Kingdom, and explained them as all being concerned with special provisions for those accused or convicted of terrorism offences. They also stressed that any exception to the protection offered by article 14 should be narrowly construed. True it is that an extended determinate sentence will only be imposed where there is a particular combination of gravity of offence and risk, but within the category of those serving extended determinate sentences, there will be various types of offence of varying seriousness. Putting it another way, what Mr Stott did has led to him receiving an extended determinate sentence, but, once imposed, that extended determinate sentence exists independently of what he did. If a life sentence is capable of constituting an acquired personal status, as Lord Bingham was understandably disposed to think it was (para 28 of R (Clift)), and a determinate term of 15 years is also (Clift v United Kingdom), it is difficult to see why an extended determinate sentence should be viewed differently. I do not think that reliance on Minter assists the Secretary of State in relation to this issue. The complaint in Minter related to a new legislative regime being introduced, which did not benefit the applicant. The selection of a particular date for the commencement of a new legislative regime did not give rise to discrimination when those who were covered by it were treated differently from those who were subject to the old regime. Given the conflating of the various issues of status, analogous situation and justification, in the passage in Minter to which reference is made, it is difficult to be sure whether, in fact, the ECtHR was rejecting the other status argument or not, but in any event, the present case does not involve the commencement of a new sentencing regime. So, whilst the attributes of the sentencing regime to which Mr Stott is subject will be of central relevance to Issue 2 in due course, for the purposes of determining status, in my view the distinction that the Secretary of State seeks to make between Mr Clift as a prisoner serving 15 years or more and Mr Stott as a prisoner serving an extended determinate term is not a real one. It follows that the decision of the ECtHR in Clift v United Kingdom is potentially influential in evaluating the present case. As to the argument that the characteristic needs to be analogous to those listed in article 14, this is difficult to pursue too far in the light of the ECtHRs acceptance that a prison sentence of a particular length can be within the article. I have no difficulty in accepting that when considering an as yet unconsidered characteristic, a court will have in mind the nature of the grounds it was thought right to list specifically, but the case law that the court cited in Clift v United Kingdom demonstrates that a strict ejusdem generis interpretation would be unduly restrictive. Bearing in mind that, although not open ended, the grounds within article 14 are to be given a generous meaning, bearing in mind the warning of the ECtHR that there is a need for careful scrutiny of differential early release schemes, lest they run counter to the very purpose of article 5, and considering all of the case law, I would conclude that the difference in the treatment of extended determinate sentence prisoners in relation to early release is a difference within the scope of article 14, being on the ground of other status. Issue 2: Analogous situation and justification In order to address the issues concerning the third and fourth elements of the article 14 claim (see para 8 above), it is necessary to understand the sentencing regime to which Mr Stott is subject, and also the other sentences with which he invites comparison. Some of the fine detail of the sentencing regimes is irrelevant for present purposes and has been omitted. Unless otherwise specified, in what follows, references to statute are to the 2003 Act. The sentencing framework: general Section 142(1) sets out the purposes of sentencing adult offenders, applicable fairly generally except in relation to life sentences. It provides that a sentencing court must have regard to: (a) (b) deterrence), (c) (d) (e) affected by their offences. the reform and rehabilitation of offenders, the protection of the public, and the making of reparation by offenders to persons the punishment of offenders, the reduction of crime (including its reduction by The sentencing framework: EDS The EDS was introduced by the Legal Aid Sentencing and Punishment of Offenders Act 2012, as one of the sentences for dangerous offenders replacing the sentence of Imprisonment for Public Protection, and is to be found in section 226A, which was added to the 2003 Act. Section 226A provides (in the version relevant to this case): 226A Extended sentence for certain violent or sexual offences: persons 18 or over (1) This section applies where (a) a person aged 18 or over is convicted of a specified offence (whether the offence was committed before or after this section comes into force), (b) the court considers that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences, the court is not required by section 224A or (c) 225(2) to impose a sentence of imprisonment for life, and (d) condition A or B is met. (2) Condition A is that, at the time the offence was committed, the offender had been convicted of an offence listed in Schedule 15B. (3) Condition B is that, if the court were to impose an extended sentence of imprisonment, the term that it would specify as the appropriate custodial term would be at least four years. (4) The court may impose an extended sentence of imprisonment on the offender. (5) An extended sentence of imprisonment is a sentence of imprisonment the term of which is equal to the aggregate of the appropriate custodial term, and a further period (the extension period) for (a) (b) which the offender is to be subject to a licence. (6) The appropriate custodial term is the term of imprisonment that would (apart from this section) be imposed in compliance with section 153(2). (7) The extension period must be a period of such length as the court considers necessary for the purpose of protecting members of the public from serious harm occasioned by the commission by the offender of further specified offences, subject to subsections (8) and (9). (8) The extension period must not exceed five years in the case of a specified violent eight years in the case of a specified sexual (a) offence, and (b) offence. (9) The term of an extended sentence of imprisonment imposed under this section in respect of an offence must not exceed the term that, at the time the offence was committed, was the maximum term permitted for the offence. (10) In subsections (1)(a) and (8), references to a specified offence, a specified violent offence and a specified sexual offence include an offence that (a) was abolished before 4 April 2005, and (b) would have constituted such an offence if committed on the day on which the offender was convicted of the offence. (11) Where the offence mentioned in subsection (1)(a) was committed before 4 April 2005 subsection (1)(c) has effect as if the words by (a) section 224A or 225(2) were omitted, and (b) compliance with section 153(2) were omitted. (12) [offenders aged at least 18 but under 21]. subsection (6) has effect as if the words in From this, it can be seen that an EDS can only be imposed if the four pre conditions set out in section 226A(1) are satisfied. The offender must be 18 or over and must have been convicted of a specified offence (section 226A(1)(a)); a specified offence is defined by section 224 as a specified violent offence (specified in Part 1 of Schedule 15 to the Act) or a specified sexual offence (specified in Part 2 of that Schedule). Secondly, the court must consider that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences (section 226(1)(b)). Thirdly, a life sentence must not be required by section 224A or section 225(2) (section 226A(1)(c)). Fourthly, either Condition A, or Condition B, must be met (section 226A(1)(d)). Condition A (section 226A(2)) is that at the time the index offence was committed, the person had been convicted of an offence specified in Schedule 15B (offences generally of a violent and sexual nature). Condition B (section 226A(3)) relates to the term that the court would specify as the appropriate custodial term if it did impose an extended sentence. By virtue of section 226A(6), the appropriate custodial term is the term of imprisonment that would, apart from section 226A, be imposed in compliance with section 153(2). Section 153(2) governs custodial sentences where there is discretion as to the length of sentence, setting out that, as a general rule, the sentence must be for the shortest term commensurate with the seriousness of the offence or combination of offences. Condition B will only apply if the appropriate custodial term that the court would impose would be at least four years. The nature of an extended sentence appears from section 226A(5). It is a sentence of imprisonment with a term equal to the aggregate of the appropriate custodial term and a further period, called the extension period, during which the offender is on licence. Subject to maximum periods set out in section 226A(8), the length of the extension period has to be fixed according to what the court considers necessary for the purpose of protecting members of the public from serious harm occasioned by the offender committing further specified offences. However, by section 226A(9), the term of the extended sentence (appropriate custodial term and extension period) must not exceed the maximum term for the offence (section 226A(9)). Release on licence of a prisoner serving an EDS is governed by section 246A. In most cases, the section requires that the Secretary of State refer the case to the Parole Board as soon as the prisoner has served the requisite custodial period, which is two thirds of the appropriate custodial term. The Parole Board can only direct the release of the prisoner if it is satisfied that it is no longer necessary for the protection of the public that he should be confined. If the Parole Board does not direct the release of the prisoner, he must be released on licence at the expiry of the appropriate custodial term. The sentencing framework: standard determinate sentences A standard determinate custodial sentence will be for the shortest term commensurate with the seriousness of the offence or combination of offences (section 153(2)). There is no extension period as there is with an EDS. The majority of standard determinate sentence prisoners are entitled to be released on licence automatically, once they have served the requisite custodial period, which is one half of their sentence (section 244). Home Detention Curfew (sections 246 and 250(5)) is available as a means of releasing a prisoner before the half way point in his sentence, on a licence coupled with a curfew condition. Whether this route is taken depends upon the Secretary of States discretion, which can be exercised at any time during the 135 days ending with the day on which the prisoner will have served the requisite custodial period. Amongst the prisoners not eligible are EDS prisoners and those serving a sentence imposed under section 236A, as to which see below. Foreign national prisoners can also be removed from custody early for the purposes of deportation (section 260). Sentencing framework: special custodial sentences for certain offenders of particular concern Section 236A (as inserted by Schedule 1 to the Criminal Justice and Courts Act 2015) provides for special custodial sentences to be passed in relation to certain offenders of particular concern (an SOPC sentence). The conditions for the imposition of such a sentence are that the offender was over 18 when the offence was committed, that he has been convicted of an offence listed in Schedule 18A to the 2003 Act (as also so inserted), and that the court does not impose a life sentence or EDS. Schedule 18A lists offences under the headings Terrorism offences, and Sexual offences (rape of a child under 13, and assault of a child under 13 by penetration). An SOPC sentence has two elements: the appropriate custodial term (the term that, in the opinion of the court, ensures that the sentence is appropriate, see section 236A(3)) and a further period of one year for which the offender is subject to a licence. The aggregate of these two elements must not exceed the term that, at the time the offence was committed, was the maximum term permitted for the offence. It is worth noting that the appropriate custodial term for the SOPC provisions differs from the appropriate custodial term for the EDS provisions. The focus is on the overall sentence, the aggregate of the two elements, which has to be commensurate with the seriousness of the offence. In contrast, an EDS comprises a custodial term commensurate with the offence plus a specified licence period, and can truly be described as an extended term. Release arrangements for an SOPC prisoner are to be found in section 244A (as also so inserted). The Secretary of State must refer his case to the Parole Board as soon as he has served one half of the appropriate custodial term, and must release him on licence if the Board directs, which it can only do if satisfied that it is not necessary for the protection of the public for the prisoner to be confined. If the Board does not direct release, the prisoner will have to serve the appropriate custodial term before he is released on licence. Sentencing framework: indeterminate sentences A life sentence must be imposed for murder (Murder (Abolition of the Death Penalty) Act 1965); this is referred to as a mandatory life sentence. There are also three other situations in which a life sentence (referred to as a discretionary life sentence) may be imposed, namely (a) life sentences for serious offences (section 225) (b) life sentences for second listed offences (section 224A) and (c) life sentences where the offence carries life as a maximum penalty. It is well understood that, generally, life sentences are sentences of last resort, see for example R v Burinskas (Attorney Generals Reference (No 27 of 2013)) (Practice Note) [2014] EWCA Crim 334; [2014] 1 WLR 4209, para 18. A life sentence must be imposed under section 225, on an offender over 18, if certain conditions are satisfied: i) The offender has been convicted of a serious offence committed after 3 December 2012; a serious offence is defined in section 224 as an offence specified in Schedule 15 to the 2003 Act (certain violent and sexual offences) which is punishable with life imprisonment. ii) The court is of the opinion that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences. iii) The court considers that the seriousness of the offence, or of the offence and one or more offences associated with it, is such as to justify the imposition of a life sentence; section 143 deals with factors to be considered in gauging seriousness, including the offenders culpability and the harm, or potential harm, caused by the offence. In Burinskas, the Court of Appeal explained how the judge should approach the sentencing of offenders who may be considered dangerous, where a sentence under section 225 or one of the allied provisions of the 2003 Act might be required. In relation to section 225, it spelled out (para 22) that consideration of iii) above requires consideration of the seriousness of the offence itself on its own or taken with other offences associated with it, the offenders previous convictions, the level of danger he poses to the public and whether there is a reliable estimate of the length of time that he will remain a danger, and the available alternative sentences. Life sentences for second listed offences are dealt with in section 224A. The (cumulative) criteria for imposing a life sentence under that section are: i) The offender is over 18 and has been convicted of an offence, committed after 3 December 2012, which is listed in Part 1 of Schedule 15B to the 2003 Act; Part 1 includes certain offences of serious violence and of terrorism, certain offences relating to weapons, and certain serious sexual offences. ii) Apart from the section, the court would impose a sentence of imprisonment of ten years or more, disregarding any extension period under section 226A. iii) The previous offence condition is met, that is, at the time the offence was committed, the offender had already been convicted of an offence listed in Schedule 15B and been sentenced to a relevant life sentence or a relevant sentence of imprisonment (the sentences which are relevant being, in essence, sentences of significant length). If the criteria are met, the court is obliged to pass a life sentence unless it is of the opinion that there are particular circumstances, which relate to the offence, to the previous offence, or to the offender, and which would make it unjust to do so in all the circumstances. It is to be noted that, as the Court of Appeal observed at para 8 of Burinskas, there is no requirement under section 224A for the offender to have been found to be dangerous within the meaning of the 2003 Act, although it is likely that in most cases he will be. A life sentence may also be imposed where the offence has a maximum penalty of life imprisonment. Two criteria for the imposition of such a life sentence were identified in Attorney Generals Reference (No 32 of 1996) [1997] 1 Cr App R(S) 261, 264, namely that the offender has been convicted of a very serious offence, and there are good grounds for believing that he may remain a serious danger to the public for a period which cannot be reliably estimated at the date of the sentence. In the case of a mandatory life sentence, unless the seriousness of the offence or offences leads the court to disapply the early release provisions, section 269 requires the judge to determine the minimum custodial term that the offender must serve before he is eligible to apply for release. In setting the minimum custodial term, the court must take account of the seriousness of the offence, and of the effect of the provisions for credit for periods of remand in custody, or on certain types of bail, which would have applied if it had sentenced him to a term of imprisonment. In assessing the seriousness of the offence, regard is to be had to the principles set out in Schedule 21 of the 2003 Act, which set statutory starting points for offences of murder and specify a range of aggravating and mitigating features, and also to any guidelines which are not incompatible with Schedule 21. In the case of discretionary life sentences, section 82A of the Powers of Criminal Courts (Sentencing) Act 2000 (as inserted by section 60 of the Criminal Justice and Court Services Act 2000 and amended by the 2003 Act) requires the court to address the question of early release. There is again provision for the court to disapply the early release provisions in light of the seriousness of the offence or offences. Otherwise, the court is required to specify the part of the sentence which has to be served before the early release provisions apply. The part of the sentence specified shall be such as the court considers appropriate taking into account the seriousness of the offence or offences, provisions for crediting certain periods on remand, and (section 82A(3)(c)) the early release provisions as compared with section 244(1) of the Criminal Justice Act 2003. The Court of Appeal explained, in Burinskas, how section 82A works: 33. The effect of section 82A is to require the sentencing judge to identify the sentence that would have been appropriate had a life sentence not been justified and to reduce that notional sentence to take account of the fact that had a determinate sentence been passed the offender would have been entitled to early release. Normally, section 82A(3)(c) will result in the specified part of the sentence being equivalent to one half of the determinate sentence that would have been imposed had a life sentence not been justified. This is not, however, an invariable rule. As the Court of Appeal said in R v Szczerba [2002] 2 Cr App R(S) 86, whether the specified part is half or two thirds of the notional determinate term, or somewhere between the two, is essentially a matter for the sentencing judges discretion. It gave examples, at para 33, of the sort of exceptional circumstances in which more than half may be appropriate. Section 28 of the Crime (Sentences) Act 1997 governs the release of life prisoners where the court has made a determination of the minimum term that is to be served, whether under section 82A or section 269 of the 2003 Act. Once he has served the minimum term, the prisoner may require the Secretary of State to refer his case to the Parole Board, and the Parole Board directs release if satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. The sentencing framework: recall of prisoners There are detailed provisions, commencing at section 244 of the 2003 Act, governing the release of prisoners on licence and the revocation of such a licence. For present purposes, it is sufficient to record the following: i) A determinate sentence prisoner who has been released early on licence (see para 90 above) will be liable, until the end of the determinate sentence, to be recalled to prison to serve the remainder of the sentence. Some prisoners (those the Secretary of State is satisfied will not present a risk of serious harm to members of the public if released) will be eligible for automatic release again within a short, stipulated period, and the Secretary of State has a discretion to release them sooner than that or the Parole Board can so direct. ii) An EDS prisoner who is recalled during the period of his licence, and other recalled determinate sentence prisoners who are not suitable for automatic release, may be released again by the Secretary of State, if the Secretary of State is satisfied that it is not necessary for the protection of the public that the prisoner should remain in prison. If the prisoner makes representations within 28 days of recall, or if not released by the Secretary of State within that period, he must be referred to the Parole Board which can direct immediate release. iii) Where a life sentence prisoner is released, it will be on a licence which, by virtue of section 31 of the Crime (Sentences) Act 1997, will remain in force until his death. He can be recalled to prison by the Secretary of State, whereupon his case will be referred to the Parole Board, which can direct his release. Otherwise, he continues to be detained pursuant to his sentence. Sentencing: the relevance of the early release provisions When determining the custodial sentence in a particular case, the judge is not to take account of the early release provisions, see for example para 44 of R v Round [2009] EWCA Crim 2667; [2010] 2 Cr App R(S) 45. However, the early release provisions are taken into account, in sentencing, in fulfilling the requirement of section 82A(3) of the Powers of Criminal Courts (Sentencing) Act 2000, above, when fixing the minimum term to be served. The Divisional Courts reasoning The focus in the Divisional Court was particularly on the comparison between the EDS being served by Mr Stott, and a life sentence, but the court was conscious that there could also, legitimately, be a comparison between the EDS and other forms of determinate sentence (para 6). It contrasted the early release provisions applicable to an EDS, requiring the prisoner to serve two thirds of the custodial term before becoming eligible for release, with the provisions for SOPC sentences (eligibility after half of the custodial term), and for life sentences excepting mandatory life sentences for murder (eligibility once the minimum term has been served which, save in exceptional circumstances, will be equivalent to half way through the notional determinate sentence). This led to the conclusion (para 30) that, putting mandatory life sentences to one side, save exceptionally, in every other case save for those sentenced to EDS, the custodial term to be served is one half of the nominate determinate term. Thus, the EDS prisoner is treated differently in relation to release on licence as compared with almost all other prisoners serving a custodial sentence (para 34). The Divisional Court was, of course, constrained by R (Clift) to find against Mr Stott on the issue of status, although Sir Brian Leveson, President of the Queens Bench Division made clear his view that it was high time that that decision be revisited. We do, however, have the benefit of the Divisional Courts views as to whether Mr Stott was in an analogous position to other relevant prisoners and whether there was justification for the different treatment of EDS prisoners. The Secretary of State argued in the Divisional Court, as in this court, that an EDS prisoner cannot properly be compared to a life prisoner, because each sentencing regime has different features (para 43). This argument did not find favour with the Divisional Court, which considered the two prisoners to be in analogous situations. It considered it essential to have regard to the principle of sentencing practice that both an EDS and a life sentence involve a period identified for punishment and deterrence and, potentially, further detention (albeit, in the case of an EDS, for a finite time) based on risk to the public (para 44). It continued: Both must accept the period for punishment and then address the issue of risk; what is at issue is the question of eligibility for consideration for release not merely the mechanism whereby issues of release are decided. In the light of this, at para 45, attention was invited to the following comparison between a determinate sentence and an EDS: Take the case of a crime which, applying the relevant guideline, justifies a sentence of 12 years imprisonment. For an offender in respect of whom there is no concern that he is a risk to the public, that will be the determinate term: as the law stands, he will serve six years and then be entitled to be released on licence (from which he can be recalled to prison for breach up to the end of the 12 year term). For another offender, deserving the same sentence but who, perhaps by reason of his mental condition, constitutes a risk to the public, the court might take the view that he requires an extended period on licence. If he was sentenced to an EDS with a custodial term of 12 years (ie the same as the first offender, their crimes being of equal gravity) with a two year extension (for the purposes of extending supervision over him), he would only be eligible for consideration of parole after eight years. The gravity of their crimes is identical and their positions (in so far as punishment and deterrence is concerned) seem, to me at least, to be analogous. The court reinforced this view by reference to an offender given an SOPC, who may have committed precisely the same offences as those committed by an offender sentenced to an EDS, and yet be eligible for release after one half of the determinate term. As for justification (paras 47 to 50), the government had explained that it wished to introduce a tougher determinate sentence, designed to enhance public protection and to maintain public confidence in the sentencing framework, and relied upon the fact that an offender eligible for an EDS had committed a serious offence and had been found to be dangerous. The court was not persuaded that this explanation for the difference in treatment of prisoners addressed what was, in the courts view, the crucial issue of the distinction between the punitive element of any sentence and that part of the sentence designed to cater for risk. The fact that the offender had committed a serious offence did not, in the courts view, provide any rational basis for altering the extent of the punitive element of a sentence, which was, in its view, the result of deferring eligibility for release in the case of an EDS prisoner; other prisoners would also have committed very serious offences, but be eligible at an earlier stage. As for dangerousness, that did not justify the different release provisions because that is to confuse punishment and deterrence with risk. This point is explained at para 49 as follows: Dangerousness under Part 12 of the 2003 Act [the sentencing provisions] is assessed by reference to future risk, and it is only at the point of potential release that the risk will be assessed (based, of course, on the history of the offender, progress in custody and resettlement plans). If relevant risk to the public remains, the offender will remain in prison. If not, it will be appropriate to release him. There is no rational justification for setting a later and arbitrary point for parole eligibility (at which risk is to be assessed) for EDS prisoners, as opposed to life sentence prisoners, or prisoners serving a sentence pursuant to section 244A of the 2003 Act. The requirement that some prisoners apply for parole, whereas others are automatically released at a certain point in their sentence, was justified as it was for the purpose of protecting the public from risk but, in the courts view, the difference in the term to be served for punishment and deterrence is not. Had it not been for the status issue, the court would accordingly have found the provisions incompatible with article 14. The appellants submissions in relation to Issue 2 The argument advanced on behalf of Mr Stott is a simple one, namely: although they are in an analogous situation, different classes of prisoner are treated differently with regard to eligibility for release, and there is no valid justification for this. If he had been given a determinate sentence, Mr Stott would have been entitled to release at the half way point in his sentence, that is after ten and a half years, and, had he been given a life sentence, he would probably also have been eligible for release after ten and a half years. So, Mr Southey suggests, in relation to eligibility for release, Mr Stott would have been in a better position had he been given a life sentence, even though life sentences are reserved for the most serious cases, for offenders who are the highest risk or have the most serious criminal records. Mr Southey invites us, in considering whether the prisoners under consideration are in analogous positions, to put weight upon the decision in Clift v United Kingdom. He also invites us to recognise that people can be in an analogous position even if their situation is not identical, and to concentrate on the similarities between EDS prisoners and other prisoners. In terms of similarities, he emphasises that both EDS prisoners and indeterminate sentence prisoners depend, for their early release, on risk assessment by the Parole Board. Like the Divisional Court, he relies upon what he says is the sentencing principle that the period preceding eligibility for parole is the punitive and deterrent element of a sentence passed, whereas any further time spent in custody is seen as pertaining to the risk to the public posed by the offender (see, for example, R (Foley) v Parole Board for England and Wales [2012] EWHC 2184 (Admin)). In his submission, this is the same for each group of prisoners, and the Secretary of States argument is wrong because it ignores that sentencing principle. Furthermore, he points out that determinate sentence prisoners, EDS prisoners, and those serving an indeterminate sentence all share the same interest, namely in being released from custody. On justification, Mr Southey reminds us that it is the differential treatment that must be justified, not the EDS itself, and in his submission, it has not been. Considerations of relative risk cannot provide the required justification, he says. It can be assumed that the highest risk offenders, and the offenders who have committed the most serious offences, are serving a life sentence, and lower risk prisoners should not be treated less favourably in relation to early release. Risk is addressed through the Parole Board process, an EDS prisoner only being released if the Parole Board is satisfied that continued detention is not necessary for the protection of the public. There is no basis, submits Mr Southey, for concluding that the risk that an EDS prisoner poses at the half way point in his sentence will necessarily be such as to require continued detention, and denying him the opportunity even to apply for release until two thirds of the way through his sentence, when the prisoner serving an indeterminate term can apply at half time. The effect of this is to impose a greater penalty without reason. Further, he says that there is no basis to distinguish between the EDS prisoner and the regular determinate sentence prisoner as both are equally culpable, and the punitive component of their sentence should be the same; differential risk is addressed by the involvement of the Parole Board in the case of the EDS prisoner. The Secretary of States submissions in relation to Issue 2 The Secretary of States case is that an EDS is not analogous either to other types of determinate sentence or to indeterminate sentences. It is submitted that it is in a class by itself, designed to address a particular combination of offending and risk. Although accepting that a life sentence can be viewed as comprising a period of detention justified by punishment and deterrent followed by detention justified solely by public protection, Sir James Eadie does not accept that a similar analysis applies to a determinate sentence. His submission is that the whole of a determinate sentence (and the whole of the custodial term of an EDS) is imposed for the purpose of punishment and deterrence. Further, Sir James submits that there is, in any event, no absolute rule that a prisoner is eligible for release at the half way point of his sentence. Some prisoners have a right to release on licence at the half way stage, but in some cases, the prisoner is entitled to apply for release sooner, and in some cases release requires the Parole Boards direction. In the case of life sentences, a prisoner may not always be eligible to apply to the Parole Board at what would be the half way point in a determinate sentence, because the minimum term of a life sentence can be fixed at more than half of the notional determinate sentence (see Szczerba above). Accordingly, in the Secretary of States submission, each type of sentence has release arrangements which have been tailored to meet the requirements of that particular sentence, justified by reference to the particular characteristics of the offenders on whom the sentence is imposed. The particular arrangements for EDS prisoners flow from the characteristics of that group of prisoners, in contrast to those serving ordinary determinate terms or indeterminate sentences. The Secretary of State draws a distinction between the present case and Clift v United Kingdom and Foley. Those cases were about relevantly similar release processes being applied differently, he says, whereas the complaint here is, in contrast, about the operation of different types of sentence, and whether the factors which justify the imposition of a particular sentence also justify the particular release arrangements that form part of the administration of the sentence. More assistance can be obtained from R (Bristow) v Secretary of State [2013] EWHC 3094 (Admin) (later affirmed in the Court of Appeal [2015] EWCA Civ 1170) and R (Massey) v Secretary of State for Justice [2013] EWHC 1950 (Admin). Sir James emphasises the wide margin of appreciation afforded to states with respect to prisoner and penal policy, although acknowledging that this court will exercise close scrutiny in relation to measures that result in detention. Here, the policy choices made by Parliament, with respect to the release arrangements for an EDS prisoner, are well within its discretion when striking a balance between the interests of public protection and the interests of the individual prisoner. Unlike in Clift v United Kingdom, the differences in treatment are all justified by the risk that EDS prisoners pose in comparison to other prisoners, and the early release provisions achieve the legitimate aim of protecting the public. Discussion I need to start with a consideration of the fundamental difference between the parties in relation to whether a determinate sentence can be said to comprise two separate components, a period for punishment and deterrence, and a further period based on the risk posed by the offender to the public, particularly as this featured significantly in the decision of the Divisional Court. The Secretary of State accepts that it has long been established that life sentences incorporate two such periods, but does not accept that that is so with regard to determinate sentences, relying on a number of decisions of the domestic courts and the ECtHR, which it is said call the two component analysis into question. It will be seen that the observations to which our attention has been invited have tended to be made in the context of determining an issue as to whether article 5(4) of the ECHR requires a review, during the course of a particular sentence, of the lawfulness of detention. In my view, the Secretary of State is correct to differentiate between determinate and indeterminate sentences in this connection. The ECtHR does make a distinction, treating the post tariff phase of an indeterminate sentences as directed at managing risk, whereas the whole of a determinate sentence is viewed as punishment. In R (Black) v Secretary of State for Justice [2009] 1 AC 949, Lord Brown (in the majority) remarked on the distinction, commenting (para 67) that, throughout its case law, the Strasbourg court has consistently appeared to treat determinate sentences quite differently, time and again contrasting them with the indeterminate cases, with article 5(4) being engaged in the determination of the length of post tariff detention in life sentence cases, but not in decisions regarding early or conditional release from a determinate term of imprisonment (para 83). So, in Mansell v United Kingdom (Application No 32072/96, 2 July 1997), Ganusauskas v Lithuania (Application No 47922/99, 7 September 1999), and Brown v United Kingdom (Application No 968/04, 26 October 2004), the ECtHR held article 5 challenges to determinate sentences to be manifestly ill founded, the sentences being justified throughout the prison term as punishment for the offence. A brief look at Mansell will illustrate the approach in the Strasbourg cases. The applicant had been sentenced to a longer custodial sentence than would have been commensurate with the seriousness of the offence, because the court considered it necessary to protect the public from serious harm (section 2 of the Criminal Justice Act 1991). He argued that his sentence consisted of a punitive part and a preventive part, and that he should have been entitled to a proper review of the lawfulness of his continued detention, with an oral hearing, as soon as he had served the period that he would have served under the normal punitive sentence. The ECtHR observed that, in contrast to indeterminate sentences, there was no question of the sentence being imposed because of factors that were susceptible to change with the passage of time, such as dangerousness or mental instability. The whole of the fixed term was a sentence which was imposed as punishment for the offences committed. The necessary judicial control was therefore incorporated in the original conviction and sentence. In R (Whiston) v Secretary of State for Justice [2015] AC 176, which concerned a determinate sentence prisoner released on Home Detention Curfew, then recalled to prison, Lord Neuberger, with whom three of the court of five agreed, also reviewed the Strasbourg case law. His observation at para 25, made in connection with Ganusauskas and Brown, might perhaps lend a modicum of further support to the Secretary of States argument against the two component analysis. He said that: in each case, the court rejected the article 5.4 complaint on the ground that the article did not apply at all in circumstances where the recall to prison occurred during the period of a determinate sentence imposed for the purposes of punishment. I would add that the reference to punishment cannot have been intended to mean solely for punishment: determinate prison sentences are imposed for a mixture of reasons, each of which should, at least normally, be treated as applicable to the whole of the sentence period. (Emphasis added) It appears from para 53 that Lady Hale, who wished to sound a note of caution about some of the reasoning by which Lord Neuberger had reached his conclusion in the appeal, might not have been entirely in agreement with what he said on this particular point, but she did comment upon the fact that the sentencing judge imposes the sentence which is thought to be correct, without regard to the right to early release, and followed that with the observation that the whole of the sentence is intended as punishment. Brown v Parole Board for Scotland [2017] UKSC 69; [2018] AC 1 might also be taken as providing some support for the Secretary of States position on punishment/risk, particularly what is said at para 60, which I set out below. The case was concerned with an extended sentence imposed under section 210A of the Criminal Procedure (Scotland) Act 1995 (as inserted by section 86 of the (inserted by Crime and Disorder Act 1998)), but there are similarities between such a sentence and an EDS. The sentence comprised a custodial term of seven years followed by an extension period of three years on licence. The prisoner was released on licence after serving two thirds of the custodial term, but then recalled. He complained of a breach of article 5, on the basis that he had not been provided with appropriate rehabilitation courses, during the period of his recall, to enable him to achieve his release, by demonstrating to the Parole Board that he no longer posed a risk to the public. Although the court took the opportunity to modify the article 5 jurisprudence by departing from R (Kaiyam) v Secretary of State for Justice (above), his action failed because he had, in fact, been provided with a range of appropriate rehabilitative measures. Lord Reed gave a judgment with which the remaining members of the court were all in agreement, and, although the issue for the court was different, some passages have some relevance to the present case. At para 49, Lord Reed noted that, in fixing the custodial term of the extended sentence, as in fixing an ordinary sentence of imprisonment, the court will take account of all matters relevant to sentencing and have regard to all the accepted objectives of a custodial sentence, including punishment, deterrence, public protection and rehabilitation. The same can be said of the present case, as these objectives form part of the sentencing process in England and Wales as well, featuring in section 142(1) of the 2003 Act as purposes of sentencing (above). Section 142(1) is in very general terms, applying to any court dealing with an offender in respect of his offences, making no difference between periods of the sentence which will be spent in custody and periods which the offender can expect to spend on licence. No doubt this is unsurprising, given that the sentencing judge is not to have regard to the early release provisions when fixing the appropriate sentence. At para 50, Lord Reed made an observation about release on licence, which must also be relevant to release on licence in England and Wales, and does perhaps underline that a licence may not only be there to protect the public, although plainly that can be significant part of its purpose and, of course, the extension period in an EDS is indeed expressly for that purpose (section 226A(7) of the 2003 Act). He said: Release on licence is intended to ensure that the process of transition from custody to freedom is supervised, so as to maximise the chances of the ex prisoners successful reintegration into the community and minimise the chances of his relapse into criminal activity. It is of note that Lord Reed drew a clear distinction between the custodial term of the extended sentence, including any period spent on licence during it, and the extension period. In the following passage from para 60, he proceeded upon the basis that the custodial term addressed the punitive aspect of the sentence, in contrast to the extension, which was for the protection of the public: 60. the purpose of detention during the extension period is materially different from that of a determinate sentence. In terms of section 210A(2)(b) of the 1995 Act, the extension period is of such length as the court considers necessary for the purpose mentioned in subsection (1)(b), namely protecting the public from serious harm from the offender. The punitive aspect of the sentence has already been dealt with by the custodial term, which is the term of imprisonment which the court would have passed on the offender otherwise than by virtue of this section: section 210A(2)(a). Where a prisoner serving an extended sentence is detained during the extension period, other than by virtue of an order made under section 16 or another sentence, his continued detention is therefore justified solely by the need to protect the public from serious harm. The Secretary of State relies also upon a body of case law concerning article 7 of the ECHR (no heavier penalty to be imposed than the one that was applicable at the time the criminal offence was committed). It is pointed out that post sentence changes to early release provisions are not treated as altering the penalty for the offence, see for example R v Docherty (above) at para 65, and the cases there cited. It is argued that this is not consistent with Mr Stotts case. If the punitive element of a determinate sentence ends upon early release, or eligibility to apply for release, then a change in the release provisions would potentially impermissibly increase the penalty imposed for the offence. Having reviewed the authorities, it seems to me fairly clear that the Strasbourg jurisprudence is against the two component analysis, so far as determinate sentences are concerned. Viewing the whole term as punitive would would also be consistent with the generally applicable purposes of sentencing set out in section 142(1) of the 2003 Act, and with the embargo on the sentencing judge having regard to the early release provisions when deciding what period of imprisonment to impose, save in particular defined circumstances. If the two component analysis is inappropriate, there must be force in the Secretary of States submission that, when looking to compare that part of an EDS which is imposed for punishment and deterrence, with the equivalent part of another sentence, it requires a comparison between the appropriate custodial term of the EDS and: in the case of a standard determinate sentence and an SOPC, the whole i) term of imprisonment; ii) in the case of an indeterminate sentence, the minimum term. Having said that, I can entirely accept that, as a matter of practice, the domestic criminal courts do see determinative sentences as having distinct punitive and risk based elements, see the Divisional Court in the present case for example. And, even if the Secretary of State is correct that a sentence should not actually be analysed in this way, it remains the stark fact that some prisoners have to serve a greater proportion of their overall sentence before becoming eligible for release on licence than others. The category in relation to which this is perhaps most challenging to explain, is where release requires the Parole Board to be satisfied on the question of risk. Some prisoners, notably for present purposes, the EDS prisoner, have to serve a greater proportion of their sentence than others, before they can try to persuade the Parole Board on that issue. Whatever the correct answer to the two component debate, this differential wait for the chance to approach the Parole Board demands attention. Accordingly, there might not be much value in pursuing the two component debate further. It is important to put the differential wait argument into proper context however. Whilst the assertion that the requirement for an EDS prisoner to serve two thirds of his sentence before becoming eligible for parole is out of step with comparable prisoners has an initial attraction, it is less compelling if the rest of the prisoners are not, in fact, in step with each other. The argument proceeds on the basis that other prisoners are eligible for release/parole at the half way point in their sentence, but on closer examination, it can be seen that this is by no means universal. Standard determinate sentence prisoners are entitled to (automatic) release at the half way point. Most life sentence prisoners (excepting those where a whole life term has been imposed) are eligible to apply for release once they have served their minimum term, and in most cases this minimum term will be the equivalent to half of the notional determinate term, but that is not universal even for discretionary life sentences (see Szczerba above), and in the case of mandatory life sentences, the period is not fixed by reference to a notional determinate term. Accordingly there are other prisoners who serve longer than half of their sentences before they have a chance of release on licence. Conversely, there are some prisoners who serve less than half. Home Detention Curfew can enable determinate sentence prisoners to achieve their release before the half way point, and an SOPC prisoner is eligible to apply for release from the half way point of his appropriate custodial term, and not the half way point in his overall sentence (which will be the aggregate of the custodial term plus the licence tacked on to it). I turn then, rather more directly, to the twin questions of whether an EDS prisoner is in an analogous position to other prisoners serving either determinate or indeterminate sentences (Issue 2A), and whether the differences in treatment that there undoubtedly are between EDS prisoners and other prisoners are justified (Issue 2B). As is apparent from the authorities concerning article 14, it is not at all easy to separate these two questions into watertight compartments, but I will at least begin with Issue 2A. In determining whether groups are in a relevantly analogous situation for article 14, regard has to be had to the particular nature of the complaint that is being made, see for example para 66 of Clift v United Kingdom. Mr Stott relies upon Clift v United Kingdom, on the basis that it involved a similar complaint to his own. However, the Secretary of State submits that it does not assist here, because it concerned a complaint about similar release provisions being operated differently whereas Mr Stotts complaint is about the operation of different types of sentence. Clift v United Kingdom can properly be described, I think, as concerning a complaint about similar release provisions being operated differently. The prisoners under consideration there, all required a recommendation from the Parole Board before they could achieve early release. But for those, like Mr Clift, who were serving determinate terms of 15 years or more, the final decision on early release lay with the Secretary of State, whereas for the other prisoners the Parole Boards recommendation was enough. The ECtHR considered the prisoners to be relevantly similar. The key was that, in each case, it was all about determining whether the prisoner posed too much of a risk to be released. So, at para 67, the court observed that a refusal of early release was not intended to constitute further punishment but to reflect the assessment of those qualified to conduct it that the prisoner in question poses an unacceptable risk upon release. As the methods of assessing risk and the means of addressing any risk identified are in principle the same for all categories of prisoners, it considered that there was no distinction to be drawn between the prisoners, who were in analogous positions. I do not see the present case as entirely on all fours with Clift v United Kingdom. R (Foley) v Parole Board for England and Wales (above), upon which Mr Southey also relies, is possibly a step closer to the present case than Clift, because it concerned the substance of the release arrangements, rather than simply the mechanism of release ie who made the final decision. The claimant had been given a determinate sentence of 18 years. She was eligible for release at the half way point in the sentence if the Parole Board recommended it, and for automatic release at the two thirds point. The test that the Parole Board had to apply in her case was more onerous than the test that would have been applicable had she been given a life sentence. She therefore argued that there was a violation of article 14. Her claim failed because R (Clift) meant that she could not establish that the different treatment was on the ground of other status, but the court went on to set out what it would have decided had there not been that obstacle. Although acknowledging that there were differences between the sentences, Treacy J (with whom Thomas LJ agreed, adding a few words) accepted, at para 71, that the situation of the claimant was analogous to an indeterminate sentence prisoner, saying: Whilst it is obvious that an offender serving a determinate sentence has the benefit of having a finite limit on the reach of the law in relation to that sentence, I do not think that constitutes a material difference. Both types of sentence now in reality are divided into a punitive element which may be followed by a period of risk based detention. So, in my view, the identified differences between a determinate and an indeterminate sentence do not prevent their treatment as analogous. The courts conclusion was that there was no objective justification for the difference. Treacy J considered the reasoning in Clift v United Kingdom pertinent, because it was also about the imposition of different early release requirements. Release during Ms Foleys sentence and during an indeterminate sentence both involved a risk assessment exercise, and consideration of risk by the same body, but significantly different tests were applied. Treacy Js analysis proceeded upon the basis that the punitive element of a determinate sentence lasted up to the half way point, leading him to conclude that there was no good reason why those who ex hypothesi are to be regarded as less dangerous because they have received a determinate rather than an indeterminate sentence, should be subject to greater punishment [or] why both types of offender should not become eligible for release subject to questions of risk at the same point in their sentence (see paras 69 and 76). The Secretary of State would distinguish Foley because of the significant part played in the courts approach by the two component (punitive/risk) analysis. Sir James invites us to set more store by R (Massey) v Secretary of State for Justice [2013] EWHC 1950 (Admin) because, although Massey involved an IPP prisoner seeking to compare himself with the later EDS regime, the complaint in both that case and this one was in essence that prisoners with different characteristics, serving different sentences, have different release provisions. The situation was not found to be analogous in Massey, and the following reasoning found at para 25 of the judgment of Moses LJ is equally applicable here, it is submitted: however he cloaks his application, the real complaint he advances is a challenge to his original sentence. The reality of his argument is that he was sentenced under a different regime. It is not coherent then to allege discrimination when compared to other offenders sentenced under a different regime. They are not in an analogous situation precisely because they were sentenced under a different regime Like the reasoning of the Divisional Court in the present case, the view of the Divisional Court in Foley cannot be dismissed lightly, given the enormous experience that the judges involved in those two decisions have in criminal work, but, for the reasons I gave earlier, I would question the two component analysis upon which the courts proceeded. Massey should also be treated with a little caution, given that it concerned a complaint derived from a change in the sentencing legislation, and differential treatment caused purely by the commencement of a new legislative regime does not constitute discrimination, see, for example, Minter v United Kingdom (above). At the least, however, Massey serves as an introduction to my consideration of whether Mr Stotts complaint is also, in fact, about the sentencing regime to which he has been consigned rather than, discretely, about the early release provisions that are part of it. It seems to me important to recognise the complexity and detail of the provisions governing the various sentences that can be imposed. It was, in part, for that reason that I set these out as fully as I did earlier. From that review of the statutory provisions concerning EDS, standard determinate sentences, SOPC, and indeterminate sentences, it can be seen that, far from there being a basic sentencing regime, with discrete variations for particular sentences, each sentence has its own detailed set of rules, dictating when it can be imposed and how it operates in practice, the early release provisions being part and parcel of the rules. Some sentences can only be imposed if there is a significant risk of the offender causing serious harm to members of the public by committing further offences, for example. Some sentences can only be imposed where the offender has already committed offences of a particular type. For some, there is automatic early release on licence, but, for others, release on licence is dependent on the Parole Board. Those serving indeterminate terms remain on licence (and liable to be recalled to prison) for the rest of their lives, whereas other offenders will be on licence for a finite period only. All of this fine detail tends to support the Secretary of States argument that each sentence is tailored to a particular category of offender, addressing a particular combination of offending and risk. Subject of course to sentencing guidance, the judge selects the sentence which matches the attributes of the case before him, and fixes the term of any period of imprisonment, extended licence etc. I can therefore see the force in the argument that the release provisions about which Mr Stott complains should not be looked at on their own, but as a feature of the regime under which he has been sentenced, the same regime that is sufficiently distinct to justify taking the view that his complaint is on the ground of other status. There might be said, therefore, to be a building case for holding that he is not in an analogous situation to others sentenced under different regimes. Weight is added to this when some of the detail of the EDS regime is compared specifically with other sentences. Of the determinate sentences, only an EDS requires a finding of significant risk to members of the public of serious harm. The Secretary of State points out that, in contrast to EDS prisoners, not all discretionary life sentence prisoners have been found to be dangerous, such a finding not being required for the imposition of life sentences under section 224A. That submission, whilst literally correct, is significantly weakened when one considers the nature of the listed offences which are a pre requisite to the imposition of such a life sentence. As we have seen, Mr Southeys submission that life sentences are reserved for offenders who are the highest risk or have the most serious criminal records, for the most serious cases, reflects the view that Treacy J took of relative dangerousness in Foley. There are important differences between an EDS and a discretionary life sentence, however. There are respects in which a discretionary life sentence must undoubtedly be viewed as having more serious consequences for the offender, notwithstanding that he may have an earlier opportunity to approach the Parole Board. An EDS involves imprisonment for a specified period which will necessarily come to an end, whether or not the prisoners release is directed by the Parole Board, but a prisoner serving a discretionary life sentence may remain in detention for the rest of his life. If he is released, he remains on licence (and liable to recall) for life, whereas the EDS prisoner is on licence for a finite period only. Recognising that there are valid arguments both ways in relation to Issue 2A, it seems appropriate to act on the wise suggestion of Lord Nicholls, in R (Carson) v Secretary of State for Work and Pensions (above), that sometimes, lacking an obvious answer to the question whether the claimant is in an analogous situation, it may be best to turn to a consideration of whether the differential treatment has a legitimate aim, and whether the method chosen to achieve the aim is appropriate and not disproportionate in its adverse impact (Issue 2B), although I will in fact return to Issue 2A again thereafter. Behind the detailed argument focusing on the particular features of particular sentences, both sides have a simple argument to advance in relation to justification. Mr Southey proceeds upon the basis that life sentences are given to the prisoners who are the highest risk or have committed the most serious offences. Those serving a determinate sentence, including an EDS, are therefore lower risk/less serious offenders, and there cannot be any justification for treating them less favourably in relation to early release than life prisoners. Relative risk cannot justify this, he says, because neither category of prisoner will be released before the Parole Board directs it, having considered the question of risk, and both categories will be on licence upon early release. Although Mr Southey also complains that there is no basis for distinguishing between those serving an EDS and those serving a determinate term, I find the comparison less persuasive than is the comparison with indeterminate sentence prisoners, given the conditions for the imposition of an EDS, which differentiate EDS prisoners from standard determinate term prisoners. The comparison may have had more force, had the two component punitive/risk analysis been unassailable. In that event, it could have been questioned how it was justified to require the EDS prisoner to serve a longer punishment period (as opposed to a longer period of detention dependent upon risk) than a standard determinate term prisoner. However, I have explained my reservations about the two component analysis earlier. The Secretary of States fundamental answer is that there are different categories of sentence, tailored to the particular characteristics of the offenders, and striking a balance between the interests of public protection and the interests of the individual prisoner. All EDS prisoners are dangerous, and the legitimate aim is to protect the public by ensuring that they serve a greater proportion of their custodial term than other categories of prisoner, which may include prisoners who are not dangerous. This is comprehensible when the position of an EDS prisoner is compared with a standard determinate term prisoner, in relation to whom there is no equivalent requirement to find specifically that there is a significant risk of serious harm to the public through further specified offences. It works less easily in relation to indeterminate sentences. True it is that there is not a universal requirement for a finding of dangerousness, before the imposition of an indeterminate sentence, but, as I implied earlier, it is not a great leap from the conditions that have to be satisfied before the sentence can be passed to the conclusion that by far the majority of indeterminate sentence prisoners will pose a risk to the public. Nevertheless, it is correctly pointed out on behalf of the Secretary of State that, in contrast to the release provisions in relation to an EDS, the release provisions in relation to indeterminate sentences must cater for prisoners who are not dangerous, and might be suitable for release sooner. Moreover, Sir James invites us to consider each sentence as a whole, when considering justification, because it is artificial to compare release provisions only. Of crucial importance is the fact that the indeterminate sentence prisoner may never be released at all, whereas the EDS prisoner will be released at the end of his custodial term, even if he fails to satisfy the Parole Board on the question of risk, and also the difference in the duration of the licence in each case. It may be apparent, by now, that I find the arguments in relation to Issue 2 finely balanced. Concentrating upon justification, for the present, it is necessary to decide whether the different treatment of EDS prisoners has a legitimate aim, and whether the method selected for achieving the aim is appropriate, and not disproportionate in its adverse impact. I do not have much difficulty in accepting that, in general terms, the aim of the EDS provisions is legitimate. Ms Foulds, an official from the Ministry of Justice who describes herself as the policy lead on adult custodial sentencing policy, says in her witness statement of September 2016 that the government introduced a tougher, extended determinate sentence as a measure designed to enhance public protection and maintain public confidence in the sentencing framework. The ECtHR in Clift v United Kingdom was not impressed with the public confidence argument, but accepted (para 74) that more stringent early release provisions may be justified where it can be demonstrated that those to whom they apply pose a higher risk to the public upon release. Given that it cannot be passed unless a risk condition is satisfied, an EDS is clearly aimed at offenders of this sort. The questions that are more difficult are whether the longer wait before the prisoner is eligible to apply to the Parole Board is an appropriate means of achieving this aim and whether it is disproportionate in its impact. The starting point for a determination of these questions is that the ECtHR would allow a Contracting State a margin of appreciation in assessing whether, and to what extent, differences in otherwise similar situations justify different treatment, and would allow a wide margin when it comes to questions of prisoner and penal policy, although closely scrutinising the situation where the complaint is in the ambit of article 5. This court must equally respect the policy choices of parliament in relation to sentencing. In the end, the answer depends significantly, I think, upon whether one concentrates entirely upon the early release provisions in the EDS and other sentences, or looks up from the detail to consider the various sentencing regimes as complete regimes. Ultimately, I am persuaded that the proper way to look at the issue is by considering each sentence as a whole, as the Secretary of State invites us to do. The sentencing judge imposes the sentence that complies with the statutory conditions prescribed by parliament, and the sentencing guidelines, and, within that framework, best meets the characteristics of the offence and the offender. The early release provisions have to be seen as part of the chosen sentencing regime, and the question of whether there is an objective justification for the differential treatment of prisoners in relation to earlier release, considered in that wider context. For reasons that I have set out above, there is a readier comparison between the EDS and an indeterminate sentence, than between a simple determinate term and an EDS. But the EDS and the indeterminate sentence are by no means a complete match, leaving aside the difference in parole eligibility. Counter balancing the indeterminate prisoners earlier eligibility for parole is the lack of any guaranteed end to his incarceration, and the life licence to which he is subjected. This fundamentally undermines the argument that the difference in treatment between the two prisoners in relation to early release is disproportionate, or putting it more plainly, unfair. I would accept that, on the contrary, bearing in mind the EDS sentencing package as a whole, the early release provisions are justified as a proportionate means of achieving the governments legitimate aim. Thus, although I would accept that Mr Stott has been treated differently on the grounds of other status within article 14, there being an objective justification for the difference in treatment of EDS prisoners, his claim must fail. It is not in fact necessary in those circumstances to give a definitive answer as to whether EDS prisoners can be said to be in an analogous situation to other prisoners. However, there is a significant overlap between the considerations that are relevant to Issue 2A and to Issue 2B, and having looked at those matters again in the context of Issue 2B, and considered the complete picture, with the benefit also of what Lord Hodge has to say on the subject in his judgment, I have come to the view that EDS prisoners cannot be said to be in an analogous situation to other prisoners. Most influential in this conclusion is that, as I see it, rather than focusing entirely upon the early release provisions, the various sentencing regimes have to be viewed as whole entities, each with its own particular, different, mix of ingredients, designed for a particular set of circumstances. For these reasons, which are, of course, different from those of the Divisional Court, I would dismiss the appeal. LORD CARNWATH: I agree that the appeal should be dismissed. I gratefully adopt Lady Blacks exposition of the legal and factual background. Status The first question under article 14 of the Convention is whether the alleged difference of treatment is attributable to a relevant status. As to that, the Divisional Court was bound by House of Lords authority to hold that it is not: R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484; [2006] UKHL 54. As Lady Black explains, that issue now falls to be reconsidered by this court, in the light of the contradictory decision of the Fourth Section of the ECtHR in Clift v United Kingdom (Application No 7205/07), 13 July 2010. Sir James Eadie QC for the Secretary of State argues that the decision in Clift does not justify departing from the principles governing the definition of status in this context, as established by a long line of Strasbourg case law, starting with the often cited decision in Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, para 56, stating that: Article 14 prohibits, within the ambit of the rights and freedoms guaranteed, discriminatory treatment having as its basis or reason a personal characteristic (status) by which persons or groups of persons are distinguishable from each other. He relies also on Lord Neubergers pithy summary of the effect of subsequent case law in R (RJM) v Secretary of State for Work and Pensions [2009] AC 311 para 45: I consider that the concept of personal characteristic (not surprisingly, like the concept of status) generally requires one to concentrate on what somebody is, rather than what he is doing or what is being done to him. Such a characterisation approach appears not only consistent with the natural meaning of the expression, but also with the approach of the ECtHR and of this House to this issue. (Emphasis added) Lord Neuberger cited Gerger v Turkey (Application No 24919/94) (unreported) 8 July 1999, in which the ECtHR had held that article 14 had no application to a law under which people committing terrorist offences were treated less favourably than other prisoners with regard to automatic parole. Sir James Eadie also points to the potentially far reaching effects of the widening of the scope of status in other areas of the law, for example immigration: cf R (HC) v Secretary of State for Work and Pensions (AIRE Centre intervening) [2017] 3 WLR 1486, para 31, where this court held that differences in immigration status did not give rise to issues under article 14. In respectful disagreement with the other members of the court, I consider that these submissions are broadly correct. To explain why, and at the risk of some repetition, it is necessary to look again at the treatment of this issue in Clift both here and in Strasbourg. Clift in the House of Lords and Strasbourg The background I start by considering the background to the decisions in Clift including the facts and the applicable legislation. The latter is set out most fully in the judgment of the ECtHR (paras 23ff). Mr Clift had been sentenced in 1994 to 18 years imprisonment for serious crimes including attempted murder, which carried a maximum sentence of life imprisonment. In March 2002 the Parole Board recommended his release on parole taking account of reduced risk and the scope for addressing it by other means. Under the legislation then in force, for prisoners serving determinate sentences of more than 15 years, release in line with a Parole Board recommendation remained in the discretion of the Secretary of State; for prisoners serving shorter sentences (and for prisoners serving indeterminate sentences) release was mandatory. In October 2002 the Secretary of State rejected the recommendation of the Parole Board in Mr Clifts case on the grounds that his release would present an unacceptable risk to the public. The distinction between automatic and discretionary release, depending on whether the sentence was more or less than 15 years, arose not directly from the primary legislation itself, but from a statutory order made under it by the Secretary of State. Section 35 of the Criminal Justice Act 1991 provided a discretionary power to release long term prisoners before the two thirds point of their sentence, if recommended by the Parole Board. Section 50 gave power to reduce the effective period of detention by converting the discretionary power under section 35 into a duty in relation to specified classes of prisoners. The Secretary of State exercised that power by the Parole Board (Transfer of Functions) Order 1998 (SI 1998/3218), which applied to prisoners serving a sentence of imprisonment for a term of less than 15 years. For those serving sentences of 15 years or more, the order left in place the discretion to order early release between the service of half and two thirds of the sentence. In the House of Lords Lord Bingham (para 33) described the discretion so given to the Secretary for State as an indefensible anomaly. That was because, following the decision of the ECtHR in Stafford v United Kingdom (2002) 35 EHRR 1121, it had become clear that assessment of the risk presented by any individual prisoner was a task with no political content and one to which the Secretary of State could not (and did not claim to) bring any superior expertise. A defence of justification would not therefore have been sustainable. (That view was in due course adopted in terms by the ECtHR: para 77). However, justification would only become relevant under article 14, if his treatment amounted to discrimination on the grounds of other status. I turn to the consideration of that issue, first in the House of Lords and then in the ECtHR. Status The House of Lords Lord Bingham (with whom all his colleagues agreed) started from the premise that the word status in this context could be equated with personal characteristic (following Kjeldsen above). He did not think that a personal characteristic could be defined by the differential treatment of which a person complains. However, Mr Clift was not complaining of the sentence passed upon him, but of being denied a definitive Parole Board recommendation. Having described the personal characteristic criterion as elusive, he continued: But I would incline to regard a life sentence as an acquired personal characteristic and a lifer as having an other status, and it is hard to see why the classification of Mr Clift, based on the length of his sentence and not the nature of his offences, should be differently regarded. However, while clearly sympathetic to the claim, he was unwilling to uphold it in the absence of support, explicit or implicit, from the Strasbourg jurisprudence (para 28). Lord Hope spoke to similar effect, agreeing that a personal characteristic cannot be defined by the differential treatment of which a person complains: It is plain too that the category of long term prisoner into which Mr Clifts case falls would not have been recognised as a separate category had it not been for the Order which treats prisoners in his group differently from others in the enjoyment of their fundamental right to liberty. But he had already been sentenced, and he had already acquired the status which that sentence gave him before the Order was made that denied prisoners in his group the right to release on the recommendation of the Parole Board. The question which his case raises is whether the distinguishing feature or characteristic which enables persons or a group of persons to be singled out for separate treatment must have been identified as a personal characteristic before it is used for this purpose by the discriminator. (para 47) Like Lord Bingham he was sympathetic to the claim, but unwilling to uphold it, the issue not yet having been addressed by the Strasbourg jurisprudence. He noted also Lady Hales observation that it was possible to regard what he has done, rather than who or what he is, as the true reason for the difference of treatment in Mr Clifts case (paras 48 49). Lady Hale expressed agreement with Lord Binghams reasons, but (as I read her judgment) with a rather different emphasis. In the course of a detailed review of the Strasbourg authorities on the grounds of discrimination covered by article 14, she referred (para 60) to the example pertinent to this case of differences in the treatment of different criminal offences, exemplified by Gerger v Turkey (above): the court deduced from the fact that people convicted of terrorist offences would be treated less favourably with regard to automatic parole that the distinction is made not between different groups of people, but between different types of offence, according to the legislatures view of their gravity: para 69. Similarly, in Budak v Turkey (Application No 57345/00) (unreported), 7 September 2004, the court had repeated the personal characteristic test from Kjeldsen, and had held that a distinction in procedure and sentences for offences tried before the state security court from those tried before other courts was made, again, not between different groups of people but between different types of offence. In conclusion on this aspect, having noted the Secretary of States acceptance that a different parole regime for foreigners liable to deportation, as compared to those with the right to remain here, fell within the proscribed grounds, she said: But a difference in treatment based on the seriousness of the offence would fall outside those grounds. The real reason for the distinction is not a personal characteristic of the offender but what the offender has done. The result is that the difference of treatment between Mr Clift and people sentenced either to shorter determinate sentences or to life imprisonment is not covered by article 14 at all (paras 62 63). She acknowledged that the law might look odd, but it was not for the court to declare legislation which Parliament has passed incompatible with the Convention rights unless the Convention and its case law require us so to do (para 63). Status the ECtHR The Fourth Section conducted a detailed review of the previous ECtHR authorities on the meaning of other status (in French toute autre situation). Its conclusions are set out in paras 55 63 of the decision. It accepted that many of the cases related to personal characteristics, in the sense that they are innate characteristics or inherently linked to the identity or the personality of the individual. However, there were others where that approach could not be applied. It gave (para 58) six examples which I list below with the courts comments: i) Engel v The Netherlands (No 1) (1976) 1 EHRR 647: the court held that a distinction based on military rank could run counter to article 14, the complaint in that case concerning a difference in treatment as regards provisional arrest between officers on the one hand and non commissioned officers and ordinary servicemen on the other. ii) Pine Valley Developments Ltd v Ireland (1991) 14 EHRR 319: the court found a violation where there was a difference in treatment between the applicants and other holders of planning permissions in the same category as theirs. Although the court did not specifically address the question of the relevant status in that case, it would appear that the distinction of which the applicants complained was between holders of outline planning permission who benefited from new legislation and holders of outline planning permission who did not (in that case, by virtue of the fact that the applicants planning complaint had already been determined by the court and that the outline planning permission had been found to be invalid see para 26 of the judgment). iii) Larkos v Cyprus (1999) 30 EHRR 597: the court found a violation of article 14 as a result of a distinction between tenants of the state on the one hand and tenants of private landlords on the other, the parties did not dispute that article 14 applied and the court saw no reason to hold otherwise. iv) Shelley v United Kingdom (2008) 46 EHRR SE16: the court considered that being a convicted prisoner could fall within the notion of other status in article 14. Sidabras and Dziautas v Lithuania (Application Nos 55480/00 and v) 59330/00), ECHR (2004) 42 EHRR 104 VIII: the court did not specifically address the question of other status but in finding a violation of article 14 and article 8 implicitly accepted that status as a former KGB officer fell within article 14. vi) Paulk v Slovakia (2006) 46 EHRR 10: the court accepted that the applicant, a father whose paternity had been established by judicial determination, had a resulting status which could be compared to putative fathers and mothers in situations where paternity was legally presumed but not judicially determined. The court went on (paras 60 61) to address two particular points made by the House of Lords, and adopted in the UK Governments argument: first, that the treatment of which the applicant complains must exist independently of the other status upon which it is based; and, secondly, reliance on Gerger to support the argument that no separate status arises where the distinction is made, not between different groups of people, but between different types of offence, according to the legislatures view of their gravity. For the former argument the court found no clear support in its case law. It said: In Paulk, cited above, there was no suggestion that the distinction relied upon had any relevance outside the applicants complaint but this did not prevent the court from finding a violation of article 14. The question whether there is a difference of treatment based on a personal or identifiable characteristic in any given case is a matter to be assessed taking into consideration all of the circumstances of the case and bearing in mind that the aim of the Convention is to guarantee not rights that are theoretical or illusory but rights that are practical and effective. It should be recalled in this regards that the general purpose of article 14 is to ensure that where a state provides for rights falling within the ambit of the Convention which go beyond the minimum guarantees set out therein, those supplementary rights are applied fairly and consistently to all those within its jurisdiction unless a difference of treatment is objectively justified. (para 60) Of the argument based on Gerger it said: The court observes that the approach adopted in Gerger has been followed in a number of cases, but all concerned special court procedures or provisions on early release for those accused or convicted of terrorism offences in Turkey. Thus while Gerger made it clear that there may be circumstances in which it is not appropriate to categorise an impugned difference of treatment as one made between groups of people, any exception to the protection offered by article 14 of the Convention should be narrowly construed. In the present case the applicant does not allege a difference of treatment based on the gravity of the offence he committed, but one based on his position as a prisoner serving a determinate sentence of more than 15 years. While sentence length bears some relationship to the perceived gravity of the offence, a number of other factors may also be relevant, including the sentencing judges assessment of the risk posed by the applicant to the public. (para 61) Discussion With respect to the Fourth Section, I do not find its reasoning in Clift convincing. It is difficult to extract any principle from the disparate list of cases in its para 58. They have very little in common, other than the fact that in none of them, it seems, was the issue of status a matter for detailed consideration because it was not contested. Equally unconvincing is the reliance on Paulk to counter the view that the treatment complained of must be distinct from the status. That proposition is no more than the ordinary reading of the words of article 14 itself. Paulk was an unusual case on very special facts. The claim succeeded under article 8 in any event, and no issue was taken about status in the consideration of article 14. I note that both Lady Hale and Lord Mance share my doubts as to the weight placed on this decision by the court in Clift. Finally the Fourth Sections discussion of Gerger is hard to follow. It is accepted that there may be cases where it is not appropriate to treat an impugned difference as one made between groups of people. But there is no indication as to why Gerger itself fell into that category of cases, or by reference to what criterion. Further, while it is of course true that sentence length may reflect factors other than the perceived gravity, it is not clear why such factors (which are likely to be special to the circumstances of the particular offender and his case) strengthen the reasons for treating the difference as one between groups. It is true that in Clift in the House of Lords, Lord Bingham was willing in principle to regard the imposition of a particular form of sentence as conferring an acquired status for these purposes. However, as is apparent from a comparison with Lady Hales speech, his approach does not appear to take full account of decisions like Gerger. That in turn formed the basis of the more limited approach subsequently taken by the House in R (RJM). Lord Neuberger (para 46), while noting that Lord Bingham would have been inclined to regard a life sentence as an acquired personal characteristic and a lifer as having an other status, observed that this was in the absence of decisions such as Gerger . I am conscious that in Mathieson v Secretary of State for Work and Pensions [2015] 1 WLR 3250 the authority of the approach of the Fourth Section in Clift v United Kingdom was accepted without question by this court. However, the factual context was very different. The key to the decision can be found in the rhetorical question posed by Lord Wilson at the conclusion of his discussion of status: Disability is a prohibited ground: Burnip v Birmingham City Council [2013] PTSR 117. Why should discrimination (if such it be) between disabled persons with different needs engage article 14 any less than discrimination between a disabled person and an able bodied person? . (para 23) I am grateful for Lady Blacks comprehensive review of the authorities on this issue. It shows that the courts both here and in Strasbourg have been struggling with difficulty over a long period to find a rational criterion for defining and limiting the scope of status in article 14. It is true, as she says (para 44), that in more recent cases the Strasbourg court has moved beyond simple reference to a personal characteristic, to more expansive phrases such as identifiable, objective or personal characteristic. However, the decision in Minter v United Kingdom (2017) 65 EHRR SE6, noted by her at paras 41 43, suggests a tendency to restrict the scope of the decision in Clift itself, at least in the context of different sentencing regimes. I note Lady Hales suggestion that sentencing criteria concentrate upon the dangerousness of the offender, itself a personal characteristic. That may be so, but I find it hard to accept that dangerousness, whether a personal characteristic or not, is a status deserving of special protection under article 14. In conclusion on this issue, short of confirmation by the Grand Chamber, I would not for myself regard the decision of the Fourth Section in Clift (or the other more recent decisions reviewed by Lady Black) as requiring us to depart from the more restrictive approach to the concept of status reflected in the actual decision of the House in Clift, and confirmed in R (RJM). I would need considerable persuasion that the authors of the Convention intended mere conviction of a criminal offence, or subjection to a particular custodial regime, to entitle the recipient to specially protected status under human rights law. More generally, it is important that article 14 is kept within its proper role within the Convention, and outside the core protected areas is not allowed to develop into a means of bypassing the carefully defined limits applicable to the individual rights. Analogy and justification I can deal with these issues shortly, because I agree with the reasons given by Lady Black and Lord Hodge for dismissing the appeal. In particular I agree that the EDS regime must be looked at as a whole and cannot be treated as analogous to regimes which have different purposes and different characteristics. It is wrong to isolate the particular feature of the provisions for release on parole, and to compare it with other release provisions without regard to their context. In this respect the case is clearly distinguishable from Clift where there was a direct analogy between the sentence as applied respectively to those serving more and less than 15 years. As Lord Hope pointed out, the difference was not part of the original sentence as prescribed by Parliament, but was imposed subsequently by Ministerial order. I am also fortified in this conclusion by the consideration that, even if Mr Stotts sentencing regime gives him a relevant status for the purposes of article 14, it is on the outer edge of the concentric circles described by Lord Walker in the passage cited by Lady Black (para 54). Consistency in sentencing policy is an important objective, but it does not impinge on the core values which article 14 is designed to protect. Short of irrationality or (in Strasbourg terms) manifest unreasonableness, the courts should not allow themselves to be drawn into detailed consideration of the lines drawn by the legislature between the treatment of different categories of offender. LORD HODGE: I am very grateful to Lady Black for setting out the facts, the legal background and the legal issues so comprehensively and clearly. I can therefore state my views briefly. I agree with her that the appeal should be dismissed. But I would dismiss the appeal on the basis that the extended determinate sentence (EDS), which has been imposed on Mr Stott, is not sufficiently analogous to the sentences, which he puts forward as comparators, to bring him within article 14 of the European Convention on Human Rights (the ECHR) and require the Government to justify his treatment. If, contrary to my view, it is necessary to proceed to consider justification, I would hold that the difference in treatment of a prisoner detained under an EDS is justified principally because of the differing natures of the regimes for imprisonment. It is not disputed that Mr Stotts complaint is within the ambit of article 5 of the ECHR so that article 14 can be invoked if there has been unjustified discrimination in relation to a rule adopted by the United Kingdom concerning the early release of convicted prisoners. The questions on the applicability of article 14 relate to (i) status, (ii) analogy, and (iii) justification. Status I agree with Lady Black that Mr Stott as a prisoner sentenced to an EDS has the required status to invoke article 14 of the ECHR. That article speaks of the ECHR rights being secured without discrimination on any ground such as and then lists specific grounds, including or other status. As Lady Black has shown in paras 13 35 of her judgment, there has been a difference of view between the House of Lords and the European Court of Human Rights (ECtHR) as to the meaning of the phrase other status in article 14, which was manifested in the speeches in the House of Lords in R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484 (Clift (HL)) and in the judgment of the 4th Section of the ECtHR in Clift v United Kingdom (Application No 7205/07, 13 July 2010) (Clift (ECtHR)). Questions are likely to arise as to the boundaries of any other status absent further guidance by the Grand Chamber of the ECtHR and I would not seek to make any general statement as to those boundaries. But I am satisfied that Mr Stott has the requisite status for the following four reasons. First, the opening words of the relevant phrase, on any ground such as, are clearly indicative of a broad approach to status. Secondly, there is ample authority in the ECtHR, the House of Lords and the Supreme Court to support the view that the words any other status should not be interpreted narrowly. Thus, in Clift (HL) para 48, Lord Hope of Craighead stated that a generous meaning should be given to the words or other status while recognising that the proscribed grounds are not unlimited. Similarly, in R (RJM) v Secretary of State for Work and Pensions [2009] AC 311 (RJM), Lord Neuberger of Abbotsbury at para 42 spoke of a liberal approach to the grounds on which discrimination was prohibited. In Clift (ECtHR), paras 55 and 56, the ECtHR spoke of the listed examples of status as being illustrative and not exhaustive and suggested that a wide meaning be given to the words other status. In Biao v Denmark (2016) 64 EHRR 1, the ECtHR again spoke of giving those words a wide meaning and in Khamtokhu and Aksenchik v Russia (Application Nos 60367/08 and 961/11) the Grand Chamber repeated that view at para 61. It appears, as Lord Neuberger stated in RJM (para 39) that the ECtHR interprets article 14 on a holistic or broad brush basis. Thirdly, the Supreme Court in Mathieson v Secretary of State for Health [2015] UKSC 47; [2015] 1 WLR 3250, para 22, has accepted the judgment in Clift (ECtHR). While, like Lord Carnwath, I would welcome further guidance from the Grand Chamber, I am persuaded that the weight of authority currently supports the view that Mr Stott has the required status under article 14 because he has been sentenced to a particular sentence of imprisonment, namely an EDS. Analogy Where I find myself in respectful disagreement with the experienced judges of the Divisional Court is that I am persuaded by Sir James Eadie QC that it is wrong to focus solely on the arrangements for early release and to disregard the existence of distinctive and separate sentencing regimes. Lady Black has helpfully set out the different types of sentence which a judge in England and Wales can impose in paras 84 105 of her judgment. I agree with her analysis in paras 123 134 of her judgment that a determinate sentence cannot be divided into a part relating to punishment and deterrence on the one hand and the avoidance of risk on the other. The idea that the punitive and deterrent part of a determinate sentence ends at the point of entitlement to, or at least eligibility for consideration for, early release is central to Mr Southeys case and the reasoning of the Divisional Court. In my view that idea is not correct. Section 142(1) of the 2003 Act sets out five purposes of sentencing. They are (i) the punishment of offenders, (ii) the reduction of crime (including its reduction by deterrence), (iii) the reform and rehabilitation of offenders, (iv) the protection of the public, and (v) the making of reparation by offenders to persons affected by their offences. Purpose (v) is not relevant to a sentence of imprisonment but purposes (i) to (iv) inclusive may co exist throughout the term of a determinate prison sentence: R (Whiston) v Secretary of State for Justice [2015] AC 176, para 25, per Lord Neuberger. In fixing the appropriate sentence of imprisonment of a convicted person, the judge does not take account of the statutory provisions for early release. In R v Round [2010] 2 Crim App R(S) 45, para 44, Hughes LJ described this requirement to disregard early release in fixing a sentence of imprisonment was a matter of principle of some importance. The Court of Appeal in R v Burinskas (Attorney Generals Reference (No 27 of 2013)) (Practice Note) [2014] 1 WLR 4209, paras 38 39 endorsed his statement. This disregard is unsurprising as the purposes of the early release regimes include matters such as economy and the relief of over crowding in prisons, as well as the public interest in re integrating a prisoner into society with the benefit of supervision. As a result, each of the four purposes of imprisonment in section 142(1) of the 2003 Act may be relevant justifications of the prisoners continued detention throughout the custodial sentence which the judge has imposed. It follows that a determinate sentence of imprisonment is not to be divided by reference to its relevant early release provisions into a period for punishment, deterrence and rehabilitation on the one hand and a period when the only purpose is the protection of the public. There is no punitive part and preventive part in a determinate sentence of imprisonment. As Lady Black has shown (paras 124 125 of her judgment), judgments of the ECtHR, which address the requirement allowing the detained person access to judicial determination of the lawfulness of his detention in article 5(4) of the ECHR, have repeatedly recognised this characteristic of the determinate sentence. I therefore find myself in respectful disagreement with the Divisional Court in R (Foley) v Parole Board for England and Wales [2012] EWHC 2184 (Admin) in so far as it reasoned (para 68 69) that the reality was that the punitive element of a determinate sentence ended at the half way point. The reality is that that element continues and would justify the detention of a prisoner if he were recalled to prison after early release. Mr Southey in his submission on behalf of Mr Stott asserts: [t]he point at which prisoners become eligible for release is the point which represents the expiry of the punitive and deterrent element of their sentences. For determinate sentence prisoners, the half way point represents the punitive element. (appellants case para 4.5.2). The Divisional Court appears to have accepted this submission in paras 44 45 and 48 of its judgment. I respectfully disagree in relation to determinate sentences for the reasons set out in the preceding two paragraphs. Similarly, in relation to SOPC sentences, which Lady Black discusses at paras 93 95 of her judgment, punishment and deterrence remain relevant grounds of detention throughout the appropriate custodial term. An EDS, which is a form of determinate sentence, similarly does not have two component parts in its custodial term. An EDS is very similar to the extended sentence in Scots law which this court discussed in Brown v Parole Board for Scotland [2017] UKSC 69; [2018] AC 1. In Lord Reeds judgment, with which the other Justices agreed, punishment and deterrence were relevant purposes throughout the custodial term (paras 49 and 60). The provisions for early release and the period on licence (if any) before the expiry of the custodial term serve the purpose of assisting a prisoner to resume his life in the community with the assistance of supervision (para 50). The early release provisions when applied to a determinate sentence in English law or to an EDS serve a similar purpose. The period on licence after the expiry of the custodial term of an extended sentence, on the other hand, is to protect the public from serious harm (paras 53 and 60). It is only in the sentencing framework relating to indeterminate sentences, which Lady Black discusses in paras 96 to 105 of her judgment, that the sentencing judge in fixing the minimum term is required to take account of the early release provisions and to split the sentence into a part which is for punishment and deterrence and another part in which retention in custody is justified only if the prisoner remains a risk to the public. Such considerations are also not relevant to mandatory life sentences. In relation to the date of early release there is also a less consistent picture than the appellant suggests. Lady Black has discussed this in paras 136 and 145 of her judgment. As she states, there are prisoners serving discretionary life sentences who are not eligible to apply for release because their minimum term imposed under section 82A of the Powers of Criminal Courts (Sentencing) Act 2000 (the 2000 Act) exceeds one half of the notional determinate term (R v Szczerba [2002] 2 Cr App R(S) 86). Further, the minimum term for prisoners on mandatory life sentences is not fixed by reference to early release provisions applicable to a notional determinate term (section 269 of and Schedule 21 to the 2003 Act). On the other hand, SOPC prisoners under section 236A of the 2003 Act are eligible to apply for release once they have served one half of the appropriate custodial term, which is less than their overall sentence, and the overall sentence is the sentence that is commensurate with the seriousness of the offence (section 236A(3)). Other prisoners on determinate sentences can achieve release before they have served one half of their sentence at the discretion of the Secretary of State by being placed on a curfew at a specified location (sections 246 and 250(5)). When assessing whether Mr Stott is in an analogous situation to other prisoners it is important to have regard to the reality that in England and Wales there are separate sentencing regimes which have different characteristics. It is appropriate to take a holistic approach to each sentencing regime in deciding whether or not one regime is analogous to another. Not all prisoners serving a discretionary life sentence will be more dangerous than a prisoner serving an EDS. There are prisoners who are serving a life sentence under section 224A of the 2003 Act, which does not require a finding that the offender was dangerous, although it is likely that in most cases he will be: Burinskas at para 8. A prisoner serving an EDS is not eligible for release at the direction of the Parole Board at one half of his custodial term while a prisoner serving a discretionary life sentence is generally so eligible when the court exercises its discretion under section 82A of the 2000 Act. But that is far from the whole picture. As the Court of Appeal recognised in Burinskas (para 36), a life prisoner might have to wait for many years after his minimum term has expired before the Parole Board consider it safe to release him. By contrast, a prisoner serving an EDS is entitled to be released at the end of the custodial period without any further assessment of risk (section 246A(7)). Similarly, a person who has been given a life sentence remains on licence and subject to recall to prison for the rest of his life. By contrast, the licence provisions imposed on a person serving an EDS end on the expiry of the specified extension period (section 226A(5) and (8)). Sir James Eadie also drew support for his submission that different sentencing regimes were not analogous from two judgments of the Divisional Court and one of the ECtHR. In R (Massey) v Secretary of State for Justice [2013] EWHC 1950 (Admin) a prisoner serving a sentence of imprisonment for public protection (an IPP) complained that he had been discriminated against compared with a prisoner who was sentenced to an EDS after the new sentences introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 because he was subject to an indeterminate period of imprisonment while the EDS prisoner was not. Moses LJ rejected this claim, stating (at para 25) that the claimant and the EDS prisoner were not in an analogous situation precisely because they were sentenced under a different regime. In R (Bristow) v Secretary of State for Justice [2013] EWHC 3094 (Admin) the Divisional Court held that a claimant was not in an analogous situation to prisoners under a previous legislative regime and (para 16) that prisoners who were subject to discretionary release were not in an analogous situation to prisoners under an automatic release scheme. In Minter v United Kingdom (2017) 65 EHRR SE 6 in which an applicant complained of being subjected to an indefinite notification requirement, the ECtHR held that there was no discrimination as the applicant had been subjected to a different sentencing regime which was the consequence of new legislation (para 68). There is some force in Mr Southeys response that the cases were concerned with changes in sentencing policy which were effected by legislation. This weakens their utility to Sir James Eadie to some extent. But the cases, and R (Massey) in particular, provide some support for his submission that one should have regard to the characteristics of each regime as a whole and not just to its provisions for early release when judging whether a claimant is in an analogous situation to someone sentenced under a different regime. In summary, I am not persuaded that a prisoner serving an EDS is in an analogous situation to prisoners under different regimes of imprisonment in relation to his eligibility for early release. This is, first, because there is no split between the punitive/deterrent part and the risk related part of a custodial term in a determinate sentence (including an EDS) at the point at which a prisoner becomes eligible for early release. This contrasts with the position of prisoners serving discretionary life sentences. The supposed existence of this split played a fundamental part in Mr Southeys argument and appears to have influenced the judgment of the Divisional Court, giving rise to a focus only on whether a prisoner remained dangerous after a spell in prison. It is, secondly, because there is no principle that a prisoner is entitled to be released or is eligible at the discretion of the Parole Board to be released once he has served one half of his custodial term. The position is, as I have stated, more complex. Thirdly, it is because a prisoner sentenced to an EDS is sentenced under a statutory regime which, when viewed in the round, has materially different characteristics from other determinate sentences and from life sentences, both discretionary and mandatory. In my view, the obvious and relevant differences between the sentencing regimes are sufficient to prevent prisoners serving sentences under these different sentencing regimes from being in an analogous situation. Justification Having reached this conclusion on issue 2A, it is not strictly necessary to consider the issue of justification. But as the ECtHR frequently wraps the issues of analogous situation and justification together, it is appropriate that I state my view briefly. The Secretary of State has explained, through the witness statement of Ms Alison Foulds, that Parliament introduced the EDS as a part of a suite of new sentencing regimes to replace the previous sentence of the IPP, which was an indeterminate sentence for dangerous offenders and which had been shown to have unsatisfactory characteristics. Ms Foulds explained that offenders eligible for an EDS have committed serious offences, which merit a custodial sentence of at least four years, and been found to be dangerous and would in the past have been eligible for an IPP but not necessarily a life sentence. She stated: In replacing the indeterminate IPP sentence, the Government committed to introducing a tougher, extended determinate sentence requiring the offender to serve at least two thirds of the custodial term rather than one half. This was a measure designed to enhance public protection and maintain public confidence in the sentencing framework. When the court considers the justification of different treatment under article 14 of the ECHR it gives a wide margin of appreciation to the democratic legislature in its determination of criminal sentencing policy but exercises close scrutiny where the allegation is that detention is arbitrary or unlawful: Clift (ECtHR) para 73. As I have stated, the early release provisions relating to a sentence do not determine what is the appropriate part of a sentence for the punitive and deterrent purposes set out in section 142. They are the result of other considerations such as economy and the prevention of overcrowding in prisons (see para 188 above). In repealing the provisions which established the IPP and in creating a particular regime for the imprisonment of persons convicted of serious offences and who are also dangerous Parliament is entitled to have regard both to public protection and to the maintenance of public confidence in criminal sentencing. The preservation of public confidence is a legitimate aim, at least in the context in which the custodial term which is appropriate for the offence has not expired: Clift (ECtHR) para 74. The three considerations, which have persuaded me that an EDS prisoner is not in an analogous situation (para 195 above), are relevant to the question of the appropriate means of achieving those aims and need not be repeated. In my view one must look at the early release provisions in the context of the individual sentencing regimes which may have positive and negative features as far as the prisoner is concerned. The EDS prisoner, convicted of a serious offence and who is dangerous at the time of sentencing, has a longer wait before he is eligible for consideration for parole than many other offenders who are subject to different regimes of imprisonment, but he also has the benefit of a defined custodial term and a defined period during which he is subject to licence thereafter, in contrast to prisoners who have received life sentences. Those are the components of the particular sentencing regime which cannot be described as arbitrary. Sir James Eadie in his submissions has not provided any separate justification for the requirement of an EDS that the prisoner serve two thirds of his sentence before he is eligible to be considered for parole rather than some other proportion, beyond saying that the offender has committed a serious offence and is dangerous at the time of sentencing. But, in my view, he does not require to do so because the EDS is a separate sentencing regime which is neither arbitrary nor unlawful. I therefore conclude in relation to issue 2B that the difference in treatment of EDS prisoners resulting from the potentially more onerous early release provisions of section 246A is justified. Accordingly, there has been no breach of article 14 taken with article 5 of the ECHR. In so concluding, I do not overlook the observation of Lord Brown of Eaton under Heywood in Clift (HL) at para 66: where the penal system includes a parole scheme, liberty is dependent no less upon the non discriminatory operation of that than on a fair sentencing process in the first place. The interest of a prisoner in obtaining early release should not be underestimated. In this case, however, access to the parole scheme depends on the terms of the particular sentencing regime and differential access to that scheme as between discrete sentencing regimes is not per se discriminatory. I am also aware that there is a real potential for a sense of unfairness about differential eligibility for early release where two people are jointly convicted of the same offence and one receives a determinate sentence while the other, because he is dangerous, receives an EDS. The grievance this would generate was a matter of concern to the judges of the Divisional Court who referred to it in paras 45 and 50 of their judgment. That is clearly not the situation in Mr Stotts case. It will not be the situation in many cases and it is not a sufficient basis for calling into question the justification for the early release provisions of the EDS generally. Article 14 of the ECHR does not in my view provide an answer to this problem; not every anomaly in sentencing is a breach of ECHR rights. I am left wondering whether in future the common law might be developed by creating an exception to the principle in R v Round where it was necessary to achieve comparative justice in such a case of joint offenders. But as parties have not had any opportunity to discuss this matter, I will say no more about it. Conclusion I would dismiss the appeal. LADY HALE: I am most grateful to Lady Black for having discussed the authorities in such depth. It has enabled me to stand back and look at the basics. The claim is that the early release provisions relating to prisoners serving an extended determinate sentence (EDS) unjustifiably discriminate against such prisoners in the enjoyment of their right to liberty, contrary to article 14 of the European Convention on Human Rights read with article 5. The basic fact about any sentence of imprisonment is that it takes away the prisoners liberty: that is the right protected by article 5. The first thing that the prisoner (and indeed anyone else) wants to know is how long for? So let us take three prisoners who have committed the same, very serious, offence: one receives an ordinary determinate sentence of, say, 21 years; another qualifies for an EDS and receives an EDS of, say 21 years, with an extended licence period of four years on top of that; and another qualifies for and receives a discretionary life sentence, with a minimum custodial period of ten and a half years. The first prisoner will automatically be released on licence after ten and a half years; the second prisoner will only be considered for release on licence after 14 years; the third prisoner will be considered for release on licence after ten and half years. Is this most basic disparity in the treatment of these three prisoners compatible with the convention rights of the less favourably treated one? The English version of article 14 reads: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The equally authentic French text reads: La jouissance des droits et liberts reconnus dans la prsente Convention doit tre assure, sans distinction aucune, fonde notamment sur le sexe, la race, la couleur, la langue, la religion, les opinions politiques ou toutes autres opinions, lorigine nationale ou sociale, lappartenance une minorit nationale, la fortune, la naissance ou toute autre situation. Thus, for the English without discrimination, the French reads sans distinction aucune, but the European Court of Human Rights has said that outlawing any distinction could lead to absurd results, and the French text should be read in the light of the more restrictive text of the English version (Belgian Linguistic case (No 2) (1968) 1 EHRR 252, para 10). On the other hand, for other status, the French reads toute autre situation, which has led the court to take an expansive view of what counts as an other status (see Carson v United Kingdom (2010) 51 EHRR 13, para 70). In article 14 cases it is customary in this country to ask four questions: (1) does the treatment complained of fall within the ambit of one of the Convention rights; (2) is that treatment on the ground of some status; (3) is the situation of the claimant analogous to that of some other person who has been treated differently; and (4) is the difference justified, in the sense that it is a proportionate means of achieving a legitimate aim? Question (1) stems from the subsidiary nature of article 14. Unlike article 1 of the 12th Protocol to the Convention (to which the United Kingdom is not a party), it does not prohibit discrimination in the enjoyment of any right set forth by law but only in the enjoyment of the Convention rights. But of course there does not have to be a breach of one of those rights otherwise the article would add nothing. The rights have to be enjoyed equally. So the facts have to fall within the ambit of one of the rights or relate to one of the ways in which one of the rights is secured within the member state. In this case it is common ground that a sentence of imprisonment falls within the ambit of article 5, which regulates the circumstances in which a person may be deprived of his liberty. Equally it is common ground that there is no breach of article 5, because article 5(1)(a) permits the lawful detention of a person after conviction by a competent court. Question (2) directs attention to the ground on which one person has been treated differently from another in the enjoyment of a Convention right. It is clearly intended to add something to the requirement of discrimination or a difference in treatment: otherwise article 14 would simple have said that the enjoyment of the Convention rights shall be secured without (unjustified) discrimination (between persons in an analogous situation). Status has usually been said to refer to a personal characteristic of the person concerned (beginning with Kjeldsen, Busk Madsen and Pedersen v Denmark (1976) 1 EHRR 711, but see also, for example, Maktouf and Damjanovic v Bosnia and Herzegovina (2013) 58 EHRR 11, para 83, and Magee v United Kingdom (2000) 31 EHRR 35, para 50, where differences in treatment between different courts or different parts of the United Kingdom were held not to be contrary to article 14 as they were not based upon personal characteristics). But it is not limited to innate qualities such as sex, race, colour, birth status or sexual orientation. It includes acquired qualities such as religion, political opinion, marital or nonmarital status, or habitual residence. But in Clift v United Kingdom (Application No 7205/07, judgment of 13 July 2010, inexplicably only reported in The Times, 21 July 2010), the court pointed out that not all the listed qualities are a personal characteristic, giving property as an example. Not only that, the court has not given an ejusdem generis interpretation to other status and has adopted a very broad approach: applying article 14, for example, to different categories of property owners (James v United Kingdom (1986) 8 EHRR 123, para 74), large and small landowners (Chassagnou v France (1999) 29 EHRR 615, para 95), and non commissioned officers and ordinary soldiers (Engle v The Netherlands (No 1) (1969) 1 EHRR 647). In Clift v United Kingdom, the court also declared itself not persuaded that the Governments argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based finds any clear support in its case law (para 60). Paulk v Slovakia (2006) 46 EHRR 10 was cited as an illustration: a man who had been adjudged father of a child in legal proceedings complained that there was no way of correcting the record when DNA tests proved that he was not the father, whereas fathers whose paternity had been established on other grounds, and mothers, did have such a possibility (Paulk, para 48). With respect, this is not a good illustration, for two reasons. First, the applicability of article 14 was not disputed and so there is no discussion of other status in the judgment. Second, and more important, while it may well be the case that there was no other difference in treatment between the applicant and the others with whom he compared himself, his status, as a man who had been adjudged father in legal proceedings, was obviously different from the status of those fathers who had not, and even more different from the status of mothers. In other words, his status was not defined by the difference in treatment complained of. That, it seems to me is the true principle: the status must not be defined solely by the difference in treatment complained of, for otherwise the words on any ground such as would add nothing to the article. There is a useful analogy here with the United Nations Convention relating to the Status of Refugees (1951) (Cmd 9171): to be recognised as a refugee, a person has to have a well founded fear of persecution on one of the Convention grounds race, religion, nationality, membership of a particular social group or political opinion. In Fornah v Secretary of State for the Home Department [2006] UKHL 46; [2007] 1 AC 412, the House of Lords affirmed the principle (also endorsed by the UN High Commissioner for Refugees) that a particular social group must exist independently of the persecution to which the group is subject: by this was meant that the group was not defined solely by the persecution it feared. That said, I have no difficulty in accepting that The question whether there is a difference of treatment based on a personal or identifiable characteristic in any given case is a matter to be assessed taking into consideration all of the circumstances of the case and bearing in mind that the aim of the Convention is to guarantee not rights that are theoretical or illusory but rights that are practical and effective (Clift v United Kingdom, para 60). Prisoners subject to an EDS can be identified as a distinct group, just as prisoners subject to an ordinary determinate sentence and prisoners subject to a life sentence, can be identified as a distinct group. They are defined by much more than the particular early release regime to which they are subjected. Indeed, the argument that this particular type of sentence is a distinct package, so persuasively put forward on behalf of the Secretary of State as a justification for the difference, confirms that fact. This is much clearer than the difference in Clift, which was simply between different lengths of determinate sentence. If further support for that conclusion were required, it could lie in the different criteria for the imposition of each type of sentence, which concentrate upon the dangerousness of the offender, itself a personal characteristic. Questions (3) and (4) are logically distinct but are often discussed together in the cases. As Lord Nicholls put it in R (Carson) v Secretary of State for Work and Pensions [2005] UKHL 17; [2006] 1 AC 173, para 3: the essential question for the court is whether the alleged discrimination, that is, the difference in treatment of which complaint is made, can withstand scrutiny. Sometimes the answer to this question will be plain. There may be such an obvious, relevant difference between the claimant and those with whom he seeks to compare himself that their situations cannot be regarded as analogous. Sometimes, where the position is not so clear, a different approach is called for. Then the courts scrutiny may best be directed at considering whether the differentiation has a legitimate aim and whether the means chosen to achieve the aim is appropriate and not disproportionate in its adverse impact. There is no such obvious, relevant difference here. The three groups in question are all prisoners serving sentences of imprisonment. From their point of view, the most important question in their lives is when will I get out? Allied to that may be two subsidiary questions, who will decide when I get out will it be automatic or will I have to go before the Parole Board? and if I am let out, what will be the consequences of that? Each group of prisoners under discussion here is subject to a different package of answers to those questions. But we must beware of treating the package which means that each of these groups has a different status as meaning that their situations are not analogous for the purpose of needing a justification for the difference in their treatment. To take an obvious example, women have a different status from men for the purpose of article 14. But the obvious physical differences between men and women do not mean that their situations are not relevantly similar, for the purpose, for example, of their right to liberty or to respect for their family lives. We have to look to the essence of the right in question to ask whether men and women prisoners are in a relevantly similar situation. The essence of the right in question here is liberty. It would obviously be discriminatory to make one sex serve longer sentences for the same crime simply because of their gender (as opposed to other factors which might justify a difference in treatment). The real question in this case has always been whether the difference in treatment can be justified as a proportionate means of achieving a legitimate aim. The background is important here. The EDS was introduced in its current form when the indefinite sentence for public protection (IPP) was abolished. It was considered necessary to replace IPP with a sentence, reserved for those who posed a particular risk to the public, which was demonstrably tougher than an ordinary determinate sentence. As Alison Foulds, policy lead on adult custodial sentencing policy in the Ministry of Justice, explained in her witness statement: This was a measure designed to enhance public protection and maintain public confidence in the sentencing framework. Offenders eligible for an EDS have committed serious offences and been found to be dangerous, and would previously have been eligible for an indefinite sentence, an IPP, but not necessarily a life sentence. The longer period to be served in prison under the EDS is justified on these grounds, and distinguishes the sentence from a standard determinate sentence, and a special determinate sentence for offenders of particular concern, which provide for automatic release at the half way point, or discretionary release from the half way point, as appropriate. Protecting the public is undoubtedly a legitimate aim. Furthermore, the criteria for imposing an EDS include that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences (Criminal Justice Act 2003, section 226A(1)(b)). The public will be better protected if he is required to serve more of his sentence in prison and can only be released during the rest of his custodial term if the Parole Board determines that this will be safe. The criterion for imposing the sentence would therefore appear to justify the difference in treatment between an EDS prisoner and a prisoner serving a standard determinate term, even though their actual offences may be commensurate. The same could be said of offenders serving a special custodial sentence for certain offenders of particular concern (Criminal Justice Act 2003, section 236A). Here the criterion is not the dangerousness of the particular offender, but the dangerousness of the offence which he has committed: if he is convicted of an offence listed in Schedule 18A, and the court does not impose a life sentence or an EDS, the court must impose a special sentence which consists of the appropriate custodial term plus an extra year for which he is subject to a licence (section 236A(1), (2)). These prisoners may be let out at half time, but only if the Parole Board decides that this will be safe. These prisoners have not been held to be dangerous in themselves in the same way that prisoners sentenced to an EDS have been held to be dangerous. Nevertheless, this comparison is getting closer to the bone, given the intrinsically dangerous nature of the offences listed in Schedule 18A (most of which have a terrorist connection). The comparison with a discretionary life sentence is more difficult to understand. It is well established that, in the absence of exceptional circumstances, the specified period which the prisoner must serve before he can be considered for release on licence should be fixed at half of the notional determinate sentence which he would have received for the offence had he not been subject to a life sentence because of his dangerousness: see R v Szczerba [2002] 2 Cr App R(S) 86. Given that a discretionary life sentence prisoner is even more dangerous than an EDS prisoner, how can it be justified that the former can be considered for release on licence after serving half of what would have been an appropriate determinate sentence, whereas the latter must wait until he has served two thirds of the appropriate determinate sentence? The publics need for protection is likely to be greater in the case of the lifer than in the case of the EDS prisoner. But in any event, neither can be released on licence until the Parole Board has determined that it will be safe to do so. The public is equally well protected in each case. It is, of course, the case that there are ways in which the EDS prisoner is better off than the lifer. He must be released on licence at the end of his appropriate custodial term, even if the Parole Board has not determined that this would be safe, whereas the lifer must only be released if this is adjudged safe. Once released on licence, he can only be returned to prison during the period of his extended sentence, whereas the lifer will remain on licence, and thus subject to return to prison, for the whole of his natural life. This is the essence of the package element which was pressed on us as a justification for the difference in their early release regimes. The package should not be salami sliced into its component parts for the purpose of deciding whether each difference in treatment can be justified. In the end, however, it is easy to see how the additional disadvantages (from the prisoners point of view) of a discretionary life sentence are justified by the considerations which led the court to impose the sentence in the first place. It is hard to see how, alone of all four types of prisoner considered here, it is thought necessary to insist that an EDS prisoner stays in prison for more than half the custodial term appropriate to the seriousness of his offending. One would have thought that, if anything, a discretionary life prisoner would be even less likely to be fit for release at the half way point. But the speed of rehabilitation is notoriously difficult to predict at the outset. That is why the decision is left to the Parole Board when the time comes to consider release. And the protection which the Parole Board offers to the public is the reason why it is not necessary, for that purpose, to insist that EDS prisoners spend a larger proportion of the appropriate term in prison. That conclusion is to my mind strengthened by the fact that, had he not been bound by the decision of the House of Lords in R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484, it would also have been the conclusion of Sir Brian Leveson, President of the Queens Bench Division, who has unrivalled experience in penal matters and would have recognised a justification if there was one. I would therefore allow this appeal and make a declaration of incompatibility. It would then be for Parliament to decide how, if at all, that incompatibility is to be rectified. LORD MANCE: Introduction I have had the advantage of reading in draft the judgments prepared by Lady Black and Lord Carnwath. They reach different conclusions on the issue whether a prisoner on whom an extended determinate sentence (EDS) has been passed under section 226A of the Criminal Justice Act 2003 (the 2003 Act) acquires a status on which he may rely for the purposes of a complaint about alleged discrimination under article 14 of the European Convention on Human Rights (ECHR). An EDS consists of the appropriate custodial terms, specified in Mr Stotts case as 21 years, and a further extension period, specified in his case as four years, during which he was to be subject to a licence. The discrimination alleged is that, under section 246A of the 2003 Act, as introduced by section 125 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 and amended by section 4 of the Criminal Justice and Courts Act 2015, a prisoner subject to an EDS of ten years or more must serve a requisite custodial term of normally two thirds of his specified appropriate custodial term, before being eligible for consideration by the Parole Board for release on licence. Serving an EDS of less than ten years, imposed prior to 13 April 2015, and not in respect of an offence listed in Parts 1 to 3 of Schedule 15B to the Criminal Justice Act 2003, are automatically released once they have served two thirds of the requisite custodial period (section 246A(2) of the 2003 Act). Under his EDS, Mr Stott would thus have to serve 14 years, before being eligible for referral to the Parole Board for consideration. The comparisons which Mr Stott seeks to draw are with prisoners sentenced to both determinate and indeterminate sentences. The former (determinate sentence prisoners) are, as Lady Black explains (para 90), entitled to be released on licence automatically, once they have served a requisite custodial sentence, which is in their case one half of their sentence. It is worth noting, in parenthesis, that under the rgime of extended sentences which was introduced by section 227 of the 2003 Act, was in force until 3 December 2003 and was the precursor of the rgime presently in issue, a prisoner was also entitled to automatic release on licence once he had served half of the requisite custodial sentence. Further, under the special custodial sentence regime introduced by Schedule 1 to the Criminal Justice and Courts Act 2015 as amended by section 236A of the 2003 Act, whereby a court could impose the appropriate custodial sentence plus a further period on licence of one year, a prisoner was entitled to have his suitability for release on licence considered by the Parole Board after serving half such sentence. The special custodial regime was available for inter alia an offender who had raped a child under 13, which it happens was also offending for which Mr Stott was sentenced. In respect of prisoners serving indeterminate sentences, the judge will determine a minimum custodial sentence which the offender must serve before being eligible to apply for early release, although the court may disapply this provision if the seriousness of the offending justifies this course. In the case of a mandatory life sentence, the minimum custodial sentence must take account of various factors, none expressly linked with any notional determinate term. In the case of a discretionary life sentence, the court must, under section 82A of the Powers of Criminal Courts (Sentencing) Act 2000, identify what sentence would have been appropriate had a determinate sentence been imposed and take account of the fact that the offender would then have been entitled to early release: see Lady Black, para 103. In practice, this normally leads to a tariff period of half the notional determinate period although, in exceptional circumstances requiring the giving of proper reasons, the sentencing judge may as a matter of discretion fix the tariff at half or two thirds or somewhere in between: R v Szczerba [2002] 2 Cr App R(S) 86; R v Jarvis [2006] EWCA Crim 1985; R v Rossi [2015] 1 Cr App R(S) 15. Status The first question in these circumstances is whether Mr Stott can claim to have an other status for the purposes of invoking article 14 of the ECHR. I agree with Lady Black that he can. I accept that the requirement of an other status cannot simply be ignored, or subsumed in the question whether any discrimination is unjustified. This is for at least three reasons. First, the language of article 14 states that there must be discrimination on a ground such as those specified, the last being other status. There would be no point in this language, if the only question was whether there was discrimination. Secondly, the ECtHR has expressly accepted as much in Clift v United Kingdom (Application No 7205/07), paras 55 to 56, while at the same time stating, at para 61, that any exception to the protection offered by article 14 . should be narrowly construed. While it may be odd to speak of a criterion for the application of article 14 as an exception, the general idea is clear enough: (a) the concept of status should be construed broadly, but (b) not every difference in treatment is on the ground of status. Thus, a difference in treatment regarding automatic parole between terrorism related and other offences was held not to be on the ground of status in Gerger v Turkey (Application No 24919/94). It was a difference based on the differing gravity of the offence, rather than on any status. For the same reason, a mere difference in the sentence imposed cannot of itself amount to a difference in status. This also explains the difference in treatment by Lord Hughes of the two arguments raised in favour of the existence of a status in R v Docherty (Shaun) [2016] UKSC 62; [2017] 1 WLR 181, para 63. As to the second argument, the mere imposition of an indeterminate sentence under the appropriate sentencing regime could not give the offender a different status. As to the first, however, Lord Hughes left open the possibility that the offender had a different status because he had been convicted prior to 3 December 2012, when the appropriate sentencing regime provided for an indeterminate sentence, rather than after 3 December 2012, when indeterminate sentences for public protection were abolished. He held instead that any discrimination on the ground of status was justified. That a mere difference in treatment does not by itself constitute a difference in status is a proposition which is difficult to fault in the light of Gerger and what I have already said. But problems have arisen from attempts to extend the application of such a proposition to cases beyond its scope. This is, I think, the root of the third difficulty expressed by Lady Black in the first sentence of para 74 of her judgment. There is no reason why a person may not be identified as having a particular status when the or an aim is to discriminate against him in some respect on the ground of that status. Thus, in Clift the categorisation of Mr Clift as a prisoner serving a sentence of more than 15 years imprisonment (a bright line distinction clearly associated in the legislatures mind with a significantly higher level of risk) was with a view to the discriminatory treatment about which Mr Clift complained, since it meant that he would receive less favourable treatment (a) as regards early release, than life prisoners presenting on their face an even greater risk, and also (b) as regards prisoners serving sentences of less than 15 years, since his release would be subject to approval by the Secretary of State who could contribute nothing relevant to any evaluation of continuing risk. It is to my mind unsurprising that such categorisation was in these circumstances regarded as giving Mr Clift a relevant status. It was common ground in Clift that being a prisoner was a status, and it was a short step from that in the circumstances to accepting that being a particular type of prisoner, namely one serving a determinate sentence of 15 years of more and viewed accordingly as presenting a particular risk (which was however addressed in a discriminatory fashion), could also be identified as a status. Similarly, it is difficult to see any real problem about attributing a relevant status to the complainant in Paulk v Slovakia (2006) 46 EHRR 10. He had the status of a father whose paternity had been established by judicial determination, in contrast with the different status of a parent whose paternity was legally presumed without judicial determination. The discrimination between these two statuses was that in the latter case paternity could subsequently be disproved by a DNA test, whereas in the former case no such procedure existed under domestic law. The ECtHR in para 60 of its judgment in Clift rejected the Governments argument that the treatment of which the applicant complains must exist independently of the other status upon which it is based. It reasoned that in Paulk there was no suggestion that the distinction relied upon had any relevance outside the applicants complaint. One might question if that could really have been so: it seems, self evidently, one thing to have to prove paternity in court and thereafter, whenever the need arose, to have to identify a valid and enforceable court decision establishing paternity, and another matter to be able simply to rely on a factual presumption. Leaving that thought on one side, however, Clift suggests that a difference in the basis of established paternity represented a sufficient difference in status, even though the only continuing effect of the distinction consisted in the discriminatory possibility in the one case and impossibility in the other of subsequent disproof of paternity by a DNA test. The same point can be tested by supposing a person who was discriminated against on the ground of some previously held, but now abandoned, religious belief or political or other opinion. That would surely be discrimination on an illegitimate ground within the language of article 14. It is likewise notable that article 14 expressly identifies national or social origin and birth as a prohibited ground of discrimination. Thirdly, article 14 addresses discrimination, whether deliberate or unconscious, having a systematic nature in the sense that it occurs on the ground of a characteristic or characteristics in some sense attributed to the victim, whether innately or as a matter of choice or against their will: see the discussion in Clift at paras 56 to 59; and see also Lady Blacks judgment at para 56(i) to (iii) and 63. Article 14 is not targeted at achieving complete equality of treatment. A firm which haphazardly treated different customers with different standards of attention because its different employees were not consistently trained to perform to the same standards could not be said to be discriminating on the ground of any status possessed by any of its customers. A person who refused to serve a customer within ordinary hours (or to stay open late out of hours, when normally he would have been prepared to do so) because he had a headache could not be said to be discriminating on the ground of any status possessed by the or any customer. There would be no question of him having to justify his conduct by reference to the severity of his headache. In the present case, I conclude without hesitation that Mr Stott possesses a relevant status, independent of the difference in treatment about which he is complaining. He is subject to an EDS, which is a sentence distinct from and has characteristics differing from those of any ordinary determinate or indeterminate sentence. The difference of treatment about which he complains consists in one consequence of his being given an EDS, namely that he was and is subject to a different regime as regards eligibility for consideration for parole. Mr Southey QC representing Mr Stott felt, rightly, obliged to concede that the claim must fail before the Administrative Court on the issue of status, because of the decision of the House of Lords in R (Clift) v Secretary of State for the Home Department [2006] UKHL 54; [2007] 1 AC 484. It follows from what I have already said that, in my opinion, the Supreme Court should now depart from that decision, and follow the clear guidance given by the ECtHR in Clift v United Kingdom. I should add that, in reaching this conclusion, I have benefitted substantially from Lady Blacks comprehensive analysis of the authorities on status. Save to the limited extent that appears from what I have said above, I have no comment on and see no reason to disagree with that analysis. Analogous position and justification The decisive questions are therefore whether an offender like Mr Stott serving an EDS is in an analogous position to an offender serving a determinate or indeterminate sentence, and, if so, whether the difference in treatment of an EDS offender as regards parole is objectively justified. In this connection, I have come ultimately to a different conclusion to Lady Black and Lord Carnwath. First, the ECtHR in Clift had no difficulty in treating prisoners serving more and less than 15 years imprisonment and life prisoners as all being in an analogous position, insofar as the assessment of the risk posed by a prisoner eligible for early release is concerned: para 67. On this basis, the question is whether the differences in their treatment as regards release on licence are justified. Like Lady Black, I do not consider that this question is avoided by the argument, advanced by the Secretary of State, that the whole of all such sentences should be seen as imposed as punishment for the offences committed, rather than as having two components, a punitive part followed by a preventive part. However such sentences may in other contexts be analysed, it remains the case that the differences between them regarding early release have significant advantages or disadvantages for the relevant prisoners, which once identified call for examination and justification. Second, as regards justification, the ECtHR accepted in Clift that more stringent early release provisions could be justified where a particular group of prisoners could be demonstrated to pose a higher risk to the public upon release: para 74. On that basis, it accepted in principle that the application of more stringent early release provisions might have to be dependent on a bright line cut off point and considered that such a bright line distinction will not of itself fall foul of the Convention; accordingly, the fact that different early release provisions applied to those serving determinate sentences of 15 years or more, compared to those serving less than 15 years, did not of itself suggest unlawful discrimination: para 76. The reason the ECtHR regarded the difference in Clift between treatment of, on the one hand, prisoners serving more than 15 years imprisonment and, on the other hand, prisoners serving less than 15 years imprisonment or serving indeterminate sentences as unjustifiable was the requirement for the Secretary of State to consent to implementation of any Parole Board recommendation for release in the case of the former: paras 77 to 78. The ECtHR said in this connection that: The differential treatment of prisoners serving 15 years or more, whose release continued to be dependent on the decision of the Secretary of State, had become an indefensible anomaly, as the assessment of the risk presented by any individual prisoner, in the application of publicly promulgated criteria, was a task which was at the relevant time recognised to have no political content and one to which the Secretary of State could not, and did not claim to, bring any superior expertise The ECtHR also held the difference in treatment in Clift between prisoners serving in excess of 15 years imprisonment and life prisoners to be unjustified for a further reason. Life prisoners apparently presented a greater risk than a prisoner on whom a determinate sentence had been passed. Yet there was in their case no requirement that the Secretary of State consent to their release. Once release was recommended by the Parole Board, it was the Secretary of States duty to direct their release on licence. By the same token, in the present case, a more stringent release regime for prisoners sentenced to an EDS could be regarded as justified, when compared with that applicable to prisoners sentenced to an ordinary determinate sentence. Any ordinary determinate sentence and the appropriate custodial term to be served under an EDS fall to be determined on the principle set out in section 153(2) of the Criminal Justice Act 2003, that they: must be for the shortest term (not exceeding the permitted maximum) that in the opinion of the court is commensurate with the seriousness of the offence, or the combination of the offence and one or more offences associated with it. One pre condition to the imposition of an EDS is, however, that the court considers that there is a significant risk to members of the public of serious harm occasioned by the commission by the offender of further specified offences: section 226A(1)(b) of the 2003 Act. Another (at the relevant time) was that the court was not required by section 224A or 225(2) to impose a sentence of imprisonment for life: section 226A(1)(c). Applying similar reasoning to that of the ECtHR in Clift, Parliament could be taken to have considered that this risk was in the case of an EDS prisoner sufficiently significant (a) to require release on licence during the currency of the appropriate custodial term to depend on a Parole Board recommendation, (b) to require two thirds of such term to have run, before the Parole Board considered whether to make such a recommendation and (c) to require an extended period on licence after expiry of the appropriate custodial term. In contrast, release on licence is, in the case of an ordinary determinate prisoner, automatic once he has served the requisite custodial period consisting of half their nominal sentence: section 244. The Administrative Court in Sir Brian Leveson, President of the Queens Bench Divisions full and helpful judgment, was not persuaded that there was any justification for a distinction which necessarily assumes that EDS prisoners remain as a class a significant risk until the two thirds point, depriving them of even the chance of demonstrating their safety for release on licence until that point, whereas all ordinary determinate prisoners are assumed to be safe for automatic release at the half way stage. I see the force of the Administrative Courts view, but in the light of the ECtHRs approach in Clift and my conclusions regarding the comparison with indeterminate prisoners in the ensuing paragraphs, I do not base my judgment on it. It is, on any view, even more difficult to understand the logic of an apparently more stringent regime for EDS prisoners, when compared with discretionary life prisoners, in circumstances where the offending was, by definition, not of such a seriousness as to attract a life sentence. The tariff period for a discretionary life prisoner is, barring exceptional circumstances, set at half the notional determinate period. Once that tariff period has expired, the life prisoner has a right to require the Secretary of State to refer his case to the Parole Board, and to be released on licence if the Parole Board is satisfied that such release is, in short, safe: Crime (Sentences) Act 1997, section 28(5). A prisoner serving an EDS, therefore, is likely to be in a significantly worse position, as regards consideration by the Parole Board and release on licence, than a discretionary life prisoner, although the latter is likely to have committed a more serious, or no less serious, offence. It is true that in other respects a life prisoner is treated more severely: if the Parole Board is not satisfied as to the safety of his release, he may remain in prison indefinitely and, if he is released, he remains on licence and may be recalled throughout his life. But this is inherent in the nature of a discretionary life sentence, and, if anything, suggests that one would expect a more, rather than less, severe regime of review for release on licence to apply to life prisoners. It is also the case that some life prisoners may be less dangerous and safer at an earlier stage for release than some prisoners serving an EDS. But that is not the general position. None of these factors explains why life prisoners are in the great generality of cases likely to be eligible for consideration of their safety for release on licence by the Parole Board at a considerably earlier point than prisoners serving an EDS can hope for. Eligibility for consideration for release is merely the gateway to consideration by the Parole Board of safety for release on licence. It does not prejudge that question. No real explanation or justification has been given for a difference in treatment, which has important practical consequences for the prisoners affected and must seem a palpable anomaly. The position regarding mandatory life prisoners is less easy to compare with that of prisoners serving an EDS. As Lady Black explains in para 102, the sentencing judge determines, in the light of the seriousness of the offence and other circumstances, a minimum custodial period after the expiry of which the prisoner has a right to require the Secretary of State to refer him to the Parole Board and a right to be released on licence if the Parole Board so recommends. But there appears to be no general or normal rule as to the length of this period, as there is in the case of discretionary life sentences: see R v Szczerba, cited above. In the event, I conclude that prisoners serving an EDS are in a significantly worse position as regards eligibility for consideration by the Parole Board and release on licence, when compared with discretionary life prisoners, that no convincing explanation or justification for this difference has been shown and that section 246A(8)(a) of the Criminal Justice Act 2003 is for this reason incompatible with article 14 read with article 5 of the ECHR, in so far as it requires two thirds of the relevant custodial period to have expired before any such eligibility arises. Since preparing this judgment on the issues of analogous situation and justification, I have also had the advantage of reading what Lady Hale says in her paras 213 to 222, with which I find myself in agreement on these issues. It follows that, in my opinion, the appeal succeeds, and Mr Stott is entitled to succeed to a corresponding declaration of incompatibility.
UK-Abs
An extended determinate sentence (EDS) is one of the available sentences for an offender who is considered dangerous. It comprises two elements: an appropriate custodial term and the extension period for which an offender is subject to a licence. Under section 246A of the Criminal Justice Act 2003, an offender serving an EDS becomes eligible for parole after two thirds of the appropriate custodial term. By contrast, other categories of prisoners serving determinate sentences become eligible after half of their sentence. Prisoners serving certain types of indeterminate sentences (i.e. discretionary life sentences) will become eligible for parole after their specified minimum term, which is ordinarily fixed at half the determinate sentence they would have received had they not been subject to a life sentence. On 23 May 2013, the appellant was sentenced to an EDS in respect of ten counts of rape. The appropriate custodial term was fixed at 21 years, with an extension period of four years. The appellant, Mr Stott, sought judicial review of his sentence. He claimed there was no justification for the difference in treatment in relation to eligibility for parole. He claimed that this was unlawful discrimination within Article 14 of the European Convention on Human Rights (ECHR), combined with Article 5 (the right to liberty). Article 14 prohibits discrimination on any ground such as sex, race or other status. The High Court dismissed his claim, but granted a certificate permitting Mr Stott to appeal directly to the Supreme Court. It was agreed that the right to apply for early release falls within the ambit of Article 5. As to whether Article 14 applies, there are two issues. The first is whether the different treatment of Mr Stott is on a ground within the meaning of other status. The second has two parts: (a) whether EDS prisoners are in an analogous situation to either indeterminate sentence prisoners or other determinate sentence prisoners; and, if so, (b) whether there is an objective justification for the difference in treatment between the categories of prisoners. A majority of the Supreme Court dismisses the appeal, holding that the EDS scheme does not breach Article 14 with Article 5. Lady Black gives the leading judgment, with which Lord Carnwath and Lord Hodge agree, save on issues specified in their separate judgments. Lady Hale and Lord Mance both give dissenting judgments. Issue 1 the status issue The Court holds by a majority (Lady Black, Lord Hodge, Lady Hale and Lord Mance) that Mr Stott had the requisite status for Article 14 [81, 184, 212, 236]. In light of the European Court of Human Rights (ECtHR) decision in Clift v United Kingdom (Application No 7205/07), the Court should depart from the decision in R (Clift) v Secretary of State for the Home Department [2007] 1 AC 484. In that case the House of Lords had held that different treatment of a prisoner serving a sentence of 15 years or more could not be said to be on the ground of other status [70]. For the purposes of determining status, there is no real distinction between Mr Clift as a prisoner serving 15 years or more and Mr Stott as a prisoner serving an EDS [79]. Considering all the relevant case law and bearing in mind that grounds within Article 14 are to be given a generous meaning, the difference in treatment of EDS prisoners in relation to early release is a difference within the scope of Article 14, on the ground of other status [81, 185, 237]. Lord Carnwath concludes that difference of treatment of EDS prisoners is not attributable to some status for the purposes of Article 14. He would dismiss the appeal on that basis [179]. Issue 2 (a) analogous situation The Court holds by a majority (Lady Black, Lord Carnwath, Lord Hodge) that EDS prisoners are not in an analogous situation to other prisoners. The various sentencing regimes must be regarded as whole entities, each designed for particular circumstances and characteristics. The differences between the sentencing regimes are such that prisoners serving sentences under different regimes are not in analogous situations [155, 180, 195]. Lady Hale and Lord Mance (dissenting) hold that EDS prisoners are in an analogous situation to other prisoners serving determinate sentences and prisoners serving discretionary life sentences [214, 239]. Lady Hale says that for all three categories of prisoner, the most important question from their point of view is when will I get out? The essence of the right in question is liberty and for that purpose their situations are relevantly similar [214]. Issue 2 (b) objective justification The Court holds by a majority (Lady Black, Lord Carnwath, Lord Hodge) that, if EDS prisoners were in an analogous situation, the difference of treatment would be objectively justified [155, 180, 201]. The aim of the EDS provisions, which includes public protection, is legitimate [152]. As to whether the EDS scheme is a proportionate means of achieving that aim, the Court must consider each sentence as a whole. Within the framework of statutory provisions and sentencing guidelines, the sentencing judge imposes the sentence that best meets the characteristics of the offence and the offender. The early release provisions are part of the chosen sentencing regime and objective justification should be considered in that wider context [154]. The EDS is better compared to an indeterminate sentence, rather than to other types of determinate sentence. Counter balancing the indeterminate prisoners earlier eligibility for parole is the lack of any guaranteed end to his incarceration, and the life licence to which he is subjected. This undermines the argument that the difference in treatment in relation to early release is disproportionate or unfair [155]. The EDS is a separate sentencing regime that is neither arbitrary nor unlawful [200]. Lady Hale and Lord Mance (dissenting) hold that that there is no justification for insisting that an EDS prisoner stay in prison for two thirds of the custodial term appropriate to the seriousness of his offending, while a discretionary life sentence prisoner, who is likely to be even more dangerous than an EDS prisoner, would be considered for release after half of what would have been an appropriate determinate sentence [218 220, 246, 248].
This appeal raises a question about the interpretation of article 16 of the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 (the Athens Convention) and its application to the Scots law of limitation of actions. Factual background Mr Lex Warner chartered the m/v Jean Elaine, a motor vessel operated by Scapa Flow Charters (SFC) for the week 11 18 August 2012. On 14 August 2012 when dressed in diving gear while preparing to dive on a wreck north west of Cape Wrath, Mr Warner fell onto the deck of the vessel. He was helped to his feet and went ahead with the dive to the depth of 88 metres. He got into trouble during the dive and, despite the assistance of other divers who brought him back to the surface of the water and on to the motor vessel, could not be revived and was pronounced dead. Mr Warners widow, Debbie Warner, raised an action against SFC in which she alleged that her husbands death was the result of SFCs negligence. She sought damages both as an individual and as guardian of their young son, Vincent, who had been born in November 2011. Her summons was signetted on 14 May 2015. SFC lodged a defence that the action was time barred under the Athens Convention, which, in the case of a death occurring during carriage, imposes a time bar of two years from the date on which the passenger would have disembarked. It is a matter of agreement between the parties that Mr Warner would have disembarked no later than 18 August 2012. Both parties agreed that the Athens Convention applied to the circumstances of the accident. SFCs time bar challenge under the Athens Convention was discussed on the Procedure Roll without hearing evidence as the facts upon which the court could determine the validity of the defence were not in dispute. The Lord Ordinary, having heard argument from both parties, upheld the time bar defence and dismissed the action. Mrs Warner appealed by reclaiming motion to the Inner House (Lord Menzies, Lady Clark of Calton and Lord Glennie). In a judgment delivered by Lord Glennie on 16 February 2017 ([2017] CSIH 13), the Inner House upheld the Lord Ordinarys opinion in relation to her claim as an individual but reversed his order in relation to her claim on behalf of her son, finding that her claim as guardian of her son was not time barred. SFC appeals to this court with the permission of the Inner House. Mrs Warner has not appealed the dismissal of her claim as an individual. The Athens Convention The Athens Convention has the force of law in the United Kingdom: Merchant Shipping Act 1995, section 183. The Carriage of Passengers and their Luggage by Sea (Domestic Carriage) Order 1987 (SI 1987/670) has extended the application of the Athens Convention to contracts for the domestic carriage of passengers by sea. Article 16 of the Athens Convention, which is set out in Schedule 6 to the 1995 Act, provides: (1) Any action for damages arising out of the death of or personal injury to a passenger or for the loss of or damage to luggage shall be time barred after a period of two years. (2) The limitation period shall be calculated as follows: in the case of personal injury, from the date of (a) disembarkation of the passenger; (b) in the case of death occurring during carriage, from the date when the passenger should have disembarked, and in the case of personal injury occurring during carriage and resulting in the death of the passenger after disembarkation, from the date of death, provided that this period shall not exceed three years from the date of disembarkation; in the case of loss of or damage to luggage, from (c) the date of disembarkation or from the date when disembarkation should have taken place, whichever is later. (3) The law of the court seized of the case shall govern the grounds of suspension and interruption of limitation periods, but in no case shall an action under this Convention be brought after the expiration of a period of three years from the date of disembarkation of the passenger or from the date when disembarkation should have taken place, whichever is later. (4) Notwithstanding paragraphs 1, 2 and 3 of this article, the period of limitation may be extended by a declaration of the carrier or by agreement of the parties after the cause of action has arisen. The declaration or agreement shall be in writing. Mrs Warners claim on behalf of her son is subject to the two year time bar in article 16(1) unless, as the Inner House held, article 16(3) applies to extend that period. In this appeal SFC accepts that Scots law as the law of the forum is the relevant law under article 16(3). SFC advances two principal contentions. SFC contends, first, that the natural meaning of the words grounds of suspension and interruption of limitation periods in article 16(3) is that they are grounds which give rise to a break in a period or course of events which is already in train. Mr Howie QC for SFC refers to the judgment of the Court of Appeal of England and Wales in Higham v Stena Sealink Ltd [1996] 1 WLR 1107. The second and alternative contention is that the words have a technical meaning derived from certain civil law systems, including the law of Spain, the Swiss Code of Obligations and the Civil Code of Quebec. Mr Howie refers the court to Berlingieri, Time Barred Actions (2nd ed) (1993) pp xiv, 157 and 164 and Baudouin et al, La Responsabilit Civile (8th ed) (2014) vol 1 (Principes gnraux), paras I 1326 and I 1333. He submits that those and other civil law systems draw a distinction between a suspension and an interruption. The former refers to the situation in which a limitation period, which has started to run but has been paused by an event, such as the onset of mental incapacity, resumes its running when the incapacity ceases with the rest of the period remaining. Thus, if an event, which had caused the limitation period to stop running after it had run for six months, ceased to exist, the limitation period would resume running with six months already spent. The latter term, interruption, refers to a circumstance in which the limitation period, having been halted by an event, commences afresh when the halting event ceases and the time which has expired before the halting event does not count towards the running the limitation period. Thus, if a two year limitation period were interrupted by an event, the limitation period would begin again with two years to run when the halting event ceased. Whichever contention is correct, SFC submits that a suspension or an interruption operates only if the limitation period has begun to run before the pausing or halting event occurred. The Athens Convention in article 16(2)(b) has a mandatory date from which the two year limitation period begins to run, namely the date when the deceased passenger, who died during carriage, should have disembarked. Article 16(3), SFC submits, allows a domestic rule of limitation of the lex fori to extend the two year limitation by up to one year when the domestic rule operates to pause the running of time in a limitation period which had already commenced but not otherwise. On either approach, SFC contends that the Scots law of limitation enacted in section 18 of the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act), which I discuss below, does not contain such grounds of suspension and interruption as to extend the limitation period. This is because, it is submitted, section 18 of the 1973 Act postpones the start of the limitation period instead of interrupting or suspending it as the Athens Convention envisages. SFC contends therefore that Mrs Warners claim as Vincents guardian is barred by the two year time bar of article 16(1) of the Athens Convention. Discussion The Athens Convention, like many international conventions concerning international carriage and transport, aims within its scope to create an international code which replaces the differing domestic rules of the states which have acceded to it by uniform international rules. In interpreting an international convention, national courts must look at the objective meaning of the words used and the purpose of the convention as a whole: Fothergill v Monarch Airlines Ltd [1981] AC 251, 272 per Lord Wilberforce, 279 per Lord Diplock, 290 291 per Lord Scarman. This approach is consistent with the approach to interpretation in articles 31(1) and 32 of the Vienna Convention on the Law of Treaties (1969) ((1971) Cmnd 7964) which entered into force in 1980 after the Athens Convention was adopted and which does not formally apply to it, but which Lord Diplock saw as a codification of pre existing public international law: Fothergill, at p 282. Because the rules of an international convention will be applied in the courts of many countries with differing domestic legal systems, our courts have adopted an approach to interpretation which respects the international character of such a document. In Stag Line Ltd v Foscolo, Mango and Co Ltd [1932] AC 328, Lord Macmillan stated (350): As these rules must come under the consideration of foreign Courts it is desirable in the interests of uniformity that their interpretation should not be rigidly controlled by domestic precedents of antecedent date, but rather that the language of the rules should be construed on broad principles of general acceptation. His formulation, which was consistent with that of Lord Atkin in the same case at 342 343, was confirmed by the House of Lords in James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) Ltd [1978] AC 141, 152 per Lord Wilberforce, and by each of their Lordships in Fothergill (above). More recently, Lord Hope of Craighead has confirmed this approach in Abnett v British Airways plc 1997 SC (HL) 26, 44; [1997] AC 430 (sub nom Sidhu v British Airways plc), 453, and in King v Bristow Helicopters Ltd 2002 SC (HL) 59; [2002] 2 AC 628 (sub nom Morris v KLM Royal Dutch Airlines), paras 75 81. In King Lord Hope stated the convention was not based on the legal system of any of the contracting states. It was intended to be applicable in a uniform way across legal boundaries (para 77). He also stated the language used should be construed on broad principles leading to a result that is generally acceptable (para 78). Similarly, Lord Hobhouse of Woodborough in King stated that the purpose of uniformity required the national court to put to one side its views about its own law and other countries laws and focus on the question what do the actual words used mean? (para 147). In carrying out this task, the courts can use as aids to the interpretation of the convention the travaux prparatoires, the case law of foreign courts on the convention and the writings of jurists in so far as the court considers necessary: Sidhu (above). Many international conventions are the product of negotiation between legal experts from many jurisdictions leading to compromise in their wording. Often the travaux prparatoires, if public and accessible, provide only limited assistance in resolving ambiguities or obscurities in a convention as the views of individual expert delegates on the meaning of the words used in a convention are simply their views and, absent consensus, are not determinative as to a definite legislative intention. When the court addresses foreign judicial decisions on a convention [c]onsiderable weight should be given to an interpretation which has received general acceptance in other jurisdictions: King, para 81 per Lord Hope. In the same paragraph Lord Hope stated that judicial decisions on the convention should be approached with discrimination if there is no clear agreement between them. In this appeal counsel informed the court that the travaux prparatoires of the Athens Convention provided no assistance. He referred to a judgment of the Court of Appeal of New Brunswick, Russell et al v Mackay [2007] NBCA 55 on the interpretation of article 16(3). In that case the Court of Appeal of New Brunswick held that article 16(3) did not allow the court of the lex fori to exercise judicial discretion under its domestic law to extend a limitation period. That is not in dispute. Counsel also referred to Malcolm v Shubenacadie Tidal Bore Rafting Park Ltd 2014 NSSC 217 in which the Supreme Court of Nova Scotia applied the time limit in article 16 of the Athens Convention to give summary judgment dismissing a claim arising from a boating accident which was raised more than four years after the accident. The judgment contains no reasoning on the interpretation of the words in issue in this appeal. This court is therefore forced back onto the principles, which I have set out above, which the courts have developed for the interpretation of international conventions. Approaching the matter that way, I take Mr Howies submissions in reverse order. For the following three reasons, I do not accept that this court should give a technical meaning to the words suspension and interruption which, SFC asserts, can be derived from certain civil law systems. First, it is not appropriate to look to the domestic law of certain civil law systems for a technical meaning of the words in an international convention which was designed to be operated in many common law systems as well. Professor Francesco Berlingieri in his work, Time Barred Actions to which I referred in para 9 above, recorded the responses of 27 national maritime law associations to a questionnaire prepared with the support of the Comit Maritime International. In chapter 4 he recorded the responses concerning the statutory provisions of the respondent countries in relation to the suspension of time bar periods. In his discussion of the response from Australia on p 157 he recorded that in Victoria, Queensland, Western Australia and Tasmania the time bar period is suspended if the claimant is under a disability when the cause of action arises, and begins when the disability ceases. Israel described as suspension the postponement of the commencement of the limitation period if the cause of action is fraud so that it would start when the claimant becomes aware of the fraud. Ireland responded similarly. This is unsurprising as the word suspension in its natural meaning can readily cover the postponement of the start of a limitation period. Secondly, even within civil law systems and mixed legal systems which are strongly influenced by the civil law there was no uniformity in the use of the expression suspension in 1974 when the Athens Convention was adopted. I recognise that there are some matters on which there is wide agreement. For example, there appears to be a recognised distinction as to result between suspension and interruption: after an interruption of a prescription period which had been running, the period commences again as of new and the prior period is in effect cancelled, while at the end of a suspension, if the prescription period has started to run, the running of time resumes at the point it was before the suspension so that the time which has passed before the suspension counts towards the prescription period. There also appears to be a widespread understanding of the meaning of interruption. Professor Berlingieris presentation (p 175f) of the responses in relation to statutory rules on interruption shows that interruption is achieved (i) by the actions of the creditor, principally by commencing judicial proceedings and, in a minority of jurisdictions, by serving a written warning or a notice of intention to exercise a right, or (ii) by the actions of the debtor, for example in acknowledging the subsistence of the debt. In those circumstances, the limitation period starts again. In this appeal we are not concerned with interruption in this sense but with the meaning of suspension in the Athens Convention. In civil law jurisdictions, the word suspension has been used in more than one sense, encompassing both a temporary pause in a prescription period which has already started to run and also the postponement of the start of a prescription period. Thus, the French Civil Code in 1974 recorded under the heading, Des causes qui suspendent le cours de la prescription the following: Article 2252. La prescription ne court pas contre les mineurs non emancips et les majeures en tutelle, sauf ce qui est dit larticle 2278 et lexception des autres cas dtermins par la loi. This article, under the heading of suspension, covers the postponement of the start of the prescription period when a person is a minor and when an adult is subject to tutorship. The Quebec Civil Code under the heading of Suspension of Prescription includes examples of circumstances in which the commencement of the prescription period is postponed, such as article 2904: Prescription does not run against persons if it is impossible in fact for them to act by themselves or to be represented by others. We were also referred to the Prescription Act 1943 (Act no 18 of 1943) of the Union of South Africa which in section 7 provided that extinctive prescription be suspended (i) until the date on which the creditor might reasonably have been expected to discover the true facts in respect of his right of action if the fraud of the debtor had prevented the creditor from discovering such facts (section 7(1)(d)) and (ii) in an action founded on the debtors fraud, until the date on which the creditor might reasonably have been expected to discover the fraud (section 7(1)(e)). Although separate provision was made in sections 9 and 10 of the 1943 Act to postpone the commencement of the prescriptive period in circumstances which overlapped with other provisions in section 7, the use of the word suspension in these two subsections of section 7 must have included the postponement of the commencement of the prescriptive period. The 1943 Act was repealed by the Prescription Act 1969 (Act no 68 of 1969) which does not use the terminology of suspension. But the 1943 Act is another indication of a non exclusive use of the word suspension. In this regard I respectfully disagree with the obiter view expressed by Supreme Court of Appeal of South Africa in in ABP 4x4 Motor Dealers (Pty) Ltd v IGI Insurance Co Ltd 1999 (3) SA 924, para 13, that the 1943 Act drew a clear distinction between the delaying of the commencement of the running of prescription and the suspension of its running after the prescription period had commenced. Further, Professor Berlingieri (p 165) records that article 132 of the Code of Obligations in Turkey treats specified circumstances as suspending the start of the period of prescription. It appears therefore that within civil law systems there is no international consensus that suspension occurs only after the prescription period has commenced which would support the technical meaning for which Mr Howie argues. Thirdly, an interpretation of article 16(3) of the Athens Convention as excluding domestic rules which have the effect of postponing the start of a limitation period would give rise to serious anomalies. Many legal systems suspend the operation of prescription or limitation when a claimant is a minor or is subject to a recognised legal disability such as mental incapacity. If Mr Howie were correct in his interpretation of suspension in the Athens Convention, the Convention would recognise as a ground of suspension a legal incapacity which arose after the prescription or limitation period commenced but not such incapacity that predated the start of that period. A minor born before the commencement of the prescription or limitation period could not take advantage of the added year which article 16(3) provides but a minor born after the commencement of the period would benefit from that added year. A similar anomaly would arise depending on the date on which a creditor or claimant was affected by an incapacity such as mental illness. Mr Howie recognised that those anomalies would arise but suggested that they were the price which was paid for the legal certainty which the Convention sought. I am not persuaded. The Athens Convention seeks to create legal certainty in article 16(3) by requiring that, where the lex fori provides a ground for suspension or interruption of the period, the damages action must nonetheless commence within the long stop period of three years. In my view, the words in article 16(3) of the Athens Convention, the grounds of suspension of limitation periods are sufficiently wide to cover domestic rules which postpone the start of a limitation period as well as those which stop the clock after the limitation period has begun. I therefore agree with Lord Glennie in the judgment of the Inner House (para 17): the word suspension is also apt to include the deferment or suspension of something which has not yet started. I turn to examine Mr Howies first submission and his reliance on the case of Higham v Stena Sealink Ltd. In that case a passenger raised an action for damages for personal injuries suffered while she was a passenger on a ferry. She raised the action just over two years after her accident. The shipowners sought to strike out the claim by pleading the two year limitation period of the Athens Convention. The Court of Appeal (Hirst and Pill LJJ) upheld the decision to strike out the claim. The court rejected an argument by the claimant that section 39 of the Limitation Act 1980 superseded the application of the time bar in article 16(1) of the Athens Convention. We are not concerned with that argument which the Court of Appeal correctly rejected. The other argument, which the Court of Appeal rejected, was that section 33 of the 1980 Act, which gives a court discretion on equitable grounds to allow an action for personal injuries to proceed notwithstanding the expiry of a limitation period, should be treated as a ground of suspension or interruption under article 16(3) of the Athens Convention. I agree with that conclusion. But there are two aspects of the reasoning of Hirst LJ with which I cannot agree. First, Hirst LJ expressed the view (at p 1112C D) that dictionary definitions of suspension and interruption all contemplated a break in a period or course of events which are presently in train. In agreement with the Inner House, I cannot agree with that view as the dictionary definition of suspension to which Hirst LJ referred included postponement as one of its meanings. In any event, as I have discussed above, there is reason to conclude that suspension in the context of prescription or limitation has a broader meaning in several legal systems. Secondly, Hirst LJ observed (obiter) that there were other sections in the Limitation Act 1980, such as section 32, which postpones the limitation period in the case of fraud, concealment or mistake, which might at first sight be eligible to qualify under article 16(3) of the Convention. But he went on to express the tentative view that the fact that in each case the section postponed the periods of limitation prescribed by this Act or words to that effect might disqualify them (p 1111F G). If in expressing that view he meant that the grounds of suspension in the lex fori were to apply under article 16(3) of the Convention only if they were framed to extend beyond the scope of the domestic limitation regime of the lex fori so as to cover limitation periods in conventions such as the Athens Convention, I must respectfully disagree. In my view, where article 16(3) speaks of the law of the court seized governing the grounds of suspension of limitation periods (in the plural) it was applying the grounds such as minority or mental incapacity which the lex fori would apply to domestic claims for personal injury, or death or loss or damage to property. Thus, the existence of a ground in a domestic limitation statute which suspended the limitation periods set out in that statute, such as section 32 of the Limitation Act 1980 (fraud, concealment or mistake) or in this appeal section 18 of the 1973 Act (legal disability by reason of non age or unsoundness of mind) is sufficient to bring article 16(3) into operation and extend the article 16 time bar by one year. Section 18 of the 1973 Act Section 18 of the 1973 Act provides: (1) This section applies to any action in which, following the death of any person from personal injuries, damages are claimed in respect of the injuries or the death. (2) Subject to subsections (3) and (4) below and section 19A of this Act, no action to which this section applies shall be brought unless it is commenced within a period of three years after (a) the date of death of the deceased; or (b) the date (if later than the date of death) on which the pursuer in the action became, or on which, in the opinion of the court, it would have been reasonably practicable for him in all the circumstances to become, aware of both of the following facts that the injuries of the deceased were (i) attributable in whole or in part to an act or omission; and (ii) that the defender was a person to whose act or omission the injuries were attributable in whole or in part or the employer or principal of such a person. (3) Where the pursuer is a relative of the deceased, there shall be disregarded in the computation of the period specified in subsection (2) above any time during which the relative was under legal disability by reason of non age or unsoundness of mind. Under the Scottish regime for limitation of actions arising out of the death of a person from personal injuries there is therefore a three year time bar and, in computing that period of limitation from the starting point in section 18(2), there is disregarded any time when the pursuer is under a legal disability, because he is under the age of 16 years (Age of Legal Capacity (Scotland) Act 1991, section 1) or because of mental incapacity. SFC accepts that if the only time bar in play were that of section 18 of the 1973 Act, Mrs Warners claim as guardian of Vincent would not be time barred. But SFC contends that section 18(3) cannot save Vincents claim from the time bar in article 16(1) of the Athens Convention (a) because it does not suspend or interrupt any period of limitation but postpones the date when the limitation period starts to run, (b) because the starting point of the limitation period under section 18 would be the date of the removal of the disability and not the date of disembarkation which article 16 imposes, and (c) because a domestic provision cannot defer the running of the two year limitation period in article 16 until beyond the long stop of three years in article 16(3). I am satisfied that there is no substance in those submissions. First, the start of the limitation period under section 18 is the date identified by subsection (2) and subsection (3) instructs the court to disregard the time thereafter during which the pursuer is under a legal disability. There is no question of postponing the start of the limitation period; that remains the date identified in subsection (2). Where the pursuers legal disability predates the start of the limitation period, the practical effect of the disregard on the calculation of the expiry of the three year limitation period will be the same as a postponement of the start of the limitation period; but the statutory mechanism is not a postponement of the start. The limitation period thus commences at the punctum temporis of the section 18(2) event and the disregard suspends the running of time until the legal disability is removed. In any event, for the reasons which I have set out above in discussing the Athens Convention I do not accept that a postponement of the start of a limitation period falls outside an international understanding of a suspension of limitation periods. Secondly, for the reasons set out in para 33 above, I do not accept that article 16(3) of the Athens Convention requires the rules for suspending the running of a limitation period in the domestic law of the lex fori to extend beyond the domestic statutory regime to encompass the limitation rules of the Convention. It is true that section 18(3) only operates to postpone the expiry date of the limitation period set out in section 18(2). But that does not matter. Article 16(3) instructs the court to look to the lex fori for its domestic grounds for suspension of limitation periods. In section 18(3) the grounds for the disregard of time are that the pursuer is under a legal disability by reason of non age or unsoundness of mind. Under article 16(3) of the Convention, that legal disability, which the domestic law of the lex fori recognises as a ground of suspension, has the effect of suspending the running of time on the limitation period imposed by article 16(1) and 16(2), namely the two years from the date when Mr Warner should have disembarked. Contrary to SFCs contention, the application of the grounds of suspension in section 18(3) of the 1973 Act involves no inconsistency with article 16(2) of the Athens Convention. Thirdly, that suspension of the running of the limitation period imposed by the Athens Convention is subject to the long stop in article 16(3): in no case shall an action under this Convention be brought after the expiration of a period of three years from the date when disembarkation should have taken place . A domestic suspension provision cannot defer the expiry of the Conventions limitation period beyond that long stop. Vincents guardian is not time barred by the Athens Convention. Conclusion In agreement with the Inner House, I conclude that Mrs Warners claim as I would dismiss the appeal.
UK-Abs
Mr Lex Warner chartered a motor vessel operated by Scapa Flow Charters (SFC) for the week of 11 18 August 2012. On 14 August 2012, when dressed in diving gear while preparing to dive on a wreck northwest of the Cape Wrath, Mr Warner fell onto the deck of the vessel. He was helped to his feet and went ahead with the dive to a depth of 88 metres. He got into trouble during the dive and, despite the assistance of other divers who brought him back to the surface of the water and onto the motor vessel, he could not be revived and was pronounced dead. Mr Warners widow, Debbie Warner, raised an action against SFC in which she alleged that her husbands death was the result of SFCs negligence. She sought damages both as an individual and as a guardian of their young son, who had been born in November 2011. SFC lodged a defence that the action was time barred under the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 (the Athens Convention), which, in the case of a death occurring during carriage, imposes a time bar of two years from the date on which the passenger would have disembarked. The parties agree that Mr Warner would have disembarked no later than 18 August 2012. However, the Athens Convention also provides that the law of the court seized of the case in this case, Scots law governs the grounds of suspension and interruption of limitation periods, but in no case can an action be brought after the expiration of a period of three years from the date on which the passenger would have disembarked: article 16(3). SFC contended that the Scots law of limitation enacted in section 18 of the Prescription and Limitation (Scotland) Act 1973 (the 1973 Act) does not contain such grounds of suspension and interruption as to extend the limitation period. It argued that section 18 of the 1973 Act postpones the start of the limitation period instead of interrupting or suspending it as the Athens Convention envisages. The Lord Ordinary upheld the time bar defence and dismissed the action. Mrs Warner appealed by reclaiming motion to the Inner House. The Inner House upheld the Lord Ordinarys opinion in relation to her claim as an individual but reversed his order in relation to her claim on behalf of her son, finding that her claim as guardian of her son was not time barred. SFC appealed to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Hodge gives the sole judgment with which the other Justices agree. In interpreting an international convention, national courts must look at the objective meaning of the words used and the purpose of the convention as a whole [14]. Courts in the UK have adopted an approach to interpretation which respects the international character of such a document: the interpretation should not be rigidly controlled by domestic precedents of antecedent date, but rather the language should be construed on broad principles of general acceptation [15]. In carrying out this task, the courts can use as aids to interpretation the travaux prparatoires, the case law of foreign courts on the convention and the writing of jurists, but in respect of the Athens Convention, such aids do not provide assistance [17 18]. Therefore, the Supreme Court relies on the broad, generally accepted principles of interpretation [19]. The Court does not accept that the words suspension and interruption should have a technical meaning derived from certain civil law systems for the following three reasons [20]. Firstly, it is not appropriate to look to the domestic law of certain civil law systems for a technical meaning of the words in an international convention which was designed to operate in many common law systems as well [21]. Secondly, even within civil law systems and mixed legal systems, there was no uniformity in the use of the expression suspension when the Athens Convention was adopted [22]. Thirdly, an interpretation of article 16(3) of the Athens Convention as excluding domestic rules which have the effect of postponing the start of a limitation period would give rise to serious anomalies [28]. The Court therefore holds that the words the grounds of suspension of limitation periods are sufficiently wide to cover domestic rules which postpone the start of a limitation period as well as those which stop the clock after the limitation period has begun [30]. Second, the Court does not accept that the natural meaning of the words grounds of suspension and interruption of limitation periods is limited to grounds which give rise to a break in a period or course of events which is already in train. For instance, the dictionary definition of suspension referred to by SFC included postponement as one of its meanings, and suspension in the context of prescription or limitation has a broader meaning in several legal systems [32]. The Court also holds that it was unnecessary for the grounds of limitation in a domestic limitation regime to be framed to extend beyond their domestic scope so as to cover limitation periods in conventions such as the Athens Convention [33]. Therefore, the existence of a ground in a domestic limitation statute which suspends the limitation periods set out in that statute is sufficient to bring article 16(3) of the Athens Convention into operation and extend the time bar by one year [33]. The Court then considers whether section 18 of the 1973 Act does in fact extend the time bar in respect of Mrs Warners claim as guardian. Firstly, the Court observes that the 1973 Act does not postpone the start of the limitation period. Rather, section 18 of the 1973 Act postpones the expiry date of the limitation period: it instructs a court to disregard the time during which the pursuer of the action is under legal disability [37]. In any event, the Court does not accept that postponement of the start of a limitation period falls outside an international understanding of a suspension of limitation periods [37]. Secondly, the legal disability recognised by section 18 of the 1973 Act has the effect of suspending the running of time on the limitation period under the Athens Convention [38]. Thirdly, that suspension is subject to the long stop of three years, as set out in article 16(3) of the Athens Convention. The Court therefore concludes that Mrs Warners claim as her sons guardian is not time barred by the Athens Convention [40]. The Court dismisses the appeal [41].
By this appeal Mr and Mrs Hancock seek to show that the redemption of the loan notes, issued to them in connection with the sale of their shares in their company, Blubeckers Ltd, fell outside the charge to capital gains tax (CGT) by virtue of the exemption in section 115 of the Taxation of Chargeable Gains Act 1992 (TCGA) for disposals of qualifying corporate bonds (QCBs). QCBs are essentially sterling only bonds (see TCGA, section 117). The noteworthy feature for present purposes of the redemption process was that, following the reorganisation, some of the loan notes issued as consideration were converted into QCBs. TCGA confers rollover relief on the disposal of securities as part of a reorganisation, ie it brings securities issued as consideration into charge for CGT purposes but defers the tax until their subsequent realisation. This is less favourable to the taxpayer than the exemption in TCGA, section 115. The roll over provisions constitute a carve out from the exemption in TCGA, section 115. They extend to certain conversions involving QCBs. The appellants seek to fall outside that carve out (and thus within the exemption in TCGA, section 115). The Court of Appeal (Lewison, Kitchin and Floyd LJJ) rejected the appellants claim: [2017] 1 WLR 4717. They considered that, although the wording of the carve out could be read literally in favour of the taxpayers, that result would be contrary to Parliaments intention. Therefore, the appellants claim for relief failed. Instead, they were entitled to rollover relief deferring tax to redemption. The legislative and factual framework in more detail For CGT purposes, there must be a relevant disposal of a relevant asset by persons chargeable to tax resulting in a gain which is chargeable for capital gains tax purposes. In this case, the appellants undoubtedly made a gain when they exchanged their shares in Blubeckers Ltd for redeemable loan notes (with a provision for an earn out under which further loan notes would, as in the event happened, be issued, dependent on the performance of the business). This transaction was a reorganisation under TCGA, section 126. Rollover relief was available under TCGA, section 127. The appellants structured the disposal of their Blubeckers shares in three stages. Stage 1 was the exchange of Blubeckers shares for Lionheart notes, which, being convertible into foreign currency, were not QCBs. At Stage 2, the terms of some of those notes were varied so that they became QCBs. At Stage 3, both sets of notes (QCBs and non QCBs) were, together and without distinction, converted into one series of secured discounted loan notes (SLNs), which were QCBs. The SLNs were subsequently redeemed for cash. It is said to be the result of the completion of Stages 2 and 3 that the appellants are not chargeable to CGT. The exact nominal amount of loan notes converted into QCBs does not matter in that, on the appellants argument, it was sufficient if the QCB element of the conversion was the smallest denomination (say 1). Rollover relief is available for reorganisations resulting in the issue of securities such as shares. TCGA, section 132, as amended by section 88(2) of the Finance Act 1997, by extending that relief to a conversion of securities, following a reorganisation, in or out of a QCB, equates the relief for such a conversion with that available for a reorganisation of share capital: 132(1) Sections 127 to 131 shall apply with any necessary adaptations in relation to the conversion of securities as they apply in relation to a reorganisation (that is to say, a reorganisation or reduction of a companys share capital). (3) For the purposes of this section and section 133 (a) conversion of securities includes any of the following, whether effected by a transaction or occurring in consequence of the operation of the terms of any security or of any debenture which is not a security, that is to say a conversion of securities of a company (i) into shares in the company, and (ia) a conversion of a security which is not a qualifying corporate bond into a security of the same company which is such a bond, and (ib) a conversion of a qualifying corporate bond into a security which is a security of the same company but is not such a bond, and (ii) a conversion at the option of the holder of the securities converted as an alternative to the redemption of those securities for cash, and (iii) any exchange of securities effected in pursuance of any enactment (including an enactment passed after this Act) which provides for the compulsory acquisition of any shares or securities and the issue of securities or other securities instead, (b) security includes any loan stock or similar security whether of the Government of the United Kingdom or of any other government, or of any public or local authority in the United Kingdom or elsewhere, or of any company, and whether secured or unsecured. The purpose of TCGA, sections 127 to 131, referred to in the opening line of section 132, is to provide that there is no disposal of shares at the time of the reorganisation, and for further matters, such as the allocation of the consideration between different classes of security, part disposals, unpaid calls and indexation. The key points to note in these provisions, which it is not necessary to set out, are (1) that a conversion as defined is to receive the same relief as a reorganisation, ie rollover relief, even if it involves QCBs whose disposal is otherwise outside the charge to CGT; and (2) that emphasis is given to the aggregation of the securities into a single asset: section 127 provides that both the original holding, taken as a single asset, which the holder disposes of under the reorganisation, and the consideration securities, also taken as a single asset, are treated as the same asset with the same acquisition date as the original holding. We are not concerned with sections 133 or 134. To ensure that the conversion of, or into, QCBs on a reorganisation is within the charge to CGT on the same basis as the issue of other securities on a reorganisation, ie on the basis that the holder is entitled to rollover relief, section 116(1) provides that the disposal will result in rollover relief where sections 127 to 130 would apply, and (these are the critical words which this court must construe): (b) [Limb A] either the original shares would consist of or include a qualifying corporate bond and the new holding would not, or [Limb B] the original shares would not and the new holding would consist of or include such a bond; (words in square brackets added) Floyd LJ, giving the first judgment in the Court of Appeal, called the first possible scenario in section 116(1)(b), Limb A, and the alternative scenario, Limb B. I will do the same. The effect of section 116(1)(b) is that, where the new holding following conversion includes QCBs, Limb A cannot apply. The question here is whether Limb B applies: the appellants contend that Limb B also cannot apply because the (aggregate) original holding prior to conversion included QCBs. The reasoning of the Upper Tribunal and the Court of Appeal The Upper Tribunal, allowing an appeal from the First tier Tribunal, held that the conversion of securities at the third stage comprised separate transactions in relation to each share converted. As the First tier Tribunal had pointed out, the relief under section 116 for QCBs had been intended to promote the market in sterling bonds and so the interpretation favoured by the appellants would go well beyond that objective. The Upper Tribunal also noted that in TCGA, section 132 Parliament had defined conversion in relation to transactions involving QCBs separately in relation to each security (see para 4 above). The Upper Tribunal also rejected HMRCs argument based on WT Ramsay Ltd v Inland Revenue Comrs [1982] AC 300, but we are not concerned with that as HMRC has not appealed against that ruling. The appellants appealed to the Court of Appeal. They repeated their argument that Stage 3 constituted a single conversion of the loan notes (including QCBs) into QCBs, and so neither limb of TCGA, section 116(1)(b) applied. HMRC responded that Stage 3 was not one transaction but two: the first transaction (the conversion of the non QCBs into QCBs) fell within Limb A and the second (the conversion of the QCBs into SLNs, which were also QCBs) was outside section 116(1)(b), but (as appears from para 12 of Floyd LJs judgment) the appellants accepted that the variation of the terms of these loan notes at Stage 2 was a conversion which carried rollover relief so that, when those bonds were redeemed, a charge to CGT on the held over gain on these bonds was triggered. Seeking guidance as to the correct approach on statutory interpretation Floyd LJ (at para 45 of his judgment) cited, among other authorities, a passage from the judgment of Neuberger J in Jenks v Dickinson [1997] STC 853, concerning QCBs and the predecessor of TCGA. That case raised the issue whether a provision which extended the meaning of QCBs with retrospective effect relieved the taxpayer of an intervening accrued tax charge on the sale of shares into which the securities which had retrospectively become QCBs had been converted. Neuberger J held that it did not. In the passage cited by Floyd LJ, Neuberger J held that the taxpayers construction was: contradictory to the evident purpose of the relevant statutory provisions, viewed as a whole, viz that capital gains made on [QCBs] should be exempt from tax, whereas capital gains made on shares should be subject to tax. In the circumstances, principle, common sense, and authority show that the court is entitled, and indeed bound, to . adopt some other possible meaning if it exists (to quote Lord Reid: see [Luke v Inland Revenue Comrs] [1963] AC 557, 579). Floyd LJ pointed out that section 132 did not give as an example of a (single) conversion a conversion of different classes of bonds (para 65). The process of applying sections 127 to 131 as required by the opening words of section 132 allowed for necessary adaptations (para 63), and so there could be aggregation of securities for the purposes of some conversions but not others. The effect of the appellants argument would be that the non QCBs would escape the charge to CGT. This was contradictory to the evident purpose of the statutory scheme. The conversion of the two classes of loan notes could and should therefore be treated separately (para 68). The words or include (providing the option of a single conversion) did not mean that there could be such a conversion (para 69). The statutory fiction in section 127 had to be restricted to avoid an unintended result (para 70). The additional words or include were an isolated drafting anomaly: the appellants argument would produce an even greater anomaly (para 71). The wording of section 116(3) and (4) which use the word constitute was consistent with the conclusion that mixed conversions were not within section 116(1)(b) (para 73). Lewison LJ agreed. He gave additional reasons. He placed greater weight on the purposive approach holding that necessary adaptations could include adaptations necessary to give effect to the policy of the statutory scheme (para 82). He too applied Jenks (para 84) and Luke v Inland Revenue Comrs (para 88). This enabled him to disregard the words or include in section 116 in the circumstances of this case. Kitchin LJ agreed with both judgments. Submissions on this appeal Mr Michael Sherry, for the appellants, repeats the arguments on interpretation that were considered by the Court of Appeal in their judgment. He compares section 116 with section 135, which I have not mentioned above as it deals with another form of reorganisation to which Parliament has also directed that sections 127 to 131 should apply with necessary adaptations, so that the fact that it may favour the single asset approach would not be determinative in relation to section 116. A new factor on which he relies is the absence of any statutory provision for apportioning consideration where, as here, the QCBs and non QCBs have been converted together without any allocation of the price. But that is a matter of mechanics and no doubt the allocation could be established by evidence. Mr Sherry emphasises the principle against taxation without clear words (the clear words principle), which can be found in the speech of Lord Wilberforce in Ramsay [1982] AC 300, 323: A subject is only to be taxed upon clear words, not upon intendment or upon the equity of an Act. Any taxing Act of Parliament is to be construed in accordance with this principle. What are clear words is to be ascertained upon normal principles: these do not confine the courts to literal interpretation. There may, indeed should, be considered the context and scheme of the relevant Act as a whole, and its purpose may, indeed should, be regarded: see Inland Revenue Comrs v Wesleyan and General Assurance Society (1946) 30 TC 11, 16 per Lord Greene MR and: Mangin v Inland Revenue Comr [1971] AC 739, 746 per Lord Donovan. The relevant Act in these cases is the Finance Act 1965, the purpose of which is to impose a tax on gains less allowable losses, arising from disposals. So, submits Mr Sherry, it goes too far to treat the transaction in issue as two conversions. There was here a single conversion and that was the legal nature of what has happened. But the answer to his reliance on the passage set out above from the speech of Lord Wilberforce in Ramsay is that the clear words principle is not infringed if, fairly and properly construed, no doubt remains as to the meaning of section 116(1)(b). Moreover, there is no question of re characterising the parties transaction. It is simply a matter of deciding what is a conversion for the purposes of the statutory scheme. Mr Michael Gibbon QC, for HMRC, submits that the Court of Appeals interpretation is principled and uses a conventional approach. The statutory scheme as so construed is fair to taxpayers generally and coherent. Discussion It is common ground that, if the conversion at Stage 3 involved separate conversions of the QCBs and the non QCBs, the appeal must fail. The question whether there was a single conversion or two separate conversions must be a question of applying the provisions of TCGA to the facts. The answer is not mandated in the appellants favour by the fact that they utilised a single transaction. Plainly, section 116(1)(b) contemplates the possibility of a single transaction which involves a pre conversion holding of both QCBs and non QCBs, and this, coupled with the fact that the Court of Appeals interpretation renders the words or include appearing in section 116(1)(b) otiose are powerful arguments in support of the appellants construction. However, the appellants interpretation result would be inexplicable in terms of the policy expressed in these provisions, which is to enable all relevant reorganisations to benefit from the same rollover relief. Taxpayers could avoid those provisions with extreme ease if the appellants are right. There would be nothing to prevent them from using the occasion of a minimal conversion (say 1 nominal QCB) following a reorganisation and obtaining relief from CGT which was plainly contrary to and inconsistent with that which was intended to apply to a conversion connected to a reorganisation. In reality, by looking to the fiscal policy behind the scheme, both Floyd and Lewison LJJ applied a purposive approach. I need not say more about the purposive approach in general, save that Lewison LJ seemed to draw a distinction between the policy of TCGA in its entirety and that part of the Act which deals with corporate reorganisations (para 82). This is not easy to follow as the policy of the Act does not materially add to the policy of the relevant sections for present purposes. Floyd and Lewison LJJ did not give any meaning to the words or include in section 116(1)(b), but as I see it this was appropriate because in section 132(3), as the Upper Tribunal pointed out, it is clear that the intention of Parliament was that each security converted into a QCB should be viewed as a separate conversion (which amounts to the same thing as regarding the conversion in this case as consisting of two conversions, one of QCBs and one of non QCBs). Moreover, it is not an objection that section 127 contemplates a single asset (see para 5 above), because Parliament has required sections 127 to 131 to be applied with necessary adaptations. In those circumstances the clear words principle is observed in the present case. Floyd and Lewison LJJ also relied on the principle in Luke v Inland Revenue Comrs [1963] AC 557. This enables the court, when interpreting a statute, to adopt (my words) a strained interpretation in place of one which would be contrary to the clear intention of Parliament. This principle in Luke can apply even to a tax statute. The clear words principle relied on by Mr Sherry does not, as Lord Wilberforce pointed out, confine the courts to a literal interpretation. However, the circumstances in which the principle in Luke can be applied must be limited, for example, to those where there is not simply some inconsistency with evident Parliamentary intention but some clear contradiction with it. Moreover, the intention of Parliament must be clearly found on the wording of the legislation. The particular issue in Luke illustrates the nature of this principle: on the ordinary meaning of the Income Tax Act 1952, section 161, enacted to prevent tax avoidance by employers meeting expenses for their employees, a director became liable to be taxed as part of his remuneration on the cost of repairs executed by his employer on a house which he had leased from his employer at a fair rent when the repairs were those for which the landlord would normally be responsible (and had agreed to be responsible). This was clearly an unreasonable result, and the intention to produce such a result could not be imputed to Parliament. The House by a majority of 3:2 held that the expenditure was within an exemption for expenditure by a company on additions to its own assets, although this provision had to be read in a somewhat broad brush way to produce that result. At p 578, Lord Reid called it any port in a storm. The principle was used in that case to prevent the unreasonable imposition of a tax charge. In this case it is invoked in like circumstances in favour of HMRC to prevent the imputation to Parliament of an intention to produce an irrational result. It has not been argued that it can only apply in favour of the taxpayer and in Jenks (above, para 10) Neuberger J applied it to the disbenefit of the taxpayer. Nothing in this judgment detracts from the principle in Luke but in my judgment, it is unnecessary to consider its application in this case because, as explained in para 23 above, the construction of the relevant provisions is clear without resort to it. In summary, using Lewison LJs mixed but vivid metaphor ([2017] 1 WLR 4717, para 89), on the true interpretation of TCGA section 116(1)(b), the potential gain within the non QCBs was frozen on conversion and did not disappear in a puff of smoke. I would dismiss this appeal.
UK-Abs
By this appeal Mr and Mrs Hancock, the appellants, seek to show that the redemption of the loan notes, issued to them in connection with the sale of their shares in their company, Blubeckers Ltd, fell outside the charge to capital gains tax (CGT) by virtue of the exemption in section 115 of the Taxation of Chargeable Gains Act 1992 (TCGA) for disposals of qualifying corporate bonds (QCBs). QCBs are essentially sterling only bonds. The appellants structured the disposal of their Blubeckers Ltd shares in three stages. (1) Stage 1 was the exchange of Blubeckers Ltd shares for notes, which, being convertible into foreign currency, were not QCBs. (2) At Stage 2, the terms of some of those notes were varied so that they became QCBs. (3) At Stage 3, both sets of notes (QCBs and non QCBs) were, together and without distinction, converted into one series of secured discounted loan notes (SLNs), which were QCBs. The SLNs were subsequently redeemed for cash. It is said to be the result of the completion of Stages 2 and 3 that the appellants are not chargeable to CGT. The noteworthy feature for present purposes of the redemption process was that, following the reorganisation, some of the loan notes issued as consideration were converted into QCBs. TCGA confers rollover relief on the disposal of securities as part of a reorganisation; this means it brings securities issued as consideration into charge for CGT purposes but then defers the tax until their subsequent realisation. This is less favourable to the taxpayer than the exemption in TCGA, section 115. The roll over provisions constitute a carve out from the exemption in TCGA, section 115. They extend to certain conversions involving QCBs. The appellants seek to fall outside that carve out (and thus within the exemption in TCGA, section 115). The appellants appealed to the First tier Tribunal regarding the chargeable gain arising on the redemption of the SLNs. The First tier Tribunal held that the conversions were to be treated as a single conversion for the purposes of section 116(1) of the TCGA such that the transaction avoided CGT. HMRC appealed to the Upper Tribunal and the Upper Tribunal allowed HMRCs appeal holding that the conversion of securities at the third stage comprised separate transactions in relation to each share converted. As the First tier Tribunal had pointed out, the relief under section 116 for QCBs had been intended to promote the market in sterling bonds and so the interpretation favoured by the appellants would go well beyond that objective. The appellants appealed to the Court of Appeal and the Court of Appeal dismissed their appeal. The Court of Appeal considered that, although the wording of the carve out could be read literally in favour of the taxpayers, that result would be contrary to Parliaments intention. The issue before the Supreme Court is whether section 116 of the TCGA applies where by a single transaction, both non QCBs (which are within the charge to capital gains tax on redemption) and QCBs (which fall outside the charge to capital gains tax on redemption) are converted into QCBs. The Supreme Court unanimously dismisses the appeal. Lady Arden, with whom the rest of the Court agrees, delivers the judgment. It was common ground that, if the conversion at Stage 3 involved separate conversions of the QCBs and the non QCBs, the appeal must fail. The question whether there was a single conversion, or two separate conversions, must be a question of applying the provisions of TCGA to the facts. The answer is not mandated in the appellants favour by the fact that they utilised a single transaction [19]. Plainly, section 116(1)(b) contemplates the possibility of a single transaction which involves a pre conversion holding of both QCBs and non QCBs, and this, coupled with the fact that the Court of Appeals interpretation renders the words or include appearing in section 116(1)(b) otiose are powerful arguments in support of the appellants construction [20]. However, the appellants interpretation would be inexplicable in terms of the policy expressed in these provisions, which is to enable all relevant reorganisations to benefit from the same rollover relief. Taxpayers could avoid those provisions with extreme ease if the appellants are right [21]. By looking to the fiscal policy behind the scheme, the Court of Appeal applied a purposive approach [22]. The Court of Appeal did not give any meaning to the words or include in section 116(1)(b), but this is appropriate because in section 132(3), as the Upper Tribunal pointed out, it is clear that the intention of Parliament was that each security converted into a QCB should be viewed as a separate conversion. Moreover, it is not an objection that section 127 contemplates a single asset because Parliament has required sections 127 to 131 to be applied with necessary adaptations. In those circumstances the clear words principle is observed in the present case [23]. There are cases where to achieve Parliaments obvious intention a strained interpretation may need to be taken in place of one which would be contrary to the clear intention of Parliament. This principle can apply even to a tax statute. However, the circumstances in which such an approach can be applied must be limited, for example, to those where there is not simply some inconsistency with evident Parliamentary intention but some clear contradiction with it. Moreover, the intention of Parliament must be clearly found on the wording of the legislation [24]. Nothing in Lady Ardens judgment detracts from that principle, but it is unnecessary to consider its application to this case because the construction of the relevant provisions is clear without resort to it [26]. Lady Arden concluded that, in summary, on the true interpretation of TCGA section 116(1)(b), the potential gain within the non QCBs was frozen on conversion and did not (to use Lewison LJs words) disappear in a puff of smoke [27].
KV, a national of Sri Lanka and of Tamil ethnicity, comes to the UK and claims asylum. He alleges that he was tortured by government forces there in the course of detention on suspicion of association with the LTTE (the Tamil Tigers). He has five long scars on his back and two shorter scars on his right arm, all of which were on any view the product of branding with a hot metal rod. He contends that they are evidence of the torture. But the tribunal in effect concludes that the scars represent wounding which was Self Inflicted By Proxy (wounding SIBP), in other words which was inflicted by another person at KVs own invitation in an attempt on his part to manufacture evidence in support of a false asylum claim. It dismisses his appeal against the refusal of asylum. By a majority the Court of Appeal, [2017] EWCA Civ 119, [2017] 4 WLR 88, dismisses his further appeal and, in doing so, makes controversial observations about the limit of the role of a medical expert in contributing to the evidence referable to a claim of torture. Now KV brings a third appeal to this court. This court must address the Court of Appeals controversial observations. They raise the point of general public importance which precipitated the grant to him of permission to appeal. But the disposal of his appeal will instead depend on whether he persuades us of an error of law, in particular an error of reasoning, in the dismissal of his appeal on the part of the tribunal. Background KV was born in 1986 and lived in Sri Lanka until his arrival in the UK in February 2011. He made his claim for asylum promptly. In March 2011 he was interviewed on behalf of the Home Office. His account was that he had worked in his fathers jewellery shop; (a) that in 2003 he had begun to assist the Tamil Tigers in valuing (b) jewellery which its members had brought to him and, with his father, in melting their gold at their request; (c) continued to assist in those ways until 2008; that, while never having been a member of the Tamil Tigers, he had (d) that government forces had arrested him in May 2009 and detained him in a camp until, with outside help, he had escaped from it in February 2011; and that during his detention they had beaten him with gun butts or (e) wooden poles every few days and, having learnt of the assistance given by him to the Tamil Tigers in respect of its gold and other valuables, had thereby sought to extract information from him about where they were kept. At the interview KV produced photographs of the scars on his back and right arm which, he said, were the product of an occasion of torture in about August 2009. It is important to note that in this initial interview his account, to which he has consistently adhered, was that his captors had first applied hot metal rods to his arm while he was conscious; that the pain had rendered him unconscious; that, while he remained unconscious, they had applied the rods to his back; that, when he regained consciousness, they had further increased the severity of the pain by pouring petrol on him and threatening to set him alight; and that some three months had elapsed before the skin had healed into scars. Later in March 2011 the Home Office refused KVs claim for asylum. It identified various perceived inconsistences in his account; and, in relation to his scars, it noted that he had produced no medical evidence in support of his account of torture, which it did not accept. In May 2011 the First tier Tribunal dismissed KVs appeal against the refusal of his claim for asylum. But the Upper Tribunal held that an error of law had vitiated the dismissal and it directed that the appeal be reheard. It then identified the appeal as an appropriate vehicle for the issue of general guidance to medical experts invited to analyse scars allegedly caused by torture, in particular if suggested on the contrary to represent wounding SIBP; and so the appeal was directed to be heard by a panel of judges in the Upper Tribunal itself. In the event the appeal was heard over three days by three of the most experienced judges of the Upper Tribunal, namely Judge Storey, Judge Dawson and Judge Kopieczek. The tribunal (as the Upper Tribunal will hereafter be described) permitted a charity, the Helen Bamber Foundation (the HBF), to intervene in the appeal. The HBF is recognised by the Home Office as a responsible provider both of expert support and treatment to those who have suffered torture or other serious harm and of medical reports intended to help UK public authorities to determine whether allegations of such suffering are true. On 22 May 2014 the tribunal explained its dismissal of KVs appeal in a mammoth document, entitled Determination and Reasons which contains 368 paragraphs on 78 pages, [2014] UKUT 230 (IAC). Massive effort on the part of each of the three judges plainly underlies the determination. As a result of it the tribunal issued six propositions of general guidance to those preparing medico legal reports in relation to scars borne by asylum seekers who allege them to be the product of torture and particularly when, on the contrary, wounding SIBP is more than a fanciful possibility. The Court of Appeal, however, considered that wounding SIBP was generally so unlikely that it was inappropriate to issue the guidance. In particular the court disagreed with the apparent suggestion in the guidance that medical experts should routinely consider it even when not canvassed by the Home Office as being a reasonably possible explanation of the asylum seekers scarring. So the court directed that the tribunals guidance be treated as of no effect. This court has not been invited to review whether it was right to jettison it. The tribunal subjected KVs evidence, together with that of his two brothers and his uncle, to appropriately rigorous analysis. It recognised that throughout the three years since his arrival in the UK his accounts of his experiences in Sri Lanka had been broadly consistent and that background country information, including that set out in para 32 below, had confirmed the existence of a practice on the part of state forces there of torturing detainees by burning them with soldering irons. It nevertheless concluded that various aspects of his evidence were unconvincing, including in relation to his alleged work for the Tamil Tigers, the frequency and severity of his alleged beatings during the years of his alleged detention, the circumstances of his alleged escape and the surprising immunity of his father from arrest and detention. But the tribunals substantial reservations about KVs credibility recede into the background in the light of its helpful identification of the central issue as follows: 337. If the appellants scarring was caused by torture in detention then the possibility of the appellants account being true, notwithstanding the identified shortcomings, becomes a real one. The tribunal thereupon embarked upon a detailed analysis of the medical evidence referable to KVs scarring, to some of which it will be necessary to return. Its conclusion was as follows: 364. In relation to the medical evidence, we have found that whilst it assisted in eliminating some possible causes, it left us with only two that were real possibilities: that the appellant was tortured as claimed; that his scarring was SIBP. Of these two real possibilities, we have found, on analysis, that the former claim does not withstand scrutiny. Certainly we cannot say in his case that the evidence inexorably points to SIBP, but given that we have concluded it is left as the only real possibility that we have not been able to discount, taking the evidence as a whole, we are satisfied that he has not shown his account is reasonably likely to be true. Thereupon the tribunal volunteered an emphatic rejection of almost all of KVs evidence: 365. We find that after 2003 he remained in Colombo and at no stage then or thereafter did he come to the adverse attention of the army or police before coming to the UK. One should respectfully place a question mark against the tribunals disclaimer in para 364 of any conclusion that the evidence inexorably pointed to wounding SIBP. If your inquiry into the disputed circumstances of a past event leads you to conclude that there are only two real possibilities and if you then proceed to reject one of them (indeed in this case to reject it in terms which could not be more absolute: see para 365), you are necessarily concluding that the other real possibility represents what happened. Evidence of Dr Zapata Bravo KV presented several pieces of medical evidence to the tribunal but much of it proved to be of limited use. The most important was that given by Dr Zapata Bravo. He was qualified both in internal (particularly chest) medicine and in psychiatry; had clinical experience of surgery; and had been subject to the apparently rigorous training of the HBF in the assessment of the physical and psychological effects of torture. On examination of KV in October 2013 Dr Zapata Bravo noted five scars on his back and two scars on his right upper arm, more particularly described as follows: (a) a flat scar on the left side of the back, just below the shoulder blade, measuring 130 x 11 mm and in the shape of an elongated and narrow parallelogram; (b) (a), slightly shorter but in the same shape; a flat scar on the right side of the back, at a level equivalent to that at a flat scar on the right side of the back, underneath that at (b), shorter a flat scar on the right side of the back, just below the waist, a flat scar on the left side of the back, underneath that at (a), shorter a slightly raised scar on the right upper arm, measuring 50 x 15 mm in a flat scar on the right upper arm, below that at (f), but longer (75mm) (c) but parallel to it and in the same shape; (d) but parallel to it and in the same shape; (e) underneath that at (d), shorter but parallel to it and in the same shape; (f) the shape of a parallelogram; and (g) and in a different, oval, shape. It was the opinion of Dr Zapata Bravo that the scars at (a) and (b) had in the past been joined together, as had the scars at (c) and (d), but that in each case they had become separated when the scarring in the small of the back, where the injury had been less severe, had disappeared. Thus, he reasoned, there had originally been five rather than seven scars, reflective of five burns caused (he had no doubt) by application of a hot metal rod. He added that the scar at (f) was the only raised scar and indicated burning even more profound than elsewhere. He could not be more precise than to say that KV had sustained the injuries prior to September 2010. For present purposes the most important part of the evidence of Dr Zapata Bravo was the distinction which he drew between the scars at (a) to (e) on the back and those at (f) and (g) on the arm. It was a distinction confirmed by photographs placed before the tribunal. The doctor pointed out that the scars on the back were long, narrow and parallel and that in particular their edges were precise. This perfect branding, as he described it, could not have occurred while KV was conscious: even if, when conscious, he had been forcibly held down, his reflex reaction to pain would have blurred the edges of the area burnt and thus of the resulting scars. But those on the arm were different. Here the branding was not perfect. The edges were blurred. They were not parallel to each other. Their length, their width and their shape were different from each other; and they did not replicate the shape of a rod. The different presentation of the scars on the arm from those on the back indicated to him that the former represented burns caused while KV had not been unconscious and so had been reacting to the pain by reflex flinching and other movements which had blurred the branding effect. And here the doctor proceeded to note that KV had indeed consistently maintained that he had not been unconscious when his arms had been burnt but had then, as a result, fallen into unconsciousness before his back was burnt. Dr Zapata Bravos conclusion was that his clinical findings were highly consistent with KVs account of torture; and that the other hypothesis, namely of wounding SIBP, was unlikely. Istanbul Protocol Dr Zapata Bravo explained in his report that his training by the HBF in relation to the effects of suggested incidents of torture had been in accordance with the Manual on the Effective Investigation and Documentation of Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, usually known as the Istanbul Protocol, submitted to the UN High Commissioner for Human Rights in 1999. As was said in its introduction, the manual was the result of three years of effort on the part of more than 75 experts in law, health and human rights, representing 40 organisations from 15 countries. The principles of effective investigation etc were collected into Annex 1 of the manual and were adopted by the General Assembly of the UN on 4 December 2000 (Resolution 55/89). The manual provides as follows: 187. For each lesion and for the overall pattern of lesions, the physician should indicate the degree of consistency between it and the attribution given by the patient. The following terms are generally used: (a) Not consistent: the lesion could not have been caused by the trauma described; (b) Consistent with: the lesion could have been caused by the trauma described, but it is non specific and there are many other possible causes; (c) Highly consistent: the lesion could have been caused by the trauma described, and there are few other possible causes; (d) Typical of: this is an appearance that is usually found with this type of trauma, but there are other possible causes; (e) Diagnostic of: this appearance could not have been caused in any other way than that described. 188. Ultimately, it is the overall evaluation of all lesions and not the consistency of each lesion with a particular form of torture that is important in assessing the torture story It follows that, in concluding that his clinical findings were highly consistent with KVs account of torture, Dr Zapata Bravo was framing his conclusion in accordance with para 187(c) of the manual. The Controversial Observations The tribunal did not suggest that, in concluding that his findings were highly consistent with KVs account of torture, Dr Zapata Bravo had exceeded the limit of his role. On the contrary, it cited authority to the effect that one of the functions of a medical report in relation to scars was to offer a clear statement in relation to their consistency with the history given. Nor did the Home Secretary submit to the Court of Appeal that Dr Zapata Bravos conclusion had been in any way professionally inappropriate. But in the Court of Appeal Sales LJ (with whom Patten LJ agreed) made observations to the opposite effect. He said: 33. In making this latter statement [that his findings were highly consistent with KVs story], Dr Zapata Bravo seems to have moved from an assessment whether the relevant lesions (ie the burns scars) could have been caused by the trauma described (ie the application of a heated metal rod) a matter on which he was capable of giving a view based on his medical expertise and which he had already addressed by saying that the scars were diagnostic of such trauma into an expression of view that he was disposed to accept the claimants account of how heated metal rods came to be applied to his skin. Dr Zapata Bravo seemed to use the Istanbul Protocol highly consistent classification, but inappropriately in relation to the claimants story, which is something different from the trauma to which that classification is expressly directed. 34. In my judgment, at this point he rather trespassed beyond his remit as an expert medical witness into the area where it was for the UT to make an assessment of all the evidence 35. [P]ara 187 of the Protocol focuses, appropriately in my view, on the question of the likely immediate cause of a lesion or wound on the body of the complainant (in our case, application of a heated metal rod to the claimants skin), which is a proper subject for expert medical evidence [I]n any event, where a medical expert is providing evidence for use in the tribunal, they should seek guidance primarily from the relevant Tribunal Rules and Practice Direction In the course of a dissenting judgment in which he concluded that the reasoning of the tribunal had been unsatisfactory and that the court should have remitted KVs appeal to it for fresh determination, Elias LJ in para 110 disagreed with the observations of the majority that Dr Zapata Bravo had exceeded the proper limit of his role in the manner alleged. In this further appeal the Home Secretary has felt unable to defend the observations of the majority and, with the benefit of the full argument which the Court of Appeal never enjoyed, nor, to be fair to counsel, never invited, it is clear that they are erroneous. In their supremely difficult and important task, exemplified by the present case, of analysing whether scars have been established to be the result of torture, decision makers can legitimately receive assistance, often valuable, from medical experts who feel able, within their expertise, to offer an opinion about the consistency of their findings with the asylum seekers account of the circumstances in which the scarring was sustained, not limited to the mechanism by which it was sustained. Had the contribution of Dr Zapata Bravo been limited to confirming KVs account that the scarring was caused by application of a hot metal rod, it would have added little to what was already a likely conclusion. But, when he proceeded to correlate his findings of a difference in the presentation of the scars on the back and those on the arm with KVs account of how the alleged torture had proceeded, he was giving assistance to the tribunal of significant potential value; and it never suggested that he lacked the expertise with which to do so. In para 33 of his judgment, set out in para 19 above, Sales LJ suggested that the references in para 187 of the Istanbul Protocol to the trauma described relate only to the mechanism by which the injury is said to have been caused. That is too narrow a construction of the word trauma. It is clear that in the protocol the word also covers the wider circumstances in which the injury is said to have been sustained. Paragraph 188 of the protocol, set out in para 16 above, which Sales LJ had himself quoted in para 31 of his judgment, guides the expert towards the type of evaluation which is important in assessing the torture story. Paragraph 105 of the protocol recommends that, in formulating a clinical impression for the purpose of reporting evidence of torture, experts should ask themselves six questions, including whether their findings are consistent with the alleged report of torture and whether the clinical picture suggests a false allegation of torture. Paragraph 122 says: The purpose of the written or oral testimony of the physician is to provide expert opinion on the degree to which medical findings correlate with the patients allegations of abuse In another case of alleged torture, namely SA (Somalia) v Secretary of State for the Home Department [2006] EWCA Civ 1302; [2007] Imm AR 1 236, the Court of Appeal, by the judgment of Sir Mark Potter, President of the Family Division, held in paras 27 and 28 that the task for which an asylum seeker tendered a medical report was to provide a clear statement as to the consistency of old scars found with the history given , directed to the particular injuries said to have occurred as a result of the torture or other ill treatment relied on as evidence of persecution. In paras 29 and 30 Sir Mark quoted paras 186 and 187 of the Istanbul Protocol and commended them as particularly instructive for those requested to supply medical reports in relation to alleged torture. In RT (medical reports causation of scarring) Sri Lanka [2008] UKAIT 00009 the Asylum and Immigration Tribunal in para 37 described the SA (Somalia) case as a landmark authority in the identification of the purpose of a medical report in relation to alleged torture and in the indorsement of the Istanbul Protocol. It is no surprise that the European Court of Human Rights should have adopted a similar construction of the role of the expert in accordance with the Istanbul Protocol: in Mehmet Eren v Turkey (2008) (Application No 32347/02), it relied in para 43 upon the conclusion of a medical report about the consistency of the clinical findings with the applicants account of serious ill treatment while he was in police custody. Again, no surprise that, in para 3.2 of its Guidelines on the Judicial Approach to Expert Medical Evidence dated June 2010, the International Association of Refugee Law Judges should have recognised the function of the report as being to provide expert opinion on the degree of correlation between the asylum seekers presentation and his allegations of torture. And indeed, no surprise that, in para 3.3 of his instruction to case workers entitled Medico Legal Reports from the Helen Bamber Foundation and the Medical Foundation Medico Legal Report Service dated July 2015, the Home Secretary should have required them to give due consideration to medical opinions given on behalf of those organisations upon the degree of consistency between the clinical findings and the account of torture. The reader will have noticed that, in making the erroneous observations quoted in para 19 above, Sales LJ added in para 35 that the primary source of guidance for experts in such circumstances should be the Tribunal Rules and the Practice Direction rather than the Istanbul Protocol. This was a point to which he returned in para 94, as follows: Contrary to what some of the expert witnesses in this case seem to have thought, it is the Practice Direction, not the Istanbul Protocol, which provides the relevant authoritative guidance as to their duty, helpful though parts of the Istanbul Protocol might be as a reference resource. Sales LJ was there referring to Practice Direction 10 in Part 4 of the Practice Directions of the Immigration and Asylum Chambers of the First tier Tribunal and the Upper Tribunal, dated 10 February 2010 and amended on 13 November 2014. But there is no inconsistency between that Practice Direction and the protocol. Of course the expert must comply with the Practice Direction, including in particular the requirement in paras 10.2 and 10.4 not to offer an opinion outside the area of his expertise. But the Practice Direction does not address the specific area addressed by the protocol, namely the investigation of torture. When invited to investigate an allegation of torture, the expert should therefore recognise the protocol as equally authoritative in accordance with the Court of Appeals decision in the SA (Somalia) case, cited in para 22 above. But Ms Harrison QC on behalf of the HBF made a further submission to the Court of Appeal, repeated before us, that in a case of alleged torture experts are entitled to express the view that they believe that the person has suffered the torture. She cited R (AM) v Secretary of State for the Home Department [2012] EWCA Civ 521, in which Rix LJ, with whom Moses LJ and Briggs J agreed, observed in paras 29 and 30 that the expert had believed the appellants account of torture and that her belief constituted independent evidence of torture which had disentitled the Home Secretary from continuing to detain her. It is not clear from the judgment of Rix LJ whether the expert had in terms said that she believed the appellant. But, as he pointed out in para 15, she had, when categorising her findings in accordance with para 187 of the Istanbul Protocol (set out in para 16 above), in effect chosen the most positive category, namely (e) Diagnostic of could not have been caused in any other way than that described in relation to one of the scars. Such a diagnosis was indeed tantamount to belief in the accuracy of the description of how that scar had been caused. A corresponding placement of a conclusion within the most negative category, namely (a) Not consistent could not have been caused by the trauma described would be tantamount to disbelief in the accuracy of the description. Where, however, more usually, the expert places his or her conclusion within categories (b), (c) or (d), there is no room, nor sanction in the protocol, for the expression of belief or otherwise in the account given. The conclusion about credibility always rests with the decision maker following a critical survey of all the evidence, even when the expert has placed his conclusion within category (a) or (e). Indeed, in an asylum case in which the question is only whether there is a real possibility that the account given is true, not even the decision maker is required to arrive at an overall belief in its truth; the inquiry is into credibility only of a partial character. Disposal of the Appeal In his dissenting judgment Elias LJ set out in detail his concerns about the reasoning of the tribunal in rejecting KVs claim of torture. In an attempt not to overburden this present judgment with analogous factual detail, I will confine it to a review of three main points. The first relates to KVs account, confirmed by the appearance of the scars on the back, that the burns there had been inflicted while he was unconscious. He said that the burns on his arms had made him lose consciousness. But the bigger question, rightly addressed by the tribunal, was how he had remained unconscious while the burns on the back were inflicted. This in turn raised the question: how long would it have taken to inflict the burns on the back? In their written reports none of the experts had addressed this question. But, at the end of his oral evidence by telephone, Dr Zapata Bravo, when asked, suggested that it would have taken ten minutes to inflict the burns on the back but added that his suggestion was speculative. But could KV have remained unconscious for ten minutes? The doctors answer was hesitant: it was that he might possibly have done so if he had been in a bad state of health, with loss of weight as a result of malnutrition, and if he had not eaten nor taken fluids. Another expert, Dr Allam, who had been asked a general question about the usual speed of recovery of consciousness, had already written, in fair conformity with Dr Zapata Bravos later hesitant hypothesis, that an individuals state of health could affect the speed of recovery. In the end, however, the tribunal found it to be an unlikely hypothesis that KV did not regain consciousness for the period of about ten minutes while the alleged torturers inflicted the burns on the back. Although the tribunal there attached central importance to an estimate of ten minutes given off the cuff and stressed to have been speculative, and although it seems altogether to have discounted Dr Zapata Bravos hesitant explanation for more prolonged unconsciousness, it is in my opinion hard for an appellate court to rule that it had not been entitled to conclude that this part of KVs account was unlikely. Its conclusion on this point cannot, however, mark the end of an overall inquiry into the existence of a real possibility that the scars reflected torture. The second point relates to Dr Zapata Bravos pivotal opinion that the different, blurred, edges to the scars on the arm indicated the infliction of burns during consciousness, which correlated with the account which KV had always given. The problem arises from the reasons given by the tribunal for rejecting the conclusion which he based upon it. It said: 348. we do not consider that Dr Zapata Bravos conclusion that the appellants scarring was highly consistent with his account of having been tortured is justified when account is taken of the doctors own evidence indicating (i) it was clinically unlikely, given their precise edging, that his scarring could have been inflicted unless he was unconscious; and (ii) that it was clinically unlikely a person could remain unconscious throughout multiple applications of hot metal rods to his arms and back, unless he was anaesthetised The paragraph raises big questions. Why does the summary of the doctors evidence at (i), in relation to precise edging, fail to limit the reference to scarring to scarring on the back? Why does the summary of his evidence at (ii) address a hypothesis, contrary to that which he (and KV himself) had advanced, that he had remained unconscious throughout the application of the rods to his arms as well as to his back? By the time it came to draft para 348, had the tribunal mislaid the pivotal point? The answer given to these questions by Sales LJ in para 21(ii) of his judgment was that in his oral evidence Dr Zapata Bravo must have said or have appeared to say that the scars on the arm as well as on the back were precisely defined and that complete analgesia would have been required to produce all of them. Sales LJ observed that KV had failed to provide the court with a transcript of the doctors oral evidence and that, without a transcript, there was no basis for criticising the tribunal. But it is dangerous for us who work in appeal courts to assume that the answer to an apparent mistake at first instance must lie in oral evidence not recorded in the judgment and not transcribed for the purposes of the appeal. The court of first instance should be expected to record the oral evidence on which it places reliance. Stung by the observations of Sales LJ, KV has provided to this court for the purposes of his further appeal a transcript of all the oral evidence given to the tribunal; and with great respect, it is clear and agreed that in his oral evidence Dr Zapata Bravo never wavered from his clinical findings of a difference in the scars as between the back and the arm, nor from the significance which he had attached to it. The Home Secretary correctly invites us to be realistic. We must accept that the drawing of a fine tooth comb through any judicial survey of complex evidence written across 368 paragraphs is likely to discover a tangle in it. In para 12 of his judgment in SS (Iran) v Secretary of State for the Home Department [2008] EWCA Civ 310 Lord Neuberger of Abbotsbury observed that appeal courts should be particularly wary of interfering with evidential conclusions made in relation to claims for asylum, in which, among other things, the paucity and fragility of the evidence are likely to be acute. On the other hand he added: given the potentially severe, even catastrophic, consequences of a mistaken rejection of an appeal, where fear of ill treatment (or worse) is alleged, it is plainly right to scrutinise any [such] decision very carefully Paragraph 348 of the tribunals determination contains more than a minor tangle. It represents its reason for rejecting Dr Zapata Bravos categorisation of high consistency in accordance with para 187(c) of the Istanbul Protocol. The tribunal there mislaid the difference in the scars on the arm to which he had attached such significance. But it needed to address it. Elias LJ said in para 108: In my judgment the [tribunal] had to find an explanation for the different appearance of these scars and it could not characterise his account of being tortured as implausible without having done so. That was his judgment. It should also, I suggest, be ours. The third point arises out of the tribunals final conclusion that there were only two real possibilities, namely that KV had been tortured and that his wounding was SIBP. The point is that the likelihood of both possibilities had to be compared with each other before either of them could be discounted. And the contention is that, when it came to compile the final section of its determination entitled Assessment of the Appellants Appeal, and in particular the final subsection, entitled Conclusion, in which it discounted the possibility of torture, the tribunal made no reference to the likelihood, or rather on any view the unlikelihood, that the wounding was SIBP. That there was extensive torture by state forces in Sri Lanka in 2009 was well established in the evidence before the tribunal. For example at para 187 of its determination it quoted an EU report dated October 2009 as follows: International reports indicate continual and well documented allegations of widespread torture and ill treatment committed by state forces (police and military) particularly in situations of detention. The UN Special Rapporteur on Torture has expressed shock at the severity of the torture employed by the army, which includes burning with soldering irons and suspension of detainees by their thumbs. By contrast, evidence of wounding SIBP on the part of asylum seekers was almost non existent. The tribunal referred at para 11 to just one unreported decision in 2011 in which it had concluded that the wounding had been SIBP. Dr Zapata Bravo said that, in the field of immigration, neither he nor any colleague to whom he had spoken had experience of wounding SIBP. He contrasted it with tribal and ritual scarring, administered with social consent, which no one had suggested to account for the scars in question. His and the other medical evidence before the tribunal indicated that the wounding of a body which that person deliberately achieved by his own hand was slightly less uncommon; but that there were parts of a body which that person could not burn without assistance and that they certainly included the burnt parts of KVs back. Dr Zapata Bravo said that in the literature he had found only one statement referable to a persons burning of himself by use of a proxy. Very rarely, it had said, an accomplice might be asked to cause a wound in a place the person cannot reach. There is no doubt that, particularly in the light of the serious lack of KVs credibility in several other areas of his evidence, the tribunal was correct to address the possibility of wounding SIBP. But, in assessing the strength of the possibility, it had to weigh the following: It is an extreme measure for a person to decide to cause himself to (a) suffer deep injury and severe and protracted pain. (b) Moreover KV needed someone to help him to do it. (c) Wounding SIBP is, in the words of Sales LJ at para 93 of his judgment, generally so unlikely. (d) If KVs wounding was SIBP, the wounds on his back could have been inflicted only under anaesthetic and so he would have needed assistance from a person with medical expertise prepared to act contrary to medical ethics. (e) If his wounding was SIBP, an explanation had to be found for the difference in both the location and in particular the presentation of the scarring as between the back and the arm. (f) If his wounding was SIBP, an explanation had to be found for the number of the wounds, namely the three wounds on the back, albeit now represented by five scars, and the two wounds on the arm. As Elias LJ observed in para 99, one or two strategically placed scars would equally well have supported a claim of torture. Elias LJ offered a summary in para 101: In my view very considerable weight should be given to the fact that injuries which are SIBP are likely to be extremely rare. An individual is highly unlikely to want to suffer the continuing pain and discomfort resulting from self inflicted harm, even if he is anaesthetised when the harm is inflicted. Moreover, the possibility that the injuries may have been sustained in this way is even less likely in circumstances where the applicant would have needed to be anaesthetised. This would in all probability have required the clandestine co operation of a qualified doctor who would have had to be willing to act in breach of the most fundamental and ethical standards, and who had access to the relevant medical equipment. That was his view. It should also, I suggest, be ours. I propose that we should direct the tribunal to determine afresh KVs appeal against the refusal of asylum.
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KV, who is a Sri Lankan national of Tamil ethnicity, arrived in the UK in February 2011 and claimed asylum. He has scars on his arm and back which he says are the result of torture, but the Home Secretarys case is that they were self inflicted by proxy (SIBP), that is, by another person at his invitation. KVs account is that although he was not a member of the LTTE (Tamil Tigers), he used to melt gold for them. He says he was detained and tortured by the Sri Lankan government, who sought to extract information about where the gold and other valuables were kept. He alleges that the government applied hot metal rods to his arm while he was conscious, the pain rendered him unconscious, and that while he remained unconscious they applied the rods to his back. He appealed unsuccessfully to the First tier Tribunal (FTT) against the Home Secretarys refusal of his claim for asylum. The Upper Tribunal (the tribunal) reheard his appeal as the FTTs decision had been vitiated by an error of law. The tribunal found various aspects of KVs evidence unconvincing but recognised that if his scarring was indeed caused by torture then there was a real possibility his story was true. Dr Zapata Bravo, a medical expert, advised that the scars were caused by burning with a hot metal rod. Furthermore, the scarring on KVs arm had blurred edges but the scarring on his back had such clearly defined edges that he must have been unconscious while the burns were inflicted. He concluded that his clinical findings were highly consistent with KVs account of torture, and that it was unlikely the scars were SIBP. The tribunal nevertheless dismissed KVs appeal, finding that (i) it was clinically unlikely, given their precise edging, that his scarring could have been inflicted unless he was unconscious; and (ii) that it was clinically unlikely a person could remain unconscious throughout multiple applications of hot metal rods to his arms and back, unless he was anaesthetised . On appeal, the Court of Appeal (CA) held by a majority that the assessment made by the tribunal was legitimately open to it and could not be criticised as perverse or irrational. Furthermore, it was beyond Dr Zapata Bravos remit as an expert medical witness to state his opinion that his findings were highly consistent with KVs account of torture as a whole. Elias LJ dissented. The Supreme Court (Lady Hale, Lord Wilson, Lady Black, Lord Briggs and Lord Kitchin) unanimously allows the appeal and remits KVs appeal against the refusal of asylum to the Upper Tribunal for fresh determination. Lord Wilson gives the only judgment. The 1999 Manual on the Effective Investigation and Documentation of Torture and other Cruel, Inhuman or Degrading Treatment or Punishment, known as the Istanbul Protocol, guides medical experts to indicate for each lesion the degree of consistency between it and the cause given by the patient, on a scale from not consistent to diagnostic of. The Istanbul Protocol provides that ultimately, it is the overall evaluation of all lesions, and not the consistency of each lesion with a particular form of torture that is important in assessing the torture story. Thus, in concluding that his clinical findings were highly consistent with KVs account, Dr Zapata Bravo framed his conclusion in accordance with the Istanbul Protocol [15] [17]. In the Supreme Court, the Home Secretary felt unable to defend the CAs observations that Dr Zapata Bravo had gone beyond his remit. In their difficult task of analysing whether scars are the result of torture, decision makers can legitimately receive assistance from medical experts who feel able to offer an opinion about the consistency of their findings with the asylum seekers account about the circumstances in which the scarring was sustained, not limited to the mechanism by which it was sustained. The CAs suggestion that the references in the Istanbul Protocol to the trauma described relate only to the mechanism by which injury is said to have been caused is too narrow a construction of the word trauma [20] [21]. On the other hand, unless an expert finds that the trauma described is either not consistent with or diagnostic of the alleged torture, it would be beyond his or her remit to state that he or she believed the appellant. The conclusion about credibility always rests with the decision maker following a survey of all the evidence [25]. This approach is consistent with that of the Court of Appeal in a previous case of alleged torture, and that of the European Court of Human Rights [22] [23]. An expert investigating an allegation of torture should recognise the Istanbul Protocol as equally authoritative to the relevant Practice Direction on expert evidence in immigration and asylum cases at the FTT and the tribunal [24]. As for the decision of the tribunal, Elias LJ in his dissenting judgment had noted various problems with the tribunals reasons for rejecting KVs account of torture [26]. In particular, the tribunals summary of the doctors evidence lacked apparent awareness that the scarring with precise edging was only on KVs back, and addressed a hypothesis, not advanced by the doctor or KV, that KV was unconscious while the hot metal rods were applied to his arms as well as to his back [28]. Given KVs serious lack of credibility in several areas, the tribunal was correct to address the possibility of wounding SIPB. However, when the tribunal concluded that there were only two real possibilities either that KV had been tortured or that the wounding was SIBP and when it rejected the former, it failed to take into account the fact that self infliction of wounds is inherently unlikely. There is evidence of extensive torture by state forces in Sri Lanka at the relevant time. By contrast, evidence of wounding SIBP on the part of asylum seekers is almost non existent. It is an extreme measure for a person to decide to cause himself deep injury and severe pain. Moreover, if KVs wounding was SIBP, the wounds on his back could only have been inflicted under anaesthetic so he would have needed the assistance of someone with medical expertise. The Supreme Court approves Elias LJs view that very considerable weight should be given to the fact that injuries which are SIBP are likely to be extremely rare [31] [35].
On 11 September 2014, the Cleveland Meat Company Ltd (CMC) bought a live bull at the Darlington Farmers Auction Mart for 1,361.20. The bull was passed fit for slaughter by the Official Veterinarian (OV) stationed at CMCs slaughterhouse. It was assigned a kill number of 77 and slaughtered. A post mortem inspection of both carcass and offal was carried out by a Meat Hygiene Inspector (MHI), who identified three abscesses in the offal. The offal was not retained. Later that day, the OV inspected the carcass and, after discussion with the MHI, declared the meat unfit for human consumption, because pyaemia was suspected. Accordingly, the carcass did not acquire a health mark certifying that it was fit for human consumption. The consequence of this was that it would have been a criminal offence for CMC to seek to sell the carcass (under regulation 19 of the Food Safety and Hygiene (England) Regulations 2013 (the Food Hygiene Regulations)). CMC took the advice of another veterinary surgeon and challenged the OVs opinion. It claimed that, in the event of a dispute and its refusal to surrender the carcass voluntarily, the OV would have to seize the carcass under section 9 of the Food Safety Act 1990 (the 1990 Act) and take it before a Justice of the Peace to determine whether or not it ought to be condemned. The Food Standards Agency (FSA) replied that there was no need for it to use such a procedure. Having been declared unfit for human consumption by the OV, the carcass should be disposed of as an animal by product. On 23 September 2014, the OV, acting for the FSA, served on CMC a notice for the disposal of the carcass as an animal by product (the disposal notice) (under regulation 25(2)(a) of the Animal By Products (Enforcement) (England) Regulations 2013 (the Animal By Products Regulations) and Regulation (EC) No 1069/2009). The disposal notice informed CMC that failure to comply with the notice could result in the Authorised Person under the Regulations arranging for compliance with it at CMCs expense and that it was an offence to obstruct an Authorised Person in carrying out the requirements of the notice. The disposal notice also stated: You may have a right of appeal against my decision by way of judicial review. An application for such an appeal should be made promptly and, in any event, generally within three months from the date when the ground for the application first arose. If you wish to appeal you are advised to consult a solicitor immediately. These judicial review proceedings are brought by the Association of Independent Meat Suppliers, a trade association acting on behalf of some 150 slaughterhouses, and CMC (the claimant appellants) to challenge the FSAs assertion that it was unnecessary for it to use the procedure set out in section 9 of the 1990 Act and to claim in the alternative that it is incumbent on the United Kingdom to provide some means for challenging the decisions of an OV in such cases. They failed in the High Court and Court of Appeal and now appeal to this Court. There are three main issues in the proceedings. The issues in the case The first revolves around an issue of domestic law. Is the procedure contained in section 9 of the 1990 Act available in these circumstances and does it have to be used by the OV or the FSA, if the carcass owner refuses to surrender the carcass voluntarily, so as to afford the carcass owner a means of challenging decisions of the OV with which it disagrees? The Food Hygiene Regulations provide that section 9 is to apply for the purpose of those Regulations. Under section 9, if it appears to an authorised officer of an enforcement authority such as the FSA that food intended for human consumption fails to comply with food safety requirements, he may seize the food and remove it in order to have it dealt with by a Justice of the Peace (who may be either a lay magistrate or a legally qualified District Judge, but who will be local to the slaughterhouse and readily accessible at all hours). If it appears to the Justice of the Peace, on the basis of such evidence as he considers appropriate, that the food fails to comply with food safety requirements, he shall condemn it and order it to be destroyed at the owners expense. If he refuses to condemn it, the relevant enforcement authority must compensate the owner for any depreciation in its value resulting from the officers action. Under section 8(2), food fails to comply with food safety requirements if it is unsafe within the meaning of article 14 of Regulation (EC) No 178/2002: ie injurious to health or unfit for human consumption (see para 12 below). The procedure in section 9 of the 1990 Act is not framed in terms of an appeal from the OVs decision. It sets out a procedure whereby an officer of a food authority or an enforcement authority can refer the question of destruction of a carcass to a Justice of the Peace for decision. Normally, we are told, the owner accepts the OVs decision that an animal is not fit for human consumption and voluntarily surrenders it. But if the owner does not, the claimant appellants say that this procedure provides both (i) a way in which the OV or the FSA can take enforcement action consequent upon the OVs decision and (ii) a means whereby the owner can subject that decision to judicial scrutiny and ask the Justice of the Peace to decide whether or not the carcass did in fact comply with the food safety requirements. They accept that the Justice of the Peace cannot order the OV to apply a health mark. However, they argue that the OV can be expected to respect the decision and apply a health mark accordingly. Further, compensation may be payable under the 1990 Act if the Justice of the Peace refuses to condemn the carcass. In the claimant appellants view, this procedure has been part of the United Kingdoms food safety regime since the 19th century, and continues to operate under the European Unions food safety regime contained in the suite of Regulations coming into force in 2006. The FSA agrees that the procedure under section 9 of the 1990 Act would be available to it as one possible means of enforcement if the operator of a slaughterhouse attempted to introduce into the food chain an animal carcass which had not been given a health mark by an OV. However, it does not accept that this procedure would be suitable, still less obligatory, to resolve a dispute as to whether the carcass is or is not fit for human consumption. A Justice of the Peace has no power to order an OV to apply a health mark and, moreover, the FSA says that he would have no power under section 9 to do anything other than condemn for disposal a carcass bearing no such mark. Although not raised by the FSA in argument, the Court observes that it would be open to the operator of a slaughterhouse such as CMS to bring judicial review proceedings in the High Court to challenge the OVs decision that the meat of a carcass was unfit for human consumption, and thus to deny a health mark, or to quash a disposal notice. The High Court may quash a decision of an OV on any ground which makes the decision unlawful, including if he acts for an improper purpose, fails to apply the correct legal test or if he reaches a decision which is irrational or has no sufficient evidential basis. The High Court does occasionally hear oral evidence and make mandatory orders, and has power to award compensation for breaches of the rights under the European Convention on Human Rights (ECHR). However, contrary to what was said in the notice quoted in para 3 above, judicial review is not an appeal on the merits of the decision. The main reason advanced by the FSA why the section 9 procedure is not also applicable is that such a procedure, operated in the way the claimant appellants say that it can be operated, in effect as an appeal against the merits of the OVs decision, would be incompatible with the regime contained in the suite of EU food safety Regulations which came into force in the United Kingdom in 2006. Hence, the second issue is whether use of the procedure in section 9 of the 1990 Act is compatible with the food safety regime laid down by European Union law, specifically by Regulation (EC) No 852/2004 on the hygiene of foodstuffs; Regulation (EC) No 853/2004 laying down specific hygiene rules for food of animal origin; Regulation (EC) No 854/2004 laying down specific rules for the organisation of official controls on products of animal origin intended for human consumption; Regulation (EC) No 882/2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules; and Regulation (EC) No 1069/2009 on health rules as regards animal by products. Also relevant is the prior Regulation (EC) No 178/2002 laying down the general principles and requirements of food law. The third issue is whether Regulation (EC) No 882/2004 mandates an appeal procedure and if so whether such an appeal should be capable of challenging the OVs decision on the full factual merits or whether the more limited scope of challenge involved in judicial review of the OVs decision and of a disposal notice as referred to above is sufficient to comply with the requirements of Regulation (EC) No 882/2004. Relevant European Union Law Under article 2 of Regulation (EC) No 178/2002, food means any substance or product intended to be, or reasonably expected to be ingested by humans. It is common ground between the parties that carcass 77 was food when it was slaughtered and remained so after the OV formed the opinion that it was unfit for human consumption and declared it as such. Article 14 of Regulation (EC) No 178/2002 provides that food shall not be placed on the market if it is unsafe. Food is deemed unsafe if it is considered to be (a) injurious to health, (b) unfit for human consumption. Article 5.1 of Regulation (EC) No 853/2004 provides that food business operators (FBOs) such as slaughterhouses shall not place on the market a product of animal origin unless it has a health mark applied in accordance with Regulation (EC) No 854/2004 (or an identification mark if a health mark is not required by the latter Regulation). Regulation (EC) No 854/2004 lays down specific rules for the organisation of official controls on products of animal origin (article 1.1). The application of the official controls which it requires is without prejudice to the primary legal responsibility of FBOs to ensure food safety under Regulation (EC) No 178/2002 (article 1.3). The controls are of several types. Article 4, for example, deals with official controls to verify an FBOs general compliance with the Regulations, including detailed audits of good hygiene practices. Article 5 requires member states to ensure that official controls with respect to fresh meat take place in accordance with Annex I. Under article 5.1, the OV is to carry out inspection tasks in, inter alia, slaughterhouses in accordance with the general requirements of section I, Chapter II of Annex I and the specific requirements of section IV. Under article 5.2, the health marking of domestic ungulates, such as cattle, is to be carried out in slaughterhouses in accordance with section I, Chapter III of Annex I; the criterion for applying health marks is stated thus: Health marks shall be applied by, or under the responsibility of, the official veterinarian when official controls have not identified any deficiencies that would make the meat unfit for human consumption. Annex I lays down detailed rules about ante mortem and post mortem inspections, how they are to be done and by whom, the application of health marks and the communication of results. Chapter IV of section III lays down detailed requirements for the qualifications and skills of Official Veterinarians and their auxiliaries (such as MHIs). Regulation (EC) No 854/2004 does not define official controls nor does it lay down any specific enforcement measures or sanctions for non compliance with the controls which it mandates. Article 1.1a provides that it applies in addition to Regulation (EC) No 882/2004 and article 2.2(b)(a) provides that the definitions in Regulation (EC) No 882/2004 shall apply as appropriate. Regulation (EC) No 882/2004 lays down general rules for the performance of official controls for a variety of purposes, including preventing risks to humans and animals and protecting consumer interests in the feed and food trade (article 1.1). It is without prejudice to specific Community provisions concerning official controls (article 1.3). Official control means any form of control that the competent authority or the Community performs for the verification of compliance with feed and food law, animal health and animal welfare rules (article 2.1). Non compliance means non compliance with feed or food law, and with the rules for the protection of animal health and welfare (article 2.10). Recitals (41) and (42) to Regulation (EC) No 882/2004 state, inter alia, that breaches of food law may constitute a threat to human health and therefore should be subject to effective, dissuasive and proportionate measures at national level, including administrative action by competent authorities in the member states. Recital (43) states: Operators should have a right to appeal against the decisions taken by the competent authority as a result of the official controls, and be informed of such a right. The Court notes that in the French language version of the Regulation the relevant phrase used is Les exploitants devraient avoir un droit de recours and in the German language version Unternehmer sollten Rechtsmittel einlegen knnen . Title VII of Regulation (EC) No 882/2004 deals with enforcement measures and Chapter I is concerned with national enforcement measures. Article 54.1 requires the competent authority, when it identifies non compliance, to take action to ensure that the operator remedies the situation. In deciding what action to take it shall take account of the nature of the non compliance and that operators past record with regard to non compliance. Article 54.2 gives a non exhaustive list of the measures which must be available where appropriate. These include (b) the restriction or prohibition of the placing on the market of food; (c) if necessary, ordering the recall, withdrawal and/or destruction of food; and (h) any other measure the competent authority deems appropriate. Article 54.3 requires the competent authority to provide the operator concerned with written notification of its decision and the reasons for it and information on rights of appeal against such decisions and on the applicable procedure and time limits. The Court notes that in the French language version this text appears as des informations sur ses droits de recours contre de telles decisions, ainsi que sur la procedure et les dlais applicables and in the German language version the phrase sein Widerspruchsrecht is used. Article 55 requires member states to lay down the rules on sanctions applicable to infringements of feed and food law and to take all measures necessary to ensure that they are implemented. The sanctions provided for must be effective, proportionate and dissuasive. The parties arguments The claimant appellants argue that the procedure in section 9 of the 1990 Act is applicable in cases such as this and is not incompatible with the regime laid down by the EU Regulations; indeed it or something like it is contemplated by the terms of article 54 of Regulation (EC) No 882/2004. In summary, they assert that: (1) The section 9 procedure was applied during the very similar regime adopted pursuant to the EU Directives before the coming into force of the suite of Regulations referred to above. There is no evidence that this caused any practical difficulties. If it was not thought inconsistent with that regime, there is no reason to think it inconsistent with the current regime. Indeed, in 2006, when the Regulations came into force, the Meat Hygiene Service Manual of Official Controls stated (and continued to state until shortly before these proceedings began) that where the OV was not satisfied that the meat was fit for human consumption and voluntary surrender was not forthcoming, the OV must seize the food under section 9 and take it before a Justice of the Peace for it to be condemned. At the very least, this is an indication of past practice under the very similar regime which preceded the current EU Regulations and of what the FSA, as competent authority, initially thought the position to be under the Regulations. (2) The official controls in Regulation (EC) No 854/2004 are in addition to the more general provisions in Regulation (EC) No 882/2004. They are specific to food of animal origin. But they contain nothing about enforcement and sanctions. Thus it is not surprising that they do not provide for a right of appeal against the decisions of the OV and competent authority. Enforcement and sanctions are provided for in Regulation (EC) No 882/2004. Regulation (EC) No 854/2004 is intended to work in combination with Regulation (EC) No 882/2004. Recital (43) to Regulation (EC) No 882/2004 indicates that a right of appeal is required in a case such as this. Articles 54 and 55 are applicable to all kinds of non compliance with Regulation (EC) No 854/2004, including non compliance with article 5 in individual cases as well as the more general non compliance dealt with by article 4. The references to prohibiting placing on the market and ordering destruction in article 54.2 are clearly apt to deal with non compliance under article 5. Article 54.3 should apply to action to deal with all kinds of non compliance. These articles, read together with recital (43) mandate a right of appeal against the OVs decision. (3) There is nothing in any of the Regulations to prohibit a procedure such as that laid down in section 9. This not only provides a means whereby the competent authority can enforce the requirements of Regulation (EC) No 854/2004 in relation to non compliance but also provides the operator with a means of challenging the decision of the OV that a carcass is not fit for human consumption on its merits. The Justice of the Peace can (and should) hear expert evidence to determine the matter. While only the OV can apply the health mark, on the claimant appellants interpretation of section 9 the Justice of the Peace can make a ruling which may result in an award of compensation if the mark is wrongly withheld. (4) At the point when the OV inspects the meat and forms the opinion that it is unfit for human consumption and declares it as such, the carcass is still food within the meaning of the above Regulations. It has not become an animal by product within the meaning of Regulation (EC) No 1069/2009, laying down health rules as regards animal by products. Animal by products are defined as entire bodies or parts of animals, products of animal origin or other products obtained from animals, which are not intended for human consumption (article 3.1). Until the process of condemnation is complete, the FBO still intends the carcass for human consumption. (5) Providing a mechanism for judicial oversight of the process of condemnation is required by article 17 of the Charter of Fundamental Rights of the European Union (CFR) (equivalent to article 1 of the First Protocol to the ECHR) which protects the right to property, read with article 47, which requires an effective judicial remedy for everyone whose rights and freedoms guaranteed by community law are violated. It would be a violation if an FBO were deprived of the property in the carcass or required to dispose of the carcass in such a way as to render it valueless without proper justification or compensation. Judicial review does not constitute an appeal which satisfies the (6) requirement in Regulation (EC) No 882/2004 that there be a right of appeal. Regulation (EC) No 882/2004 requires that there be a right of appeal against the decision of an OV on the merits going beyond what is possible in judicial review. Against this, the competent authority, the FSA, argues that it would be incompatible with the regime established by the Regulations if resort were made to the procedure under section 9 of the 1990 Act in order to challenge the decision of the OV under article 5 of Regulation (EC) No 854/2004 on its merits. The FSA accepts that the lawfulness of the decision can be challenged in judicial review proceedings as set out above. In summary, the FSA asserts that: (1) The requirements of Regulation (EC) No 854/2004 are a lex specialis in relation to products of animal origin. Regulation (EC) No 882/2004 is without prejudice to specific Community provisions regarding official controls (article 1.3). Regulation (EC) No 854/2004 therefore takes precedence over Regulation (EC) No 882/2004 where it is necessary to do so. (2) There is a distinction between the roles undertaken by the OV under article 4 of Regulation (EC) No 854/2004 and those undertaken under article 5. The former concerns the audit of an FBOs general practices and compliance with food hygiene requirements. It is accepted that article 54 of Regulation (EC) No 882/2004 is capable of being applied to that role. However, it should be noted that, despite the wording of recital (43), article 54.3 stops short of positively requiring that there be a right of appeal. (3) The role of inspecting and health marking individual carcasses under article 5 is quite different from the audit role under article 4. The OV alone (with the assistance permitted under the Regulation) has responsibility for deciding whether or not to apply a health mark, which is a necessary prerequisite to placing the meat on the market. Nobody other than the OV can perform this task. This can only be done when official controls have not identified any deficiencies that would make the meat unfit for human consumption. That weighted double negative test is consistent with the overall aim laid down in article 1.1 of Regulation (EC) No 178/2002, of the assurance of a high level of protection of human health and consumers interest in relation to food. It may be that the meat remains food even after the OV has decided not to apply a health mark, but it cannot thereafter be lawfully intended for human consumption. (4) The qualifications and experience of the OV are carefully specified so as to ensure that he or she is properly qualified to undertake that decision making role (with the assistance permitted under the Regulations). It would be incompatible with the requirements of Regulation (EC) No 854/2004 for a person or body other than the OV as referred to in article 5.2 and which does not have those qualifications and experience, such as a Justice of the Peace acting pursuant to section 9 of the 1990 Act, to decide whether a carcass should have had a health mark applied to it, even if adjudicating with the benefit of expert evidence presented by each side. (5) Article 17 of the CFR (and article 1 of the First Protocol to the ECHR) permit control of the use of property if this is a proportionate means of achieving a legitimate aim (reference is made to Booker Aquaculture Ltd (trading as Marine Harvest McConnell) v Scottish Ministers (Joined Cases C 20/00 and C 64/00) [2003] ECR I 7411). The above aim is undoubtedly legitimate and the means chosen proportionate. Article 17 does not mandate a right of challenge to the imposition of such controls. (6) If there is a requirement that there be a right of appeal in relation to the decision of an OV under article 5.2 of Regulation (EC) No 854/2004, it is satisfied by the availability of judicial review as set out above. Judicial review also satisfies any requirement under article 17 of the CFR (or article 1 of the First Protocol to the ECHR) of a possibility of judicial control of the actions of an OV. Conclusion (1) Do Regulations (EC) Nos 854/2004 and 882/2004 preclude a procedure whereby pursuant to section 9 of the 1990 Act a Justice of the Peace decides on the merits of the case and on the basis of the evidence of experts called by each side whether a carcass fails to comply with food safety requirements? (2) Does Regulation (EC) No 882/2004 mandate a right of appeal in relation to a decision of an OV under article 5.2 of Regulation (EC) No 854/2004 that the meat of a carcass was unfit for human consumption and, if it does, what approach should be applied in reviewing the merits of the decision taken by the OV on an appeal in such a case? For the purposes of this reference, the Court of Justice of the European Union is asked to assume that the claimant appellants interpretation of section 9 of the 1990 Act is correct, and that a Justice of the Peace has power to give a ruling which may result in an award of compensation if he considers that a health mark ought to have been applied to a carcass. In order to determine this appeal, this Court refers the following questions to the Court of Justice of the European Union:
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Cleveland Meat Company Ltd (CMC) bought a bull at auction. It was passed fit for slaughter by the Official Veterinarian (OV) stationed at its slaughterhouse. After a post mortem inspection of the carcass, and discussion with a Meat Hygiene Inspector, the OV declared the meat unfit for human consumption. It did not therefore acquire a health mark. CMC took the advice of another veterinarian surgeon and challenged the OVs opinion. It contended that in the event of a dispute, and of its refusal to surrender the carcass voluntarily, the OV would have to seize it under s 9 of the Food Safety Act 1990 (the 1990 Act) and take it before a Justice of the Peace to determine whether or not it should be condemned. The respondent (the FSA) did not accept that it needed to use this procedure. It maintained that the carcass should be disposed of as an animal by product and served a notice for such disposal. CMC, together with Association of Independent Meat Suppliers, issued a claim for judicial review to challenge the FSAs assertion that it did not have to use the s 9 procedure. They claimed in the alternative that it was incumbent on the UK to provide some means for challenging the decisions of an OV in such cases. The claim failed in the High Court and Court of Appeal. Before the Supreme Court there were three main issues. The first was a matter of domestic law: whether the s 9 procedure was available or mandatory in these circumstances. The second issue was whether the use of the s 9 procedure was compatible with the food safety regime laid down by European Union law, specifically Regulations (EC) 178/2002, 852/2004, 853/2004, 854/2004, 882/2004, and 1069/2009. The third issue was whether Regulation 882/2004 mandates an appeal procedure and, if so, whether such an appeal should allow a challenge to the full factual merits of the OVs decision or whether the limited scope of challenge in a judicial review claim is sufficient to comply with the regulations requirements. The Supreme Court decides to refer two questions to the Court of Justice of the European Union. The terms of the reference are set out by Lady Hale and Lord Sales in their joint judgment, with whom Lord Hodge, Lady Black and Lord Lloyd Jones agree. For the purposes of this reference, the Court of Justice of the European Union is asked to assume that the claimant appellants interpretation of section 9 of the 1990 Act is correct, and that a Justice of the Peace has power to give a ruling which may result in an award of compensation if he considers that a health mark ought to have been applied to a carcass. In order to determine this appeal, this Court refers the following questions to the Court of Justice of the European Union [22]: (1) Do Regulations (EC) Nos 854 and 882 preclude a procedure whereby pursuant to section 9 of the 1990 Act a Justice of the Peace decides on the merits of the case and on the basis of the evidence of experts called by each side whether a carcass fails to comply with food safety requirements? (2) Does Regulation (EC) No 882 mandate a right of appeal in relation to a decision of an OV under article 5.2 of Regulation (EC) No 854 that the meat of a carcass was unfit for human consumption and, if it does, what approach should be applied in reviewing the merits of the decision taken by the OV on an appeal in such a case?
This appeal concerns the correct treatment for income tax purposes of the respondents (Mr Derrys) claim for share loss relief under section 132 of the Income Tax Act 2007 (ITA). The claimed loss arose in this way. On 22 March 2010 (tax year 2009/10) Mr Derry bought 500,000 shares, at a cost of 500,000, in a company called Media Pro Four Ltd. On 4 November 2010 (tax year 2010/11) he sold them to the Island House Private Charitable Trust for 85,500, thereby realising a capital loss of 414,500. In his return for 2009/10, submitted by his accountants on 24 January 2011, he claimed share loss relief for that amount against his income for that year under ITA section 132, with the aim of reducing to that extent his taxable income for that year. The appellant (the Revenue) has identified the claim as a case of possible tax avoidance, but whether that is so is not an issue presently before us. The appeal raises two questions. The first relates to the effect in law of such a claim to set the relief against the income for the previous year (the loss relief issue). The second relates to the effect of the inclusion of such a claim (even if erroneous) within Mr Derrys return for the previous year, in circumstances where the Revenue have failed to institute a timeous enquiry into the return under Taxes Management Act 1970 as amended (TMA) section 9A (the tax return issue). The first is an issue of pure statutory interpretation, depending on the interaction of the certain provisions of the ITA and of the TMA. The second raises issues as to the correct understanding and effect of Mr Derrys return, in the light of the law and practice relating to the self assessment regime, having regard in particular to the guidance given by this court in Revenue and Customs Comrs v Cotter [2013] UKSC 69; [2013] 1 WLR 3514 (Cotter). The procedural background is as follows. In December 2011, Mr Derrys accountants submitted his tax return for 2010/11 online, which (consistently with the position as stated in his 2009/10 return) said of the loss of 414,500: This loss relief has already been claimed and relief obtained in 2009/10. Nothing turns on the detail of this return. The Revenue responded by three steps: i) On 4 January 2012, the Revenue gave notice of their intention to open an enquiry into the claim for share loss relief for 2009/10. This notice was issued under TMA Schedule lA, on the footing that the claim had been made outside of a return by virtue of paragraph 2(3) of Schedule 1B. That enquiry remains open. However, if, as Mr Derry submits, Schedule 1B had no application and the claim was properly made within the return for 2009/10, then (as is common ground) the enquiry under Schedule 1A had no statutory basis. ii) On 16 February 2012, the Revenue gave notice of their intention to open an enquiry under TMA section 9A into the return for 2010/11. The accompanying letter indicated that it would be necessary to look at all the arrangements surrounding the claim, an area of concern being that the claimed losses might have arisen from a marketed scheme of arrangements with the purpose of avoiding tax. That enquiry also remains open. iii) On 21 February 2014, the Revenue issued a demand under TMA section 60 for tax allegedly due for the tax year 2009/10 in the sum of 166,044.26 with interest. On 6 June 2014, this was replaced by a demand for 95,546.36 with interest. On 21 May 2014, Mr Derry began the present judicial review proceedings, which were treated by agreement as relating to the replacement demand of 6 June 2014. He failed on both issues before the Upper Tribunal but succeeded on the second issue before the Court of Appeal (and therefore succeeded overall). The Revenue appeal on that issue with the permission of this court; Mr Derry resists the appeal on that issue but seeks to uphold the decision in any event on Issue 1. The statutory framework The Tax Law Rewrite project As noted above, the relevant provisions are contained in the ITA and the TMA. In considering the interpretation of the ITA it is necessary in my view to have in mind its genesis as part of the Tax Law Rewrite project. The main purpose of that project, as stated in the ITA Explanatory Notes (paras 5 and 7) was to rewrite the income tax legislation that has not so far been rewritten so as to make it clearer and easier to use The Act does not generally change the meaning of the law when rewriting it. The minor changes which it does make are within the remit of the Tax Law Rewrite project and the Parliamentary process for the Act. In the main, such minor changes are intended to clarify existing provisions, make them consistent or bring the law into line with established practice. For a useful description and evaluation of the project, see David Salter The tax law rewrite in the United Kingdom: plus change plus cest la meme chose? [2010] BTR 671. I would also refer to the explanation of the drafting approach for the project, given by Stephen Timms MP, then Financial Secretary to the Treasury, in 2009 in the course of opening the Second Reading Committee debate on the second Corporation Tax Bill: The project now has a well established approach to rewriting legislation, developed with the help of people whom it has consulted over a number of years. It restructures legislation to bring related provisions together and to provide more logical ordering. It also helps users by providing navigational aids, such as signposts, to make relevant parts of the legislation easier to find, and it has introductory provisions to set the scene. It unpacks dense source legislation by using shorter sentences and, where possible, it harmonises definitions. It uses modern language and helps the reader with aids such as formulae, tables and method statements, when appropriate. (Hansard, HC, col 3, Second Reading Committee, Corporation Tax Bill, 2008 2009 (January 15, 2009) (HC General Committee Debates, Session 2008 09) cited by David Salter op cit p 680.) In Eclipse Film Partners (No 35) LLP v Comrs of Her Majestys Revenue and Customs [2013] UKUT 639 (TCC); [2014] STC 1114 Sales J, likened the correct approach to statutory interpretation to that appropriate to a consolidation statute (as explained by the House of Lords in Farrell v Alexander [1977] AC 59): When construing a consolidating statute, which is intended to operate as a coherent code or scheme governing some subject matter, the principal inference as to the intention of Parliament is that it should be construed as a single integrated body of law, without any need for reference back to the same provisions as they appeared in earlier legislative versions. An important part of the objective of a consolidating statute or a project like the Tax Law Rewrite Project is to gather disparate provisions into a single, easily accessible code. That objective would be undermined if, in order to interpret the consolidating legislation, there was a constant need to refer back to the previous disparate provisions and construe them (para 97) I would respectfully endorse this guidance, which should be read with Lady Ardens comments (paras 84 90) on the relevance of prior case law. At the same time I would emphasise that the task should be approached from the standpoint that the resulting statutes are intended to be relatively easy to use, not just by professionals but also by the reasonably informed taxpayer, and that the signposts are there for a purpose, in particular to give clear pointers to each stage of the taxpayers journey to fiscal enlightenment. Income Tax Act 2007 The ITA clearly reflects these principles (as will be readily apparent from a comparison with its immediate predecessor, the Income and Corporation Taxes Act 1988 ICTA 1988). It starts in section 2 with an Overview of the Act, designed to give specific guidance as to what follows. Thus, the reader is told that the Act has 17 Parts, the effect of each of which is then summarised with references to the corresponding chapters. Relevant in the present context are Part 2, which contains basic provisions about income tax, including (a) provision about the annual nature of income tax (Chapter 1) and (c) the calculation of income tax liability (Chapter 3); and Part 4 which is about loss relief including relief for (d) losses on disposal of shares (Chapter 6) . In Part 2, section 4 establishes income tax as an annual tax, charged for a tax year running from 6 April to 5 April in the following year. Chapter 3, headed Calculation of Income Tax Liability provides in section 23 a step by step guide to the process: 23. The calculation of income tax liability To find the liability of a person (the taxpayer) to income tax for a tax year, take the following steps. Step 1 Identify the amounts of income on which the taxpayer is charged to income tax for the tax year. The sum of those amounts is total income. Each of those amounts is a component of total income. Step 2 Deduct from the components the amount of any relief under a provision listed in relation to the taxpayer in section 24 to which the taxpayer is entitled for the tax year. See sections 24A and 25 for further provision about the deduction of those reliefs. The sum of the amounts of the components left after this step is net income. Steps 3 to 7 (not relevant to the present dispute) set out further steps in the calculation process, leading to the conclusion: The result is the taxpayers liability to income tax for the tax year. As Henderson LJ noted (para 50) the introduction of the statutory concept of net income under Step 2 was an innovation, bringing about (in his words): a welcome degree of precision and clarity in place of the previous non statutory concept of net statutory income representing total income less allowable deductions. In the present case Step 2 would have pointed a taxpayer in Mr Derrys position to sections 24 and 25 for guidance on the reliefs there mentioned, including (under section 24(1)(a)) Chapter 6 of Part 4 (share loss relief). Section 25(2) would have told him to deduct such reliefs in the way which will result in the greatest reduction in his tax liability. Moving on, as directed, to Part 4 (Loss relief), he would have found in section 59 an Overview of that Part, including a reference to losses on a disposal of certain shares (see Chapter 6) (section 59(1)(d)); and (in case he had forgotten) reminding him that this Part needs to be read with Chapter 3 of Part 2 (calculation of income tax liability) (section 59(2)). Section 131 is the first of a group of sections under Chapter 6, dealing with Share loss relief against general income. An individual is eligible for share loss relief if he incurs an allowable loss for capital gains tax purposes on the disposal of any qualifying shares in any tax year, defined as the year of the loss. Qualifying shares include shares in a qualifying trading company, the conditions for which are set out in sections 134 to 143. Section 132 provides: Entitlement to claim (1) An individual who is eligible for share loss relief may make a claim for the loss to be deducted in calculating the individuals net income (a) (b) (c) for the year of the loss, for the previous tax year, or for both tax years. (See Step 2 of the calculation in section 23.) If the claim is made in relation to both tax years, the (2) claim must specify the year for which a deduction is to be made first. (3) Otherwise the claim must specify either the year of the loss or the previous tax year. (4) The claim must be made on or before the first anniversary of the normal self assessment filing date for the year of the loss. Notable here again is the specific reference back to Step 2 in the calculation of liability under section 23. Section 133 (headed How the relief works) provides: (1) This subsection explains how the deductions are to be made. Step 1 Deduct the loss in calculating the individuals net income for the specified tax year The reference to net income again takes the reader back to section 23 where that concept is defined. At this point, in relation to the first issue, I note Ms McCarthy QCs submission, for Mr Derry, that the provisions of the ITA so far considered give clear and conclusive guidance as to the treatment of his claim to share loss relief for the purposes of assessing his liability for the tax year 2009/10, which is not overridden by anything elsewhere in the ITA or in the TMA. On the other side, for the Revenue Mr Nawbatt QC submits that this is only part of the story. He refers to ITA section 1020(2) which, as he says, would have pointed the taxpayer in the direction of TMA in these terms: For further information about claims and elections, see TMA 1970 (in particular section 42(2), (10) and (11) and Schedule 1A). Although there is no specific reference to TMA Schedule 1B, that as he submits is to be taken as encompassed in the general reference to the TMA itself. He also relies by way of analogy on more specific references to the TMA in other chapters of Part 4. They are in Chapter 2 (Trade losses) and Chapter 5 (Employment loss relief). The legislative pattern in each case is very similar to the provisions relating to share loss relief, but in each case, there appear (respectively in section 60(2) and section 128(7)) the following words: This Chapter is subject to paragraph 2 of Schedule 1B to TMA 1970 (claims for loss relief involving two or more years). There is no equivalent reservation in the sections relating to share loss relief. However, Mr Nawbatt submits that the analogy indicates the appropriate relationship between the loss relief provisions and the TMA; and that, even without such a specific reference, section 1020 is sufficient to point the taxpayer in that direction; or alternatively that the terms of Schedule 1B are sufficiently clear in themselves to make such a signpost unnecessary. The TMA, as its title implies, is concerned principally with the management of the tax rather than fixing liability. Although it dates back to 1970, it has been subject to substantial amendment since then, in particular in connection with the introduction of self assessment (under the Finance Act 1994) with effect from the year 1996 1997. The following provisions are those in force in the relevant tax year, that is 2009/10. I refer first to those relating to tax returns and self assessment, which are relevant principally to the second issue. Section 8(1) empowers an officer of HMRC to give a notice requiring a person chargeable to income tax and capital gains tax for a year of assessment to make and deliver, on or before the date specified in subsection (1A), a return containing the information required by the notice, supported by such accounts and other relevant material as may reasonably be so required. The date so specified (for present purposes) is 31 January next following the year of assessment. By subsection (1AA)(a): the amounts in which a person is chargeable to income tax and capital gains tax are net amounts, that is to say, amounts which take into account any relief or allowance a claim for which is included in the return; By subsection (1AA)(b) the amount payable by way of income tax is the difference between the chargeable amount and the aggregate amount of any income tax deducted at source and certain tax credits. Subsection (1H) requires the Commissioners to prescribe what constitutes an electronic return. (See also section 113 which provides generally for any returns to be in such form as the Board prescribe.) Section 9(1) provides that, subject to immaterial exceptions, every return under section 8: shall include a self assessment, that is to say (a) an assessment of the amounts in which, on the basis of the information contained in the return and taking into account any relief or allowance a claim for which is included in the return, the person making the return is chargeable to income tax and capital gains tax for the year of assessment; and (b) way of income tax an assessment of the amount payable by him by Section 9A enables an officer of the Board to give notice of his intention to enquire into a return under section 8 within the time allowed, that is 12 months from the date of delivery for returns delivered on or before the date specified in the previous section. By subsection (4)(a), an enquiry may extend to anything contained (or required to be contained) in the return, including any claim included in the return. Returning to the first (loss relief) issue, section 42 (headed Procedure for making claims etc) provides: (1) Where any provision of the Taxes Acts provides for relief to be given, or any other thing to be done, on the making of a claim, this section shall, unless otherwise provided, have effect in relation to the claim. (2) where notice has been given under section 8 of this Act, a claim shall not at any time be made otherwise than by being included in a return under that section if it could, at that or any subsequent time, be made by being so included. (11) Schedule 1A to this Act shall apply as respects any claim or election which is made otherwise than by being included in a (a) return under section 8 of this Act, (11A) Schedule 1B to this Act shall have effect as respects certain claims for relief involving two or more years of assessment. Thus subsections (11) and (11A) take the reader on to Schedules 1A and 1B. The latter is most directly relevant to the first issue. Schedule 1A (headed Claims etc not included in returns) provides for any such claim to be made in such form as the Board may determine (paragraph 2(3)), and provides power to enquire into the claim within a specified period (paragraph 5). The Board is required to give effect to a claim as soon as practicable by discharge or repayment of tax (paragraph 4(1)), save that, if an enquiry has been opened into the claim, this obligation is postponed until the enquiry is completed, subject to power before then to give effect to all or part of the claim on a provisional basis (paragraph 4(3)). Schedule 1B (headed Claims for relief involving two or more years) provides in paragraph 2 (headed Loss relief): (1) This paragraph applies where a person makes a claim requiring relief for a loss incurred or treated as incurred, or a payment made, in one year of assessment (the later year) to be given in an earlier year of assessment (the earlier year). (2) Section 42(2) of this Act shall not apply in relation to the claim. (3) The claim shall relate to the later year. (4) Subject to sub paragraph (5) below, the claim shall be for an amount equal to the difference between the amount in which the person is chargeable to (a) tax for the earlier year (amount A); and (b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (amount B). (6) Effect shall be given to the claim in relation to the later year, whether by repayment or set off, or otherwise. The loss relief issue The issue in short is whether, having exercised his right (under section 132) to claim the relevant loss relief in the previous year (2009/10), Mr Derry was correct to deduct that loss in calculating his net income and consequent tax liability for that year (under section 23); or whether, as the Revenue contend, that right was in effect overridden by TMA Schedule 1B, with the result that the loss, though claimed in year 2009/10, was to be treated as relating to the following year. The decisions below Both the Upper Tribunal and Court of Appeal decided this issue in favour of the Revenue. It is not possible to do justice to their reasoning without relatively full reference to the leading judgment of Henderson LJ in the Court of Appeal (agreed by the other members of the court), which in turn refers with general approval to that of Morgan J in the Upper Tribunal. It also provides a useful summary of the respective contentions of the parties, which have been substantially repeated in this court. Having set out the relevant provisions of the TMA, Henderson LJ observed (paras 26 28) that the terms of paragraph 2 of Schedule 1B, read in isolation, were apt to apply to a claim for loss relief under section 131, and as such would have the same consequences as explained (in respect of employment loss relief) by Lord Hodge in Cotter. He identified the critical issue as being whether the omission from Chapter 6 of a provision equivalent to section 60(2) or section 128(7) reflects a legislative intention that Schedule 1B should not apply to Chapter 6, even though (as I have already pointed out) the language of paragraph 2 of Schedule 1B would be entirely apt to apply to Chapter 6 in the same way as it applies to Chapters 2 and 5. (para 35) He recorded (paras 37ff) that Morgan J had begun by observing that TMA section 42 applied unless otherwise provided and asking whether there was anything to disapply the section in respect of Mr Derrys claim under section 132. He had answered that question in the negative, noting also that neither side had put forward any persuasive reason for the difference of treatment between claims under Chapters 2 and 5 as compared to Chapter 6. He had described the specific references in the former to Schedule 1B as signposts; but he did not regard the lack of a similar signpost in Chapter 6 as clear enough to be otherwise provided for the purposes of section 42(1). He had also concluded that there was no inconsistency between the detailed provisions of sections 132 and 133 of ITA 2007, taken together with the operation of section 23 and paragraph 2 of Schedule 1B. Henderson LJ regarded this observation as clearly correct, adding that it (was) not challenged by Mr Derry. (The latter understanding appears to have been mistaken, having regard to an extract we were shown by Ms McCarthy from Mr Derrys Replacement Skeleton Argument in the Court of Appeal.) Morgan J had also considered and rejected an argument for Mr Derry based on the reference in section 42(11A) to its application only to certain claims. Again, Henderson LJ agreed commenting: The structure of Schedule 1B is that it applies to certain specified claims for relief involving two or more years. The provisions relating to loss relief are contained in paragraph 2. The remaining paragraphs deal with entirely separate claims, for example relief for fluctuating profits of farming etc in paragraph 3, and the carry back of post cessation receipts in paragraph 5. It is therefore entirely natural for the provision in the body of TMA 1970 which gives effect to Schedule 1B to say that it shall have effect as respects certain claims for relief involving two or more years of assessment, that is to say the various claims for relief which are dealt with in the Schedule. Much clearer language would in my judgment have been needed if Parliament had intended to stipulate that the provisions contained in Schedule 1B were to apply only to claims expressly identified elsewhere in the Taxes Acts as ones to which Schedule 1B applied. Another way of making the same point is to say that the subject matter of Schedule 1B is to be ascertained by looking at its provisions, which are given effect (but not circumscribed) by section 42(11A). (para 42) Turning to the submissions in the Court of Appeal, he noted Ms McCarthys reliance on Lord Dunedins well known enumeration of the three stages in the imposition of a tax that is, declaration of liability, assessment, and methods of recovery (Whitney v Inland Revenue Comrs [1926] AC 37, 52). The first (in Lord Dunedins words) was the part of the statute which determines what persons in respect of what property are liable. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. She submitted that Mr Derrys liability was fixed by the provisions of Chapter 6 and could not be overridden by provisions relating to the assessment stage, other than by clear words as found in Chapters 2 and 5 of ITA Part 4. Henderson LJ disagreed (para 49). Lord Dunedins classic statement was of little assistance in respect of the present UK tax system which is vastly more complex than it was a century ago: one cannot always expect today to find that provisions relating to the imposition and calculation of liability are unaffected by provisions relating to the machinery of assessment. The language of Schedule 1B paragraph 2 was clearly apt to cover Mr Derrys claim, and the absence of an express signpost in Chapter 6 was not a sufficiently strong counter indication. He also rejected (para 50) an argument that sections 132 133 constituted a more specific statutory regime, enacted later than Schedule 1B, and should therefore take precedence. Finally, he agreed with the Upper Tribunal that there was nothing in the legislative history which cast useful light on the question (paras 51 52). He noted Ms McCarthys submission that the inclusion of signposts in respect of trade loss relief and employment loss relief may have been connected with the treatment of the predecessor provision (section 380 of ICTA 1988) by the Court of Appeal in Blackburn v Keeling [2003] EWCA Civ 1221. But the reason for the absence in sections 132 133 of a similar cross reference remained obscure; the possibility that it was simply an oversight certainly cannot be excluded. Comment on Issue 1 With respect to the carefully developed reasoning of the judges below, they seem to me not only to have paid too little regard to the legislative purpose and scheme of the ITA, but also to have started from the wrong point. It is notable that the introductory paragraphs of Henderson LJs judgment make only passing reference to the opening sections of the ITA discussed above, and in particular to section 23, by which (on its face) Mr Derrys liability for the relevant tax year 2009/10 was fixed. Instead, his reasoning on this part of the case starts from the proposition that the words of TMA Schedule 1B paragraph 2 read in isolation are apt to cover Mr Derrys claim, and only then refers to the governing provisions of the ITA, asking whether the omission of a specific signpost in ITA Chapter 6 reflects a legislative intention that it should not apply (paras 26, 35). While it may be true, as Henderson LJ said, that modern tax legislation in general is much more complex than at the time of Lord Dunedins classic statement, the purpose of the tax law rewrite was to restore a measure of simplicity and coherence to the principal tax statutes. In any event, one does not need high judicial authority to make the obvious point that the first step in the imposition of a tax is to establish (in Lord Dunedins words) what persons in respect of what property are liable. Taken together section 23 and sections 131 132 appear to constitute a clear and self contained code for the treatment of a claim to share loss relief such as that of Mr Derry. Sections 132 133 in terms give him an entitlement to make the claim, to specify the tax year to which it is to be applied, and to do so by deducting it in the calculation of his net income for the purpose of section 23. For good measure section 132(1) provides a specific signpost to Step 2 in section 23. That section in turn makes clear that the result of that, and the other steps there set out, is his tax liability for the tax year in question. Having taken such care to walk the taxpayer through the process of giving effect to his entitlement as part of his tax liability for the year specified by him, it would seem extraordinary for that to be taken away, without any direct reference or signpost, by a provision in a relatively obscure Schedule of another statute concerned principally, not with liability, but with management of the tax. Section 1020 makes no specific reference to Schedule 1B, and in any event refers only to information in general terms, rather than anything likely to affect the substance of liability. By contrast sections 60(2) and 128(7) are more than mere signposts, as the judges below characterised them. The words subject to are substantive in effect, imposing a qualification on the right otherwise conferred by those provisions. Applying ordinary principles of interpretation, the absence of similar words in section 132 would naturally be taken as indicating that this right is not subject to the same qualification. Turning to the TMA, it is true that words of Schedule 1B taken on their own would be apt to apply to a claim under sections 132 133. However, I do not regard that as enough to displace the clear provisions of the ITA in respect of liability. I do not see this as turning so much on whether one set of provisions is more specific than the other, but rather on the fact that the ITA is in principle the governing statute in respect of tax liability, and as such should take precedence in the absence of any indication to the contrary. Further, unlike the judges below, I see a significant inconsistency between the two sets of provisions: the first gives the taxpayer an unqualified right to claim a deduction in the previous year; the second in effect removes that right by treating it as relating to the current year. I also see force in Ms McCarthys reliance on the reference in section 42(11A) to certain claims for relief involving two or more years. As she says, this may be read as implying that not all such claims are covered, and that one needs to look elsewhere to identify which. (I do not forget that in Cotter para 14, Lord Hodge proceeded on the basis that section 42(11A) had the same effect in respect of employment loss relief as the specific provision in section 128(7), but the point was not in issue and does not seem to have been subject to argument.) The only countervailing consideration, to my mind, is the lack of any obvious explanation, in the statutory history or otherwise, of the different treatment of this form of loss relief. In a post hearing note Mr Nawbatt gave a detailed account of the treatment of the various forms of loss relief under the previous legislation. This shows, as is common ground, that the pre 2007 law did not draw any material distinction between share loss relief (section 574 ICTA 1988), and trade and employment loss relief (section 380 ICTA 1988). Mr Nawbatt was also able to point to some indications in the ITA Explanatory Notes (eg in respect of section 1025, which is not directly relevant to the present case) that the authors of the notes may have assumed that share loss relief would be subject to TMA Schedule 1B, in the same way as the other forms of relief. However, taken at their highest, these indications are far from providing a basis for departing from the ordinary principles of statutory interpretation, absent any suggestion that they produce a result which is absurd or unworkable. Indeed, for the taxpayers liability to be determined by reference to legal archaeology of this kind would negate the whole purpose of the tax law rewrite. It is neither necessary nor appropriate for the court to speculate as to Parliaments intentions to justify a departure from the natural interpretation of the statutory language. For these reasons, in respectful disagreement with the Upper Tribunal and the Court of Appeal, I would hold that Mr Derry was entitled to make his claim to share loss relief in the year 2009/10. The tax return issue The view I have reached on the first issue makes it strictly unnecessary to reach a conclusion on the second issue. So much was conceded by Mr Nawbatt for the Revenue in response to a question from the court early in the hearing but see para 65 below. Consistently with that concession, if (as I have decided) Mr Derry succeeds on Issue 1, then the claim properly formed part of Mr Derrys return for the year 2009/10, and that it could only be challenged by a notice served within time under TMA section 9A. However, the second issue is of some difficulty and of general importance. It may be helpful therefore for us to express some views on the respective submissions. This issue has to be approached on the assumption that Mr Derry was wrong on the first issue, and that the inclusion of the loss relief claim in the assessment of his liability for 2009/10 was in error. Before further considering this issue, it is necessary to refer in more detail to the factual background. The sequence of events On 24 January 2011 Mr Derrys accountants filed his 2009/10 self assessment tax return (the 2010 return). The Additional Information pages (Ai3 and Ai4) were completed as follows. In Boxes 3 and 4 (headed Trading Losses) he put 414,500.00 as the amount for which he was claiming relief, and 2009/10 as the tax year for which it was claimed. Box 19 (which was a blank space for additional information) contained the following entry: Box 3 of page Ai3 shows capital losses realised on disposal of subscriber shares in an unlisted trading company in year ended 5 April 2011. These losses have been carried back to year ended 5 April 2010 and relief claimed under section 131, section 132 ITA 2007. He also calculated his own tax and completed the tax calculation summary pages (pages TC1 and 2) in the 2009 10 return as follows. On page TCl (headed self assessment), in Box 1 (total tax due before any payments on account), the figure of 95,546.36 appeared automatically as a result of entries made elsewhere on the form. Page TC2 (headed adjustments to tax due) stated You may need to make an adjustment to increase or decrease your tax for 2009 10 because you are . carrying back to 2009 10 certain losses from 2010 11 . In Box 15 (Any 2010/11 repayment you are claiming now) Mr Derry inserted the figure of 165,800; and in Box 16 (Any other information) the words: The reduction in tax payable in Box 15 of page TC2 relates to the loss carry back claim arising from the carry back of losses of GBP 414,500 as set out on page Ai3. The corresponding reduction in tax payable in the year ended 5 April 2010 following this loss carry back claim is GBP 165, 800 being GBP 414,500 at 40%. Mr Derry had already suffered tax deducted at source of 102,233.64 on his income for 2009/10 (made up principally of employment income of 497,120). What followed was described by Henderson LJ: 10. the effect of his claim for loss relief carried back from 2010/11 was to generate a significant repayment of tax due to him. This was quantified in his personal tax computation, generated by the 2010 Return, as a refund due to him of 70,253.64. 11. On 18 October 2011, HMRC repaid a sum of 70,487.90 to Mr Derry. It is unclear why HMRC refunded this slightly higher amount, but the payment was clearly intended to include the amount claimed by Mr Derry, albeit HMRC now say that the payment was made in error because full checks had yet to be completed in relation to the loss relief claim. The legal effect of these entries is a matter of dispute. In the first place the Revenue do not accept that the personal tax computation is properly to be characterised as generated by the 2010 Return (in Henderson LJs words). They accept that Mr Derry self assessed his own tax liability for 2009/10, but their position is that his self assessed liability was in the sum of (plus) 95,546.36, given in Box 1 on page TC1, not the figure after taking account of loss relief. The reference to the loss relief claim was to be treated as additional information in respect of a free standing credit or FSC (a non statutory term: see Upper Tribunal para 61), but not as directly relevant to his liability for the year 2009/10. The judgments below On this issue there was a difference between the Upper Tribunal and the Court of Appeal. Morgan J agreed with the Revenues interpretation: I consider that the tax return should be construed against the background of the relevant legal provisions. Under Chapter 6 of Part 4 of ITA, Mr Derry is able to make a claim in relation to such capital losses against the income in the year 2010 2011 and also the year 2009 2010 but such a claim relates to the year 2010 2011 and does not reduce the tax payable for the year 2009 2010. Against that background, I consider that the presence of the claim for capital losses does not displace the clear assessment to tax in the sum of 95,546.36. (UT para 52) Henderson LJ disagreed with this reasoning (CA para 60). It failed to recognise the distinction between the claim itself, which could only be given effect in 2010/11, and the self assessment which Mr Derry performed, albeit on an erroneous basis, for 2009/10; and also failed to give effect to the adjustment made and explained in Boxes 15 and 16 on page TC2. Further it was inconsistent with parts of Lord Hodges reasoning in Cotter. He also rejected as an impossible contention the submission for HMRC that the entry in Box 15 should not be construed as forming part of the calculation of liability to tax for 2009/10: The purpose of the tax calculation is to calculate the tax due for the year of assessment. The rubric above boxes 13 to 15 refers to the need to make an adjustment to increase or decrease your tax for 2009 10, because of claims (inter alia) to carry back to 2009/10 certain losses from 2010/11. In this context, although the wording of Box 15 itself (Any 2010 11 repayment you are claiming now) is on any view rather imprecise, it can only sensibly be understood as referring to a carry back of losses from 2010/11 in reduction of the tax actually due for 2009/10. This is what Mr Derry purported to do, and this was the basis on which he calculated the repayment of tax due to him (para 63) Cotter At this stage it is necessary to refer in more detail to the leading judgment of Lord Hodge in Cotter itself. Mr Cotter had claimed to carry back to the previous year (2007/08) loss relief allegedly sustained in 2008/09. He had originally submitted his return for 2007/08 without a claim for loss relief and had left it to the Revenue to calculate the tax due. That had led to a calculation of his tax liability for the year based on the return as it then stood. He later entered into a tax avoidance scheme intended to eliminate that liability, for which purpose his accountants submitted a provisional 2007/08 loss relief claim and proposed amendments to his 2007/08 self assessment form relying on his loss relief claim. The Revenue opened an enquiry into the claim under Schedule 1A, and in the meantime refused to give effect to the claim. In due course they instituted county court proceedings for the tax due. In his defence Mr Cotter challenged the jurisdiction of the court, on the grounds that he had made an effective claim for relief in his tax return for 2007/08 which could only be challenged by an enquiry under section 9A, and in relation to which the First tier Tribunal had exclusive jurisdiction. The proceedings were transferred on this issue to the Chancery Division of the High Court, which rejected his defence. Although his appeal to the Court of Appeal was successful, their decision was reversed by the Supreme Court (the single judgment being given by Lord Hodge). It was held that by virtue of Schedule 1B his claim, though referred to in his amended 2007/08 tax return, must be treated as relating to the following tax year, and not therefore as part of the return in the relevant sense, that being limited to the information required to establish his liability for the year in question. More directly relevant to the present case, however, is a passage in Lord Hodges judgment commenting (obiter) on the position if Mr Cotter had made the calculation of liability himself, rather than leaving it to HMRC to do so. In order to set this passage in the context of Lord Hodges discussion of the interaction of the relevant provisions and the tax return form, it is appropriate to quote the relevant paragraphs in full: 24. Where, as in this case, the taxpayer has included information in his tax return but has left it to the revenue to calculate the tax which he is due to pay, I think that the revenue is entitled to treat as irrelevant to that calculation information and claims, which clearly do not as a matter of law affect the tax chargeable and payable in the relevant year of assessment. It is clear from section 8(1) and 8(1AA) of the 1970 Act that the purpose of a tax return is to establish the amounts of income tax and capital gains tax chargeable for a year of assessment and the amount of income tax payable for that year. The revenues calculation of the tax due is made on behalf of the taxpayer and is treated as the taxpayers self assessment: section 9(3)(3A) of the 1970 Act 25. The tax return form contains other requests, such as information about student loan repayments (page TR2), the transfer of the unused part of a taxpayers blind persons allowance (page TR3) or claims for losses in the following tax year (Box 3 on page Ai3) which do not affect the income tax chargeable in the tax year which the return form addresses. The word return may have a wider meaning in other contexts within the 1970 Act. But, in my view, in the context of sections 8(1), 9, 9A and 42(11)(a) of the 1970 Act, a return refers to the information in the tax return form which is submitted for the purpose of establishing the amounts in which a person is chargeable to income tax and capital gains tax for the relevant year of assessment and the amount payable by him by way of income tax for that year: section 8(1) [of] the 1970 Act, as substituted firstly by section 178(1) of the Finance Act 1994 and then further amended by section 121(1) of the Finance Act 1996 and by section 114 of and Schedule 27 to the Finance Act 2007. 26. In this case, the figures in Box 14 on page CG1 and in Box 3 on page Ai3 were supplemented by the explanations which Mr Cotter gave of his claim in the boxes requesting any other information and additional information in the tax return. Those explanations alerted the revenue to the nature of the claim for relief. It concluded, correctly, that the claim under section 128 of the 2007 Act in respect of losses incurred in 2008/2009 did not alter the tax chargeable or payable in relation to 2007/2008. The revenue was accordingly entitled and indeed obliged to use Schedule 1A of the 1970 Act as the vehicle for its enquiry into the claim: section 42(11)(a). 27. Matters would have been different if the taxpayer had calculated his liability to income and capital gains tax by requesting and completing the tax calculation summary pages of the tax return. In such circumstances the revenue would have his assessment that, as a result of the claim, specific sums or no sums were due as the tax chargeable and payable for 2007/2008. Such information and self assessment would in my view fall within a return under section 9A of the 1970 Act as it would be the taxpayers assessment of his liability in respect of the relevant tax year. The revenue could not go behind the taxpayers self assessment without either amending the tax return (section 9ZB of the 1970 Act ) or instituting an enquiry under section 9A of the 1970 Act. It follows that a taxpayer may be able to delay the 28. payment of tax by claims which turn out to be unfounded if he completes the assessment by calculating the tax which he is due to pay. Accordingly, the revenues interpretation of the expression return may not save it from tax avoidance schemes. But what persuades me that the revenue is right in its interpretation of return is that income tax is an annual tax and that disputes about matters which are not relevant to a taxpayers liability in a particular year should not postpone the finality of that years assessment. While recognising that the last two paragraphs were not binding, Henderson LJ regarded them as following logically from Lord Hodges earlier analysis. He saw a clear distinction between the inclusion in the return of information which is irrelevant in law to the taxpayers liability for that year (even if included by implicit invitation of the Revenue), and the taxpayers self assessment of the tax which he is due to pay: a taxpayers self assessment is a different matter. Plainly, errors of many different kinds may be made in such an assessment, and they may include errors about the availability of a relief. If the Revenue is dissatisfied with the taxpayers self assessment, its remedy is either to amend the return or to open an enquiry into it under section 9A of TMA 1970. , such an enquiry may extend to anything contained (or required to be contained) in the return. The boxes on page TC2 for adjustments to tax due must in my view be regarded as containing information required to be contained in the return, where the taxpayer elects to perform his own self assessment, because such adjustments form an integral part of the calculation of the tax due to be paid by him for the year in accordance with sections 23 and 24 of ITA 2007. It follows that the information contained in those boxes cannot be regarded as extraneous to the return. As I understand it, this is the essential point which Lord Hodge was making in Cotter at para 27, and if I may respectfully say so, I agree with it. (para 57) The Revenues difficulty in the present case arose simply from their failure to take the obvious step of opening an enquiry into the 2010 return within the statutory time limit. The submissions in the appeal Ms McCarthy generally supported the reasoning of the Court of Appeal on this issue, and relied in particular on Lord Hodges observations in paras 27 28 as directly applicable to Mr Derrys claim. For the Revenue, Mr Nawbatt submitted that the obiter observations in Cotter cannot be taken as suggesting that reliefs may be forced into year 1 where they do not in law relate to year 1. Lord Hodges observations should not be taken as intended to create a situation where a taxpayer can erroneously (or perhaps deliberately) make a claim as part of his self assessment exercise and expect to benefit from the error unless noticed and acted upon by the Revenue. The Court of Appeals reasoning in the present case, he submitted, turned on a misunderstanding of the correct meaning of self assessment, which relates solely to the action required to establish the amounts in which a person is chargeable to tax for the year, as reflected in the total tax figure given in the self assessment Box. It is wrong to regard other parts of the Tax Calculation Summary pages as part of that exercise if, as explained in Cotter (para 25) they do not affect the assessment of income tax chargeable for the year. Mr Deans evidence At this point I should refer to the witness statement of Mr Graham Dean, a Senior Investigator with the Revenue, which was admitted before the Upper Tribunal and referred to by Morgan J on other matters (see UT paras 47, 59ff). Mr Deans evidence was not mentioned by the Court of Appeal. Nor was it included in the original papers for this court or referred to in the written submissions; it was only produced at the request of the court. He speaks with experience as an Inspector of Taxes for more than 25 years, and particular experience of leading investigations into share loss relief avoidance. Mr Dean explains the procedures governing the submission of tax returns online, by use either of the Revenues own software, or software provided by other suppliers complying with the Revenues technical specifications and designed to produce the same computations (paras 5 6). He comments on the significance of different parts of the return: As well as the mandatory information relating to income and gains and the self assessment for the year in question (as required under sections 8 and 9), the tax return also provides spaces to allow the taxpayer, if he wishes, to provide other information or to make claims not related to the year in question. These are provided for administrative convenience and customer service but, being optional, are not subject to the consistency checks described above. One such matter is the ability to submit an early claim to relieve trading or capital losses arising in the immediately following tax year (year 2) by reference to income for the current year (year 1) or an earlier year. If the taxpayer wishes to make such a claim effective, he would also need to compute the amount of the tax repayment that he considers will arise from the claim and enter this in the box labelled Any [year 2] payment you are reclaiming now within the section headed adjustments to tax due. As these claims are not part of the year 1 return and do not affect the self assessment for that year, they are frequently referred to as stand alone claims. (paras 12 13) He explains that such a year 2 repayment claim is shown on the taxpayers self assessment statement of account as a Free Standing Credit or FSC. This, he says, simply records what the taxpayer has claimed. It does not represent HMRCs approval of the claim. Referring to Box 15 on page TC2, he says that is not part of the return, so it is not subject to any of the automated tax consistency checks (para 16). Commenting on Mr Derrys own return, and the entry in Box 15, he says that the effect of entering the figure of 165,800 in this box was to automatically generate an FSC of the same amount ; and that, when it was set against the balancing payment of 95,546.36 due on 31 January 2011, the computer automatically allocated the FSC against that liability first showing the balance as a repayment pending of 70,253.64 (paras 25, 28). Although he has been unable to ascertain the precise circumstances of the repayment made to Mr Derry before the conclusion of the enquiry, his own view, given the size of the claim and the fact that the company in question had not been identified, was that it had been made if not in error, then prematurely (para 31). Finally, he mentions the operational problems caused for the Revenue by the Court of Appeals decision in Cotter. But notes without further comment that the Revenues appeal was allowed by the Supreme Court. It does not appear that any similar evidence was before the court in Cotter. There was some uncertainty at the end of the hearing about the precise status of Mr Deans evidence, or the extent to which it was relied on in support of the Revenues submissions. Although we invited further submissions on certain questions apparently arising from it, I do not think the evidence itself is critical to our consideration of this issue. It is of some interest in explaining, not only the background to the present appeal, but more generally aspects of the Revenues approach to the self assessment process, and the workings of its internal systems. However, as Ms McCarthy rightly submits, neither the Revenues internal management systems, nor Mr Deans subjective understanding of them, can ultimately be determinative of the issue before us. That must turn on the correct interpretation of the law, and an objective reading of the tax return within its statutory framework. It may be, as Lady Arden suggests, that the relevant statutory framework should be taken as including the terms in which the relevant return forms, paper or electronic, are prescribed by the Revenue (under sections 8(1H) and 113 of the 1970 Act). That may in turn raise a question whether, in respect of the on line forms, those prescribed terms include, or are to be taken as including, the automatic adjustments built into the Revenues software, including the calculation in Box 1. Mr Deans evidence provides no direct assistance on the point, and neither party based any submissions on it. On the limited material before us, it is difficult to draw any firm conclusions. Post hearing submissions on Cotter One point on which we asked for clarification was the Revenues position on Lord Hodges obiter comments in Cotter, and in particular whether it mattered that the return in that case was in paper form rather than on line as in the present case. I quote Mr Nawbatts response: The material difference between submitting a paper return (including the tax calculation pages) and an on line return is that because the tax calculation pages on the paper return are completed manually it is physically possible for the taxpayer to enter into Box 1 TC1 a figure that is not the sum of the relevant boxes that feed into the self assessment for the year. As explained in Rouse 2 [R (Rouse) v HMRC [2014] STC 230], at para 14, if HMRC wanted to enquire into that Box 1 figure it would have to open a section 9A enquiry Mr Cotters case involved a paper return and had he requested the tax calculation pages he would have completed the Box 1 TC1 calculation manually rather than leaving it to HMRC to carry out the calculation. It is HMRCs position that Lord Hodges obiter comments in para 27 were addressing a hypothetical scenario in which Mr Cotters manual calculation of the Box 1 figure had involved the deduction of the year 2 loss relief, ie the figure Mr Cotter had manually inserted into Box 1 had been arrived at after deducting the year 2 relief . This interpretation, he submitted, is supported by Lord Hodges reference to Mr Cotter having calculated his liability to income tax by completing the tax calculation summary pages, giving the Revenue his assessment that specific sums or no sums were due as the tax chargeable for that year. The equivalent pages of the on line form used by Mr Derry did not permit such a specific calculation. To establish his claim he would have needed to complete the capital gains pages on the year 1 return, which it is said would have fed into the figure in Box 1. Ms McCarthy rejected this narrow view of Lord Hodges comments, and also the Revenues attempt to distinguish between the different parts of the Tax Calculation Summary. As she points out, Box 1 includes a reference to student loan repayment, which as Lord Hodge accepted (para 25) is extraneous to the chargeable income tax of the year. On the other hand, the Revenue accept that some other parts of the summary (Boxes 11 and 12: Blind persons surplus allowance and married couples surplus allowance) do feed into the tax for the current year. As Ms McCarthy submits, it is impossible to draw any clear distinction based simply on the printed entries in the form itself. She rejects as absurd the novel suggestion that, in order to claim a relief relevant to his income tax liability, he should have to fill in a part of the return dealing with capital gains. Comment on Issue 2 Ms McCarthys submission, like the Court of Appeals reasoning, appears consistent with the natural reading of the statutory provisions. Section 9 requires the taxpayer to make a self assessment of the chargeable amount of tax on the basis of the information contained in the return and taking into account any relief a claim for which is included in the return (emphasis added). On its face, this implies that the return is treated as including the relief as claimed by the taxpayer in his return, whether or not the claim ultimately proves well founded. The Revenues case rests on the assertion that the process of self assessment is defined by the figure which appears in Box 1 under that title, and that other claims, including in particular in Box 15, are irrelevant in so far as they do not feed into the self assessment for the current year. Although, as already noted (para 40 above), Mr Nawbatt had conceded that this issue would not arise if Mr Derry succeeded on the first issue, his post hearing submission appeared to go back on that. Mr Nawbatt has not in terms sought permission to withdraw his concession and I agree with Ms McCarthy that it is much too late for him to do so. But in any event, the submission seems to me misconceived. It implies that, by prescribing an on line form which makes it impossible to make the necessary adjustment to the self assessment figure, the Revenue can deprive a taxpayer of a relief to which he is lawfully entitled and to which a claim has been clearly included on the face of his return. That cannot be right. It may be, as Mr Dean seems to be saying, that it would have bypassed the Revenues automated tax consistency checks. However, that is not the fault or the concern of the taxpayer. Whether the same would apply if the taxpayer had no such lawful entitlement raises more difficult issues. As already noted (para 52 above), the Court of Appeal proceeded on the basis that, even if the claim was made in error in that year, it would still be part of the self assessment. As Henderson LJ said: Plainly, errors of many different kinds may be made in such an assessment, and they may include errors about the availability of a relief. If the Revenue is dissatisfied with the taxpayers self assessment, its remedy is either to amend the return or to open an enquiry into it under section 9A of TMA 1970 (para 57) As he saw it, the Revenues difficulty was of their own making, in that they had failed to take the obvious step of opening a timely enquiry into the 2010 Return, so enabling them to challenge the repayment of tax claimed by Mr Derry at the same time as pursuing enquiries into the claim itself and into his 2011 return (para 58). Ms McCarthy in substance adopts the same reasoning. The fact that the taxpayers self assessment may be erroneous in some respect does not impact on the procedural means available to the Revenue to challenge it. Mr Nawbatt on the other side submits that, if the inclusion of the claim for that year was invalid in law, it could not be relied on to create an immunity from challenge which would not otherwise be available. I am not satisfied that these issues have been fully explored in argument before us, which has concentrated on the entitlement to relief rather than the means of enforcement. As has been seen, there remain unresolved uncertainties as to the correct interpretation of the entries in the on line form and their treatment by the Revenue. In addition, we heard little discussion of the relationship of the enquiries respectively under section 9A and Schedule 1A paragraph 5. Apart from timing, I did not understand it to be suggested that there was any material difference between the processes. While it may be prudent for the Revenue to institute an enquiry under the former section, if there is any doubt about what is properly to be treated as part of the return, it does not necessarily follow that the Revenue is thereafter bound by the contents of the return for all purposes. If it later emerges that a claim was wrongly included in the return for that year (for example, because it should have been treated as subject to TMA Schedule 1B), it may at least be arguable that the Revenue should not be precluded at that later stage from opening an enquiry on the correct basis. These are potentially important issues. Since we do not have to decide them in the context of the present case, I would prefer to leave them open for further consideration in an appropriate case with the benefit of full examination of the relevant law and practice. Conclusion For the reasons given under Issue 1 I would dismiss the Revenues appeal, and confirm the order of the Court of Appeal. Finally, I repeat Lord Hodges concluding comment in Cotter: 36 The revenues submission, which I have accepted, that some entries in a tax return form are not part of the tax return for the purposes of, among others, section 9 and 9A of the 1970 Act, may create avoidable uncertainty to taxpayers and their advisers. But that uncertainty could be removed if the return form which the revenue prescribes (section 113 the 1970 Act) were to make clear which boxes requesting information were not relevant to the calculation of tax due in the particular year of assessment. In particular, the revenue could make this clear where the form provides for the intimation of stand alone claims which relate to another tax year. We were not told what action, if any, has been taken in response to this advice. The uncertainties revealed by the submissions in the present case have underlined its importance. There is an urgent need for clarification, not only of the precise legal status of the different parts of the return, but also of any relevant differences between the paper and electronic versions of the return, and their practical consequences. LADY ARDEN: I am most grateful to Lord Carnwath for his judgment. I agree that this appeal should be dismissed as a result of Issue 1, subject to the observations on interpreting consolidation statutes made below. But on the second issue I have respectfully reached a different conclusion and so I will take that issue first. In summary on Issue 2, I would provisionally express the view that in consequence of this courts decision in Revenue and Customs Comrs v Cotter [2013] 1 WLR 3514 and the evidence of Mr Graham Dean on behalf of HMRC, which Lord Carnwath summarises at paras 57 58 above, the erroneous entry of a loss relief claim which a taxpayer was not entitled to make in that year (not this case) in Box 15 of the prescribed online tax return does not make that tax return form a tax return for enquiry purposes. That (provisionally) means that in those circumstances HMRC would be right to open an enquiry into the claim and not the return. Because this appeal is principally about which enquiry HMRC must open, I will take Issue 2 first. Issue 2: would making an erroneous claim for relief in an online tax return make that claim part of the tax return? Issue 2 arises where a taxpayer has a claim for relief which relates to two years and Taxes Management Act 1970 (TMA), Schedule 1B applies to it (a year 2 related claim). Under TMA, section 9(1) he must include in his return an assessment of the amount for which he is liable to pay tax taking in to account any relief or claim included in the return (see paras 22 and 64 above) (the tax calculation pages). Suppose that the taxpayer submits a return online for the year and claims in it relief for a loss which relates to the following year. His return will contain Box 15 (described by Lord Carnwath at para 43 above). Will his entry of a claim in Box 15 form part of that return for the purposes of the enquiry provisions of the TMA so that if HMRC wish to open an enquiry into that claim for relief they must open an enquiry into the return and not the claim? There needs to be a clear answer to this question to avoid unnecessary service of numerous precautionary enquiry notices. The relevant part of the tax calculation pages of the tax return is Box 1, which set out the total tax due, and Boxes 13 15 and the narrative above all three boxes, namely Boxes 13 15. Lord Carnwath has described Box 15 and that narrative in para 43 above. Box 13 is for increase in tax due because of adjustments in an earlier year and Box 14 is for decrease in tax due because of adjustments in an earlier year. HMRC has filed the evidence of Mr Dean. According to Mr Dean, once the information in the tax return (apart from the tax calculation pages) has been completed, the software presents a tax calculation from that information. Mr Dean further explains that, when a claim is inserted into Box 15, the tax payable by the individual and shown in Box 1 is unaffected. Using my own words, there is no reconciliation or adjustment between Box 15 and Box 1: the figure for the tax due for the year covered by the return remains exactly the same. What Box 15 on Mr Deans evidence enables the taxpayer to do is to make an early claim for the relief and to adjust his liability for tax for the following year in accordance with HMRCs understanding of the law. There is a dispute between the parties as to the extent to which Mr Deans evidence forms part of the evidence in these proceedings but the Upper Tribunal noted that it was accepted by both parties save in relation to a point which is no longer material (see [2016] STC 334, para 46). In those circumstances I propose to deal with the issue on the basis of Mr Deans evidence, but on a provisional basis only because this matter needs to be argued between HMRC and a taxpayer who is interested to argue otherwise. I agree with Lord Carnwath that it is not open to HMRC to argue that the online form prevented Mr Derry from making an adjustment to his calculation of the tax due if that is what he is entitled to do. They can, however, raise that argument against taxpayers with year 2 related claims. It is pertinent here to note that HMRC must not simply prescribe a separate form of tax return for use online they must also prescribe what constitutes an electronic return: see Taxes Management Act, section 8(1H), as amended by the Finance Act 2007. This power is conferred by primary legislation and therefore sections 9(1) and 8(1H) must be read harmoniously together. The form is in fact available for use only through HMRCs online services or with third party software approved by HMRC. It seems reasonable to infer that the automatic calculations and inhibitors on reconciliations built into the software and, it may be assumed, HMRCs online return form constitute part of the prescribed return and are included in what constitutes the return, but this point has not been the subject of argument. Again provisionally, there is no reason as it seems to me why the online form should not preclude an adjustment which would produce a result which was incompatible with the Taxes Acts. The objective in designing a tax return form, including an online form, is to help the taxpayer file a tax return which properly shows his liability, no more and no less. Indeed, Lord Hodge in Cotter specifically envisaged that HMRC could take steps to prevent a taxpayer making claims in the online form which he was not entitled to make: see para 24 set out by Lord Carnwath at para 51 above. It is now necessary to go back to Cotter. As I see it, Cotter teaches us that there is a difference, for the purposes of the TMA sections 8(1), 9, 9A and 42(11)(a) at least, between a tax return and a tax return form. This may be seen from paras 25 and 36 of Lord Hodges judgment in Cotter, cited by Lord Carnwath at paras 51 and 52 above. This court there held that, if an item does not fall to be taken into account for the purpose of calculating the tax payable by the taxpayer submitting the form, it is to be left out of account and does not constitute part of the return for the purposes mentioned. Mr Dean supplies the evidence as to how the relevant item in this case (the entry in Box 15) is treated in the online form, and that is only to notify HMRC of the claim and not to affect the tax payable. The Court of Appeal reached the conclusion that the claim made by Mr Derry was relevant to the calculation of the tax due (see para 47 above) but they took no account of the Mr Deans evidence. However, if that evidence is accepted, it would seem to me provisionally to follow that that their conclusion was wrong and that the effect described by Lord Hodge in para 27 of Cotter (para 51 above) would apply only in this case to a paper return in which the taxpayer performed his calculation of tax due taking the claim into account. It follows that the Court of Appeal would be in error in applying Lord Hodges reasoning to an online return (see per Henderson LJ cited at para 52 above). If that is correct, then as I see it (as I have said) provisionally, unless the ratio in Cotter is to be in some way qualified for online tax return forms (which is not suggested), the relief claimed through Box 15 would not form part of the statutory return even if the true interpretation of Box 15 is that it is permitting an adjustment to the tax. I do not consider that a taxpayer would necessarily have been misled by this since he would see that his entry had no effect on the figure in Box 1. On that basis, HMRC would not have to open an enquiry into the return where the taxpayer had filled in Box 15 with an erroneous claim as opposed to an enquiry into the claim. I would provisionally so hold for the reasons that I have given. Issue 1: approach to interpretation of tax rewrite statutes On Issue 1, while agreeing with all that Lord Carnwath has said, I add some observations about the approach to interpretation of the ITA and consolidation statutes in general to provide the context in which the passage from the judgment of Sales J approved by this court should be applied. In deciding how the court should interpret a statute, the type of statute as set out in the statutes preamble is a relevant consideration. In the case of the Income Tax Act 2007 (ITA), the preamble provides that the Act is to restate, with minor changes, certain enactments relating to income tax; and for connected purposes. So, ITA is not a pure or straight consolidation Act. However, as the Explanatory Notes cited by Lord Carnwath confirm, it is not (except for the minor changes) intended to change the law. That is a matter which the courts must in my judgment respect when interpreting the new legislation. In this regard it is of some significance in interpreting consolidation statutes that they receive less Parliamentary scrutiny than other primary legislation. The respect to which I have referred for giving effect to Parliaments intention where it is possible to do so is often expressed in terms of a presumption, in relation to consolidating statutes, that Parliament did not intend to change the law. It would often be laborious for a court to investigate what provisions had been consolidated in any particular provision of a consolidating statute. It would be wrong in general for it to do so. The process of drafting a consolidation statute requires specialist techniques and skills and can be very complex. But the position is different in relation to prior case law. The restraint required by the House of Lords in Farrell v Alexander [1977] AC 59 relates to legislative history, and not to relevant antecedent case law. Moreover, in practice, even where a statute is a consolidation statute, courts often look at previous case law on provisions that are consolidated to assist them interpret the new provision where there is any doubt or simply to confirm the view that they have formed. This is good sense in the interest of the consistency of the law, the fulfilment of Parliaments presumed intention and the efficient use of judicial resources. There is a further issue, yet to be resolved, as to the application of the doctrine of precedent where there is a previous binding decision on the same provision in the earlier enactment: see the discussion in Bentine v Bentine [2016] Ch 489. Reference back to the earlier case law does not undo the good work done by the consolidation, or run counter to it, since Parliament is likely to have had the previous case law in mind in any event when enacting the consolidating statute without any pre consolidation amendment. I agree that HMRCs appeal should be dismissed.
UK-Abs
On 22 March 2010 (tax year 2009/10), Mr Derry bought 500,000 shares at a cost of 500,000 in a company called Media Pro Four Ltd. On 4 November 2010 (tax year 2010/11) he sold them to the Island House Private Charitable Trust for 85,500, realising a loss of 414,500. In his tax return for 2009/10, submitted by his accountants on 24 January 2011, Mr Derry claimed share loss relief for that amount against his income for that year under section 132 of the Income Taxes Act 2007 (the 2007 Act), with the aim of reducing to that extent his taxable income for that year. Her Majestys Revenue and Customs (HMRC) have identified the claim as a case of possible tax avoidance. In December 2011, Mr Derrys accountants submitted his tax return for 2010/11 online, which said that the relief for the loss of 414,500 had already been claimed and relief obtained in 2009/10. In response, HMRC opened an enquiry into the claim for share loss relief. This was made under schedule 1A of the Taxes Management Act 1970 (the 1970 Act) on the basis that it was a claim made outside of a return. It then opened an enquiry into the return for 2010/11 under section 9A of the 1970 Act. HMRC subsequently issued a demand for 95,546.36 with interest. Mr Derry began judicial review proceedings relating to the demand. The two issues were: (1) Whether, having exercised his right to claim the relevant loss relief in the previous year (2009/10), Mr Derry was correct to deduct that loss in calculating his net income for that year; or whether, as HMRC contend, that right was overridden by schedule 1B of the 1970 Act, such that the loss, although claimed in year 2009/10, was to be treated as relating to the following year. (2) Whether, if it was an error for Mr Derry to make a claim for relief in the tax return for 2009/10, that claim is nonetheless part of the tax return for that year. Mr Derry failed on both issues in the Upper Tribunal. On the first issue, the Court of Appeal found in favour of HMRC. On the second issue, it found in favour of Mr Derry that the claim for relief was part of the 2009/10 return. As HMRC had failed to open an enquiry into the 2009/10 return within the statutory time limit, it allowed the claim for judicial review. HMRC appeals the decision on the second issue. Mr Derry resists the appeal on that issue but seeks to uphold the decision in any event on the first issue. The Supreme Court unanimously dismisses the appeal as it finds in favour of Mr Derry on the first issue. The loss relief was correctly deducted from the net income for 2009/10. Lord Carnwath gives the lead judgment, with which Lord Reed, Lady Black and Lord Kitchin agree. Lady Arden gives a concurring judgment. (1) HMRCs appeal: whether the loss relief was correctly deducted from the net income in 2009/10. Lord Carnwath observes that section 23 and sections 131 132 of the 2007 Act create a clear and self contained code for the treatment of a claim to share loss relief such as that of Mr Derry. Sections 132 133 give him an entitlement to make the claim, to specify the tax year to which it is to be applied, and to do so by deducting it in the calculation of his net income for the purpose of section 23 [35]. It would be extraordinary for that entitlement to be taken away, without any direct reference or signpost, by a provision in a relatively obscure schedule of another statute (schedule 1B of the 1970 Act), which is concerned principally with management of tax, rather than with liability. Provisions in the 2007 Act which refer to the 1970 Act do not assist. For example, while sections 60(2) and 128(7) of the 2007 Act refer to schedule 1B of the 1970 Act as a qualification of the rights otherwise conferred by those provisions, the absence of similar words in section 132 of the 2007 Act indicates that this right is not subject to the same qualification [36]. The words of schedule 1B of the 1970 Act are not sufficient to displace the clear provisions of the 2007 Act in respect of liability. As the governing statute in respect of tax liability, the 2007 Act should take precedence in the absence of any indication to the contrary [37]. Any such indications in the legislative history or the explanatory notes to the 2007 Act do not provide a basis for departing from the ordinary principles of statutory interpretation. There is no suggestion that they produce an absurd or unworkable result, and for the taxpayers liability to be determined by reference to legal archaeology would negate the whole purpose of the tax law rewrite [38]. Lord Carnwath endorses the guidance on interpreting consolidation statutes, such as the 2007 Act, in Eclipse Film Partners (No 35) LLP v Commissioners of Her Majestys Revenue and Customs [2013] UKUT 639 (TC) at paragraph 56 [9 10]. Lady Arden adds that the courts may look at previous case law on consolidated provisions in the interests of the consistency of the law, the fulfilment of Parliaments presumed intention that the law should not be changed, and the efficient use of judicial resources [88]. (2) Mr Derrys cross appeal: whether an erroneous claim for loss relief would be part of the 2009/10 tax return. Lord Carnwath notes that the conclusion on the first issue makes it strictly unnecessary to reach a conclusion on the second issue [40]. Furthermore, he is not satisfied that the issues were fully explored in argument before the Supreme Court, which concentrated on the entitlement to relief rather than the means of enforcement. There remain unresolved uncertainties as to the correct interpretation of the entries in the online form and their treatment by HMRC, and the relationship between enquiries under section 9A (into a return) and Schedule 1A paragraph 5 (into a claim outside a return) of the 1970 Act [68]. In a separate judgment, Lady Arden expresses the provisional view, in light of the Supreme Courts decision in Commissioners for Her Majestys Revenue and Customs v Cotter [2013] 1 WLR 1514, the provisions of the legislation, the prescribed online tax return form and the evidence of Mr Graham Dean on behalf of HMRC, that the erroneous entry of a loss relief claim, which a tax payer was not entitled to make in that years return, does not form part of the tax return for enquiry purposes. On that basis, HMRC would be right to open an enquiry into the claim and not the return [73 83].
This has proved an unusually difficult case to resolve. Not only are the substantive issues, relating to the compatibility of abortion law in Northern Ireland with articles 3 and 8 of the European Convention on Human Rights (the ECHR or the Convention), of considerable depth and sensitivity; but there is also the procedural issue raised by the Attorney General for Northern Ireland, who challenges the standing of the Northern Ireland Human Rights Commission (NIHRC) to bring these proceedings. The court is divided on both questions, but in different ways. On the substantive compatibility issues, a majority Lord Mance, Lord Kerr, Lord Wilson and I hold that the current law is incompatible with the right to respect for private and family life, guaranteed by article 8 of the Convention, insofar as it prohibits abortion in cases of rape, incest and fatal foetal abnormality. Lady Black agrees with that holding in the case of fatal foetal abnormality. Lord Kerr and Lord Wilson also hold that it is incompatible with the right not to be subjected to inhuman or degrading treatment, guaranteed by article 3 of the Convention. Lord Reed and Lord Lloyd Jones hold that the law is not incompatible with either article 8 or article On the procedural issue, a majority Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones hold that the NIHRC does not have standing to bring these proceedings and accordingly that this court has no jurisdiction to make a declaration of incompatibility to reflect the majority view on the compatibility issues. A minority Lord Kerr, Lord Wilson and I hold that the NIHRC does have standing and would have made a declaration of incompatibility. In these unusual circumstances, it is not possible to follow our usual practice and identify a single lead judgment which represents the majority view on all issues. We have therefore decided to revert to the previous practice of the appellate committee of the House of Lords and print the judgments in order of seniority. It is for that reason only that my judgment comes first. Far more substantial judgments on all issues follow from Lord Mance and Lord Kerr. Introduction The substantive questions in this case are legal issues specifically related to the implementation in UK law, by the Human Rights Act 1998 (HRA), of the ECHR, which in turn has to be interpreted in the light of other international treaties to which the UK is a party, in this case the United Nations Convention on the Elimination of All Forms of Discrimination against Women 1979 (CEDAW) and the United Nations Convention on the Rights of Persons with Disabilities 2006 (CRPD). Moral and political issues, important though they undoubtedly are, are relevant only to the extent that they are relevant to the legal issues which have to be resolved. The starting point for any discussion of the legal issues has to be the right of all human beings, male and female, to decide what shall be done with their own bodies. This right has long been recognised by the common law: it is the reason why consent is needed for invasive medical treatment however well intentioned: see Montgomery v Lanarkshire Health Board (General Medical Council intervening) [2015] AC 1430. It is also recognised by the ECHR: see Pretty v United Kingdom (2002) 35 EHRR 1, where it was said that the notion of personal autonomy is an important principle underlying the interpretation of its guarantees (para 61). For many women, becoming pregnant is an expression of that autonomy, the fulfilment of a deep felt desire. But for those women who become pregnant, or who are obliged to carry a pregnancy to term, against their will there can be few greater invasions of their autonomy and bodily integrity. The point is vividly made in Professor Thomsons famous article (A Defence of Abortion, reprinted in R M Dworkin (ed), The Philosophy of Law): You wake up in the morning and find yourself back to back in bed with an unconscious violinist. A famous unconscious violinist. He has been found to have a fatal kidney ailment, and the Society of Music Lovers has canvassed all the available medical records and found that you alone have the right blood type to help. They have therefore kidnapped you, and last night the violinists circulatory system was plugged into yours, so that your kidneys can be used to extract poisons from his blood as well as your own. The director of the hospital now tells you, Look, were sorry the Society of Music Lovers did this to you we would never have permitted it had we known. But still, they did it, and the violinist is now plugged into you. To unplug you would be to kill him. But never mind, its only for nine months. By then he will have recovered from his ailment, and can be safely unplugged from you. There can be no doubt that the grossest invasion of your legal rights has taken place: the question is whether you are now under a legal duty to endure that invasion for the next nine months. By definition we are here considering the cases of women and girls who either did not want to become pregnant at all, or having experienced the joy of a wanted pregnancy, have reached the agonising conclusion that because of the foetal abnormalities, they do not wish to carry the pregnancy to term. There will of course be women who decide that they do wish to continue the pregnancy despite the circumstances. Any woman or girl who finds herself in such a situation and wants an abortion will have made her own moral choice, often a very difficult moral choice. The question is whether others, many of whom will never be placed in that situation, are entitled to make a different moral choice for her, and impose upon her a legal obligation to carry the pregnancy to term. The present law, contained in sections 58 and 59 of the Offences Against the Person Act 1861, an Act of the UK Parliament, and section 25(1) of the Criminal Justice Act (NI) 1945, an Act of the Northern Ireland legislature, does impose that obligation upon her, unless there is a risk to her life or of serious long term or permanent injury to her physical or mental health. Indeed, it does more than that. It has, as the United Nations Committee on the Elimination of Discrimination against Women has recently pointed out, a chilling effect upon clinicians, who are reluctant to discuss the options for fear of being thought to aid, abet, counsel or procure an abortion which might be unlawful. It also discourages women who have had abortions, lawful or unlawful, from seeking proper after care, because of section 5 of the Criminal Law Act (NI) 1967: anyone who knows or believes that an offence has been committed and has information which might be of material assistance in securing the apprehension, prosecution, or conviction of the person who committed it, commits an offence if they fail without reasonable excuse to give that information to the police within a reasonable time. The Departmental Guidance for Health and Social Care Professionals on Termination of Pregnancy in Northern Ireland (March 2016) draws professionals attention to both these risks. The Royal Colleges of Obstetricians and Gynaecologists, of Midwives and of Nursing described the 2013 draft as intimidating for women and for professionals and the CEDAW Committee found that the finalised Guidance perpetuates such intimidation (Report of the inquiry concerning the United Kingdom of Great Britain and Northern Ireland under article 8 of the Optional Protocol to the Convention on the Elimination of All Forms of Discrimination against Women, CEDAW/C/OP.8/GBR/1, published 23 February 2018, para 18). This being the state of the law in Northern Ireland, it is not suggested that this Court can strike it down or interpret it out of existence. The only question is whether it is incompatible with either article 3 or article 8 of the ECHR and whether the Court both can and should declare it so. The first question, therefore, is whether the NIHRC has standing to bring these proceedings. Standing This is an arid question, because there is no doubt that the NIHRC could readily have found women who either are or would be victims of an unlawful act under the Human Rights Act 1998 and either supported or intervened in proceedings brought by those women. The relevant sections of the Northern Ireland Act 1998, which established the Commission, are set out in full in paras 48, 49 and 50 of Lord Mances judgment. Under section 69(5) of the Northern Ireland Act 1998, the NIHRC may do two things: the first is to give assistance to individuals in accordance with section 70 (section 69(5)(a)). Section 70 applies to proceedings involving law or practice relating to the protection of human rights which a person in Northern Ireland has brought or wishes to bring (section 70(1)(a)) or proceedings in which such a person relies or wishes to rely on such law or practice (section 70(1)(b)). This will clearly encompass, not only actions brought under section 7(1)(a) of the HRA, but also other proceedings in which a person wishes to rely on the HRA; the latter must include cases such as Ghaidan v Godin Mendoza [2004] 2 AC 557, in which there was no suggestion of an unlawful act by a public authority but the court was being asked to construe certain provisions of the Rent Act 1977 compatibly with the Convention rights. The second thing that the NIHRC may do is to bring proceedings involving law or practice relating to the protection of human rights (section 69(5)(b)). Unlike section 69(5)(a), there is no cross reference to another section of the Act which might limit the breadth of that power. Nevertheless, it is argued that the power is limited by section 71, which is headed Restrictions on application of rights. The first thing to notice about section 71 is that it is directed to sections 6(2)(c) or 24(1)(a) of the Northern Ireland Act (set out in para 51 of Lord Mances judgment). Section 71(1) provides that nothing in those sections shall enable a person to bring any proceedings on the ground that any legislation or act is incompatible with the Convention rights or to rely on any of the Convention rights in any such proceedings unless he would be regarded as a victim of the legislation or act in the European Court of Human Rights in Strasbourg. Section 6(2)(c) provides that an Act of the Northern Ireland Assembly is outside its competence (and thus not law under section 6(2)) if it is incompatible with any of the Convention rights. Section 71(3) limits the scope of that prohibition. Section 24(1)(a) provides that a Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with any of the Convention rights. Section 71(4) similarly limits the scope of that prohibition. The aim of section 71(1) was thus to prevent private persons bringing proceedings to challenge Acts of the Assembly, subordinate Northern Irish legislation or executive acts unless they could claim to be victims. But, under section 71(2), the principal Law Officers of England, Northern Ireland and Scotland could bring such proceedings. It is not clear why the original version of section 71(1) (set out in para 175 of Lord Kerrs judgment) referred to section 69(5)(b), but it had the effect of preventing the NIHRC bringing proceedings to challenge any legislation or act, because the NIHRC could never (or hardly ever) claim to be a victim of such legislation or act. That defect was recognised by the House of Lords in In re Northern Ireland Human Rights Commission [2002] NI 236 and the problem dealt with by deleting the reference to section 69(5)(b) in section 71(1) and expressly providing in section 71(2A) that the prohibition did not apply to the NIHRC. It is clear, therefore, that the NIHRC has power to challenge any legislation or act without being its victim. Sections 71(2B) and (2C) go on to deal with the Commissions instituting or intervening in human rights proceedings. Section 71(2B)(a) makes it clear that the Commission itself need not be a victim of the unlawful act to which the proceedings relate. But section 71(2B)(c) provides that the Commission may act only if there is or would be one or more victims of the unlawful act. By section 71(2C) human rights proceedings means proceedings under section 7(1)(b) of the HRA or under section 69(5)(b) of the Northern Ireland Act. Section 7(1)(b) refers to claims that a public authority has acted or proposes to act incompatibly with a Convention right, which claims may be relied on in any legal proceedings, but only if the person making the claim is or would be a victim of the unlawful act. Construing the subsection as a whole, the reference to proceedings under section 69(5)(b) must mean proceedings brought by the NIHRC claiming that a public authority has acted or proposes to act incompatibly with a Convention right. It then makes perfect sense for section 71(2B)(c) to provide that the NIHRC can only bring proceedings in respect of an unlawful act if there is or would be a real victim of such an act. But we know that the Human Rights Act provides two different methods of seeking to ensure compliance with the Convention rights. One is for victims to bring proceedings in respect of an unlawful act of a public authority, or to rely on such an unlawful act in other proceedings, pursuant to section 7(1) of the HRA. The other is to challenge the compatibility of legislation under sections 3 and 4 of the HRA, irrespective of whether there has been any unlawful act by a public authority. This may be done in proceedings between private persons, as in Wilson v First County Trust (No 2) [2004] 1 AC 816 and Ghaidan v Godin Mendoza. But it may also be done in judicial review proceedings brought by person with sufficient standing to do so. A current example is Steinfeld v Secretary of State for Education [2017] 3 WLR 1237, where the provisions in the Civil Partnership Act 2004 limiting civil partnerships to same sex couples are under challenge. The NIHRC clearly has standing to bring such proceedings by virtue of section 69(5)(b). In my view, therefore, section 71(2B) and (2C) are dealing only with proceedings brought by the NIHRC, or interventions by the NIHRC in proceedings brought by others, in respect of claims that a public authority has acted or proposes to act unlawfully. Not surprisingly it requires that there be an identifiable victim of such an unlawful act. But it does not apply to or limit the general power of the NIHRC to challenge the compatibility of legislation of any sort under sections 3 and 4 of the HRA. This would be clearer still if the words if any were inserted after unlawful act in section 71(2B)(c), but it is in my view clear that the unlawful act means the unlawful act alleged in the proceedings, so it does not apply where no such unlawful act is alleged. For the reasons given by Lord Kerr, it would be very surprising if it did limit the NIHRCs power to bring such a challenge. It is to my mind clear that the Equality and Human Rights Commission in Great Britain, albeit operating under different legislation (set out in para 63 of Lord Mances judgment), does have that power, so there can be no objection in principle. Article 8 I propose first to address the compatibility of Northern Ireland abortion law with article 8 of the ECHR, because it is common ground that the current law is indeed an interference with the right of pregnant women and girls to respect for their private lives which is guaranteed by article 8(1). The question is whether in terms of article 8(2) it is justified because it is in accordance with the law and is necessary in a democratic society for the protection of health or morals, or for the protection of the rights and freedoms of others. In answering the second part of that question, it is now customary to ask whether the measure in question has a legitimate aim, is rationally connected to that aim, and is a proportionate means of achieving it. For the reasons given by Lord Kerr and Lord Mance, I agree that such interference is not justified, but would like to make a few points of my own. Although the current state of the law has been criticised for its lack of clarity and is certainly not as clear as is the law in the rest of the UK it is no more uncertain than many other areas of the law which rely upon the application of particular concepts in this case a risk to life or of serious and prolonged or permanent injury to physical or mental health to the facts of a particular case. It is also sufficiently accessible to those affected by it for the interference to be in accordance with the law for this purpose. It is more difficult to articulate the legitimate aim. It cannot be protecting the rights and freedoms of others, because the unborn are not the holders of rights under the Convention (Vo v France (2004) 40 EHRR 12) or under domestic law (In re MB (Medical Treatment) [1997] 2 FLR 426). But the community undoubtedly does have a moral interest in protecting the life, health and welfare of the unborn it is that interest which underlies many areas of the law, including the regulation of assisted reproduction, and of the practice of midwifery, as well as of the termination of pregnancy. But the community also has an interest in protecting the life, health and welfare of the pregnant woman that interest also underlies the regulation of assisted reproduction, of midwifery and of the termination of pregnancy. And pregnant women are undoubtedly rights holders under the both the Convention and domestic law with autonomy as well as health and welfare rights. The question, therefore, is how the balance is to be struck between the two. Where there is no consensus of opinion among the member states of the European Union, the Strasbourg court will usually allow individual member states a wide (though not unlimited) margin of appreciation when undertaking such balancing exercises. In A, B and C v Ireland (2010) 53 EHRR 13, the majority of the Grand Chamber of the Strasbourg court took the unusual step of holding that the margin of appreciation allowed to Ireland had not been decisively narrowed, despite the existence of a consensus amongst a substantial majority of the contracting States allowing abortion on wider grounds than those allowed under Irish law (which was and, for the time being at least, remains even narrower than the law in Northern Ireland). The majority felt able to do this because the prohibition was based on the profound moral views of the Irish people as to the nature of life and women had the right to lawfully travel abroad for an abortion with access to appropriate information and medical care in Ireland (para 241). The minority (of six) pointed out that this was the first time that the court had disregarded a European consensus on the basis of profound moral views and considered it a real and dangerous new departure, even assuming those views were still well embedded in the conscience of the Irish people (para O III11). Two of the women in the A, B and C case were seeking abortions on what were described as health and well being grounds: the majority found no violation. The third was concerned that continuing her pregnancy might endanger her life because she had cancer: the Court found a violation of the States positive obligation to secure effective respect for her private life because there was no accessible and effective procedure by which she could have established whether she qualified for a lawful abortion in Ireland. The position in this case is quite different. In the first place, there is no evidence that the profound moral views of the people of Northern Ireland are against allowing abortion in the three situations under discussion here. Quite the reverse. There is a remarkably consistent series of public opinion polls showing majority support for abortion in these circumstances. The most recent survey was a serious academic study, more rigorous than a conventional opinion poll (the results of the Northern Ireland Life and Times Survey are set out in para 110 of Lord Mances judgment). This evidence cannot be lightly dismissed when the argument is that profound moral views of the public are sufficient to outweigh the grave interference with the rights of the pregnant women entailed in making them continue their pregnancies to term even though they, by definition, have reached a different moral conclusion no doubt, for many, an agonising one. In the second place, we are dealing with three very different situations from those with which the A, B and C case was concerned, situations in which it cannot seriously be contended that a pregnant woman has a duty to carry the pregnancy to term. In the case of rape, not only did she not consent to becoming pregnant, she did not consent to the act of intercourse which made her pregnant, a double invasion of her autonomy and the right to respect for her private life. In this connection, it is worth noting that the Sexual Offences (Northern Ireland) Order 2008 labels two offences rape: article 5 makes it the offence of rape intentionally to penetrate, inter alia, a vagina with a penis where the woman does not consent and the man does not reasonably believe that she consents; article 12 makes it the offence of rape of a child intentionally to penetrate a person under 13 with a penis, irrespective of consent or a belief in consent; both offences carry a maximum of life imprisonment. Article 16 is labelled Sexual activity with a child and makes it an offence for a person of 18 or older intentionally to touch another person where the touching is sexual and that other person is either under 16 and the toucher does not reasonably believe that she is 16 or over or she is under 13. If the touching involves penetration of a vagina with a penis, the offence carries a maximum sentence of 14 years imprisonment. Thus the only difference between the article 16 offence and the article 12 offence is that, if the child is 13 or over but under 16, no offence is committed if the penetrator reasonably believed that she was 16 or over. Consent or reasonable belief in consent does not feature in either offence. Thus it is conclusively presumed in the law of Northern Ireland that children under 16 are incapable of giving consent to sexual touching, including penetration of the vagina by a penis. It is difficult, therefore, to see any reason to distinguish between the offences under article 12 and article 16 for the purpose of this discussion, nor indeed to exclude pregnancies which would be the result of an offence under article 16 were it not for the penetrators reasonable belief that the child was 16 or over: she is still deemed incapable of giving a real consent to it. The claim refers only to rape and incest (as well as foetal abnormality) but there is no longer any offence labelled incest in Northern Ireland law. There is, however, an offence under article 32 of the 2008 Order labelled Sexual activity with a child family member which follows the same pattern as article 16: it covers sexual touching of a child whom the toucher knows or can reasonably be expected to know is related in the defined ways; if the child is 13 but under 18 the toucher must not believe that she is 18 or over; no such exception applies if the child is under 13; the offence carries a maximum penalty of 14 years imprisonment if the touching involves penetration, inter alia, of the vagina. Article 68 creates an offence labelled Sex with an adult relative: penetration and article 69 creates an offence of consenting to such penetration. Thus the criminal law covers (in substance) the same ground as was previously covered by the law of incest. I see no reason to exclude pregnancies which are the result of the offences created by articles 16, 32 and 68 from this discussion. Nor do I see any reason to treat child pregnancies resulting from penetration by a relative any differently from child pregnancies arising in other circumstances. Adult pregnancies are different, because there may have been genuine consent to the penetration. But the giving of that consent is itself an offence, and so the law should not treat it on the same footing as a real consent. Furthermore, as Lord Mance has convincingly demonstrated, there is good evidence that most intra familial sexual relationships are abusive. And once again, by definition we are discussing a woman who does not consent to the pregnancy: she has made a conscious choice that she does not wish to continue with it. These are all, therefore, situations in which the autonomy rights of the pregnant woman should prevail over the communitys interest in the continuation of the pregnancy. I agree, for the reasons given by Lord Kerr and Lord Mance, that in denying a lawful termination of her pregnancy in Northern Ireland to those women and girls in these situations who wish for it, the law is incompatible with their Convention rights. I agree with Lord Mance, in particular, that relying on the possibility that she may be able to summon up the resources, mental and financial, to travel to Great Britain for an abortion if anything makes matters worse rather than better. This conclusion is reinforced by the recent Report of the CEDAW Committee. This contains a helpful discussion of the difficulties of travelling out of Northern Ireland for abortion, which it concludes is not a viable solution (paras 25 to 32). The third type of case with which we are concerned, that of foetal abnormality, does have to be separated into cases where the foetus suffers from a fatal abnormality, one which will cause death either in the womb or very shortly after delivery, and other serious abnormalities. Both share the feature that the pregnancy may have been very much wanted by the woman, and her partner, and the news of the abnormality will have been doubly devastating. But in the case of fatal foetal abnormality, there can be no community interest in obliging the woman to carry the pregnancy to term if she does not wish to do so. There is no viable life to protect. It is, of course, essential that the diagnosis be as accurate as possible, but we have the evidence of Professor Dornan that, before the law was clarified in Family Planning Association of Northern Ireland v Minister for Health, Social Security and Public Safety [2004] NICA 39; [2005] NI 188, abortions were offered in such cases and there was a high level of accuracy in the diagnosis. Travelling to Great Britain is even more difficult in such cases, as the problem is often detected comparatively late in the pregnancy, at 18 to 20 weeks, which leaves very little time to make the arrangements and there may be no counselling offered on what the options are. If the woman does manage to travel, not only will she have all the trauma and expense associated with that, but also serious problems in arranging the repatriation of the foetal remains. Serious foetal abnormality is a different matter. The CEDAW committee has obviously had some difficulty in reconciling its views on the legalisation of abortion, which it systematically recommends in all cases (Report, para 58), with the views of the United Nations Committee on the Rights of Persons with Disabilities. Thus the CEDAW Committee states (Report, para 60): The Committee interprets articles 12 and 16, clarified by GR Nos 24 and 28, read with articles 2 and 5, to require States parties to legalise abortion, at least in cases of rape, incest, threats to the life and/or health (physical or mental) of the woman, or severe foetal impairment. The Committee has not taken the view it does of the legalisation of abortion because there is an express provision to that effect in the Convention: it has taken the view that it is the inescapable conclusion from the rights which the Convention does recognise. Article 12 requires State parties to eliminate discrimination against women in the field of health care, in order to ensure equality between men and women in access to health care services. Article 16 requires the same in relation to family relations, including the right to decide freely and responsibly on the number and spacing of children. Article 2 is a general prohibition of discrimination against women and requires positive steps to achieve equality between men and women. Article 5 requires, inter alia, the elimination of practices based on the inferiority or superiority of either of the sexes or on stereotypical roles for men and women. However (Report, para 62): In cases of severe foetal impairment, the Committee aligns itself with the Committee on the Rights of Persons with Disabilities in the condemnation of sex selective and disability selective abortions, both stemming from the need to combat negative stereotypes and prejudices towards women and persons with disabilities. While the Committee consistently recommends that abortion on the ground of severe foetal impairment be available to facilitate reproductive choice and autonomy, States parties are obligated to ensure that womens decisions to terminate pregnancies on this ground do not perpetuate stereotypes towards persons with disabilities. Such measures should include the provision of appropriate social and financial support for women who choose to carry such pregnancies to term. Accordingly, the CEDAW Committee recommended to the UK that it adopt legislation legalising abortion at least where there is a threat to the pregnant womans physical or mental health; rape or incest; and severe foetal impairment, including fatal foetal abnormality without perpetuating stereotypes towards persons with disabilities and ensuring appropriate and ongoing support, social and financial, for women who decide to carry such pregnancies to term (para 85). As already stated, the guarantees contained in the ECHR should be interpreted in the light of other relevant international human rights instruments. Some may think that the CEDAW Committees recommendations strike the right balance, but I recognise and understand that others may think that they do not give sufficient weight to the valuable and rewarding lives led by many people with serious disabilities. Article 3 Article 3 differs from article 8 in several ways. First, the right not to be subjected to torture or inhuman or degrading treatment or punishment is absolute it is not to be balanced against any other rights, including the right to life of people whose lives might be saved if, for example, a prisoner were tortured in order to discover their whereabouts. Second, therefore, the treatment complained of has to reach what is referred to as a minimum level of severity but which actually means a high level of severity in order to attract the prohibition. Third, although the motive with which the treatment is inflicted may be relevant, the principal focus is upon the effect upon the victim. I have no doubt that the risk of prosecution of the woman, and of those who help her, thus forcing her to take that risk if she procures an illegal abortion in Northern Ireland, or to travel to Great Britain if she is able to arrange that, constitutes treatment by the State for this purpose. It is the State which is subjecting her to the agonising dilemma. I also have little doubt that there will be some women whose suffering on being denied a lawful abortion in Northern Ireland, in the three situations under discussion here, will reach the threshold of severity required to label the treatment inhuman or degrading. This is another respect in which article 3 is unlike article 8. In every case where a woman is denied a lawful abortion in Northern Ireland which she seeks in the three situations under discussion, her article 8 rights have been violated. But it cannot be said that every woman who is denied an abortion in such circumstances will suffer so severely that her rights under article 3 have been violated. It depends upon an intense focus on the facts of the individual case which the article 8 question, at least in the three cases under discussion, does not. This is not a situation, as it is under article 8, where the operation of the law is bound to produce incompatible results in every case. But neither is it a situation where the law can always be operated compatibly with the Convention rights if the public authority takes care to act in a way which respects those rights. Rather, it is a situation in which the law is bound to operate incompatibly in some cases. I have sympathy for the view expressed by Lord Kerr that the risk of acting incompatibly with article 3 rights is such as to engage the positive obligation of the state to prevent that risk materialising; but it is unnecessary to decide the point, in the light of my conclusion that the present law is incompatible with article 8 in the three respects discussed above. Remedy I have reached the following conclusions (i) that the NIHRC does have standing to challenge the legislation in question here; (ii) that, in denying a lawful abortion in Northern Ireland to a woman who wishes it in cases of rape, incest and fatal foetal abnormality, the law is incompatible with article 8 of the Convention; and (iii) that it will also operate incompatibly with article 3 of the Convention in some cases. I agree, for the reasons given by Lord Kerr, that the incompatibility with article 8 cannot be cured by further reading down of section 58 of the Offences against the Person Act 1861 under section 3 of the HRA. Should we therefore make a declaration of incompatibility under section 4 of the HRA? I understand, of course, the view that this is a matter which should be left entirely to the democratic judgment of the Northern Ireland Assembly (or the United Kingdom Government should direct rule have to be resumed). But I respectfully disagree for several reasons. First, although the Strasbourg court was prepared to accord Ireland a wide measure of appreciation in the A, B and C case, that was, as the minority pointed out, most unusual. It cannot be guaranteed that the Strasbourg court would afford the United Kingdom the same margin of appreciation in this case, given that public opinion in Northern Ireland is very different from assumed public opinion in Ireland at the time of the events in A, B and C. In any event, even if it did, that does not answer the question. It means only that the United Kingdom authorities have to decide what is, or is not, compatible with the Convention rights. Second, this is not a matter on which the democratic legislature enjoys a unique competence. It is a matter of fundamental human rights on which, difficult though it is, the courts are as well qualified to judge as is the legislature. In fact, in some ways, the courts may be thought better qualified, because they are able to weigh the evidence, the legal materials, and the arguments in a dispassionate manner, without the external pressures to which legislators may be subject. It falls within the principle accepted by the House of Lords in In re G (Adoption: Unmarried Couple) [2009] AC 173 and indeed by the majority of this Court in R (Nicklinson) v Ministry of Justice (CNK Alliance Ltd intervening) [2015] AC 657. Third, Parliament has expressly given the higher courts the power to rule upon the compatibility or incompatibility of legislation with the Convention rights. Parliament did not say, when enacting section 4 of the HRA, but there are some cases where, even though you are satisfied that the law is incompatible with the Convention rights, you must leave the decision to us. Parliamentary sovereignty is respected, not by our declining to make a declaration, but by what happens if and when we do. Parliament has three options. First, it may share the courts view and approve a fast track remedial order under section 10 of the HRA, which is appropriate if the matter is quite simple and easy to solve. Second, it may share our view and pass an Act of Parliament to put things right, which is appropriate if the matter is not simple and easy to solve, and complex arrangements have to be put in place. Third, it may do nothing. This could be because it disagrees with courts view, and prefers to wait and see what view is eventually taken by the European Court of Human Rights. Or it could be because it is inclined to leave matters as they are for the time being. The do nothing option is no doubt more attractive if the matter is one which Strasbourg would regard as within the UKs margin of appreciation. It is at this point that the democratic will, as expressed through the elected representatives of the people, rules the day. All that a declaration on incompatibility does, therefore, is place the ball in Parliaments court. This is not a case like Nicklinson in which the matter was already before Parliament and the issues were not as clear cut: the case had changed from one of active euthanasia to one of assisted suicide in the course of its progress through the courts. In this case, if the court has reached a firm conclusion that the law is incompatible there is little reason not to say so, particularly where, as here, the UK has already been advised that the law is in breach of its international human rights obligations under another treaty. I would therefore have allowed this appeal and made a declaration accordingly, but in the light of the majoritys view of the standing of the NIHRC to bring these proceedings it must follow that we have no jurisdiction formally to declare the majoritys view. But, as Lord Mance explains in para 135 that does not mean that it can safely be ignored. LORD MANCE: Summary (a) By these proceedings against the Department of Justice and the Attorney General for Northern Ireland (the respondents), the Northern Ireland Human Rights Commission (the Commission) challenges the compatibility of the law in Northern Ireland with articles 3 and 8 of the European Convention on Human Rights (the Convention rights), insofar as that law prohibits abortion in cases of fatal and other foetal abnormality, rape and incest. (b) The respondents raise an initial objection to the challenge, that it is outside the Commissions competence (in the sense of power) to institute abstract proceedings of this nature (an actio popularis). I deal with this issue in paras 47 to 72. The courts below considered that the Commission had competence. The Supreme Court concludes by a majority, consisting of Lord Reed, Lady Black, Lord Lloyd Jones and myself, that the objection is well founded and that the courts below were wrong on this issue. (c) It follows that the Supreme Court has no jurisdiction to give any relief in respect of the challenge to Northern Ireland abortion law. But that challenge has been fully argued, and evidence has been put before the Court about a number of specific cases. It would, in the circumstances, be unrealistic and unhelpful to refuse to express the conclusions at which I would have arrived, had I concluded that the Commission had competence to pursue the challenge. (d) I would have concluded, without real hesitation at the end of the day, that the current state of Northern Ireland law is incompatible with article 8 of the Convention, insofar as it prohibits abortion in cases of fatal foetal abnormality, rape and incest, but not insofar as it prohibits abortion in cases of serious foetal abnormality: see paras 73 to 134. That conclusion, obiter in my case, is of the essence of the judgments of the three members of the Court (Lady Hale, Lord Kerr and Lord Wilson) who (dissenting) would have held that the Commission had competence. Lady Black would (obiter) reach the same conclusion as I do with regard to fatal foetal abnormality, but not rape or incest. Lord Kerr and Lord Wilson would go further than I would have done and hold that the current law in Northern Ireland law is also incompatible with article 3 of the Convention rights as regards fatal foetal abnormality, rape and incest. Lady Hales view on this point appears in paras 28 to 30 of her judgment. (e) With that summary, I will turn to introduce the proceedings more fully. However, those who may at the outset wish to have an idea of the distressing cases to which the Commission has drawn attention in the context of its challenge can look at once at paras 84 to 90 below. Introduction This is an appeal in proceedings for judicial review commenced by the Northern Ireland Human Rights Commission (the Commission) on 11 December 2014. By their Order 53 statement, the Commission sought general relief, unrelated to any particular set of facts, consisting of: a. A declaration pursuant to section 6 and section 4 of the Human Rights Act 1998 (the HRA) that sections 58 and 59 of the Offences against the Person Act 1861 (the 1861 Act) and section 25 of the Criminal Justice Act (NI) 1945 (the 1945 Act) are incompatible with articles 3, 8 and 14 of the European Convention on Human Rights so far as they relate to access to termination of pregnancy services for women with pregnancies involving a serious malformation of the foetus or pregnancy as a result of rape or incest; b. A declaration that, notwithstanding the provisions of the above sections, women in Northern Ireland may lawfully access termination of pregnancy services within Northern Ireland in cases of serious malformation of the foetus or rape or incest; c. A declaration that the rights of women in Northern Ireland with a diagnosis of serious malformation of the foetus or who are pregnant as a result of such rape or incest are breached by the above sections; and/or d. such further or other relief as the Court might think appropriate. The declarations sought to focus on three broad situations: serious malformation of the foetus; rape; and incest. In this judgment, I shall divide the first into fatal foetal abnormality and serious (but not fatal) foetal abnormality. The expert evidence before the judge indicated that doctors are well capable of identifying cases of fatal foetal abnormality, that is cases where the foetus will die in the womb or during or very shortly after birth. As to rape, it was made clear during the course of submissions before the Supreme Court, that the Commission, when commencing these proceedings, had in mind situations in which, because a child was under the age of 13, consent cannot in law be given, but had not focused on, for example, sexual offences (not described in law as rape) committed against children aged 13 or more, but under the age of 16. I return to this aspect in paras 73 and 131 below. As to incest, there was again no detailed examination of the offence(s) in question. There is no longer any offence called, in law rather than colloquially, incest. Since 2008, the relevant law is found in articles 32 to 36 and 68 to 69 of the Sexual Offences (Northern Ireland) Order 2008, mirroring sections 25 to 29 and 64 to 65 of the Sexual Offences Act 2003 in England and Wales. These articles introduce a very wide range of penetrative offences involving related persons, but it is only those which can lead to pregnancy which are presently relevant. In this context, article 32 contains offences under the head Sexual activity with a child family member. This is capable of commission where the child family member (B) is either under 18, and is someone who the person committing the offence (A) does not reasonably believe to be 18 or over, or is under 13. The relevant family relationships are defined in section 34, and the maximum punishment on conviction on indictment of an offence involving penetration of the vagina is up to 14 years. Article 68 contains the offence of Sex with an adult relative: penetration, which may, inter alia, be committed when a person aged 16 or over (A) penetrates the vagina of (B) aged 18 or over. Article 69 contains the offence of Sex with an adult relative: consenting to penetration, which may be committed where A (aged 18 or over) penetrates the vagina of B (aged 16 or over) with Bs consent. Articles 68 and 69 have their own definition of the prohibited relationships, and the maximum sentence on conviction of indictment is in each case up to two years. For convenience, I shall in this judgment continue to use the colloquial term incest to refer to all three offences, although it is clear that the legislator has identified a significant general difference between offences under article 32 involving a child family member on the one hand and offences under articles 68 and 69 involving adults. I shall consider the position in respect of incest in greater detail in paras 127 to 131 below. In support of its Order 53 statement, the Commissions Chief Commissioner, Mr Les Allamby, swore an affidavit, confirming that the Commissions case was made pursuant to section 4 of the HRA and based on alleged incompatibility with Convention Rights of the sections identified above of both the 1861 and the 1945 Acts. In other words, it treated both Acts as primary legislation. On that basis, it is not clear on what basis it could have been thought that any relief could be granted beyond that identified in sub para (1). Just conceivably, sub paras (2) and (4) may have been framed to cover the possibility of a more expansive interpretation of the Bourne exception (deriving from R v Bourne [1939] 1 KB 687), along the lines which the Lord Chief Justice accepted in the Court of Appeal: para 79. Be that as it may be, while the 1861 Act is clearly primary legislation, the same cannot in my opinion be said of the 1945 Act. The 1945 Act was an Act of the Parliament of Northern Ireland, established by the Government of Ireland Act 1920. In terms of the HRA, it constitutes subordinate, rather than primary, legislation: see the definitions in section 21 of the HRA, and in particular paragraph (c) in relation to subordinate legislation. For present purposes, this point may not prove significant, since it is unclear what section 25 of the 1945 Act adds, at least in law, to sections 58 and 59 of the 1861 Act. Brice Dicksons Law in Northern Ireland, para 7.17, instances the 1945 Act as one of a number introduced in the face of jury reluctance to convict of existing offences with greater overtones of evilness in the same areas. Before the Supreme Court, the first issue is whether it was within the Commissions competence to seek the relief identified in sub paragraph 43 above, that is a general declaration of incompatibility in relation to primary legislation of the United Kingdom Parliament. This issue is raised both in direct response to the Commissions claim and pursuant to devolution questions referred to the Supreme Court under section 33 of the Northern Ireland Act 1998 (the NI Act 1998) by the Attorney General for Northern Ireland by notice dated 18 January 2017. The devolution questions which have been referred ask, in summary, whether the Commission was empowered to institute human rights proceedings or seek a declaration of incompatibility other than as respects an identified unlawful act or acts. Only if it was within the Commissions competence to issue proceedings for the relief claimed, could the court make any declaration of incompatibility, even if incompatibility was otherwise established. The second issue, arising strictly only if the Commission had such competence, is whether any incompatibility is established. Both Horner J and the Court of Appeal held that the Commission had such competence. Having so held, Horner J went on to conclude that there was incompatibility, but only in so far as it is an offence to procure a miscarriage (a) at any stage during a pregnancy where the foetus has been diagnosed with a fatal foetal abnormality, or (b) up to the date when the foetus is capable of being born alive where a pregnancy arises as a result of rape or incest. The Court of Appeal, in three differently reasoned judgments, concluded that there was no incompatibility. The respondents, the Department of Justice and the Attorney General for Northern Ireland, appeal on the first issue, while the Commission appeals on the second issue. The Commissions competence to seek the relief claimed Logically, the issue of the Commissions competence should be taken first, and I propose to do so, although in the event it will also be appropriate to express views on the issue of incompatibility, which has been fully argued. The Commission is a body corporate created by section 68 of the NI Act 1998. It was accepted by the House of Lords in In re Northern Ireland Human Rights Commission [2002] NI 236 that it only has such powers as are conferred on it by statute, though these can clearly include such powers as may fairly be regarded as incidental to or consequential upon those things which the legislature has authorised: ibid, p 243C. The relevant statutory provisions in the current legislation define the Commissions functions as follows: 69. The Commissions functions. (1) The Commission shall keep under review the adequacy and effectiveness in Northern Ireland of law and practice relating to the protection of human rights. (2) The Commission shall, before the end of the period of two years beginning with the commencement of this section, make to the Secretary of State such recommendations as it thinks fit for improving its effectiveness; the adequacy and effectiveness of the functions (a) (b) conferred on it by this Part; and (c) of this Part relating to it. the adequacy and effectiveness of the provisions (3) The Commission shall advise the Secretary of State and the Executive Committee of the Assembly of legislative and other measures which ought to be taken to protect human rights as soon as reasonably practicable after receipt of (a) a general or specific request for advice; and (b) on such other occasions as the Commission thinks appropriate. (4) The Commission shall advise the Assembly whether a Bill is compatible with human rights as soon as reasonably practicable after receipt of (a) a request for advice; and (b) on such other occasions as the Commission thinks appropriate. (5) The Commission may (a) give assistance to individuals in accordance with section 70; and (b) bring proceedings involving law or practice relating to the protection of human rights. (6) The Commission shall promote understanding and awareness of the importance of human rights in Northern Ireland; and for this purpose it may undertake, commission or provide financial or other assistance for (a) (b) research; and educational activities. (7) The Secretary of State shall request the Commission to provide advice of the kind referred to in para 4 of the Human Rights section of the Belfast Agreement (8A) The Commission shall publish a report of its findings on an investigation. (8) For the purpose of exercising its functions under this section the Commission may conduct such investigations as it considers necessary or expedient (9) The Commission may decide to publish its advice and the outcome of its research (10) The Commission shall do all that it can to ensure the establishment of the committee referred to in paragraph 10 of that section of that Agreement. (11) In this section a reference to the Assembly includes a reference (a) to a committee of the Assembly; (b) human rights includes the Convention rights. Section 70 of the NI Act reads: 70. Assistance by Commission. (1) This section applies to (a) proceedings involving law or practice relating to the protection of human rights which a person in Northern Ireland has commenced, or wishes to commence; or (b) proceedings in the course of which such a person relies, or wishes to rely, on such law or practice. (2) Where the person applies to the Northern Ireland Human Rights Commission for assistance in relation to proceedings to which this section applies, the Commission may grant the application on any of the following grounds (a) that the case raises a question of principle; (b) that it would be unreasonable to expect the person to deal with the case without assistance because of its complexity, or because of the persons position in relation to another person involved, or for some other reason; that there are other special circumstances which (c) make it appropriate for the Commission to provide assistance. (3) Where the Commission grants an application under subsection (2) it may (a) provide, or arrange for the provision of, legal advice; (b) arrange for the provision of legal representation; (c) provide any other assistance which it thinks appropriate. (4) Arrangements made by the Commission for the provision of assistance to a person may include provision for recovery of expenses from in certain circumstances. Section 71 reads as follows: the person 71. Restrictions on application of rights. (1) Nothing in section 6(2)(c) or 24(1)(a) shall enable a person to bring any proceedings in a court or tribunal on (a) the ground that any legislation or act is incompatible with the Convention rights; or (b) to rely on any of the Convention rights in any such proceedings unless he would be a victim for the purposes of article 34 of the Convention if proceedings in respect of the legislation or act were brought in the European Court of Human Rights. (2) Subsection (1) does not apply to the Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland, the Advocate General for Scotland or the Lord Advocate. (2A) Subsection (1) does not apply to the Commission. (2B) In relation to the Commissions instituting, or intervening in, human rights proceedings (a) the Commission need not be a victim or potential victim of the unlawful act to which the proceedings relate, (b) section 7(3) and (4) of the Human Rights Act 1998 (c 42) (breach of Convention rights: sufficient interest, &c) shall not apply, (c) be one or more victims of the unlawful act, and (d) no award of damages may be made to the Commission (whether or not the exception in section 8(3) of that Act applies). the Commission may act only if there is or would (2C) For the purposes of subsection (2B) human rights proceedings means proceedings (a) which rely (wholly or partly) on section 7(1)(b) of the Human Rights Act (i) 1998, or (ii) (b) an expression used in subsection (2B) and in section 7 of the Human Rights Act 1998 has the same meaning in subsection (2B) as in section 7. section 69(5)(b) of this Act, and (3) Section 6(2)(c) (a) does not apply to a provision of an Act of the Assembly if the passing of the Act is, by virtue of subsection (2) of section 6 of the Human Rights Act 1998, not unlawful under subsection (1) of that section; and (b) does not enable a court or tribunal to award in respect of the passing of an Act of the Assembly any damages which it could not award on finding the passing of the Act unlawful under that subsection. (4) Section 24(1)(a) (a) does not apply to an act which, by virtue of subsection (2) of section 6 of the Human Rights Act 1998, is not unlawful under subsection (1) of that section; and (b) does not enable a court or tribunal to award in respect of an act any damages which it could not award on finding the act unlawful under that subsection. In this section the Convention has the same meaning (5) as in the Human Rights Act 1998. 6. Legislative competence. (1) A provision of an Act is not law if it is outside the legislative competence of the Assembly. (2) A provision is outside that competence if any of the following paragraphs apply Sections 6(2)(c) and 24(1)(a), to which reference is made at the start of section 71 address the legislative competence of, respectively, the Northern Ireland Assembly and of Northern Irish Ministers and departments, as follows: (a) it would form part of the law of a country or territory other than Northern Ireland, or confer or remove functions exercisable otherwise than in or as regards Northern Ireland; (b) it deals with an excepted matter and is not ancillary to other provisions (whether in the Act or previously enacted) dealing with reserved or transferred matters; (c) rights; it is incompatible with EU law; (d) (e) it discriminates against any person or class of person on the ground of religious belief or political opinion; (f) it is incompatible with any of the Convention it modifies an enactment in breach of section 7. (3) For the purposes of this Act, a provision is ancillary to other provisions if it is a provision (a) which provides for the enforcement of those other provisions or is otherwise necessary or expedient for making those other provisions effective; or (b) which is otherwise incidental to, or consequential on, those provisions; 24. EU law, Convention rights, etc. (1) A Minister or Northern Ireland department has no power to make, confirm or approve any subordinate legislation, or to do any act, so far as the legislation or act is incompatible with EU law; is incompatible with any of the Convention (a) rights; (b) (c) discriminates against a person or class of person on the ground of religious belief or political opinion; (d) in the case of an act, aids or incites another person to discriminate against a person or class of person on that ground; or (e) in breach of section 7. in the case of legislation, modifies an enactment (2) Subsection (1)(c) and (d) does not apply in relation to any act which is unlawful by virtue of the Fair Employment and Treatment (Northern Ireland) Order 1998, or would be unlawful but for some exception made by virtue of Part VIII of that Order. Sections 6, 7 and 8 of the HRA provide as follows: It is unlawful for a public authority to act in a way which 6. Acts of public authorities. (1) is incompatible with a Convention right. (2) Subsection (1) does not apply to an act if (a) as the result of one or more provisions of primary legislation, the authority could not have acted differently; or (b) in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with the Convention (3) rights, the authority was acting so as to give effect to or enforce those provisions. In this section public authority includes (a) (b) functions of a public nature; a court or tribunal, and any person certain of whose functions are but does not include either House of Parliament or a person exercising functions in connection with proceedings in Parliament. (4) (5) In relation to a particular act, a person is not a public authority by virtue only of subsection (3)(b) if the nature of the act is private. (6) failure to (a) for legislation; or (b) make any primary legislation or remedial order. An act includes a failure to act but does not include a introduce in, or lay before, Parliament a proposal 7. Proceedings. (1) A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may (a) bring proceedings against the authority under this Act in the appropriate court or tribunal, or rely on the Convention right or rights concerned (b) in any legal proceedings, but only if he is (or would be) a victim of the unlawful act. (2) In subsection (1)(a) appropriate court or tribunal means such court or tribunal as may be determined in accordance with rules; and proceedings against an authority include a counterclaim or similar proceeding. (3) If the proceedings are brought on an application for judicial review, the applicant is to be taken to have a sufficient interest in relation to the unlawful act only if he is, or would be, a victim of that act. (4) (5) Proceedings under subsection (1)(a) must be brought before the end of the period of one year beginning with the date on (a) which the act complained of took place; or (b) considers equitable having regard circumstances, such longer period as the court or tribunal to all the but that is subject to any rule imposing a stricter time limit in relation to the procedure in question. (6) In subsection (1)(b) legal proceedings includes (a) proceedings brought by or at the instigation of a public authority; and (b) tribunal. an appeal against the decision of a court or (7) For the purposes of this section, a person is a victim of an unlawful act only if he would be a victim for the purposes of article 34 of the Convention if proceedings were brought in the European Court of Human Rights in respect of that act. 8. Judicial remedies. (1) In relation to any act (or proposed act) of a public authority which the court finds is (or would be) unlawful, it may grant such relief or remedy, or make such order, within its powers as it considers just and appropriate. (2) But damages may be awarded only by a court which has power to award damages, or to order the payment of compensation, in civil proceedings. (3) No award of damages is to be made unless, taking account of all the circumstances of the case, including any other relief or remedy granted, or order (a) made, in relation to the act in question (by that or any other court), and (b) other court) in respect of that act, the consequences of any decision (of that or any the court is satisfied that the award is necessary to afford just satisfaction to the person in whose favour it is made. (4) In determining (a) whether to award damages, or (b) the amount of an award, the court must take into account the principles applied by the European Court of Human Rights in relation to the award of compensation under article 41 of the Convention. The Commission relies on section 69(5)(b) of the NI Act 1998 for its power to bring these proceedings. But proceedings relying wholly or partly on section 69(5)(b) constitute, under section 71(2C)(a)(ii), human rights proceedings and are subject therefore to the restrictions (taking this word from the heading of section 71) in section 71(2B). Under section 71(2B)(a), the Commission need not itself be a victim or potential victim of the unlawful act to which the proceedings relates and, consistently with this, section 71(2B)(b) provides that sections 7(3) and (4) of the HRA do not apply. But section 71(2B) contains a number of pointers to the fact that the legislature contemplated that human rights proceedings, for the purposes of section 71(2B), are proceedings which relate to an unlawful act. That contemplation can be seen in the reference in section 71(2B)(a) to the unlawful act to which the proceedings relate. The provision in section 71(2B)(c) that the Commission may act only if there is or would be one or more victims of the unlawful act reflects the same contemplation. It is also consistent with the provision in section 71(2B)(d) that no award of damages may be made to the Commission, whatever the position would be under section 8(3) of the HRA, since section 8 addresses the possibility of an award of damages as a remedy available in relation to an act (or proposed act) which the court finds is (or would be) unlawful. The other type of proceedings which, under section 71(2C)(a)(i) constitute human rights proceedings for the purposes of section 71(2B) and (2C), consists of proceedings in which a person who is (or would be) a victim of the unlawful act pursuant to section 7(1)(b) of the HRA relies on a Convention right. Section 71(2C)(a)(i) does not refer to section 7(1)(a), which provides that a person who claims that a public authority has acted or proposes to act in a way made unlawful by section 6(1) of the HRA may bring proceedings against the authority. It does not follow that its reference to section 7(1)(b) covers only situations where a Convention right is relied on by way of defence, rather than as the basis of a claim. Section 7(1)(b) is wide enough to cover both. This type of proceedings will by definition involve the Commission intervening in, rather than instituting, the proceedings within the opening words of section 71(2B). In this context, section 71(2B) reflects and regulates the existence of the incidental or consequential power which the House of Lords held the Commission to possess in In re Northern Ireland Human Rights Commission: see para 66 below. The Commission will, in contrast, be acting pursuant to its power under section 69(5)(b) to bring proceedings involving law or practice relating to the protection of human rights, when it institutes human rights proceedings within the opening words of section 71(2B). The upshot under section 71(2B) and (2C) is that, where the Commission is intervening in human rights proceedings, the person instituting the proceedings must be an actual or potential victim of an unlawful act, and, where the Commission is itself instituting human rights proceedings, it need not be, but there must be an actual or potential victim of an unlawful act to which the proceedings relate. By section 71(2C)(b), an expression used in subsection (2B) and in section 7 of the HRA has the same meaning in the former as in the latter. Section 7(1) of the HRA refers to section 6(1) of the HRA for the concept of an unlawful act, and that subsection provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right. But the subsection is expressly stated, by section 6(2), not to apply to (in summary) an authoritys act which was (a) compelled by a provision of primary legislation or which was (b) to give effect to or enforce one or more provisions of or made under primary legislation which cannot be read or given effect in a way which is compatible with Convention rights. Further, by section 6(6), an act does not include a failure to introduce, or lay before Parliament a proposal for legislation or make any primary legislation. It follows that the Commissions powers under sections 69 and 71 of the NI Act 1998 do not include either instituting or intervening in proceedings where the only complaint is that primary legislation, such as the 1861 Act, is incompatible with the Convention Rights. Neither the Westminster Parliaments enactment of, nor its or the Northern Irish legislatures failure to repeal or amend, the 1861 Act can constitute an unlawful act under sections 6 and 7 of the HRA: see the preceding paragraphs of this judgment. Such proceedings would not therefore involve any suggestion of an unlawful act within the meaning of section 7 of the HRA or, therefore, of section 71 of the NI Act. The Lord Chief Justice of Northern Ireland thought that this conclusion could be avoided by reading into section 71(2C)(a)(ii) the additional words in respect of unlawful acts after Act: para 42. This would leave section 69(5)(b) completely unconstrained and unregulated by section 71 as regards proceedings not relying on any unlawful act. That is by itself implausible. But, more fundamentally, there is neither a need nor any basis for any such words to be read into section 71. A reading of section 71 as a whole makes clear that it was envisaged as establishing a limited jurisdiction. Section 71(1) identifies the requirement of victimhood to be satisfied by any person challenging legislation of the devolved Assembly or subordinate legislation or other acts of the devolved administration which are unlawful in terms of sections 6 and 7 of the HRA. Further, sections 71(3) and (4) make express that section 71(1) is not intended to embrace proceedings challenging legislation of the devolved Assembly or subordinate legislation or an act of the devolved administration which is, by virtue of section 6(2) of the HRA, not unlawful for the purposes of sections 6(1) and 7 of the HRA. It is in other words clear that no one can claim to be an actual or potential victim in relation to any such devolved or subordinate legislation or devolved act if it was compelled by or done to give effect to or to enforce provisions of primary legislation. The exclusion of the Commission from section 71(1) is simply the prelude to the Commissions powers to institute or intervene in proceedings, but this is carefully limited to situations where there is or would be an unlawful act, of the kind identified in section 7 of the HRA. It is likewise clear that the Commission cannot either institute or intervene in proceedings where neither it nor anyone else can claim to be an actual or potential victim of an unlawful act, because the situation falls within section 6(2) of the HRA. In these circumstances, it is, as I have said, implausible to suppose that Parliament by the NI Act 1998 at the same time intended the Commission to be able to institute or intervene in proceedings where the complaint was that primary legislation of the United Kingdom Parliament was itself incompatible with the Convention rights, without either referring to this or imposing any restriction on the circumstances. It would amount to carte blanche to the Commission, without having to establish any standing or interest other than its general interest in promoting and protecting human rights, to bring any proceedings it thought fit to establish the interpretation and/or incompatibility of primary legislation under section 3 and/or 4 of the HRA. This would contrast incongruously with the express and careful delimitation by Parliament of its capacity to institute or intervene in proceedings where and only where a specific unlawful act is in question under sections 6 and 7. It is wrong to approach the present issue on the basis of an assumption that it would be anomalous if the Commission did not have the (apparently unlimited) capacity suggested to bring proceedings to establish the interpretation, or incompatibility with Convention rights, of any primary Westminster legislation it saw as requiring this for the better protection of human rights. The issue is one of statutory construction, not a priori preconception. It is in fact no surprise, in my view, that Parliament did not provide for the Commission to have capacity to pursue what would amount to an unconstrained actio popularis, or right to bring abstract proceedings, in relation to the interpretation of United Kingdom primary legislation in some way affecting Northern Ireland or its supposed incompatibility with any Convention right. On the contrary, it is natural that Parliament should have left it to claimants with a direct interest in establishing the interpretation or incompatibility of primary legislation to initiate proceedings to do so; and should have limited the Commissions role to giving assistance under sections 69(5)(a) and 70 and to instituting or intervening in proceedings involving an actual or potential victim of an unlawful act as defined in section 7 of the Human Rights Act 1998. True it is that sections 3 and 4 of the HRA are not made expressly subject to the victimhood requirement which affects sections 6 and 7: R (Rusbridger) v Attorney General [2004] 1 AC 357, para 21, per Lord Steyn; though they must undoubtedly be subject to the usual rules regarding standing in public law proceedings. However, a capacity to commence general proceedings to establish the interpretation or incompatibility of primary legislation is a much more far reaching power than one to take steps as or in aid of an actual or potential victim of an identifiable unlawful act. Further, Parliaments natural understanding would have reflected what has been and is the general or normal position in practice, namely that sections 3 and 4 would be and are resorted to in aid of or as a last resort by a person pursuing a claim or defence under sections 7 and 8: see Lancashire County Council v Taylor [2005] EWCA Civ 284; [2005] 1 WLR 2668, para 28, reciting counsels submission, and paras 37 44, concluding that, to exercise the courts discretion to grant a declaration to someone who had not been and could not be personally adversely affected would be to ignore section 7. This being the normal position, it is easy to understand why there is nothing in section 71 to confer (the apparently unlimited) capacity which the Commission now suggests that it has to pursue general proceedings to establish the interpretation or incompatibility of primary legislation under sections 3 and/or 4 of the HRA, in circumstances when its capacity in the less fundamental context of an unlawful act under sections 6 and 7 is expressly and carefully restricted. In instructive written submissions by the Equality and Human Rights Commission (EHRC) for England and Wales and Scotland as intervener, the EHRC invites comparison with the legislation which governs it, and suggests that it would be incongruous if there were a distinction between the position in England, Wales and Scotland on the one hand and Northern Ireland on the other. Sections 9 and 30 of the Equality Act 2006 provide as follows in relation to the EHRC: 9(1) Human rights The Commission shall, by exercising the powers conferred by this Part encourage good practice in relation to human (a) promote understanding of the importance of human rights, (b) rights, (c) promote awareness, understanding and protection of human rights, and (d) encourage public authorities to comply with section 6 of the Human Rights Act 1998 (c 42) (compliance with Convention rights). Judicial review and other legal proceedings 30. (1) The Commission shall have capacity to institute or intervene in legal proceedings, whether for judicial review or otherwise, if it appears to the Commission that the proceedings are relevant to a matter in connection with which the Commission has a function. (2) The Commission shall be taken to have title and interest in relation to the subject matter of any legal proceedings in Scotland which it has capacity to institute, or in which it has capacity to intervene, by virtue of subsection (1). (3) The Commission may, in the course of legal proceedings for judicial review which it institutes (or in which it intervenes), rely on section 7(1)(b) of the Human Rights Act 1998 (c 42) (breach of Convention rights); and for that purpose the Commission may act only if there is or would the Commission need not be a victim or potential (a) victim of the unlawful act to which the proceedings relate, (b) be one or more victims of the unlawful act, (c) and (d) no award of damages may be made to the Commission (whether or not the exception in section 8(3) of that Act applies); section 7(3) and (4) of that Act shall not apply, and an expression used in this subsection and in section 7 of the Human Rights Act 1998 has the same meaning in this subsection as in that section. (4) Subsections (1) and (2) (a) do not create a cause of action, and (b) are, except as provided by subsection (3), subject to any limitation or restriction imposed by virtue of an enactment (including an enactment in or under an Act of the Scottish Parliament) or in accordance with the practice of a court. These provisions are different from those in the NI Act 1998, in both its original form and the form in which it was amended in 2007. It is open to argument under section 30(1) of the 2006 Act that the EHRC is given general capacity to initiate proceedings relevant to any matter in connection with which the Commission has a function, and that section 30(3) is merely regulating one particular kind of such proceedings. I need express no view on the correctness of this argument. Even if it were correct, the mere perception that it might be welcome and entirely sensible, as the EHRC put it, if both the Northern Ireland Commission and the EHRC had the same powers cannot help construe different statutory schemes enacted at different times in different terms and without reference to each other. For these reasons, I conclude that sections 69 and 71 are incapable of conferring on the Commission power to institute or intervene in proceedings in so far as the complaint relates to the suggested incompatibility of primary legislation of the United Kingdom Parliament, namely the 1861 Act, with one or more of the Convention rights scheduled to the HRA. This conclusion is in my opinion reinforced by consideration of the legislative history of the NI Act 1998. As originally enacted, section 71 contained only subsections (1), (2), (3), (4) and (5). Subsections (2A), (2B) and (2C) were only added in 2007 by the Justice and Security (Northern Ireland) Act 2007, and so in the light of In re Northern Ireland Human Rights Commission, decided in 2002. Importantly also, subsection (1) as originally enacted commenced with the words: Nothing in section 6(2)(c), 24(1)(a) or 69(5)(b) shall enable a person Subject to the omission in 2007 of the reference in subsection (1) to section 69(5)(b) and the addition in 2007 of the reference to the Advocate General for Northern Ireland in 2007, subsections (1) and (2) remain otherwise as originally enacted. In In re Northern Ireland Human Rights Commission, the Commission had been refused permission by a coroner to intervene in an inquest into the Omagh bomb explosion in 1998, where in its view questions of human rights had arisen on which it would be appropriate for it to make submissions. By a majority, the House held that a power to intervene could be regarded as incidental to other powers expressly conferred by section 69, while noting that neither section 69(5)(a) nor section 69(5)(b) applied in terms, and that both could, under the then wording, only be invoked if the Commission could show that it was a victim for the purposes of the Convention. The Commission would, in reality, have been unable to do this. Firstly, it is a statutory public authority, listed as such in paragraph 1A of Schedule 2 to the Parliamentary Commissioner Act 1967, to which reference is made in section 75(3)(a) of the NI Act 1998. It is a core public authority within the scope of that concept as identified in Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank [2004] 1 AC 546, para 8, per Lord Nicholls, and paras 43 47, per Lord Hope. As the House there acknowledged, core public authorities owe Convention duties, but cannot themselves be victims. Even if the Commission had been a hybrid public authority, this would only mean that it was not a public authority in respect of acts of a private nature: see Aston Cantlow, para 11 per Lord Nicholls. The present proceedings are indisputably of a public nature. Secondly and in any event, the Convention test of victimhood requires an individual applicant to have been actually affected by the alleged violation, and does not contemplate a kind of actio popularis relating to the interpretation or application of Convention rights: Klass v Germany (1978) 2 EHRR 214. The European Court of Human Rights reiterated this point with clarity in Stbing v Germany (2012) 55 EHRR 24, para 62: [I]n cases arising from individual applications it is not the Courts task to examine domestic legislation in the abstract. Rather, it must examine the manner in which the relevant legislation was applied to the applicant in the particular circumstances of the individual case In section 71(1) as originally enacted, it is clear that the reference to sections 6(2)(c), 24(1)(a) and 69(5)(b) covered all circumstances in which it was contemplated that these sections could be invoked. The legislature, for understandable reasons (see para 60 above), did not contemplate or provide that the Commission should have competence under section 69(5)(b) to bring abstract proceedings under sections 3 and 4 of the HRA. In this respect, it was following the general approach of the European Court of Human Rights itself: see Klass v Germany and Stbing v Germany (para 68 above). The need to focus on individual facts was also powerfully emphasised (in the context of article 8) by Judge Lpez Guerra, joined by Judge Casadevall, in their concurring judgment in A, B and C v Ireland (2010) 53 EHRR 13. The 2007 amendments to the NI Act 1998 confirm the legislatures approach in this regard. They removed the reference to section 69(5)(b) from section 71(1), and moved it to section 71(2C). The clear effect of section 71(2B) and (2C) is they also deal with all circumstances contemplated as falling within section 69(5)(c) and that such circumstances are to be limited to only one situation, viz where there is or would be one or more victims of an unlawful act within sections 6 and 7 of the HRA, in aid of whom the Commission initiates or intervenes in proceedings. It is, as I have said, implausible to suppose that Parliament intended at the same time to give the Commission tacit and unrestricted capacity to pursue the much more serious course of initiating proceedings to establish the interpretation or incompatibility of primary legislation, whenever it decided that this would promote or protect human rights. The combination of section 69(5)(b) and section 71 in my view therefore clearly excludes any power on the part of the Commission to institute proceedings to assert the alleged incompatibility of primary legislation of the United Kingdom Parliament with Convention rights. Any such challenge by the Commission is in my opinion outside the scope of section 71, both before and after its 2007 amendment. But, even if it were not so, it would not involve any identifiable unlawful act or any act of which any identifiable person could be said to be the actual or potential victim. The result may be seen, in some eyes, as inconvenient. However, I think it entirely comprehensible that Parliament should have left any such challenge made by reference to Convention rights to be raised in a specific context, by a victim. The Commission would be able under sections 69(5)(a) and 70 of the NI Act to give assistance to an individual commencing or wishing to commence proceedings raising a human rights issues or relying or wishing to rely on such an issue in current proceedings. That is however quite a different matter from the Commission initiating such proceedings in the abstract itself. Nothing in the Houses reasoning in In re Northern Ireland Human Rights Commission supports a suggestion that there has ever existed such a power on the part of the Commission to initiate legal proceedings. Any such suggestion would have been inconsistent with section 71 as originally enacted and would now be inconsistent with section 71 as amended with its careful definition and restriction of the circumstances in which the Commission may institute or intervene in proceedings. Those restrictions clearly exclude the claim to institute abstract proceedings for a declaration of incompatibility with primary United Kingdom legislation, which the Commission now advances. It is at this point appropriate to say something further about the 1945 Act, which the Commission appears to have treated as primary legislation for the purposes of the HRA: see para 45 above. As I have already indicated, that does not seem to me correct. It follows that it might have been open to the Commission to claim that the failure of the Northern Ireland Assembly to repeal or amend section 25 of the 1945 Act constituted itself an unlawful act within the meaning of sections 6 and 7 of the HRA. I do not see how such a claim could be directed to the first respondent, The Department of Justice, which is not a law making body (and, for good measure, would appear also to have been precluded from taking any initiative to amend the 1945 Act by virtue of section 28A of the Northern Ireland Act and paragraph 2.4 of the Ministerial Code, which assigns such matters to the Executive Committee of the Northern Ireland Assembly). The second respondent, the Attorney General, was not sued as representing the Northern Ireland Government and it may be could not have been (see section 17(3) of the Crown Proceedings Act 1947). But even assuming that a claim could have been made against him on that basis, the Commission would still be subject to the restriction under section 71(2B) that it could only institute the present proceedings if there is or would be one or more victims of the unlawful act. That restriction is not satisfied by a general assertion that the failure to abrogate or amend section 25 is likely to give rise to victims. Section 71(2B) contemplates the specific existence and identification of a victim who can say that he or she is or would be the victim of an unlawful act, in a way which satisfies section 7(1) of the HRA. Finally, however, I repeat the point made in para 45 above, that, even if the Commission could satisfy the restrictions of section 71(2B) and establish that the maintenance in force of section 25 constituted an unlawful act, the practical effect would appear to be either nothing or very little, having regard to the continuing effect of sections 58 and 59 of the 1861 Act. In summary, the present proceedings were not instituted by identifying any unlawful act or any actual or potential victim of it. First and fundamentally, as regards sections 58 and 59 of the 1861 Act, this is because they were brought to challenge the compatibility with the Convention rights of United Kingdom primary legislation, which by statutory definition is not a complaint about any act which is unlawful under the HRA or indeed otherwise. Secondly, although this would not have resolved the first objection if they had been, the proceedings were not, in fact, brought by reference to any particular alleged victim of any such incompatibility, and this remains the case although evidence has subsequently been adduced about a number of specific cases. In these circumstances, I would uphold the respondents objection to the Commissions pursuit of these proceedings, and answer the questions raised by the Attorney General of Northern Irelands reference in the negative. The alleged incompatibility The case advanced by the Commission, with the support of a number of the interveners (other interveners joining the respondents in opposition to it), involves different categories which can be identified as follows: (a) Cases of fatal foetal abnormality, (b) Cases of serious foetal abnormality, (c) Cases of pregnancy due to rape, (d) Cases of pregnancy due to incest. Clearly, there is room for argument at the margin about the precise definition and scope of these categories. There is however medical evidence to the effect that circumstances falling within category (a) can be reasonably clearly identified, whether they involve the inevitable or likely death of the foetus in the womb or within a fairly short period after birth. Cases within category (b) are on that basis cases where the foetus will live for a reasonable period after birth, but suffer from permanent abnormalities. As to category (c), the Commission initiated these proceedings with the narrow focus indicated in para 42 above. The circumstances of the JR76 interveners (see para 89 below), relating to a child of 13 or over but under 16, were not in the Commissions mind. Sexual activity with such a child is capable of constituting one of a number of sexual offences, not described as rape, set out in sections 16 to 22 of the Sexual Offences (Northern Ireland) Order 2008, (2008) No 1769 (NI 2), depending inter alia on the age of the person committing the offence. As the evidence regarding the JR76 interveners illustrates (para 89 below), a pregnancy in a case involving such an offence can well involve most distressing circumstances. However, since the question is whether current Northern legislation is bound to operate incompatibly with the Convention rights in a legally significant number of cases, it is unnecessary for us on this appeal to attempt to address every conceivable case. Bearing in mind the narrow focus of both the Commissions case as initiated and of the submissions which we heard in this area, I will focus on rape in the legal sense, and leave other cases to be considered separately, though in the light of course of any relevant assistance which this judgment may afford. Sections 58 and 59 of the 1861 Act provide as follows: 58. Administering drugs or using instruments to procure abortion. Every woman, being with child, who, with intent to procure her own miscarriage, shall unlawfully administer to herself any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, and whosoever, with intent to procure the miscarriage of any woman, whether she be or be not with child, shall unlawfully administer to her or cause to be taken by her any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, shall be guilty of felony, and being convicted thereof shall be liable to be kept in penal servitude for life . 59. Procuring drugs, &c to cause abortion. Whosoever shall unlawfully supply or procure any poison or other noxious thing, or any instrument or thing whatsoever, knowing that the same is intended to be unlawfully used or employed with intent to procure the miscarriage of any woman, whether she be or be not with child, shall be guilty of a misdemeanor, and being convicted thereof shall be liable to be kept in penal servitude. Section 25 of the 1945 Act provides: 25. Punishment for child destruction. (1) Subject as hereafter in this sub section provided, any person who, with intent to destroy the life of a child then capable of being born alive, by any wilful act causes a child to die before it has an existence independent of its mother, shall be guilty of felony, to wit, of child destruction, and shall be liable on conviction thereof on indictment to penal servitude for life: Provided that no person shall be found guilty of an offence under this section unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother. (2) For the purposes of this and the next succeeding section, evidence that a woman had at any material time been pregnant for a period of 28 weeks or more shall be prima facie proof that she was at that time pregnant of a child then capable of being born alive. The word unlawfulness used in sections 58 and 59 of the 1861 Act was explained by Macnaghten J in directions given to the jury in the seminal case of R v Bourne [1939] 1 KB 687; [1938] 3 All ER 615. In order to understand its scope, he pointed to different wording used to define an associated offence in both the Infant Life (Preservation) Act 1929 in England and section 25 of the 1945 Act. Under both provisions, it is necessary to prove that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother. Macnaghten J held that the same requirement was implied by the word unlawful in section 58 (and, it follows, section 59). He also considered that impairment of health might reach a stage where it was a danger to life, and that the words ought to be construed in a reasonable sense, and, if the doctor is of opinion, on reasonable grounds and with adequate knowledge, that the probable consequence of the continuance of the pregnancy will be to make the woman a physical or mental wreck, the jury are quite entitled to take the view that the doctor, who, in these circumstances, and in that honest belief, operates, is operating for the purpose of preserving the life of the mother: pp 693 694. further relaxed, in particular by the Abortion Act 1967, providing: In other parts of the United Kingdom, the prohibition of abortion has been 1. Medical termination of pregnancy. (1) Subject to the provisions of this section, a person shall not be guilty of an offence under the law relating to abortion when a pregnancy is terminated by a registered medical practitioner if two registered medical practitioners are of the opinion, formed in good faith that the pregnancy has not exceeded its twenty (a) fourth week and that the continuance of the pregnancy would involve risk, greater than if the pregnancy were terminated, of injury to the physical or mental health of the pregnant woman or any existing children of her family; or that the termination is necessary to prevent grave (b) permanent injury to the physical or mental health of the pregnant woman; or (c) that the continuance of the pregnancy would involve risk to the life of the pregnant woman, greater than if the pregnancy were terminated; or (d) that there is a substantial risk that if the child were born it would suffer from such physical or mental abnormalities as to be seriously handicapped. (2) In determining whether the continuance of a pregnancy would involve such risk of injury to health as is mentioned in paragraph (a) of subsection (1) of this section, account may be taken of the pregnant womans actual or reasonably foreseeable environment In Northern Ireland, the law remains as stated in the 1861 and 1945 Acts and explained in R v Bourne. In Family Planning Association of Northern Ireland v Minister for Health, Social Services and Public Safety [2004] NICA 37, [2005] NI 188 (the FPANI case), the Association did not challenge that proposition, but by judicial review proceedings, claimed, successfully in the Court of Appeal, that it was incumbent on the defendant Minister to investigate how many women in Northern Ireland who had pregnancies terminated in other parts of the United Kingdom could have had their abortions terminated lawfully in Northern Ireland, to provide guidance to women in that position to reduce the number travelling abroad for abortions and to provide guidance to clinicians to enable them to ensure that those having abortions gave informed consent. The Court of Appeal also expressed views about the effect of the principles established in R v Bourne. The Court concluded that it was incumbent on the Minister or his department to investigate the need for and if necessary issue guidelines to clarify for the medical profession and the public the legal principles governing abortion, including the provision of aftercare for those having abortions in Northern Ireland as well as those returning from having an abortion in England. Its conclusions were to be expressed more precisely in declarations, which were not examined before the Supreme Court on the present appeal. Articles 2, 3, 8 and 14 of the Convention rights scheduled to the HRA provide as follows: 2. Right to life. 1. Everyones right to life shall be protected by law. 2. Deprivation of life shall not be regarded as inflicted in contravention of this article when it results from the use of force which is not more than absolutely necessary: in defence of any person from unlawful violence; in order to effect a lawful arrest or to prevent the (a) (b) escape of a person lawfully detained; in action lawfully taken for the purpose of quelling a riot or insurrection. 3. Prohibition of torture. No one shall be subjected to torture or to inhuman or degrading treatment or punishment. 8. Right to respect for private and family life. 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. Prohibition of discrimination. 14. The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. The issue on this appeal is whether the existing law in Northern Ireland is compatible with these articles of the Convention in the categories of case identified in paras 42 and 67 above. During the submissions made by Ms Caoilfhionn Gallagher QC for Humanists UK as interveners, a submission was made that the existing law, interpreted in accordance with R v Bourne, was generally too imprecise to be in accordance with the law within article 8. That is a submission which lies outside the scope of the present appeal. It would require revisiting the territory covered in the FPANI case and, quite probably, considering what has occurred in the light of whatever declarations were made in that case. That is not what the present appeal has been or is about. Even if there proved to be force in the point made by Ms Gallagher, it could at best only lead to a conclusion that the legal principles should be further clarified, whether by the court or the department or by legislative amendment. The Abortion Act 1967 applicable in the rest of the United Kingdom demonstrates the feasibility of further legislative clarification. When considering the compatibility in the abstract of the current Northern Ireland legislation with any particular Convention right, it is not enough to show that, as a matter of practice or when applied in the light of administrative guidance, legislation has proved prone to give rise to unjustified infringement of a Convention right. The relevant question is whether the legislation itself is capable of being operated in a manner which is compatible with that right, or, putting the same point the other way around, whether it is bound in a legally significant number of cases to lead to unjustified infringement of the right. That is how Lady Hale DPSC expressed the test in The Christian Institute v The Lord Advocate [2016] SLT 805, para 88. She cited her own previous words in R (Ali) and R (Bibi) v Secretary of State for the Home Department [2015] 1 WLR 5055, para 2, where she rightly emphasised that the test sets a complainant a difficult task and at para 6 she also cited words of Lord Hodge at para 69, on which I wish to make this observation. Lord Hodge stated in para 69 that The court would not be entitled to strike down the Immigration Rule under consideration in that case unless satisfied that it was incapable of being operated in a proportionate way and so was inherently unjustified in all or nearly all cases. In support, Lord Hodge cited a dictum of Aikens LJ, giving the only reasoned judgment in R (MM (Lebanon)) v Secretary of State for the Home Department [2014] EWCA Civ 985; [2015] 1 WLR 1073, para 134, to the effect that If the particular immigration rule is one which, being an interference with the relevant Convention right, is also incapable of being applied in a manner which is proportionate or justifiable or is disproportionate in all (or nearly all) cases, then it is unlawful. However, I myself see no basis for so high a numerical test. It cannot be necessary to establish incompatibility to show that a law or rule will operate incompatibly in all or most cases. It must be sufficient that it will inevitably operate incompatibility in a legally significant number of cases. That itself is, as Lady Hale observed, is a difficult hurdle to overcome. Very often the problem lies not in the law or rule itself, but in the way it has been understood or applied in practice, and, even in borderline cases, very often the solution can be found in a conforming interpretation, however bold, under section 3 of the Human Rights Act 1998. The latter course is not however possible in relation to the 1861 or 1945 Acts, in view of their unequivocal tenor and terms. Expert evidence Professor (or as he was then Dr) James Dornan, director of foetal medicine at the Royal Jubilee Maternity Service at the Royal Maternity Hospital, Belfast gave evidence to the court in the FPANI case and has given further evidence in the present proceedings. In the FPANI case (see paras 122 to 123), he explained how, after his appointment as a consultant with responsibility for foetal medicine in 1986, he had clarified with the Department of Health the implications of diagnosis of congenital deformities, and was, as he recorded in a letter dated 31 August 2001, informed that we should not change our clinical practice and that termination of pregnancy should be carried out for lethal abnormalities or abnormalities where there would be a major physical or mental problem for the foetus prior to the stage of viability. (At that time 28 weeks, now considered to be 24 weeks.) We were also informed that termination could be offered and performed on a pregnancy that could have a serious mental or physical effect on the mother. Therefore for the past decade, terminations of pregnancy for the above abnormalities have been offered to mothers and are carried out on mothers from throughout Northern Ireland in our unit. In the FPANI case (para 83), Nicholson LJ inferred that the Department of Health had not considered the legal position in relation to abnormal foetuses, and that It would appear that it has never been indicated to Dr Dornan or his colleagues that it might be necessary to obtain a psychiatric viewpoint on the mothers mental health, if that was the ground on which the abortion of a viable foetus was carried out or that the effect on the mothers health would have to be serious and long term. In the present proceedings, Professor Dornan has updated the position in a statement dated 17 October 2017, in which he records that the FPANI case made it clear that we could no longer offer a pregnant woman the option of an abortion on the grounds of fatal foetal abnormality alone, the focus had to be on the pregnant woman and a pregnancy could be lawfully terminated if its continuation threatened her life or would have a serious and long term effect on her physical or mental health (para 12). His statement endorses the Department of Healths and the Royal College of Midwiferys conclusions that foetal or serious foetal abnormalities can now be diagnosed with a high degree (Professor Dornan says extremely high degree) of accuracy. As to fatal or lethal abnormality, he summarises clinicians typical understanding of that term as applying where a foetus is diagnosed as liable to die during pregnancy, labour or within a short period of birth (para 17), and adds that clinicians are well able to accurately diagnose antenatally whether a foetus has a condition which is incompatible with life, whether in the sense that it is unlikely to be able to continue to term, to survive the birth process or to be able to maintain its vital functions independently for anything more than a few days (para 20). Professor Dornan also explains the risks of, in particular, sepsis to the physical health of a mother of an abnormal foetus, which may die and remain undetected in utero for a significant period (up to two weeks), as well as the significant risks to the mental health of a mother required to continue with a pregnancy knowing that her baby has a fatal abnormality and may die at any moment. Horner J accepted that The doctors know when the foetus has an FFA (a fatal foetal) abnormality. This is primarily a medical diagnosis not a legal judgment (para 160). Before the Supreme Court Christian Action and Research in Education (CARE), ADF International (UK) and Professor Patricia Casey as joint interveners suggested that other professional opinion differed but the evidence before the judge and his finding were clear. Factual cases put in evidence The Commissions case on the issue before the Court is supported by evidence relating to a selection of pregnant women. Their experiences are harrowing. Three cases concern foetal abnormality. In the first, Ashleigh Topley recounts her joy as a prospective mother in 2013, up to the point when a 20 week scan revealed her babys severe bone abnormality, with a fatal prognosis. A doctor explained that an abortion would be a possibility, only for that relatively hopeful outcome to be shattered by a consultants distressingly blunt statement the next day: Well, thats not going to happen, followed by another to the effect that, if Mrs Topley were to continue with the pregnancy, things would just proceed as normal. A later consultants appointment confirmed that the babys condition meant that it could survive through Mrs Topley in the womb, unless and until its heart ran out of room, but would not survive birth. At 35 weeks pregnant, her waters broke and she gave birth to a girl, whose appearance indicated that her heart had probably stopped beating two or so days earlier. During and after the pregnancy, Mrs Topley faced the ordeal of others congratulating her on her pregnancy or asking about the baby. A second sad case is that of Sarah Ewart, on whose behalf as an intervener the Supreme Court has received both written and oral submissions. In summer 2013, just prior to 20 weeks into her pregnancy, a scan revealed that her baby had anencephaly, the lack of a developed brain and skull. She was told that there was no risk to her health, and that the baby would be monitored fortnightly and labour induced if it was then discovered that it had died. She did not feel that she could say that her mental health was at risk (and a consultant psychiatrist later confirmed that he could not predict this either). She was horrified to discover that, without a skull, the baby could not travel down the birth canal, and decided that she could not face the prospect of a long and painful labour. Her mother contacted Assembly and Westminster representatives, with scant results. Her doctor explained the guidelines for abortion (presumably those developed after the FPANI case), and that nothing could be done for Ms Ewart in Northern Ireland, adding that she wasnt going to prison for anyone. The concerns of Ms Ewart, her husband and parents were increased by a departmental briefing to the effect that the courts in Northern Ireland have not ruled on whether it is lawful to encourage or arrange for someone to have a termination and that in the absence of current law on the subject, it remains a grey area and practitioners should be mindful of that fact. There were protesters outside the Family Planning Association in Belfast, who crowded round and abused them as they left. The Association had however by then arranged an appointment for an abortion in Streatham, where no one knew about anencephaly. Her Northern Ireland medical notes could not be transferred to the English clinic, where she felt criticised for having left an abortion so late and the process lacked dignity and was like a conveyor belt. There was, apparently because of a lack of clarity whether this would be permitted in Northern Ireland, no autopsy on the remains to provide an indication of the likelihood of recurrence of fatal foetal conditions. The whole experience was devastating and at times almost overwhelming. The third case is that of Denise Phelan, a qualified lawyer and teacher, who found herself having to carry until one month before her due date in summer 2016 a baby who she knew from an early stage could not live. Her evidence is that none of her professional training was of any assistance at all in dealing with the reality that in my most desperate time of need the law of Northern Ireland not only could not assist me but actually made things worse. She continued: The sadness I felt in learning that the foetus I was carrying had a fatal abnormality was completely overtaken by the horror of realising that I had to continue on with the pregnancy in the knowledge that the foetus could die at any moment and then there would be the awful experience of having to deliver it. After learning that her baby had Edwards Syndrome, Mrs Phelan and her husband were told that they would have to go to England if they decided to terminate the pregnancy, but that doctors in Northern Ireland could not because of the law give any information about that. She understood that there was a limit of 24 weeks for such a process, and was not informed to the contrary. When she and her husband asked further about English clinics, they were shocked not just at the cost which was over 1,400, but more so by how the abortion clinics acted like businesses and by the apparent absence of any NHS aftercare. She had a prior history of mental illness and chronic migraine, which reasserted itself with a vengeance, leaving her incredibly ill with grief, depression, and chronic migraine and vomiting. She records one psychiatrist saying on the telephone that if a mothers mental health was at risk, the symptoms would simply be treated with medication, while the psychiatrist who she saw assessed her as ineligible for an abortion under Northern Ireland law, saying the bar was set so high that an abortion on those grounds was impossible to obtain. With her husband she eventually made arrangements to attend an English abortion clinic in her 24th week, but she had chronic migraine and could not travel. She became even more depressed and ill as a result, and thought of committing suicide. She knew when her baby died, but it was five days before she was induced to give birth. During that period the dead baby released meconium which fills the womb and suffers decay, an experience for which no one had prepared her and her husband and which remains seared in her mind. As one example of a case involving rape, Dawn Purvis of Marie Stopes International Northern Ireland (MSNI) cites client B, who presented at MSNI pregnant after being raped by her partner, with whom she was enduring a domestically violent relationship and who had refused to allow her to use any contraception. Her GP had refused to refer her to any health care provider on the basis that abortion was illegal in Northern Ireland, and MSNI assessed her as ineligible for an abortion under Northern Ireland law. Client B was upset and distressed at being informed that she would have to travel to England for an abortion, this being compounded by her fear of her partner and of his reaction if he found out that she was pregnant and planning a termination. She underwent a termination outside Northern Ireland. Other examples of the distressing consequences of pregnancy following rape are given by Mara Clarke of Abortion Support Network (ASN). One is of a woman beaten and raped by a group of men including a close relative. Northern Ireland organisations and agencies knew of her circumstances, but none offered any assistance. She managed to raise 100 towards the costs of obtaining an abortion in England, including travel and accommodation, with ASN funding the remaining 1,200. She later told ASN that, without their help, she would be dead either by her own hand or by that of those who abused her. The case of two other interveners before the Supreme Court calls for mention. They are mother and daughter, identified as the JR76 interveners, referring to judicial review proceedings to which they are party in Northern Ireland. The daughter aged 15, and therefore legally unable to consent to sexual intercourse, became pregnant as a result of a relationship with a boy one year older. The boy was abusive, and threatened to kick the baby out of her and to stab it if born. The daughter wanted to continue her schooling and go to university. Discussing the situation with her supportive mother, the daughter decided that she could not go through with the pregnancy or a termination in England. She would have had to obtain travel documents and go with her mother. Instead, she asked her mother to obtain pills to put an end to the pregnancy, neither apparently realising this was unlawful. Taking the pills led to heavy bleeding, as a result of which the daughter saw her GP, but not to termination of the pregnancy. The GP referred her to Children and Adolescent Mental Health Services (CAMHS), who advised a referral to a local maternity/gynaecologist clinic and also contacted Social Services, who a month later contacted the Police Service of Northern Ireland (PSNI). The PSNI then, without notice, obtained her medical records from her GP and CAMHS, which led to her being questioned on child protection grounds in her mothers absence, and then to her mother being interviewed under caution and charged by the Public Prosecution Service for Northern Ireland. The pending judicial review proceedings relate to that decision to prosecute. As an example of pregnancy due to incest, Dawn Purvis identified client C, aged under 13, who presented at MSNI with a relative after becoming pregnant as a result of familial sexual abuse elsewhere within the family. Client C had, as is common in such cases, concealed the abuse and pregnancy beyond nine weeks and four days. MSNI only provide medical abortions within that period, and then not to girls under 16. MSNI initiated its safeguarding procedures and social services and the PSNI became involved. Client C became frightened and distressed when told that she would have to travel to England, but did so. Subsequently, the PSNI have asked to retain the products of conception, and have travelled to England to collect them. These are distressing cases. But they are not before the Court for resolution, in the way that they could have been if those directly involved in them had brought proceedings as victims. Had these cases been before the Court, the circumstances of each would have been the subject of individualised investigation and adjudication. Instead, they are deployed in support of a general challenge to Northern Ireland law as incompatible with the Convention rights. Further, the Court is invited to address this challenge in terms of risk. An analogy is suggested with cases such as Chahal v United Kingdom [1996] 23 EHRR 413 and Saadi v Italy [2008] 49 EHRR 30, where the European Court of Human Rights identified as the relevant test of the legitimacy of a deportation, whether there would be a real risk of torture or inhuman or degrading treatment in the country to which deportation was proposed. In my view, these points demonstrate the problem about treating the Commission as having a generalised competence to challenge legislation, and illustrate a likely reason why the NI Act 1998 was framed so as not to confer such a competence. When a challenge is made by a victim, the court focuses on the treatment which the victim has actually received or is actually receiving, and its cause may well prove not to have been the applicable legislation, but rather the way this was (mis)understood or (mal)administered. In contrast, where, as here, the claim is that the legislation itself presents a risk of treatment incompatible with the Convention, the focus is in one sense narrowed, in so far as it is now solely on the legislation and its effect, but in another sense broadened, in so far as it is submitted that compatibility must be judged not by reference to actual facts, but by reference to risk. That said, others among my colleagues consider that the Commission is competent to bring the present proceedings. In the circumstances I shall go on to express my own views on the generalised challenges which are made. The starting point is that an unborn foetus is not treated in domestic law as being already a person. In the context of abortion, a conclusion that a foetus is not a person appears to follow naturally from the interpretation of the 1861 and 1945 Acts, according to which the preservation both of the mothers life and of her long term mental health from serious damage prevail, without more, over any interests of the unborn foetus. The English law position was considered more generally in In re MB (Medical Treatment) [1997] EWCA Civ 3093; [1997] 2 FLR 426, 444. The issue there was whether the court had power to compel a woman of competent decision making power to have a caesarean in order to save her unborn child. The Court of Appeal rejected the existence of such a power, saying forcibly: The law is, in our judgment, clear that a competent woman who has the capacity to decide may, for religious reasons, other reasons, or for no reasons at all, choose not to have medical intervention, even though, as we have already stated, the consequence may be the death or serious handicap of the child she bears or her own death. She may refuse to consent to the anaesthesia injection in the full knowledge that her decision may significantly reduce the chance of her unborn child being born alive. The foetus up to the moment of birth does not have any separate interests capable of being taken into account when a court has to consider an application for a declaration in respect of a caesarian section operation. The court does not have the jurisdiction to declare that such medical intervention is lawful to protect the interests of the unborn child even at the point of birth. (italics added) In Attorney Generals Reference (No 3 of 1994) [1998] AC 245, the House concluded, as the headnote puts it, that a foetus is neither a distinct person separate from its mother, nor merely an adjunct of the mother, but was a unique organism to which existing principles could not necessarily be applied. This introduces a note of caution about any absolutist attempt of definition, and the italicised sentence in the quotation from In re MB (Medical Treatment) above may in that respect be too dogmatic. The European Court of Human Rights has also taken a somewhat more nuanced approach. Vo v France (2004) 40 EHRR 12 was concerned with a case where a doctor by negligence had caused the termination of a pregnancy at the 20 to 24 weeks stage. The doctor had been acquitted of causing unintentional harm on the ground that the foetus was not at that stage a person. Complaint was made that this involved a breach of article 2. The European Court of Human Rights after considering the previous case law said that, in the circumstances examined to date, under various national laws on abortion, the unborn child is not regarded as a person, directly protected by article 2. However, it went on to leave open the possibility that in certain circumstances certain safeguards might be extended to the unborn child (para 80). In the context of the new situation before it, no single answer could be given to the question when life begins and who is a person. The question was within each states margin of appreciation (para 82). But, so far as there was a consensus, it was only that the foetus/embryo belonged to the human race and had the potential to develop into a full person (para 84). In A, B and C v Ireland (2010) 53 EHRR 13, the issue was whether the Irish prohibition on abortion was compatible with the Convention. The prohibition applied save where necessary to save the mothers life, so obliging pregnant mothers fearing for their health or well being if their pregnancy continued to travel to England for an abortion. The Court at para 213 referred to Vo v France in support of a dictum that the womans right to respect for her private life must be weighed against other competing rights and freedoms involved including those of the unborn child. That is a more open ended proposition, but at para 222 the Court repeated that it had been confirmed by the Courts finding in . Vo v France that it was neither desirable nor possible to answer the question of whether the unborn was a person for the purposes of article 2 of the Convention. In the light of this and of the Courts case law generally, the Court cannot in para 213 be read as equating the interests of an unborn child with those of the mother in the context of abortion. Article 3 The Commissions primary case is that the 1861 and 1925 Acts infringe article 3. Article 3 contains an unqualified or absolute prohibition of torture and of inhuman or degrading treatment or punishment. The European Court of Human Rights explained the concept in Gfgen v Germany (2010) 52 EHRR 1, para 88 in these terms: In order for ill treatment to fall within the scope of article 3, it must attain a minimum level of severity. The assessment of this minimum depends on all the circumstances of the case, such as the duration of the treatment, its physical or mental effects and, in some cases, the sex, age, and state of health of the victim. Further factors include the purpose for which the treatment was inflicted together with the intention or motivation behind it, as well as its context, such as an atmosphere of heightened tension and emotions. Again, it is apparent that the exercise which the Commission invites of judging the general incompatibility of legislation with article 3 sits uneasily with the case by case and contextual approach with which both the European Court of Human Rights and domestic courts are more familiar under article 3. The European Court of Human Rights has considered article 3 in the context of abortion in a number of cases. A, B and C v Ireland is a useful starting point, although it did not concern foetal abnormality, rape or incest. The three applicants, all resident in Ireland, each travelled to England for an abortion, believing that they had no right to one in Ireland. Each had become pregnant unintentionally. The Court found that the first applicant had had an abortion for reasons of health and well being, namely her history of alcoholism, post natal depression and difficult family circumstances, the second applicant had had an abortion because she did not feel ready to be a mother, and the third applicant had had an abortion because of a fear (whether or not well founded) that her pregnancy constituted a risk to her life, because it might cause her cancer to recur and mean that she did not then receive cancer treatment in Ireland. The Court accepted that, although the psychological impact was not susceptible to clear proof, travelling abroad for an abortion constituted a significant psychological burden on each applicant (para 126), and said that an abortion in Ireland would have been a less arduous process, as well as less expensive. The third applicant made the additional complaint (which the Court upheld under article 8) that there had been no proper regulatory framework and system for considering and establishing whether she was entitled to an abortion in Ireland. The judgment is of interest for the Courts treatment of the complaints made in the above circumstances by all three applicants under article 3. The Court recited the effect of the first two sentences quoted above from Gfgen and went on simply to say that the facts alleged do not disclose a level of severity falling within the scope of article 3, with the result that it rejected the complaints under that article as manifestly ill founded (paras 164 165). I note in passing that, contrary to the Commissions submissions before the Supreme Court, I see no reason to exclude as a relevant factor in the connection that the foetuses in question would have been viable. The first and second applicants complaints under article 8 were rejected on the ground that the prohibition in Ireland of abortion for health and well being reasons, based as it is on the profound moral views of the Irish people as to the nature of life left open the right to lawfully travel abroad for an abortion with access to appropriate information and medical care in Ireland, and represented a choice which fell within the margin of appreciation accorded to the Irish state (para 241). The third applicant succeeded under article 8 on special grounds, as already mentioned. In two cases the European Court of Human Rights has held that article 3 was infringed by failures to give effect to rights to an abortion which domestic law in the circumstances conferred. It is well established in Strasbourg case law that a Convention breach may consist in failing to give effect to domestic law rights, even though there is no Convention obligation on domestic law to provide such rights: see eg RR v Poland (2011) 53 EHRR 31, para 200, Marckx v Belgium (1979) 2 EHRR 330, para 31, and Stec v United Kingdom (2005) 41 EHRR SE18, para 53. In RR v Poland the applicant learned of possible malformation of the foetus from an ultrasound at the 18 week stage. Her repeated requests for genetic tests were met with procrastination, confusion and a lack of proper counselling and information, and it was not until the 23rd week that, with the help of a sympathetic doctor, she was able to gain access to a hospital by subterfuge and have appropriate tests, the results of which were only available two weeks later. She was then told that the foetus had Edwards syndrome, but was refused an abortion on the basis that it was now too late, after the 24 week stage. As a result, she had to carry the baby to term, and deliver it. The legislation providing for abortion expressly, and unequivocally entitled a pregnant woman to unimpeded access to prenatal information and testing (para 156). The applicant was in a situation of great vulnerability and deeply distressed by the information that the foetus could be malformed (para 159). The services not provided to her had been available, and she had been shabbily treated and, as the Polish Supreme Court had also found, humiliated (para 160). In P and S v Poland [2012] 129 BMLR 120, P aged 14 became pregnant due to rape, evidenced by bruises. Polish law permitted an abortion in such circumstances, but the reality of its practical implementation was in striking discordance with the theoretical right. P was given contradictory information and was subject to religious pressure, medical procrastination, combined with the release by a hospital of information to the national press, exposing P to public comments, unwanted and intrusive text messages from unknown persons and harassment by anti abortion activists. The Lublin Family Court even removed P from the custody of her mother (S), on the (unfounded) basis that her mother was pressurising her to have an abortion contrary to her wishes, and put her in a juvenile shelter. Eventually, after S complained to the Ministry of Justice, she was informed that P could have an abortion in Gdansk, 500 kilometres away. S and P drove there clandestinely and the abortion was carried out on 17 June 2008. Nonetheless, in July 2008 criminal proceedings were begun against P on suspicion of unlawful sexual intercourse with a minor under 15. These proceedings were only dismissed in November 2008 on the basis that P was the victim, not the perpetrator. In these circumstances, the Court focused on Ps great vulnerability, her young age, the extent to which she had been pressurised and exposed to unwanted public attention, the misguided criminal proceedings commenced against her, and (echoing a phrase from RR v Poland) procrastination, confusion and lack of proper and objective counselling and information throughout; and on that basis found a breach of article 3. In contrast, in Tysiac v Poland (2007) 45 EHRR 42, the Court rejected the applicants complaint under article 3, while accepting it under article 8. She had complained about the failure to afford her an abortion in circumstances where she had an understandable fear that giving birth would lead to her losing her already poor sight, leading to a further six months of pregnancy and a caesarean birth, after which her sight did in fact deteriorate significantly (although the causation of this was in issue), causing her immense personal hardship and psychological distress. The Court held that there was no adequate system in Poland for deciding whether an abortion was lawful and appropriate, for resolving issues arising in this connection and for enabling the applicant to know her position, thereby exposing her to prolonged uncertainty, severe distress and anguish. Nonetheless, the Court only held there to have been a breach of article 8. The case made under article 3 was rejected, evidently on the ground that the ill treatment did not reach the requisite level of severity, since the Court referred in this connection to Ilhan v Turkey (2000) 34 EHRR 36, para 87, which proceeded on that basis. These three cases are all instances of careful consideration of particular facts, to decide whether the relevant threshold of severity has been crossed. They were decided on an assessment of the actual circumstances of the conduct relied on as contrary to article 3. They were not decided by reference to an assessment of the risk that the State might commit an actual breach of article 3. They lend no support to a general conclusion that the current Northern Irish legislative position necessarily involves a breach of article 3 in respect of any pregnant woman faced with a choice between carrying her foetus to term or travelling abroad for an abortion. Even when one takes into account that the present case concerns pregnancies where the foetus is diagnosed as fatally or seriously abnormal or is the result of rape or incest, it remains the case that the pregnant woman may, and it seems likely in most cases can if she chooses, travel elsewhere from Northern Ireland for an abortion. It is clear that this can be a distressing and expensive experience, even taking into account that it has now been accepted that the NHS should bear the costs of such an abortion in England. Nevertheless, this is the result of current Northern Irish legislative policy, which itself no doubt originates in moral beliefs about the need to value and protect an unborn foetus. In these circumstances, I do not see that current Northern Ireland law can be regarded as giving rise either generally or necessarily in any case to distress of such severity as to infringe article 3, any more than the European Court of Human Rights considered it to be in A, B and C v Ireland. Instead, the focus should be on individual cases, in a way which the Commissions actio popularis does not permit. The appellant submits that it is wrong to look solely in this connection to article 3 of the Human Rights Convention. International legal material under other instruments, to which the European Court of Human Rights would itself have regard, can and in their submission should inform the view taken of article 3: see eg Opuz v Turkey (2009) 50 EHRR 28, para 185. In the present context, the Commission invites attention to decisions of the United Nations Human Rights Committee (UNHRC) in relation to article 7 of the International Covenant on Civil and Political Rights, the first sentence of which is, with the addition of the further alternative cruel before inhuman or degrading, in identical terms to the first sentence of article 3 of the Human Rights Convention. In Mellet v Ireland (9 June 2016) and Whelan v Ireland (17 March 2017), substantially overlapping groups of distinguished international lawyers have recently considered specific complaints by two Irish women about the circumstances in which they were denied abortions in respect of fatally abnormal foetuses in Ireland, and were compelled to travel abroad to obtain them. In each case, the UNHRC concluded that the prohibition on abortion in Ireland, the shame and stigma associated with the criminalisation of abortion of a fatally ill foetus, the compulsion in such a case to travel abroad from the familiar home environment to have an abortion, the lack of information and assistance in Ireland, before and after such abortion, the fact of having to leave the babys remains behind and then in Whelan having them unexpectedly delivered by courier, were all factors combining to lead to a conclusion that article 7 was breached. In each case, the UNHRC also concluded that there was arbitrary or unlawful interference with the complainants privacy contrary to article 17 of the Covenant. Mellet and Whelan represent the conclusions of distinguished lawyers under a different international treaty to the Human Rights Convention. In both cases, the UNHRC received and recorded submissions from the Irish government on A, B and C v Ireland. The UNHRC did not, however, specifically address the requirement under the case law of the European Court of Human Rights for treatment to have a significant severity before it falls to be treated under article 3, compared for example with article 8 of the Convention, or consider the (perhaps more restrictively worded) equivalent of article 8 to be found in article 7 of the Covenant. Further, in both decisions, the UNHRC was at pains to note that, according to General Comment No 20 on the Covenant, its text was not limited, and no justification or extenuating circumstances may be invoked to excuse a violation for any reason: Whelan at para 7.7. While it also true that article 3 of the Human Rights Convention is in terms unqualified, the contextual application which the European Court of Human Rights adopts (para 94 above) militates against too absolutist an approach. It is not clear that the UNHRC takes the same approach. Even so, both UNHRC decisions adopt the same approach as the European Court of Human Rights, in that they focus intensely on the particular facts. Although the UNHRC decisions do so in the context of fatal foetal abnormality, which is now in issue before the Supreme Court, they are not authorities as to the position under the Human Rights Convention and, even if they were, they could not stand for a general proposition that the Northern Ireland legislation with which the present appeal is concerned must itself be condemned as generally incompatible with article 3. For these reasons, therefore, I would reject the Commissions general case that the 1861 and 1945 Acts are of themselves incompatible with article 3 of the Human Rights Convention. That does not mean that the Northern Ireland authorities treatment of a pregnant woman, with a foetus with a fatal abnormality or the result of rape or incest (or, indeed, in other cases) may not on particular facts achieve that level of severity that justifies a conclusion of breach of article 3. It means only that the legislation by itself cannot axiomatically be regarded as involving such a breach. Article 8 It is common ground that the prohibition of abortion in the circumstances in issue on this appeal constitutes an interference coming within the scope of, or engaging, article 8 in the case of persons affected by that prohibition: see also A, B and C v Ireland, para 214. But article 8 is, in contrast to article 3, qualified by reference to the interests identified in its para 2 and set out in para 80 above. In A, B and C v Ireland the questions arising were addressed under three heads: (i) Was the interference in accordance with the law? (ii) Did it pursue a legitimate aim? (iii) Was it necessary in a democratic society? In domestic authority a more detailed, overlapping schema is commonly identified: (i) Was the aim or objective of the interference sufficiently important to justify the limitation of a fundamental right? (ii) Was the interference rationally connected to such aim or objective? (iii) Could a less intrusive measure have been used? (iv) Having regard to these matters and to the severity of the interference, was a fair balance struck between the rights of the individual and of the community? See Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700, per Lord Sumption at para 20 and, in slightly greater detail, Lord Reed at para 74. Taking head (i), in the present context, the interference was prescribed by law the 1861 and 1945 Acts. I have already noted that this appeal is not about whether those Acts define sufficiently clearly the circumstances in which abortion is permitted. It is clear at least since the FPANI case that they exclude, as such and without more, abortion in the circumstances of foetal abnormality and of pregnancy due to rape or incest, with which this appeal is concerned. The next step, taking head (ii), is to identify and consider the legitimacy of the aim or objective of the legislative prohibition. In terms of article 8(2), the potentially relevant interests are the protection of health or morals, and, perhaps, if a foetus is treated as or equated with an other, the protection of the rights and freedoms of others. It is clear that there exists in Northern Ireland a considerable body of religious or moral opinion that places great weight on the interests of the unborn child and believes that, even in the situations in issue on this appeal, those interests deserve such protection as the present legislative prohibition affords. How much protection is actually achieved, when the possibility exists and is clearly taken up by many pregnant women of travelling abroad for an abortion, is however very doubtful. The likelihood is that it is only a few women who are not sufficiently informed or sufficiently funded and organised who miss out on this possibility. With regard to the moral or religious case made against abortion, in A, B and C v Ireland (para 222) the European Court of Human Rights recalled that it had in Open Door Counselling and Dublin Well Woman v Ireland (1992) 15 EHRR 244: found that the protection afforded under Irish law to the right to life of the unborn was based on profound moral values concerning the nature of life which were reflected in the stance of the majority of the Irish people against abortion during the 1983 referendum. The impugned restriction in that case was found to pursue the legitimate aim of the protection of morals of which the protection in Ireland of the right to life of the unborn was one aspect. The position in Ireland was that, pursuant to the 1983 referendum, the Eighth Amendment to the Irish Constitution was passed to the effect that Ireland acknowledges the right to life of the unborn and with due respect to the equal right to life of the mother, guarantees in its laws to regard and, as far as practicable, by its laws to defend and vindicate that right. A, B and C v Ireland shows that a constitutional choice in such terms is well capable of constituting the pursuit of a legitimate aim, even though it is not one which is shared by, or reflects any sort of consensus in, other Council of Europe States. In A, B and C v Ireland, the Court was not persuaded that limited opinion polls put before it by the applicants were sufficiently indicative of a change in the views of the Irish people, concerning the grounds for lawful abortion in Ireland, as to displace the states opinion to the Court on the exact content of the requirements of morals in Ireland (para 226). The position in Northern Ireland is very different. The retention in Northern Ireland of the 1861 and 1925 Acts, without qualification, is not the result of, and has not been endorsed by, any referendum. It reflects without much doubt a deliberate moral choice or choices in the past on an issue which is still controversial. But the extent of the protection given to the foetus is less extensive than in Ireland. There is no express recognition of a right, still less an equal right, to life on the part of the unborn, and the Northern Ireland legislation permits abortion to protect not only the life of the pregnant woman, but also her mental health from serious long term injury. Further, Mr McGleenan for the Department of Justice does not argue that a foetus has a free standing right to life, but for an analysis along the lines adopted by the European Court of Human Rights in Vo v France, whereby the foetus has a potential and intrinsic value. The issue is currently controversial for at least two reasons. First, the Commission has been pressing the Northern Ireland Department of Justice since 2013 to present proposals for amending the law in all the areas before the Supreme Court. The Department eventually concluded that the law should be reconsidered as a matter of policy, not, Mr McGleenan stressed, because it considered that the Convention required such reconsideration. But it confined its October 2014 consultation paper, as well as its June 2015 paper seeking approval to draft a bill, to fatal foetal abnormality. In February 2016 the Northern Ireland Assembly voted by 59 votes to 40 against amendments to the Justice (No 2) Bill which would have legalised abortion in cases of fatal foetal abnormality and by 64 votes to 32 against amendments legalising abortion in cases of rape, incest or indecent assault. The opposition to these amendments was presented on the basis that the Justice Bill was the wrong vehicle for consideration of an issue which was best dealt with in a more measured way, and was accompanied by a proposal for a working group. Such a group was set up, and it is anticipated that it will recommend reform. But, in the absence of any Northern Ireland government since early 2017, no progress has been possible. Nonetheless, Mr McGleenan submits, the ordinary legislative process should be followed, even though it is, at least for the time being, at an impasse. On the other hand, the Commission now submits that there is strong public support for changes in the law. A poll commissioned by Amnesty International in 2014 found that respectively 69%, 68% and 60% of those polled people considered that abortion should be permitted in cases of respectively rape, incest and fatal foetal abnormality. In 2017 the Northern Ireland Life and Times Survey, a joint project of Queens University, Belfast and the Ulster University, reported on the results of a survey undertaken in 2016, which showed the following percentages definitely or probably in favour of permitting abortion in the following situations: Probably Foetus 23 has fatal abnormality and will not survive birth Foetus has serious abnormality and may not survive birth Pregnancy due to rape or incest A woman has a serious health condition and a doctor says she will die if she continues with the pregnancy A doctor says there is a serious threat to the womans physical or mental health if she continues with the pregnancy Definitely 58 24 27 54 56 30 28 46 45 17 44 31 17 A doctor says there is more risk to the life of a pregnant woman if she continues with the pregnancy than if she were to have an abortion A woman wants an abortion because she does not want to have children Neither Horner J nor Weatherup LJ in the Court of Appeal was prepared to put much weight on opinion polls in the present context. Weatherup LJ noted that a referendum had not been held and could not be expected in Northern Ireland where the use of a referendum is usually reserved for constitutional issues (para 145). Accordingly, he said, support for a measure must be gauged by the votes of members of Parliament and in respect of devolved matters that means the votes of the members of the Northern Ireland Assembly. Weatherup LJs observations address an important point. The paradigm, at both the Westminster and devolved levels, is one of representative democracy. It is integral to representative democracy that a Parliament or other legislative Assembly may reach and maintain decisions which would not be shared by a majority if put to a popular vote. A classic instance is the abolition in most cases of the death penalty in the UK in 1965, in circumstances where public opinion overwhelmingly supported its retention at that date, and appears to have remained on balance in favour of such a penalty until 50 years later. Where deployed as an exception to this paradigm, a referendum can certainly have a potent effect. But there are no rules as to when referenda take place, and none is likely on the subject of abortion in Northern Ireland. And opinion polls can never equate to a referendum. Views elicited by opinion polls cannot by themselves prevail over the decision to date by the Northern Ireland Assembly to maintain, at least for the present, the existing policy and law. As a matter of general principle, the paradigm must apply, when it comes to deciding whether the present prohibition pursues a legitimate aim or objective. The one qualification that may be made relates to the nature of the Assemblys most recent vote on 10 February 2016 to reject amendments to the Justice (No 2) Bill: para 109 above. Out of a total of 108 potential votes, I understand that most of the Ulster Unionist members (with 16 votes between them) and Alliance members (with 8 votes between them) were in favour of the amendments, while the Democratic Union Party (the DUP), the largest party (38 votes) does not appear to have rejected the amendments for reasons of inflexible moral principle, but rather because the issues demanded careful consideration from the medical professionals, practitioners, families and ethics and legal experts to ensure that sufficient and proper clarity and guidance are the hallmarks of the way forward. It was the DUP which in these circumstances proposed the establishing of a working party as the key to a sensible, informed and appropriate way forward, with a view to its reporting in six months. Since January 2017, any such solution has been precluded by the cessation of the Assemblys activity, and over two years have now elapsed since the vote on 10 February 2016 without any step towards a real resolution of this pressing issue. Taking the approach of the European Court of Human Rights in A, B and C v Ireland, the focus moves to question (iii): was the interference necessary in a democratic society? Taking the more detailed approach indicated in Bank Mellat, the interference can be seen to be rationally connected with the fulfilment of the relevant aim or objective, in so far as the aim or objective is a moral one. On the other hand, if the connection is viewed by reference to the success of the current legislation in preserving births and lives of babies who would otherwise be aborted, the connection is less readily sustained, bearing in mind the lack of up to date evidence on this point. In August 2017 the Advertising Standards Authority rejected a complaint that a poster issued by the pro life campaign group BothLivesMatter was misleading, when it estimated at 100,000 the total number of people alive in Northern Ireland today, who would not be had the Abortion Act 1967 been extended to Northern Ireland. That figure does not however bear or help in any way in relation to the situations of abnormality, rape and incest in issue on this appeal. The real issue on this appeal is, on that basis, whether the interference was necessary in a democratic society, in the sense that, having regard to all the relevant matters, it struck a fair balance. In the present context, that means a fair balance between the rights of the pregnant woman and the interests of the foetus which the community has by maintaining the 1861 and 1925 Acts determined to merit protection. In relation to this central issue, the Supreme Court faces a fundamental question about its role in relation to that of the Northern Ireland Assembly, which has until now determined to maintain the 1861 and 1925 Acts unamended in an area where devolution has conferred on it legislative competence to amend the law. Looked at from the perspective of the European Court of Human Rights, there is no doubt that this is a situation where that Court would afford the United Kingdom, represented in this context by the Northern Ireland Assembly, a large margin of appreciation. That is evidenced by A, B and C v Ireland, although as pointed out in the concurring judgment of Judge Lpez Guerra, joined by Judge Casadevall in that case, the margin is not unlimited at the Strasbourg level. Here, however, the Convention rights have been domesticated, and the position in that context is on any view different. As Lord Hoffmann put it in In re G [2009] 1 AC 173, para 37: In such a case, it is for the court in the United Kingdom to interpret articles 8 and 14 and to apply the division between the decision making powers of courts and Parliament in the way which appears appropriate for the United Kingdom. The margin of appreciation is there for division between the three branches of government according to our principles of the separation of powers. There is no principle by which it is automatically appropriated by the legislative branch. See also my judgment, at paras 128 130, where I pointed out that Sections 3, 4 and 6 of the Human Rights Act 1998 define the courts role in relation to the new domestic Convention rights. Courts must act compatibly with them (unless primary legislation precludes this, when all that courts can do is make a declaration of incompatibility). But I added this important note of caution: In performing their duties under sections 3 and 6, courts must of course give appropriate weight to considerations of relative institutional competence, that is to the decisions of a representative legislature and a democratic government within the discretionary area of judgment accorded to those bodies: see Brown v Stott [2003] 1 AC 681, 703, though the precise weight will depend on inter alia the nature of the right and whether it falls within an area in which the legislature, executive or judiciary can claim particular expertise: see R v Department of Public Prosecution, Ex p Kebilene [2000] 2 AC 326, 381 per Lord Hope of Craighead. The Supreme Court has quite recently had again to consider its role in relation to the United Kingdom Parliament in a context which can be seen as having both similarities to and differences from the present. R (Nicklinson) v Ministry of Justice [2015] AC 657 involved the question whether primary legislation which prevented assistance being given to persons with locked in syndrome who wished to commit suicide was compatible with Convention rights. The Supreme Court by a majority reiterated the applicability in this context of the approach taken in In re G. But, by a different majority, it also held that it would be inappropriate to make a declaration of incompatibility. One reason given by some of the members of the majority in this connection was that proportionality is sensitive to considerations of institutional competence and legitimacy and that a further opportunity should be given for both ministerial and Parliamentary reconsideration (see paras 115 116 per Lord Neuberger, paras 166 170 per Lord Mance and para 197(d) per Lord Wilson) without prejudging the position if Parliament chose to maintain the blanket prohibition on assisting suicide. On the present appeal, the Department of Justice and the Attorney General for Northern Ireland are able to rely on Nicklinson, when submitting that the Northern Ireland Assembly should be given the opportunity of completing its unfinished work of examination of the present law. The obvious difficulty about this has already been identified. There is no assurance as to when or even that the Northern Ireland Assembly will resume its activity or address an issue on which it had wished to receive the working party report some 20 months ago. Nicklinson was also a different case from the present in significant respects. First, it centred on a difficult balancing exercise between the interests of different adult persons: on the one hand, the sufferer with locked in syndrome, unable to act autonomously, but unable to receive assistance to commit suicide; on the other hand, the others, elderly or infirm, who might feel pressured by others or by themselves to commit suicide, if assistance were permissible. The balancing of autonomy and suffering against the risks to others was and is a particularly sensitive matter. The legislature had chosen an absolute protection against the latter risks, with which the courts should not, at least at that juncture, interfere. On the present appeal, there is in law no question of a balance being struck between the interests of two different living persons. The unborn foetus is not in law a person, although its potential must be respected. In addition, the current legislation already recognises important limitations on the interests and protection of the unborn foetus. It permits abortion of a healthy foetus in circumstances where the mothers life would be at risk or where she would suffer serious long term damage to her physical or psychological health. There is therefore no question of any absolute protection of even a healthy foetus. The Northern Ireland position is in that respect also more nuanced than the Irish position considered in A, B and C v Ireland, where the profound moral views identified by the European Court of Human Rights subordinated the interests of the unborn foetus in only one situation, namely where the pregnant womans life would otherwise be compromised. A further difference is that Nicklinson was decided against a background where the attitude maintained by the United Kingdom Parliament reflected a similar attitude across almost the whole of the rest of Europe. Northern Ireland is, in contrast, almost alone in the strictness of its current law, with Irelands even stricter regime having been reconsidered in the referendum held on 25 May 2018, in which the people of that country voted by a large majority (66.4%) to replace the Eighth Amendment of the Irish Constitution, effected in 1983 (which had, as already stated, affirmed the right to life of the unborn, and guaranteed, with due regard to the equal right to life of the mother, to respect and, as far as practicable, but its laws to defend and vindicate that right, by the simple words: Provision may be made by law for the regulation of termination of pregnancy. Under the Eighth Amendment, prior to such replacement, and in the light of Irish Supreme Court decision in Attorney General v X [1992] IESC 1 (a case of pregnancy following rape) and the Protection of Life during Pregnancy Act 2013, abortions were only permissible where there was a real and substantial risk to the womans life (including by suicide). None of this of course means axiomatically that the Northern Irish position may not be justifiable. The margin of appreciation has its domestic homologue in the respect due to the decisions of a representative legislature and a democratic government within the discretionary area of judgment accorded to those bodies, which I mentioned in In re G (para 130). But the close ties between the different parts and peoples of the United Kingdom make it appropriate to examine the justification for the differences in this area with care. One might think that this would also apply as between peoples living and able freely to interchange with each other on the same island. In the light of the above, it is, I think, appropriate to examine the substantive position in relation to the present prohibition before returning to the question whether the Supreme Court should express its own view on the proportionality of the prohibition, rather than leaving it to the Northern Ireland Assembly to complete its consideration of the matter, when and if it resumes operations. I start with cases of fatal foetal abnormality, and identify in this context a number of considerations. Fatal foetal abnormality First, the present position in Northern Ireland is, as I have pointed out, not an absolutist, but a qualified, one. The interests of even the entirely viable foetus are already subordinated not simply to the life, but also to the maintenance, in substance, of the long term physical and psychological health, of the pregnant woman. Second, and in contrast, a pregnant woman is in Northern Ireland refused an abortion of a foetus which can be and has been diagnosed definitively as suffering a fatal abnormality which will cause it either to die in the womb or shortly after birth. In the case of a foetus with a fatal abnormality, Horner J said there was nothing to weigh in the balance (para 160). That may perhaps put the point too high, but, even if it does, I agree with his view that the present law cannot be regarded as proportionate. It is difficult to see what can be said to justify inflicting on the woman the appalling prospect of having to carry a fatally doomed foetus to term, irrespective of such associated physical risk as that may on the evidence involve. Third, the moral beliefs or policy views at the origin of the present law, or relied on now to justify it, cannot in my opinion explain the contrast in the treatment of these two situations. Even viewing the latter situation by itself, they cannot justify the infliction of such suffering on women who, by definition, do not share such beliefs or views. Fourth, the present law treats the pregnant woman as a vehicle who must (as far as Northern Ireland is concerned) be expected to carry a foetus to birth, whatever the other circumstances, and whatever her wishes, as long as this experience does not end her life or ruin her health. As Ms Dinah Rose QC for the Family Planning Association and other interveners submitted, and as I would accept, that approach fails to attach any weight whatsoever to personal autonomy and the freedom to control ones own life: values which underpin article 8 of the Convention. Fifth, whatever view may be taken on the first four points, the actual effect of the present law in achieving its aims appears negligible as well as haphazard, in so far it appears probable that all it does is put the large majority of women affected to the stress, indignity and expense of arranging for a mechanical process of abortion away from their familiar home surroundings and sources of local support, while meaning that a minority of women, less well informed, funded or organised, miss out on an abortion altogether (witness the experiences of Mrs Topley and Mrs Phelan). Even for the majority who do travel abroad, the potential stress and trauma is clearly substantial and potentially long term, even though not sufficiently serious to justify an abortion under current Northern Ireland law. The European Court of Human Rights in A, B and C v Ireland relied on the possibility of travelling abroad to have an abortion as a reason for not condemning Irish law. To my mind, however, the fact that the present Northern Ireland law does not achieve its identifiable aims, in most cases, but merely outsources the issue, by imposing on the great majority of women within the categories in issue on this appeal the considerable stress and the cost of travelling abroad, away from their familiar home environment and local care, to undergo the humiliating conveyor belt experience described in evidence, is a potent indication that the present law is disproportionate. In so far as it does achieve such aims, it in effect victimises unfortunates who miss this humiliating opportunity, because of stress, confusion or lack of funding or organisation in the situation in which they find themselves. I cannot therefore regard the present law as striking a proportionate balance between the interests of women and girls in the cases of fatal foetal abnormality, when it fails to achieve its objective in the case of those who are well informed and well supported, merely imposing on them harrowing stress and inconvenience as well as expense, while it imposes severe and sometimes life time suffering on the most vulnerable, who, commonly because of lack of information or support, are forced to carry their pregnancy to term. A number of the considerations identified in relation to fatal foetal abnormality apply with equal force in relation to rape. This is so in particular in relation to the considerations identified in paras 122, 125 and 126. As to the considerations identified in paras 123 and 124, pregnancy following rape must be considered on the assumption that the foetus is perfectly viable. The moral beliefs or policy relied on to justify the current law focus on that point. But pregnancy following rape presents anguish of a different nature, certainly comparable in severity with that imposed on a woman who is expected to carry a foetus with a fatal abnormality to term. In the case of a pregnancy resulting from rape, a woman is not just expected to carry the foetus to birth, as long as the experience does not end her life or ruin her health (the consideration identified in para 125). She is also potentially responsible for the child once born, under a relationship which may continue as long as both live. Causing a woman to become pregnant and bear a child against her will (as by a negligently performed vasectomy of a partner in McFarlane v Tayside Health Board [2000] 2 AC 59) was described in Parkinson v St James and Seacroft University Hospital NHS Trust [2001] EWCA Civ 530; [2002] QB 266, para 58 as an invasion of that fundamental right to bodily integrity. Hale LJ went on there to describe the profound physical and psychological changes involved in pregnancy, as well as the continuing responsibilities, legal and practical, of a mother after giving birth, of which, short of adoption, she cannot rid herself. The additional burden and torment of being expected to carry to birth and thereafter to live with a baby who is the product of a rape can only be imagined. Sexual crime is, as Horner J said at para 161 the grossest intrusion on a womans autonomy in the vilest of circumstances. This is a situation where the law should protect the abused woman, not perpetuate her suffering. That this trauma will not by definition amount to serious and long term psychological injury seems to me quite insufficient to outweigh this consideration. Again, there is the possibility, very probably taken up by most in these categories, of travelling abroad for an abortion (the consideration identified in para 126). Again, I am unable to regard this as any justification of the law. On the contrary and for reasons already given in para 126, I regard it rather as a factor confirming its disproportionality. The current law in Northern Ireland does not significantly achieve its object. It stresses and humiliates the majority and victimises the minority. I therefore conclude that the current law is disproportionate in relation to cases of pregnancy due to rape. Incest It is clear from the legislation itself, briefly outlined in para 44 above, that there are differences between cases which fall, colloquially though no longer in law, under the head of incest. Cases of pregnancy resulting from sexual activity with a child, falling within article 32 of the 2008 Order, are clearly at one end of a scale. But Professor Jennifer Temkin LLD of Sussex University, an expert in the field, also records (citing in support D E H Russells Sexual Exploitation (1984), p 114) that: The general view is, however, that incest rarely commences above the age of 20 but having started at a younger age may continue into adulthood. (Do we need the Crime of Incest? (1991) Current Legal Problems 185, 187.) Further, the Home Office White Paper Protecting the Public Strengthening Protection Against Sex Offenders and Reforming the Law on Sexual Offences, (2002), Cm 5668, which preceded the Sexual Offences Act 2003 in England and Wales stated (para 59) that there is evidence that some adult familial relationships are the result of long term grooming by an older family member and the criminal law needs to protect adults from abuse in such circumstances. Professor Temkins answer to the question in her title was affirmative. She refers to innumerable studies showing that incest in all its forms is frequently harmful or extremely harmful to victims (p 186). She cites D Glaser and S Froshs Child Sexual Abuse (1988), p 17, as recording that sexually abused children commonly show depression, guilt or lowered self esteem, and D Finkelhors study Sexually Victimised Children (1979), p 101, as indicating that father/daughter incest is particularly traumatic and as finding that the girls suffering most trauma were those abused between the ages of 16 and 18 (p 100). Professor Temkin also points out that rape is hard to prove and that Many coercive and exploitative incestuous acts will not fall within the narrow legal definition of rape (p 193). Incest is also destructive both to those who participate in it and to those who are indirectly involved (p 187). It crosses a boundary, which is necessary to protect the family and the individual from the family (p 188). It is, in short, potentially destructive of wider family relationships, even though it also witnesses a prior breakdown of ordinary behaviour. These factors exist quite apart from a slight, though noticeable, risk of foetal and post natal abnormalities: surveys referred to in a Max Planck Institut report put before the German Constitutional Court in the case of Herrn S (2 BvR 392/07 of 26 February 2008) identify a 1.7 to 2.8% increased risk of genetic abnormalities in a child of an incestuous relationship and a 7 to 30% increased risk of disease in the first year of life. In the present context, that risk, which is a further factor relied on by Professor Temkin in favour of the current criminalisation of incest, can be put on one side. Most of the points made above with regard to incest are underlined in the German Federal Constitutional Courts judgment of 26 February 2008 in the case of Herrn S (2 BvR 392/07 of 26 February 2008). This judgment, when examined by the European Court of Human Rights in Stbing v Germany (2012) 55 EHRR 24 was held not to involve any violation of article 8 of the Convention. Stbing was in fact one of the cases, to which Professor Temkin refers as having so much exercised the romantic imagination of some writers (and, she might have added, at least one composer), but which are statistically irrelevant (p 188). It was a case of a brother brought up from the age of three separate from his birth family, to which he only returned aged about 24, to discover that he had a seven years younger sister, with whom he very soon commenced consensual sexual relations, and over the next five years had four children. Perhaps with such rare cases in mind, it has been suggested that the prohibition on consensual sexual relations between adults falling within the presently prohibited degrees of affinity should be reconsidered (see eg Incest Should Incest between Consenting Adults be a Crime? by H H Peter Bowsher QC [2015] Crim LR 208, and other material there cited). But it is clear that, when pregnancy due to incest is under consideration, the focus cannot and should not be on the rare situation exemplified in Stbing. Rather, it must be on the sort of picture found by the Scottish Law Commission in its 1980 Memorandum No: 44, The Law of Incest in Scotland. Examining some 16 cases where pregnancies were alleged to have occurred, the Scottish Law Commission found that two involved step fathers and step daughters, and that, of the remaining 14, 11 concerned father daughter incest, two concerned brother sister incest, and one uncle niece incest. The present issue is whether a blanket prohibition of abortion in cases of incest is proportionate. In the light of the factors I have identified, I have no doubt that the only answer is that it is not. The most typical cases of abortion involve exploitative relationships with young or younger female relatives. The agony of having to carry a child to birth, and to have a potential responsibility for, and lifelong relationship with, the child thereafter, against the mothers will, cannot be justified. The same considerations that I have identified in paras 122, 125 and 126 above apply. Similar considerations to those which I have identified in relation to rape in para 127 above also apply. There can be exceptional cases, such as perhaps Stbing, where such considerations do not apply with the same force, but they cannot justify a law which is clearly disproportionate in many, indeed typical, instances of incest. Serious foetal abnormality I have up to this point left on one side cases of serious foetal abnormality, in respect of which the Commission also seeks relief, by way of a declaration of incompatibility. Like Horner J (para 166), I see the position here as different. The foetus has the potential to develop into a child though it will have to cope with a mental and/or physical disability. There can also be additional stresses and strains which may have serious effects upon the whole family, as Hale LJ said in Parkinson (para 90). The law is, as she also said at para 91, able to distinguish between the needs of ordinary children and the special needs of a disabled child, and to cater for the latter in terms of care and facilities or, in an appropriate case, by way of damages. But in principle a disabled child should be treated as having exactly the same worth in human terms as a non disabled child, save to the extent that additional costs due to the disability may be identified and recovered in damages from someone negligently responsible for causing the disability: Parkinson, para 90. This is also the consistent theme of the United Nations Committee on the Rights of Persons with Disabilities, expressing concerns about the stigmatising of persons with disabilities as living a life of less value than that of others, and about the termination of pregnancy at any stage on the basis of foetal abnormality, and recommending States to amend their abortion laws accordingly (CRPD/C/GBR/CO/1). If this embraces fatal foetal abnormality, I cannot go so far. But, in relation to disability, I consider that the Committee has a powerful point. Further, although the Abortion Act 1967 itself distinguishes children who would be seriously handicapped from others, this is in the context of a law which entrusts that judgment to the opinion of two registered medical practitioners formed in good faith: section 1. In the result, I share Horner Js view that it is not possible to impugn, as disproportionate and so incompatible with article 8, legislation which prohibits abortion of a foetus diagnosed as likely to be seriously disabled. Article 14 We were addressed separately on the question whether the present Northern Irish law involves discrimination against women. The case made was that the prohibition of abortion necessarily or at least primarily affects women, not men, that it is not necessary to find any comparator and that gender based discrimination is a suspect ground, carrying a heavy burden to justify. In view of the conclusions which I have come to on article 8, I do not find it necessary or propose to address this topic. Conclusion I return to the question whether a positive conclusion of incompatibility is appropriate in relation to cases where there is a diagnosis of fatal foetal abnormality or where the pregnancy is due to rape or incest. Should this Court leave the position in relation to these categories to be considered further whenever the Northern Ireland Assembly resumes operation and receives whatever report or recommendations the working group presents? First, there is the consideration that it is unclear what will happen in Northern Ireland, in particular whether and when the Assembly will resume its operations. But this is not itself decisive. What is clear is that the issue has been under discussion for some five years, since it was first raised by the Commission, without any definite upshot. Further, if we were to refrain now from any conclusion on it, or were to defer to the Assembly for the time being, in order for it to reach and express its own definitive position, we would have in my opinion to do so on the basis that it would then still be open to a person affected to return to court to have the matter finally resolved, if the legislature did not amend the existing law in the three areas identified. In my opinion, that is not an appropriate course, as the need for such amendment is evident and the outcome of any further litigation would in that respect be inevitable. I am in short satisfied that the present legislative position in Northern Ireland is untenable and intrinsically disproportionate in excluding from any possibility of abortion pregnancies involving fatal foetal abnormality or due to rape or incest. My conclusions about the Commissions lack of competence to bring these proceedings means that there is however no question of making any declaration of incompatibility. But the present law clearly needs radical reconsideration. Those responsible for ensuring the compatibility of Northern Ireland law with the Convention rights will no doubt recognise and take account of these conclusions, at as early a time as possible, by considering whether and how to amend the law, in the light of the ongoing suffering being caused by it as well as the likelihood that a victim of the existing law would have standing to pursue similar proceedings to reach similar conclusions and to obtain a declaration of incompatibility in relation to the 1861 Act. LORD KERR: (with whom Lord Wilson agrees) Introduction (a) Fatal foetal abnormality Ashleigh Topley married in September 2012. She and her husband had been together for seven years before they married. They wanted to have children and they stopped using contraception shortly after their wedding. In October 2013, to her great joy, Mrs Topley discovered that she was pregnant. Her baby was due to be born in July 2014. On 14 February, she attended hospital for a 20 week scan. It was diagnosed that the foetus was suffering from a fatal form of skeletal dysplasia. Mr and Mrs Topley were told that their baby would die either in the womb or within a short time of birth. As it happens, their daughter, Katy, died before her birth on 26 May 2014, when Mrs Topley was 35 weeks pregnant. A post mortem examination revealed that she had suffered from osteogenesis imperfecta, type 2, a form of skeletal dysplasia. Mrs Topley has provided a moving account of the harrowing ordeal that she and her husband faced after they learned that their baby would not survive. They received conflicting advice as to whether a termination of her pregnancy would be possible. She had to endure the experience of receiving congratulations from well intentioned individuals about the impending birth, while she was trying to come to terms with the awful reality that her baby would not survive. The three months between February and May 2014 were deeply traumatic for her. She summarised her plight in this passage of her witness statement: It was clear to me that the current 1egal framework takes no account of the circumstances that we found ourselves in. In the normal course of events, an abortion is not something that would have occurred to me. However, the serious condition that my daughter suffered from thrust us into a situation that no one could predict. My daughter was bound to die before, or close to, her birth. If she had survived, even for a short period, she may have suffered. This tragic situation was compounded for me by the apparent inability of the medical profession to offer me a termination even in these circumstances. If this had been available, I believe it would have diminished our suffering. Being forced to continue with this pregnancy added to the tragedy. We were not able to grieve for our daughter even at the time of her actual death or to start to deal with our emotions. This was further compounded by the fact that the medical professionals could not even agree amongst themselves whether a termination was permitted. Sarah Jane Ewart found out that she was pregnant on 15 July 2013. On 26 September 2013, it was discovered that her baby had anencephaly. This meant that the foetus did not have a skull; there was no bone above the eye sockets and jaw line. There was no possibility of survival beyond birth. Mrs Ewart asked if she could have a caesarean section. She was told that this would not happen. Like Mrs Topley she had to endure the ordeal of being congratulated by well wishers. She felt unable to tell them of what she described as the awfulness of the truth. Mrs Ewarts gynaecologist was so concerned about the possibility that, if she gave Mrs Ewart advice as to where she might go to seek help in relation to the termination of her pregnancy, she (the gynaecologist) would be exposed to the risk of prosecution, it was impossible for her to offer that advice. Mrs Ewarts general medical practitioner was similarly reluctant to advise. Mrs Ewarts experience of the worry associated with her condition; the indignity she felt in having to travel to England to have her pregnancy terminated; the traumatic experience of the termination; and her dependence on her mother and husband throughout this ordeal are all movingly and graphically described in her witness statement. The prolonged torment that she had to suffer is pitifully recounted by her. Her fear of becoming pregnant with another anencephalic baby, and having to undergo a similar tribulation to that which she suffered in 2013, is entirely understandable and incontestably obvious. Denise Phelan and her husband discovered in November 2015 that they were expecting their first child. The pregnancy was planned and the baby was, in Mrs Phelans words, very much wanted. In her affidavit she has described the horror of her experience during her pregnancy; the nightmare of discovering that her baby suffered from the most grievous condition; the suffering that she had to endure while waiting for the birth of the child, doomed to die (in fact her baby girl died five days before birth); the frustration and dismay at her and her husbands inability to access medical assistance for their plight; and the dreadful torment that they both had to bear after the baby was delivered stillborn. The courage of these women in giving unsparing accounts of their experiences is wholly admirable. It is impossible not to feel profound sympathy for their plight and for the ordeal that each of them has had to endure. Admiration and sympathy do not provide an answer to the complex questions which arise on this appeal, however. A dispassionate analysis of those questions is required. But the nature of their suffering and the trauma of their experiences are by no means irrelevant to the unravelling and resolution of the issues to which this appeal gives rise. (b) Pregnancy because of rape or incest Dawn Purvis is the programme director of Marie Stopes International in Northern Ireland (MSNI). This is a non profit making organisation which works in about forty countries providing sexual and reproductive health services. MSNI opened a clinic in Belfast in October 2012. It offers a range of services including advice on methods of contraception, information and support for women dealing with an unplanned pregnancy, as well as access to safe and legal abortion services and post abortion care. In an affidavit made for the purposes of these proceedings, Ms Purvis described the case of a woman who had consulted MSNI after having been raped by her partner. He refused to allow her to use any form of contraception. She was fearful that he would react violently if he discovered that she was pregnant and was seeking an abortion. Her general medical practitioner refused to refer her to any health care provider, observing simply that abortion was illegal in Northern Ireland. When this woman sought help from MSNI, it was decided that she could not qualify for an abortion under the current law. She was therefore obliged to leave Northern Ireland in order to obtain an abortion elsewhere. Ms Purvis described another case: that of a child less than 13 years old, who came to MSNI, having become pregnant as a result of sexual abuse by a member of her family. The girl and the relative who accompanied her to MSNI believed that she could be treated in Northern Ireland. She had never been outside that country before and, unsurprisingly, was frightened and distressed when told that she would have to travel to England. MSNI provided support and the child had a termination of her pregnancy carried out away from Northern Ireland. Fortunately, she was accompanied by an adult to the place where that procedure occurred but it is not difficult to imagine how traumatic the experience must have been for her. Mara Clarke is the director of the Abortion Support Network (ASN) in Coventry. Her organisation has helped a number of women and girls from Northern Ireland who have sought their assistance after becoming pregnant as a result of rape. In an affidavit of 2 February 2015, she described the distressing circumstances of four women who had been sexually assaulted and had been made pregnant. The accounts of the suffering of these women and, in some cases, the privations which their families had to endure are distressing in the extreme. I will refer only to one. The victim had been beaten and raped by a group of men. She discovered that she was pregnant. Despite the fact that a number of organisations in Northern Ireland became aware of her predicament, she was offered no support or help. She was able to raise only 100 towards the cost of travelling to England to obtain an abortion. ASN made her a grant of 1,200 to meet the additional costs of travelling, having the procedure performed and hotel accommodation. Some considerable time later, having seen a television programme about their work, she wrote to ASN to thank them for their help, adding, poignantly, that, without it, she would be dead, either by her own hand, or by the hands of those who had raped and beaten her. The Northern Ireland Human Rights Commission (described hereafter as NIHRC or the Commission), the appellant in these proceedings, has claimed that the experiences of these individuals are typical of those that many women and girls in Northern Ireland have been forced to undergo. NIHRC also claims that the reaction of medical practitioners and their reluctance to offer any assistance for fear of prosecution under the current law are also entirely typical. Those claims have not been disputed by the respondents or any of the interveners in the appeal. Again, this is not surprising in light of the current state of the law in relation to abortion in Northern Ireland. The current law Section 58 of the Offences Against the Person Act 1861, as amended, provides that: Every woman, being with child, who, with intent to procure her own miscarriage, shall unlawfully administer to herself any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, and whosoever, with intent to procure the miscarriage of any woman, whether she be or be not with child, shall unlawfully administer to her or cause to be taken by her any poison or other noxious thing, or shall unlawfully use any instrument or other means whatsoever with the like intent, shall be guilty of felony, and being convicted thereof shall be liable to be kept in penal servitude for life. Section 59 of the 1861 Act, again as amended, provides that: Whosoever shall unlawfully supply or procure any poison or other noxious thing, or any instrument or thing whatsoever, knowing that the same is intended to be unlawfully used or employed with intent to procure the miscarriage of any woman, whether she be or be not with child, shall be guilty of a misdemeanour, and being convicted thereof shall be liable to be kept in penal servitude. The Criminal Justice Act (Northern Ireland) 1945 was an Act of the Northern Ireland Parliament made by virtue of powers vested in that body by section 20 of the Government of Ireland Act 1920. Section 25 of the 1945 Act extended to Northern Ireland the effect of the materially identical section 1 of the Infant Life (Preservation) Act 1929. Section 25 of the 1945 Act provides that: (1) Subject as hereafter in this sub section provided, any person who, with intent to destroy the life of a child capable of being born alive, by any wilful act causes a child to die before it has an existence independent of its mother, shall be guilty of felony, to wit, of child destruction, and shall be liable on conviction thereof on indictment to penal servitude for life: Provided that no person shall be found guilty of an offence under this section unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother. (2) For the purposes of this and the next succeeding section, evidence that a woman had at any material time been pregnant for a period of 28 weeks or more shall be prima facie proof that she was at that time pregnant of a child then capable of being born alive. Sections 58 and 59 of the 1861 Act have been considered with section 1 of the 1929 Act in England and Wales in R v Bourne [1939] KB 687 and with section 25 of the 1945 Act in Northern Ireland in Family Planning Association of Northern Ireland v Minister for Health, Social Services and Public Safety [2004] NICA 39; [2005] NI 188 (the FPANI case). The latter case also dealt with section 25 of the 1945 Act. In Bourne a surgeon performed an abortion on a young girl of 14 years who had become pregnant as a result of rape. He was charged under section 58 of the 1861 Act with unlawfully procuring an abortion. The jury was directed that it was for the prosecution to prove that the operation was not performed in good faith for the purpose of preserving the life of the girl. The surgeon was not obliged to wait until the patient was in peril of immediate death. As to the words of the 1929 Act, that no person shall be found guilty of an offence under this section unless it is proved that the act which caused the death of the child was not done in good faith for the purpose only of preserving the life of the mother, Macnaghten J (the trial judge) said to the jury that, although those words did not appear in section 58 of the 1861 Act, they were implied by the word unlawful in that section. Those words ought to be construed in a reasonable sense said Macnaghten J, and it was, therefore, the surgeons duty to perform the operation if he was of the reasonable opinion that the probable consequence of the pregnancy continuing would be to make the patient a physical and mental wreck. In the Court of Appeal in the present case ([2017] NICA 42, Morgan LCJ, Gillen and Weatherup LJJ), the Lord Chief Justice, Sir Declan Morgan, suggested that it was possible to construe the words, for the purpose only of preserving the life of the mother so as to include circumstances where the mothers life was significantly adversely affected para 49. Developing this theme, he said at para 79: I accept that the grain of the 1861 Act and the 1945 Act was intended to provide substantial protection for the foetus but in my view the phrase for the purpose of preserving the life of the mother cannot in present circumstances be interpreted reasonably as confining protection for the mother by way of abortion to those circumstances where it is likely that she will be a physical or mental wreck. I have had the benefit of affidavits sworn in these proceedings by Sarah Ewart and AT [Ashleigh Topley]. Some aspects of the effect on these women of the prohibition of abortion in this jurisdiction in their circumstances have been described in [earlier paras of the judgment]. The present law prioritises the need to protect to a reasonable extent the life that women in these emotionally devastating situations can enjoy. In my opinion that requires the court to determine what is reasonably tolerable in todays society. That is not to be defined by the values of the 1930s. I conclude that circumstances such as those described in those affidavits fall within the scope of the Bourne exception interpreted in accordance with that test. I consider that in each case the effects on these women were such that the option of abortion in this jurisdiction after appropriate advice should have been open. That conclusion is not dependent upon the state of health of the foetus. Gillen LJ expressed disagreement with these statements in para 91 of his judgment. He considered that it was institutionally inappropriate for the court to change the effect of the legislation and its interpretation in R v Bourne. Weatherup LJ also disagreed with the Lord Chief Justices view that contemporary standards could serve to enlarge the scope of the Bourne exception. He pointed out that the law as expressed by Macnaghten J had been applied by the Court of Appeal in Northern Ireland in the FPANI case where Nicholson LJ said at para 75: Procurement of a miscarriage (or abortion) is a criminal offence [in Northern Ireland] punishable by a maximum sentence of life imprisonment if the prosecution proves beyond any reasonable doubt to the satisfaction of a jury: (1) that the person who procured the miscarriage did not believe that there was a risk that the mother might die if the pregnancy was continued; or (2) did not believe that the mother would probably suffer serious long term harm to her physical or mental health; or (3) did not believe that the mother would probably suffer serious long term harm to her physical or mental health if she gave birth to an abnormal child ; (4) a person who is a secondary party to the commission of the criminal offence referred to above is liable on conviction to the same penalty as the principal; (5) it follows that an abortion will be lawful if a jury considers that the continuance of the pregnancy would have created a risk to the life of the mother or would have caused serious and long term harm to her physical or mental health. Campbell LJ in the FPANI case said in para 140 that the law in Northern Ireland permits a termination where there is a serious and long term risk to the mothers mental or physical health or well being. Sheil LJ, in accepting the principles which were said by counsel for the Minister for Health to encapsulate the law in Northern Ireland, reached essentially the same conclusion. Among those principles were that a termination of pregnancy was unlawful unless performed to preserve the life of the mother; that life included mental and physical life; that a termination would be lawful where there was a real and serious adverse effect on health but that this had to be permanent or long term. This, therefore, was the law of Northern Ireland, as pronounced by a unanimous Court of Appeal in that jurisdiction in October 2004. The Lord Chief Justices judgment in the present case would have brought about a significant change in that law in two respects. In the first place, it would shift the emphasis towards the need to protect to a reasonable extent the life that women [in cases such as those of Mrs Topley and Mrs Ewart] would enjoy (emphasis supplied). Secondly it would eliminate the requirement that there be a real, serious, long term or permanent effect on the womans physical or mental health. This would be a radical departure from not only the law as Macnaghten J declared it to be in Bourne but also as the Court of Appeal in Northern Ireland held it to be in 2004. The fundamental nature of the alteration of the law that this would bring about is perhaps best illustrated by the Lord Chief Justices statement that the court was required to determine what was reasonably tolerable in todays society. I do not consider that such a change in statutory law can be achieved by judicial decision. The 1861 and 1945 Acts are the foundation of the law on abortion in Northern Ireland. They forbid the termination of pregnancy unless it is required to preserve the mothers life. That has been interpreted to mean that abortion is permitted in order to save the mother from a condition of physical or mental devastation. That condition has been held to equiparate to long term or permanent effect on the mothers health which is both real and serious. I do not consider that it is possible to stretch the concept of preservation of life beyond these notions. The proceedings On 2 February 2015, NIHRC was given permission to apply for judicial review. Three declarations were sought: (i) A declaration pursuant to section 6 and section 4 of HRA, that sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act were incompatible with articles 3, 8 and 14 of the European Convention on Human Rights and Fundamental Freedoms [hereafter ECHR or the Convention] as they relate to access to termination of pregnancy services for women with pregnancies involving a serious malformation of the foetus or pregnancy as a result of rape or incest. (ii) A declaration that, notwithstanding the provisions of sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act, women in Northern Ireland may lawfully access termination of pregnancy services within Northern Ireland in cases of serious malformation of the foetus or rape or incest. (iii) Further and in the alternative, a declaration that the rights of women in Northern Ireland, with a diagnosis of serious malformation of the foetus or who are pregnant as a result of rape or incest, under articles 3, 8 and 14 of ECHR are breached by sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act. Following the grant of leave to apply for judicial review, a number of organisations sought to intervene in the proceedings. They were given permission to intervene and have been represented in the proceedings before this court, although the number of interveners has increased from those who participated in the hearing before the High Court and the Court of Appeal. On 17 February 2015, the High Court issued a Notice of Incompatibility under section 4 of HRA and Order 121 of the Rules of the Court of Judicature (the rules), notifying the Attorney General and the Department of Justice that they might enter an appearance to the proceedings. The court also issued a devolution notice under paragraph 5 of Schedule 10 to the Northern Ireland Act 1998 (NIA) and Order 120 of the Rules. The case was heard at first instance by Horner J on 15 17 June 2015. NIHRC argued that where there was a serious malformation of the foetus or where the pregnancy was the result of rape or incest, the prohibition on abortion in Northern Ireland breached the rights of women and girls under article 3, article 8 and article 14 (read together with article 8) of ECHR. The Attorney General and the Department of Justice disputed these claims, arguing that there was no violation of ECHR and that, in any event, the Commission did not have standing to bring proceedings for judicial review. Horner J held that the application for judicial review should succeed in part. He held that the Commission had standing to apply for the relief that it sought. He also found that sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act were incompatible with article 8 in cases of fatal foetal abnormality, rape and incest, but not in cases of serious malformation of the foetus para 184 of his judgment. He dismissed that part of the application that depended on article 3. The Attorney General and the Department of Justice appealed Horner Js judgment. They argued that a declaration of incompatibility could not be granted in the absence of an identified unlawful act and that the Commissions failure to identify someone who was or would be a victim of the asserted breaches of the Convention was fatal to the success of the application for judicial review because it did not allow for an examination of the particular facts said to constitute the breach. NIHRC did not have standing, therefore, it was submitted. They challenged the judges findings in relation to article 8 and they claimed that he had erred in holding that the life of an unborn foetus was not protected by the common law of Northern Ireland. NIHRC cross appealed, arguing that the relevant statutory provisions were incompatible with article 3 of ECHR and article 14 (read with article 8). It also argued that appropriate declarations should have been made in the case of serious as well as fatal foetal abnormality. All three members of the Court of Appeal agreed that the Commission had standing to bring the judicial review challenge para 46 of Morgan LCJs judgment. The Lord Chief Justice held that it was within the margin of appreciation of the contracting states of the Council of Europe to determine the nature of the protection to be afforded a foetus paras 50 52 of his judgment. Gillen LJ agreed with this conclusion. Weatherup LJ held that, although the foetus was not entitled to protection under article 2 of ECHR, it was possible that some recognition of a foetuss rights might arise under article 8 paras 126 131. Gillen and Weatherup LJJ agreed with the Lord Chief Justices conclusions that article 3 was not engaged paras 52 60 of his judgment. In relation to article 8, Morgan LCJ, after reviewing European authorities, particularly A, B and C v Ireland [2010] 53 EHRR 13, concluded that the article 8 claim did not succeed, although, as observed above, he considered that the principles in Bourne could be applied to the cases of Mrs Topley and Mrs Ewart. The Lord Chief Justice conducted a close examination of the A, B and C case and concluded that it did not lend decisive weight to the arguments advanced by the Attorney General and the Department of Justice para 74. Gillen LJ disagreed. He considered that the A, B and C case established that a broad margin of appreciation should be accorded to the contracting states of the Council of Europe on the question of the legal requirements for lawful abortion paras 103 105. Weatherup LJ expressed what he described as a provisional view that the restriction on the termination of pregnancy in cases of fatal foetal abnormality and as a result of rape and incest would amount to a breach of the right to respect for private life under article 8. He considered, however, that it would not be institutionally appropriate for the court to intervene see para 178 of his judgment. Standing The discussion about the standing of the Commission to bring these proceedings begins with the Belfast Agreement and the influence which it had on the NIA. That Act was introduced to implement the agreement made in Belfast between various political parties in Northern Ireland on 10 April of that year (1998). Paragraph 5 of Strand One of the agreement stated that safeguards would be put in place to ensure that all sections of the community were protected. Those safeguards were to include the rights guaranteed by ECHR. By para 5 of Strand Three, dealing with new institutions, it was provided that NIHRC would be established. Its task would be to keep under review the adequacy and effectiveness of laws and practices, making recommendations to Government as necessary; providing information and promoting awareness of human rights; considering draft legislation referred to them by the new Assembly; and, in appropriate cases, bringing court proceedings or providing assistance to individuals doing so. This aspiration found expression in section 69 of NIA. It deals with the Commissions functions. Subsection (1) reflects para 5 of Strand Three and provides that NIHRC should keep under review the adequacy and effectiveness in Northern Ireland of laws and practice relating to the protection of human rights. Subsection (3) enjoins the Commission to advise the Secretary of State and the Executive Committee of the Northern Ireland Assembly of legislative and other measures which ought to be taken into account to protect human rights and subsection (4) requires NIHRC to advise the Assembly whether a Bill which it proposes to pass is compatible with human rights. Subsection (6) emphasises the broad scope of the Commissions remit in relation to the protection of human rights. It is required to promote understanding and awareness of the importance of human rights in Northern Ireland and for this purpose it may undertake or commission research and educational activities. The provision in section 69 which is most directly relevant to the issue of NIHRCs standing to bring the present proceedings is subsection (5). It provides: The Commission may (a) give assistance to individuals in accordance with section 70; and (b) bring proceedings involving law or practice relating to the protection of human rights. The approach to the interpretation of these provisions should start with the general proposition that it would be anomalous if NIHRC did not have the power to challenge the compatibility of legislation with the provisions of ECHR, given its principal stated function (in section 69(1)) see para 169 above. An obvious way in which that function can be fulfilled is that the Commission should have the opportunity to present a legal challenge to potentially incompatible legislation. It is in the nature of things that not every item of legislation which is inconsistent with ECHR rights will be subject to challenge by individuals affected by it. To cater for that circumstance, it is appropriate that NIHRC should perform a supervisory function, monitoring legislation, both proposed and historic, for its conformity with contemporary human rights standards. To deny it the legal capacity to challenge legislation would deprive the Commission of an important means of carrying out its fundamental role. Moreover, the power to challenge incompatible legislation is a natural complement to the duty to advise the Secretary of State and the Executive Committee of the Northern Ireland Assembly about legislative and other measures necessary to protect human rights. The respondents argue that neither NIA nor the Human Rights Act 1998 (HRA) confers on NIHRC a freestanding right to challenge legislation on the basis of its avowed incompatibility with ECHR. It is claimed that the Commission may only contest the legislations consistency with the Convention in proceedings brought to challenge an act of a public authority which is said to be incompatible with an ECHR right and where there is an identified victim of the alleged unlawful act. The requirement that there be a victim is derived from section 7 of HRA and section 71(1) of NIA. Section 7 of HRA provides in subsection (1): Section 71(1) of NIA originally provided that: (1) A person who claims that a public authority has acted (or proposes to act) in a way which is made unlawful by section 6(1) may (a) bring proceedings against the authority under this Act in the appropriate court or tribunal, or (b) in any legal proceedings, rely on the Convention right or rights concerned but only if he is (or would be) a victim of the unlawful act. (1) Nothing in section 6(2)(c), 24(1)(a) or 69(5)(b) shall enable a person (a) to bring any proceedings in a court or tribunal on the ground that any legislation or act is incompatible with the Convention rights; or (b) such proceedings, to rely on any of the Convention rights in any unless he would be a victim for the purposes of article 34 of the Convention if proceedings in respect of the legislation or act were brought in the European Court of Human Rights. (the reference to section 69(5)(b) was deleted in the amended version) In In re Northern Ireland Human Rights Commission [2002] NI 236, the House of Lords held that the Commission had the power to apply to intervene in court proceedings where a human rights issue arose. In para 11 of his speech, however, Lord Slynn of Hadley observed that section 69(5)(b) did not enable the Commission to bring proceedings on the ground that legislation was incompatible with a Convention right unless it was a victim for the purpose of proceedings brought in the European Court of Human Rights (referred to hereafter as ECtHR or the Strasbourg court). And at para 23 he said that: in respect of proceedings in which it is sought to contend that legislation is incompatible with the European Human Rights Convention they can only be brought, it seems, if the Commission can show that it is a victim for the purposes of the Convention. These observations prompted the amendment of section 71. As originally enacted section 71(2) had provided that subsection (1) did not apply to the Attorney General, the Advocate General for Northern Ireland, the Attorney General for Northern Ireland, the Advocate General for Scotland or the Lord Advocate. Section 14 of the Justice and Security (Northern Ireland) Act 2007 inserted the following provisions, among others, to section 71: (2A) Subsection (1) does not apply to the Commission. (2B) In relation to the Commissions instituting, or intervening in, human rights proceedings (a) the Commission need not be a victim or potential victim of the unlawful act to which the proceedings relate, section 7(3) and (4) of the Human Rights Act (b) 1998 (c 42) (breach of Convention rights: sufficient interest, &c) shall not apply, (c) be one or more victims of the unlawful act, and (d) no award of damages may be made to the Commission (whether or not the exception in section 8(3) of that Act applies). the Commission may act only if there is or would In circumstances in which the requirement that NIHRC be a victim was removed by this new provision, it would be surprising that the Commission should continue to be obliged to identify a particular victim before it could bring proceedings concerning the incompatibility of an item of legislation with ECHR. I shall deal with this argument in more detail below but, first, it should be noted that the Attorney General for Northern Ireland also argues that, even if section 4 of HRA were to be regarded as creating a new cause of action, NIHRC is explicitly prevented by section 71(2B) and (2C) (as to which see para 179 below) from challenging primary legislation in the absence of a specific unlawful act. Thus, not only must there be a specific victim, an identified unlawful act must have been perpetrated. I am of the clear view that section 71(2B) does not confine the Commissions opportunity to act to circumstances where a specific act directed to a particular individual is identified. Although that is, arguably, a possible theoretical interpretation of the provision, its adoption would run directly counter to the spirit of the amendment. Its purpose must surely have been to ensure that the Commission could challenge legislation which it perceived to be incompatible with the Convention. That conclusion is reinforced by a consideration of section 71(2B)(c). Section 71(2B)(c) provides that the Commission may only act if there is or would be one or more victims. The Commissions power to act on behalf of potential victims and, importantly, to act pre emptively would be robbed of its essence if unlawful act was interpreted in the narrow, literal sense. The amendment to the NIA was made in order to make it easier for NIHRC to institute HRA proceedings. In light of the clear intention to widen NIHRCs powers, it would be illogical that these would be restricted by the imposition of a requirement that there be a particular, identified unlawful act. Section 71(2C) provides: (2C) For the purposes of subsection (2B) human rights proceedings means proceedings (a) which rely (wholly or partly) on section 7(1)(b) of the Human Rights Act (i) 1998, or (ii) an expression used in subsection (2B) and in (b) section 7 of the Human Rights Act 1998 has the same meaning in subsection (2B) as in section 7. section 69(5)(b) of this Act, and Paragraph 8 of the Explanatory Notes to the 2007 Act (although the Notes do not form part of the Act and were not endorsed by Parliament) is illuminating on the question of whether a victim needs to be identified. In material part, it reads: This Act makes provision to extend the powers of the Northern Ireland Human Rights Commission It amends the Northern Ireland Act 1998 by granting powers to the Commission to institute judicial proceedings in the Commissions own right, and when doing so to rely upon the European Convention on Human Rights. This will mean that the Commission can bring test cases without the need for a victim to do so personally. I reject the arguments that the Commission is obliged to identify a victim and that it must demonstrate that an unlawful act has actually taken place before it may bring proceedings to challenge the compatibility of legislation with ECHR. HRA contemplates two distinct and complementary mechanisms for the protection of Convention rights challenges to legislation under sections 3 5 of the Act and challenges to the acts of public authorities under sections 6 9 per Lord Rodger in Wilson v First County Trust Ltd (No 2) [2004] 1 AC 816, para 206. The title to sections 3 5 of the Act is legislation, and to sections 6 9 public authorities. There is every reason to conclude that the availability of two different species of challenge was in the contemplation of the legislature. True, of course, it is that a challenge to a decision of a public authority may prompt a declaration of incompatibility in relation to the legislation under which the act of the authority has taken place. But that circumstance does not preclude the making of a declaration of incompatibility where a freestanding challenge to the legislation is made and its intrinsic nature (as opposed to its impact on a particular individuals rights under ECHR), is deemed to be inconsistent with the Convention. This, I consider, is clear from the terms of section 4(1) (4) of HRA. They state: (1) Subsection (2) applies in any proceedings in which a court determines whether a provision of primary legislation is compatible with a Convention right. (2) If the court is satisfied that the provision is incompatible with a Convention right, it may make a declaration of that incompatibility. (3) Subsection (4) applies in any proceedings in which a court determines whether a provision of subordinate legislation, made in the exercise of a power conferred by primary legislation, is compatible with a Convention right. (4) If the court is satisfied that the provision is incompatible with a Convention right, and that (disregarding any possibility of revocation) the primary legislation concerned prevents removal of the incompatibility, it may make a declaration of that incompatibility. Section 69(5)(b) empowers NIHRC to bring proceedings. The only restriction on that right is that the proceedings must involve law or practice relating to human rights claims. A claim under section 4 of the HRA meets that requirement. The respondents objection resolves to the claim that an application for a declaration of incompatibility must be parasitic on or ancillary to a claim that an individuals right has been violated. But there is nothing in the text of section 4 which warrants that view. There is no reason why the court should not entertain proceedings in which NIHRC claims that the 1861 and 1945 Acts contain provisions which are generally incompatible with ECHR. Proceedings for a declaration of incompatibility are still proceedings. Nothing in section 4 of HRA suggests that an application for such a declaration must be an adjunct to some other claim. Cases which challenge primary legislation without claiming that a public authority has acted unlawfully do not engage section 6. They are actions under sections 3 or 4, and the victim requirement in section 7 need not be satisfied. In R (Rusbridger) v Attorney General [2004] 1 AC 357, journalists sought to challenge section 3 of the Treason Felony Act 1848 which, at least arguably, criminalised the publication of articles advocating abolition of the monarchy. An article to that effect was published in the Guardian newspaper and both before and after its publication, the claimant journalists sought an assurance that its publication would not lead to their being prosecuted. The Attorney General refused to give that assurance. The claimants original complaint was that the Attorney General had acted contrary to section 6(1) HRA by refusing to confirm that no prosecution would be brought if articles advocating republicanism were published in the Guardian. They launched judicial review proceedings under section 7(1)(a) of HRA, complaining of a breach of section 6(1) of HRA (which makes it unlawful for a public authority to act in a way which is incompatible with a Convention right), and in the alternative seeking a declaration pursuant to section 3 of HRA as to the scope of application of section 3 of the 1848 Act, or a declaration of incompatibility pursuant to section 4 HRA. The section 6(1) HRA complaint failed at first instance but the Court of Appeal permitted the case to proceed as an amended claim for a declaration that section 3 of the 1848 Act should be read down by the insertion of words expressly limiting its application to situations where there were acts of force or constraint or other unlawful means: [2002] EWCA Civ 397, paras 16 17, 25 and 28. When, therefore, the case came before the House of Lords it was for a declaration under section 3 of HRA (which requires courts to read and give effect to legislation in a way that is compatible with Convention rights, in so far as that is possible) and, alternatively for a declaration of incompatibility under section 4. There was no challenge to any act of a public authority as being contrary to section 6 of HRA. The case did not proceed under section 7 of HRA, therefore. Lord Steyn made it clear that, in those circumstances, the requirement in section 7, that there be a victim, did not have to be satisfied para 21. Lord Scott and Lord Walker agreed with this analysis. In the event, the House of Lords in Rusbridger refused to grant the relief sought but that was because the litigation served no practical purpose and had been unnecessary para 28. The important point to take from that case, however, in so far as the present appeal is concerned, is that it recognised a distinct form of proceeding under sections 3 and 4 of HRA which did not require victim status to be established. It was a principal feature of the respondents case in the present appeal that section 4 of HRA created no new or freestanding cause of action and that it was merely a remedies provision. That submission is clearly wrong. It fails to recognise the two distinct mechanisms for enforcing Convention rights and is inconsistent with Rusbridger. In Ghaidan v Godin Mendoza [2004] 2 AC 557 a claim for possession of a flat owned by Mr Ghaidan was made. It was resisted on the basis that the defendant had succeeded to a secure tenancy as the surviving spouse of the original tenant. The House of Lords applied section 3(1) HRA to interpret the relevant provisions of the Rent Act 1977 so that they benefited same sex as well as opposite sex couples. Lord Millett, dissenting on the application of section 3(1), would nevertheless have considered making a declaration of incompatibility pursuant to section 4 HRA (para 55). In this case, again, there was no section 6(1) challenge to an act of a public authority. The relevant obligation was either section 3 (in the case of the majority) or section 4 (according to Lord Millett). It was not deemed necessary that there be a victim. Likewise, in Wilson v First County Trust (No 2) Lord Hope noted that no claim had been made by a victim that a public authority had acted in a way that was unlawful under section 6(1) of HRA para 91. None of these three cases was brought in reliance on section 7(1) of HRA. In none of them was the lack of a victim considered to render the claims unfeasible. The cases exemplify the first of the two mechanisms adumbrated by Lord Rodger in Wilson v First County Trust (No 2), namely a challenge to the compatibility of legislation which is not associated with a challenge to an act of a public authority said to be in violation of a Convention right. In extremely helpful submissions prepared by Mr Coppel QC on behalf of the equivalent body in Great Britain, the Equality and Human Rights Commission (EHRC), it has been argued that the Equality Act 2006 (EA) invests EHRC with the power to institute proceedings which challenge the compatibility of legislation with ECHR. By virtue of section 30(1) of EA, EHRC has the capacity to institute or intervene in legal proceedings, whether for judicial review or otherwise, if it appears to the Commission that the proceedings are relevant to a matter in connection with which the Commission has a function. As with section 71A of NIA, EHRC is exempted from the victim requirement in relation to proceedings under section 7(1)(b) of HRA section 30(3) of EA. Mr Coppel QC argues that, given the enforcement mechanisms contained in the HRA, such proceedings may be constituted as section 7 HRA proceedings which challenge the act of a public authority as being contrary to section 6(1) HRA, or they may be founded on sections 3 and 4 HRA so as to seek a compatible interpretation of primary legislation, or challenge that legislation as incompatible, without there being any allegation of breach of section 6(1) HRA. Proceedings brought by the EHRC in the latter category would, he says, unquestionably be relevant to the EHRCs functions (for example) to promote protection of human rights and, in certain cases, to encourage compliance with section 6 HRA. This can be achieved by establishing a Convention compliant interpretation of legislation or by the remedying of incompatible legislation following a declaration of incompatibility. Either outcome will constrain public authorities to act compatibly with Convention rights. I accept Mr Coppels submissions. They have not been challenged by the respondents to this appeal. It would be wholly anomalous that NIHRC should not be competent to institute proceedings challenging the compatibility of legislation with ECHR unless it identified a victim and a specific unlawful act, when EHRC had been relieved of those requirements. This is especially so given that the insertions into the NIA by the Justice and Security (Northern Ireland) Act were made in the year following the EA. The Attorney General has argued that the reason for requiring an actual unlawful act and a specifically identified victim is to avoid challenges to the law in the abstract it is not sufficient, he contends, to claim that the mere existence of a law violates Convention rights. This argument is misconceived for two reasons. First, such a restriction would only be appropriate to prevent individuals from bringing challenges which serve no practical purpose. It should not operate to inhibit the bringing of proceedings by statutory bodies which have been specifically empowered to do so in order to address violations of Convention rights. Secondly, this is not in any sense an actio popularis. It is not an academic challenge brought against obsolete legislation. The 1861 and the 1945 Acts have a direct impact on individuals, as the cases discussed in the first part of this judgment amply demonstrate. It is notable that section 71(2B)(c) provides that the Commission may act only if there is or would be one or more victims of the unlawful act. If, as I consider to be the case, the implementation of the provisions of the 1861 and 1945 Acts involves the violation of Convention rights, it is clear that there have been and will be victims of such violations. The Attorney Generals suggestion that, in order to satisfy the requirement that there would be victims of the unlawful act, NIHRC must bring its case by reference to a specific potential victim and a concrete set of facts, is plainly incorrect. The natural meaning of a power to act where there would be victims clearly indicates an intention that the Commission should be able pre emptively to prevent human rights violations rather than merely bring post hoc proceedings relating to actual violations. Quite apart from this, the Attorney Generals submission (in para 53 of his reference) that the Commission has not identified any individual who is or would be a victim of any unlawful act (nor has any intervener) cannot be accepted. If these legislative provisions are found to be incompatible with ECHR, clearly there are actual and potential victims. The cases described above amply demonstrate this. And, as NIHRC notes at para 64 of its reply to the reference, neither of the respondents has ever disputed that there are women and girls in the three categories instanced, fatal foetal abnormality, serious foetal abnormality and pregnancy as the result of rape or incest. The practical effects of a finding that NIHRC does not have standing should not be shied away from. These can be considered at a general and at a particular level. The first is to deny the body instituted for the precise purpose of defending and promoting human rights protection in Northern Ireland of one of the most obvious means of securing that protection. It introduces a perplexing and unaccountable discrepancy between the powers available to EHRC and NIHRC. Most importantly, as this case vividly illustrates, it makes a significant inroad into the practicality and effectiveness of the article 3 and 8 rights of pregnant girls and women in Northern Ireland. Women suffering from the ill effects of a pregnancy where there is a fatal foetal abnormality or who are pregnant because of rape or incest do not have the luxury of time within which to seek vindication of their rights. This is pre eminently a situation where an independent body such as NIHRC should be invested with the power to mount a challenge to legislation which violates, and will violate if it continues in force, the rights of some members of the female population of Northern Ireland. Article 13 of ECHR provides for the right to an effective remedy. It is in these terms: Everyone whose rights and freedoms as set forth in this Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity. This article was not included in the schedule to the HRA 1998 because it was thought that the HRA 1998 itself provided an effective remedy. A requirement that there must be a specific unlawful act affecting a particular individual before breach of article 3 or article 8 can be canvassed throws into substantial question whether an effective remedy is possible for that section of the female population of Northern Ireland whose foetus has a fatal abnormality or who are pregnant as a result of rape or incest. Fatal foetal abnormality is frequently not detected until the 20 week scan. If, for instance, the end point at which a woman may seek an abortion is 24 weeks (as under the Abortion Act 1967), this provides an impossibly short time within which vindication of the womans rights could be achieved. Moreover, the number of women who have had to endure the trauma of a fatal foetal abnormality pregnancy or a pregnancy which is the consequence of rape or incest and who would be prepared, after the event, to assert a violation of their rights cannot be presumed to be significant. If NIHRC is unable, by reason of a lack of standing, to bring proceedings to protect such womens rights, I consider that they will be deprived of the practical and effective remedy which article 13 guarantees. I consider, therefore, that NIHRC has standing to bring the present proceedings. The decision of the majority that the appellant does not have standing appears to me, with respect, to depart from a well established line of authority that an interpretation of a statute which gives effect to the ascertainable will of Parliament should be preferred to a literal construction which will frustrate the legislations true purpose. In R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687, Lord Bingham said at para 8: The basic task of the court is to ascertain and give effect to the true meaning of what Parliament has said in the enactment to be construed. But that is not to say that attention should be confined and a literal interpretation given to the particular provisions which give rise to difficulty. Such an approach not only encourages immense prolixity in drafting It may also (under the banner of loyalty to the will of Parliament) lead to the frustration of that will, because undue concentration on the minutiae of the enactment may lead the court to neglect the purpose which Parliament intended to achieve when it enacted the statute. Every statute other than a pure consolidating statute is, after all, enacted to make some change, or address some problem, or remove some blemish, or effect some improvement in the national life. The courts task, within the permissible bounds of interpretation, is to give effect to Parliaments purpose. So the controversial provisions should be read in the context of the statute as a whole, and the statute as a whole should be read in the historical context of the situation which led to its enactment. A similar approach was taken by Lord Carswell in R v Z (Attorney General for Irelands reference) [2005] 2 AC 645, where, having cited Lord Binghams statements in Quintavalle, he said at para 49: My Lords, this appeal serves as a very good example of the principle of statutory construction that in seeking to ascertain the mischief towards which a statute is directed it can be of prime importance to have regard to the historical context. If the words of a statutory provision, when construed in a literalist fashion, produce a meaning which is manifestly contrary to the intention which one may readily impute to Parliament, when having regard to the historical context and the mischief, then it is not merely legitimate but desirable that they should be construed in the light of the purpose of the legislature in enacting the provision: cf Karpavicius v The Queen [2003] 1 WLR 169, 175 176, paras 15 16, per Lord Steyn. In Attorney Generals Reference (No 5 of 2002) [2005] 1 AC 167, Lord Steyn said at para 31: No explanation for resorting to a purposive construction is necessary. One can confidently assume that Parliament intends its legislation to be interpreted not in the way of a black letter lawyer, but in a meaningful and purposive way giving effect to the basic objectives of the legislation. A more recent example of the same approach is found in Littlewoods Ltd v Revenue and Customs Comrs [2017] 3 WLR 1401, where Lord Reed and Lord Hodge said: the literal reading fatally compromises the statutory scheme created by Parliament. It cannot therefore be the construction of the critical words which Parliament intended. (para 37) and that and that: It is not a literal construction, but a departure from a literal construction is justified where it is necessary to enable the provision to have the effect which Parliament must have intended. (para 39) Bennion on Statutory Interpretation, 7th ed (2017), states at section 11.1 that: General judicial adoption of the term purposive construction is relatively recent, but the concept is not new the idea that the courts should pay regard to the purpose of a provision led to the resolution in Heydons case [which was reported in 1584]. when judges speak of purposive construction, they are often referring to a strained construction However, a purposive construction in the true sense (that is, construing an enactment with the aim of giving effect to the legislative purpose) does not necessarily require the statutory language to be strained. Most often, a purposive construction in this sense will also be a grammatical construction, as the purpose and wording of an enactment will usually align with one another. The conclusion that the Commission has standing to institute proceedings does not require a strained construction of the legislation. The statement in section 71(2B)(c) that the Commission may bring proceedings only where there is or would be victims of an unlawful act can reasonably be interpreted to mean that the Commission may act where it is clear that there have been and will be victims of the implementations of the provisions of the 1861 and 1945 Acts (as noted in para 58 above). Indeed, to interpret these words as meaning that a case must be brought in relation to a specific potential victim and a specific unlawful act constitutes a much more obviously strained construction. Section 11.1 of Bennion also cites the American case of Cabell v Markham (1945) 148 F 2d 737, in which Justice Learned Hand explained the merits of purposive interpretation: Of course, it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing: be it a statute, a contract, or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning. Whether the interpretation of the relevant provisions is considered in terms of giving effect to the overall purpose of the legislation or curing a mischief or in its historical context, the permissible and plainly proper construction to be given to those provisions is that the Commission has standing to bring the present proceedings. The decision in this case sweeps away a vital protection for the people of Northern Ireland which, I am convinced, Parliament intended that they should have. It is my hope that Parliament will swiftly restore that protection in legislation which permits no debate as to its purpose. There is another consideration. It relates to the constitutional character of the NIA. In Robinson v Secretary of State for Northern Ireland [2002] NI 390, Lord Bingham made the following statement at para 11 in relation to that Act: The 1998 Act does not set out all the constitutional provisions applicable to Northern Ireland, but it is in effect a constitution. the provisions should, consistently with the language used, be interpreted generously and purposively, bearing in mind the values which the constitutional provisions are intended to embody. To like effect, in R v Director of Public Prosecutions, Ex p Kebeline [2000] 2 AC 326, 375, Lord Hope said: In Attorney General of Hong Kong v Lee Kwong kut [1993] AC 951, 966 Lord Woolf referred to the general approach to the interpretations of constitutions and bills of rights indicated in previous decisions of the Board, which he said were equally applicable to the Hong Kong Bill of Rights Ordinance 1991. He mentioned Lord Wilberforces observation in Minister of Home Affairs v Fisher [1980] AC 319, 328 that instruments of this nature call for a generous interpretation suitable to give to individuals the full measure of the fundamental rights and freedoms referred to, and Lord Diplocks comment in Attorney General of The Gambia v Momodou Jobe [1984] AC 689, 700 that a generous and purposive construction is to be given to that part of a constitution which protects and entrenches fundamental rights and freedoms to which all persons in the state are to be entitled. The same approach will now have to be applied in this country when issues are raised under the 1998 Act about the compatibility of domestic legislation and of acts of public authorities with the fundamental rights and freedoms which are enshrined in the Convention. I consider that these strong statements as to the approach to be taken to constitutional provisions provide a powerful indication that the standing of NIHRC to take these proceedings should be recognised. Article 3 of ECHR Article 3 provides: No one shall be subjected to torture or to inhuman or degrading treatment or punishment. The first thing to notice about this provision is its absolute nature. It unequivocally forbids torture or treatment which can properly be regarded as inhuman or degrading. If that threshold is passed, there is no question of mitigation or justification of the action which constitutes the offending behaviour. The focus is directly on the behaviour said to constitute torture or inhuman or degrading treatment rather than on the circumstances in which it occurred or the avowed reasons for it. If the treatment to which an individual is subjected can properly be regarded as torture or inhuman or degrading, it does not matter a whit what the person or agency which is responsible for the perpetration of that treatment considers to be the justification for it. Nor does it matter that it is believed to be necessary to inflict the treatment to protect the interests of others. Torture and inhuman or degrading treatment are forbidden. That is an end of it. But the anterior question, whether the threshold has been passed; whether the complained of behaviour is torture or inhuman or degrading treatment, does not, in every instance, leave out of account the purpose of the conduct. In Gfgen v Germany (2010) 52 EHRR 1, para 88 the Strasbourg court said: In order for ill treatment to fall within the scope of article 3 it must attain a minimum level of severity. The assessment of this minimum depends on all the circumstances of the case, such as the duration of the treatment, its physical or mental effects and, in some cases, the sex, age and state of health of the victim. Further factors include the purpose for which the treatment was inflicted together with the intention or motivation behind it, as well as its context, such as an atmosphere of heightened tension and emotions. It is necessary to treat this statement with some care, however. The three cases referred to in footnote 38 to the paragraph and which are said to support the proposition that the purpose or motivation of the persons inflicting the treatment was relevant and whether it had occurred at a time of heightened tension was material were Aksoy v Turkey (1996) 23 EHRR 553 (at para 64); Egmez v Cyprus (2000) 34 EHRR 29 (at para 78); and Krastanov v Bulgaria (2004) 41 EHRR 50 (at para 53). These cases were concerned with, inter alia, the question whether the deliberate assault of the victim constituted torture or what might be regarded as the lesser wrongdoing of meting out inhuman or degrading ill treatment. The decisions of the Strasbourg court in those cases linked the issue of torture (or the absence of it) to the question whether police officers were seeking to extract a confession. This confines the issue of motivation or purpose to a relatively narrow compass. It is understandable that ill treatment designed to extract information might be regarded as torture because it has that purpose, while the same treatment with no particular motivation would not qualify. It is important to note, however, that the treatment complained of in all three cases was considered to be in breach of article 3. It was inhuman or degrading. So, the decisions in those cases are a far cry from saying that the motivation of the inflictor of the ill treatment will always be relevant to, much less determinative of, the question of whether that ill treatment crosses the threshold which article 3 prescribes. It appears to me, therefore, that examination of the purpose of the offending behaviour or of the motivation of the person or the state which perpetrates it is principally, if not exclusively, concerned with an assessment of whether treatment which might otherwise not meet the standard set by article 3 crosses the threshold by reason of that motivation or purpose. One can readily understand why this should be so. Conduct which is offensive but, examined out of context lacking in the necessary level of severity to amount to a breach of article 3, can be converted to that condition where there are base motives for its infliction because this can contribute to its degrading or inhuman qualities. It is more difficult to see how the motivation of the inflictor of the treatment or the purpose of its being inflicted, can convert behaviour which would otherwise meet article 3 standards to a condition where it does not. In this connection, what ECtHR had to say in para 151 of RR v Poland (2011) 53 EHRR 31 is relevant: Although the purpose of [alleged ill treatment] is a factor to be taken into account, in particular whether it was intended to humiliate or debase the victim, the absence of any such purpose does not inevitably lead to a finding that there has been no violation of article 3. To bring these considerations home to the present case, I do not accept that the purpose of preserving the impugned provisions of the 1861 and 1945 Acts is relevant to the question whether their effect constitutes torture or inhuman or degrading treatment. That effect must be independently examined for its potential to qualify as treatment forbidden by article 3. If it is found to reach that standard, it cannot be diminished or rescued from the status of article 3 ill treatment by what might be said to be laudable motives or objectives. If I am wrong in that conclusion and it is relevant to take into account the purpose of preserving the impugned legislative provisions and the motivation of those responsible for their preservation, I consider that no great weight should be accorded to those factors in the present case. One begins with the premise that the primary focus of article 3 is on its effect on the victim. Where that effect is, by any objective standard, plainly degrading or inhumane, very considerable and provable benefits would surely be required to displace the primary position. It has been claimed that some 100,000 people in Northern Ireland are alive today because of the law in relation to abortion in that province. That claim featured in a poster issued by the pro life campaign group, Both Lives Matter, in January 2017. The poster was the subject of a complaint to the Advertising Standards Agency (ASA). It was suggested that the poster was misleading and that the claim, that 100,000 people were alive because of the law on abortion in Northern Ireland, could not be substantiated. ASA did not uphold the complaint. It considered that, contrary to the complaint that the advertisement had made an absolute, objective claim, it was a large, round figure that readers would typically associate with estimates and that, furthermore, readers would appreciate that it was not possible to calculate the precise number of abortions that would have theoretically occurred in Northern Ireland if abortion had been legal over the past 50 years. The joint written submissions of the interveners, CARE, ADF International and Professor Patricia Casey, cited this figure and it was relied on in the oral submissions by Mr Mark Hill QC on their behalf, to support their claim that the abortion law in Northern Ireland had a positive, beneficial effect. I do not consider that that claim is sustained by the material on which it purports to rely. I say that for two reasons. Firstly, although ASA dismissed the complaint, it is clear from its report that while it endorsed the methodologies employed by the campaign group, it did not vouch for the accuracy of the figure. It is in the nature of such an exercise that, at best, only a broad estimate could be made. Secondly, even if the accuracy of the figure could be established, it cannot be taken as a given that this outweighs the interests of women required to carry foetuses to term against their will. In this context, it is to be remembered that the clear jurisprudence of Strasbourg (which will be discussed later in this judgment) is that a foetus does not enjoy rights, whereas the expectant mother does. It is therefore misconceived to assert that, because a number of children have been born who would not otherwise have been, this trumps the essential case of the appellant on article 3. This case is that a law requiring mothers to carry babies with fatal abnormalities to term or where their pregnancy is the result of rape or incest, carries an inevitable risk that a number of them will have suffered inhuman or degrading treatment, contrary to the article. It is, in my opinion, beyond question that many women in Northern Ireland who have had to continue with a pregnancy against their will, or who have had to travel to England to obtain an abortion, have had to undergo treatment forbidden by article 3. I will give my reasons for that conclusion later in this judgment. In as much as the motivation of those responsible for the preservation of the laws bears on the question of whether an article 3 breach has been established, it can be said that it is difficult to ascertain what that motivation is, much less that it is soundly based. The respondents point to the fact that on 10 February 2016, members of the Northern Ireland Assembly voted, by 59 votes to 40, against legalising abortion in cases of fatal foetal abnormality, after an amendment was tabled by a Member of the Legislative Assembly (MLA) to the Justice (No 2) Bill. A further amendment legalising it in cases of sexual crimes tabled by another MLA was also unsuccessful. Since that date, the issue of the law on termination of pregnancy has not been further debated by the Assembly, nor has the Northern Ireland Executive considered outstanding proposals from the Department of Justice to change the law to cover cases of fatal foetal abnormality. It would be quite wrong, in my view, to conclude from this that those MLAs who voted against the amendments shared the same stance on why the law should not be amended, much less that this vote is indicative of the will of the majority of the population in Northern Ireland that the law on abortion should be maintained. As NIHRC has submitted, there is no necessary correlation between the votes cast in the Assembly on such issues and the moral views of the people of Northern Ireland. This aspect will be discussed in detail in the sections of this judgment dealing with article 8 and institutional competence and I say nothing more about it here. On the question of the reasons that MLAs voted as they did, the Hansard report of the debate in the Assembly is illuminating. Mrs Pengelly spoke on behalf of the Democratic Unionist party (DUP). She urged MLAs to vote against the amendment in relation to fatal foetal abnormality. She did so, however, on the basis that further investigation and consultation were required. She did not suggest that the DUP (then the largest party in the Assembly) was unalterably opposed to amendment of the abortion law. To the contrary, although she said that the DUP was opposed to the extension of the 1967 Abortion Act to Northern Ireland, in the following passages she made clear that the DUP had not shut its mind to possible reform: The issue before us requires it demands careful consideration from the medical professionals, practitioners, families and ethics and legal experts to ensure that sufficient and proper clarity and guidance are the hallmarks of the way forward. That is absolutely essential to ensure that the arrangements are fully grounded in compassion, good law, support and the protection of our integrity and to ensure that our societal values and rights are properly and carefully balanced and maintained Tread carefully. That is why the DUP is rejecting the amendment but outlining a road map to a sensible, informed and appropriate way forward. The Minister of Health has been asked to establish, by the end of February, a working group that will include clinicians in this field and legally qualified persons to make recommendations on how this issue can be addressed, including, if necessary, bringing forward draft legislation. We have asked that all interested parties should be consulted and that the group will be tasked to report within six months. We all need to hear more fully the views of the Royal College and others. We all need the opportunity to ask those vital questions to get the appropriate advice. That is why the working group is the best and most appropriate way forward I urge members to vote against the amendment and for the proposed way forward that we are outlining a sensible way that is based on expertise, evidence and careful, thoughtful consideration. Support a way forward that is based on love, compassion and hope. Mrs Dolores Kelly, speaking on behalf of the Social Democratic and Labour Party declared that her party was a pro life party. But the opposition of her party to the amendment was not based solely on that position. She considered that greater clarity was required about the guidelines issued by the Department of Health as to when termination could legally take place. She welcomed the decision of the First Minister to set up a working group to consider the question of abortion law in Northern Ireland. Again, it is clear that this party did not have an implacable opposition to amendment of the law. At the time of the vote on the amendment, the make up of the Assembly was DUP 38; Sinn Fin 29; Ulster Unionist Party 16; Social Democratic and Labour Party 14; Alliance Party of Northern Ireland 8; Traditional Unionist Voice 1; Green Party 1; Independent 1. It is clear from the voting record that the bulk of the opposition came from DUP but members of other parties, notably, the Social Democratic and Labour party, also joined the no lobby while members of the Ulster Unionist party and the Alliance party supported the amendment. It is inescapably clear, therefore, that there was no single, cohesive view among those who voted against the amendment as to the reasons for doing so. The motivation for preserving the law in its current state cannot begin to qualify as a basis for treating what would otherwise be inhuman or degrading treatment as something less than that. The applicability of article 3 to cases of fatal foetal abnormality and rape or incest I have already referred (in para 215 above) to the absolute nature of article 3. That characteristic was recognised by ECtHR in Pretty v United Kingdom [2002] 35 EHRR 1. At paras 50 52, the court said: 50. An examination of the Courts case law indicates that article 3 has been most commonly applied in contexts in which the risk to the individual of being subjected to any of the proscribed forms of treatment emanated from intentionally inflicted acts of State agents or public authorities. It may be described in general terms as imposing a primarily negative obligation on States to refrain from inflicting serious harm on persons within their jurisdiction. However, in light of the fundamental importance of article 3, the Court has reserved to itself sufficient flexibility to address the application of that article in other situations that might arise. 51. In. particular, the Court has held that the obligation on the High Contracting Parties under article 1 of the Convention to secure to everyone within the jurisdiction the rights and freedoms defined in the Convention, taken together with article 3, requires States to take measures designed to ensure that individuals within their jurisdiction are not subjected to torture or inhuman and degrading treatment or punishment, including such treatment administered by private individuals. A positive obligation on the State to provide protection against inhuman or degrading treatment has been found to arise in a number of cases: see, for example the above cited A v United Kingdom where the child had been caned by his stepfather and Z v United Kingdom where four child applicants were severely abused and neglected by their parents. It also imposes requirements on State authorities to protect the health of persons deprived of liberty. 52. As regards the types of treatment which fall within the scope of article 3 of the Convention, the Courts case law refers to ill treatment that attains a minimum level of severity and involves actual bodily injury or intense physical or mental suffering Where treatment humiliates or debases an individual showing a lack of respect for, or diminishing, his or her human dignity or arouses feelings of fear, or inferiority capable of breaking an individuals moral and physical resistance, it may be characterised as degrading and also fall within the prohibition of article 3. The suffering which flows from naturally occurring illness, physical or mental, may be covered by article 3, where it is, or risks being, exacerbated by treatment, whether flowing from conditions of detention, expulsion or other measures, for which the authorities can be held responsible. The Attorney General argued that those who wished to have an abortion in Northern Ireland but were forbidden by the law from obtaining one had not been ill treated within the meaning of article 3 in that they had not been treated at all by the state. I do not accept that argument. At present, a girl or woman who obtains an abortion in circumstances other than those narrowly prescribed by the 1861 and 1945 Acts commits a criminal offence and is liable to prosecution. That constitutes ill treatment in so far as imposing that sanction on women amounts to a breach of article 3. Likewise, requiring a woman to carry to term a foetus who is doomed to die, or a foetus who is the consequence of rape or incest, when the impact on the mother is inhuman or degrading is, in every sense, treatment to which the woman is subjected by the state. It is, moreover, treatment which because of its inhumanity or degrading effect, is in violation of article 3. Moreover, the threat of prosecution of a doctor whose assistance in the termination of a pregnancy is sought has a direct impact on a girls or womans experience of pregnancy where, for instance, she has been told that the foetus she is carrying has a fatal abnormality. In this connection, the evidence of Professor Dornan is highly pertinent. He is a distinguished obstetrician and gynaecologist whose appointments include Emeritus Professor in Maternal and Foetal Medicine at the Queens University of Belfast and the Professor of Health and Life Sciences at Ulster University. He is also a member of the external advisory group to Centre for Maternal and Newborn Health (CMNH). CMNH is a World Health Organisation collaborating Centre for Research and Training on Maternal and Newborn Health whose work includes emergency obstetric care in Africa and Asia. Professor Dornan has explained that before the decision in the FPANI case, it was the clinical practice in the unit in which he was a consultant to carry out terminations of pregnancy where lethal abnormalities of the foetus were detected on screening and where abnormalities were discovered prior to the stage of viability (at that time 28 weeks, now considered to be 24 weeks) which indicated that there would be a major physical or mental problem for the foetus. After the judgments of the Court of Appeal were handed down in FPANI, that practice changed radically, as Professor Dornan explained in para 12 of his affidavit: The FPANI case, which was finally decided in 2004, made it clear that we could no longer offer a pregnant woman the option of an abortion on the grounds of fatal foetal abnormality alone. Rather the focus was to be solely on the pregnant woman. Therefore, a pregnancy could be lawfully terminated if its continuation threatened her life or would have a serious and long term effect on her physical or mental health. Hence a diagnosis of fatal foetal abnormality would only be relevant to offering a termination if the continuation with that pregnancy would have such an impact. Unless, therefore, a doctor could advise with confidence that there would be a serious and long term effect on a mothers physical or mental health, it was legally forbidden to carry out a termination of pregnancy in the case of a fatal abnormality of the foetus. And this, as Professor Dornans affidavit convincingly shows, despite the high level of accuracy in such diagnoses. In sum, a doctor treating a pregnant mother is able to tell her with confidence that her baby has a fatal condition but is not be able to offer her a termination of her pregnancy unless a prognosis of serious and long term mental or physical ill health for the mother (an inherently difficult prognosis to make) is possible. It is small wonder that the doctors in the examples given at the beginning of this judgment felt unable to assist their patients. Not all mothers who are told that the baby they are carrying has a fatal abnormality will suffer the trauma that was endured by the women whose experiences have been described earlier. Likewise, not all girls or women who become pregnant as a result of rape or incest will suffer to the same extent. Some may have uncommon reserves of stoicism and fortitude. But it is undeniable that some will suffer profound psychological trauma. That circumstance is sufficient to give rise to a violation of article 3 where proper safeguards to mitigate the risk of such trauma are not put in place. Obligations owed by the state under article 3 extend to protecting individuals from the risk of a breach of its provisions as well as a positive duty to provide appropriate healthcare treatment where the denial of that treatment would expose victims to ill treatment contrary to article 3. The positive obligation to protect citizens from ill treatment is stated in A v United Kingdom (1998) 27 EHRR 611: Article 1 taken together with article 3, requires states to take measures designed to ensure that individuals within their jurisdiction are not subjected to torture or inhuman or degrading treatment or punishment (para 22). In RR v Poland (2011) 53 EHRR 31, the court stated that it cannot be excluded that the acts and omissions of the authorities in the field of health care policy may in certain circumstances engage their responsibility under article 3 by reason of their failure to provide appropriate medical treatment (para 152). In Chahal v United Kingdom (1996) 23 EHRR 413 the ECtHR held that the risk of the applicant being subjected to torture, inhuman or degrading treatment if he was returned to India was sufficient to give rise to a breach of article 3 where the British authorities had evinced an intention to deport him there. So also in Saadi v Italy [2008] 49 EHRR 30, the Strasbourg court held that since there were substantial grounds for believing that, in the event of his deportation to Tunisia, the applicant would face a real risk of ill treatment, contrary to article 3, to return him there, as the Italian authorities proposed to do, would violate his article 3 rights. In Sufi and Elmi v United Kingdom [2011] 54 EHRR 9 it was held that the risk of the applicants being subjected to treatment which would violate article 3 if returned to Somalia meant that the British authorities would be in breach of the article if they carried through their intention to deport them to that country. The risk of women and girls being subject to ill treatment contrary to article 3 is therefore sufficient to trigger the states positive obligations to take measures to prevent that happening. That such a risk exists while the impugned legislative provisions remain in force is beyond dispute, in my opinion. Article 3 prohibits torture and inhuman or degrading treatment. Degrading treatment means subjecting someone to humiliation or debasement see RR v Poland at para 150. In my view, it is plainly humiliating to require a girl or woman to continue a pregnancy when she knows that the foetus she carries will die or where she finds that pregnancy abhorrent because it is the consequence of rape or incest. It has been suggested that since a woman from Northern Ireland who wishes to have an abortion can obtain one by travelling to England or Scotland, she can avoid inhuman or degrading treatment. I do not accept this. Termination of pregnancy is one of lifes most traumatic and fraught experiences. To be required to travel away from home and to undergo an abortion in unfamiliar surroundings without the normal support network that a woman would expect and hope to have is in itself deeply upsetting. A girl or woman who has become pregnant as a result of rape or incest is already in a vulnerable position and liable to suffer extreme distress. So too a mother who has been told that the child she carries will not survive. That distress can only be increased and compounded by forcing the woman to seek termination of her pregnancy in a different country, away from her family and friends and without the support of her own doctor. The fact of being required to do so is in itself sufficient to expose her to the risk of inhuman and degrading treatment. The Court of Appeals treatment of the article 3 issue Sir Declan Morgan LCJ rejected the Commissions article 3 case on the ground that the standard of severity of impact required for its engagement in this field was so high see para 60 of his judgment. In reaching that conclusion, the Lord Chief Justice examined four decisions of the Strasbourg court Tysiac v Poland (2007) 45 EHRR 42; A, B and C v Ireland (2010) 53 EHRR 13; RR v Poland; and P and S v Poland (2013) 129 BMLR 120. Before examining those decisions, it is to be noted that, as Sir Declan observed in para 53 of his judgment, the threshold level for the engagement of article 3 is relative. In other words, whether the treatment complained of is to be regarded as torture or inhuman or degrading depends on a close examination of the individual circumstances of any case in which breach of article 3 is claimed. Those individual circumstances must comprehend not only the nature of the behaviour but also its effect on those affected by it and a number of other factors. As the ECtHR said in Ireland v United Kingdom (1978) 2 EHRR 25: It depends on all the circumstances of the case, such as the nature and context of the treatment, the manner and method of its execution, its duration, its physical or mental effects and, in some cases, the sex, age and state of health of the victim. It is not appropriate, therefore, to categorise those wishing to have a termination of pregnancy as inhabiting a single class of persons and to theorise that a high level of severity is required before article 3 is engaged for any member of that group. The same law may affect different women in different ways. The fact that some feel able to face an ordeal with stoicism or even equanimity, does not mean that others, who do not react in the same way, and who suffer severe trauma when confronted with the same prospect as those who can contemplate it equably, cannot be the victims of an article 3 breach. That is not to say, however, that those women and girls who become pregnant as a result of rape or incest, or who have been found to be bearing foetuses with serious or fatal abnormality do not share certain characteristics. Rape or incest victims are in a highly vulnerable group para 162 of P and S v Poland. Being required to give birth to a child which is the result of sexual abuse or assault carries at least the risk of having to endure treatment which is forbidden by article 3. Likewise, a woman who is obliged to carry to term a foetus who is fatally malformed is placed in a position of similar peril see RR v Poland at para 159. A law which forbids a woman, impregnated as a result of sexual assault, from avoiding its consequence, when the continuation of the pregnancy is utterly abhorrent to her and when it will prolong and intensify her suffering, faces a formidable hurdle in its defence to a claim that it violates her article 3 rights. So does a law which demands that a woman, who has been told that the foetus she carries cannot survive, but must nevertheless be sustained by her until his or her inevitable demise, with all the horrible effects that will be visited on the mother during the period, must live with that knowledge. The cases which NIHRC have cited exemplify the agony of such women. In Tysiac v Poland a pregnant woman was denied an abortion, notwithstanding her general medical practitioners opinion that her already significant myopia would deteriorate if she was to give birth. Ophthalmic specialists disagreed. ECtHR found that she had been the victim of a breach of article 8 of ECHR. The court dealt perfunctorily with her claim under article 3, stating in para 68 that the facts did not disclose a breach of the article. The judgment did not elaborate on the reasons for this conclusion. I do not consider that this case assists in the present appeal, at least not on the issue of article 3. A, B and C v Ireland was a case in which three women had been required to travel from Ireland to the United Kingdom to obtain an abortion. It will be necessary to consider the case in some detail in relation to article 8 and the margin of appreciation but, for present purposes, I focus on what the ECtHR had to say about article 3. In paras 124 127, the court set out its findings as to the circumstances in which each of the applicants travelled to England to obtain an abortion. Although the Irish government had not accepted the versions of events given by the applicants and asserted that these were not substantiated, the court considered that the essential facts as related by the women should be regarded as proved. In particular, at para 126 the court said: The Court considers it reasonable to find that each applicant felt the weight of a considerable stigma prior to, during and after their abortions: they travelled abroad to do something which, on the Governments own submissions, went against the profound moral values of the majority of the Irish people and which was, or (in the case of the third applicant) could have been, a serious criminal offence in their own country punishable by penal servitude for life. Moreover, obtaining an abortion abroad, rather than in the security of their own country and medical system, undoubtedly constituted a significant source of added anxiety. The Court considers it evident that travelling abroad for an abortion constituted a significant psychological burden on each applicant. As regards the physical effects of having to travel abroad to obtain an abortion, the court, at para 127, said: As to the physical impact of travelling for an abortion abroad, it is evident that an abortion would have been physically a less arduous process without the need to travel, notably after the procedure. However, the Court does not find it established that the present applicants lacked access to necessary medical treatment in Ireland before or after their abortions. The Court notes the professional requirements on doctors to provide medical treatment to women post abortion. Finally, the court accepted that in the case of the first applicant, having to travel to England cast a significant financial burden on her and that the second and third applicants were put to considerable expense. These effects, physical, psychological and financial, did not, in the courts estimation, constitute a breach of article 3. The reason for that conclusion is pithily expressed in para 164: the Court reiterates its case law to the effect that ill treatment must attain a minimum level of severity if it is to fall within the scope of article 3. The assessment of this minimum depends on all the circumstances of the case, such as the duration of the treatment, its physical or mental effects and, in some cases, the sex, age and state of health of the victim. In the above described factual circumstances and whether or not such treatment would be entirely attributable to the state, the Court considers that the facts alleged do not disclose a level of severity falling within the scope of article 3 of the Convention. Two important points should be made about this passage. The first is that the court was careful to reiterate the well established formula that the assessment of whether the minimum standard of severity has been met depends on all relevant circumstances. The second, and related, point is that the courts rejection of the applicants claims under article 3 rested squarely on its evaluation of the particular facts of those cases. Apart from its restatement of the requirement to examine all material circumstances, the court expressed no general principle that might be considered applicable to cases where the facts were significantly different. Plainly, cases of serious or fatal abnormality of the foetus or cases where pregnancy is the consequence of sexual assault or incest are markedly different from the A, B and C case. In my opinion, the judgment in that case does not assist in the decision as to whether there is an article 3 breach in the three categories involved in these proceedings. In RR v Poland it was discovered at the 18 week scan of the applicant in February 2002 that the foetus she was carrying might have a malformation. Two subsequent scans confirmed the possibility that the foetus was malformed. Throughout March 2002 the applicant sought, without success, to obtain genetic tests or an abortion. Eventually, on 21 March 2002 a scan confirmed that the foetus was malformed. The applicant had an amniocentesis on 26 March 2002. She was then 23 weeks pregnant. She did not receive the results until 9 April. It was revealed that the foetus had Turner syndrome. The applicant thereafter requested an abortion, but that request was refused because under the applicable domestic law, the last point at which an abortion could be undertaken on the basis of foetal abnormality was 24 weeks, and that time limit had expired. ECtHR held that there had been a violation of article 3. In para 150, the court gave a useful definition of degrading treatment: Treatment has been considered degrading when it was such as to arouse in victims feelings of fear, anguish and inferiority capable of humiliating and debasing them [Iwanczuk v Poland (2004) 38 EHRR 8 at para 51; and Wikiorko v Poland (14612/02) March 31, 2009 at para 45]. It is, of course, the case that RR was entitled to seek an abortion under the law of Poland on the basis that the child she was carrying had a serious malformation. And it is plainly relevant that the failure of the medical authorities to act promptly denied her the opportunity to vindicate that legal entitlement. But what ECtHR had to say about the nature of the effect on her in being required to carry the baby to term is clearly relevant to an evaluation of the impact that the imposition of such a requirement has on a woman who does not enjoy equivalent rights in the domestic laws of the country of which she is a citizen. At para 159 the court said: The Court notes that the applicant was in a situation of great vulnerability. Like any other pregnant woman in her situation, she was deeply distressed by information that the foetus could be affected with some malformation. It was therefore natural that she wanted to obtain as much information as possible so as to find out whether the initial diagnosis was correct, and if so, what was the exact nature of the ailment. She also wanted to find out about the options available to her. As a result of the procrastination of the health professionals as described above, she had to endure weeks of painful uncertainty concerning the health of the foetus, her own and her familys future and the prospect of raising a child suffering from an incurable ailment She suffered acute anguish through having to think about how she and her family would be able to ensure the childs welfare, happiness and appropriate long term medical care. (Emphasis supplied) In RR the applicants distress was rooted in her uncertainty about the prospects for her unborn child and the impact that her condition would have on her family. It was also due to the lack of information provided by the medical authorities. But, where a woman is presented with a definite diagnosis as to the future for the foetus she carries and the certainty that nothing can be done in Northern Ireland to alleviate her plight, can it be said that her anguish is less acute than that suffered by RR? If a lack of certainty about prognosis and the options available is sufficient to constitute a violation of article 3, is not a definite prognosis and the complete shutting down of all options an a fortiori case of breach of that article? It cannot be correct, as the Attorney General and Mr McGleenan QC for the Department of Justice argued, that the breach of article 3 in RRs case depended on the existence of her right to an abortion. The focus of article 3 is on the impact on the person affected by the ill treatment alleged, not on the reasons which underlie it. In Gfgen v Germany (quoted at para 216 above) the ECtHR stated that the Convention prohibits in absolute terms torture and inhuman or degrading treatment or punishment, irrespective of the conduct of the person concerned (para 87) and the prohibition on ill treatment of a person applies irrespective of the conduct of the victim or the motivation of the authorities. Torture, inhuman or degrading treatment cannot be inflicted even in circumstances where the life of an individual is at risk. No derogation is allowed even in the event of a public emergency threatening the life of a nation. (para 107) In the case of Mubilanzila Mayeka and Kaniki Mitunga v Belgium (2006) 46 EHRR 23, which concerned a five year old child detained by the Belgian authorities in an immigration centre, the court assessed the impact of the treatment on the applicant, stating that her position was: characterised by her very young age, the fact that she was an illegal immigrant in a foreign land and the fact that she was unaccompanied by her family from whom she had become separated so that she was effectively left to her own devices. She was thus in an extremely vulnerable situation. In view of the absolute nature of the protection afforded by article 3 of the Convention, it is important to bear in mind that this is the decisive factor and it takes precedence over considerations relating to the second applicants status as an illegal immigrant. She therefore indisputably came within the class of highly vulnerable members of society to whom the Belgian state owed a duty to take adequate measures to provide care and protection as part of its positive obligations under article 3 of the Convention. (para 55) Those who come within a highly vulnerable class (such, I suggest, as girls or women who have become pregnant as the result of rape or incest, or those who are at risk of significant suffering because they are carrying babies with a fatal foetal abnormality) are owed duties by the state under article 3 of the Convention. The nature of that duty to those within the vulnerable class is, as this case illustrates, to take adequate measures for their care and protection. In other words, it is incumbent on the state to recognise the vulnerability of girls and women in those categories and to take steps to ensure that they are appropriately protected. The states duty does not depend on or require the onset of actual suffering by an individual within the class. It is triggered by recognition of the likelihood that such suffering will occur to at least some members of the vulnerable group. P and S v Poland was a case in which the applicants were daughter and mother. In 2008, at the age of 14, P became pregnant as a result of rape. In order to have an abortion, in accordance with the 1993 Polish Law on Family Planning, she obtained a certificate from the public prosecutor on 20 May 2008 to the effect that her pregnancy had resulted from unlawful sexual intercourse. Thereafter, the applicants encountered substantial difficulties in obtaining an abortion for P. She came under pressure to have the baby from the head gynaecologist of one of the hospitals to which she had been brought; similar pressure was exerted by a Catholic priest who had been brought to see her, although she did not ask for him; she was induced to sign a statement that she wished to carry the baby to term; her mother was required to sign a statement that the carrying out of the abortion would put Ps life at risk; details of the case were released to the media and P was subject to intrusive and distressing messages and a press campaign renewing the pressure on her to keep the baby; she was unlawfully separated from her mother; when she sought police protection from harassment by anti abortion protesters, she was arrested on suspicion of having had unlawful sexual intercourse; she and her mother received contradictory information from two public hospitals as to whether they needed a referral from the regional consultant for gynaecology and obstetrics in addition to the certificate from the prosecutor, as to who could perform the abortion, who could make a decision, whether there was any waiting time prescribed by law, and what other conditions, if any, had to be complied with; finally, mother and daughter were compelled to travel a considerable distance in clandestine conditions in order for the abortion to be carried out. The Strasbourg court, in considering whether a breach of article 3 had been made out, placed considerable emphasis on the first applicants vulnerability. At paras 161 and 162 of its judgment, the court said this: 161. For the courts assessment of this complaint it is of a cardinal importance that the first applicant was at the material time only 14 years old. The certificate issued by the prosecutor confirmed that her pregnancy had resulted from unlawful intercourse. The court cannot overlook the fact that the medical certificate issued immediately afterwards confirmed bruises on her body and concluded that physical force had been used to overcome her resistance. 162. In the light of the above, the court has no choice but to conclude that the first applicant was in a situation of great vulnerability. The court concluded that Ps treatment at the hands of the authorities was deplorable and so it undoubtedly was. The Lord Chief Justice in the present case said that the P and S judgment demonstrates the high level of severity required in this context para 59. If by that, Sir Declan meant that, in every instance, an ordeal akin to that suffered by P was required to establish a breach of article 3, I do not agree. The Strasbourg court in its judgment in P and S was careful to repeat the definition of degrading treatment offered in RR v Poland; Iwanczuk v Poland (2004) 38 EHRR 148; and Wikiorko v Poland (Application No 14612/02 unreported 31 March 2009) see para 159. Feelings of fear, anguish and inferiority capable of humiliating and debasing those affected by ill treatment can be aroused by conduct of a different stripe from that endured by P and her mother in the P and S case. Could it be said, for instance, that the child whose case was described by Ms Purvis and which is detailed in para 10 above, did not suffer such feelings and did not feel humiliated and debased as a consequence? We need to be clear about what the current law requires of women in this context. It is not less than that they cede control of their bodies to the edict of legislation passed (in the case of the 1861 Act) more than 150 years ago and (in the case of the 1945 Act) almost 75 years ago. Binding the girls and women of Northern Ireland to that edict means that they may not assert their autonomy in their own country. They are forbidden to do to their own bodies that which they wish to do; they are prevented from arranging their lives in the way that they want; they are denied the chance to shape their future as they desire. If, as well as the curtailment on their autonomy which this involves, they are carrying a foetus with a fatal abnormality or have been the victims of rape or incest, they are condemned, because legislation enacted in another era has decreed it, to endure untold suffering and desolation. What is that, if it is not humiliation and debasement? Conclusions on article 3 I consider that the law on abortion in Northern Ireland is incompatible with the article 3 rights of the girls and women of that country who are pregnant with foetuses which have a fatal abnormality or who are pregnant as a result of rape or incest. I would make a declaration of incompatibility under section 4 HRA to that effect. Article 8 Article 8 of ECHR provides: 1. Everyone has the right to respect for his private and family life, his home and his correspondence. 2. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. It is accepted that the Acts of 1861 and 1945 interfere with womens rights under article 8. The single issue on this aspect of the case is whether that interference is justified. It is also accepted that it is for the state to establish that justification. The first question to be asked is whether the interference is in accordance with the law. If it is, as is now well established, examination of whether the interference with a qualified Convention right is justified requires a court to follow a four stage process. Those four stages were set out by Lord Wilson in R (Aguilar Quila) v Secretary of State for the Home Department (AIRE Centre intervening) [2012] 1 AC 621, para 45. They are (a) is the legislative objective sufficiently important to justify limiting a fundamental right?; (b) are the measures which have been designed to meet it rationally connected to it?; (c) are they no more than are necessary to accomplish it?; (d) do they strike a fair balance between the rights of the individual and the interests of the community? (See also Lord Reed at para 75 of Bank Mellat v HM Treasury (No 2) [2014] AC 700 and Lord Sumption in the same case at para 20) In accordance with the law Following the hearing of this case before the Court of Appeal, it appears that the Lord Chief Justice sought further submissions on the meaning to be given to the word unlawfully in section 58 of the 1861 Act. In NIHRCs printed case, at para 116, it is said that the Department, in its reply to that request, stated at para 20 that the Bourne test does not afford sufficient clarity or certainty of interpretation. NIHRC states that, if this is correct, it must follow that the lack of clarity and certainty means that the criminalisation of abortion in these circumstances is not in accordance with the law as required by article 8(2): Sunday Times v United Kingdom (1979) 2 EHRR 245, para 49. Ms Gallagher QC, on behalf of the intervener, Humanists UK, has suggested that the limited qualification to the prohibitions in sections 58 and 59 of the 1861 Act provided under section 25 of the 1945 Act, as interpreted in Bourne and affirmed in the FPANI case, is insufficiently precise and accessible for Northern Irish women with fatal foetal abnormality pregnancies. Nor was it, she suggested, sufficiently clear to allow medical professionals to decide whether they might be able provide a lawful abortion in their own jurisdiction. She claimed that the lack of clarity was underscored by the Lord Chief Justices proposed extension of the Bourne defence. It is to be remembered, of course, that both Gillen and Weatherup LJJ disagreed with the Lord Chief Justices analysis on this point and none of the parties to the appeal has sought to advance it. Nor did they apparently make submissions to that effect before the Court of Appeal. For the reasons that I have given, I do not consider that the proposed extension to Bourne is feasible and I would therefore not be prepared to hold that a lack of certainty has been introduced by the Lord Chief Justices proposal. One might observe, however, that the formula used by Macnaghten J does not lend itself to ready, confident definition. What is meant by a physical and mental wreck? Would contemporary thinking on that term accord with what it was understood to mean in 1938? There must be some question, at least, therefore, as to whether the law is sufficiently clear and accessible to women seeking abortion in Northern Ireland and to those medical practitioners from whom abortions are sought. Since this issue was not widely canvassed on the hearing of the appeal and since it is unnecessary for me to reach a final view on it in order to decide the appellants claim that the 1861 and 1945 Acts are in breach of article 8, I say nothing more on the subject. Legitimate aim Both the Department of Justice and the Attorney General have expressed in terms of some generality what the legitimate aim is that the relevant sections of the 1861 and 1945 Acts are designed to achieve. They have said that that aim is the protection of the unborn child. This was refined somewhat in the printed case of the Attorney General which, when challenging Weatherup LJs judgment on the point, suggested that the legitimate aim was the protection of the unborn childs life to the extent possible without significant and enduring damage to the life or health of the mother para 79. Horner J accepted that the protection of the unborn child was a legitimate aim so long as the foetus was viable. Even if there was a prospect that the child would suffer disability after birth, it was still a legitimate aim to afford him or her protection. The judge considered, however, that prohibition on the termination of a pregnancy where the foetus [was] doomed to die because a fatal abnormality [rendered him or her] incapable of an existence independent of the mothers womb was not a legitimate aim para 148 of his judgment. Morgan LCJ did not expressly articulate the legitimate aim at stake in this case but referred to that identified by the ECtHR in A, B and C v Ireland which he stated was the protection of morals of which the protection in Ireland of the right to life of the unborn was one aspect para 67 of the Lord Chief Justices judgment. Gillen LJ considered that this statement encapsulated the legitimate aim in the present case. The legitimate aim was, he said, the protection of morals in this jurisdiction of which the protection of the right to life of the unborn child is one aspect para 102. Weatherup LJ stated that the avowed legitimate aim was the protection of the unborn child, based on the moral view that the unborn child requires protection para 144. The Lord Chief Justice and Gillen LJ considered that the protection of the unborn child as an aspect of the protection of morals was a legitimate aim. As I discuss in the next paras, Weatherup LJ was, at least, doubtful about that proposition. Weatherup LJ pointed out that, where the existing law permits the termination of a pregnancy where the foetus is healthy, provided there is sufficient threat to the long term health of the mother, the rationale for forbidding the abortion of a foetus which has no prospect of survival is not easy to find para 167 where he said: The evidence submitted on behalf of the respondent does not address the particular character of the legitimate aim of the restrictions by reference to the precise nature of the moral view that the unborn child should be protected in such circumstances. The evidence submitted concerns the materials circulated in the consultation process about the scope of proposals for amendment of the present law. The focus is on the practicalities of amendments and the nature of conditions that might apply, all entirely legitimate matters for discussion. What is absent is the underlying rationale for the exclusion of fatal foetal abnormality by reference to the moral view on the protection of the unborn child when that protection is not afforded in those cases where termination of pregnancy is permitted under present arrangements in the case of a healthy unborn child by recognising a preference for the quality of life of the mother. (original emphasis) In other words, where a firm medical diagnosis has been made that the foetus will not survive, what is the moral value in insisting that the mother carry the unborn child to term? In this context, it is important to recognise that all three members of the Court of Appeal identified the legitimate aim as being the protection of the unborn child as an element of the moral values or views of society rather than having any intrinsic worth. The case made by the Attorney General appears to depart from the Court of Appeals understanding of the legitimate aim and to assign an inherent and fundamental value to the life of the unborn child. At para 81 of his printed case, the Attorney makes this claim: the balance struck by the current law of Northern Ireland does not purport to afford absolute protection to the unborn child. The balance is struck, instead, in favour of the mothers life and health, with the public interest in the protection of life before birth giving way when (and only when) the impact on the mother reaches the level where a threat to the life of the mother or serious and long term threat to her health can be established. Where that impact is not serious or not long term, the unborn child is absolutely protected, whether or not he/she came into being as a result of rape or incest and whether or not his/her life is likely to be short lived. On this argument, the legitimate aim of the legislation must be taken to be that, absent serious and long term threat to the mothers health, the foetus must be afforded complete and unconditional protection. Much of the argument surrounding this issue is also (and more directly) relevant to the third and fourth stages identified by Lord Wilson in Quila. As Lord Sumption said in Bank Mellat, the four requirements are logically separate, but in practice they inevitably overlap because the same facts are likely to be relevant to more than one of them (para 20). But I do not accept that the aim identified by the Attorney General in such absolute terms can be regarded as legitimate. How can it be said to be legitimate to force a woman to carry a baby to term, when there is conclusive evidence that it will not survive? Although he does not say so explicitly, Weatherup LJ appeared at least to doubt that restrictions on abortion in cases of fatal foetal abnormality could be a legitimate aim see the passage from para 167 of his judgment quoted at para 273 above. It should be noted, however, that at para 145 he stated that he was satisfied that the restriction on termination of pregnancies pursues the legitimate aim of the protection of morals reflecting the views of the majority of the members of the last Assembly on the protection of the unborn child. If expressed in general terms such as the protection of the unborn child, I have no quarrel with the proposition that restriction on the termination of pregnancy pursues a legitimate aim. It is when one begins to examine the nature of the restriction that difficulties with the legitimacy of the aim emerge. But this debate finds a more natural home in consideration of the third and fourth stages of Quila and I will return to it when dealing with those aspects. Rational connection If one posits that the legitimate aim is the protection of the unborn child, there is an obvious and rational connection between the aim and the restriction on termination of pregnancy. If, however, the legitimate aim is the protection of foetuses with a reasonable prospect of survival and is attended by a blanket ban on abortion in all cases where there is not a serious and long term threat to the health of the mother, a rational connection between the aim and the means employed is less easily forged. This subject is better dealt with under the third and fourth requirements of the proportionality analysis, however. The least intrusive means The third stage in Quila, are the measures no more than is necessary to achieve the aim? is sometimes expressed as, are they the least intrusive means of accomplishing the objective?. The starting point of the discussion on this question must be the recognition of the fundamental nature of the right in question. A womans right to respect for her private life, her right to exercise autonomy over her own body, her entitlement to make decisions as to her own welfare and happiness lie at the very centre of her existence. Interference with that right, to be proportionate, must be no more than is necessary to achieve the aim that it is designed to fulfil. In Mouvement Raelien Suisse v Switzerland (2012) 56 EHRR 14, para 75, in the course of considering the proportionality of the measure under challenge, ECtHR said, the authorities are required, when they decide to restrict fundamental rights, to choose the means that cause the least possible prejudice to the rights in question. And in Nada v Switzerland (2012) 56 EHRR 18, para 183, the Strasbourg court employed a similar formula: The court has previously found that, for a measure to be regarded as proportionate and as necessary in a democratic society, the possibility of recourse to an alternative measure that would cause less damage to the fundamental right at issue whilst fulfilling the same aim must be ruled out. The exercise involved in deciding whether the measure is the least intrusive throws the focus back on the question of the legitimacy of the aim. In relation to cases involving fatal foetal abnormality, is it the protection of every foetus whose continued existence does not present a threat of serious, long term harm to the health of the mother, irrespective of the chances of his or her survival, as the Attorney General argues, or is it, as Horner J suggests, the protection of unborn children who enjoy a prospect of viable life? Viewed through the prism of the fundamental nature of the mothers right under article 8, I have no hesitation in concluding that it is the latter. The question of the protection of morals or moral values adds nothing to this debate, in my opinion. As Weatherup LJ implicitly suggested, how can it be moral to allow the abortion of a healthy foetus where there is a serious threat to the long term health of the mother but to forbid it when the foetus will not survive? If, therefore, the legitimate aim in restricting abortion in these cases is the protection of unborn children who have a reasonable chance of survival after birth, the reasonableness of imposing a blanket ban on the termination of pregnancy in every case where its continuation does not present a serious, long term threat to the health of the mother is obviously difficult. Put in stark terms, if the foetus has little hope of survival, can it be said that requiring the mother to carry it to term is the least intrusive means of achieving the aim of protecting the unborn child who does have a hope of survival? Clearly not. Different considerations arise in the case of victims of rape and incest. As I have said, all three members of the Court of Appeal considered that the protection of the unborn child was an aspect of the moral values of the people of Northern Ireland, whereas the Attorney General in the appeal before this court appears to have espoused a legitimate aim which asserts the protection of the unborn child as an intrinsic value. If the legitimate aim is as the Court of Appeal expressed it to be, like Weatherup LJ, I have difficulty in understanding how the moral values of the population of Northern Ireland permit abortion to take place when there is a threat of serious, long term ill health to the mother but forbid it where that cannot be said to be present but the mother finds the pregnancy repugnant and a constant reminder of the sexual abuse to which she has been subjected. As Weatherup LJ said (at para 172), the underlying rationale for the exclusion of pregnancy arising from rape or incest by reference to the moral view on the protection of the unborn child is absent from the case presented on behalf of the respondents. If the Attorney General is right and the protection of the unborn child has an intrinsic value, freestanding of considerations of morality, it may well be that there is no less intrusive means of securing that value than by forbidding abortion in all cases save where there is a serious long term risk to the health of the mother. The Attorney General has not explained why the protection of the unborn child should be segregated from the moral values of the people of Northern Ireland, however. Moreover, the majority in A, B and C v Ireland, on which both respondents so crucially rely, identified the moral values of the population of Ireland as a critical feature in the justification for the restriction on abortion in that country. Since, however, the respondents avowed justification for interference with the rights of girls and women made pregnant as the result of rape or incest fails at the fourth stage of the proportionality exercise, I do not propose to discuss this issue further. A fair balance? As with the least intrusive means stage, so the discussion as to whether a fair balance is struck between the rights of the mother (whose foetus has a fatal abnormality or is the result of rape or incest) and the interests of the community, must begin with a clear sighted appreciation of the fundamental nature of the right involved. A woman who knows that the foetus will not survive or one who has been impregnated as a result of rape or incest and who wishes to have her pregnancy terminated is, under the current law of Northern Ireland, coerced to carry her baby to term, or to leave her country and travel abroad to have that wish fulfilled. For the reasons that I have given, I consider that requiring such a woman to do so amounts to exposing her to a breach of her article 3 rights. It follows that placing her under such duress cannot be said to strike a fair balance between her fundamental right under article 8 and the interests of the community. Even if I had decided that no breach of article 3 was involved, however, I would have concluded that a fair balance is not struck between the competing interests and I now give my reasons for that conclusion. Much has been made by the respondents about the margin of appreciation that Strasbourg has accorded to the contracting states of the Council of Europe in the field of social policy. It has been suggested in particular that, in relation to abortion in Ireland, a wide margin of freedom in decision making must be afforded to the state because of the sensitivity which attends this difficult and delicate subject. Before examining the ECtHR jurisprudence in this area, it is necessary to remember that the margin of appreciation principle is one which is not relevant in the domestic setting, at least not in the sense that the expression has been used by the Strasbourg court. The margin of appreciation principle applied on the pan European plane by the supra national court in Strasbourg recognises that in the field of social policy, there may be different views among the individual contracting states, reflecting, among other things, differing moral standards and cultural values of the various societies of the states which comprise the Council of Europe. Where those differences are marked, ECtHR evinces a reticence in imposing a universal prescription applicable to all contracting states and leaves it to the institutions of those states to make the choice which best suits the concerns and values of its citizens. When it comes to the domestic superintendence by one institution (the judiciary) of another institutions (the executives or the legislatures) decision in the field of human rights, there is no place for reticence on the basis of a margin of appreciation. There may be a case for the courts to defer to the decision of one of the other organs of the state either because of what is sometimes described as institutional competence or, relatedly, because it is considered that the decision maker is more fully equipped to take a decision than is the court. But that is not, in the strict sense, a question of the domestic courts according a margin of appreciation to those institutions. Horner J dealt with this subject admirably in the section of his judgment entitled Margin of Appreciation between paras 35 and 56. I agree with all that he had to say there and need not repeat it, beyond recalling his apt quotation of the celebrated passage from the speech of Lord Bingham of Cornhill in A v Secretary of State for the Home Department [2005] 2 AC 68, para 42: I do not accept the distinction which [the Attorney General] drew between democratic institutions and the courts. It is of course true that the judges in this country are not elected and are not answerable to Parliament. It is also of course true that Parliament, the executive and the courts have different functions. But the function of independent judges charged to interpret and apply the law is universally recognised as a cardinal feature of the modern democratic State, a cornerstone of the rule of law itself. The Attorney General is fully entitled to insist on the proper limits of judicial authority, but he is wrong to stigmatise judicial decision making as in some way undemocratic. It is particularly inappropriate in a case such as the present in which Parliament has expressly legislated in section 6 of the 1998 Act to render unlawful any act of a public authority, including a court, incompatible with a Convention right, has required courts (in section 2) to take account of relevant Strasbourg jurisprudence, has (in section 3) required the courts, as far as possible, to give effect to Convention rights and has conferred a right of appeal on derogation issues. The effect is not, of course, to override the sovereign legislative authority of the Queen in Parliament, since if primary legislation is declared to be incompatible the validity of the legislation is unaffected (section 4(6)) and the remedy lies with the appropriate minister (section 10), who is answerable to Parliament. The 1998 Act gives the courts a very specific, wholly democratic, mandate. As Professor Jowell has put it, The courts are charged by Parliament with delineating the boundaries of a rights based democracy. (Judicial deference: servility, civility or institutional capacity? [2003] PL 592, 597). The institutional competence factor has sometimes been expressed as the discretionary area of judgment see R v Director of Public Prosecutions, Ex p Kebeline [2000] 2 AC 326, 381, per Lord Hope, where he said: In this area difficult choices may have to be made by the executive or the legislature between the rights of the individual and the needs of society. In some circumstances it will be appropriate for the courts to recognise that there is an area of judgment within which the judiciary will defer, on democratic grounds, to the considered opinion of the elected body or person whose act or decision is said to be incompatible with the Convention. The notion of deference to the elected institutions has not been without criticism. In R (Lord Carlile of Berriew) v Secretary of State for the Home Department [2015] AC 945 Lord Sumption at para 22 said: As a tool for assessing the practice by which the courts accord greater weight to the executives judgment in some cases than in others, the whole concept of deference has been subjected to powerful academic criticism: see, notably, TSR Allan, Human Rights and Judicial Review: a Critique of Due Deference [2006] CLJ 671; J Jowell, Judicial Deference: Servility, Civility or Institutional Capacity? [2003] PL 592. At least part of the difficulty arises from the word, with its overtones of cringing abstention in the face of superior status. In some circumstances, deference is no more than a recognition that a Court of review does not usurp the function of the decision maker, even when Convention rights are engaged. Beyond that elementary principle, the assignment of weight to the decision makers judgment has nothing to do with deference in the ordinary sense of the term. It has two distinct sources. The first is the constitutional principle of the separation of powers. The second is no more than a pragmatic view about the evidential value of certain judgments of the executive, whose force will vary according to the subject matter. On the question of the usurpation of the function of the decision maker, in the circumstances of the present case, this simply does not arise. The Northern Ireland Assembly has not made a decision. Its largest party, at the time of the debate in February 2016, declared that further consultation and consideration were required. Other parties, such as the SDLP, who voted against the measure, were not irreversibly opposed to reform. Likewise, the evidential value of judgments of the executive holds no sway here because none has been made. The courts should feel no sense of inhibition in relation to the question of whether the current law offends article 8 of the Convention, in the light of the absence of any firmly expressed view of the democratic institutions of Northern Ireland. Substantial reliance was placed by the respondents on the decision of this court in R (Nicklinson) v Secretary of State for Justice [2015] AC 657. In that case the claimants, although suffering from irreversible physical disabilities rendering them immobile, were of sound mind and aware of their predicament. They wished to die at a time of their choosing but were not physically capable of ending their own lives unaided. They had a settled and considered wish that their death should be hastened by the requisite assistance. They sought judicial review on the basis that, under both common law and ECHR, those who provided them with assistance to bring about their death ought not to be subject to any criminal consequences. In particular, they applied for declarations that the law of murder, or of assisted suicide forbidden by section 2(1) of the Suicide Act 1961, was incompatible with the right to respect for private life under article 8 of ECHR. At para 116, Lord Neuberger said: There is a number of reasons which, when taken together, persuade me that it would be institutionally inappropriate at this juncture for a court to declare that section 2 is incompatible with article 8, as opposed to giving Parliament the opportunity to consider the position without a declaration. First, the question whether the provisions of section 2 should be modified raises a difficult, controversial and sensitive issue, with moral and religious dimensions, which undoubtedly justifies a relatively cautious approach from the courts. Secondly, this is not a case like In re G (Adoption: Unmarried Couple) where the incompatibility is simple to identify and simple to cure: whether, and if so how, to amend section 2 would require much anxious consideration from the legislature; this also suggests that the courts should, as it were, take matters relatively slowly. Thirdly, section 2 has, as mentioned above, been considered on a number of occasions in Parliament, and it is currently due to be debated in the House of Lords in the near future; so this is a case where the legislature is and has been actively considering the issue. Fourthly, less than 13 years ago, the House of Lords in R (Pretty) v Director of Public Prosecutions [2002] 1 AC 800 gave Parliament to understand that a declaration of incompatibility in relation to section 2 would be inappropriate, a view reinforced by the conclusions reached by the Divisional Court and the Court of Appeal in this case: a declaration of incompatibility on this appeal would represent an unheralded volte face. Several obvious points of distinction between the situation encountered in the Nicklinson case and this appeal are immediately apparent. True it may be that this case, like Nicklinson, gives rise to a difficult, controversial and sensitive issue, with moral and religious dimensions, but I would not accept that, in this instance, the incompatibility is difficult to identify or that it is difficult to cure. To the contrary, denial of a womans right to autonomy, which must surely be an indispensable aspect of her right to respect for a private life, gives rise to a readily identifiable incompatibility in cases of fatal foetal abnormality, rape or incest. And, the remedy for that incompatibility is easy to find. A simple amendment to the 1861 and 1945 Acts, permitting termination of pregnancy in those cases would achieve that aim. The other obvious point of distinction is that, unlike the position of Parliament in the Nicklinson case, the Northern Ireland Assembly is not about to actively [consider] the issue. The fourth factor identified by Lord Neuberger in Nicklinson (that a declaration of incompatibility would be a volte face) does not arise in this instance. It is to be remembered that a declaration of incompatibility does no more than indicate to the appropriate legislative body that a particular statutory provision has been deemed to be inconsistent with citizens Convention rights. As was said in paras 343 and 344 of Nicklinson: 343. An essential element of the structure of the Human Rights Act 1998 is the call which Parliament has made on the courts to review the legislation which it passes in order to tell it whether the provisions contained in that legislation comply with the Convention. By responding to that call and sending the message to Parliament that a particular provision is incompatible with the Convention, the courts do not usurp the role of Parliament, much less offend the separation of powers. A declaration of incompatibility is merely an expression of the courts conclusion as to whether, as enacted, a particular item of legislation cannot be considered compatible with a Convention right. In other words, the courts say to Parliament, This particular piece of legislation is incompatible, now it is for you to decide what to do about it. And under the scheme of the Human Rights Act 1998 it is open to Parliament to decide to do nothing. 344. What the courts do in making a declaration of incompatibility is to remit the issue to Parliament for a political decision, informed by the courts view of the law. The remission of the issue to Parliament does not involve the courts making a moral choice which is properly within the province of the democratically elected legislature. In advancing the case that the interests of the unborn child should be balanced against the article 8 rights of the mother, the respondents relied heavily on the decision of ECtHR in the case of Vo v France (2004) 40 EHRR 12. In that case, because of negligence on the part of her doctor, the applicant suffered injury to her amniotic sac, which necessitated the termination of her pregnancy. The foetus was between 20 and 24 weeks at termination. The doctor was charged with causing unintentional injury but was acquitted on the basis that the foetus was not, at that stage, a human person. The Strasbourg court observed that article 2 (which guarantees the right to life) was silent as to when life began and on the issue of who came within its protection. The court had not previously considered whether an unborn child had article 2 rights. Such case law as there was indicated that, at least in the context of abortion, an unborn child did not have a right to life and was not a person within the meaning of article 2. It had not been ruled out, however, that, in certain circumstances, the Convention might be applicable paras 76 80. It was legally difficult, indeed inappropriate, to impose one exclusive answer to the question of when life began on all the contracting states of the Council of Europe. This came within the margin of appreciation enjoyed by the various states para 82. It is, of course, important to note that Vo was a case where there was no conflict between the rights of the mother and the interests of the foetus. The mothers complaint was that her doctor had wrongly made it necessary to terminate her pregnancy. There was no occasion for the court to consider what weight should be given to the position of the foetus in circumstances where the womans article 8 rights were being interfered with. The Department of Justice has drawn attention to the observations of the Grand Chamber in Vo to the effect that there was no consensus among European states as to when life begins and suggests that, in effect, this is what NIHRC invites this court to recognise. Mr McGleenan also argues that since the Strasbourg court has not moved to exclude prenatal life, this court should find that article 2 extends to protect the human rights of the most vulnerable. He claims that a finding that article 2 did not extend protections to prenatal life would go against the very grain of the Convention. I do not accept these arguments. In the first place, the Grand Chamber in Vo had the opportunity to say that article 2 protected the life of the unborn child and explicitly refrained from so holding. More fundamentally, however, if article 2 were held to apply to unborn life, no abortion could ever be legal. In the context of abortion the right enshrined in article 2 would be absolute. In my view, the proper construction to be placed on Vo is that contracting states enjoy a margin of appreciation in deciding when human life begins but that this does not afford protection to the foetus under article 2. As NIHRC has submitted, no case in Strasbourg has recognised an article 2 entitlement for a foetus. Indeed, such a finding would run directly counter to the consensus across the vast majority of contracting states as to the right to abortion in cases of rape, incest and fatal foetal abnormality. While the laws of those states vary in terms of gestational limits, all apart from Ireland, Liechtenstein, Malta, San Marino and Andorra are unanimous in permitting abortion in those circumstances. Domestic law does not recognise rights vested in the unborn child. The courts of this country have consistently stated that the foetus has no separate rights in UK law, see In re MB [1997] 2 FLR 426; and Attorney Generals Reference (No 3 of 1994) [1998] AC 245. This line of jurisprudence mirrors that in the Canadian Supreme court in Winnipeg Child and Family Services (Northwest Area) v G (1997) 3 BHRC 611. In A, B and C v Ireland, ECtHR portrayed the balancing exercise between the first and second applicants article 8 rights and the interests of society in para 230 of its judgment thus: the Court must examine whether the prohibition of abortion in Ireland for health and/or well being reasons struck a fair balance between, on the one hand, the first and second applicants right to respect for their private lives under article 8 and, on the other, profound moral values of the Irish people as to the nature of life and consequently as to the need to protect the life of the unborn. The first applicant had become pregnant unintentionally. She was unmarried, unemployed and already had had four young children. They had been taken into care because of As inability to cope with them. She had a history of depression during all of her pregnancies. She travelled to England for an abortion, believing that she would not be able to obtain one in Ireland. Her case on article 8 was, therefore, firmly rooted in the claim that her rights under the article had been unjustifiably interfered with. The second applicant also became pregnant unintentionally. She had been advised by two different doctors that there was a substantial risk of an ectopic pregnancy but was aware by the time that she decided to travel to England for an abortion that the pregnancy was not ectopic. She did not feel able to care for a child at this time in her life and the case was principally concerned with whether an abortion should be available on well being grounds. In the case of the third applicant, C, she had been treated for three years with chemotherapy for a rare form of cancer. She had been advised that it was not possible to predict the effect of pregnancy on her cancer and that if she did become pregnant it would be dangerous for the foetus if she were to have chemotherapy during the first trimester. Her cancer went into remission and she became pregnant unintentionally. She had been unaware of this when she underwent a series of tests for cancer which were contraindicated during pregnancy. She consulted her general medical practitioner and several medical consultants. She claimed that she did not receive sufficient information as to the impact of the pregnancy on her health and life and the consequences of her prior tests for cancer on the well being of the foetus. At para 233, the court dealt with the margin of appreciation available to the Irish state in defence of its position that abortion should not be available to the states citizens: There can be no doubt as to the acute sensitivity of the moral and ethical issues raised by the question of abortion or as to the importance of the public interest at stake. A broad margin of appreciation is, therefore, in principle to be accorded to the Irish state in determining the question whether a fair balance was struck between the protection of that public interest, notably the protection accorded under Irish law to the right to life of the unborn, and the conflicting rights of the first and second applicants to respect for their private lives under article 8 of the Convention. At para 234, the court made the conventional point that a margin of appreciation would be narrowed where there was a relevant consensus among contracting states as to the circumstances in which abortion should be available. Rejecting the governments submission to the contrary, at para 235, the court said that there was indeed a consensus among a substantial majority of the contracting states of the Council of Europe towards allowing abortion on broader grounds than that accorded under Irish law. The first and second applicants could have obtained an abortion on request (according to certain criteria including gestational limits) in some 30 such states. The first applicant could have obtained an abortion justified on health and well being grounds in approximately 40 contracting states and the second applicant could have obtained an abortion justified on well being grounds in some 35 contracting states. Despite this significant consensus, the court concluded that the margin of appreciation had not been decisively narrowed. It is of critical importance that one should focus precisely on why the court arrived at that (which would at first sight appear to be an) anomalous result. The essential reasoning of the court on this issue is given at para 237: Of central importance is the finding in the above cited Vo case that the question of when the right to life begins came within the states margin of appreciation because there was no European consensus on the scientific and legal definition of the beginning of life, so that it was impossible to answer the question whether the unborn was a person to be protected for the purposes of article 2. Since the rights claimed on behalf of the foetus and those of the mother are inextricably interconnected, the margin of appreciation accorded to a states protection of the unborn necessarily translates into a margin of appreciation for that state as to how it balances the conflicting rights of the mother. It follows that, even if it appears from the national laws referred to that most contracting parties may in their legislation have resolved those conflicting rights and interests in favour of greater legal access to abortion, this consensus cannot be a decisive factor in the Courts examination of whether the impugned prohibition on abortion in Ireland for health and well being reasons struck a fair balance between the conflicting rights and interests, notwithstanding an evolutive Convention. interpretation of Two themes emerge from this passage. The first is that there is no consensus as to when life begins. The second is that the rights claimed on behalf of the foetus and those of the mother are interconnected. As to the first of these, as I have pointed out, full article 2 protection cannot be afforded the foetus otherwise no termination of pregnancy would be lawful. (Indeed, as will become clear, the ECtHR acknowledged this in para 238). The courts reference to article 2 is only explicable on the basis that some lesser form of protection for the interests of the unborn child can be recognised by an individual contracting state. The majority in A, B and C did not explain how that might work in practice. As to the interconnectedness of the interests of the mother and her unborn child, it is not made clear what, if any impact, this should have on the balancing exercise. The majority certainly found that there was an interference with the applicants rights, and with it came the obligation on the part of the state to justify that interference. What is not clear from the judgment is whether an adjustment to the way in which the interests of the mother and those of the community generally is required because the interests of the foetus and the mother are interconnected. The matter becomes even less clear, in my opinion, when one considers para 238 of the majoritys judgment: It is indeed the case that this margin of appreciation is not unlimited. The prohibition impugned by the first and second applicants must be compatible with a states Convention obligations and, given the Courts responsibility under article 19 of the Convention, the Court must supervise whether the interference constitutes a proportionate balancing of the competing interests involved. A prohibition of abortion to protect unborn life is not therefore automatically justified under the Convention on the basis of unqualified deference to the protection of pre natal life or on the basis that the expectant mothers right to respect for her private life is of a lesser stature. Nor is the regulation of abortion rights solely a matter for the contracting states, as the Government maintained relying on certain international declarations. However, and as explained above, the Court must decide on the compatibility with article 8 of the Convention of the Irish states prohibition of abortion on health and well being grounds on the basis of the above described fair balance test to which a broad margin of appreciation is applicable. This constitutes a reassertion of the need for a balancing of the competing interests. The passage does not explain how this is to be carried out, however, other than by referring again to the broad margin of appreciation, which, apparently, derives from the lack of consensus as to when life begins. Quite why a lack of consensus on that matter should prompt a broad margin of appreciation on the circumstances in which abortion should be permitted, and how it affects the balancing exercise in practice, remain unexplained. Some insight into the courts reasoning is to be gleaned from the first passage of para 239: From the lengthy, complex and sensitive debate in Ireland as regards the content of its abortion laws, a choice has emerged. Irish law prohibits abortion in Ireland for health and well being reasons but allows women, in the first and second applicants position who wish to have an abortion for those reasons, the option of lawfully travelling to another state to do so (Emphasis supplied) The background to the restriction of abortion in Ireland was that a referendum had been held in 1983, resulting in the adoption of a provision which became article 40.3.3 of the Irish Constitution which was in the following terms: The State acknowledges the right to life of the unborn and, with due regard to the equal right to life of the mother, guarantees in its laws to respect, and, as far as practicable, by its laws to defend and vindicate that right. In the referendum 53.67% of the electorate had voted, with 841,233 votes in favour of this amendment and 416,136 against. Although proposals in subsequent referenda which sought to restrict further the circumstances in which abortion might be available in Ireland were defeated, ECtHR in the A, B and C case plainly laid great store by the result of the 1983 poll. At para 126 of its judgment, for instance, it said that the applicants, in travelling abroad to obtain abortions, were conscious that they were going against the profound moral values of the majority of the Irish people. The government had submitted to the Strasbourg court that the protection accorded under Irish law to the right to life of the unborn was based on profound moral values deeply embedded in the fabric of society in Ireland and the legal position was defined through equally intense debate. At para 222 the court said of this argument: The Court recalls that, in the Open Door case [(1992) 15 EHRR 244], it found that the protection afforded under Irish law to the right to life of the unborn was based on profound moral values concerning the nature of life which were reflected in the stance of the majority of the Irish people against abortion during the 1983 referendum Clearly, therefore, the Strasbourg court in A, B and C considered that it should continue to deal with the question of justification of the restrictions on abortion in Ireland on the basis that they reflected the profound moral values of a majority of the Irish population. Whether that was justified on the basis of a referendum held 28 years before in which only 53.67% of the population voted is at least questionable but, in any event, no such assumption may be made in respect of the population of Northern Ireland. For the reasons that I have given, the vote in 2016 in the Assembly cannot be taken as an indication that the majority of the elected representatives opposed reform. To the contrary, it is evident that a majority was prepared to contemplate an amendment of the current law. For that reason alone, A, B and C v Ireland cannot be regarded as a significant decision in the present case. Quite apart from that consideration, however, such evidence as is available about the current views of the Northern Ireland population points clearly away from the conclusion that a majority of that countrys population wishes to maintain the law on abortion in its present form. In 2016 the Northern Ireland Life and Times Survey (NILT Survey) asked the Northern Ireland public for their views on a range of issues relating to abortion and abortion law. 1,208 respondents took part in the survey. These were chosen as representative of the various social groups in Northern Ireland. 58% of those surveyed considered that where the foetus had a fatal abnormality and would not survive beyond birth, abortion should definitely be legal. 23% felt that abortion in those circumstances should probably be legal, while 6% thought that it should probably be illegal and 10% believed that it should definitely be illegal. 4% were undecided. The respondents to the survey were also asked for their views on whether abortion should be legal in cases where a woman had become pregnant as a result of rape or incest. 54% said that abortion in those circumstances should definitely be legal. 24% believed that it should probably be legal. 8% considered that it should probably be illegal and 11% were of the view that it should definitely be illegal. 4% were undecided. At para 141 of his judgment, Horner J said that little weight can be attached to opinion polls as they are dependent on the nature of the questions asked, the circumstances in which they were asked and the nature of the persons sampled. Weatherup LJ agreed with that view see para 145 of his judgment. Both Horner J and Weatherup LJ considered that the only reliable indicator of the true nature of public opinion would be a referendum and, as Weatherup LJ observed, this was unlikely to take place in Northern Ireland since referenda were generally reserved for constitutional issues para 145. It is unquestionably correct that one should be wary of treating opinion polls, however well conducted, as an infallible guide to the views of the people on any particular issue. That is not to say, however, that they have no usefulness in counteracting a claim as to what the public mood or opinion might be. I, like Horner J and Weatherup LJ, am not disposed to accept the results of the NILT survey as providing positive evidence of the preponderant view of the people of Northern Ireland on the question of when abortion should be available. But I am not prepared wholly to discount the NILT survey. At the least, it serves to cast substantial doubt on the claim made by the respondents that opposition to the change in the law is firmly embedded in the minds and attitudes of the people of Northern Ireland. I have concluded, therefore, that when the balancing exercise is conducted in this case, the scales fall firmly in favour of a breach of article 8. Under the current law, no account is taken of a womans right to autonomy. Severe criminal sanctions are applied to those who obtain an abortion in Northern Ireland save in the narrowly circumscribed circumstances permitted by the 1861 and 1945 Acts. These undoubtedly have a significant chilling effect both on women who wish to obtain an abortion and doctors who might assist them. Abortion in cases where there is a fatal foetal abnormality or the pregnancy is the result of rape or incest is available throughout the vast majority of countries in Europe. The counterweight which the ECtHR found to exist in the A, B and C case (the profound moral values embedded in the fabric of Irish society) is not present in this much more limited instance. I am satisfied, therefore that the maintenance of sections 58 and 59 of the 1861 Act and section 25 of the 1945 Act in their present form constitutes a breach of article 8 of ECHR and would make a declaration of incompatibility in respect of those provisions in cases involving fatal foetal abnormality or where pregnancy has resulted from rape or incest. International law and standards In the High Court and the Court of Appeal NIHRC relied on a number of international treaties and judgments, decisions and general statements of treaty bodies. Horner J dealt with these in a section of his judgment entitled International Law and Obligations between paras 59 and 71. Again, I find myself in agreement with the judge in his observations and I do not repeat them. The Court of Appeal did not deal with these arguments. Although the traditional and orthodox view is that courts do not apply unincorporated international treaties (JH Rayner (Mincing Lane) Ltd v Department of Trade and Industry [1990] 2 AC 418, per Lord Oliver at 499 and R (Miller) v Secretary of State for Exiting the European Union [2018] AC 61), as Lord Hughes stated in R (SG) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] 1 WLR 1449, para 137, such treaties may be relevant in a number of ways. NIHRC relies on the third of these, namely, where the court is applying ECHR via the HRA. As Lord Hughes observed, the ECtHR has accepted that, in appropriate cases, the Convention should be interpreted in the light of generally accepted international law in the same field. Similar propositions are to be found in Convention jurisprudence, most notably, Demir v Turkey (2008) 48 EHRR 1272, para 69; Neulinger v Switzerland (2010) 54 EHRR 31, para 131. The international conventions on which the Commission principally relied were the 1979 Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the International Covenant on Civil and Political Rights (ICCPR), the United Nations Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment and Punishment (UNCAT), the Council of Europe (CoE) European Social Charter (ESC) and Resolution 1607 (2008) and the United Nations Convention on the Rights of the Child (UNCRC). The Commission has cited a number of authorities in which ECtHR has relied on conclusions of the CEDAW committee, the ICCPR committee, UNCAT, ESC and UNCRC. It is unnecessary for me to discuss those decisions, in light of the view that I have formed on the compatibility of the impugned legislative provisions. It is sufficient to record that the conclusion that the current law in Northern Ireland on abortion, as it affects fatal foetal abnormality and pregnancy as a result of rape and incest is incompatible with the Convention, is in harmony with many of those decisions. I express no view (because it is not necessary to do so) on the recent decisions of the United Nations Human Rights Committee in Mellet v Ireland (9 June 2016) and Whelan v Ireland (17 March 2017). The status of those decisions and their relevance in domestic proceedings such as these are far from straightforward subjects. I consider it prudent to defer consideration of those matters to a case where they are more directly in issue. Serious malformation of the foetus In para 64 et seq of his judgment, Horner J gave a number of reasons for refusing to hold that the unavailability in Northern Ireland of abortion in cases of serious malformation of a foetus was not incompatible with the Convention rights of women in that country. I agree with his reasoning and conclusions. The United Nations Convention on the Rights of Persons with Disabilities (UNCRPD) is one of the treaties specified as an EU treaty under the EC (Definition of Treaties) (UNCRPD) Order 2009. Section 6(2)(d) of the NIA forbids the Northern Ireland Assembly from making laws contrary to UNCRPD. That circumstance alone would not, of course, preclude a finding of incompatibility but, as Horner J pointed out, UNCRPD is based on the premise that if abortion is permissible, there should be no discrimination on the basis that the foetus, because of a defect, will result in a child being born with a physical or mental disability. That is a weighty factor to place in the balance, and one which is not present in cases of fatal foetal abnormality or rape and incest. This is particularly so in the light of UNCRPD Committees consistent criticism of any measure which provides for abortion in a way which distinguishes between the unborn on the basis of a physical or mental disability, relying on general principles and obligations (articles 1 4) and equality and non discrimination (article 5) see Horner J at para 65. As Horner J pointed out, many children born with disabilities, even grave disabilities, lead happy, fulfilled lives. In many instances they enrich and bring joy to their families and those who come into contact with them. Finally, the difficulty in devising a confident and reliable definition of serious malformation is a potent factor against the finding of incompatibility. For these and the other reasons given by the judge, I would refuse to make a declaration of incompatibility in the case of serious malformation of the foetus. LORD REED: (with whom Lord Lloyd Jones agrees) I respectfully agree with Lord Mance, for the reasons which he gives, that the Commission has no power to bring the present proceedings. The questions referred by the Attorney General for Northern Ireland should be answered in the negative and the appeal of the Commission should be dismissed. Given that conclusion, it would ordinarily follow that the court should express no view on whether the laws challenged by the Commission are or are not compatible with Convention rights. Since Parliament has not conferred on the Commission the power to bring proceedings challenging in the abstract the compatibility of legislation with Convention rights, it follows that it cannot have intended that the courts should determine that issue in proceedings of that nature. That conclusion is supported by the practical difficulties involved in attempting to carry out an abstract assessment of compatibility, unanchored to the facts of any particular case. Those members of the court who take a different view of the Commissions standing to bring these proceedings are however expressing their opinion on the question which it has placed before the court; and Lord Mance also considers it appropriate to do so for the reasons which he has explained. In those circumstances, it is as well that I should explain my own view. General observations It is difficult to envisage a more controversial issue than the proper limits of the law governing abortion. Diametrically opposed views, and every shade of opinion in between, are held with equal sincerity and conviction. Each side of the debate appeals to moral or religious values which are held with passionate intensity. In a democracy on the British model, the natural place for that debate to be resolved is in the legislature. The laws involvement in the question is strictly limited. Parliament has enacted the Human Rights Act 1998, which requires the courts to give effect to the Convention rights of individuals so far as that can be done compatibly with primary legislation, and, where primary legislation is incompatible with Convention rights, enables the courts to make a declaration to that effect. It has also enacted provisions in the devolution statutes under which legislation is outside the legislative competence of the devolved legislatures if it is incompatible with Convention rights, and the devolved administrations have no power to do any act which is incompatible with Convention rights: see, in relation to Northern Ireland, sections 6(2)(c) and 24(1)(a) of the Northern Ireland Act 1998. The Convention rights include the right not to be subjected to torture or to inhuman or degrading treatment, under article 3 of the European Convention on Human Rights and Fundamental Freedoms, and the right to respect for private and family life, under article 8. The article 3 right, like the right to life under article 2, and the prohibition on slavery under article 4, is expressed in absolute terms. The article 8 right, like the right to freedom of thought, conscience and religion, the right to freedom of expression, the right to freedom of assembly and association, and the right to freedom to marry, under articles 9 to 12 respectively, is expressed in terms which allow for restrictions: it is subject to such interferences as are in accordance with the law and are necessary in a democratic society in the interests of national security, public safety or the economic well being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others. Like a number of other Convention rights, it thus allows scope for contention as to how it is to be balanced with other competing interests. The distinction between absolute and qualified rights is fundamental to the operation of the Convention. The absolute rights reflect unconditional moral imperatives which are owed to individuals simply as human beings: not to kill them other than in certain specific situations, not to torture them, not to subject them to inhuman or degrading treatment, and not to hold them in slavery. Although the content of these rights is nuanced, and they might even be said to be subject, in substance, to certain qualifications, they are not in principle amenable to balancing against other interests. There is no scope for their being restricted by democratic policy choices. They are not issues on which the Convention accepts that there is scope for democratic debate. The courts task is not to assess the proportionality of murder, torture or enslavement, but to secure that the right to be protected against such treatment is respected. There is therefore, in principle, no room for the European Court of Human Rights to defer to the judgement of national authorities on the question whether conduct is in breach of the substantive, negative, obligations imposed by an absolute provision such as article 3: the question falls outside the scope of the principle of subsidiarity. The threshold for finding a breach of article 3 is correspondingly high: the court has repeatedly emphasised that ill treatment has to attain a minimum level of severity before it can be regarded as falling within the ambit of the article. The same high threshold applies when article 3 is applied by national courts. Thus, under article 3, there is in principle no scope for constitutional deference to the judgement of democratic institutions, but it is only where the stringent requirements of the article are satisfied that the courts will adopt such an uncompromising approach. The qualified rights are essentially different. They belong to individuals as social beings, and are subject to such limitations as are justifiable in the society in which they live. The Conventions acceptance that they are subject to restrictions that are necessary in a democratic society not just in any democratic society, but specifically in the particular society in question opens the door to democratic policy choices. The Convention accepts that there is room for reasonable minds to differ as to the policy which should be adopted. The role of the court is to determine whether the restrictions imposed in a particular case are justifiable on one of the permissible grounds, generally by applying a test of proportionality. The European Court of Human Rights can thus recognise the legitimacy of decision making at the national level, when applying a qualified provision such as article 8, and acknowledge that a judgement as to the restrictions which can appropriately be imposed in a given society is in principle best made by the authorities of that country. National courts can equally respect the judgements made by the democratic institutions of their society, applying the principle of proportionality in a manner which reflects the constitutional principle of the separation of powers. It follows that the extent, in practice, to which elements of social and ethical policy are taken out of the hands of national democratic processes and determined by judges depends on how stringently absolute provisions of the Convention, such as article 3, are applied by both the European and national courts, and on how much respect they pay to the judgement of national democratic institutions when applying a proportionality analysis to restrictions of qualified rights such as that recognised in article 8. At the European level, increasing emphasis has been placed on the critical role of national legislatures in defining human rights protection within the scope of the qualified rights. Increasing attention has therefore been paid to the question whether a legislative measure has been based on considered debate, including consideration of the impact of the measure on the Convention right in question, and of the necessity of the interference: see, for example, Donald and Leach, Parliaments and the European Court of Human Rights (2016), and Spano, The European Court of Human Rights: Subsidiarity, Process Based Review and Rule of Law (2018) HRLR 1. Parliamentary processes are regarded as especially important where the question involves the assessment of moral or ethical issues falling squarely within the scope of democratic debate, or where the legislative policy adopted reflects a historical tradition of giving legal effect to a particular conception of social or moral life. At national level, it is equally important that the courts should respect the importance of political accountability for decisions on controversial questions of social and ethical policy. The Human Rights Act and the devolution statutes have altered the powers of the courts, but they have not altered the inherent limitations of court proceedings as a means of determining issues of social and ethical policy. Nor have they diminished the inappropriateness, and the dangers for the courts themselves, of highly contentious issues in social and ethical policy being determined by judges, who have neither any special insight into such questions nor any political accountability for their decisions. Abortion law and Convention rights In interpreting the Convention in cases concerned with abortion, the European Court of Human Rights has demonstrated its awareness of the sensitivity of this topic and the extent to which it is better suited to determination by national authorities. It has never interpreted the Convention as requiring contracting states to introduce laws permitting abortion, either generally or in relation to particular categories of pregnancy. In its most recent consideration of the issue, in the case of A, B and C v Ireland (2010) 53 EHRR 13, the Grand Chamber rejected complaints by two Irish women that the prohibition on abortion in Ireland (a more restrictive prohibition than in Northern Ireland), by effectively compelling them to travel elsewhere if they wished to terminate their pregnancy, with similar consequences to those described in the present case, had violated their rights under articles 3 and 8 (the third applicant raised somewhat different issues relating to her specific situation). The court accepted that travelling abroad for an abortion was both psychologically and physically arduous for each of the applicants, and that it was also financially burdensome. Nevertheless, it pointed out that ill treatment must attain a minimum level of severity if it was to fall within the scope of article 3, and concluded that the facts alleged did not disclose a level of severity falling within the scope of the article. The complaint under article 3 was found to be manifestly ill founded. In relation to article 8, it was argued on behalf of the first and second applicants, as in the present case, that it had not been shown that the restrictions were effective in achieving the aim pursued: the abortion rate for women in Ireland was similar to states where abortion was legal since Irish women chose to travel abroad for abortions in any event. Even if the restrictions were effective, the first and second applicants questioned how the Irish state could maintain the legitimacy of their aim given the opposite moral viewpoint espoused by human rights bodies worldwide. They also suggested that the current prohibition on abortion in Ireland no longer reflected the views of the Irish people, arguing that there was evidence of greater support for broader access to legal abortion. It was pointed out that the financial burden of travel impacted particularly on poor women and their families. It was also emphasised that women experienced the stigma and psychological burden of doing something abroad which was a serious criminal offence in their own country. The extent of the prohibition on abortion in Ireland also stood in stark contrast to the more flexible regimes for which there was a clear European and international consensus. Reliance was placed, in that regard, on a range of international materials, including material produced by CEDAW. There was in addition said to be a lack of assistance by doctors, due to the chilling effect of a lack of clear legal procedures combined with the risk of serious criminal and professional sanctions. In response, the European Court of Human Rights referred to its previous case law finding that the protection afforded under Irish law to the right to life of the unborn was based on profound moral values concerning the nature of life. It referred to its finding in Vo v France (2004) 40 EHRR 12 that it was neither desirable nor possible to answer the question of whether the unborn was a person for the purposes of article 2 of the Convention, so that it would be equally legitimate for a state to choose to consider the unborn to be such a person and to aim to protect that life. In relation to the balancing exercise required by article 8, the court observed that the state authorities are, in principle, in a better position than the international judge to give an opinion, not only on the exact content of the requirements of morals in their country, but also on the necessity of a restriction intended to meet them (para 232). It continued: There can be no doubt as to the acute sensitivity of the moral and ethical issues raised by the question of abortion or as to the importance of the public interest at stake. A broad margin of appreciation is, therefore, in principle to be accorded to the Irish state in determining the question whether a fair balance was struck between the protection of that public interest, notably the protection accorded under Irish law to the right to life of the unborn, and the conflicting rights of the first and second applicants to respect for their private lives under article 8 of the Convention. (para 233) This broad margin of appreciation was not decisively narrowed by the consensus among other contracting states towards allowing abortion on broader grounds than under Irish law (a consensus which, the court said, made it unnecessary to look further to international trends and views): Of central importance is the finding in the above cited Vo case, referred to above, that the question of when the right to life begins came within the states margin of appreciation because there was no European consensus on the scientific and legal definition of the beginning of life, so that it was impossible to answer the question whether the unborn was a person to be protected for the purposes of article 2. Since the rights claimed on behalf of the foetus and those of the mother are inextricably interconnected, the margin of appreciation accorded to a states protection of the unborn necessarily translates into a margin of appreciation for that state as to how it balances the conflicting rights of the mother. It follows that, even if it appears from the national laws referred to that most contracting parties may in their legislation have resolved those conflicting rights and interests in favour of greater legal access to abortion, this consensus cannot be a decisive factor. (para 237) The court noted that the states margin of appreciation was not unlimited. It emphasised, however, that the law in Ireland was the product of considered democratic debate: From the lengthy, complex and sensitive debate in Ireland as regards the content of its abortion laws, a choice has emerged. Irish law prohibits abortion in Ireland for health and well being reasons but allows women, in the first and second applicants position who wish to have an abortion for those reasons, the option of lawfully travelling to another state to do so. (para 239) The court also placed some emphasis on the fact that the prohibition of abortion in Ireland was accompanied by measures designed to assist certain categories of women in obtaining access to abortion facilities elsewhere: On the one hand, the Thirteenth and Fourteenth Amendments to the Constitution removed any legal impediment to adult women travelling abroad for an abortion and to obtaining information in Ireland in that respect. Legislative measures were then adopted to ensure the provision of information and counselling about, inter alia, the options available including abortions services abroad, and to ensure any necessary medical treatment before, and more particularly after, an abortion. The importance of the role of doctors in providing information on all options available, including abortion abroad, and their obligation to provide all appropriate medical care, notably post abortion, is emphasised in CPA [Crisis Pregnancy Agency] work and documents and in professional medical guidelines. (ibid) In those circumstances, although the court accepted that the process of travelling abroad for an abortion was psychologically and physically arduous, especially for women in impoverished circumstances, and also accepted that it might be the case that the prohibition on abortion was to a large extent ineffective in protecting the unborn, in the sense that a substantial number of women took the option of travelling abroad for an abortion, nevertheless the first and second applicants complaints under article 8 were rejected. Having regard to the right to lawfully travel abroad for an abortion with access to appropriate information and medical care in Ireland, the court did not consider that the prohibition in Ireland of abortion for health and well being reasons, based as it was on the profound moral views of the Irish people as to the nature of life and as to the consequent protection to be accorded to the right to life of the unborn, exceeded the margin of appreciation accorded to the Irish state. The prohibition consequently struck a fair balance between the womens right to respect for their private lives and the rights invoked on behalf of the unborn. The third applicants complaint under article 8, which succeeded, concerned a different issue (the absence of a procedure by which she could have established whether she qualified for a lawful abortion in Ireland on grounds of the risk to her life of her pregnancy), and is of no relevance to the present case. The present case In the light of the European courts relatively recent judgment in A, B and C, it appears to me to be impossible to hold that the legislation in force in Northern Ireland is incompatible with article 3. In that regard, I again agree with the reasoning of Lord Mance. As he states, even when one takes into account that the present case focuses on pregnancies where the foetus is abnormal or has been conceived as the result of a sexual offence, it is apparent that the great majority of Northern Irish women wishing to terminate their pregnancy in such circumstances are able to do so by travelling elsewhere. The consequences are similar to those with which A, B and C was concerned, and do not meet the threshold for a violation of article 3. Some individual cases have been put forward in which it is said that the women in question were unable to travel abroad as a result of the failure of health professionals to provide them with appropriate assistance and advice, and endured harrowing experiences as a consequence. It may be that such cases, if established in individual applications, would be found to involve a violation of article 3. But, disturbing though those cases are, the possibility that there might be a violation of article 3 in an individual case cannot warrant a declaration that the legislation, as such, is incompatible with article 3. If a breach of article 3 were established in an individual case, the court might grant declaratory relief, but the terms of the relief would reflect the circumstances which had led to the violation. Whether it was appropriate to grant a declaration that the legislation itself was incompatible, because it could not be given effect in a manner which was compliant with article 3, would depend on a close examination of the facts of the case, and of the role which the legislation had played in bringing about the violation. In relation to article 8, I agree with Lord Mance that no declaration of incompatibility should be made, but I have reached that conclusion for somewhat different reasons. I would emphasise at the outset a point which this court has made on several occasions, namely that an ab ante challenge to the validity of legislation on the basis of a lack of proportionality faces a high hurdle: if a legislative provision is capable of being operated in a manner which is compatible with Convention rights in that it will not give rise to an unjustified interference with article 8 rights in all or almost all cases, the legislation itself will not be incompatible with Convention rights: Christian Institute v Lord Advocate [2017] HRLR 19, para 88. As in relation to article 3, the judgment in A, B and C appears to me to provide valuable guidance. The practical effect of the law in Northern Ireland, as in Ireland, is to require women to travel elsewhere if they wish to terminate their pregnancy. The general prohibition on termination for reasons other than a danger to life, or a danger of serious injury to health, is accompanied by guidance to doctors and other professionals on the information and advice which should be provided to women who wish to obtain a termination (Department of Health, Social Services and Public Safety, Guidance for Health and Social Care Professionals on Termination of Pregnancy in Northern Ireland, March 2016). That guidance advises health professionals that they can provide women who cannot lawfully obtain an abortion in Northern Ireland with information about abortion services lawfully available in other jurisdictions, and about their freedom to travel there. It also advises health professionals about their responsibility to provide aftercare, counselling and other support services to women who have had a termination of pregnancy carried out outside Northern Ireland. In those circumstances, I am not persuaded that the issues arising under article 8 in relation to the law in Northern Ireland are in general materially different from those considered in A, B and C, even if one confines ones attention to women undergoing a pregnancy where the foetus is abnormal or has been conceived as the result of a sexual offence. They are free to travel to England or Scotland, where they can have their pregnancy terminated free of charge in an NHS hospital, provided that the termination is lawful under the law in force there. They should be able to obtain advice about termination from health professionals in Northern Ireland, and they should receive whatever care they may require in Northern Ireland after the termination has been carried out. Most of the arguments relied on by those who would hold the law in Northern Ireland to be incompatible with article 8 are the same as those rejected by the European court in A, B and C. Of course, to the extent that the law places restrictions on the availability of abortion, it treats the moral value of protecting the life of the unborn as outweighing the womans personal autonomy and freedom to control her own life. That is true of any restriction on abortion. Of course, the law applies even to those who do not share the ethical perspective which underpins it. That is the nature of law: it applies to everyone, whether they agree with it or not. It may be that the law is largely ineffective to protect the unborn, because the great majority of women who wish to have abortions do so anyway, travelling to England for that purpose. Nevertheless, a society cannot be bound under the Convention to permit behaviour which it considers morally repugnant, merely because a prohibition can be obviated. On the contrary, the fact that a prohibition imposed for moral reasons can be obviated may tend to support its proportionality, since it imposes less of a restriction in reality on those who do not share the moral values which underpin it. As in relation to article 3, the court has been provided with accounts of individual cases which, if they were established in individual applications, would almost certainly demonstrate violations of article 8, due principally, it would appear, to shortcomings in the provision of advice and support by health care professionals. But the possibility that there might be violations of article 8 in some individual cases does not warrant a bald declaration that the legislation, as such, is incompatible with article 8. The principal difference between this case and A, B and C is that it raises the question whether it is proportionate to treat the moral value of protecting the life of the unborn as outweighing the womans personal autonomy in situations where the foetus is abnormal or was conceived as the result of a sexual offence: an issue which arises in a particularly acute form in cases where the foetus suffers from a fatal abnormality. There is no doubt that such situations can result in emotional anguish for the women involved, and that there can be circumstances in which, if the woman is unable to obtain a termination of the pregnancy, its continuation may pose a serious risk to her health and well being. Nevertheless, the difficulty in the form of the present appeal is that it does not invite the court to investigate the facts of individual cases where Northern Irish women undergoing particular categories of pregnancy have been unable to obtain an abortion, and to decide whether they justify the conclusion that the legislation itself is incompatible with article 8. Instead, the court is invited, as an abstract exercise, to define categories of pregnancy in respect of which a termination must be legally available if the legislation is to be compatible with article 8. That approach requires the court to address a number of difficult issues: for example, whether to treat some categories of pregnancy differently from other pregnancies at all; whether, if so, to draw the line at foetuses with fatal abnormalities which will prevent their surviving until birth or for more than a short time after birth, or to include foetuses with serious but non fatal abnormalities; whether to differentiate between healthy foetuses conceived as the result of sexual offences and other healthy foetuses; and whether, if so, to draw the line at foetuses conceived as the result of offences which were non consensual, or to include those conceived as the result of consensual offences. These are highly sensitive and contentious questions of moral judgement, on which views will vary from person to person, and from judge to judge, as is illustrated by the different views expressed in the present case. They are pre eminently matters to be settled by democratically elected and accountable institutions, albeit, in the case of the devolved institutions, within limits which are set by the Convention rights as given effect in our domestic law. A process of democratic consideration of these issues has begun in Northern Ireland and has not yet been completed, as a result of the breakdown of devolved government in January 2017. It is important that a review of these issues should be completed. It appears from the accounts of individual cases put forward in these proceedings that there is every reason to fear that violations of the Convention rights will occur, if the arrangements in place in Northern Ireland remain as they are. In those circumstances, these issues need to be discussed and determined in a democratic forum, which is where they pre eminently belong. In the meantime, the courts will have to deal with any individual cases which may come before them. But, in the present proceedings, there is no need for this court to pre empt democratic debate on changes to the law or to the arrangements for the provision of health services, or, by determining the requirements of the Convention in advance of that debate, to take the matter out of the hands of democratically accountable institutions. LADY BLACK: The Commissions competence to seek the relief claimed I agree with Lord Mance that, for the reasons he gives, the Commission has no power to bring the present proceedings. From that it would follow that the questions referred by the Attorney General for Northern Ireland should be answered in the negative and the Commissions appeal dismissed. Despite this conclusion, I feel I should express my view as to the substance of the Commissions appeal, as other members of the court have done. Article 3 I agree with Lord Mances view that, for the reasons that he sets out in paras 94 to 103 of his judgment, the Commissions argument that the legislation in Northern Ireland is incompatible with article 3 of the ECHR must be rejected. Article 8: Generally I also agree with what Lord Mance says about article 8 in the passage of his judgment commencing at para 104 and concluding at para 121, but I do not entirely share his view in relation to the compatibility of the legislation with article 8. He considers the law incompatible in cases where the pregnancy has resulted from rape or certain other sexual crimes, and in cases of fatal foetal abnormality, that is to say where the foetus cannot survive at all after birth or will die very shortly after delivery. I would only wish to express the view that the law is incompatible in cases of fatal foetal abnormality. Article 8: Cases other than fatal foetal abnormality As to cases which do not concern fatal foetal abnormality, I find myself in agreement with Lord Reeds reasoning in relation to article 8. He has pointed out the similarity between the arguments advanced unsuccessfully in A, B and C v Ireland, and those relied upon in the present case. Although it is important to note that A, B and C did not concern the particular categories of pregnancy with which we are concerned, it persuades me that, in relation to pregnancies where the foetus has a non fatal abnormality or has been conceived as the result of a sexual offence, I must bring myself to accept two related propositions. First, notwithstanding the widespread consensus (in Europe and internationally) in favour of more flexible abortion regimes, it must be accepted that there may be room for different moral viewpoints. Secondly, it must be accepted that the balance between the protection of the life of the unborn child, the interests of society, and the rights of the pregnant woman may be struck in different ways. In these circumstances, and given the difficulty identified by Lord Reed as to where to draw the line in accommodating the categories of case with which we have been concerned, as well as the current lack of certainty about what moral views are presently held by the population of Northern Ireland, I do not feel that it would be appropriate at this stage to express a positive conclusion that the legislation itself is incompatible with article 8. In so saying, I also have in mind that, as Lord Mance says at para 92 of his judgment, other factors can play a part, in addition to the legislation itself, in producing adverse treatment of which complaint may be made. He points out that where one is able to examine the specific circumstances that have arisen, the cause of the impugned treatment may, in some cases, prove to have been not the applicable legislation itself, but rather the way that it was (mis)understood or (mal)administered. That is one of the reasons why an abstract challenge to legislation presents such a difficulty. In such circumstances, alleviating the hardship of women in the categories of case that we have been asked to consider, may involve a combination of amending the law and taking practical steps to ensure that proper information and support is available to the women concerned, countering what Lord Kerr has described (para 176) as the significant chilling effect on women who wish to obtain an abortion and doctors who might assist them. Given the diverse circumstances covered by the categories upon which we have been asked to focus (as to which, see for example Lord Mances discussion of the position in relation to sexual crimes, commencing at para 127 of his judgment), the solutions require democratic debate. However, Lord Reed has made observations about the worrying situation disclosed in the accounts placed before us, and about the need for the review that had been begun in Northern Ireland to be resumed and completed. I share his view about the importance of this and about the fact that there is every reason to fear that violations of the Convention rights of women in Northern Ireland will occur if arrangements there remain as they are. Article 8: Fatal foetal abnormality In relation to foetuses with fatal abnormalities, I would go further than Lord Reed does. I do not consider the present law in Northern Ireland to be compatible with article 8 of the ECHR in relation to this category of case. Where the unborn child cannot survive, in contrast to the other categories of pregnancy with which we are concerned, there is no life outside the womb to protect. In those circumstances, even if allowance is made for the intrinsic value of the life of the foetus, the moral and ethical views of society cannot, it seems to me, be sufficient to outweigh the intrusion upon the autonomy of the pregnant woman, and her suffering, if she is obliged to carry to term a pregnancy which she does not wish to continue. Furthermore, as Lady Hale points out, and as can be seen from the experiences of some of those whose circumstances were placed before the court, a problem such as this is often diagnosed comparatively late in the pregnancy. This is likely to make the process of termination more demanding for the woman than it would be at an earlier stage in the pregnancy, and to compound the problems that exist for any woman who has to travel abroad for the procedure, including by significantly restricting the time available for making arrangements to have the termination carried out in Great Britain so as to avoid it having to be carried out at an advanced stage of the pregnancy.
UK-Abs
Ss. 58 and 59 of the Offences Against the Person Act 1861 (an Act of the UK Parliament) (the 1861 Act) and s.25(1) of the Criminal Justice Act (NI) 1945 (an Act of the Northern Ireland legislature) (the 1945 Act) criminalise abortion in Northern Ireland. It is not however a crime to receive or supply an abortion where it is done in good faith for the purpose of preserving the life of the mother. Further it is not a crime to receive or supply an abortion where the continuance of the pregnancy will make the woman a physical or mental wreck the Bourne exception following R v Bourne [1939] 1 KB 687. The Northern Ireland Human Rights Commission (NIHRC) challenges the compatibility of the law of Northern Ireland with Art 3 (the prohibition of torture and of inhuman or degrading treatment), Art 8 (the right of everyone to respect for their private and family life) and Art 14 (the prohibition of discrimination) of the European Convention on Human Rights (ECHR) insofar as that law prohibits abortion in cases of (a) serious malformation of the foetus, (b) pregnancy as a result of rape, and/or (c) pregnancy as a result of incest. NIHRC seeks declarations to that effect under s.6 and s.4 of the Human Rights Act 1998 (HRA 1998). These proceedings are brought in the name of NIHRC, rather than the name of particular victims. Examples of particular individuals however were relied on by NIHRC during the proceedings. In the High Court Horner J held that NIHRC had standing to bring these proceedings in its own name. Further Horner J held that sections 58 and 59 of the 1861 Act were incompatible with Art 8 insofar as they criminalise abortion in cases of (a) fatal foetal abnormality, (b) rape up to the date when the foetus is capable of being born alive and (c) incest up to the date when the foetus is capable of being born alive. He made a declaration of incompatibility to that effect under s.4 HRA 1998. He did not consider that the law was incompatible with Art 3. The Northern Ireland Court of Appeal (NICA) held that NIHRC had standing to bring these proceedings. However, in three differently reasoned judgments it concluded that there was no incompatibility with any of the articles of the ECHR. NIHRC appeals the decision of NICA. NICA has also referred a reference from the Attorney General for Northern Ireland on devolution issues under para 33 of sch 10 to the Northern Ireland Act 1998 (NIA 1998). The reference relates to whether NIHRC has standing to bring these proceedings, specifically, whether NIHRC has the power to institute human rights proceedings or to seek a declaration of incompatibility other than in relation to an identified unlawful act. A majority of the court dismisses the appeal. A majority (Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones) concludes that NIHRC does not have standing to bring these proceedings. As such, the court does not have jurisdiction to make a declaration of incompatibility in this case. A minority of the court (Lady Hale, Lord Kerr and Lord Wilson) considers that NIHRC does have standing to bring these proceedings. A majority of the court (Lady Hale, Lord Mance, Lord Kerr and Lord Wilson) does however consider that the current law in Northern Ireland is disproportionate and incompatible with Art 8 ECHR insofar as that law prohibits abortion in cases of (a) fatal foetal abnormality, (b) pregnancy as a result of rape and (c) pregnancy as a result of incest. Lady Black joins that majority on (a) but not on (b) or (c). A minority of the court (Lord Reed, Lady Black on (b) and (c) and Lord Lloyd Jones) considers that it is not possible to conclude in the abstract, in proceedings of the present nature (as distinct from individual applications), that the current law is disproportionate or incompatible with Art 8. A majority of the court (Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones) concludes that the current law, in the abstract, is not incompatible with Art 3 ECHR. A minority of the court (Lord Kerr and Lord Wilson) disagrees and considers that it is. Lady Hale expresses sympathy with the view expressed by Lord Kerr but does not consider it necessary to decide on incompatibility in relation to Art 3 in light of her decision on Art 8. Standing Lord Mance (with whom Lord Reed, Lady Black and Lord Lloyd Jones agree) considers that NIHRC does not have standing to bring these proceedings. They were not instituted by identifying any unlawful act or any potential victim of it [73]. NIHRC relies on s.69(5)(b) of the NIA 1998 for its power to institute these proceedings. These proceedings constitute human rights proceedings under s.71(2C)(a)(ii) and are therefore subject to the restrictions in s.71(2B) [54]. Under s.71(2B) and (2C), where NIHRC is instituting human rights proceedings, it need not be a victim, but there must be an actual or potential victim of an unlawful act to which the proceedings relate [54 and 56]. S.71(2C)(b) states that an expression used in s.71(2B) has the same meaning as the same expression used in s.7 HRA 1998. S.7 HRA 1998 refers to s.6(1) for the concept of unlawful act. It does not apply to an authoritys act which was (a) compelled by a provision of primary legislation or was (b) to give effect to or enforce one or more provisions of or made under primary legislation which cannot be read or given effect in a way which is compatible with ECHR rights. Further, under s.6(6) HRA 1998, an act does not include a failure to introduce or lay before Parliament a proposal for legislation or make any primary legislation [57]. It follows that NIHRCs powers under ss.69 and 71 NIA 1998 do not include either instituting or intervening in proceedings where the only complaint is that primary legislation, such as the 1861 Act, is incompatible with the ECHR because such proceedings would not involve any unlawful act within the meaning of ss.6 and 7 HRA 1998 and consequently s.71 NIA 1998 [58]. It is no surprise that Parliament did not provide for NIHRC to have capacity to pursue what would amount to unconstrained actio popularis regarding the interpretation or compatibility of primary legislation with Convention rights [61]. The 1945 Act, as an act of a devolved legislature, is not primary legislation. It might have been open to NIHRC to claim that the failure of the Northern Ireland Assembly to repeal or amend s.25 constituted an unlawful act within the meaning of ss.6 and 7 HRA 1998. However, NIHRC, pursuant to s.71(2B), would still have to demonstrate that there is or would be one or more victims of the unlawful act. That restriction is not satisfied by a general assertion that the failure to abrogate or amend s.25 is likely to give rise to victims. There must be a specific and identifiable victim who is or would be the victim of an unlawful act [72]. Even if NIHRC could establish standing regarding the 1945 Act it would have little practical effect given the ongoing effect of the 1861 Act [72]. A minority of the court (Lady Hale, Lord Kerr and Lord Wilson) concludes that NIHRC does have standing to bring these proceedings. Lady Hale and Lord Kerr (with whom Lord Wilson agrees) hold that there are two separate species of challenge under the HRA 1998. One is for victims to bring proceedings in respect of an unlawful act of a public authority, or to rely on such an unlawful act in other proceedings, pursuant to s.7(1). The other is to challenge the compatibility of legislation under sections 3 and 4 irrespective of whether there has been any unlawful act by a public authority. NIHRC has standing to bring such proceedings by virtue of s.69(5)(b) [17 and 183 184]. In Lady Hales view section 71(2B) and (2C) deal only with proceedings brought by NIHRC or interventions by NIHRC in proceedings brought by others in respect of claims that a public authority has acted or proposes to act unlawfully. But it does not apply to or limit the general power of the NIHRC to challenge the compatibility of legislation under sections 3 and 4 of HRA 1998. The unlawful act means the unlawful act alleged in the proceedings so does not apply where no such unlawful act is alleged [18]. In Lord Kerrs view the only restriction on NIHRCs power to bring proceedings under s.69(5)(b) NIA 1998 is that the proceedings must involve law or practice relating to human rights [184]. Under s.71(2B)(c) the NIHRC may act only if there is or would be one or more victims of the unlawful act. Would be victims indicates an intention that NIHRC should be able to act pre emptively [195]. The majority decision departs in his view from well established authority that an interpretation of a statute which gives effect to the ascertainable will of Parliament should be preferred to a literal construction which will frustrate the legislations true purpose [202 213]. S.71(2B)(c) can reasonably be interpreted to mean that NIHRC may act where it is clear that there have been and will be victims of the implementation of the provisions of the 1861 and 1945 Acts, which is satisfied in this case [195 and 208]. If NIHRC is unable to bring proceedings to protect the rights of women in the three situations in this case, they will be deprived of an effective remedy under Art 13 ECHR [199]. Article 8 The courts decision on standing means that there is no possibility of making a declaration of incompatibility under s.4 HRA 1998. However, a majority of the court (Lady Hale, Lord Mance, Lord Kerr and Lord Wilson) considers that the current law in Northern Ireland on abortion is disproportionate and incompatible with Art 8 insofar as it prohibits abortion in cases of (a) fatal (as distinct from serious) foetal abnormality (b) pregnancy as a result of rape and (c) pregnancy as a result of incest. If an individual victim did return to court in relation to the present law, a formal declaration of incompatibility would in all likelihood be made. Lady Hale agrees with the reasons provided by Lord Mance and Lord Kerr and writes separately only on a few points. Lady Black joins the majority in relation to (a) but not in relation to (b) and (c). The majority on this issue starts from the position that the current law is an interference with the right of pregnant women and girls to respect for their private lives, guaranteed by Art 8(1). The question is whether the Northern Ireland abortion law is justified under Art 8(2) [9, 104, 263 and 265]. The majority concludes that it is not. Lord Mance and Lord Kerr (with whom Lord Wilson agrees) hold that the general clarity of the existing law on abortion was not the focus of the present appeal. Lord Mance holds that it is clear that all the categories in issue are prohibited under the 1861 and 1945 Acts [81, 105 and 269]. Lady Hale considers that it is no more uncertain than other areas of law which rely upon the application of particular concepts to particular facts [20]. All of the majority accept that the current law pursues a legitimate aim: the moral interest in protecting the life, health and welfare of the unborn child [21, 105 and 278]. Lady Hale highlights that the community also has an interest in protecting the life, health and welfare of the pregnant woman [21]. It is accepted that the unborn are not right holders under Art 2 ECHR and do not have a right to life in domestic law or in Northern Ireland [21, 24, 94 and 305 306]. The law as it currently stands already permits abortion to protect not only the life of the pregnant woman but also her mental health from serious long term injury [24 and 106 108]. The majority refer to the opinion polls produced by NIHRC demonstrating strong public support for changes in the law [24, 110 and 322]. Lord Mance accepts that views elicited by opinion polls cannot prevail over the decision to date by the Northern Ireland Assembly which is to maintain the existing policy and law [111]. However, Lady Hale and Lord Kerr (with whom Lord Wilson agrees) state that this evidence cannot be lightly dismissed when the argument is that profound moral views of the public are sufficient to outweigh the grave interference on the rights of pregnant women and a change in the law [24 and 325]. All of the majority however agree that the Working Group established by the Northern Irish Assembly demonstrates that the Assembly is not necessarily opposed to amending the law in the future but that any such solution has been precluded by the cessation of the Assemblys activities since January 2017 [112 and 228 229]. The majority holds that the banning of abortion in all the categories at issue is rationally connected to the legitimate aim [113 and 279]. The real issue on this appeal is whether the interference with womens Art 8 rights is necessary in a democratic society in that it strikes a fair balance between the rights of the pregnant woman and the interests of the foetus by maintaining the 1861 and 1925 Acts [21, 117 and 287]. The majority all refer to the institutional role of the UKSC in relation to the legislature. A distinction is drawn between the margin of appreciation applied by Strasbourg and considerations of institutional competence required in a domestic context [37 28, 115 and 289 295]. Lady Hale remarks that this is not a matter on which the domestic legislature enjoys a unique competence. Lady Hale, Lord Mance and Lord Kerr all highlight that Parliament, through s.4 HRA 1998, has expressly given the high courts power to rule on compatibility of legislation with the ECHR [39 and 292]. The majority on this issue also distinguishes the present case from R (Nicklinson) [2014] UKSC 38 in reaching a decision that it is institutionally appropriate for the Supreme Court to consider the compatibility of the existing law on abortion with the Convention rights. The Northern Irish Assembly is not about to actively consider the issue of abortion there is no assurance as to when it will resume its activity [40, 117 and 299]. There is no question of a balance being struck between the interests of two different living persons as in Nicklinson. The unborn foetus is not in law a person, although its potential must be respected [119]. Nicklinson was also decided against a background where the attitude maintained by the UK Parliament reflected a similar attitude across almost the whole of Europe. Northern Ireland, in contrast, is almost alone in the strictness of its current law. The close ties between the different parts and peoples of the UK make it appropriate to examine the justification for differences in this area with care [120]. Lord Kerr also distinguishes the present case from Nicklinson on the basis that the present incompatibility is not difficult to identify or cure. A simple amendment to the 1861 and 1945 Acts permitting termination of pregnancy in the three situations would achieve that aim [298]. Fatal foetal abnormality: the majority and Lady Black conclude that there is no community interest in obliging the woman to carry a pregnancy to term where the foetus suffers from a fatal abnormality [28, 133, 326, 368 and 371]. Lord Mance remarks that the present law treats the pregnant woman as a vehicle and fails to attach any weight to her personal autonomy [125]. The present law also fails to achieve its objective in the case of those who may choose to travel for an abortion, merely imposing on them harrowing stress and inconvenience as well as expense, while it imposes severe and sometimes life time suffering on the most vulnerable who, because of lack of information, or support are forced to carry their pregnancy to term [27, 28 and 126]. Serious foetal abnormality: By contrast, it is not possible to impugn as disproportionate and incompatible with Art 8 legislation that prohibits abortion of a foetus diagnosed as likely to be seriously disabled. A disabled child should be treated as having equal worth in human terms as a non disabled child [31, 133 and 331]. Rape: the majority considers that the current law is disproportionate in cases of rape and that the rights of the pregnant woman should prevail over the community interest in the continuance of the pregnancy [27, 127 and 326]. Lord Mance mentions that NIHRC made it clear that its submissions on rape included offences against children under the age of 13 who could not give consent in law but that it had not focused on sexual offences (not described as rape) committed against girls aged 13 or more but under the age of 16 [44]. Lady Hale, however, considers that for the purposes of this case, it is unnecessary to distinguish between offences where the child is under 13 and offences where the child is under 16 where no offence is committed if the perpetrator reasonably believed she was over 16. It is presumed under the law of Northern Ireland that children under 16 are incapable of giving consent to sexual touching, including penetration of the vagina by a penis, irrespective of the perpetrators belief and there is no reason to exclude such pregnancies from this case [25]. Lord Mance considers that causing a woman to become pregnant and bear a child against her will is an invasion of the fundamental right to bodily integrity. Neither Lord Mance nor Lady Hale consider the possibility of travel for an abortion as a justification for the law but rather a factor demonstrating its disproportionality [27 and 127]. Incest: A blanket prohibition of abortion in cases of incest is not proportionate [27, 132 and 326]. Lord Mance (with whom Lady Hale agrees) points to the fact that the most typical cases of incest involve abusive relationships with young or younger female relatives. The agony of having to carry a child to birth and have a potential responsibility and lifelong relationship with the child thereafter against the mothers will cannot be justified [27 and 132]. Lord Reed (with whom Lord Lloyd Jones and Lady Black (on pregnancy resulting from rape and incest) agree) would not make a declaration of incompatibility under Art 8. They are not convinced that the three situations are, as abstract categories, materially different from those explored in the case of A, B and C v Ireland (2011) 53 EHRR 13. Women are free to travel to obtain abortions on the NHS in England and Scotland. They should be provided with advice about termination, by medical professionals in Northern Ireland, and should receive whatever care they may require there after the termination has been carried out [357 and 369]. The court has been provided with information about individual cases which, if established in individual applications, would almost certainly demonstrate violations of Art 8, due principally to shortcomings in the provision of medical advice and support. However, this does not warrant a bald declaration that the legislation as such is inherently incompatible with Art 8 [359]. The difficulty with the form of the present appeal is that it does not enable the court to examine the facts of individual cases [361 and 369]. Defining categories of pregnancy in which abortions should be permitted involves highly sensitive and contentious questions of moral judgment [362]. They are pre eminently matters to be settled by democratically elected and accountable institutions [362 and 369]. That democratic consideration has not been completed in Northern Ireland as a result in the breakdown of devolved government in January 2017. However, there is every reason to fear that violations of the ECHR will occur if the arrangements in place in Northern Ireland remain as they are [363 and 370]. Article 3 A majority of the court (Lord Mance, Lord Reed, Lady Black and Lord Lloyd Jones) would not have made a declaration that the law of Northern Ireland is incompatible with Art 3 ECHR [34 and 100]. Art 3 is an absolute right. The treatment complained of has to reach a minimum level of severity in order to contravene it [95]. The majority all agree that there will be some women in the three situations in this case, whose suffering on being denied an abortion in Northern Ireland will reach the threshold of severity required to label the treatment inhuman or degrading. But Lord Mance notes that it cannot be said that legally significant number of women denied an abortion in such circumstances will suffer so severely that her Art 3 rights have been violated [82]. Whether there has been any violation also depends on the facts of the individual case [34, 95, 103, 354 and 367]. Lord Mance (with whom Lord Reed, Lady Black and Lord Lloyd Jones agree) considers that the cases relied on by NIHRC to demonstrate breach of Art 3: RR v Poland (2011) 53 EHRR 31, P & S v Poland [2012] 129 BMLR 120 and Tysiac v Poland (2007) 45 EHRR 412 were decided on an assessment of the actual circumstances of the conduct relied on. They were not decided on the basis of a risk that the State might commit a breach of Art 3 [100, 353 and 367]. Lord Mance (with whom Lord Reed, Lord Lloyd Jones and Lady Black agree) notes that women are able to travel elsewhere to obtain an abortion. Although this can be a distressing and expensive experience, it does not generally or necessarily give rise to distress of such severity so as to infringe Art 3: see A, B and C [100, 353 and 367]. A minority (Lord Kerr with whom Lord Wilson agrees) would have made a declaration that the law of Northern Ireland is incompatible with Art 3 ECHR insofar as it prohibits abortion in the three categories of case presented [262]. Even though some mothers may not, there is a risk that some mothers who are denied an abortion in cases (a), (b) and (c) above will suffer profound psychological trauma which is sufficient to give rise to a violation of Art 3 [235]. The state owes individuals an obligation to protect them from the risk of a breach of Art 3 as well as a positive duty to provide appropriate healthcare treatment where the denial of that treatment would expose victims to ill treatment contrary to Art 3 [235]. The risk of women and girls being subject to ill treatment contrary to Art 3 is sufficient to trigger the states positive obligations. Travelling to England or Scotland to obtain an abortion does not avoid this. The fact of being required to do so is in itself sufficient to expose women and girls to the risk of inhuman and degrading treatment [238]. Lady Hale expresses sympathy with the view expressed by Lord Kerr (with whom Lord Wilson agrees) but does not consider it necessary to decide on incompatibility in relation to Art 3 in light of her decision on Art 8 [34].
This appeal raises a short issue as to the requirements for valid service of a completion notice so as to bring a newly completed building within liability for non domestic rates. The statutory framework Liability for non domestic rates depends on a property being entered as a hereditament in the rating list. The completion notice procedure, under section 46A of and Schedule 4A to the Local Government Finance Act 1988, as inserted, (the Act) provides a mechanism whereby a new building, which has not yet been occupied, may be brought into the rating list. Subject to any appeal, a validly served completion notice has the effect that the building to which it relates is deemed to have been completed on the date specified in the notice. It is then shown in the rating list as a separate hereditament (or hereditaments), and is valued as if it were complete (section 46A(2)). Once the building is so shown in the rating list, its owner (or its occupier if it becomes occupied) becomes liable to an assessment for non domestic rates. The procedure is set out in Schedule 4A. Paragraph 1(1) of Schedule 4A provides that, if it comes to the notice of a billing authority that the work remaining to be done on a new building in its area can reasonably be expected to be completed within three months, it shall (unless the valuation officer directs otherwise) serve on the owner of the building a notice, known as a completion notice. Paragraph 1(2) contains a similar provision in respect of a new building that has been completed. The completion notice must (a) specify the building to which it relates and (b) state the day which the billing authority proposes as the completion day (para 2(1)). In the case of a building which has yet to be completed, the completion day proposed should be: [s]uch day, not later than three months from and including the day on which the notice is served, as the authority considers is a day by which the building can reasonably be expected to be completed. (para 2(2)) In the case of a building which appears to have been completed, it should be the day on which the notice is served (para 2(3)). A person on whom the completion notice is served may appeal to the Valuation Tribunal on the ground that the relevant building has not been or cannot reasonably be expected to be completed by the day stated in the notice (para 4(1)). Where an appeal is not withdrawn or dismissed, the completion day shall be such day as the tribunal shall determine (para 4(2)). An appeal must be brought within 28 days after the date on which the appellant received the completion notice (Non Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 (SI 2009/2268) regulation 19(1), made under paragraph 8(2)(a) of Schedule 11 to the Act). Paragraph 8, which deals with service, provides: Without prejudice to any other mode of service, a completion notice may be served on a person (a) by sending it in a prepaid registered letter, or by the recorded delivery service, addressed to that person at his usual or last known place of abode or, in a case where an address for service has been given by that person, at that address; in the case of an incorporated company or body, (b) by delivering it to the secretary or clerk of the company or body at their registered or principal office or sending it in a prepaid registered letter or by the recorded delivery service addressed to the secretary or clerk of the company or body at that office; or (c) where the name or address of that person cannot be ascertained after reasonable inquiry, by addressing it to him by the description of owner of the building (describing it) to which the notice relates and by affixing it to some conspicuous part of the building. General provision for the service of statutory notices by local authorities is also made by section 233 of the Local Government Act 1972. In particular it provides: (7) If the name or address of any owner, lessee or occupier of land to or on whom any document mentioned in subsection (1) above is to be given or served cannot after reasonable inquiry be ascertained, the document may be given or served either by leaving it in the hands of a person who is or appears to be resident or employed on the land or by leaving it conspicuously affixed to some building or object on the land. As to the date of service, under such statutory provisions, section 7 of the Interpretation Act 1978 provides: Where an Act authorises or requires any document to be served by post (whether the expression serve or the expression give or send or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post. Factual background In January 2009 the respondent (UKI) began the redevelopment of a building at 1 Kingsway to provide 130,000 sq ft of office space. In February 2012 the appellant council informed UKIs agents that it intended to serve a completion notice specifying a completion date of 1 June 2012. It asked the agents to confirm the identity of the owner of the building, but the agents declined to do so without obtaining instructions from their client which were not forthcoming. At that time the building was managed by Eco FM (Eco) under a contract with UKI, but Eco had no authority to accept service of documents on its behalf. On 5 March 2012, the council delivered a completion notice by hand to the building, specifying 1 June 2012 as the completion date. The notice was addressed to the Owner, 1 Kingsway, London WC2B 6AN. It was given to a receptionist employed by Eco, who scanned and emailed a copy of the notice to UKI. It was received by UKI not later than 12 March 2012. On 29 March 2012 an appeal was lodged by UKIs agents against the completion notice, purportedly on behalf of Eco, on the grounds (inter alia) that the service of the notice was invalid. On 7 May 2013, the premises were brought into the list with a rateable value of 2,750,000 with effect (as subsequently corrected) from 1 June 2012. This was met by a proposal on behalf of UKI that the entry be deleted. The proposal was not accepted by the valuation officer and was transmitted to the Valuation Tribunal for determination on appeal. The appeals against both the completion notice and the inclusion of the premises in the list were consolidated and heard by the Valuation Tribunal (President Graham Zellick QC), which allowed the appeal. That decision was reversed by the Upper Tribunal (Deputy President Martin Rodger QC) [2015] RA 433 but re instated by the Court of Appeal (Gloster, Macur, and King LJJ) [2017] PTSR 1606. The Court of Appeal (para 37) recorded as common ground: i) that the state of the premises at the relevant time was such that, but for the deeming effect of a completion notice, the premises could not have been entered in the rating list; ii) that the name and address of UKI as owner of the building could have been ascertained by the council by reasonable inquiry, notwithstanding the fact that UKI had instructed the agents not to divulge its name. Accordingly, the council could not rely on the means of service on the premises permitted by paragraph 8(c) of Schedule 4A to the Act, or section 233(7) of the Local Government Act 1972. The issue for this court, as identified in the agreed statement of facts and issues, is whether the completion notice was validly served on the date that it was received by UKI, in circumstances where: i) it was not delivered directly to UKI by the council, but passed through the hands of the receptionist employed by Eco, who was not authorised for that purpose by either party; ii) it was received by UKI in electronic rather than paper form. Service the authorities It is common ground that, by virtue of the opening words of paragraph 8 of Schedule 4A to the Act, the three specific methods there set out do not exclude other methods of service available under the general law. There is no serious dispute as to what that entails. In Sun Alliance and London Assurance Co Ltd v Hayman [1975] 1 WLR 177, 185 CA (a case under the Landlord and Tenant Act 1954), Lord Salmon said: According to the ordinary and natural use of English words, giving a notice means causing a notice to be received. Therefore, any requirement in a statute or a contract for the giving of a notice can be complied with only by causing the notice to be actually received unless the context or some statutory or contractual provision otherwise provides (No distinction is drawn in the cases between serving and giving a notice: see Kinch v Bullard [1999] 1 WLR 423, 426G.) To similar effect in Tadema Holdings Ltd v Ferguson (1999) 32 HLR 866, 873, Peter Gibson LJ said (in a case relating to service of a notice under the Housing Act 1988): Serve is an ordinary English word connoting the delivery of a document to a particular person. Specific statutory provisions such as paragraph 8 are designed, not to exclude other methods, but rather to protect the server from the risk of non delivery. As was said by Slade LJ in Galinski v McHugh (1988) 57 P & CR 359 (in relation to a similar service provision in the Landlord and Tenant Act 1927 section 23(1)): This is a subsection appearing in an Act which contains a number of provisions requiring the giving of notice by one person to another and correspondingly entitling that other person to receive it. In our judgment, the object of its inclusion . is not to protect the person upon whom the right to receive the notice is conferred by other statutory provisions. On the contrary, section 23(1) is intended to assist the person who is obliged to serve the notice, by offering him choices of mode of service which will be deemed to be valid service, even if in the event the intended recipient does not in fact receive it. (p 365, original emphasis) Indirect service More controversial, and relevant in the present case, is whether it matters that the notice reaches the intended recipient, not directly or through an agent authorised for that purpose, but by the action of a third party. On this point we were referred to an observation (obiter) of Sir Robert Megarry V C in Townsends Carriers Ltd v Pfizer Ltd (1977) 33 P & CR 361. That concerned a break option in a lease exercisable by either party upon the giving of written notice to the other. The premises were used by U Ltd, an associated company of the defendant, and correspondence relating to rent demands and other matters had been between that company and WT Ltd, an associated company of the claimant. It was held that a notice given by U Ltd to WT Ltd was valid, on the basis of an assumed general agency arising from past conduct, even though neither company was expressly authorised for that purpose. The Vice Chancellor also noted but rejected an argument that the relevant clause required the tenant to give notice to the landlord, and that, although the landlord had ultimately received the notice, no notice had ever been given to the landlord as such. He said: I do not think that a requirement to give notice is one that excludes the indirect giving of notice. The question is whether the notice has been given, not whether it has been given directly. If the notice emanates from the giver and reaches the ultimate recipient, I do not think that it matters if it has passed through more hands than one in transit. (p 366) Electronic communication The other main issue in this appeal is whether it matters that the notice was received by UKI in electronic form. We were referred to no direct authority on service of a scanned copy of a notice by email. However, Mr Kokelaar for the council relied on two earlier authorities in which delivery of notices by fax was accepted as valid. In Hastie & Jenkerson v McMahon [1990] 1 WLR 1575 the Court of Appeal accepted that service of a list of documents by fax was valid service for the purposes of a consent order in civil proceedings under the Rules of the Supreme Court. In the leading judgment, Woolf LJ said: . are there any legal reasons why advantage should not be taken of the progress in technology which fax represents to enable documents to be served by fax, assuming that this is not contrary to any of the Rules of the Supreme Court? The purpose of serving a document is to ensure that its contents are available to the recipient and whether the document is served in the conventional way or by fax the result is exactly the same. [Counsel] on behalf of the defendant submits that what is transmitted by fax is not the document but an electronic message. However, this submission fails to distinguish between the method of transmission and the result of the transmission by fax. What is produced by the transmission of the message by fax, admittedly using the recipients machine and paper, is the document which the other party intended should be served. What is required is that a legible copy of the document should be in the possession of the party to be served. This fax achieves. I therefore conclude that service by fax can be good service subject to any requirement of the order requiring service of a particular document and any requirement of the Rules of the Supreme Court. (pp 1579 1580). I emphasise that if a document is served by a means for which neither the rule nor statute provides, there will only be good service if it be proved that the document, in a complete and legible state, has indeed been received by the intended recipient. I realise that transmission of documents by fax is a relatively recent development. If, in a particular case, what emerges from the recipients fax machine is not, or may not be, complete or is not wholly legible, a court will be justified in concluding that the document has not been properly served. (p 1585) Agreeing, Glidewell LJ added: The third member of the court Lloyd LJ, while not dissenting, expressed some misgivings. He would have preferred to wait for consideration of the question by the Supreme Court Procedure Committee. As he said, while it is easy enough for courts to give a benevolent construction to the rules to take account of some new contrivance, such as the telex machine or the fax, it is not so easy to see what the repercussions will be, and what other consequential amendments to the rules may be required (p 1586). The other authority to which we were referred on this point was PNC Telecom plc v Thomas [2003] BCC 202. Sir Andrew Morritt V C held that a letter sent by fax constituted a validly deposited notice to convene an extraordinary general meeting under section 368 of the Companies Act 1985. The Vice Chancellor noted that by that time the Electronic Communications Act 2000 (2000 Act) enabled specific modifications to be made to authorise communication by electronic means under existing statutes, including the Companies Act. Some such modifications had been made, but not in respect of section 368. Counsel before him had been unable to indicate the basis on which some of these provisions had been singled out for amendment but others not (para 14). In any event, he did not think that the 2000 Act could be regarded as designed to introduce fax as a permitted means of communication for that had been done on a case by case basis over the preceding 30 years or so (para 16). Among other authorities he referred to the words of Woolf LJ set out above. He also noted with agreement observations of Laddie J in Inland Revenue Comrs v Conbeer [1996] BCC 189, on the potential advantages of delivery by fax in terms of reliability and speed. He saw no reason why fax transmission should not give rise to a valid deposit under section 368, in circumstances where no one had been misled or disadvantaged, and the ultimate result is exactly the same as if it had been transmitted in person or by post (para 22). The principal dispute on this part of the case is whether these authorities can be relied on as extending to a copy sent by email, having regard in particular to the provisions made in that respect by the 2000 Act. Section 8 empowers Ministers to make regulations to modify primary and secondary legislation for the purpose of authorising or facilitating the use of electronic communications. Electronic communication is widely defined as including any form of communication transmitted while in an electronic form (section 15(1)). In respect of non domestic rates (and council tax) specific regulations have been made for the use of electronic billing in certain circumstances, and subject to particular restrictions: see the Council Tax and Non Domestic Rating (Electronic Communications) (England) Order 2003 (SI 2003/2604). Thus for example provision is made for the service of certain forms of notice to be given to a person by sending the notice by electronic communication to such address as may be notified by that person for that purpose (see article 4). No such modification has been made in respect of completion notices. The judgments below In the Valuation Tribunal (at para 38), the President thought that, even accepting the formulation by Peter Gibson LJ in the Tadema Holdings case (para 15 above), there had been no delivery of the actual notice to the owner. In his view intended recipients were entitled to receive the original of any formal notice, in the absence of an expression of willingness to accept electronic service. The Upper Tribunal took a different view. The Deputy President found it difficult to accept that: in a case where the vital information has successfully been imparted to the person who needs to receive it, and that person has acted on it by exercising the right of appeal, the need for discipline and regularity in the exercise of the statutory power should be sufficiently powerful considerations to require that the recipients liability be determined on the basis that the information had never been received. (para 46) Unlike the President he did not see that this approach offended any public interest consideration. Referring to the dicta in the Townsends Carriers case, he said: If the mode of service selected by the billing authority achieves its objective I find it very difficult to see why the public interest or the interests of justice to which the President referred should render service legally effective in some cases but ineffective in others. In my judgment a document which arrives in the hands of the intended recipient by an unorthodox route has still been served (para 47) In sending on the notice to UKI, the receptionist had been doing no more than one would expect of a responsible employee of a company engaged to manage the building (para 48). He dealt more shortly with the issue of electronic communication, saying simply that, there being no dispute that the electronic copy had been received, he could see no justification for distinguishing between notices in different forms (para 49). The Court of Appeals conclusion turned principally on what they understood to be the natural or normal usage of the statutory language. As Gloster LJ said; The relevant statutory requirements of section 46A of and paragraph 1 of Schedule 4A to the 1988 Act for present purposes are: (a) that the billing authority (b) shall serve the required completion notice (c) on the owner of the building. For the billing authority merely to leave the notice with a third party, not authorised to accept service of the notice on the owners behalf, or, indeed, to effect service on the authoritys behalf, in the hope, or with the intention, that the notice will somehow be brought to the attention of the owner, and where a copy of the notice or its contents are in fact subsequently communicated to the owner by the third party, does not, on any natural or normal usage of the words serve and on, constitute service on the owner by the authority. In other words, the concept of service on the owner by the authority in paragraph 1 of Schedule 4A to the 1988 Act cannot be construed as including effectively all methods of communication or transmission, which ultimately result in the information in the notice (or the notice itself) being brought to the attention of, or delivered to, the owner, in circumstances where the information in the document, or the document itself, has been communicated to the owner by a third party who is not authorised either to accept, or effect, service . (para 44) She also attached weight to the statutory context: it is a taxing statute which imposes rating liability on a property owner on an assumed basis. The timetable for a taxpayer to raise an appeal against the completion notice is strict and is based upon the date upon which it received the completion notice. In those circumstances there are obvious policy considerations which point to a need for certainty and precision as to the date of service (para 49) On the question of indirect service she did not think that the observations of Sir Robert Megarry V C could be treated as of general application: It is clear from subsequent cases that Megarry V Cs dictum has not been generally applied to justify an expansion of the concept of service to embrace all situations where ultimately the person on whom the relevant notice or document ought to be served has come to know of the contents of the notice, irrespective of whether he or his authorised agent have actually been served. Thus, for example, in Fagan v Knowsley Metropolitan Borough Council (1985) 50 P & CR 363 this court rejected the application of the dictum in circumstances where what was relevant was the mandatory statutory code for service under section 30 of the Compulsory Purchase Act 1965. The fact that the service provisions were mandatory in that case does not detract from UKIs submission that what has to be considered in each case is what are the necessary requirements for service under the relevant statutory scheme. Likewise, a number of cases have emphasised the well established principle that service on a solicitor who does not have authority to accept service of the particular notice on behalf of his client is not valid service on that party. Glen International Ltd v Triplerose Ltd [2007] L & TR 28; [2007] EWCA Civ 388 makes clear that the Townsends case can be distinguished as being a decision on the particular facts (see para 22) rather than laying down any generally applicable principle. In the Glen International Ltd, the Court of Appeal did not go on to consider whether the solicitors had passed a copy of the notice to their client. But it is implicit in that judgment that onward transmission would not have rendered ineffective service effective. (paras 51 52) On the issue of electronic communication, while inclining to a different view from that of the Upper Tribunal, she preferred to leave the matter undetermined in the absence of more detailed submissions on the statutory regime (para 54). The submissions in this court For the council, Mr Kokelaar adopts the reasoning of the Upper Tribunal, as supported by the authorities to which I have referred. In summary, he submits, the words serve and service in Schedule 4A should be given their ordinary meaning, that is delivery of a document to a particular person. Under general principles, a notice (under statute or contract) is regarded as having been served if it has been received by the intended recipient. In this case the notice was received by UKI and served its statutory purpose of communicating to UKI the completion date proposed by the council, and it was acted upon by UKI. As in Townsends Carriers the fact that it passed through the hands of the receptionist did not invalidate service. Alternatively, the receptionist must be taken as having been impliedly authorised to pass it on to UKI. In relation to service by email, the reasoning of the authorities on service by fax is indistinguishable. There is nothing in Schedule 4A, or in the 2000 Act, to exclude service of a completion notice by electronic means, where the ultimate result is exactly the same as if a hard copy had been transmitted in person or by post. For UKI Mr Kolinsky QC supports the reasoning of Gloster LJ in the Court of Appeal. In particular he adopts her three stage analysis of the relevant provision, arguing that the council failed at the first stage, that is the requirement for service on the owner by the billing authority. Whatever method is adopted, it must be the authority itself (acting through its officers) which effects the service. Service through a third party, which is neither the owners agent nor duly authorised to act on the authoritys behalf, is not service on the owner by the authority. Further, Mr Kolinsky submits that the involvement of the Eco receptionist broke the necessary chain of causation. Mr Kokelaars suggestion that the receptionist had implied authority to act for the council was misplaced, having regard to the detailed statutory scheme governing delegation of local authority functions. It would have been different if for example the council had used a process server under its contractual control to carry out personal service. Use of such a method might be authorised as incidental to the authoritys functions under section 111(1) of the Local Government Act 1972, without involving any unlawful delegation. He relies on statements by the Court of Appeal as to the permissible use of contractors or agents under that section, in Crdit Suisse v Allerdale Borough Council [1997] QB 306, 359G per Hobhouse LJ. Mr Kolinsky also repeats Gloster LJs emphasis on the need for certainty in a taxing statute. In that context he relies on paragraph 2(3) of Schedule 4A to the Act where (in relation to a completed building) the authority is required to specify the date of service as the date from which liability is to begin. There can be no such certainty if the council has no control over the process by which the notice reaches the recipient. On the issue of electronic communication, he points to the fact that ministerial intervention was considered necessary to authorise the use of such communication in some aspects of the non domestic rating scheme, while no such intervention was made in respect of completion notices. This carefully drawn scheme would be otiose if there existed some common law rule permitting the use of electronic service as a generality. Further the limitation of electronic service to cases where the ratepayer had assented by providing an address for electronic service would make no sense if the authority were able to serve without the ratepayers consent. Discussion The method of attempted service adopted by the council was far from ideal. As already noted, the purpose of specific provisions such as paragraph 8 is to provide reliable methods of service and to minimise the risk to the council of non delivery. Given that, as is now accepted, the name and address of the owner could have been discovered by reasonable inquiry, it is not clear why this was not done. We have had no satisfactory explanation for this failure, nor indeed for the failure to take corrective action when the objection to service was raised. Nothing in this judgment should be taken as detracting from the good sense of the Presidents observation (Valuation Tribunal, para 43): In practice, billing authorities would be well advised to secure the protection afforded by paragraph 8 and not serve outside those provisions unless confident that the circumstances are such that good service will be effected. However, the two legal issues on which the judges below disagreed are of some general importance and merit consideration by this court. Hence the grant of permission to appeal. Indirect service The difference between the Upper Tribunal and the Court of Appeal comes down to a narrow point. The Upper Tribunal thought that, since the notice issued by the council reached the hands of the intended recipient, it mattered not that the route was unorthodox. Gloster LJ thought that this approach failed to give effect to the concept of service on the owner by the authority (emphasis added). For my part I would accept that the means by which the notice arrives at its destination is not wholly immaterial. In itself the reference to the billing authority is simply to identify the body responsible for service; it says nothing about how that is to be done. The real issue, as I see it, adopting the words of Lord Salmon in the Sun Alliance case, is whether the authority caused the notice to be received by UKI. In other words there must be a sufficient causal connection between the authoritys actions and the receipt of the notice by the recipient. Mr Kolinsky appeared implicitly to accept that analysis, but he submitted that the chain of causation was broken by the interposition of a third party in the form of the Eco receptionist. He challenged Mr Kokelaars suggestion that the receptionist was given implied authority to serve the notice, at least in any formal sense. To that extent I would agree with him; but it is unnecessary and unrealistic in my view to introduce concepts of agency or statutory delegation into this simple sequence of events. As the Deputy President accepted, the Eco receptionist, on receiving from the council officer a hand delivered notice addressed to the Owner, did no more than would reasonably be expected of a responsible employee in that position: that is, pass on the notice to the person to whom it was addressed. It was the natural consequence of the councils actions. Mr Kolinsky objected that the receptionist was not under the control of the council, as would have been for example a process server acting under contract. However, causation does not necessarily depend on control. Mr Kokelaar countered with the example of a notice correctly addressed, but mistakenly delivered to a neighbouring address and then passed on by the occupant to the intended recipient. Like him I see no reason why that should not be treated as effective service under ordinary principles of causation, even though the friendly neighbour was not under the control of either party. This approach to indirect service is consistent with that of Sir Robert Megarry V C in the Townsends Carriers case. I would agree with Gloster LJ (see para 29 above) that his words cannot be read as intended to embrace all situations where ultimately the intended recipient has come to know of the contents of the notice. There needs to be actual receipt of the notice, and a sufficient causal link with the actions of the council. Of the cases to which she referred, Fagan v Knowsley Metropolitan Borough Council provides no assistance, because, as she acknowledged, it was concerned with a mandatory statutory code. More pertinent perhaps is her reference to cases relating to service of notice on solicitors. As she says, service of a notice on a solicitor who does not have his clients authority to accept service of the particular notice is not in itself valid service. She cited Glen International which concerned service of a notice by the landlord in relation to leasehold enfranchisement. It is true that, having found that the tenants solicitor on whom the notice was served had no authority to accept it, the court did not go on to inquire whether the notice was in fact passed on to the tenant. It is also true, as Gloster LJ noted, that Townsends Carriers case was referred to as a decision on the particular facts, but that seems to have been on the agency issue. There is no indication that the case was used to support an argument based on indirect service; nor indeed that there was any evidence that the solicitor had passed on the actual notice, nor any reasonable expectation that he would do so. That situation is readily distinguishable in my view from the purely mechanical role played by the receptionist in this case. A further argument against the Upper Tribunals approach was the potential uncertainty it leaves as to the date of service. As Mr Kolinsky points out, it may be important not only for both parties, but also for the valuation officer, to be able to identify the date of service with precision. Thus, in respect of a building which appears to have been completed, the date of service must be identified in the notice (paragraph 2(3)), and, subject to appeal, is treated as the completion day so triggering liability to rates. In respect of a building yet to be completed the proposed completion day must be not later than three months from and including the date of service (Schedule 4A, paragraph 2(2)). The difficulty with this argument, in my view, is that some uncertainty in this respect is inherent in the legislation, in which neither the methods of service, nor the dates of service in different circumstances, are exhaustively defined. The simple answer for the authority may be that, where the date of service is critical, it is able to choose a statutory method which eliminates or minimises the risk of the notice being rendered invalid by failure to specify the correct date of service. If it chooses a non statutory method it must bear that risk. The risk of prejudice to the owner is limited, since outside the statutory grounds service depends on actual receipt by the intended recipient, and the time for appeal is also related to receipt. Electronic communication In spite of the misgivings expressed by Lloyd LJ in the Hastie case, it does not appear that the reasoning of the majority has been questioned in any subsequent cases, before or since the enactment of the 2000 Act. Notably it was applied in the PNC Telecom case notwithstanding the recognition that modifications had been made under the 2000 Act to other parts of the Companies Act 1985. Although those cases were concerned specifically with fax transmission of a copy of the relevant notice, no good reason has been suggested for distinguishing that from transmission by email as in this case. Given that this was the state of the general law immediately preceding the enactment of the 2000 Act, Parliament must be taken to have legislated against that background. Mr Kolinsky would need to point to some provision of that Act which expressly or impliedly restricts the previous law, or overall inconsistency sufficient to overcome the general presumption that Parliament does not intend to change the common law (see Bennion on Statutory Interpretation sections 25.6, 25.8). In my view he was unable to do so. Nor did he refer to any authority to support such a submission. It is not enough that the new law may overlap in certain respects with the general law. The purpose of the 2000 Act, as stated in its long title, was to make provision to facilitate the use of electronic communications . There is nothing to indicate an intention to cut down the existing law. Against the background of the detailed scheme established by or under the 2000 Act, it may seem anomalous that the same result may be achieved in some cases by more informal means. However, the purpose of the Act and Orders made under it is to provide a clear and certain basis for the routine use of such methods by authorities. That purpose is not undermined by a conclusion that under general principles, and on the particular facts of this case, the notice was successfully served. Conclusion For these reasons, in respectful disagreement with the Court of Appeal, I would allow the appeal and restore the order of the Upper Tribunal.
UK-Abs
Liability for non domestic rates depends on a property being entered as a hereditament in the rating list. Section 46A of and Schedule 4A to the Local Government Finance Act 1988 (the 1988 Act) create a completion notice procedure, by which a new building that has not yet been occupied may be brought into the rating list. Where a completion notice has been validly served the building to which it relates is deemed to have been completed on the date specified in the notice. It is then shown in the rating list as a separate hereditament, valued as if it were complete, and its owner or occupier becomes liable to an assessment for non domestic rates. In January 2009, the respondent (UKI) began the redevelopment of a building at 1 Kingsway. In February 2012, the appellant council informed UKIs agents that it intended to serve a completion notice specifying a completion date of 1 June 2012. The building was being managed by Eco FM (Eco), under a contract with UKI, but Eco had no authority to accept service on UKIs behalf. On 5 March 2012, the council delivered a completion notice by hand to the building, specifying 1 June 2012 as the completion date. It was addressed to Owner, 1 Kingsway, London WC2B 6AN. It was given to a receptionist employed by Eco, who scanned and emailed a copy of the notice to UKI, which received it by no later than 12 March 2012. On 29 March 2012, an appeal was lodged by UKIs agents against the completion notice, on behalf of Eco, on the grounds that the service of the notice was invalid because it was not served on UKI but on the receptionist for Eco. On 7 May 2013, the premises were brought into the rating list with effect from 1 June 2012. UKI proposed that the entry be deleted due to invalid service, but this was not accepted by the valuation officer. The Valuation Tribunal allowed the appeal against the completion notice and the inclusion of the premises in the rating list. The Upper Tribunal reversed that decision, but it was re instated by the Court of Appeal. The issue for the Supreme Court is whether the completion notice was validly served on the date it was received by UKI, in circumstances where: (i) it was not delivered directly but passed through the hands of Ecos receptionist, who was not authorised for that purpose by either party; and (ii) it was received in electronic, rather than paper form. Indirect service The Supreme Court unanimously allows the appeal and restores the order of the Upper Tribunal. Lord Carnwath gives the lead judgment. (i) The means of service prescribed by the statute are not exclusive. Under ordinary principles the real issue is whether the council caused the notice to be received by UKI [36]. Regarding the interposition of a third party, in the form of the Eco receptionist, it is unnecessary and unrealistic to introduce concepts of agency or statutory delegation. As the Upper tribunal observed, the Eco receptionist did no more than would reasonably be expected of a responsible employee in that position. It was the natural consequence of the councils actions [37]. Causation does not depend on control. For example, if a notice is correctly addressed, but mistakenly delivered to a neighbour who passes it on to the intended recipient, there is no reason why that should not be treated as effective service under ordinary principles of causation, even though that neighbour was not under the control of either party [38]. Arguments about possible uncertainty are not persuasive, since some uncertainty in this respect is inherent in the legislation, in which neither the methods of service nor the dates of service in different circumstances are exhaustively defined. Where the date of service is critical, a billing authority may choose a statutory method of service that eliminates or minimises the risk of invalidity by failure to specify the correct date of service. If it chooses a non statutory method, it must bear that risk. The risk of prejudice to the building owner is limited, as outside the statutory methods service depends on actual receipt by the intended recipient [42 43]. (ii) Electronic communication Before the enactment of the Electronic Communications Act 2000 (the 2000 Act), the state of the law was such that service by fax was valid. There is no good reason for distinguishing transmission by fax from transmission by email as in this case. Parliament must be taken to have legislated against that background. The respondent has not been able to indicate any provision of the 2000 Act that expressly or impliedly restricts the previous law, nor an overall inconsistency sufficient to overcome the general presumption that Parliament does not intend to change the common law [44 45]. The purpose of the 2000 Act and Orders made under it is to provide a clear and certain basis for the routine use of electronic methods by authorities. That purpose is not undermined by a conclusion that under general principles, and on the particular facts of this case, the notice was successfully served by email. Therefore, the property was correctly brought into the rating list with effect from 1 June 2012 [46].
This appeal concerns the Hague Convention on the Civil Aspects of International Child Abduction (25 October 1980) (the Abduction Convention). It raises general questions relating to: the place which the habitual residence of the child occupies in the (1) scheme of that Convention, and (2) whether and when a wrongful retention of a child may occur if the travelling parent originally left the home State temporarily with the consent of the left behind parent or under court permission, and the agreed or stipulated time for return has not yet arrived. In addition, the facts of the present case raise particular questions whether the trial judges conclusions were properly open to him upon: (a) the habitual residence of the children in the case; and (b) whether a wrongful retention in fact occurred, and if so when. The 1980 Hague Abduction Convention The Abduction Convention is in force for some 97 States. Its preamble records the desire of those States: to protect children internationally from the harmful effects of their wrongful removal or retention and to establish procedures to ensure their prompt return to the State of their habitual residence Article 1 states the objects of the Convention as follows: to secure the prompt return of children wrongfully (a) removed to or retained in any Contracting State; and (b) to ensure that rights of custody and of access under the law of one Contracting State are effectively respected in the other Contracting States. The general scheme of the Convention is to enable a left behind parent to make this application in the State to which a child has been taken, seeking return of the child. States are required to set up Central Authorities to transmit and receive such applications. Where the removal from the home State, or the retention in the destination State is wrongful, the courts of the recipient State are required by article 12 to order the return of the child forthwith. Apart from a saving provision in article 20 which permits refusal to return where such would amount to a breach of the requested States fundamental principles of human rights, that obligation to return is subject to very limited exceptions which, if present, enable (but do not require) return not to be ordered. Those exceptions are found in article 13 (rights of custody not being exercised; consent or acquiescence of the left behind parent; grave risk that return would expose the child to physical or psychological harm or would place him/her in an intolerable situation; childs objections), and in article 12 (child has been in the recipient State for one year from the wrongful removal or retention and is now settled there). Where prompt notice of wrongful removal or retention is received, the recipient State is required by article 16 to abstain from any decision on the merits of rights of custody, unless it is determined that return is not to be ordered. Moreover, States are required to act fast on any request. By article 11 an initial period of six weeks is stipulated, and the applicant or his Central Authority are entitled to an explanation from the recipient State if that period is exceeded. Thus the return is summary and its object is to enable merits decisions as to the childs future to be made in the correct State, rather than in the State to which the child has been wrongfully taken, or in which he/she has been wrongfully retained. The general purposes and scheme of the Convention are expanded upon in an explanatory report by Professor Elisa Prez Vera on the work of the drafting conference, which report accompanied the original framing of the Convention; it is accordingly an aid to construction recognised in international law and in particular under article 32 of the Vienna Convention on the Law of Treaties (1969). In England and Wales the Convention is given domestic effect by the Child Abduction and Custody Act 1985, section 1(2). Four key concepts underlie the Convention: wrongful removal, wrongful retention, rights of custody and return. The principal provisions which require attention in the present case, apart from the preamble and article 1, set out above, are articles 3, 4, 5, 12 and 16. So far as relevant, they say: Article 3 The removal or the retention of a child is to be considered wrongful where (a) it is in breach of rights of custody attributed to a person, an institution or any other body, either jointly or alone, under the law of the State in which the child was habitually resident immediately before the removal or retention; and (b) at the time of removal or retention those rights were actually exercised, either jointly or alone, or would have been so exercised but for the removal or retention. Article 4 The Convention shall apply to any child who was habitually resident in a Contracting State immediately before any breach of custody or access rights. The Convention shall cease to apply when the child attains the age of 16 years. Article 5 For the purposes of this Convention [rights of access] (a) rights of custody shall include rights relating to the care of the person of the child and, in particular, the right to determine the child's place of residence; (b) Article 12 Where a child has been wrongfully removed or retained in terms of article 3 and, at the date of the commencement of the proceedings before the judicial or administrative authority of the Contracting State where the child is, a period of less than one year has elapsed from the date of the wrongful removal or retention, the authority concerned shall order the return of the child forthwith. The judicial or administrative authority, even where the proceedings have been commenced after the expiration of the period of one year referred to in the preceding paragraph, shall also order the return of the child, unless it is demonstrated that the child is now settled in its new environment. Article 16 After receiving notice of a wrongful removal or retention of a child in the sense of article 3, the judicial or administrative authorities of the Contracting State to which the child has been removed or in which it has been retained shall not decide on the merits of rights of custody until it has been determined that the child is not to be returned under this Convention or unless an application under this Convention is not lodged within a reasonable time following receipt of the notice. The facts The mother, although born in Canada, was brought up in England and is originally of British nationality. The father is Australian. Mother went to live in Australia in 2008. There she met, and later married, the father. She took Australian citizenship in 2014 and so now has dual British/Australian nationality. Two children were born to them in 2012 and 2014. By the end of 2014 the marriage was in difficulties. Mother was on maternity leave from her job at the time. She told Father that she wanted to make a trip to England with the children before going back to work. Although initially reluctant, he agreed to an eight week visit. Mother and the children came to England on 4 May 2015 with return tickets then scheduled for 24 June. They went to stay with the maternal grandmother, where they have since remained. Discussions between Mother and Father then resulted in Father agreeing to an extension of the eight week visit. Initially, Father agreed to a four week extension. But then, on 28 June 2015 he sent Mother an email which said: For the happiness of yourself & the children & for moving on with our lives I am in agreement that u n the children stay in the UK for a year. That email left open whether the year ran from its date or from Mothers first arrival six or seven weeks earlier. The difference does not affect the outcome of the present dispute, but it is relevant that Father raised the question in emails to Mother whether she intended to return in May or June 2016. She did not answer the question. On the basis of the extension she gave notice to her Australian employer and looked for work in England. In September 2015 she enrolled the older child at a local pre school. The children had entered England on six month visitor visas, so steps needed to be taken to regularise the longer stay now contemplated. What Mother then did loomed large at the hearing before the judge. Without telling Father she applied on 2 November 2015 for British citizenship for the children. She engaged solicitors to make the application. Those solicitors wrote on her behalf to the United Kingdom immigration authorities on 4 November 2015. In the course of a long letter they asserted that the marriage had irretrievably broken down, that Mother had been the object of repeated domestic abuse which had, moreover affected the elder child adversely, that she had been effectively forced not to return to Australia in order to safeguard herself and the children and that the children could not return to Australia because there was nowhere safe for them to go. The letter added: It cannot be in doubt that the childrens centre of life is, and will be, in the UK where the children are registered as requested. Meanwhile in continuing correspondence between the parents, Father pressed Mother on her expected date of return. On 11 February 2016 she wrote saying that she did not know what her plans were but Short term I will not be returning in May. She added I will not base my return to Australia at your demand. Later, Father referred her to the Abduction Convention and instructed solicitors who wrote formally to ask Mother when she planned to return. She replied in June 2016: Thank you for allowing me the time to seek professional advice I can confirm that I intend to remain in the UK for the short term. In due course both parents gave oral evidence at the hearing before the judge of Fathers application under the Abduction Convention. By then it was accepted that Mother did not propose to return. The issue of when she had so decided was much in contention. The judges conclusions on the topic are considered below: [2016] EWHC 3535 (Fam). But Mothers own case was that by April 2016 she had felt that we wouldnt be going back. That meant that on any view there had been a decision not to return before the expiry of the agreed year of stay in England. That gives rise to the second general question in this case, namely: whether and when such a decision can make the retention in the destination country wrongful for the purposes of the Abduction Convention before the expiry of any agreed or sanctioned term of residence there. The judge also had to make findings as to the place of the childrens habitual residence. The details of his conclusions are set out below, but he found that they were habitually resident in England and Wales by at the latest the end of June 2016, which was the last possible date for the expiry of the agreed year of stay. He added that in his view it was eminently arguable that they had acquired habitual residence significantly before that date. Those findings give rise to the first general question in this case, namely: what is the effect on an application under the Abduction Convention if the child has become habitually resident in the destination (requested) State before the act relied on as a wrongful removal or retention occurs. The significance of the two general questions In the simple paradigm case of wrongful removal, one parent will have taken the child from the State where s/he is habitually resident to a destination State. Similarly, in the simple paradigm case of wrongful retention, one parent will have travelled with the child from the State of habitual residence to the destination State, for example for an agreed fortnights holiday (and thus without the removal being wrongful), but will then wrongfully have refused to return. In each of those paradigm cases, the child will have remained habitually resident in the home State. An application under the Abduction Convention will be made in the destination (or requested) State for the return of the child to the State of habitual residence. The return will be a summary one, without investigation of the merits of any dispute between the parents as to custody, access or any other issue relating to the upbringing of the child (article 16). Such merits decisions are for the courts of the State of the childs habitual residence. In some cases, however, it is possible that by the time of the act relied upon as a wrongful removal or retention, the child may have acquired habitual residence in the destination State. It is perhaps improbable in the case of removal, but it is not in the case of retention. It may particularly happen if the stay in the destination State is more than just a holiday and lasts long enough for the child to become integrated into the destination State. It is the more likely to happen if the travelling parent determines, however improperly, to stay, and takes steps to integrate the child in the destination State. Even in the case of wrongful removal it may be possible to imagine such a situation if, for example, there had been successive periods of residence in the destination State, followed by a removal from the State of origin which infringed the rights of custody of the left behind parent. In England and Wales at least, this possibility did not in practice arise in the past, since it was regarded as axiomatic that one parent could not by unilateral action alter the habitual residence of the child. This proposition dated from a dictum of Lord Donaldson MR in In re J (A Minor) (Abduction: Custody Rights) [1990] 2 AC 562, 572, and the decision of Wall J in In re S (Minors) (Child Abduction: Wrongful Retention) [1994] Fam 70, which was approved by the Court of Appeal in In re M (Abduction: Habitual Residence) [1996] 1 FLR 887, 892, and, as Baroness Hale explained in A v A (Children: Habitual Residence) [2014] AC 1 at para 39, it was thereafter taken for granted. Such a proposition is, however, not generally adopted in other countries, including the United States, sits uneasily with the equally axiomatic principle that habitual residence is a question of fact, not law, and is difficult to accommodate within the European approach which requires an examination of integration, as exemplified in Proceedings brought by A (Case C 523/07) [2010] Fam 42 and Mercredi v Chaffe (Case C 497/10PPU) [2012] Fam 22, and which is binding on this country via Council Regulation (EC) No 2201/2003 (Brussels II Revised): see the analysis of Baroness Hale in A v A. It was recognised in In re H (Children) [2015] 1 WLR 863 that such a rule could not survive. If the habitual residence of the child may have changed to the destination State by the time of the wrongful act of removal or retention relied upon, then it becomes necessary to know whether the summary procedure of the Abduction Convention remains available in such a case or does not. Hence the first general question. If the answer is that it is not available, because the Abduction Convention pre supposes an application made in a destination State which is not the State of habitual residence, then the second general question becomes of importance. It becomes important because deliberate acts aimed at integrating the child in the destination State may well be undertaken by the travelling parent once he has decided not to honour his obligation to return to the State of origin. It will then matter whether such acts, or other manifestations of his decision, can themselves amount to wrongful retention. If they can, then wrongful retention may occur before any change of habitual residence has been achieved and whilst the child is still habitually resident in the State of origin. If they cannot, and wrongful retention cannot occur until the day of agreed return arrives, it may be too late for any application under the Abduction Convention, because the same acts which derive from and accompany the decision not to return may themselves have resulted in the child becoming habitually resident in the destination State. The first general question: habitual residence The first question is accordingly this: if by the time of the act relied on as wrongful removal or retention the child is habitually resident in the State where the application for return is made, is summary return under the Abduction Convention still available or not? This question did not arise in either of the courts below, where everyone proceeded on the assumption that the answer was no. It arose in the course of argument in this court, and we have had the benefit not only of some immediate oral submissions, but of considered post hearing written submissions from both parties and from the International Centre for Family Law, Policy and Practice as intervener. The argument that summary return under the Abduction Convention remains available runs as follows: (a) there is no express statement in the Convention that the remedy of summary return is available only where at the time of the act relied on as wrongful the child either remains habitually resident in the State of origin or is not habitually resident in the requested State; (b) on the contrary, article 3 refers to habitual residence only in order to identify the proper law that is to say to identify the law which determines whether a given act is wrongful (because it is in breach of rights of custody) or not; (c) therefore, if the child starts by being habitually resident in State A, but has by the time of the act relied on as wrongful become habitually resident in State B, all that article 3 requires is that you look to the law of State B to decide whether the act was wrongful or not; that is so whether State B is the requested State, or some intermediate State where the child has become habitually resident before arriving in the requested State; (d) once it has been decided that the act constituted either wrongful removal or wrongful retention, the Convention takes the court to article 12, which requires an order for return, subject to the limited exceptions contained in that article and article 13; (e) moreover, it is noticeable that article 12, in providing for an order for return, does not specify that return must be to the state of the childs habitual residence; it could be to any State; this reinforces the conclusion that habitual residence does not govern the place where application for return may be made, but is only referred to in the Convention in order to provide which law is to determine wrongfulness. Accordingly, it is said, on facts such as those of the present case, if the childs habitual residence is in England by the time of the act relied on as wrongful retention, that simply means that it becomes English law which decides whether the retention was wrongful. If it is decided that it is wrongful, there can still be a return to Australia. This may be a possible construction if one has regard simply to the wording of articles 3 and 12. It is, however, not a persuasive construction if one takes into account the general scheme of the Convention. Nor is it the way that the Convention has been operated over the nearly 40 years of its life. Nor is this construction consistent with the way in which the Convention has been treated by subsequent multi lateral instruments in the general field of the conflict of laws in relation to disputes about the upbringing of children. By the time of the Abduction Convention, habitual residence was already established as the principal internationally recognised basis for according jurisdiction relating to the upbringing of children. At any rate by the time of the 1961 Hague Convention on the Protection of Infants, habitual residence was, together with in some respects the law of the childs nationality, the principal basis for jurisdiction (see article 1). By the time of the Abduction Convention, Professor Prez Veras report was saying (in para 19) that the Convention: rests implicitly on the principle that any debate on the merits of the question, ie on custody rights, should take place before the competent authorities in the State where the child had its habitual residence prior to its removal (See also para 66 which repeats the point.) Since then the principle has become even more firmly entrenched. The 1996 Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Cooperation in respect of Parental Responsibility and Measures for the Protection of Children (the 1996 Convention) accords jurisdiction, by article 5, to the State for the time being of habitual residence, subject only to few qualifications. So, for states members of the European Union (EU), does Regulation 2201/2003 (Brussels II Revised) by article 8. The entire scheme of the Abduction Convention is to provide a summary remedy which negates the pre emptive force of wrongful removal or retention. The aim was also to defeat forum shopping. This is made clear by Professor Prez Veras report, especially at paras 14 15. 14. Now, even if the [left behind parent] acts quickly, that is to say manages to avoid the consolidation through lapse of time of the situation brought about by the removal of the child, the abductor will hold the advantage, since it is he who has chosen the forum in which the case is to be decided, a forum which, in principle, he regards as more favourable to his own claims. 15. To conclude, it can firmly be stated that the problem with which the Convention deals together with all the drama implicit in the fact that it is concerned with the protection of children in international relations derives all of its legal importance from the possibility of individuals establishing legal and jurisdictional links which are more or less artificial. In fact, resorting to this expedient, an individual can change the applicable law and obtain a judicial decision favourable to him. Admittedly, such a decision, especially one coexisting with others to the opposite effect issued by the other forum, will enjoy only a limited geographical validity, but in any event it bears a legal title sufficient to legalize a factual situation which none of the legal systems involved wished to see brought about. With that aim in mind, the framers of the Convention deliberately abjured a treaty which provided for recognition or enforcement of the decisions of the State of habitual residence. Paragraph 36 of the report makes this clear: 36. Secondly, the Convention is certainly not a treaty on the recognition or enforcement of decisions on custody. This option, which gave rise to lengthy debates during the first meeting of the Special Commission, was deliberately rejected. Due to the substantive consequences which flow from the recognition of a foreign judgment, such a treaty is ordinarily hedged around by guarantees and exceptions which can prolong the proceedings. Now, where the removal of a child is concerned, the time factor is of decisive importance . Hence the alternative scheme adopted, for mandatory summary return. Hence also the critical rule in article 16 that the courts of the requested State are to abstain from exercising any jurisdiction which they may have (for example based upon the presence of the child) to make a merits decision. This underlying rationale of the scheme of the Abduction Convention was recognised by this court in In re E (Children) (Abduction: Custody Appeal) [2011] UKSC 27; [2012] 1 AC 144. Baroness Hale and Lord Wilson observed at para 8: The first object of the Convention is to deter either parent (or indeed anyone else) from taking the law into their own hands and pre empting the result of any dispute between them about the future upbringing of their children. If an abduction does take place, the next object is to restore the children as soon as possible to their home country, so that any dispute can be determined there. The left behind parent should not be put to the trouble and expense of coming to the requested state in order for factual disputes to be resolved there. The abducting parent should not gain an unfair advantage by having that dispute determined in the place to which she has come. The whole point of the scheme adopted was to leave the merits to be decided by the courts of the place of the childs habitual residence. The preamble makes this clear in almost the first words of the Convention. If, however, the child has by the time of the act relied on as wrongful become habitually resident in the requested State, then that State will be the appropriate place for the merits of any custody dispute to be resolved. If the requested State is the habitual residence of the child, there can be no place for a summary return to somewhere else, without a merits based decision, still less for such to be mandatory. That would be so whether or not the removal or retention was, judged by the law of the requested State, as the State of habitual residence, wrongful, for even if it were, it would remain open to either party to ask the courts of that State to review the future plans for the upbringing of the child. This understanding of the scheme of the Abduction Convention is reflected in the provisions of both the 1996 Convention and Brussels II Revised. A large number of nations are party to these two multinational instruments, but not nearly so many as are party to the Abduction Convention. These two instruments are concerned, unlike the Abduction Convention, with recognition and enforcement. But they are scrupulous to ensure that wherever possible they are consistent with the Abduction Convention, whose scheme they very plainly seek to preserve. The 1996 Convention adopts, by article 7(2) a definition of wrongful removal and retention in the same words as article 3 of the Abduction Convention. Substantively, article 7(1) provides for cases of wrongful removal and retention a limited exception to the ordinary rule in article 5 that jurisdiction moves with the habitual residence of the child. In effect, the State of habitual residence immediately before the wrongful removal or retention keeps jurisdiction until not only habitual residence has shifted but also there has been an opportunity for the summary return provided for by the Abduction Convention. The effect, plainly intended, is to preserve the regime of the Abduction Convention, and in particular the mandatory summary return. But if, at the time of the wrongful act, the requested State had become the State of habitual residence, the extension by article 7(1) to the jurisdiction of the previous State of habitual residence would have no application and the requested State would have sole jurisdiction; in such an event, there could be no question of a mandatory summary return without consideration of the merits. Brussels II Revised adopts a similar structure to the 1996 Convention. article 2(11) provides a definition of wrongful removal and retention which, although not in identical words to article 3 of the Abduction Convention, achieves the same result, and in particular makes the test for wrongfulness the law of the State of habitual residence immediately before the act relied upon. Article 10 prolongs the jurisdiction of that State in the event of a wrongful removal or retention in much the same terms as does article 7 of the 1996 Convention. As with the 1996 Convention, the intention is plainly to preserve the regime of the Abduction Convention, and article 11 goes on to make supplemental provision for the handling of applications under it. It is revealing that it does so after introduction in the following terms: (1) Where a person [etc] having rights of custody applies to the competent authorities in a member state to deliver a judgment on the basis of [the Abduction Convention] in order to obtain the return of a child that has been wrongfully removed or retained in a member state other than the member state where the child was habitually resident immediately before the removal or retention, paragraphs 2 to 8 shall apply. (Emphasis supplied) Of course, this provision applies only as between States members which are of the EU. But there is no reason why such States alone should adopt a rule that the requested State must be a different one from the State of habitual residence immediately before the wrongful act. On the contrary, the aim is clearly to preserve the scheme of the Abduction Convention. The words other than the member state where the child was habitually resident immediately before the removal or retention plainly assume that this is the scheme implicit in the Abduction Convention. Recital 17 to the Regulation, which expresses the intention that the Abduction Convention should continue to operate, also assumes a difference between the State of habitual residence and the State requested to make a return order. There are other examples of legislative provisions making explicit the principle that return under the Abduction Convention presupposes return from a state other than that of habitual residence at the time of the wrongful act. In New Zealand, the Convention is given effect by the Care of Children Act 2004. In that Act, removal includes retention, in each case as defined in article 3 of the Convention. Section 103 provides: (1) The Authority must take action under the Convention to secure the prompt return of the child to a Contracting State other than New Zealand if the Authority receives, in respect of a child, an application claiming (a) that the child is present in New Zealand; and (b) that the child was removed from that other Contracting State in breach of the applicants rights of custody in respect of the child; and that at the time of the removal those rights of (c) custody were actually being exercised by the applicant, or would have been so exercised but for the removal; and (d) that the child was habitually resident in that other Contracting State immediately before the removal. (Emphasis supplied) In Australia the equivalent Family Law (Child Abduction Convention) Regulations 1986 provide by regulation 16(1A)(b) that one of the conditions for an order for return is that the child habitually resided in a convention country immediately before the childs removal to, or retention in, Australia. In re H (Minors) (Abduction: Custody Rights), In re S (Minors) (Abduction: Custody Rights) [1991] 2 AC 476 the House of Lords addressed the question whether wrongful removal and wrongful retention were mutually exclusive concepts; the issue arose in the context of the commencement date for the 1985 Act as between the two States involved. The House held that for the purposes of the Abduction Convention the two concepts were mutually exclusive, and that because article 12 required it to be possible to calculate the 12 month period from a wrongful retention, as well as from a wrongful removal, the former could not be regarded as simply continuing, but had to have an identified date, in effect its beginning. Giving the sole speech, Lord Brandon explained, at 498G: The preamble of the Convention shows that it is aimed at the protection of children internationally (my emphasis) from wrongful removal or retention. article 1(a) shows that the first object of the Convention is to secure the prompt return to the state of their habitual residence of children in two categories: (1) children who have been wrongfully removed from the state of their habitual residence to another contracting state; and (2) children who have been wrongfully retained in a contracting state other than the state of their habitual residence instead of being returned to the latter state. The Convention is not concerned with children who have been wrongfully removed or retained within the borders of the state of their habitual residence. (Emphasis of other supplied) That echoed an observation of Lord Donaldson MR in the same case in the Court of Appeal. He had said, [1991] 2 AC 476, 486F: plainly the Act and Convention can only apply if the child is found in a different State from that in which it was habitually resident The question raised in the present case did not arise for decision in In re H; In re S and so the observations noted were not the result of argument on the point now at issue. They were, however, a considered analysis of the scheme of the Abduction Convention, and they have been consistently followed in England and Wales ever since. In consequence in a number of cases, which it is not necessary to list, applications under the Convention have failed where the child was habitually resident in England and Wales by the time of the wrongful act relied upon. The researches of counsel, for which we are very grateful, have disclosed that a similar approach has been adopted in Scotland, France, Israel, Switzerland, Canada, Australia, New Zealand and various United States courts whether federal or state. Whilst those surveys cannot by their nature be exhaustive of every decision in every jurisdiction, what is significant is that none of them, including those conducted on behalf of those arguing against the currently assumed analysis (Father and the Intervener), has unearthed any decision to the contrary. In C v M (2014) (Case C 376/14PPU); [2015] Fam 116 the Court of Justice of the European Union (CJEU) adopted the same analysis. The French Father had made application to the Irish Court for the return of children who had been taken to Ireland by Mother. The background was an initial decision of the French court permitting relocation to Ireland, which had been appealed promptly. Mother had moved notwithstanding the pending appeal, a stay having been refused to Father, and subsequently the French decision had been reversed by the appeal court. The Irish court was minded to find that the child had become at some stage habitually resident in Ireland. It referred a number of questions to the CJEU. The CJEU decided (1) that the initial removal to Ireland had not been wrongful, because of the then extant first instance decision permitting the move (para 44), (2) that the subsequent retention there after the French appellate decision might justify an order for return but (3) this would depend on whether by then the child was habitually resident in Ireland (paras 45 49 and 63). If habitual residence had by then been established in Ireland, there could be no order for return. At para 48 the court said: Article 11(1) of the Regulation [vis Brussels II Revised] provides that paragraphs 2 8 of that article are to apply where the holder of rights of custody applies to the competent authorities of a member state to deliver a judgment on the basis of the 1980 Hague Convention in order to obtain the return of a child that has been wrongfully removed or retained in a member state other than the member state where the child was habitually resident immediately before the wrongful removal or retention. It follows that this is not the case if the child was not habitually resident in the member state of origin immediately before the removal or retention. It is certainly true that this paragraph proceeds from the words of article 11(1) of Brussels II Revised. But the application which the father had made was under the Abduction Convention. He had referred also to Brussels II Revised, but this Regulation does not contain the duty to return a child; what it does is to recognise that the Abduction Convention does contain such a duty, and by article 11 it provides supplementary rules for how this duty is to be performed. En route to its conclusion, the CJEU emphasised, first, that the Regulation and the Abduction Convention were to be uniform, that is to say consistent (para 58), and secondly that a decision to return under the Abduction Convention is not a decision on the merits and thus there can be no occasion for a conflict of jurisdiction between the requesting and requested State (paras 37 and 40 42). It left to the Irish court the decision of fact whether and when habitual residence had been established in Ireland. It may be that its proposition that for a return order under the Abduction Convention to be made it was essential that the child was habitually resident at the time of the wrongful act in the State of origin, as distinct from some State other than the requested State, might be wider than necessary, for it may not have considered the possibility of habitual residence in an intermediate State, which did not arise for debate. But what is abundantly clear is that it is only under the Abduction Convention that a summary order for return is provided for, and that such an order could not be made if the child was, by the time of the wrongful act relied upon, habitually resident in the requested State. There is no hint in the courts decision that Brussels II Revised has in any sense modified the fundamentals of the scheme of the Abduction Convention for EU members; quite the contrary. In the later case of OL v PQ (2017) (Case C 111/17PPU), a different chamber of the CJEU reached a similar conclusion. The court held that a child born in Greece was habitually resident there, despite the originally Italian home of her parents, and that in consequence an order under the Abduction Convention for return from Greece to Italy could not be made by the Greek court. At para 38 the court said: It is clear from those provisions that the concept of habitual residence constitutes a key element in assessing whether an application for return is well founded. Such an application can succeed only if a child was, immediately before the alleged removal or retention, habitually resident in the member state to which return is sought. The nearest case proffered as any indication to the contrary is In re G (A Minor) (Enforcement of Access Abroad) [1993] Fam 216. There, the Court of Appeal held that a Canadian resident father could use the Abduction Convention (article 21) to enforce his Canadian given rights of access in relation to a child who was habitually resident in England by the time the mother declined to comply with them. But that was not a case involving any question of return. The provisions of the Convention in relation to access are notably more fluid and flexible. They simply require the central authorities to facilitate co operation with a view to preserving access rights. They make no demands of the courts of the requested State and to the extent that they contemplate that an application may be made there, they appear to assume that those courts will conduct a merits hearing. They provide no guide to the scheme of the Convention in relation to applications for orders for summary return. These various examples of the practice as to the application of the Abduction Convention thus all point in the same direction. The Convention cannot be invoked if by the time of the alleged wrongful act, whether removal or retention, the child is habitually resident in the State where the request for return is lodged. In such a case, that State has primary jurisdiction to make a decision on the merits, based on the habitual residence of the child and there is no room for a mandatory summary return elsewhere without such a decision. It may of course be that in making a merits decision, the court of the requested State might determine that it is in the best interests of the child to be returned to his previous home State, and indeed might do so without detailed examination of all possible evidence, as the English courts may do (see In re J (A Child) (Custody Rights: Jurisdiction) [2005] UKHL 40; [2006] 1 AC 80). But so to do is very different from making a summary order for return without consideration of the merits under the Abduction Convention. The submissions made to this court addressed also the separate question of whether a return under the Abduction Convention, if made, must always and only be made to the State of habitual residence immediately before the wrongful act. It is to be noted that article 12 does not contain any such restriction, and that Professor Prez Veras report at para 110 makes clear that the decision not to do so was deliberate. The reason given is that whilst ordinarily that State will be the obvious State to which return should be made, there may be circumstances in which it would be against the interests of the child for that to be the destination of return. The example given is of the applicant custodial parent who has, in the meantime, moved to a different State. The propriety, in such circumstances, of an order returning the child to the new home state of the custodial parent is not in issue in this case. For the reasons given above, the silence of article 12 on the destination of a return order is of no help on the issue which does arise, namely whether an order for return can be made if at the time of the wrongful act the child was habitually resident in the requested State. It is however to be observed in passing that the unusual circumstances envisaged in para 110 of the Prez Vera report were held at first instance to have arisen in O v O (Child Abduction: Return to Third Country) [2013] EWHC 2970 (Fam); [2014] Fam 87 and there did result in an order for return to the new home State. The second general question: when does wrongful retention occur? This was the question of principle on which leave to appeal to this court was given. If the child has been removed from the home State by agreement with the left behind parent for a limited period (and thus the removal is not wrongful), can there be a wrongful retention before the agreed period of absence expires? The classic example of the possibility is where the travelling parent announces, half way through the agreed period (say of a sabbatical year of study for the parent) that he will not under any circumstances return the child in accordance with the agreement he made. He might do more. He might effectively make it impracticable to return, by, for example, selling his house in the home State, abandoning his job there, and obtaining residency in the new State for himself and the child on the basis of an undertaking that they will both remain there indefinitely. No doubt other examples could be postulated. The question is whether, if such a thing occurs, there is then and there a wrongful retention, or whether his retention of the child cannot in law be wrongful until the date agreed for return arrives and, as it was graphically put in the American case of Falk v Sinclair (2009) 692 F Supp 2d 147, the aeroplane lands and the child is not among those who disembark. There is some difficulty in devising a suitable shorthand for the possibility of wrongful retention in advance of the due date for return. One which has been used is anticipatory retention. This is certainly convenient but it may lead to misconceptions. If early wrongful retention is a legal possibility, it is not because there is an anticipation of retention. On the contrary, the child is retained in the destination State from the moment of arrival, just as he is removed from the home State at the moment of departure. If the departure and arrival are permitted by agreement with the left behind parent, or sanctioned by the court of the home State, they are still respectively removal and retention, but they are not wrongful. So what is under consideration is a retention which becomes wrongful before the due date for return. The key to the concept of early wrongful retention, if it exists in law, must be that the travelling parent is thereafter denying, or repudiating, the rights of custody of the left behind parent and, instead of honouring them, is insisting on unilaterally deciding where the child will live. In the absence of a better expression, the term which will be used here will, for that reason, be repudiatory retention. That is not to import contractual principles lock stock and barrel into the concept, for the analogy with a contract is only partial. It is simply to attempt a shorthand description. The expert and thorough analysis of the known cases in several different jurisdictions which was undertaken in this case by Black LJ, as she then was, cannot be improved upon. It is to be found at paras 28 97 of her judgment [2017] EWCA Civ 980; [2017] 3 FCR 719. On this part of her judgment the Court of Appeal was unanimous. It shows that a concept of repudiatory retention has been recognised in some jurisdictions, and for many years now: early examples included Wall Js decision in In re S (Minors) (Abduction: Wrongful Retention) [1994] Fam 70 and the Canadian case of Snetzko v Snetzko (1996) CanLII 11326. Other cases have rejected the concept, for example in Australia. There are cases going either way in the United States. It follows that there is no generally accepted international practice on the point, nor is there clear authority either way in this jurisdiction. In those circumstances it is necessary for this court to address the principle of the suggested concept. The Court of Appeal concluded unanimously that there was a concept of repudiatory retention known to the law. It divided, however, as to whether it could exist only when the repudiation was communicated to the left behind parent (or at least manifested by action), as Black LJ held, or whether such communication was not necessary in law, as Sharp and Thirlwall LJJ concluded. In considering the existence of the concept, it is necessary also to address how repudiatory retention, if it exists at all, may occur. The helpful submissions made to this court identified six suggested reasons why such a concept is inconsistent with the Abduction Convention and not known to the law. In principle there can only be a single act of wrongful retention and (i) this cannot occur until the due date for return arrives, and is not honoured, because until then there is no breach of the rights of custody of the left behind parent. (ii) In ordinary language retention means continuing to hold or to keep possession; however, until the due date for return arrives, the travelling parents retention is sanctioned and not wrongful. (iii) A repudiatory retention is too uncertain a concept, for the travelling parent may change his mind and return after all on the due date, whatever he may have said or done earlier. (iv) If repudiatory retention were acknowledged, the effect might be to start the clock running before the left behind parent knew about it, with the consequence that the 12 month period stipulated in article 12 might wholly or partly pass and the left behind parent be deprived of or hindered in the right to a certain order for return. (v) Any such concept would be likely to lead to prolonged hearings in applications under the Abduction Convention when it is axiomatic that they should be such as can be dealt with swiftly and summarily. (vi) No such concept is needed because the left behind parent will, if he cannot obtain a summary return order under the Abduction Convention, have other effective remedies. The crux of the issue lies in the first two contentions, which are different ways of expressing the same point. If there is no breach of the rights of custody of the left behind parent, then it is clear that the Convention cannot bite; such a breach is essential to activating it, via articles 3 and 12. It is clearly true that if the two parents agree that the child is to travel abroad for a period, or for that matter if the court of the home State permits such travel by order, the travelling parent first removes, and then retains the child abroad. It is equally true that both removal and retention are, at that stage, sanctioned and not wrongful. But to say that there is sanctioned retention is to ask, rather than to answer, the question when such retention may become unsanctioned and wrongful. When the left behind parent agrees to the child travelling abroad, he is exercising, not abandoning, his rights of custody. Those rights of custody include the right to be party to any arrangement as to which country the child is to live in. It is not accurate to say that he gives up a right to veto the childs movements abroad; he exercises that right by permitting such movement on terms. He has agreed to the travel only on terms that the stay is to be temporary and the child will be returned as agreed. So long as the travelling parent honours the temporary nature of the stay abroad, he is not infringing the left behind parents rights of custody. But once he repudiates the agreement, and keeps the child without the intention to return, and denying the temporary nature of the stay, his retention is no longer on the terms agreed. It amounts to a claim to unilateral decision where the child shall live. It repudiates the rights of custody of the left behind parent, and becomes wrongful. The plain purpose of the Abduction Convention is to prevent the travelling parent from pre empting the left behind parent. The travelling parent who repudiates the temporary nature of the stay and sets about making it indefinite, often putting down the childs roots in the destination State with a view to making it impossible to move him home, is engaging in precisely such an act of pre emption. It is possible that there might also be other cases of pre emptive denial of the rights of custody of the left behind parent, outside simple refusal to recognise the duty to return on the due date. It is not, however, necessary in the present case to attempt to foresee such eventualities, or to consider whether fundamental failures to observe conditions as to the care or upbringing of the child might amount to such pre emptive denial. It is enough to say that if there is a pre emptive denial it would be inconsistent with the aim of the Abduction Convention to provide a swift, prompt and summary remedy designed to restore the status quo ante to insist that the left behind parent wait until the aeroplane lands on the due date, without the child disembarking, before any complaint can be made about such infringement. It is no doubt true that a travelling parent might change his mind after an act of repudiation. But so he might after a failure to return on the due date, and commonly does when faced by notice of the provisions of the Abduction Convention, or by an application under it. So also he might, after making an unsanctioned move to an unagreed country, or after embarking on an unsanctioned programme of religious conversion. The possibility of a change of heart is no reason not to recognise that the heart needs changing if rights of custody in the left behind parent are to be respected. On the contrary, the desirability of inducing a prompt change of mind is an argument for recognising a repudiatory retention when and if it occurs. Proof that it has occurred is a matter of evidence, and what manifestation of it must be demonstrated is considered below. If a concept of repudiatory retention exists, it would indeed follow that once such an act occurs, the article 12 12 month clock would begin to run at that point. If the left behind parent knows of the repudiation, there is every reason why it should run. If he does not, the possibility exists that the 12 month period partly, or sometimes wholly, may pass before he finds out and can make an application under the Abduction Convention. But it is a mistake to think of the 12 month period as a limitation period, of the kind designed in Limitation Acts to protect a wrongdoer from claims which are too old to be pursued. It is not a protection for the wrongdoer. Rather, it is a provision designed in the interests of the child. It operates to limit the mandatory summary procedure of the Convention to cases where the child has not been too long in the destination State since the wrongful act relied on. Where it applies, it does not prevent a summary return; it merely makes it discretionary. In the event that an act of wrongful repudiatory retention had been concealed, that concealment might well be one factor in the decision whether to order return or not. In other cases, the settlement of the child might be so well established that notwithstanding the wrong done by the travelling parent, it is too late to disturb it. Such decisions are fact sensitive ones which are properly left to the court of the requested State. The risk of the 12 month period running without the knowledge of the left behind parent is in any event distinctly less fatal to his interests than the risk of the childs habitual residence being changed without his knowledge, or indeed with his knowledge but without him being able to invoke the Convention because the due date for return has not yet arrived. The latter risk creates a complete bar to return under the Convention; the former a discretionary one. The concern that Abduction Convention applications may become longer and more complicated is a point well made. It was convincingly voiced in the Court of Appeal by Black LJ. It is of the essence of such cases that the remedy is a swift and summary one. Oral evidence should be the exception, not the rule. But some limited disputes of fact are bound to arise. In the kind of case where retention is in question, it will often be critical to establish what the terms were of any arrangement under which the child travelled. That may be as necessary to establish the date of due return (and thus conventional wrongful retention) as to establish an earlier repudiatory retention. The Family Division judges who hear these cases are well used to managing them actively and to controlling any tendency to spill outside the issues necessary to determine them. If the correct rule is that repudiatory retention must be demonstrated by overt act or statement (see below) the danger of speculative applications being made, or of hearings degenerating into speculative cross examination as to the internal and undisclosed thinking of the travelling parent ought not to arise. It may be that in many cases which would be covered by the concept of repudiatory retention the left behind parent may have remedies alternative to an application under the Abduction Convention. We were pressed with the contention that ordinarily he will be able to seek an order for return in the home State, and then enforce it in the destination State. This may indeed sometimes be possible. It will be possible if both States are party to the 1996 Convention and if at the time of the application to the court of the home State the child is still habitually resident there. In that event, the home State has jurisdiction (article 5) and the destination State must enforce its decision (article 23). Article 7 of the 1996 Convention prolongs the jurisdiction of the home State if there has been a wrongful retention, but if the habitual residence of the child has been changed to the destination State by the time of the act relied upon, there will be no wrongful retention and article 7 will not apply. Nevertheless, the necessity for habitual residence in the home State presents no greater hurdle to the left behind parent under the 1996 Convention than under the Abduction Convention, because if the habitual residence of the child has shifted to the destination State by the time of the act relied on, neither form of machinery will work. Likewise, if both States are members of the EU and governed by Brussels II Revised. All that said, the critical fact is that by no means all States which are party to the Abduction Convention are party to the 1996 Convention; at the time of the hearing in this court there were some 49 States which are not. Even fewer are members of the EU. The Abduction Convention has its own self contained scheme and should function as such. The recognition and enforcement provisions in the 1996 Convention are, as explained above, meant to preserve that scheme and not to substitute for it. Moreover, such an application to the home State would have to trigger a merits hearing, in which the home State has to adjudicate upon where the best interests of the child now lie, and upon whether habitual residence has shifted, all depending on facts occurring perhaps some thousands of miles away. That is not at all the same as the mandatory summary remedy provided by the Abduction Convention. Even in jurisdictions, such as England and Wales, which retain the practice of sometimes returning children without a full investigation of the facts (In re J, para 34 above), the remedy is not, for the left behind parent, the equivalent of the Abduction Conventions mandatory summary return. For all these reasons, the principled answer to the question whether repudiatory retention is possible in law is that it is. The objections to it are insubstantial whereas the arguments against requiring the left behind parent to do nothing when it is clear that the child will not be returned are convincing and conform to the scheme of the Abduction Convention. The remaining question is what is needed to constitute such repudiatory retention. As with any matter of proof or evidence, it would be unwise to attempt any exhaustive definition. The question is whether the travelling parent has manifested a denial, or repudiation, of the rights of the left behind parent. Some markers can, however, be put in place. (i) It is difficult if not impossible to imagine a repudiatory retention which does not involve a subjective intention on the part of the travelling parent not to return the child (or not to honour some other fundamental part of the arrangement). The spectre advanced of a parent being found to have committed a repudiatory retention innocently, for example by making an application for temporary permission to reside in the destination State, is illusory. (ii) A purely internal unmanifested thought on the part of the travelling parent ought properly to be regarded as at most a plan to commit a repudiatory retention and not itself to constitute such. If it is purely internal, it will probably not come to light in any event, but even supposing that subsequently it were to do so, there must be an objectively identifiable act or acts of repudiation before the retention can be said to be wrongful. That is so in the case of ordinary retention, and must be so also in the case of repudiatory retention. (iii) That does not mean that the repudiation must be communicated to the left behind parent. To require that would be to put too great a premium on concealment and deception. Plainly, some acts may amount to a repudiatory retention, even if concealed from the left behind parent. A simple example might be arranging for permanent official permission to reside in the destination State and giving an undertaking that the intention was to remain permanently. (iv) There must accordingly be some objectively identifiable act or statement, or combination of such, which manifests the denial, or repudiation, of the rights of custody of the left behind parent. A declaration of intent to a third party might suffice, but a privately formed decision would not, without more, do so. (v) There is no occasion to re visit the decision of the House of Lords in In re H; In re S (para 28 above) that wrongful retention must be an identifiable event and cannot be regarded as a continuing process because of the need to count forward the 12 month period stipulated in article 12. That does not mean that the exact date has to be identifiable. It may be possible to say no more than that wrongful retention had clearly occurred not later than (say) the end of a particular month. If there is such an identifiable point, it is not possible to adopt the submission made to the Court of Appeal, that the left behind parent may elect to treat as the date of wrongful retention either the date of manifestation of repudiation or the due date for return. It may of course be permissible for the left behind parent to plead his case in the alternative, but that is a different thing. When once the actual date of wrongful retention is ascertained, the article 12 period begins to run. This case: the judges decision The judge ([2016] EWHC 3535 (Fam)) held that there was no concept of repudiatory retention known to the law. But he helpfully addressed the facts on the hypothesis that he was wrong about that. He held that the application to the immigration authorities made on 4 November 2015 did not amount to such a repudiatory retention, because although it was concealed from Father, something had to be done to regularise the stay of the children once it was to last more than their six month visas permitted. Father, he held, could not properly have objected to such regularisation, even if Mother feared that he might have tried. There can be no doubt that the judge significantly misdirected himself here. It was not the application for permission to stay which was potentially significant. It was what was said, in support of it, about Mothers intentions. Of course it was said by her solicitors, but if it showed that by that date she had determined that the childrens centre of life is, and will be, in the UK indefinitely, then it would be capable of being an objectively identifiable manifestation, made to an official third party, of her repudiation of Fathers rights of custody, and of the fact that thereafter her retention of the children in the United Kingdom was not in accordance with the arrangement she had made with him, but in defiance of it. However, the question which matters is not whether the judge made this error, but whether it affected his conclusion that Mother had not, before the expiry of the agreed year (which he determined was at the end of June 2016) made any act of repudiatory retention. The judge went on to examine Mothers state of mind. He found that she vacillated in what she meant to do. He had seen her examined and cross examined, and it is clear that he believed her when she said that as at both November 2015 and February 2016, she had not yet made up her mind. In February she had told Father only that she would not be returning in May (when the year would not, on the judges findings, have expired). He attributed her uncertainty in part to anticipation of harassment from Father. He then directed himself that even though she gave evidence that by the end of April 2016 she had resolved not to return, that could not be a date for repudiatory retention because it was too imprecise and thus inconsistent with the In re H; In re S rule that retention must be a definite occurrence rather than a continuing process. To the extent that he relied on imprecision he was, again, clearly wrong. There is, as explained above, nothing in In re H; In re S which prevents a court from saying that retention had occurred not later than the end of April. But what does prevent there from being a repudiatory retention in April is that Mothers internal thinking could not by itself amount to such. If she had had such an intention in November, the application to the immigration authorities would have been capable of amounting to an objective manifestation of her repudiation, but the judge believed her when she said that she did not. It was open to him to believe her or not to believe her about this. He saw her and this court has only a transcript. It does not provide nearly sufficient basis for overturning his decision. His error about the potential significance of what was said to the immigration authorities in November is not inconsistent with his yet believing the witness whom he saw when she said that she had not then (or until April) made up her mind to stay. These findings need to be considered alongside the judges decision as to the habitual residence of the children. He reviewed a body of evidence from Mother, relatives, neighbours and the playschool manager, to the effect that the children were, by the Summer of 2016, firmly integrated into the social and family environment of the part of England in which they had lived for a year, and, in the case of the younger child, for somewhat longer than he had lived in Australia. By reference to the decision of Hayden J in In re B (A Child) (Custody Rights: Habitual Residence) [2016] EWHC 2174 (Fam); [2016] 4 WLR 156, he directed himself correctly as to the test of habitual residence and the factors relevant to the integration necessary to establish it. He found that the children were, by the time of their otherwise wrongful retention at the end of June 2016, already habitually resident in the United Kingdom, so that the Abduction Convention could not apply to call for a mandatory summary return. He expressed the view that they had probably become habitually resident in England much earlier than June 2016. There is no basis in law for criticising the judges decision as to habitual residence. His remark that it was arguable that the children had established habitual residence by the time of the November application to the immigration authorities may well be going too far, for at that stage they had been in the United Kingdom only since May, a period of about six months, but that remark does not alter the propriety of his decision as to June 2016, by which time more than a years residence had passed, during which the children had clearly become integrated parts of English life. For my part, I recognise the force of the contention that the judges error about the potential significance of what was said at the time of the November application to the immigration authorities infected his decision that there was no combination of intention not to return and outward manifestation of that decision until the following summer. But for the reasons given above I conclude that that infection did not in fact take place. It follows that by the time the children were retained in the United Kingdom inconsistently with Fathers rights of custody they had become habitually resident here. That being so, the application under the Abduction Convention cannot succeed. The consequence is that Mothers appeal against the order of the Court of Appeal must succeed, whilst Fathers cross appeal in relation to the finding as to habitual residence must be dismissed. LORD KERR: (dissenting) There is much in Lord Hughes judgment with which I agree. Like Lord Wilson (with whose proposed disposal I fully agree) I would have dismissed the appeal. There is perhaps a slight difference in emphasis between us, however, on the reasons that the appeal should be dismissed and, on that account, I add this short judgment. When dealing with the effect of wrongful retention of a child by what has been described as a travelling parent, one can recognise that various factors are in play. One starts with the proposition that, in general, it should not be possible for a child to acquire or for a parent to bestow habitual residence after the time that wrongful retention begins. A strong imperative exists for discouraging travelling parents from the view that they can avoid the consequences of the Abduction Convention by concealing an intention to retain the child in the country to which they have travelled, on the pretext, for instance, of a holiday of fixed or limited duration. To insist that wrongful retention can only occur at the end of an agreed period of absence could lead to absurd results; would encourage dissimulation on the part of the travelling parent; and would permit habitual residence to be acquired by the perpetration of deception on the left behind parent. As against that, it is often difficult retrospectively to decide when wrongful retention began. It may be the outcome of a gradual change of attitude on the part of the travelling parent. Retention in the country travelled to may be acquiesced in by the left behind parent, even if she or he suspects that the travelling parent may be in the process of forming an intention not to return the child to the country where she or he was habitually resident. If the child has formed relationships in the travelled to country and is well settled there (albeit as a result of the travelling parents covertly formed intention not to return him or her) do the best interests of the child obtrude on the question of where her or his habitual residence should be found to be? No final answers to these potentially difficult questions need be given in the present appeal. I raise them solely to illustrate the extremely trying problems that can arise in this fraught area. How is the fact (and the time of onset) of wrongful retention to be established? Clearly the intention of the travelling parent wrongfully to retain is needed. Must this be accompanied by some overt act or event by which the intention becomes manifest? Not without misgivings, I am prepared to accept that this is required. The reason for my misgivings can be explained by taking a simple but not, I suggest, fanciful, example. Suppose a husband persuades his wife to allow him to take their children to his parents native country on the promise that he will return within a stipulated period. Days after leaving, he conceives a firm determination that the children and he will never return. He does not communicate this to anyone. Some months later, he takes action which clearly demonstrates that he has no intention of returning the children. Evidence emerges that this was his plan from the outset. Is the period between his first determining not to return the children and the later event reckonable in the assessment as to whether they have acquired habitual residence in the country of their paternal grandparents? If we say that the retention only becomes wrongful when the intention of the retaining parent becomes manifest, how is the claim by the father in my example that the children have become habitually resident in his parents country to be resisted? Again, however, this conundrum does not require to be solved in the present appeal and, having expressed my misgivings about the notion that some manifestation of the wrongful retention is required, I say no more about it. For the reasons given by Lord Hughes and Lord Wilson, the judge ([2016] EWHC 3535 (Fam)) was wrong to hold that the law did not recognise repudiatory retention. His examination of when such a wrongful retention might have occurred (if, contrary to his view, the concept exists in law) appears to have been coloured by that primary finding, for he concluded that it had not arisen in this case at all. That finding simply cannot be reconciled with his statement in para 80 that as the months went by, the mother gradually came to the conclusion that she and the children should remain in England. She had reached that conclusion by around April though it was not communicated to the father. And this, notwithstanding that he had earlier said, at para 62, that a finding that there was a wrongful retention on some unspecified date in April 2016 is too imprecise. The opportunity for a firm finding as to the precise timing that an intention was formed is, in the nature of things, unlikely to be always possible. Intentions are formed over days, weeks or even years. Because it is not possible to make a positive finding of the date on which it had been formed is not a reason for not making a finding as to the time by which it had been formed. And indeed Judge Bellamy appears to have done precisely that when he said in para 80 that the mother had decided by around April that the children should remain in England. The judge, having made that finding, was obliged to consider whether the childrens habitual residence had been established in England by April 2016. He did not do that. On that account alone, his decision cannot be allowed to stand, in my opinion. It is impossible to say that, if he had recognised the true implication of his statement that the mother had, by April 2016, formed the intention not to return the children, he would nevertheless have decided that habitual residence in England had by then already been established. In the absence of a finding to that effect, or alternatively the inevitability of such a conclusion, it is quite impossible to conclude that the habitual residence of the children had changed at a time which would displace the fathers rights under the Abduction Convention. There is a more fundamental problem with the judges judgment. This concerns the communications to the Home Office in November 2015. In the letter from the mothers solicitor, it was asserted that she had been advised not to return to Australia; that it was necessary that she remain in England to safeguard herself and her children; and that there was no doubt that the childrens centre of life is and will be in the UK. At paras 53 and 59 of his judgment, the judge dealt with the application for British citizenship in the following terse passages: And The solicitors letter to the Home Office dated 4th November sets out information clearly designed to persuade and assumes that the person making the decision will be exercising a discretion. As the Home Office was not required to exercise a discretion it follows that any misleading or inaccurate information set out in that letter cannot have had any bearing on the decision of the Home Office to approve the childrens applications. As the father well knew, the children had entered the UK on six month visitors visas. To enable them to stay for the year to which the father had agreed, some step had to be taken to enable them lawfully to remain in the UK beyond 5th November. I do not accept that it can properly be said that the mother wrongfully retained the children from 5 November 2015. From these passages, two reasons for the judges conclusions can be discerned. First, the circumstance that the Home Office did not have to exercise a discretion meant that any misleading or inaccurate information in the letter should be discounted or ignored. Secondly, the fact that the father knew that something would have to be done to allow the children to remain in the United Kingdom after 5 November 2015 eliminated any possibility of the mother having wrongfully retained the children from that date. Neither reason is sustainable. More importantly, the conclusions that he reached on those matters deflected the judge from recognising and considering the significance of the evidence provided by the November 2015 correspondence as to the mothers intention at that time. The failure to give proper consideration to that evidence fatally undermines the conclusion reached by the judge as to the time at which the mother had conceived the intention to retain the children in England. In turn, this extinguishes the basis for his decision that the wrongful retention did not begin until June 2016 and that, by that time, the habitual residence of the children was England. Why was the judge wrong to decide that, because the Home Office did not have to exercise a discretion, any misleading or inaccurate information in the letter should be discounted or ignored? Because this was nothing to the point. The significance of the letter in the context of these proceedings was its potential to provide an insight into what the mothers intention was at the time that it was written. The purpose of the letter, the result that it sought to achieve, was entirely incidental to that critical consideration. The importance of the letter bore on the question of what the mothers sentiments about the retention of her children in England were at the time of its dispatch. What it sought to persuade the Home Office of was entirely irrelevant to that question. But the judge dismissed the letter as a potential source of evidence on that central question. Until that question is addressed, the conclusion that the mother had not formed any intention wrongfully to retain the children in England in November 2015 is simply insupportable. Likewise, the fact that the father knew that something would have to be done in November 2015 to ensure that the legal entitlement of the children to remain living in England was preserved, has no direct bearing on the question whether the letter from the mothers solicitor showed that, as early as that date, the mother had decided that she would not return the children to Australia. The contents of the letter certainly suggested that that was the case. As already observed (in para 11 above), it had said that she had been advised not to return to Australia; that it was necessary that she remain in England to safeguard herself and her children; and that there was no doubt that the childrens centre of life is and will be in the UK. What the judge should have asked himself was, is it conceivable that such a letter would be sent if the mother had not already decided that she and the children would not return to Australia?. Instead, he elided that question by concentrating on the circumstance that the husband must have known that the mother would have to do something to regularise the childrens continued stay in England. The important question was why the letter was couched in the terms that it was, if it did not reflect the mothers settled intention to remain here. That question was never asked by the judge and it has not been possible to address it since. It needs to be asked and satisfactorily answered before any conclusion as to the mothers intention in November 2015 about returning her children to Australia can be I consider that this court should have dismissed the mothers appeal. reached. That is why, in my opinion, remittal of the case for a proper hearing is unavoidable. LORD WILSON: (dissenting) I respectfully agree with the exposition of law in the judgment of Lord Hughes. I disagree with him only when, from para 52 onwards under the heading This case: the judges decision, he reaches the conclusion that the mothers appeal should be allowed. The trial judge (the judge) held that the law did not recognise a repudiatory retention and that the mothers retention of the children in the UK became wrongful only on 28 June 2016, which he found to have been the agreed date for their return to Australia. The judge added, however, that, even if the law did recognise a repudiatory retention, he did not consider that it had arisen in the present case, whether in November 2015 or in April 2016 or at all. As Lord Hughes has explained, the Court of Appeal was right to hold that the law does indeed recognise a repudiatory retention. The majority (Sharp and Thirlwall LJJ) proceeded to hold that the judges conclusion that in any event it had not arisen in the present case had been flawed; and they ordered that the case be remitted for further inquiry in that regard, particularly in relation to circumstances in November 2015. In my view the majority were right to order that the possibility of a repudiatory retention, particularly in November 2015, required further to be explored. It required further to be explored by reference in particular to the mothers intention; to the need for some objectively identifiable act of repudiation; and to whether, immediately before any repudiatory retention, the children had already acquired their habitual residence in the UK. Although, like the majority in the Court of Appeal, I will focus principally on circumstances in November 2015, I wish briefly to address the possibility of a repudiatory retention of the children on the part of the mother in April 2016. The judge found: I am satisfied that as the months went by the mother gradually came to the conclusion that she and the children should remain in England. She had reached that conclusion by around April though it was not communicated to the father. So why was there no repudiatory retention in April 2016? In para 55 above Lord Hughes explains that Mothers internal thinking could not by itself amount to such. If she had had such an intention in November, the application to the immigration authorities would have been capable of amounting to an objective manifestation of her repudiation, but the judge believed her when she said that she did not. Today this court decides, with hesitant concurrence on the part of Lord Kerr, that the concept of a repudiatory retention requires not only an intention on the part of the travelling parent to retain a child beyond the agreed date of return but also some objectively identifiable act of repudiation on her part. If, however curiously (see below), the objectively identifiable act occurred in November 2015 but the requisite intention arose only by around April 2016, how obvious is it that the requirements of the concept were not at any rate by then satisfied? More importantly, however, the majority in the Court of Appeal were in my view right to set aside the judges finding that the mothers intention to retain the children beyond 28 June 2016 arose only by around April 2016. For he did not grapple with evidence which seemed clearly to point to her having developed that intention by November 2015. This evidence was the letter dated 4 November 2015 from the mothers solicitor to the Home Office, which accompanied her applications on behalf of the children to be registered as UK citizens. The context was that the children had entered the UK on 5 May 2015 pursuant to visitors visas due to expire on 5 November 2015. In the light of the fathers agreement that they could remain with the mother in the UK until 28 June 2016, it was necessary for their visas to be extended for almost eight months. But the regularisation of their stay in the UK for that extended period could have been achieved without their becoming UK citizens. So the mothers applications for them to be registered as UK citizens called for an explanation. Her failure to notify the father in advance that she was making the applications also called for an explanation and, in cross examination, it received one: she explained that she believed that he would have obstructed them. To her statement in answer to the fathers application, the mother exhibited her solicitors letter dated 4 November 2015. In the letter the solicitor said: that the mother was effectively forced not to return to Australia in that she was advised not to return to Australia; that the interests of these two children are best served by their being (a) order to safeguard herself and her children; (b) (c) in the UK; and (d) be, in the UK where the children are registered as requested. that it cannot be in doubt that the childrens centre of life is, and will The terms of the letter therefore appear to be entirely inconsistent with an intention on the part of the mother to return with the children to Australia in June 2016 or at all. In the body of her statement the mother said that her decision not to return the children to Australia in June 2016 had developed over time and had not arisen long before that date. But she made no comment upon the content of her solicitors letter to the Home Office. She did not say that any part of it had been written without her approval or was untrue. On the contrary she said that her solicitor had been utterly clear that there was nothing wrong or deceptive in the applications for citizenship, being an assertion with which she seems there to have associated herself. In cross examination the mother was taxed, albeit perhaps in terms too general, about the content of the solicitors letter. She agreed that it did not indicate that she and the children would return to Australia in June 2016. She denied that, as at the date of the letter, she had formed an intention to stay with them indefinitely in the UK but, whether in re examination or otherwise, she offered no explanation for what her solicitors had said. In my view the content of the solicitors letter dated 4 November 2015, in support of applications for the children to acquire UK citizenship, represented a major obstacle to any finding that the mother had not by then intended to keep the children indefinitely in the UK. Before making any such finding, the judge was obliged to weigh that evidence and, on some basis or another, to explain it away. But, apart from an early reference to any misleading or inaccurate information set out in that letter, he did not address its content in any way. He said simply: If there is a binding legal principle in relation to anticipatory breach, I do not accept that the circumstances surrounding the childrens applications for British citizenship amount to such a breach. As the father well knew, the children had entered the UK on six month visitors visas. To enable them to stay for the year to which the father had agreed, some step had to be taken to enable them lawfully to remain in the UK beyond 5 November. With respect to the judge, he was there missing the main point and was indeed making an unconvincing subsidiary point. His crucial finding about the mothers intention in November 2015, not even expressly made but to be inferred from his reference to around April 2016, was flawed; and the majority in the Court of Appeal were correct to order that inquiry into it should be conducted again.
UK-Abs
This matter centres around a married man and woman who, until 2015, had been living together in Australia with their two children. By the end of 2014 the marriage was in difficulties. The mother, who holds British citizenship, wanted to make a trip to England with the children before returning to work from maternity leave. The father agreed to an eight week stay. The mother and the children came to England on 4 May 2015 where they have since remained. Discussions between the mother and father resulted in the father agreeing to an extension of the eight week visit up to a year. Based on the extension, the mother gave notice to her employer and looked for work in England. In September 2015, the mother enrolled the older child at a local pre school. Without telling the father, on 2 November 2015, she applied for British citizenship for both children who had entered England on six month visitor visas. Her solicitors wrote a letter to the immigration authorities on her behalf indicating that she and the children could not return to Australia for fear of domestic abuse. In continuing correspondence, the father pressed the mother on the childrens expected date of return. The mother indicated that she did not know what her plans were but made clear that she would not be returning in May 2016. In June 2016, she expressed her intention to remain in the UK. The father made an application in the High Court under the Convention of 25 October 1980 on the Civil Aspects of International Child Abduction (the Abduction Convention). The issue of when the mother had decided not to return to Australia was in contention. The mothers own case was that by April 2016 she had felt she and the children would not be returning. The arguments before the Court meant that, on any view, there was a decision not to return to Australia before the expiry of the agreed year. The judge held that the children were habitually resident in England and Wales by the end of June 2016 so that mandatory summary return was unavailable under the Abduction Convention. But he accepted mothers evidence that she did not have the intention, in November 2015, or before April 2016, not to return to Australia. The mother now appeals against the Court of Appeals decision. The issues in the appeal are: (1) what is the effect on an application under the Abduction Convention if a child has become habitually resident in the destination state before the act relied on as a wrongful removal or retention occurs; and (2) if a child has been removed from their home state by agreement with the left behind parent for a limited period can there be a wrongful retention before the agreed period of absence expires (so called repudiatory retention)? The father cross appeals on the issue of habitual residence. The Supreme Court allows the appeal and dismisses the cross appeal. Lord Hughes gives the lead judgment with whom Lady Hale and Lord Carnwath agree. Lord Kerr and Lord Wilson each give judgments concurring on the two points of principle but dissenting on the outcome of this case on its facts. Issue 1 When considering the general scheme of the Abduction Convention, the construction that summary return is available if, by the time of the act relied on as a wrongful removal or retention, a child is habitually resident in the state where the application for return is made is unpersuasive. That construction is inconsistent with the operation of the Abduction Convention since 1980 and its treatment by subsequent international legal instruments. [19] The Abduction Convention is designed to provide a summary remedy which negates the pre emptive force of wrongful removal or retention and to defeat forum shopping. [21] The point of the scheme adopted by the Abduction Convention was to leave the merits to be decided by the courts of the place of the childs habitual residence. If the forum state is the habitual residence of the child, there can be no place for a summary return to somewhere else, without a merits based decision. This understanding of the scheme of the Abduction Convention is reflected in the provisions of both the Revised Brussels II Regulation and the 1996 Hague Convention on Recognition, Enforcement and Cooperation in respect of Parental Responsibility and Measures for the Protection of Children. [23] The Abduction Convention cannot be invoked if by the time of the alleged wrongful act, whether by removal or retention, the child is habitually resident in the state where the request for return is lodged. In such a case, that state has primary jurisdiction to decide on the merits, based on the childs habitual residence, and there is no room for a mandatory summary decision. [34] Issue 2 Repudiatory retention has been recognised in some jurisdictions, but no generally accepted international practice or authority exists on the point. [39] The desirability of inducing a prompt change of mind in the retaining parent is an argument for recognising a repudiatory retention when and if it occurs. The 12 month time limit for seeking mandatory summary return runs from the point a repudiatory retention occurs and that period may pass before an applicant is aware of the repudiatory retention. However, it is not a limitation period but a provision in the childs interest to limit mandatory summary return. Once elapsed it renders a summary return discretionary. The concern that repudiatory retention would make Abduction Convention applications longer and more complicated is a point well made. However, Family Division judges are used to managing applications actively and controlling any tendency to spill outside the relevant issues. Further, if repudiatory retention requires an overt act or statement, this lessens the danger of speculative applications. [46 48] Repudiatory retention is possible in law. The objections to it are insubstantial, whereas the arguments in favour are convincing and conform to the scheme of the Abduction Convention. It would be unwise to attempt an exhaustive definition of proof or evidence. An objectively identifiable act of repudiation is required, but it need not be communicated to the left behind parent nor does an exact date need to be identifiable. [50 51] On the present facts there could not have been a wrongful retention in April 2016 as the mothers internal thinking could not by itself amount to such. If she had such an intention in November 2015, the application to the immigration authorities could have amounted to a repudiatory retention. But it was open to the judge to believe the mothers evidence that she did not possess this intention in November. [55] There is no basis in law for criticising the judges decision as to habitual residence. [57] Lord Kerr dissents on the outcome of this case on its facts. He expresses misgivings about repudiatory retention requiring an overt act by the travelling parent. [63] The judges finding that wrongful retention did not arise in this case could not be reconciled with his statement that the mother had concluded by April 2016 that she and the children should remain in England. [68] Moreover, the judges conclusion that the mother had not formed any intention to retain the children in England in November 2015 is insupportable as he failed to address the question of what bearing the letter of November 2015 had on her intention. [72] Lord Wilson also dissents on the outcome of this case on its facts. The solicitors letter to the immigration authorities in November 2015 represented a major obstacle to any finding that the mother had not by then intended to keep the children in the UK indefinitely. The judges finding as to the mothers intention in November 2015 was flawed and the Court of Appeal were correct to order a fresh inquiry into her intention. [91 92]
Section 15(1) of the Equality Act 2010 (the 2010 Act) provides that A person (A) discriminates against a disabled person (B) if (a) A treats B unfavourably because of something arising in consequence of Bs disability, and (b) A cannot show that the treatment is a proportionate means of achieving a legitimate aim. The central issue in this appeal is the meaning of the expression treats unfavourably. The facts can be shortly stated by reference to the agreed statement. Mr Williams was employed by the second respondent (the University) from 12 June 2000 until he retired for ill health reasons with effect from 30 June 2013, at the age of 38. He suffers from Tourettes syndrome and other conditions which satisfy the definition of disability under section 6 of the 2010 Act. He had been an active member of the second respondents pension scheme (the Scheme) throughout his employment, and had over 13 years pensionable service at the date of termination. For the first ten years of his employment, he had worked full time (35 hours per week). Thereafter, he worked anything from 17.5 26 hours per week when he was fit to work. By June 2013 his agreed working hours were half of his full time hours (17.5 hours per week) and had been so for nearly two years, even though he was not at work for approximately 11 months. It is agreed that each reduction in hours of working arose from his disabilities. The variations in his working hours were made at his request as a reasonable adjustment, with the Universitys agreement. Between June 2012 and April 2013, he took unpaid leave so that he could undergo specialist brain surgery, which took place in late November 2012. He commenced a phased return to work in late April 2013. However, in May 2013 he applied for ill health early retirement (IHR) under the Scheme, and his application was successful, the agreed medical view being that he was likely to be permanently incapable of efficiently discharging the duties of his post with the University or in relation to any comparable post. He retired with effect from 30 June 2013. The Scheme provided for accrual of benefits on a final salary basis up until 1 August 2009, from which time the Scheme was amended so that accrual of benefits on and after that date was on the basis of Career Average Revalued Earnings (CARE). Under the IHR provisions of the Scheme, Mr Williams is and was entitled to, and received, the following: i) A lump sum and annuity, payable immediately, based on his accrued benefits without any actuarial reduction for early receipt. The annuity and lump sum were calculated on the basis of his actual salary at the relevant times, whether full time or part time; ii) An enhancement to both his lump sum and annuity (the enhanced element), again payable immediately and without any actuarial reduction for early receipt. The enhanced element was calculated on the basis of his actual salary at date of retirement and a period of deemed pensionable service, as though he had continued to be employed in active service to his Normal Pension Date (NPD) under the Scheme (age 67). The dispute relates solely to the enhanced element. Mr Williams contends that the reduced figure, resulting from its calculation by reference to his part time rather than full time salary, constitutes unfavourable treatment because of something arising in consequence of his disabilities, that is his inability to work full time. It therefore involves discrimination within the meaning of section 15(1)(a), unless shown under section 15(1)(b) to be a proportionate means of achieving a legitimate aim, or in other words justified. This contention was upheld by the Employment Tribunal, but rejected on appeal by the Employment Appeal Tribunal (Langstaff J) [2015] ICR 1197 and by the Court of Appeal (Arden, Briggs and Bean LJJ) [2018] ICR 233. It is common ground that if the appeal succeeds, the appeal will have to be remitted to the Employment Tribunal to consider the issue of justification under section 15(1)(b). Comparison with the previous law It is accepted by both sides that section 15 needs to be considered in the context of the previous law, as interpreted by the House of Lords in Lewisham London Borough Council v Malcolm [2008] UKHL 43; [2008] 1 AC 1399. We have been referred to the words of the Solicitor General in a Public Bill Committee on what was then clause 14 of the Equality Bill (Hansard (HC Debates), 16 June 2009, col 275): Like the provision in the 1995 Act, clause 14 is intended to provide that the disabled person demonstrates that they have been subjected to detrimental treatment because of something connected with their disability and, secondly, that the duty holder should be able to justify that treatment. However, we have revised the wording from the 1995 Act because we cannot simply carry it forward as the finding in the courts said that we did not achieve the protection that we intended. We therefore dropped the requirement for a comparator. Similarly, the Explanatory Note to section 15 of the Act states: This section is a new provision. The Disability Discrimination Act 1995 provided protection from disability related discrimination but, following the judgment of the House of Lords in the case of London Borough of Lewisham v Malcolm [2008] UKHL 43, those provisions no longer provided the degree of protection from disability related discrimination that is intended for disabled people. This section is aimed at re establishing an appropriate balance between enabling a disabled person to make out a case of experiencing a detriment which arises because of his or her disability, and providing an opportunity for an employer or other person to defend the treatment. The direct predecessor of section 15 was section 3A of the Disability Discrimination Act 1995: (1) For the purposes of this Part, a person discriminates against a disabled person if (a) for a reason which relates to the disabled persons disability, he treats him less favourably than he treats or would treat others to whom that reason does not or would not apply, and (b) he cannot show that the treatment in question is justified. Malcolm itself had been concerned with section 22 of the 1995 Act, directed at disability related discrimination in the management of property, including in that case by eviction. Section 24(1) defined discrimination for that purpose in similar terms to section 15. It required consideration of whether, on the assumption that the eviction was for a reason related to a persons disability, it involved treating him less favourably than others to whom that reason does not or would not apply. In Malcolm a council tenant who suffered from schizophrenia had sublet his flat in breach of the tenancy agreement. When the council sought to determine the tenancy, he argued that the reason for his action related to his illness and that the eviction constituted discrimination contrary to section 22. It is convenient to refer to the helpful summary of the background and substance of the decision by Elias LJ in Griffiths v Secretary of State for Work and Pensions [2015] EWCA Civ 1265; [2017] ICR 160 (a case directly concerned with reasonable adjustments under section 20 of the 2010 Act). As he explained (paras 52 54), one of the issues for the House was how the relevant comparison should be made: Who were the others to whom that reason does not or would not apply? This had been considered in detail by Mummery LJ giving judgment in the Court of Appeal in Clark v Novacold Ltd [1999] ICR 951. He illustrated the two competing constructions by taking the example of a blind man who wished to take his guide dog into a restaurant which had a no dogs rule. Should the comparison be with an able bodied man who wished to take his dog into the restaurant? If so, there would be no less favourable treatment because all are treated the same. The able bodied man too would be refused entry for the same reason, namely that he wished to take his dog into the restaurant. Or should the comparison be with an able bodied man who did not need to take a dog into the restaurant and would not therefore be excluded? In that case there would be unfavourable treatment. In the context of Malcolm the first approach would require the comparison with an able bodied man who had sublet, and the second with someone who had not sublet. The problem with the first analysis was that it effectively rendered disability related discrimination a dead letter and equated it for practical purposes with direct disability discrimination as Lord Brown of Eaton under Heywood recognised in terms. The problem with the second analysis was that it effectively did away with the comparison exercise altogether, as all their Lordships accepted. It requires a comparison with persons to whom the reason for the treatment does not apply; logically the claimant will always be treated less favourably than such persons. The Court of Appeal in Clark v Novacold Ltd had preferred the latter approach on the grounds that it was what Parliament had intended, but in Malcolm their Lordships held, by a majority on this point that the former was the proper comparison. So, in the view of the majority, the comparison is a like for like exercise; the comparator must be similarly placed to the disabled claimant in all relevant respects save for the disability. This is precisely what is required in direct discrimination cases. Although it is not in dispute that the wording of section 15 was intended in broad terms to reverse the ruling in Malcolm, our task is not to try to re construct the pre Malcom law. It is to the section itself, interpreted in accordance with ordinary principles, that we must look for the applicable tests in the present case. The most obvious feature, in line with the Solicitor Generals explanation, is the removal of any element of comparison. Instead, section 15 appears to raise two simple questions of fact: what was the relevant treatment and was it unfavourable to the claimant? The judgments below The Employment Tribunal (para 32) accepted as correct the case as presented on behalf of Mr Williams. Its essence appears from the passage quoted by the tribunal at para 23 of their judgment. It was argued that, in line with previous authority on the equivalent term detriment, the expression unfavourable treatment should be given a broad meaning, including any financial or economic disadvantage. The submission continued: A simple reasonable and logical analysis of the pension rules leads to the inevitable realisation that a person who retires suddenly following a heart attack or stroke would receive their deemed years of service at their full time salary whilst a disabled employee who before retiring is forced to work part time due [to] an increasing disability only receives their deemed years of service at their part time salary. The disabled employee is consequently at a substantial financial disadvantage. (para 23) On its face, that formulation appeared to re introduce a form of comparison which the new section was intended to eliminate, but this time by reference to a hypothetical comparison with the treatment of someone with a different form of disability. In the EAT Langstaff J (President) held that in this respect the tribunal had been in error (para 30). I do not understand that aspect of his reasoning to be under challenge before us. As Ms Crasnow QC says (in her speaking note for Mr Williams): Comparing Mr W to others who have different medical histories (stroke/heart attack) is the wrong approach. At the beginning of Langstaff Js judgment, he had commented on the effect of the scheme for Mr Williams, which he described as immensely favourable: Under the rules of the pension scheme applicable to him employees were entitled to a pension on retirement at age 67, but not earlier, unless retiring when their ill health was such that they were plainly incapable of continuing in work. In the latter case, employees would be entitled not only to the immediate payment of pension without actuarial reduction in respect of the work they had already done (accrued pension) but also to an enhanced pension. This was also paid without actuarial reduction for early receipt as if they had continued working until normal retirement age (in the claimants case 67) continuing to receive the salary they had been receiving when they retired. This was plainly an immensely favourable arrangement for anyone eligible for it. Those eligible for it were necessarily disabled (within the meaning of the Equality Act 2010). Any other 38 year old who left the service of the university at that age would have no prospect of receiving the payment of any accrued pension entitlement until they reached what would have been their normal retirement age, nor any prospect of receiving any enhanced pension. (para 1) In a section under the heading Unfavourably, he gave his own view of the meaning of the term (paras 27 29). He did not think the word could be equated with the word detriment used elsewhere in the Act; nor, as was agreed, did it require a comparison with an identifiable comparator, actual or hypothetical. It was to be measured against an objective sense of that which is adverse as compared with that which is beneficial. He noted that the same word was used elsewhere in the Act, in provisions which have a longer pedigree, in relation to discrimination on the grounds of pregnancy (section 18(2)). In that context it had the sense of placing a hurdle in front of, or creating a particular difficulty for, or disadvantaging a person . It was likely to be intended to have much the same sense in section 15. It was for a tribunal to recognise when an individual has been treated unfavourably, and it was not possible to be prescriptive. However, in his view treatment which is advantageous cannot be said to be unfavourable merely because it is thought it could have been more advantageous, or, put the other way round, because it is insufficiently advantageous. The determination of that which is unfavourable involves an assessment in which a broad view is to be taken and which is to be judged by broad experience of life. Persons may be said to have been treated unfavourably if they are not in as good a position as others generally would be. He cited Malcolm as an obvious example of a life event which would generally be regarded as adverse. He also disagreed with the tribunals reasons for rejecting the respondents case on justification (paras 40ff). However, he was unable to say that there was necessarily only one result to which a properly directed tribunal could come. Accordingly he ordered that the appeal should be remitted to a different panel for a full rehearing (paras 50 51). In the Court of Appeal, the leading judgment was given by Bean LJ. He adopted a similar approach to that of Langstaff J, although he also considered the application of the competing interpretations to different hypothetical examples. For the substance of his reasoning it is sufficient to refer to two passages. In the first (paras 42 43) he distinguished decided cases, including Malcolm, in which there had been an act which in itself caused disadvantage: In the leading cases cited to us the treatment complained of has been an act which itself disadvantages the claimant in some way. In Clark v Novacold Ltd the claimant was dismissed. In the Lewisham London Borough Council case Mr Malcolm was evicted. In Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] ICR 337 the claimant chief inspector had part of her duties as a manager (the appraisal of subordinates) removed. The House of Lords held that it was not necessary for her to show financial loss in order to establish a detriment; it was enough that she might reasonably feel demeaned by this decision in the eyes of those over whom she had authority. Ms Casserley [counsel for Mr Williams] placed the Shamoon case at the forefront of her argument, but I do not consider that it assists her. Mr Williams case does not turn on a question of reasonable perception. His pension is undoubtedly less advantageous or less favourable than that of a hypothetical comparator suddenly disabled by a heart attack or stroke. But it is far more advantageous or favourable than it would be if he had not become permanently incapacitated from his job. The Shamoon case is not authority for saying that a disabled person has been subjected to unfavourable treatment within the meaning of section 15 simply because he thinks he should have been treated better. Ms Casserleys argument begins by treating unfavourable as not requiring any comparator but in reality it does depend on a comparator, namely another disabled member of the scheme with a different medical history. No authority was cited to us to support the view that a disabled person who is treated advantageously in consequence of his disability, but not as advantageously as a person with a different disability or different medical history would have been treated, has a valid claim for discrimination under section 15 subject only to the defence that the treatment was a proportionate means of achieving a legitimate aim. If such a claim were valid it would call into question the terms of pension schemes or insurance contracts which confer increased benefits in respect of disability caused by injuries sustained at work, or which make special provision for disability caused by one type of disease (for example cancer). The critical question In the second (paras 48 49) he rejected what he saw as counsels implicit comparison with the treatment of different disability: can be put in this way: whether treatment which confers advantages on a disabled person, but would have conferred greater advantages had his disability arisen more suddenly, amounts to unfavourable treatment within section 15. In agreement with the President of the Employment Appeal Tribunal I would hold that it does not. He differed from Langstaff J only in respect of the disposal of the appeal, having taken the view, shared as he thought with the EAT, that the undisputed facts of this case cannot amount to unfavourable treatment within section 15 (para 52), the issue of justification did not arise, and accordingly he saw no purpose in remitting to the tribunal. Accordingly the court substituted an order simply dismissing Mr Williams claims. The submissions in this court For Mr Williams, Ms Crasnows submissions, as I understood them, had a somewhat different emphasis from the case below. I have already noted her rejection of the comparison (drawn before the tribunal) with a person with a different disability. Although her case was developed at considerable length, both in the appellants written case and in a speaking note presented to the court, her central submission can be shortly stated. In the words of her speaking note, it was unfavourable to calculate the enhanced element of his pension using his final salary (that is, the lower part time salary) given that he had been working part time: only because of his disabilities. Had he not been disabled he would have continued to work full time. The same point was expressed slightly more fully in the written case (para 51): It is submitted that if the Court of Appeal had correctly understood the meaning of unfavourable, as advocated by the appellant, it would have been bound to find that Mr Williams was treated unfavourably, suffering detriment. The unfavourable treatment was the adoption of his part time salary as the multiplier when calculating the enhanced element of his pension, when at all times he was on a full time contract and his hours had been reduced solely as a temporary reasonable adjustment by way of a phased return. The detriment was that he was unable to achieve the full payment under that scheme. The two concepts are very similar and here one is an inevitable consequence of the other. Her supporting submissions took issue with various aspects of the reasoning of the EAT and the Court of Appeal, including the suggestion of Langstaff J that the word unfavourably must be taken to have a different meaning from the word detriment as used elsewhere in the Act. She referred to the guidance given in the Equality and Human Rights Commissions Code of Practice (2011), which she said adopts a more flexible approach. Under the heading What is unfavourable treatment?, the Code states: 5.7 For discrimination arising from disability to occur, a disabled person must have been treated unfavourably. This means that he or she must have been put at a disadvantage. Often, the disadvantage will be obvious and it will be clear that the treatment has been unfavourable; for example, a person may have been refused a job, denied a work opportunity or dismissed their employment. But sometimes unfavourable treatment may be less obvious. Even if an employer thinks that they are acting in the best interests of a disabled person, they may still treat that person unfavourably. from The reference in that passage to disadvantage took her to an earlier passage dealing with the word disadvantage as it appears elsewhere in the statute (section 19): 4.9 Disadvantage is not defined by the Act. It could include denial of an opportunity or choice, deterrence, rejection or exclusion. The courts have found that detriment, a similar concept, is something that a reasonable person would complain about so an unjustified sense of grievance would not qualify. A disadvantage does not have to be quantifiable and the worker does not have to experience actual loss (economic or otherwise). It is enough that the worker can reasonably say that they would have preferred to be treated differently. Those passages, Ms Crasnow submitted, show that words such as unfavourably, disadvantage, and detriment are similar in effect. The last sentence also supports a test which is not purely objective; regard may be had to what is reasonably seen as unfavourable by the person affected. In this connection she relied also on the UN Convention on the Rights of Persons with Disabilities, which was said to require a broad interpretation of discrimination, and in particular to support the need to have regard to the subjective experience of the person concerned, albeit tempered by a reasonableness test. For the respondents, Mr Bryant QC generally supported the reasoning of the EAT and the Court of Appeal. In particular he adopted Langstaff Js interpretation (paras 28 29) of the word unfavourably: it has the sense of placing a hurdle in front of, or creating a particular difficulty for, or disadvantaging a person The determination of that which is unfavourable involves an assessment in which a broad view is to be taken and which is to be judged by broad experience of life. This objective test, he submitted, was to be contrasted with the mixed subjective/objective test held to apply when determining whether an individual has been subjected to a detriment under section 39 of the Act, that is whether the treatment is of such a kind that a reasonable worker would or might take the view that in all the circumstances it was to his detriment? (per Lord Hope in Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 11; [2003] ICR 337, para 35). However, as he submitted, whichever test is adopted the conclusion is the same. Mr Williams had not been treated unfavourably. He had not received a lower or lesser pension than would otherwise have been available to him if he had not been disabled. If he had not been disabled, and had been able to work full time, the consequence would not have been calculation of his pension on a more favourable basis, but loss of entitlement to any pension at all until his normal retirement date. Discussion Since I am substantially in agreement with the reasoning of the Court of Appeal, I can express my conclusions shortly, without I hope disrespect to Ms Crasnows carefully developed submissions. I agree with her that in most cases (including the present) little is likely to be gained by seeking to draw narrow distinctions between the word unfavourably in section 15 and analogous concepts such as disadvantage or detriment found in other provisions, nor between an objective and a subjective/objective approach. While the passages in the Code of Practice to which she draws attention cannot replace the statutory words, they do in my view provide helpful advice as to the relatively low threshold of disadvantage which is sufficient to trigger the requirement to justify under this section. It is unnecessary to refer to more remote sources such as the United Nations Conventions. Nor do I find it useful to speculate about the application of the section or the Code in hypothetical cases which are not before the court. On the other hand, I do not think that the passages in the Code do anything to overcome the central objection to Mr Williams case as now formulated, which can be shortly stated. It is necessary first to identify the relevant treatment to which the section is to be applied. In this case it was the award of a pension. There was nothing intrinsically unfavourable or disadvantageous about that. By contrast in Malcolm, as Bean LJ pointed out (para 42), there was no doubt as to the nature of the disadvantage suffered by the claimant. No one would dispute that eviction is unfavourable. Ms Crasnows formulation, to my mind, depends on an artificial separation between the method of calculation and the award to which it gave rise. The only basis on which Mr Williams was entitled to any award at that time was by reason of his disabilities. As Mr Bryant says, had he been able to work full time, the consequence would have been, not an enhanced entitlement, but no immediate right to a pension at all. It is unnecessary to say whether or not the award of the pension of that amount and in those circumstances was immensely favourable (in Langstaff Js words). It is enough that it was not in any sense unfavourable, nor (applying the approach of the Code) could it reasonably have been so regarded. For these reasons I would dismiss the appeal.
UK-Abs
Mr Williams was employed by Swansea University from 12 June 2000 until he retired for ill health reasons on 30 June 2013 at the age of 38. He suffers from Tourettes syndrome and other conditions satisfying the definition of disability under section 6 of the Equality Act 2010 (the 2010 Act). He had been an active member of the universitys pension scheme (the pension scheme) throughout his employment. He was employed by the university for 13 years. For the first 10 he worked full time and then, for the final three, he worked between 17.5 and 26 hours per week when he was fit to do so. The reduction in working hours arose from his disabilities. When he retired he was working half his full time hours (17.5 hours a week). The pension scheme provided for accrual of benefits on a final salary basis until 1 August 2009, from which time it was amended so that accrual of benefits on and after that date was on the basis of Career Average Revalued Earnings. Under the ill health early retirement provisions, Mr Williams was entitled to a lump sum and annuity, calculated on the basis of his actual salary at relevant times, whether full or part time. The amount of this part of the pension was not in dispute. He was also entitled to an enhancement, calculated on the basis of his actual salary at the date of retirement. This element was the point of dispute. Section 15(1) of the 2010 Act provides that: A person (A) discriminates against a disabled person (B) if (a) A treats B unfavourably because of something arising in consequence of Bs disability, and (b) A cannot show that the treatment is a proportionate means of achieving a legitimate aim. Mr Williams claimed that the calculation of the enhancement constituted discrimination within this section, as it was based upon his final part time salary, rather than his full time salary. He said this was unfavourable treatment because of something arising in consequence of his disabilities, namely his inability to work full time. The Employment Tribunal agreed with Mr Williams, but this was overturned by the Employment Appeal Tribunal and the Court of Appeal. The central issue for the Supreme Court is the meaning of the expression treats unfavourably. The Supreme Court unanimously dismisses the appeal. Lord Carnwath gives the lead judgment. The Supreme Court held that in most cases, including this one, little is likely to be gained by seeking to draw distinctions between the word unfavourably in section 15 of the 2010 Act and analogous concepts such as disadvantage or detriment found in other provisions of the Act, or between an objective and a subjective/objective approach [27]. Passages in the Equality and Human Rights Commissions Code of Practice (2011) provide helpful guidance as to the relatively low threshold of disadvantage sufficient to trigger the requirement to justify under section 15 of the 2010 Act, but they do not overcome the central objection to Mr Williams case [27 28]. First, it is necessary to identify the relevant treatment to which section 15 of the 2010 Act is to be applied. In this case it was the award of a pension. There is nothing intrinsically unfavourable or disadvantageous about that. The appellants argument depends on an artificial separation between the method of calculation and the award to which it gave rise. The only basis on which Mr Williams was entitled to any award at this time was by reason of his disabilities. Had he been able to work full time, the consequence would have been, not an enhanced entitlement, but no immediate right to a pension at all. In those circumstances the award was not in any sense unfavourable, nor (applying the approach of the Code) could it reasonably have been so regarded [28].
Part II of the Landlord and Tenant Act 1954 confers a qualified security of tenure on business tenants. A tenant in occupation of the premises under a tenancy for a term of years certain may stay over and request a new tenancy beginning upon its expiry, unless before the tenancy was granted the landlord had served a notice informing the tenant of his rights and the parties had then agreed to exclude the relevant provisions of the Act. The tenant may apply to the court under section 24(1) of the Act for an order granting one. The court is required to make that order unless the landlord makes out one of seven grounds of opposition specified in section 30(1), in which case it is required to refuse one. One of those grounds is that the landlord intends to demolish or reconstruct the premises. The question which arises on this appeal is whether it is open to the landlord to oppose the grant of a new tenancy if the works which he says that he intends to carry out have no purpose other than to get rid of the tenant and would not be undertaken if the tenant were to leave voluntarily. The directly relevant provisions of the Act are section 30(1)(f) and section 31A. Section 30(1)(f) provides that the landlord may oppose the grant of a new tenancy on the ground that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding . Section 31A (which was inserted by the Law of Property Act 1969, section 7(1)), provides: (1) Where the landlord opposes an application under section 24(1) of this Act on the ground specified in paragraph (f) of section 30(1) of this Act the court shall not hold that the landlord could not reasonably carry out the demolition, reconstruction or work of construction intended without obtaining possession of the holding if (a) the tenant agrees to the inclusion in the terms of the new tenancy of terms giving the landlord access and other facilities for carrying out the work intended and, given that access and those facilities, the landlord could reasonably carry out the work without obtaining possession of the holding and without interfering to a substantial extent or for a substantial time with the use of the holding for the purposes of the business carried on by the tenant; or the tenant is willing to accept a tenancy of an (b) economically separable part of the holding and either paragraph (a) of this section is satisfied with respect to that part or possession of the remainder of the holding would be reasonably sufficient to enable the landlord to carry out the intended work. Section 37 provides that where a court is precluded from ordering the grant of a new tenancy on certain grounds, including this one, the tenant is entitled to compensation. The premises in issue on this appeal comprise the ground floor and basement of 80, Jermyn Street in the St Jamess area of London. The freeholders of the building are the South London and Maudsley NHS Foundation Trust and the landlord is the head lessee. The tenant is a textile dealership and consultancy, specialising in antique tapestries and textiles. It occupies the ground floor and basement under an underlease for a term of 25 years from 2 January 1989, and uses them as a retail art gallery, showroom and archive. The rest of the building is occupied and managed by the landlord as a hotel. The local planning authority, Westminster City Council, has designated the St Jamess area as a special policy area, in which it seeks to protect and promote certain uses, namely private members clubs, art galleries and niche retail outlets. Pursuant to that policy, the premises occupied by the tenant are recognised as having a specific, sui generis, use for planning purposes, namely mixed use, comprising retail, depository, research centre, archive library, publishing and conservation for historic tapestries, textile art and carpets. Any material change of use would require planning consent. On 16 March 2015, the tenant served statutory notices requesting the grant of a new tenancy. On 15 May 2015, the landlord served a statutory counter notice opposing the grant of a new tenancy under section 30(1)(f) of the Act. On 8 June 2015, the tenant applied in the Central London County Court for an order. A preliminary issue was directed whether that ground of opposition was made out. The facts are unusually stark. In its defence, the landlord put forward several successive schemes said to represent the works which it intended to carry out. These works were designed (i) to be sufficiently substantial to qualify under ground (f); (ii) to be too substantial and disruptive to be carried out by exercising a right of entry while the tenant remained in possession; and (iii) to avoid the need for planning permission, which would have enabled the tenant to argue that its likely refusal would make the project ineffective. In the words of the judge (HHJ Saggerson), the proposed scheme of works was designed with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works commercial or practical utility and irrespective of the expense. The scheme went through three iterations. The first scheme involved incorporating the former bar of the hotel into the ground floor of the premises. This scheme was shortly abandoned and replaced by a new scheme which involved creating two new retail units incorporating the premises occupied by the tenant and part of the hotel, and carrying out certain associated external works including the installation of a new street door to allow access to one of the units. The planning officers of the local authority recommended this scheme for refusal, whereupon it was withdrawn and replaced by a third scheme, which was the one eventually relied upon at the trial of the preliminary issue. The third scheme was based on the second, with two significant differences. First, it omitted the external works, which would have required planning permission. For this reason, the internal wall dividing the two proposed retail units stopped two metres short of the shopfront at ground floor level; and there was no external door to one of the units, so that it could be accessed only through the other. Secondly, the new scheme added more extensive internal works, many of which were objectively useless. They included the artificial lowering of part of the basement floor slab, in a way which would achieve nothing other than the creation of an impractical stepped floor in one of the units; the repositioning of smoke vents for no reason; and the demolition of an internal wall at ground floor level followed by its immediate replacement with a similar wall in the same place. The cost of the scheme was estimated by the landlord at 776,707 excluding VAT, in addition to statutory compensation of 324,000 payable to the tenant. It is common ground that the proposed works had no practical utility. This was because, although the works themselves required no planning permission, it would be impossible to make any use of them at all without planning permission for change of use, which the landlord did not intend to seek. Planning permission would have been required because the scheme involved combining premises permitted for hotel use with premises permitted for sui generis use. In addition, one of the retail units was unusable without an entrance from the street. In accordance with a common practice in this field, the landlord supported its evidence of intention with a written undertaking to the court to carry out the works if a new tenancy was refused. The sole purpose of the works was to obtain vacant possession. The landlords evidence was that it was prepared to run the risk that the premises occupied by the tenant would be rendered unusable in order to secure its objective of undertaking [the third scheme] and thereby remove the claimant from the premises. The landlord submitted that the works are thoroughly intended because they are a way of obtaining possession. That is all there is to it. As the landlords principal witness put it, the third scheme was designed purely for the purpose of satisfying ground (f). The judge found that the landlord genuinely intended to carry out the works if they were necessary in order to get rid of the tenant, but that it did not intend to carry out the works if it were not necessary to do so for that purpose. It would not, for example, have been necessary to carry out the works if the tenant agreed to go voluntarily, or it were to be found possible to carry them out by exercising a right of entry without obtaining vacant possession. The landlord gave evidence that in the longer term, it was hoped that the departure of the tenant would facilitate a more ambitious plan of works to add 28 bedrooms to the hotel. It was proposed to review the desirability of proceeding with this plan in 2018. These further works were not, however, the works relied upon by the landlord for the purpose of satisfying ground (f). Schemes like this will not always be economically feasible. They depend on the value of vacant possession exceeding the cost of the useless works. But in locations such as the west end of London, where property values are high and/or rentals depressed by planning restrictions, they may make economic sense as a means of obtaining vacant possession. On that footing, Judge Saggerson found that the landlord genuinely intended to carry out the works and that ground (f) was made out. He therefore declined to order a new tenancy. On appeal to the High Court, Jay J agreed, but gave permission for a leap frog appeal to this court. The justification for the leap frog appeal was that the decision of the courts below was based on a line of authority in the Court of Appeal and the House of Lords to the effect that the operation of the section depended on a two part test. The landlord had to prove (i) that it had a genuine intention to carry out qualifying works; and (ii) that it would practically be able to do so. It was submitted on behalf of the landlord that the effect of these decisions was that nothing else mattered. In particular, the landlords motives, the reasonableness of its intentions, or the objective utility of the works, whether for its own purposes or in the public interest, were all alike irrelevant, except (as the landlord accepted) as material from which the court might infer that the intention to carry them out was not genuine. The origin of the two part test proposed by the landlord is the decision of the Court of Appeal in Cunliffe v Goodman [1950] 2 KB 237.This was an appeal in an action for damages for breach of a repairing covenant on the expiry of a lease. By section 18(1) of the Landlord and Tenant Act 1927, no such damages were recoverable if it is shown that the premises would at or shortly after the termination of the tenancy have been or be pulled down, or such structural alterations made therein as would render valueless the repairs covered by the covenant. The language, purpose and context of the statutory provision under consideration were therefore quite different from those of Part II of the Act of 1954. But it had been held in Marquess of Salisbury v Gilmore [1942] 2 KB 38 that the test for the application of section 18(1) depended on the intention of the landlord at the time when the tenancy came to an end, and the judgment of Asquith LJ in Cunliffe has been treated as a general definition of intention. He held, at p 253, that it connoted a state of affairs which he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition. On the facts of that case, the landlord failed because it was found that he had no settled intention to carry out the works but was reserving his final decision until further information should become available. After the passage of the 1954 Act, a trio of cases addressed the question of intention in the context of ground (f). The background to all three cases was similar. The landlord wished to occupy the premises himself, but ground (g), which authorised the refusal of a new tenancy in that case, was available only if he had held his interest in the premises for at least five years before the end of the tenants term. Landlords who had acquired their interest within the five year period therefore proposed works to redevelop the premises before moving into occupation, in order to bring themselves within ground (f) instead. The argument was that the existence of ground (g) implied that ground (f) should not be available to a landlord who intended to occupy the premises himself but failed to satisfy the conditions on which ground (g) was available. In Atkinson v Bettison [1955] 1 WLR 1127, the Court of Appeal held that this kind of problem fell to be resolved by determining which was the primary reason for the landlords desire to obtain vacant possession. The judge had refused to order a new tenancy because he found that the landlords real purpose was to occupy the premises and that the proposed redevelopment was no more than an ancillary purpose directed to that end. The Court of Appeal affirmed his decision. Denning LJ (with whom Hodson and Morris LJJ agreed) held that, where there were two purposes, only the primary purpose was relevant. In Fisher v Taylors Furnishing Stores Ltd [1956] 2 QB 78 it was held that the landlords intention to demolish and reconstruct satisfied ground (f), notwithstanding that his purpose was to occupy the premises himself without being able to satisfy ground (g). Denning LJ, delivering the leading judgment in the Court of Appeal, reinterpreted his earlier judgment in Atkinson v Bettison and resiled from his statement that only the primary purpose was relevant. A landlord might have two purposes but, provided that the purpose of demolishing or reconstructing the premises was genuine, it would satisfy ground (f). Grounds (f) and (g) were distinct and each of them had to be considered on their own terms separately. The true view of the earlier decision, he said (p 84), was that the courts should ensure that landlords whose real purpose was to occupy the premises themselves but failed to satisfy ground (g), did not devise spurious schemes of works in order to obtain possession on ground (f): For this purpose the court must be satisfied that the intention to reconstruct is genuine and not colourable; that it is a firm and settled intention, not likely to be changed; that the reconstruction is of a substantial part of the premises, indeed so substantial that it cannot be thought to be a device to get possession; that the work is so extensive that it is necessary to get possession of the holding in order to do it; and that it is intended to do the work at once and not after a time. Unless the court were to insist strictly on these requirements, tenants might be deprived of the protection which Parliament intended them to have. It must be remembered that if the landlord, having got possession, honestly changes his mind and does not do any work of reconstruction, the tenant has no remedy. Hence the necessity for a firm and settled intention. Morris LJ, who had also sat in Atkinson v Bettison, said (p 89): Where, as in section 30(1)(f), proof of an intention is to be supplied, and of an intention related to a particular time, then the genuineness of a declared intention may have to be decided. Considerations as to what may be a landlords primary purpose, or his real intention, or his main purpose, or his secondary purpose, or his real reason (to quote phrases which have been used), are only of relevance and assistance in the course of deciding whether the landlord has proved that he genuinely has an intention of doing one of the things specified in section 30(1)(f), and of doing it on the termination of the current tenancy. The third case was the decision of the House of Lords in Bettys Cafs Ltd v Phillips Furnishing Stores Ltd [1959] AC 20. The decision is authority for two propositions: (i) that the relevant intention of the landlord was his intention at the date of the hearing; and (ii) that grounds (f) and (g) were distinct grounds of opposition, and that accordingly ground (f) should not be read as implicitly excluding cases where the landlord wished to occupy the premises himself. However, the tenant also sought to resurrect the argument rejected in Fisher v Taylors Furnishing Stores Ltd that redevelopment must be the landlords primary purpose, and two members of the Appellate Committee, Lord Denning and Lord Morton, commented on that attempt, obiter. Lord Denning (p 52) reaffirmed the view which he had expressed in Fisher. Lord Morton (pp 44 45) also rejected the tenants argument, but on the more limited ground that it wrongly assumed that grounds (f) and (g) were mutually exclusive categories. The speeches throw little light on the broader relevance (if any) of the landlords motives in seeking to redevelop the premises. But the House may fairly be said to have implicitly endorsed the approach taken in Fisher rather than that in Atkinson. The decision of the Court of Appeal in Housleys Ltd v Bloomer Holt Ltd [1966] 1 WLR 1244 turned on the identity of the relevant premises for the purposes of ground (f). Diplock LJ, however, took the opportunity to point out that Bettys Cafs must be regarded as having definitively laid to rest the concept of the primary purpose floated in Atkinson v Bettison. He observed (p 1251) that the fallacy in that case lay in the proposition that one had got to look and see what the primary intention or purpose or motive of the landlord was. The same point was subsequently made by the Court of Appeal in Turner v Wandsworth Borough Council [1994] 69 P & CR 433, where it was decisive. The facts of that case were that the landlord proposed to demolish the premises with a view to leasing them for a short period as a car park and selling them thereafter if market conditions were favourable. The judge found that the intention to demolish was genuine but that it was colourable because it was simply a device to be able to sell. The Court of Appeal allowed the appeal. Staughton LJ, delivering the only reasoned judgment, treated the above cases as authority for the proposition that in general, motive is irrelevant, provided there is a genuine intention to demolish or reconstruct (p 436). As Baroness Hale pointed out in Majorstake Ltd v Curtis [2008] AC 787, paras 34 35, it is clear that for the purposes of section 30(1)(f) of the Act of 1954 it is for the landlord to decide what works he wishes to carry out and where. It follows that if his intention is genuine, it cannot matter whether it is reasonable, or whether reasonable changes to the scheme would make it consistent with the tenants continued possession of the demised premises: see Decca Navigator Co Ltd v Greater London Council [1974] 1 WLR 748; Blackburn v Hussain [1988] 1 EGLR 77, 79 (Taylor LJ). Although the point must be regarded as res integra in this court, I accept the submission of Mr Fetherstonhaugh QC (who appeared for the landlord) that the touchstone of ground (f) is a firm and settled intention to carry out the works. The landlords purpose or motive are irrelevant save as material for testing whether such a firm and settled intention exists. This is implicit in the abundant case law generated by the Act since Atkinson v Bettison and it is the plain meaning of intention in both ground (f) and ground (g). Mr Fetherstonhaugh is also surely right in saying that as a statutory interference with the landlords proprietary rights, the protection conferred by the Act should be carried no further than the statutory language and purpose require. It confers no more than a qualified security on the tenant. Certain interests of the landlord override whatever security it was intended to confer on the tenant, and one of them is the right to demolish or reconstruct his property in whatever way he chooses at the expiry of the term. Nonetheless, I do not think that these considerations avail the landlord on the facts of the present case. This appeal does not, as it seems to me, turn on the landlords motive or purpose, nor on the objective reasonableness of its proposals. It turns on the nature or quality of the intention that ground (f) requires. The entire value of the works proposed by this landlord consists in getting rid of the tenant and not in any benefit to be derived from the reconstruction itself. The commercial reality is that the landlord is proposing to spend a sum of money to obtain vacant possession. Indeed, in many cases, apart from the statutory compensation, landlords with proposals like these will not even have to spend the money. They need only supply the tenant with a schedule of works substantial and disruptive enough to be inconsistent with his continued occupation. If the landlords argument is correct, the tenant will have no incentive to go to court just to get an undertaking to carry out the works, from which he could derive no possible benefit. He will recognise defeat and leave voluntarily. The landlord will then have no need to give an undertaking to the court and no reason to carry out the works. The result is that no overriding interest of the landlord will be served which section 30 can be thought to protect. The right to obtain vacant possession on the expiry of the existing term, which is all that the landlord is getting for his money, is not in itself an interest protected by section 30. On the contrary, in a case where the parties have not agreed to contract out of statutory protection, it is the very interest that Part II of the Act is designed to restrict. These considerations are relevant not so much in themselves as because in such a case one would usually infer what in this case the landlord has been honest enough to admit, ie that the landlords intention to carry out the works was conditional. It intended to carry them out only conditionally on their being necessary to get the tenant out, and not, for example, if he left voluntarily or if the judge was persuaded that the works could be done by exercising a right of entry. Does an intention of this kind engage ground (f)? The courts below thought that it was a sufficient answer to this question that the condition was satisfied at the time of the trial, because it was by then clear that the tenant would not in fact leave voluntarily and that the works could not be done by way of a right of entry while he remained in possession. A dictum of Neuberger J in Al Malik Carpets (Private) Ltd v London Buildings (Highgate) Ltd [1999] All ER (D) 971, Transcript p 11, suggests that he too would have regarded it as sufficient, although the point was not directly in issue in that case. I respectfully disagree. The problem is not the mere conditionality of the landlords intention, but the nature of the condition. Section 30(1)(f) of the Act assumes that the landlords intention to demolish or reconstruct the premises is being obstructed by the tenants occupation. Hence the requirement that the landlord could not reasonably do so without obtaining possession of the holding. Hence also the provision of section 31A that the court shall not hold this requirement to have been satisfied if the works can reasonably be carried out by exercising a right of entry and the tenant is willing to include a right of entry for that purpose in the terms of the new tenancy. These provisions show that the landlords intention to demolish or reconstruct the premises must exist independently of the tenants statutory claim to a new tenancy, so that the tenants right of occupation under a new lease would serve to obstruct it. The landlords intention to carry out the works cannot therefore be conditional on whether the tenant chooses to assert his claim to a new tenancy and to persist in that claim. The acid test is whether the landlord would intend to do the same works if the tenant left voluntarily. On the facts found by Judge Saggerson, the tenants possession of the premises did not obstruct the landlords intended works, for if the tenant gave up possession the landlord had no intention of carrying them out. Likewise, the landlord did not intend to carry them out if the tenant persuaded the court that the works could reasonably be carried out while it remained in possession. In my judgment, a conditional intention of this kind is not the fixed and settled intention that ground (f) requires. The answer would be the same if what the landlord proposed was a demolition, conditionally on its being necessary to obtain possession from the court. More complex issues would arise if the landlord intended to carry out some substantial part of the proposed works whether or not it was necessary to do so in order to obtain vacant possession from the court, and part of them only if it was necessary in order to gain possession. This might arise if, for example, the unconditional part of the landlords plan was insufficiently substantial or disruptive to warrant the refusal of a new tenancy, so that spurious additional works had to be added for the sole purpose of obtaining possession. In a situation like that, the answer is likely to depend on the precise facts. If, however, it is established that, at the time of the trial, were the tenant hypothetically to leave voluntarily, the landlord would not carry out the spurious additional works, then the tenants claim to a new tenancy would normally fall to be resolved by reference only to the works which the landlord unconditionally intended. Just as the landlords motive or purpose, although irrelevant in themselves, may be investigated at trial as evidence for the genuineness of his professed intention to carry out the works, so also they may be relevant as evidence of the conditional character of that intention. In both cases, the landlords motive and purpose are being examined only because inferences may be drawn from them about his real intentions. Likewise, although the statutory test does not depend on the objective utility of the works, a lack of utility may be evidence from which the conditional character of the landlords intention may be inferred. I am not persuaded by Mr Fetherstonhaughs submission that if the law is as I believe it to be, landlords will disguise their intentions more effectively than his clients did. It would be unworldly for this court to ignore that possibility. But we cannot decide an issue of statutory construction on the assumption that landlords will withhold the truth from the court on an application for a new tenancy. We have to proceed on the footing litigants are honest or, if they are not, that they will be found out by the experienced judges who hear these cases. This makes it unnecessary for me to deal with the tenants alternative submission that the landlords apparent intention should be disregarded for want of any commercial purpose, by analogy with the approach taken in W T Ramsay Ltd v Inland Revenue Comrs [1982] AC 300 to tax avoidance schemes. That submission is not only more radical in its implications but more difficult to reconcile with established authority on the Act of 1954. I would allow the appeal and declare that on the facts found the landlord does not intend, within the meaning of section 30(1)(f), to carry out the works specified in the scheme of works relied upon in opposition to the tenants application for a new tenancy. LORD BRIGGS: (with whom Lady Black and Lord Kitchin agree) I agree with Lord Sumptions conclusion that this appeal should be allowed, and with his reasons for that conclusion. I add a few words of my own out of respect for the concern persuasively expressed by the County Court judge, that the forensic assessment, as at the hearing date, of the question whether the landlord intended to do the proposed works if the tenant left voluntarily would be to travel not merely into the realm of the hypothetical, but into the positively counter factual. The reasonable expression of such a concern by a judge experienced in this type of litigation should not lightly be disregarded. In Bettys Cafs Ltd v Phillips Furnishing Stores Ltd [1959] AC 20 the House of Lords laid down, in unmistakable terms, a rule that the question whether the landlord had the requisite intention to enable the grant of a new tenancy to be resisted under section 30(1)(f) of the Landlord and Tenant Act 1954 had to be determined by reference to the landlords intention as at the time of the hearing, not at any earlier date. In that case the company landlord only proved its intention by reference to a board meeting held a week after the hearing started. Nothing in these judgments alters that rule in any way. But there are potential difficulties in addressing conditionality of intention at the hearing date, which Judge Saggerson regarded as fatal to the submission that this was what section 30(1)(f) should be interpreted as requiring. In the real world, as a business tenancy approaches its contractual termination date, a landlord may well be faced with alternative future scenarios: will the tenant leave voluntarily or seek a new tenancy? These alternatives may be discussed in negotiations, or at a mediation, before or even after the tenant begins proceedings for the grant of a new tenancy. The landlord may well form alternative intentions to meet both eventualities. If the tenant leaves voluntarily the landlord may just carry out a modest refurbishment before occupying the premises for its own business, or selling with vacant possession. If the tenant plans to fight for a new tenancy, the landlord may intend to do large scale works, or to demolish premises with significant development value, in order to be able (under the law as understood by the courts below) to oppose the tenants application successfully. If the landlord is a company, there may be board minutes in which these alternative intentions are recorded. But by the time of the hearing these alternative intentions about what if any works the landlord will do if the tenant leaves voluntarily will usually just be past history. The tenant will by then have committed substantial costs, and risked liability for the landlords costs, in pursuing its claim for a new tenancy to a hard fought hearing. The prospect of voluntary departure may have receded to a purely theoretical irrelevance, like a cloud the size of a mans hand. In such a case the landlord may no longer have any relevant intention in relation to that hypothetical and indeed counter factual possibility. In some cases the tenant may from the outset have manifested such a determination to seek a new tenancy at all costs that voluntary departure may never have been a sufficient possibility for the landlord to have given it a moments thought, still less formed an intention about it. To the question in cross examination: does your company now intend to carry out these works if the tenant goes voluntarily, the landlords witness might say, with complete honesty, as at the hearing date, that she and her fellow directors dont waste their valuable time discussing irrelevant hypothetical possibilities. It is to escape this forensic cul de sac that legitimate recourse may now have to be had to a forensic examination of the landlords purpose or motive, as Lord Sumption suggests. As he points out at the beginning of his judgment, the real issue of principle in this case is whether the landlord should be able to resist a new tenancy by reference to intended works of construction if its only purpose in doing them is to get rid of the tenant. Of course, as the cases reviewed by Lord Sumption show, a direct invocation of a purpose test is not permitted by the language of section 30(1)(f), because it speaks solely of intention. Parliament has chosen to define this ground of opposition by reference to intention, but cannot have intended thereby to enable a landlord to defeat a claim under the Act by asserting and proving an intention to do works purely for the purpose of getting rid of the tenant, such that the works (or the qualifying works) would not be done if the tenant left voluntarily. The courts have until now restricted the forensic examination of the landlords purpose or motive to a test of the genuineness of that intention. By genuineness I have no doubt that the court meant honesty. In practice, that examination has, for very many years, largely been overtaken by the common use of the undertaking to the court to carry out the works if a new tenancy is refused, as a reliable litmus test for genuine intention. But neither the undertaking to the court, nor the examination of the genuineness of the landlords intention, will reveal whether the landlords intention is of the disqualifying conditional kind, as this case demonstrates. This landlords intention, backed up by a proffered undertaking to the court, was perfectly genuine, and the fact that the avowed purpose of the otherwise useless works was only to get rid of the tenant said nothing at all to detract from its genuineness. But the frank admission as to the landlords underlying purpose said all that was necessary to reveal that the intention to do the works was only of that conditional kind, such that the works would not have been done if the tenant had agreed to go voluntarily. There is nothing hypothetical or counter factual about testing the type or quality of the landlords intention, as at the time of the hearing, by an analysis of the purpose or motive behind it. The disqualifying underlying purpose (just to get rid of the tenant) is a continuing aspect of the landlords then current intention, even if the direct question whether, in other circumstances (the tenant going voluntarily), the landlord would have intended to do the relevant works appears hypothetical and even counter factual. Recourse to an examination of motive or purpose does not mean that a desire to remove the tenant will always, or even usually, disqualify the landlord from resisting the grant of a new tenancy under section 30(1)(f). An intention to demolish and/or redevelop business premises is very frequently influenced by commercial considerations which include the departure of the tenant. The landlord may wish to redevelop the premises so as to be suitable for his own use, or for a sale or re letting to a different type of tenant who would pay a higher rent, and these considerations may transform what would otherwise be the excessive cost of the proposed works into something financially viable. The only legitimate purpose of the examination of purpose, beyond testing the genuineness of the landlords intention, will be to enable the court to decide whether the landlord would have done the relevant works if the tenant had left voluntarily. This is, as Lord Sumption explains, the acid test of the type or quality of intention under section 30(1)(f). I also agree with Lord Sumptions view that the same acid test will have to be applied where the landlord asserts an intention to carry out works which, as a whole, would require the tenant to vacate, but where it is alleged that the landlord would only carry out some lesser scheme, not justifying the refusal of a new tenancy, if the tenant were to leave voluntarily. Cases of that kind may be more likely than the stark facts of the present case, and they will probably give rise to factual questions of some nicety, incapable of resolution by the proffer of a simple undertaking to the court, as happens at present. This may introduce an element of complexity and expense into proceedings in the County Court which, for many years, have yielded to a simple technique for speedy resolution. But I can see no other way of giving effect to what seems to me always to have been the plain intention of Parliament, that a tenants statutory right to a new tenancy should not be circumvented by proposed works which, viewed as a whole, would not have been undertaken by the landlord if the tenant had left voluntarily.
UK-Abs
This appeal concerns qualified security of tenure enjoyed by business tenants, pursuant to Part II of the Landlord and Tenant Act 1954 (the Act). Section 24(1) of the Act provides a procedure to landlords for contesting the grant of an application for a new tenancy. The ground for opposition in issue on this appeal is that under section 30(1)(f) (ground (f)), which provides as follows: that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding, or a substantial part of those premises, or to carry out substantial work on the construction of the building or part thereof and that he could not reasonably do so without obtaining possession of the holding. The premises in issue are the ground floor and basement of 80 Jermyn Street in the St Jamess area of London. The appellant, the tenant, is a textile dealership and consultancy. The appellant occupies the ground floor and basement under an underlease for a 25 year term from 2 January 1989 and uses them as a retail art gallery, showroom and archive. The rest of the building is occupied and managed by the respondent, the landlord, as a hotel. Planning permission is required for any material change of use. On 16 March 2015, the tenant served statutory notices requesting the grant of a new tenancy. On 15 May 2015, the landlord served a statutory counternotice opposing the grant of a new tenancy under section 30(1)(f) of the Act. On 8 June 2015, the tenant applied for an order in the Central London County Court. A preliminary issue raised was whether that ground of opposition was made out. The landlords defence put forward successive schemes reflecting the work it intended to carry out. It was accepted by the landlord that the proposed scheme of works was designed with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works commercial or practical utility and irrespective of the expense. The third scheme, which was in issue on this appeal: (i) omitted external works which would have required planning permission and (ii) added more extensive internal works, many of which were objectively useless. The estimated cost of the works to the landlord was 776,707 (excluding VAT), plus 324,000 in statutory compensation. It was common ground that the proposed works had no practical utility other than eviction. His Honour Judge Saggerson in the County Court considered that the landlord genuinely intended to carry out the works and that ground (f) was made out. On appeal to the High Court, Mr Justice Jay agreed, but gave permission for a leap frog appeal to this Court (by passing the Court of Appeal). The Supreme Court unanimously allows the appeal, deciding that ground (f) cannot be invoked. Lord Sumption gives the leading judgment, with which Lady Hale, Lady Black and Lord Kitchin agree. Lord Briggs gives a concurring judgment, with which Lady Black and Lord Kitchin also agree. Lord Sumption considers ground (f) requires a firm and settled intention to carry out the scheme of works the landlords purpose or motive is immaterial except to test whether the intention required by section 30(1)(f) exists [16]. It is irrelevant whether a landlords intention is reasonable or whether reasonable changes to the scheme could be made so as to allow the tenants continued possession [15]. This appeal does not turn on the landlords motive or purpose, nor on an objective assessment of the reasonableness of the proposed scheme of works, but on what it is that the landlord must intend if ground (f) is to apply [17]. The reason why the landlords approach cannot satisfy ground (f) is not merely the conditionality of its intention to do the proposed works, but the nature of the condition. Ground (f) assumes that the landlords intention to demolish or reconstruct the premises is obstructed by the tenants occupation. This is exemplified by (i) the words could not reasonably do so without obtaining possession of the holding in section 30(1)(f) and (ii) section 31A, which precludes a finding that ground (f) has been satisfied if the works can reasonably be carried out by exercising a right of entry that the tenant is willing to include in the terms of the new tenancy [19]. It follows that the landlords intention to carry out the works cannot be conditional on whether the tenant chooses to assert his claim to a new tenancy. The intention to demolish or reconstruct the premises must exist independently of the tenants statutory claim to a new tenancy [19]. On the facts, the tenants possession of the premises did not obstruct the landlords intended works and the landlord did not intend to carry them out if the tenant persuaded the court that the works could reasonably be carried out while he remained in possession [19]. The entire value of the proposed scheme lies in removing the tenant and not in any benefit to be derived from reconstruction itself [17]. Although not directly relevant in itself, the landlords motive or purpose may be evidence of (i) his genuine intention to carry out the proposed works and (ii) the conditional character of that intention. Similarly, a lack of utility of works may allow an inference as to the conditional character of the landlords intention [21]. Lord Briggs agrees with Lord Sumption that the appeal should be allowed [24]. He clarifies that the Courts decision does not depart from the rule laid down by the House of Lords in Bettys Cafs Ltd v Phillips Furnishing Stores Ltd (No.1) [1959] AC 20 that whether the landlord had the requisite intention to rely on ground (f) falls to be assessed at the time of the hearing, not at any earlier date [25]. Lord Briggs explains that examining evidence as to the landlords purpose or motive is likely to be a valuable means of testing not merely the genuineness (i.e. honesty) but also the conditionality of the landlords intention, so as to ascertain whether it is in accordance with the statutory objective behind section 30(1)(f) [26 31].
The Finance Act 2015 introduced a regulatory scheme requiring wholesalers supplying duty paid alcohol to be approved by Her Majestys Revenue and Customs Commissioners (HMRC or the Commissioners) under section 88C of the Alcoholic Liquor Duties Act 1979 (ALDA). Approval may only be given if HMRC are satisfied that the person seeking to carry on the activity is a fit and proper person to do so. OWD, Hollandwest and Budge Brands (the wholesalers) were already involved in the wholesale supply of duty paid alcohol when the scheme was introduced. They needed HMRC approval to continue to trade. Approval was refused because HMRC were not satisfied that they were fit and proper. Each wholesaler appealed to the First tier Tribunal (FTT) against the decision, inviting HMRC to permit them to continue trading whilst the appeals were pending. When HMRC refused to permit this, the wholesalers brought judicial review proceedings in the High Court challenging that refusal, and seeking orders that would permit them to carry on trading until after the determination of the FTT appeal. Having failed in the High Court, they obtained a measure of relief in the Court of Appeal, but on terms that they did not find satisfactory. Both they and HMRC appeal to this court against aspects of the Court of Appeals decision. The principal questions for determination in this court Two principal questions arise for determination on the appeal. The first, in broad outline, is this: when HMRC have refused a persons application for approval under section 88C of ALDA, what, if any, power do they have to permit that person to carry on trading pending the determination of an appeal to the FTT? HMRCs case is that they have no power to grant temporary approval pending the determination of a wholesalers appeal. The wholesalers argue that section 88C of ALDA enables HMRC to grant such approval or, failing that, HMRC can do so under section 9 of the Commissioners for Revenue and Customs Act 2005 (the 2005 Act). The Court of Appeal held that temporary approval can be granted to a person under section 88C of ALDA, but not under section 9 of the 2005 Act. However, contrary to the wholesalers argument, it held that considerations of hardship and the impact on the persons appeal rights were irrelevant to the decision whether to grant temporary approval to cover the appeal period, and that HMRCs focus must be purely on whether the person was fit and proper for that limited purpose. The issues that require attention in relation to this first question are, therefore, whether HMRC have any power at all, and if so, on what basis it is to be exercised. The second question concerns the position if HMRC either do not have power to permit trading pending the determination of an appeal to the FTT, or have power but decline to exercise it. In those circumstances, what interim relief, if any, can the High Court grant to ensure that the appeal to the FTT is not thwarted by the wholesaler going out of business whilst awaiting its determination? The Court of Appeal held that the High Court was able to grant injunctive relief under section 37 of the Senior Courts Act 1981. Drawing on CC & C Ltd v Revenue and Customs Comrs [2014] EWCA Civ 1653; [2015] 1 WLR 4043 (CC & C Ltd), it held that relief would only be granted in rare circumstances, but that this could include where there was a clear and properly evidenced claim that a failure to grant interim relief would render the appeal to the FTT illusory. This accorded with the position of HMRC. The wholesalers disagreed with the narrow limits imposed by the Court of Appeal on the scope for relief, but were refused permission to appeal to this court on that ground. Accordingly, the hearing before us began on the basis that the High Court had power to grant injunctive relief, exercisable in exceptional circumstances. As a result of questions which arose in the course of oral argument about the High Courts power, we received further written submissions on the point, after the hearing. Although both parties continued to support the existence of a power in the High Court, the issue needs attention in this judgment. The regulatory scheme: background The regulatory scheme introduced by the Finance Act 2015 was designed to combat fraud in relation to tax due on alcohol. Alcoholic liquors are subject to excise duty. Generally the charge to duty arises at the moment of importation into the United Kingdom, or at the moment of production here. The charge normally falls exclusively on the distiller/manufacturer/importer of alcohol. The duty paid is then reflected in the price of the alcohol as it passes down the supply chain. Alcohol was, however, entering the supply chain without the requisite duty being paid, resulting in a significant loss of tax revenue. There had long been a requirement for those dealing in duty suspended alcohol to be approved by HMRC, but there was no equivalent requirement for those dealing in duty paid alcohol. The introduction of the present scheme, known as the Alcohol Wholesaler Registration Scheme (AWRS), closed that gap. The statutory provisions Section 54 of the Finance Act 2015 inserted Part 6A and Schedule 2B into ALDA. Much of the fine detail of the statutory provisions is not necessary for present purposes and what follows is, at times, a broad summary only. A central concept is controlled activity. By virtue of section 88A(8), controlled activity means selling controlled liquor wholesale, offering it for sale wholesale, or arranging in the course of a trade or business for it to be sold or offered for sale wholesale. By section 88A(2), a sale is of controlled liquor if it is a sale of dutiable alcoholic liquor on which duty is charged under the Act at a rate greater than nil, with the excise duty point for the liquor falling at or before the time of the sale. By section 88A(3), subject to some exceptions, the sale is wholesale if the seller makes the sale, in the course of his trade or business, to a trade or business buyer, for the buyer to sell or supply in the course of his trade or business. It must be noted that one of the exceptions is, by section 88A(3)(d), an excluded sale. Section 88A(7) defines a sale as an excluded sale if it is of a description prescribed by or under regulations made by the Commissioners. Section 88B gives the Commissioners power to make provision, by regulations, for certain matters, including as to the cases in which sales are, or are not, to be treated for the purposes of Part 6A as (amongst other things) wholesale sales, and sales of controlled liquor. Section 88C deals with approval to carry on controlled activity. It provides: 88C. Approval to carry on controlled activity (1) A UK person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under this section. (2) The Commissioners may approve a person under this section to carry on a controlled activity only if they are satisfied that the person is a fit and proper person to carry on the activity. (3) The Commissioners may approve a person under this section to carry on a controlled activity for such periods and subject to such conditions or restrictions as they may think fit or as they may by or under regulations made by them prescribe. (4) The conditions or restrictions may include conditions or restrictions requiring the controlled activity to be carried on only at or from premises specified or approved by the Commissioners. (5) The Commissioners may at any time for reasonable cause revoke or vary the terms of an approval under this section. (6) In this Part approved person means a person approved under this section to carry on a controlled activity. Section 88D obliges HMRC to maintain a register of approved persons. It is to contain such information relating to approved persons as the Commissioners consider appropriate (section 88D(2)). HMRC may make publicly available such information contained in the register as they consider necessary to enable those who deal with a person who carries on a controlled activity to determine whether the person in question is an approved person in relation to that activity (section 88D(3)). This publicly available information is important as section 88F provides that [a] person may not buy controlled liquor wholesale from a UK person unless the UK person is an approved person in relation to the sale. Section 88G supports the statutory scheme by establishing various criminal offences. For example, section 88G(1) makes it an offence to contravene section 88C(1) by selling liquor wholesale knowing, or having reasonable grounds to suspect, that the buyer is carrying on a trade or business and the liquor is for sale or supply in the course of that trade or business. Buying controlled liquor from an unapproved person, contrary to section 88F, is also an offence, if the person knows or has reasonable grounds to suspect the unapproved status of the supplier. The Wholesaling of Controlled Liquor Regulations 2015 The Wholesaling of Controlled Liquor Regulations 2015 (SI 2015/1516) (the 2015 Regulations) were made under Part 6A of ALDA. They provide for the manner in which an application for approval is to be made and processed. The application must be on a prescribed form, regulation 3(1). If HMRC refuse an application, they must notify the applicant of that In the present context, the following provisions of the Regulations are of note: i) ii) and give reasons, regulation 4(4). iii) In addition to any conditions or restrictions imposed by HMRC under section 88C(3) of ALDA, the approval of a person is subject to such conditions and restrictions as the Commissioners may prescribe, regulation 7. iv) HMRC may prescribe descriptions of sales that are excluded sales for the purposes of Part 6A of ALDA, regulation 10. v) Part 6 of the Regulations provides for dutiable alcoholic liquor to be subject to forfeiture where a person contravenes section 88C or section 88F or any condition or restriction imposed under Part 6A of ALDA or under the Regulations. vi) By regulation 2, prescribed means prescribed by the Commissioners in a published notice. Excise Notice 2002: Alcohol Wholesaler Registration Scheme Excise Notice 2002: Alcohol Wholesaler Registration Scheme (EN2002) was made under ALDA and the 2015 Regulations. It explains what the AWRS is about and addresses various particular aspects of it. It has been amended many times since its first publication in November 2015. The version which is relevant to the decisions of HMRC in this case is that in force between 21 June 2016 and 26 March 2017; unless otherwise specified, references are to that version. Existing wholesalers who sought approval after the introduction of the scheme were informed, by the relevant version of EN2002, that they could continue to trade as normal until receipt of HMRCs decision (para 6.5). Para 6.10 set out how HMRC would assess whether an applicant was fit and proper to carry on a controlled activity. It contains a list of relevant points, and a general statement that: HMRC must be satisfied the business is genuine and that all persons with an important role or interest in it are law abiding, responsible, and dont pose any significant threat in terms of potential revenue non compliance or fraud. Para 10 dealt with conditions and restrictions. It said that HMRC may decide to apply specific conditions or restrictions where they consider that a wholesaler is fit and proper to be approved but some additional controls are still needed, which would be used to address specific concerns HMRC had about the business. In contrast, if HMRC considered a wholesaler was not fit and proper to be approved, approval would be refused or revoked rather than allowing the wholesaler to trade subject to added conditions. In para 15(4), which dealt with revocation by HMRC of an existing approval, circumstances were identified in which approval was likely to be revoked, and it was pointed out that the controlled activity could not be carried on after revocation. However, the paragraph ended with a passage to which it will be necessary to return: Where HMRC think the circumstances merit, they may allow a reasonable period of time to wind down the business, for example, to dispose of any legitimate stock. Doubts have been expressed about HMRCs power to allow a period of grace in this way. The version of EN2002 published on 27 March 2017 put the position in relation to disposal of stock on winding down on a rather firmer footing by providing, under regulation 10 of the 2015 Regulations, for such sales to be excluded sales. Challenging a refusal of approval A wholesaler can challenge HMRCs refusal of approval by seeking a review of it by HMRC and/or appealing to the FTT. Sections 13A 16 of the Finance Act 1994 (FA 1994) (as amended by article 1(2) of and Schedule 1 to the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009 (SI 2009/56) govern the review and appeal process. Reviews are covered by section 15A F. By section 15F, the nature and extent of the review are such as appear appropriate to HMRC in the circumstances, but account must be taken of representations made. The review may conclude that the decision is to be upheld, varied, or cancelled. An appeal to the FTT can be brought either as an alternative to seeking a review or, where there has been a review, against the review decision. The provisions as to appeals are set out in section 16. A central concept is that of a relevant decision. This is defined in section 13A which, in subsection (2)(a) (j), lists the decisions which are relevant decisions. A decision for the purposes of Part 6A of ALDA as to whether or not a person is to be approved and registered, or as to the conditions or restrictions on approval and registration, features in subsection (2)(j). By section 16(8) of FA 1994, such a decision is classed as an ancillary matter. Section 16(4) sets out the FTTs powers on an appeal in relation to any decision as to an ancillary matter, or any decision on the review of such a decision. It provides that the tribunals powers shall be confined to a power, where the tribunal are satisfied that the Commissioners or other person making that decision could not reasonably have arrived at it, to do one or more of the following, that is to say (a) to direct that the decision, so far as it remains in force, is to cease to have effect from such time as the tribunal may direct; (b) to require the Commissioners to conduct, in accordance with the directions of the tribunal, a review or further review as appropriate of the original decision; and (c) in the case of a decision which has already been acted on or taken effect and cannot be remedied by a review or further review as appropriate, to declare the decision to have been unreasonable and to give directions to the Commissioners as to the steps to be taken the that unreasonableness do not occur when comparable circumstances arise in future. repetitions of for securing These limited powers contrast with the wider powers available to the FTT, under section 16(5), when dealing with other relevant decisions which are not classed as decisions as to ancillary matters. In those appeals, the FTT can also vary the decision or quash it and substitute its own decision. It is to be noted that, in ALDA appeals such as the present ones, FA 1994 gives the FTT no power to suspend the effect of a challenged decision pending an appeal, nor is any such power contained in the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009/273). This contrasts with the position in appeals relating to relevant decisions which come within section 13A(2)(a) (h) of FA 1994, which include a variety of decisions as to payment of duties, levies, assessments, security and penalties. Normally, by section 16(3) of FA 1994, an appeal in such a case will not be entertained unless the amount of duty which HMRC have determined, by the challenged decision, is payable has been paid or deposited with them. However, the appeal can proceed without full payment if HMRC issue a certificate stating that they have accepted such security as appears to them to be adequate, or that, on the grounds of the hardship that would otherwise be suffered by the appellant, they do not require security or have accepted such lesser security as they consider appropriate. If no certificate is issued, the appellant will be able to bring the appeal nonetheless, if the FTT decides that the certificate should not have been refused, and are satisfied that HMRC have been given such security (if any) as it would have been reasonable for them to accept. The Court of Appeal in the present case said (para 29) that this amounts to the FTT having a circumscribed power to provide interim relief. The Commissioners of Revenue and Customs Act 2005, section 9 Section 9(1) of the 2005 Act confers ancillary powers on HMRC in the following terms: The Commissioners may do anything which they think (a) necessary or expedient in connection with the exercise of their functions, or (b) functions. incidental or conducive to the exercise of their Section 51(2) of the 2005 Act provides the following assistance in interpreting the meaning of functions: (2) In this Act (a) function means any power or duty (including a power or duty that is ancillary to another power or duty), and (b) a reference to the functions of the Commissioners or of officers of Revenue and Customs is a reference to the functions conferred by or by virtue of this Act, or (i) (ii) by or by virtue of any enactment passed or made after the commencement of this Act. Issue 1A: what powers do HMRC have under section 88C ALDA to permit trading pending the determination of an appeal to the FTT? When HMRC refuse approval under section 88C, do they nevertheless have power under that section to grant temporary approval pending a wholesalers appeal to the FTT? To recap, HMRC deny that they have any such power under section 88C, whereas the wholesalers support the conclusion of the Court of Appeal that there is power, but challenge the Court of Appeals conclusion that hardship and the impact on a wholesalers appeal rights are irrelevant to the exercise of the power. The Court of Appeals reasoning for its conclusion about section 88C is to be found in paras 52 to 54 of the judgment of Burnett LJ, with whom the other members of the court agreed. Para 52 deals with HMRCs submissions. As Burnett LJ explained, it had been readily accepted on behalf of HMRC through their counsel (then, as now, Sir James Eadie QC) that subsections (2) and (3) [of section 88C] hang together. It was not a question simply of whether, in the abstract, a person was fit and proper, HMRC accepting that it was feasible for persons to fail to satisfy HMRC that they are fit and proper to conduct a wholesale alcohol business without conditions, but to satisfy them that they are fit and proper subject to conditions. Nevertheless, HMRC submitted that a temporary approval lasting a finite period could not be a proper basis to use the combined operation of the two subsections. It is important to identify the precise reason for this submission, which is reflected in HMRCs submissions to this court as well. It was, as summarised in the concluding lines of para 52: because there would have been no relevant change of circumstance relating to fitness since the general decision was made. Mr Eadie QC accepted that the statute envisaged an approval being given for a limited time but only, as he put it, if HMRC were satisfied on day one that the person concerned was fit and proper. Para 53 set out the following examples of situations in which approval might properly be limited in some way: In the following two paragraphs, Burnett LJ set out his conclusion in these terms: 53. It is possible to envisage that HMRC might have well founded concerns about the operation of a business at one of is locations, but not others. A condition limiting trading to specified sites might follow. They might consider the involvement of a particular proprietor, director or senior employee as critical to the grant of approval. By contrast, they might consider the involvement of a particular person to be inimical to the grant of approval. They might limit the period of approval to coincide with the known plans for retirement of an individual of significance in the business. They might limit the period to enable systems to be improved about which there is some concern. They might insist on the production of regular information to meet underlying concerns about record keeping and the like. 54. A conclusion that a person is not fit and proper for unconditional approval does not preclude conditional approval of that person. In my view HMRC have power under section 88C(3) to grant a temporary approval pending appeal if they conclude that a person is fit and proper for that limited period, perhaps with additional conditions. That is a possible conclusion that might be reached even if a general approval is being denied. In substance, if not in form, that is what HMRC were doing before 27 March when they purported to grant 30 days or more grace. The focus of a decision would remain whether the person was fit and proper but for the more limited purpose. Hardship and the impact on appeal rights would be extraneous considerations. Section 88C does not confer upon HMRC a broad discretionary power of approval but it is possible that they could conclude that a person is fit and proper for a limited time to continue trading. To the extent that HMRC apprehended that they had no power to do what was asked of them by the claimant, in my view they erred. 55. there is nothing in the statutory scheme relied upon by HMRC which excludes the possibility of what amounts to an ancillary application for temporary approval in the face of a refusal of the general application. In the light of these conclusions, Burnett LJ determined (para 87) that HMRCs decisions that they had no power to grant temporary approval to the wholesalers to trade pending appeal should be quashed, and the question returned to them for reconsideration. HMRC submit that the Court of Appeal was wrong to conclude that they had power to grant temporary approval to the wholesalers under section 88C. However, if it is found that section 88C does confer such power then, in HMRCs submission, the Court of Appeal was correct as to the criteria for the exercise of the power. It is necessary to appreciate exactly how HMRC put their criticism of the Court of Appeal. The following passage from their written case goes to the heart of the argument: It is therefore submitted that HMRC could not properly conclude someone was not fit and proper to carry on the controlled activity (even on conditions which include the power to approve for a limited time only); yet then separately conclude in response to a request that the same business and leadership might be fit and proper to carry on the controlled activity pending appeal to the FTT against the first finding (Emphasis in the original) From this, it is clear that HMRCs argument is addressed to a situation in which they have already concluded that someone is not fit and proper even for a limited period, and whatever conditions might be imposed. In their submission, the introduction of an extraneous factor which has nothing to do with fitness and propriety (ie the fact that an appeal is pending) cannot alter this assessment of fitness. The wholesalers appear to interpret HMRCs argument rather differently. They have taken HMRC to be contending that whether a person is fit and proper is an absolute question, that must be determined without considering whether the imposition of a time limit or other conditions might make it possible to approve someone as fit and proper. For example, they refer, in their written case, to HMRCs thesis that unless it is satisfied that a person is fit and proper to carry on a controlled activity (ie without consideration of whether that person might be fit and proper for a period, with conditions, with restrictions or any combination of these) it cannot approve a person under section 88C If HMRC were advancing the thesis there set out, it would be an untenable one, in my view. But as I have said, they are not doing so. They are not insisting that absolute fitness and propriety is required in all cases, but addressing the situation where, as here, they have concluded that no conditions or limitations will enable them to be satisfied that the person is fit and proper. The power to incorporate such conditions/limitations is always present, and the relevant technical guidance given to HMRC officers making AWRS decisions specifically drew attention to the option of approval with conditions, including an example of imposing a time limit on the approval. On the facts of these appeals, HMRC had nevertheless concluded that the wholesalers were not fit and proper. I would accept their argument that in those circumstances there is no power to grant temporary approval pending appeal. If the person is not fit and proper for even a limited period of time, that holds good whatever purpose the time limited approval would be designed to achieve. If considerations of hardship and the impact that maintaining the decision would have on the efficacy of the appeal were relevant to HMRCs decision, it might be different. But I am satisfied that the Court of Appeal was right to conclude that such considerations are not to the point. Section 88C operates through the medium of HMRC being satisfied that the person is a fit and proper person to carry on the activity, and the impact upon the person, or his business, of a refusal of approval is not material to that evaluation. The wholesalers invite attention to HMRCs practice, prior to the 27 March 2017 version of EN2002, of allowing a winding down period to a business whose approval was revoked, where they thought the circumstances merited it (see para 21 above). They submit that such temporary approval was granted under section 88C, noting that the Court of Appeal saw it that way (para 54), and submitting that it demonstrates the existence of the power that HMRC now deny. HMRC respond that the provision of a winding down period is different in character from temporary approval pending appeal, being closed ended, and presuming the rationality of the refusal. In my view, the practice (now, of course, ceased) of continuing approval during a winding down period cannot prove the existence of the power for which the wholesalers contend. It may serve to provoke a closer look at the scope of section 88C, but if, after that exacting inspection, the conclusion is reached that it does not encompass the power to grant temporary approval pending appeal, the fact that HMRC may have proceeded, in the past, on the basis of a looser construction of the section, does not alter that conclusion. It may not be irrelevant that HMRC took the opportunity in the 27 March 2017 EN2002 to regularise the position through the route of excluded sales (see para 22 above). Notwithstanding the earlier practice relating to a winding down period, I remain of the view that section 88C does not permit the temporary approval for which the wholesalers argue. Issue 1B: can HMRC give temporary approval pending appeal under section 9 of the 2005 Act? The wholesalers primary argument in the Court of Appeal, renewed as part of their case before this court, was that HMRC have power to grant approval pending appeal under section 9 of the 2005 Act. Section 9, which is set out in full at para 28 above, permits the Commissioners to do anything which they think necessary or expedient in connection with, or incidental or conducive to, the exercise of their functions. The Court of Appeal was not prepared to accept that this permitted the temporary approval sought. Burnett LJ gave this summary of his reasons for rejecting that construction: 35. In my judgment section 9 of the 2005 Act does not provide HMRC with power to approve persons as fit and proper to trade in wholesale alcohol pending appeal to the FTT, when they have concluded they are not fit and proper persons. Such an action could not be either necessary or expedient in connection with the exercise of their functions; nor would it be incidental or conducive to the exercise of their functions. It would be inconsistent with the statutory scheme. The wholesalers argue that there is nothing inconsistent with the statutory scheme in section 9 being interpreted as enabling HMRC to approve them to trade pending appeal. HMRC say, first, that the only route by which permission can be granted is the section 88C route, and secondly that to use section 9 for temporary approvals would run counter to the statutory scheme as a whole. Their first point is shortly stated: section 88C(1) provides that a person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under this section (my italics). The wholesalers reply that there is nothing in section 88C(1) that prohibits HMRC from granting permission by a different route, and complain that if the provision were to be interpreted in this way, there would be no scope for the use of the powers set out in section 9. It is put this way in their written case: Allowing a decision maker to do something that that decision maker could otherwise not do in the performance of a function is precisely what ancillary and incidental powers do. If an ancillary power never enables the decision maker to do something that the decision maker otherwise lacks the power to do, then the ancillary power is left with nothing to do. I have no doubt that there are situations in which the sort of considerations identified by the wholesalers in this passage would lead the court to accept that the Commissioners have indeed got ancillary powers of one sort or another. But it all depends upon the general attributes, and detailed provisions, of the particular statutory scheme in relation to which the question arises, and the nature of the ancillary powers being considered. There are, in the authorities, plentiful statements to this effect, made in various contexts, see for example the following, from Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1 at p 31D E: The authorities deal with widely different statutory functions but establish the general proposition that when a power is claimed to be incidental, the provisions of the statute which confer and limit functions must be considered and construed. Section 9 concerns ancillary powers which are necessary or expedient in connection with the Commissioners exercise of their functions, or incidental or conducive to that exercise, not ancillary powers which undermine or contradict those functions. I do not accept that recourse can be had to it to provide an alternative route to time limited approval, supplementing section 88C in the way that the wholesalers suggest. I say that not only because of the terms of section 88C itself, which permit authorisation only under that section (approval given by the Commissioners under this section), but also because of the attributes of the whole scheme of which section 88C forms part. Rather than assisting the Commissioners exercise of their functions under the scheme, such a use would, in my view, undermine the scheme. To start with section 88C itself, it is important to take sections 88C(1) and (2) together. By subsection (1), a person may not carry on a controlled activity otherwise than in accordance with an approval given by the Commissioners under section 88C. By subsection (2), the Commissioners may only give the required approval if they are satisfied that the person is a fit and proper person to carry on the activity. So where, as here, they are not so satisfied, they may not give approval under section 88C, and without approval under section 88C, the person may not carry on the controlled activity. Amongst the consequences that follow if he does act without approval, the person will be guilty of an offence (section 88G). It can hardly be said to be necessary or expedient to the exercise of the functions under that tightly drafted scheme, which has at its heart that the Commissioners will only approve people to sell controlled liquor wholesale if satisfied that they are fit and proper to do so, for the Commissioners to be able to draw upon the ancillary powers in section 9 to grant approval to someone in relation to whom they are not satisfied, nor yet can that be said to be incidental or conducive to the exercise of their functions under the scheme. Furthermore, approval granted under section 9 would not be of any practical assistance to the wholesaler unless he were also put on the register of approved persons under section 88D. By sections 88F and 88G, a person may commit a criminal offence by buying from a person who is not approved, and would need to have recourse to the register to confirm the status of the wholesaler before buying. By using section 9 powers to enter the wholesaler on the register, HMRC would appear to be holding out as fit and proper a person in relation to whom they have formed the opposite view. It is unreal to suggest, as the wholesalers do, that this could be satisfactorily addressed by HMRC including information about the wholesaler under section 88D(2), to the effect that the approval is only temporary pending the outcome of the wholesalers appeal to the FTT and that actually HMRC do not consider the person fit and proper. But, says Mr Coppel QC for the wholesalers, it is necessary to look at HMRCs functions as a whole, not just their functions under section 88C, or under Part 6A of ALDA. I readily accept that as a general proposition, but I do not think that it justifies HMRC using section 9 to grant temporary approval. Mr Coppel relies on the fact that HMRCs section 88C decisions are attended by a review and appeal process, in which HMRC have a role, including a duty to give effect to whatever decision the FTT reaches. He argues that, as part and parcel of their functions in the appeal process, HMRC must be able to take steps to ensure the effectiveness of the wholesalers right to have his appeal heard, especially bearing in mind that, even if it ultimately turns out that approval was wrongly refused, the wholesaler will receive no compensation for the damage suffered whilst awaiting the appeal, including potentially the final closure of the business. So, where implementation of the challenged decision pending appeal is likely to result in the wholesaler suffering substantial, and irreversible, harm, he submits that HMRC must take as their starting point that temporary approval should be granted so as to keep the appeal right alive, although he would concede that the starting point could be displaced if the likelihood and scale of harm to the revenue would be greater, if temporary approval were to be granted, than the likelihood and scale of the harm to the wholesaler from a refusal. I am not persuaded by this argument. I do not accept that the fact that HMRCs decision is subject to an appeal, to which they are a party, is a proper foundation upon which to conclude that it is necessary or expedient, incidental or conducive, to the exercise of their functions to assume a power to grant temporary approval so as to preserve the wholesalers position pending that appeal. With certain other types of relevant decision, HMRC do have a role in facilitating an appeal to the FTT, by relaxing the normal requirement for duty to be paid prior to an appeal. As can be seen from para 27 above, they can effectively waive the standard security required under section 16(3) of FA 1994 on the grounds of hardship, and, if they are not prepared to do so, the FTT can intervene to allow the appeal to proceed nevertheless, if it decides that HMRC should not have refused to provide the required certificate. It cannot be said, therefore, that the review and appeal provisions were drafted without heed to the possibility that HMRC/the FTT might need powers to allow relief pending appeal, but when it comes to ancillary decisions such as the decisions in question here, there is nothing in sections 13A 16 of FA 1994 (see above at para 23 et seq), or in the Tribunal Procedure (First tier Tribunal) (Tax Chamber) Rules 2009, conferring any power on either HMRC or the FTT to suspend, or circumvent, the consequences of the decision that is being challenged pending determination of the appeal. R (Wilkinson) v Inland Revenue Comrs [2005] 1 WLR 1718 offers some insight as to how this absence of express power might bear upon the operation of a general provision such as section 9 of the 2005 Act. It concerned bereavement allowance, which at that time was payable only to widows and not to widowers. The House of Lords rejected the argument that section 1 of the Taxes Management Act 1970, which said that income tax shall be under the care and management of the Commissioners of Inland Revenue, could be construed as giving the revenue a discretionary power to grant an extra statutory concession allowing a widower to claim the equivalent to a widows bereavement allowance. Lord Hoffmann observed at para 21, with the agreement of the rest of the House, that the power could not be construed so widely as to enable the commissioners to concede, by extra statutory concession, an allowance which Parliament could have granted but did not grant. Although the context was not the same as in the present case, section 1 of the Taxes Management Act 1970 not being concerned with ancillary powers in quite the same way as section 9 of the 2005 Act, it can similarly be said here that section 9 should not be construed as conferring on HMRC a power to grant temporary approval pending appeal which Parliament could have conferred through Part 6A or the FA 1994, but did not. That temporary approval pending appeal is not part of the scheme is perhaps underlined also by the fact that express provision was made in section 54(12) of the Finance Act 2015 for the time from which the prohibition on trading in section 88C was to apply, namely when the wholesalers application to HMRC was disposed of (ie by section 54(13), has been determined by HMRC, withdrawn, abandoned, or otherwise ceases to have effect), rather than from the conclusion of any appeal against the decision on the application. Issue 2: High Court powers (1) The approach of the Court of Appeal in CC & C Ltd and in the present case In the Court of Appeal, it was common ground that the High Court has power to grant injunctive relief to assist a wholesaler pending his appeal to the FTT, but there was a dispute between the parties as to the basis on which relief could be granted. In determining this issue, the Court of Appeal drew heavily upon its earlier decision in CC & C Ltd and it will be necessary to look, therefore, at that decision. There are considerable similarities between CC & C Ltd and the present case, although CC & C Ltd concerned wholesale trade in duty suspended goods, not duty paid goods. Those trading wholesale in duty suspended goods were required to be approved and registered by HMRC. The claimant company had been approved and registered for some years, when HMRC revoked the registration on the basis that it was no longer fit and proper. Like HMRCs decisions in the present case, the decision in CC & C Ltd was classed, for the purposes of sections 13A 16 of the FA 1994, as a decision relating to an ancillary matter. The company appealed to the FTT against the decision and also commenced proceedings in the Administrative Court to obtain interim relief pending the determination of the appeal, claiming that there was a risk that it would be irreparably damaged meanwhile. Underhill LJ, with whom the other members of the court agreed, had no doubt that the court has jurisdiction, in the formal sense, under section 37(1) of the [Senior Courts Act 1981] to make an order of the kind sought (para 38, and see also Lewison LJs short judgment commencing at para 48). The court was concerned with the approach that should be taken to the exercise of that jurisdiction. At para 39, Underhill LJ said that it was trite law that where Parliament has enacted a self contained scheme for challenging decisions, it would normally be wrong for the High Court to permit such decisions to be challenged by way of judicial review. He cited a passage from a judgment of the Privy Council, in Harley Development Inc v Comr of Inland Revenue [1996] 1 WLR 727, 735 736, culminating in the following: Their Lordships consider that, where a statute lays down a comprehensive system of appeals procedure against administrative decisions, it will only be in exceptional circumstances, typically an abuse of power, that the courts will entertain an application for judicial review of a decision which has not been appealed. Underhill LJ set out in paras 41 and 42 why, where Parliament could have made provision for suspensory orders to be made pending appeal to the FTT but had not done so, the court was not entitled to intervene to grant a trader interim relief simply on the basis that there is a pending appeal with a realistic chance of success. But, he said, it did not follow that there were no circumstances in which the court may grant such relief, and he noted that HMRC did not so contend. He went on, in paras 43 and 44, to set out when relief may be granted. He said that: where the challenge to the decision is not simply that it is unreasonable but that it is unlawful on some other ground, then the case falls outside the statutory regime and there is nothing objectionable in the court entertaining a claim for judicial review or, where appropriate, granting interim relief in connection with that claim. A precise definition of that additional element may be elusive and is unnecessary for present purposes. The authorities cited in the Harley Development case refer to abuse of power, impropriety and unfairness. [Counsel for HMRC] referred to cases where HMRC had behaved capriciously or outrageously or in bad faith. Those terms sufficiently indicate the territory that we are in, but I would sound a note of caution about capricious and unfair. A decision is sometimes referred to rhetorically as capricious where all that is meant is that it is one which could not reasonably have been reached; but in this context that is not enough, since a challenge on that basis falls within the statutory regime. As for unfair, I am not convinced that any allegation of procedural unfairness, however closely connected with the substantive unreasonableness alleged, will always be sufficient to justify the intervention of the court: [counsel for HMRC] submitted that cases of unfairness would fall within the statutory regime to the extent that the unfairness impugned the reasonableness of the decision. As I have noted above, the types of unfairness contemplated in [R v Inland Revenue Comrs, Ex p Preston [1985] AC 835] which is the source of the use of the term in the Harley Development case were of a fairly fundamental character. But since procedural unfairness is not relied on in this case I need not consider the point further. Summarising his conclusion at para 44, he said that the court may entertain a claim where it is arguable that the decision was not simply unreasonable but was unlawful on one of the more fundamental bases identified above. He said that such cases will, of their nature, be exceptional. The CC & C case was not one of them, and relief was not available. following components: In the present case, Burnett LJ analysed the ratio of CC & C as having the 61. (i) The High Court has jurisdiction to grant an injunction maintaining registration pending appeal to the FTT, which has been revoked by HMRC, when a parallel challenge to that decision is made in judicial review proceedings. (ii) The jurisdiction should not be exercised simply on the basis that the person concerned has a pending appeal with a realistic chance of success. If the decision is challenged only on the basis that (iii) HMRC could not reasonably have come to it, the case falls within section 16 of the Finance Act 1994 and the court should not intervene. (iv) If the challenge to the decision is on some other ground outside the statutory regime the court may entertain judicial review or grant interim relief. (v) A definition of the additional element needed is elusive but would include abuse of power, impropriety and unfairness as envisaged in Harley Development Inc v Comr of Inland Revenue [1996] 1 WLR 727. Having lost their argument that CC & C Ltd had been decided per incuriam or should be distinguished, the wholesalers accepted that their cases did not fall within any of what Burnett LJ described (para 73) as the exceptions identified as examples in CC & C Ltd but submitted that interim relief should be granted because otherwise there was a risk that their rights under article 6 and article 1 protocol 1 (A1P1) of the European Convention on Human Rights (ECHR) would be violated. The argument, both in relation to article 6 and A1P1, was put on the basis that by the time the appeal is heard, the wholesalers would have ceased to be viable and their appeals to the FTT would be ineffective. The Court of Appeal found it sufficient to deal with the argument by focussing on article 6 alone, finding it unnecessary to explore the altogether more complicated route of A1P1, para 82, and in due course I will take the same approach. Burnett LJs conclusion was as follows: 81. In my opinion, a statutory appeal against a refusal of approval which is unable to provide a remedy before an appellant has been forced out of business, rendering the appeal entirely academic (or theoretical or illusory in the language of the Strasbourg Court) is capable of giving rise to a violation of article 6 which the High Court would be entitled to prevent by the grant of appropriate injunctive relief under section 37 of the 1981 Act. To that extent, the exceptions enumerated by Underhill LJ in the CC & C Ltd case [2015] 1 WLR 4043 can be expanded to include cases in which a claimant can demonstrate, to a high degree of probability, that the absence of interim relief would violate its ECHR rights. Moreover, such an injunction need not be ancillary to a claim for judicial review of any decision of HMRC, although it might be. Burnett LJs reasoning for his conclusion (see paras 77 to 81) involved the following steps: i) The dispute concerns civil rights and obligations for the purposes of article 6, see Tre Traktrer AB v Sweden (1989) 13 EHRR 309, in which the Strasbourg court concluded that there was a violation of article 6 where a company had its licence to sell alcohol revoked by two administrative bodies, neither of which was a court or tribunal. ii) Unlike in Tre Traktrer AB, the wholesalers have appeals to the FTT which satisfy the requirement for a hearing by a tribunal. iii) However, the ECHR is intended to guarantee rights that are practical and effective, not theoretical or illusory, see Airey v Ireland (1979) 2 EHRR 305 and other authorities set out at para 80 of Burnett LJs judgment. iv) If an appellant is forced out of business before the statutory appeal concludes, the appeal is rendered theoretical or illusory. It is important to recognise the lack of debate that there was in the Court of Appeal about this element of the case. At para 76, Burnett LJ recorded that Sir James Eadie accepted on behalf of HMRC that the High Court may grant an interim injunction to vindicate the Convention rights of the wholesalers, though emphasising (1) that (as Burnett LJ himself expressly accepted) the first port of call must be the FTT itself, which could be expected to expedite the appeal to avoid the problem, and (2) that proper evidential support would be required for an argument based on the ECHR. It was not argued on behalf of the wholesalers that interim relief should issue automatically, without it being demonstrated that the wholesaler could not survive until the appeal was heard. As Burnett LJ set out at para 83, Mr Coppel recognised that factors such as the strength of the appeal and the nature of the concern that led to the refusal to approve would be factors to be weighed when considering whether to grant an injunction, reflecting the fact that the scheme exists to protect the public purse and legitimate traders. Burnett LJ set out the sort of compelling evidence that would be required before relief would be granted: 85. A claimant seeking an injunction would need compelling evidence that the appeal would be ineffective. It would call for more than a narrative statement from a director of the business speaking of the dire consequences of delay. The statements should be supported by documentary financial evidence and a statement from an independent professional doing more than reformulating his clients stated opinion. Otherwise, a judge may be cautious about taking prognostications of disaster at face value. It should not be forgotten that a trader who sees ultimate failure in the appeal would have every incentive to talk up the prospects of imminent demise of the business, in an attempt to keep going pending appeal. Equally, material would have to be deployed which provided a proper insight into the prospects of success in an appeal. There is no permission filter for an appeal to the FTT. The High Court would not intervene in the absence of a detailed explanation of why the decision of HMRC was unreasonable. It must not be overlooked that the FTT is not exercising its usual appellate jurisdiction in these types of case where it makes its own decision. Finally, there would have to be detailed evidence of the attempts made to secure expedition in the FTT and the reasons why those attempts failed. Burnett LJ anticipated that the circumstances in which it was appropriate for injunctive relief of this kind to issue would be rare, as practical relief would be achievable by obtaining temporary approval from HMRC under section 88C (not a route that I consider available for the reasons set out earlier) or, failing that, by seeking expedition from the FTT. The evidence in support of injunctive relief in the present cases had not been sufficient to satisfy either of the two judges who entertained the proceedings at first instance that the appeals would be rendered nugatory without interim relief, as Burnett LJ set out: 86. In the ABC Ltd case William Davies J considered himself bound by the CC & C Ltd case to refuse injunctive relief even if the claimants could show that the appeal would be rendered nugatory. However, at para 48 he concluded that the evidence did not suggest that was inevitable. The evidence demonstrated that there was a prospect that the appeal would be rendered nugatory, no more. In the X Ltd and Y Ltd case, Andrew Baker J dealt with the strength of the evidence relating to the business prospects of the claimants in paras 39 and 40. He was unpersuaded by the assertions that they would not survive the appeal process. In those circumstances, even if either judge had considered a free standing injunction by reference to rights guaranteed by article 6 of the ECHR, it would have been refused. (2) The limited scope of Issue 2 This courts engagement in the issue as to the High Courts powers is narrowly confined for procedural reasons. Only the wholesalers sought to appeal against the Court of Appeals determination on this aspect of the case. Their notice of appeal sought permission to appeal on three grounds. The first ground challenged the Court of Appeals decision that section 9 of the 2005 Act did not give HMRC any power to permit temporary trading pending the outcome of an appeal to the FTT. Permission was given for this ground to be pursued and I have addressed it above. Ground 2 was that the Court of Appeal were wrong to conclude that it was only in exceptional circumstances that the High Court could grant interim relief pending an appeal to the FTT. Ground 3 was that the Court of Appeal were wrong to conclude that even where implementation of HMRCs decision prior to the outcome of an appeal to the FTT would violate a wholesalers ECHR rights, the High Court should not grant interim relief as the first port of call must be to the FTT to expedite the appeal. Permission to appeal was not granted in relation to either of these grounds. In these circumstances, both parties understandably approached the appeal to this court on the basis that the High Court has power to grant injunctive relief where the wholesalers article 6 rights would otherwise be infringed by the business ceasing to be viable before the FTT could consider the matter, rendering the appeal provided by statute entirely academic, and that the circumstances in which that power would be exercised were as set out in CC & C Ltd, as interpreted by the Court of Appeal in the present case. This courts refusal of permission to appeal in relation to the High Courts injunctive powers immunises that position from challenge in the present proceedings. Furthermore, it has not been the role of this court to review the established finding that the evidence produced by the wholesalers in support of their application for injunctive relief on an article 6 basis failed to meet the required standard (see para 86 of Burnett LJs judgment, set out above). The question that arose during the course of the hearing before us was the discrete question of what form the High Courts order could legitimately take, where a case for injunctive relief was made out. If minded to make an order, what, if anything, could the High Court order HMRC to do to protect the position of a wholesaler pending appeal? Supplementary written submissions were provided following the hearing directed to this point. (3) The parties supplementary submissions In their supplementary submissions, both sides adhere to the position that the Court of Appeal was correct to conclude that the power in section 37 of the Senior Courts Act 1981 could be exercised in the AWRS context, in exceptional cases. HMRC emphasise the breadth of the High Courts power under section 37, being a power to make orders and grant interim relief whenever it considers it just and convenient to do so, including when necessary to protect effective rights of access to court, whether derived from article 6 of the ECHR or the common law. This enables it, they say, to make an order which will have the effect of holding the ring pending the appeal, unconstrained by the limitations and conditions imposed upon HMRC by the legislation and public law principles. They also submit that Parliament can be taken to have enacted the AWRS on the basis that the High Courts powers to grant interim relief remain intact. In their submission, an order can be made requiring them to give the wholesaler provisional approval, under section 88C, to sell controlled liquor, and also to add the wholesaler to the section 88D register. They support this on the basis that, although they could not act in this way of their own initiative, they could do so pursuant to a court order because the courts role is part of the statutory scheme. In the alternative, HMRC propose that an order could be made requiring them to exercise their power, under regulation 10 of the 2015 Regulations (see para 16 above), to exclude certain descriptions of sales from ALDA. As with temporary approval, HMRC would not, they stress, independently use this power to exclude sales in circumstances like the present, but they would do so if ordered by the court to do that. If this route were to be taken, the wholesaler would be outside the ALDA regime whilst the appeal to the FTT was pending. It would be necessary, therefore, for the court to impose conditions that would need to be met by the wholesaler for the exclusion to continue, for example as to record keeping and due diligence. HMRC seek to explain why their own exclusion of sales to allow a winding down period (see above) should not be taken to indicate that they have power, without court intervention, to grant a wholesaler relief pending an appeal. They draw a distinction between their limited exercise of power, which is consistent with the statutory scheme, and an open ended exclusion pending appeal. The latter would, in their view, be a stretch too far for them, but not for the High Court when intervening on the basis that the case was exceptional and that there was a need to protect effective access to justice. Like HMRC, the wholesalers also submit that the High Court can order HMRC to approve and register a wholesaler temporarily under section 88C and section 88D. They say this on the basis that unless HMRC has decided that the wholesaler is not fit and proper to carry on any controlled activity for any period of time, regardless of all conditions and restrictions HMRC might impose, there is a residual power in the High Court to order HMRC to act under section 88C and D. Failing that, they propose that the order could focus upon section 9 of the 2005 Act. If neither of those routes is available, they rely upon section 8(1) of the Human Rights Act 1998, which they say gives the court power to act to ensure the efficacy of the appeal to the FTT, as required by article 6 ECHR (and, they say, A1P1). (4) Discussion It will be apparent, from what I have set out of their submissions, that the parties do not share the courts anxieties as to what, if any, form of order the High Court could make to safeguard the position of a wholesaler, without requiring HMRC to trespass impermissibly outside the statutory provisions relevant to the AWRS. As a result of this, the court has not had the benefit of any testing analysis, in the written or oral argument, of the parties essentially agreed position. This is not intended as a criticism (the parties were entitled to make the legal submissions they considered appropriate) but the result is that the process has not entirely dispelled the courts unease about the form that the High Courts order might legitimately take. To illustrate the point, let me take the suggestion that the High Court could order HMRC to grant temporary approval under section 88C to a wholesaler whose application they have rejected, but who has appealed to the FTT and has established an article 6 case for relief pending the appeal. Section 88C approval, whether indefinite or limited in time, depends on HMRC being satisfied that the wholesaler is fit and proper to carry on the controlled activity; that is an essential condition for approval under the section. For matters to have reached this point, however, HMRC must necessarily have concluded that they are not satisfied that the wholesaler is fit and proper, even for a limited period of trading. If the High Court orders HMRC to grant temporary approval to the wholesaler in these circumstances, it is necessarily requiring HMRC to be satisfied when they are not satisfied, and I question how that can properly be done. That example points to a more fundamental concern. Generally the High Courts power to order a person to do something by mandatory injunction is exercisable for the purpose of making that person do something that he has it within his powers to do and should have done, but has failed to do. Here, the court has concluded, and HMRC agree, that there is in fact nothing which HMRC can properly do in the exercise of their statutory functions. They may fairly be said to have no relevant power which they could legitimately exercise in this context without straying outside the purpose for which the power was given. In such circumstances, a conclusion that the High Court could nonetheless solve the problem by granting an injunction looks worryingly like endorsing the exercise of some sort of inherent authority to override an Act of Parliament, on the basis that the end justifies the means. It would take a lot of persuading for me to conclude that this would be a proper exercise of the High Courts undoubtedly wide power to grant injunctive relief, but the parties agreement that it is permissible has closed off adversarial submissions on the point. The absence of debate between the parties makes it undesirable to make any definitive pronouncement as to whether an appropriate form of order might be found as a vehicle for the exercise, by the High Court, of its power to grant relief to a wholesaler pending an appeal to the FTT. Since the case for relief was not, in fact, made out on the evidence in the present case (see para 86 of the Court of Appeal judgment, set out at para 61 above), it is unnecessary to do so, and I will say no more on the subject. It should be noted that Mr Coppel invites the court to broaden its interpretation of section 88C of ALDA and section 9 of the 2005 Act by viewing them with ECHR considerations in mind, and/or bearing in mind article 47 of the Charter of Fundamental Rights and Freedoms of the European Union. Just as I am uneasy about accepting that the statutory scheme can be interpreted in such a way as to enable the High Court to come to the assistance of a wholesaler whose ECHR rights are in issue, so I do not readily see how section 88C and section 9 could be more broadly interpreted to the same end. I need not say more on the subject, however, as Mr Coppels argument would not, in any event, assist the wholesalers in this case, given that their evidence did not establish that their ECHR rights are endangered. Conclusions I would allow HMRCs appeal against the Court of Appeals order remitting to HMRC the question of whether the wholesalers should be given temporary approval under section 88C. HMRC do not, in my view, have power, in circumstances such as the present ones, to grant such temporary approval under that section. I would dismiss the wholesalers appeal against the Court of Appeals determination that HMRC do not have power to grant temporary approval under section 9 because, in my view, the Court of Appeal were right. LORD HUGHES: (with whom Lord Sumption agrees) For the reasons so clearly set out by Lady Black, I agree that: (i) HMRC has no power under section 88C of the Alcoholic Liquor Duties Act 1979 (ALDA) to approve temporarily an existing trader whom it has determined not to be a fit and proper person even for a short period and even subject to conditions; and (ii) nor has HMRC any power to do this under section 9 of the Commissioners for Revenue and Customs Act 2005; moreover (iii) although this is not for decision in the present case, it is also difficult to see, where a trader has been refused registration, on the grounds that HMRC is not satisfied that it is a fit and proper person, even for a limited period or on conditions, that a power to preserve its ability to trade pending appeal to the FTT can be found in the High Court. As to (iii), it is highly significant that HMRC, which sponsored the legislation in question, thought it right to contend in these proceedings that the High Court does have the third mentioned kind of power pending appeal, albeit only in cases where it is clearly established that otherwise good grounds of appeal would be rendered nugatory if the power did not exist. The principle underlying that approach is correct, and responsible. Neither in English law nor under the ECHR is there any general right to an appeal against an adverse decision, such as the one here under consideration, viz a determination that a trader is not a fit and proper person to be approved under ALDA. But in this instance a right of appeal has been conferred by section 16 of the Finance Act 1994, albeit the grounds upon which it can succeed are limited: see para 25 of Lady Blacks judgment. Where such a right exists in law it would potentially be a breach of article 6 ECHR (right to a fair trial), read with article 13 (right to an effective remedy) if it were rendered illusory or nugatory by the absence of any power to suspend or stay the adverse decision of HMRC until the appeal can be determined. In the particular case of a trader who had an existing business at the time when the registration scheme introduced by section 88C of ALDA, his right of appeal to the FTT might be rendered illusory or nugatory if he would be forced out of business before a good case on appeal could be determined. There may be few who are genuinely in this position, and with the passage of time those thus affected must be a reducing number. But some are enough to result in potential incompatibility of the legislation with the ECHR. It is not possible for courts to invent a remedial legislative provision where, as seems here to be the case, the language of the self executing scheme adopted by ALDA and of the appellate structure adopted by the Finance Act 1994 do not admit of a construction which allows for a power to stay a decision of HMRC pending appeal. Nor, if the courts reading of the legislation is correct, can there be a remedy under section 8 of the Human Rights Act, since there is no unlawfulness if no other course is possible see section 6(2). But if potential incompatibility is to be avoided, those responsible for legislation in this field may wish urgently to address amendment, for example to give either the FTT or the High Court a limited power to impose a stay pending appeal in defined circumstances.
UK-Abs
The Finance Act 2015 introduced a regulatory scheme requiring wholesalers supplying duty paid alcohol to be approved by Her Majestys Revenue and Customs Commissioners (HMRC) under section 88C of the Alcoholic Liquor Duties Act 1979 (the 1979 Act). Approval may only be given if HMRC are satisfied that the person seeking to carry on the activity is a fit and proper person to do so. OWD, Hollandwest and Budge Brands (the wholesalers) were already involved in the wholesale supply of duty paid alcohol when the scheme was introduced. They needed HMRC approval to continue to trade. HMRC refused as they were not satisfied that the wholesalers were fit and proper. Each wholesaler appealed to the First tier Tribunal (FTT) against the decision. They asked HMRC to permit them to continue trading whilst the appeals were pending. HMRC refused to do so and the wholesalers brought judicial review proceedings in the High Court challenging that refusal. The High Court dismissed their claims. The Court of Appeal held that temporary approval can be granted to a person under section 88C of the 1979 Act, but not under section 9 of the Commissioners for Revenue and Customs Act 2005 (the 2005 Act). Contrary to the wholesalers argument, it held that considerations of hardship and the impact on the persons appeal rights were irrelevant to the decision on temporary approval. The Court of Appeal further held that if HMRC was not able or willing to permit trading pending the appeal, the High Court was able to grant injunctive relief under section 37 Senior Courts Act 1981. Relief (i.e. a mandatory injunction requiring temporary approval of the wholesalers) would only be granted in rare circumstances, including where there was a clear and properly evidenced claim that a failure to grant interim relief would render the appeal to the FTT futile. The wholesalers appeal and HMRC cross appeal to the Supreme Court. The two questions considered are: (1) What power does HMRC have to permit a person to carry on trading pending the determination of an appeal to the FTT? (2) If HMRC does not have such a power or refuses to exercise it, what interim relief can the High Court grant? The Supreme Court unanimously allows HMRCs appeal against the Court of Appeals conclusion that HMRC has the power to permit temporary trading under section 88C of the 1979 Act. It unanimously dismisses the wholesalers appeal against the Court of Appeals determination that HMRC does not have that power under section 9 of the 2005 Act. Lady Black gives the judgment of the court. Lord Hughes gives a concurring judgment, with which Lord Sumption agrees. Issue 1A the powers of HMRC under section 88C of the 1979 Act HMRC has concluded that the wholesalers were not fit and proper, regardless of any conditions that could be imposed, including a time limit on the approval. In those circumstances, HMRC do not have the power to grant temporary approval pending appeal. If the person is not fit and proper for even a limited period, that holds good whatever purpose the time limited approval would be designed to achieve. The Court of Appeal was right to conclude that considerations of hardship and the impact of maintaining the decision on the efficacy of the appeal were not material to the evaluation under section 88C of whether a person is fit and proper [38]. HMRCs former practice of continuing approval during a winding down period does not prove the existence of the power for which the wholesalers contend [40]. Issue 1B the powers of HMRC under section 9 of the 2005 Act Section 9 permits HMRC to do anything which they think necessary or expedient in connection with, or incidental or conducive to, the exercise of their functions [42]. It is not concerned with ancillary powers that undermine or contradict those functions. Recourse cannot be had to section 9 to provide an alternative route to time limited approval, supplementing section 88C in the way that the wholesalers suggest. This is not only because section 88C itself only permits authorisation under that section, but also because of the attributes of the whole scheme of which section 88C forms a part [45]. By using section 9 powers to enter a wholesaler on the register, HMRC would appear to be holding out as fit and proper a person in relation to whom they have formed the opposite view [46]. The fact that HMRCs decision is subject to an appeal is not a proper foundation upon which to conclude that it is necessary or expedient, incidental or conducive, to the exercise of their functions to assume a power to grant temporary approval [48]. Issue 2 High Court powers In the Court of Appeal, it was common ground that the High Court has the power to grant injunctive relief to assist a wholesaler pending his appeal to the FTT, but there was a dispute as to the basis on which relief could be granted [50]. The two judges at first instance were not satisfied that the evidence in support of injunctive relief was sufficient, and the wholesalers did not have permission to appeal to the Supreme Court in relation to the circumstances in which the High Court may grant injunctive relief [61 63]. The question that arose during the hearing was what form the High Courts order could legitimately take, where a case for injunctive relief was made out [64]. If the High Court orders HMRC to grant temporary approval to the wholesaler where HMRC has concluded that the wholesaler is not fit and proper, it would necessarily be requiring HMRC to be satisfied of the opposite [70]. The High Courts power to order a mandatory injunction is exercisable for the purpose of making a person do something that he has it within his powers to do, yet here there is nothing HMRC can properly do in the exercise of their statutory functions [71]. However, the absence of debate between the parties makes it undesirable to make a definitive pronouncement on this matter, and the fact that the case for relief was not made out in the present case means it is unnecessary to do so [72]. Lord Hughes adds that the legislation may be incompatible with the European Convention on Human Rights, where traders who had an existing business when the registration scheme was introduced, and who are refused approval but have good grounds for appeal, might be forced out of business before their appeal could be determined [77].
Supplies of education to students in the United Kingdom are exempt from value added tax (VAT) if they are made by a college of a university within the meaning of Note 1(b) to Item 1, Group 6 of the Value Added Tax Act 1994 (the VAT Act). This appeal concerns the criteria to be applied in determining whether an undertaking is such a college. In these proceedings the appellant (SEL) contends that its supplies of education to students in the United Kingdom were and are exempt from VAT because it was and remains a college of Middlesex University (MU). For this reason, it appealed against assessments raised by the Commissioners for Her Majestys Revenue and Customs (the Commissioners) in respect of its accounting periods 1 May 2009 to 29 February 2012. It has also appealed against subsequent assessments, but these have been stayed by agreement with the Commissioners pending the outcome of this appeal. SELs appeal was allowed by the First tier Tribunal (the FTT, Judge John Clark and Dr Michael James MBE) by its decision dated 28 February 2014: TC/2011/022521. The Commissioners appealed that decision to the Upper Tribunal (the UT, Judge Colin Bishopp and Judge Guy Brannan) which allowed the appeal by its decision dated 25 April 2016: [2016] UKUT 193 (TCC); [2016] STC 1837. SEL then appealed to the Court of Appeal. The appeal was heard over three days in June 2017. The Court of Appeal dismissed the appeal by its decision dated 28 July 2017 (Patten, Black and Sales LJJ): [2017] EWCA Civ 1116; [2017] STC 2166. SEL now appeals to this court. In broad terms the appeal gives rise to the following questions: first, whether the Court of Appeal adopted the correct approach in determining whether SEL was a college of MU for the purposes of Note 1(b) to Item 1, Group 6 of the VAT Act; and secondly, if it did not, whether, upon application of the correct test, SEL was such a college. The relevant facts SEL is an English company and a subsidiary of SAE Technology Group BV, a Dutch company. Both are part of the SAE group of companies which trades around the world under the name SAE Institute (SAEI). SAE is an acronym for School of Audio Engineering and SAEI has for many years provided education in audio and digital media technologies, and as a result has gained a significant reputation in that field. SAEI has conducted business in the United Kingdom since 1985, first through SAE Educational Trust Ltd (SETL) and, since 1 May 2009, through SEL. From that date SEL has taught in the United Kingdom the higher education courses to which I shall come in a moment. MU is a United Kingdom university within the meaning of the VAT Act, Group 6, Item 1, Note 1(b). It has never had any financial interest in any SAE group company, and no MU employee has ever been a director of any such company. Similarly, no SAE group company has had a representative on MUs governing body or has played any direct part in its governance. Nevertheless, the relationship between MU and SAEI has been very close and is a reflection of a series of agreements addressing the nature of that relationship, the validation by MU of SAEI programmes of education and the accreditation of SAE group companies. As early as 1998 SAEI and MU agreed a memorandum of cooperation which provided for the teaching by SAE Technology College of Bachelor of Arts (BA) degree courses in Recording and Multimedia Arts at specified campuses. These courses were described as validated collaborative programmes of MU. Overall responsibility for the courses was retained by MU but their day to day direction was undertaken by employees of an SAEI group company. Over the years that followed this memorandum was superseded by other memoranda of cooperation and the validation of BA degree courses in Multimedia, Interactive Animation and Games Programming. In 2009 another memorandum of cooperation was agreed which consolidated into a single framework the programmes which had by that time been validated by earlier memoranda. It set out the terms on which MU agreed to validate specified courses and how entry requirements were to be set and satisfied. In short, admission requirements would be set by SAEI but conform to MUs general requirements; students who met those requirements would be selected by SAEI using procedures agreed by MU; selected students would be enrolled by SAEI for one of MUs qualifications; enrolled students would be considered members of MU and taught by SAEI subject to MUs quality safeguards; and in due course those enrolled students would be assessed by SAEI subject to MUs regulations and, if they completed their programmes of study successfully, would be awarded a degree by MU. From time to time SAEI and MU also entered into what have been termed partnership agreements which made more general provision relating to the relationship between them. The first such agreement, entered into in 2003, recorded the intention of the parties to work together to develop undergraduate and taught graduate degree courses at SAEI centres in the United Kingdom and around the world. It was intended at that time that within five years MU would consider an application from SAEI for MU accreditation which would allow SAEI to validate for itself courses leading to the award of undergraduate degrees by MU. In 2009 SAEI and MU entered into another partnership agreement which recorded that within 12 months MU would consider an application from SAEI for such accreditation. To this end, it was agreed that senior executives of MU and SAEI would meet three times a year to develop their collaboration on undergraduate and postgraduate courses of study. In September 2010 SAEI was accredited by MU to validate, provide, monitor and review courses of study leading to MU BA degrees in Recording Arts, Film Making, Digital Film Animation and Multimedia articles The instrument of accreditation permitted SAEI to conduct MU graduation ceremonies but graduating students could also attend a graduation ceremony at MU if they so wished. A memorandum of cooperation confirmed the independent status of SAEI and allowed it to retain its own governing council and academic board and responsibility for its own financial management. In July 2011 MU and SAEI entered into what was described as a Special Associate College Agreement (SACA). This recorded their successful cooperation over 14 years in the provision of courses of education, including courses leading to MU undergraduate and graduate awards. It provided, by clause 2: As a further extension of that special relationship in the context of higher education in the United Kingdom, the University and SAE Education, UK (hereinafter referred to as SAE UK) have agreed a long term partnership, which is detailed below. This builds upon the existing status of SAE UK as a Middlesex University Associate College. The legal framework The origin of the common system for the collection of VAT in the European Union lies in the First Council Directive 67/227/EC of 11 April 1967 on the harmonisation of legislation of member states concerning turnover taxes (the First Directive). This recognised the interest of the common market in achieving a harmonisation of legislation concerning turnover taxes so as to eliminate, so far as possible, factors which might distort competition, and it provided, in article 2, that the principle of the common system involved the application to goods and services of a general tax on consumption which was proportional to their price. The Second Council Directive 67/228/EEC, also of 11 April 1967, on the harmonisation of legislation concerning turnover taxes and procedures for application of the common system of VAT (the Second Directive) made further provision for harmonisation and recorded in its fifth recital that the introduction of zero rates of tax gave rise to difficulties and it was highly desirable to limit strictly the number of exemptions. However, article 10 of the Second Directive exempted from VAT in any member state the supply of goods to places outside the territory of that state and the provision of services relating to such goods or goods in transit, and, of particular relevance to this appeal, also provided that, subject to consultation, any member state could determine the other exemptions it considered necessary. The First and Second Directives were followed by the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of member states relating to turnover taxes (the Sixth Directive). This recited the need for a common system of exemptions and, in Title X, article 13, part A, made express provision for the exemption of certain activities in the public interest, including the supply of services related to education. Article 13A(1) provided, so far as material: A. Exemptions for certain activities in the public interest 1. Without prejudice to other Community provisions, member states shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse: (i) childrens or young peoples education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, provided by bodies governed by public law having such as their aim or by other organizations defined by the member state concerned as having similar objects. Article 13A(2) contained examples of the conditions member states might impose when recognising other organisations having similar objects to those of public bodies. It provided, so far as material: 2(a) Member states may make the granting to bodies other than those governed by public law of each exemption provided for in (1) (i) of this article subject in each individual case to one or more of the following conditions: they shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied, exemption of the services concerned shall not be likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to value added tax. In due course the Sixth Directive was itself recast by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (the Principal VAT Directive). Recital (4) of the Principal VAT Directive reiterates the objective of the legislative scheme as being to harmonise legislation on turnover taxes and eliminate, so far as possible, factors which may distort competition. It reads: The attainment of the objective of establishing an internal market presupposes the application in member states of legislation on turnover taxes that does not distort conditions of competition or hinder the free movement of goods and services. It is therefore necessary to achieve such harmonisation of legislation on turnover taxes by means of a system of value added tax (VAT), such as will eliminate, as far as possible, factors which may distort conditions of competition, whether at national or Community level. Title IX sets out various exemptions, including the exemption concerning the provision of university education first introduced in the Sixth Directive in the manner I have described. Article 131 of Chapter 1 of Title IX provides: The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the member states shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse. Chapter 2 of Title IX contains Exemptions for certain activities in the public interest. Article 132(1)(i) of this Chapter says that member states shall exempt: the provision of childrens or young peoples education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the member state concerned as having similar objects. Article 133 contains examples of the conditions member states may impose when recognising other organisations having similar objects to those of public bodies. It echoes article 13(2) of the Sixth Directive and reads, so far as relevant: Member states may make the granting to bodies other than those governed by public law of each exemption provided for in points (i) of article 132(1) subject in each individual case to one or more of the following conditions: (a) the bodies in question must not systematically aim to make a profit, and any surpluses nevertheless arising must not be distributed, but must be assigned to the continuance or improvement of the services supplied; (d) the exemptions must not be likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT. These provisions of the Principal VAT Directive and the general scheme of which they form a part were considered by the Court of Justice of the European Union (the CJEU) in Minister Finansw v MDDP sp z oo Akademia Biznesu, sp komandytowa, (Case C 319/12) [2014] STC 699. MDDP, a Polish undertaking, carried on the business of organising for profit specialised training courses and applied to the Polish Minister for Finance for confirmation that it was entitled to deduct input VAT levied on the goods and services it needed for its business. The Minister refused to provide that confirmation and so MDDP issued proceedings in which it claimed that its activities should not be exempt from VAT but subject to it, and that Polish law, which provided that such activities were exempt, was incompatible with the Principal VAT Directive. A reference by the Polish court to the CJEU asked, in substance, whether articles 132(1), and 133 of the Principal VAT Directive must be interpreted as meaning that educational services provided for commercial purposes not governed by public law were precluded from exemption from VAT. In addressing that question, the CJEU explained (at paras 33 to 36) that articles 132(1)(i) and 133 do not preclude educational services provided for commercial purposes by bodies not governed by public law from being exempt from VAT; however, under article 132(1)(i), supplies of educational services are exempt only if they are provided by bodies governed by public law or by other organisations recognised by the member state concerned as having similar objects. It followed that the exemption in issue, which applied generally to all supplies of educational services, whatever the aim pursued by the private organisations providing those services, was incompatible with article 132(1)(i). The CJEU continued (at paras 37 to 38) that, in so far as article 132(1)(i) does not specify the conditions or procedures for defining those similar objects, it is for the national law of each member state to lay down rules, and that member states have a discretion in that respect; and it is for the national courts to examine whether member states, in imposing such conditions, have observed the limits of their discretion in applying the principles of EU law, in particular the principle of equal treatment, which, in the field of VAT, takes the form of the principle of fiscal neutrality. The answer to the referred question necessarily followed, as the CJEU explained at para 39: point (i) of article 132(1), article 133 and article 134, of the VAT Directive must be interpreted as meaning that they do not preclude educational services provided for commercial purposes by bodies not governed by public law from being exempt from VAT. However, point (i) of article 132(1) of that directive precludes a general exemption of all supplies of educational services, without consideration of the objects pursued by non public organisations providing those services. VAT was introduced to the United Kingdom by the Finance Act 1972 (the FA 1972) which implemented the First and Second Council Directives. Parliament chose to exercise the wide discretion then conferred upon member states by exempting the various supplies set out in Schedule 5. These included as Group 6, Item 1: The provision of education if it is provided by a school or university; or it is of a kind provided by a school or university (a) (b) and is provided otherwise than for profit. Note (3) defined university as including a university college and the college, school or hall of a university. The United Kingdom has given effect to the Principal VAT Directive (and before it, the Sixth Directive) in the VAT Act. Exempt supplies are set out in Schedule 9. Items 1 and 4 of Group 6 of Schedule 9 read, so far as material: 1. The provision by an eligible body of (a) education; 4. The supply of any goods or services (other than examination services) which are closely related to a supply of a description falling within item 1 (the principal supply) by or to the eligible body making the principal supply provided (a) the goods or services are for the direct use of the pupil, student or trainee (as the case may be) receiving the principal supply; and (b) where the supply is to the eligible body making the principal supply, it is made by another eligible body. Note (1) then explains that: (1) For the purposes of this Group an eligible body is (b) a United Kingdom university, and any college, institution, school or hall of such a university; (e) a body which is precluded from distributing and does (i) not distribute any profit it makes; and (ii) applies any profits made from supplies of a description with this Group to the continuance or improvement of such supplies; It can be seen that Parliament has not expressly limited the bodies it has recognised in Note 1(b) to those which do not make a profit. It will also be noted that the phrase any college, institution, school or hall of such a university in Note (1)(b) is similar to the phrase college, school or hall of a university in Schedule 5, Group 6, Item 1, Note (3) of the FA 1972, and this is a matter to which I must return. Domestic authorities The provisions of the VAT Act to which I have referred have been considered in a number of decisions of the courts in this jurisdiction. For the purposes of this appeal, I must refer to three of them for they form an important part of the background to the decisions of the FTT, the UT and the Court of Appeal in this case. The first is that of Burton J in Customs and Excise Comrs v School of Finance and Management (London) Ltd [2001] STC 1690. The School of Finance and Management London (SFM) delivered a number of courses of study for the University of Lincolnshire and Humberside and claimed to be exempt from VAT as a college of a university under Note (1)(b) to Group 6 of Schedule 9 to the VAT Act. The tribunal found that SFMs fundamental purpose was to provide education services leading to the award of a university degree and that it was fairly to be regarded as a college of the university. On appeal, the Commissioners contended first, that, having regard to the provisions of the Sixth Directive set out above, Note (1)(b) only encompassed bodies governed by public law having education as their aim; secondly, that SFM was not a college; and thirdly, if SFM was a college, it was not a college of a United Kingdom university. The judge rejected all three contentions and dismissed the appeal. So far as the third was concerned, the parties put forward a non exhaustive list of 15 relevant factors termed the SFM factors which fell to be considered. For their part, the Commissioners relied on eight factors, the first four of which were said to be determinative: (i) the presence of a foundation document establishing the college as part of the university by way of a constitutional link; (ii) an absence of independence on the part of the college; (iii) the financial dependence of the college on the university or the financial interdependence of each on the other; (iv) the absence of distributable profit; (v) an entitlement to public funding; (vi) the presence of permanent links between the college and the university; (vii) the physical proximity of the college to the university; and (viii) an obligation on the college to offer a minimum number of university places. SFM accepted that all of these factors were arguably relevant but argued that none was determinative. It contended that of more relevance were seven further factors: (ix) the possession by the college of a similar purpose to that of the university; (x) the provision by the college of courses leading to a degree from the university; (xi) the supervision by the university of the colleges courses and the regulation by the university of the quality standards of those courses; (xii) the admission of students of the college as members of the university with university identity cards; (xiii) the submission of students of the college to disciplinary regulations and requirements of the university; (xiv) the entitlement of successful students of the college to receive a degree from the university at a university degree ceremony; and (xv) the description of the college as an associate/affiliated college of the university. The Commissioners accepted these were relevant (subject to their submissions as to the determinative nature of the first four of their own features). Shortly after Burton J handed down his judgment, the Court of Appeal gave judgment in Customs and Excise Comrs v University of Leicester Students Union [2001] EWCA Civ 1972; [2002] STC 147. Here the issue was whether supplies of drinks by the students union of Leicester University were exempt from VAT. The Commissioners took the view that they were not. By an interim decision on a preliminary issue, the Manchester VAT tribunal held that the union was an integral part of the university and so an eligible body, and it was entitled to an exemption in respect of any supplies which were closely related to the supply of education within the meaning of Item 4 of Group 6 of Schedule 9. On appeal, the judge considered that the real question was whether the union was an integral part of the university such that it could properly be said that the soft drinks sold in the union were sold by the university. He held it could not, and that, in consequence, the tribunal ought to have held that the soft drinks were not supplied by the eligible body making the principal supply of education within the meaning of Item 4. On further appeal to the Court of Appeal, the substantial argument was, as before the judge, whether the union was an integral part of the university and as such an eligible body. The Court of Appeal found it was not. It was not encompassed by the phrase a United Kingdom university for it was an entity distinct from the university. Further, it was not an institution of such a university within the meaning of Note 1(b) because it supplied no education. Peter Gibson LJ, with whom Morland J agreed, explained at para 36: 36. Note 1(b) on its face refers to five entities, a United Kingdom University, and four entities of such a University. The conjunction connecting a United Kingdom University with the four other entities is the word and, not including. Further, the four other entities are alternative to each other as can be seen by the conjunction or between school and hall. On the ordinary and natural meaning of the words used in note 1(b) I would construe them as covering both a university itself and, in those cases where there are separate entities which are nevertheless parts of that university, any of those separate entities. Furthermore, the common characteristic of all those four entities in my opinion is that they are suppliers of education. Arden LJ considered that the students union did promote an object of utility within the university community and was potentially an institution of the university. But the question for her was whether the term institution had a narrower meaning in the context of Note (1)(b). She answered that question in two steps, the first of which was to consider the meaning of the expression of such a university: 55. Note 1(b) uses the expression the university and of the university. In the latter expression the word of cannot mean belong to or form part of since the former is not the case with regard to Oxbridge colleges (which are presumably intended to be covered) and the latter is included within the expression the university. In other words, the expression of the university seems to me to denote a state of affairs whereby the university is in some sense an umbrella organisation which provides education and related services in conjunction with other bodies or wherein the body in question has some form of status under the University statutes, for example to present candidates for matriculation. The second was to consider the meaning of the word institution in this context. Here she did not agree that a college, institution, school or hall of a university had itself to be a supplier of education. For her the key question was whether the body in question had academic links with the university and so recognition from the university, and this the union did not have. The third decision is that of the Court of Appeal in Finance and Business Training Ltd v Revenue and Customs Comrs [2016] EWCA Civ 7; [2016] STC 2190. Here the question was whether the taxpayer, FBT, a profit making enterprise, was exempt from VAT in respect of the supply of courses leading to the grant of degrees by the University of Wales. The FTT decided it was not. Although it supplied a university education, FBT also had to show that it was an integrated part of the university, and that it had failed to do. In reaching this conclusion, the FTT applied the SFM factors and attached particular weight to the nature of the relationship between FBT and the university, which it found to be short term, commercial and held out as being one of partnership. An appeal to the UT was dismissed. On further appeal to the Court of Appeal, it was argued by FBT, among other things, that Parliament had failed to set conditions for the education exemption in accordance with EU law and, in particular, the principles of legal certainty and fiscal neutrality. Arden LJ (with whom Gloster and Sharp LJJ agreed), rejected that submission. She explained that it was up to each member state to set the conditions under which bodies not governed by public law would be entitled to the education exemption, and how it did so was a matter for national law. It was therefore open to Parliament to decide which non public bodies would qualify, and it had done so in Note (1)(b). However, Parliament was constrained by article 132(1)(i) as to which bodies it could include. She continued, at paras 55 to 57: 55. In those circumstances, it has taken the view that the body must be one which provides education in like manner to a body governed by public law, that is, there must be a public interest element in its work. It has decided to draw the line, in the case of universities to those colleges, halls and schools which are integrated into universities and which are therefore imbued with its objects. 56. For FBT to show that its exclusion from this group is a breach of the fiscal neutrality principle would require it to say that it belongs to the same class as those institutions which meet the integration test in Note (1)(b). Neither of the tribunals made any findings that would support that conclusion and this court is hearing an appeal only on a point of law. 57. FBT contends that Parliament has not met the requirements of the EU law principle of legal certainty by setting out criteria which are to apply to determine when non public bodies seek to enjoy the education exemption. The criteria have to be neutral, abstract and defined in advance. In my judgment, this is achieved by the combination of note (1)(b) and the SFM factors. These factors are neutral, they are abstract and defined in advance. By applying them, it is possible to know what supplies and which suppliers qualify for exemption. The decisions below (a) The First tier Tribunal The FTT carried out a multi factorial assessment in order to determine whether SEL was sufficiently integrated with MU to justify the conclusion that it was a college of the university and for that purpose considered each of the 15 SFM factors. In carrying out that exercise, it conducted an extensive analysis of the evidence. Having done so, it was satisfied that SEL, as the United Kingdom arm of SAEI, had since May 2009 been an Associate College of MU, and a college of MU within the meaning of Note 1(b). It set out the factors which it considered carried the greatest weight at para 293: (1) Status of Associated College, combined from September 2010 with status of Accredited Institution. (2) Long term links between SAE Institute and MU. Similar purposes to those of a university, namely the provision of higher education of a university standard. (3) Courses leading to a degree from MU, such courses being supervised by MU, which regulated their quality standards. (4) Conferment of degrees by MU, received by SAE students at MU degree ceremonies. (b) The Upper Tribunal On further appeal by the Commissioners, the UT adopted an approach which differed in some respects from that of the FTT. It explained that it is necessary to adopt a multi step evaluation of the relationship between the undertaking and the university. It must first be determined whether they had a common understanding of their relationship. If they did, the next question is whether they had a common understanding that the undertaking was a college of the university. If the answer to that question is also in the affirmative, it must be considered whether the relationship was sufficiently close to justify the conclusion that the undertaking was indeed a college of the university within the meaning of Note 1(b), and it is here that the SFM factors are relevant. If the relationship was sufficiently close, the final step is to consider whether the undertaking supplied university level education. It was the UTs view that the FTT failed properly to take the first and second steps, and had it done so it would have found that they should be answered in the negative. It therefore allowed the Commissioners appeal. (c) The Court of Appeal The approach of the Court of Appeal differed from those of both the FTT and the UT. Patten LJ (with whom Black and Sales LJJ agreed) explained that the test of whether an undertaking is part of a university is considerably more hard edged than earlier decisions had suggested. It is necessary for the relevant undertaking to show that it is a part of the university in the sense of being a constituent part with all the rights and privileges for its students which that entails. Inherent in this test is the need to demonstrate some legal relationship which establishes and confirms the status of the undertaking. It matters not whether this relationship is embodied in a formal foundation or constitutional document or whether it is based upon some other binding agreement. But it has to be one which in a real sense makes the undertaking a constituent part of the university. It had not been established that SEL was a part of MU in a constitutional or structural sense and so the appeal fell to be dismissed. Note 1(b) the correct approach The starting point for a consideration of the proper interpretation of Note 1(b) to Schedule 9, Group 6, Item 1 of the VAT Act must be articles 131 to 133 of the Principal VAT Directive. These make clear that member states must exempt transactions involving the provision of, among other things, university education by bodies governed by public law having such education as their aim. Member states must also exempt transactions by other organisations which they have recognised as having similar objects to those governed by public law and which also have education as their aim. In accordance with well established principles, the terms used in articles 131 to 133 to specify exemptions from VAT must be construed strictly. Nevertheless, they must also be construed in a manner which is consistent with the objectives which underpin them and not in such a way as to deprive them of their intended effects. The general objective of the exemptions in articles 133 to 135 is, I think, readily apparent and, so far as university education is concerned, it is to ensure that access to the higher educational services this necessarily involves is not hindered by the increased costs that would result if those services were subject to VAT. This was explained by the CJEU in Commission of the European Communities v Federal Republic of Germany (Case C 287/00) [2002] ECR I 5811; [2002] STC 982, a decision which concerned article 13A(1)(i) of the Sixth Directive, which, as we have seen, is an exemption drawn in very similar terms to those of article 132(1)(i) of the Principal VAT Directive. The court said this about the purpose of the Article in considering the concept of services which are closely related to university education, and whether research activities fell within its scope: 47. Nevertheless, that concept does not require an especially strict interpretation since the exemption of the supply of services closely related to university education is designed to ensure that access to the benefits of such education is not hindered by the increased costs of providing it that would follow if it, or the supply of services and of goods closely related to it, were subject to VAT (see, by analogy, in relation to article 13(A)(1)(b) of the Sixth Directive, Commission v France (Case C 76/99) [2001] ECR I 249, para 23). However, if the undertaking by State universities of research projects for consideration is made subject to VAT, that does not have the effect of increasing the cost of university education. That does not mean that all organisations which provide educational services may be granted a tax exemption by member states, however. The services must be provided by organisations governed by public law or by other organisations recognised by the member state in issue as having similar objects. It is essentially for this combination of reasons that the CJEU held in MDDP that articles 132(1) and 133 of the Principal VAT Directive do not preclude the inclusion of educational services provided by private organisations for commercial purposes in the tax exemption but do preclude a general exemption of all supplies of educational services without consideration of the objects pursued by the private organisations which are providing them. In implementing articles 132 and 133 of the Principal VAT Directive, the United Kingdom and other member states therefore had a discretion in deciding which bodies, other than those governed by public law, they would recognise as providing educational services, including university education. But that discretion was limited in the manner I have described, and whilst it was open to member states to exempt educational services provided by private bodies for commercial purposes, they could not do so without consideration of the objects those bodies pursued. It was also limited in other important respects for, in implementing the Directive, member states were required to respect the general principles of law that form part of the order of the European Union, including the principles of fiscal neutrality, legal certainty and proportionality. As I have explained, Parliament has chosen to exercise the discretion conferred upon it by exempting from VAT, so far as relevant, the provision of education by a United Kingdom university and any college of such a university. The term university is not defined in the VAT Act. However, the conditions under which a body in the United Kingdom is entitled to use the word university in its title are regulated by statute. Over 100 bodies are presently entitled to call themselves a university and they vary greatly in character. A small but nonetheless significant number of them are private and run for profit. Some, such as the University of London, are collegiate federal universities in which, for many purposes, the constituent colleges operate on an independent basis. Others, such as the University of Oxford and the University of Cambridge, comprise a kind of federal system of colleges, schools and faculties, in which the colleges are generally financially independent and self governing. These are just examples. Other universities also comprise or have close relationships with colleges, including the University of the Arts London, the University of the Highlands and Islands and Queens University of Belfast. The connection between each of these universities and its respective colleges has its own particular character and is a reflection of the history of the institutions involved. It is against the background of the range of possible arrangements between universities and their colleges that the meaning of the phrase college of such a university in Note (1)(b) falls to be determined. In my judgment the following points are material. First, for its activities to fall within the scope of Item 1(a), any college of a university, as an eligible body, must provide education. Secondly and as we have seen, the supply of educational services is exempt only if it is provided by bodies governed by public law or by other bodies recognised by the member state as having similar objects. Parliament has exercised the discretion conferred upon it by recognising for this purpose the provision of education by universities, and it has done so regardless of whether those universities are charities or are private and run for profit. If, as I believe, the phrase a United Kingdom university in Note 1(b) therefore extends to private universities which are run for profit then in my opinion the same must apply to the expression any college of such a university. There can be no justification for treating the scope of the two expressions differently in this respect. Further, were it otherwise, private colleges of a university providing higher education services would be obliged to charge VAT on their supplies, rendering them more expensive and so restricting the opportunities of students to access them, contrary to the purpose of the exemption. Thirdly, there is in my view nothing in Note 1(b) or the broader context which would justify limiting the scope of the phrase any college of such a university to colleges which are a constituent part of a university in a constitutional or structural sense. To the contrary, if satisfaction of such a constituent part test were required, it would effectively exclude commercial providers such as SEL from the exemption for it is a test they will rarely if ever be able to satisfy. That, so it seems to me, would be contrary to the principle of fiscal neutrality in the light of the decision by Parliament not to limit the bodies it has recognised in Note 1(b) to those which do not make a profit. Fourthly, the United Kingdom must be taken to have recognised that a college (or, for that matter, a school or hall) of a university within the meaning of Note 1(b) has similar objects to those of a university which is governed by public law and which provides education to young people. In my opinion this consideration focuses attention on the objects of the body in issue, the nature of the educational services that it supplies, and how integrated those services are with those of the university. Put another way, it is necessary to examine the characteristics of those educational services and the context in which they are delivered rather than the precise nature of the legal and constitutional relationship between the body that provides them and its university. Of course, I recognise that if a college is a part of a university in a constitutional or structural sense then it is overwhelmingly likely that any educational services it provides will reflect this relationship and so the college may properly be regarded as a college of that university within the meaning of Note 1(b). But it does not follow that the converse is also true. It is entirely possible that an independent and private body which conducts its business of providing education for profit will be so integrated with a university that its educational activities and objects are indistinguishable from those of a college which is constitutionally part of the university or, indeed, from those of the university itself. All of these matters point to the conclusion that the integration test explained in the SFM case and adopted by the FTT is essentially correct. However, I think the factors to be considered do need some refinement. As I have said, the presence of a foundation or constitutional document or some other legal relationship establishing the college as a constituent part of the university in a constitutional or structural sense will be sufficient to prove that it is a college of the university within the meaning of Note 1(b), save in an exceptional case. But that is not a necessary condition. In assessing whether a body is a college of a university the following five questions are also likely to be highly relevant: (i) whether they have a common understanding that the body is a college of the university; (ii) whether the body can enrol or matriculate students as students of the university; (iii) whether those students are generally treated as students of the university during the course of their period of study; (iv) whether the body provides courses of study which are approved by the university; and (v) whether the body can in due course present its students for examination for a degree from the university. If a body can establish the presence of each of these five features, focused as they are on the objects of the body, the relationship between the students of the body and the university and the degree to which the activities of the body are recognised by and integrated with the university, then in my judgment it is highly likely to be a college of the university within the meaning of Note 1(b). Again, I do not suggest that there may not be other cases where the degree of integration of the activities of the body and the university is such that it may properly be described as a college of the university in light of some or most of the factors I have identified and other aspects of the services it supplies. All will depend on the particular circumstances of the case. However, some of the SFM factors are, in my view, likely to be of much less assistance in light of the matters to which I have referred. Here I have in mind: (i) whether the body is independent from the university; (ii) whether the body is financially dependent on the university, or whether the body and the university are financially interdependent; (iii) whether the body generates any distributable profit; (iv) whether the body is entitled to public funding; (v) the presence or absence of permanent links between the body and the university; (vi) the degree of physical proximity between the body and the university; and (vii) whether the body has any an obligation to offer a minimum number of university places. I do not suggest that none of these matters will ever have any evidential weight. For example, the duration of the relationship between the body and the university and how long it may be expected to last may have some relevance, if only as part of the background, but these and similar matters are unlikely to be determinative. In my judgment it follows that the reasoning of Peter Gibson LJ in the University of Leicester Students Union case at para 36 (which I have set out at para 34 above) needs some qualification. I accept that the words in those cases where there are separate entities which are nevertheless parts of the university, any of those separate entities in Note 1(b) include a college, institution, school or hall of a university which is separate from the university but which is nevertheless a part of it in a constitutional or structural sense. But, for the reasons I have given, I do not accept that the scope of Note 1(b) is limited to such entities, and if that is what Peter Gibson LJ meant by the use of these words, I respectfully disagree with him. In my view the correct approach was expressed succinctly by Arden LJ in FBT at para 55, which I have recited above. The question is whether the college and the university are so integrated that the entity is imbued with the objects of the university, and that is best answered in the manner I have described. Did the Upper Tribunal and the Court of Appeal fall into error? The UT did not reject the integration approach or question the value of the SFM factors but introduced the sequential test which I have set out at para 39 above. I recognise that if a taxpaying body is a college of a university one would expect to see some recognition of that by the university. I also accept the importance of establishing that the university and the body have a common understanding that the body is a college of the university. But it seems to me that these are matters which are best addressed in the context of and as part of the general assessment of their relationship, the extent to which their activities are integrated and whether they share the same objects. That brings me to the judgment of Patten LJ in the Court of Appeal, with which Black and Sales LJJ agreed. It is carefully reasoned and merits great respect. His analysis began with the FA 1972. He noted, entirely correctly, that it exempted the provision of education by an eligible body and that it defined the term university as including a university college and the college, school or hall of a university. He also observed, again correctly, that at the time this exemption came into effect the relevant EU provisions on exemptions were those contained in article 10 of the Second Directive which, as we have seen, gave each member state a broad discretion as to which exemptions to create beyond the supply of goods to places outside that state, and services relating to such goods or goods in transit. He concluded, and I agree, that the language of item 1 in the FA 1972 must be taken to represent what Parliament considered at that time should constitute the scope of the exemption for the supply of education by a university. Patten LJ turned next to the meaning of the phrase college, school, or hall of a university in the context of United Kingdom universities as they operated in 1972. Here, focusing on the universities of Oxford and Cambridge, he observed that their colleges and private halls, though self governing and legally independent, formed an integral part of the structure of their respective universities and that their members made up the universitys teaching staff and students. Patten LJ also found support for his approach in the provisions of the Education Reform Act 1988 (the 1988 Act) and the Education (Listed Bodies) (England) Order 2010 (the 2010 Order) made under it. The 1988 Act makes it an offence to award a degree that is not a recognised award. Under section 214(2), a recognised award includes an award granted or to be granted by a university which is authorised by Royal Charter or Act of Parliament to grant degrees, and any award granted or to be granted by any body for the time being permitted by a university to act on its behalf. Any such body falls within the definition of a recognised body in section 216(4). Section 216(2) of the 1988 Act requires the Secretary of State to compile and publish by order a list of the names of the bodies which appear to him to fall within section 216(3) which provides, so far as relevant: (3) A body falls within this subsection if it is not a recognised body and it: (b) is a constituent college, school or hall or other institution of a university which is a recognised body. The 2010 Order was made pursuant to section 216(2) and, as Patten LJ observed, it lists, among other bodies, all the colleges and halls of the universities of Oxford, Cambridge, Durham and Queens University Belfast, and the Institutes constituting the School of Advanced Study in the University of London. I would add that the 2010 Order was revoked and replaced by The Education (Listed Bodies) (England) Order 2013 which came into force on 30 December 2013. This expands the list of colleges and halls and includes one college of the University of South Wales and several colleges of the University of the Highlands and Islands. It was notable, Patten LJ continued, that the provisions of section 216(3)(b) were all but identical to those of Schedule 5, Group 6, Item 1 of the FA 1972 in defining what was included in a university, and it was unlikely that the similarity between the provisions was accidental. He recognised that the purpose of the two sets of provisions was very different but thought that both of them were seeking to identify the constituent parts of a university; and further, that the 1988 Act and the 2010 Order provided a useful illustration of how essentially the same statutory language had come to be interpreted and applied, albeit in the regulation of the granting of degrees. Patten LJ turned next to the VAT Act. Here he noted what he termed the stylistic and grammatical differences between Note 1(b) of Schedule 9, Group 6, Item 1 of the VAT Act and the definition of a university in Note (3) of Schedule 5, Group 6, Item 1 of the FA 1972 but he could see nothing in these differences or in the Sixth Directive to justify giving what he thought was essentially the same language a much wider meaning. He was of the view that there was nothing in the EU legislation which compelled member states to cast the scope of the exemption more widely than, in the case of the United Kingdom, it had previously chosen to do. He thought the focus of Note 1(b), and that of Note (3) before it, was on identifying the constituent parts of the university. The phrase of a university was common to both statutes and in his opinion this was determinative of the position. Patten LJ also considered the decisions in SFM, University of Leicester Students Union and FBT. Having done so, he was still of the view that it was necessary for SEL to establish what he understood Peter Gibson LJ to have described in University of Leicester Students Union, namely that it was a part of the university in the sense of being a constituent part with all the rights and privileges for its students and other members which that entailed. In my judgment Patten LJ has fallen into error in the following important respects. First, in focusing on the colleges of Oxford and Cambridge, all of which form a part of the structure of their respective universities, he has failed to take into account the variety of reasonable and foreseeable arrangements between a university and a college. Secondly, the 1988 Act is in my view of no real assistance in construing the provisions of Schedule 9, Group 6 of the VAT Act. The 1988 Act does not purport to implement or give effect to any EU legislation, let alone the Sixth Directive or the Principal VAT Directive. Further and as Patten LJ himself recognised, the purposes of the 1988 Act and the orders made under it are very different from those of the VAT Act. The 1988 Act is concerned with the grant of awards. The relevant provisions of the VAT Act, on the other hand, are concerned with the provision of education. Thirdly, Patten LJ has in my view failed properly to take into account the difference between the provisions of the First and Second Directives, on the one hand, and those of the Sixth Directive and the Principal VAT Directive, on the other, namely the scope and nature of the discretion they respectively confer on member states to exempt supplies of education from VAT. The provisions of the VAT Act are not the same as those of the FA 1972 and, most importantly, must be interpreted in the light of the wording and purpose of the Sixth Directive and now the VAT Directive, the breadth of the discretion conferred on member states by those Directives, and the need for Parliament, in exercising that discretion, to apply the relevant principles of EU law, including the principle of equal treatment. Finally, and for the reasons I have given, the judgment of Peter Gibson LJ in University of Leicester Students Union does not provide any sound support for the conclusion Patten LJ reached. I have therefore come to the conclusion that the Court of Appeal has fallen into error. The correct approach is to ascertain the nature and purpose of the educational activities of the college in issue, and whether those activities are so integrated with those of its university that it may properly be said to have the same objects as that university. That exercise may conveniently be carried out in the manner I have described at paras 47 to 56 above. The application of the correct approach In my judgment the analysis of the evidence carried out by the FTT was careful and comprehensive. It found, among other things, that SEL, as the United Kingdom arm of SAEI, had been an Associate College of MU since May 2009 and that the parties had proceeded on that basis; that the links between SAEI and MU were well established and likely to endure; that most of SELs courses were supervised by MU and their quality was regulated by MU; that SELs purposes were similar to those of MU; that SELs students became students of MU and received degrees from MU; and that the activities of SEL were substantially integrated into those of MU. It identified the factors upon which it particularly relied in the passage I have set out at para 38 above. In my judgment these findings had a sufficient basis in the evidence and there is no proper ground for interfering with them. In allowing the appeal, the UT considered that the FTT failed to distinguish between the activities of SAEI and those of SEL. It found that the various agreements relied upon by SEL were made between SAEI and MU; that SAEI was not a college of MU and SEL had the same status as SAEI; that MU was initially unaware of SELs existence as a corporate entity and so there was no common understanding between them; and that the FTT failed properly to consider what was meant by the term Associate College. In my judgment these are not fair criticisms. In May 2009 SEL stepped into the shoes of SETL and from that point was the entity through which the activities of SAEI were conducted in the United Kingdom. The factual findings of the FTT were sufficient to justify its conclusion that SELs activities were integrated into those of MU and that it shared the objects of MU. In my opinion the FTT was entitled to find that in May 2009 SEL became and thereafter remained a college of MU within the meaning of Schedule 9, Group 6, Item 1, Note (1)(b) of the VAT Act. Conclusion For the reasons I have given, I would allow the appeal.
UK-Abs
Supplies of education to students in the United Kingdom are exempt from value added tax (VAT) if they are made by a college of a university within the meaning of Note 1(b) to Item 1, Group 6 of the Value Added Tax Act 1994 (the VAT Act). The appellant (SEL) contends that its supplies of education to students in the United Kingdom were and are exempt from VAT because it was and remains a college of Middlesex University (MU). SEL is a subsidiary of SAE Technology Group BV. Both are part of the SAE group of companies which trades around the world under the name SAE Institute (SAEI). MU is a United Kingdom university within the meaning of the VAT Act, Group 6, Item 1, Note 1(b). It has never had any financial interest in any SAE group company. Nevertheless, the relationship between MU and SAEI has been very close and is a reflection of a series of agreements addressing the nature of that relationship, the validation by MU of SAEI programmes of education and the accreditation of SAE group companies. SEL appealed against assessments raised by the Commissioners for Her Majestys Revenue and Customs (the Commissioners) in respect of its accounting periods 1 May 2009 to 29 February 2012. It has also appealed against subsequent assessments, but these have been stayed by agreement with the Commissioners pending the outcome of this appeal. SELs appeal was allowed by the First tier Tribunal (FTT). The Commissioners appealed that decision to the Upper Tribunal which allowed the appeal. SEL then appealed to the Court of Appeal, this appeal was dismissed. There are two issues for the Supreme Court: first, whether the Court of Appeal adopted the correct approach in determining whether SEL was a college of MU for the purposes of Note 1(b) to Item 1, Group 6 of the VAT Act; and secondly, if it did not, whether, upon application of the correct test, SEL was such a college. The Supreme Court unanimously allows the appeal. Lord Kitchin, with whom the rest of the Court agrees, delivers the judgment. The starting point for a consideration of the proper interpretation of Note 1(b) to Schedule 9, Group 6, Item 1 of the VAT Act must be articles 131 to 133 of the Principal VAT Directive. These make clear that member states must exempt transactions involving the provision of, among other things, university education by bodies governed by public law having such education as their aim. Member states must also exempt transactions by other organisations which they have recognised as having similar objects to those governed by public law and which also have education as their aim [41]. The general objective of the exemptions is to ensure that access to the higher educational services is not hindered by the increased costs that would result if those services were subject to VAT [43]. Parliament has chosen to exercise the discretion conferred upon it by exempting from VAT the provision of education by a United Kingdom university and any college of such a university. The term university is not defined in the VAT Act. However, the conditions under which a body in the United Kingdom is entitled to use the word university in its title are regulated by statute. Over 100 bodies are presently entitled to call themselves a university and they vary greatly in character. A small but nonetheless significant number of them are private and run for profit [46]. It is against the background of the range of possible arrangements between universities and their colleges that the meaning of the phrase college of such a university in Note (1)(b) falls to be determined [47]. In Lord Kitchins judgment the following points are material [47]. First, for its activities to fall within the scope of Item 1(a), any college of a university, as an eligible body, must provide education [48]. Secondly, the supply of educational services is exempt only if it is provided by bodies governed by public law or by other bodies recognised by the member state as having similar objects [49]. Thirdly, there is nothing in Note 1(b) or the broader context which would justify limiting the scope of the phrase any college of such a university to colleges which are a constituent part of a university in a constitutional or structural sense. To the contrary, if satisfaction of such a constituent part test were required, it would effectively exclude commercial providers such as SEL from the exemption for it is a test they will rarely if ever be able to satisfy [50]. Fourthly, it is necessary to examine the characteristics of those educational services and the context in which they are delivered rather than the precise nature of the legal and constitutional relationship between the body that provides them and its university [51]. Lord Kitchin recognises that the presence of a foundation or constitutional document or some other legal relationship establishing the college as a constituent part of the university in a constitutional or structural sense will be sufficient to prove that it is a college of the university within the meaning of Note 1(b), save in an exceptional case. However, that is not a necessary condition. In assessing whether a body is a college of a university the following five questions are also likely to be highly relevant: (i) whether they have a common understanding that the body is a college of the university; (ii) whether the body can enrol or matriculate students as students of the university; (iii) whether those students are generally treated as students of the university during the course of their period of study; (iv) whether the body provides courses of study which are approved by the university; and (v) whether the body can in due course present its students for examination for a degree from the university [53]. If a body can establish the presence of each of these five features, then it is highly likely to be a college of the university within the meaning of Note 1(b). This is not to suggest that that there may not be other cases where the degree of integration of the activities of the body and the university is such that it may properly be described as a college of the university. All will depend on the particular circumstances of the case [54]. Lord Kitchin concludes that the factual findings of the FTT were sufficient to justify its conclusion that SELs activities were integrated into those of MU and that it shared the objects of MU. The FTT was entitled to find that in May 2009 SEL became and thereafter remained a college of MU within the meaning of Schedule 9, Group 6, Item 1, Note (1)(b) of the VAT Act [73].
The central issue in this appeal is whether the Court of Appeal in Northern Ireland was entitled to order that a claim for damages under section 8 of the Human Rights Act 1998, for breach of the requirement under article 2 of the European Convention on Human Rights that an investigation into a death should begin promptly and proceed with reasonable expedition, should not be brought until an inquest has been concluded, or if already brought should be stayed until after that date. The facts The appellants son, Pearse Jordan, was shot and killed by a member of the Royal Ulster Constabulary on 25 November 1992. In 1994 the appellants husband, Hugh Jordan, made an application to the European Court of Human Rights, complaining that the failure to carry out a prompt and effective investigation into his sons death was a violation of article 2. An inquest commenced on 4 January 1995 but was adjourned shortly afterwards. On 4 May 2001 the European Court of Human Rights upheld Mr Jordans complaint and awarded him 10,000 in respect of non pecuniary damage, together with costs and expenses: Jordan v United Kingdom (2003) 37 EHRR 2. A fresh inquest into Pearse Jordans death commenced on 24 September 2012, and a verdict was delivered on 26 October 2012. Hugh Jordan then brought proceedings for judicial review of the conduct of the inquest, which resulted in the verdict being quashed: In re Jordans application for Judicial Review [2014] NIQB 11. A subsequent appeal against that decision was dismissed: [2014] NICA 76. In 2013 Hugh Jordan brought the present proceedings for judicial review, in which he sought declarations that the Coroner and the Police Service of Northern Ireland (PSNI) had been responsible for delay in the commencement of the inquest in violation of his rights under article 2, together with awards of damages under section 8 of the Human Rights Act in respect of the delay from 4 May 2001 until 24 September 2012. Stephens J upheld the claim against the PSNI, finding that there had been a series of failures to disclose relevant information until compelled to do so, and also a delay in commencing a process of risk assessment relating to the anonymity of witnesses: [2014] NIQB 11, paras 350 359. Following a further hearing in that case and five other similar cases, he made a declaration that the PSNI delayed progress of the Pearse Jordan inquest in breach of article 2 of the European Convention on Human Rights and contrary to section 6 of the Human Rights Act 1998, and awarded damages of 7,500: [2014] NIQB 71. The Chief Constable of the PSNI appealed against the declaration and award of damages, contending that although the PSNI might have been responsible for part of the delay, they should not have orders made against them where other state authorities had also been responsible for the delay but were not party to the proceedings. Hugh Jordan cross appealed against the dismissal of his claim against the Coroner. The Department of Justice was joined as a respondent to the proceedings. It is a matter of agreement before this court that, at the hearing of the appeal, the Court of Appeal raised a preliminary issue relating to the timing of the application for judicial review, and heard argument on that issue only. The judgment itself states that the issue of timing was raised by counsel for the PSNI, who argued that the application was time barred under section 7(5) of the Human Rights Act, since there was no finding that delay in breach of article 2 had occurred within the period of 12 months immediately prior to the commencement of the proceedings, and there was no reason why the court should exercise its discretion to extend the period for bringing proceedings under section 7(5)(b). Judgment was handed down on 22 September 2015: [2015] NICA 66. That judgment was subsequently withdrawn and a revised judgment, also dated 22 September 2015, was issued on 12 May 2017. The resultant orders, also dated 22 September 2015, were made on 10 June 2017. The judgment and orders are discussed below. The immediate result of the orders was a stay of proceedings. A further inquest into Pearse Jordans death commenced on 22 February 2016 and a verdict was delivered on 9 November 2016. That verdict was challenged in judicial review proceedings brought by Pearse Jordans mother, the present appellant, but without success: In re Jordans application for Judicial Review [2018] NICA 34. She also took over the conduct of the present proceedings from her husband as his health had deteriorated so as to prevent him from taking part. On 23 October 2017, following a hearing which it had convened of its own motion in the exercise of its case management functions, the Court of Appeal lifted the stay on the present proceedings. It had been in place for a period of two years and one month. Both the Chief Constables appeal and the claimants cross appeal were heard during 2018. The cross appeal was dismissed: [2018] NICA 23. The appeal has not yet been decided. The delays in the investigation into Pearse Jordans death, and the repeated litigation which has characterised that process, are a common feature of what have come to be known as legacy cases: that is to say, cases concerning deaths occurring in Northern Ireland during the Troubles. In his recent judgment In re Hughes application for Judicial Review [2018] NIQB 30, Sir Paul Girvan found that there was systemic delay in these cases, arising from a lack of resources to fund inquests of the length, complexity and contentiousness involved. There were at that point 54 inquests pending in relation to 94 deaths. Only one inquest was heard during 2018. In an effort to address this problem, reforms have been proposed by the Lord Chief Justice of Northern Ireland which, it is hoped, will enable all the outstanding cases to be heard within five years. The proposed reforms have not however been implemented, as the necessary funding has not been provided. The judgment and order of the Court of Appeal In its judgment the court considered how section 7(5) of the Human Rights Act applies to complaints of delay in relation to the holding of inquests. Section 7(1)(a) provides that a person who claims that a public authority has acted in a way which is made unlawful by section 6(1) (ie has acted in a way which is incompatible with a Convention right) may bring proceedings against the authority under the Act. Section 7(5) provides: (5) Proceedings under subsection (l)(a) must be brought before the end of the period of one year beginning with the date on (a) which the act complained of took place; or (b) considers equitable having regard circumstances such longer period as the court or tribunal the to all The court observed that it was apparent from the history of this case and other legacy cases that delay as a result of failures to disclose evidence had been a recurring problem. Where there had been a series of failures of disclosure, was it necessary, the court asked, for the applicant to issue proceedings within one year of the end of a particular failure to disclose, or was the applicant entitled to include periods of delay resulting from earlier failures where proceedings were issued within 12 months of the latest failure? Might the answer to that question depend upon whether there was a finding that all of the failures of disclosure were part of a policy or practice to cause delay? The court did not answer these questions, but it observed that in the light of these issues, and the very long delays occurring in legacy cases, those who wished to avoid being captured by the primary limitation period under section 7(5)(a) might well feel obliged to issue proceedings separately in relation to each and every incident of delay. That might involve separate proceedings against different public authorities allegedly contributing to periods of delay which might or might not overlap. If each case had to be pursued within one year of the end of each particular element of delay, that would introduce a proliferation of litigation in respect of which periods of delay justified an award of damages against which public authorities. Practicality and good case management pointed towards ensuring that all of those claims against each public authority should be heard at the same time. In the present case a fresh inquest had been ordered (ie the inquest which began on 22 February 2016 and had already been completed when the substituted judgment was delivered). If it did not take place within a reasonable time, that would constitute a fresh breach of the Convention for which a remedy, including damages, might be available. It was when the inquest was completed that it would be possible to examine all the circumstances surrounding any claim for delay, and the court would then be in a position to determine whether adequate redress required an award of damages and, if so, against which public authority in which amount. The court stated at para 21: We consider, therefore, that in legacy cases the issue of damages against any public authority for breach of the adjectival obligation in article 2 ECHR ought to be dealt with once the inquest has finally been determined. Each public authority against whom an award is sought should be joined. In order to achieve this it may be necessary to rely upon section 7(5)(b) of the 1998 Act. The principle that the court should be aware of all the circumstances and the prevention of even further litigation in legacy cases are compelling arguments in favour of it being equitable in the circumstances to extend time if required. Where the proceedings have been issued within 12 months of the conclusion of the inquest, time should be extended. This appears on its face to constitute general guidance for all legacy cases in which damages are sought. The court made it clear at para 22 that it expected there to be very few, if any, exceptions to this approach: We find it difficult to envisage any circumstances in which there should be an exception to the approach set out in the preceding paragraph in such cases. The court concluded at para 23: For the reasons given we consider that the claim for damages for delay should be assessed after the completion of the inquest but should be made within one year of the completion. Since we have ordered a fresh inquest in this case that period has not yet commenced. We will hear the parties on whether the appeal on the award of damages should be adjourned until after the inquest or allowed without adjudication on the merits to enable the issue of a fresh claim. The first sentence in this passage again appears to constitute general guidance for legacy cases (since damages had already been assessed in the present case). So far as the present case was concerned, the alternatives set out in the third sentence were either to adjourn further consideration of the appeal until after the inquest had been completed, or to allow the appeal without a decision on the merits, so that the proceedings were brought to an end and a further claim could be brought after the inquest. In the event, the resultant order stayed the proceedings until the conclusion of the inquest, as explained earlier. Separate orders were made on 10 June 2017 in respect of the appeal and the cross appeal. In relation to the appeal, the court ordered: 1. that the claim for damages for breach of the article 2 procedural requirement that an inquest be conducted promptly should not be brought until the inquest has finally been determined. that where a claim for damages for breach of the article 2. 2 procedural requirement that an inquest be conducted promptly is brought within 12 months of the conclusion of the inquest, time should be extended under section 7(5)(b) of the 1998 Act [ie the Human Rights Act]. that the appeal be stayed until the conclusion of the 3. inquest proceedings. In relation to the cross appeal, the court ordered: 1. that the issue of delay at ground 7 on the cross appeal be stayed until the conclusion of the inquest proceedings. Paragraph 1 of the order in the appeal was consistent with the general guidance given in the judgment, and appeared to lay down a general rule that claims of the present kind should not be brought until an inquest has been concluded. It has no direct bearing on the present proceedings, where the claim was brought as long ago as 2013. Paragraph 2 addressed the implications of paragraph 1 in relation to the limitation period imposed by section 7(5). Only paragraph 3, and the order in the cross appeal, directly concerned the present proceedings. The decision of the Court of Appeal appears to have been understood as laying down a general rule that claims of the present kind could not be brought before the conclusion of an inquest, and that any claims which had been brought before that stage should be stayed until then. The present appeal The present appeal was brought in order to challenge the general guidance given by the Court of Appeal, reflected in paragraph 1 of the order made in the appeal. The main issue in the appeal was agreed to be whether the Court of Appeal was correct to rule that a victim adversely impacted by delay in the conduct of an inquest could not bring a claim for damages prior to the conclusion of the inquest. The appellant sought to set aside the judgment and order made by the Northern Ireland Court of Appeal whereby it decided that her claim for damages for breach of article 2 ECHR by reason of delay could only be brought after the conclusion of the inquest into her sons death. In re McCords application for Judicial Review After the hearing of the present appeal, the Court of Appeal handed down judgment in another legacy case where the applicant had applied for leave to issue judicial review proceedings in which he sought a declaration that the non disclosure of certain documents by the PSNI had caused delay in the holding of an inquest, in violation of his rights under article 2: In re McCords application for Judicial Review, unreported, 18 January 2019. The proceedings had been stayed by the High Court. In the course of its judgment, the Court of Appeal considered the judgment under appeal in the present proceedings (in its original version). It said at paras 21 22, in relation to para 27 of its original judgment in the present case (identical to para 22 of the revised version, cited at para 15 above): 21. We accept that this passage created the impression that in every legacy case any application to pursue a remedy by way of damages for delay could only be dealt with at the end of the inquest. Indeed it is clear that that was the common understanding of the parties before the learned trial judge as a result of which the applicant decided to abandon the determination of his claim for damages in the proceedings and rely solely upon the claim for a declaration 22. We consider, however, that this passage of the judgment ought to be interpreted in a rather more qualified manner. First, it has to be borne in mind that the court, having given the judgment in September 2015, decided of its own motion to relist the case for the determination of the damages claim in June 2017 having regard to the fact that the inquest had not yet concluded. Secondly, it needs to be borne in mind that this was a case management decision and was not intended to set forth any rule of law about the entitlement to damages in legacy cases. Thirdly, the case was concerned with circumstances in which there were active and ongoing inquest proceedings but where issues of delay in the course of those active proceedings arose. It was such cases that were being discussed in this passage of the judgment and we consider that the interpretation of para 27 [ie para 22 of the revised version] should be confined to cases in which those circumstances are present. The court observed at para 23 that the case before it was different: The inquest in this case has not taken place. No Coroner has been allocated to hear it and no materials have been provided to the Coroners Service by the police. It is impossible to estimate how many years it might take before the inquest might proceed In these circumstances the appeal was allowed. In the light of this judgment, it appears that the Court of Appeal intends the guidance given in the present case to be confined to cases where the only outstanding issue is damages and where an inquest can be expected to begin within the near future, if not already under way. The court also indicated in para 22 that the appropriateness of the stay should be kept under review, and that it should be lifted if the claim for damages will not otherwise be determined within a reasonable time. Discussion In considering the guidance given by the Court of Appeal in the present case, as clarified in the case of McCord, it must be borne in mind at the outset that, in cases of the present kind, it is the delay itself which constitutes a breach of the claimants Convention rights and gives rise to a right to bring proceedings under the Human Rights Act. The breach does not crystallise only after the inquest has been concluded: the claimant is entitled to bring proceedings as soon as the delay reaches the requisite threshold under article 2. Claims arising from such delay are brought under section 7(1)(a) of the Human Rights Act. That provision confers a statutory right on any person who claims that a public authority has acted in a way which is incompatible with a Convention right to bring proceedings against the authority, provided that he or she qualifies as a victim of the unlawful act and brings the proceedings within the time limits set by section 7(5). The court then has the power to grant appropriate relief under section 8. This may take the form of relief designed to end the delay, such as a mandatory order or declaration, or relief designed to compensate for the consequences of delay, in the form of an award of damages. In the present proceedings, both a declaration and damages were sought and awarded. The same remedies were also sought in the McCord case, although the claim for damages was abandoned in light of the guidance given in the present case. No court can take away the right conferred by section 7(1)(a), whether in the exercise of case management powers or otherwise. Leaving aside the courts power to control vexatious litigants and abuses of process, which are not here in issue, there can be no question of anyone being prevented from bringing proceedings at a time of their choosing (subject to the limitation provision in section 7(5)) in respect of a claimed violation of their Convention rights. Although the court cannot prevent proceedings from being brought by persons who claim that their Convention rights have been violated, it can exercise powers of case management in relation to those proceedings. Such powers can include ordering a stay of proceedings in appropriate circumstances. In that regard, however, three important aspects of Convention rights must be borne in mind. 1. Rights that are practical and effective First, the European Court has emphasised many times that Convention rights must be applied in a way which renders them practical and effective, not theoretical and illusory: see, for example, Airey v Ireland (1979) 2 EHRR 305, para 24. The effectiveness of the right under article 2 to have an investigation into a death begin promptly and proceed with reasonable expedition could be gravely weakened if there were a general practice of staying proceedings seeking to secure the prompt holding of an inquest, typically by obtaining a mandatory order or a declaration. Although compensation might be payable at a later stage, the primary object of the Convention, and of the Human Rights Act, is to secure compliance with the Convention so far as possible, rather than to tolerate violations so long as compensation is eventually paid. On the other hand, a practice of staying the assessment of damages (as distinct from the consideration of remedies designed to end the delay) until the entirety of the delay can be considered is less likely to undermine the effectiveness of the right, since that is less likely to depend on the point in time at which damages are assessed and awarded. Nevertheless, it remains necessary to consider whether that might be the consequence of a stay in the individual case before the court. 2. Determination within a reasonable time Secondly, since the right conferred by section 7(1)(a) of the Human Rights Act is a civil right within the meaning of article 6 of the Convention, a claimant is entitled under that article to have his claim determined within a reasonable time. That right under article 6 is distinct from the article 2 right on which the proceedings are based. A breach of the article 6 right is itself actionable under section 7(1)(a). The staying of proceedings will be unlawful if it results in a breach of the reasonable time guarantee in article 6. That would be a real possibility in some cases, if stays until after the completion of an inquest were ordered as a general rule. In the McCord case, the Court of Appeal observed that it was impossible to estimate how many years it might take before the inquest might proceed. In the proceedings brought by Hugh Jordan successfully challenging the verdict of the second inquest, the Lord Chief Justice remarked that if the existing legacy inquests are to be brought to a conclusion under the present system someone could easily be hearing The proportionality of a restriction on access to the courts some of these cases in 2040: [2014] NICA 76, para 122. The state of affairs described in Sir Paul Girvans recent judgment In re Hughes application for Judicial Review is consistent with that assessment. Plainly, a stay of that duration, or anything like it, would constitute a breach of article 6. 3. Thirdly, since a stay of proceedings prevents a claim from being pursued so long as it remains in place, it engages another aspect of article 6 of the Convention, namely the guarantee of an effective right of access to a court: see, for example, Woodhouse v Consignia plc [2002] EWCA Civ 275; [2002] 1 WLR 2558. It must therefore pursue a legitimate aim, and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved: see Tinnelly & Sons Ltd v United Kingdom (1998) 27 EHRR 249, para 72. It follows that even in a case where a stay would not render the article 2 right ineffective or breach the reasonable time guarantee in article 6, it is nevertheless necessary to consider whether it would be a proportionate restriction of the right of access to a court. As will be explained, that exercise requires consideration of the circumstances of the individual case before the court. So far as legitimate aims are concerned, the Court of Appeal mentioned two objectives: that a proliferation of litigation should be avoided, and that the court should be aware of all relevant circumstances when determining claims. Both of those aims are clearly legitimate. The courts concern about a potential proliferation of litigation was based, as it explained, on uncertainty in the legal profession about the answers to certain questions affecting the limitation of claims: whether a separate violation of the article 2 right to a prompt investigation, for which a separate claim arises, occurs on every occasion when a public authority is responsible for some measure of unjustified delay; and if so, whether such claims become time barred under section 7(5)(a), subject to the courts exercise of its discretion under section 7(5)(b), 12 months after each claim arises. How those questions should be answered has seemingly yet to be considered. If a suitable case were brought before the court for determination, that uncertainty could be resolved one way or the other. Until that occurs, however, the courts concern that uncertainty may result in a proliferation of litigation is reasonable and constitutes an important consideration on one side of the scales. In relation to the other legitimate aim, namely that the court should be aware of all relevant circumstances, the point made by the Court of Appeal was that it is only after an inquest has been completed that it is possible to determine whether adequate redress for delay requires an award of damages, and if so against which public authority and in which amount. Whether that is so depends on how damages are assessed. Hitherto, assessment has not depended on factors which can only be considered after an inquest. The possibility of assessing damages on a broadly conventional basis prior to the conclusion of an inquest is demonstrated by several judgments of the European Court in cases emanating from Northern Ireland, including its judgment in the Jordan case. That is not to say, however, that there may not be good practical reasons for staying the proceedings, where the question arises of whether it is appropriate to award damages, and if so in what amount. Particularly in a situation where the court may have to decide claims against different public bodies in respect of the same or different periods of delay, deferring consideration of these issues until after the conclusion of an inquest may enable the court to consider all relevant periods of delay, and responsibility for them, at one and the same time. It is therefore another means of reducing the risk of an undue burden being placed on the courts by a proliferation of claims for damages (and potentially for contribution, depending on how the concept of joint and several liability applies in this context: another question which seemingly has yet to be considered). As indicated earlier, this is a relevant and significant factor to be weighed in the balance. Whether a stay is proportionate depends on an assessment of the weight of the competing interests at stake in the circumstances of the particular case. The cogency of the arguments in favour of a stay will depend on the degree of risk that the proceedings may otherwise result in a proliferation of litigation, if that is the legitimate aim pursued. On the other side of the scales, the importance to the claimant of obtaining monetary redress for the violation of his or her Convention rights without avoidable delay has to be considered. In most cases the claimant is likely to be the widow, parent or child of the deceased, and may suffer anguish as decades pass without any adequate inquiry into the circumstances of the death, particularly where there are allegations of state involvement in the death (as in the present case), and of collusion and cover up. The imposition of delay in the determination of their claim for damages may cause additional distress. There may be other factors in individual cases which make the expeditious determination of the claim particularly important. The present case, for example, illustrates the importance of expedition where proceedings are brought by claimants who are elderly or infirm. In striking an appropriate balance between the different interests at stake, the length of any stay will be of considerable importance. There is no doubt that there may be cases in which it is proportionate to impose a stay on a claim for damages in a legacy case, weighing the relevant factors for and against it. There is equally no doubt that there may be cases in which, weighing those factors, a stay is not proportionate. Since the relevant factors can differ in nature and weight from one case to another, it follows that courts should carry out the necessary balancing exercise in the individual case. A virtually automatic rule requiring all such claims to be stayed until after the inquest, regardless of their individual circumstances, would not comply with that requirement, and in addition, as previously explained, would result in breaches of the reasonable time requirement of article 6. The present case The guidance which the Court of Appeal was understood to have given in paras 21 23 of its judgment in the present case was not consistent with the foregoing principles. On its face, it involved no assessment of proportionality or consideration of individual circumstances. It was also liable to render the article 2 procedural right ineffective, and to result in breaches of the reasonable time guarantee. The clarification provided in the case of McCord has, however, considerably narrowed the apparent scope of that guidance, so as to confine it to cases where the only outstanding issue is damages and where an inquest can be expected to begin within the near future, if not already under way. The court also indicated that the appropriateness of the stay should be kept under review, and that it should be lifted if the claim for damages will not otherwise be determined within a reasonable time. Guidance to that effect is generally consistent with the principles discussed above, although it remains necessary to allow for the possibility of exceptions in individual cases. The foregoing discussion has concerned the general guidance given by the Court of Appeal in the present case, and the reconsideration of that guidance in the case of McCord. So far as the present proceedings are concerned, the decision which is challenged was to stay the claim for damages until the inquest had been concluded. It has not been argued that the effect of that decision was to render the claimants article 2 right theoretical or illusory, or that there was a breach of the reasonable time requirement imposed by article 6. On the other hand, it does not appear from the judgment of the Court of Appeal that it carried out any assessment of the proportionality of the stay which it ordered. It is uncertain whether the court would have ordered the stay if such an assessment had been conducted, particularly if Mr Jordans ill health had been drawn to its attention. Conclusion It is impossible not to feel considerable sympathy for the serious practical difficulties which the courts in Northern Ireland face in dealing with legacy cases, and which prompted the guidance which was given in the present case and clarified in the case of McCord. As has been explained, the guidance as originally given was defective on its face, and the appellant was entirely justified in bringing this appeal in order to challenge it. The Court of Appeal has, however, recognised that the terms in which it expressed itself have caused difficulty, and it has resolved the problem in its McCord judgment, to which I would only add that it remains necessary to consider whether that general guidance should be applied in the circumstances of an individual case. So far as complaint is made about the order made in the present proceedings, this court would not normally question a case management decision. The decision in question was however taken without any evident consideration of its proportionality in the particular circumstances of this case. In addition, it is uncertain whether the Court of Appeal would have reached the same decision if the question of proportionality had been considered in the light of all the relevant facts, including the then claimants declining health. In these circumstances I would allow the appeal.
UK-Abs
On 25 November 1992, Pearse Jordan was shot and killed by a member of the Royal Ulster Constabulary. In 1994, his father, Hugh Jordan, made an application to the European Court of Human Rights (ECtHR) complaining that the failure to carry out a prompt and effective investigation into his sons death was a violation of article 2 of the European Convention on Human Rights (ECHR). An inquest commenced on 4 January 1995 but was adjourned shortly afterwards. On 4 May 2001, in Jordan v United Kingdom (2003) 37 EHRR 2, the ECtHR upheld the complaint and awarded damages of 10,000. A fresh inquest into Pearse Jordans death commenced on 24 September 2012, and a verdict was delivered on 26 October 2012, but Hugh Jorden then brought proceedings for judicial review, which resulted in the verdict being quashed: In re Jordans Application for Judicial Review [2014] NIQB 11. In 2013, Hugh Jordan brought the present proceedings for judicial review seeking declarations that the Police Service of Northern Ireland (PSNI) and the Coroner had violated his article 2 rights by delaying the commencement of the inquest and an award of damages under section 8 of the Human Rights Act 1998 (HRA) in respect of the delay from 4 May 2001 until 24 September 2012. At first instance, Stephens J upheld the claim against the PSNI and awarded damages of 7,500 but dismissed the claim against the Coroner. The PSNI appealed against the declaration and damages award, and Hugh Jordan cross appealed against the dismissal of his claim against the Coroner. On 22 September 2015, the Court of Appeal ordered that the proceedings should be stayed until after the inquest had been completed. That order was subsequently withdrawn, and an order in similar terms was made on 10 June 2017, which Mr Jordan appealed against. Meanwhile, a further inquest had commenced on 22 February 2016, and a verdict was delivered on 9 November 2016. The stay was lifted on 23 October 2017. The Supreme Court unanimously allows the appeal. Lord Reed, with whom the rest of the Court agrees, delivers the judgment. The Court of Appeal in Northern Ireland held that in so called legacy cases, which concern deaths that occurred in Northern Ireland during the Troubles, the issue of damages against any public authority for breach of the adjectival obligation in article 2 ECHR [i.e. the obligation to investigate the circumstances of the death] ought to be dealt with once the inquest has finally been determined. This appeared to constitute general guidance, and, consistently with this, the Court of Appeal ordered that the claim for damages for breach of the article 2 procedural requirement that an inquest be conducted promptly should not be brought until the inquest has finally been determined. [16] [17] The appeal was against this part of the Court of Appeals order. [20] After the hearing of this appeal, the Court of Appeal, in another legacy case, In Re McCords Application for Judicial Review, clarified the remarks in Jordan, so that it appears that it intends the guidance to be confined to cases where damages are the only outstanding issue and where an inquest can be expected to begin in the near future, if not already under way. Further, the appropriateness of the stay should be kept under review, and it should be lifted if the claim for damages will otherwise not be determined within a reasonable time. [24] Lord Reed states that it must be borne in mind at the outset that, in cases of the present kind, it is the delay itself which constitutes a breach of the claimants Convention rights and that [t]he breach does not crystallise only after the inquest has been concluded. [25] Section 7(1)(a) of the HRA, pursuant to which claims arising from such delay are brought, confers a statutory right on any person to bring proceedings against a public authority that acted in a way which was incompatible with their Convention right. [26] No court can take that statutory right away. [27] However, it can exercise powers of case management, including ordering a stay, but, when doing so, three important aspects of Convention rights must be borne in mind. [28] First, Convention rights must be practical and effective. [29] Second, a stay will be unlawful if it results in a breach of the reasonable time guarantee in article 6 of the Convention. [31] [32] Third, a stay also engages another aspect of article 6, namely the guarantee of an effective right of access to a court. It must therefore pursue a legitimate aim, and there must be a reasonable relationship of proportionality between the means employed and the aim sought to be achieved. [33] This requires an assessment of the weight of the competing interests in the particular case: the risk of a proliferation of litigation, the avoidance of which was the legitimate aim pursued by the stay, against the importance to the claimant of obtaining monetary redress for the violation of his or her Convention rights without avoidable delay. There may be factors in individual cases which make the expeditious determination of the claim particularly important. The present case, for example, illustrates the importance of avoiding delay where proceedings are brought by claimants who are elderly or infirm, since Hugh Jordans health has so deteriorated that his wife had to take over the conduct of these proceedings. [37] On its face, the guidance given by the Court of Appeal in the present case involved no assessment of proportionality or consideration of individual circumstances. It was also liable to render the article 2 procedural right ineffective resulting in breaches of the reasonable time guarantee. [39] However, the McCord judgment resolved this. Nevertheless, it remains necessary to consider whether that general guidance should be applied in the circumstances of an individual case. In the present case, the stay was imposed without any evident consideration of its proportionality. It is uncertain whether it would have been imposed if proportionality had been considered in the light of all the relevant facts, including Hugh Jordans declining health. The appeal is therefore allowed. [41] [42]
The appellant, Ms Samuels, was an assured shorthold tenant of 18 Dagger Lane, West Bromwich, Birmingham, where she lived with four children. In July 2011, having fallen into rent arrears, she was given notice to leave. She later applied to the respondent council as homeless under Part VII of the Housing Act 1996. But it was decided that she was intentionally homeless, on the ground that the accommodation at Dagger Lane was affordable and reasonable for her to continue to occupy, and that its loss was the result of her deliberate act in failing to pay the rent. That decision was ultimately confirmed on review by the council in a letter dated 11 December 2013. The central issue in this appeal is whether the council adopted the correct approach in determining that the accommodation was affordable for those purposes. Ms Samuelss appeal to the County Court against the councils decision was dismissed by H H Judge Worster on 10 June 2014, and her further appeal was dismissed by the Court of Appeal (Richards, Floyd, and Sales LJJ) [2016] PTSR 558 on 27 October 2015. She appeals to this court with permission granted by the court on 19 February 2018. (The notice of appeal recorded that the very substantial delay in bringing the case to this court was caused by funding problems, related to the refusal of legal aid, and the need to proceed by way of conditional fee agreement. Legal Aid was reinstated after permission to appeal had been granted by this court. We were told that in the meantime she and her family have been living in temporary accommodation provided by the council.) The statutory framework The relevant statutory provisions are in Part VII of the 1996 Act. The authority becomes under a full duty to secure accommodation to a person found homeless, if they find certain conditions satisfied, one of which is that they are not satisfied that she became homeless intentionally (section 193(1)). That in turn depends on whether she deliberately did or failed to do anything in consequence of which she ceased to occupy accommodation which was available for her occupation and which it would have been reasonable for [her] to continue to occupy (section 191(1)). The initial decision is made under section 184 of the 1996 Act; section 202 confers a right to request a review by the authority itself; section 204 confers a right of appeal to the County Court on a point of law. Section 177(3) enables the Secretary of State by order to specify matters to be taken into account or disregarded in determining the question under section 191(1). The Homelessness (Suitability of Accommodation) Order 1996 (SI 1996/3204) (the 1996 Order), made in the exercise of that power, provided: 2. Matters to be taken into account In determining whether it would be, or would have been, reasonable for a person to continue to occupy accommodation there shall be taken into account whether or not the accommodation is affordable for that person and, in particular, the following matters the financial resources available to that person, (a) including, but not limited to, salary, fees and other remuneration; social security benefits; (i) (ii) the costs in respect of the accommodation, (b) including, but not limited to, (i) payments of, or by way of, rent; (d) that persons other reasonable living expenses. Section 182(1) requires the authority to have regard to guidance given by the Secretary of State. The relevant guidance at the time was the Homelessness Code of Guidance for Local Authorities (the Code). It was issued in 2006, replacing earlier versions dated 1999 and 2002. Paragraph 17.39 of the Code set out article 2 of the 1996 Order, with additional italicised comments. It stated inter alia that account must be taken of: the financial resources available to him or her (ie all (a) forms of income), including, but not limited to: (i) salary, fees and other remuneration (from such sources as investments, grants, pensions, tax credits etc); social security benefits (such as housing benefit, (ii) income support, income based Jobseekers Allowances or Council Tax benefit etc) On the expenses side, the reference to rent was expanded: payments of, or by way of, rent (including rent default/property damage deposits). There were no italicised additions to the reference to that persons other reasonable living expenses. Paragraph 17.40 read: In considering an applicants residual income after meeting the costs of the accommodation, the Secretary of State recommends that housing authorities regard accommodation as not being affordable if the applicant would be left with a residual income which would be less than the level of income support or income based jobseekers allowance that is applicable in respect of the applicant, or would be applicable if he or she was entitled to claim such benefit. This amount will vary from case to case, according to the circumstances and composition of the applicants household. A current tariff of applicable amounts in respect of such benefits should be available within the authoritys housing benefit section. Housing authorities will need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials (Emphasis added) As will be seen, an important issue in the appeal is whether the reference to use of income support as a guide is to be treated as extending also to benefits in respect of children, in particular child tax credit. It is helpful in this context to refer to Humphreys v Revenue and Customs Comrs [2012] UKSC 18; [2012] 1 WLR 1545, where Lady Hale explained the change. Having noted that income support was a means tested benefit at the officially prescribed subsistence level, she described the introduction of child tax credit (CTC): Child tax credit and working tax credit were introduced by the Tax Credits Act 2002. Child tax credit replaced the separate systems for taking account of childrens needs in the tax and benefits systems. Previously, people in work (or otherwise liable to pay income tax) might claim the childrens tax credit to set off against their income. This was administered by the tax authorities. People out of work (or otherwise claiming means tested benefits) might claim additions to their income support or income based jobseekers allowance to meet their childrens needs. This was administered by the benefits authorities. Under the new system, a single tax credit is payable in respect of each child, irrespective of whether the claimant is in or out of work, and is administered by Her Majestys Revenue and Customs. Child tax credit is like income support and jobseekers allowance, in that it is a benefit rather than a disregard and it is means tested, so that the higher ones income the less the benefit, until eventually it tapers out altogether. (paras 3 4) Ms Samuels income and expenditure For the purpose of comparing her income and expenditure at the relevant time, the evidence provided to the authority, and recorded by the county court judge (paras 15ff), presented a somewhat confusing picture, not assisted by the varying estimates presented by or on behalf of Ms Samuels. On the income side, at the time that she left 18 Dagger Lane Ms Samuels was dependent entirely on social security benefits, amounting in total to a monthly income of 1,897.84, made up of: i) housing benefit (548.51) ii) income support (290.33); iii) child tax credit (819.00); iv) child benefit (240.00). Excluding housing benefit, therefore, the total available for other living expenses was 1,349.33. On the expenses side, her rent was 700 per month, leaving a shortfall compared to her housing benefit taken alone of 151.49. Her estimates of her non housing expenses had varied in the course of her exchanges with the council. Her initial estimate had been only 380 per month (including 150 food/household items). By the time of the review decision, a revised schedule had been submitted by her solicitors on 1 November 2013, giving a total estimate of 1,234.99, consisting of: i) 750 food/household items; ii) 80 electricity; iii) 100 gas; iv) 50 clothes; v) 43.33 TV licence; vi) 43.33 school meals; vii) 108.33 travel; viii) 20 telephone; ix) 40 daughters gymnastics. No supporting information was provided. The accompanying letter said: It is impossible for our client, who as you are aware has learning difficulties to remember precise details, we are confident that these figures are reasonably accurate. It will be seen that, on an overall view (including housing benefit and rent), her monthly income amounted to 1,897.84 entirely from benefits, and her expenses amounted to 1,934.99, giving a shortfall of about 37 per month. According to the authoritys inquiries of her landlords, she also had arrears of rent of 1,600, although she claimed it was only one months rent (700). This difference was left unresolved by the judge (para 23). Although these figures were accepted as common ground in the lower courts, Ms Garnham for the Child Poverty Action Group (CPAG) has pointed to some apparent discrepancies in respect of benefits. She explains in her witness statement of 11 January 2019, para 68: I note that in para 11 of the judgment of the Court of Appeal the appellant gives her income at the relevant time as child tax credits of 189 a week (ie 819 a month), income support of 67 a week (ie 290.33 a month) and child benefit of 240 a month. The correct amount of child tax credits would in fact be 206.15 a week. Assuming the figures given by the appellant are correct, it is likely that the tax credit award was in fact being paid at a lower rate to recover a previous overpayment. The other figures given for income support are out by 0.50 per week (so monthly should be 292.50) and for child benefit the figure given is a four weekly figure rather than the calendar month figure of 262.16. I record this evidence for completeness and in case the differences may become material hereafter. However, it is not directly relevant to the appeal, which is in principle limited to points of law arising from the original decision of the council, and taking into account the information then before it. The councils decision The councils final position on affordability in the present case appears from their review decision letter dated 11 December 2013. The letter, written by the case officer, was long and detailed, and dealt with other issues which are no longer in dispute. It began by referring in general terms to various sources considered, including the Code of Guidance (see para 6 above), but there was no specific reference to the paragraphs dealing with affordability. The officer first addressed, and rejected, a suggestion that her last settled accommodation should be treated as her ex partners address, where she went for a period after leaving 18 Dagger Lane. The officer then turned to the treatment of affordability, which was dealt with relatively briefly. He referred to the shortfall in respect of monthly rent (151.49), and the monthly income, apart from housing benefit, of 1,349.33 (see above). He noted that on the expenditure figures originally submitted there would have been a significant amount of disposable income from which to fund your shortfall. Referring to the amended figures, he commented: It is now asserted that contrary to the provided figure of 150 for housekeeping, the actual figure was 750 per month, or 173 per week. This figure seems to me to be excessive for a family of your size, given that this is purported to only account for food and household items, with utilities and travel expenses accounted for elsewhere. I accept that a figure of 150 per month for food and household bills for a family of your size is equally likely to be inaccurate, but I consider that it is a matter of normal household budgeting that you would manage your household finances in such a way to ensure that you were able to meet your rental obligation. I cannot accept that there was not sufficient flexibility in your overall household income of in excess of 311 per week to meet a weekly shortfall in rent of 34. [The figures of household income (311) and shortfall in rent (34) given in the letter appear to be the (rounded) weekly equivalents of the monthly figures given earlier in the letter (1,349.33 and 151.49 respectively).] The officer noted that, in spite of some learning difficulties, she had confirmed her ability to pay her bills on time and manage her finances. It was concluded accordingly that the accommodation at 18 Dagger Lane was affordable for her. The appeal In the County Court counsel for Ms Samuels raised a number of grounds of appeal, including the alleged failure of the reviewing officer to have regard to paragraph 17.40 of the Code of Guidance. The Judge rejected this submission (para 54). He referred to Balog v Birmingham City Council [2013] EWCA Civ 1582; [2014] HLR 14, in which a similar submission had been rejected by the Court of Appeal. He accepted counsels submission for the authority that the Code was a recommendation; the Code had been referred to in the letter, and it was reasonable to assume that the decision was made having considered its provisions. He added that if paragraph 17.40 was not fully considered, it was an error which does not invalidate the decision. The reasons did not need to set out every aspect of the decision making process. The appeal was dismissed by the Court of Appeal. Giving the sole judgment, Richards LJ noted the submission by Mr Stark for Ms Samuels that when an applicant is reliant entirely on benefits, regard should be had to the fact that such benefits are set at subsistence level and are not designed to give a level of income that allows flexibility to spend outside maintaining a very basic standard of living, and that income support, child tax credits and child benefit are not intended to cover housing costs; it is the purpose of housing benefit to cover those costs (para 24). He did not accept that there was such a necessary starting point: The 1996 Order and the guidance make clear that account should be taken of all forms of income (including social security benefits of all kinds) and of relevant expenses (including rent and other reasonable living expenses). This suggests that a judgment has to be made on the basis of income and relevant expenses as a whole. It does not suggest that benefits income is to have any special status or treatment in that exercise, let alone that one should adopt the starting point formulated by Mr Stark. (para 25) With regard to the alleged failure to have regard to paragraph 17.40, he noted (para 34) the comment of Kitchin LJ in Balog v Birmingham City Council [2014] HLR 14, para 49 that review officers are not obliged to identify each and every paragraph of the guidance which bears upon the decision they have to make. Referring to the comparison with income support he said: It is true that the review decision did not address that point in terms. It did, however, take into account the payment of income support, and on the face of it the appellants residual income after the cost of her accommodation (ie after deduction of the shortfall in her rent) was well in excess of the level of her income support. At the hearing of the appeal Mr Stark did not suggest otherwise He did submit that the child tax credits should also be taken into account in this part of the exercise, but that is not what paragraph 17.40 says (para 36) He also referred to a new point which Mr Stark had sought to introduce in post hearing written submissions related to changes in the relative treatment of income support and child tax credit. So far as he understood it, this seemed to him to depend on a strained and implausible construction of the guidance itself, but in any event he accepted the authoritys submission that it was too late to raise it (para 37). The submissions in this court For the appellant, Mr Stark, with the support of Mr Westgate QC for the interveners, asks the court to look at the issues in this case against a background in which shortfalls between contractual rent and maximum levels of housing benefit have become common for a number of reasons, in both the private and social rented sectors, because of developments in social security policy. These include the local housing allowance size criteria and the social sector size criteria (the spare room subsidy / bedroom tax rules); contractual rent exceeding local broad rent levels for local housing allowance, originally set at the 50th centile of local reference rents but reduced to the 30th centile in 2011; the freezing of local reference rent rates from 2012 to 2013, and 2016 to 2020; and the benefit cap. He refers to evidence of the increasing incidence of homelessness linked to inability to afford rents. For example, the National Audit Office report, Homelessness (HC 308, 2017) identified a threefold increase since 2010 2011 in the number of applicants as a result of the ending of an assured shorthold tenancy. The report observed: 1.16. In all cases front line staff said that the key reason why people were presenting as homeless was the end of tenancies in the private rented sector. They said that this was due to increases in rents in the private sector, and a decline in peoples ability to pay these rents. This decline in ability to pay was said to be partly due to welfare reforms. Against this background, although he makes a number of related points, Mr Starks underlying submission is that it was wrong in principle for the council to treat Ms Samuels non housing benefit as containing a surplus which could be treated as available to make up shortfalls in housing benefits. More specifically he submits (in the words of his written case): The respondent failed to correctly apply the 1996 Order. Rather than add all income and subtract all reasonable expenditure, it treated the appellants housing benefit as hypothecated for rent, then asked whether the gap between housing benefit and rent could be bridged from other income Linked to this was a submission (supported by the interveners) that the council had failed to pay regard to paragraph 17.40, as correctly interpreted. It was submitted that the reference to a residual income less than the level of income support must be taken as not limited to income support in the strict sense, but as including amounts available in respect of the children, by way of child benefit or child tax credit. This, he says, is necessary to give effect to the obvious policy of the guidance, which is apparent also from the reference to the amount varying according to the composition of the applicants household. It would make no sense to recommend the use of her income support on its own, as a recommended guide to the reasonable family expenditure which must take account of the needs of the children. This interpretation is also necessary, it is said, to avoid arbitrary differences between different claimants. In this respect paragraph 17.40 must be understood against the background of changes in the treatment of benefits for claimants with children such as Ms Samuels. These changes occurred since the Code was first issued in 1999, and re issued in 2002, with paragraph 17.40 in substantially the same form. (The only change from 2002 was the omission of the word significantly before the words less than the level of income support). The changes are described in detail in the evidence of Ms Garnham, Chief Executive of CPAG. I can conveniently take the summary from Mr Westgate QCs submission for the interveners: Prior to April 2004, income support recipients with children would have received family premiums and dependent child additions as part of their claim (old style support). After April 2004, new income support recipients with children would no longer receive these additional payments in respect of children as part of their income support award but would instead have received Child Tax Credit instead (new style support). It was stated Government policy that there should be an equivalence between old style income support rates for children and child tax credit rates. The shift was not intended to disadvantage families who receive new style support, ie income support for the parent and child tax credit for each of the children. This change did not affect those who had been continuously receiving income support. According to the official statistics cited by Mr Stark, in 2006 when the Code was issued, the majority of claimants were still receiving income support including amounts for children. For that group, it would have been clear that the full amount of income support, including the amounts for children, would be taken into account. Although the proportion of claimants on the old arrangements had reduced to 1 in 20 by 2011, the wording of paragraph 17.40 remained the same. But it cannot have been intended that the advice in the paragraph should apply in a different way to the two groups, simply because of a change in the way their benefits were presented. Indeed to do so would be both irrational and discriminatory (in terms of articles 8 and 14 of the Human Rights Convention). More generally, Mr Stark submits that the benefits are intended as no more than the officially prescribed subsistence level (see Humphreys v Revenue and Customs Comrs [2012] UKSC 18; [2012] 1 WLR 1545, para 3 per Lady Hale). They are designed to cover necessary living expenses of the family. They cannot properly be treated as notionally available to make up a shortfall between housing benefit and rent. Thus in Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47; [2015] 1 WLR 3250, para 15 (which concerned the cost occasioned by the prolonged stay in hospital of a disabled child, in a case where the family were receiving income support with child benefits and child tax credit), Lord Wilson observed that income support brought the familys economy up to, but not beyond, subsistence level; and that the Secretary of State had conceded that there would have been no surplus available to meet such extra expenditure as the family might incur as a result of [their child being admitted to hospital]. He relies also on what was said by Henderson J in Burnip v Birmingham City Council [2012] EWCA Civ 629; [2013] PTSR 117, para 45: it is necessary to draw a clear distinction between the benefits which Mr Burnip was entitled to claim for his subsistence, and those which he was entitled to claim in respect of his housing needs. It would therefore be wrong in principle, in my judgment, to regard Mr Burnips subsistence benefits as being notionally available to him to go towards meeting the shortfall between his housing related benefits and the rent he had to pay. Although these statements were made specifically with reference to income support, it cannot have been intended that benefits related to children would be treated less favourably. Further, to do so would be inconsistent with the authoritys duty to have regard to the need to safeguard and promote the welfare of children (Children Act 2004 section 11(2); and see Nzolameso v Westminster City Council (Secretary of State for Communities and Local Government intervening) [2015] UKSC 22; [2015] PTSR 549, paras 22 30). In support of these submissions Mr Westgate refers to more recent statements in the government White Paper Universal Credit: welfare that works (DWP, November 2010 CM 7957). He refers to chapter 2 (Universal Credit: a new approach to welfare) which states: The personal amount is the basic building block of Universal Credit as it is in existing benefits. The purpose of the personal amount is to provide for basic living costs. It will broadly reflect the current structure of personal allowances in Income Support, Jobseekers Allowance and the assessment phase of Employment and Support Allowance, with single people and couples getting different rates. (para 19) The Government is committed to providing the financial support less well off families need to cover childrens living costs. We will therefore include fixed amounts within Universal Credit to provide for these costs. The amounts will be based on those currently provided through Child Tax Credit. They will be additional to Child Benefit. (para 38, emphasis added) Thus says Mr Westgate the personal allowance provides for no more than basic living costs while the amounts for children provide the support which the families need to cover (their) living costs. Although those passages are related directly to Universal Credit, the passages make clear that the policy approach as respects the purpose, and the level of, benefits has not changed from the previous system. Finally, Mr Westgate relies on the evidence of Polly Neate, Chief Executive of Shelter, as to the lack of any generally accepted guidance for authorities to assess the reasonableness of living expenses under the Suitability Order. Shelters research shows a wide variety of practice among housing authorities, and the absence of any transparent or evidence based guidance for that purpose. According to her evidence, 60% of authorities told Shelter that they have no internal guidance to assist them; only 17 of the 246 authorities who responded to Shelters Freedom of Information Act requests provided any training to housing decision makers on affordability assessment; and 43 of the 105 authorities who had some form of guidance or policy relied on one of three published guides on expenditure: (i) the Standard Financial Statement (SFS); (ii) the Common Financial Statement (CFS); or (iii) the Association of Housing Advice Services (AHAS) guideline figures. According to Ms Neate, none of these is designed for assessing affordability under the Housing Act, and they are subject to other concerns described in her evidence. In response to the appellants submissions, Mr Manning for the council adopts the reasoning of the Court of Appeal. The review officer correctly applied the approach of the 1996 Order, which required him to consider all sources of income, including social security benefits of all kinds. There was nothing in the Order, or any other policy statement, to support Mr Starks central thesis that non housing welfare benefits cannot be used to meet housing costs, nor taken into account in assessing the affordability of rented accommodation. Had it been intended that any category of non housing benefits should be excluded from consideration, it would have been easy so to provide. In the absence of such provision, it is not for the authority to investigate the policy from time to time behind particular benefits. The arguments based on the history of paragraph 17.40 of the Code, he submits, are not supported by the wording of the paragraph. The specific reference to tax credits in paragraph 17.39 shows that the author had the changes well in mind. The authoritys duty to have regard to the Code does not require, or entitle, it to search for interpretations which are not clear on a natural reading of the wording, nor to assume a meaning of income support based on a previous version of benefits law. Statements in the authorities to the effect that income support was set at subsistence level were made in different statutory contexts. In any event, child tax credit and child benefit are not subsistence benefits in that sense (see Humphreys supra para 22; R (PO) v Newham London Borough Council [2014] EWHC 2561 (Admin), paras 45 46). Discussion It is unfortunate that the submissions for the appellant, and in particular the arguments based on the interpretation of paragraph 17.40, seem to have been fully developed for the first time in this court. We do not therefore have the full benefit of the experience in this field of the Court of Appeal. Although Mr Westgates submissions and the supporting evidence for the interveners have provided some valuable background to the legal issues, we must bear in mind that this is an appeal relating to a particular decision, made more than five years ago, on the information then available to the council, not a general review of the law and policy in this field. There is an attraction in the argument that references to income support in paragraph 17.40 should be understood in the sense in which that expression was apparently used at the time of the earlier versions of the Code. It seems surprising, even nonsensical, that the level of income support should be maintained as a guide to affordability, but without regard to the changes which excluded from income support any allowance for the children of the family. However, those issues are not in my view critical to the resolution of this appeal. I would start from the terms of the 1996 Order itself. On the one side it requires the authority to take into account all sources of income, including all social security benefits. I agree with Mr Manning that there is nothing in the Order which requires or justifies the exclusion of non housing benefits of any kind. On the other side it requires a comparison with the applicants reasonable living expenses. Assessment of what is reasonable requires an objective assessment; it cannot depend simply on the subjective view of the case officer. Furthermore, as Mr Stark submits, affordability has to be judged on the basis that the accommodation is to be available indefinitely (see R (Aweys) v Birmingham City Council [2009] WLR 1506; [2009] UKHL 36). Guidance is provided by paragraph 17.40, where the Secretary of State recommends authorities to regard accommodation as unaffordable if the applicants residual income would be less than the level of income support (para 6 above). Even if that recommendation in respect of income support is not interpreted as extending to benefits for children, the lack of a specific reference does not make the level of those benefits irrelevant. As the authorities referred to by Mr Stark (para 26 above) show, benefit levels are not generally designed to provide a surplus above subsistence needs for the family. If comparison with the relevant benefit levels is material to the assessment of the applicant, it is difficult to see why it should be any less material in assessing what is reasonable by way of living expenses in relation to other members of the household. Relevant also is the duty under the Children Act to promote and safeguard the welfare of children. The guidance makes clear, as one would expect, that amounts will vary according to the circumstances and composition of the applicants household. Further, it is to be noted that, immediately after the reference to the household, there is a reference to a current tariff in respect of such benefits (plural), which suggests that the tariff may be looked at in respect of benefits other than income support, and is at least a good starting point for assessing reasonable living expenses. That was not how the review officer dealt with Ms Samuels case. He asked whether there was sufficient flexibility to enable her to cope with the shortfall of 151.49 between her rent and her housing benefit. However, the question was not whether, faced with that shortfall, she could somehow manage her finances to bridge the gap; but what were her reasonable living expenses (other than rent), that being determined having regard to both her needs and those of the children, including the promotion of their welfare. The amount shown in the schedule provided by her solicitors (1,234.99) was well within the amount regarded as appropriate by way of welfare benefits (1,349.33). In the absence of any other source of objective guidance on this issue, it is difficult to see by what standard that level of expenses could be regarded as other than reasonable. For these reasons in my view the appeal should be allowed and the review decision must be quashed. Mr Stark has not in his submissions invited us to give any further relief at this stage. I would however add that, in the light of the law as I have endeavoured to explain it, and on the information available to us, I find it hard to see on what basis the finding of intentional homelessness could be properly upheld. I therefore express the hope that, five years on, the process can be short circuited, and the council will on reconsideration be able to accept full responsibility under Part VII for Ms Samuels and her family. Postscript more recent developments For completeness, since this judgment may be relevant in future cases, I note that in the time since the councils decision there have been significant changes to the law and policy in this area. The Welfare Reform Act 2012 effected a radical overhaul of the benefits system, with the introduction of Universal Credit. When fully in force it will replace the existing system of means tested benefits and tax credits with a single payment. Awards under the new scheme comprise a standard allowance, with additional amounts for children, housing and other particular needs. Another significant change in 2017 was the Homelessness Reduction Act 2017, which among other things was designed to involve authorities at an earlier stage in preventing homelessness. In connection with the new legislation the government undertook a review of the Homelessness Code of Guidance, for which purpose it consulted on a revised draft published in October 2017. Under affordability, paragraph 17.40 was replaced by the following much shorter version: 17.45 Housing authorities will need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials specific to their circumstances. There was no reference to the use of welfare benefits as a guide. The governments consultation response dated February 2018 recorded a significant number of requests from all stakeholder groups for further guidance on assessing the affordability of accommodation, and that it had been decided to include additional information on assessing affordability for a person based on Universal Credit standard allowances in chapter 17. The revised paragraph of the 2018 Code as issued reads: 17.46 Housing authorities will need to consider whether the applicant can afford the housing costs without being deprived of basic essentials such as food, clothing, heating, transport and other essentials specific to their circumstances. Housing costs should not be regarded as affordable if the applicant would be left with a residual income that is insufficient to meet these essential needs. Housing authorities may be guided by Universal Credit standard allowances when assessing the income that an applicant will require to meet essential needs aside from housing costs, but should ensure that the wishes, needs and circumstances of the applicant and their household are taken into account. (Emphasis added) It will be noted that this is no longer a recommendation but merely something which may be used as guidance; and that the suggested comparison is with Universal Credit standard allowances. The court did not hear argument on whether this is limited to a standard allowance payable to adults or whether it includes amounts payable in respect of children. It is not clear from the consultation response whether the new form of wording followed any discussion of the issues raised in this appeal or highlighted in the interveners evidence. That evidence shows what appears to be an unfortunate lack of consistency among housing authorities in the treatment of affordability, and a shortage of reliable objective guidance on reasonable levels of living expenditure. It is to be hoped that, in the light of this judgment, the problem will be drawn to the attention of the relevant government department, so that steps can be taken to address it and to give clearer guidance to authorities undertaking this very difficult task.
UK-Abs
The appellant, Ms Samuels, was an assured shorthold tenant of a property in West Bromwich, Birmingham, where she lived with four children. In July 2011, having fallen into rent arrears, she was given notice to leave. She later applied to the respondent council to be treated as homeless under Part VII of the Housing Act 1996 (the 1996 Act). A local housing authority becomes under a duty to secure accommodation to a person found homeless if certain conditions are satisfied. One condition is that they are not satisfied that the person became homeless intentionally. That depends on whether she deliberately did or failed to do anything which caused her to leave accommodation that was available and would have been reasonable for her to continue to occupy. Article 2 of the Homelessness (Suitability of Accommodation) Order 1996 provided that, in determining whether it would be reasonable for a person to continue to occupy accommodation, the local authority will take into account whether that accommodation is affordable. That includes consideration of the financial resources available to that person, including social security benefits, and consideration of the persons other reasonable living expenses. The local authority is required to have regard to guidance given by the Secretary of State, which at the time was the Homelessness Code of Guidance for Local Authorities (the Code) issued in 2006. Paragraph 17.40 of the Code stated: In considering an applicants residual income after meeting the costs of the accommodation, the Secretary of State recommends that housing authorities regard accommodation as not being affordable if the applicant would be left with a residual income which would be less than the level of income support or income based jobseekers allowance that is applicable in respect of the applicant, or would be applicable if he or she was entitled to claim such benefit. [] The council decided that Ms Samuels was intentionally homeless, on the grounds that the accommodation in West Bromwich was affordable and reasonable for her to continue to occupy, and that its loss was the result of her deliberate act in failing to pay the rent. In concluding that the accommodation was affordable, the council found that the shortfall in rent could have been met by greater flexibility in the household budgeting. Ms Samuelss appeal to the County Court against the councils decision was dismissed and her further appeal was dismissed by the Court of Appeal. The central issue in her appeal to the Supreme Court is whether the council adopted the correct approach in determining that the accommodation was affordable for the purposes of the 1996 Act. The Supreme Court unanimously allows the appeal and quashes the councils decision. Lord Carnwath gives the judgment of the court. The 1996 Order requires the authority to take into account all sources of income, including all social security benefits. There is nothing in it to require or justify the exclusion of non housing benefits of any kind. It also requires consideration of the applicants reasonable living expenses, which necessitates an objective assessment, not simply the subjective view of the case officer [34]. Even if the recommendation in paragraph 17.40 of the Code in respect of income support is not interpreted as extending to benefits for children, the lack of a specific reference does not make the level of those benefits irrelevant. Benefit levels are not generally designed to provide a surplus above subsistence needs for the family. If comparison with relevant benefit levels is material to the assessment of the applicant, it should not be any less material in assessing what is reasonable by way of living expenses in relation to other members of the household. The duty to promote and safeguard the welfare of children under the Children Act 1989 is also relevant [35]. As one would expect, the guidance makes clear that the amount of an applicable benefit will vary according to the circumstances and composition of the applicants household. It also refers to the current tariffin respect of such benefits (plural), implying that the tariff may be looked at in respect of benefits other than income support, and is at least a good starting point for assessing reasonable living expenses [35]. The review officer in Ms Samuels case asked whether there was sufficient flexibility to enable her to cope with the shortfall between her rent and her housing benefit. But the question ought to have been what her reasonable living expenses were (other than rent), to be determined having regard to both her needs and those of the children. The total expenses shown in the schedule provided by her solicitors (1,234.99) was well within the amount regarded as appropriate by way of welfare benefits (1,349.33). It is difficult to see by what standard those expenses could be regarded as unreasonable [36]. The appeal is therefore allowed, and the review decision quashed. In light of the information available to the Court, Lord Carnwath finds it hard to see on what basis the finding of intentional homelessness could be properly upheld. He therefore hopes that on reconsideration the council will be able to accept full responsibility under Part VII of the 1996 Act for Ms Samuels and her family [37].
The tort of defamation is an ancient construct of the common law. It has accumulated, over the centuries, a number of formal rules with no analogue in other branches of the law of tort. Most of them originated well before freedom of expression acquired the prominent place in our jurisprudence that it enjoys today. Its coherence has not been improved by attempts at statutory reform. Statutes to amend the law of defamation were enacted in 1888, 1952, 1996 and 2013, each of which sought to modify existing common law rules piecemeal, without always attending to the impact of the changes on the rest of the law. The Defamation Act 2013 is the latest chapter in this history. Broadly speaking, it seeks to modify some of the common law rules which were seen unduly to favour the protection of reputation at the expense of freedom of expression. In particular, there had been criticism of a state of the law in which persons resident outside the United Kingdom with only a very limited reputation in the United Kingdom were able to sue here for defamation and obtain substantial damages. One of the principal provisions of the new Act was section 1, which provided that a statement was not to be regarded as defamatory unless it had caused or was likely to cause serious harm to the claimants reputation. The claimant, Bruno Lachaux, is a French aerospace engineer who at the relevant time lived with his British wife Afsana in the United Arab Emirates. The marriage broke down, and in April 2011 he began divorce proceedings in the UAE courts and sought custody of their son Louis. In March 2012, Afsana went into hiding with Louis in the UAE, claiming that she would not get a fair trial in its courts. In August 2012, the UAE court awarded custody of Louis to his father. In February 2013, Mr Lachaux initiated a criminal prosecution against Afsana for abduction. In October of that year, having found out where Louis was, he took possession of him under the custody order. In January and February 2014, a number of British newspapers published articles making allegations about Mr Lachauxs conduct towards Afsana during the marriage and in the course of the divorce and custody proceedings. These appeals arise out of two libel actions begun by him in the High Court on 2 December 2014 against the publishers of the Independent and the Evening Standard, and a third begun on 23 January 2015 against the publisher of the i. Other libel actions were begun against the publisher of similar articles in another online newspaper, but we are not directly concerned with them on these appeals. In February 2015, Eady J conducted a meaning hearing. In a reserved judgment, he held that the article in the Independent bore eight defamatory meanings, and the article in the Evening Standard 12. In summary, the articles were held to have meant (inter alia) that Mr Lachaux had been violent and abusive towards his wife during their marriage, had hidden Louis passport to stop her removing him from the UAE, had made use of UAE law and the UAE courts to deprive her of custody and contact with her son, had callously and without justification taken Louis out of her possession, and then falsely accused her of abducting him. For the purpose of the trial of the issue before of serious harm, which took place before Warby J in July 2015, the newspapers did not contest the primary facts set out in Mr Lachauxs Particulars of Claim. Their case was that the statements in the articles were not defamatory because they did not meet the threshold of seriousness in section 1(1) of the Act of 2013. To appreciate the force of this point, it is necessary to summarise some well established features of the common law relating to damage to reputation. The common law background The law distinguishes between defamation actionable per se and defamation actionable only on proof of special damage. But although sharing a common label, these are very different torts with distinct historical origins. Libel, which is always actionable per se, originated in the disciplinary jurisdiction of the ecclesiastical courts and the criminal jurisdiction of the Court of Star Chamber. The gist of the tort is injury to the claimants reputation and the associated injury to his or her feelings. Defamation actionable per se comprised, in addition to all libels, four categories of slander which were assimilated to libel on account of their particular propensity to injure the reputation of the claimant. These categories were (i) words imputing criminal offences, (ii) words imputing certain contagious or infectious diseases, and (iii) words tending to injure a person in his or her office, calling, trade or profession. The Slander of Women Act 1891 added (iv) words imputing unchastity to a woman. In these cases, the law presumes injury to the claimants reputation and awards general damages in respect of it. These are not merely compensatory, but serve to vindicate the claimants reputation. In a frequently quoted passage of his speech in Broome v Cassell & Co Ltd [1972] AC 1027, 1071, Lord Hailsham LC acknowledged that this may put the plaintiff in a purely financial sense in a much stronger position than he was before the wrong. Not merely can he recover the estimated sum of his past and future losses, but, in case the libel, driven underground, emerges from its lurking place at some future date, he must be able to point to a sum awarded by a jury sufficient to convince a bystander of the baselessness of the charge . Special damage, ie pecuniary loss caused by the publication, may be recovered in addition, but must be proved. By comparison, slander which is not actionable per se originated as a common law action on the case, and is governed by principles much closer to those of the law of tort generally. The law does not presume injury to reputation by mere oral statements and treats injury to feelings as insufficient to found a cause of action. Special damage, representing pecuniary loss rather than injury to reputation, must be proved: see McGregor on Damages, 20th ed (2017), paras 46.002, 46.003; Gatley on Libel and Slander, 12th ed (2013), para 5.2. The interest which the law protects in cases where a defamatory statement is actionable per se differs from that which it protects in other cases. The gist of the tort where the statement is not actionable per se is not injury to reputation but, as Bowen LJ observed in Ratcliffe v Evans [1892] 2 QB 524, 532, wrongfully inflicted pecuniary loss: cf Jones v Jones [1916] 2 AC 481, 490 (Viscount Haldane). Indeed, it is an open question, which has given rise to conflicting dicta, whether general damage is recoverable at all in such cases. For present purposes a working definition of what makes a statement defamatory, derived from the speech of Lord Atkin in Sim v Stretch [1936] 2 All ER 1237, 1240, is that the words tend to lower the plaintiff in the estimation of right thinking members of society generally. Like other formulations in the authorities, this turns on the supposed impact of the statement on those to whom it is communicated. But that impact falls to be ascertained in accordance with a number of more or less artificial rules. First, the meaning is not that which other people may actually have attached to it, but that which is derived from an objective assessment of the defamatory meaning that the notional ordinary reasonable reader would attach to it. Secondly, in an action for defamation actionable per se, damage to the claimants reputation is presumed rather than proved. It depends on the inherently injurious character (or tendency, in the time honoured phrase) of a statement bearing that meaning. Thirdly, the presumption is one of law, and irrebuttable. In two important cases decided in the decade before the Defamation Act 2013, the courts added a further requirement, namely that the damage to reputation in a case actionable per se must pass a minimum threshold of seriousness. The first was Jameel (Yousef) v Dow Jones & Co Inc [2005] QB 946. The Saudi claimant had sued the publishers of the Wall Street Journal for a statement published online in Brussels to the effect that he had been funding terrorism. The statement was shown to have reached just five people in England and Wales. The Court of Appeal rejected a submission that the conclusive presumption of general damage was incompatible with article 10 of the Human Rights Convention. Lord Phillips of Worth Matravers MR, delivering the leading judgment, observed (para 37) that English law has been well served by a principle under which liability turns on the objective question of whether the publication is one which tends to injure the claimants reputation. But he held that the presumption could not be applied consistently with the Convention in those cases, said to be rare, where damage was shown to be so trivial that the interference with freedom of expression could not be said to be necessary for the protection of the claimants reputation. The appropriate course in such a case was to strike out the claim, not on the ground that it failed to disclose a cause of action, but as an abuse of process. The Court of Appeal held that it was an abuse of process for the action before them to proceed where so little is now seen to be at stake, and duly struck it out. The effect of this decision was to introduce a procedural threshold of seriousness to be applied to the damage to the claimants reputation. Two things are clear from the language of Lord Phillips judgment. One is that the threshold was low. The damage must be more than minimal. That is all. Secondly, the Court of Appeal must have thought that the operation of the threshold might depend, as it did in the case before them, on the evidence of actual damage and not just on the inherently injurious character of the statement in question. The second case was Thornton v Telegraph Media Group Ltd [2011] 1 WLR 1985, a decision of Tugendhat J. It arose out of an application by the Defendant newspaper to strike out part of the Particulars of Claim in a libel action on the ground that the statement complained of was incapable of being defamatory. Allowing the application, Tugendhat J held that in addition to the procedural threshold recognised in Jameel, there was a substantive threshold of seriousness to be surmounted before a statement could be regarded as meeting the legal definition of defamatory. The judges definition (para 96) was that a statement may be defamatory of him because it substantially affects in an adverse manner the attitude of other people towards him, or has a tendency so to do (the emphasis is the judges). He derived this formula from dicta of Lord Atkin in Sim v Stretch [1936] 2 All ER 1237. At para 94, he dealt with the relationship between the definition thus arrived at and the presumption of general damage, in terms which suggested that (unlike the Jameel test) the application of the threshold depended on the inherent propensity of the words to injure the claimants reputation: If the likelihood of adverse consequences for a claimant is part of the definition of what is defamatory, then the presumption of damage is the logical corollary of what is already included in the definition. And conversely, the fact that in law damage is presumed is itself an argument why an imputation should not be held to be defamatory unless it has a tendency to have adverse effects upon the claimant. It is difficult to justify why there should be a presumption of damage if words can be defamatory while having no likely adverse consequence for the claimant. The Court of Appeal in Jameel (Yousef)s case [2005] QB 946 declined to find that the presumption of damage was itself in conflict with article 10 (see para 37), but recognised that if in fact there was no or minimal actual damage an action for defamation could constitute an interference with freedom of expression which was not necessary for the protection of the claimants reputation: see para 40. Section 1 of the Defamation Act 2013 Section 1 is in the following terms: 1 Serious harm (1) A statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant. (2) For the purposes of this section, harm to the reputation of a body that trades for profit is not serious harm unless it has caused or is likely to cause the body serious financial loss. On the present appeals, the rival constructions of this provision may be summarised as follows. The case on behalf of Mr Lachaux is that the Act leaves unaffected the common law presumption of general damage and the associated rule that the cause of action is made out if the statement complained of is inherently injurious or, as Lord Phillips put it in Jameel and Tugendhat J in Thornton, it has a tendency to injure the claimants reputation. The effect of the provision on this view of the matter is simply that the inherent tendency of the words must be to cause not just some damage to reputation but serious harm to it. The defendant publishers dispute this. Their case is that the provision introduces an additional condition to be satisfied before the statement can be regarded as defamatory, on top of the requirement that the words must be inherently injurious. It must also be shown to produce serious harm in fact. They submit that unless it was self evident that such a statement must produce serious harm to reputation, this would have to be established by extraneous evidence. Warby J, after a careful analysis of the Act and the antecedent common law, substantially accepted the defendant publishers case on the law. But he found, on the facts, that the relevant newspaper articles did cause serious harm to Mr Lachaux. The Court of Appeal (McFarlane, Davis and Sharp LJJ) [2018] QB 594, preferred Mr Lachauxs construction of section 1, but they upheld the judges finding of serious harm. Although the Act must be construed as a whole, the issue must turn primarily on the language of section 1. This shows, very clearly to my mind, that it not only raises the threshold of seriousness above that envisaged in Jameel (Yousef) and Thornton, but requires its application to be determined by reference to the actual facts about its impact and not just to the meaning of the words. In the first place, the relevant background to section 1 is the common law position, as I have summarised it. Parliament is taken to have known what the law was prior to the enactment. It must therefore be taken to have known about the decisions in Jameel (Yousef) and Thornton and the basic principles on which general damages were awarded for defamation actionable per se. There is a presumption that a statute does not alter the common law unless it so provides, either expressly or by necessary implication. But this is not an authority to give an enactment a strained interpretation. It means only that the common law should not be taken to have been altered casually, or as a side effect of provisions directed to something else. The Defamation Act 2013 unquestionably does amend the common law to some degree. Its preamble proclaims the fact (an act to amend the law of defamation). It is not disputed that there is a common law presumption of damage to reputation, but no presumption that it is serious. So the least that section 1 achieved was to introduce a new threshold of serious harm which did not previously exist. The question on these appeals is what are the legal implications of that change, and what necessarily follows from it. Even where some change to the common law was intended, it should not go any further than that. As Lord Reid observed in Black Clawson International Ltd v Papierwerke Waldhof Aschaffenburg AG [1975] AC 591, 615, Parliament can be presumed not to have altered the common law further than was necessary. Secondly, section 1 necessarily means that a statement which would previously have been regarded as defamatory, because of its inherent tendency to cause some harm to reputation, is not to be so regarded unless it has caused or is likely to cause harm which is serious. The reference to a situation where the statement has caused serious harm is to the consequences of the publication, and not the publication itself. It points to some historic harm, which is shown to have actually occurred. This is a proposition of fact which can be established only by reference to the impact which the statement is shown actually to have had. It depends on a combination of the inherent tendency of the words and their actual impact on those to whom they were communicated. The same must be true of the reference to harm which is likely to be caused. In this context, the phrase naturally refers to probable future harm. Ms Page QC, who argued Mr Lachauxs case with conspicuous skill and learning, challenged this. She submitted that likely to cause was a synonym for the inherent tendency which gives rise to the presumption of damage at common law. It meant, she said, harm which was liable to be caused given the tendency of the words. That argument was accepted in the Court of Appeal. She also submitted, by way of alternative, that if the phrase referred to the factual probabilities, it must have been directed to applications for pre publication injunctions quia timet. Both of these suggestions seem to me to be rather artificial in a context which indicates that both past and future harm are being treated on the same footing, as functional equivalents. If past harm may be established as a fact, the legislator must have assumed that likely harm could be also. As to pre publication injunctions, the section is designed to import a condition to be satisfied if the statement is to be regarded as defamatory at all. It is not concerned with the remedies available for defamation, whether interlocutory or final. It is right to add that pre publication injunctions are extremely rare, because of the well established constraints on judicial remedies which restrict freedom of expression in advance of publication. Thirdly, it is necessary to read section 1(1) with section 1(2). Section 1(2) is concerned with the way in which section 1(1) is to be applied to statements said to be defamatory of a body trading for profit. It refers to the same concept of serious harm as section 1(1), but provides that in the case of such a body it must have caused or be likely to cause serious financial loss. The financial loss envisaged here is not the same as special damage, in the sense in which that term is used in the law of defamation. Section 1 is concerned with harm to reputation, whereas (as I have pointed out) special damage represents pecuniary loss to interests other than reputation. What is clear, however, is that section 1(2) must refer not to the harm done to the claimants reputation, but to the loss which that harm has caused or is likely to cause. The financial loss is the measure of the harm and must exceed the threshold of seriousness. As applied to harm which the defamatory statement has caused, this necessarily calls for an investigation of the actual impact of the statement. A given statement said to be defamatory may cause greater or lesser financial loss to the claimant, depending on his or her particular circumstances and the reaction of those to whom it is published. Whether that financial loss has occurred and whether it is serious are questions which cannot be answered by reference only to the inherent tendency of the words. The draftsman must have intended that the question what harm it was likely to cause should be decided on the same basis. Finally, if serious harm can be demonstrated only by reference to the inherent tendency of the words, it is difficult to see that any substantial change to the law of defamation has been achieved by what was evidently intended as a significant amendment. The main reason why harm which was less than serious had given rise to liability before the Act was that damage to reputation was presumed from the words alone and might therefore be very different from any damage which could be established in fact. If, as Ms Page submits, the presumption still works in that way, then this anomaly has been carried through into the Act. Suppose that the words amount to a grave allegation against the claimant, but they are published to a small number of people, or to people none of whom believe it, or possibly to people among whom the claimant had no reputation to be harmed. The laws traditional answer is that these matters may mitigate damages but do not affect the defamatory character of the words. Yet it is plain that section 1 was intended to make them part of the test of the defamatory character of the statement. I agree, as the judge did, that this analysis is inconsistent with the previous common law governing statements actionable per se. But it is inconsistent with it only to this extent: that the defamatory character of the statement no longer depends only on the meaning of the words and their inherent tendency to damage the claimants reputation. To that extent Parliament intended to change the common law. But I do not accept that the result is a revolution in the law of defamation, any more than the lower thresholds of seriousness introduced by the decisions in Jameel and Thornton effected such a revolution. Ms Page argued that to construe section 1 in the way that I have done would transform the way in which the Limitation Act 1980 applies to actions for defamation; and that it would effectively abolish the distinction between defamation actionable per se and defamation actionable only on proof of special damage. In both respects, this was said to be inconsistent with other provisions of the Act, notably sections 8 and 14. Section 8 is concerned with limitation. Section 4A of the Limitation Act 1980 provides for a limitation period in defamation actions of one year from the accrual of the cause of action. The cause of action is treated at common law as accruing on publication where it is actionable per se, and on the occurrence of special damage in other cases. Successive publications therefore give rise at common law to distinct causes of action. Section 8 of the Defamation Act 2013 provides that where a statement has been made to the public or a section of the public (for example in a newspaper) and later republished in the same or substantially the same terms, any cause of action against the [same] person for defamation in respect of the subsequent publication is to be treated as having accrued on the date of the first publication. The object of this provision is to deprive claimants of the right to sue on a further publication by the same person of substantially the same defamatory statement, more than a year after the first publication. They must sue on the first publication or run the risk of being time barred. The argument is that section 8 assumes that the common law rule that the cause of action accrues on publication subsists, subject only to the modification that the accrual of the cause of action for a qualifying second publication is backdated to the date of the first. Therefore, it is said, section 1 must be construed on the footing that the cause of action is complete on publication and not on some later date at which serious harm may occur. One of the problems of legislating piecemeal for different aspects of the law of defamation, as the Act of 2013 does, is that the interrelation between different rules may be overlooked. I rather doubt whether Parliament got to grips with the implications of section 1 for limitation. I would not therefore modify my construction of section 1, which I regard as clear, even if I agreed with Ms Page that its effect was to postpone the accrual of the cause of action for defamation actionable per se. But I do not agree with her about that. It is necessary to distinguish between the damage done to an interest protected by the law, and facts which are merely evidence of the extent of that damage. Where a statement is actionable per se, the interest protected by the law is the claimants reputation. As an element in the cause of action for defamation, publication does not mean commercial publication, but communication to a reader or hearer other than the claimant. The impact of the publication on the claimants reputation will in practice occur at that moment in almost all cases, and the cause of action is then complete. If for some reason it does not occur at that moment, the subsequent events will be evidence of the likelihood of its occurring. In either case, subsequent events may serve to demonstrate the seriousness of the statements impact including, in the case of a body trading for profit, its financial implications. It does not follow that those events must have occurred before the claimants cause of action can be said to have accrued. Their relevance is purely evidential. The position is different where a statement is not actionable per se, because the interest protected by the law in that case is purely pecuniary. The pecuniary loss must therefore have occurred. Section 14 is concerned only with the law of slander. It abolishes two of the four categories of slander actionable per se, by repealing the Slander of Women Act 1891 which made the imputation of unchastity to a woman actionable per se, and by providing that an imputation that a person has a contagious or infectious disease is not to be actionable without proof of special damage. The argument is that since section 14 abolishes two of the categories of slander actionable per se, section 1 should not be read as abolishing all of them. The fallacy of this argument is that it assumes that section 1 does abolish all of them. I do not think that it does. To say that a slander is actionable per se simply means that it is actionable without proof of special damage. That is still the case for the two surviving special categories of slander. As I have pointed out above, special damage in this context means damage representing pecuniary loss, not including damage to reputation. Section 1 is not concerned with special damage in that sense but with harm to the reputation of the claimant, ie with harm of the kind represented by general damage. It simply supplements the common law by introducing a new condition that harm of that kind must be serious and in the case of trading bodies that it must result in serious financial loss. The Court of Appeals analysis not only gives little or no effect to the language of section 1. It is to my mind internally contradictory. Davis LJ, who delivered the only reasoned judgment, accepted the submission on behalf of Mr Lachaux that the seriousness of the harm caused to the claimants reputation by the publication depended on the inherent tendency of the words. But he appears to have thought (paras 70 73) that where this was serious, the result was to set up an inference of fact, which it was open to the defendant to rebut by evidence. As Ms Page accepted, this will not do. The common law rule was that damage to reputation was presumed, not proved, and that the presumption was irrebuttable. If the common law rule survives, then there is no scope for evidence of the actual impact of the publication. That is the main reason why in my opinion it cannot survive. Davis LJ has, with respect, accepted the legal analysis advanced on behalf of Mr Lachaux, while attaching to it the consequences of the legal analysis advanced on behalf of the newspapers. In my opinion, Warby Js analysis of the law was coherent and correct, for substantially the reasons which he gave. Application to this case On the footing that (as I would hold) Mr Lachaux must demonstrate as a fact that the harm caused by the publications complained of was serious, Warby J held that it was. He heard evidence from Mr Lachaux himself and three other witnesses of fact, and received written evidence from his solicitor. He also received agreed figures, some of them estimates, of the print runs and estimated readership of the publications complained of and the user numbers for online publications. He based his finding of serious harm on (i) the scale of the publications; (ii) the fact that the statements complained of had come to the attention of at least one identifiable person in the United Kingdom who knew Mr Lachaux and (iii) that they were likely to have come to the attention of others who either knew him or would come to know him in future; and (iv) the gravity of the statements themselves, according to the meaning attributed to them by Sir David Eady. Mr Lachaux would have been entitled to produce evidence from those who had read the statements about its impact on them. But I do not accept, any more than the judge did, that his case must necessarily fail for want of such evidence. The judges finding was based on a combination of the meaning of the words, the situation of Mr Lachaux, the circumstances of publication and the inherent probabilities. There is no reason why inferences of fact as to the seriousness of the harm done to Mr Lachauxs reputation should not be drawn from considerations of this kind. Warby Js task was to evaluate the material before him, and arrive at a conclusion on an issue on which precision will rarely be possible. A concurrent assessment of the facts was made by the Court of Appeal. Findings of this kind would only rarely be disturbed by this court, in the absence of some error of principle potentially critical to the outcome. It was submitted on behalf of the defendant newspapers that there were errors of principle in the judges treatment of the facts. It was said that the injury to Mr Lachauxs reputation was at least in part the result of artificial legal rules, notably the repetition rule which treats as defamatory the reporting, even without endorsement, of another persons statement; and the Dingle rule (see Associated Newspapers Ltd v Dingle [1964] AC 371) that a defendant cannot rely in mitigation of damages on the fact that similar defamatory statements have been published about the same claimant by other persons. The argument was that while these rules of law are well established, they do not affect the factual inquiry required by section 1, namely whether the harm caused by a particular publication was serious. It was also said that the judge should not have taken account of the damage that Mr Lachauxs reputation might suffer in the eyes of people who might get to know him in future. Warby J must have rejected all of these submissions, and the Court of Appeal agreed with him. So do I. The repetition rule is a rule governing the meaning of a statement and the availability of the defence of truth. A statement that someone else has made a defamatory statement about the claimant, although literally true, is treated as equivalent to a direct statement to the same effect. The policy is that repeating someone elses libellous statement is just as bad as making the statement directly: Lewis v Daily Telegraph [1964] AC 234, 260 (Lord Reid). The rule is nothing to do with the threshold of seriousness, and nothing in the 2013 Act can be taken as implicitly abolishing it or limiting its application. The effect of the Dingle rule is to treat evidence of damage to the claimants reputation done by earlier publications of the same matter as legally irrelevant to the question what damage was done by the particular publication complained of. It has been criticised, but it is well established. It has the pragmatic advantage of making it unnecessary to determine which of multiple publications of substantially the same statement occurred first, something which in the case of a newspaper would often be impossible to ascertain and might differ from one reader to the next. The practical impact of the Dingle rule in the modern law is limited by section 12 of the Defamation Act 1952, which allows a defendant to rely in mitigation of damage on certain recoveries or prospective recoveries from other parties for words to the same effect; and by the operation of the Civil Liability (Contribution) Act 1978. Section 1 of the Act is concerned with the threshold of harm and not with the measure or mitigation of general damage. But both raise a similar question of causation. It would be irrational to apply the Dingle rule in one context but not the other, and no one is inviting us to abrogate it. The judge was therefore entitled to apply it. Turning, finally, to the complaint about the impact of the publications on those who did not know Mr Lachaux but might get to know him in future, there is no principled reason why an assessment of the harm to the claimants reputation should not take account of the impact of the publications on those who had never heard of him at the time. The claimants reputation is harmed at the time of publication notwithstanding that the reader or hearer knows nothing about him other than what the publication tells him. It cannot make any difference that it is only later, when he comes to know the claimant personally, that the latters diminished reputation is of any personal interest to him. Disposal For these reasons, while I would state the law differently from the Court of Appeal, I would dismiss these appeals on the facts.
UK-Abs
This appeal concerns the interpretation of section 1(1) of the Defamation Act 2013 (the 2013 Act), which is one of the principal new provisions. Section 1(1) provides: (1) A statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant. The claimant, Bruno Lachaux, is a French aerospace engineer who at the relevant time lived with his British wife, Afsana, in the United Arab Emirates (UAE). The marriage broke down. In April 2011, he began divorce proceedings in the UAE courts and sought custody of their son, Louis. In March 2012, Afsana went into hiding with Louis in the UAE, claiming that she would not get a fair trial there. In August 2012, the UAE court awarded custody of Louis to his father. In October 2012, Mr Lachaux, having found out where Louis was, used the powers under the custody order to take Louis under his care, and subsequently initiated a criminal prosecution against Afsana for abduction. In January and February 2014, several British newspapers published articles making allegations about Mr Lachauxs conduct towards Afsana during the marriage and in the course of the divorce and custody proceedings. These appeals arise out of two libel actions begun by him in the High Court on 2 December 2014 against the publishers of the Independent and Evening Standard, and a third begun on 23 January 2015 against the publisher i. In February 2015, at a so called meaning hearing in the High Court, Mr Justice Eady held that the Independent and Evening Standard articles had eight and 12 defamatory meanings respectively. In summary, they were held to have meant (amongst other things) that Mr Lachaux had been violent and abusive towards his wife during their marriage, had hidden Louis passport to stop her removing him from the UAE, had made use of UAE law and the UAE courts to deprive her of custody and contact with her son, had callously and without justification taken Louis out of her possession, and then falsely accused her of abducting him. The newspapers did not contest the primary facts relied on by Mr Lachaux in his Particulars of Claim. Instead, their case was that the statements in the articles were not defamatory because they did not meet the serious harm test under section 1(1) of the 2013 Act. In the High Court, Mr Justice Warby (Warby J) held that Mr Lachaux had demonstrated, by evidence, that the harm caused by the publications complained of was serious, within the meaning of section 1(1). The Court of Appeal dismissed the newspapers appeal, but focused instead on the inherent tendency of the words to damage Mr Lachauxs reputation. The newspapers appeal to the Supreme Court against the finding of serious harm. The Supreme Court unanimously dismisses the appeal, but for reasons different from those of the Court of Appeal. Lord Sumption gives the lead judgment, with which all members of the Court agree. The law distinguishes between defamation actionable per se, which includes all libels and now two (previously four) special types of slander, and defamation actionable only on proof of special damage, which covers all other slanders [4 5]. Pecuniary loss must be established for the latter category [5]. Before the 2013 Act, two decisions (Jameel (Yousef) v Dow Jones & Co Inc [2005] QB 946 (CA) and Thornton v Telegraph Media Group Ltd [2011] 1 WLR 1985 (QB)) introduced the requirement that damage to reputation in defamation actionable per se must pass a minimum threshold of seriousness [7 9]. This Court considers that section 1 of the 2013 Act not only raises the threshold of seriousness from that in Jameel and Thornton, but requires its application to be determined by reference to the actual facts about its impact, not merely the meaning of the words [12]. The reasons are as follows: First, the 2013 Act undoubtedly amends the common law to some degree, so the least that section 1 achieved was to introduce a new threshold of serious harm which did not previously exist. If serious harm within the meaning of section 1(1) can be demonstrated only by reference to the inherent tendency of the words, no substantial change in the law would have been achieved. However, it is clear that section 1 was intended to make the significant amendment that the extent of damage is now part of the test for a defamatory statement. [13, 16] Secondly, section 1 necessarily means that a statement which would previously have been regarded as defamatory, given its inherent tendency, is no longer actionable unless it has caused or is likely to cause harm which is serious. The words has caused refer to the consequences of the publication, specifically historic harm. This is a factual matter which must be established by reference to the impact of the statement. It depends on a combination of the inherent tendency of the words and their actual impact on the recipients. The words likely to be caused naturally refer to probable future harm. If past harm may be established as a fact, Parliament must have assumed that future harm could too. [14] Thirdly, section 1(1) must be read with section 1(2). Section 1(2) deals with how section 1(1) is to be applied to defamatory statements in relation to a body trading for profit. It adopts the serious harm requirement, but provides that for such a body the statement must have caused or be likely to cause serious financial loss. Thus, for trading bodies, the financial loss in section 1(2) is the measure of the harm referred to in section 1(1), not special damage as understood in the law of defamation. It must exceed the pre 2013 Act threshold of seriousness. This requires an actual impact analysis. [15] Lord Sumption does not accept that this interpretation of section 1 leads to any major inconsistency with section 8 (on limitation) or section 14 (on slanders actionable per se). [17 19] On the facts, the Supreme Court largely adopts Warby Js legal approach. It finds no error in his serious harm finding [20]. The finding was properly based on a combination of the meaning of the words, Mr Lachauxs situation, the circumstances of publication and the inherent probabilities [21].
A company employs a business executive pursuant to a written agreement. Following the termination of her employment she wishes to become employed by a firm whose business is in competition with that of the company. The company contends that her proposed employment would breach a covenant in the agreement. She answers that the covenant is void at common law because part of it is in unreasonable restraint of trade. Before this court the company replies with three contentions, each of which she disputes. Each of the companys contentions raises an issue with a different hypothesis, as follows: (A) The hypothesis in Issue (A) is that the employees construction of the part of the covenant alleged to be in unreasonable restraint of trade is correct. Here the company contends that the impugned part falls outside the doctrine against restraint of trade (the doctrine) and that it is therefore irrelevant that, had it fallen within the doctrine, it would have been in unreasonable restraint of it. (B) The hypothesis in Issue (B) is that the employees construction of the impugned part is incorrect. Here the company contends that, upon a correct construction of it, it is not in unreasonable restraint of trade. (C) The hypothesis in Issue (C) is that, as in Issue (A), the employees construction of the impugned part is correct; but that, contrary to the companys contention in Issue (A), it does fall within the doctrine. Here the company contends that, although it is in unreasonable restraint of trade, the impugned part should be severed and removed from the remainder of the covenant, which would therefore survive so as to prohibit the employees entry into the proposed employment. One can argue that Issue (B) is logically anterior to Issue (A). But, since Issue (A) purports to test the very boundaries of the doctrine, a balance of convenience favours consideration of it first. I will explain why in my opinion the most difficult and important issue raised in the appeal is Issue (C): when part of a post employment covenant is in unreasonable restraint of trade, in what circumstances should the court sever and remove it so as to leave the employee bound by the remainder of it? The Facts Egon Zehnder Ltd (the company), the appellant, is the UK subsidiary of a Swiss company and part of a worldwide group which is in the business of specialist executive search and recruitment. The group has nine practice areas into one of which it will place each of its recruiting customers. Ms Tillman, the respondent, had previously been employed by J P Morgan as European Managing Director. The company considered that she would be ideally placed in the financial services practice area of its business. It employed her as a consultant, with effect from 5 January 2004, pursuant to the terms of an employment agreement dated 10 December 2003. It agreed to pay her a salary of 120,000 pa and, at the end of the first year, a bonus of 100,000 provided that she then remained in its employment. Mann J, at first instance, observed that the company regarded Ms Tillman as a bit special and that it expected to promote her. It duly promoted her to be a principal in 2006 and to be a partner in 2009. A condition of her becoming a partner was that she should hold shares in the Swiss holding company; and she began to do so. In 2012 she became joint global head of the companys financial services practice area. The agreement made in 2003 was never replaced in order to reflect her promotions although no doubt a few of its terms, in particular relating to her remuneration, then changed. In any event, however, resolution of the issues raised by the appeal requires the court to address the terms of the original agreement. Clause 13 of the agreement was entitled COVENANTS and it provided for five restraints upon the activities of Ms Tillman following the end of her employment, all limited to the six months which would immediately follow it. By the first, in clause 13.1, she covenanted not to endeavour to entice away from the company any of its employees in specified senior positions. The other four restraints were included in clause 13.2. Its introductory words, arguably relevant to Issue (B), are as follows: You [Ms Tillman] shall not without the prior written consent of the company directly or indirectly, either alone or jointly with or on behalf of any third party and whether as principal, manager, employee, contractor, consultant, agent or otherwise howsoever By the first of the other four restraints, set out in clause 13.2.1, Ms Tillman covenanted not to solicit the custom of, nor to deal with, specified suppliers of services to the company. By the second, set out in clause 13.2.2, she covenanted not to seek to interfere with supplies to the company. By the fourth, set out in clause 13.2.4, she covenanted not to use any name likely to be confused with any name recently used by the company. The third of the restraints in clause 13.2, set out in clause 13.2.3, is central to all the issues in the appeal. There Ms Tillman covenanted that she would not directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which were carried on at the Termination Date or during the period of 12 months prior to that date and with which you were materially concerned during such period. I will refer to this as the non competition covenant. By clause 13.3, Ms Tillman acknowledged that the provisions of clause 13 were fair, reasonable and necessary to protect the goodwill and interests of the company. Clause 13.4 provided: If any of the restrictions or obligations contained in this clause 13 is held not to be valid as going beyond what is reasonable for the protection of the goodwill and interest of the Company but would be valid if part of the wording were deleted, then such restriction or obligation shall apply with such modifications as may be necessary to make it enforceable. As I will explain, the question raised in Issue (B) relates to whether the word interested in clause 13.2.3 purports to prohibit Ms Tillman from holding any shares in a company conducting business in competition with such businesses there specified as were conducted within the companys group. To that question an earlier clause of the agreement, casting a restraint upon her during the period of her employment, is arguably relevant: 4.5. You shall not, during the course of your employment, directly or indirectly, hold or have any interest in, any shares or other securities in any company whose business is carried on in competition with any business of the Company , except that you may hold or have an interest in, for investment only, shares or other securities in a publicly quoted company of up to a maximum of 5% of the total equity in issue of that company. On 30 January 2017 Ms Tillmans employment by the company came to an end. Shortly thereafter she informed it that she intended to start work, on (as she later added) 1 May 2017, as an employee of a firm which was in competition with the company. She made clear that she intended fully to comply with all her covenants in the agreement apart from that in clause 13.2.3. She conceded that, by its terms, this last clause prevented her entry into the proposed employment but alleged that it was in unreasonable restraint of trade and therefore void. On 10 April 2017 the company issued proceedings in which it applied for an interim injunction to restrain Ms Tillmans entry into the proposed employment. On the undertaking of the company to compensate her in damages if the court were later to hold it not to be entitled to the injunction, she undertook not to enter into the proposed employment until the court had determined the application. The lower courts were impressively accommodating to the fact that the issue related to a covenant which on any view had no effect beyond 30 July 2017. On 15 and 16 May 2017 Mann J heard the companys application and on 23 May he delivered a substantial judgment in which he granted the injunction: [2017] EWHC 1278 (Ch), [2017] IRLR 828. On 11 July the Court of Appeal heard Ms Tillmans expedited appeal and on 21 July, by a judgment delivered by Longmore LJ with which Patten and Sales LJJ agreed, it upheld it, set aside the injunction and dismissed the companys claim: [2017] EWCA Civ 1054, [2018] ICR 574. It is against the Court of Appeals order that the company brings the present appeal. The temporal limitation of the dispute and therefore the reality that determination of the companys application would dispose of the whole claim also led the parties to agree, and Mann J to accept, that the grant of the injunction should depend on a closer inquiry into the merits of the companys claim than whether it merely raised a serious question apt to the conventional determination of an application for an interim injunction: NWL Ltd v Woods [1979] 1 WLR 1294. By her Defence, Ms Tillman alleged that the non competition covenant exceeded the companys need to protect its legitimate interests, and was therefore void, for no less than five different reasons. But, by the time of the hearing before Mann J, the substantial focus was on one argument alone. It was that the effect of the part of the non competition covenant not to be interested in any of the competing businesses there specified was unreasonably to prohibit her from holding even a minority shareholding in such a business. She did not allege that she aspired to hold any shares in the business which proposed to employ her or in any other of the competing businesses there specified; but such was agreed to be irrelevant. The companys response to her argument was (a) to dispute that, on its proper construction, the covenant prohibited her from holding even a minority shareholding in any of the competing businesses there specified; and to concede that, if, contrary to (a), the covenant did prohibit her from (b) doing so, the whole of it was in unreasonable restraint of trade but to contend that a word or words (which the judge took to be the words or interested) should be severed and removed from the remainder of the clause, with the result that she would remain prohibited from entering into the proposed employment. Mann J upheld the companys response at (a) above. He so construed the word interested in the non competition covenant as not to prohibit Ms Tillman from holding shares in any of the competing businesses there specified. He therefore had no need to address what he took to be the companys alternative contention that, together of course with the word or, the word should be severed and removed from the remainder of the clause; he added however that, although it had not been developed at any length, he did not find that contention appealing. In upholding Ms Tillmans appeal, the Court of Appeal rejected the construction placed by Mann J upon the word interested in the non competition covenant. It held that its effect would be to prohibit Ms Tillman from holding even a minority shareholding in any of the competing businesses there specified and that, as such, the covenant was in unreasonable restraint of trade; and it refused to sever the word from the remainder of the clause so as to save the remainder of the prohibition. Issue (A): The Doctrine The hypothesis here is that Ms Tillman is correct to construe the word interested in the non competition covenant as purporting to prohibit her from holding any shares, however small a proportion of those issued, in a company conducting business in competition with such of the businesses of the group as are there specified. On that hypothesis the company concedes that, if the doctrine applied to it, the prohibition reflected in that word, in particular by excluding the sort of minor shareholding which was permitted to Ms Tillman during her employment, would exceed any necessary protection of its interests; that it would therefore be in unreasonable restraint of trade; and that the word would accordingly need to be severed and removed from the remainder in order to justify the injunction sought. But the company contends that the doctrine does not apply at all to a prohibition against holding shares. Not every post employment restriction agreed in a contract of employment will, says the company, restrain trade. It seeks to make its point by reference to an extreme example: what if (it asks) Ms Tillman had there agreed not to play mah jong for six months following the end of her employment? The company did not raise Issue (A) in either of the courts below. Wrongly, as I will suggest, it considered that the doctrine of precedent would have obliged both of them to reject its contention which the issue reflects. The company seems to have had in mind in particular the decision of the Court of Appeal in Scully UK Ltd v Lee [1998] IRLR 259. An employee had covenanted that throughout the year following termination he would not engage in or be otherwise interested in, whether as a shareholder employee or in any other capacity any business, which was defined in terms not limited to the employers competitors. The trial judge held that the prohibition against shareholding on the part of the employee was too wide because it would catch even a small holding but that it should be severed and removed and that the remainder should be enforced against him. The Court of Appeal took no issue with the judges objection to the prohibition against shareholding but upheld the employees appeal on the basis that there were other unreasonable features of the covenant incapable of severance. It seems clear therefore that in the Scully UK case both courts were making an assumption, rather than reaching a focussed determination, that the word interested not only represented a prohibition against holding shares but also fell within the doctrine. The same can be said of the decision in Geo Hill and Co v Hill (1886) 55 LT 769. The claimant company acquired the meat export business of the defendant, who covenanted not to be in any way concerned or interested in any similar business within ten miles of the Royal Exchange. He became an employee of a similar business within that radius. The judge held that it was unnecessary to decide whether he was interested in the business, which, the judge added, meant in commercial language entitled to profits, because on any view he was concerned in it; and that the covenant should be enforced against him. When a court makes an assumption about the law, instead of reaching a focussed determination in relation to it, the decision based upon it does not carry binding authority under the doctrine of precedent: National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397, 406 to 408. But, notwithstanding the absence of a decision on Issue (A) which could have been sought in the courts below, this court has granted permission to the company to raise it and it must therefore receive a focussed determination. The doctrine is one of the earliest products of the common law. It epitomises the nation which developed it: a nation which has ascribed central importance to the freedom of all of us to work in the interests both of the self sufficiency of ourselves and our families and of our common prosperity. In Dyers case, 2 Hen 5, f 5, pl 26, 1414, John Dyer, a dyer, was sued in the Court of Common Pleas for breach of a condition in an indenture that he would not work as a dyer for six months. He contended that he had not broken the condition but Justice Hull observed that he should have taken a wider point, namely that the obligation was void. By God, added the judge, if the plaintiff was here, he would go to prison until he paid a fine to the King. Two hundred years later the invalidity of restraints of trade remained unqualified. In Colgate v Bacheler (1601) Cro Eliz 872, the defendant agreed that, if for three years his son worked as a haberdasher in Canterbury or Rochester, he would pay the plaintiff 20. The court held the agreement to be void irrespective of its limitations of time and place because it was against the benefit of the commonwealth and because the defendants son ought not to have been abridged of his trade and living. But in the 17th century the absolute nature of the right of the ex employee or vendor of a business to work or trade elsewhere irrespective of his covenant began to be tempered. For paradoxically the doctrine against restraint of trade was positively inhibiting trade. In Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 564, Lord Macnaghten explained: it was found that a rule so rigid and far reaching must seriously interfere with transactions of every day occurrence. Traders could hardly venture to let their shops out of their own hands; the purchaser of a business was at the mercy of the seller; every apprentice was a possible rival. So the rule was relaxed. The law came to recognise that the employer or the purchaser of a business had legitimate interests which might justify his placing limited restrictions on his employee or vendor. In 1711 Chief Justice Parker, later Lord Macclesfield, gave the seminal judgment of the Court of Queens Bench in Mitchel v Reynolds. The immaculate report of it is at (1711) 1 P Wms 181 and any study of the contribution made by law reporters to the development of our law would do well to include it. The defendant had assigned to a purchaser the lease of a bakery in Holborn for five years and had entered into a bond with him not to trade as a baker elsewhere in Holborn for that period. Lord Macclesfield held at p 192 that all restraints of trade were presumed to be bad but that at p 193 that Judge Hulls vehemence towards them had been (a) the presumption was rebuttable; (b) excusable but not his manner of expressing it; (c) at p 191 that a restraint of trade throughout England would always be bad (for what does it signify to a tradesman in London what another does at Newcastle?); but (d) of the assignment, was reasonable and should be enforced. at p 197 that this bakers bond, limited to Holborn and to the five years Thus was the concept of reasonableness authoritatively grafted on to the doctrine by way of modification of it. Based as it is on public policy, the doctrine has regularly had to adjust to social change. The need for adjustment is well exemplified by the decision of the appellate committee of the House of Lords in the Nordenfelt case cited in para 24 above. The appellant, who had been a manufacturer of guns and ammunition, had covenanted with the respondent, which had taken over his business, not to engage in manufacture of them anywhere in the world for 25 years. The committee held that, notwithstanding its width, the covenant was reasonable and so enforceable against him. Lord Herschell, the Lord Chancellor, explained at p 547 that changed conditions of commerce and of the means of communication meant that Lord Macclesfields reference to the irrelevance to a London trader of similar trade in Newcastle was out of date; and that what would once have been merely a burden on the covenantor may now be essential if there is to be reasonable protection to the covenantee. Lord Watson observed at p 555 that there had been a protracted struggle between the principle of freedom of contract and the doctrine and that the latter had had the worse of the encounter, particularly in courts of equity. Lord Macnaghten held at p 565 that there was a general rule that restraints of trade were void but that there was an exception to the rule where the restriction was reasonable by reference to the interests of both parties and of the public. You cannot, so he observed at p 572 in relation to a vendors covenant, sell the cow and sup the milk. In Herbert Morris Ltd v Saxelby [1916] 1 AC 688 the members of the appellate committee all stressed that different considerations applied to restraints on a vendor of a business from those which applied to restraints on an ex employee; that, as Lord Atkinson said at p 701, the purchaser of a business had paid for its goodwill, including for the vendors covenant which protected and enhanced it; that, as Lord Shaw of Dunfermline said at p 714, an employer was entitled to reasonable protection against dissemination of his trade secrets or solicitation of his customers, in other words against misuse of his property, but not directly against the employees use of his skill and his manual or mental ability, which were the employees own property; and that, as Lord Shaw added at p 716, a delicate balance was always required between freedom of trade and freedom of contract. During the last century questions arose about the width of the doctrine, in particular whether it extended beyond contracts of employment and for sale of a business. Did it apply to a contract in which I agree to buy specified goods only from you? Or to sell specified goods only to you? Or to sell to others specified goods bought only from you? An early example was Servais Bouchard v The Princes Hall Restaurant (Ltd) (1904) 20 TLR 574. A restaurant in Piccadilly had contracted with a supplier of burgundy not to sell burgundy to its customers other than such as it had purchased from the supplier. The restaurant broke the contract and the Court of Appeal held that the supplier was entitled to enforce it. Sir Richard Henn Collins, the Master of the Rolls, held that the contract fell outside the doctrine; the other members of the court apparently held instead that, albeit within the doctrine, the restraint was reasonable. Later decisions demonstrated a similar slide into a verdict in relation to reasonableness in preference to an attempt to discern the boundaries of the doctrine: Dickson v Pharmaceutical Society of Great Britain [1970] AC 403, 431. The outer reaches of the doctrine were, however, more fully explored, albeit with obvious difficulty, by the appellate committee in Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269. The garage company had entered into solus agreements with Esso to sell petrol bought only from Esso at two of its filling stations and to do so at one of them for in effect five years and at the other for 21 years. The committee held that, on balance, both contracts fell within the doctrine and that, while the agreement for the shorter period was reasonable and enforceable against the garage, the other was unreasonable and unenforceable. Lord Reid noted at p 294 that a contract under which a person agreed to work exclusively for another fell outside the doctrine although it detracted from his freedom to work as he pleased; and at p 298 that a restrictive covenant upon land which prohibited its use for trading fell outside the doctrine because the purchaser of the land who became subject to it was not surrendering any freedom to trade there which he had previously enjoyed. Lord Pearce observed at p 325 that, for the same reason, a contract under which a publican took a lease from a brewer of a tied public house fell outside the doctrine; but that the garage company, by contrast, already ran the filling stations when it accepted Essos restrictions. He added at p 328 that it was the sterilising of a mans capacity for work and not its absorption that underlay the objection to restraint of trade; and he cited Warner Brothers Pictures, Inc v Nelson [1937] 1 KB 209, in which the contract by which Miss Bette Davis had agreed not to work otherwise than for the claimant for one year was enforced against her. Lord Wilberforce, at pp 333 to 335, favoured a pragmatic analysis under which restrictive covenants on land and tied public houses, having long been accepted to fall outside the doctrine, must for that reason be taken to have satisfied the demands of public policy on which the doctrine rested. In my view the resolution of Issue (A) does not require any closer study of the boundaries of the doctrine. For the contract in the present case is of the classic type between employer and employee and, as is agreed, it does provide for a restraint of trade which falls within the doctrine and which is therefore void unless reasonable. The only question under Issue (A) is whether an assumed prohibition against holding shares forms part of the restraint. In this regard assistance is to be derived from the decision of the Court of Appeal in Proactive Sports Management Ltd v Rooney [2011] EWCA Civ 1444, [2012] IRLR 241. Wayne Rooney set up a company to which he assigned his image rights, in other words his rights to exploit his image by, for example, his indorsement of sports products and by other forms of promotion and sponsorship. His company contracted with the claimant to act as its agent in negotiating contracts for the exploitation of his image. His company breached the contract and, when sued by the claimant, it contended that the contract fell within the doctrine. The claimant disputed that it did so but accepted the trial judges conclusion that, if it did so, its terms were in unreasonable restraint of trade and unenforceable, albeit that it was entitled to a restitutionary remedy. At para 67 my lady, then Arden LJ, recorded the claimants submission that Wayne Rooneys trade was as a footballer and that exploitation of his image rights formed no part of it. She held however at paras 92 and 93 that, although his business of exploiting his image rights was ancillary to, and indeed dependent on, his primary occupation of playing football, it fell within the doctrine. The other members of the court agreed. Gross LJ added at para 153 that Wayne Rooneys activities on field and, in exploiting his image rights, off field were both part of a single trade; and at para 155 that the court should adopt a broad, practical, rule of reason approach to determining the applicability of the doctrine. It is an approach which this court should also adopt. In Issue (A) the company contends that the word interested in the non competition covenant falls outside the doctrine but concedes that the remainder of the covenant falls within it. It is a curious proposition, namely that the restraints provided in the rest of the covenant are valid only if reasonable but that the restraint provided by that word is valid although unreasonable. The company cites no authority in which a particular word in a covenant which substantially falls within the doctrine has been held to fall outside it. The covenant was cast in terms which, no doubt on advice, the company considered that it could justify as reasonable for the purposes of the doctrine; and among these terms was one which, for the purposes of Issue (A), we are to construe as prohibiting Ms Tillman from holding any shares in the specified businesses. By clause 13.3 Ms Tillman acknowledged that the provisions of this clause 13 are fair and reasonable. The acknowledgement is hard to explain unless the law required them all of them to be fair and reasonable. A similar conclusion is to be derived, even more clearly, from clause 13.4, set out in para 9 above. It provided that, were any restriction in clause 13 to be held invalid as exceeding what was reasonable for the protection of the companys interest, it should be severed and the balance of the restriction should remain enforceable. Subclause (4) represents a clear acknowledgement that all the restraints in subclauses (1) and (2) fall within the doctrine. Nor is it in any way surprising that, in seeking to protect itself against competing activity on the part of Ms Tillman in the immediate aftermath of her employment, the company should have aspired to prohibit her from holding shares in the potentially competitive businesses specified in the non competition covenant. Any controlling shareholding on her part would, by definition, enable her to direct the competitors operations. But even a minority shareholding, say a 25% shareholding in a company started up with three others, would enable her to influence its operations. And, even more obviously, the employment of a top executive such as Ms Tillman is frequently subject to conditions that she should hold shares in her employer or be remunerated partly in its shares or in options to purchase them. Indeed, as explained in para 5 above, it was a condition of her becoming a partner in the company in 2009 that she should hold shares in the holding company. In substance as well as in form the restraint on shareholding is part of the restraint on Ms Tillmans ability to work in the immediate aftermath of her employment. The proper determination of Issue (A) is that, on the assumption that the word interested purports to restrain Ms Tillman from holding shares in the specified businesses, it falls within the doctrine. Issue (B): Construction The companys argument here is that, when properly construed, the word interested in the non competition covenant does not prohibit Ms Tillman from holding shares in the businesses there specified; and that accordingly in this respect Mann J was right and the Court of Appeal was wrong. The company concedes that in some contexts a person holding shares in a company will properly be described as being interested in it. But it contends, uncontroversially, that the meaning of the word is informed by its context in the agreement as a whole: Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173, para 10. It argues that the word interested, when considered in the context of its agreement with Ms Tillman as a whole, does not cover a shareholding; and that in particular it fails to cover a shareholding once the validity principle, as explained below, has been applied so as to identify its meaning. One might expect the company to have aspired, and reasonably to have aspired, to prohibit Ms Tillman from, for example, having a controlling interest as a shareholder in a competing company even if she was not working in it. But, in relation to this issue, the company cannot have it both ways: it cannot sensibly argue that the word interested covers a large shareholding but not a small shareholding. It is all or nothing. The company contends for nothing. Better considered without reference to its original formulation in Latin, which nowadays few people understand, the validity principle proceeds on the premise that the parties to a contract or other instrument will have intended it to be valid. It therefore provides that, in circumstances in which a clause in their contract is (at this stage to use a word intended only in a general sense) capable of having two meanings, one which would result in its being void and the other which would result in its being valid, the latter should be preferred. In the present appeal, however, the parties are at odds about the specific circumstances in which the principle is engaged. Is it engaged only when the two meanings are equally plausible or is it also engaged even when the meaning which would result in validity is to some extent less plausible? In In re Badens Deed Trusts [1969] 2 Ch 388 the Court of Appeal, by a majority, determined the meaning of a deed of settlement by reference to the validity principle. Harman LJ said at p 400: the court is at liberty, if the considerations on both sides seem evenly balanced, to lean towards that which may effectuate rather than frustrate the settlors intentions I by no means hold that the court may take this course by flying in the teeth of the provisions of the deed, so that the weaker view may prevail because it is likely to have an effectual result, but where the terms of the deed produced a balance so even as the present I am of opinion that the doctrine may be called in aid. (italics supplied) To say that rival meanings are evenly balanced is to say that they are equally plausible. Thus, in The Interpretation of Contracts, 6th ed, 2015, Sir Kim Lewison offers the following proposition at the head of chapter 7, section 16: Where two interpretations of an instrument are equally plausible, upon one of which the instrument is valid, and upon the other of which it is invalid, the court should lean towards that interpretation which validates the instrument. (italics supplied) Others, however, have taken a wider view of the circumstances in which the principle is engaged. In the text of section 16 Sir Kim quotes an observation made by my Lady, then Arden LJ, in Anglo Continental Educational Group (GB) Ltd v Capital Homes (Southern) Ltd [2009] EWCA Civ 218, [2009] CP Rep 30, para 13, that if the agreement is susceptible of an interpretation which will make it enforceable and effective, the court will prefer that interpretation to any interpretation which would result in its being void (italics supplied). And in TFS Derivatives Ltd v Morgan [2004] EWHC 3181 (QB), [2005] IRLR 246, Cox J suggested at para 43 that the principle applied if there was an element of ambiguity about the meaning of a covenant. It was her approach which, in the present case, Mann J adopted at paras 32 and 43. In my view the point at which the validity principle is engaged lies between these various descriptions of it. To require a measure of equal plausibility of the rival meanings is to make unnecessary demands on the court and to set access to the principle too narrowly; but, on the other hand, to apply it whenever an element of ambiguity exists is to countenance too great a departure from the otherwise probable meaning. In Inland Revenue Comrs v Williams [1969] 1 WLR 1197, which related to the meaning of a clause in a deed of appointment, Megarry J adverted at p 1201 to the reference by Harman LJ in the Badens Deed Trusts case to the need for an even balance and added: It is possible that the same approach might be adopted where the scales are tilted only slightly to one side or the other; but plainly it cannot apply where, apart from the effect of the rule against perpetuities or some other sources of invalidity, the court reaches the conclusion that one construction is clearly preferable to the other the right view may well be that, before the doctrine can apply, the court must be left in a state of real and persistent uncertainty of mind. In Great Estates Group Ltd v Digby [2011] EWCA Civ 1120, [2012] 2 All ER (Comm) 361, Toulson LJ explained that, if the contract was capable of being read in two ways, the meaning which would result in validity might be upheld even if it is the less natural construction. And in Tindall Cobham 1 Ltd v Adda Hotels [2014] EWCA Civ 1215, [2015] 1 P & CR 5, Patten LJ, with whom the other members of the court agreed, observed at para 32 that the search was for a realistic alternative construction which might engage the principle. In my view Megarry J, Toulson LJ and Patten LJ were identifying the point at which the principle is engaged in much the same place. Let us work with Patten LJs adjective: let us require the alternative construction to be realistic. In its need to set up a realistic construction of the word interested, alternative to a construction which relates it to a shareholding, the company adverts to three features of the context of the word in the agreement as a whole. The first is the content of clause 4.5, set out in para 10 above. For the duration of her employment, it expressly prohibited Ms Tillman from holding shares in specified businesses except for a holding of up to 5% of issued shares in a publicly quoted company. So the company argues that, when in their agreement it and Ms Tillman wanted to address her holding of shares, they did so expressly; and that it would be anomalous that, having acknowledged her freedom to hold a limited number and type of shares in specified businesses during her employment, they should have agreed that she should be prohibited from doing so in the immediate aftermath of her employment by their use of the word interested, which of course stands unqualified in the non competition covenant. This argument found favour with Mann J, who held that it would be right to adopt a construction which did not give rise to this anomaly. The second feature relates to the introductory words of clause 13.2, set out in para 7 above. There the company and Ms Tillman set out the different types of status in which she was to be subject to the restraints which followed, namely as principal, manager, employee, contractor, consultant, agent or otherwise howsoever. Notwithstanding (says the company) the catch all words at the end, the significance of the list is that it could so easily have included the word shareholder if the restraint in the non competition covenant had been intended to prohibit Ms Tillman from holding shares. The third feature relates to the direct link in the non competition covenant between the word interested and the words in any business. Interest in a business, submits the company, connotes active interest in it and is to be contrasted with the passive interest of a shareholder in a company. In relation to the first and third features the company claims to derive valuable support from the decision of Foskett J in Tradition Financial Services Ltd v Gamberoni [2017] EWHC 768 (QB), [2017] IRLR 698. There the post employment restrictions on the employee were in somewhat similar terms to those in the present case and included a covenant on his part not for six months to undertake, carry on or be employed, engaged or interested in any capacity in any business activity of a specified character. Among the employees various contentions that the restrictions were in unreasonable restraint of trade was a contention, identical to that reflected in Issue (B), that the word interested disabled him from holding even a small quantity of shares in companies of the specified character. In response the employer in the Tradition Financial Services case adverted to two features of the contract, identical to the first and third features to which the company adverts in the present case. Thus, as Foskett J explained in para 127 of his judgment, the employer relied on an earlier clause of the contract under which during his employment the employee had been permitted to hold small amounts of shares, even apparently in competing companies. This was the foundation of the employers primary argument, which the judge described as follows and which he accepted: it cannot sensibly have been intended that [the employee] should be subject to a more onerous restriction as to shareholdings after his employment had terminated than whilst still an employee, particularly if it is suggested that the more onerous obligation is created by a clause that makes no express reference to shareholdings at all. In other words, whatever interested in any capacity . in any business activity means, it cannot be a reference to a shareholding. Indeed, as Foskett J explained in para 128, the employer also relied on the fact that the covenant prohibited the employee from being interested in a business activity and it argued that passive investment by way of a minority shareholding was not a business activity. The judge explained that he gave less weight to this argument but that, when added to the employers primary argument, it supported his conclusion that the word interested did not cover a shareholding. The trouble is that, without expressly acknowledging it, Foskett J, whose opinion is on any view entitled to considerable respect, was there departing from the obvious natural meaning of the word interested, such as had been recognised in our law for more than a century without dissent. In Smith v Hancock [1894] 2 Ch 377 the defendant sold his grocery business near Stoke on Trent to the claimant and agreed not for the following ten years to carry on or be in any wise interested in any similar business operating within five miles of it. The defendants wife set up a grocery within those parameters. In the Court of Appeal Lindley LJ held at p 386 that the word interested meant a proprietary or pecuniary interest and that it did not extend to the indirect interest which every man has in the happiness and welfare of his wife. He and A L Smith LJ both reluctantly held that, on the judges findings, the defendant was not interested in his wifes business. In Gophir Diamond Co v Wood [1902] 1 Ch 950 the ex employee of a jewellery shop in Regent Street had become a salaried employee of a rival shop in the same street. Swinfen Eady J noted at p 952 that his covenant had only been not to be interested in a similar business; and the judge added, intriguingly for present purposes, that in that regard the covenant had materially departed from the common form in the then current edition of Palmers Company Precedents that the covenantor should not be engaged or concerned or interested in a similar business. He held that, since his remuneration had in no way depended on the profits of the rival shop, the ex employee was not in breach of his covenant. It does seem that the phrase engaged or concerned or interested, adopted in the non competition covenant in the present case, has been included in standard precedents for the drafting of non competition covenants throughout the last century. It has popped up frequently in the reported cases, including in CEF Holdings Ltd v Mundey [2012] EWHC 1524 (QB), [2012] IRLR 912. Silber J there held that for various reasons the non competition covenant was in unreasonable restraint of trade. One of his reasons, set out in para 65(i), was that [i]ts width is so great that it prevents any employees from having any interest in [a competing] company, such as even owning one share in a publicly quoted company. The companys alternative construction of the word interested needs to be realistic. What is its proposed construction? At the hearing Lady Hale inquired about it. Even Mr Laddie QC on behalf of the company struggled to find an answer. He suggested that the word might be casual surplusage. Is that good enough? What was the construction placed on the word by Foskett J in the Tradition Financial Services case? As set out in para 48 above, he did no more than to adopt the employers submission that, whatever it meant, it did not refer to shareholding. Was that good enough? The proper determination of Issue (B) is that the natural construction of the word interested, consistent with long standing authority, is that it covers a shareholding; that the three features of the present agreement on which the company relies are insufficient to require a different construction to be placed on the word, when found in clause 13.2.3; that the company fails to establish even a realistic alternative construction of it which would engage the validation principle; that the word interested in the non competition covenant in the present case therefore covers a shareholding, whether large or small, and on that basis is, as is conceded, in unreasonable restraint of trade; and that, unless it can be severed and removed from the rest of the clause, the Court of Appeal was right to set aside the injunction granted against Ms Tillman. Issue (C): Severance Where part of a contract is unenforceable, the enforceability of the remainder represents an issue which arises far more widely than in contracts of employment. In Carney v Herbert [1985] AC 301 the problem was that the security for payment of the price, for which a contract for the sale of shares had provided, was not only a guarantee but also mortgages which were statutorily illegal. The Privy Council indorsed a decision of the Supreme Court of New South Wales that the provision for mortgages could be severed and removed from the contract, with the result that the guarantee should be enforced. Lord Brightman, who delivered the judgment of the Board, observed at p 309 that tests for determining severability in certain types of case were not always applied satisfactorily in others. But then, with hesitation, he suggested at p 317 that, as a general rule, where parties enter into a lawful contract and there is an ancillary provision which is illegal but exists for the exclusive benefit of the plaintiff, the court may and probably will, if the justice of the case so requires, and there is no public policy objection, permit the plaintiff to enforce the contract without the illegal provision. It is clear that considerations of public policy drove the evolution of the doctrine under common law that post employment restraints of trade were, unless reasonable, void: see paras 23 to 25 above. It is less clear that, until the early years of the last century, considerations of public policy also drove a more restrictive approach to severance in post employment restraints of trade than was adopted in other areas. Take, for example, Chesman v Nainby (1726) 2 Ld Raym 1456. Miss Nainby traded as a draper from her home in Drury Lane. Prior to her marriage Mrs Chesman became apprenticed to Miss Nainby. Mrs Chesman entered into a bond that, after leaving Miss Nainbys service, she would not trade as a draper, nor assist anyone else to do so, within half a mile of Miss Nainbys home in Drury Lane or of any other house that [Miss Nainby] shall think proper to remove to and that, in the event of breach, she would pay Miss Nainby 100. After leaving Miss Nainbys service Mrs Chesman assisted her husband to trade as a draper elsewhere up Drury Lane. It was held in the Court of Common Pleas, and upheld on appeal first by the Court of Kings Bench and then by the House of Lords itself in accordance with the opinion of its judicial members, that Mrs Chesman owed Miss Nainby 100. Applying the recent decision in Mitchel v Reynolds addressed in para 25 above, the court accepted that it was unreasonable to seek to restrict Mrs Chesman from trading, or continuing to trade, within half a mile of any other house to which Miss Nainby might at any stage move, even in the remotest part of the kingdom. Nevertheless at p 1459 it upheld Miss Nainbys submission that if a bond is given, with condition to do several things, and some are agreeable to law, and some against the common law; the bond shall be good as to the doing the things agreeable to law, and only void as to those that are against the law. Early in the last century, however, a much more restrictive view was suddenly taken of the availability of severance in post employment covenants. The reasons of public policy which drove a conclusion that, unless reasonable, they were void were adopted and expanded to suggest a further conclusion that, where parts of them were unreasonable, not even the reasonable parts should usually be enforced. This further conclusion was most vividly expressed in unlikely circumstances. In Mason v Provident Clothing and Supply Co Ltd [1913] AC 724 the employee had covenanted not to work for any of the employers competitors within 25 miles of London. The appellate committee held that the employer had failed to establish that the extension of the restraint to the area thus specified was reasonably necessary for its protection and concluded that it was therefore void. It is hard to see how on any view the offending words could have been severed; and, although the employer apparently argued in the alternative for severance, it must have done so briefly for there is no mention of it in the report of its counsels argument. At all events, at the end of his speech, with which no other member of the committee expressed agreement, Lord Moulton, at p 745, added the following: It was suggested in the argument that even if the covenant was, as a whole, too wide, the court might enforce restrictions which it might consider reasonable (even though they were not expressed in the covenant), provided they were within its ambit. My Lords, I do not doubt that the court may, and in some cases will, enforce a part of a covenant in restraint of trade, even though taken as a whole the covenant exceeds what is reasonable. But, in my opinion, that ought only to be done in cases where the part so enforceable is clearly severable, and even so only in cases where the excess is of trivial importance, or merely technical, and not a part of the main purport and substance of the clause. It would in my opinion be pessimi exempli if, when an employer had exacted a covenant deliberately framed in unreasonably wide terms, the Courts were to come to his assistance and, by applying their ingenuity and knowledge of the law, carve out of this void covenant the maximum of what he might validly have required. It must be remembered that the real sanction at the back of these covenants is the terror and expense of litigation, in which the servant is usually at a great disadvantage, in view of the longer purse of his master. These passing observations of Lord Moulton were to have an electric effect on the law. Within six months of their publication Sargant J was seeking to explain part of them away. In SV Nevanas & Co v Walker and Foreman [1914] 1 Ch 413 an employer admitted that the second part of a post employment covenant was void but contended that the first part was valid and, following severance, should be enforced. Sargant J held that the first part was also void and so dismissed the claim. He was however at pains to say that, had the first part been valid, the second part could have been severed and removed from it. He said at p 422 that he wished to clear the ground at once from a suggestion that, in view of certain remarks of Lord Moulton in the recent case of [Mason], this part of the covenant is invalidated, because the succeeding part of the covenant is, admittedly, too wide. I do not think that those remarks were intended to be applicable to cases where the two parts of a covenant are expressed in such a way as to amount to a clear severance by the parties themselves, and as to be substantially equivalent to two separate covenants. No question of the kind was involved in the case before the House of Lords, and I think that Lord Moulton was not intending to deal with the numerous cases of high authority in which the good part of such a covenant was held to be enforceable, notwithstanding its collocation with a bad part Several months later, however, Lord Moultons observations attracted outspoken support from Neville J in Goldsoll v Goldman [1914] 2 Ch 608. In the event the judge applied the principle of severance to a non competition agreement made between two jewellers in Bond Street; and, later to be substantially upheld by the Court of Appeal [1915] 1 Ch 292, he enforced the valid part of it by injunction. At the outset of his judgment, however, at pp 611 612, he had railed against the long standing modification of the doctrine against restraint of trade which rescued a restraint to the extent that it was reasonable; indeed he called it a blot on the jurisprudence. Then at p 613 he had added: Again I think that the application of the doctrine of severability of the terms of a contract in restraint of trade has proved mischievous. It seems to me to be in accordance both with principle and justice that if a man seeks to restrain another from exercising his lawful calling to an extent which the law, even as it now stands, deems unreasonable, the contract by which he does so, whether grammatically severable or not, should be held to be void in toto. To hold otherwise seems to me to expose the covenantor to the almost inevitable risk of litigation which in nine cases out of ten he is very ill able to afford Thus was the stage set for the decisions in Attwood v Lamont, first of the Divisional Court of the Kings Bench Division, [1920] 2 KB 146, and then of the Court of Appeal, [1920] 3 KB 571. The claimant, who carried on business in Kidderminster as a draper, tailor and general outfitter, employed the defendant as a cutter in the tailoring department. The defendant covenanted not at any time thereafter to trade as a tailor, dressmaker, general draper, milliner, hatter, haberdasher, gentlemens, ladies or childrens outfitter within ten miles of Kidderminster. The defendant left the claimants employment and set up business as a tailor; and, although he based it more than ten miles away, he returned to Kidderminster to obtain and execute tailoring orders there, including from the claimants former customers. The Divisional Court, on appeal from the county court, agreed that the list of prohibited trades was too wide but held that the covenant should be severed so as to enable the reference to all trades other than that of a tailor to be removed and that the defendant should be enjoined from trading as a tailor within ten miles of the town. Bailhache J at p 156 held that the covenant was clearly severable. He noted that in the Mason case, in which on any view the covenant had not been severable, Lord Moulton had added that, even if clearly severable, a covenant should not be severed unless the excess was trivial or technical. But he, Bailhache J, expressed himself satisfied that Lord Moultons addition was contrary to authority. Sankey J at pp 158 159 made similar remarks. The Court of Appeal, reversing the order of the Divisional Court, held that the covenant was not severable. But, although its conclusion was unanimous, the route taken to it was different. Lord Sterndale MR gave the first judgment; but the binding authority of the decision attached to the judgment of Younger LJ because it was with his judgment that, without adding anything, Atkin LJ agreed. Lord Sterndale observed at p 577 that the tendency of recent decisions had been to limit severability more than previously but that in his view it remained the law that severance was available if the parts proposed to be severed were independent and if it did not affect the meaning of what was proposed to remain. At p 578 he quoted with approval what Sargant J had said in the SV Nevanas case, set out in para 59 above; and he suggested that, if severance of one part were to leave the remainder of the covenant with a meaning different in kind and not only in extent from its previous meaning, the parts of the covenant could not be said to be substantially equivalent to separate covenants. At p 580 he concluded, however, that severance of the list of trades would entirely alter the scope and intention of the agreement and so failed Sargant Js test. Younger LJ (a) stated at p 581 that recent decisions of the House of Lords had wrought a fundamental change in the approach of the law to post employment restrictions, which were peculiarly susceptible to current views of public policy; (b) observed there that the principle of freedom of contract still remained operative in contracts between the vendor and purchaser of a business; (c) suggested at p 593 that severance of a covenant was available only where it was not really a single covenant but [was] in effect a combination of several distinct covenants; (d) held there that the list of prohibited trades was in effect contained in one covenant because (so he reasoned) the claimant himself had only one trade and not several trades; (e) noted there that, even if he was wrong to regard the list of trades as contained in one covenant, the court should nevertheless decline to sever it; (f) quoted with approval at pp 594 595 the observations first of Lord Moulton that severance should be confined to the trivial and the technical and then of Neville J in the Goldsoll case that a partly unreasonable restraint should make it entirely void, even if grammatically severable; and (g) concluded at p 595 that severance should not generally be allowed. Although, as I will suggest in para 82 below, there were, and remain, good reasons of public policy for the law to take a cautious approach to the severance of a post employment restraint, the decision of the majority in the Attwood case, founded, as it was, upon the passing observations of Lord Moulton and on the hostile approach of Neville J to the whole concept, suddenly made the common law fiercely restrictive of it. How easy would it be for courts to apply the first requirement, that the covenant should in effect be a combination of different covenants? And what would they make of the second requirement, that the part proposed to be removed should be no more than trivial or technical? In Putsman v Taylor [1927] 1 KB 637 the claimant employed the defendant as manager of his tailoring business at 49 Snow Hill in Birmingham. The defendant covenanted that, following the end of his employment, he would not be employed by a tailor (a) anywhere else on Snow Hill nor (b) within half a mile of Aston Cross nor (c) within half a mile of the Bristol Road. He became employed by a tailor at 73 Snow Hill. The Divisional Court of the Kings Bench Division severed the covenant, removed (b) and (c) as too wide and enforced (a) against the defendant by way of injunction. Salter J suggested at pp 640 641 that in the Attwood case it had been Lord Sterndale who had articulated a definite test, namely whether severance would render the covenant different in kind and not only in extent; and he held that removal of (b) and (c) affected only the extent of the covenant. Talbot J observed at p 643 that the law relating to the severability of illegal contracts was as fully applicable to those in restraint of trade as to those illegal in any other respect; and at p 645 that Lord Moultons observations in the Mason case referred to the inability of the court to substitute terms which had not been expressed for terms which were unreasonably wide. Neither judge addressed the second requirement identified in the Attwood case. In Scorer v Seymour Jones [1966] 1 WLR 1419 the Court of Appeal took a similar approach to that taken by the Divisional Court in the Putsman case. The claimant, an estate agent in Dartmouth, opened a branch in Kingsbridge and employed the defendant to manage it. The defendants post employment covenant was not to set up as an estate agent within five miles either of Kingsbridge or of Dartmouth. He set up as an estate agent within five miles of Kingsbridge. The court severed the covenant, removed the reference to Dartmouth as too wide and enforced the remainder. Although the Attwood case was cited to them, none of the judges expressly referred to either of its requirements. In T Lucas & Co Ltd v Mitchell [1974] 1 Ch 129 the claimant, which manufactured foodstuffs, employed the defendant as a salesman in Manchester. His post employment covenant was not to deal in goods similar to those manufactured by the claimant nor to solicit orders from, nor to supply, any of its recent customers. Following termination of his employment, he solicited orders from a number of its recent customers. The Court of Appeal held that the claimants legitimate interests justified the covenants against solicitation and supply but that the covenant against dealing was unreasonable. It held, however, that the latter should be removed following severance and the former enforced. By a judgment delivered on its behalf by Russell LJ, it held at p 135 that the latter could be removed without altering the nature of the contract and that its removal would not confer on the former a meaning and effect different in kind and extent. Then, at p 136, the court addressed the further step apparently required by the Attwood case; and, although it did so in slightly ambiguous terms, a careful reading of the report impels the conclusion that it was referring to what I have described as the second requirement in the Attwood case, namely that the part proposed to be removed should be no more than trivial or technical. The court declared that it looked askance at this requirement, which, it added, much strains our loyalty to precedent and with which a decision of equal stature, namely that of the Court of Appeal in the Scorer case, was wholly inconsistent. The post employment covenant in Sadler v Imperial Life Assurance Co of Canada Ltd [1988] IRLR 388 arose in circumstances significantly different from those addressed above. The defendant employed the claimant as an insurance agent on commission, to be calculated by reference to premiums paid to the defendant for the first ten years under any policy which he had procured. A clause of the contract stated that, if in certain circumstances he left the defendants employment, it would, subject to a proviso, continue to pay him commission in respect of premiums thereafter paid to it for the first ten years under any policy which he had procured. The proviso was that this post employment commission would cease if he began to work for another insurance company. The claimant left the defendants employment and began to work for another insurance company. The defendant refused to pay him further commission. In his claim for payment of it he contended that the proviso was in unreasonable restraint of trade and thus void and that it should be severed and removed from the remainder of the clause, which should continue to entitle him to the commission. Mr Peter Crawford QC, sitting as a deputy judge of the Queens Bench Division, upheld his claim. He rejected the defendants contention that if, which it had denied, the doctrine against restraint of trade applied at all, the whole clause, including for the payment of further commission, was void. Following a survey of the authorities, the deputy judge concluded at para 19 that the proviso could be removed from the remainder of the clause since (1) there was no need to add to or modify the wording of the remainder, (2) the remainder continued to be supported by adequate consideration and (3) the removal did not so change the character of the contract that it becomes not the sort of contract that the parties entered into at all. Save for one complicating feature, the circumstances in Marshall v NM Financial Management Ltd [1995] 1 WLR 1461 were similar to those in the Sadler case. The claimants remuneration from the company was again linked to premiums paid over many years under policies issued by the company which he had procured. Again the contract included a clause that in specified circumstances such remuneration should continue to be paid notwithstanding termination of his agency; but in this case payment was subject to two provisos. The first was that in the immediately following year he should not work for a competitor. Within that year the claimant, then aged 40, did work for a competitor. Mr Jonathan Sumption QC, sitting as a deputy judge of the Chancery Division, chose to apply the three criteria for severance which had been identified in the Sadler case; but he suggested a fourth, namely that severance should be consistent with the public policy underlying avoidance of the offending part. He said at p 1466 that application of the third criterion, which called for inquiry into change in the character of the contract, was altogether more satisfactory than the more traditional and question begging statement of the test: whether there is one obligation or more than one. The complicating feature was the second proviso, which identified an alternative route to entitlement to post employment commission, namely that on termination the agent should have attained the age of 65. This second proviso was not even arguably in restraint of trade but, if the first proviso were alone to be removed, the second would survive to preclude payment of the commission to the claimant. In the event the deputy judge regarded both provisos as linked and removed them both. In the Marshall case the Court of Appeal, [1997] 1 WLR 1527, dismissed the companys appeal against the deputy judges decision. Millett LJ observed at p 1531: Although the question is described as one of severance it is important to bear in mind that we are not concerned to decide how much of an offending restriction should be struck down. In such a case the question is to what extent can the party who imposed the restriction enforce those parts of it which are not in unreasonable restraint of trade. We are concerned with a very different question, namely, whether the party who has been freed from an invalid restraint of trade can enforce the remainder of the contract without it. As Millett LJ observed, it was the employee (or agent) who was seeking severance in the Sadler and Marshall cases; and therefore there was no relevance in the public policy reasons for restricting severance when sought by overbearing employers who had required their employees to subscribe to extravagant restraints. In Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613, [2007] ICR 1539, the defendants, who had been employed by the claimant as independent financial advisers, covenanted that, for the year immediately following termination of their employment, they would not deal with any of the claimants clients with whom they had dealt in the preceding year; and that, if they had then dealt with agents of its clients, the agents should be deemed to be its clients for this purpose. The Court of Appeal held that the deeming of agents as clients was unreasonable; that the covenant should be severed and the deeming provision removed; and that the remainder of the restraint should be enforced against the defendants. In a judgment with which Sir Anthony Clarke MR and Carnwath LJ agreed, Maurice Kay LJ (a) observed at para 34 that [a]t one stage there had been an assumption in the authorities, such as the Mason case, that courts should be reluctant to sever a covenant in restraint of trade in favour of an employer; (b) declared at paras 35 37 that the appropriate starting point was what Lord Sterndale and Younger LJ had said in the Attwood case; (c) noted at para 38 that in the T Lucas case, cited in para 69 above, the court had authoritatively rejected the second prerequisite of severance which Younger LJ had identified; addressed at para 40 the three criteria identified in the Sadler case and (d) noted that it had been applied both in the Marshall case and in the TFS Derivatives case cited in para 41 above; (e) rejected at paras 41 and 42 the suggestion that those three criteria applied only to claims by employees to post employment commission and likened the third criterion to the reference in the T Lucas case to the availability of severance if achievable without altering the nature of the contract; (f) approaching these cases and should be adopted; and (g) the deeming provision removable. concluded at para 44 that application of those three criteria rendered suggested at para 43 that the threefold test is a useful way of Following the decision in 2007 in the Beckett case, there have been a number of decisions at first instance in which issues of severability of post employment restraints have been determined by reference to those three criteria, sometimes with the addition of the fourth criterion suggested in the Marshall case. For example, in East England Schools CIC v Palmer [2013] EWHC 4138 (QB), [2014] IRLR 191, the claimants business was that of an agency which sought to find teachers for schools with teaching vacancies. Among the post employment restraints included in the first defendants contract with the claimant was a provision that, whether as shareholder or otherwise, she should not be concerned with the supply of Services to any school or teacher with whom she had had recent dealings. Mr Richard Salter QC, sitting as a deputy judge of the Queens Bench Division held at para 77 that this provision, which specifically extended to her status as a shareholder, was unreasonably wide because it would even prevent her from having a minority shareholding in a competing company which supplied such services. But, by reference to the three criteria and the additional criterion, he proceeded to declare that the provision should be severed and removed from the remainder of the restraints, which were enforceable. He had therefore asked himself at para 86 whether severance would change the underlying character of the contract. He had not asked himself whether the unreasonable provision in effect formed a separate covenant. In UK Power Reserve Ltd v Read [2014] EWHC 66 (Ch) there was focus, yet again, on whether the effect of the words concerned or interested in a post employment restraint was to preclude the ex employee from having no more than a passive minority shareholding in a competitor, because, if so, they were unreasonably wide. Mr Jeremy Cousins QC, sitting as a deputy judge of the Chancery Division, held that, in the light of a proviso, such was not the effect of the words. But in paras 87 to 93 he observed in passing that, had such been their effect, he would have severed the covenant and removed them from the remainder in accordance with the four criteria first identified in the Sadler and Marshall cases. He referred in para 87 to the strong body of recent authority which suggested that the law had developed so as to require them to be applied. In Freshasia Foods Ltd v Lu [2018] EWHC 3644 (Ch) Mr Daniel Alexander QC, sitting as a deputy judge of the Chancery Division, recently granted an interlocutory injunction by way of enforcement of parts of an employees non solicitation post employment covenant. Treating the inquiry as purely interlocutory, he made only provisional determinations. These were that three aspects of the covenant were unreasonably wide but that, following severance, they should be removed from the remainder. Prompted in part, so it would seem, by the Court of Appeals decision against which this present appeal is brought, he conducted a wide ranging survey of the law of severance of post employment restraints in which he made a number of valuable observations. Even more recently, following a full hearing, Arnold J delivered a judgment in the Freshasia Foods case, [2019] EWHC 638 (Ch), in which he ruled at para 144 that the employer had failed to establish legitimate interests which required the protection of the covenant. He therefore declined to continue the injunction; and, apart from adverting to the difficulty of reconciling the decision in the Beckett case with the decision under present appeal, he explained at para 148 that he had no need to address the issues relating to severance. This final disposal of the application does not however detract from the value of the deputy judges observations. In particular he (a) observed that the deeming provision in the Beckett case could not be regarded as a separate covenant but had nevertheless been severed (para 37); (b) inferred from the Beckett case that the historical reluctance to sever, exemplified in the Mason and Attwood cases, was something of a relic (para 41); (c) recognised on the one hand that an employer had legitimate interests worthy of protection in the public interest; that they might easily be prejudiced when an important employee left; and that they should not be frustrated by too narrow an approach to severability (para 48); (d) recognised on the other hand that Lord Moultons concerns in the Mason case remained valid; and that the law should not allow an employer first to extract an unreasonably wide restraining covenant, inhibiting the employee from leaving to work elsewhere and even from threatening to do so in order to obtain fairer terms from him, and then, if challenged in court, too easily to secure its removal and the enforcement of the remainder (paras 49 and 50); (e) questioned whether Lord Moultons concerns were best addressed by a rule which denies severance of a term within a single covenant, even if insignificant (paras 51 and 52); and (f) concluded that it might be preferable to address substance rather than form and thus to permit the removal of relatively minor terms if it would not materially change the nature of the contract (para 53). A survey of the development in England and Wales of the severance principle, when applied to post employment restraints of trade, would be deficient if it failed to note the current standing of the principle in other common law jurisdictions. In Shafron v KRG Insurance Brokers (Western) Inc [2009] 1 RCS 157 the Supreme Court of Canada, by a judgment delivered by Rothstein J, firmly adhered at para 36 to the historical approach directed by the Attwood case from the foot of the observations of Lord Moulton; and it even rejected the move in the T Lucas case to shed the second requirement of triviality or technicality. By contrast, in Lee Gwee Noi v Humming Flowers and Gifts Pte Ltd [2014] SGHC 64, a magisterial survey of the standing of the principle in Singapore, albeit conducted at first instance, concluded that its application there was subject to the three criteria approved in the Beckett case: paras 155 and 172. In New Zealand the legislature has relieved the courts altogether from the shackles of the severance principle by conferring on them a discretion actively to rewrite an unreasonable covenant in restraint of trade: see section 83(1)(b) of the Contract and Commercial Law Act 2017. Now, at last, it becomes appropriate to address the reasoning of the Court of Appeal in refusing to sever the words or interested from the remainder of Ms Tillmans non competition covenant. In paras 29 and 30 Longmore LJ cited the Attwood case for the proposition that parts of a single covenant could not be severed; and he observed that, in that it prevented Ms Tillman from engaging or being concerned or interested in a competing business in any one of several capacities, the non competition covenant had to be read as a whole and could not be severed. In para 33 he rejected the companys submission that the three criteria approved in the Beckett case had replaced the requirement for separate covenants. He explained that: The requirement is reflected in the third of the three tests because it must always be doubtful whether parts of a single covenant can be deleted without the contract becoming not the sort of contract that the parties entered into at all. We in this court have had the benefit of fuller argument and greater opportunity for reflection than had the Court of Appeal. At all events it is clear that, even were the Attwood case still to be regarded as authoritative, that court took a narrow view of its effect in appearing to discern a single covenant by reference to nothing other than the form of its words. More importantly, however, the time has come to determine whether the Attwood case should remain authoritative. High ranking employees can do particular damage to the legitimate interests of their employers following termination of their employment; and it may be that, when they enter into their post employment covenants, they are able to negotiate with their employers on nearly an equal footing. As Denning LJ said in M & S Drapers v Reynolds [1957] 1 WLR 9, 19, A managing director can look after himself; and so, arguably, could Ms Tillman. But then he added: A traveller is not so well placed to do so. The law must protect him. It is clearly common practice for an employer to present a prospective employee with a substantial written contract, many terms of which, including those imposing post employment restraints, are derived from books of precedent. It is as valid in 2019 as it was in 1913 to infer that most prospective employees will not be able, even if minded, to decline to accept such terms, still less, following the end of their employment, to defend a claim that they are in breach of them. The courts must continue to adopt a cautious approach to the severance of post employment restraints. Nevertheless both of the requirements which were shoe horned into the law by the Attwood case were, as we have seen, to prove both instantly controversial and ultimately unsatisfactory. An inquiry whether the covenant proposed to be severed was indeed one covenant or whether in effect it was more than one covenant proved to be of elusive application, largely dependent on the eye of the beholder. Why was the list of prohibited trades in the Attwood case one covenant but the list of prohibited areas in each of the Putsman and Scorer cases in effect more than one covenant? And, being a question noted in para 78(e) above, why should an unreasonable restraint of insignificant proportions fail to qualify for severance just because of its place in a single covenant? The second requirement of triviality or technicality reflected an attempt to sideline application of the entire severance principle to post employment restraints. It is far from clear that, even in 1913 and 1920, public policy demanded it; and in 1972 in the T Lucas case, it was rightly criticised in the strongest possible terms, following which it fell away. criteria indorsed in the Beckett case. The first is that the unenforceable provision is capable of being removed without the necessity of adding to or modifying the wording of what remains. This is the so called blue pencil test. Unfortunately it can work capriciously and, if the aspiration of our judgments today had been to discern in the common law a principle which can always be applied so as to produce a sensible outcome, we would have laboured in vain. In his judgment in the Divisional Court in the Attwood case, cited in para 61 above, Bailhache J said at p 155: It therefore becomes appropriate to analyse the effect of each of the three the courts will sever in a proper case where the severance can be performed by a blue pencil but not otherwise. To give an illustration, a covenant not to carry on business in Birmingham or within 100 miles may be severed so as to reduce the area to Birmingham, but a covenant not to carry on business within 100 miles of Birmingham will not be severed so as to read will not carry on business in Birmingham. The distinction seems artificial, but is I think settled. The distinction is indeed settled. It is inherent in the word severance itself, which means cutting things up and does not extend to adding things in. The blue pencil criterion is a significant brake on application of the principle; and, although it can work arbitrarily, it is in my view an appropriate brake on the ability of employers to secure severance of an unreasonable restraint customarily devised by themselves. Were it ever to be thought appropriate to confer on the court a power to rewrite a restraint so as to make it reasonable, it would surely have to be achieved by legislation along the lines of that in New Zealand which has been noticed in para 79 above. The second criterion is that the remaining terms continue to be supported by adequate consideration. It goes without saying that an employer who sues on a covenant made otherwise than under seal must show that he provided consideration for it. But why is it said to be a prerequisite of his ability to sever? The answer is surely to be found in the unusual circumstances of the Sadler and Marshall cases, which generated the criteria adopted in the Beckett case. In those two cases it was the claimant employee who secured severance of unreasonable obligations cast by the contract upon himself. In that situation the court needed to satisfy itself (and in each case it did so) that, were his unreasonable obligation to be removed, there would nevertheless remain consideration passing from him under the contract such as would support the obligation which he was seeking to enforce. In the usual post employment situation, however, the need to do so does not arise. A claimant employer who asks the court to sever and remove part of a covenant made by the defendant employee is in no way proposing to diminish the consideration passing from himself under the contract such as is necessary to support the obligation which he seeks to enforce. In the usual situation the second requirement can be ignored. The third criterion is that the removal of the unenforceable provision does not so change the character of the contract that it becomes not the sort of contract that the parties entered into at all. This is the crucial criterion and I find it impossible to equate it with the Attwood requirement, as suggested by the Court of Appeal. In my view this third criterion was rightly imported into the general jurisprudence by the Beckett case and has rightly been applied by our courts ever since then, otherwise than in the decision under appeal. But I suggest, with respect, that the criterion would better be expressed as being whether removal of the provision would not generate any major change in the overall effect of all the post employment restraints in the contract. It is for the employer to establish that its removal would not do so. The focus is on the legal effect of the restraints, which will remain constant, not on their perhaps changing significance for the parties and in particular for the employee. Application of the severance principle to Ms Tillmans restraint covenants now becomes straightforward. First, the words or interested are capable of being removed from the non competition covenant without the need to add to or modify the wording of the remainder. And, second, removal of the prohibition against her being interested would not generate any major change in the overall effect of the restraints. So those words should be severed and removed. Another of the Court of Appeals objections to removing the words or interested from Ms Tillmans non competition covenant was that removal would be idle in that the remainder would continue unlawfully to oblige her not to hold any shares in companies of the character there specified. For the covenant would then become that she would not directly or indirectly engage or be concerned in any business; and, so the Court of Appeal considered, any holding of shares in a company would mean that she was indirectly concerned in it. The company expressly accepts, at any rate in this court, that, if necessary, it would be content for the words or be concerned also to be removed from Ms Tillmans covenant; and my view is that, had the Court of Appeals construction of the word concerned been correct, it would, by reference to the criteria identified above, have been appropriate also to remove them. But are you, as no more than a shareholder in a company, concerned in it? In Ashcourt Rowan Financial Planning Ltd v Hall [2013] EWHC 1185 (QB), [2013] IRLR 637, the defendants non competition covenant prohibited him from being engaged or concerned in any business. It did not include the words or interested. Andrew Smith J concluded at para 39, that the word concerned denoted working for the business or having some other active involvement in it and so did not extend to a proprietary interest, such as a shareholding, in it. But a conclusion which there was clearly borderline becomes stronger in the present case. For Ms Tillman covenanted that she would not engage or be concerned or interested ; and there was no specific reference to her doing so as a shareholder, as there was in the East England Schools case. Conventional principles of construction require value to be attributed, if possible, to each word of an agreement. But, were the word concerned to be construed so as to cover passive interest in a business such as that enjoyed by a shareholder, what value would be left to be attributed to the word interested? Nor is such an exercise in construing the word concerned undermined by the fact that the words or interested are to be severed and removed. The meaning which the words of an agreement carry at its inception is not changed by later events. In British Reinforced Concrete Engineering Co Ltd v Schelff [1921] 2 Ch 563, 573, Younger LJ (no less) said: Now the effect of severing by striking out with a blue pencil the obnoxious part of a covenant is not to alter or affect the construction of what is left. That must be construed as if the portion struck out still remained Conclusion I therefore propose that the court should set aside the Court of Appeals order and should overrule the decision in the Attwood case; and that, although the contractual period of the restraints has expired long ago, it should formally restore the injunction granted by Mann J, subject only to the removal of the words or interested. The court should also invite submissions on the proper orders in respect of the costs incurred in each of the three courts. In para 104 of his judgment on the interim inquiry into the Freshasia Foods case the deputy judge described as legal litter the unreasonable parts of post employment restrictions to which employers extract the agreement of prospective employees; and he added that they cast an unfair burden on others to clear them up. It is a neat metaphor. In my view the company should win but there might be a sting in the tail.
UK-Abs
In 2003, the appellant, Egon Zehnder Ltd (Egon Zehnder), an executive search and recruitment company, hired the respondent, Ms Tillman, to work in its financial services practice area. She was first employed as a consultant and promoted to principal in 2006, partner in 2009 and joint global practice head in 2012. She was always employed largely on the terms of her original contract (the agreement). Clause 13 provided for five restraints upon the activities of Ms Tillman following the end of her employment, all limited to a period of six months from the termination date. Clause 13.2.3 (the non competition covenant) is in issue in this appeal. By this covenant, Ms Tillman agreed that she would not directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of [Egon Zehnder] within a twelve month period prior to the termination date and with which [she was] materially concerned during such period. On 30 January 2017 Ms Tillmans employment with Egon Zehnder came to an end. Shortly thereafter, she informed it that she intended to start work as an employee of a competitor firm. She made clear that she intended to comply with all her covenants in the agreement apart from the non competition covenant in clause 13.2.3. She conceded that it would prevent her proposed employment within the restricted six month period but alleged that it was in unreasonable restraint of trade and thus void. On 10 April 2017 Egon Zehnder issued proceedings. It applied for an interim injunction to restrain Ms Tillmans entry into the proposed employment. On 23 May 2017 Mr Justice Mann (Mann J) in the High Court granted the injunction. The Court of Appeal allowed Ms Tillmans appeal and set aside the injunction. In the courts below, the enforceability of the non competition covenant turned on whether the words interested in unreasonably prevented even a minor shareholding by Ms Tillman in a competing business and, if so, whether the offending part of the covenant could be severed. Mann J agreed with the company that interested in did not preclude a minor shareholding, without reaching a final view on severance. The Court of Appeal disagreed with Mann J on the effect of the words interested in, considering that they did prohibit even a minor shareholding, and refused to sever those words. Clause 13.2.3 was thus held to be void as an unreasonable restraint of trade. In this Court, the issues were whether: (1) assuming that clause 13.2.3 prohibits shareholding, that part of the covenant falls entirely outside the restraint of trade doctrine; (2) the words interested in, properly construed, prohibit any shareholding; and (3) the correct approach to severance was applied. The Supreme Court unanimously allows the appeal. Lord Wilson gives the lead judgment, with which all members of the Court agree. The injunction granted by Mann J is formally restored although the contractual period of restraint has since expired. Issue (1): Scope of application of the restraint of trade doctrine The restraint of trade doctrine is one of the earliest products of the common law, and reflects the central importance ascribed to the freedom to work [22]. By the early 20th century, it was recognised that different considerations applied to restraints on the seller of a business from those on an ex employee [27]. The question of the width of the doctrine has arisen, particularly in Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269 (HL), which remains the key decision [27 29]. It is not necessary to decide on the outer boundaries of the doctrine in this case [30]. The agreement is an employment contract, and it is agreed that clause 13.2.3 does provide for a restraint of trade [30]. In substance as well as in form the restraint on shareholding is part of the restraint on Ms Tillmans ability to work after her employment with Egon Zehnder, so the doctrine applies on the facts [33 34]. Issue (2): Proper construction of the words interested in This issue turns on the proper understanding of the validity principle in construing agreements. This principle proceeds on the premise that the parties to a contract or other instrument will have intended it to be valid [38]. This Court considers that requiring two meanings to be equally plausible or for there to be an element of ambiguity is unsatisfactory [38 42]. The test of whether the alternative construction is realistic is preferred [42]. In the present case, the starting point is that the phrase engaged or concerned or interested, adopted in clause 13.2.3, has long been included in standard precedents for the drafting of non competition covenants and treated as including a shareholding prohibition [51]. Egon Zehnder was unable to advance a realistic alternative construction of the word interested [52]. The natural meaning of the word, which includes a shareholding (large or small), applies [53]. Subject to severance, clause 13.2.3 is thus void as an unreasonable restraint of trade [53]. Issue (3): Correct approach to severance in restraint of trade cases On the question of severance, this Court is faced with two main differing approaches, found in particular in the decisions in Attwood v Lamont [1920] 3 KB 571 (CA) and Beckett Investment Management Group Ltd v Hall [2007] ICR 1539 (CA) [57 73]. The Attwood approach limits severance to situations where the covenant is in effect a combination of different covenants [66]. By contrast, the Beckett approach uses three criteria for severance [73]. This Court prefers the Beckett approach, provides guidance on its application and overrules the decision of the Court of Appeal in Attwood [81 91]. On the Beckett approach, the first criterion is whether the unenforceable provision is capable of being removed without the necessity of adding to or modifying the wording of what remains this is the so called blue pencil test [85]. The second criterion is that the remaining terms continue to be supported by adequate consideration [86]. This will not usually be in dispute [86]. The third criterion is that the removal of the unenforceable provision does not so change the character of the contract that it becomes not the sort of contract that the parties entered into at all [87]. This is the crucial criterion but this Court prefers to express it as being whether removal of the provision would not generate any major change in the overall effect of all the post employment restraints in the contract [87]. It is for the employer to establish this, and the focus is on the legal effect of the restraints and not their perhaps changing significance for the parties [87]. On the facts, the words or interested are capable of being removed from clause 13.2.3 without the need to add to or modify the wording of the rest of the clause and removal of the prohibition against her being interested would not generate any major change in the overall effect of the restraints [88].
This litigation arises from alleged toxic emissions from the Nchanga Copper Mine in the Chingola District of Zambia. The claimants, who are the respondents to this appeal, are a group currently consisting of some 1,826 Zambian citizens who live in four communities within the Chingola District. They are, by any standards, very poor members of rural farming communities served by watercourses which provide their only source of water for drinking (by themselves and their livestock) and irrigation for their crops. They say that both their health and their farming activities have been damaged by repeated discharges of toxic matter from the Nchanga Copper Mine into those watercourses, from 2005 to date. The Nchanga Copper Mine (the Mine) consists, in part, of an open cast mine, said to be the second largest in the world, and in part of a deep mine. Its immediate owner is the second defendant Konkola Copper Mines plc (KCM), which is a public company incorporated in Zambia. KCM is the largest private employer in Zambia, employing some 16,000 people, mainly at the Mine. The first defendant Vedanta Resources plc (Vedanta) is the ultimate parent company of KCM. It is the parent of a multinational group, listed on the London Stock Exchange, with interests in minerals, power, oil and gas in four continents. Vedanta is incorporated and domiciled in the United Kingdom. Although Vedanta claims only to have 19 employees of its own, eight of whom are its directors, the Vedanta Group employs some 82,000 people worldwide. KCM is not a 100% subsidiary of Vedanta, since the Zambian government has a significant minority stake, but materials published by Vedanta state that its ultimate control of KCM is not thereby to be regarded as any less than it would be if wholly owned. The claims against both defendants are pleaded in common law negligence and breach of statutory duty. Those causes of action are pursued against KCM on the basis that it is the operator of the Mine. As against Vedanta, the same causes of action are said to arise by reason of the very high level of control and direction that the first defendant exercised at all material times over the mining operations of the second defendant and its compliance with applicable health, safety and environmental standards: (Particulars of Claim, para 79). This appeal is all (and only) about jurisdiction; that is, the jurisdiction of the courts of England and Wales to determine those claims against both defendants. As against Vedanta, the claimants rely upon article 4 of the Recast Brussels Regulation (Regulation (EU) 1215/2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters). As against KCM the claimants rely upon what may loosely be called the necessary or proper party gateway of the English procedural code for permitting service of proceedings out of the jurisdiction, now to be found mainly in para 3.1 of CPR Practice Direction 6B. The procedural background to this appeal is, in outline, as follows. The claimants issued the Claim Form in July 2015. Vedanta was served within the jurisdiction. Service was effected on KCM out of the jurisdiction pursuant to permission obtained on a without notice application on 19 August 2015. Both Vedanta and KCM applied to challenge jurisdiction, in September and October 2015 respectively. Their applications were heard together, over three days in April 2016, by Coulson J, who delivered a comprehensive reserved judgment dismissing them on 27 May 2016 [2016] EWHC 975 (TCC). The defendants appeals were heard over two days in July 2017 and dismissed, again in a comprehensive reserved judgment, in October 2017 [2018] 1 WLR 3575. The defendants further appeals to this court were heard, again over two full days, in January 2019. Proportionality It is necessary to say something at the outset about the disproportionate way in which these jurisdiction issues have been litigated. In Spiliada Maritime Corpn v Cansulex Ltd (the Spiliada) [1987] AC 460, 465, Lord Templeman said this, about what was, even then, the disproportionate manner in which jurisdiction challenges were litigated: In the result, it seems to me that the solution of disputes about the relative merits of trial in England and trial abroad is pre eminently a matter for the trial judge. Commercial Court judges are very experienced in these matters. In nearly every case evidence is on affidavit by witnesses of acknowledged probity. I hope that in future the judge will be allowed to study the evidence and refresh his memory of the speech of my noble and learned friend Lord Goff of Chieveley in this case in the quiet of his room without expense to the parties; that he will not be referred to other decisions on other facts; and that submissions will be measured in hours and not days. An appeal should be rare and the appellate court should be slow to interfere. That dictum is, in my mind equally applicable to all the judges in what are now the Business and Property Courts of England and Wales, including, as in this case, the Technology and Construction Court. That requirement for proportionality, and for respect to be given to first instance decisions on jurisdiction, has been repeated, perhaps in less colourful terms, in numerous subsequent cases. In VTB Capital plc v Nutritek International Corpn [2013] 2 AC 337, Lord Neuberger of Abbotsbury said this, at paras 82 to 83: 82. The first point is that hearings concerning the issue of appropriate forum should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost. There is also a real danger that, if the hearing is an expensive and time consuming exercise, it will be used by a richer party to wear down a poorer party, or by a party with a weak case to prevent, or at least to discourage, a party with a strong case from enforcing its rights. 83. Quite apart from this, it is simply disproportionate for parties to incur costs, often running to hundreds of thousands of pounds each, and to spend many days in court, on such a hearing. The essentially relevant factors should, in the main at any rate, be capable of being identified relatively simply and, in many respects, uncontroversially. There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial. At para 84 Lord Neuberger cited dicta to the same effect by Waller LJ in Cherney v Deripaska (No 2) [2010] 2 All ER (Comm) 456, para 7, in which he concluded that it would have been better for both parties and better use of court time if they had expended their money and their energy on fighting the merits of the claim. Jurisdiction challenges frequently raise questions about whether the claim against one or more of the defendants raises a triable issue. As it is now common ground, this broadly replicates the summary judgment test. Issues of this kind are, regardless whether contained within jurisdiction disputes, subject to a similar requirement for proportionality, the avoidance of mini trials and the exercise of judicial restraint, in particular in complex cases, as was emphasised in the following well known passage from the speech of Lord Hope of Craighead in Three Rivers District Council v Governor and Company of the Bank of England (No 3) [2003] 2 AC 1: 94. For the reasons which I have just given, I think that the question is whether the claim has no real prospect of succeeding at trial and that it has to be answered having regard to the overriding objective of dealing with the case justly. But the point which is of crucial importance lies in the answer to the further question that then needs to be asked, which is what is to be the scope of that inquiry? I would approach that further question in this way. The 95. method by which issues of fact are tried in our courts is well settled. After the normal processes of discovery and interrogatories have been completed, the parties are allowed to lead their evidence so that the trial judge can determine where the truth lies in the light of that evidence. To that rule there are some well recognised exceptions. For example, it may be clear as a matter of law at the outset that even if a party were to succeed in proving all the facts that he offers to prove he will not be entitled to the remedy that he seeks. In that event a trial of the facts would be a waste of time and money, and it is proper that the action should be taken out of court as soon as possible. In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini trial on the documents without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman [[2001] 1 All ER 91], at p 95, that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all. 96. In Wenlock v Moloney [1965] 1 WLR 1238 the plaintiffs claim of damages for conspiracy was struck out after a four day hearing on affidavits and documents. Danckwerts LJ said of the inherent power of the court to strike out, at p 1244B C: this summary jurisdiction of the court was never intended to be exercised by a minute and protracted examination of the documents and facts of the case, in order to see whether the plaintiff really has a cause of action. To do that is to usurp the position of the trial judge, and to produce a trial of the case in chambers, on affidavits only, without discovery and without oral evidence tested by cross examination in the ordinary way. This seems to me to be an abuse of the inherent power of the court and not a proper exercise of that power. The extent to which these well known warnings have been ignored in this litigation can be measured by the following statistics about the materials placed before this court. The parties two written cases (ignoring annexes) ran to 294 pages. The electronic bundles included 8,945 pages. No less than 142 authorities were deployed, spread over 13 bundles, in relation to an appeal which, on final analysis, involved only one difficult point of law. A particular reason for the requirement to exercise proportionality in jurisdiction disputes of this kind is that, in most cases, they involve a contest between two competing jurisdictions in either of which the parties could obtain substantial justice. The exception, an issue whether substantial justice is obtainable in one of the competing jurisdictions, may require a deeper level of scrutiny, not least because a conclusion that a foreign jurisdiction would not provide substantial justice risks offending international comity. Such a finding requires cogent evidence, which may properly be subjected to anxious scrutiny. Nonetheless, the fact that such an issue arises in a particular case (as in this appeal) is no excuse for ignoring the requirement for proportionality in relation to all the other issues. Judicial restraint is of particular importance in relation to jurisdiction disputes which, wholly exceptionally, reach this court, in particular in cases such as the present, where the Court of Appeal has already concurred with the fact finding and evaluative analysis of the first instance judge. The essential business of this court is to deal with issues of law, rather than fact finding or the re exercise of discretion. The pursuit of detailed matters of factual (or evaluative) analysis in this court is therefore inappropriate, both because it is likely to involve a needless and useless misapplication of the parties time and resources, and because it distracts this court from its proper focus upon real issues of law. Nor is it permissible to dress up what is in reality a factual dispute as if it were, or involved, a misdirection in law by the first instance judge. As will appear, a telling example in the present case is the appellants assertion that Coulson J applied an insufficiently rigorous or detailed analysis of the claimants pleaded case against Vedanta, for the purpose of deciding whether it disclosed a real issue to be tried. Within every jurisdiction dispute, or embedded question whether there is a triable issue, the first instance judge faces a typical quandary: how to balance the requirement for proportionality against the need to ensure that resources are not wasted on an unnecessary trial. The choice, at how deep a level of detail to conduct that analysis and then in how much detail to express conclusions in a judgment, are matters for the experienced first instance judge, with which an appellate court should be slow to interfere. The fact that it has been necessary, despite frequent judicial pronouncements to the same effect, yet again to emphasise the requirements of proportionality in relation to jurisdiction appeals, suggests that, unless condign costs consequences are made to fall upon litigants, and even their professional advisors, who ignore these requirements, this court will find itself in the unenviable position of beating its head against a brick wall. The issues on this appeal Although technically there are two appeals, one by each of the defendants, they are closely interrelated and the proceedings before this court are best understood as a single appeal. The issues, and the interrelationship between them, can most easily be summarised by reference to the structure applicable to the establishment of jurisdiction in claims against defendants one of which is domiciled within, and the other without, the jurisdiction of the English court. The defendant domiciled here will be referred to as the anchor defendant. The defendant domiciled abroad will be referred to as the foreign defendant. The essential structure is common ground and may therefore be briefly summarised. the Recast Brussels Regulation, which provides that: Jurisdiction against the anchor defendant derives directly from article 4.1 of Subject to this Regulation, persons domiciled in a member state shall, whatever their nationality, be sued in the courts of that member state. That basic provision is designed not only for the protection of EU domiciliaries, but also to enable a claimant to know, with reasonable certainty, where he may sue. In Owusu v Jackson (Case C 281/02) [2005] QB 801 the Court of Justice held, contrary to earlier English jurisprudence, that this conferred a right on any claimant (regardless of their domicile) to sue an English domiciled defendant in England, free from jurisdictional challenge upon forum non conveniens grounds, even where the competing candidates for jurisdiction were England (part of a member state) and some other non member state such as, here, Zambia. The decision related to article 2 of the earlier Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters 1968, which was in identical terms to the present Recast Brussels Regulation. This does not, of course, prevent any defendant from seeking to have a claim struck out as an abuse of process or as disclosing no reasonable cause of action, or from seeking reverse summary judgment upon the basis that the claim discloses no triable issue against that defendant. Vedanta has not pursued a strike out or summary judgment application of that kind, but both it and KCM assert that the claimants pleaded case and supporting evidence disclose no real triable issue against Vedanta, because Vedanta cannot be shown to have done anything in relation to the operation of the Mine sufficient either to give rise to a common law duty of care in favour of the claimants, or a statutory liability as a participant in breaches of Zambian environmental protection, mining and public health legislation. Vedanta was, it is said, merely an indirect owner of KCM, and no more than that. Secondly, Vedanta maintains that, even if the pleaded claim discloses a triable issue against it, nonetheless the claim should be stayed as an abuse of EU law, because the claimants are using a claim against Vedanta in England purely as a vehicle for attracting English jurisdiction against their real target defendant, KCM, by means of the necessary or proper party gateway. Both these submissions were rejected by the judge, and by the Court of Appeal, but are pursued here, with the requisite permission of this court. Further, the appellants submit that the issue as to abuse of EU law deserves a reference to the Court of Justice. The claimants invocation of English jurisdiction as against KCM depends, as already noted, upon the necessary or proper party gateway. This forms a long established part of English private international law which, pursuant to article 6.1 of the Recast Brussels Regulation, is determinative of the jurisdiction of the English courts against a defendant, like KCM, not domiciled in a member state. The necessary or proper party gateway long ante dates the Civil Procedure Rules but is now enshrined in Part 6 Practice Direction B para 3.1 as follows: The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where (3) A claim is made against a person (the defendant) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and there is between the claimant and the (a) defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim. The express terms of the Practice Direction set out only part of what a claimant relying upon the necessary or proper party gateway must show. It is common ground that, by reference to those terms and well settled authority, the claimant must demonstrate as follows: that the claims against the anchor defendant involve a real issue to be if so, that it is reasonable for the court to try that issue; that the foreign defendant is a necessary or proper party to the claims i) tried; ii) iii) against the anchor defendant; iv) success; v) that, either, England is the proper place in which to bring the combined claims or that there is a real risk that the claimants will not obtain substantial justice in the alternative foreign jurisdiction, even if it would otherwise have been the proper place, or the convenient or natural forum. that the claims against the foreign defendant have a real prospect of As already noted, the question whether the claims disclose a real triable issue against Vedanta is a main issue on this appeal. It is however accepted that, if the claimants surmount this hurdle, it would be reasonable for the English court to try that issue, and that KCM would be at least a proper party to the claims against Vedanta. It is also (now) common ground that the claims against KCM have a real prospect of success. Both the judge and the Court of Appeal found in the claimants favour on real issue and proper place. In addition, they both found that, even if Zambia would otherwise have been the proper place in which to bring the claims, there was a real risk that the claimants would not obtain substantial justice in the Zambian jurisdiction. Those questions remain in issue on this appeal. In the remainder of this judgment, the issues will be addressed in the following order: i) Abuse of EU law. ii) Real issue as against Vedanta. iii) Proper place. iv) Substantial justice. Abuse of EU law The essence of the appellants case under this heading may be summarised as follows. First, it is an abuse of EU law to use article 4 of the Recast Brussels Regulation as a means of enabling claimants to establish jurisdiction against an anchor defendant for the collateral purpose of attracting a member states international jurisdiction against foreign defendants, who are the real targets of the claim. It is said that, whereas article 4 is designed to protect defendants domiciled within the EU, this abuse exposes to litigation domiciled parent companies who would not, apart from their status as anchor defendants, otherwise be sued at all. The judges response was to acknowledge that there might be an abuse if the pursuit of the anchor defendant had been for the sole purpose of attracting jurisdiction as against the foreign defendant, but not otherwise. He found, on the facts, that although the prospect of attracting jurisdiction against KCM was a substantial reason why the claimants sued Vedanta in England, it was not their only reason. They had a bona fide claim, disclosing a real issue for trial, against Vedanta and a desire to obtain judgment against Vedanta rather than merely against KCM, because of a perception, supported by some evidence, that KCM might prove to be of doubtful solvency. Faced with those findings of fact as to the claimants motivation, the appellants pursue this ground of appeal upon the basis that the judges application of a sole purpose test for abuse of EU law was too narrow or, at least, not acte clair, thereby necessitating a reference to the Court of Justice. For the purposes of analysis, the abuse of EU law claim needs to be approached upon the assumption, but without at this stage deciding, that the claim discloses a real triable issue as against Vedanta. If it does not, then Vedanta falls away as an anchor defendant, and the necessary or proper party gateway, as against KCM, closes. Furthermore, as will appear, I consider that the judges conclusion that the claim discloses a real triable issue as against Vedanta cannot be overturned in this court. Nor can the judges conclusion that Vedanta was not sued by the claimants in England for the sole purpose of attracting English jurisdiction over KCM be challenged on this appeal. His conclusion that Vedanta was sued in England for the genuine purpose of obtaining damages, albeit that attracting English jurisdiction over KCM was an important contributor to that decision, was a finding of fact. Although arrived at by a necessarily summary process which did not permit cross examination of the claimants witness evidence as to motive, it was well supported by evidence that the claimants risked finding, after obtaining judgment against KCM, that it was unable to pay the judgment debt. The judges findings of fact on this issue were endorsed by the Court of Appeal (at para 38 per Simon LJ). They were final findings, in the sense that those factual issues will not be revisited at any later stage in the proceedings. It is contrary to the practice of this court to re open concurrent factual findings made in both the courts below. To be fair, counsel for each of the appellants made no significant effort to do so. basis that: a) b) Vedanta; but, c) one of the principal reasons (although not the sole reason) why the claimants sued Vedanta in England was so as to be able, by the use of article 4 and the necessary or proper party gateway in conjunction, to sue KCM in England as well. the claimants have pleaded a real triable issue against Vedanta; the claimants genuinely desire to obtain judgment for damages against I therefore approach the legal analysis of this abuse of EU law issue on the On that factual basis, I am satisfied, to the extent that the point is acte clair, that the EU principle of abuse of law does not avail the appellants. The starting point is the need to recognise that, following Owusu v Jackson, what is now article 4.1 lays down the primary rule regulating the jurisdiction of each member state to entertain claims against persons domiciled in that state. The Recast Brussels Regulation itself (like its predecessors) contains a number of express provisions which derogate from that primary rule. As exceptions to it, they are all to be narrowly construed. If, therefore, the Recast Brussels Regulation also contains (as it probably does) an implied exception from the otherwise automatic and mandatory effect of article 4, based upon abuse of EU law, then that is also an exception which is to be narrowly construed. The centrality of article 4, as the basis of member states jurisdiction over their own domiciliaries, is laid down not only in Owusu v Jackson itself, but in a series of later authorities, and fully recognised by academic writers, even those who, prior to Owusu v Jackson, had taken the opposite view where the relevant competition between jurisdictions lay between a member state and a non member state. Decisions of the Court of Justice which have re emphasised the centrality of article 4, and the need to construe any exceptions or derogations from it restrictively, include Melzer v MF Global UK Ltd (Case C 228/11) [2013] QB 1112, at paras 23 to 24 of the judgment. Dicta in the English courts to the same effect include, in this court, A v A (Children: Habitual Residence) [2014] AC 1, per Lady Hale at para 31 and, more recently, AMT Futures Ltd v Marzillier, Dr Meier & Dr Guntner Rechtsanwaltsgesellschaft mbH [2018] AC 439, per Lord Hodge at para 13. Distinguished academics who are (now) of the same view include Professor Adrian Briggs who in Private International Law in English Courts (2014), at para 4.362, concludes that, since Owusu, the ship has now sailed and in Civil Jurisdiction and Judgments, 6th ed (2015), at para 2.304, that the answer is clear, and debate has moved on. Of the same view are (now) the editors of Dicey, Morris & Collins on Conflict of Laws, 15th ed (2012), at para 12 020. There are a small number of cases in the Court of Justice where either the Court or the Advocate General has addressed specifically the question of abuse of law in the context of the Recast Brussels Regulation and its predecessors. They mainly concern the alleged abusive use of article 8.1 (formerly article 6.1) as a means of circumventing article 4 (formerly article 2). Article 8.1 contains provision (in a much more mechanical form than the English forum conveniens doctrine) for a limited departure from article 4, by providing that: A person domiciled in a member state may also be sued: 1) 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 resulting from separate proceedings; It is therefore a limited form of necessary or proper party gateway out of the strictures of article 4. When read with the enabling words of article 5, it gives the claimant a choice to sue an EU domiciled defendant in a member state other than that of its domicile in order to avoid the risk of irreconcilable judgments. It is of no direct relevance in the present case because there is no co defendant to the claim against Vedanta domiciled in another member state. Since article 8.1 is itself to be restrictively interpreted because it derogates from the primary rule of jurisdiction in article 4, it might be thought that the Court of Justice would liberally apply an abuse of law principle where it perceived that article 8 was being misused as a means of circumventing article 4. Nonetheless the cases show that abuse of EU law has been restrictively interpreted, even in that context. In Freeport plc v Arnoldsson (Case C 98/06) [2008] QB 634 the claimant sought to use article 6.1 of the Judgments Regulation (EC) No 44/2001 (the predecessor of article 8.1) as a means of invoking the jurisdiction of the Swedish courts over a claim against an English company, because a Swedish company was a co defendant. One of the objections raised by the English defendant was that the claimant was making an abusive use of article 6.1, by joining the Swedish company as a vehicle for that purpose, so as to disable the primary rule (then in article 2) requiring the English company to be sued in England. At para 66 of his opinion, Advocate General Mengozzi said that in order to disapply article 6.1 it would be necessary to show not merely that the claimant had joined the Swedish defendant for the sole object of removing one of those defendants from the courts of his own domicile but also that it would be necessary to show, not merely fraudulent or wrongful intent, but that the action bought against the defendant domiciled in the forum member state appears to be unfounded manifestly unfounded in all respects to the point of proving to be contrived or devoid of any real interest for the claimant. Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Akzo Nobel NV (Evonik Degussa GmbH intervening) (Case C 352/13) [2015] QB 906 was another case about an alleged abuse of article 6.1 in an international cartel case against defendants domiciled in a number of member states. It was said that the claimants had deliberately delayed settlement of a claim against a German defendant for the purpose of attracting the jurisdiction of the German courts against co defendants domiciled in other member states, thereby committing an abuse of article 6.1. Advocate General Jskinen advised, at para 84 of his opinion, that: In accordance with the courts consistent case law, the rule [on jurisdiction laid down in article 6(1) of the Brussels I Regulation] cannot be interpreted in such a way as to allow a plaintiff to make a claim against a number of defendants for the sole purpose of removing one of them from the jurisdiction of the courts of the member state in which that defendant is domiciled (my emphasis). In its judgment, the Court of Justice expressly affirmed that opinion in para 27, adding at para 33 that in the context of cartel cases nothing short of collusion between the claimant and the anchor defendant would be sufficient to engage the abuse of law principle. Those decisions of the Court of Justice show that, even before the Freeport case, there was an established line of authority which limited the use of the abuse of EU law principle as a means of circumventing article 6 (now article 8) to cases where the ability to sue a defendant otherwise than in the member state of its domicile was the sole purpose of the joinder of the anchor defendant. Even though there appears to be no authority directly upon abuse of EU law in relation to article 4 itself (or its predecessors), the need to construe any express or implied derogation from article 4 restrictively would appear to make the position a fortiori in relation to article 4, as indeed the judge himself held. But the matter does not stop there. Such jurisprudence as there is about abuse of EU law in relation to jurisdiction suggests that the abuse of law doctrine is limited to the collusive invocation of one EU principle so as improperly to subvert another. In the present case the position is quite different. The complaint is that article 4 is being used as a means of circumventing or misusing the English national regime for the identification of its international jurisdiction over persons not domiciled in any member state: ie the forum conveniens jurisprudence and, specifically, the necessary or proper party gateway. This complaint forms a central theme in the appellants submissions not only about abuse of EU law, but also about the necessary or proper party gateway itself. It is worth close examination at this stage because, to the extent that it is well founded, it raises the question whether the remedy (if any) for its adverse consequences is to be found in EU law or in the English private international law traditionally called the forum conveniens doctrine. Prior to Owusu v Jackson (although, as is now recognised, illegitimately once the UK had become a member state) the English courts took a two handed approach to any attempt to use the ability to serve an anchor defendant (domiciled in England) as of right, coupled with invocation of the necessary or proper party gateway as the basis for obtaining permission to serve a foreign defendant out of the jurisdiction in cases where, leaving aside the risk of irreconcilable judgments, the natural forum was the jurisdiction where the foreign defendant was domiciled. With one hand, the court could refuse (or set aside) permission to serve the foreign defendant out of the jurisdiction. With the other hand the court could stay the proceedings against the anchor defendant, in both cases on the basis that the foreign jurisdiction was the forum conveniens (or using the CPR English equivalent, the proper place) for the conduct of the litigation as a whole. By dealing with the claims against both defendants, the English court thereby neatly avoided the risk of irreconcilable judgments or multiplicity of proceedings. Following Owusu v Jackson the English court has one hand tied behind its back. No more can it stay the proceedings against the anchor defendant on forum conveniens grounds. This is the precise ratio of Owusu v Jackson, and the Court of Justice was fully aware of the difficulties which that conclusion would be likely to cause in the traditional exercise of the English courts forum conveniens jurisprudence in such cases. The result is, in a case (such as the present) where the English court is persuaded that, whatever happens to the claim against the foreign defendant, the claimants will in fact continue in England against the anchor defendant, the risk of irreconcilable judgments becomes a formidable, often insuperable, obstacle to the identification of any jurisdiction other than England as the forum conveniens. Thus not only is one of the courts hands tied behind its back, but the other is, in many cases, effectively paralysed. In the context of group litigation about environmental harm, the appellants say that it has the almost inevitable effect that, providing a minimum level of triable issue can be identified against an English incorporated parent, then litigation about environmental harm all around the world can be carried on in England, wherever the immediate cause of the damage arises from the operations of one of that groups overseas subsidiaries. Two consequences flow from that analysis. The first is that, leaving aside those cases where the claimant has no genuine intention to seek a remedy against the anchor defendant, the fact that article 4 fetters and paralyses the English forum conveniens jurisprudence in this way in a necessary or proper party case cannot itself be said to be an abuse of EU law, in a context where those difficulties were expressly recognised by the Court of Justice when providing that forum conveniens arguments could not be used by way of derogation from what is now article 4. The second is that to allow those very real concerns to serve as the basis for an assertion of abuse of EU law would be to erect a forum conveniens argument as the basis for a derogation from article 4, which is the very thing that the Court of Justice held in Owusu v Jackson to be impermissible. In my view, if there is a remedy for this undoubted problem, it lies in an appropriate adjustment of the English forum conveniens jurisprudence, not so as to permit the English court to stay the proceedings against the anchor defendant, if genuinely pursued for a real remedy, but rather to temper the rigour of the need to avoid irreconcilable judgments which has, thus far, served to disable the English court from concluding that any jurisdiction other than its own is the forum conveniens or proper place for the litigation of the claim against the foreign defendant. As will appear, I consider that there is a solution to this difficulty along those lines, where the anchor defendant is prepared to submit to the jurisdiction of the domicile of the foreign defendant in a case where, as here, the foreign jurisdiction would plainly be the proper place, leaving aside the risk of irreconcilable judgments. For those reasons I would resolve the abuse of EU law issue in favour of the claimants, without any need for a reference to the Court of Justice. Real issue to be tried as against Vedanta The single task of the judge under this heading was to decide whether the claim against Vedanta could be disposed of, and rejected, summarily, without the need for a trial. This is because, although Vedanta made no reverse summary judgment application of its own, the assertion by a foreign defendant seeking to set aside permission to serve outside the jurisdiction under the necessary or proper party gateway that the claim against the anchor defendant discloses no real issue to be tried involves, as is now agreed, a summary judgment test: see Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804, per Lord Collins of Mapesbury at para 82. That was a case about the civil procedure rules of the Isle of Man but the Judicial Committee of the Privy Council treated those provisions as in substance no different in their effect from those in the English Civil Procedure Rules: see para 67. Summary judgment disputes arise typically, and real triable issue jurisdiction disputes arise invariably, at a very early stage in the proceedings. In the context of a jurisdiction challenge the court will, typically, have only the claimants pleadings. Proportionality effectively prohibits cross examination and neither party will have had the benefit of disclosure of the opposing partys documents, albeit that in exceptional circumstances a direction for limited specific disclosure may be given: see Rome v Punjab National Bank (No 1) [1989] 2 All ER 136, per Hirst J, para 141 and Flatela Vava v Anglo American South Africa Ltd [2012] EWHC 1969 (QB). No order for limited disclosure was sought or made in the present case. The extent to which the absence of disclosure of defendants documents may impede claimants in demonstrating a triable issue depends of course upon what are said to be the defects in its case. In the present case the critical question is whether Vedanta sufficiently intervened in the management of the Mine owned by its subsidiary KCM to have incurred, itself (rather than by vicarious liability), a common law duty of care to the claimants or, (on the claimants expert evidence), a fault based liability under the Zambian environmental, mining and public health legislation in connection with the escapes of toxic materials from the Mine alleged to have caused the relevant harm. The level of intervention in the management of the Mine requisite to give rise to a duty of care upon Vedanta to persons living, farming and working in the vicinity is (as is agreed) a matter of Zambian law, but the question whether that level of intervention occurred in the present case is a pure question of fact. I make no apology for having suggested during argument that it is blindingly obvious that the proof of that particular pudding would depend heavily upon the contents of documents internal to each of the defendant companies, and upon correspondence and other documents passing between them, currently unavailable to the claimants, but in due course disclosable. This poses a familiar dilemma for judges dealing with applications for summary judgment. On the one hand, the claimant cannot simply say, like Mr Micawber, that some gaping hole in its case may be remedied by something which may turn up on disclosure. The claimant must demonstrate that it has a case which is unsuitable to be determined adversely to it without a trial. On the other, the court cannot ignore reasonable grounds which may be disclosed at the summary judgment stage for believing that a fuller investigation of the facts may add to or alter the evidence relevant to the issue: see Tesco Stores Ltd v Mastercard Inc [2015] EWHC 1145, per Asplin J at para 73. The main thrust of the appellants case under this heading was that a conclusion that Vedanta had incurred a duty of care to the claimants would involve a novel and controversial extension of the boundaries of the tort of negligence, beyond any established category, calling for a cautious incremental approach by analogy with established categories, which therefore required a detailed investigation of the claimants case, which neither the judge nor the Court of Appeal carried out. It was submitted therefore that this court needed to carry out that detailed analysis. For that purpose Mr Charles Gibson QC for KCM undertook, mainly in writing, a thorough review of the appellants published documents describing their relationship, and Mr Richard Hermer QC for the claimants responded in kind, albeit to some extent under protest that this was not an exercise which this court ought to undertake. It might be thought that an assertion that the claim against Vedanta raised a novel and controversial issue in the common law of negligence made it inherently unsuitable for summary determination. It is well settled that difficult issues of law of that kind are best resolved once all the facts have been ascertained at a trial, rather than upon the necessarily abbreviated and hypothetical basis of pleadings or assumed facts. The appellants submission that this case involves the assertion of a new category of common law negligence liability arises from the fact that, although the claimants chose to plead their case by seeking to fit its alleged facts within a series of four indicia given by the Court of Appeal in Chandler v Cape plc [2012] 1 WLR 3111, it was submitted that this was by no means a Chandler type of case. It may, like the claim in the Chandler case, loosely be categorised as a claim that a parent company has incurred a common law duty of care to persons (in this case neighbours rather than employees) harmed by the activities of one of its subsidiaries. But the liability of parent companies in relation to the activities of their subsidiaries is not, of itself, a distinct category of liability in common law negligence. Direct or indirect ownership by one company of all or a majority of the shares of another company (which is the irreducible essence of a parent/subsidiary relationship) may enable the parent to take control of the management of the operations of the business or of land owned by the subsidiary, but it does not impose any duty upon the parent to do so, whether owed to the subsidiary or, a fortiori, to anyone else. Everything depends on the extent to which, and the way in which, the parent availed itself of the opportunity to take over, intervene in, control, supervise or advise the management of the relevant operations (including land use) of the subsidiary. All that the existence of a parent subsidiary relationship demonstrates is that the parent had such an opportunity. Mr Gibson and Mr Hermer were eventually ad idem in commending to the court the pithy and in my view correct summary of this point by Sales LJ in AAA v Unilever plc [2018] EWCA Civ 1532, para 36: There is no special doctrine in the law of tort of legal responsibility on the part of a parent company in relation to the activities of its subsidiary, vis vis persons affected by those activities. Parent and subsidiary are separate legal persons, each with responsibility for their own separate activities. A parent company will only be found to be subject to a duty of care in relation to an activity of its subsidiary if ordinary, general principles of the law of tort regarding the imposition of a duty of care on the part of the parent in favour of a claimant are satisfied in the particular case. The legal principles are the same as would apply in relation to the question whether any third party (such as a consultant giving advice to the subsidiary) was subject to a duty of care in tort owed to a claimant dealing with the subsidiary. Helpful guidance as to relevant considerations was given in Chandler v Cape plc; but that case did not lay down a separate test, distinct from general principle, for the imposition of a duty of care in relation to a parent company. He continued, at para 37: Although the legal principles are the same, it may be that on the facts of a particular case a parent company, having greater scope to intervene in the affairs of its subsidiary than another third party might have, has taken action of a kind which is capable of meeting the relevant test for imposition of a duty of care in respect of the parent. He proceeded then to provide typical examples, which included this case, which had already by then been decided by the Court of Appeal. Sales LJ thought that cases where the parent might incur a duty of care to third parties harmed by the activities of the subsidiary would usually fall into two basic types: (i) Where the parent has in substance taken over the management of the relevant activity of the subsidiary in place of or jointly with the subsidiarys own management; (ii) Where the parent has given relevant advice to the subsidiary about how it should manage a particular risk. For my part, I would be reluctant to seek to shoehorn all cases of the parents liability into specific categories of that kind, helpful though they will no doubt often be for the purposes of analysis. There is no limit to the models of management and control which may be put in place within a multinational group of companies. At one end, the parent may be no more than a passive investor in separate businesses carried out by its various direct and indirect subsidiaries. At the other extreme, the parent may carry out a thoroughgoing vertical reorganisation of the groups businesses so that they are, in management terms, carried on as if they were a single commercial undertaking, with boundaries of legal personality and ownership within the group becoming irrelevant, until the onset of insolvency, as happened within the Lehman Brothers group. Mr Gibson sought to extract from the Unilever case and from HRH Emere Godwin Bebe Okpabi v Royal Dutch Shell plc [2018] EWCA Civ 191; [2018] Bus LR 1022, a general principle that a parent could never incur a duty of care in respect of the activities of a particular subsidiary merely by laying down group wide policies and guidelines, and expecting the management of each subsidiary to comply with them. This is, he submitted, all that the evidence thus far deployed in the present case demonstrated about the Vedanta Group. Again, I am not persuaded that there is any such reliable limiting principle. Group guidelines about minimising the environmental impact of inherently dangerous activities, such as mining, may be shown to contain systemic errors which, when implemented as of course by a particular subsidiary, then cause harm to third parties. In the Chandler case, the subsidiary inherited (by taking over a business formerly carried on by the parent) a system for the manufacture of asbestos which created an inherently unsafe system of work for its employees, because it was carried on in factory buildings with open sides, from which harmful asbestos dust could, and did, escape. As a result, and after a full trial, the parent was found to have incurred a duty of care to the employees of its subsidiary, and the result would surely have been the same if the dust had escaped to neighbouring land where third parties worked, lived or enjoyed recreation. It is difficult to see why the parents responsibility would have been diminished if the unsafe system of work, namely the manufacture of asbestos in open sided factories, had formed part of a group wide policy and had been applied by asbestos manufacturing subsidiaries around the world. Even where group wide policies do not of themselves give rise to such a duty of care to third parties, they may do so if the parent does not merely proclaim them, but takes active steps, by training, supervision and enforcement, to see that they are implemented by relevant subsidiaries. Similarly, it seems to me that the parent may incur the relevant responsibility to third parties if, in published materials, it holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not in fact do so. In such circumstances its very omission may constitute the abdication of a responsibility which it has publicly undertaken. Once it is recognised that, for these purposes, there is nothing special or conclusive about the bare parent/subsidiary relationship, it is apparent that the general principles which determine whether A owes a duty of care to C in respect of the harmful activities of B are not novel at all. They may easily be traced back as far as the decision of the House of Lords in Dorset Yacht Co Ltd v Home Office [1970] AC 1004, in which the negligent discharge by the Home Office of its responsibility to supervise Borstal boys working on Brownsea Island in Poole Harbour led to seven of them escaping and causing serious damage to moored yachts in the vicinity, including one owned by the plaintiff. The essence of the claimants case against Vedanta is that it exercised a sufficiently high level of supervision and control of the activities at the Mine, with sufficient knowledge of the propensity of those activities to cause toxic escapes into surrounding watercourses, as to incur a duty of care to the claimants. In the lengthy Particulars of Claim (in which this allegation of duty of care, together with its particulars, occupied 13 pages) the claimants make copious reference, including quoted highlights, to material published by Vedanta in which it asserted its responsibility for the establishment of appropriate group wide environmental control and sustainability standards, for their implementation throughout the group by training, and for their monitoring and enforcement. The claimants have exhibited the underlying published materials to witness statements, and relied, in addition, upon a management services agreement between Vedanta and KCM and a witness statement of a Mr Kakengela, a middle manager of KCM who gave evidence about changes in the mode of management of the Mine after KCM became part of the Vedanta Group. The judges approach to this issue may be summarised as follows. First, he accepted that it was arguable that the Zambian courts would identify the relevant principles of Zambian common law in accordance with those established in England. It is now common ground that he was entitled on the evidence to do so. Secondly, he accepted the invitation of counsel on both sides to treat Caparo Industries plc v Dickman [1990] 2 AC 605, and its three ingredients of foreseeability, proximity and reasonableness, as the starting point. This assumed, contrary to my view, that he was dealing with a novel category of common law negligence liability, but he can hardly be criticised for having done so in the light of the parties joint invitation. Thirdly he was guided by the claimants own pleaded case to focus upon the question whether the indicia in the Chandler case were satisfied. In my view, and that of the Court of Appeal in this case, the Chandler indicia are no more than particular examples of circumstances in which a duty of care may affect a parent. They were so described by Arden LJ when setting them out in the Chandler case. Although this if anything imposed an unnecessary straitjacket, both upon the claimants and the judge, it did not lead to the identification of a wider basis in law for the recognition of the relevant parental duty of care than that which, in my view, the law actually provides, by reference to basic principle. Next, the judge reminded himself, correctly in my view, that the answer to the question whether Vedanta incurred a duty of care to the claimants was likely to depend upon a careful examination of materials produced only on disclosure, and in particular upon documents held by Vedanta: see para 118. He cautioned himself against embarking on any sort of mini trial. At para 119 he said this: In the light of that view, it is unnecessary for me to identify in any detail the evidence [on] which the claimants rely in support of their case that Vedanta, as the parent company, owed a relevant duty of care. He then identified in four short sub paragraphs the particular material which supported his view that the claimants case was arguable. They included part of the published material, namely a report entitled Embedding Sustainability which, he said, stressed that the oversight of all Vedantas subsidiaries rested with the board of Vedanta itself, made particular reference to problems with discharges into water and to the particular problems arising at the Mine. He relied upon the management services agreement between Vedanta and KCM to which I have referred, upon a decision of the Irish High Court about the group (Elmes v Vedanta Lisheen Mining Ltd [2014] IEHC 73) and upon the witness statement of Mr Kakengela. He concluded by recognising the need for a cautious approach to the relevant evidence filed by KCMs principal witness Mr Ndulo, whose credibility he said had been subject to serious adverse comment (including a finding of dishonesty) by a Commercial Court judge in an earlier case: see U & M Mining Zambia Ltd v Konkola Copper Mines plc (No 3) [2014] EWHC 3250 (Comm). For its part the Court of Appeal followed a broadly similar course, while reminding itself that the Chandler indicia were no more than examples, and making a slightly different selection from the voluminous evidence of those parts of Vedantas published statements indicative at least of an arguable case for having undertaken a sufficiently close intervention into the operation of the Mine to attract the requisite duty of care. In my view the appellants primary submission under this heading, that the judge and the Court of Appeal failed to apply sufficient rigour to their analysis of the claimants pleadings and evidence on this question, fails in limine. This was not a case of the assertion, for the first time, of a novel and controversial new category of case for the recognition of a common law duty of care, and it therefore required no added level of rigorous analysis beyond that appropriate to any summary judgment application in a relatively complex case. Nor does the judges judgment disclose any lack of appropriate rigour. The question as to triable issue as against Vedanta was one of a significantly larger number of contentious issues than those which have survived in this court. The reason which the judge gave for the relative brevity of his analysis of the underlying materials in para 119 of his judgment said nothing about the depth and rigour of his own review of those materials. He was merely seeking to explain why, in what was necessarily a long and detailed judgment, having formed a clear view that the case against Vedanta was arguable, it was unnecessary to burden his judgment with a lengthy and detailed description of his own analysis. For the reasons I have already given, his legal analysis may have departed slightly from the ideal, but only in respects in which either he followed the parties joint invitation, or by imposing a straitjacket derived from the Chandler case which, if anything, increased rather than reduced the claimants burden in demonstrating a triable issue. But in that respect those imperfections were largely cleared up by the Court of Appeal which, rightly in my view, recognised that they did not undermine the judges conclusion. This court has, again, been taken at length through the relevant underlying materials. For my part, if conducting the analysis afresh, I might have been less persuaded than were either the judge or the Court of Appeal by the management services agreement between the appellants, or by the evidence of Mr Kakengela. But I regard the published materials in which Vedanta may fairly be said to have asserted its own assumption of responsibility for the maintenance of proper standards of environmental control over the activities of its subsidiaries, and in particular the operations at the Mine, and not merely to have laid down but also implemented those standards by training, monitoring and enforcement, as sufficient on their own to show that it is well arguable that a sufficient level of intervention by Vedanta in the conduct of operations at the Mine may be demonstrable at trial, after full disclosure of the relevant internal documents of Vedanta and KCM, and of communications passing between them. It matters not whether this court would have reached the same view as did the judge about triable issue. It is sufficient that, for the reasons which I have given, there was material upon which the judge could properly do so, and that his assessment was not vitiated by any error of law. Breach of statutory duty by Vedanta The claimants plead that, regardless whether Vedanta owed any common law duty of care to them, its intervention in the operation of the Mine caused it to commit breaches of duties imposed by Zambian statutes, even though KCM was the sole licensed operator of the Mine. They are the Mines and Minerals Development Act 2008, the Environmental Management Act 2011 and the Environmental Protection and Pollution Control Act 1990. Generally speaking they impose strict liability on KCM but, according to the opinion of the claimants Zambian law expert, they also impose a fault based liability on a wider range of persons. For example, section 4 of the Environmental Management Act 2011 enables the court to compel the person responsible for any environmental degradation to restore the environment to its status quo ante and to provide compensation to any victim for the harm caused. In paras 91 and following of the Particulars of Claim the same facts are repeated as are relied upon for the assertion of a common law duty of care against Vedanta by the repeated use of this rubric: In the light of the matters pleaded above and the First Defendants direction and control over the operations of the Second Defendant I must admit having some difficulty with the concept of a fault based liability which does not depend upon the existence of a prior legal duty to take care. Nonetheless, it is reasonably clear from the claimants Zambian law experts evidence (which for the purposes of testing an arguable case it is agreed must be accepted, although vigorously challenged) that substantially the same inquiry as to the extent of Vedantas intervention in the operation of the Mine is required for the purpose of establishing breach by it of statutory duty, as is required for the identification of a common law duty of care to the claimants. It follows that no useful purpose is served by a minute examination of issues about that statutory duty. Furthermore, once it is concluded that there is no basis for going behind the judges conclusion that the claimants had an arguable case in common law against Vedanta, the question whether or not the claimants have an arguable statutory claim as well can make no difference to the outcome of this appeal. For much the same reasons, both the judge and the Court of Appeal dealt with the statutory basis of claim with commendable brevity. Is England the proper place in which to bring the claim against KCM? important question of law. CPR 6.37(3) provides that: I have found this to be the most difficult issue in this appeal. It does raise an The court will not give permission [to serve the claim form out of the jurisdiction] unless satisfied that England and Wales is the proper place in which to bring the claim. (my emphasis) The italicised phrase is the latest of a series of attempts by English lawyers to label a long standing concept. It has previously been labelled forum conveniens and appropriate forum, but the changes in language have more to do with the Civil Procedure Rules requirement to abjure Latin, and to express procedural rules and concepts in plain English, than with any intention to change the underlying meaning in any way. The best known fleshed out description of the concept is to be found in Lord Goff of Chieveleys famous speech in the Spiliada case, summarised much more recently by Lord Collins in the Altimo case at para 88 as follows: The task of the court is to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice; That concept generally requires a summary examination of connecting factors between the case and one or more jurisdictions in which it could be litigated. Those include matters of practical convenience such as accessibility to courts for parties and witnesses and the availability of a common language so as to minimise the expense and potential for distortion involved in translation of evidence. Although they are important, they are not necessarily conclusive. Connecting factors also include matters such as the system of law which will be applied to decide the issues, the place where the wrongful act or omission occurred and the place where the harm occurred. Thus far, the search for these connecting factors gives rise to no difficult issues of principle, even though they may not all point in the same direction. The problems thrown up by this appeal all arise from the combination of two factors. The first is that the case involves multiple defendants domiciled in different jurisdictions. The second is that, following Owusu v Jackson, the court is disabled from the exercise of its traditional common law power to stay the proceedings against the domiciled anchor defendant by reason of article 4: see paras 23 to 41 above. There can be no doubt that, when Lord Goff originally formulated the concept quoted above, he would have regarded the phrase in which the case can be suitably tried for the interest of all the parties as referring to the case as a whole, and therefore as including the anchor defendant among the parties. Although the persuasive burden was reversed, as between permission to serve out against the foreign defendant and the stay of proceedings against the anchor defendant, the court was addressing a single piece of multi defendant litigation and seeking to decide where it should, as a whole, be tried. The concept behind the phrases the forum and the proper place is that the court is looking for a single jurisdiction in which the claims against all the defendants may most suitably be tried. The Altimo case also involved multiple defendants. Although it was decided after Owusu v Jackson, it concerned the international jurisdiction of the courts of the Isle of Man, so that the particular problems thrown up by this appeal did not arise. An unspoken assumption behind that formulation of the concept of forum conveniens or proper place, may have been (prior to Owusu v Jackson) that a jurisdiction in which the claim simply could not be tried against some of the multiple defendants could not qualify as the proper place, because the consequence of trial there against only some of the defendants would risk multiplicity of proceedings about the same issues, and inconsistent judgments. But the cases in which this risk has been expressly addressed tend to show that it is only one factor, albeit a very important factor indeed, in the evaluative task of identifying the proper place. For example, in Socit Commerciale de Rassurance v Eras International Ltd (The Eras Eil Actions) [1992] 1 Lloyds Rep 570, Mustill LJ said this, at p 591: in practice the factors which make the party served a necessary or proper party will also weigh heavily in favour of granting leave to make the foreigner a party, although they will not be conclusive. In cases where the court has found that, in practice, the claimants will in any event continue against the anchor defendant in England, the avoidance of irreconcilable judgments has frequently been found to be decisive in favour of England as the proper place, even in cases where all the other connecting factors appeared to favour a foreign jurisdiction: see eg OJSC VTB Bank v Parline Ltd [2013] EWHC 3538 (Comm), per Leggatt J at para 16. That is a fair description of the judges reasoning in the present case. Having found that, looking at the matter as between the claimants and KCM, all the connecting factors pointed towards Zambia, the judge concluded that, factoring in the closely related claim against Vedanta, which he found as a matter of fact that the claimants were likely to pursue in England in any event, the risk of irreconcilable judgments arising from separate proceedings in different jurisdictions against each defendant was decisive in identifying England as the proper place: see paras 160 to 168. He said that: The alternative two trials on opposite sides of the world on precisely the same facts and events is unthinkable. It is obvious from his analysis (assuming that substantial justice could be obtained in Zambia) that, had the English court retained its jurisdiction to stay the proceedings as against Vedanta, as it was thought it did prior to Owusu v Jackson, the judge would have done so, and thereby ensured that the case was brought to trial against both defendants in Zambia. The appellants submitted that the judges approach took insufficient account of the fact that the language of CPR 6.37(3) requires the court to be satisfied that England and Wales is the proper place in which to bring the claim, rather than the proper place for trial of the case as a whole. By the claim it was submitted that the rule meant only the claim against the foreign defendant. It is evident that, if the judge had confined himself to that analysis, he would have set aside service against KCM, subject to the substantial justice issue. The appellants contrasted the wording of the predecessor rule, RSC Order 11 rule 4(2) which provided that: No such permission shall be granted unless it shall be made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction under this Order. (my emphasis) I have not been persuaded that this change of language from the case to the claim was intended to effect any change in the previously clearly stated requirement for the court to consider the proper place for the case as a whole. In particular, the phrase the claim is used in CPR Practice Direction 6B paragraph 3.1(3) in a way which suggests that the foreign defendant must be a necessary or proper party to that claim, which is the claim which has been or will be served on the anchor defendant. I have however been much more troubled by the absence of any particular focus by the judge upon the fact that, in this case, the anchor defendant, Vedanta, had by the time of the hearing offered to submit to the jurisdiction of the Zambian courts, so that the whole case could be tried there. This did not, of course, prevent the claimants from continuing against Vedanta in England, nor could it give rise to any basis for displacing article 4 as conferring a right to do so upon the claimants. But it does lead to this consequence, namely that the reason why the parallel pursuit of a claim in England against Vedanta and in Zambia against KCM would give rise to a risk of irreconcilable judgments is because the claimants have chosen to exercise that right to continue against Vedanta in England, rather than because Zambia is not an available forum for the pursuit of the claim against both defendants. In this case it is the claimants rather than the defendants who claim that the risk of irreconcilable judgments would be prejudicial to them. Why (it may be asked) should that risk be a decisive factor in the identification of the proper place, when it is a factor which the claimants, having a choice, have brought upon themselves? Although this is not a question which the judge addressed in terms, he plainly regarded the OJSC VTB Bank case as in substance indistinguishable from this case, and there is to be found an analysis of that very question by Leggatt J, at paras 8 to 10: 8. The two other arguments on which Mr Moverley Smith places greater weight are, first, an argument that it is a matter of choice on the claimants part to bring the proceedings against the first and third defendants here. Those defendants, he says, could equally well have been sued in Russia. There is no evidence before the court that that is the case, but I am prepared to assume for the purposes of argument today that it is the case, and in any event Mr Moverley Smith has confirmed, albeit only in the course of his oral submissions, that if necessary the first and third defendants will give undertakings to submit to the jurisdiction of the Russian courts. 9. The argument, therefore, is, in substance, that although the claimant has chosen to sue the first and third defendants in this country, it has an alternative forum available, a forum which is much more convenient when one considers all the connecting factors, and that if the claimant chooses still to pursue claims against the first and third defendants in England even if unsuccessful in joining the second defendant to those claims so that the second defendant can only be pursued in Russia, then that is a choice which it has made, and the fact that it is a matter of choice negates, or substantially diminishes, the weight that would otherwise be given to the importance and desirability of avoiding duplication of proceedings and the risk of inconsistent judgments. 10. I see the force of that point but it does not seem to me to answer the fact that it is a matter of entitlement on the claimants part to sue the first and third defendants in England. There is no reason why the claimant should be expected or required to relinquish that right in order to avoid duplication of proceedings. Rather, it seems to me that the existence of that right and the fact that it is being exercised is the starting point and the background against which I ought to consider the question of whether England is also the appropriate forum for the claim against the second defendant. Coulson J was, in the present case, no doubt aware that Vedanta had made the same offer as had been made by the anchor defendant before Leggatt J to submit to the jurisdiction of the relevant foreign court, but the question is whether Leggatt Js analysis is or is not right in principle. If it is, then I consider that the judges analysis of the proper place question in the present case cannot be faulted. But if it is not, then there is a need to consider whether the force of the risk of irreconcilable judgments ought to be either eliminated or at least reduced in the balancing of all relevant factors, below a level which the judge regarded as decisive. Mr Gibson submitted that, if Leggatt Js analysis is right, then the risk of irreconcilable judgments is likely to be decisive in every case where the claimants have a right to sue the anchor defendant in England under article 4, regardless of the strength of the other connecting factors with the foreign jurisdiction. It would, he said, be hard to imagine stronger connecting factors than those in either the OJSC VTB Bank case or in this case, and I am inclined to agree with him. The result would be, as outlined in paras 38 to 40 above, that the English court would not merely have one hand tied behind its back because of its inability to stay the proceedings against the anchor defendant, but the other hand paralysed by the almost inevitable priority to be given to the risk of irreconcilable judgments, where claimants chose to exercise their right to continue against the anchor defendant in England. After anxious consideration, I have come to the conclusion that Leggatt Js analysis of this point, followed by the judge, is wrong. At the heart of it lies the proposition that, because a claimant has a right to sue the anchor defendant in England, there is no reason why the claimant should be expected or required to relinquish that right in order to avoid duplication of proceedings. In my judgment, there is good reason why the claimants in the present case should have to make that choice, always assuming that substantial justice is available in Zambia (which is a necessary but hypothetical predicate for the whole of the analysis of this issue). There is nothing in article 4 which can be interpreted as being intended to confer upon claimants a right to bring proceedings against an EU domiciliary in the member state of its domicile in such a way that avoids incurring the risk of irreconcilable judgments. On the contrary, article 4 is, as was emphasised in Owusu v Jackson, blind to considerations of that kind. The mitigation of that risk is available in a purely intra EU context under article 8.1 (where that risk is expressly recognised). But it is unavailable where the related defendant is (as here) domiciled outside any of the member states. Looking at the matter from an intra member states perspective, a person wishing to bring related claims against a number of defendants which, if litigated separately, would give rise to a risk of irreconcilable judgments, has a choice. The claimant may bring separate proceedings against each related defendant in the member state of that defendants domicile, thereby incurring a risk of irreconcilable judgments. Or the claimant may bring a single set of proceedings against all the defendants in the member state of the domicile of only one of them, so as to avoid that risk. That choice is what article 8.1 expressly permits. If the risk of irreconcilable judgments is one which, as in the present case, exists to the prejudice only of the claimants, I can see no possible reason why a right to sue in England under article 4 should not give rise to the same choice, where the alternative jurisdiction lies outside that of the member states, in a place where the claimant may sue all the defendants, not because of article 8.1, but because they are all prepared to submit to that jurisdiction. The alternative view (as expressed by Leggatt J) that the right conferred by article 4 should not expose the claimants to the need to make such a choice would appear to convert the right conferred by article 4 to an altogether higher level of priority, where the alternative forum lies outside that of the member states, than it does where the alternative forum lies inside, under article 8. In short, if the article 4 right is not a trump card for the purpose of avoiding irreconcilable judgments within the confines of the member states, why should it become a trump card outside those confines? The recognition that claimants seeking to avail themselves of their article 4 rights to sue an anchor defendant are nonetheless exposed to a choice whether to do so at the risk of irreconcilable judgments, even in cases where article 8 is not available, but another proper, convenient or natural forum is available for the pursuit of the case against all the defendants is, to my mind, the answer to the conundrum posed in para 40 above. It does not in any way bring into play forum conveniens considerations as a reason for denying the claimants access to the jurisdiction of England as a member state, against the anchor defendant. It simply exposes the claimants to the same choice, whether or not to avoid the risk of irreconcilable judgments, as is presented by the combination of article 4 and article 8 in an intra EU context. That analysis does not mean, when the court comes to apply its national rules of private international law to the question whether to permit service out of the jurisdiction upon KCM, that the risk of irreconcilable judgments is thereby altogether removed as a relevant factor. But it does in my view mean that it ceases to be a trump card, and that the basis upon which the judge, following Leggatt J in the OJSC VTB Bank case, regarded it as decisive, involved an error of principle. Since the Court of Appeal appears to have adopted the same approach as the judge on this issue, I would regard it as incumbent upon this court to carry out that balancing of connecting factors and risk of irreconcilable judgments afresh. Like the judge, it seems to me sensible first to do so without regard to any risk that the claimants would not obtain substantial justice if required to proceed, at least against KCM, in Zambia. It is unnecessary to do more than barely summarise the connecting factors with Zambia which led the judge to the conclusion that, putting aside the risk of irreconcilable judgments, Zambia was overwhelmingly the proper place for the claim to be tried. He described those factors as relevant to a trial as between the claimants and KCM, but the only factor to the contrary which he identified for the purposes of a notional trial as between the claimants and Vedanta was the risk of irreconcilable judgments. In fact, almost all the connecting factors with Zambia identified by the judge are equally applicable to the case as a whole (ie as against KCM and Vedanta). In summary: i) The allegedly wrongful acts or omissions occurred primarily in Zambia. This is plainly true of the claim against KCM, but since the liability of Vedanta depends mainly upon the extent to which it intervened in the operation of the Mine, it is likely to be true of Vedanta as well. ii) The causative link between the allegedly negligent operation of the Mine and the damage which ensued is of course the escape of noxious substances into waterways, which also occurred within Zambia. iii) The Mine was operated (whether by KCM alone, or by KCM and Vedanta together, as the claimants allege) pursuant to a Zambian mining licence and subject to Zambian legislation. In any event, it is common ground that all the applicable law is Zambian, even if that country may prove to follow the common law of England and Wales in material respects. iv) The claimants are all poor persons who would have real difficulty travelling to England to give evidence, for example of their injuries, or of the damage to their land and livelihoods. Although English is an official language in Zambia, many of the claimants only speak a local dialect which would require translation in order to be understood by an English judge or advocate, but not by their Zambian equivalents. v) KCMs witnesses of fact are all based in Zambia. They far outnumber the potential witnesses employed by Vedanta, some (but by no means all) of whom may be supposed to be domiciled in England. vi) Although relevant disclosable documents will be likely to be found in England and in Zambia (in the possession or control of Vedanta and KCM respectively), many of KCMs documents would, like the evidence of their witnesses, require translation for use in an English court, but not in a Zambian court, which has the considerable advantage in this context of being effectively bilingual. vii) All the regulatory and testing records and reports relevant to the alleged emissions from the Mine are likely to be based in Zambia, as is the responsible regulator. viii) Against all those factors it may, as already noted, be the case that significant relevant documents are located in England. In an age when documents may be scanned (if not already in electronic form) and then transmitted easily and cheaply round the world, this does not seem to me to be a powerful factor. Some of the relevant conduct which the claimants may allege against Vedanta or upon which Vedanta may wish to rely by way of defence, may well have occurred in England, for example at board meetings of Vedanta. But its relatively small number of employees are likely to find it much easier to travel to Zambia than their counterparts in KCM, let alone the claimants themselves, would find it for the purposes of travel to England, if only because of the enormous disparity in the number who would be required to travel in each case. ix) A judgment of the Zambian court would be recognisable and enforceable in England, against Vedanta. Zambian judgments are enforceable in England under Part II of the Administration of Justice Act 1920. Zambia is specifically listed as a relevant Commonwealth jurisdiction for the purposes of the 1920 Act by the Reciprocal Enforcement of Judgments (Administration of Justice Act 1920, Part II) (Consolidation) Order (SI 1984/129). I would not ignore, or downplay, the mitigation of those factors which good case management of an English claim might be able to achieve. For example, as has happened in the past, the English judge may arrange for sittings in Zambia, for Zambian evidence to be taken by video conference, and for a Zambian court room or building to be continuously available to the claimants and the Zambian public to listen to and to view on screen those parts of the trial being conducted in England. As already noted, even if the volume of documents located in Zambia greatly exceeds those located in England (as is likely), modern facilities for their transmission should, to a considerable extent, reduce the inconvenience which might otherwise arise from their current location. In conclusion, it is sensible to stand back and look at the matter in the round. This case seeks compensation for a large number of extremely poor Zambian residents for negligence or breach of Zambian statutory duty in connection with the escape within Zambia of noxious substances arising in connection with the operation of a Zambian mine. If substantial justice was available to the parties in Zambia as it is in England, it would offend the common sense of all reasonable observers to think that the proper place for this litigation to be conducted was England, if the risk of irreconcilable judgments arose purely from the claimants choice to proceed against one of the defendants in England rather than, as is available to them, against both of them in Zambia. For those reasons I would have concluded that the claimants had failed to demonstrate that England is the proper place for the trial of their claims against these defendants, having regard to the interests of the parties and the ends of justice. Substantial justice Even if the court concludes (as I would have in the present case) that a foreign jurisdiction is the proper place in which the case should be tried, the court may nonetheless permit (or refuse to set aside) service of English proceedings on the foreign defendant if satisfied, by cogent evidence, that there is a real risk that substantial justice will not be obtainable in that foreign jurisdiction. The same test was, prior to Owusu v Jackson, applicable in the context of an application for a stay of English proceedings against a defendant served within the jurisdiction. The question whether there is a real risk that substantial justice will be unobtainable is generally treated as separate and distinct from the balancing of the connecting factors which lies at the heart of the issue as to proper place, but that is more because it calls for a separate and careful analysis of distinctly different evidence than because it is an inherently different question. If there is a real risk of the denial of substantial justice in a particular jurisdiction, then it seems to me obvious that it is unlikely to be a forum in which the case can be tried most suitably for the interests of the parties and the ends of justice. In the present case the judge described this as an access to justice issue. By this he meant that the real risk (in his view a probability) that substantial justice would be unavailable in Zambia had nothing to do with any lack of independence or competence in its judiciary or any lack of a fair civil procedure suitable for handling large group claims. Rather, it derived essentially from two factors: first, the practicable impossibility of funding such group claims where the claimants were all in extreme poverty; and secondly, the absence within Zambia of sufficiently substantial and suitably experienced legal teams to enable litigation of this size and complexity to be prosecuted effectively, in particular against a defendant (KCM) with a track record which suggested that it would prove an obdurate opponent. The judge acknowledged that in the large amount of evidence and lengthy argument presented on this issue there was material going both ways, giving rise to factual issues some of which he had to resolve, but others of which he could not resolve without a full trial. Nonetheless he concluded not merely that there was a real risk but a probability that the claimants would not obtain access to justice so that, in his view, and notwithstanding the need for caution and cogent evidence, this reason for preferring the English to the Zambian jurisdiction was established by a substantial margin beyond the real risk which the law requires. There is no satisfactory substitute for a full reading of the judges careful analysis of this issue, to which he gave his full and detailed attention notwithstanding the fact that he had already concluded, without regard to the access to justice issue, that he should refuse the defendants applications upon the basis that England was the proper place for the trial of the case. I will confine myself to a bare summary of his reasoning, sufficient to make sense of the analysis which follows. The judge found that the claimants were at the poorer end of the poverty scale in one of the poorest countries of the world, that they had no sufficient resources of their own (even as a large group) with which to fund the litigation themselves, that they would not obtain legal aid for this claim and nor could it be funded by a Conditional Fee Agreement (CFA) because CFAs are unlawful in Zambia. Nonetheless he acknowledged that there was some evidence that lawyers would be prepared to pursue such claims on the basis of the up front payment of a modest deposit to fund disbursements, but otherwise on the basis that the lawyers would recover payment for their work from costs ordered to be paid (without a success fee) from the defendants, if the claim succeeded. He acknowledged also that the evidence did not demonstrate that no lawyers would be prepared to offer to undertake the litigation on that basis, but rather that those who might offer would simply lack the resources, in terms of numbers in the legal team, or experience, with which to be able to conduct complex litigation of this kind with the requisite degree of competence and efficiency. Finally, he acknowledged that there was some evidence of group environmental litigation of a similar kind being conducted before the Zambian courts, but he considered, upon the basis of detailed evidence about those cases that they supported, rather than detracted from, a view that the Zambian legal profession lacked the resources and experience with which to conduct such litigation successfully. As the Court of Appeal observed when affirming the judges decision on this issue, the appellants face formidable difficulties in asking any appellate court to overturn this detailed fact finding exercise, by an experienced judge who stated in terms (and there is no reason to doubt) that he had read all the relevant materials and carefully considered the detailed opposing arguments. Nonetheless, and supported by a written intervention by the Attorney General of Zambia, the appellants mounted a full frontal attack on the judges conclusions which, they submitted, this court ought to entertain because of flaws in the judges application of the relevant law. In outline, these were as follows: The judge failed to heed judicial warnings that funding issues will only i) in exceptional cases justify a finding of lack of substantial justice. ii) The judge failed to acknowledge that substantial justice required the claimants to take their forum as they found it. iii) The judge failed to pay due regard to considerations of comity, and a requirement for cogent evidence. I will take those in turn. There are indeed judicial warnings of undoubted authority that the English court should not in this context conclude, otherwise than in exceptional cases, that the absence of a means of funding litigation in the foreign jurisdiction, where such means are available in England, will lead to a real risk of the non availability of substantial justice: see Connelly v RTZ Corpn plc (No 2) [1998] AC 854, 873 per Lord Goff and Lubbe v Cape plc [2000] 1 WLR 1545, 1555 per Lord Bingham of Cornhill. They were in fact both cases in which that hurdle of exceptionality was surmounted, in the first in relation to exposure to radiation at a uranium mine in Namibia and the second in relation to exposure to asbestos from mining and processing in South Africa. The judge plainly had those considerations well in mind, since he regarded the Lubbe case as one of three authorities which set out the relevant law, and Lord Goffs dicta in the Connelly case are quoted in full by Lord Bingham in the Lubbe case. Of course, a judge may cite all the relevant authorities and yet still misapply the law, but in this case the judge came nowhere near treating the absence of particular forms of litigation funding in Zambia, such as legal aid and CFAs, as conclusive. He conducted a searching analysis of all possible forms of funding, and found that most were unavailable but that the one which was in principle available would not attract a legal team which was both prepared to act, and able to do so with the requisite resources and experience. Although the judge did not refer to it expressly, the evidence included the possibility of funding cases of this kind, or the necessary underlying research, by contribution from locally based NGOs, but the absence of reference to a matter of detail in a judgment about an issue which the judge only dealt with for completeness comes nowhere near to demonstrating that he left this evidence out of account. The gist of the appellants second point is that the judges denigration of the accessibility of substantial justice in Zambia was too heavily based upon a comparison between the relatively rudimentary way in which a case of this kind could be litigated in Zambia, and its likely elaborate treatment by well resourced legal teams (in particular on the claimants side) in England. The judge plainly regarded this litigation as both complex and weighty. As an experienced judge of the Technology and Construction Court his assessment deserves respect. It is also in my view objectively justified. In the absence of any admissions from the appellants which might serve to narrow the issues (and there are none), large aspects of the claimants collective and individual claims will depend upon the presentation of expert evidence. They will include identifying the emissions which actually occurred, and their toxicity, establishing whether the system of operation of the Mine (both in its planning and implementation) fell short of that requisite to satisfy a duty of care, tracing the emissions through to watercourses in the vicinity of the claimants, proving (during a considerable period of time) that these emissions caused damage to particular claimants land, business and health, and quantifying (save perhaps in relation to personal injuries) the diminution in the value of business and property thereby caused. Much of that expert work will, from the perspective of the claimants legal team, have to be paid for as disbursements, but it will still need to be supervised by competent and experienced lawyers. As is evident from the decision of the Supreme Court of Zambia in Nyasulu v Konkola Copper Mines plc [2015] ZMSC 33, it will be necessary for each individual claimant to prove both causation and loss, and to value their loss unless (which did not happen in that case and has not been volunteered here) KCM were to agree that issues of that kind could be determined either on the basis of typical claimants or by means of an out of court claims management process. It is of course possible, indeed likely, that the litigation of all those issues in Zambia would, even if funding and the necessary legal resources were available, be undertaken on a simpler and more economical scale than would be likely if undertaken in the Technology and Construction Court by large, sophisticated legal teams, without necessarily depriving the claimants of substantial justice. But the judge did not address this question by way of a comparison between litigation in England and in Zambia. His enquiry was directed to the question whether the unavoidable scale and complexity of this case (wherever litigated) could be undertaken at all with the limited funding and legal resources which the evidence led him to conclude were available within Zambia. His judgment does not therefore disclose the misdirection about the meaning of substantial justice which is suggested by the appellants. Finally, the judges analysis positively demonstrates that he had due regard to considerations of comity and the requirement for cogent evidence. He referred to the need for cogent evidence in express terms, at para 174. He identified the evidence which he found persuasive and quoted from some of it. Cogent evidence does not mean unchallenged evidence. on grounds of comity. At para 198 he said this: It is also evident that the judge was conscious of the need to exercise restraint I am conscious that some of the foregoing paragraphs could be seen as a criticism of the Zambian legal system. I might even be accused of colonial condescension. But that is not the intention or purpose of this part of the judgment. I am not being asked to review the Zambian legal system. I simply have to reach a conclusion on a specific issue, based on the evidence before me. And it seems to me that, doing my best to assess that evidence, I am bound to conclude that the claimants would almost certainly not get access to justice if these claims were pursued in Zambia. My conclusion that the judge did not misdirect himself in law in any of the respects contended for by the appellants is sufficient to dispose of this issue since, otherwise, the appellants case in relation to it is no more or less than a challenge to judicial fact finding. But for completeness I will say something about what appeared to be the strongest point in the appellants challenge. This was that the judge failed to have sufficient regard to the evidence constituted by a series of Zambian cases, comparable in differing extents to this case, in which groups of claimants had managed to litigate issues about pollution and environmental damage all the way to a fair trial and even to a success on liability in the Nyasulu case referred to above. The judge studied each of those cases (of which the Nyasulu case is the most relevant) in some detail and was presented with significant evidence about the underlying reasons why, save for 12 claimants out of 2,000 in that case, the claimants were almost routinely unsuccessful. There was one case against KCM which settled, but there was an issue, which the judge could not decide, as to whether many of the claimants received their share of the settlement sum. It is a sufficient example of the lack of foundation for this factual challenge on appeal to look at the appellants best two examples. In the Nyasulu case, 2,000 claimants joined in group litigation about a discharge from the Mine in 2006 into the Mushishima stream and thereby into the Kafue river. Medical reports evidencing personal injuries were put in evidence only in relation to 12 claimants. The trial judge found in favour of the claimants on liability, and was content to award general damages to all 2,000 claimants on the base of medical evidence about only 12 of them. In the Supreme Court ([2015] ZMSC 33) the judge was upheld on liability but the claim by the remaining 1,989 claimants was dismissed for want of medical evidence to prove that they had suffered any loss. At first sight this might appear to have been a disaster attributable to a difference of view between the first instance and appellate judges, but Coulson J was provided with evidence about how the case had been prepared, both from one of the claimants and from the lawyer who conducted the claimants defence of KCMs appeal in the Supreme Court. The judge was entitled to conclude from that evidence that the reason why so few of the claimants had medical evidence deployed on their behalf was that this would have required funding from the claimants which they could not afford, for disbursements which the lawyers instructed would not have been able to pay for out of their own resources. In Shamilimo v Nitrogen Chemicals of Zambia Ltd (2007/HP/0725), a case about radiation emissions, there was evidence which entitled Coulson J to find, as he did, that this claim failed on causation because the claimants could not fund the necessary expert evidence to prove it. In conclusion therefore, there was in relation to both those cases evidence from which the judge was entitled to conclude that they supported rather than detracted from his overall finding that funding and local legal resources were insufficient to enable the claimants to obtain substantial justice in Zambia. It is irrelevant whether an appellate court might, upon a review of the same evidence, reach a different conclusion, even with the assistance from the Attorney General of Zambia, for which the court is grateful. The result is that the appellants fail on this issue of substantial justice. Conclusion Having rejected the appellants case on abuse of EU law and real triable issue, but having upheld their case on proper place, I would, but for their failure on the issue as to substantial justice, have been minded to allow their appeal. As it is however I consider that this appeal should be dismissed, on the substantial justice issue.
UK-Abs
This is a procedural appeal about the jurisdiction of the English courts in relation to a group tort claim. It concerns alleged toxic emissions from the Nchanga Copper Mine (the Mine) in Zambia. The claimants (the respondents to this appeal) are approximately 1,826 Zambian citizens who live in the Chingola District. They are very poor members of rural farming communities who are reliant on open bodies of water for drinking and irrigation for their crops. They allege that their health and farming activities have been damaged by the discharge of toxic matter from the Mine into those waterways from 2005 onwards. The owner of the Mine is the second defendant, Konkola Copper Mines plc (KCM). KCM is a Zambian company. The first defendant, Vedanta Resources PLC (Vedanta), is KCMs ultimate parent company. It is incorporated and domiciled in the United Kingdom. The Zambian government has a significant minority stake in KCM, but Vedantas published materials state that, in practice, it has the same ultimate control of KCM as it would if it were a wholly owned subsidiary of Vedanta. The claims against the defendants (the appellants to this appeal) are for the torts of negligence and breach of statutory duty. The claims against KCM, as the foreign defendant, are based on its role as the operator of the Mine. The claims against Vedanta rely on its allegedly high level of control and direction over KCMs mining operations and compliance with applicable health, safety and environmental standards. Against Vedanta, the claimants rely on its domicile in England, pursuant to article 4.1 of Regulation (EU) 1215/2012 (Recast Brussels Regulation). Against KCM, the claimants rely on the necessary or proper party gateway for service out of the jurisdiction in paragraph 3.1 of Practice Direction 6B in the Civil Procedure Rules (CPR). The claimants issued the present proceedings in England in July 2015. Vedanta was served within the jurisdiction, while KCM was served out of the jurisdiction, with permission obtained on a without notice application. Both Vedanta and KCM applied to challenge jurisdiction. Coulson J, in the High Court, dismissed that challenge in May 2016. The Court of Appeal dismissed the defendants appeals in October 2017. The defendants appealed to the Supreme Court and the claimants cross appealed. The main issues are: (1) whether it is an abuse of EU law to rely on article 4 of the Recast Brussels Regulation for jurisdiction over Vedanta as anchor defendant so as to make KCM a necessary or proper party; (2) whether the claimants pleaded case and supporting evidence disclose no real triable issue against Vedanta; (3) whether England is the proper place in which to bring the claims; and (4) even if Zambia would otherwise be the proper place, whether there was a real risk that the claimants would not obtain access to substantial justice in the Zambian jurisdiction. Both in the High Court and in the Court of Appeal, the claimants succeeded on all four issues. The Supreme Court dismisses the appeal. Lord Briggs gives the lead judgment, with which all members of the Court agree. The claimants succeed on issues (1), (2) and (4), though not on issue (3). (1) Abuse of EU law: Article 4.1 of the Recast Brussels Regulation confers a right on any claimant (regardless of their domicile) to sue an English domiciled defendant in England irrespective of connecting factors to other jurisdictions [16]. Issue (1) presupposes that there is a real triable issue against Vedanta [17, 26]. Further, the judges finding that Vedanta was sued in England for the genuine purpose of obtaining damages, even though attracting English jurisdiction over KCM was a key contributing factor, is not open to challenge [27]. Any implied exception to the effect of article 4.1 must be construed narrowly [29 30]. The EU case law on abuse of law under article 8.1 (related defendants) is equally restrictive [31 34]. In that context, the test is whether the sole purpose of joining a defendant is to sue them other than in their Member State of domicile [35]. The EU case law also suggests that the abuse of law doctrine is limited to situations where EU law is invoked collusively to subvert other EU provisions [36]. In light of the decision in Owusu v Jackson (C 281/02) [2005] QB 801 (CJEU), arguments based on forum conveniens cannot justify derogating from the primary rule of jurisdiction in article 4.1 [36 40]. The concern about the wide effect of article 4.1 in this case is best addressed under the domestic law on the necessary or proper party gateway [40]. The claimants thus succeed on issue (1) [41]. (2) Real triable issue as against Vedanta: The summary judgment test applies to issue (2) and it falls to be decided without cross examination or disclosure of the opposing partys documents, given the need for proportionality [42 43]. In this case, the question what level of managerial intervention by Vedanta in KCMs operation of the Mine is sufficient to attract liability in negligence is a question for Zambian law, but the question what that level actually was is a pure question of fact [44]. The assertion that the negligence claim against Vedanta raises a novel and controversial legal issue is misplaced, as the liability of parent companies in relation to the activities of their subsidiaries is not, in itself, a distinct category of negligence unsuited to summary determination [49 51, 54]. On the facts, there was sufficient material identified by the judge in support of the view that the claimants case was arguable and the judge made no error of law in assessing this issue, so his decision on the negligence claim must stand [55 62]. Further, as Zambian law requires substantially the same factual inquiry for the breach of statutory duty claim, the judge properly concluded that this claim was also arguable and, in any event, the point is academic [65]. (3) England as the proper place: The domestic law proper place test requires a summary examination of connecting factors to one or more potential jurisdictions [66]. The search is for a single jurisdiction in which the claims against all defendants may most suitably be tried [68]. Importantly, in cases where it was found that the claim(s) against the anchor defendant will be continued in England, the courts have treated the risk of irreconcilable judgments as a decisive factor in favour of England as the proper place for the claim against the non EU defendant as well [70]. The judge in this case applied that approach [71 72]. That was a legal error in circumstances where Vedanta had by the time of the hearing offered to submit to the Zambian jurisdiction, so that the whole case could be tried there [75, 79]. While an offer to submit does not preclude a claim in England against Vedanta alone, it has the effect that a risk of irreconcilable judgments would be the result of the claimants choice to exercise their article 4 right, rather than because Zambia is not an available forum for all the claims [75]. Leggatt Js judgment in OJSC VTB Bank v Parline Ltd [2013] EWHC 3538 (Comm) is overruled on this point since: (1) article 4 is not designed to avoid the risk of irreconcilable judgments; (2) article 8.1 on joinder is limited to the intra EU context and gives claimants a choice to consolidate proceedings in order to avoid that risk; and (3) there is no reason therefore why claimants should not have to make the same choice, merely because the foreign defendant is domiciled outside the EU [79 83]. It does not follow that the risk of irreconcilable judgments is not a relevant factor in this case, but it is no longer a trump card such that the judge made an error of principle in regarding it as decisive [84]. Looking at the relevant connecting factors in the round, Zambia would plainly have been the proper place for this litigation as a whole, provided substantial justice was available to the parties in Zambia [85 87]. The risk of irreconcilable judgments mainly concerns the claimants, and they have the choice to avoid it by suing all the defendants in Zambia, or to incur it by exercising their right to sue Vedanta in England. (4) Substantial justice in Zambia: Even if the court concludes that a foreign jurisdiction is the apparently the proper place, the court may still permit service of English proceedings on the foreign defendant if cogent evidence shows that there is a real risk that substantial justice would not be obtainable in that foreign jurisdiction [88]. In this case, the judge identified access to justice issues in Zambia [89]. It is not in doubt that Zambia has independent judges, courts and civil procedure which would ensure a just trial of large environmental group claims like this one [89]. The issues are twofold. First, the practicable impossibility of funding such group claims where the claimants are all in extreme poverty, because they could not obtain legal aid and because conditional fee agreements (CFAs) are unlawful in Zambia [89 90]. Secondly, the absence within Zambia of sufficiently substantial and suitably experienced legal teams to enable effective litigation of this size and complexity, in particular against a well resourced opponent like KCM [89]. The criticisms that the judge failed in his approach to the access to justice issue are not well founded [92 98]. Overall, the defendants fail on issue (4), which means their success on issue (3) is academic [101 102]. Conduct of litigation on jurisdiction: The court takes the opportunity to warn litigants of the need to conduct jurisdiction disputes in an economical and proportionate manner [6 14].
The appellants in this case are the executors of Mrs Beryl Coulter, who died in Jersey on 9 October 2007, leaving her residuary estate on trust for purposes which are agreed to be exclusively charitable under English law. The appellants were appointed under Mrs Coulters will as the trustees. They were domiciled in Jersey, and the proper law of the trust (the Coulter Trust) was specified in the will as the law of Jersey. The estate included assets in the United Kingdom amounting to 1.7m. At the time of Mrs Coulters death, there was in force a treaty between the United Kingdom and Jersey which included provision for the exchange of information relating to income tax. In 2009 a further treaty (the United Kingdom/Jersey Tax Information Exchange Agreement) came into force, which included provision for the exchange of information relating to inheritance tax. On 1 October 2010 the appellants retired as trustees (but not as executors) and were replaced by a UK resident trustee. On 12 October 2010 the will was amended so as to make the proper law of the trust the law of England and Wales. On 14 February 2014 the Coulter Trust was registered as a charity under the law of England and Wales. Section 23 of the Inheritance Tax Act 1984 (the Inheritance Tax Act) provides for an exemption from inheritance tax in respect of gifts to charities. On 29 May 2013 the respondents, Her Majestys Revenue and Customs (HMRC), determined that Mrs Coulters gift of her residuary estate to the Coulter Trust did not qualify for relief under section 23, as it had not been given to a charity within the meaning of that provision. That conclusion was based on the fact that the Coulter Trust was governed by the law of Jersey as at the date of Mrs Coulters death, and on a construction of section 23 which limited relief to trusts governed by the law of a part of the United Kingdom. On the basis that Jersey was not a part of the United Kingdom for the purposes of section 23, it followed that relief was not available. The amount of inheritance tax due, if relief is not available, is about 567,000. The appellants have appealed against that determination on the basis that it is incompatible with article 56 of the Treaty Establishing the European Community (EC), now article 63 of the Treaty on the Functioning of the European Union (TFEU). As we shall explain, that provision prohibits restrictions on the free movement of capital between EU member states, and between member states and third countries. HMRCs primary response is that article 56 has no application to the facts of this case, on the basis that, although Jersey is not a part of the United Kingdom for the purposes of section 23, a movement of capital between the United Kingdom and Jersey should be regarded as an internal transaction taking place within a single member state. HMRC further argue that the restriction resulting from the adverse treatment of the Coulter Trust is in any event justifiable under EU law, in view of the fact that there was no mutual assistance agreement covering inheritance tax in force between the United Kingdom and Jersey at the date of Mrs Coulters death. The principal issues arising in the appeal are: (1) whether Jersey forms part of the United Kingdom for the purposes of article 56 EC, and, if not, (2) whether the refusal of relief under section 23 of the Inheritance Tax Act in respect of Mrs Coulters gift of her residuary estate to the Coulter Trust is justifiable under EU law. (1) The status of Jersey for the purpose of EU law relating to free movement of capital Article 56 EC (now article 63 TFEU) provides: (1) Within the framework of the provisions set out in this chapter, all restrictions on the movement of capital between member states and between member states and third countries shall be prohibited. (2) Within the framework of the provisions set out in this chapter, all restrictions on payments between member states and between member states and third countries shall be prohibited. It is common ground between the parties that whereas article 56 applies in the United Kingdom, it does not apply in Jersey, in the sense that Jersey is not required to comply with the provisions of article 56. It is also common ground between the parties that article 56 applies to gifts to charities and that the limitation of tax relief on a gift to the Coulter Trust would, if article 56 were engaged, amount to a restriction on the free movement of capital. Since Jersey is not a member state, the gift to the Coulter Trust was not a movement of capital between member states. The issue therefore turns on whether Jersey is to be regarded as a third country for the purposes of article 56. The status of Jersey in domestic constitutional law The relationship between the Channel Islands (which include the Bailiwick of Jersey) and the United Kingdom in domestic constitutional law was considered in some detail in the judgment of Lady Hale in R (Barclay) v Lord Chancellor and Secretary of State for Justice (No 2) (Attorney General of Jersey intervening) [2014] UKSC 54; [2015] AC 276, paras 6 to 18. The Channel Islands are not part of the United Kingdom and have never been British colonies or dependent territories. They are Crown Dependencies which enjoy a unique relationship with the United Kingdom and the Commonwealth through the Crown in the person of the Sovereign. The prerogative powers of the Crown as regards Jersey are exercised by Order in Council. The Channel Islands were originally part of the Duchy of Normandy. At the Norman conquest of England in 1066, the Duke of Normandy became the King of England. When France took possession of continental Normandy in 1204, the Channel Islands retained their allegiance to the King of England. By the Treaty of Paris, 1259 France relinquished any claim to the Channel Islands. The Treaty of Calais, 1360 confirmed that the King of England shall have and hold all the islands which he now holds (Minquiers and Ecrehos case (France v United Kingdom), ICJ Reports 1953, pp 47, 54). The relationship between the Channel Islands and the Crown has continued to observe the distinct laws and ancient customs of the Channel Islands which are rooted in Norman customary law. Successive sovereigns have confirmed by Royal Charter privileges and liberties to Jersey including an independent judicature. Jersey also has its own legislature. Jersey is not an independent state in international law. The United Kingdom Government is responsible for the international relations and the defence of the Channel Islands. Under international law the United Kingdom Government has the power to extend to the Channel Islands the operation of a treaty which the United Kingdom has concluded. The scope of application of EU law Article 29 of the Vienna Convention on the Law of Treaties, 23 May 1969, provides that unless a different intention appears from a treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory. Article 299(1) EC (now article 355 TFEU) makes specific provision for the territorial scope of EU law. It provides that the EC Treaty applies to the EU member states including the United Kingdom of Great Britain and Northern Ireland. The remainder of article 299 then makes special provision for the extent to which EU law applies to a number of countries and territories which have links with EU member states. Article 299(3) provides: The special arrangements for association set out in Part Four of this Treaty shall apply to the overseas countries and territories listed in Annex II to this Treaty. This Treaty shall not apply to those overseas countries and territories having special relations with the United Kingdom of Great Britain and Northern Ireland which are not included in the aforementioned list. Annex II currently lists 21 territories as overseas countries and territories (OCTs). The list does not include the Channel Islands or the Isle of Man. Article 299(4) provides: The provisions of this Treaty shall apply to the European territories for whose external relations a member state is responsible. Article 299(6) makes express provision for the Channel Islands and the Isle of Man. Notwithstanding the preceding paragraphs: (c) this Treaty shall apply to the Channel Islands and the Isle of Man only to the extent necessary to ensure the implementation of the arrangements for those islands set out in the Treaty concerning the accession of new member states to the European Economic Community and to the European Atomic Energy Community signed on 22 January 1972. Further provision is made in additional treaties, such as the various treaties of accession, to give effect to article 299 in each specific case. In the case of the Channel Islands, Protocol 3 to the Treaty of Accession, 22 January 1972 sets out the arrangements for those islands. Article 1(1) provides: The Community rules on customs matters and quantitative restrictions, in particular those of the Act of Accession, shall apply to the Channel Islands and the Isle of Man under the same conditions as they apply to the United Kingdom. In particular, customs duties and charges having equivalent effect between those territories and the Community, as originally constituted and between those territories and the new member states, shall be progressively reduced in accordance with the timetable laid down in articles 32 and 36 of the Act of Accession. The Common Customs Tariff and the ECSC unified tariff shall be progressively applied in accordance with the timetable laid down in articles 39 and 59 of the Act of Accession, and account being taken of articles 109, 110 and 119 of that Act. The reference to quantitative restrictions is to restrictions on the free movement of goods. Article 1(2) makes specific provision in respect of agricultural products and products processed therefrom. Article 3 applies the provisions of the Euratom Treaty to the Channel Islands. The effect of article 6 is that EU rules on free movement of persons within the EU do not apply to Channel Islanders unless they have at any time been ordinarily resident in the United Kingdom for five years or have a British parent or grandparent. The combined effect of article 299(6) EC and Protocol 3 to the Act of Accession is that the rules of EU law relating to the common customs area, including the free movement of goods, apply in Jersey (Jersey Produce Marketing Organisation Ltd v States of Jersey (Case C 293/02) [2006] 1 CMLR 29 (Jersey Produce)). However, save to the extent stated in Protocol 3, other rules of EU law do not apply in Jersey. In particular, EU rules on free movement of capital do not apply in Jersey. (The current EU provisions on the free movement of capital (ie article 56 EC, now article 63 TFEU) were only introduced in the Maastricht Treaty which entered into force in 1994.) The submissions of the parties Article 56 EC will be engaged if the movement of capital between the United Kingdom and Jersey is a movement of capital between member states or between a member state and a third country. On behalf of the appellants, Mr Alan Steinfeld QC submits that it is a movement of capital between a member state and a third country on the basis that Jersey is to be regarded as a third country for the purposes of article 56. That submission was accepted by the Court of Appeal (Lord Briggs, Arden LJ and Green J) in the present case ([2017] EWCA Civ 1584; [2018] 1 WLR 3013). HMRC submit that this is incorrect and that a movement of capital between the United Kingdom and Jersey should be regarded as a transaction internal to a single member state, the United Kingdom. Ms Kelyn Bacon QC, on behalf of HMRC, submits that since Jersey is not a state with its own legal personality, it cannot formally have the status of a third country. It is, instead, a European territory for which the United Kingdom is responsible. While the EU has treated Jersey as having third country status for some specific purposes (see, for example, Decision 2008/393/EU on the adequate protection of personal data in Jersey [2008] OJ L 138/21, recital (5)), there is no categorical answer to the question whether it should be classified as a member state or a third country. Rather, the answer varies on a case by case basis according to the relevant legal framework and taking account of the objectives pursued by the Treaty arrangements for the territory in question. She submits that the question that has not yet been answered by the Court of Justice of the European Union (CJEU) is whether, in respect of a European territory such as Jersey in which the Treaty provisions on the free movement of capital do not apply, a flow of capital between that territory and its own associated member state should also be regarded as a transaction between a member state and a third country, in other words whether it can be considered a third country as against its own member state. She submits that the fact that Jersey is a European territory for whose external relations the United Kingdom is responsible indicates that a movement of capital between the United Kingdom and Jersey should be regarded as an internal transaction taking place within a single member state, in the same way that a movement of capital between London and Edinburgh would be an internal transaction. She accepts, however, that the resolution of this issue is not acte clair and accordingly submits that if it is necessary for this court to decide this issue it should make a preliminary reference to the CJEU. Her Majestys Attorney General for Jersey (the Attorney General) has intervened in the proceedings. On his behalf, Mr Conrad McDonnell submits that the effect of article 299 is that Jersey is a part of the EU for the purposes only of those provisions of EU law which are expressly specified as having effect there, with the result that it must be treated for such purposes as a part of a member state, namely the United Kingdom. He submits, however, that Jersey is not part of the EU for the purposes of those provisions of EU law which, by virtue of article 299, do not have effect there and that, as it is not otherwise part of a member state, it must in this context be considered a third country. Mr McDonnell accepts that article 299 does not expressly state that where and to the extent that provisions of the EC Treaty apply to an overseas territory (article 299(3)) or to a European territory (article 299(4) (6)) that territory is to be treated as part of one of the member states for such purposes. However, he submits that it is only in this way that article 299 can be effective since the relevant substantive provisions of EU law make provision only for the rights of citizens of one of the member states, or for transactions between two member states, or transactions between a member state and a third country. He submits, furthermore, that this is borne out by the logic of the decisions of the CJEU on the territorial scope of the EC Treaty. The jurisprudence of the CJEU It is necessary to consider in some detail the relevant decisions of the Court of Justice on the territorial scope of the EC Treaty. On close examination they can be seen to reveal a clear and consistent approach. In particular, the question whether a territory is to be regarded as a third country is context specific and will depend on whether, under the relevant Treaty of Accession and supplementary measures, the relevant provisions of EU law apply to that territory. Van Der Kooy v Staaatssecretaris van Financien (Case C 181/97) [1999] ECR I 483 concerned the entry into the Netherlands of the motor vessel Joshua from the Netherlands Antilles. At the relevant date article 227 of the EC Treaty (the predecessor of article 299 EC, considered above) defined the area of application of the Treaty by a list of member states which included the Kingdom of the Netherlands. The Netherlands Antilles form part of the Netherlands but, by way of derogation from article 227, had been added to the list of OCTs referred to in article 227(3), to which the general provisions of the Treaty did not apply. The national proceedings raised the question whether the entry of the vessel into the Netherlands was an intra Community transaction in which case it would not have been subject to Value Added Tax under the Sixth Directive. Advocate General Ruiz Jarabo Colomer considered that the Sixth Directive did not allow the entry of goods from an OCT to be classified as an intra Community transaction. It was to be treated as an import. In his view: Those countries and territories, which fall neither within the Community customs area nor within the scope of the Treaty subject to the provisions applicable under the special Association rules in article 226(3) do not constitute the territory of a member state for the purposes of applying VAT. That conclusion, moreover, is consistent with the scheme of the Sixth Directive: if even certain national territories to which the Treaty is, in principle, applicable, are regarded for VAT purposes as third territories, a fortiori the same view must be taken of the OCT, whose links with the Treaty, as such, are less strong than those of the third territories. (at paras 36, 37) The Court of Justice agreed. Under the special arrangements applicable to the OCTs, including the Netherlands Antilles, in the absence of express reference the general provisions of the Treaty did not apply to the OCTs. Consequently, the entry into a member state of goods coming from the Netherlands Antilles cannot be categorised as an intra Community transaction for the purposes of the Sixth Directive, unless a special provision so prescribes. (para 38) A similar conclusion was drawn in Commission of the European Communities v United Kingdom (Case C 30/01) [2003] ECR I 9481. Under article 299(4) EC, the Treaty applies to Gibraltar as it is a Crown Colony for whose external relations the United Kingdom is responsible. However, the UK Act of Accession provided that certain Treaty provisions did not apply in Gibraltar. In particular, Gibraltar was excluded from the customs territory of the Community. In this case, brought by the Commission supported by Spain, the United Kingdom established that the exclusion of Gibraltar from the customs territory of the Community necessarily implied that neither the Treaty rules on free movement of goods nor the rules of secondary Community legislation intended, as regards the free circulation of goods, to ensure approximation of the laws of the member states, were applicable in Gibraltar. As a result, therefore, the status of Gibraltar is, in a sense, the converse of that of the Channel Islands. Whereas EU law generally applies in Gibraltar, EU law on free movement of goods does not. For the purposes of the present appeal, the observation of Advocate General Tizzano (at para 62) that Gibraltar must be considered as a third country for the purposes of the Community provisions on movement of goods is worthy of note. By contrast, in the Jersey Produce case the CJEU held that Jersey was to be treated as if it were a part of the United Kingdom for the purposes of the application of specific Treaty provisions concerning the free movement of goods. Proceedings before the Royal Court of Jersey concerned the compatibility with Community law of the Jersey Potato Export Marketing Scheme Act 2001. The Royal Court made a preliminary reference to the Court of Justice which addressed the question whether the territory of the United Kingdom, the Channel Islands and the Isle of Man can be treated as the territory of a single member state for the purposes of the application of Community rules on free movement of goods. The reasoning of the Court of Justice was as follows: 45. It is appropriate, first of all, to recall that the court has previously stated that, just as the distinction between Channel Islanders and other citizens of the United Kingdom cannot be likened to the difference in nationality between the nationals of two member states, neither, because of other aspects of the status of those Islands, can relations between the Channel Islands and the United Kingdom be regarded as similar to those between two member states (Pereira Roque, cited above, at paras 41 and 42). It must be observed, next, that it is stated in article 1(1) 46. of Protocol No 3 that the Community rules on customs matters and quantitative restrictions are to apply to the Channel Islands and the Isle of Man under the same conditions as they apply to the United Kingdom. 47. Such wording suggests that, for the purposes of the application of those Community rules, the United Kingdom and the Islands are, as a rule, to be regarded as a single member state. 48. The same is true of the statement in the first subparagraph of article 1(2) of Protocol No 3, which refers to the levies and other import measures laid down in Community rules and applicable by the United Kingdom. The court then noted that such a construction of article 1 of Protocol 3 had also been applied by the Community legislature, before concluding: 54. It is clear from all the preceding points that, for the purposes of the application of articles 23 EC, 25 EC, 28 EC and 29 EC, the Channel Islands, the Isle of Man and the United Kingdom must be treated as one member state. The passage at para 45 echoes the conclusion of the Court of Justice in Pereira Roque v Lieutenant Governor of Jersey (Case C 171/96) EU:C:1998:368; [1998] 3 CMLR 143, paras 42 43, a case on free movement of persons. In that case the court held that article 4 of Protocol 3 to the Act of Accession did not prohibit a difference of treatment resulting from the fact that a national of another member state could be deported from Jersey under national legislation, notwithstanding that nationals of the United Kingdom were not liable to deportation. It was in that context that the court held that, as Channel Islanders were British nationals, the distinction between them and other citizens of the United Kingdom could not be likened to the difference in nationality between the nationals of two member states. In Prunus SARL v Directeur des services fiscaux (Case C 384/09) [2011] I ECR 3319; [2011] STC 1392 the Court of Justice considered the status of the British Virgin Islands (the BVI) for the purposes of free movement of capital under article 56 EC (now article 63 TFEU). The BVI are one of the OCTs for which provision is made in article 299(3) EC. In a passage to which HMRC draw particular attention, Advocate General Cruz Villalon observed (at para 39): All of the foregoing confirms that there is no categorical answer to the question whether an OCT should be categorised as a member state or a third country, and instead the answer varies on a case by case basis according to the relevant legal framework and taking into careful consideration the objectives pursued by the special arrangements for association laid down in Part Four of the TFEU. However, the Advocate General also drew attention (at para 66) to the lacuna which would result should free movement of capital not apply to the OCTs. [T]he free movement of capital laid down in article 63 TFEU must apply to OCTs, since otherwise there would be a paradox in that a freedom granted to third countries would be denied to territories with which the Union has special relations. The Court of Justice in Prunus noted (at para 20) that in view of the unlimited territorial scope of article 56 EC, it must be regarded as necessarily applying to movements of capital to and from OCTs. However, it considered that OCTs were to be treated as non member states for the purposes of free movement of capital. 28. It is necessary to determine, first, whether, for the purposes of the application of the Treaty provisions on free movement of capital, OCTs are to be treated as member states or non member states. 29. The court has already held that the OCTs are subject to the special association arrangements set out in Part Four of the Treaty, with the result that, failing express reference, the general provisions of the Treaty, whose territorial scope is in principle confined to the member states, do not apply to them OCTs therefore benefit from the provisions of European Union law in a similar manner to the member states only when European Union law expressly provides that OCTs and member states are to be treated in such a manner. 30. It should be noted that the EU and FEU Treaties do not contain any express reference to movements of capital between member states and OCTs. It follows that OCTs benefit from the liberalisation of 31. the movement of capital provided for in article 63 TFEU in their capacity as non member states. Joined Cases C 24/12 and C 27/12 X BV v Staatssecretaris van Financin [2014] STC 2394 concerned dividends paid by companies incorporated in the Netherlands to companies incorporated in the Netherlands Antilles which had been subjected to a dividend tax in the Netherlands. The Netherlands court requested a preliminary ruling on whether the EU rules on free movement of capital were to be interpreted as precluding a measure of a member state which was likely to hinder movements of capital between that member state and its own overseas countries and territories. Council Decision 2001/822 EC on the association of the overseas countries and territories with the European Community (the OCT Decision), which came into effect in its current form in 2001, made specific provision for free movement of capital between member states and OCTs. (The OCT Decision was not applicable in Prunus because the transaction in that case had occurred in 1998.) Article 47 stated that restrictions on payment and on movements of capital were prohibited between the EU and OCTs. Article 55(2) of the OCT Decision provided that nothing in the OCT Decision was to be construed to prevent the adoption or enforcement of any measure aimed at preventing the avoidance of taxes pursuant to the tax provisions of domestic fiscal legislation. In the course of his opinion, Advocate General Jaaskinen observed (at para 48): Thus, movements of capital between the Netherlands and the Netherlands Antilles, in other words two territories having a different status with regard to the applicability of EU law, do not represent a purely internal situation. Therefore, article 56(1) EC is applicable and the Netherlands Antilles has to be considered as being in the same position in relation to the Netherlands as third countries. The Court of Justice held (at paras 52 54) that the tax measure fell within article 55(2) of the OCT Decision and, as a result, there was no need to examine to what extent the rules of EU law applicable to the relations between the EU and OCTs apply between a member state and its own OCT. R (The Gibraltar Betting and Gaming Association Ltd) v Revenue and Customs Comrs (Government of Gibraltar intervening) (Case C 591/15) EC:EU:C:2017:449; [2017] 4 WLR 167; [2017] STC 1300 concerned a new tax regime which required gambling service providers to pay gaming duty in respect of services provided to UK persons regardless of whether the gambling service provider was located in the United Kingdom or in another country. The claimant association, whose members were primarily Gibraltar based gambling operators, brought proceedings for judicial review in the High Court of Justice maintaining that these were extra territorial taxes which constituted an obstacle to freedom to provide services and which discriminated against service providers situated outside the United Kingdom and accordingly were incompatible with article 56 TFEU on freedom to provide services. The High Court made a preliminary reference to the CJEU. That court considered that the first question referred asked essentially whether article 355(3) TFEU (formerly article 299(4) EC) is to be interpreted as meaning that the provision of services by operators established in Gibraltar to persons established in the United Kingdom constitutes, under EU law, a situation confined in all respects within a single member state. As we have seen, Gibraltar is the converse of Jersey in that, whereas only Community rules on free movement of goods apply in Jersey, Community rules with the exception of rules on free movement of goods apply in Gibraltar. In Gibraltar Betting Advocate General Szpunar concluded that the United Kingdom and Gibraltar are to be considered as a single member state for the purposes of the application of the Treaty rules on freedom to provide services. In his opinion he carried out a survey of the earlier authorities. He explained (at paras 43 45) the observation of Advocate General Jacobs in Department of Health and Social Security v Barr and Montrose Holdings (Case C 355/89) [1991] ECR I 3479 that the movement of workers between the United Kingdom and the Isle of Man was not wholly internal to a member state, on the ground that article 2 of Protocol 3 to the Act of Accession provided that Community rules on free movement of workers do not apply to the Isle of Man. It was therefore logical that, for the purposes of those rules, the situation between the United Kingdom and the Isle of Man was not a purely internal one. He referred with approval (at para 35) to the conclusion of Advocate General Tizzano in Commission v United Kingdom that Gibraltar must be considered as a third country for the purposes of the Community provisions on movement of goods. With regard to Jersey Produce he contrasted the situations of Gibraltar and Jersey and observed that in the case of Jersey article 355(5)(c) TFEU (formerly article 299(6)(c) EC) constituted a lex specialis in relation to article 355(3) TFEU (formerly article 299(4) EC). He then continued (at para 48): As a result of that specialised provision, the Treaty rules do not apply fully but apply only in part to Jersey, within the limits laid down by the specific regime created for it. In this respect, the general legal situation regarding Jersey is identical to that of the Isle of Man. 49. Now, and this is the crux of the matter: Jersey Produce Marketing Organisation was about the Treaty provisions on the free movement of goods. Contrary to the situation in Barr and Montrose Holdings, no rules of the specific regime applied to the Channel Islands. Consequently the court held that for the purpose of the application of [articles 28, 30, 34 and 35 TFEU,] the Channel Islands, the Isle of Man and the United Kingdom must be treated as one member state. 50. Nothing else can or should, in my view, be said of the situation of the UK and Gibraltar when it comes to the freedom of provision of services under article 56 TFEU. The Grand Chamber of the Court of Justice agreed with the conclusion of Advocate General Szpunar. It held that the provision of services by operators established in Gibraltar to persons established in the United Kingdom constitutes, as a matter of EU law, a situation confined in all respects within a single member state. Its reasoning appears at paras 35 43 which need to be set out in full. 35. It is true that the court has previously held, as observed by all the interested parties, that Gibraltar does not form part of the United Kingdom (see, to that effect, judgment of 23 September 2003, Commission v United Kingdom (Case C 30/01) [EU:C:2003:489], para 47, and 12 September 2006, Spain v United Kingdom [(Case C 145/04) EU:C:2006:543], para 15). 36. That fact is not, however, decisive in determining whether two territories must, for the purposes of the applicability of the provisions on the four freedoms, be treated as a single member state. Indeed, the court has previously held, in para 54 of the judgment of 8 November 2005, Jersey Produce Marketing Organisation , that, for the purposes of the application of articles 23, 25, 28 and 29 EC, the Channel Islands, of which the Bailiwick of Jersey forms part, the Isle of Man and the United Kingdom must be treated as a single member state, notwithstanding the fact that those islands do not form part of the United Kingdom. 37. In reaching that conclusion, the court, after observing that the United Kingdom is responsible for the Bailiwick of Jerseys external relations, relied in particular on the fact that, according to article 1(1) of Protocol No 3 on the Channel Islands and the Isle of Man annexed to the 1972 Act of Accession, EU rules on customs matters and quantitative restrictions are to apply to the Channel Islands and to the Isle of Man under the same conditions as they apply to the United Kingdom, and on the fact that no aspect of the status of those islands suggests that relations between the islands and the United Kingdom are akin to those between member states (see, in that regard, judgment of 8 November 2005, Jersey Produce Marketing Organisation, , paras 43, 45 and 46). 38. As regards, in the first place, the conditions under which article 56 TFEU is to apply to Gibraltar, it is true that article 355(3) TFEU does not state that article 56 is to apply to Gibraltar under the same conditions as they apply to the United Kingdom. 39. That said, it should be recalled that article 355(3) TFEU extends the applicability of the provisions of EU law to the territory of Gibraltar, subject to the exclusions expressly provided for in the 1972 Act of Accession, which do not, however, cover freedom to provide services. 40. Furthermore, the fact, relied on by the Government of Gibraltar, that article 56 TFEU is applicable to Gibraltar, by virtue of article 355(3) TFEU, and to the United Kingdom, by virtue of article 52(1) TEU, is irrelevant in that regard. In an analogous context, the fact that EU rules on customs matters and quantitative restrictions apply to the Channel Islands and to the Isle of Man, pursuant to article 1(1) of Protocol No 3 annexed to the 1972 Act of Accession, and to the United Kingdom, pursuant to article 52(1) TEU, has not prevented the court from concluding that, for the purposes of the application of those rules, those islands and the United Kingdom are to be treated as a single member state (judgment of 8 November 2005, Jersey Produce Marketing Organisation , para 54). 41. In the second place, there is no other factor that could justify the conclusion that relations between Gibraltar and the United Kingdom may be regarded, for the purposes of article 56 TFEU, as akin to those existing between two member states. 42. To treat trade between Gibraltar and the United Kingdom in the same way as trade between member states would be tantamount to denying the connection, recognised in article 355(3) TFEU, between that territory and that member state. It is common ground in that regard that it is the United Kingdom that has assumed obligations towards the other member states under the Treaties so far as the application and transposition of EU law in the territory of Gibraltar is concerned (see, in that regard, judgments of 23 September 2003, Commission v United Kingdom (Case C 30/01) EU:C:2003:489, paras 1 and 47, and 21 July 2005, Commission v United Kingdom (Case C 349/03) EU:C:2005:488, para 56), as the Advocate General observed in point 37 of his Opinion. 43. It follows that the provision of services by operators established in Gibraltar to persons established in the United Kingdom constitutes, under EU law, a situation confined in all respects within a single member state. The position of the European Commission On behalf of the Attorney General, Mr McDonnell also draws our attention to the current practice of the European Commission which, he submits, demonstrates that the Commission treats Jersey as a third country for all purposes other than those connected with the Common Customs Area. He refers to three examples. (1) EU Directive 95/46/EC on the protection of individuals with regard to the processing of personal data and on the free movement of such data provides in article 25 that restrictions apply to the transfer of personal data out of the EU to third countries, unless those third countries are found by the Commission to have adequate data protection standards. Commission Decision 2008/393/EC of 8 May 2008 provides that Jersey meets these standards. Paragraph 5 of the Preamble states: The Bailiwick of Jersey is one of the dependencies of the British Crown (being neither part of the United Kingdom nor a colony) that enjoys full independence, except for international relations and defence which are the responsibility of the United Kingdom Government. The Bailiwick of Jersey is therefore to be considered as a third country within the meaning of Directive 95/46/EC. (2) Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms provides for Commission Decisions on equivalence of supervisory and regulatory regimes in third countries. Commission Implementing Decision 2014/908/EU includes Jersey in the list of equivalent third countries and territories in Annexes I, IV and V. (3) The Alternative Investment Fund Managers Directive (AIFMD), Directive 2011/61/EU, regulates the management of unlisted investment funds, including hedge funds. Managers established outside the EU are permitted to do business in the EU only if their jurisdictions are approved as having similar regulatory standards. In July 2016 the European Securities and Markets Authority (ESMA) advised the European Parliament that Jersey was one of 12 non EU countries which should be granted such approval (ESMA/2016/1138 and 1140). Discussion On behalf of HMRC Ms Bacon submits that the only case concerning free movement of capital in which the present issue was directly raised before the CJEU was X BV, because it concerned relations between a member state and a territory linked with that same member state, namely the Netherlands and the Netherlands Antilles. In that case, however, the court declined to answer this particular question by deciding the case on the basis of the OCT Decision. She nevertheless draws attention to the fact that before the Netherlands Supreme Court (Hoge Raad) made the reference to the CJEU, the Netherlands Court of Appeal had concluded that the movement of capital from the Netherlands to the Netherlands Antilles was an internal matter governed by domestic law, on the ground that the Netherlands and the Netherlands Antilles were part of the same international legal entity. (See the judgment of the CJEU at para 32.) Furthermore, in the Netherlands Supreme Court Advocate General Wattel had come to the same conclusion in his opinion (Case No 11/00483, conclusions of AG Wattel dated 23 December 2011). As HMRC rightly accept, only limited weight can be put on the decision of the Netherlands Court of Appeal and the opinion of Advocate General Wattel in the national proceedings in X BV. In the event, it was not necessary for the CJEU to decide the point and the actual decision has no direct application to Jersey as Jersey is not an OCT. On the other hand, however, it seems to us that the clear explanation by Advocate General Jaaskinen (cited above at para 25) to the effect that movement of capital between the Netherlands and the Netherlands Antilles, two territories having a different status with regard to the applicability of EU law, is not a purely internal situation and that the Netherlands Antilles is to be considered as being in the same position in relation to the Netherlands as third countries, is entitled to considerable weight. It is, nevertheless, a central plank of HMRCs case on this issue that a transaction between a member state and its own associated territory cannot be regarded as a transaction between a member state and a third country. HMRC accept that a movement of capital from another member state to Jersey would be a transfer to a third country within article 56, but maintain that a transfer from a member state to its own associated territory should be regarded as a purely internal situation as in Jersey Produce and Gibraltar v Commission. Here Ms Bacon draws particular attention to the close economic links between the United Kingdom and Jersey, one of the matters referred to by Advocate General Leger in Jersey Produce (at para 34, footnote 27), as accounting for the specific regime reserved to the Channel Islands and the Isle of Man. She observes that, although Jersey is not in a formal currency union with the United Kingdom, there is de facto monetary union between the United Kingdom and Jersey. Jersey has a currency board arrangement with sterling. As part of the background, reference is also made to the fact that the Organisation for Economic Co operation and Development (OECD) Convention was extended to Jersey by the United Kingdom on 20 July 1990 and that the OECD Codes of Liberalisation of Capital Movements and Current Invisible Operations apply to Jersey. Similarly, the Multilateral Convention on Mutual Administrative Assistance in Tax Matters of the OECD and the Council of Europe, signed in Strasbourg on 25 January 1988, entered into force in respect of Jersey on 1 June 2014. In this regard, HMRC also rely on the reasoning of the CJEU in Jersey Produce cited at para 7 above. HMRC submit that the Court of Justice there advanced two reasons for its conclusion. One was the wording of article 1 of Protocol No 3 to the Treaty of Accession, referred to in paras 46 and 47. The other was the more general point, stated at para 45, that relations between the Channel Islands and the United Kingdom cannot be regarded as similar to those between two member states. Both of these reasons, it is submitted, are then picked up at para 54 as leading to the conclusion that the Channel Islands and the United Kingdom must be treated for this purpose as one member state. Ms Bacon submits that para 45 in itself would be sufficient to support the conclusion and draws attention to the fact that the Court of Justice in Gibraltar Betting at para 37 referred to both aspects of Jersey Produce. We are unable to accept this submission. In our view, the Court of Justice at para 45 is simply setting the context within which the Treaty provisions operate and this general statement lacks the degree of specificity which would be required to provide an independent basis of decision. The decision is clearly founded on the notion that Community rules on free movement of goods apply to Jersey with the result that it is, for that purpose, to be treated as part of the United Kingdom. The decisions of the Court of Justice in this area provide a systematic and consistent approach to resolving issues such as the present. The question whether a territory is to be regarded as a third country is context specific and will depend on whether, under the relevant Treaty of Accession and supplementary measures, the relevant provisions of EU law apply to that territory. The proximity of the ties between a member state and the territory in question is not a factor justifying departure from that scheme. Thus, the reasoning of the Court of Justice in Van der Kooy and in Commission v United Kingdom is consistent with and supportive of the Attorney Generals submission. Similarly, the observation of Advocate General Jaaskinen in X BV (at para 48) that the Netherlands Antilles should be treated as a third country is entirely in accord with this approach. In each case, the transaction was not regarded as internal to the member state concerned because the relevant rule of EU law did not apply in the associated territory. That was the case notwithstanding the fact that the territory was associated with the member state in question. Conversely, in Jersey Produce the Community rules on free movement of goods applied in Jersey with the result that it was, for that purpose, to be treated as part of the United Kingdom. In the same way, in Gibraltar Betting Community rules on free movement of services applied both in the United Kingdom and to Gibraltar with the result that the provision of services by operators established in Gibraltar to persons established in the United Kingdom was a situation confined within a single member state. As Mr McDonnell put it in his submissions on behalf of the Attorney General, the CJEU has determined that for the purposes of the Treaty provisions which apply in those territories, they should be treated as part of the European Union, but for the purposes of the Treaty provisions which do not apply in those territories, they should be treated as third countries. In our view the decision of the Court of Justice in Prunus is determinative of the present issue before this court. In that case, which pre dated the OCT Decision which made specific provision for free movement of capital between member states and OCTs, the Court of Justice held that for the purposes of the free movement of capital the BVI were to be treated as non member states. (Here, the court clearly regarded the terms non member states and third countries as synonymous. It explained at para 20 of its judgment that article 56 EC, which prohibits all restrictions on the movement of capital between member states and between member states and third countries, has unlimited territorial scope and must be regarded as necessarily applying to movements of capital to and from OCTs.) For the reasons stated above, that decision is not distinguishable on the ground that the BVI are not associated with France. In this way, as Advocate General Villalon observed in respect of OCTs in Prunus at para 39, the answer varies on a case by case basis according to the relevant legal framework and taking into consideration the objectives pursued by the special arrangements for association. In the present case it is clear that, as the EU rules on free movement of capital do not apply in Jersey, Jersey is to be considered a third country for the purpose of a transfer of capital from the United Kingdom. Capital has moved from a member state where article 56 applies to a territory where it does not and that cannot be considered a purely internal situation. Accordingly, we would decline to make a preliminary reference on this point to the CJEU. (2) Whether the refusal of relief is justifiable under EU law Since EU rules on the free movement of capital apply to transfers of capital between the United Kingdom and Jersey, and it is accepted, as explained at para 6 above, that the refusal of relief under section 23 of the Inheritance Tax Act to the Coulter Trust constitutes a restriction on such free movement, the remaining question is whether the restriction is justifiable under EU law. The Court of Appeal concluded that it was, following two hearings before differently constituted panels. At the first hearing, before Moore Bick, Tomlinson and Kitchin LJJ, the court considered the construction of section 23 as a matter of domestic law, leaving aside the effect of EU law, and concluded that in order to qualify for relief the trust under which property was held for charitable purposes must be governed by the law of some part of the United Kingdom and be subject to the jurisdiction of the courts of the United Kingdom: [2016] EWCA Civ 938; [2017] PTSR 73; [2016] STC 2218. In so holding, the court upheld the decision of Rose J: [2014] EWHC 3010 (Ch); [2015] STC 451. It is necessary to explain the basis on which the Court of Appeal arrived at that interpretation of section 23. So far as material, section 23 is in the following terms: (1) Transfers of value are exempt to the extent that the values transferred by them are attributable to property which is given to charities. (6) For the purposes of this section (a) property is given to charities if it becomes the property of charities or is held on trust for charitable purposes only; and donor shall be construed accordingly. Section 272 of the Inheritance Tax Act, as it stood at the relevant time, provided that: Charity and charitable have the same meanings as in the Income Tax Acts. Section 989 of the Income Tax Act 2007 (the Income Tax Act) defined charity for the purposes of the Income Tax Acts as follows: charity means a body of persons or trust established for charitable purposes only. Reading section 23(1) and (6) of the Inheritance Tax Act together with section 989 of the Income Tax Act, it follows that transfers of value are exempt to the extent that the values transferred by them are attributable to property which (a) becomes the property of a body of persons or trust established for charitable purposes only, or (b) is held on trust for charitable purposes only. Those alternatives have been described in these proceedings as the two limbs of section 23(6). On the face of these provisions, the Coulter Trust would appear to qualify for relief. Its purposes are charitable purposes under English law. It is irrelevant under the legislation that those purposes are to be carried out outside the United Kingdom. There is nothing on the face of any of the provisions which confines the scope of the relief to trusts which are governed by the law of a part of the United Kingdom and are subject to the jurisdiction of courts in the United Kingdom. However, in Camille & Henry Dreyfus Foundation Inc v Inland Revenue Comrs [1956] AC 39, a case decided long before the United Kingdoms entry into the EEC, it was held by the House of Lords that the phrase trust established for charitable purposes only, in section 37 of the Income Tax Act 1918, must be interpreted as being implicitly limited to trusts which were governed by the law of some part of the United Kingdom and were subject to the jurisdiction of the courts of the United Kingdom. Since the same phrase appears in the definition of charity in section 989 of the Income Tax Act, and section 272 of the Inheritance Tax Act requires charity and charitable to be given the same meaning in that Act as in the Income Tax Acts, the Court of Appeal concluded that the gloss placed in Dreyfus on the language now found in section 989 of the Income Tax Act was also incorporated, by means of section 272 of the Inheritance Tax Act, into section 23 of that Act. Accordingly, relief under section 23 was available only to trusts which were governed by the law of some part of the United Kingdom and were subject to the jurisdiction of the courts of the United Kingdom. The court rejected the appellants argument that a distinction should be drawn in that regard between the first and second limbs of section 23(6). It followed that the Coulter Trust, being established under and governed by the law of Jersey, was not a charity within the meaning of section 989 of the Income Tax Act, and that Mrs Coulters will did not effect a gift of property to a charity within the meaning of section 23(1) of the Inheritance Tax Act. At the first hearing of the appeal, the Court of Appeal allowed the grounds of appeal to be amended so as to raise for the first time arguments based on EU law, which were then considered at a second hearing before Arden and Briggs LJJ and Green J. At that hearing, HMRC accepted that the domestic interpretation of section 23 arrived at following the first hearing, reflecting the construction placed on the definition of charity for income tax purposes in the Dreyfus case, violated the principle of freedom of movement of capital. However, they argued that the refusal of relief in the present case was nevertheless justified under EU law, since they had to be able to confirm that a claimant for relief under section 23 was carrying out charitable objects, and for that purpose had to be able to enforce the co operation of official channels in the country where the claimant was based. They submitted that it was therefore necessary for there to be a mutual assistance agreement in force between the United Kingdom and the country in question. In the absence of such an agreement, the refusal of relief was justifiable under EU law. The absence of such an agreement between the United Kingdom and Jersey at the time of Mrs Coulters death was, they submitted, conclusive in favour of their case on justification. The Court of Appeal, in a judgment given by Arden LJ with which the other members of the court agreed, concluded that the availability of relief under section 23 of the Inheritance Tax Act could not, in conformity with EU law, be limited by the restriction imposed by the Dreyfus decision, but that it would be justified for section 23 to contain a right for HMRC to verify information about an overseas charity by means of a mutual assistance agreement: [2017] EWCA Civ 1584; [2018] 1 WLR 3013; [2018] STC 910, para 88. That meant, they said, that the appeal must fail, since there was no such agreement in force between the United Kingdom and Jersey at the time of Mrs Coulters death. In saying that, the court appears to have been anticipating its decision later in the judgment that, although section 23 contained no such right for HMRC to verify information by means of a mutual assistance agreement, such a right could be read into section 23 as a matter of judicial interpretation. The court also reached its conclusion that the appeal must fail because of the absence of a mutual assistance agreement between the United Kingdom and Jersey at the time of Mrs Coulters death notwithstanding its finding (para 84) that HMRC had no need of a mutual assistance agreement in the present case: The position in this case is that the taxing authority does not need to verify any information. HMRC do not seek any information from the appellants. HMRC accept that the objects of the Coulter Trust are charitable for the purposes of UK law. They do not suggest that the position was any different at the date of Ms Coulters death. Likewise, HMRC do not suggest that the terms of the Coulter Trust would not be enforced in Jersey if there was any failure to apply the assets of the Coulter Trust for charitable purposes or that the position was any different at the date of Ms Coulters death. Arden LJ had earlier noted (para 78) that a potential difficulty for the court was that there was no provision in section 23 of the Inheritance Tax Act requiring that a mutual assistance agreement must be in force. She observed that Parliament could, in conformity with article 56, limit the relief under section 23 to cases in which the charity was based in an EU country or in a third country which had such an agreement with the United Kingdom. It had not however done so. Nevertheless, Arden LJ considered that such a requirement could be read into section 23 as a matter of interpretation, citing authority concerned with the application of section 3 of the Human Rights Act 1998. In her view, section 23 was to be interpreted as permitting relief to be given from inheritance tax: where the relevant charity both [satisfies] UK law requirements concerning a charity and [is] based in (a) an EU country or (b) a third country which [has] an information exchange agreement with the UK. By satisfies UK law requirements was meant that the purposes of the charity are charitable according to UK law and that the charity is subject to the supervision of the courts in the country in which it is based. Discussion On its face, section 23 of the Inheritance Tax Act does not impose any restriction on the free movement of capital. In particular, it does not discriminate between gifts to charities governed by the law of the United Kingdom and gifts to charities governed by the law of other EU member states or third countries. It is, on its face, entirely compliant with article 56 EC. That is so even if section 272 of the Inheritance Tax Act and section 989 of the Income Tax Act are taken into account, since those provisions, on their face, are equally non discriminatory. The only relevant restriction which existed at any material time, and with which this appeal is concerned, is the restriction imposed by the judicial gloss which was placed on the words now found in section 989 of the Income Tax Act in the case of Dreyfus: a restriction which, when incorporated into section 23 of the Inheritance Tax Act, has the effect of confining relief under that provision to trusts governed by the law of a part of the United Kingdom and subject to the jurisdiction of United Kingdom courts. There can be no doubt that the Dreyfus gloss on the language of section 989 of the Income Tax Act, as applied to section 23, is incompatible with article 56 EC. It is plain that the restriction of relief from inheritance tax to trusts governed by the law of a part of the United Kingdom cannot be justified under EU law. Article 56 EC is directly applicable as law in the United Kingdom, and must be given effect in priority to inconsistent national law, whether judicial or legislative in origin. It follows that the Dreyfus gloss on the language of section 989 of the Income Tax Act cannot be applied to section 23 in situations falling within the scope of article 56. The resultant position is as set out in para 49 above: applying section 23 without incorporating the Dreyfus gloss, there is no relevant restriction on the availability of relief beyond the conditions appearing on the face of the provision. That result is in conformity with article 56. Since it is undisputed that the Coulter Trust satisfied those conditions at the relevant time, it follows that it qualifies for the relief. That is the conclusion which the Court of Appeal should have reached, once it had decided that the Dreyfus gloss on the language of section 989 of the Income Tax Act, if incorporated into section 23 of the Inheritance Tax Act, imposed a restriction which was incompatible with article 56. Having reached that decision, the court could not apply that entirely judge made restriction, and therefore had to apply section 23 without the gloss placed on the language used in section 989 of the Income Tax Act in the Dreyfus case. It would then have arrived at a result which complied with article 56. With great respect to the Court of Appeal, it should not have concerned itself with a hypothetical restriction concerned with the existence of mutual assistance agreements, even if it considered that such a restriction might have been justifiable under EU law and might have been imposed by Parliament. The fact was that there was no such restriction in existence. Neither section 23 of the Inheritance Tax Act nor section 989 of the Income Tax Act made relief for trusts in third countries conditional on there being a mutual assistance agreement in place. The fact that such a restriction, if it had existed, might have been in conformity with EU law did not mean that it could be imposed by the court, by means of a purported interpretation of the language used in section 23. Having reached the conclusion that section 23 of the Inheritance Tax Act can be brought into conformity with article 56 by disapplying the Dreyfus gloss on the meaning of the words contained in section 989 of the Income Tax Act, and that, having done so, the gift to the Coulter Trust qualifies for relief under section 23, it is unnecessary for this court to decide the other issues in dispute between the parties: in particular, whether the Court of Appeal was correct to hold that the Dreyfus gloss applied to both limbs of section 23(6), and whether it was correct to hold that a general requirement that there be a mutual assistance agreement in place at the time of the testators death would constitute a justifiable restriction on freedom of movement of capital under EU law. The Court of Appeals decision cannot stand, even if it was correct in its determination of those issues. Conclusion For these reasons, we conclude that article 56 EC applied to Mrs Coulters gift of assets in the United Kingdom to trustees in Jersey, that the refusal of relief from inheritance tax on that gift under section 23 of the Inheritance Tax Act was in breach of article 56, and that the appeal should therefore be allowed.
UK-Abs
The appellants are the executors of Mrs Beryl Coulter, who died in Jersey on 9 October 2007, leaving her residuary estate on trust for charitable purposes (the Coulter Trust). The appellants were domiciled in Jersey and the will specified that the trust was to be governed by Jersey law. The estate included substantial assets in the United Kingdom. In October 2010, the appellants retired as trustees (but not as executors) and were replaced by a UK resident trustee. The will was amended to make the proper law of the Coulter Trust the law of England and Wales. In 2014, the Coulter Trust was registered as a charity under English law. In 2013, Her Majestys Revenue and Customs (HMRC) determined that Mrs Coulters gift to the Coulter Trust did not qualify for the relief from inheritance tax in respect of gifts to charities provided by section 23 of the Inheritance Tax Act 1984. This was because section 23 limited relief to trusts governed by the law of a part of the United Kingdom, the Coulter Trust was governed by the law of Jersey at the date of Mrs Coulters death, and Jersey was not a part of the United Kingdom for the purposes of section 23. The appellants appealed against HMRCs determination on the basis it is incompatible with article 56 of the Treaty Establishing the European Community (EC) (now article 63 of the Treaty on the Functioning of the European Union (TFEU)), which prohibits restrictions on the free movement of capital between EU member states, and between member states and third countries. HMRC argues that article 56 does not apply here because a movement of capital between the United Kingdom and Jersey should be regarded as an internal transaction taking place within a single member state. The Court of Appeal accepted the appellants submission that Jersey is to be regarded as a third country for the purposes of article 56, but decided that the restriction of section 23 to trusts governed by the law of part of the United Kingdom was nevertheless justifiable under EU law. The issues arising in this further appeal are: (1) whether a movement of capital between the United Kingdom and Jersey should be regarded as an internal transaction taking place within a single member state for the purposes of article 56; and (2) if not, whether the refusal of relief under section 23 in respect of the gift to the Coulter Trust is justifiable under EU law. The Supreme Court unanimously allows the appeal. Lord Reed and Lord Lloyd Jones give the judgment, with whom all members of the Court agree. Article 56 prohibits all restrictions on payments or the movement of capital between member states, and between member states and third countries. It is common ground between the parties that article 56 applies to gifts to charities and that Jersey is not a member state. The issue therefore turns on whether Jersey is to be regarded as a third country [7]. The Bailiwick of Jersey is a Crown Dependency which, along with the other Channel Islands, enjoys a unique relationship with the United Kingdom through the Crown [8]. Jersey is not an independent state in international law; the UK government is responsible for its international relations and has the power to extend to Jersey the operation of a treaty concluded by the United Kingdom [10]. Article 29 of the Vienna Convention on the Law of Treaties 1969 provides that a treaty is binding upon each party in respect of its entire territory unless a different intention is expressed [11]. Article 299(1) EC (now article 355 TFEU) makes express provision for the territorial scope of EU law [13]. Protocol 3 to the Treaty of Accession 1972 provides that the free movement of goods applies to the Channel Islands [14]. However, other rules of EU law do not apply in Jersey, including the EU rules on free movement of capital [15]. Decisions of the Court of Justice of the European Union (the CJEU) provide a systematic and consistent approach to this issue. The question of whether a territory is to be regarded as a third country is context specific and will depend on whether, under the relevant Treaty of Accession and supplementary measures, the relevant provisions of EU law apply to that territory [35]. The decision of Prunus SARL v Directeur des services fiscaux (Case C 384/09) [2011] I ECR 3319, in which the CJEU held that the British Virgin Islands were to be treated as third countries, is determinative of the issue in the present case [36]. Jersey is to be considered a third country for the purpose of a transfer of capital from the United Kingdom [37]. Accordingly, EU rules on the free movement of capital do apply to transfers of capital between the United Kingdom and Jersey, and it is accepted that the refusal of relief under section 23 is a restriction on that free movement. The remaining question is therefore whether the restriction is justifiable under EU law [38]. On its face, section 23 does not impose any restriction on the free movement of capital and is therefore compliant with article 56 [50]. The only restriction is that imposed by the judicial gloss placed on the words now found in section 989 of the Income Tax Act 2007 by the House of Lords in Camille and Henry Dreyfus Foundation Inc v Inland Revenue Comrs [1956] AC 39 (Dreyfus) a restriction which, when incorporated into section 23, has the effect of confining relief under that provision to trusts governed by the law of a part of the United Kingdom and subject to the jurisdiction of the UK courts. There can be no doubt that the Dreyfus gloss on section 989, as applied to section 23, is incompatible with article 56. It is plain that the restriction of relief from inheritance tax to trusts governed by the law of a part of the United Kingdom cannot be justified under EU law [51]. Article 56 is directly applicable and must be given effect in priority to inconsistent national law, whether judicial or legislative in origin. The Dreyfus gloss on section 989 cannot be applied to section 23 in situations falling within the scope of article 56. Since it is undisputed that the Coulter Trust satisfied the conditions at the time, it follows that it qualifies for the relief [52].
This appeal is concerned with the interpretation of article 24(2) of the Brussels I Recast Regulation (Parliament and Council Regulation (EU) No 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Recast Regulation)), which sets out a special regime to determine jurisdiction in relation to certain matters regarding the governance of corporations. Although the issue in the present case relates to where a Turkish company and certain Turkish domiciled individuals may be sued, and Turkey is of course not an EU member state, it is common ground that article 24(2) of the Recast Regulation applies to determine the question of jurisdiction which arises in this case. Article 24 is in Section 6 of the Recast Regulation, entitled Exclusive jurisdiction. Article 24(2) provides as follows: The following courts of a member state shall have exclusive jurisdiction, regardless of the domicile of the parties: (2) in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the member state in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law; The sixth appellant (Koza Altin) is a publicly listed company incorporated in Turkey. It carries on a business specialising in gold mining. It is part of a group of Turkish companies known as the Koza Ipek Group (the Group) which were formerly controlled by the second respondent (Mr Ipek) and members of his family. Amongst other things, the Group has media interests in Turkey. The first respondent (Koza Ltd) is a private company incorporated in England in March 2014. It is a wholly owned subsidiary of Koza Altin. Mr Ipek says that he and the Group have been targeted unfairly by a hostile government in Turkey, including by making them the subject of an investigation into alleged criminal activity and taking steps against them in conjunction with that investigation. In order to defend himself as regards control of Koza Ltd, in September 2015 Mr Ipek caused a number of changes to be made to Koza Ltds constitution and share structure. A new class of A shares was created and Koza Ltds articles of association were amended to introduce a new article 26 (article 26), which purported to preclude any further changes to the articles of association or any change of directors save with the prior written consent of the holders of the A shares. Two A shares were issued, one to Mr Ipek and one to his brother. The validity and effect of these changes is in issue in these proceedings. The respondents contend that they are valid and lawful. The appellants contend that they are invalid and unlawful attempts to entrench Mr Ipek and his associates in control of Koza Ltd. In proceedings in Turkey relating to the criminal investigation in respect of Mr Ipek and the Group, on 26 October 2015 pursuant to article 133 of the Turkish Criminal Procedure Code the Fifth Ankara Criminal Peace Judge appointed certain individuals as trustees of Koza Altin and other companies in the Group, with power to control the affairs of those companies in place of the existing management. Pursuant to further decisions of the judge dated 13 January and 3 March 2016, the first to fifth appellants were appointed as the trustees in relation to Koza Altin. I refer to them together as the trustees, although in further proceedings in Turkey in September 2016 they were replaced by the Tasarruf Mevduati Sigorta Fonu (the Savings Deposit Insurance Fund of Turkey) as trustee of Koza Altin. The trustees, with Koza Altin itself, are the relevant parties in the present proceedings in England and for this appeal. On 19 July 2016, the trustees caused Koza Altin to serve a notice on the directors of Koza Ltd under section 303 of the Companies Act 2006, requiring them to call a general meeting to consider resolutions for their removal and replacement with three of the trustees. The directors of Koza Ltd did not call such a meeting, so on 10 August 2016 Koza Altin served a notice pursuant to section 305 of the 2006 Act to convene a meeting on 17 August 2016 to consider those resolutions. The service of this notice prompted Mr Ipek and Koza Ltd to make an urgent without notice application on 16 August seeking an injunction to prevent the meeting taking place and, so far as required, orders for service out of the jurisdiction and for alternative service. Injunctive relief as set out in the application was sought on two bases. It was contended that (i) the notices of 19 July and 10 August 2016 (the notices) were void under section 303(5)(a) of the 2006 Act because at least one of the holders of the A shares (Mr Ipek) did not consent to the proposed resolutions and so, if passed, they would be ineffective as being passed in breach of article 26 (I refer to this claim as the English company law claim); and (ii) the notices were void on the basis that the English courts should not recognise the authority of the trustees to cause Koza Altin to do anything as a shareholder of Koza Ltd, because they were appointed on an interim basis only and in breach of Turkish law, the European Convention on Human Rights and natural justice, so that it would be contrary to public policy for the English courts to recognise the appointment (I refer to this claim as the authority claim). As regards jurisdiction, the primary submission for Mr Ipek and Koza Ltd was that permission to serve out of the jurisdiction was not required because the English courts had exclusive jurisdiction to deal with the whole claim pursuant to article 24(2) of the Recast Regulation. At the without notice hearing before Snowden J on 16 August 2016, the judge accepted this submission. He granted interim injunctive relief as sought by Mr Ipek and Koza Ltd and gave permission for alternative service at the offices of Mishcon de Reya LLP, the solicitors acting for Koza Altin and the trustees. Mr Ipek and Koza Ltd issued their claim form on 18 August 2016 seeking a declaration that the notices were ineffective, an injunction to restrain Koza Altin and the trustees from holding any meeting pursuant to the notices and from taking any steps to remove the current board of Koza Ltd, a declaration that the English courts do not recognise any authority of the trustees to cause Koza Altin to call any general meetings of Koza Ltd or to do or permit the doing of anything else as a shareholder of Koza Ltd and an injunction to restrain the trustees from holding themselves out as having any authority to act for or bind Koza Altin as a shareholder of Koza Ltd and from causing Koza Altin to do anything or permit the doing of anything as a shareholder of Koza Ltd. Koza Altin and the trustees filed an acknowledgement of service indicating their intention to contest jurisdiction and then issued an application to do that. At the same time, Koza Altin filed a Defence and Counterclaim to the English company law claim, impugning the validity and enforceability of article 26 and also impugning the validity and effectiveness of the board resolution of Koza Ltd pursuant to which the two A shares were issued. In turn, Mr Ipek and Koza Ltd issued an application to strike out the acknowledgment of service, Koza Altins Defence and Counterclaim and all other steps taken by Mishcon de Reya LLP purportedly on behalf of Koza Altin in the proceedings, on the basis that the authority of those who had caused Koza Altin to take these steps should not be recognised in this jurisdiction. The application of Koza Altin and the trustees to challenge jurisdiction was heard by Asplin J in December 2016. Their position was that (i) the English courts have no jurisdiction under article 24(2) of the Recast Regulation over the trustees in relation to any part of the claims; (ii) the English courts do have jurisdiction under that provision over Koza Altin in respect of the English company law claim, which relates to the affairs of Koza Ltd; and (iii) the English courts have no jurisdiction under that provision over Koza Altin in respect of the authority claim, which relates to the conduct of the business of Koza Altin. Asplin J dismissed the application by order made on 17 January 2017. It was common ground that the English company law claim fell within article 24(2) of the Recast Regulation so that the English courts had jurisdiction in relation to it and in the judges assessment the authority claim was inextricably linked with that claim, which she considered was the principal subject matter of the proceedings viewed as a whole. Koza Altin and the trustees appealed on the grounds that Asplin J had erred in holding that article 24(2) conferred jurisdiction on the English courts to determine the authority claim and had erred in holding that article 24(2) conferred jurisdiction on the English courts to determine any of the claims against the trustees. The Court of Appeal dismissed the appeal. Like Asplin J, it held that the authority claim is inextricably linked with the English company law claim and it held that article 24(2) required the court to form an overall evaluative judgment as to what the proceedings are principally concerned with, which in this case is a challenge to the ability of Koza Altin to act as a shareholder of Koza Ltd in relation to Koza Ltds internal affairs (see, in particular, paras 45 46 and 49 51). That was so even if certain parts of the relief sought, if viewed in isolation, appeared to go further than that, in that they related to the validity of decisions taken by the organs of Koza Altin. In the view of the Court of Appeal, therefore, by virtue of article 24(2) the English courts have jurisdiction in relation to the authority claim as well as in relation to the English company law claim. In addition, the Court of Appeal dismissed a distinct submission for the trustees that the English courts have no jurisdiction in relation to them under article 24(2), based on the fact that they are not necessary parties in the proceedings. Despite the court accepting that they are not necessary parties, it held that jurisdiction was established under article 24(2) in relation to the trustees because the subject matter of the proceedings involving them remained the same and the rationale of avoiding conflicting decisions in relation to the same subject matter applied, as did the rationale of ensuring that the proceedings are tried in the courts best placed to do so (paras 52 54). The trustees and Koza Altin now appeal with permission granted by this court. They submit that in holding that the English courts have jurisdiction under article 24(2) in relation to the authority claim, which is concerned with the validity of decisions of the organs of Koza Altin, a Turkish company, the Court of Appeal has given that provision an impermissibly wide interpretation. On proper construction of article 24(2), it is the courts of Turkey which have the relevant close connection with the authority claim and the English courts could not be regarded as having relevant (putatively exclusive) jurisdiction under that provision in relation to that claim. The issues on the appeal are (i) whether article 24(2) confers jurisdiction on the English courts to determine the authority claim as against Koza Altin and (ii) whether article 24(2) confers exclusive jurisdiction on the English courts to determine either the authority claim or the English company law claim as against the trustees. Each side maintains that the proper interpretation of article 24(2) is acte clair in their favour, but if it is not then a reference to the Court of Justice of the European Union is sought. The Recast Regulation The Recast Regulation is intended to lay down common rules governing jurisdiction assumed by member states. Insofar as relevant for present purposes, the basic scheme is encapsulated as relevant for present purposes in recitals (13) (16) and (19): (13) There must be a connection between proceedings to which this Regulation applies and the territory of the member states. Accordingly, common rules of jurisdiction should, in principle, apply when the defendant is domiciled in a member state. (14) A defendant not domiciled in a member state should in general be subject to the national rules of jurisdiction applicable in the territory of the member state of the court seised. However, in order to ensure the protection of consumers and employees, to safeguard the jurisdiction of the courts of the member states in situations where they have exclusive jurisdiction and to respect the autonomy of the parties, certain rules of jurisdiction in this Regulation should apply regardless of the defendants domicile. (15) The rules of jurisdiction should be highly predictable and founded on the principle that jurisdiction is generally based on the defendants domicile. Jurisdiction should always be available on this ground save in a few well defined situations in which the subject matter of the dispute or the autonomy of the parties warrants a different connecting factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction. (16) In addition to the defendants domicile, there should be alternative grounds of jurisdiction based on a close connection between the court and the action or in order to facilitate the sound administration of justice. The existence of a close connection should ensure legal certainty and avoid the possibility of the defendant being sued in a court of a member state which he could not reasonably have foreseen (19) The autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, should be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation. The scheme for allocation of jurisdiction under the Recast Regulation, therefore, is that persons domiciled in a member state should generally be sued in that member state (article 4), but pursuant to article 5 may also be sued in the courts of another member state in certain cases specified in sections 2 to 7 of Chapter II of the Recast Regulation. Section 2 is entitled Special jurisdiction. Within it, article 7 sets out rules applicable in particular kinds of case, including contract, tort, unjust enrichment and certain other cases; and article 8 provides, among other things, that a person domiciled in a member state who is one of a number of related defendants may be sued in the courts of the place where any one of them is domiciled, provided the claims are closely connected. Section 3 deals with jurisdiction in matters relating to insurance; section 4 with jurisdiction over consumer contracts; and section 5 with jurisdiction over individual contracts of employment. Section 6 comprises article 24, dealing with cases of exclusive jurisdiction. Section 7, comprising articles 25 and 26, deals with prorogation of jurisdiction. I set out here the full text of article 24: The following courts of a member state shall have exclusive jurisdiction, regardless of the domicile of the parties: (1) in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the member state in which the property is situated. However, in proceedings which have as their object tenancies of immovable property concluded for temporary private use for a maximum period of six consecutive months, the courts of the member state in which the defendant is domiciled shall also have jurisdiction, provided that the tenant is a natural person and that the landlord and the tenant are domiciled in the same member state; (2) in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the member state in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law; (3) in proceedings which have as their object the validity of entries in public registers, the courts of the member state in which the register is kept; in proceedings concerned with the registration or (4) validity of patents, trademarks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the member state in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each member state shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that member state; (5) in proceedings concerned with the enforcement of judgments, the courts of the member state in which the judgment has been or is to be enforced. Article 25 provides in material part as follows: If the parties, regardless of their domicile, have agreed 1. that a court or the courts of a member state are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that member state. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. 3. The court or courts of a member state on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between those persons or their rights or obligations under the trust are involved. 4. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to articles 15, 19 or 23, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of article 24. 1. Apart from jurisdiction derived from other provisions of this Regulation, a court of a member state before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of article 24. Article 26(1) provides: These provisions indicate the priority given under the scheme of the Recast Regulation to the jurisdiction of the courts of a member state which have exclusive jurisdiction under article 24. The cases of exclusive jurisdiction within article 24 comprise situations where reasons exist to recognise an especially strong and fixed connection between the subject matter of a dispute and the courts of a particular member state. For the cases falling within article 24, the principle of exclusive jurisdiction cuts across and takes priority over the other principles underlying the Recast Regulation, including the principle of jurisdiction for the courts of the member state where the defendant is domiciled and the principle of respect for party autonomy referred to in recital (19) and reflected in various provisions of the Regulation. The priority given to the jurisdiction of a member state within article 24 is underlined by departures from other general rules set out in the Recast Regulation. In particular, in section 8 of Chapter II, entitled Examination as to jurisdiction and admissibility, article 27 provides for an exception to the usual rule in section 9 of Chapter II that it is the courts in a member state which are first seised with a matter which shall have jurisdiction in relation to it, so that the courts of other member states should decline jurisdiction accordingly. Article 27 provides: Where a court of a member state is seised of a claim which is principally concerned with a matter over which the courts of another member state have exclusive jurisdiction by virtue of article 24, it shall declare of its own motion that it has no jurisdiction. Also, in Chapter III, in section 3 (entitled Refusal of recognition and enforcement), article 45(1)(e) provides that the recognition of a judgment shall be refused if the judgment conflicts with Section 6 of Chapter II (ie with the provision for exclusive jurisdiction contained in article 24) and article 46 states that enforcement of a judgment shall be refused in cases falling within article 45. Discussion Issue (i): claim The application of article 24(2) in relation to the authority Since article 24(2) of the Recast Regulation is a provision which creates exclusive jurisdiction for the courts of a member state in the circumstances specified, its proper interpretation can be tested on the hypothesis that Turkey stands in the position of a member state. If Koza Altin were a company which had its seat in a member state, say Greece, article 24(2) would apply to allocate exclusive jurisdiction in relation to the authority claim either to Greece or to England. They could not both have exclusive jurisdiction under the Recast Regulation, since that would be contrary to the very idea of the jurisdiction being exclusive. The interpretation of article 24(2) does not change in the present case just because the other state in question (Turkey) happens not to be a member state. The position in relation to article 24(2) is to be contrasted with that in relation to the general rule of jurisdiction in article 4 and the provisions contained in section 2 of Chapter II of the Recast Regulation. Under article 4 and those provisions, it is quite possible that the courts of two or more member states might have jurisdiction in relation to the same claim. This causes no difficulty under the scheme of the Recast Regulation. In all such cases it is the priority rules in section 9 of Chapter II which determine the jurisdiction where the claim should proceed, which generally depends on which court is first seised. But as noted above, those rules are disapplied where a claim falls within the exclusive jurisdiction provision in article 24. Accordingly, it is clear from the scheme of the Regulation that the interpretation and application of that provision cannot depend on the type of evaluative judgment in relation to which different courts could reasonably take different views. In principle, there should be only one correct application of article 24 in relation to a given claim. This tells strongly against the broad evaluative approach to the interpretation and application of article 24(2) adopted by the courts below. As stated in recital (15) of the Recast Regulation, the objective of the Regulation is to set out rules governing the allocation of jurisdiction which are highly predictable. The desirability of having clear rules for allocation of jurisdiction is obvious, since parties who wish to bring claims and to defend them need to have a clear idea of which courts have jurisdiction so that they can decide how to proceed effectively and so as to minimise costs. Also, rules which are highly predictable in their effects serve the purpose of enabling different courts to determine with a minimum of effort whether they have jurisdiction in respect of any given claim. As is clear from the recitals and scheme of the Recast Regulation, a further objective of the regime is to avoid inconsistent judgments on the same issue being produced by the courts of different member states. The case law of the Court of Justice of the European Union (the Court of Justice, formerly called the European Court of Justice) regarding the interpretation of article 24 has reached an advanced stage. In my view it shows clearly that the interpretation of article 24(2) adopted by the courts below in these proceedings cannot be sustained. An important early judgment was given in Hassett v South Eastern Health Board (Case C 372/07) [2008] ECR I 7403 regarding article 22(2) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, the predecessor of article 24(2) in the Recast Regulation. In proceedings in Ireland relating to a medical negligence claim against the Health Board, two doctors who had been involved in the incident in question were joined in a claim for contribution brought by the Health Board. The doctors in turn sought an indemnity or contribution from the Medical Defence Union in England (the MDU), of which they were members, to which they claimed they had an entitlement under the MDUs articles of association. The MDUs board decided to reject their claim, so the doctors sought to join the MDU in the Irish proceedings to claim in those proceedings the indemnity or contribution to which they maintained they were entitled. The MDU resisted this on the basis that the doctors claim concerned the validity of the boards decision and so fell within article 22(2), with the result that the English courts had exclusive jurisdiction in relation to that claim. This issue was referred to the Court of Justice, which disagreed with the MDU. The court held that article 22(2) had to be interpreted strictly (that is to say, narrowly), since it was an exception to the general rule of jurisdiction under the Regulation based on domicile, and that it should not be given an interpretation broader than is required by [its] objective (paras 18 19); accordingly, the provision must be interpreted as covering only disputes in which a party is challenging the validity of a decision of an organ of a company under the company law applicable or under the provisions governing the functioning of its organs, as laid down in its Articles of Association (para 26). Since the doctors were not challenging the fact that the MDUs board was empowered under the articles to take the decision it did, but were challenging the manner in which that power was exercised, the dispute between the doctors and the MDU did not fall within article 22(2) (paras 27 30). The court did not approach the application of article 22(2) by making an evaluative judgment about how the doctors claim related to the proceedings in Ireland, but instead focused its analysis on the specific nature of the claim against the particular defendant, the MDU. In view of its strict approach to the interpretation of article 22(2), it held that it could not be said that, in order for that provision to apply, it is sufficient that a legal action involve merely some link with a decision adopted by an organ of a company (paras 22 25). The Court of Justice adopted the same approach to the interpretation and application of article 22(2) of Regulation No 44/2001 in Berliner Verkehrsbetriebe (BVG), Anstalt des ffentlichen Rechts v JP Morgan Chase Bank NA (Case C 144/10) EU:C:2011:300; [2011] 1 WLR 2087 (the BVG case). JP Morgan and BVG, a local authority in Germany, entered into an interest rate swap contract which contained an English exclusive jurisdiction clause. JP Morgan brought proceedings in England claiming payments which it maintained were due under the contract. BVG argued that the swap contract was not valid because it had acted ultra vires in entering into it so that the decisions of its organs approving the making of the contract were null and void, with the result that the German courts had exclusive jurisdiction by virtue of article 22(2) of the Regulation. BVG also commenced proceedings in Germany for a declaration that the contract was void because the decision to enter into it had been ultra vires. The German court referred the question of jurisdiction to the Court of Justice. The Court of Justice held that the German courts did not have exclusive jurisdiction under article 22(2). The court followed its judgment in the Hassett case to the effect that article 22(2) had to be given a strict interpretation (paras 30 32). It emphasised that a strict interpretation of article 22(2) which did not go beyond what was required by the objectives pursued by it was particularly necessary precisely because article 22(2) is a rule of exclusive jurisdiction which cuts across the usual expectation that parties to a contract have autonomy to choose their forum (para 32). It further observed that one of the aims of article 22(2) was to confer exclusive jurisdiction on the courts of a member state in specific circumstances where, having regard to the matter at issue, those courts are best placed to adjudicate upon the disputes falling to them, because there is a particularly close link between those disputes and the member state (para 36). Having identified a divergence between different language versions of article 22(2), the court held that this was to be resolved by interpreting that provision as covering only proceedings whose principal subject matter comprises the validity of the constitution, the nullity or the dissolution of the company, legal person or association or the validity of the decisions of its organs (para 44). It also held that in a dispute of a contractual nature, questions relating to the contracts validity, interpretation or enforceability are at the heart of the dispute and form its subject matter, with the result that [a]ny question concerning the validity of the decision to conclude the contract, taken previously by the organs of one of the companies party to it, must be considered ancillary (para 38 and also paras 39 42). In other words, in relation to a claim based on a contract and brought in England pursuant to an exclusive jurisdiction clause in which an ultra vires defence was advanced, which was inextricably bound up with and hence ancillary to the underlying claim, a narrow interpretation of article 22(2) meant that the ultra vires defence did not have the effect of pulling the whole proceedings or any part thereof into the exclusive jurisdiction of the German courts. In that context it could not be said that the principal subject matter of the proceedings comprised the validity of the decisions of [BVGs] organs as would be required if article 22(2) was to have any application (para 44 of the judgment). This point deserves emphasis, in light of the very different way in which the Court of Appeal in the present proceedings sought to draw guidance from the BVG case. Relying on the judgment in that case, the Court of Appeal held that article 24(2) of the Recast Regulation required the court to form an overall evaluative judgment as to what the proceedings are principally concerned with (para 46). But this approach had the effect of expanding the application of article 24(2) (ex article 22(2) of Regulation No 44/2001), contrary to the guidance in the Hassett case and the BVG case, rather than narrowing its application, as the Court of Justice had been at pains to do in its judgments in those cases. According to the Court of Appeal, article 24(2) of the Recast Regulation is to be read as having the effect of allowing a party which is able to bring one claim within that article (the English company law claim) to add on another claim (the authority claim) which is conceptually distinct and is not inextricably bound up with the former claim, so that the latter claim is to be taken to fall within the scope of article 24(2) as regards the jurisdiction of the English courts as well. In my view, Mr Crow QC for Koza Altin and the trustees was right to criticise this step in the Court of Appeals analysis as an illegitimate reversal of the approach indicated in the judgment of the Court of Justice in the BVG case. Putting it another way, an evaluative assessment of proceedings relating to a specific claim, taken as a whole, may show that a particular aspect of the claim which involves an assessment of the validity of the decisions of a companys organs is so bound up with other features of the claim that it cannot be said that this is the principal subject matter of those proceedings, as would be required to bring the proceedings within the scope of article 24(2). This was the effect of the ruling of the Court of Justice in the BVG case. It does not follow from this that one can say the reverse, namely that where there are two distinct claims one, taken by itself, falling within article 24(2) as regards the exclusive jurisdiction of the English courts and the other, taken by itself, not falling within article 24(2) as regards such jurisdiction it is legitimate to maintain that by virtue of an overall evaluative judgment in relation to both claims taken together the second claim should be found also to fall within article 24(2) so that the English courts have exclusive jurisdiction in relation to it. In this sort of situation, it is the guidance in paras 22 25 of the Hassett judgment which is relevant, to the effect that a mere link between a claim which engages article 24(2) and one which does not is not sufficient to bring the latter within the scope of that provision. In the present case the English company law claim and the authority claim can be said to be connected in a certain sense, but they are distinct claims which are not inextricably bound up together. Koza Altin is a shareholder in Koza Ltd and may act as such. The issue, so far as the authority claim is concerned, is whether it has done so validly, acting by relevant organs authorised according to the law of its seat. The English company law claim can be brought and made good on its own terms without any need to get into the merits of the authority claim. The authority claim likewise can be brought and made good on its own terms without any need to get into the merits of the English company law claim. Assessing the authority claim as a distinct set of proceedings, clearly their principal subject matter does not comprise the validity of the decisions of the organs of a company which has its seat in England. In fact, it is clear that their principal subject matter comprises the validity of the decisions of the organs of a company which has its seat in another country, so that if Koza Altin had had its seat in Greece (as a hypothesis to test the validity of the respondents submissions) then, far from allocating exclusive jurisdiction to the English courts, article 24(2) of the Recast Regulation would have allocated exclusive jurisdiction to the Greek courts. It would not be tenable to suggest that the English courts had exclusive jurisdiction under article 24(2) in such a case. This analysis fits with and is supported by the scheme and underlying objectives of the Recast Regulation. First, in such a hypothetical case, Koza Altin might have had subsidiaries in several EU member states all of which might potentially have been affected by actions taken by the trustees on its behalf as occurred with the decision to send the notices concerning Koza Ltd in the present case. The relevant issues regarding the validity of the decisions of the trustees acting on behalf, and as an organ, of Koza Altin would fall to be assessed in the light of circumstances in the place of its seat and would be governed by the law of that place (in the hypothetical example, Greece), which would indicate clearly that it should be sued there. Secondly, requiring that Koza Altin and the trustees should be sued in the jurisdiction where it had its seat would ensure that one single authoritative judgment from the courts there would resolve the relevant disputes affecting subsidiary companies in all the other member states without any risk of inconsistent judgments based on evidence of Greek law (in the hypothetical example) being produced by the courts of each of those other member states. These two points reflect the primary reasons for the introduction of what is now article 24(2) of the Recast Regulation in the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, as set out in the report dated 27 September 1968 on that Convention by Mr P Jenard. Mr Jenard explained the reasons for providing for exclusive jurisdiction in the form of what is now article 24(2) as follows: It is important, in the interests of legal certainty, to avoid conflicting judgments being given as regards the existence of a company or association or as regards the validity of the decisions of its organs. For this reason, it is obviously preferable that all proceedings should take place in the courts of the state in which the company or association has its seat. It is in that state that information about the company or association will have been notified and made public These reasons underlying what is now article 24(2) of the Recast Regulation have been treated by the Court of Justice as significant factors relevant to the interpretation of that provision. The Court of Justice emphasised the importance of arriving at an interpretation of the provision so as to avoid the risk of inconsistent decisions in its judgment in the Hassett case at para 20 and again in its judgment in the BVG case at para 40. In the Hassett judgment at para 21 the court drew on Mr Jenards report to explain that it is the courts of the member state in which the company has its seat which are regarded as best placed to deal with disputes regarding the validity of decisions of its organs, inter alia because it is in that state that information about the company will have been notified and made public, hence [e]xclusive jurisdiction is attributed to those courts in the interests of the sound administration of justice. The interpretation of article 24(2) above is further supported by the judgment of the Court of Justice in Schmidt v Schmidt (Case C 417/15) EU:C:2016:881; [2017] I L Pr 6. That case concerned the ground of exclusive jurisdiction set out in article 24(1) of the Recast Regulation, as regards rights in rem in immovable property. In reliance on article 24(1) the claimant brought proceedings in Austria seeking rescission of a gift of land located there and, in consequence, an order for rectification of the Austrian land register. The Court of Justice held that whilst the latter aspect of the proceedings fell within article 24(1), the rescission claim did not. The court rejected the claimants contention that since there was plainly a link between the two claims, the whole proceedings should be regarded as falling within article 24(1) (paras 33 to 43). Contrary to that contention, article 24(1) had to be read narrowly and with a precise focus on each distinct claim in the proceedings to which it was said to apply. This was in line with the opinion of the Advocate General, in particular at paras 47 to 49. At para 48 of her opinion, Advocate General Kokott said that as article 24 is an exception to the general principles underlying the Recast Regulation, the provision is to be interpreted narrowly, and the concept of proceedings restricted to the claim that specifically has as its object a right in rem. The approach of the Advocate General and of the court is not compatible with the overall classification approach to the application of article 24(2) adopted by the Court of Appeal in the present case, according to which it concluded that the provision was applicable to the authority claim by reason of its being linked with the English company law claim. The Court of Justice has recently reviewed the position regarding the interpretation and application of article 22(2) of Regulation No 44/2001, the predecessor of article 24(2) of the Recast Regulation, in EON Czech Holding AG v Ddouch (Case C 560/16) EU:C:2018:167; [2018] 4 WLR 94. The case concerned a resolution by the general meeting of a Czech company to transfer all the securities in the company, including minority shareholdings, to its principal shareholder, the defendant, a German company. The minority shareholders brought proceedings in the Czech courts seeking to review the reasonableness of the consideration for their shares set by that resolution. Under Czech law, a ruling that the consideration was unreasonable would not result in the resolution being declared invalid (but presumably could result in an order that additional consideration should be paid). The defendant raised a jurisdictional objection in those proceedings, maintaining that by reason of its seat the German courts alone had jurisdiction. The Czech Supreme Court referred to the Court of Justice the question whether the Czech courts had exclusive jurisdiction in relation to the dispute by virtue of article 22(2) of Regulation No 44/2001. The Court of Justice answered that question in the affirmative. It reiterated and emphasised the key points which had emerged from its previous jurisprudence. The relevant passage merits being set out in full: 26. As regards the general scheme and context of Regulation No 44/2001, it should be recalled that the jurisdiction provided for in article 2 of that Regulation, namely that the courts of the member state in which the defendant is domiciled are to have jurisdiction, constitutes the general rule. It is only by way of derogation from that general rule that the Regulation provides for special and exclusive rules of jurisdiction for cases, which are exhaustively listed, in which the defendant may or must, depending on the case, be sued in the courts of another member state: the Reisch Montage case, para 22 and Berliner Verkehrsbetriebe (BVG), Anstalt des ffentlichen Rechts v JP Morgan Chase Bank NA (Case C 144/10) EU:C:2011:300; [2011] 1 WLR 2087; [2011] ECR I 3961, para 30. 27. Those rules of special and exclusive jurisdiction must accordingly be interpreted strictly. As the provisions of article 22 of Regulation No 44/2001 introduce an exception to the general rule governing the attribution of jurisdiction, they must not be given an interpretation broader than that which is required by their objective: Hassetts case, paras 18 and 19 and the BVG case, para 30. 28. As regards the objectives and the purpose of Regulation No 44/2001, it should be recalled that, as is apparent from recitals (2) and (11) thereof [which correspond with recitals (4) and (15) of the Recast Regulation], that Regulation seeks to unify the rules on conflict of jurisdiction in civil and commercial matters by way of rules of jurisdiction which are highly predictable. That Regulation thus pursues an objective of legal certainty which consists in strengthening the legal protection of persons established in the European Union, by enabling the applicant easily to identify the court in which he may sue and the defendant reasonably to foresee before which court he may be sued: Falco Privatstiftung v Weller Lindhorst (Case C 533/07) EU:C:2009:257; [2010] Bus LR 210; [2009] ECR I 3327, paras 21 22, Taser International Inc v SC Gate 4 Business SRL (Case C 175/15) EU:C:2016:176; [2016] QB 887, para 32 and Granarolo SpA v Ambrosi Emmi France SA (Case C 196/15) EU:C:2016:559; [2017] CEC 473, para 16. 29. Furthermore, as is apparent from recital (12) of that Regulation [which corresponds with recital (16) of the Recast Regulation], the rules of jurisdiction derogating from the general rule of jurisdiction of the courts of the member state in which the defendant is domiciled supplement the general rule where there is a close link between the court designated by those rules and the action or in order to facilitate the sound administration of justice. 30. In particular, the rules of exclusive jurisdiction laid down in article 22 of Regulation No 44/2001 seek to ensure that jurisdiction rests with courts closely linked to the proceedings in fact and law (see, with regard to article 16 of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (OJ 1972 L299, p 32), the provisions of which are essentially identical to those of article 22 of Regulation No 44/2001, Gesellschaft fur Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (Case C 4/03) EU:C:2006:457; [2006] ECR I 6509; [2007] ILPr 34, para 21), in other words, to confer exclusive jurisdiction on the courts of a member state in specific circumstances where, having regard to the matter at issue, those courts are best placed to adjudicate upon the disputes falling to them by reason of a particularly close link between those disputes and that member state: the BVG case, para 36. 31. Thus, the essential objective pursued by article 22(2) of Regulation No 44/2001 is that of centralising jurisdiction in order to avoid conflicting judgments being given as regards the existence of a company or as regards the validity of the decisions of its organs: Hassetts case [2008] ECR I 7403, para 20. 32. The courts of the member state in which the company has its seat appear to be those best placed to deal with such disputes, inter alia because it is in that state that information about the company will have been notified and made public. Exclusive jurisdiction is thus attributed to those courts in the interests of the sound administration of justice: Hassetts case, para 21. lidosta Rga VAS 33. However, the court has held that it cannot be inferred from this that, in order for article 22(2) of Regulation No 44/2001 to apply, it is sufficient that a legal action involve some link with a decision adopted by an organ of a company (Hassetts case, para 22), and that the scope of that provision covers only disputes in which a party is challenging the validity of a decision of an organ of a company under the company law applicable or the provisions of its article of association governing the functioning of its organs: Hassetts case, para 26 and flyLAL Lithuanian Airlines AS (in liquidation) v Starptautisk (Case C 302/13) EU:C:2014:2319; [2014] 5 CMLR 1277, para 40. 34. In the present case, while it is true that, under Czech law, proceedings such as those at issue in the main proceedings may not lead formally to a decision which has the effect of invalidating a resolution of the general assembly of a company concerning the compulsory transfer of the minority shareholders shares in that company to the majority shareholder, the fact none the less remains that, in accordance with the requirements of the autonomous interpretation and uniform application of the provisions of Regulation No 44/2001, the scope of article 22(2) thereof cannot depend on the choices made in national law by member states or vary depending on them. 35. On the one hand, the origin of those proceedings lies in a challenge to the amount of the consideration relating to such a transfer and, on the other, their purpose is to secure a review of the reasonableness of that amount. 36. It follows that, having regard to article 22(2) of Regulation No 44/2001, legal proceedings such as those at issue in the main proceedings concern the review of the partial validity of a decision of an organ of a company and that such proceedings are, as a result, capable of coming within the scope of that provision, as envisaged by its wording. 37. Thus, in those circumstances, a court hearing such an application for review must examine the validity of a decision of an organ of a company in so far as that decision concerns the determination of the amount of the consideration, decide whether that amount is reasonable and, where necessary, annul that decision in that respect and determine a different amount of consideration. 38. Furthermore, an interpretation of article 22(2) of Regulation No 44/2001 according to which that provision applies to proceedings such as those at issue in the main proceedings is consistent with the essential objective pursued by that provision and does not have the effect of extending its scope beyond what is required by that objective. In that regard, the existence of a close link between the 39. courts of the member state in which [the Czech company] is established, in the present case the Czech courts, and the dispute in the main proceedings is clear. 40. In addition to the fact that [the Czech company] is a company incorporated under Czech law, it is apparent from the file submitted to the court that the resolution of the general meeting that determined the amount of the consideration forming the subject of the main proceedings and the acts and formalities relating to it were carried out in accordance with Czech law and in the Czech language. 41. Likewise, it is not disputed that the court with jurisdiction must apply Czech substantive law to the dispute in the main proceedings. Consequently, bearing in mind the close link between the dispute in the main proceedings and the Czech courts, the latter are best placed to hear that dispute relating to the review of the partial validity of that resolution and the attribution, pursuant to article 22(2) of Regulation No 44/2001, of exclusive jurisdiction to those courts is such as to facilitate the sound administration of justice. The attribution of that jurisdiction to the Czech courts is also consistent with the objectives of predictability of the rules of jurisdiction and legal certainty pursued by Regulation No 44/2001, since, as Advocate General Wathelet observed in point 35 of his opinion, the shareholders in a company, especially the principal shareholder, must expect that the courts of the member state in which that company is established will be the courts having jurisdiction to decide any internal dispute within that company relating to the review of the partial validity of a decision taken by an organ of a company. 42. This reasoning again is not compatible with the decisions of the courts below in the present case. If one tests the application of article 24(2) of the Recast Regulation by reference to the hypothetical Greek case referred to above, it is clear by reference to the factors identified by the Court of Justice that it would be the courts in Greece which had exclusive jurisdiction under that provision in relation to the authority claim, not the courts in England. The non applicability of article 24(2) according to its proper interpretation does not alter when one asks whether the English courts have jurisdiction under that provision in the present case. Article 24(2) does not apply in the present case by reason of the strict (ie narrow) interpretation to be given to that provision (para 27 of the EON judgment, above). It is not sufficient that there is a link between the authority claim and the English company law claim (para 33 of the EON judgment, above). There is an absence of any particularly close link between the authority claim and the English courts as would be required to bring the case within article 24(2) (para 30 of the EON judgment, above); on the contrary, the relevant particularly close link as regards the authority claim is with the courts in Turkey. 43. In my view, the EU law regarding the interpretation and application of article 24(2) of the Recast Regulation, as reiterated in the EON judgment, is clear. It is acte clair that this provision does not cover the authority claim in the present proceedings. This means that the English courts cannot assert jurisdiction over Koza Altin and the trustees in relation to that claim in the present proceedings on the basis of that provision, and their appeal in that regard should be allowed. Before leaving this part of the case, however, it should be pointed out that there is an important consequence which flows from the fact that Turkey is not a member state of the EU. It means that the courts in Turkey do not enjoy exclusive jurisdiction in respect of the authority claim by virtue of the Recast Regulation. Therefore, even though the authority claim does not fall within the exclusive jurisdiction provision in article 24(2) as regards the courts in England, that does not prevent those courts from assuming jurisdiction in relation to the authority claim on some other basis, if one exists under the general English regime in the Civil Procedure Rules governing service of proceedings on persons outside the jurisdiction. It is not necessary to examine this possibility further, because in the present case it is solely on the basis of article 24(2) that the English courts have assumed jurisdiction over Koza Altin and the trustees in these proceedings in relation to the authority claim. Issue (ii): The application of article 24(2) in relation to the trustees Since on its proper interpretation article 24(2) of the Recast Regulation does not cover the authority claim, the English courts have no jurisdiction in relation to the trustees under that provision with respect to that claim. The proceedings against the trustees are principally concerned with the authority claim. It cannot be said that the fact that the English courts have jurisdiction under article 24(2) in relation to the English company law claim, as it concerns Koza Ltd, means that such jurisdiction extends to cover the trustees, who are not necessary parties to that claim and are more removed from it than they are in relation to the authority claim. Once it is appreciated that the application of article 24(2) to the authority claim and its application to the English company law claim are to be considered separately, a strict interpretation of article 24(2) as explained by the Court of Justice leads to the conclusion that it does not cover the trustees in relation to the latter claim. Further, the rationale underlying article 24(2) of avoiding conflicting decisions in relation to the relevant subject matter of each respective claim and the rationale that each respective claim should be tried in the courts best placed to do so both support that view. Conclusion I would allow the appeals by Koza Altin and the trustees and would accept their case that (i) the English courts have no jurisdiction under article 24(2) of the Recast Regulation over the trustees in relation to any part of the claims; (ii) the English courts have jurisdiction under that provision over Koza Altin in respect of the English company law claim, which is principally concerned with the affairs of Koza Ltd; and (iii) the English courts have no jurisdiction under that provision over Koza Altin in respect of the authority claim, which is principally concerned with the conduct of the business of Koza Altin.
UK-Abs
This appeal is about article 24(2) of the Brussels I Recast Regulation (Regulation (EU) No 1215/2012) (the Recast Regulation). This sets out special jurisdictional rules on the governance of corporations. The sixth appellant (Koza Altin) is a publicly listed company in Turkey. It is part of the Koza Ipek Group (the Group), formerly controlled by the second respondent (Mr Ipek) and his family. The first respondent (Koza Ltd) is a private company in England and a wholly owned subsidiary of Koza Altin. Mr Ipek alleges that he and the Group have been targeted unfairly by the Turkish government. In September 2015, he caused a number of changes to be made to Koza Ltds constitution and share structure to control his interests. Their validity and effect are in issue in these English proceedings. On 26 October 2015, in Turkish proceedings relating to a criminal investigation, a judge appointed certain individuals as trustees of Koza Altin and companies in the Group. Subsequently, he appointed the first to fifth appellants as trustees. On 19 July 2016, the trustees caused Koza Altin to serve a notice on the directors of Koza Ltd under section 303 of the Companies Act 2006 (the 2006 Act), requiring them to call a general meeting to consider resolutions for their removal and replacement with three of the trustees. The directors refused. On 10 August 2016, Koza Altin served a notice under section 305 of the 2006 Act to convene a meeting on 17 August. On 16 August, Mr Ipek and Koza Ltd made an urgent without notice application seeking an injunction to prevent the meeting. Injunctive relief was sought on two bases. First, that the notices of 19 July and 10 August 2016 (the notices) were void under section 303(5)(a) of the 2006 Act (the English company law claim). Second, that the notices were void because the English courts should not recognise the authority of the trustees to cause Koza Altin to do anything as a Koza Ltd shareholder, since they were interim appointees only and acting contrary to Turkish law, human rights and natural justice (the authority claim). On 16 August 2016, Snowden J granted interim injunctive relief. On 18 August, Mr Ipek and Koza Ltd issued a claim seeking declaratory and injunctive relief. Koza Altin and the trustees filed an acknowledgement of service and then an application contesting jurisdiction. Koza Altin also filed a Defence and Counterclaim to the English company law claim. In turn, Mr Ipek and Koza Ltd issued a strike out application, alleging lack of authority. Asplin J, in the High Court, dismissed the jurisdiction challenge on 17 January 2017. It was common ground that the English company law claim fell within article 24(2) of the Recast Regulation. Her assessment was that the authority claim was inextricably linked with that claim, which she considered the principal subject matter of the proceedings as a whole. Koza Altin and the trustees appealed. The Court of Appeal dismissed the appeal. It largely agreed with Asplin Js assessment and also rejected a distinct submission that the trustees are not necessary parties. The trustees and Koza Altin appeal to this Court. The issues are: (1) whether article 24(2) of the Recast Regulation confers jurisdiction on the English courts to determine the authority claim as against Koza Altin and (2) whether article 24(2) confers exclusive jurisdiction on the English courts to determine either the authority claim or the English company law claim as against the trustees. The Supreme Court unanimously allows the appeal. Lord Sales gives the sole judgment, with which all members of the Court agree. The basic scheme for allocation of jurisdiction under the Recast Regulation is that persons domiciled in a member state of the European Union should generally be sued in that member state (by article 4), but they may also be sued in another member state in certain situations, including in cases of exclusive jurisdiction specified under article 24 [20]. The cases of exclusive jurisdiction within article 24 reflect situations where there is an especially strong and fixed connection between the subject matter of a dispute and the courts of a particular member state [24]. The principle of exclusive jurisdiction supersedes the other principles underlying the Recast Regulation, including the domiciliary principle of jurisdiction (under article 4) and the principle of respect for party autonomy [25]. Given the scheme of the Recast Regulation, in principle, there should be only one correct application of article 24 in relation to a given claim [28]. The interpretation and application of article 24 cannot depend on an evaluative judgment in which different courts could reasonably take different views [28]. This is consistent with the objectives of setting highly predictable rules on the allocation of jurisdiction and avoiding inconsistent judgments on the same issue by the courts of different member states [29]. Decisions of the Court of Justice of the European Union, particularly Hassett v South Eastern Health Board (Case C 372/07) [2008] ECR I 7403 and Berliner Verkehrsbetriebe v JP Morgan Bank Chase Bank NA (Case C 144/10) [2011] 1 WLR 2087, show that article 24(2) is to be construed narrowly, as an exception to the general domiciliary principle, and should not be given an interpretation broader than required by its objective [31 32, 40 41]. These decisions also stress the importance of arriving at an interpretation which avoids the risk of inconsistent decisions [39]. Therefore, the interpretation of article 24(2) adopted by the Court of Appeal cannot be sustained. An evaluative assessment of proceedings relating to a specific claim may show that a particular aspect of the claim, involving an assessment of the validity of decisions of a companys organs, is so linked with other features of the claim that it is not the principal subject matter of those proceedings, as required by article 24(2). Where there are two distinct claims one, by itself, falling within article 24(2) and the other, by itself, not falling within article 24(2) it is not legitimate to maintain that by an overall evaluative judgment as to both claims taken together the second also falls within article 24(2), giving the English courts exclusive jurisdiction. A mere link between the two claims is not sufficient. [33 34] On issue (1), in this case, the English company law claim and the authority claim are connected in a sense, but they are distinct claims which are not inextricably bound up together. The English company law claim can be brought and made good on its own terms without regard to the authority claim, as can the authority claim. Assessing the authority claim as a distinct set of proceedings, clearly the principal subject matter does not comprise the validity of the decisions of the organs of a company with its seat in England. That interpretation and application of article 24(2) is acte clair. The English courts thus lack article 24(2) jurisdiction over Koza Altin and the trustees as to that claim. [35, 43] On issue (2), since article 24(2) does not cover the authority claim, the English courts lack article 24(2) jurisdiction in relation to the trustees with respect to that claim. The proceedings against the trustees are principally concerned with the authority claim. Article 24(2) jurisdiction over the English company law claim cannot extend to the trustees, who are not necessary parties to that claim. [45]
On 12 May 2008, Mr Karel Konecny (the appellant), a Czech national, was convicted in his absence by the District Court in Brno Venkov, Czech Republic (the District Court) of three offences of fraud, committed between November 2004 and March 2005, and was sentenced to eight years imprisonment. It was alleged that the three offences concerned a total sum of approximately 120,000. The extradition of the appellant has been requested by the District Court by a European Arrest Warrant (EAW) dated 17 April 2013 pursuant to the European Council Framework Decision of 13 June 2002 on the European Arrest Warrant and the Surrender Procedures between member states (2002/584/JHA) (the Framework Decision). The Czech Republic is a designated Category 1 territory pursuant to section 1 of the Extradition Act 2003 (the 2003 Act), by the Extradition Act 2003 (Designation of Part 1 Territories) Order 2003 (SI 2003/3333), as amended by the Extradition Act 2003 (Amendment to Designations) Order 2004 (SI 2004/1898). Part 1 of the 2003 Act, as amended, applies in this case. The EAW states that it is based on an enforceable judgment, namely the judgment of the District Court dated 12 May 2008, confirmed by the resolution of the Regional Court in Brno dated 23 July 2008. The EAW specifies that the appellant will be afforded an unqualified right to be re tried upon return in the event that he makes an application to be re tried. A letter from the District Court dated 17 March 2017 confirms that: (1) The appellant was never arrested in connection with the offences; (2) He was never questioned in connection with the offences; (3) He was never informed that he had been sought for questioning; and (4) He was never subject to a restriction from leaving the Czech Republic. The EAW was submitted to, and received by, the National Crime Agency (NCA), an authority designated by the Secretary of State for the purposes of Part 1 of the 2003 Act. On 2 March 2017 the EAW was certified by the NCA under sections 2(7) and (8) of the 2003 Act. The appellant was arrested pursuant to section 3 of the 2003 Act on 2 March 2017. The initial hearing took place at Westminster Magistrates Court pursuant to section 4 of the 2003 Act. The appellant was remanded in custody to the extradition hearing. The extradition hearing took place before District Judge Ashworth at Westminster Magistrates Court on 10 April 2017. One of the issues raised was whether, under section 14 of the 2003 Act, extradition would be oppressive or unjust given the passage of time since the offences. In reliance on section 14(a) of the 2003 Act, the appellant argued that he was an accused person facing a prospective trial and that it would be unjust and oppressive to order his extradition taking into account the delay since 2004 and events and changes in his personal circumstances within that period. The appellant also maintained that his extradition would infringe his rights under article 8 of the European Convention on Human Rights (ECHR). In his judgment dated 24 April 2017 District Judge Ashworth ruled that it was the conviction provisions in section 14(b) which were the operative provisions and that, as a result, the passage of time to be considered under section 11(1)(c) and section 14 was restricted to the period from 12 May 2008 (the date of conviction by the District Court) onwards. He concluded that the circumstances of the delay did not justify a finding that it would be unjust or oppressive to return the appellant to the Czech Republic. He went on to consider whether the return of the appellant would infringe the appellants article 8 rights and, in that context, considered the delay since the offences were committed. He, nevertheless, concluded that the public interest factors in favour of extradition outweighed the considerations relating to the appellants family and private life, even when the delay was taken into account. The appellants surrender to the Czech Republic was ordered pursuant to section 21(3) of the 2003 Act. The appellant sought to appeal against the order for his extradition. On 21 June 2017 Collins J granted permission to appeal. On 27 September 2017 Sir Wyn Williams, sitting as a judge of the High Court, upheld the District Judges ruling that it was the conviction provisions of section 14(b) which were applicable, with the result that the passage of time to be considered under section 11(1)(c) and section 14 was restricted to the period since conviction on 12 May 2008. The judge concluded that the extradition of the appellant would not be unjust or oppressive. He did, however, address the issue of delay further in the context of the article 8 challenge. He noted that the District Judge was fully aware of the very long delay between the offending and the hearing before him. Sir Wyn considered that the delay which had occurred was a powerful factor militating against extradition. However, he could not conclude that the District Judges decision on the article 8 issue could be said to be wrong. Accordingly, he dismissed the appeal pursuant to section 27(1)(b) of the 2003 Act. On 7 November 2017 the High Court certified the following point of law of general public importance: In circumstances where an individual has been convicted, but that conviction is not final because he has an unequivocal right to a retrial after surrender, is he accused pursuant to section 14(a) of the 2003 Act, or unlawfully at large pursuant to section 14(b) for the purposes of considering the passage of time bar to surrender? On the same date the High Court refused permission to appeal to the Supreme Court. On 23 March 2018 the Supreme Court (Lord Mance, Lord Hughes and Lady Black) granted permission to appeal to the Supreme Court. The relevant legislation The European Union system for the surrender of a requested person for the purposes of conducting a criminal prosecution or executing a custodial sentence or detention order is established by the Framework Decision as amended. The recitals in the preamble make clear that its objective is to abolish extradition between member states and replace it by a system of surrender between judicial authorities. It was intended that the introduction of a new simplified system of surrender of sentenced or suspected persons for the purposes of execution or prosecution should make it possible to remove the complexity and potential for delay inherent in previous extradition procedures (recital (5)). The mechanism of the EAW is based on a high level of confidence between member states (recital (10)). In relations between member states the EAW was intended to replace all the previous instruments concerning extradition (recital (11)). Article 1 of the Framework Decision provides in relevant part: Definition of the European arrest warrant and obligation to execute it Article 1 1. The European arrest warrant is a judicial decision issued by a member state with a view to the arrest and surrender by another member state of a requested person, for the purposes of conducting a criminal prosecution or executing a custodial sentence or detention order. 2. Member states shall execute any European arrest warrant on the basis of the principle of mutual recognition and in accordance with the provisions of this Framework Decision. Article 3 sets out grounds for mandatory non execution of an EAW and article 4 sets out grounds for optional non execution. Article 8 provides in relevant part: Article 8 Content and form of the European arrest warrant 1. The European arrest warrant shall contain the following information set out in accordance with the form contained in the Annex: (c) evidence of an enforceable judgment, an arrest warrant or any other enforceable judicial decision having the same effect, coming within the scope of articles 1 and 2; (f) the penalty imposed, if there is a final judgment, or the prescribed scale of penalties for the offence under the law of the issuing member state; Council Framework Decision 2009/299/JHA of 26 February 2009 amends the Framework Decision. Its full title states that its purpose is enhancing the procedural rights of persons and fostering the application of the principle of mutual recognition to decisions rendered in the absence of the person concerned at the trial. Recital (6) of the Preamble states: It inserts article 4a into the Framework Decision which provides in relevant part: (6) The provisions of this Framework Decision amending other Framework Decisions set conditions under which the recognition and execution of a decision rendered following a trial at which the person concerned did not appear in person should not be refused. These are alternative conditions; when one of the conditions is satisfied, the issuing authority, by completing the corresponding section of the European arrest warrant or of the relevant certificate under the other Framework Decisions, gives the assurance that the requirements have been or will be met, which should be sufficient for the purpose of the execution of the decision on the basis of the principle of mutual recognition. Article 4a Decisions rendered following a trial at which the person did not appear in person 1. The executing judicial authority may also refuse to execute the European arrest warrant issued for the purpose of executing a custodial sentence or a detention order if the person did not appear in person at the trial resulting in the decision, unless the European arrest warrant states that the person, in accordance with further procedural requirements defined in the national law of the issuing member state: (a) in due time: either was summoned in person and (i) thereby informed of the scheduled date and place of the trial which resulted in the decision, or by other means actually received official information of the scheduled date and place of that trial in such a manner that it was unequivocally established that he or she was aware of the scheduled trial; and (ii) was informed that a decision may be handed down if he or she does not appear for the trial; or (b) being aware of the scheduled trial, had given a mandate to a legal counsellor, who was either appointed by the person concerned or by the state, to defend him or her at the trial, and was indeed defended by that counsellor at the trial; or after being served with the decision and being (c) expressly informed about the right to a retrial, or an appeal, in which the person has the right to participate and which allows the merits of the case, including fresh evidence, to be re examined, and which may lead to the original decision being reversed: expressly stated that he or she does not (i) contest the decision; or (ii) did not request a retrial or appeal within the applicable time frame; or (d) was not personally served with the decision but: (i) will be personally served with it without delay after the surrender and will be expressly informed of his or her right to a retrial, or an appeal, in which the person has the right to participate and which allows the merits of the case, including fresh evidence, to be re examined, and which may lead to the original decision being reversed; and (ii) will be informed of the time frame within which he or she has to request such a retrial or appeal, as mentioned in the relevant European arrest warrant. Article 2(3) of Council Framework Decision 2009/299/JHA of 26 February 2009 sets out the amended requirements of the information to be included in an EAW in such a case. The Framework Decision as amended is implemented in the United Kingdom by Part 1 of the Extradition Act 2003 as amended. Section 2 provides in relevant part: 2. Part 1 warrant and certificate (1) This section applies if the designated authority receives a Part 1 warrant in respect of a person. (2) A Part 1 warrant is an arrest warrant which is issued by a judicial authority of a category 1 territory and which contains (a) the statement referred to in subsection (3) and the information referred to in subsection (4), or (b) the statement referred to in subsection (5) and the information referred to in subsection (6). (3) The statement is one that (a) the person in respect of whom the Part 1 warrant is issued is accused in the category 1 territory of the commission of an offence specified in the warrant, and (b) the Part 1 warrant is issued with a view to his arrest and extradition to the category 1 territory for the purpose of being prosecuted for the offence. (4) (5) The statement is one that (a) the person in respect of whom the Part 1 warrant is issued has been convicted of an offence specified in the warrant by a court in the category 1 territory, and (b) the Part 1 warrant is issued with a view to his arrest and extradition to the category 1 territory for the purpose of being sentenced for the offence or of serving a sentence of imprisonment or another form of detention imposed in respect of the offence. Section 10 provides: 10. Initial stage of extradition hearing Section 11 provides in relevant part: 11. Bars to extradition (1)(1) This section applies if a person in respect of whom a Part 1 warrant is issued appears or is brought before the appropriate judge for the extradition hearing. (2) The judge must decide whether the offence specified in the Part 1 warrant is an extradition offence. (3) If the judge decides the question in subsection (2) in the negative he must order the persons discharge. (4) If the judge decides that question in the affirmative he must proceed under section 11. (1) If the judge is required to proceed under this section he must decide whether the persons extradition to the category 1 territory is barred by reason of the passage of time; (c) (2) Sections 12 to 19F apply for the interpretation of subsection (1). (3) If the judge decides any of the questions in subsection (1) in the affirmative he must order the persons discharge. (4) If the judge decides those questions in the negative and the person is alleged to be unlawfully at large after conviction of the extradition offence, the judge must proceed under section 20. (5) If the judge decides those questions in the negative and the person is accused of the commission of the extradition offence but is not alleged to be unlawfully at large after conviction of it, the judge must proceed under section 21A. Section 14 provides: 14. Passage of time A persons extradition to a category 1 territory is barred by reason of the passage of time if (and only if) it appears that it would be unjust or oppressive to extradite him by reason of the passage of time since he is alleged to have committed the extradition offence (where he is (a) accused of its commission), or (b) become unlawfully at large (where he is alleged to have been convicted of it). Section 20 provides: 20. Case where person has been convicted (1) If the judge is required to proceed under this section (by virtue of section 11) he must decide whether the person was convicted in his presence. (2) If the judge decides the question in subsection (1) in the affirmative he must proceed under section 21. (3) If the judge decides that question in the negative he must decide whether the person deliberately absented himself from his trial. (4) If the judge decides the question in subsection (3) in the affirmative he must proceed under section 21. (5) If the judge decides that question in the negative he must decide whether the person would be entitled to a retrial or (on appeal) to a review amounting to a retrial. (6) If the judge decides the question in subsection (5) in the affirmative he must proceed under section 21. (7) If the judge decides that question in the negative he must order the persons discharge. (8) The judge must not decide the question in subsection (5) in the affirmative unless, in any proceedings that it is alleged would constitute a retrial or a review amounting to a retrial, the person would have these rights (a) the right to defend himself in person or through legal assistance of his own choosing or, if he had not sufficient means to pay for legal assistance, to be given it free when the interests of justice so required; (b) the right 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. Section 21 provides in relevant part: 21. Person unlawfully at large: human rights (1) If the judge is required to proceed under this section (by virtue of section 20) he must decide whether the persons extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998 (c 42). (2) If the judge decides the question in subsection (1) in the negative he must order the persons discharge. (3) If the judge decides that question in the affirmative he must order the person to be extradited to the category 1 territory in which the warrant was issued. Section 21A provides in relevant part: 21A Person not convicted: human rights and proportionality If the judge is required to proceed under this (1) section (by virtue of section 11), the judge must decide both of the following questions in respect of the extradition of the person (D) the extradition would be (a) whether the extradition would be compatible with the Convention rights within the meaning of the Human Rights Act 1998; (b) whether disproportionate. (2) In deciding whether the extradition would be disproportionate, the judge must take into account the specified matters relating to proportionality (so far as the judge thinks it appropriate to do so); but the judge must not take any other matters into account. (3) These are the specified matters relating to proportionality the seriousness of the conduct alleged to (a) constitute the extradition offence; (b) the likely penalty that would be imposed if D was found guilty of the extradition offence; (c) the possibility of the relevant foreign authorities taking measures that would be less coercive than the extradition of D. (4) The judge must order Ds discharge if the judge makes one or both of these decisions that the extradition would not be (a) compatible with the Convention rights; (b) disproportionate. that the extradition would be (5) The judge must order D to be extradited to the category 1 territory in which the warrant was issued if the judge makes both of these decisions that the extradition would be compatible (a) with the Convention rights; (b) disproportionate. that the extradition would not be Section 68A provides: 68A. Unlawfully at large (1) A person is alleged to be unlawfully at large after conviction of an offence if (a) he is alleged to have been convicted of it, and (b) his extradition is sought for the purpose of his being sentenced for the offence or of his serving a sentence of imprisonment or another form of detention imposed in respect of the offence. (2) This section applies for the purposes of this Part, other than sections 14 and 63. The EAW The EAW in this case was issued by the District Court on 17 April 2013. It states that it is based on an enforceable judgment, namely the judgment of the District Court dated 12 May 2008, confirmed by the resolution of the Regional Court in Brno dated 23 July 2008. It states that the length of the custodial sentence imposed was eight years. In compliance with article 4a of the Framework Decision as amended it states in Box (d) that the decision was reached in absentia and that the person concerned has not been summoned in person or otherwise informed of the date and place of the hearing which led to the decision rendered in absentia. However, it specifies legal guarantees as follows: After surrendering, the convict will have the right for a new process in his presence. Such right is ensured by the provisions of section 306a para 2 of the Code of Criminal Procedure. The provisions of section 306a para 2 of the Code of Criminal Procedure say: Section 306a (1) If reasons for the proceedings against the escaped person cease, it will be proceeded in the criminal procedure based on general provisions. If the defendant requires so, the evidence already given in the previous court proceedings, the nature of which allows so or the repetition of which are not hindered by any significant fact, shall be given again in the proceedings in front of the court. Otherwise the protocols on giving of such evidence will be read out to the defendant or the video and audio recordings made on the acts made via videoconference facilities shall be played to him and he will be allowed to make his statement on them. (2) If the proceedings against the escaped person were ended by a legally effective conviction and subsequently the reasons ceased, for which the proceedings were lead against the escaped person; based on the application of the convict filed within eight days as of the delivery of the conviction, the court of the first degree shall revoke such a conviction and the main hearing will be done repeatedly, in the scope stipulated under para 1. The convict must receive instructions on the right to file an application for revocation of the legally effective conviction when the conviction is delivered. The court reasonably proceeds if it is required by an international treaty by which the Czech Republic is bound. (3) The period from the legal effectiveness of the conviction until its revocation pursuant to para 2 shall not be counted in the statute of limitations. (4) the resolution to the disadvantage of the defendant. In the new proceedings there cannot be any change in The EAW then sets out a description of each of the three offences of fraud of which the appellant was convicted. Accusation warrants and conviction warrants Part 1 of the 2003 Act gives effect in national law to the Framework Decision as amended. The choice of form and methods to achieve that result is left to member states. In this instance, the United Kingdom has departed significantly from a direct implementation of the scheme of the Framework Decision. The provisions of Part 1 of the 2003 Act must, nevertheless, be interpreted as intended to give effect to the Framework Decision and, so far as possible, construed consistently with its terms and purpose. (Criminal proceedings against Pupino (Case C 105/03) [2006] QB 83, paras 43, 47; Office of the Kings Prosecutor, Brussels v Cando Armas [2005] UKHL 67; [2006] 2 AC 1 per Lord Bingham at para 8; Dabas v High Court of Justice in Madrid, Spain [2007] UKHL 6; [2007] 2 AC 31 per Lord Hope at para 25; Caldarelli v Judge for Preliminary Investigations of the Court of Naples, Italy [2008] UKHL 51; [2008] 1 WLR 1724 per Lord Bingham at para 22, per Lord Mance at para 42.) The Framework Decision defines the EAW as a judicial decision issued by a member state with a view to the arrest and surrender by another member state of a requested person for the purposes of conducting a criminal prosecution (an accusation warrant) or executing a custodial sentence or detention order (a conviction warrant) (article 1(1)). In general, the Framework Decision deals with accusation and conviction cases together although the respective formal requirements of the two types of warrant differ. The 2003 Act distinguishes between an accusation warrant (section 2(3) and (4)) and a conviction warrant (section 2(5) and (6)). This distinction is particularly pronounced under the 2003 Act because not only do the formal requirements of the respective warrants differ but the statute also sets out separate routes which must be followed in those respective cases. On the face of the Acts provisions, the judge at the extradition hearing must initially in both cases decide under section 10 whether the offence specified in the Part 1 warrant is an extradition offence. If it is, he must then consider whether extradition is barred by any of the matters set out in section 11. Most of the bars apply equally to accusation and conviction warrants but two (absence of prosecution decision and forum) apply only to accusation warrants. The bar arising by reason of the passage of time is amplified in section 14 which draws an important distinction between an accused person (where the relevant period will be the passage of time since he is alleged to have committed the extradition offence) and a convicted person (where the relevant period will be the passage of time since he is alleged to have become unlawfully at large). If extradition is not barred, the different routes diverge further at this point. The statute provides that if the person is alleged to be unlawfully at large after conviction of the extradition offence the judge must proceed under section 20 (section 11(4)). Under section 20, the court must be satisfied that, where the person has been convicted, he was convicted in his presence, or he deliberately absented himself from his trial, or he would be entitled to a retrial or (on appeal) to a review amounting to a retrial. If section 20 is satisfied the judge must proceed under section 21 which addresses the compatibility of the persons extradition with Convention rights under the Human Rights Act 1998 (HRA 1998). By contrast, if the person is accused of the commission of the extradition offence but is not alleged to be unlawfully at large after conviction of it, section 11(5) directs that the judge must proceed under section 21A. Section 21A is discrete from section 21 and requires the judge to address both Convention rights under the 1998 Act and the issue of proportionality. At the heart of the present appeal lies the issue of the characterisation of the appellant as an accused person or a convicted person. The application in an individual case of the distinction drawn by the Framework Decision between these two cases may often be far from straightforward given the inevitable differences in criminal procedure among member states. However, the EAW system is founded on the high level of mutual trust and confidence between member states and, as a result, in seeking to give effect to this distinction when applying implementing legislation, a national court will usually attach considerable weight to the description by the requesting judicial authority in the EAW of the position in its own national law. In Caldarelli Lord Bingham expressed the matter in this way: Under article 1 of the Framework Decision the EAW is a judicial decision issued by the requesting state which (by article 2) this country (subject to the provisions of the Decision) must execute on the basis of the principle of mutual recognition. It might in some circumstances be necessary to question statements made in the EAW by the foreign judge who issues it, even where the judge is duly authorised to issue such warrants in his category 1 territory, but ordinarily statements made by the foreign judge in the EAW, being a judicial decision, will be taken as accurately describing the procedures under the system of law he or she is appointed to administer. (para 24) Similarly, in Istanek v District Court of Prerov [2011] EWHC 1498 (Admin) Laws LJ, observed: The statement of information, having its source in the judicial authority in the requesting state, is ordinarily in our courts to be taken at face value. It may exceptionally be appropriate to initiate further inquiry of the requesting states authorities. (para 25) The view of the requesting judicial authority expressed in the EAW will, therefore, not always be conclusive. However, it will normally be influential and, in the absence of evidence to the contrary, it is likely to be followed. (See the discussion in Caldarelli, per Lord Mance at para 42.) The appellants case On behalf of the appellant, Mr Mark Summers QC submits that the category of convicted persons is limited to persons who are finally convicted and that all other persons are to be treated as accused. He further submits that, while the content of the EAW in the present case would satisfy the requirements of either an accusation warrant or a conviction warrant under section 2 of the 2003 Act, the appellant, despite manifestly not being finally convicted, was treated as a convicted rather than an accused person for the purpose of his extradition proceedings and that this radically changed the substantive content and course of those proceedings. In particular, he points to the following consequences: (1) The appellants EAW was measured against the less exacting conviction requirements of section 2(5) (6) of the 2003 Act as opposed to the accusation requirements of section 2(3) (4). (2) He was treated as being unlawfully at large from that conviction rather than still accused of the offences, for the purposes of the passage of time assessment under section 14. Mr Summers submits that, as a result, consideration of delay prior to conviction and consideration of injustice were precluded. Mr Summers seeks to advance his case on two distinct bases. First, he submits that, as a matter of EU law, the appellant is required to be categorised as a person whose return is sought for the purposes of conducting a criminal prosecution within article 1(1) of the Framework Decision. Secondly, he submits that, as a matter of domestic law, the appellant is not to be categorised as convicted under the 2003 Act. These submissions will be considered in turn. EU law Mr Summers places at the forefront of his submissions on EU law the decision of the CJEU in Proceedings concerning IB (Case C 306/09) [2011] 1 WLR 2227. IB, a Romanian national had been convicted of criminal offences in Romania and sentenced to four years imprisonment to be served under a system of supervised release. That sentence was upheld on appeal. However, on further appeal the Supreme Court ordered that the sentence be served in custody. The decision of the Supreme Court was rendered in absentia and IB was not notified of the date or place of the hearing. The sentence was never executed. IB fled Romania and settled in Belgium where he obtained a residence permit and was joined by his wife and children. The Romanian requesting authority issued an EAW for his arrest with a view to executing the sentence. At the relevant time, prior to Council Framework Decision 2009/299/JHA, article 4(6) of the Framework Decision authorised the executing judicial authority to refuse to execute the warrant if the [EAW] has been issued for the purposes of execution of a custodial sentence where the person is resident in the executing member state and that state undertakes to execute the sentence in accordance with its domestic law. Article 5(1) provided that where the EAW had been issued for the purposes of executing a sentence in absentia without notice to the person concerned, surrender might be subject to a condition that the issuing judicial authority give an assurance that the person will have an opportunity to apply for a retrial. Article 5(3) provided that where a person whose return is sought for the purposes of prosecution is a resident of the executing member state, surrender may be subject to the condition that the person is returned to the executing member state to serve there any sentence passed against him in the issuing member state. Article 18 of the Belgian Law on Transfers, which governed the execution in Belgium of sentences imposed abroad, did not apply to sentences imposed in absentia save in specified cases where the sentence had become final. The Belgian Court of First Instance, Nivelles, found that under Romanian procedural law, due to the fact that he had been sentenced in absentia, IB was entitled to be retried. That court took the view that it was a warrant for the execution of a sentence and that therefore there were no legal grounds for refusing execution or making it conditional on the later return of IB to serve his sentence in Belgium. It held that IB could not rely on the Belgian law implementing article 4(6) of the Framework Decision because it only applied to final decisions and IB had the right to request a retrial. The court referred the matter to the Belgian Constitutional Court which, in turn, made a preliminary reference to the CJEU. Its first two questions were as follows: (1) Is a European arrest warrant issued for the purposes of the execution of a sentence imposed in absentia, without the convicted person having been informed of the date and place of the hearing, and against which that person still has a remedy, to be considered to be, not an arrest warrant issued for the purposes of the execution of a custodial sentence or detention order within the meaning of article 4(6) of Framework Decision [2002/584], but an arrest warrant for the purposes of prosecution within the meaning of article 5(3) of the Framework Decision? (2) If the reply to the first question is in the negative, are article 4(6) and article 5(3) of the Framework Decision to be interpreted as not permitting the member states to make the surrender to the judicial authorities of the issuing state of a person residing on their territory who is the subject, in the circumstances described in the first question, of an arrest warrant for the purposes of the execution of a custodial sentence or detention order, subject to a condition that that person be returned to the executing state in order to serve there the custodial sentence or detention order imposed by a final judgment against that person in the issuing state? Mr Summers places particular reliance on the following passage in the judgment of the CJEU in response to the first two questions: 56. If the sentence imposed in absentia which, in the case in the main proceedings, provides the basis for the arrest warrant is not yet enforceable, the surrender would serve the specific purpose of enabling a criminal prosecution to be conducted or the case to be retried, that is to say surrender would be for the purposes of criminal prosecution which is the situation envisaged by article 5(3) of Framework Decision 2002/584. 57. Given that the situation of a person who was sentenced in absentia and to whom it is still open to apply for a retrial is comparable to that of a person who is the subject of a European arrest warrant for the purposes of prosecution, there is no objective reason precluding an executing judicial authority which has applied article 5(1) of Framework Decision 2002/584 from applying the condition contained in article 5(3) of that framework decision. 61 In the light of all of the foregoing considerations, the answer to the first and second questions is that articles 4(6) and 5(3) of Framework Decision 2002/584 must be interpreted as meaning that, where the executing member state has implemented article 5(1) and article 5(3) of that Framework Decision in its domestic legal system, the execution of a European arrest warrant issued for the purposes of execution of a sentence imposed in absentia within the meaning of article 5(1) of the Framework Decision, may be subject to the condition that the person concerned, who is a national or resident of the executing member state, should be returned to the executing State in order, as the case may be, to serve there the sentence passed against him, following a new trial organised in his presence in the issuing member state. The CJEU concluded in relation to the first two questions: Mr Summers submits that this decision and, in particular, the passage at paras 56 and 57 establish that, in all cases where a person whose surrender is sought under an EAW following conviction in absentia of which he had no notice and, as a result, is entitled to a retrial, the EAW must be characterised as for the purposes of conducting a criminal prosecution and not for the purposes of executing a custodial sentence. I am unable to accept this submission. (1) The referring court expressly asked by its first question whether in circumstances where there was a right of retrial the EAW should be treated not as a warrant for the purposes of the execution of a custodial sentence but as a warrant for the purposes of prosecution. The CJEU did not answer that question directly. (2) Instead it stated that if the sentence imposed in absentia is not yet enforceable the surrender would serve the purpose of enabling a criminal prosecution to be conducted or the case to be retried and the surrender would be for the purposes of criminal prosecution. It did not say that that consequence followed if the sentence was enforceable but subject to an application to set it aside. (3) The CJEU then went on to say (at para 57) that the situation of a person sentenced in absentia and who could apply for a retrial was comparable to that of a person who was the subject of a prosecution warrant. On that basis, it was able to conclude that there was no objective reason precluding an executing judicial authority from applying the condition contained in article 5(3). The court was extending the application of article 5(3). It was not saying that such a warrant was or was to be treated for all purposes as if it were a prosecution warrant. (4) The CJEU concluded (at para 57) that the condition contained in article 5(3) could be applied by an executing judicial authority which had applied article 5(1). The warrant must, therefore, have been issued for the purposes of executing a sentence or detention order. (5) Had the CJEU intended to draw the conclusion for which the appellant contends, it would have effected a fundamental change in the operation of the EAW scheme. I am confident that, had this been intended, such a development would have been expressed by the court in the clearest terms possible. (6) I accept that there are certain passages in the opinion of Advocate General Cruz Villalon which go some way to support the proposition for which the appellant in this case contends. In particular, at paras 49 51 the Advocate General considers that an EAW which allows the person sought to be retried is formally a warrant for execution of a sentence which, once the person states that he or she wishes to be retried, becomes in substance a warrant for the purposes of prosecution. Accordingly, he says, entry into play of article 5(1) changes the form of the arrest warrant but does not affect the rights accorded to the person concerned under EU law. However, there is no trace of such reasoning in the judgment of the court. Moreover, it is inconsistent with the dichotomy between accusation warrants and conviction warrants established by the Framework Decision, a dichotomy which has been maintained since the decision in IB. When asked by the court during the course of his submissions whether there was any other Luxembourg authority to support his submission, Mr Summers very frankly accepted that there was no such direct authority. He did, however, refer the court to Criminal proceedings against Tupikas (Case C 270/17PPU) [2017] 4 WLR 188. This case, it seems to me, is concerned with a different issue. There, the EAW mentioned an enforceable judgment sentencing the defendant to a term of imprisonment and further stated that he had unsuccessfully appealed against that judgment. He had appeared in person at the trial at first instance but the EAW provided no information as to whether he had appeared at the appeal hearing. The CJEU held that where the criminal procedure of the issuing member state gives rise to successive judicial decisions, at least one of which has been handed down in absentia, the concept of trial resulting in the decision in article 4a(1) of the Framework Decision must be interpreted as relating only to the instance at the end of which the decision is handed down which finally rules on the guilt of the person concerned and imposes a penalty on him, following a re examination, in fact and in law, of the merits of the case (at para 98). The decision was therefore concerned with ascertaining which stage or stages of proceedings constitute the trial resulting in the decision for the purposes of article 4a. Criminal proceedings against Zdziaszek (Case C 271/17PPU) [2017] 4 WLR 189 addresses the same issue and applies Tupikas. This is a distinct question from that before us, namely whether the present case is to be treated as an accusation case or a conviction case. (I note that the same conclusion was drawn by the Divisional Court (Treacy LJ and Males J) in Attila Imre v District Court in Szolnok (Hungary) [2018] EWHC 218 (Admin), para 57.) In particular, Tupikas and Zdziaszek do not support the proposition that for an EAW to be issued for the purpose of executing a custodial sentence it must be a final judgment of conviction in the sense that it is irrevocable. On the contrary, the court in Tupikas observed: In that regard, it should be pointed out that although article 8(1)(c) of Framework Decision 2002/584 uses the terms enforceable judgment or any other enforceable judicial decision having the same effect and although such enforceability is decisive in determining the time from which a European arrest warrant may be issued, that enforceability is of lesser relevance under article 4a(1) of that Framework Decision. However, it is appropriate to pay attention to the final nature of the decision or judgment for the purposes of interpreting article 4a(1), as is apparent from other relevant, convergent provisions of the Framework Decision. (para 71) I note that article 1(1) of the Framework Decision identifies the two categories of warrant without including any reference to a final decision. The references in the Preamble of the Framework Decision to abolishing the formal extradition procedure in respect of persons who are fleeing from justice after having been finally sentenced (recital 1) and a system of free movement of judicial decisions in criminal matters, covering both pre sentence and final decisions (recital 5) are merely incidental. Article 8(f) does require that a warrant should state the penalty imposed if there is a final judgment. By contrast, article 8(c) requires a warrant to contain evidence of an enforceable judgment and any other enforceable judicial decision having the same effect. We now have an authoritative statement from the CJEU in Tupikas (para 71) that while it is appropriate to pay attention to the final nature of the decision or judgment for the purposes of interpreting article 4a(1), it is enforceability which is decisive in determining the time from which a European arrest warrant may be issued. (See also, in this regard, IB at para 56.) I have, accordingly, come to the clear conclusion that the appellants case founded on EU law is not made out. In these circumstances, I would refuse the application on behalf of the appellant, made during the oral hearing, to refer this issue to the Court of Justice of the European Union for a preliminary ruling. Domestic law On behalf of the appellant it is submitted that, because he has a right to be retried, he is required to be treated as an accused person for the purposes of Part 1 of the 2003 Act. Contumacious convictions Mr Summers submits that a conviction where a defendant has an unfettered and unconditional right to have the conviction set aside and to obtain a retrial has always been regarded, as a matter of English law, as a conviction in contumacy (conviction par contumace) and not a final judgment. He submits that courts in this jurisdiction have consistently held that the categorisation of such a case depended upon a factual assessment of whether, upon return, the defendant would enjoy an unqualified right to a retrial on the merits notwithstanding the conviction. If so, that persons extradition had to be sought as an accused person, the conviction being contumacious. If not, the persons extradition had to be sought as a convicted person. In this regard we were referred to a large number of decisions concerning contumacious convictions. It is clear that courts in this jurisdiction, applying legislation previously in force, have been willing to treat a person convicted in his absence as an accused person, provided that the whole matter can be reopened as of right in the event of his subsequent surrender and appearance. (See, for example, R v Governor of Pentonville Prison, Ex p Zezza [1983] 1 AC 46, per Lord Roskill at p 55D E.) This approach has also been reflected in the legislation itself. (See, for example, section 26 Extradition Act 1870; section 19(2), Fugitive Offenders Act 1967; Schedule 1, paragraph 20 to the Extradition Act 1989.) However, the appellants reliance on these authorities fails to take account of the fact that the EAW was intended to be a new departure introducing a simplified scheme for the surrender of accused and convicted persons. The Framework Decision sets out a relatively detailed scheme which distinguishes between an accusation warrant and a conviction warrant without giving any indication that a principle of contumacious convictions resembling that developed in this jurisdiction was to play any part. On the contrary, provision was made originally in article 5(1) and is now made by article 4a(1) for cases of conviction in absentia without requiring or permitting a person with a right of retrial to be dealt with under the scheme as an accused person. Indeed, the original article 5(1) contemplated that cases of conviction in absentia would be dealt with under a conviction warrant, as does recital (13) in the Preamble to Framework Decision 2009/299/JHA. Recital (4) in the Preamble to that Framework Decision provides: (4) It is therefore necessary to provide clear and common grounds for non recognition of decisions rendered following a trial at which the person concerned did not appear in person. This Framework Decision is aimed at refining the definition of such common grounds allowing the executing authority to execute the decision despite the absence of the person at the trial, while fully respecting the persons right of defence. This Framework Decision is not designed to regulate the forms and methods, including procedural requirements, that are used to achieve the results specified in this Framework Decision, which are a matter for the national laws of the member states. Lest the contrary be suggested, I consider that the final sentence of this recital leaves no room for the application of a principle which would be inconsistent with the common scheme. In the same way, in the implementing legislation in Part 1 of the 2003 Act section 20 is clearly intended to make comprehensive provision for cases of conviction in absentia without requiring or permitting a contumacious conviction to be treated as an accusation case. I consider that the principles relating to contumacious convictions developed in the case law under previous legislation can have no application under the current scheme. For courts in this jurisdiction now to impose this concept unilaterally on the EAW scheme by requiring accusation warrants in such cases would be highly disruptive of the EAW scheme and inconsistent with the obligations of the United Kingdom under it. The principle of contumacious convictions described above is likely to be the origin of an observation of Lord Brown in Gomes v Government of the Republic of Trinidad and Tobago [2009] UKHL 21; [2009] 1 WLR 1038 in relation to section 82 of the 2003 Act, a provision in Part 2 of the Act, which is in substantially identical terms as section 14. The final question discussed before the House was the period of time for consideration under section 82. It starts, of course, with the date of the alleged offence (section 82(a)) or when the fugitive became unlawfully at large (section 82(b)) (a fugitive tried in his absence without having deliberately absented himself from his trial falling for this purpose under section 82(a)). (para 38) Whatever may be the current relevance of the principle of contumacious convictions as developed in this jurisdiction to extradition proceedings under Part 2 of the 2003 Act, I consider that it has none under Part 1. The statutory scheme More generally, I consider that the appellants case that, because of his right to be retried, he is required to be treated as an accused person for the purposes of Part 1 of the 2003 Act is inconsistent with the EAW scheme and the express provisions of the statute. Mr Summers submits that, when section 11 is applied in this case, if none of the bars to extradition applies the case falls within section 11(5) because the appellant is a person accused. However, even if the appellant were required to be treated as a person accused for this purpose, which I would not accept, that subsection applies only where the person is accused of the commission of an extradition offence but is not alleged to be unlawfully at large after conviction of it. Section 68A defines unlawfully at large for the purposes of section 11. Here, the appellant clearly falls within that definition. He is alleged to have been convicted of the relevant offences and his extradition is sought for the purpose of his serving a sentence of imprisonment imposed in respect of those offences. His case does not fall within subsection 11(5) but within subsection 11(4) because he is alleged to be unlawfully at large after conviction of the extradition offence. As a result, the judge is directed to proceed under section 20 and not under section 21A. Mr Summers then submits that if section 20 is applied to the case of this appellant, he would enter section 20 as a convicted person but should leave as an accused person. He would have been recognised by the extradition court as entitled to an unfettered and unconditional retrial. In these circumstances, it is submitted, fairness ought to dictate that he now be recategorized as an accused person and that all of the antecedent statutory questions that have been answered on the false premise that he was a convicted person be re examined. I am unable to accept this submission. First, section 20 is intended to provide protection in the specific case of a person convicted in his absence and the sequential application of its express provisions achieves precisely that. In the present case, it is common ground that the appellant was not convicted in his presence within subsection 20(1) and that he did not deliberately absent himself from his trial under subsection 20(3). However, it is also common ground that he would be entitled to a retrial under subsection 20(5) which meets the requirements of subsection 20(8). If the last issue were not resolved in that way, the appellant would have to be discharged. In this case, however, the judge is directed by subsection 20(6) to proceed under section 21 which addresses the human rights of persons unlawfully at large. Secondly, I am unable to accept the submission that section 20 is the successor to section 6(2) of the Extradition Act 1989 and therefore was never intended to apply to persons with a right of retrial. In this regard I note the decision of the Divisional Court in Foy v The Governor of HM Prison Brixton and the Government of France (unreported) 14 April 2000 on the earlier provision. However, whatever may have been the position under the 1989 Act, it is clear that section 20 is intended to make comprehensive provision for cases where a convicted person was convicted in absentia. Thirdly, Mr. Summers submits that if a person convicted in absentia subsequently disavows his right to a retrial his status would revert to that of a convicted person. However, nothing in the statutory scheme contemplates or makes provision for such changes of status. Mr Summers accepts that section 20(6), which requires the judge to proceed under section 21 which addresses the human rights of persons unlawfully at large, appears to preclude the approach for which he contends. It does indeed. If a person whose surrender is sought emerges from section 20 as an accused person his or her case should, surely, thereafter be dealt with under section 21A which addresses the human rights and proportionality of a person not convicted. Mr Summers response was that this was an oversight in the drafting of the legislation. He submits that it would still be open to the extradition court at any stage to recognise that the warrant was no longer valid as a conviction warrant within the meaning of section 2 and to cause it to be re appraised and re issued if necessary as an accusation warrant. Further, he submits that the fact that EU law requires a defendant in such circumstances to be re treated as an accused person requires the court to adopt a reading of section 20 which achieves that result or to find a common law solution which achieves that result. Here he relies on Criminal proceedings against Pupino. For reasons stated earlier in this judgment, I do not accept that EU law requires the result for which he contends. Moreover, it seems to me that this proposed reading of section 20 cannot be correct and, on the contrary, that subsections 20(6), (7) and (8) make it entirely clear that a person with a right to a retrial which meets the requirements in (8) is to be treated as convicted not as accused. The express provisions in their natural meaning provide a coherent structure within which to address all cases of trial in absentia. Authorities We have been referred to a number of authorities which, it is said, support the appellants case. Mr Summers places considerable reliance on the decision of the House of Lords in Caldarelli. In that case, Mr Caldarelli had been convicted by an Italian court of a drugs offence and sentenced to a term of imprisonment. He had deliberately absented himself from the trial but was represented by lawyers appointed by him personally. His lawyers lodged an appeal on his behalf. While that appeal was still pending an Italian judge issued an EAW which stated that he was accused in Italy of a drugs offence. He was arrested in the United Kingdom under the warrant and his extradition to Italy ordered. He appealed on the ground that the warrant ought to have included a statement that he had been convicted of an offence in accordance with section 2(5) of the 2003 Act and was therefore invalid. The appeal was dismissed on the ground that his extradition was sought for the purposes of his being prosecuted for an offence within section 2(3)(b). Contrary to what might appear at first sight, however, the decision does not assist the appellant in the present case. Under Italian law the first instance judgment and sentence were neither final nor enforceable until the criminal appeal process was concluded and Mr Caldarelli was not regarded as convicted until his conviction became final. Furthermore, he was not entitled as of right to a retrial or to a review amounting to a retrial. As Lord Bingham explained: Here, as is common ground, the foreign judge has treated the appellant as an accused and not a convicted person. This seems strange to an English lawyer, familiar with a procedure by which a defendant sentenced to imprisonment at the end of a jury trial goes down the steps from the dock to the cells. But such is not the practice in Italy where the trial is indeed a continuing process, not yet finally completed in this case, and not an event. On the evidence the appellant falls within section 11(5) of the Act as a person accused of the commission of an extradition offence but not alleged to be unlawfully at large after conviction of it, not within section 11(4) as a person alleged to be unlawfully at large after conviction of it. In terms of recital 1 of the Framework Decision he has not been finally sentenced and (article 8(f)) no final judgment has been given as to the penalty imposed. (para 24) We were also referred, on behalf of the appellant, to the decision of the Divisional Court (Sharp LJ and Sweeney J) in Lewicki v Preliminary Investigation Tribunal of Napoli, Italy [2018] EWHC 1160 (Admin). That decision was, however, an application of Caldarelli (see Sweeney J at paras 67 68) and therefore does not assist the appellant. The appellant also relies on a line of relatively recent authority in which it was held that persons convicted in absentia who had a right to request a new trial could be dealt with as persons accused. In R (Bikar) v The Governor of HM Prison Brixton [2003] EWHC 372 (Admin), a case on the Extradition Act 1989, the applicants, who had been convicted in absentia in the Czech Republic resisted their extradition under an accusation warrant on the ground that autrefois convict applied. Henriques J held that as they had a right to request a new trial this was not a final judgment and accordingly they could be dealt with as persons accused as in Foy v Governor of HM Prison Brixton where the Divisional Court had held that a person who would be entitled to have his conviction set aside was rightly regarded for the purposes of section 6(3) of the Extradition Act 1989 as a person accused. In Usti Nad Labem Regional Court (Czech Republic) v Janiga [2010] EWHC 463 (Admin) Mr Janiga had absconded after the start of his trial in the Czech Republic. An EAW was issued. In the period between the issue of the warrant and the extradition hearing in the United Kingdom he was convicted and sentenced in his absence, although lawyers attended the hearing on his behalf. His lawyers lodged an appeal against conviction and sentence. On appeal the conviction was upheld but the sentence reduced. At the extradition hearing the District Judge ordered his discharge on the ground that the accusation warrant was defective as he had been convicted. The Divisional Court (Waller LJ and Swift J) allowed the appeal. Further information provided by the issuing authority established a right to apply for reversal of the judgment and this puts it completely beyond doubt in our view that the conviction and sentence were not final and enforceable (at paras 49 53). In Ruzicka v District Court of Nitra, Slovakia [2010] EWHC 1819 (Admin) the Divisional Court (Elias LJ and Keith J) held that an accusation warrant issued by the Slovakian judicial authority was valid notwithstanding the fact that Mr Ruzicka had already been convicted and sentenced in Slovakia because he had appealed against the conviction and sentence in circumstances in which the appeal had caused the conviction and sentence to cease to be valid. In these circumstances the court considered it plain that the conviction and sentence was not a final determination of the criminal process. Until the expiry of time within which to appeal the judgment was neither final nor enforceable. Accordingly, the accusation warrant was in correct form. The court approved the similar conclusion in Janiga. Bikar, Janiga and Ruzicka should, however, be contrasted with Sonea v Mehedinti District Court, Romania [2009] EWHC 89 (Admin); [2009] 2 All ER 821 and Istanek v District Court of Prerov [2011] EWHC 1498 (Admin). In Sonea the appellant was arrested under a conviction warrant which stated that in his absence he had been tried and convicted in Romania and sentenced to ten years imprisonment. He appealed against an order for his extradition contending that because he had a right to a re trial in Romania the warrant should have been drafted as an accusation warrant and was therefore invalid. This submission was rejected by the Divisional Court (Scott Baker LJ and Maddison J). Scott Baker LJ, delivering the only judgment, considered (at para 9) that it was necessary to follow carefully and chronologically the structure of the 2003 Act and that it was liable to be misleading to pick out observations by judges concerned with earlier legislation. The structure of Part 1 of the Extradition Act 2003 envisages a step by step approach by the judge. Each step requires consideration of a particular question and its answer determines the next move that the judge is required to make. It is to be noted that it is only when the step by step exercise takes the judge to section 20 that he is required to consider whether the person was convicted in his presence, whether he deliberately absented himself from his trial and whether he would be entitled to a retrial or (on appeal) to a review amounting to a retrial. As Ms Mannion, for the respondent, observes section 20 is only reached where a person has been convicted and if Ms Freemans argument is correct none of the steps set out in such detail in section 20 would be relevant. Ms Freemans argument, as it seems to me, puts the cart before the horse. It seeks to extract questions that Parliament has said fall to be dealt with under section 20 and make them issues that determine the nature of the warrant, whereas the legislation clearly sets out a step by step process that the judge must follow. (paras 16, 18) The fact that the appellant had an unfettered right to a retrial did not stop the warrant from being a conviction warrant. A similar approach was adopted by the Divisional Court (Laws LJ, Collins and Stadlen JJ) in Istanek. The appellant had been convicted in the Czech Republic in his absence. He was entitled to a full retrial by virtue of section 306a of the Czech Penal code, the same provision which applies in the present case. A conviction EAW was issued for his surrender and his return was ordered. On behalf of the appellant it was argued that he was, in truth, an accused person and not a convicted person and that the warrant was, accordingly, invalid. Laws LJ, delivering the only judgment, noted the apparently conflicting authorities and observed (at para 29) of Bikar, Janiga and Ruzicka that all three were cases where the result arrived at was in fact in conformity with the requesting states position on the question whether the proposed extraditee was to be treated as accused or convicted. However, in his view there was no reason to hold that in the result any of those cases was wrongly decided on its facts. He considered it plain that Sonea was correctly decided. Laws LJ considered (at para 23) that it was inherent in the scheme of the 2003 Act that courts in this jurisdiction will proceed on the basis of the statements in the warrant and will properly categorise the relevant facts according to the procedures and law of the foreign state. Applying Caldarelli, he observed (at paras 23 25) that information in an EAW, having its source in the judicial authority of the requesting state, is ordinarily in our courts to be taken at face value although it may exceptionally be appropriate to initiate further inquiry of the requesting authority. With regard to finality, he noted (at paras 26 27) that the definition of the EAW in article 1(1) contained no reference to finality although there was a reference to it in article 8(1)(f). He considered that insofar as finality is an incident of conviction for the purposes of a conviction EAW, the warrant will reflect the meaning of finality applied in the criminal jurisdiction of the requesting state. Furthermore, he considered (at para 28) that the existence of a right of retrial cannot be treated, as a matter of law, as systematically inconsistent with the fugitive being a convicted person. To apply such a one size fits all approach would be inconsistent with his general approach and with section 20. The issue of characterisation was not to be decided by courts in this jurisdiction by their own lights. That would be contrary to the position taken by the Czech judicial authority which had explained that if a fugitive convicted in absentia did not ask for his case to be reopened, the judgment would remain legally binding and enforceable, as the entire proceedings had already taken place and the judgment was already legally valid. I find the reasoning of the Divisional Courts in Sonea and Istanek compelling. The scheme of Part 1 of the 2003 Act is restrictive in that the judge at an extradition hearing is directed to follow particular routes through the statute depending on his answer to each question the statute requires him to address. This step by step approach is entirely incompatible with the appellants case. If and to the extent that Sonea and Istanek are inconsistent with the approach adopted in other cases, in particular Bikar, Janiga and Ruzicka, I consider that Sonea and Istanek are to be preferred. The process of characterisation The criteria for determining what constitutes a criminal conviction for the purposes of the Framework Decision and implementing legislation within member states must be derived from the Framework Decision. Those criteria must be applied to the position as it exists under the law and practice of the member state of the requesting authority. I consider, therefore, that the following principles should be applied by a court in this jurisdiction when seeking to characterise a case as an accusation case or a conviction case. (1) The dichotomy drawn by the Framework Decision between accusation warrants and conviction warrants is a matter of EU law. The Framework Decision does not have direct effect but national implementing legislation should, so far as possible, be interpreted consistently with its terms. (2) The court should seek to categorise the relevant facts by reference to their status and effects in the law and procedure of the member state of the requesting judicial authority. (3) Ordinarily, statements made by the requesting judicial authority in the EAW or in supplementary communications will be taken to be an accurate account of its law and procedure but evidence may be admitted to contradict them. (4) A person may properly be regarded as convicted for this purpose if the conviction is binding and enforceable under the law and procedure of the member state of the requesting authority. (5) For this purpose, it is not a requirement that a conviction should be final in the sense of being irrevocable. In particular, a convicted person who has a right to a retrial may, nevertheless, be properly considered a convicted person for this purpose, provided that the conviction is binding and enforceable in the law and procedure of the member state of the requesting authority. (6) While the view of the requesting judicial authority on the issue of characterisation cannot be determinative, the question whether a conviction is binding and enforceable will depend on the law of that member state. Disadvantage to the appellant? Complaint is made that treating the appellant as a convicted person as opposed to an accused person disadvantaged him in the extradition proceedings in two respects. First it is said that the EAW was measured against the less exacting requirements of a conviction case in section 2(5) (6) as opposed to those of an accusation case in section 2(3) (4). The particular point made here concerns particularity. In Sandi v The Craiova Court, Romania [2009] EWHC 3079 (Admin) Hickinbottom J observed (at para 33), when delivering the judgment of the Divisional Court, that there is no reason why the same level of particularity of the circumstances of the offence is needed for a conviction warrant as for an accusation warrant. However, he went on to point out (at paras 34 36) that, while the appropriate level of particularity to satisfy section 2(6)(b) will depend on the circumstances of each case, in a conviction case the requested person will need to have sufficient details of the circumstances of the underlying offences to enable him sensibly to understand what he has been convicted of and sentenced for and to enable him to consider whether any bars to extradition might apply. In the present case it has not been suggested that there is any specific deficiency in the particulars contained in the warrant which would disadvantage the appellant if he exercises his right to a retrial. On the contrary, the EAW contains in Box (e) full particulars of the three relevant offences. Secondly, it is said that the appellant is prejudiced in the consideration of the bar to extradition on grounds of passage of time under section 11(1)(c) and section 14 because the relevant periods of time differ in an accusation warrant and a conviction warrant. Section 14 provides that a persons extradition is barred by reason of the passage of time if it would be unjust or oppressive to extradite him by reason of the passage of time (a) in an accusation case, since he is alleged to have committed the offence; and (b) in a conviction case, since he is alleged to have become unlawfully at large. Unjust is directed primarily to the risk of prejudice to the accused in the conduct of the trial itself; oppressive is directed to hardship to the accused resulting from changes in his circumstances that have occurred during the period to be taken into consideration (Kakis v Government of the Republic of Cyprus [1978] 1 WLR 779 per Lord Diplock at pp 782H 783A). To my mind, there is more substance in this complaint. This bar to extradition operates very differently depending on whether the requested person is categorised as an accused person under section 14(a) (in which case he may rely on the entire passage of time since the date of the offence to found injustice or oppression) or as a person unlawfully at large after conviction under section 14(b) (in which case he may rely only on the passage of time since the date of the conviction). Mr Summers submits that in the present case this precluded any consideration of injustice in relation to the retrial and coloured the courts assessment of oppression. If, as I consider to be the case, a person with a right to a retrial is correctly classified as a convicted person for the purposes of the 2003 Act, I accept that this could work to his disadvantage in the operation of section 14 because the passage of time prior to his conviction is excluded from consideration. It seems to me that this is a deficiency in the drafting of the statute which requires consideration by the legislature at an early opportunity. This is a matter which has troubled judges in a number of cases concerning convictions in absentia. In Campbell v Public Prosecutor of the Grande Instance Tribunal of St Malo, France [2013] EWHC 1288 (Admin) Keith J was inclined to think that the appellant could not rely on the passage of time since the date of commission of the alleged offence because he faced a conviction warrant, but he nevertheless examined whether the delay from that date would have been oppressive for the purposes of section 14 and concluded that it would now be an abuse of process to insist upon his return. In R (Cousins) v Public Prosecution of the Grande Instance Tribunal of Boulogne sur Mer, France [2014] EWHC 2324 (Admin) at para 12 Ouseley J expressed his concern that where there has been a delay prior to a conviction in absentia the requesting judicial authority could, in effect, prevent section 14 from being argued. In his view it would be an unfair and prejudicial outcome if there were no other means whereby the section 14 facts could be given full rein. He had reservations about using article 8 as some sort of kitchen sink for all aspects of extradition that cannot properly be considered under other headings (at para 14). However, he dealt with the matter on the basis that there would be no injustice to the appellant through consideration of injustice and oppression to the full extent using the article 8 framework. Similarly, in Wisniewski v Regional Court of Wroclaw, Poland [2016] EWHC 386 (Admin); [2016] 1 WLR 3750 the Divisional Court (Lloyd Jones LJ and Holroyde J) considered that in such circumstances the human rights examination under section 21 would provide a safety net which would permit the effect of passage of time to be brought into account. In Farzal Rahman v County Court of Boulogne sur Mer, France [2014] EWHC 4143 (Admin) Blake J adopted a rather different approach. There a conviction warrant was founded on a conviction in absentia. It was common ground that Mr Rahman had had no notice of the proceedings leading to conviction and that the conviction could be set aside on his demand. The judge was referred to Campbell and Cousins and was invited by counsel for the appellant to look at the full period of the delay either on abuse of process grounds or on article 8 grounds. The judge said that he shared the reservations of Ouseley J about simply proceeding down the article 8 route as a catch all where the central point the appellant wanted to make was the change of circumstances caused by the passage of time since the offence was first committed. Noting that the definition of unlawfully at large in section 68A of the 2003 Act did not apply to section 14, he considered that it was necessary to give it a meaning which avoided the absurdity of effectively preventing the appellant from pleading delay at all. He concluded that: [I]n effect a person remains accused of a crime for the purposes of the oppression limb of section 14 unless or until there has been a conviction from which he was required to participate from which he has absconded himself and is therefore a fugitive from justice. Such an approach avoids having to shoehorn the present problem either into abuse of process questions, where there is a more rigorous test and a requirement generally of absence of good faith or simply leaving it to a factor in the article 8 balance. (sic) I sympathise with the judges wish to find an interpretation of section 14 which would enable him to do justice in the particular case. However, I consider that this strenuous reading is inconsistent with the scheme of the Framework Decision and Part 1 of the 2003 Act. It seems to me that until such time as section 14 can be amended by Parliament, article 8 provides an appropriate and effective alternative means of addressing passage of time resulting in injustice or oppression in cases where the defendant has been convicted in absentia. Passage of time is clearly capable of being a relevant consideration in weighing the article 8 balance in extradition cases. (See H (H) v Deputy Prosecutor of the Italian Republic, Genoa (Official Solicitor intervening) [2012] UKSC 25; [2013] 1 AC 338 per Baroness Hale JSC at paras 6, 8.) It is capable of having an important bearing on the weight to be given to the public interest in extradition. In the article 8 balancing exercise, the relevant period of time will not be subject to the restrictions which appear in section 14. I note that in Lysiak v District Court Torun, Poland [2015] EWHC 3098 (Admin), a conviction case, the Divisional Court (Burnett LJ and Hickinbottom J) attached great weight to the nine years the criminal proceedings in Poland took to come to trial and the further two and a half years it took for the conviction to be confirmed in appeal proceedings, when concluding that it would be disproportionate under article 8 to return the defendant to Poland. Furthermore, in cases where it is maintained that passage of time would result in injustice at the retrial to which the defendant is entitled, this consideration could also be brought into account under article 8. The risk of prejudice at a retrial would be highly relevant in the balancing exercise which the extradition court would be required to undertake. Moreover, the threshold test to be satisfied would not be one of injustice or oppression but the lower one of disproportionality. This feature also makes reliance on article 8 a more effective solution than abuse of process where the burden on an appellant would be a much heavier one. Application to the present case On behalf of the appellant it is submitted that he should be treated as an accused person rather than a convicted person for the purpose of his extradition proceedings. The EAW states in Box (b) that the enforceable judgment on which the warrant is based is the judgment of the District Court dated 12 May 2008, confirmed by the resolution of the Regional Court on 23 July 2008. It states in Box (d) that the decision was rendered in absentia and that the appellant had not been summoned or otherwise informed of the hearing. However, it also states that after surrendering the appellant will have the right to a new process by virtue of section 306a of the Code of Criminal Procedure. I note that subsection 306a(2) refers to an application for revocation of the legally effective conviction and that subsection 306a(3) refers, in the context of limitation, to the period from the legal effectiveness of the conviction until its revocation. The letter from the requesting judicial authority dated 17 March 2017 confirms that the appellant will have an unqualified right for complete retrial before court. There was no evidence before the District Judge to contradict the statements of the requesting judicial authority as to the relevant law and procedure in the Czech Republic. In these circumstances District Judge Ashworth correctly characterised the EAW as a conviction warrant. Furthermore, he was correct in characterising this as a conviction case. The EAW indicated that there was an enforceable judgment and a legally effective conviction which would remain such until revoked. There was no evidence before him as to the law and procedure of the Czech Republic on which he could have concluded that this should be characterised as an accusation case. The District Judge proceeded by following the appropriate channel in the case of a conviction warrant as required by the 2003 Act. It was common ground that the offences specified in the warrant were extradition offences as required by section 10. Under section 11(1)(c), as amplified by section 14, he considered whether extradition was barred by reason of the passage of time since the appellant was convicted in 2008 and concluded that it was not. So far as section 20 is concerned, it was common ground that the appellant had been tried, convicted and sentenced in absentia, and that the appellant had not deliberately absented himself from his trial, but that he would be entitled to a retrial meeting the requirements of subsection 20(8). The District Judge therefore, correctly, proceeded to consider under section 21 the appellants ground founded on his right to respect for his family and private life under article 8 ECHR. Having decided that the appellants extradition would be compatible with his Convention rights, the District Judge ordered his extradition to the Czech Republic as required by section 21(3). In the present case the appellant was convicted on 12 May 2008 of three offences alleged to have been committed between November 2004 and March 2005. The conviction was confirmed by the Regional Court on 23 July 2008. The EAW was issued on 17 April 2013. It was certified by the National Crime Agency on 2 March 2017 and the appellant was arrested on the same day. At the extradition hearing the appellant relied on evidence as to changes in his personal circumstances. He also maintained that in 2005 the police in the Czech Republic had spoken to him and removed documents relevant to his defence to the current offences. The documents, which he claimed would exculpate him, had not been returned. At the extradition hearing the District Judge considered the passage of time under section 11(1)(c) and section 14. At this point in his judgment he confined his attention to the passage of time since the date of conviction in 2008. In 2003 the appellant had been convicted and sentenced to four years imprisonment in the Czech Republic. That conviction related to the same building project to which the 2008 convictions related. He had been aware in November 2005 that the police were once again conducting investigations. He came to the United Kingdom in June 2007. In November 2007 the Office of the District Public Prosecutor had issued a consent to his detention. The District Judge noted that as there was no direct evidence that the appellant knew of the proceedings against him, it was common ground that he could not be considered a fugitive for the purposes of section 14. During the period since 2008 the appellant had been working as a lorry driver in the United Kingdom. His partner had suffered a workplace accident in 2012 which had impaired her ability to work although she now works full time at her own jewellery making business. The District Judge considered that the long period between conviction and arrest on the EAW had not been a time of particular change in the appellants life. The offending was particularly serious, repetitive and followed closely his release for a similar offence. Mr Konecny had been termed a particularly dangerous recidivist by the Czech authorities. So far as the documents given to the police in 2005 were concerned, there had been a trial in 2008 and there was no evidence to suggest that the documents had been lost or destroyed. If they had been, the magistrate was entitled to assume that the retrial to which the appellant was entitled would be compliant with article 6 ECHR and that that would take account of that potential unfairness. Having regard to all these factors he concluded that the circumstances of the delay did not justify a finding that it would be unjust or oppressive to return the appellant. This was not, in his assessment, a borderline case where culpable delay on the part of the judicial authority would tip the balance in the appellants favour. However, the District Judge returned to the issue of delay when carrying out the balancing exercise under article 8 ECHR. He listed this among the factors militating against extradition. He noted that the delay since the crimes were committed could both diminish the weight to be attached to the public interest and increase the impact upon private and family life. Here the offending had been some 12 13 years earlier when the appellant had been considerably younger. The passage of time would have served to mature him and in the intervening period he had worked peaceably. There was no evidence he had any knowledge of the proceedings against him. There was no explanation for the considerable delay in finding him, bearing in mind that he was living openly in another member state. Nevertheless, the public interest factors in favour of extradition outweighed his family and private life considerations, even when the delay was taken into account. On appeal, Sir Wyn Williams considered that the District Judge had been correct in considering that, when assessing whether the passage of time rendered his return unjust or oppressive under sections 11(1)(c) and 14 of the 2003 Act, the relevant period of time commenced on 12 May 2008. He referred to the fact that throughout that period the appellant had led a settled life in the north of England and that this was a marked change from the time when he was apparently committing serious offences in the Czech Republic. The District Judge was not to be criticised for his observations in relation to the possibly exculpatory papers. There was no real basis for a conclusion that extradition would be unjust. He could not conclude that the District Judge was wrong to conclude that extradition of the appellant would not be oppressive. Sir Wyn returned to the issue of delay in the context of article 8. He considered that the District Judge was entitled to approach the case on the basis that there had been long delays in the processes leading to the certification of the EAW which were unexplained. The District Judge was not wrong in failing to infer from the length of the delay that the requesting judicial authority or the National Crime Agency were guilty of culpable delay. The District Judge was right to consider that there were very powerful factors supporting an order for extradition. While Sir Wyn observed that he might have been more troubled than was the District Judge about the length of the delay, he was unable to say that his ultimate decision that extradition was not an unwarranted interference with article 8 rights was wrong. Accordingly, he dismissed the appeal. I am satisfied that in this case full and appropriate account was taken of the entire passage of time since the offences were allegedly committed, albeit in the context of section 21 of the 2003 Act and article 8 ECHR as opposed to sections 11(1)(c) and 14 of the 2003 Act. I am also satisfied that this appellant has not been disadvantaged in any way as a result. Like Sir Wyn, I might have been more troubled than the District Judge about the length of delay in this case, but I am unable to say that the decision of the District Judge was wrong. Finally, I should record that in his case Mr Summers points to what he says are further instances of substantive unfairness which might result from the characterisation of a case as a conviction case where the person whose return is sought has a right to a retrial. These relate to double criminality, prematurity, issues of forum and proportionality. However, as it is accepted on behalf of the appellant that they do not arise in this case and as they were not developed in argument, I do not propose to address them. Conclusion For these reasons, I would dismiss the appeal.
UK-Abs
On 12 May 2008, Mr Konecny (the appellant), a Czech national, was convicted in his absence by the District Court in Brno Venkov, Czech Republic (the District Court) of three offences of fraud, committed between November 2004 and March 2005, and was sentenced to eight years imprisonment. The extradition of the appellant was requested by the District Court by a European Arrest Warrant (EAW) dated 17 April 2013 pursuant to the European Council Framework Decision of 13 June 2002 on the European Arrest Warrant and the Surrender Procedures between member states (2002/584/JHA) (the Framework Decision). The Framework Decision is implemented in the United Kingdom by Part 1 of the Extradition Act 2003 (the 2003 Act). The EAW states that it is based on an enforceable judgment, namely the judgment of the District Court dated 12 May 2008. The EAW also specifies that the appellant will be afforded an unqualified right to be re tried upon return in the event that he makes an application to be re tried. On 2 March 2017, the EAW was certified by the National Crime Agency (NCA) and the appellant was arrested. The extradition hearing took place on 10 April 2017. In reliance on section 14(a) of the 2003 Act, the appellant argued that he was an accused person facing a prospective trial and that it would be unjust and oppressive to order his extradition taking into account the delay since 2004. The appellant also maintained that his extradition would infringe his rights under article 8 of the European Convention on Human Rights (ECHR). District Judge Ashworth ruled that it was the conviction provisions in section 14(b) of the 2003 Act which were the operative provisions and that, as a result, the passage of time to be considered under section 11(1)(c) and section 14 was restricted to the period from 12 May 2008 (the date of conviction by the District Court) onwards. He concluded that the circumstances of the delay did not justify a finding that it would be unjust or oppressive to return the appellant to the Czech Republic. He also considered that the public interest factors in favour of extradition outweighed the considerations relating to the appellants family and private life under article 8 of the ECHR. In this context he took account of the passage of time since 2004. On 27 September 2017, the High Court dismissed the appeal. On 7 November 2017, the High Court certified the following point of law of general public importance: In circumstances where an individual has been convicted, but that conviction is not final because he has an unequivocal right to a retrial after surrender, is he accused pursuant to section 14(a) of the 2003 Act, or unlawfully at large pursuant to section 14(b) for the purposes of considering the passage of time bar to surrender?. The appellant sought and obtained permission to appeal to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Lloyd Jones gives the sole judgment with which the other Justices agree. At the heart of the present appeal lies the issue of the characterisation of the appellant as an accused person or a convicted person. The EAW system is founded on the high level of mutual trust and confidence between member states and, as a result, in seeking to give effect to this distinction when applying implementing legislation, a national court will usually attach considerable weight to the description by the requesting judicial authority in the EAW of the position in its own national law. The view of the requesting judicial authority will not always be conclusive, but it will normally be influential and, in the absence of evidence to the contrary, it is likely to be followed [18]. The Court considers that the appellants case founded on EU law is not made out [28]. It also considers that the appellants case is inconsistent with the EAW scheme and the express provisions of the 2003 Act [34]. The express provisions in their natural meaning provide a coherent structure within which to address all cases of trial in absentia [37]. The Court considers that the following principles should be applied by a court in this jurisdiction when seeking to characterise a case as an accusation case or a conviction case [50]: (1) The dichotomy drawn by the Framework Decision between accusation warrants and conviction warrants is a matter of EU law. The Framework Decision does not have direct effect but national implementing legislation should, so far as possible, be interpreted consistently with its terms. (2) The court should seek to categorise the relevant facts by reference to their status and effects in the law and procedure of the member state of the requesting judicial authority. (3) Ordinarily, statements made by the requesting judicial authority in the EAW or in supplementary communications will be taken to be an accurate account of its law and procedure but evidence may be admitted to contradict them. (4) A person may properly be regarded as convicted for this purpose if the conviction is binding and enforceable under the law and procedure of the member state of the requesting authority. (5) For this purpose, it is not a requirement that a conviction should be final in the sense of being irrevocable. In particular, a convicted person who has a right to a retrial may, nevertheless, be properly considered a convicted person for this purpose, provided that the conviction is binding and enforceable in the law and procedure of the member state of the requesting authority. (6) While the view of the requesting judicial authority on the issue of characterisation cannot be determinative, the question whether a conviction is binding and enforceable will depend on the law of that member state. The Court accepts that where a person with a right to a retrial is correctly classified as a convicted person for the purposes of the 2003 Act it could work to his disadvantage in the operation of section 14 because the passage of time prior to his conviction is excluded from consideration. This is a deficiency in the drafting of the statute which requires consideration by the legislature at an early opportunity [54]. However, until such time as section 14 can be amended by Parliament, article 8 of the ECHR provides an appropriate and effective alternative means of addressing passage of time resulting in injustice or oppression in cases where the defendant has been convicted in absentia [58]. In this case, District Judge Ashworth correctly characterised the EAW as a conviction warrant. The EAW indicated there was an enforceable judgment and a legally effective conviction which would remain such until revoked. The Court was satisfied that full and appropriate account was taken of the passage of time since the offences were allegedly committed, and the appellant has not been disadvantaged in any way as a result [70]. For these reasons, the Court dismisses the appeal [72].
The question that arises in this appeal is whether a court order must always be obtained before clinically assisted nutrition and hydration, which is keeping alive a person with a prolonged disorder of consciousness, can be withdrawn, or whether, in some circumstances, this can occur without court involvement. Terminology The term prolonged disorder of consciousness encompasses both a permanent vegetative state (sometimes referred to as a persistent vegetative state, and often shortened to PVS) and a minimally conscious state (or MCS). Prolonged disorder of consciousness is commonly shortened to PDOC and that practice is followed in this judgment. Clinically assisted nutrition and hydration is now referred to as CANH, although it has been variously described in the past. The facts Mr Y was an active man in his fifties when, in June 2017, he suffered a cardiac arrest which resulted in severe cerebral hypoxia and extensive brain damage. He never regained consciousness following the cardiac arrest. He required CANH, provided by means of a percutaneous endoscopic gastrostomy, to keep him alive. The month after his cardiac arrest, Mr Y was admitted to the regional hyper acute rehabilitation unit under the control of the first respondent NHS Trust so that his level of awareness could be assessed. In late September, his treating physician concluded that he was suffering from PDOC and that even if he were to regain consciousness, he would have profound cognitive and physical disability, remaining dependent on others to care for him for the rest of his life. A second opinion was obtained in October, from a consultant and professor in Neurological Rehabilitation, who considered that Mr Y was in a vegetative state and that there was no prospect of improvement. Mrs Y and their children believed that he would not wish to be kept alive given the doctors views about his prognosis. The clinical team and the family agreed that it would be in Mr Ys best interests for CANH to be withdrawn, which would result in his death within two to three weeks. On 1 November 2017, the NHS Trust issued an application in the Queens Bench Division of the High Court for a declaration (1) that it was not mandatory to seek the courts approval for the withdrawal of CANH from a patient with PDOC when the clinical team and the patients family were agreed that it was not in the patients best interests that he continue to receive that treatment, and (2) that no civil or criminal liability would result if CANH were to be withdrawn. At a directions hearing on 3 November, Fraser J invited the Official Solicitor to act as Mr Ys litigation friend in the proceedings but, rather than adjourning the case for a hearing in the Court of Protection as the Official Solicitor sought, he ordered that the final hearing be expedited and listed before OFarrell J in the Queens Bench Division on 10 November. On 10 November, OFarrell J [2017] EWHC 2866 (QB) refused the Official Solicitors renewed application for the case to be transferred to the Court of Protection. She considered that it would have been appropriate to transfer the case if the court were being asked to determine whether the withdrawal of treatment was in Mr Ys best interests, but that, in fact, the issue she had to determine was a purely legal issue. She concluded that it was not established that there was any common law principle that all cases concerning the withdrawal of CANH from a person who lacks capacity had to be sanctioned by the court. In her view, at para 52, where the clinicians have followed the Mental Capacity Act and good medical practice, there is no dispute with the family of the person who lacks capacity or others interested in his welfare, and no other doubts or concerns have been identified, there is no requirement to bring the matter before the court. Such was the situation in Mr Ys case, she considered, and accordingly she granted the following declaration: It is not mandatory to bring before the court the withdrawal of CANH from Mr Y who has a prolonged disorder of consciousness in circumstances where the clinical team and Mr Ys family are agreed that it is not in his best interests that he continues to receive that treatment. The judge granted the Official Solicitor permission to appeal and certified the case, pursuant to section 12 of the Administration of Justice Act 1969, as appropriate for an appeal directly to the Supreme Court. In case the result of the appeal was that proceedings should be brought in the Court of Protection, the judge gave directions so that any such proceedings could progress without delay. So it was that the Official Solicitor obtained a further expert report, from a different neuro rehabilitation consultant. However, although CANH had been continued pending the appeal, on 22 December 2017 Mr Y died, having developed acute respiratory sepsis. The expert instructed by the Official Solicitor could only base his report upon documentation, including Mr Ys medical records. In the report, he referred to the difficulty in diagnosing vegetative and minimally conscious states, and gave his opinion that, had Mr Y survived, further assessments, over a longer period of time, would have been required in order to reach a reliable conclusion that he was in a permanent vegetative state. Notwithstanding that, in view of Mr Ys death, the proceedings could no longer serve any purpose for him and his family, this court determined that the appeal should go ahead, because of the general importance of the issues raised by the case. Accordingly, the court has received full argument from Mr Gordon QC and Ms Paterson for the Official Solicitor, and Mr Sachdeva QC and Ms Dobson for the first two respondents (the NHS Trust which manages the regional hyper acute rehabilitation unit at which Mr Y was a patient until he was discharged to a nursing home and the Clinical Commissioning Group which funded the nursing home). Written submissions were permitted from the four intervenors. Mrs Y understandably felt unable to participate in the proceedings at what is an exceptionally sad and difficult time for her and her family. The opposing arguments in brief summary I will look at the Official Solicitors case in detail later, but it may help to introduce the issues now by means of the briefest of summaries. The Official Solicitor submits that, in every case, court approval must be sought before CANH can be withdrawn from a person with PDOC, thus ensuring that the patients vulnerable position is properly safeguarded by representation through the Official Solicitor, who can obtain independent expert medical reports about his condition and prognosis, and make submissions to the court on his behalf if appropriate. The Official Solicitor derives this requirement essentially from the common law and/or the European Convention on Human Rights (ECHR), in particular article 2 and article 6. In his submission, his position finds support in the Mental Capacity Act Code of Practice, issued on 23 April 2007 pursuant to section 42(1) of the Mental Capacity Act 2005 (MCA 2005). He submits that it is irrelevant that neither the MCA 2005 nor the Court of Protection Rules specifically impose the requirement for which he contends. The first and second respondents disagree, submitting that neither the common law nor the ECHR imposes a universal requirement to obtain court approval prior to the withdrawal of CANH. The case law preceding the MCA 2005 The MCA 2005 was a watershed in the law relating to people who lack capacity. Before the Act, questions relating to the management of the property and affairs of adults who did not have capacity to make their own decisions, were dealt with in the old style Court of Protection, and questions relating to the care and welfare of such adults were resolved under the inherent jurisdiction of the High Court. The MCA 2005 established a new regime with, amongst other things, a new Court of Protection which has jurisdiction in relation to both property matters and issues relating to personal care. Nevertheless, an examination of the common law in relation to the treatment of patients such as Mr Y must commence with the pre MCA 2005 cases, and I turn first to two centrally important House of Lords decisions, In re F (Mental Patient: Sterilisation) [1990] 2 AC 1 and Airedale NHS Trust v Bland [1993] AC 789. In In re F (Mental Patient: Sterilisation), the House of Lords considered whether the court had jurisdiction to grant a declaration that it would not be unlawful for a sterilisation operation to be carried out on a woman who, because of mental incapacity, was unable to consent to the operation herself. Although not concerned with precisely the sort of life and death decision that is involved in the present litigation, the decision is relevant because their Lordships were required to determine a sensitive and difficult question relating to medical treatment of a mentally incapacitated adult. They determined that the court could, under its inherent jurisdiction, make a declaration that the proposed operation was in the patients best interests and therefore lawful. They also held that where the procedure was intended to prevent pregnancy rather than for the purpose of treating a disease, although not necessary to establish the lawfulness of the operation, it was highly desirable, as a matter of good practice, that a declaration be obtained before the operation took place. The starting point for the reasoning was the established common law position that a doctor cannot lawfully operate on adult patients of sound mind, or give them any other treatment involving the application of physical force without their consent, and if he were to do so, he would commit the tort of trespass to the person (p 55), but that, in the case of a patient who lacked the capacity to consent to treatment, a doctor could lawfully operate or give other treatment provided that it was in the best interests of the patient. There was a range of views as to whether, with an operation such as the proposed sterilisation operation, it was desirable/necessary to obtain a declaration from the court that the procedure was in the patients best interests. All were in favour of a declaration being obtained but, for the most part, put the matter on the basis of good practice, rather than finding it to be a legal requirement that such a declaration first be obtained. There was fairly general agreement with the approach of Lord Brandon of Oakbrook. At p 56, he identified six special features of the particular operation which were influential in his view that, whilst the lawfulness of the treatment did not depend upon the courts approval and it was not therefore strictly necessary as a matter of law to seek it, the involvement of the court was highly desirable as a matter of good practice. The six features were: first, the operation will in most cases be irreversible; secondly, by reason of the general irreversibility of the operation, the almost certain result of it will be to deprive the woman concerned of what is widely, and as I think rightly, regarded as one of the fundamental rights of a woman, namely, the right to bear children; thirdly, the deprivation of that right gives rise to moral and emotional considerations to which many people attach great importance; fourthly, if the question whether the operation is in the best interests of the woman is left to be decided without the involvement of the court, there may be a greater risk of it being decided wrongly, or at least of it being thought to have been decided wrongly; fifthly, if there is no involvement of the court, there is a risk of the operation being carried out for improper reasons or with improper motives; and, sixthly, involvement of the court in the decision to operate, if that is the decision reached, should serve to protect the doctor or doctors who perform the operation, and any others who may be concerned in it, from subsequent adverse criticisms or claims. Lord Goff of Chieveley expressed his own view (p 79) that, as a matter of practice, the operation should not be performed without first obtaining the opinion of the court that the operation is, in the circumstances, in the best interests of the person concerned, by seeking a declaration that the operation is lawful. In his opinion, the courts guidance should be sought in order to obtain an independent, objective and authoritative view on the lawfulness of the procedure in the particular circumstances of the relevant case, after a hearing at which it can be ensured that there is independent representation on behalf of the person upon whom it is proposed to perform the operation. Lord Griffiths would have been minded to make it a legal requirement to obtain the sanction of the High Court in all cases, and considered that the common law could be adapted to introduce such a requirement. However, he recognised that he would be making new law, and that the other members of the House considered that it was not open to them to take that course. He therefore accepted what Lord Brandon had proposed, but as second best (pp 70 to 71). Airedale NHS Trust v Bland [1993] AC 789 concerned a man who had been left in a persistent vegetative state after being injured in the Hillsborough disaster. He could see, hear, and feel nothing and could not communicate in any way. There was no prospect whatever that he would make any recovery, but if he continued to have the medical care that he was receiving, there was every likelihood that he would maintain his present state of existence for many years to come. Over three years after the accident, the family and the patients doctors having formed the view that, in these circumstances, it was appropriate to stop prolonging his life by artificial means, an application was made by the hospital authority for declarations that the measures keeping him alive, including artificial nutrition and hydration, could lawfully be discontinued, which would result in his death. The House of Lords held that the declarations could and should be granted, explaining why in a series of thoughtful speeches considering the moral and legal aspects of the issue. It is important to set the decision in context. Recent developments in medical technology, including the development of life support systems, had made it possible for patients who would otherwise have died to survive. As Lord Browne Wilkinson said (p 878C et seq), those recent developments had fundamentally affected previous certainties about what was life and what was death, and meant that the time and manner of someones death might no longer be dictated by nature but might instead be determined by a human decision. Wholly new ethical and social problems had been raised by the developments, and society was not of one mind about them. It was not a foregone conclusion that the withdrawal of artificial life support measures could be tolerated at all by the criminal and civil law, and the decision to endorse the declarations that had been granted by the President of the Family Division was only arrived at after an extensive review of the law, and then only on a narrow basis tied firmly to the facts of the case. Their Lordships were at pains to emphasise that the case was an extreme one, it having been overwhelmingly established that the patient was, and would remain, insensate. They were conscious that there would be cases in which the facts were less extreme and the issues, legal and ethical, even more difficult. They did not seek, in their decision, to provide a set of universal principles, dictating the answers in all other cases, and there was acknowledgment that some of the issues arising may more properly be for Parliament to determine. A sense of the delicacy with which the House was proceeding is conveyed by Lord Mustills observation that [e]very step forward requires the greatest caution (p 899F). In these circumstances, it is not at all surprising that their Lordships held that, for the time being, the guidance of the court should be sought before treatment and care of a patient were discontinued. Given the central importance that Mr Gordon attaches to what they said about this, the relevant passages will need to be cited in full in due course, but, before doing that, it is appropriate to underline the following three points of importance that are found in the speeches and have relevance not only to the decision in the Bland case, but also to subsequent decisions, including the present one: i) As has already been seen from In re F (Mental Patient: Sterilisation) (supra), it is unlawful to administer medical treatment to an adult who is conscious and of sound mind, without his consent; to do so is both a tort and the crime of battery. Such an adult is at liberty to decline treatment even if that will result in his death, and the same applies where a person, in anticipation of entering into a condition such as PVS, has given clear instructions that in such an event he is not to be given medical care, including artificial feeding, designed to keep him alive. ii) Where a person, due to accident or some other cause, becomes unconscious and thus unable to give or withhold consent, it is lawful for doctors to give such treatment as, in their informed opinion, is in the best interests of the patient. Where it is no longer in the best interests of the patient to provide treatment, it may, and ultimately should, be discontinued (see, for example, p 867 of Lord Goffs speech, with which Lord Keith of Kinkel and Lord Lowry agreed). iii) The argument that artificial feeding (in that case by nasogastric tube) was not medical treatment at all, but indistinguishable from normal feeding, was rejected. Regard had to be had to the whole regime which was keeping the patient alive, and in any event a medical technique was involved in the feeding. I come now to look in more depth at what their Lordships had to say in the Bland case when explaining their position in relation to declaratory relief. It is useful to start with their recognition that the courts and the medical profession were working together in addressing the new situation that had arisen as a result of scientific advances. The medical profession had already been working on the issue and there was available a Discussion Paper on Treatment of Patients in Persistent Vegetative State, issued in September 1992 by the Medical Ethics Committee of the British Medical Association. On the basis of it, at p 870, Lord Goff paid tribute to the evident care with which the topic was being considered by the medical profession. In a passage which remains relevant today, he commented as follows on the respective roles of doctors and judges in life and death cases (p 871): I also feel that those who are concerned that a matter of life and death, such as is involved in a decision to withhold life support in case of this kind, should be left to the doctors, would do well to study this paper. The truth is that, in the course of their work, doctors frequently have to make decisions which may affect the continued survival of their patients, and are in reality far more experienced in matters of this kind than are the judges. It is nevertheless the function of the judges to state the legal principles upon which the lawfulness of the actions of doctors depend; but in the end the decisions to be made in individual cases must rest with the doctors themselves. In these circumstances, what is required is a sensitive understanding by both the judges and the doctors of each other's respective functions, and in particular a determination by the judges not merely to understand the problems facing the medical profession in cases of this kind, but also to regard their professional standards with respect. Mutual understanding between the doctors and the judges is the best way to ensure the evolution of a sensitive and sensible legal framework for the treatment and care of patients, with a sound ethical base, in the interest of the patients themselves. This is a topic to which I will return at the end of this opinion, when I come to consider the extent to which the view of the court should be sought, as a matter of practice, in cases such as the present. At p 873, Lord Goff did return to the topic, saying: I turn finally to the extent to which doctors should, as a matter of practice, seek the guidance of the court, by way of an application for declaratory relief, before withholding life prolonging treatment from a PVS patient. The President considered that the opinion of the court should be sought in all cases similar to the present. In the Court of Appeal, Sir Thomas Bingham MR expressed his agreement with Sir Stephen Brown P in the following words, ante, pp 815 816: This was in my respectful view a wise ruling, directed to the protection of patients, the protection of doctors, the reassurance of patients families and the reassurance of the public. The practice proposed seems to me desirable. It may very well be that with the passage of time a body of experience and practice will build up which will obviate the need for application in every case, but for the time being I am satisfied that the practice which the President described should be followed. Before the Appellate Committee, this view was supported both by Mr Munby, for the Official Solicitor, and by Mr Lester, as amicus curiae. For the respondents, Mr Francis suggested that an adequate safeguard would be provided if reference to the court was required in certain specific cases, ie, (1) where there was known to be a medical disagreement as to the diagnosis or prognosis, and (2) problems had arisen with the patients relatives disagreement by the next of kin with the medical recommendation; actual or apparent conflict of interest between the next of kin and the patient; dispute between members of the patients family; or absence of any next of kin to give their consent. There is, I consider, much to be said for the view that an application to the court will not be needed in every case, but only in particular circumstances, such as those suggested by Mr Francis. In this connection I was impressed not only by the care being taken by the Medical Ethics Committee to provide guidance to the profession, but also by information given to the Appellate Committee about the substantial number of PVS patients in the country, and the very considerable cost of obtaining guidance from the court in cases such as the present. However, in my opinion this is a matter which would be better kept under review by the President of the Family Division than resolved now by your Lordships House. I understand that a similar review is being undertaken in cases concerned with the sterilisation of adult women of unsound mind, with a consequent relaxation of the practice relating to applications to the court in such cases. For my part, I would therefore leave the matter as proposed by the Master of the Rolls; but I wish to express the hope that the President of the Family Division, who will no doubt be kept well informed about developments in this field, will soon feel able to relax the present requirement so as to limit applications for declarations to those cases in which there is a special need for the procedure to be invoked. Lord Keith said (p 859): The decision whether or not the continued treatment and care of a PVS patient confers any benefit on him is essentially one for the practitioners in charge of his case. The question is whether any decision that it does not and that the treatment and care should therefore be discontinued should as a matter of routine be brought before the Family Division for endorsement or the reverse. The view taken by the President of the Family Division and the Court of Appeal was that it should, at least for the time being and until a body of experience and practice has been built up which might obviate the need for application in every case. As Sir Thomas Bingham MR said, this would be in the interests of the protection of patients, the protection of doctors, the reassurance of the patients families and the reassurance of the public. I respectfully agree that these considerations render desirable the practice of application. Lord Lowry said (p 875): Lord Browne Wilkinson said (p 885): Procedurally I can see no present alternative to an application to the court such as that made in the present case. This view is reinforced for me when I reflect, against the background of your Lordships conclusions of law, that, in the absence of an application, the doctor who proposes the cessation of life supporting care and treatment on the ground that their continuance would not be in the patients best interests will have reached that conclusion himself and will be judge in his own cause unless and until his chosen course of action is challenged in criminal or civil proceedings. A practical alternative may, however, be evolved through the practice of the Family Division and with the help of the Medical Ethics Committee, which has already devoted so much thought to the problem, and possibly of Parliament through legislation. I am very conscious that I have reached my conclusions on narrow, legalistic, grounds which provide no satisfactory basis for the decision of cases which will arise in the future where the facts are not identical. I must again emphasise that this is an extreme case where it can be overwhelmingly proved that the patient is and will remain insensate: he neither feels pain from treatment nor will feel pain in dying and has no prospect of any medical care improving his condition. Unless, as I very much hope, Parliament reviews the law, the courts will be faced with cases where the chances of improvement are slight, or the patient has very slight sensate awareness. I express no view on what should be the answer in such circumstances: my decision does not cover such a case. I therefore consider that, for the foreseeable future, doctors would be well advised in each case to apply to the court for a declaration as to the legality of any proposed discontinuance of life support where there has been no valid consent by or on behalf of the patient to such discontinuance. Lord Mustill did not say anything specifically on the topic, but he spoke of his profound misgivings about almost every aspect of this case (p 899), and, as the comment that I have already quoted above shows, he urged that matters should proceed with the greatest caution. The practice of seeking declarations as to the lawfulness of medical treatment became firmly established in the years after In re F and the Bland case, as can be seen from the comment of Hale J, as Baroness Hale then was, in In re S (Hospital Patient: Courts Jurisdiction) [1995] Fam 26, that it has been followed in many cases (p 31E). The next case which needs to be considered is R (Burke) v General Medical Council (Official Solicitor and others intervening) [2006] QB 273. There, the court was called upon to determine issues in relation to a patient who was competent but suffering from a congenital degenerative brain condition. In contrast to the Bland case, the litigation was not brought in order to obtain the courts sanction for treatment being withdrawn, but in order to ensure that it would not be withdrawn. Nevertheless, the decision covers ground which is of relevance to the present issue. The patient wished to ensure that the artificial nutrition and hydration that he would need as his degenerative condition progressed would not be withheld by the medical practitioners responsible for his care. He sought judicial review of the General Medical Councils 2002 guidance, Withholding and Withdrawing Life prolonging Treatments: Good Practice in Decision making, on the basis that it was incompatible with his rights at common law and under the ECHR in, inter alia, failing to spell out a legal requirement to obtain prior judicial sanction for the withdrawal of artificial nutrition and hydration. The Court of Appeal considered the principles applicable in such circumstances and found the guidance compatible with them. Giving the judgment of the court, the Master of the Rolls, Lord Phillips of Worth Matravers, considered whether there was in fact a legal requirement to obtain court authorisation before withdrawing artificial nutrition and hydration, as Munby J had determined that there was, in certain circumstances. The Court of Appeal did not agree that such a requirement existed. Summarising the legal position, the Master of the Rolls said (para 71): We asked Mr Gordon to explain the nature of the duty to seek the authorisation of the court and he was not able to give us a coherent explanation. So far as the criminal law is concerned, the court has no power to authorise that which would otherwise be unlawful: see, for instance, the observation of Lord Lowry in Blands case [1993] AC 789, 875H. Nor can the court render unlawful that which would otherwise be lawful. The same is true in relation to a possible infringement of civil law. In Blands case the House of Lords recommended that, as a matter of good practice, reference should be made to the Family Court before withdrawing ANH from a patient in a PVS, until a body of experience and practice had built up. Plainly there will be occasions in which it will be advisable for a doctor to seek the courts approval before withdrawing ANH in other circumstances, but what justification is there for postulating that he will be under a legal duty so to do? [Original emphasis] Having considered, but rejected, the possibility that the Human Rights Act 1998 and the decision of the European Court of Human Rights (the ECtHR) in Glass v United Kingdom [2004] 1 FLR 1019 had converted what was only a requirement of good practice into a legal requirement, the court said (para 80): The true position is that the court does not authorise treatment that would otherwise be unlawful. The court makes a declaration as to whether or not proposed treatment, or the withdrawal of treatment, will be lawful. Good practice may require medical practitioners to seek such a declaration where the legality of proposed treatment is in doubt. This is not, however, something that they are required to do as a matter of law. Mr Burke made a complaint to the ECtHR under articles 2, 3, 8 and 14 of the ECHR (Burke v United Kingdom (Application No 19807/0) 11 July 2006). It was rejected as manifestly ill founded. The ECtHR expressed itself satisfied that the presumption of domestic law is strongly in favour of prolonging life where possible, which accords with the spirit of the Convention (p 8 of the decision). Dealing specifically with the argument that there was insufficient protection for someone in Mr Burkes position, because a doctor might reach a decision to withdraw artificial nutrition and hydration without being obliged to obtain approval from the court, the court saw no problem with a process which involved taking into account the patients previously expressed wishes and those of people close to him, and the opinions of medical personnel, and approaching a court only if there was any conflict or doubt as to the applicants best interests. It appears to have been content to endorse what the Court of Appeal said: the Court would refer to the Court of Appeals explanation that the courts do not as such authorise medical actions but merely declare whether a proposed action is lawful. A doctor, fully subject to the sanctions of criminal and civil law, is only therefore recommended to obtain legal advice, in addition to proper supporting medical opinion, where a step is controversial in some way. Any more stringent legal duty would be prescriptively burdensome doctors, and emergency ward staff in particular, would be constantly in court and would not necessarily entail any greater protection. The Mental Capacity Act 2005 Since 2007, the MCA 2005 has been the statutory context within which treatment decisions are taken in relation to those who lack capacity, essentially without input from the court, but with the possibility of an application being made to court should the case require it. It may be helpful briefly to review the main provisions of the Act which are relevant to the present issue, dealing first with provisions of general application and then coming, in para 39, to the provisions dealing with the courts involvement and, in para 40, to the provision requiring the Lord Chancellor to issue codes of practice. I start with two provisions which place the best interests of the person who lacks capacity at the heart of the process. Section 1(5) provides that an act done, or a decision made, under the Act for or on behalf of a person who lacks capacity must be done, or made, in his best interests. Section 4 sets out how someone determining, for the purposes of the Act, what is in a persons best interests must go about the task. All the relevant circumstances must be considered, and the steps listed in the section must be taken. They include considering, so far as reasonably ascertainable, the persons wishes and feelings, and the beliefs and values that would be likely to influence his decision if he had capacity, as well as the other factors that he would be likely to consider if he were able to do so. Also to be taken into account are the views of various specified people who have some responsibility for or are interested in his welfare. There is a specific subsection, section 4(5), dealing with a determination that relates to life saving treatment; it provides that in such cases, in considering whether the treatment is in the best interests of the person concerned, the person making the determination must not be motivated by a desire to bring about his death. Section 5 allows carers, including health professionals, to carry out acts in connection with personal care, health care, or treatment of a person who lacks capacity to consent. It provides a significant degree of protection from liability, provided that the act is done in the reasonable belief that capacity is lacking and that the act is in the patients best interests. If these conditions are satisfied, no more liability is incurred than would have been incurred if the patient had had capacity to consent and had done so. There are provisions of the Act which enable someone to cater in advance for the possibility that he or she will, in future, lose the capacity to make decisions about his or her own welfare. One such provision is section 9 which deals with lasting powers of attorney, under which the donor gives the donee authority to make decisions about the donors personal welfare. Such a power of attorney is subject to the restrictions in section 11(7), and thus subject to sections 24 to 26 of the Act (see immediately below). Although it will normally extend to giving or refusing consent to the carrying out or continuation of a treatment by a person providing health care for the donor, section 11(8) provides that it will not authorise the giving or refusing of consent to the carrying out or continuation of life sustaining treatment, unless the instrument contains express provision to that effect. Sections 24 to 26 deal specifically with advance decisions to refuse treatment. They enable an adult with capacity to decide in advance that if he later lacks capacity to consent to the carrying out or continuation of a specified health care treatment, that treatment is not to be carried out or continued. Such an advance decision applies to life sustaining treatment only if the decision is verified by a statement from the person concerned that it is to apply even if his life is at risk, and the decision complies with certain formalities set out in section 25(6), which essentially requires it to be written, signed and witnessed. Section 37 makes provision for a situation in which an NHS body is proposing to provide serious medical treatment for a person who lacks capacity to consent to it and there is no one, other than those engaged in providing care or treatment for the person in a professional capacity or for remuneration, whom it would be appropriate to consult in determining what would be in the persons best interests. Serious medical treatment means treatment which involves providing, withholding or withdrawing treatment of a kind prescribed by regulations made by the appropriate authority, which in practice will relate to situations in which a finely balanced decision has to be taken or what is proposed would be likely to involve serious consequences for the patient. Before providing the treatment, the NHS body must instruct an independent mental capacity advocate (referred to as an IMCA) to represent the person, although treatment which is urgently needed can be provided even though it has not been possible to appoint an IMCA. In providing treatment, the NHS body has to take into account information provided or submissions made by the IMCA. The provisions of sections 15 to 17 of the Act give the court power to make decisions about personal welfare and to make declarations and orders in respect of a person who lacks capacity. Section 15 deals with declarations, including declarations as to the lawfulness or otherwise of any act which has been or is to be done. Section 16 enables the court, by making an order, to make personal welfare decisions for a person without capacity, and, by section 17, the courts power in this regard extends to giving or refusing consent to the carrying out or continuation of a treatment by a person providing health care for the patient. Section 16(3) makes it clear that the courts powers under section 16 are subject to the provisions of the Act and, in particular, to section 1 and to section 4. What governs the courts decision about any matter concerning the patients personal welfare is therefore the patients best interests. Section 42 provides for the Lord Chancellor to prepare and issue codes of practice on various subjects. Before preparing a code, the Lord Chancellor has duties to consult, and a code may not be issued unless it has been laid before both Houses of Parliament in accordance with section 43(2). Section 42(4) imposes a duty on someone acting in a professional capacity in relation to a person who lacks capacity to have regard to any relevant code. Section 42(5) provides that if it appears to a court conducting any criminal or civil proceedings that a provision of a code, or a failure to comply with a code, is relevant to a question arising in the proceedings, the provision or failure must be taken into account in deciding the question. Before leaving this overview of the provisions of the 2005 Act, it is worth noting a provision which is not to be found amongst them. The Law Commission had recommended (see Law Commission Report No 231 on Mental Incapacity, published in 1995, particularly para 6.21) that the new statute should provide that the discontinuance of artificial sustenance to an unconscious patient with no activity in the cerebral cortex and no prospect of recovery should in every case require the prior approval of the court, unless an attorney or court appointed manager had express authority to make the decision, albeit that flexibility for the future was to be incorporated by providing that the Secretary of State could, by order, replace the need for court approval with a requirement for a certificate from an independent medical practitioner duly appointed for that purpose. As the Explanatory Notes to the 2005 Act state, the Act has its basis in the Law Commission Report. However, it does not seem to have been thought appropriate to include in it a requirement of court approval. In a note provided by counsel for the appellant, it is suggested that the reason for this was that the government concluded that, rather than creating inflexible legal rules, the better course would be for the courts to continue to decide which cases should have their prior sanction, with the situations in which that was the case being set out in a code of practice (see Baroness Ashton of Uphollands statement during the debate on the Bill in the House of Lords, Hansard (HL Debates) 25 January 2005, vol 668, col 1243). Mental Capacity Act 2005 Code of Practice The Mental Capacity Act 2005 Code of Practice (the Code), issued under section 42 of the MCA 2005, came into effect in April 2007. Chapter 5 of the Code has a section entitled How should someones best interests be worked out when making decisions about life sustaining treatment? It includes the following: 5.31 All reasonable steps which are in the persons best interests should be taken to prolong their life. There will be a limited number of cases where treatment is futile, overly burdensome to the patient or where there is no prospect of recovery. In circumstances such as these, it may be that an assessment of best interests leads to the conclusion that it would be in the best interests of the patient to withdraw or withhold life sustaining treatment, even if this may result in the persons death. The decision maker must make a decision based on the best interests of the person who lacks capacity. They must not be motivated by a desire to bring about the persons death for whatever reason, even if this is from a sense of compassion. Healthcare and social care staff should also refer to relevant professional guidance when making decisions regarding life sustaining treatment. 5.33 Doctors must apply the best interests checklist and use their professional skills to decide whether life sustaining treatment is in the persons best interests. If the doctors assessment is disputed, and there is no other way of resolving the dispute, ultimately the Court of Protection may be asked to decide what is in the persons best interests. 5.36 As mentioned in para 5.33 above, where there is any doubt about the patients best interests, an application should be made to the Court of Protection for a decision as to whether withholding or withdrawing life sustaining treatment is in the patients best interests. Chapter 6 of the Code is entitled What protection does the Act offer for people providing care or treatment? Healthcare and treatment decisions are dealt with from paras 6.15 to 6.19. Para 6.16 says that major healthcare and treatment decisions, such as major surgery or a decision that no attempt is to be made to resuscitate a patient, need special consideration. Health care staff are directed to work out carefully what would be in the persons best interests, taking into account the views of people in various categories, and involving an IMCA where no one else is available to consult. Para 6.17 commends multi disciplinary meetings as often the best way to decide on a persons best interests. They bring together healthcare and social care staff to discuss the persons options and may involve those who are closest to the person concerned. However, the paragraph stresses that final responsibility for deciding what is in the best interests of the person lies with the member of healthcare staff responsible for the persons treatment, who should record their decision, how they reached it, and the reasons for it, in the patients clinical notes. As long as they have recorded objective reasons to show that the decision is in the persons best interests, and the other requirements of section 5 of the Act are met, all healthcare staff taking actions in connection with the particular treatment will be protected from liability. Para 6.18 then goes on to single out certain treatment decisions in the following terms: 6.18 Some treatment decisions are so serious that the court has to make them unless the person has previously made a Lasting Power of Attorney appointing an attorney to make such healthcare decisions for them (see chapter 7) or they have made a valid advance decision to refuse the proposed treatment (see chapter 9). The Court of Protection must be asked to make decisions relating to:20 the proposed withholding or withdrawal of artificial nutrition and hydration (ANH) from a patient in a permanent vegetative state (PVS) cases where it is proposed that a person who lacks capacity to consent should donate an organ or bone marrow to another person the proposed non therapeutic sterilisation of a person who lacks capacity to consent (for example, for contraceptive purposes) cases where there is a dispute about whether a particular treatment will be in a persons best interests. See paragraphs 8.18 8.24 for more details on these types of cases. Footnote 20 to para 6.18 refers to procedures resulting from those court judgments but the court judgments in question are not named. Para 6.19 develops matters a little: Chapter 8 of the Code deals with the role of the Court of Protection. Commencing at para 8.18, there is a section headed Serious healthcare and treatment decisions. Paras 8.18 and 8.19 read: 6.19 This last category may include cases that introduce ethical dilemmas concerning untested or innovative treatments where it is not known if the treatment will be effective, or certain cases involving a termination of pregnancy. It may also include cases where there is conflict between professionals or between professionals and family members which cannot be resolved in any other way. Where there is conflict, it is advisable for parties to get legal advice, though they may not necessarily be able to get legal aid to pay for this advice. Chapter 8 gives more information about the need to refer cases to court for a decision. 8.18 Prior to the Act coming into force, the courts decided that some decisions relating to the provision of medical treatment were so serious that in each case, an application should be made to the court for a declaration that the proposed action was lawful before that action was taken. Cases involving any of the following decisions should therefore be brought before a court: decisions about the proposed withholding or withdrawal of artificial nutrition and hydration (ANH) from patients in a permanent vegetative state (PVS) cases involving organ or bone marrow donation by a person who lacks capacity to consent cases involving the proposed non therapeutic sterilisation of a person who lacks capacity to consent to this (eg for contraceptive purposes) and all other cases where there is a doubt or dispute about whether a particular treatment will be in a persons best interests. 8.19 The case law requirement to seek a declaration in cases involving the withholding or withdrawing of artificial nutrition and hydration to people in a permanent vegetative state is unaffected by the Act30 and as a matter of practice, these cases should be put to the Court of Protection for approval. Footnote 30 refers to the Bland case. Just to complete the picture, para 15.36 says that [t]here are some decisions that are so serious that the court should always make them and refers the reader back to chapter 8 for more information about that type of case. It will be noted that the Code of Practice does not seem to be entirely consistent in its approach to involving the court in serious treatment decisions, chapter 6 asserting that the Court of Protection must be asked to make certain decisions, and chapter 8 that certain decisions should be brought before a court. It will be necessary to return to this later. Court of Protection Rules and Practice Directions Court of Protection Rules are made by the President of the Family Division (who is the President of the Court of Protection), in exercise of powers conferred by the MCA 2005. Assistance is provided by an ad hoc Rules Committee which is chaired by the Vice President of the Court of Protection, and includes judges of the Court of Protection, experienced solicitors and barristers, representatives of local authorities, court staff and the Official Solicitor. The first set of rules were the Court of Protection Rules 2007 (SI 2007/1744). They were replaced by the Court of Protection Rules 2017 (SI 2017/1035) which came into force on 1 December 2017. Both sets of Rules have been supplemented by Practice Directions. The Court of Protection Rules 2007 were accompanied by Practice Direction 9E. This was entitled Applications relating to serious medical treatment and set out the procedure to be followed where the application concerned serious medical treatment. Para 5 of the Practice Direction said that cases involving decisions about the proposed withholding or withdrawal of artificial nutrition and hydration from a person in a permanent vegetative state or a minimally conscious state should be regarded as serious medical treatment for the purposes of the Rules and this Practice Direction, and should be brought to the court. When the 2017 Rules replaced the 2007 Rules, this provision was revoked and no equivalent provision was introduced. As to the reasoning for this change, some insight is provided by the notes of a meeting in July 2017 of the ad hoc Court of Protection Rules Committee, which are headed Further Note: Serious Medical Treatment Practice Directions 9E and12A (28 July 2017). The notes state (para 7) that no final recommendation was formulated by the committee. However, it is recorded (para 4) that it had been concluded that Practice Direction 9E should not have included provisions as to what cases should be brought to court, since a practice direction cannot properly direct when an application should be made, and that accordingly any new practice direction should not include any equivalent provision. The final paragraph records that Charles J, as the chairman of the committee, would recommend and so instruct work to be done to remove and not replace Practice Direction 9E. It appears that the committee had considered, but not generally favoured, a practice direction which took a different approach, for example recording what had been said in the decided cases. It was, however, common ground that the British Medical Association, the Law Society, the Ministry of Justice and the Department of Health (the reference, in the conclusions and recommendations section of the note, to the Ministry of Defence must be a mistake) would create a working group to address the underlying issues and the giving of guidance which would take account of developing authority and so would consider how the guidance produced could be readily updated. The case law: domestic decisions after MCA 2005 Aintree University Hospitals NHS Foundation Trust v James [2013] UKSC 67; [2014] AC 591 was the first case to come before the Supreme Court under the MCA 2005. It concerned a patient with multiple medical problems, who had a very limited level of awareness and lacked capacity to make decisions concerning his medical treatment. The hospital Trust applied for a declaration, under section 15 of the MCA 2005, that it would be lawful, as being in the patients best interests, for three particular life preserving treatments to be withheld if his condition got worse. The family did not agree with the withdrawal of treatment and, at first instance, Peter Jackson J refused to grant the declaration. By the time of the Trusts appeal to the Court of Appeal, the patient had suffered a dramatic deterioration; he was completely dependent on mechanical ventilation and was comatose or semi comatose. The Court of Appeal allowed the appeal and granted the declaration. The patient subsequently died, following a cardiac arrest, but the Supreme Court nonetheless heard his widows appeal, which gave rise to questions concerning the proper approach to the assessment of a patients best interests in the post MCA 2005 era. The appeal was dismissed, although Peter Jackson Js approach to determining the patients best interests was preferred to that of the Court of Appeal. Baroness Hale gave a judgment with which the other justices all agreed. She restated, now with reference to the provisions of the MCA 2005, the position as to invasive medical treatment of a patient. Although going over ground covered in the pre MCA 2005 cases, it is worth setting out the relevant passages in full, since they establish the up to date legal context for the questions that arise in the present appeal. She said: 19. Generally it is the patients consent which makes invasive medical treatment lawful. It is not lawful to treat a patient who has capacity and refuses that treatment. Nor is it lawful to treat a patient who lacks capacity if he has made a valid and applicable advance decision to refuse it: see the 2005 Act, sections 24 to 26. Nor is it lawful to treat such a patient if he has granted a lasting power of attorney (under section 10) or the court has appointed a deputy (under section 16) with the power to give or withhold consent to that treatment and that consent is withheld; but an attorney only has power to give or withhold consent to the carrying out or continuation of life sustaining treatment if the instrument expressly so provides (section 11(8)) and a deputy cannot refuse consent to such treatment: section 20(5). 20. Those cases aside, it was recognised by the House of Lords in In re F (Mental Patient: Sterilisation) [1990] 2 AC 1 that where a patient is unable to consent to treatment it is lawful to give her treatment which is necessary in her best interests. Section 5 of the Mental Capacity Act 2005 now provides a general defence for acts done in connection with the care or treatment of a person, provided that the actor has first taken reasonable steps to establish whether the person concerned lacks capacity in relation to the matter in question and reasonably believes both that the person lacks capacity and that it will be in his best interests for the act to be done. However, section 5 does not expressly refer both to acts and to omissions, the giving or withholding of treatment. The reason for this, in my view, is that the fundamental question is whether it is lawful to give the treatment, not whether it is lawful to withhold it. Baroness Hale underlined further, in para 22, that the focus is on whether it is in the patients best interests to give the treatment, rather than whether it is in his best interests to withhold it or withdraw it. She continued: If the treatment is not in [the patients] best interests, the court will not be able to give its consent on his behalf and it will follow that it will be lawful to withhold or withdraw it. Indeed, it will follow that it will not be lawful to give it. It also follows that (provided of course that they have acted reasonably and without negligence) the clinical team will not be in breach of any duty towards the patient if they withhold or withdraw it. The court did not have to consider the issue that now falls for determination. However, it is worth noting that Baroness Hale spoke in approving terms, in para 47, of the sensible advice given by the General Medical Council in their guidance on Treatment and care towards the end of life: Good practice in decision making (see below) and said that nothing in her judgment was inconsistent with it. In re Briggs (Incapacitated Person) [2018] Fam 63 concerned a man in a minimally conscious state. His wife brought proceedings under section 21A of the MCA 2005 (as inserted by paragraph 9 of Schedule 2 to the Mental Health Act 2007) seeking a determination that it was not in her husbands best interests to continue to be given the CANH that he needed to survive. By virtue of having applied under section 21A, the wife was entitled to non means tested legal aid. It was contended, against her, that the issue of her husbands treatment could not be raised under section 21A (which deals with the courts powers in relation to the authorisation of deprivation of liberty) and that the application should have been brought under other provisions of the Act, which would have resulted in only means tested funding being available. The question for the court was therefore whether section 21A was broad enough to cover the treatment application. The Court of Appeal held that it did not provide a route for determining questions in relation to medical treatment where, as in that case, the deprivation of liberty itself was not the real or essential issue before the court. An application for a welfare order under section 16 of the Act should have been made. In the course of the judgment, King LJ (with whom both other members of the court agreed, Sir Brian Leveson P adding a few words of his own) made some observations about the issue that now concerns this court. Although obiter, they are still valuable, not least for their insight into what happens in practice. At the time, Practice Direction 9E remained in force, and King LJ observed, at para 24, that at first glance there seemed to be a tension between the practice direction, which appeared to say that all cases of withholding or withdrawing treatment in relation to a minimally conscious person should be brought before the court, and the Code which said that matters should be brought before the court where there was a doubt as to the persons best interests. Because the Code was a statutory code to which the MCA 2005 made it mandatory to have regard, she said that the Code must take precedence and then continued: 26. In reality virtually all of these traumatic decisions are made by agreement between the families and the treating teams of the person involved. To suggest that every case should go before a judge (even where all concerned are in accord as to what was in the best interests of the patient) would not only be an unnecessary pressure on the overstretched resources of the NHS trusts and add to the burden on the courts but, most importantly, would greatly add to the strain on the families having to face these unimaginably distressing decisions. In my judgment, the practice direction provides valuable procedural guidance but should not be interpreted as introducing a requirement that all cases where a decision is to be made about the withdrawal of CANH must come before a court. Having rejected the argument that medical treatment decisions could be taken, in a case such as that which the court was considering, under section 21A of the MCA 2005, King LJ set out in para 108 what, in her view, was the proper approach to a medical treatment case. In so far as relevant to the present appeal, she said: (i) If the medical treatment proposed is not in dispute, then, regardless of whether it involves the withdrawal of treatment from a person who is minimally conscious or in a persistent vegetative state, it is a decision as to what treatment is in Ps best interests and can be taken by the treating doctors who then have immunity pursuant to section 5 of the MCA. (ii) If there is a dispute in relation to medical treatment of an incapacitated person, and, specifically, where there is a doubt as to whether CANH should be withdrawn, then the matter should be referred to the court for a personal welfare determination under sections 15 to 17 of the MCA. In similar vein, Sir Brian Leveson P said, at para 114, that [i]f agreement between the authorities and the family is possible, litigation will not be necessary. Finally, in terms of the post MCA 2005 domestic case law, I would refer to two decisions of the Court of Protection. It is important to do so, because judges of the Family Division, who sit also in the Court of Protection, deal regularly with the very difficult welfare decisions which have to be taken as people approach the end of their lives, and this experience gives weight to their views. In In re M (Adult Patient) (Minimally Conscious State: Withdrawal of Treatment) [2011] EWHC 2443 (Fam); [2012] 1 WLR 1653, a case concerning a woman in a minimally conscious state, Baker J expressed the view (paras 78, 82 and 257) that all decisions about the proposed withholding or withdrawal of ANH from a person in a persistent vegetative state or minimally conscious state should always be brought to the court. By this, it can be seen from para 257 that he meant that such decisions must be referred to court. He considered that the legal position has been clear since the decision in the Bland case and, in so far as there was any difference between the Code (which might have suggested that applications to court were not necessary unless the doctors assessment of the patients best interests was disputed) and the position set out in Practice Direction 9E, it was the Practice Direction which reflected the law. Our attention was invited to a fairly recent paper entitled A matter of life and death (2017) 43 J Med Ethics 427 written by Baker J from which it appears that, at least up to that point, he continued to be of the view that he expressed in In re M. He acknowledged that the time may come when applications to court were only necessary where there was a dispute, but did not believe that time had yet been reached. In his view, at p 434, medical science and the law were still evolving and until such time as there was greater clarity and understanding about the disorders of consciousness, and about the legal and ethical principles to be applied, there remains a need for independent oversight, and applications to the court should continue to be obligatory in all cases where withdrawal of ANH is proposed. He did, however, identify an urgent need for a more streamlined procedure for court resolution, avoiding undue cost and delay. In In re M (Incapacitated Person: Withdrawal of Treatment) [2017] EWCOP 18; [2018] 1 WLR 465, the court was concerned with the withdrawal of CANH from a woman who was suffering from Huntingtons disease and was in a minimally conscious state. Her family, her clinicians, and a specialist from whom a second opinion had been sought, were agreed that it was in her best interests not to continue with treatment, notwithstanding that that would result in her death, and a declaration was made to that effect. Peter Jackson J responded to a request from the parties for clarification as to whether legal proceedings were, in fact, necessary prior to withholding or withdrawing CANH when an incapacitated persons family and clinicians agreed that CANH was no longer in the persons best interests. At the time he decided the case, Practice Direction 9E (which had been influential in Baker Js decision) was still effective, but his view differed from Baker Js. Notwithstanding the provisions of the Practice Direction, he held (paras 37 and 38) that, on the facts with which he was dealing, the decision about what was in Ms best interests could lawfully have been taken by her treating doctors, having fully consulted her family and having acted in accordance with the MCA 2005 and with recognised medical standards, without reference to the court. He pointed out that there was no statutory obligation to bring the case to court and gave his view that none of the cases and materials cited in his judgment sustained the proposition that a court decision was necessary as a matter of law rather than of practice. He did not consider that article 2 of the ECHR mandated court oversight, taking the view that the approach taken in Ms case fully respected her article 2 rights in a fashion contemplated in Lambert v France (2016) 62 EHRR 2. He drew attention to the fact that, overwhelmingly, treatment decisions up to and including the withholding of life support are taken by clinicians and families working together in accordance with good practice, with no suggestion of mandatory court involvement, and expressed the view that it was anomalous to require it for a limited subset of cases (those involving PVS or MCS) which were not sufficiently different to justify different treatment. Identifying another anomaly, he also observed that there was no suggestion that the court should be involved where there was a valid and applicable advance decision, yet the grave consequences of the decision and the risk of error were no different in such cases from cases where there was no advance decision. He also referred to the deterrent effect of costly and time consuming proceedings, both on the individual case and on the patient population in general. He considered that a mandatory litigation requirement may deflect clinicians and families from making true best interests decisions and in some cases lead to inappropriate treatment continuing by default. He gave Ms case as an example, in that she continued to receive CANH that neither her doctors nor her family thought in her best interests for almost a year until a court decision was eventually sought. He made quite clear, however, that the court is always available where there is disagreement, or where it is felt for some other reason that an application should be made, although this would only arise in rare cases. Strasbourg jurisprudence Since Mr Gordon relies upon the ECHR as one foundation for his argument that there is a requirement to apply to court for a declaration in every case, it is important to look at the case law of the ECtHR on the subject. I have already referred to the case of Burke in 2006. The case of Lambert v France (2016) 62 EHRR 2 is also very much in point, although it received only a passing mention in the appellants written case. If there were any doubt as to its significance, in Gard v United Kingdom (2017) 65 EHRR SE9, the ECtHR described it as its landmark Grand Chamber case Lambert (para 79). Lambert concerned a man, VL, who had sustained serious head injuries, rendering him tetraplegic and completely dependent. He had irreversible brain damage and was receiving artificial nutrition and hydration. Through the collective procedure established in France by the Public Health Code as amended by the Act of 22 April 2005 on patients rights and end of life issues (the Public Health Code), a decision was taken by Dr K to withdraw nutrition and hydration. VLs wife, and ultimately also his parents, a half brother and a sister, were involved in the decision making process. His parents, half brother and sister opposed the withdrawal of nutrition and hydration, and there was considerable litigation in France. This culminated in the Conseil dtat. Furnished with an expert medical report which concluded that VL was in a vegetative state, and after considering observations on the Public Health Code from a number of amici curiae, the Conseil held that Dr Ks decision was not unlawful. The parents, half brother and sister made an application to the ECtHR, arguing that there was a violation of (inter alia) articles 2 and 8 of the ECHR. By a majority, the court found that there was no violation of article 2, and that there was no need for a separate ruling on article 8. In its judgment, it referred back to its previous decisions in Glass (2003) 37 EHRR CD66 and Burke v United Kingdom (Application No 19807/0) (supra), observing at para 143 that: in addressing the question of the administering or withdrawal of medical treatment [in those cases], it took into account the following factors: the existence in domestic law and practice of a regulatory framework compatible with the requirements of article 2; whether account had been taken of the applicants previously expressed wishes and those of the persons close to him, as well as the opinions of other medical personnel; and the possibility to approach the courts in the event of doubts as to the best decision to take in the patients interests. These factors were relevant to its decision about VL (and were set out again subsequently in para 80 of Gard), as well as the criteria laid down in the Council of Europes Guide on the decision making process regarding medical treatment in end of life situations. The Guide had been drawn up in the course of work on patients rights and with the intention of facilitating the implementation of the Oviedo Convention on Human Rights and Biomedicine (see para 59 of Lambert), which has been ratified by 29 of the Council of Europe member states, but not the United Kingdom. The ECtHR observed (para 165) that the comparative law materials available to it showed that, in those countries which authorise the withdrawal of treatment, and where the patient has not given any advance directive, there is a great variety of arrangements governing the taking of the final decision to withdraw treatment. The most common situation was that the final decision was taken by the doctor treating the patient, but it could be taken jointly by the doctor and the family, by the family or legal representative, or (as it is put in para 75) even the courts. The ECtHR determined that the French legal provisions, as interpreted by the Conseil dtat, constituted a legal framework which was sufficiently clear to regulate with precision the decisions taken by doctors in situations such as VLs, and which ensured protection of patients lives. It is worth looking in a little detail at what was required by French law at the relevant time. By the Public Health Code (including the Code of Medical Ethics which is part of it), the decision to limit or withdraw treatment of a person who is unable to express his or her wishes is taken by the doctor in charge of the patient, after the implementation of a collective procedure. The circumstances in which such a decision can be taken are set out in article R.4127 37 para I of the Public Health Code. I have included the provision in both French and English in order that the reference to unreasonable obstinacy in the English translation might be better understood; the ECtHR explains it in para 53 as continuing treatment to unreasonable lengths. En toutes circonstances, le mdecin doit sefforcer de soulager les souffrances du malade par des moyens appropris son tat et lassister moralement. Il doit sabstenir de toute obstination draisonnable dans les investigations ou la thrapeutique et peut renoncer entreprendre ou poursuivre des traitements qui apparaissent inutiles, disproportionns ou qui nont dautre objet ou effet que le maintien artificiel de la vie. The doctor shall at all times endeavour to alleviate suffering by the means most appropriate to the patients condition, and provide moral support. He or she shall refrain from any unreasonable obstinacy in carrying out examinations or treatment and may decide to withhold or discontinue treatment which appears futile or disproportionate or the only purpose or effect of which is to sustain life artificially. Before taking the decision, the doctor is required to consult with the care team where there is one, and there has to be a reasoned opinion of at least one doctor acting as an independent consultant. The decision has to take into account any wishes previously expressed by the patient, in particular in the form of advance directives, the views of any person of trust that the patient may have designated and of the family or, failing this, of another person close to the patient. Reasons have to be given for any decision to limit or withdraw treatment, and the position has to be documented in the patients file. Whilst the matter had, in VLs case, been litigated in the courts, demonstrating that recourse could be had to court if necessary, court approval was not required by the French provisions. Although the applicants did not advance any argument that this rendered the system unsatisfactory for the purposes of article 2, they did complain about the decision making process on other grounds, considering that the decision should have been a genuinely collective one or, at the very least, provision should have been made for mediation in the event of disagreement. This complaint led the court to consider what obligations there were concerning the decision making process. Rejecting the complaint, it said (para 168) that the organisation of the decision making process, including the designation of the person who takes the final decision to withdraw treatment and the detailed arrangements for the taking of the decision, fall within the states margin of appreciation. The French process (as amended, although not substantially, in 2016) once more withstood scrutiny by the ECtHR in January 2018 in Afiri and Biddarri v France (Application No 1828/18) 23 January 2018. The court again re iterated the elements set out in para 143 of Lambert (supra) and repeated the observations it had there made (para 168) about the organisation of the decision making process. Other guidance Various medical bodies in the UK have produced codes relating to the withdrawal of life sustaining treatment. In chronological order, they are: i) The BMAs Withholding and Withdrawing Life Prolonging Medical Treatment: Guidance for decision making (first published in 1999, 3rd ed 2007) ii) The GMCs Treatment and care towards the end of life: good practice in decision making (published May 2010) iii) The report of the Royal College of Physicians (the RCP) entitled Prolonged disorders of consciousness: National clinical guidelines (the report of a working party in 2013) iv) An Interim Guidance document produced in December 2017 by the GMC, BMA and RCP entitled Decisions to withdraw clinically assisted nutrition and hydration (CANH) from patients in permanent vegetative state (PVS) or minimally conscious state (MCS) following sudden onset profound brain injury. The last document referred to in the previous paragraph was published after the decisions at first instance in the present case, the Court of Appeals decision in Briggs, and Peter Jackson Js decision in In re M. It was not meant to override the existing guidance from each of the three bodies, but to supplement it, responding to the statements in those cases that there is no requirement for treating clinicians to seek court approval to withdrawing CANH, and to the withdrawal of Practice Direction 9E. It summarises the recent developments in the law, and also the views of the GMC, BMA, and RCP about good clinical and professional practice in the area. It is intended that before long it will be replaced with a new final guidance, which (the introduction to the Interim Guidance says) will recommend safeguards to ensure that a robust and thorough assessment process continues to be followed prior to the withdrawal of CANH. It is necessary to look in more detail at this body of professional guidance since it has a very important part to play in ensuring the proper protection of patients and in maintaining the confidence of the public in the health care system. Whatever impression might be conveyed by terms such as guidance and guidelines, the practice set out in the various documents has significant weight. This is perhaps particularly so in relation to guidance emanating from the GMC, which has a special role in providing guidance for the medical profession. It was established by statute, the Medical Act 1983, with the over arching objective of protecting the public, and is charged with setting and maintaining the standards that doctors across the UK must follow, where necessary taking action in relation to a doctor if he or she is found to be falling below the required standard. Its statutory powers under the Medical Act include power to issue advice for members of the medical profession on standards of professional conduct, standards of professional performance and medical ethics (section 35). The GMCs 2010 guide to good practice draws upon the domestic and European jurisprudence and covers the matters that one would therefore expect. I will not rehearse all those matters here, particularly given that guidance is continuing to evolve, and will simply give a broad indication of the nature and ambit of the document. It provides the doctor with a decision making model, applicable where an adult lacks the capacity to decide about treatment and care. As part of the decision making process, the doctor is to: find out about any valid advance decision made by the patient or consider what treatments are clinically appropriate and likely to i) make an assessment of the patients condition, ii) benefit the patient, iii) anyone who has legal authority to decide for him, iv) as far as practical and appropriate, consult members of the healthcare team and those close to the patient and, when deciding about treatment, take their views into account, v) take steps towards the appointment of an IMCA where appropriate, vi) attempt to resolve disagreements about what treatment and care would be of overall benefit to the patient, seeking legal advice on applying to court for an independent ruling if agreement is not reached. The guide requires a record to be made of decisions about treatment, and of who was consulted in relation to the decisions. There is a section specifically addressing CANH, particularly stressing the need to listen to and consider the views of the patient and those close to them, and to explain the issues to be considered. The doctor is alerted to the need, in the event of disagreement about CANH, to ensure that the patient or someone acting on their behalf is advised on how to access their own legal advice or representation. Where the patient is not expected to die in any event in hours or days, but the doctor judges that CANH would not be of overall benefit to him, all reasonable steps must be taken to get a second opinion from a senior clinician who is not already directly involved but who should examine the patient. If that is not practically possible in exceptional circumstances, advice from a colleague must still be sought. As to patients in PVS or a condition closely resembling it, the guide says that the courts require that you approach them for a ruling. This is, however, modified in the Interim Guidance of December 2017 which proceeds upon the basis that there will be cases in which no court application is required. The December 2017 Interim Guidance starts by identifying that a best interests decision cannot be taken for the patient where he has made a valid and applicable advance decision to refuse treatment which covers CANH, or where an attorney appointed under a suitable lasting power of attorney makes the decision. It then goes on to say that where there is disagreement about best interests or the decision is finely balanced, an application should be made to court for a declaration as to whether CANH continues to be in the patients best interests. Then, dealing with the remainder of cases, the guidance sets out the steps that should be taken to ensure that there is proper consultation prior to determining what is in the patients best interests. These include ensuring that the RCP guidelines have been followed regarding assessment, with the assessment carried out by professionals with the appropriate training, that guidance in the Mental Capacity Act Code, and from the BMA, RCP and/or GMC has been followed, that there have been formal, documented best interests meetings with those who care for the patient and are interested in his or her welfare, and that an IMCA is consulted where necessary. The doctor is told to find out as much as possible about the patients values, wishes, feelings and beliefs. A second clinical opinion should be sought from a consultant with experience of PDOC who has not been involved in the patients care and who should, so far as reasonably practical, be external to the NHS Trust/Clinical Commissioning Group (CCG); the consultant should examine the patient and review the medical records and the information that has been collected. There should be very detailed records kept, both a clinical record (covering many specified matters) and a record of discussions, meetings and so on. The RCP document is lengthy, covering the diagnosis and management of patients with PDOC. There is a section devoted to assessment, diagnosis, and monitoring, in which the doctor is alerted to the challenges in making an accurate diagnosis and the need for evaluation by a multi disciplinary team of expert clinicians, with the family and close friends of the patient having a key role, and is told that the diagnostic assessment process should follow a structured approach, elements of which are described in some detail. Another section of the document covers ethical and medico legal issues, also in detail. The BMA guidance is similarly substantial, its aim being to provide a coherent and comprehensive set of principles which apply to all decisions to withhold or withdraw life prolonging treatment (Introduction p xiii). It should be noted that the Faculty of Intensive Care Medicine (FICM) and the Intensive Care Society (ICS) have also issued joint recommendations in the form of Guidelines for the provision of intensive care services; these include recommendations about end of life care. The submissions on behalf of the Official Solicitor Considerations of human dignity and the sanctity of human life are, quite rightly, central to the Official Solicitors case. His submission is that only by requiring judicial scrutiny in every case concerning the withdrawal of CANH from a patient suffering from PDOC can human life and dignity be properly safeguarded. An important part of the protection is, he submits, the oversight of an independent and neutral person such as the Official Solicitor, who can investigate, expose potential disputes, and give the patient a voice in the decision making, and it is court proceedings that enable the Official Solicitor to be involved. Medical guidance on its own is, in his submission, insufficient protection, and so, until other protective mechanisms are devised, the common law and/or the ECHR dictate that an application to court must be made. I do not understand the Official Solicitor to go so far as to submit that In re F (Mental Patient: Sterilisation) and Blands case specifically impose a common law requirement for a court application in every case. His argument is less direct. In his written case, Mr Gordon says that it is abundantly clear from those cases that the House of Lords implicitly accepted the link between the need for common law protection of patients rights and necessary mechanisms (not yet sufficiently advanced) to give full protection of those rights. That, in his submission, is what led them to say that for the time being a declaration should be sought, it being the only suitably protective mechanism so far available. Since, in the Official Solicitors view, the necessary mechanisms have still not been developed, there remains no satisfactory alternative protection for patients. In those circumstances, it is artificial, he submits, to distinguish between a statement of good practice, and what is required by common law, as they are in fact one and the same, necessitating court involvement in every case. The passing of the MCA 2005 has not changed matters, it is submitted, and the common law is not undermined by the absence of an express statutory provision in it requiring court involvement. Indeed it is asserted that, on the contrary, [i]t was clear that Parliament intended that judicial scrutiny of any decision to withdraw CANH should continue for the foreseeable future. In terms of recent support for his position, Mr Gordon seeks to rely upon something that Baroness Hale said in In re N v (An Adult) (Court of Protection: Jurisdiction) [2017] AC 549, para 38. Whereas I intend to address the bulk of the Official Solicitors submissions later, this one can be dealt with straight away. I did not include In re N v (An Adult) (Court of Protection: Jurisdiction) in my rsum of the authorities as it is not on the point which requires determination here. The issue related to the powers of the Court of Protection where a public body, the local commissioning group, refused to provide or fund a care package for an incapacitated adult which his parents thought would be in his best interests. At para 38, introducing her discussion of that very different issue, Baroness Hale said: Section 5 of the 2005 Act gives a general authority, to act in relation to the care or treatment of P, to those caring for him who reasonably believe both that P lacks capacity in relation to the matter and that it will be in Ps best interests for the act to be done. This will usually suffice, unless the decision is so serious that the court itself has said it must be taken to court (My italics) It seems to me over ambitious to seek to rely upon the italicised sentence, taken out of context, as support for the existence of the common law requirement for which Mr Gordon contends. Turning to the ECHR, the Official Solicitor seeks to invoke article 2 (right to life), article 6 (right to a fair trial), article 8 (right to respect for private and family life) and article 14 (prohibition of discrimination) as further support for the assertion that court involvement is a necessary component in securing the patients rights. The jurisprudence of the ECtHR makes clear, he says, that if there is doubt as to the medical position or the patients best interests, there must be a real remedy and, in cases such as the present, only a court application will reveal whether there is doubt. Here, without the Official Solicitors full participation in the present proceedings, it was impossible to know whether or not there was any dispute about the medical evidence or about Mr Ys best interests, and as a result Mr Ys article 6 rights were eroded to the point that his article 2 rights were afforded no effective protection. An argument is also advanced in reliance upon article 14, which it is said will be breached because a patient in Mr Ys position unjustifiably has less protection than an adult who has capacity and is terminally ill, the latter having the protection in relation to assisted dying afforded by section 2 of the Suicide Act 1961 (which makes it an offence to do an act capable of encouraging or assisting a suicide). It is important to note some of the special features of PDOC cases which in the Official Solicitors submission necessitate court involvement. He stresses the particular vulnerability of patients with PDOC, the difficulty in assessing the level of a persons consciousness, and the dangers of a wrong diagnosis or a wrong conclusion about what is in the persons best interests. He invites attention to examples of diagnostic errors in the decided cases where, for example, a patient has been thought to be in a permanent vegetative state but found later to be in a minimally conscious state. He submits that, although decisions about withdrawing treatment have to be made in relation both to patients with PDOC, and patients in intensive care with life limiting illnesses or injuries, the two categories of patient are different. The patient with PDOC may be clinically stable and may live for a prolonged period with only appropriate nursing care, hydration and nutrition, whereas the patient in intensive care may require more active medical intervention and support and may face death within hours or days. Furthermore, it is suggested that there is a particular concern about the morality of withdrawing CANH, which many might see as basic care, as opposed to certain other types of treatment. Lord Brandons reasoning at p 56 of In re F (Mental Patient: Sterilisation) (supra) (where he identified a number of special features which made the involvement of the court highly desirable) applies equally to PDOC cases, it is submitted. Similarly in point is Lord Lowrys concern, expressed in the Bland case (supra), that without court oversight, the doctor will be judge in his own cause. In addition, there is a danger, it is said, that the doctor may persuade family members who might not have the resources (emotional or financial) to question the doctors decision. Far from the need for independent scrutiny having diminished since the Bland case, Mr Gordon submits that it has increased as the growing understanding of disorders of consciousness has revealed the shortcomings of the assessments that have to be carried out. Discussion Permeating the determination of the issue that arises in this case must be a full recognition of the value of human life, and of the respect in which it must be held. No life is to be relinquished easily. As Baroness Hale said at para 35 of Aintree University Hospitals NHS Foundation Trust v James (supra): The authorities are all agreed that the starting point is a strong presumption that it is in a persons best interests to stay alive. And yet there may come a time when life has to be relinquished because that is in the best interests of the patient. The situation of Mr Y, and the ordeal through which his family has been going, serve as a solemn reminder of how illness may confront any one of us at any time and of the difficulties that face the patient, his family, and the medical staff whose job it is to do the best that they can for them. As Lord Browne Wilkinson said in Blands case (p 877), the questions for us are questions of law, [b]ut behind the questions of law lie moral, ethical, medical and practical issues of fundamental importance to society. The weight of that consideration anchors the legal decisions which I would make. Before turning to the central questions in the case, it is worth restating the basic position with regard to medical treatment, because it is upon this foundation that everything else is built. Although the concentration is upon the withdrawal of CANH, it must be kept in mind that the fundamental question facing a doctor, or a court, considering treatment of a patient who is not able to make his or her own decision is not whether it is lawful to withdraw or withhold treatment, but whether it is lawful to give it. It is lawful to give treatment only if it is in the patients best interests. Accordingly, if the treatment would not be in the patients best interests, then it would be unlawful to give it, and therefore lawful, and not a breach of any duty to the patient, to withhold or withdraw it. For a recent authoritative statement to this effect, see the Aintree case, although I would add that if a doctor carries out treatment in the reasonable belief that it will be in the patients best interests, he or she will be entitled to the protection from liability conferred by section 5 of the MCA 2005 (see para 36 above). It is also important to keep in mind that a patient cannot require a doctor to give any particular form of treatment, and nor can a court (see, for example, R (Burke) v General Medical Council at paras 50 and 55, and the Aintree case at para 18). I turn then to the core issue, commencing with a consideration of what, if any, requirements are imposed by domestic law. This consideration must start with the Bland case. In my view, there can be no question of the House of Lords there having imposed a legal requirement that in all cases of PVS (or any other form of prolonged disorder of consciousness) an application must be made to the court before CANH can be withdrawn. The scene had been set in In re F (Mental Patient: Sterilisation), where consideration was given to whether it was necessary to seek a declaration before carrying out a sterilisation operation on a woman who could not consent to the procedure herself. This was the case in which Lord Brandon set out the six features which made it highly desirable to seek the involvement of the court as a matter of good practice, five of which features the Official Solicitor relies upon in his present argument. That none of their Lordships in In re F considered that they were laying down a common law requirement to apply to the court is put beyond doubt by the speech of Lord Griffiths. It will be recalled that he would have been inclined to make it a legal requirement to seek the sanction of the court in all cases, and thought that the common law could be adapted to do so, but was deterred because the other members of the House considered that this would be making new law and inappropriate. In re F was very much in the minds of their Lordships in the Bland case, as can be seen from their speeches, and the approach they took to the question of court involvement was similar to that taken in In re F. There was no suggestion that the common law was now being developed in the sort of way that Lord Griffiths had eschewed in In re F. It was made quite clear that it was as a matter of practice that guidance should be sought from the court by way of declaratory relief, the practice of applying being desirable. It was contemplated that the President of the Family Division would keep matters under review and it was hoped that he would, in time, be able to limit applications for declarations to cases where there was a special need; this would have been difficult had the House of Lords created a legal requirement of a declaration in every case. The position was underlined in R (Burke) v General Medical Council (supra) where the Court of Appeal expressly rejected the argument that there was a legal duty to seek a declaration from the court before withdrawing artificial nutrition and hydration from a patient in PVS, affirming that the House of Lords in Blands case had recommended as a matter of good practice that reference be made to the court. Mr Gordon submits that the Court of Appeal was not there addressing the same issue as this court must now address, namely the protection of the vulnerable class of patients with PDOC, and that it had only been addressed on the situation of PVS patients in passing. I do not consider that Burkes case can be removed from the picture in this way. It seems to me to be an accurate statement of the legal position and of relevance to the issue before us. Accordingly, when the Mental Capacity Act 2005 came into force in 2007, there was no universal requirement, at common law, to apply for a declaration prior to withdrawing CANH. Mr Sachdeva, for the respondents, argues that it would be inconsistent with the statutory regime established by Parliament in the MCA 2005 to have such a requirement. The Act makes provision for decisions to be taken on behalf of those who lack capacity, based upon what is in their best interests, without involving a court. By section 5, subject of course to the impact of any relevant lasting power of attorney or advance decision to refuse treatment, a clinician who treats a patient in accordance with what he reasonably believes to be the patients best interests does not incur any liability, in relation to the treatment, that he would not have incurred if the patient had had capacity to consent and had consented to it. Provision is made for the court to make decisions about personal welfare where necessary, but the Act does not single out any sub class of decisions which must always be placed before the court, and there is no requirement for the Official Solicitor to be involved in best interest decisions relating to serious medical treatment. There is an attraction to Mr Sachdevas argument that the MCA 2005 is a complete statutory code but, had there been a common law requirement of court involvement by the time it was passed, I think I might nonetheless have been prepared to accept that it could have survived the silence of the Act on the subject. However, as there was no pre existing common law requirement, the point does not arise for decision. The absence of any requirement in the statute of the type for which the Official Solicitor contends is nevertheless of interest, given the recommendations of the Law Commission Report No 231 which brought it to attention as one of the possible options, and given that the Act is based upon that report. In contrast to the statute itself, the Mental Capacity Act 2005 Code of Practice does speak of applications to court in cases such as the present, but is contradictory in what it says about them. Paras 5.33 and 5.36 speak in terms of an application being made if there is any doubt or dispute about the doctors assessment of the patients best interests. Although para 6.18 suggests that the court has to make/must be asked to make the decision about withholding or withdrawing artificial nutrition and hydration from a patient in PVS, that statement seems to have been derived from the case law, which dealt only in terms of good practice, not of legal obligation. And paras 8.18 and 8.19, to which para 6.18 invites reference, say that an application should be made to the court and that as a matter of practice such cases should be put to the Court of Protection for approval, referring to a case law requirement to seek a declaration, the source of which is given as the Bland case. A Code in these rather ambiguous terms, plainly attempting to convey what the cases have so far decided, cannot extend the duty of the medical team beyond what the cases do in fact decide is incumbent upon them. Whatever the weight given to the Code by section 42 of the MCA 2005, it does not create an obligation as a matter of law to apply to court in every case. Practice Direction 9E which accompanied the Court of Protection Rules 2007 said that decisions about the proposed withholding or withdrawal of artificial nutrition and hydration from a person in a persistent vegetative state or a minimally conscious state should be brought to court. It is understandable that the ad hoc Rules Committee decided that, in so far as the practice direction purported to direct which cases had to be brought to court, it went beyond its proper scope; a practice direction cannot establish a legal obligation when none exists already, see U v Liverpool City Council (Practice Note) [2005] 1 WLR 2657, para 48. In any event, as no equivalent practice direction accompanies the Court of Protection Rules 2017, it is not necessary to delve into the matter further. No requirement to apply to court can be found in the post MCA 2005 case law either. The decision of Baker J in In re M (Adult Patient) (Minimally Conscious State: Withdrawal of Treatment) does not assist because it proceeded upon the basis that the Bland case had established that all decisions about the proposed withholding or withdrawal of CANH had as a matter of law to be brought to court and I would not interpret the Bland case in this way. The view of King LJ, expressed obiter in the Court of Appeal in In re Briggs [2018], that treating doctors can take a decision without recourse to court where there is no dispute about it should, however, be accorded weight. This is so even allowing for the possibility raised by Mr Gordon that the court may not have had full argument on the subject and may not have been referred to all the relevant passages in the Code, as King LJ spoke only of one of the less prescriptive provisions. It is important to note the views of those who, like her, have long experience in the Family Division where life and death issues are regularly litigated. Peter Jackson Js judgment in In re M (Incapacitated Person: Withdrawal of Treatment) (given after the Court of Appeals decision in the Briggs case) is also of assistance, particularly for the judges analysis of why, in his view, the decision as to what was in Ms best interests could have been taken without reference to the court. Mr Gordon points out that the Official Solicitor was not formally involved in that case and that there was no oral argument on the topic. However, as Peter Jackson J set out in para 30, he did invite and receive a substantial skeleton argument prepared by leading and junior counsel on behalf of the Official Solicitor which, he said, (among other things) trenchantly asserts that an application to court should be made in every case of proposed withdrawal of CANH, unless there is a valid advance directive. There is no doubt, therefore, that Peter Jackson J will have been made aware of the arguments that ran counter to the view he ultimately formed. Mr Gordon advances four respects in which he says the judge went wrong, namely: (1) he failed to recognise that PDOC patients are distinct from other patients, (2) he mistakenly attributed the delay to the proceedings when the majority of it appears to have been caused by other factors, (3) he failed to see that matters are very different when an advance decision has been made pursuant to section 24 of MCA 2005, and (4) he failed to recognise that if there is no requirement for court involvement, the article 2 requirement identified in Lambert v France for regulations compelling hospitals to adopt appropriate measures for the protection of patients lives will not be satisfied. For the most part, these are issues which arise as part of the Official Solicitors argument before this court and the reasons why I do not find them compelling will therefore appear in due course. There being, therefore, in my view, no requirement in domestic law for an application to court of the type that the Official Solicitor says is imperative for the protection of patients, the next question is whether the ECHR generates a need for an equivalent provision to be introduced. To my mind, the answer is a clear no. The first port of call is the landmark Grand Chamber case of Lambert v France on the French collective procedure which, it will be recalled, provided for the doctor to take the decision, with no application to court required, yet satisfied the ECtHR as being sufficiently protective of the articles 2 and 8 rights there engaged. I set out in a little detail earlier (para 71) what the French procedure required and it bears a significant resemblance to the procedure set out in the medical guidance in this country. In each case, the context for the decision is similar in that the French article R.4127 37 para I says that the doctor can decide to withhold or discontinue treatments qui apparaissent inutiles, disproportionns ou qui nont dautre objet ou effet que le maintien artificiel de la vie, and para 5.31 of the Mental Capacity Act Code speaks of cases where treatment is futile, overly burdensome to the patient or where there is no prospect of recovery. The French code requires the doctor to consult with the care team, and to take into account any wishes expressed by the patient and the views of people close to him, and the same is required by the MCA 2005 and the medical guidance here. An independent consultants opinion is required in France and should also be sought in this country. The court is available if necessary in France as it is here. As I have said, Lambert v France was not a central feature of the Official Solicitors written case, but as he developed his argument in oral submissions, Mr Gordon sought to distinguish the decision on the basis that France has a formally prescribed procedure with guarantees and we do not. To comply with the ECHR, a system must have a prescribed procedure, he says, and the sort of professional guidance that we have in this country will not suffice. The ECtHR has repeatedly set out certain factors that it considers relevant to the question of administering or withdrawing medical treatment. They can be found in para 143 of Lambert v France (see para 69 above), and also in Glass v United Kingdom, Burke v United Kingdom, Gard v United Kingdom, and Afiri and Biddarri v France. The first of those factors is the existence in domestic law and practice of a regulatory framework compatible with the requirements of article 2, which no doubt is (quite properly) the foundation of Mr Gordons submission that a prescribed procedure is required. Where I differ from Mr Gordon is in his assertion that the system in this country is not what the ECtHR was looking for. True it is that in France there is a comprehensive legislative framework, set out in the Code de la sant publique, whereas the same cannot be said for our domestic law. However, we too have provisions designed to protect the human rights of patients and their families, and I have no difficulty in viewing the combined effect of the MCA 2005, the Mental Capacity Act Code, and the professional guidance, particularly that emanating from the GMC, as a regulatory framework. The basic protective structure is established by the MCA 2005, which I have described above. An advance decision about life sustaining treatment can be taken in accordance with sections 24 to 26 and will be respected. Similarly, a proper role is established for lasting powers of attorney by section 9 and the other sections associated with it. Where the decision is taken by a doctor, section 5 establishes the conditions that must be satisfied if the doctor is to be protected from liability. It directs the focus firmly to the best interests of the patient, and that imports the provisions of section 4 which include taking into account the perspective that the patient would have on the decision if he had capacity and the views of those with an interest in the patients welfare. Section 4(5) imposes the safeguard that the person making the decision must not be motivated by a desire to bring about his death. Section 37 makes provision for an IMCA to represent the patient where appropriate, and sections 15 to 17 ensure that application can be made to court for a decision about the patients welfare where necessary. Notwithstanding the contradictions in it with which I have already dealt, the Code contains valuable guidance, and regard must be had to it by virtue of section 42. The passages that I referred to earlier are only a small fraction of the Code but it will be noted from them that, for example, it commends multi disciplinary meetings when making healthcare and treatment decisions, and speaks about recording decisions and the reasons for them. It also expressly provides (see para 5.31, quoted above) that when making decisions regarding life sustaining treatment, healthcare and social care staff should refer to relevant professional guidance. Given the statutory framework within which the GMC operates, I would single out its guidance to the medical profession as undeniably part of the established regulatory framework. As I have set out above, it has provided its own individual guidance in 2010, and has joined with the BMA and RCP to provide supplementary Interim Guidance in 2017, with final guidance planned for 2018. The second of the factors to which consistent reference has been made by the ECtHR is whether account has been taken of the patients previously expressed wishes and those of people close to him, as well as the opinions of other medical personnel. The MCA 2005 requires this to happen, and is reinforced by the professional guidance available to doctors. The third factor that features consistently in the ECtHRs evaluation is the possibility of approaching the courts in the event of doubts as to the best decision to take in the patients interest and, of course, that possibility exists in this country. As Peter Jackson J said in In re M (Incapacitated Person: Withdrawal of Treatment) at para 38, those considering withdrawal of CANH should not hesitate to approach the Court of Protection in any case in which it seems to them to be right to do so. The opportunity to involve the court is available whether or not a dispute is apparent, and is of particular benefit where the decision is a finely balanced one. No one would discourage an application in any case where it is felt that the assistance of the court would be valuable. And if a dispute has arisen and cannot be resolved, it must inevitably be put before the court. Mr Gordon characterises Lambert as a case about the facts, which tells us nothing about first principles. He submits, also, that the article 6 argument that he advances was not put to the court in this or any of the other ECtHR cases. This is not how I see the case of Lambert or the ECtHR jurisprudence generally. The Lambert decision forms part of a consistent line of Strasbourg decisions and it tells us, in my view, that the ECtHR does not regard it as problematic, in principle, that a decision to withhold or withdraw CANH from patient with a prolonged disorder of consciousness should be made by a doctor, without obligatory court involvement. If there be any doubt about the implications of this for the present case, reference to Burke v The United Kingdom removes it. The ECtHR was there required to consider our domestic provisions, even before they were bolstered by the MCA 2005, specifically focusing on the GMC guidance then in force. Breaches of articles 2, 3, 8 and 14 were alleged, and it was one of the applicants complaints that the GMC guidance failed to spell out a legal requirement to obtain prior judicial sanction. The ECtHR proceeded upon the basis that article 2 imposes positive obligations on the State to make regulations compelling hospitals to adopt appropriate measures for the protection of their patients lives, yet no suggestion was made that such regulations were lacking in the United Kingdom. The argument that there was insufficient protection because a doctor might decide to withdraw CANH without being under an obligation to obtain the approval of the court was expressly rejected, and I have already cited (see para 33 above) what the ECtHR said in so doing. Recognising the practical realities, it observed that a more stringent legal duty would be prescriptively burdensome, resulting in some medical staff being constantly in court, and would not necessarily entail any greater protection. As for the Official Solicitors article 6 argument, even if that particular argument was not put before the ECtHR in terms, the question of hearing rights was an obvious component in the arguments that were advanced in Burkes case, and there is no reason to suppose that the outcome would have been different if there had been a specific article 6 complaint. The same might be said of Lamberts case, where article 6 was indeed referred to, but only by way of a complaint that the doctor who took the decision was not impartial, not as part of a wider argument that court involvement is required in every case. Moreover, I would accept Mr Sachdevas argument that what engages article 6 is a disagreement or a question of law and/or fact in dispute, and that, in the light of the safeguards to be found in the MCA 2005 and the Code, together with the professional guidance, there is no basis for the Official Solicitors suggested approach of engaging article 6 by assuming in every case that there is a dispute. Of the Official Solicitors ECHR arguments, it only remains to deal with article 14. It is not in point, in the present case, in my view. The analogy that Mr Gordon seeks to draw between someone in Mr Ys position and a person with capacity who seeks assistance in bringing his or her life to an end is not a proper analogy. There is, as Mr Sachdeva says, a critical distinction in both the domestic and the Strasbourg jurisprudence, between an act which constitutes the intentional taking of life and therapeutic abstention from treatment. We are presently dealing with the latter, whereas assisted dying concerns the former. It is worth observing also that an article 14 argument was advanced in Burkes case before the ECtHR and was rejected as manifestly ill founded. The argument was to the effect that the applicant was treated less favourably on account of his disease than others who need CANH but are not suffering from a disease that causes them to lose competence to influence their treatment. The court observed that neither a competent nor an incompetent patient can require a doctor to give treatment that the doctor considers is not clinically justified, thus no difference of treatment arises. In so far as a competent patient is able to participate in the consultation process and an incompetent patient is not, the court said that the patients are not in a relatively similar situation. It remains to stand back from this intense focus upon the law, in order to consider the issue in its wider setting. In so doing, it is necessary to exercise the restraint that is required of a court when it ventures into areas of social and ethical uncertainty, and especially when it does so in the abstract, setting out views which will be of general application (as is necessarily so in this case) rather than resolving a clearly defined issue of law or fact that has arisen between the litigants appearing before it. Lord Goff remarked, in the passage at p 871 of the Bland case which I have set out at para 22 above, upon how frequently doctors have to make decisions which may affect the continued survival of their patients, and how experienced they are in this respect. Judges have also developed experience in dealing with life and death decisions, but it is experience of a different sort from that of the medical team which actually treats the patient, and of the professional bodies responsible for regulating and guiding them, and this limitation must be recognised and taken into account. It has been of particular assistance to have, from the written submissions of the intervenors, an insight into the practicalities of caring for patients who are critically ill, and also some idea of the large number of patients who might be affected in some way by the decision in the instant case. It is important to acknowledge that CANH is more readily perceived as basic care than, say, artificial ventilation or the administration of antibiotics, and withholding or withdrawing it can therefore cause some people a greater unease. However, it was decided as far back as the Bland case that CANH is in fact to be seen as medical treatment. It is not easy to explain, therefore, why it should be treated differently from other forms of life sustaining treatment, and yet that is the consequence of the legal position for which the Official Solicitor contends. Furthermore, the Official Solicitors focus is on only one sub set of patients who are, for one reason or another, unable to take their own decisions about their medical care and in respect of whom life sustaining treatment is under consideration. This is a point that Peter Jackson J made in In re M (Incapacitated Person: Withdrawal of Treatment), and it emerges with some force from the written submissions of the BMA and of the ICS and the FICM. It is not only those, such as Mr Y, who suffer an acute episode and are then stabilised, who may require CANH. The need for it can arise also, for example, in the advanced stages of a degenerative neurological condition such as Huntingtons disease or multiple sclerosis, or in the advanced stages of dementia, where there may be a recognised downward trajectory. Presently, the BMA say, in the case of patients who have suffered a severe stroke, or are significantly cognitively impaired but conscious, or are suffering from a degenerative neurological condition or other condition with a recognised downward trajectory, decisions to withhold or withdraw CANH are made on a regular basis without recourse to the courts. The BMA can see no principled or logical reason for requiring court review in relation to patients with PVS and MCS but not for a patient with a different condition. Similarly, it can find no logical reason why one form of medical treatment, CANH, is treated differently from other forms of medical treatment such as artificial ventilation. The submissions of the ICS and FICM are illuminating as to what occurs in units delivering critical care to patients. Most admissions to such units occur as an emergency, without the patient having made any advance decision about treatment, and possibly already so unwell that he or she has impaired consciousness or is unable to communicate wishes. Most decisions relating to medical treatment in the critical care setting, including as to whether life sustaining treatment is withheld or withdrawn, have to be made without the participation of the patient. They are, we are told, almost invariably taken on the basis of (in England & Wales) best interests and (in Scotland) benefit, on the basis of consensual decision making as between the clinical team and the patients family and carers. In that critical care setting, CANH is not considered differently from any other form of life sustaining treatment. This is said to reflect the reality in critically ill patients that it is the withdrawal of invasive or non invasive ventilation, vasoactive medical and renal replacement therapy, and the double effect from administration of medications to ensure patient comfort towards the end of life, that leads to the natural death of the patient, rather than cessation of CANH. It is likely, where CANH is withdrawn from a patient who is clinically stable but suffering from a prolonged disorder of consciousness, that death will result from the withdrawal of CANH, so to this extent there is a difference between the two groups of patients. However, once CANH is seen as medical treatment, there is a parallel between the cases. In any event, I have difficulty in accepting that there are readily apparent and watertight categories of patient, with PDOC patients clearly differentiated from, say, patients with a degenerative neurological condition or critically ill patients, in such a way as to justify judicial involvement being required for the PDOC patients but not for the others. The dilemmas facing the medical team and those close to the patient may well be very similar in each of these cases. It would be a mistake to think, for example, that the intensive care doctor simply does whatever is necessary to stop the patient dying, no matter what the cost to the patient, any more than does the doctor looking after a PDOC patient or the stroke patient or the patient with Huntingtons disease. In all of these cases, the medical team take their decisions as to treatment, whether it is CANH, or some other form of treatment such as artificial ventilation or cardio pulmonary resuscitation or the administration of antibiotics, by determining what is in the patients best interests. In so doing, the doctors will often have difficult diagnoses to make, reaching a prognosis may be challenging, and the evaluation of the patients best interests may not be entirely straightforward. All these tasks may call for considerable professional skill and individual judgement. Furthermore, although the Official Solicitor submits that it should be possible, with proper case management, to obtain a decision from the court speedily, giving an example of a case which was concluded within eight weeks, I fear that that is an over optimistic view of the situation. I note that even in that case, the delay would have been about six weeks longer had it not been for the parties shortening their time estimate (it would seem in part by removing from it the time for the judge to prepare the judgment) and another case coming out of the judges list. Even allowing for Peter Jackson J to have over estimated the precise period of delay in obtaining an order in In re M (Incapacitated Person: Withdrawal of Treatment), the facts of that case exemplify the dangers. The pressure of business in the courts charged with handling such cases is significant and delays are almost inevitable. As King LJ observed in In re Briggs, quite apart from the pressure that court cases place on the overstretched resources of NHS trusts, they add greatly to the strain on families facing acutely distressing decisions. In a case where all the proper procedures have been observed and there is no doubt about what is in the best interests of the patient, there is much to be said for enabling the family and the patient to spend their last days together without the burden and distraction, and possibly expense, of court proceedings. In addition, I do not disagree with Peter Jackson Js observation that there is a risk that the need to go to court might deflect clinicians and families from making true best interests decisions and might lead in some cases to inappropriate treatment continuing by default. Equally, it is not inconceivable that it might, as the BMA suggest, generate a reluctance, in some cases, to start CANH because of the procedures attending its withdrawal. The Official Solicitor submits that the challenges of diagnosis have increased since the Bland case, rather than the way becoming clearer as might have been expected. The difficulties in diagnosis are underlined in the submissions of the intervenors, Care Not Killing, and the report of Professor Sturman which accompanies them, but are also apparent from other material available to us. Medical science, continually developing, cannot always provide answers, and greater knowledge can produce yet more questions. Developments in this area of medicine include the ability to differentiate between vegetative state and minimally conscious state, and improvement in the outcomes for some individual patients. These changes inevitably create new challenges of diagnosis and management, new uncertainties, for the medical profession. The situation is not, however, on a par with that which faced the House of Lords in the Bland case. The survival of patients such as Anthony Bland, then so unprecedented, is now a well established feature of medical practice. The documentation supplied to us shows that the difficulty that there is in assessing the patient and in evaluating his or her best interests is well recognised. The process is the subject of proper professional guidance, covering vitally important matters such as the involvement in the decision making process of a doctor with specialist knowledge of prolonged disorders of consciousness, and the obtaining of a second opinion from a senior independent clinician with no prior involvement in the patients care. The second opinion, as contemplated in the guidance (see paras 79 and 80 above, for example), is, in my view, a crucial part of the scrutiny that is essential for decisions of this sort, and the guidance sets parameters which should ensure that it is an effective check, in that the clinician who provides the second opinion must (so far as reasonably practical in the circumstances of the case) be external to the organisation caring for the patient, and is expected to carry out his or her own examination of the patient, consider and evaluate the medical records, review information about the patients best interests, and make his or her own judgement as to whether the decision to withdraw (or not to start) CANH is in the best interests of the patient. Thus the interests of patients and their families are safeguarded, as far as possible, against errors in diagnosis and evaluation, premature decisions, and local variations in practice. If, at the end of the medical process, it is apparent that the way forward is finely balanced, or there is a difference of medical opinion, or a lack of agreement to a proposed course of action from those with an interest in the patients welfare, a court application can and should be made. As the decisions of the ECtHR underline, this possibility of approaching a court in the event of doubts as to the best interests of the patient is an essential part of the protection of human rights. The assessments, evaluations and opinions assembled as part of the medical process will then form the core of the material available to the judge, together with such further expert and other evidence as may need to be placed before the court at that stage. In conclusion, having looked at the issue in its wider context as well as from a narrower legal perspective, I do not consider that it has been established that the common law or the ECHR, in combination or separately, give rise to the mandatory requirement, for which the Official Solicitor contends, to involve the court to decide upon the best interests of every patient with a prolonged disorder of consciousness before CANH can be withdrawn. If the provisions of the MCA 2005 are followed and the relevant guidance observed, and if there is agreement upon what is in the best interests of the patient, the patient may be treated in accordance with that agreement without application to the court. I would therefore dismiss the appeal. In so doing, however, I would emphasise that, although application to court is not necessary in every case, there will undoubtedly be cases in which an application will be required (or desirable) because of the particular circumstances that appertain, and there should be no reticence about involving the court in such cases.
UK-Abs
The question in this appeal is whether a court order must always be obtained before clinically assisted nutrition and hydration (CANH), which is keeping a person with a prolonged disorder of consciousness (PDOC) alive, can be withdrawn, or whether, in some circumstances, this can occur without court involvement. In June 2017 Mr Y, an active man in his fifties, suffered a cardiac arrest which consequently led to extensive brain damage due to lack of oxygen. He never regained consciousness following the cardiac arrest and required CANH to keep him alive. His treating physician concluded that, even if he regained consciousness, he would have profound disability and would be dependent on others to care for him for his remining life. A second opinion from a consultant and professor in Neurological Rehabilitation considered Mr Y to be in a vegetative state without prospect of improvement. Mrs Y and their children believed that he would not wish to be kept alive given the doctors views about his prognosis. The clinical team and the family agreed that it would be in Mr Ys best interests for CANH to be withdrawn, which would result in his death within two to three weeks. On 1 November 2017, the NHS Trust sought a declaration in the High Court that it was not mandatory to seek the courts approval for the withdrawal of CANH from a patient with PDOC when the clinical team and the patients family agreed that it was not in the patients best interests to continue treatment and that no civil or criminal liability would result if CANH were withdrawn. The High Court granted a declaration that it was not mandatory to seek court approval for withdrawal of CANH from Mr Y where the clinical team and Mr Ys family were in agreement that continued treatment was not in his best interests. The judge granted permission to appeal directly to the Supreme Court. In the intervening period Mr Y died but the Supreme Court determined that the appeal should go ahead because of the general importance of the issues raised by the case. The Supreme Court unanimously dismisses the appeal. Lady Black gives the sole judgment with which the other Justices agree. It has not been established that the common law or the European Convention on Human Rights (ECHR) give rise to the mandatory requirement to involve the court to decide upon the best interest of every patient with PDOC before CANH can be withdrawn [126]. The fundamental question facing a doctor, or a court, considering treatment of a patient who is not able to make his or her own decision is not whether it is lawful to withdraw or withhold treatment, but whether it is lawful to give it. It is lawful to give treatment only if it is in the patients best interests. If a doctor carries out treatment in the reasonable belief that it will be in the patients best interests, he or she will be entitled to the protection from liability conferred by section 5 of the Mental Capacity Act (MCA) 2005 [92]. The starting point on whether there is a common law requirement to seek a court order is the House of Lords decision in Airedale NHS Trust v Bland [1993] A.C. 789. However, there can be no question of the House of Lords in that case having imposed a legal requirement that in all cases of patients in a persistent vegetative state an application must be made to court before CANH can be withdrawn. Instead they recommended as a matter of good practice that reference be made to the court [93 94]. Therefore, when the MCA 2005 came into force in 2007 there was no universal requirement, at common law, to apply for a declaration prior to withdrawing CANH and the MCA itself did not single out any class of decisions which must always be placed before the court [95]. The MCA 2005 Code of Practice (the Code) does speak of applications to court in cases such as the present but does so in a contradictory fashion on the issue of whether such applications are mandatory [97]. Further, no requirement to apply to court can be found in the post MCA 2005 case law [98]. The ECHR does not generate a need for an equivalent provision to be introduced [102]. The European Court of Human Rights (ECtHR) decision in Lambert v France 62 EHRR 2 and subsequent cases have repeatedly set out factors relevant to the administering or withdrawing of medical treatment. These are factors which the UK has complied with. First, the UK has a regulatory framework compatible with the requirements of article 2 in the form of the combined effect of the MCA 2005, the Code, and professional guidance, particularly that of the GMC [105]. Second, the MCA 2005 requires doctors to take into account the patients express wishes and those of people close to him, as well as the opinions of other medical personnel [108]. Third, the opportunity to involve the court is available whether or not a dispute is apparent [109]. Lambert and subsequent decisions show that the ECtHR does not regard it as problematic, in principle, that a decision to remove CANH from a patient with PDOC should be made by a doctor without obligatory court involvement [110]. CANH is medical treatment and it is not easy to explain, therefore, why it should be treated differently from other forms of life sustaining treatment [116]. In any event, it is difficult to accept that one can delineate patients with PDOC from other patients in such a way as to justify judicial involvement being required for the PDOC patients but not the others. In all cases, the medical team make their treatment decisions by determining what is in the patients best interest [119]. If it transpires that the way forward is finely balanced, there is a difference of medical opinion, or a lack of agreement from persons with an interest in the patients welfare, a court application can and should be made [125].
Section 103A of the Employment Rights Act 1996 (the Act) provides: An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee made a protected disclosure. In this appeal the dispute surrounds the reason for the dismissal of Ms Jhuti, the appellant, from her employment by Royal Mail Group Ltd (the company). As I will explain, the facts found by the employment tribunal (the tribunal) show that (a) Ms Jhuti made protected disclosures within the meaning of section 43A of the Act, colloquially described as whistleblowing, to her line manager; (b) the line managers response to her disclosures was to seek to pretend over the course of several months that Ms Jhutis performance of her duties under her contract of employment with the company was in various respects inadequate; (c) whether Ms Jhuti should be dismissed; and (d) having no reason to doubt the truthfulness of the material indicative of Ms Jhutis inadequate performance, the other officer decided that she should be dismissed for that reason. in due course the company appointed another officer to decide So what was the reason for Ms Jhutis dismissal? Was it that her performance was inadequate? Or was it that she had made protected disclosures? These specific questions generate the following question of law of general importance which brings the appeal to this court: In a claim for unfair dismissal can the reason for the dismissal be other than that given to the employee by the decision maker? On 17 September 2013 the company employed Ms Jhuti as a media specialist in its MarketReach unit under a contract terminable by either side on three months notice. But the contract provided that, for the first six months, she would be on trial and that, if she failed it, the company could dismiss her on one weeks notice. The unit had two teams. Ms Jhuti was assigned to Mr Widmers team. The role of a media specialist in the company is to promote the use of mail by businesses engaged in marketing activities. Ms Jhuti had previously worked at a senior level in the media industry. On 16 October 2013 Ms Jhuti was shadowing Ms Mann. Ms Jhuti formed the view that Ms Mann was or might be infringing Ofcoms guidance, reflected in the companys own policy, in respect of Tailor Made Incentives (TMIs). The companys dominant position in the postal market had led its regulator, Ofcom, by the issue of guidance, to seek to control its offers of TMIs to customers: it provided that, while they could be offered to new customers or to existing customers in respect of new products, they should not be offered to existing customers in respect of repeat business. Ms Jhuti formed the view that Ms Mann was not complying with that guidance nor with the company policy which reflected it and that the business which flowed from her improper offers would assist her in achieving her targets and in securing a bonus for herself and, indirectly, for Mr Widmer himself. Ms Jhuti soon formed the same view about offers of TMIs made by another member of Mr Widmers team. By two emails to Mr Widmer dated 8 November 2013 and by a third email to him dated 12 November, Ms Jhuti reported her concerns about Ms Manns perceived non compliance with Ofcoms guidance and with company policy in relation to offers of TMIs. Mr Widmer apprised his line manager, namely Mr Reed, the companys Sales Director, of Ms Jhutis reports. By an email which the tribunal described as sinister, Mr Reed responded to him as follows: The TMI issue is one we should look at, so she needs to provide evidence of that, and has to be aware that she is making quite strong and serious allegations in this area. On 13 November 2013 there was a meeting between Ms Jhuti and Mr Widmer. It lasted for no less than four hours. Mr Widmer asked her at length about her understanding of the guidance and policy in relation to TMIs. He commented that her understanding of them was questionable and that, if it was wrong, it would impact on her position. He asked her whether she was sure that she wished to make the allegations against Ms Mann. He observed that Ms Jhuti was on trial and that the allegation could cause problems for everyone. During a short break Ms Jhuti realised that, were she to press the allegations further, her employment would be at risk. When the meeting resumed, Ms Jhuti therefore apologised repeatedly; and she acceded to Mr Widmers suggestion that, by email to him, she should admit that she had made a mistake and should retract the allegations. Thereafter Mr Widmer administered to her what she described as, and the tribunal accepted to have been, a two hour dress down in which, for the first time, he insisted that she was failing to meet the requirements of her role and in which he provided her with a list of fresh performance targets for her to meet. Later that day Ms Jhuti duly sent the email by which she retracted the allegations. She said that her wires had been crossed in relation to Ms Manns offers of TMIs. Thereafter Mr Widmer set up intensive weekly meetings with Ms Jhuti, unmatched for other members of his team, which, so he said, were necessary in order to monitor her performance. In an email dated 3 December 2013 to Ms Rock in the Human Resources department (HR), Mr Widmer, who had begun to tell Ms Jhuti repeatedly that her progress was disappointing, said that he intended to compile examples of material which would support concerns that she was not meeting expected standards. In the absence of Mr Widmer, off sick for several weeks over Christmas 2013, the other team leader in the unit supervised Ms Jhutis work. She told Ms Jhuti that she was happy with her progress. Her advice was just keep [Mr Widmer] happy and you will be fine. At a meeting on 18 December 2013 Mr Roberts, who within the company had particular expertise in connection with TMIs, acknowledged to Ms Jhuti that media specialists were offering them inappropriately. He said that we all know and that changes were necessary to eradicate the abuses. At two protracted meetings with Ms Jhuti in January 2014 following his return to work, Mr Widmer resumed his criticisms of her performance. Ms Jhuti found it hard to discern precisely what he expected of her. By then she was suffering from alopecia. Mr Widmer also sent a further email to HR to the effect that her performance was not up to expectations and that, in the absence of change, the company would need to consider exiting her. At a further meeting on 5 February 2014 Mr Widmer told Ms Jhuti that she was to be placed on a six week performance improvement plan and that, unless she complied with it, she would not pass her trial period. The fourth of the five stated objectives of the plan was for her to disclose to him all the key client contacts in the travel industry which she had made during her previous employments. On 6 February 2014 Ms Jhuti sent an email to HR in which she expressed concern about Mr Widmers conduct towards her. She alleged that it was all due to an issue which she had raised previously and which, being on trial, she had been forced to rescind. She stated that she had consulted her doctor for stress which, in her view, was causing her alopecia. She said that she believed that the demand for disclosure of information gained during previous employments was one with which she could not lawfully comply and that it represented part of an agenda to dismiss her if she failed to accede to it. Ms Jhutis email to HR precipitated a meeting with Ms Rock on 10 February 2014. Ms Jhuti reiterated that Mr Widmer had been harassing her because she had accused Ms Mann of an improper use of TMIs. She said that they had helped Ms Mann to achieve her performance targets and to secure a bonus for herself and indirectly for Mr Widmer himself, thereby in effect defrauding the company. Ms Rock responded that Mr Widmer was a respected employee; that he would be the one to be believed; that Ms Jhuti might regard the company as not right for her; and that, by reference to her performance, the company might find a way to dismiss her. By email to Ms Rock dated 25 February 2014 Ms Jhuti wrote: It is clear I am being managed to be removed, all on the basis of [Mr Widmer] holding what I believe is a grudge from the day I raised an issue If you want me out, all based on the initial issue I raised, then just tell me to go On 29 February 2014 Ms Jhuti was told that her request for a different line manager was granted and that it would be Mr Reed. Mr Reed extended Ms Jhutis trial period by one month, to 17 April. He told Ms Jhuti that she was not making the progress which he would have expected. But he admitted that the length of Mr Widmers meetings with her had been excessive. He said that he did not wish to discuss the allegations which she had made in 2013 because HR was addressing them. On 12 March 2014 Ms Jhutis general practitioner signed her off work by reason of work related stress, anxiety and depression. She never thereafter returned to work. A few days prior to Ms Jhutis cessation of work, Ms Rock had on behalf of the company offered her three months salary in return for a voluntary termination of her employment. Ms Jhuti had rejected the offer. Following its cessation, Ms Rock increased the offer to a years salary. The tribunal described the ostensible generosity of it, to an employee with an insufficiently long period of employment to be able to claim unfair dismissal on the general basis set out in section 98 of the Act, as extremely strange. Ms Jhuti did not respond to the increased offer. In April 2014 the company appointed Ms Vickers, a manager with the same seniority as Mr Reed, to decide whether it should terminate Ms Jhutis employment. Ms Vickers had had no previous dealings with Ms Jhuti. Her instructions were to review the evidence rather than (so it appears) to investigate matters for herself. She was supplied with numerous emails passing between Mr Widmer and Ms Jhuti, including her email of retraction dated 13 November 2013, but not with the emails dated 8 and 12 November nor with her emails to HR dated 6 and 25 February 2014. On 11 July 2014 Ms Vickers invited Ms Jhuti to attend a meeting on 18 July. Ms Jhuti responded in about 50 lengthy emails which the tribunal found to be often incoherent and irrational, in marked contrast to her earlier emails. She referred to being sacked for telling the truth so Ms Vickers asked Mr Widmer to explain what she meant. He replied that Ms Jhuti had alleged that TMIs were being offered inappropriately but that, when he had explained the units observance of the strict criteria for offers of TMIs, she had been happy to accept that she had misunderstood what had occurred. Ms Jhuti did not attend any meeting with Ms Vickers, whether on 18 July 2014 or otherwise. She was too ill to do so. By letter to Ms Jhuti dated 21 July Ms Vickers communicated her decision that the company should dismiss her from her employment on three months notice, thus with effect from 21 October. Ms Vickers explained that from November 2013 to March 2014, and despite having been subject in February 2014 to Mr Widmers performance improvement plan, Ms Jhuti had failed to meet required standards of performance and that it was unlikely that she would do so in future. In September 2014, having consulted solicitors, Ms Jhuti exercised her right to bring an internal appeal against Ms Vickers decision. On 28 August 2015, so almost a year later, it was dismissed. The tribunal found that the conduct of it had been unsatisfactory. By her claim to the tribunal, which had been lodged on 18 March 2015, Ms Jhuti presented two complaints. First Complaint: Detriments In the appeal before this court, nothing directly turns on the first complaint. This complaint was presented under section 48(1A) of the Act, which falls within Part V of it. In it Ms Jhuti contends that she made protected disclosures within the meaning of section 43A, which falls within Part IVA of it. The contention is that they were disclosures of information which, so she reasonably believed, she made in the public interest and which tended to show that criminal offences had been committed or that persons had failed to comply with legal obligations to which they were subject (section 43B(1)(a) and (b)) and which she made to her employer (section 43C(1)(a)). Ms Jhuti proceeds to contend that, contrary to section 47B(1) of the Act, she was subjected to detriments by acts of the company done on the ground that she had made the protected disclosures. She seeks compensation from the company for the detriments pursuant to section 49(1)(b). At first sight a possible obstacle to the first complaint, not yet finally resolved, is presented by section 47B(2) of the Act, which provides: This section does not apply where the worker is an employee, and the detriment in question amounts to dismissal (a) (b) (within the meaning of Part X). Thus the exclusion provided by subsection (2) applies only where the detriment amounts to dismissal. In the present case the detriments which the tribunal identified, and which I will address in para 32(b) below, all preceded the dismissal. The detriments may well have caused Ms Jhutis dismissal. But can it be said that they amounted to it? Neither party takes issue with the proposition articulated by Underhill LJ in the decision under appeal: 78. There is thus, on the arguments advanced before us, no obstacle in principle to the claimant recovering compensation [under section 49(1)(b)] for dismissal consequent on detriment. Whether she can do so in practice, or to what extent, is of course a matter for the employment tribunal at the remedy hearing. The judges proposition was confirmed in a formal declaration made in the Court of Appeals order. Although, as I will explain, the tribunal had made observations suggesting that Ms Jhutis dismissal was consequent upon the detriments to which it found her to have been subjected, the Court of Appeal there held that it remained open to the company to argue otherwise before the tribunal at a future remedy hearing; and the company says that it proposes to do so. As I will explain, another potential obstacle to the first complaint was presented by section 48(3) of the Act, which provides: An employment tribunal shall not consider a complaint under this section unless it is presented (a) before the end of the period of three months beginning with the date of the act to which the complaint relates or, where that act is part of a series of similar acts , the last of them, or (b) within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three months. Second Complaint: Unfair Dismissal This complaint was presented under section 111(1) of the Act, which falls within Part X of it, entitled Unfair Dismissal. Ms Jhuti alleges that, pursuant to section 103A, set out in para 1 above, her dismissal was unfair because the reason for it was that she had made protected disclosures. Section 103A is an example of what is often called automatic unfair dismissal. It is to be contrasted with the provision in section 98, entitled General, under which, if pursuant to subsection (1) the employer establishes that the reason (or, if more than one, the principal reason) for the dismissal is of the kind there specified, the fairness of the dismissal falls to be weighed by reference to whether it was reasonable in all the circumstances pursuant to subsection (4). The application of subsection (4) to section 103A is excluded by section 98(6)(a). So there is no weighing by reference to whether the dismissal was reasonable in all the circumstances: under section 103A unfairness is automatic once the reason for the dismissal there proscribed has been found to exist. In Kuzel v Roche Products Ltd [2008] EWCA Civ 380, [2008] ICR 799, the Court of Appeal addressed the location of the burden of proof under section 103A. It held that a burden lay on an employee claiming unfair dismissal under the section to produce some evidence that the reason for the dismissal was that she had made a protected disclosure but that, once she had discharged that evidential burden, the legal burden lay on the employer to establish the contrary: see paras 57 and 61 of the judgment of Mummery LJ. The Decision of the Tribunal The tribunal (Employment Judge Baty and two lay members) made a series of decisions upon the complaints in respect of liability and explained them in a comprehensive set of written Reasons. In relation to the first complaint the tribunal decided as follows: (a) Ms Jhuti had made four protected disclosures within the meaning of section 43A. She had made them in the three emails to Mr Widmer dated 8 and 12 November 2013 and also at her meeting with Ms Rock on 10 February 2014. In breach of her right under section 47B(1), Ms Jhuti had in four (b) respects been subjected to detriments by acts of the company done on the ground that she had made the protected disclosures. First, Mr Widmer, who did not genuinely have serious concerns about her performance, had from 13 November 2013 imposed particular targets and mandatory weekly meetings solely on Ms Jhuti and had bullied, harassed and intimidated her. He had done so as a result of her disclosures to him and he had been setting her up to fail. Second, still lacking any serious concerns about her performance, Mr Widmer had on 5 February 2014 imposed upon Ms Jhuti a performance improvement plan, with which she was required to comply in order to pass her trial period and which included a demand for disclosure of key contacts made during previous employments. He had done so as a result, again, of her disclosures to him and he had again been setting her up to fail. Third and fourth, Ms Rock had in March 2014 made an offer to Ms Jhuti of three months salary and had later increased it to one years salary, as inducements to her to relinquish her employment, which Ms Jhuti did not wish to do. Ms Rock had done so as a result of all four disclosures, in particular the disclosure to her on 10 February. (c) Ms Jhutis complaint was not out of time because it related to a series of acts, the last of which occurred within the three months specified under section 48(3)(a). The tribunals reasoning in this respect is irrelevant to the present appeal. (d) Assessment of the amount of compensation to be paid by the company to Ms Jhuti in respect of the detriments should be conducted at a remedy hearing. But the tribunal decided that the second complaint should be dismissed. It held that the complaint failed to satisfy section 103A because the reason, or at least the principal reason, for Ms Jhutis dismissal had not been her making of the protected disclosures. It found that the disclosures had played no part in the reasoning of Ms Vickers who, albeit by reference to evidence which was hugely tainted, genuinely believed that the performance of Ms Jhuti had been inadequate and who had dismissed her for that reason. But the tribunal added the following observation, which it underlined: 346. However, given Mr Widmers actions, including the treatment which he meted out to the claimant as a result of her protected disclosures, the email trail that he prepared in this context, and his other actions as set out in these reasons above, it was inevitable that Ms Vickers would, as she did, dismiss the claimant. The Decision of the Appeal Tribunal The company appealed to the Employment Appeal Tribunal (the appeal tribunal) against decisions made by the tribunal in respect of the first complaint. In particular it challenged the decision that Ms Jhutis first complaint had been presented in time. Ms Jhuti cross appealed against the dismissal of her second complaint; and it was agreed that the judge in the appeal tribunal, Mitting J, should determine the cross appeal first. On 19 May 2016, by a judgment numbered UKEAT/0020/16 and reported at [2016] ICR 1043, Mitting J allowed Ms Jhutis cross appeal. He held, at paras 33 and 34, that, if someone in a managerial position, responsible for the employee, had manipulated a decision to dismiss her which had been made in ignorance of the manipulation, the manipulators reason for dismissal could be attributed to the employer for the purpose of section 103A; and he held, at paras 35 and 36, that on the tribunals findings the reason for Ms Jhutis dismissal was therefore her making of the protected disclosures. Mitting J granted permission to the company to appeal to the Court of Appeal against his order in this respect. He also stayed the companys appeal to the appeal tribunal pending determination of its proposed appeal to the Court of Appeal. The Decision of the Court of Appeal On 20 October 2017, by judgments numbered [2017] EWCA Civ 1632 and reported at [2018] ICR 982, the Court of Appeal allowed the companys appeal. The only substantive judgment was delivered by Underhill LJ; by their judgments, Jackson and Moylan LJJ did no more than to agree with it. The Court of Appeal held that, subject to possible qualifications said to be irrelevant to the present case, a tribunal required to determine the reason (or, if more than one, the principal reason) for the dismissal under section 103A of the Act, and for that matter under section 98(1)(a), was obliged to consider only the mental processes of the person or persons who was or were authorised to, and did, take the decision to dismiss para 57. It is against the Court of Appeals decision to set aside Mitting Js order and to reinstate the tribunals dismissal of her second complaint that Ms Jhuti brings the present appeal. The Court of Appeal also remitted to the appeal tribunal the task of determining the companys appeal, stayed by Mitting J, against the tribunals decision that Ms Jhutis first complaint was presented in time in accordance with section 48(3) of the Act. It appears that the appeal tribunal allowed the companys appeal and remitted the issue under the subsection for re determination by the tribunal; that, by a different route, the tribunal again determined that the complaint was presented in time; and that the companys appeal against the tribunals re determination has recently been dismissed. Reason for the Dismissal The question is whether the tribunal correctly identified the reason (or, if more than one, the principal reason) for the dismissal within the meaning of section 103A of the Act. But the same words also appear in numerous other sections in Part X of it. In particular, as explained in para 30 above, they appear in subsection (1) of section 98, which contains the current provision for a claim of unfair dismissal on the general basis; indeed those same words have been applied to a general claim for unfair dismissal ever since introduction of the claim into the law by section 24 of the Industrial Relations Act 1971. The courts answer to the question in relation to section 103A must relate equally to the other sections in Part X in which the same words appear, and also, for example, to section 98(4), which requires the tribunal to determine whether the employer acted reasonably in treating the reason for dismissal as sufficient. At first sight, therefore, the question seems to be of wide importance. On the other hand, as the company acknowledges, the facts of the present case are extreme: an employee on trial blows the whistle upon improper conduct on the (a) part of her line managers team; (b) her line manager responds by deciding to pretend that the employees performance of her duties is inadequate and to secure a conclusion that she has failed her trial period; (c) over the next months he bullies and harasses her with targets, meetings and an improvement plan, by which he sets her up to fail; (d) he succeeds in creating, in emails and otherwise, a false picture of her inadequate performance; the decision to dismiss the employee is made by an officer who, in her (e) review of the evidence, fails to perceive the falsity of the picture which he has created; and (f) in particular the employee, in no condition to meet the decision maker or otherwise to present her case clearly to her, fails to help her to understand the falsity of the picture. Instances of decisions to dismiss taken in good faith, not just for a wrong reason but for a reason which the employees line manager has dishonestly constructed, will not be common. The need to discern a state of mind, such as here the reason for taking action, on the part of an inanimate person, namely a company, presents difficulties in many areas of law. They are difficulties of attribution: which human being is to be taken to have the state of mind which falls to be attributed to the company? In Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 a New Zealand statute required a holder of specified investments to give notice of its holding to a regulator as soon as it became aware of its holding. Unbeknown to any others in the company apart from one colleague, its chief investment officer improperly acquired such investments on the companys behalf. The judicial committee of the Privy Council held that his knowledge of the holding should be attributed to the company and thus triggered the requirement for the company to give notice; and that it was unnecessary to decide whether in some more general sense he was the companys directing mind and will. On behalf of the committee Lord Hoffmann said, at p 507: [G]iven that [a rule] was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy. This context dependent nature of the task of attributing a human state of mind to a company was re affirmed by Lord Sumption in Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23, [2016] AC 1, at para 67. The context of the present case is a search for the reason for a companys dismissal of an employee. In Abernethy v Mott, Hay and Anderson [1974] ICR 323, 330, Cairns LJ offered the classic definition: A reason for the dismissal of an employee is a set of facts known to the employer, or it may be of beliefs held by him, which cause him to dismiss the employee. In West Midlands Co operative Society Ltd v Tipton [1986] AC 536 Lord Bridge of Harwich, in a speech with which the other members of the appellate committee agreed, indorsed at p 545 the definition of Cairns LJ; approved at p 544 observations by Lord Reid in Post Office v Crouch [1974] 1 WLR 89, 95 96, that statutory provisions for claims for unfair dismissal must be construed in a broad and reasonable way so that legal technicalities shall not prevail against industrial realities and common sense; and observed at p 545 that the reason for the dismissal to which the provisions referred might aptly be termed the real reason for it. In enacting section 103A Parliament clearly intended to provide that, where the real reason for dismissal was that the employee had made a protected disclosure, the automatic consequence should be a finding of unfair dismissal. But is the meaning of the section, to be collected from its language construed in the light of its context and purpose, that, when the employees line manager deliberately hides the real reason behind a fictitious reason, the latter is instead to be taken as the reason for dismissal if adopted in good faith by the decision maker on the companys behalf? In giving an affirmative answer to that question the Court of Appeal considered itself bound by its earlier decision in Orr v Milton Keynes Council [2011] EWCA Civ 62, [2011] ICR 704, which had not been drawn to the attention either of the tribunal or of the appeal tribunal. The tribunal in the Orr case had not clearly found all the relevant facts and the three judgments in the Court of Appeal differ in their recital of some of them as well as in relation to the legal issue to which they gave rise. An attempted summary is as follows: (a) Mr Orr was employed by the council as a youth worker. (b) Contrary to his managers instruction, Mr Orr discussed a recent sexual assault with the youths with whom he was working. (c) The manager sought in an underhand way to reduce Mr Orrs working hours and Mr Orr discovered, or may have discovered, that the manager had done so. (d) There was an altercation between Mr Orr and the manager, in which Mr Orr lapsed into Jamaican patois. (e) The manager thereupon responded with words which were held to amount to unlawful race discrimination, to the effect that those who use the patois mumble unintelligibly. (f) Mr Orr thereupon lost his temper and behaved in an insubordinate manner towards the manager. (g) An officer was appointed to decide whether Mr Orr should be dismissed. (h) Mr Orr chose not to contribute to the officers inquiry. (i) The manager did contribute to the officers inquiry but withheld from him the facts at (c) and (e). (j) Pursuant to the decision of the officer, who was unaware of the facts at (c) and (e), the council dismissed Mr Orr. The main issue before the Court of Appeal was whether, for the purpose of section 98(4) of the Act, the council acted reasonably in treating Mr Orrs insubordination as a sufficient reason for dismissing him. For that purpose, what knowledge should be attributed to the council? Just the knowledge of the officer? Or also the knowledge of the manager? Moore Bick LJ at para 58 gave a clear answer, with which Aikens LJ at para 86 agreed: it was the knowledge of the person who was deputed to carry out the employers functions under section 98, and only of that person, which fell to be attributed to the company for that purpose. So Mr Orr failed in his appeal against the rejection of his complaint of unfair dismissal. But Sedley LJ dissented from the dismissal of Mr Orrs appeal. He held at para 19 that the officer appointed to decide whether an employee should be dismissed has to be taken to know not only those things which he or she ought to know but any other relevant facts the employer actually knows [including] facts known to persons who in some realistic and identifiable way represent the employer in its relations with the employee concerned. If, as would seem inescapable, relevant things known to a chief executive must be taken to be known to both the corporation and its decision maker, the same is likely to be the case as the chain of responsibility descends. It is equally likely not to be the case when one reaches the level of fellow employees or those in more senior but unrelated posts. Mr Jones QC, on behalf of Ms Jhuti, does not seek to persuade this court to approve the need for an inquiry into the knowledge of facts as wide as Sedley LJ there suggested. He also accepts the criticism made by Moore Bick LJ at para 60 that attribution to the officer of facts known to the manager would be artificial. It is attribution to the company of facts known to the manager (here Mr Widmer) for which Mr Jones contends; and he relies on a sentence in para 29 of the judgment of Sedley LJ, seemingly inconsistent with what he had said in para 19, in which he observed that Mr Orrs case involved imputing the managers knowledge not to the officer but to the council. For various reasons, some already visible, Mr Orrs case was not a satisfactory vehicle for any full, reasoned, articulation of principle in relation to the attribution to the employer of facts unknown to the decision maker but known to those in the chain of responsibility above the employee. Nor were the facts of his case, in which what was told to the decision maker was true but did not include part of the background, comparable to those in the present case, in which the decision maker was deceived by the presentation to her of a falsely constructed set of criticisms. While in the present case he correctly acknowledged that the Court of Appeal was bound by its majority decision in the Orr case, Underhill LJ identified at para 62 a different situation in which, so he suggested, it might be appropriate for a tribunal to attribute to the employer knowledge held otherwise than by the decision maker. He was referring to the knowledge of a manager who, alongside the decision maker, had had some responsibility for the conduct of the disciplinary inquiry. It was a suggestion which he had first made in his judgment in The Co Operative Group Ltd v Baddeley [2014] EWCA 658. There, in para 42, he had referred to a situation in which the decision makers beliefs had been manipulated by some other person involved in the disciplinary process who has an inadmissible motivation. For short, Underhill LJ had added (perhaps questionably), an Iago situation. He had proceeded: [Counsel] accepted that in such a case the motivation of the manipulator could in principle be attributed to the employer, at least where he was a manager with some responsibility for the investigation; and for my part I think that must be correct. I respectfully agree that in the situation there identified by Underhill LJ it might well be necessary for the tribunal to attribute to the employer the knowledge of the manipulator; but, as Underhill LJ accepted, the proposition in no way helps to resolve the present case because Mr Widmer cannot be taken to have had responsibility, alongside Ms Vickers, for any part of the conduct of the inquiry. In its opposition to the attribution to it of the knowledge of Mr Widmer for the purpose of identifying its reason for dismissing Ms Jhuti, the company, by Mr Gorton QC, relies principally on the provisions of section 47B of the Act, part of which has been addressed above. The argument is that the section gives a valuable right to workers not to be subjected to detriment by acts done on the ground that they have made a protected disclosure; and that there is therefore no reason under section 103A to (so it is said) stretch the attribution to the company of the reason for dismissal beyond that given by the appointed decision maker. It is in two different situations that section 47B confers the right to which the company refers. Subsection (1) caters for the first situation: here the workers right is not to be subjected to detriment by any act done by his employer on the specified ground. Subsections (1A) to (1E), inserted into the Act by section 19(1) of the Enterprise and Regulatory Reform Act 2013, cater for the second situation: here the right is not to be subjected to detriment by any act done by another worker on the specified ground but, subject to a limited defence to which it is unnecessary to refer, the other workers act is treated as the employers act so as to render the employer vicariously liable for it. One aspect of the companys argument appears to be that, to catch the conduct of other employees who act against whistleblowers as Mr Widmer did, the provision for the employers vicarious liability in subsections (1A) to (1E) of section 47B affords an entirely adequate remedy. With respect, this aspect of the argument seems curious. A close study of the documents in the present case yields the confident conclusion that, as set out in para 32(b) above, the right of Ms Jhuti under section 47B which the tribunal held to have been infringed was the right under subsection (1), arising in the first situation in which the employer does the act and is directly liable for it. It was not the right under subsections (1A) to (1E), arising in the second situation in which another worker does the act and the employer is vicariously liable for it. It follows that, of the four acts (including series of acts) by which the tribunal found Ms Jhuti to have been subjected to detriment, the two acts of Mr Widmer (and for that matter the two acts of Ms Rock) were attributed to the company so as to make it directly liable for the detriments. This unchallenged attribution to the company of the acts of Mr Widmer, which, had it known of the circumstances surrounding them, it could not have authorised, affords no support for its approach to attribution under section 103A. But the companys reliance on section 47B of the Act has a wider dimension. Rising above the dichotomy between the two situations there identified, its argument is that, in one way or the other, the right there given to those in the position of Ms Jhuti affords to them all the relief which they could reasonably expect. The argument has generated comparison between the time limit for presenting a complaint of subjection to detriment under section 47B (see section 48(3), set out in para 29 above) and the allegedly more generous limit for presenting a complaint of unfair dismissal under section 103A (see section 111(2)); and comparison also between the remedy for subjection to detriment, compensation for which can extend to injury to feelings, and the remedies for unfair dismissal, which do not provide such compensation but which include interim relief under section 128 and orders for reinstatement or re engagement under section 113 such as have no parallel in relation to a complaint of detriment. There is a limit to the utility of such comparisons. There will inevitably be facets of the two complaints which will make one of them more advantageous than the other to the complainant or to the employer. Overarchingly, however, Parliament has, by section 103A, provided that, where an employees whistleblowing is the reason for it, a dismissal should automatically be unfair and should thus attract the remedies set out in Part X; and, as noted in para 28 above, it has also, by section 47B(2), withdrawn the rights provided by that section from the whistleblowing employee who is subjected to a detriment which amounts to dismissal. It is therefore obvious that whistleblowers are not confined to remedies under Parts IVA and V of the Act. The task of this court, mandated by section 103A, is to determine whether the tribunal properly identified the reason for Ms Jhutis dismissal. The company is right to object to any stretching of that word. On the other hand we should respond to the encouragement of Lord Reid in the Crouch case, cited in para 45 above, to approach the problem in a broad and reasonable way in accordance with industrial realities and common sense. In searching for the reason for a dismissal for the purposes of section 103A of the Act, and indeed of other sections in Part X, courts need generally look no further than at the reasons given by the appointed decision maker. Unlike Ms Jhuti, most employees will contribute to the decision makers inquiry. The employer will advance a reason for the potential dismissal. The employee may well dispute it and may also suggest another reason for the employers stance. The decision maker will generally address all rival versions of what has prompted the employer to seek to dismiss the employee and, if reaching a decision to do so, will identify the reason for it. In the present case, however, the reason for the dismissal given in good faith by Ms Vickers turns out to have been bogus. If a person in the hierarchy of responsibility above the employee (here Mr Widmer as Ms Jhutis line manager) determines that, for reason A (here the making of protected disclosures), the employee should be dismissed but that reason A should be hidden behind an invented reason B which the decision maker adopts (here inadequate performance), it is the courts duty to penetrate through the invention rather than to allow it also to infect its own determination. If limited to a person placed by the employer in the hierarchy of responsibility above the employee, there is no conceptual difficulty about attributing to the employer that persons state of mind rather than that of the deceived decision maker. Conclusion There is no need to remit to the tribunal an issue whether, upon the proper attribution to the company of Mr Widmers state of mind, the reason for Ms Jhutis dismissal was that she had made the protected disclosures. Mitting J in the appeal tribunal was correct to hold that, although the tribunal had considered it necessary to address the state of mind only of Ms Vickers, it had made findings determinative of that issue in favour of Ms Jhuti. Such part of the order of the Court of Appeal as allowed the companys appeal against his order should be set aside; and his order should be restored. There is no need to overrule the decision in the Orr case; by our decision, we attach only a narrow qualification to it. Yes, if a person in the hierarchy of responsibility above the employee determines that she (or he) should be dismissed for a reason but hides it behind an invented reason which the decision maker adopts, the reason for the dismissal is the hidden reason rather than the invented reason. The answer to the question of law identified in para 1 above is therefore as follows:
UK-Abs
The appeal concerns the dismissal of Ms Jhuti, the appellant, from her employment by Royal Mail Group Ltd (the company). The key question of law that it raises is as follows: in a claim for unfair dismissal under Part X of the Employment Rights Act 1996 (the Act), can the reason for the dismissal be other than that given to the employee by the employers appointed decision maker? The facts found by the employment tribunal (the tribunal) in this case included the following. During her trial period, Ms Jhuti made protected disclosures under section 43A of the Act, commonly described as whistleblowing. Her line managers response was to pretend that her performance was inadequate, including by bullying her and by creating, in emails and otherwise, a false picture of her performance. The company appointed another employee to decide whether Ms Jhuti should be dismissed. Ms Jhuti, who had in the meantime been signed off work for work related stress, anxiety and depression, was unable to present her case to the decision maker in meetings or otherwise. Having no reason to doubt the truthfulness of the material indicative of Ms Jhutis inadequate performance, the decision maker decided that she should be dismissed for that reason. Ms Jhuti brought two complaints in the tribunal. The first complaint (on which nothing in the present appeal turns directly) was that, contrary to section 47B(1) of the Act, she had been subjected to detriments by acts of the company done on the ground of her whistleblowing. The second complaint was that her dismissal was unfair under section 103A, which provides that a dismissal is unfair if the reason (or, if more than one, the principal reason) for the dismissal is that the employee made a protected disclosure. The tribunal dismissed this second complaint. It found that, as the decision maker had dismissed her on the ground of a genuine belief that her performance had been inadequate, the reason for dismissal was her performance and so section 103A did not apply. The Employment Appeal Tribunal (the EAT) reversed this decision, holding that the reason for dismissal was the making of the protected disclosures. The Court of Appeal allowed the companys appeal against the EATs decision and reinstated the tribunals dismissal of the complaint of unfair dismissal. It held that a tribunal required to determine the reason for dismissal under section 103A was obliged to consider only the mental processes of the employers authorised decision maker. Ms Jhuti appealed to the Supreme Court. The Supreme Court unanimously allows the appeal. It sets aside the part of the Court of Appeals order allowing the companys appeal against the EATs order and reinstates the latter order. Lord Wilson gives the only judgment, with which the other Justices agree. The question is whether the tribunal correctly identified the reason (or, if more than one, the principal reason) for the dismissal under section 103A, which relates specifically to whistleblowing. But these words also appear elsewhere in Part X, including in section 98, the general provision for unfair dismissal. So the courts answer must relate equally to those other sections [39]. While the question seems to be of wide importance, however, the facts of this case are extreme: instances of decisions to dismiss taken in good faith, not just for a wrong reason but for a reason which the employees line manager has dishonestly constructed, will not be common [40 41]. When applying a rule to a company which requires attributing to it a state of mind, it is necessary to consider the language of the rule (if it is a statute), as well as its content and policy [42 43]. By section 103A, Parliament clearly intended to provide that, where the real reason for dismissal was whistleblowing, the automatic consequence should be a finding of unfair dismissal [44 45]. The Court of Appeal in this case determined that, when an employees line manager hides the real reason behind a fictitious reason, the latter is to be taken as the reason for dismissal if adopted in good faith by the decision maker [46]. It considered itself bound by its earlier decision in Orr v Milton Keynes Council [2011] EWCA Civ 62, [2011] ICR 704 (Orr), which held that it was the knowledge only of the decision maker which fell to be attributed to the employer for the purposes of section 98 [47 49]. Yet, for various reasons, Orr was not a satisfactory vehicle for the articulation of principle; nor were its facts comparable to those in the present case [50 53]. The company, in opposing the attribution to it of the knowledge of Ms Jhutis line manager, argues that section 47B of the Act already gives protection to whistleblowers, such that there is no reason to construe section 103A as capturing reasons for dismissal other than the decision makers [54]. Section 47B protects workers from being subjected to detriment by acts of the employer (subsection (1)), or of another worker (subsections (1A) to (1E)). In the latter case the employer is liable for the other workers acts [55]. But the tribunal attributed to the company the acts of Ms Jhutis line manager which it found to have caused detriment to her, and held that subsection (1), rather than subsections (1A) to (1E), applied. This attribution to the company (which it does not challenge) of acts which it could not have authorised had it known of the circumstances surrounding them provides no support for its approach to attribution under section 103A [56]. The wider dimension of the companys argument based on section 47B is that the right it gives to workers in Ms Jhutis position affords to them all the relief they could reasonably expect [57]. Yet Parliament has, by section 103A, provided that a dismissal should automatically be unfair where an employees whistleblowing is the reason for it. It has also, by section 47B(2), withdrawn the protection of that section from whistleblowers subjected to a detriment which amounts to dismissal [58]. It is therefore obvious that whistleblowers are not confined to remedies under section 47B [59]. In searching for the reason for a dismissal, courts need generally look only at the reason given by the decision maker. But where the real reason is hidden from the decision maker behind an invented reason, the court must penetrate through the invention [60 61]. So the answer to the appeals key question is, yes, if a person in the hierarchy of responsibility above the employee determines that she should be dismissed for one reason but hides it behind an invented reason which the decision maker adopts, the reason for the dismissal is the hidden reason rather than the invented reason [62].
This appeal concerns the statutory right of appeal against decisions by the Secretary of State for the Home Department (the Secretary of State) to refuse protection claims and human rights claims under Part 5 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) as amended. The particular question for decision is as follows: Where a person has already had a protection claim or a human rights claim refused and there is no pending appeal, do further submissions which rely on protection or human rights grounds have to be accepted by the Secretary of State as a fresh claim in accordance with rule 353 of the Immigration Rules if a decision in response to those representations is to attract a right of appeal under section 82 of the 2002 Act? It is a conspicuous feature of litigation in the field of immigration and asylum in this jurisdiction that those whose protection claims or human rights claims have already been refused seek to make further applications adducing further submissions or evidence in support. It is necessary that provision be made for such renewed applications for which there is a sound basis, not least because circumstances may change significantly and unforeseeably following the rejection of a claim. In R v Secretary of State for the Home Department, Ex p Onibiyo [1996] QB 768 Sir Thomas Bingham MR noted (at pp 781 782) that, for example, it is not hard to imagine cases in which an initial claim for asylum might be made on insubstantial, or even bogus, grounds, and be rightly rejected, but in which circumstances would subsequently arise or come to light showing a threat of a kind requiring the grant of asylum. As he observed, a scheme of legal protection which could not accommodate that possibility would be seriously defective. In appropriate cases, it will be necessary to afford access to the statutory system of appeals when a second or subsequent submission is rejected. Nevertheless, it is necessary to protect such a scheme of legal protection from abuse. There is, therefore, a need to exclude from the statutory system of appeals second or successive applications which are made on grounds which have previously been rejected or which have no realistic prospect of success, and which are often advanced simply in order to delay removal from the United Kingdom. The challenge is to provide a system which can deal fairly and effectively with all such applications while also complying with the United Kingdoms international obligations. The facts The appellant, Mr Jamar Robinson, is a national of Jamaica who was born on 14 May 1991. He arrived in the United Kingdom on 9 October 1998 when he was seven years old. He was given leave to enter until 9 April 1999 and then remained in the United Kingdom without leave. In 2005, at the age of 13, he applied for indefinite leave to remain in the United Kingdom as a dependant of his aunt who had made an application under a one off exercise to allow families who have been in the United Kingdom for three years or more to stay. His aunt was granted indefinite leave to remain on 13 May 2011. The appellants application was refused as part of later deportation proceedings. The appellant has a number of criminal convictions. The index offences which triggered deportation proceedings were two robberies for each of which he was sentenced on 20 April 2011 to 18 months detention, to run concurrently. At sentence he was 19 years of age. On the same occasion he was convicted of failing to comply with the requirements of a previous community order. On 31 August 2011, aged 20, he was convicted of an offence of robbery and an offence of theft, in respect of which he was sentenced to terms of 40 months detention and 16 months detention respectively, to run concurrently. On 12 October 2012, aged 21, he was convicted of an offence of violent disorder, committed while he was an inmate at HMP Feltham, for which he was sentenced to 12 months imprisonment. On 10 June 2011 he was notified by the Secretary of State of his liability to deportation. His previous legal representatives responded on 16 August 2011. On 17 July 2013 a deportation order was signed in respect of the appellant. He appealed to the First tier Tribunal (Immigration and Asylum Chamber) (FTT) against his proposed deportation. His appeal was based on his claimed right to respect for his private life in the United Kingdom. It was accepted that at that time there was no family life in play. His appeal was dismissed and he was refused permission to appeal to the Upper Tribunal (Immigration and Asylum Chamber) (UT) by the FTT and by the UT. He exhausted his rights of appeal on 1 May 2015. On 13 May 2015 the appellants previous solicitors made brief further submissions to the Secretary of State on his behalf. The focus of these submissions was that the appellants then partner was pregnant and due to give birth on 28 July 2015. The application did not explicitly request that the deportation order be revoked, nor did it explicitly make reference to human rights. The Secretary of State treated the further representations as an application to revoke the appellants deportation order on the basis that deportation would breach article 8 of the European Convention on Human Rights. She responded to those submissions in a letter of 23 June 2015. She concluded that deportation would not breach article 8. She refused to revoke the deportation order, and she decided that his submissions did not amount to a fresh human rights claim under rule 353 of the Immigration Rules. The appellants son was born on 26 July 2015. He is a British citizen by birth because his mother is British. The appellant then made further submissions to the Secretary of State on 28 July 2015 regarding the birth of his son and providing some documentation from the hospital. The Secretary of State responded to these further submissions in a letter dated 31 July 2015. Once again, the Secretary of State concluded that deportation of the appellant would not breach article 8 and that his further submissions did not amount to a fresh claim under rule 353 of the Immigration Rules. On 18 July 2015 the Secretary of State gave directions for the appellants removal to Jamaica on 9 August 2015. A request for temporary admission was made on 30 July 2015 in order to enable the appellant to visit his son. The enclosed documents included a statutory declaration from the appellant declaring that he is the childs father. The appellant was subsequently named as the father on the childs birth certificate. On 5 August 2015 the appellants solicitors gave notice of appeal to the FTT against the Secretary of States decision of 31 July 2015. In a decision dated 7 August 2015, promulgated on 10 August 2015, the FTT declined jurisdiction on the basis that there was no right of appeal against the decision of 31 July 2015. On 7 August 2015 the appellant made an application for permission to apply for judicial review of the Secretary of States decisions of 23 June 2015 and 31 July 2015 not to accept the further representations as fresh claims and the removal directions given on 18 July 2015. After the proceedings were lodged the Secretary of State confirmed that removal of the appellant would be deferred. The appellant applied to amend his grounds to include the FTT as second respondent and to challenge its decision of 7 August 2015 that the appellant had no right to appeal against the decision of 31 July 2015. UT Judge Allen granted the appellant permission to join the FTT and to amend his grounds. On 19 November 2015 UT Judge Eshun granted the appellant permission to apply for judicial review. The application for judicial review was heard by UT Judge Southern on 16 February 2016 who held that: the decisions of 23 June 2015 and 31 July 2015 were lawful with the Secretary of States letters were not refusals to revoke the the FTT had correctly decided that the appellant had no right of appeal (1) to the FTT; (2) appellants deportation order; and (3) regard to rule 353 of the Immigration Rules. He refused permission to appeal to the Court of Appeal. On 9 March 2016 the appellant applied to the Court of Appeal for permission to appeal. The Secretary of State sought to deport the appellant to Jamaica on 13 April 2016. On 12 April 2016 Rafferty LJ granted the appellant a stay on removal. On 2 December 2016 Underhill LJ, on consideration of the papers, granted permission to appeal to the Court of Appeal. On 4 May 2017 the Court of Appeal (Jackson, Hamblen and Flaux LJJ) dismissed the appellants appeal and refused permission to appeal to the Supreme Court. The appellant was granted a stay on removal pending final determination of his appeal. The Supreme Court granted permission to appeal by order dated 10 April 2018. The relevant legislation Part 5 of the 2002 Act in force immediately prior to the commencement of the Immigration Act 2014 (the 2014 Act) ie prior to 20 October 2014, provided in relevant part: 82. Right of appeal: general (1) Where an immigration decision is made in respect of a person he may appeal to the Tribunal. (2) refusal of entry clearance, refusal of a certificate of entitlement In this Part immigration decision means refusal of leave to enter the United (a) Kingdom, (b) (c) under section 10 of this Act, (d) refusal to vary a persons leave to enter or remain in the United Kingdom if the result of the refusal is that the person has no leave to enter or remain, (e) variation of a persons leave to enter or remain in the United Kingdom if when the variation takes effect the person has no leave to enter or remain, (f) revocation under section 76 of this Act of indefinite leave to enter or remain in the United Kingdom, (g) a decision that a person is to be removed from the United Kingdom by way of directions under section 10(1)(a), (b), (ba) or (c) of the Immigration and Asylum Act 1999 (c 33) (removal of person unlawfully in United Kingdom), (h) a decision that an illegal entrant is to be removed from the United Kingdom by way of directions under paragraphs 8 to 10 of Schedule 2 to the Immigration Act 1971 (c 77) (control of entry: removal), (ha) a decision that a person is to be removed from the United Kingdom by way of directions under section 47 of the Immigration, Asylum and Nationality Act 2006 (removal: persons with statutorily extended leave), (i) a decision that a person is to be removed from the United Kingdom by way of directions given by virtue of paragraph 10A of that Schedule (family), (ia) a decision that a person is to be removed from the United Kingdom by way of directions under paragraph 12(2) of Schedule 2 to the Immigration Act 1971 (c 77) (seamen and aircrews), (ib) a decision to make an order under section 2A of that Act (deprivation of right of abode), a decision to make a deportation order (j) under section 5(1) of that Act, and (k) under section 5(2) of that Act. refusal to revoke a deportation order 84. Grounds of appeal (1) An appeal under section 82(1) against an immigration decision must be brought on one or more of the following grounds (c) that the decision is unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Human Rights Convention) as being incompatible with the appellants Convention rights; that removal of the appellant from the (g) United Kingdom in consequence of the immigration decision would breach the United Kingdoms obligations under the Refugee Convention or would be unlawful under section 6 of the Human Rights Act 1998 as being incompatible with the appellants Convention rights. 92. Appeal from within United Kingdom: general (1) A person may not appeal under section 82(1) while he is in the United Kingdom unless his appeal is of a kind to which this section applies. (4) This section also applies to an appeal against an immigration decision if the appellant (a) has made an asylum claim, or a human rights claim, while in the United Kingdom, or 94. Appeal from within United Kingdom: unfounded human rights or asylum claim (1) This section applies to an appeal under section 82(1) where the appellant has made an asylum claim or human rights claim (or both). (2) A person may not bring an appeal to which this section applies in reliance on section 92(4)(a) if the Secretary of State certifies that the claim or claims mentioned in subsection (1) is or are clearly unfounded. 96. Earlier right of appeal (1) An appeal under section 82(1) against an immigration decision (the new decision) in respect of a person may not be brought if the Secretary of State or an immigration officer certifies (a) that the person was notified of a right of appeal under that section against another immigration decision (the old decision) (whether or not an appeal was brought and whether or not any appeal brought has been determined), (b) that the claim or application to which the new decision relates relies on a matter that could have been raised in an appeal against the old decision, and (c) that, in the opinion of the Secretary of State or the immigration officer, there is no satisfactory reason for that matter not having been raised in an appeal against the old decision. (2) An appeal under section 82(1) against an immigration decision (the new decision) in respect of a person may not be brought if the Secretary of State or an immigration officer certifies (a) that the person received a notice under section 120 by virtue of an application other than that to which the new decision relates or by virtue of a decision other than the new decision, (b) that the new decision relates to an application or claim which relies on a matter that should have been, but has not been, raised in a statement made in response to that notice, and that, in the opinion of the Secretary of (c) State or the immigration officer, there is no satisfactory reason for that matter not having been raised in a statement made in response to that notice. 113. Interpretation (1) In this Part, unless a contrary intention appears asylum claim means a claim made by a person to the Secretary of State at a place designated by the Secretary of State that to remove the person from or require him to leave the United Kingdom would breach the United Kingdoms obligations under the Refugee Convention, human rights claim means a claim made by a person to the Secretary of State at a place designated by the Secretary of State that to remove the person from or require him to leave the United Kingdom would be unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Convention) as being incompatible with his Convention rights, the Refugee Convention means the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 and its Protocol, Part 5 of the 2002 Act was amended with effect from 20 October 2014 in a number of respects. Section 82(1) now provides: 82. Right of appeal to Tribunal (1) A person (P) may appeal to the Tribunal where the Secretary of State has decided to the Secretary of State has decided to (a) refuse a protection claim made by P, (b) refuse a human rights claim made by P, or (c) revoke Ps protection status. the Secretary of State has decided to (1) An appeal under section 82(1)(a) (refusal of protection claim) must be brought under one or more of the following grounds (a) that removal of the appellant from the United Kingdom would breach the United Kingdoms obligations under the Refugee Convention; Section 84 of the 2002 Act now provides: 84. Grounds of appeal (b) that removal of the appellant from the United Kingdom would breach the United Kingdoms obligations in relation to persons eligible for a grant of humanitarian protection; (c) that removal of the appellant from the United Kingdom would be unlawful under section 6 of the Human Rights Act 1998 (public authority not to act contrary to Human Rights Convention). (2) An appeal under section 82(1)(b) (refusal of human rights claim) must be brought on the ground that the decision is unlawful under section 6 of the Human Rights Act 1998. There were consequential amendments to sections 85, 86, 92, 94 and 96. Substantive changes were made to section 92 which now provides: 92. Place from which an appeal may be brought or continued (1) This section applies to determine the place from which an appeal under section 82(1) may be brought or continued. (2) In the case of an appeal under section 82(1)(a) (protection claim appeal), the appeal must be brought from outside the United Kingdom if (a) the claim to which the appeal relates has been certified under section 94(1) or (7) (claim clearly unfounded or removal to safe third country), or (b) Otherwise the appeal must be brought from within the United Kingdom. (3) In the case of an appeal under section 82(1)(b) (human rights claim appeal) where the claim to which the appeal relates was made while the appellant was in the United Kingdom, the appeal must be brought from outside the United Kingdom if (a) the claim to which the appeal relates has been certified under section 94(1) or (7) (claim clearly unfounded or removal to safe third country) or section 94B (certification of human rights claims made by persons liable to deportation), or Otherwise, the appeal must be brought from within the United Kingdom. In the case of an appeal under section 82(1)(b) (4) (human rights claim appeal) where the claim to which the appeal relates was made while the appellant was outside the United Kingdom, the appeal must be brought from outside the United Kingdom. Section 94 now provides in relevant part: 94. Appeal from within United Kingdom: unfounded human rights or protection claim (1) The Secretary of State may certify a protection claim or a human rights claim as clearly unfounded. The definition of human rights claim in section 113 was amended by the 2014 Act and now provides as follows: human rights claim means a claim made by a person to the Secretary of State at a place designated by the Secretary of State that to remove the person from or require him to leave the United Kingdom or to refuse him entry to the United Kingdom would be unlawful under section 6 of the Human Rights Act 1998 (c 42) (public authority not to act contrary to Convention). Immigration Rules, rule 353 The Immigration Rules have contained provisions in respect of previously refused applications since May 1994 (HC 395, rule 346). A rule in substantially the same form as the current rule 353 has been in force since it was introduced by HC 1112 in October 2004. (See para 36, below.) The current rule 353 of the Immigration Rules HC 1025, which has been in force since February 2015, provides: 353. When a human rights or protection claim has been refused or withdrawn or treated as withdrawn under paragraph 333C of these Rules and any appeal relating to that claim is no longer pending, the decision maker will consider any further submissions and, if rejected, will then determine whether they amount to a fresh claim. The submissions will amount to a fresh claim if they are significantly different from the material that has previously been considered. The submissions will only be significantly different if the content: had not already been considered; and (i) taken together with the previously considered (ii) material, created a realistic prospect of success, notwithstanding its rejection. This paragraph does not apply to claims made overseas. The decision of the Court of Appeal In the Court of Appeal Jackson LJ, with whom the other members of the court agreed, rejected a submission on behalf of the appellant that human rights claim in section 82(1)(b) of the 2002 Act as amended means any human rights claim and that its meaning is not confined to an original claim or a subsequent claim which constitutes a fresh claim within rule 353 of the Immigration Rules. He also rejected a submission that the Supreme Court considered precisely the same question in R (BA (Nigeria)) v Secretary of State for the Home Department [2009] UKSC 7; [2010] 1 AC 444 when construing the phrase a human rights claim in section 92(4)(a) of the 2002 Act as it then stood. The decision of the Supreme Court on the meaning of human rights claim in BA (Nigeria) did not apply to statutory provisions which determine whether a right of appeal exists at all. In his view, it would be an absurd reading of section 82, in either its previous or current form, to interpret it as permitting an applicant to make the same human rights claim over and over again, each time appealing to the FTT against the rejection of that claim. He concluded that a human rights claim in section 82(1)(b) of the 2002 Act must mean an original human rights claim or a fresh human rights claim which falls within rule 353 of the Immigration Rules. Submissions of the parties On this appeal the parties have made very detailed submissions orally and in writing for which the court is grateful. It seems to me, however, that Mr Michael Fordham QC on behalf of the appellant makes two essential submissions which lie at the heart of his case. (1) First, he submits that the Onibiyo line of authority which established that in the case of a second or successive submission it was for the Secretary of State to decide whether this constituted a fresh claim giving rise to a right to appeal did not survive the decision of the Supreme Court in BA (Nigeria), and that, accordingly, there is no longer any role for rule 353 of the Immigration Rules. In this regard he submits that this court should reject the reading of BA (Nigeria) favoured by Lord Neuberger of Abbotsbury MR in the Court of Appeal in R (ZA (Nigeria)) v Secretary of State for the Home Department [2010] EWCA Civ 926; [2011] QB 722. (2) Secondly, he submits that the amendments to Part 5 of the 2002 Act effected by the 2014 Act abrogate the control mechanism established by the Onibiyo line of authority and rule 353 of the Immigration Rules and that the words human rights claim as they appear in section 82(1)(b) of the 2002 Act following amendment by the 2014 Act are to be interpreted without reference to rule 353. On this basis he submits that any second or subsequent submission which is a human rights claim under section 113(1) attracts a right of appeal under section 82, notwithstanding that the individual has made a previous claim that removal would breach a relevant obligation, whether the same relevant obligation or a different one, whether on the same basis or a different one, whether with the same or different submissions and evidence, but subject however to the certification provisions in sections 94 and 96. In response on behalf of the Secretary of State, Sir James Eadie QC submits: (1) BA (Nigeria) does not establish that the words human rights claim as they appear in Part 5 of the 2002 Act are to be interpreted without reference to the Onibiyo line of authority or rule 353 of the Immigration Rules. The actual decision in BA (Nigeria) was that rule 353 had no further part to play for the purposes of section 92(4)(a) once there was an appeal against an immigration decision. It did not determine that the Secretary of State was no longer entitled to decide the prior question as to whether a second or subsequent submission constituted a claim at all. In his support he relies on the analysis of BA (Nigeria) by Lord Neuberger MR in ZA (Nigeria). (2) The amendments to the 2002 Act effected by the 2014 Act have not changed the position. It remains the case that there will only be an asylum or human rights claim to be determined if, in relevant cases, further submissions are considered to amount to a fresh claim. The Onibiyo line of authority In order to address the issues raised by this appeal it is necessary to consider in some detail the way in which a line of authority concerning second or subsequent submissions to the Secretary of State has developed. It starts in 1996 with the decision of the Court of Appeal (Sir Thomas Bingham MR, Roch and Swinton Thomas LJJ) in Onibiyo. The applicant had made an application for asylum under the Asylum and Immigration Appeals Act 1993 (1993 Act), based on the political activities of his father. The Secretary of State refused his application and his appeal under section 8(3)(b) of the 1993 Act was dismissed. The applicant then indicated that he was making a fresh claim for asylum based on his own association with the opposition in Nigeria. Rule 346, Statement of Changes in Immigration Rules (1994) (HC 395), which was then current, provided: When an asylum applicant has previously been refused asylum in the United Kingdom and can demonstrate no relevant and substantial change in his circumstances since that date, his application will be refused. The Home Office stated in a letter that it was of the view that the representations did not constitute a fresh claim for asylum and had been treated as further information to the original claim. The request for revocation of the deportation order against him was refused on the ground that there had not been any material change in circumstances since the previous refusal decision sufficient to justify revocation. The applicants solicitors took issue with this letter and submitted a notice of appeal to a special adjudicator under section 8(3)(b) of the 1993 Act. The Secretary of State maintained his position and in a subsequent letter explained that the first letter had not constituted a refusal of asylum but a consideration and dismissal of the further information provided. In the circumstances the Secretary of State had not made a fresh decision and the appeal was invalid. The applicant applied for judicial review. A preliminary question was whether a person may during a single uninterrupted stay in the United Kingdom make more than one claim for asylum within the 1993 Act. The Master of the Rolls, with whom the other members of the court agreed, rejected the submission of the Secretary of State that once a person had made a claim for asylum, been refused by the Secretary of State and unsuccessfully exercised his rights of appeal, that exhausted his legal rights. The obligation of the United Kingdom under the Refugee Convention not to return a refugee to a county where his life or freedom would be threatened for a Convention reason remained binding until the moment of return. Accordingly, three questions arose for consideration. First, what constitutes a fresh claim? Secondly, how and by whom is it decided whether a claim is a fresh claim or not? Thirdly, what are the procedural consequences of a decision that a claim is or is not a fresh claim? In response to the first question, it was not controversial that there had to be a significant change from the claim as previously presented, such as might reasonably lead a special adjudicator to take a different view. The acid test must always be whether, comparing the new claim with that earlier rejected, and excluding material on which the claimant could reasonably have been expected to rely in the earlier claim, the new claim is sufficiently different from the earlier claim to admit of a realistic prospect that a favourable view could be taken of the new claim despite the unfavourable conclusion reached on the earlier claim. (at pp 783H 784B) In response to the second question, rule 328 of the Statement of Changes in Immigration Rules made clear that all asylum applications would be determined by the Secretary of State in the first instance. In response to the third question, no particular difficulty arose where the Secretary of State treated the submission as a fresh claim, whether asylum was then granted or refused. In the latter case, the same consequences should follow as on a refusal of an initial claim. A problematic situation arose, however, where, as on the facts of that case, the Secretary of State did not recognise the submission as a fresh claim and, therefore, declined to take or omit to take any action which would trigger a right of appeal. It would clearly be open to the asylum seeker, in those circumstances, to have resort to the court to challenge that decision. However, a question of considerable difficulty was whether the court should approach this as a question of precedent fact or whether the decision should be susceptible to challenge only on Wednesbury principles. As the answer to the question was not determinative of the appeal, the Master of the Rolls proffered a tentative answer in favour of the latter view. (at pp 784D 785D) Following the decision in Onibiyo, rule 346 was amended to reflect the judgment in that case. The amended version provided: Where an asylum applicant has previously been refused asylum the Secretary of State will determine whether any further representations should be treated as a fresh application for asylum. The Secretary of State will treat representations as a fresh application for asylum if the claim advanced in the representations is sufficiently different from the earlier claim that there is a realistic prospect that the conditions set out in para 334 will be satisfied. In considering whether to treat the representations as a fresh claim, the Secretary of State will disregard any material which: is not significant; or is not credible; or (i) (ii) (iii) was available to the applicant at the time when the previous application was refused or when any appeal was determined. (CM 3365) In Cakabay v Secretary of State for the Home Department (Nos 2 and 3) [1999] Imm AR 176, after the appellants appeals against the refusal of asylum had been dismissed, he had submitted further evidence which the Secretary of State concluded did not constitute a fresh claim. The appellant purported to appeal against this decision. The Secretary of State successfully applied for a declaration that the appellate authorities had no jurisdiction in the matter. The judge, reviewing the decision on Wednesbury principles, also concluded that the Secretary of States decision could not be held to be unreasonable. The Court of Appeal (Peter Gibson, Schiemann and Potter LJJ) upheld the decision. Schiemann LJ explained that the statute made no express provision as to what is to be done in the case of repeated claims for asylum by the same person. Nevertheless, there was a need for categorisation and to distinguish between what he termed a repetitious claim and a fresh claim: In the case of a repetitious claim no more is required to be done: the first decision has ensured that the United Kingdom has complied with its obligations under the Convention. Section 6 of the 1993 Act creates no inhibition on the claimants removal: the Secretary of State has on the occasion of his decision on the first claim decided the repetitious claim. So far as the decision on the claimants repetitious application for leave to enter is concerned, the claimant will be told that leave has already been refused and that there is no need for any new decision. (at p 181) Despite the focus on repetitious claims, it is clear that the reasoning of Schiemann LJ applies equally to any further submissions that failed to meet the test in rule 346. Similarly, Peter Gibson LJ (at p 193) considered that if the representations amounted to no more than the same claim as that which had already failed, or if the criteria of rule 346 were not met, there would be no claim for asylum within the statute and therefore no appeal would lie under section 8(1) of the 1993 Act against a determination adverse to the asylum seeker that there had been no fresh claim. Consistently with what the Court of Appeal in Onibiyo had assumed to be correct, the court went on to hold that no appeal lay under section 8(1) of the 1993 Act from the determination of the Secretary of State that fresh representations do not amount to a claim for asylum. Schiemann LJ accepted that a categorisation decision has potentially severe consequences and that, in such a context, arguments based on the possibilities of abuse should not weigh heavily in matters of construction. Nevertheless, Parliament had not provided for an appeal on the merits against a categorisation decision (at p 185 186). (See also Peter Gibson LJ at p 194.) In this way the courts imposed a gloss on the operation of the statutory scheme which made no express provision for the handling of second or successive submissions. The effect of these decisions was that it was for the Secretary of State to decide whether further submissions amounted to a fresh claim. Where the Secretary of State had taken a rational decision that further submissions did not amount to a fresh claim for asylum under rule 346 of the Immigration Rules, there was no asylum claim to determine and therefore no need to make any decision to refuse leave to enter. In these circumstances, no right of appeal arose under section 8 of the 1993 Act. A categorisation decision was, however, open to challenge by judicial review. On 7 November 2002 Parliament enacted the 2002 Act, which effectively replaced the 1993 Act. The 2002 Act itself has subsequently been amended on a number of occasions. Part 5 of the 2002 Act concerns immigration and asylum appeals. Section 82 conferred a statutory right of appeal against an immigration decision and listed what constituted an immigration decision. The grounds of appeal included in section 84(1)(g) that removal would breach the United Kingdoms obligations under the Refugee Convention or would be unlawful under section 6 of the Human Rights Act 1998 as being incompatible with the appellants Convention rights. Section 92 required an appeal to be out of country unless it concerned one of five of the immigration decisions listed in section 82(2) or the individual had made an asylum or human rights claim. Section 94 empowered the Secretary of State to issue a certificate that an asylum or human rights claim was clearly unfounded, in which case an appeal would be limited to an out of country appeal. Section 96 empowered the Secretary of State to issue a certificate relating to an earlier right of appeal in which a matter now relied upon could and should have been raised, in which case an appeal could not be brought at all. In October 2004 rule 353 was introduced (HC 1112). 353. When a human rights or asylum claim has been refused and any appeal relating to that claim is no longer pending, the decision maker will consider any further submissions and, if rejected, will then determine whether they amount to a fresh claim. The submissions will amount to a fresh claim if they are significantly different from the material that has previously been considered. The submissions will only be significantly different if the content: had not already been considered; and (i) taken together with the previously considered (ii) material, created a realistic prospect of success, notwithstanding its rejection. This paragraph does not apply to claims made overseas. Rule 353A was inserted by HC 82/2007. 353A. Consideration of further submissions shall be subject to the procedures set out in these Rules. An applicant who has made further submissions shall not be removed before the Secretary of State has considered the submissions under paragraph 353 or otherwise. This paragraph does not apply to submissions made overseas. In WM (DRC) v Secretary of State for the Home Department [2006] EWCA Civ 1495; [2007] Imm AR 337 the Court of Appeal (Buxton, Parker and Moore Bick LJJ) confirmed (per Buxton LJ at paras 8 10) that there is no provision for appeal from a decision of the Secretary of State as to the existence of a fresh claim and, accordingly, the court was engaged only through the medium of judicial review. The Secretary of States decision as to whether there was a fresh claim was not a fact, nor precedent to any other decision, but was the decision itself. The court could not take that decision out of the hands of the decision maker. The decision remained that of the Secretary of State, subject only to review on a Wednesbury basis, albeit applying anxious scrutiny. In ZT (Kosovo) v Secretary of State for the Home Department [2009] UKHL 6; [2009] 1 WLR 348 the House of Lords by a majority extended the applicability of the Onibiyo approach. The Secretary of State had rejected the applicants claims for asylum and protection on human right grounds and certified the claims as clearly unfounded under section 94(2) of the 2002 Act. As a result, the applicant had no in country right of appeal and he was served with a decision to remove him as an illegal immigrant. He made two further submissions, but the Secretary of State maintained her certification of the claims as clearly unfounded. The House of Lords held by a majority (Lord Hope dissenting) that the Secretary of State had erred in applying section 94(2) of the 2002 Act rather than rule 353 to the further submissions. The words any appeal relating to that claim is no longer pending in rule 353 should be interpreted in accordance with the definition of a pending appeal in section 104 of the 2002 Act. If there was no appeal pending, the qualifying words had no application. Furthermore, it made sense that the rule should be disapplied during, and only during, the currency of an appeal since if an appeal was pending further submissions could be made to the appeal tribunal. As Lord Neuberger observed (at para 86), it would seem silly if rule 353 only applied after an appeal had been brought and concluded but did not apply before an appeal was brought and could never apply in a case where no appeal had been brought. BA (Nigeria) Some nine months after the House of Lords delivered its decision in ZT (Kosovo) on 4 February 2009, the Supreme Court delivered its decision in BA (Nigeria) on 26 November 2009. Mr Fordhams primary submission is that the Onibiyo line of authority did not survive the decision of the Supreme Court in BA (Nigeria) and that, accordingly, there is no longer any role for rule 353 of the Immigration Rules. BA (Nigeria) concerned two separate cases. BA, who had previously been granted indefinite leave to remain, was served with a decision that he would be deported on his release from prison on licence from a sentence of imprisonment of ten years. He appealed on human rights grounds against that decision and his appeal failed. He was served with a deportation order. BA then made further submissions as to why he should not be deported. The Secretary of State agreed to consider his reasons for seeking revocation of the deportation order but declined to revoke it. Directions were then given for his removal. The other case was that of PE who had entered the United Kingdom clandestinely. His application for asylum was rejected by the Secretary of State. It was decided that directions were to be given for his removal to Cameroon. He did not appeal against that decision. Before it was put into effect, however, he was convicted and sentenced to imprisonment for having a forged passport and using it to obtain work. The Secretary of State decided to make a deportation order against him. PE appealed unsuccessfully against that decision on asylum and human rights grounds. The deportation order was signed and served on him, following which his representatives made written representations for the decision to be reconsidered. In particular, it was claimed that he would be persecuted in Cameroon on account of his homosexuality. The Secretary of State declined to reconsider her decision; in her view the representations did not amount to a fresh claim within rule 353. PE purported to appeal against that decision but the tribunal held that it was not an appealable decision. Both BA and PE applied for judicial review. In each of these cases the refusal of the Secretary of State to revoke the deportation order following further representations was accepted to be an immigration decision within section 82(2)(k). It was common ground, accordingly, that each applicant had a right of appeal under section 82(1). It was also common ground that neither of the claims would have been certifiable under section 94 or section 96 (although it appears that the Secretary of State took this position solely because, so far as section 94 was concerned, it applied only where the appellant has made an asylum claim or a human rights claim (or both)). The issue was whether the right of appeal could be exercised from within the United Kingdom. (See Lord Hope DPSC at para 14.) Section 92(1) precluded an appeal under section 82(1) by a person while he is in the United Kingdom, unless his appeal was of a kind to which section 92 applied. Section 92, by virtue of section 92(4)(a), applied to an appeal against an immigration decision if the appellant has made an asylum claim, or a human rights claim, while in the United Kingdom so that in such a case there would be a right to an in country appeal. Lord Hope encapsulated the issue (at para 2): The question is whether the expression an asylum claim, or a human rights claim, in section 92(4)(a) of the 2002 Act includes any second or subsequent claim that the asylum seeker may make, or only a second or subsequent claim which has been accepted as a fresh claim by the Secretary of State under rule 353 of the Statement of Changes in Immigration Rules (1994) (HC 395). The Supreme Court (Baroness Hale JSC dissenting) held that it was not open to the Secretary of State to rely on rule 353 and the Onibiyo reasoning to deny an in country right of appeal in those circumstances. As Lord Neuberger MR observed in ZA (Nigeria) at para 52, the actual decision in BA (Nigeria) was that rule 353 had no further part to play for the purposes of section 92(4)(a) once there was an appeal against an immigration decision. However, the reasoning by which the Supreme Court reached that conclusion is open to different interpretations which were formulated by Lord Neuberger in ZA (Nigeria) in the following terms (at para 51). Like the Administrative Court, I have not found it entirely easy to resolve the issue of whether the Supreme Court was saying (a) as the claimants contend, that rule 353 has no part to play at all following the introduction of Part 5 of the 2002 Act, or (b) as the Secretary of State argues, that rule 353 has no part to play where there has been an appealable immigration decision and the only issue is whether the appeal is of a kind to which section 92 applies. Ultimately, however, again like the Administrative Court, I have come to the conclusion that the Secretary of States more limited interpretation is to be preferred. In the present appeal, Mr Fordham has sought to persuade us that the broader reading of BA (Nigeria) is correct and that the narrower reading favoured by Lord Neuberger in ZA (Nigeria) is incorrect. Mr Fordham is able to point to certain passages in the judgment of Lord Hope in BA (Nigeria) (with which Lord Scott, Lord Rodger and Lord Brown agreed) which certainly lend support to the view that the new scheme introduced by the 2002 Act has rendered the reasoning in Onibiyo and rule 353 redundant. I draw attention, in particular, to the following passages. (1) Lord Hope (at para 29), referring to section 94(2) and section 96, noted that the new system introduced by Part 5 of the 2002 Act contains a range of powers that enable the Secretary of State or an immigration officer to deal with the problem of repeat claims. It was common ground that the present cases were not certifiable under either of these two sections. Why then, he asked rhetorically, should they be subjected to a further requirement which is not mentioned anywhere in the 2002 Act. He continued: It can only be read into the Act by, as Sedley LJ in the Court of Appeal put it, glossing the meaning of the words a claim so as to exclude a further claim which has not been held under rule 353 to be a fresh claim The court had to do this in Ex p Onibiyo But there is no need to do this now. It is not just that there is no need now to read those words into the statute. As Mr Husain pointed out, the two systems for excluding repeat claims are not compatible. (at paras 29, 30) (2) At para 31 Lord Hope observed: The ground of appeal referred to in section 84(1)(g) has been designed to honour the international obligations of the United Kingdom. To exclude claims which the Secretary of State considers not to be fresh claims from this ground of appeal, when claims which he certifies as clearly unfounded are given the benefit of it, can serve no good purpose. On the contrary, it risks undermining the beneficial objects of the Refugee Convention which the court in Ex p Onibiyo , under a legislative system which had no equivalent to section 95, was careful to avoid. (3) At para 33 Lord Hope observed: There is no doubt, as I indicated in ZT (Kosovo) v Secretary of State for the Home Department , para 33, that rule 353 was drafted on the assumption that a claimant who made further submissions would be at risk of being removed or required to leave immediately if he does not have a fresh claim. That was indeed the case when this rule was originally drafted, as there was no equivalent of section 92(4) of the 2002 Act. But Mr Husains analysis has persuaded me that the legislative scheme that Parliament has now put in place does not have that effect. Its carefully interlocking provisions, when read as a whole, set out the complete code for dealing with repeat claims. Rule 353, as presently drafted, has no part to play in the legislative scheme. As an expression of the will of Parliament, it must take priority over the rules formulated by the executive. Rule 353A on the other hand remains in place as necessary protection against premature removal until the further submissions have been considered by the Secretary of State. Similarly, Lord Rodger (at para 37), rejecting the submission that the expression an asylum claim in section 92(4)(a) should be given the same meaning as Sir Thomas Bingham MR gave to the expression a claim for asylum in section 6 of the 1993 Act, noted that the contexts were significantly different since the 2002 Act contains a new scheme for dealing with abusive claims. Given that new scheme, there is no longer the same need to adopt the former interpretation and, indeed, the one now adopted fits the new context better. Lord Brown (at para 44) explained that he had reached his conclusion only on the basis that: the statutory solution to the problem of abuse created by the making of repeat asylum claims lies not in construing an asylum claim in section 92(4)(a) of the Nationality, Immigration and Asylum Act 2002 as the Court of Appeal in R v Secretary of State for the Home Department, Ex p Onibiyo construed a claim for asylum in section 6 of the Asylum and Immigration Appeals Act 1993 but rather in the Secretary of State issuing certificates where appropriate under sections 94 or 96 of the 2002 Act (no equivalent provisions having been available under the 1993 Act). Nevertheless, there are to my mind major difficulties inherent in this reading of BA (Nigeria). Here I find myself in total agreement with the reasoning of Lord Neuberger on this point in ZA (Nigeria) which I gratefully acknowledge. First, in principle there is no conflict between Onibiyo and rule 353 on the one hand and the statutory scheme in Part 5 of the 2002 Act on the other. I note that when Onibiyo was decided in 1996 there was in force a system of certification under paragraph 5 of Schedule 2 to the 1993 Act which established special appeal procedures for claims without foundation. With respect to Lord Hope, I do not consider that there is any incompatibility between what he described as the two systems for excluding repeat claims. They operate at different stages of the response to a purported renewed claim. BA (Nigeria) establishes that, as the statutory provisions then stood, where the Secretary of State receives further submissions on which he makes an immigration decision within section 82 there will, in the absence of certification, be an in country right of appeal. It decides that in those circumstances it is not then open to the Secretary of State to rely on the Onibiyo reasoning or rule 353 in order to contend that the submissions did not amount to a claim and that, as a result, there is no need for a decision and no entitlement to a statutory appeal. It is entirely understandable that in such a case there is no room for the operation of rule 353. Onibiyo and rule 353, by contrast, address a prior issue, namely whether there is a claim which requires a decision at all. Secondly, I do not consider that the effect of the machinery introduced by Part 5 of the 2002 Act, in particular the powers of certification under sections 94 and 96, is to render the Onibiyo reasoning and rule 353 redundant. As Lord Neuberger observed in ZA (Nigeria) (at para 24), the issue should not be decided simply by seeing whether sections 94 and 96 can be interpreted so as to cover every application falling within rule 353, as it is equally valid to consider whether they can be construed consistently with rule 353 having an independent effect. In my view, rule 353 continues to perform a useful role notwithstanding the machinery introduced by Part 5 of the 2002 Act. (1) Section 94 applies to claims which are clearly unfounded, whether they are original claims or purported renewed claims. By contrast, rule 353 applies only to supplemental submissions which purport to be claims. (2) The effect of certification under section 94 is to limit an appeal to an out of country appeal. Certification under section 96 has the effect that an appeal under section 82(1) may not be brought. The effect of rule 353 is that no right of appeal ever arises. (3) As indicated above, where it applies rule 353 operates at a prior stage to section 94. In the case of a purported renewed claim there is a legitimate preliminary issue as to whether it constitutes a claim requiring a decision on the merits at all. Rule 353 addresses that issue. Section 94, on the other hand, proceeds on the basis that there is a valid claim which requires consideration on the merits and a decision. It creates a machinery of certification of the claim as clearly unfounded so as to prevent an in country appeal. (4) The fact that section 94 applies to both original and purported renewed claims does not deprive rule 353 of its utility in relation to the latter category. In appropriate cases, rule 353 relieves the Secretary of State from taking a decision on the merits of the application and refusing it. It operates by enabling him to reject the submissions as not constituting a claim requiring decision. Section 94, however, comes into play only when the Secretary of State has considered a claim on its merits and refused it. At that stage, certification operates to block a right to an in country appeal which would otherwise arise. Thus rule 353 can be operated as a sort of gatekeeper by the Secretary of State to prevent further submissions amounting to, or being treated as, a claim, thereby not getting into Part 5 territory at all. (ZA (Nigeria) per Lord Neuberger MR at para 26) With respect to Mr Fordham, it is not the case that this interposing function arose only because of the additional requirement of an immigration decision in the pre 2014 statutory list in section 82(1) of the 2002 Act. On the contrary, it is founded on the need to identify what constitutes a claim for this purpose. (5) Section 96(1) addresses a different aspect of renewed claims from rule 353. Section 96(1) applies where a person seeks to rely on a matter that could have been raised in an earlier appeal against an immigration decision and the Secretary of State or the immigration officer considers that there is no satisfactory reason for the failure to do so. It is, in a sense, the converse of the situation addressed by rule 353. (6) Part 5 as originally enacted included a subsection 96(3) which provided: (3) A person may not rely on any ground in an appeal under section 82(1) if the Secretary of State or an immigration officer certifies that the ground was considered in another appeal under that section brought by that person. This provision was much closer to rule 353 than is section 96(1) as both rule 353 and section 96(3) address similar situations. However, section 96(3) did not achieve its effect by denying the existence of a claim requiring a decision on the merits, but by requiring such a renewed claim to be treated as a fresh claim and enabling the Secretary of State to block an appeal on the particular ground which had been raised previously. In any event, section 96(3) is no longer in force, having been repealed by section 30 of the Asylum and Immigration (Treatment of Claimants, etc) Act 2004 with effect from 1 October 2004. Thirdly, there are features of the regulatory scheme which are difficult to reconcile with an intention on the part of Parliament that provisions in Part 5 of the 2002 Act should provide a comprehensive and exclusive code for dealing with repeat claims and that rule 353 should no longer be effective. (1) When the 2002 Act was enacted there was no attempt to repeal or amend rule 346, the predecessor to rule 353. (2) Parliament has approved subsequent amendments to the Immigration Rules which have not included the deletion of rule 353 which remains in force. (3) Section 53 of the Borders, Citizenship and Immigration Act 2009 (the 2009 Act) amended section 31A of the Senior Courts Act 1981 to permit transfer from the High Court to the Upper Tribunal of judicial review applications where: the application calls into question a decision of the Secretary of State not to treat submissions as an asylum claim or a human rights claim wholly or partly on the basis that they are not significantly different from material that has previously been considered As Lord Neuberger observed in ZA (Nigeria) (at para 19), here Parliament has plainly legislated on the basis that rule 353 is still in force and section 53 of the 2009 Act would have been positively meaningless if rule 353 had no further function. (4) Following the amendment of the 2002 Act by the 2014 Act, rule 353 was amended so as to ensure that it applies to human rights claims and protection claims (HC 1025). Once again, this is inconsistent with the suggestion that rule 353 had become ineffective. These features strongly suggest that rule 353 continues to perform an important function. Fourthly, I am persuaded that the broad reading of BA (Nigeria) for which the appellant contends is inconsistent with ZT (Kosovo) where the House of Lords held (Lord Hope dissenting) that the Secretary of State had erred in applying section 94(2) of the 2002 Act rather than rule 353 in considering the applicants further submissions. By contrast, there is no difficulty in reconciling the two decisions if the ratio decidendi of BA (Nigeria) is merely that rule 353 has no part to play where there is an appealable immigration decision. If the Supreme Court did decide in BA (Nigeria) that rule 353 is entirely redundant following the introduction of Part 5 of the 2002 Act, it must have intended to overrule or to depart from the decision of the House of Lords some nine months earlier in ZT (Kosovo). However, BA (Nigeria) contains no express statement to that effect. Moreover, while an earlier decision may be impliedly overruled, it is extremely improbable that this was the intention here, for reasons summarised by Lord Neuberger in ZA (Nigeria) as follows (at para 53): I have great difficulty with the notion that the later case relied on by the claimants overruled the earlier case. (i) Both decisions relate to a much litigated issue, and the earlier decision was given less than a year before the later decision; (ii) the point at issue was directly addressed and decided in all five reasoned judgments in the earlier decision, and even the reasoning of the dissenter would have to be treated as overruled; (iii) the earlier decision is expressly referred to three times in the leading judgment, and once in the only other reasoned judgment, in the later decision without apparent disapproval, and both judgments were given by judges involved in the earlier decision; (iv) the actual outcome in the later decision can perfectly easily be reconciled with the earlier decision, namely on the basis that the later decision is limited to further submissions which have been treated as a fresh claim; (v) this more limited interpretation of the later decision is consistent with the Court of Appeals reasoning and conclusion in that case, which was specifically approved by the Supreme Court; (vi) this more limited interpretation of the later decision is also consistent with a recent statute, whereas the wider interpretation, which would involve overruling the earlier decision, is not. For these reasons I agree with the Court of Appeal in ZA (Nigeria) that what is said in BA (Nigeria) is limited to cases where there is an appealable decision. As Lord Neuberger explained: Once there is such a decision, the complete code contained in the legislative scheme applies and rule 353 has no part to play. However, as decided in ZT (Kosovo) , rule 353 still has a part to play: the Secretary of State can decide that the further submissions are not a fresh claim, in which case one does not enter the territory governed by the complete code of the legislative scheme. (ZA (Nigeria) at para 59) For these reasons, I consider that Mr Fordhams primary case is not made out. The 2014 amendments to the 2002 Act Part 5 of the 2002 Act was substantially amended by the 2014 Act which restructured rights of appeal. The most relevant provisions as amended are set out at paras 19 to 23 above. Section 82 no longer restricts a right of appeal to an appeal against an immigration decision as formerly listed in section 82(2). In particular, there is no longer any right of appeal in respect of a decision to make a deportation order or a refusal to revoke such an order per se. Instead a person may appeal where the Secretary of State has decided to refuse a protection claim or a human rights claim made by that person or has decided to revoke that persons protection status. Post 2014 authority Before drawing conclusions as to the impact of the 2014 amendments to the 2002 Act on the present proceedings, it is convenient to consider the more recent decisions on this point. In Waqar v Secretary of State for the Home Department [2015] UKUT 169 (IAC) the appellant contended that the Secretary of States decision not to treat his further submissions as amounting to a fresh claim for the purposes of rule 353 amounted to a refusal of a human rights claim under section 82 as amended. The appellant maintained that rule 353 is now subsumed within the statutory provisions and that a right of appeal under section 82 as amended arises in all refused human rights claims, subject only to certification under sections 94 or 96. It was submitted that there is no longer a requirement for a categorisation step because the statutory framework now provides all necessary safeguards against repetitious or unmeritorious claims. In rejecting the submission, the Upper Tribunal (UTJ Coker, UTJ Kebede) held (at paras 18, 19, 20) that BA (Nigeria) is not authority for the proposition that submissions amount to a claim and that the response to those submissions is a decision within the meaning of Part 5. Submissions that purport to be a human rights claim do not without more trigger a right of appeal. There has to be an intermediate categorisation in which rule 353 provides the mechanism to determine whether they amount to a claim. If they do not, the decision is not a decision to refuse a human rights claim. In R (MG) v First tier Tribunal (Immigration and Asylum Chamber) [2016] UKUT 283 (IAC) the applicant had made a claim for asylum which had been rejected and his appeal had been dismissed. Further submissions on his behalf were rejected by the Secretary of State who maintained the earlier decision that he did not qualify for asylum and concluded that the further representations were not a fresh claim. The applicant lodged a notice of appeal with the First tier Tribunal which rejected it because no notice of an appealable decision had been issued. On a challenge to that decision by way of judicial review it was submitted, without taking issue with the decision of the Upper Tribunal in Waqar, that as a result of Parliaments decision to grant a right of appeal from a refusal of a protection claim the judge in the First tier Tribunal has jurisdiction to decide whether there had been a decision to refuse a protection claim. The Upper Tribunal (Blake J and UTJ Grubb) rejected the submission. In our view, notwithstanding the significant change in section 82 from a right of appeal against an immigration decision on a protection ground to a right of appeal against a protection decision itself, Parliament can be presumed to have legislated against the background of satisfaction with the previous law as declared in ZA (Nigeria). There is no indication in the amendments made, that it was intended to transfer responsibility for the categorisation decision of whether a claim is a fresh claim to the FtT. Indeed, the general purpose of the 2014 amendments was to reduce the appellate jurisdiction of the FtT. (at para 14) They further held that an assessment of whether a protection claim is a fresh claim is not a question of jurisdictional fact but a matter of assessment and evaluation for the Secretary of State subject to supervision by judicial review. Furthermore, when the Secretary of State concludes that the claim before her is not a fresh claim she does not refuse a protection claim. In R (Sharif Hussein) v First Tier Tribunal (para 353: present scope and effect) IJR [2016] UKUT 409 (IAC); [2017] Imm AR 84 the applicants appeal against a deportation order had been dismissed. He made further submissions in support of a request to revoke the order which were rejected by the Secretary of State who also concluded that they did not amount to a fresh claim within rule 353. The First tier Tribunal held that there was no exercisable right of appeal. The issue in the judicial review which followed was to what extent, if at all, the Secretary of State could utilise rule 353 to preclude the applicant from appealing to the First tier Tribunal under section 82. The applicant, first, relied on the judgment of Lord Hope in BA (Nigeria) in support of the proposition that rule 353 had no part to play following the introduction of Part 5 of the 2002 Act. Secondly, he submitted that the effect of the 2014 amendments to the 2002 Act was that rule 353 no longer applied to the categorisation issue as to whether submissions were a claim within section 82 and was now relevant only to certification issues. The Upper Tribunal (Dove J and Peter Lane UTJ) rejected both submissions. It was bound by ZA (Nigeria) to reject the first submission. With regard to the second submission it considered that despite the changes made by the 2014 Act the concept of a claim remained central to the new section 82. It also noted that if Parliament had intended to limit rule 353 to certification decisions, it would have been amended to make that clear. In fact, the amendment to rule 353 made following the 2014 Act to ensure that it applies to human rights claims and protection claims demonstrated that it was intended to have continuing effect. These matters have been considered recently by the Court of Appeal (Arden and Sales LJJ) in Secretary of State for the Home Department v VM (Jamaica) [2017] EWCA Civ 225; [2017] Imm AR 1237, a judgment delivered shortly before that of the Court of Appeal in the present case. Sales LJ described the relationship of section 82(1) and rule 353 in the clearest terms (at para 28): Section 82(1) and paragraph 353 of the Immigration Rules operate in combination. If the Secretary of State decides that new representations in relation to some earlier decision (whether of her own or by the tribunal) which is now final and closed do not amount to a fresh claim under paragraph 353 she will simply reject the representations as matters which do not affect the position of the applicant within the regime of immigration law. In that sort of case, on the assessment of the Secretary of State the representations do not amount to a claim by the applicant, so her decision is not a decision to refuse a human rights claim (or any other sort of claim) within the scope of section 82(1). No right of appeal arises in relation to her decision that the new representations do not amount to a fresh claim. Such a decision can only be challenged by way of judicial review. On this point I agree with the decision of the UT in Waqar v Secretary of State for the Home Department (Statutory Appeals/paragraph 353) [2015] UKUT 169 (IAC) at paras 19 20. The effect of the 2014 amendments The second principal submission on behalf of the appellant is that the amendments made in 2014 to Part 5 of the 2002 Act have effected a fundamental change in the operation of the statutory scheme with the result that, whatever may have been the position after BA (Nigeria), rule 353 no longer applies and accordingly no longer performs a gatekeeper function. First, on behalf of the appellant, Mr Fordham points to the fact that section 82, as amended, now confers a right of appeal where the Secretary of State has decided to refuse a human rights claim (section 82(1)(b)). Human rights claim is defined by section 113(1) for the purposes of Part 5 unless a contrary intention appears. Mr Fordham submits that this is striking because the question of the Part 5 meaning of human rights claim is the same question that previously arose for decision in the Supreme Court in BA (Nigeria) which established that those words, as they appear in Part 5 of the 2002 Act, are to be interpreted without reference to rule 353. Thus, he submits, a second or subsequent human rights claim is a human rights claim for the purpose of those statutory provisions regardless of whether the Secretary of State accepts or refuses to accept that the claim is a fresh claim within rule 353. I am unable to accept this submission. In BA (Nigeria) the Supreme Court considered that there was, in each of the cases, a human rights claim within section 92(4)(a) and, therefore, an appeal would be an in country right of appeal, subject to the possibility of certification which did not arise in that case. However, the reason there was an entitlement to appeal there was because the human rights claims had resulted, in each case, in a refusal to revoke a deportation order which was a qualifying immigration decision under section 82(2)(k). It was this which excluded the operation of rule 353. Consequently, the present issue is not the same issue that previously arose for consideration in BA (Nigeria). The issue in the present case, as previously explained, is the prior question of whether there is a claim at all. For the same reason, it is not the case that rejection of Mr Fordhams submission results in the same words bearing different meanings in different sections within Part 5 of the 2002 Act. Secondly, Mr Fordham relies on the fact that the 2014 amendments remove the former requirement of an immigration decision to which the human rights claim and its rejection needed to have a nexus. He submits that the effect of the simplified scheme is that any submission that removal would breach a relevant obligation will amount to a human rights or protection claim, the rejection of which will give rise to a right of appeal. Once again, I am unable to accept this submission. The appellant is not assisted by the fact that under the amended section 82 there is no longer a requirement to establish an immigration decision within the list previously set out in section 82(2). In fact, the contrary is the case. A decision to refuse to revoke a deportation order was formerly an immigration decision under section 82(2)(k) and therefore gave rise to an in country right of appeal, subject to the possibility of certification, but this is no longer the case. The 2014 amendments limit immigration appeals to circumstances in which there has been a refusal of a protection claim or a human rights claim, or where protection status has been revoked. (For present purposes I will concentrate on human rights claims.) However, the structure and operation of section 82 remain unchanged. Under the amended section 82(1) a person may appeal to the tribunal where the Secretary of State has decided to refuse a human rights claim made by him, but this does not relieve that person of the burden of establishing that the refusal was in response to a valid claim. The definitions in Part 5 do not address this question and the answer will depend on the application of the Onibiyo line of authority. Onibiyo, Cakabay, ZA (Nigeria) and VM (Jamaica) establish that there will only be a human rights claim to be determined if further submissions are considered to amount to a fresh claim. Rule 353, in turn, is directed at the manner in which a court should approach that prior question. Under the post 2014 provisions it remains the case that if there is no claim, there is no appealable decision. Thirdly, Mr Fordham makes a series of submissions relating to the intention of Parliament in enacting the 2014 amendments. In his submission, Parliament used straightforward language for the purposes of the section 82 statutory right of appeal. If, he submits, it had been the intention to maintain the structure for which the Secretary of State contends, Parliament would be expected to make that clear, but the contrary is the case. Parliament did not introduce Sir Thomas Binghams acid test into the definition of asylum claim in Part 5 of the 2002 Act. Parliament did not provide that claim was to be construed in accordance with the Immigration Rules, as it did in the case of humanitarian protection in section 82(2)(d) of the 2002 Act introduced by amendment in 2014. It did not say that claim involved an act by the Secretary of State, giving the Secretary of State a gatekeeper function as to what constitutes a claim. It did not impose an exclusion by reference to the Immigration Rules in any statutory provision which is in force. Here Mr Fordham draws attention to the fact that section 12 of the Immigration, Asylum and Nationality Act 2006 (the 2006 Act) has never been brought into force. It provides that human rights claim does not include a claim which, having regard to a former claim, falls to be disregarded for the purposes of this Part in accordance with immigration rules. Parliament did not say that the Part 5 right of appeal is subject to exceptions or limitations specified in the Immigration Rules. Rather section 82(3) states that the right of appeal under subsection (1) is subject to the exceptions and limitations specified in this Part. Mr Fordham submits that such clarification might have been expected in the light of BA (Nigeria). The difficulty with these submissions is that they fail to take account of the principle of informed interpretation and the judicial authorities on Part 5 as they stood at the date of the 2014 amendments. Parliament is normally presumed to legislate in the knowledge of and having regard to relevant judicial decisions. (See, generally, Bennion on Statutory Interpretation, 7th ed, (2017) section 24.6.) In the present context, the Court of Appeal in ZA (Nigeria) had provided an authoritative explanation of the effect of BA (Nigeria). As Sir James Eadie put it in his submissions, Parliament can therefore be assumed to have legislated in the light of a consistent line of authority which established that a purported human rights claim that did not meet the threshold of a fresh claim under rule 353 was not a claim at all. Had Parliament intended to depart from this approach, it would surely have made express provision to that effect. On the contrary, there is nothing in the amendments made in 2014 which supports the view that Parliament intended to open the door so as to enable repeated claims raising human rights issues to generate multiple appeals. (See, in this regard, Hussein per Dove J and UTJ Lane at para 42.) I should, for the sake of completeness, address two further matters arising from Mr Fordhams submissions in this regard. First, it would not be appropriate to speculate as to why section 12(3) of the 2006 Act has not been brought into force but, in any event, in seeking to ascertain the intention of Parliament the court must have regard to the legislation as enacted. (See ZA (Nigeria) per Lord Neuberger MR at para 57.) Secondly, the explanatory notes to the 2006 Act state that the amendments to the definition of human rights claim and asylum claim in section 113 of the 2002 Act were made to clarify that further submissions which follow the refusal of an asylum or human rights claim but which do not amount to a fresh claim will not carry a further right of appeal. Conclusion For these reasons I consider that the Court of Appeal was correct to conclude that a human rights claim in section 82(1)(b) of the 2002 Act as amended means an original human rights claim or a fresh human rights claim within rule 353. More generally, where a person has already had a protection claim or a human rights claim refused and there is no pending appeal, further submissions which rely on protection or human rights grounds must first be accepted by the Secretary of State as a fresh claim in accordance with rule 353 of the Immigration Rules if a decision in response to those representations is to attract a right of appeal under section 82 of the 2002 Act. For these reasons I would dismiss the appeal. Finally, I draw attention to two recent developments. First, in July 2018 Justice published a report on Immigration and Asylum Appeals by a Working Party chaired by Professor Sir Ross Cranston which highlights the pressures facing the current appeals system. Secondly, since the oral hearing on this appeal the Law Commission has published a consultation paper on the Immigration Rules which seeks to identify the underlying causes of their complexity, and to identify principles under which they can be redrafted to make them simpler and more accessible (Law Commission: Simplification of the Immigration Rules; CP 242, 21 January 2019). The Law Commissions initiative is timely and welcome. As will be apparent from this judgment, the structure of both primary and secondary legislation in this field has reached such a degree of complexity that there is an urgent need to make the law and procedure clear and comprehensible.
UK-Abs
The appellant is a Jamaican national who arrived in the United Kingdom on 9 October 1998 when he was seven years old. He has several criminal convictions, including two robberies that triggered deportation proceedings. On 17 July 2013, a deportation order was issued. He appealed to the First tier Tribunal (Immigration and Asylum Chamber) (FTT) against his proposed deportation, based on a claimed right to respect for his private life in the UK. It was accepted at the time that there was no family life in play. His appeal was dismissed, and he was refused permission to appeal to the Upper Tribunal (Immigration and Asylum Chamber) (UT). He exhausted his rights of appeal on 1 May 2015. On 13 May 2015, the appellants previous solicitors made further submissions to the Secretary of State, focusing on the fact that his partner at the time was pregnant. The submissions did not explicitly request that the deportation order be revoked, nor did they refer to human rights. The Secretary of State treated the representations as an application to revoke the deportation order on the basis that it would breach Article 8 of the ECHR. In a letter dated 23 June 2015, the Secretary of State concluded that deportation would not breach Article 8, refused to revoke the deportation order and decided that the submissions did not amount to a fresh human rights claim under paragraph 353 of the Immigration Rules (rule 353). The appellants son was born on 26 July 2015. The appellant made further submissions to the Secretary of State on 28 July 2015 regarding the birth of his son and providing documentation from the hospital. In a letter dated 31 July 2015, the Secretary of State again concluded that deportation would not breach Article 8 and that the further submissions did not amount to a fresh claim. The appellant appealed against the decision of 31 July 2015 but the FTT declined jurisdiction on the basis that there was no right of appeal against the decision. The UT dismissed his application for judicial review of the Secretary of States decision that the further representations were not a fresh claim and the FTTs decision that he had no right of appeal. On 4 May 2017, the Court of Appeal dismissed his appeal. The Supreme Court dismisses the appeal. Lord Lloyd Jones gives the sole judgment with which the other Justices agree. The question in this appeal is: where a person has already had a human rights claim refused and there is no pending appeal, do further submissions that rely on human rights grounds have to be accepted by the Secretary of State as a fresh claim in accordance with rule 353 if a decision in response to those representations is to attract a right of appeal under section 82 of the Nationality, Immigration and Asylum Act 2002 (the 2002 Act) [1]? The appellant raises two principal arguments for why they do not. 1. BA (Nigeria) The appellant submits that the line of authority beginning with R v Secretary of State for the Home Department Ex p Onibiyo [1996] QB 768, which established that it was for the Secretary of State to decide whether further submissions constituted a fresh claim giving rise to a right of appeal, did not survive the Supreme Courts decision in BA (Nigeria) v Secretary of State for the Home Department [2009] UKSC 7 [26]. The Court disagrees as BA (Nigeria) was limited to cases where the further submissions have been rejected and there was an appealable decision [50]. Its reasons are as follows: (1) BA (Nigeria) established that, where the Secretary of State receives further submissions on which he makes an immigration decision within section 82 of the 2002 Act, in the absence of certification there will be an in country right of appeal. Onibiyo and rule 353, by contrast, address a prior issue of whether there is a claim requiring a decision at all [46]. (2) The 2002 Act, particularly the powers of certification under sections 94 and 96, does not render Onibiyo and rule 353 redundant. The effect of rule 353 is that no right of appeal ever arises, rather than only to limit to an out of country appeal, and it operates at a prior stage to section 94. Section 96(1) addresses a different aspect of renewed claims, as it applies where a person relies on a matter that could have been raised in an earlier appeal but has no satisfactory reason for not doing so [47]. (3) Parliament did not intend the 2002 Act to provide a comprehensive code for dealing with repeat claims or for rule 353 no longer to be effective. There was no attempt to repeal rule 353s predecessor and Parliament has approved subsequent amendments to the Immigration Rules that did not delete rule 353. Moreover, following the amendment of the 2002 Act in 2014, rule 353 was amended to ensure it applies to human rights claims and protection claims, which suggests it was still effective [48]. (4) The appellants broad reading of BA (Nigeria) is inconsistent with ZT (Kosovo) v Secretary of State for the Home Department [2009] UKHL 6, in which the House of Lords held that the Secretary of State had erred in applying section 94(2) of the 2002 Act rather than rule 353 in considering further submissions. BA (Nigeria) merely decided that rule 353 has no part to play once there is an appealable immigration decision. It contains no express statement that it intends to overrule or depart from ZT (Kosovo), and it is extremely improbable that that was the intention [49]. 2. 2014 Amendments to the 2002 Act The appellant submits that the amendments to the 2002 Act effected by the Immigration Act 2014 fundamentally changed the operation of the statutory scheme, with the result that rule 353 no longer applies [58]. The Court rejects these submissions for the following reasons: (1) Referring to rule 353 to determine if subsequent submissions are a human rights claim does not result in the same words bearing different meanings. In BA (Nigeria) there was in each case a human rights claim, but there was a right of appeal against an immigration decision, so the interpretation of human rights claim did not need to refer to rule 353. In this case, the issue is the prior question of whether there is a claim at all [59]. (2) The 2014 amendments limit appeals to where there has been a refusal of a protection claim or a human rights claim, or the revocation of protection status. The structure and operation of section 82 remains unchanged. The amended section 82 does not relieve a person of the burden of establishing that the Secretary of State has refused a valid human rights claim [60]. (3) Parliament is presumed to legislate in the knowledge of and having regard to relevant judicial decisions. In the present context, the Court of Appeal in ZA (Nigeria) v Secretary of State for the Home Department [2010] EWCA Civ 926 had provided an authoritative explanation of the effect of BA (Nigeria). Parliament is therefore assumed to have legislated in light of a consistent line of authority establishing that a purported human rights claim short of the threshold of a fresh claim under rule 353 was not a claim at all. There is nothing in the 2014 amendments to suggest Parliament intended to enable repeated claims raising human rights issues to generate multiple appeals [62]. Therefore, human rights claim in section 82 of the amended 2002 Act means an original human rights claim or a fresh human rights claim within rule 353. As a result, the Secretary of States response to the appellants further submissions did not attract a right of appeal [64].
Under the Mental Health Act 1983 (the MHA), the Crown Court may impose a hospital order together with a restriction order upon a mentally disordered offender, if this is considered necessary to protect the public from serious harm. This means that the patient is liable to indefinite detention in hospital for medical treatment and can only be discharged by the Secretary of State for Justice or the First-tier Tribunal (the FtT). Such a discharge can be conditional, which means that the patient remains subject to recall to hospital, as well as to whatever conditions are imposed by the Secretary of State or the FtT. The question in this case is whether the conditions imposed can, if the patient consents, be such as would amount to a deprivation of liberty within the meaning of article 5 of the European Convention on Human Rights (ECHR). The patient in this case is anxious to get out of hospital and is willing to consent to a very restrictive regime in the community in order that this can happen. The Secretary of State argues that this is not legally permissible. The factual background The patient was born on 11 July 1983 and so is now aged 35. He has a diagnosis of mild learning disabilities, autistic spectrum disorder, and pathological fire setting. On 27 April 2001, when aged 17, he was convicted of arson, being reckless as to whether life would be endangered, and arson. He was made the subject of a hospital order under section 37 of the MHA, together with a restriction order under section 41. Apart from a brief period from December 2006 to April 2007, when he was conditionally discharged, he has been detained in hospital ever since. He is considered to represent a serious risk of fire setting and of behaving in a sexually inappropriate way towards women. His current application to the FtT for a conditional discharge was heard on 15 May 2015. His responsible clinician and the treating clinical team opposed his discharge but considered that he would benefit from a change of environment and a transfer to another low secure forensic unit. Two external experts considered that he could be safely managed in the community under a conditional discharge, provided that a suitable care plan was in place. There was no plan at that stage, but it was envisaged that a suitable plan would involve a level of restriction, supervision and monitoring which would amount to a deprivation of liberty within the meaning of article 5 of the ECHR, as explained by this court in Surrey County Council v P; Cheshire West and Chester Council v P [2014] UKSC 19; [2014] AC 896 (Cheshire West). In short, he would be required to live at a particular place, which he would not be free to leave, and would not be allowed out without an escort. He was prepared to consent to such a placement and it was agreed that he had the capacity to do so. No such placement had yet been identified, and so it was not possible for the FtT to discharge him then. But the FtT was invited to rule upon whether, as a matter of principle, it would be lawful to discharge him on condition that he complied with a care plan which would amount to a deprivation of liberty. The FtT ruled that it had no such power. In doing so, it followed the decision of the Court of Appeal in B v Secretary of State for Justice [2011] EWCA Civ 1608; [2012] 1 WLR 2043 that the FtT had no power to impose conditions which in themselves amounted to a deprivation of liberty. It rejected an argument that this could be circumvented by a condition of compliance with a care plan, because the conditions in the care plan would be imposed by the authority which devised and implemented the care plan, and not by the hospital or the FtT. It also found that any consent which the patient purported to give would not be a genuine, properly considered and reliable consent, given his propensity to change his mind and that the only alternative was to remain in hospital. It made no decision as to whether such a discharge would be appropriate in his case. On the patients appeal to the Upper Tribunal, Charles J decided that there was power to impose a condition of compliance with a care package, provided that the patient had the capacity to consent to it and did consent: [2015] UKUT 644 (AAC); [2016] MHLR 198. On the Secretary of States appeal to the Court of Appeal, the court held that it was bound by the ratio of B, which was clear: there was no power to impose conditions which amounted to a deprivation of liberty, even with the consent of a patient with the capacity to do so, and the appeal was allowed: [2017] EWCA Civ 194; [2017] 1 WLR 4681. The patient now appeals to this court. The legal background Restriction orders have their origin in the Mental Health Act 1959, which is the foundation of the modern mental health law, now contained in the 1983 Act (as later amended, principally by the Mental Health Act 2007). Under an ordinary hospital order, the patient was admitted to hospital for treatment for a defined period, which could be renewed from time to time by his responsible medical officer (now his responsible clinician). He could be discharged by his responsible medical officer, the hospital managers or a Mental Health Review Tribunal (now the FtT). In other words, the length of time he spent in hospital was in the hands of the medical authorities or the tribunal. There was no power to recall him to hospital after discharge, although he could be admitted afresh if the grounds existed. Under what is now called a restriction order, on the other hand, the patients detention lasted indefinitely, and the powers of the responsible medical officer to discharge him or even to grant him leave of absence, could only be exercised with the consent of the Home Secretary (now the Secretary of State for Justice). The Home Secretary had an independent power to grant a discharge, which could be either absolute or conditional; if conditional, the patient could be recalled to hospital at any time. Those powers survive unchanged into what is now section 42(2) and (3) of the MHA 1983. It is not express, but must be implicit, that the Secretary of State has power to vary the conditions from time to time. Other than that, neither the 1959 Act or its successor the 1983 Act said anything about the kinds of condition which might be imposed and they provided no sanctions for their breach, other than the possibility of recall to hospital. Under the 1959 Act, the Mental Health Review Tribunal could review the case periodically, but could only make recommendations to the Home Secretary and had no power itself to grant a discharge. Thus, from the states point of view, a restriction order combined the advantages of a hospital order with the advantages of indefinite preventive detention and a power of instant recall to hospital after a conditional discharge. All of this was enacted before the United Kingdom recognised the right of individual petition to the European Court of Human Rights in 1966. In X v United Kingdom (1981) 4 EHRR 181, a conditionally discharged restricted patient complained that he had been recalled to hospital after three years in the community, without any grounds having to be shown and without immediate recourse to a tribunal which could direct his release. The court held that, under article 5(1)(e) of the ECHR, he could only be detained as a person of unsound mind if the criteria laid down in Winterwerp v The Netherlands (1979) 2 EHRR 387 were fulfilled: he must reliably be shown to be suffering from a true mental disorder, established on the basis of objective medical expertise; the disorder must be of a kind or degree warranting compulsory confinement; and the validity of continued confinement would depend upon the persistence of such a disorder. In Xs case, the court saw no reason to doubt the medical opinion that these criteria did exist when he was recalled to hospital. On the other hand, the court did find a breach of article 5(4), which requires that every person deprived of his liberty by detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful. The result of this (and other developments) was that the 1959 Act was amended in 1982 and then consolidated in the MHA 1983. Restricted patients detained in hospital were given the right to apply to a Mental Health Review Tribunal within the same periods that ordinary hospital order patients could apply: that is, once within the second six months after detention and once within every 12 months thereafter (section 70). A conditionally discharged patient could apply once within the second 12 months after his discharge and within every two-year period thereafter (section 75(2)). If a conditionally discharged patient is recalled to hospital, his case must be referred to a tribunal within one month of the recall (section 75(1)(a)). He himself can also apply within the same periods after his recall as he could after his initial detention (section 75(1)(b)). Allied to that, the tribunal was itself given the power to discharge a restricted patient, either absolutely or conditionally. Originally, the tribunal had to be satisfied that the grounds for detention did not exist; but this was amended, following a declaration of incompatibility, by the Mental Health Act 1983 (Remedial) Order 2001 (SI 2001/3712). As the MHA now stands, the patient must be discharged if the tribunal is not satisfied that all the grounds for his detention continue to exist: ie that he is suffering from mental disorder or from mental disorder of a nature or degree which makes it appropriate for him to be liable to be detained in a hospital for medical treatment; or that it is necessary for the health or safety of the patient or for the protection of other persons that he should continue to receive such treatment; or that appropriate medical treatment is available for him (section 72(1)(b)(i), (ii) and (iia)). If the tribunal is (a) not so satisfied and (b) is satisfied that it is not appropriate for the patient to remain liable to be recalled to hospital for medical treatment, it must direct his absolute discharge (section 73(1)). Where (a) applies but (b) does not, the tribunal must direct his conditional discharge (section 73(2)). Where a tribunal directs a conditional discharge, the Secretary of State may recall the patient to hospital at any time under section 42(3) (section 73(4)(a)). The patient must also comply with the conditions imposed by the tribunal at the time or by the Secretary of State at any later time (section 73(4)(b)). The Secretary of State may vary the conditions set either by the tribunal or by himself at any time (section 73(5)). Thus the Secretary of State is in complete charge of what the conditions are and whether the patient should be recalled to hospital. There are no sanctions for breach of the conditions other than recall to hospital, which may be at any time. No criteria for recall are laid down in the MHA. However, the logic of X v United Kingdom is that at least the Winterwerp criteria must be satisfied; and in any event, the tribunal will have to discharge the patient once more if not satisfied that the MHA criteria are met (and see R (MM) v Secretary of State for the Home Department [2007] EWCA Civ 687, (2007) 98 BMLR 130, where it was agreed that breach of a condition was not a free-standing ground for recall and the Secretary of State must form a view of whether the statutory criteria are met). However, the MHA says nothing, and has never said anything, about what the conditions may be. In practice, the Secretary of State will usually impose conditions of residence at a stated address and for both clinical and social supervision. The social supervisor provides practical support, for example in accessing the aftercare services to which the patient is entitled under section 117 of the MHA, and is expected to have regular meetings with the patient (Ministry of Justice, Guidance for social supervisors, 18 March 2009). The clinical supervisor is responsible for the regular assessment of the patients mental health and monitoring his medication (Ministry of Justice, Guidance for clinical supervisors, 18 March 2009). The Ministry expects reports from both supervisors after the first month and every three months thereafter. It is usually a condition that the patient shall comply with treatment as directed by the clinical supervisor (para 23 of the Guidance for clinical supervisors). However, the power to impose treatment without consent upon hospital patients, by force if need be, contained in section 63 of the MHA, does not apply to conditionally discharged restricted patients (section 56(3)(c), as substituted by section 34(2) of the 2007 Act). A patient is entitled to refuse treatment unless he lacks the capacity to make the decision, in which case the Mental Capacity Act 2005 (MCA) may permit treatment which is in his best interests, but will only permit coercion in order to impose treatment in very limited circumstances (MCA, sections 5 and 6). Hence, in R (SH) v Mental Health Review Tribunal [2007] EWHC 884 (Admin); (2007) 10 CCLR 306, Holman J rejected a challenge to the legality of a condition to comply with treatment as being contrary both to the common law right to choose what medical treatment to have and to the right to respect for private life in article 8 of the ECHR. Although the condition said shall comply, the patient remained free to choose whether or not to have the treatment at each and every time when he was required to do so. That refusal would not, by itself, necessarily lead to his recall to hospital. Nevertheless, the Secretary of States policy on recall states that failure to comply with medication will usually trigger consideration of whether the patient should be recalled, as would non-compliance with other conditions. Whether the patient is in fact recalled depends on a range of factors (Ministry of Justice, The recall of conditionally discharged restricted patients, 4 February 2009, paras 5 and 7). The arguments The purpose of conditional discharge is to enable the patient to make a safe transition from the more institutional setting of a hospital to a less institutional setting in the community. Transition through progressively less secure hospital conditions before discharge into the community is common and conditional discharge is part of the same continuum. As Lord Bingham put it in R (H) v Secretary of State for the Home Department [2003] UKHL 59; [2004] 2 AC 253, at para 26: the conditional discharge regime, properly used, is of great benefit to patients and the public and conducive to the Convention object of restricting the curtailment of personal liberty. If there is any possibility of treating and supervising a patient in the community, the imposition of conditions permits that possibility to be explored and, it may be, tried. So why, in an appropriate case, asks Mr David Lock QC on behalf of the patient, should that purpose not be served by a transition into a community setting which is different from a hospital but nevertheless amounts to a deprivation of liberty, because the patient is under continuous supervision and control and not free to leave? If this condition cannot be imposed, the patient will stay in hospital longer than he otherwise would have done and the MHAs rehabilitative purpose will be frustrated. He argues that there is nothing in either the common law interpretation of section 73(2) (or for that matter section 42(2)) or in article 5 of the ECHR to prevent the imposition of such a condition where the patient consents to it and has the capacity so to do. As to the common law, the interpretation of section 73(2) (and section 42(2)) may depend, in part at least, on what is meant by discharge. Does it mean, as the patient argues, discharge from detention in the hospital where he is currently detained or, as the Secretary of State argues, discharge from the liability to be detained? If it means the latter, then a condition of continued detention, albeit not in a hospital, would not amount to a discharge. If it means the former, then that obstacle at least is removed. In Secretary of State for the Home Department v Mental Health Review Tribunal for Mersey Regional Health Authority [1986] 1 WLR 1170, Mann J held that it meant discharge from hospital, so that a condition could not be imposed that the patient reside in another hospital, even if not under conditions of detention. In R (Secretary of State for the Home Department) v Mental Health Review Tribunal, PH as interested party [2002] EWHC 1128 (Admin); [2002] MHLR 241, known as PH, Elias J held that it meant discharge from detention in hospital, so that there could be a discharge on condition of residence in another hospital: but he also held that the crucial question was whether the conditions amounted to detention, which was not permitted. The Court of Appeal proceeded on the assumption that this proposition was correct and decided that the conditions imposed were not such as to amount to a deprivation of liberty and therefore that they were not ultra vires: [2002] EWCA Civ 1868; [2003] MHLR 202. The MHA draws a clear distinction between being actually detained, being liable to be detained, and being neither. A patient who is detained in hospital under compulsory powers such as a hospital order, including a restriction order, is actually detained. A hospital order or other compulsorily detained patient who is granted leave of absence under section 17 of the MHA remains liable to be detained (see section 17(1)). A patient who is released from hospital under a community treatment order under section 17A is not liable to be detained (see section 17D(2), as inserted by section 32(2) of the 2007 Act). But a restricted patient who is granted a conditional discharge remains liable to be detained: this much appears from section 42(2), which states that a restricted patient who is absolutely discharged ceases to be liable to be detained, with the clear implication that a restricted patient who is conditionally discharged remains liable to be detained. This must mean that discharge has a different meaning when referring to restricted patients in sections 42(2) and 73(2) from the meaning that it has in sections 23 and 72 when dealing with the discharge of unrestricted patients. Section 23(1) states that a patient who is for the time being liable to be detained shall cease to be so liable if ordered to be discharged by his responsible clinician, the hospital managers or (in certain circumstances) his nearest relative. It contains no power to grant a conditional discharge. Section 72 deals with the tribunals powers to discharge non-restricted patients who are liable to be detained and also confers no power to impose a conditional discharge. Discharge in sections 23 or 72 must therefore mean an absolute discharge, not only from detention but also from the liability to be detained. On the other hand, discharge in sections 42(2) and 73(2) when referring to the conditional discharge of restricted patients, cannot mean discharge from the liability to be detained, because the patient remains liable to be detained. It must therefore mean discharge from the hospital in which the patient is currently detained. Does it therefore follow, as Elias J considered, and the Court of Appeal agreed, that it must mean discharge from any sort of detention? In Secretary of State for Justice v RB [2010] UKUT 454 (AAC), the Upper Tribunal (Carnwath LJ, HHJ Sycamore and UTJ Rowland), held that it did not and that it was not bound by PH to hold that it did (para 54). In its view: The premise for exercise of the tribunals powers is that the patient has previously been lawfully detained (so that article 5 has been complied with); but that he does not now need to be detained in a hospital and that some other form of accommodation is appropriate, subject to the possibility of recall. The next step is to devise the conditions. At that stage, it is hard to see why the question whether the conditions would amount to detention for the purposes of article 5 should come into it. Even if they do amount to such detention, there will be no breach of article 5 because the 1983 Act makes provision for the procedural safeguards guaranteed by article 5. The tribunals concern should be simply to decide what is necessary for the well-being and protection of the patient, and the protection of the public and to satisfy themselves that the patient is willing to comply with the conditions and to that extent consents to them. We see no reason why Parliament should have wished them to concern with themselves with the fine distinctions which may arise under the Strasbourg case law on detention. (para 53) The only qualification was that the conditions could not impose detention in a hospital because, by definition, the tribunal had to have held that it was not satisfied that the criteria for such detention existed (para 55) (see para 10 above). The Court of Appeal did not agree: B v Secretary of State for Justice [2011] EWCA Civ 1608; [2012] 1 WLR 2043. The only form of detention of restriction order patients which was authorised by the MHA was detention in a hospital for medical treatment. Such an invasion of the fundamental common law right to liberty should not be read into the general words of section 73. This would be contrary to the principle of legality: R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115. It would conflict with the scheme of the Act, under which the Secretary of State could approve the patients transfer to another hospital or into guardianship. And the lack of criteria would mean that the detention was not in accordance with the law for the purpose of article 5 of the ECHR. The Court of Appeal adopted the reasoning in Bs case when reaching the same conclusion in this case. As to the ECHR, Mr Lock argues that there is no deprivation of liberty if the patient consents: in Storck v Germany (2005) 43 EHRR 6, the European Court held: the notion of deprivation of liberty within the meaning of article 5(1) does not only comprise the objective element of a persons confinement to a certain limited place for a not negligible length of time. Individuals can only be considered as being deprived of their liberty if, as an additional subjective element, they have not validly consented to the confinement in question. (para 74) The same formulation was repeated by the Grand Chamber in Stanev v Bulgaria (2012) 55 EHRR 22, para 117. Hence, in Storck, although there was a deprivation of liberty in respect of one period of detention in a psychiatric clinic, there was no such deprivation in respect of another, as the patient had consented to being there. But it is also clear from Storck that an initial consent can be withdrawn, for example, where the patient attempts to leave the hospital. And it is clear from later decisions, such as Buzadji v Moldova (Application No 23755/07), Grand Chamber Judgment of 5 July 2016, that consent given in circumstances where the choice is between greater and lesser forms of deprivation of liberty - there between detention in prison and detention under house arrest - may be no real consent at all. It is, of course, an irony, not lost on the judges who have decided these cases, that the Secretary of State for Justice is relying on the protection of liberty in article 5 in support of an argument that the patient should remain detained in conditions of greater security than would be the case were he to be conditionally discharged into the community. It is, however, difficult to extract the principle of the least restrictive alternative from the case law under article 5. This has not concerned itself with the conditions of the patients detention (which may raise issues under article 3 or 8), as long as the place of detention is appropriate to the ground upon which the patient is detained: thus, in Ashingdane v United Kingdom (1985) 7 EHRR 528, the court rejected a complaint that the patient should have been transferred from Broadmoor to a more open hospital setting much earlier than he was. Mr Lock also argues that there is unjustified discrimination between a patient who has and a patient who lacks the capacity to decide for himself. If the patient lacks capacity, the Court of Protection can authorise a deprivation of liberty in accordance with the sort of care plan which is envisaged in this case, provided that it is in his best interests, whereas if the patient has capacity, the FtT has no power to do so, even with his consent. This is a new point, perhaps prompted by the obiter dictum in the Court of Appeal (at para 35), to the effect that the FtTs power to defer a decision might be used to invoke the jurisdiction of the Court of Protection to authorise the deprivation of liberty of an incapacitated patient under section 16 of the MCA. The Court of Protection cannot authorise the deprivation of liberty of an incapacitated person who is ineligible within the meaning of Schedule 1A to the MCA, section 16A (as inserted by section 50 of, and Schedule 8 to, the 2007 Act). A restricted patient who is actually detained in hospital is ineligible (falling within Case A in para 2). A restricted patient who is conditionally discharged from hospital falls either within Case B or Case C and is not wholly ineligible. A deprivation of liberty whose purpose consists wholly or mainly in medical treatment in hospital cannot be authorised, but a deprivation for other purposes can be authorised, provided that it is not inconsistent with the requirements of their MHA regime. Whether the Court of Protection could authorise a future deprivation, once the FtT has granted a conditional discharge, and whether the FtT could defer its decision for this purpose, are not issues which it would be appropriate for this court to decide at this stage in these proceedings. Assuming that both are possible, and therefore that there might be an incompatibility with article 14, read either with article 5 or with article 8, it would make no difference to the outcome of this case. The outcome of this case depends upon whether it is possible to read the words discharge subject to conditions in section 42(2) (dealing with the Secretary of States powers) and conditional discharge in section 73(2) (dealing with the FtTs powers) as including the power to impose conditions which amount to a deprivation of liberty within the meaning of article 5. Conditional discharge: what does it mean? The MHA is silent: it says nothing about the type or content of the conditions which may be imposed by the Secretary of State or the FtT. In this respect it has remained unchanged since the 1959 Act. There are several possibilities: (1) that the FtT cannot impose a condition of detention in a hospital but the Secretary of State may do so; (2) that neither may do so; (3) that both may impose a condition of detention in a place which is not a hospital within the meaning of the MHA whether or not the patient consents; (4) that both may do so but only if the patient consents; and (5) that neither may do so. There is of course the argument that a condition which amounts to a detention or deprivation of liberty could nonetheless serve the rehabilitative purpose of the power of conditional discharge. Just as there is nothing in the MHA which permits it, there is nothing in the MHA which prohibits it. The thinking of the experienced Upper Tribunal in RB (para 21 above) is worthy of respect. The main textual argument in favour of a power to impose such a condition is that a conditionally discharged patient remains liable to be detained within the meaning of the MHA (see para 18 above). As such, he is more akin to a hospital patient who has been given leave of absence than to a patient who is subject to a community treatment order. Discharge therefore cannot mean discharge from compulsion. Although it must mean discharge from the hospital where he is currently detained, it need not mean any more than that, and so could encompass a range of possible arrangements. Furthermore, although it is clear that the FtT cannot impose a condition of detention in a hospital for treatment, because by definition the FtT is not satisfied that the grounds for such detention exist (para 10 above), the same is not true of the Secretary of State. He has power to discharge the patient conditionally irrespective of whether the grounds for detention in hospital still exist. Moreover, if there is power to impose such a condition, it is difficult to see why the patients consent should be a pre-requisite. The patients willingness to comply with the conditions is always, of course, a highly relevant factor in deciding whether he is suitable for discharge; but this is a practical rather than a legal requirement. Yet no-one in these proceedings has suggested that there is power to impose such a condition without the patients consent. On the other hand, there are compelling reasons not to construe sections 42(2) and 73(2) in such a way. The first reason is one of high principle: the power to deprive a person of his liberty is by definition an interference with his fundamental right to liberty of the person. This engages the rule of statutory construction known as the principle of legality, as explained in the well-known words of Lord Hoffmann in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, at 131: the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. The words of sections 42(2) and 73(2) are about as general as it is possible to be. Parliament was not asked to consider whether they included a power to impose a different form of detention from that provided for in the MHA, without any equivalent of the prescribed criteria for detention in a hospital, let alone any of the prescribed procedural safeguards. While it could be suggested that the FtT process is its own safeguard, the same is not the case with the Secretary of State, who is in a position to impose whatever conditions he sees fit. The second reason is one of practicality. The patients continued co-operation is crucial to the success of any rehabilitation plan. There is, as the FtT found in this case, always a concern that the patients willingness to comply is motivated more by his desire to get out of hospital than by a desire to stay in whatever community setting he is placed. As Holman J pointed out in SH (para 13 above), the MHA confers no coercive powers over conditionally discharged patients. Breach of the conditions is not a criminal offence. It is not even an automatic ground for recall to hospital, although it may well lead to this. But a recalled patient cannot be kept in hospital if the grounds for detaining him there are not satisfied. The patient could withdraw his consent to the deprivation at any time and demand to be released. It is possible to bind oneself contractually not to revoke consent to a temporary deprivation of liberty: the best-known examples are the passenger on a ferry to a defined destination in Robinson v Balmain New Ferry Co Ltd [1910] AC 295 and the miner going down the mine for a defined shift in Herd v Weardale Steel, Coal and Coke Co Ltd [1915] AC 67. But that is not the situation here: there is no contract by which the patient is bound. This leads to the third and perhaps most compelling set of reasons against such a power: it would be contrary to the whole scheme of the MHA. That Act provides in detail for only two forms of detention: (1) detention for no more than 36 hours in a place of safety, which may be a hospital, under sections 135 and 136; and (2) detention in a hospital under the civil powers contained in sections 2 (for assessment), 3 (for treatment) and 4 (for assessment in an emergency); or under a court order made in criminal proceedings under sections 35 (remand to hospital for report), 36 (remand to hospital for treatment), 37 (hospital order), 38 (interim hospital order), 41 (restriction order), and 45A (hospital and limitation directions, as inserted by section 46 of the Crime (Sentences) Act 1997); or under the Secretary of States directions under sections 47 (transfer of persons imprisoned under criminal powers) or 48 (transfer of persons imprisoned under civil powers). In each of those cases, the Act gives specific powers, both to convey the patient to the hospital or a place of safety and to detain him there: see sections 135(3) and 136(2) for detention in a place of safety; section 6(2) for detention in hospital under civil powers; sections 35(9) and 36(8) for remands to hospital for report or treatment; section 40(1) and (2) for a hospital order (with or without a restriction order) and an interim hospital order; section 45B(1) for a hospital and limitation direction; and section 47(3) for prisoner transfers. There is no equivalent express power to convey a conditionally discharged restricted patient to the place where he is required to live or to detain him there. If the MHA had contemplated that such a patient could be detained, it is inconceivable that equivalent provision would not have been made for that purpose. The MHA also makes detailed provision for the retaking of people who absent themselves from the place of safety or hospital where they are detained. A person authorised to be detained in a place of safety is deemed to be in legal custody and the person authorised to detain him has all the powers of a constable for that purpose (section 137(1) and (2)). If he escapes from legal custody, he may be retaken by that person or by any constable or Approved Mental Health Professional (section 138(1)). For hospital patients, as already explained (para 18 above), the MHA draws a distinction between being detained and being liable to be detained. A patient who is granted leave of absence and a conditionally discharged restricted patient remain liable to be detained but are not in fact detained under the MHA (at least unless the responsible clinician has directed that a patient given leave of absence remain in custody, under section 17(3)). The MHA contains elaborate provisions for recovering patients who are absent without leave. These are: patients who have absented themselves from the hospital where they are detained without having been granted leave of absence under section 17; patients who fail to return to hospital from leave when they should have done; patients on leave who have been recalled to hospital; and patients who break a condition of residence in their leave of absence (MHA, section 18(1)). A conditionally discharged patient who is recalled to hospital by the Secretary of State is also treated as if he were absent without leave for the purpose of the powers in section 18 (MHA, section 42(4)(b)). Patients who are absent without leave may be taken into custody and returned to hospital (the hospital where they were previously detained or, in the case of a conditionally discharged restricted patient, the hospital specified in the Secretary of States warrant of recall) by any police officer, any Approved Mental Health Professional, or by anyone on the staff of or authorised by that hospital (section 18(2)). Thus a conditionally discharged restricted patient is not liable to be taken into custody and returned anywhere unless and until he is recalled to hospital by the Secretary of State. Merely absenting himself from the place where he is required to live is not enough. Once again, if the MHA had contemplated that he might be detained as a condition of his discharge, it is inconceivable that it would not have applied the same regime to such a patient as it applies to a patient granted leave of absence under section 17. Added to those considerations is another which was influential with the Court of Appeal. A hospital order patient (including a patient on leave of absence) can apply to the FtT once within the second six months of his detention and once within every 12-month period thereafter. A conditionally discharged restricted patient who has not been recalled to hospital can only apply once within the second 12 months of his discharge and once within every two-year period thereafter. At the very least, this is an indication that it was not thought that such patients required the same degree of protection as did those deprived of their liberty; and this again is an indication that it was not contemplated that they could be deprived of their liberty by the imposition of conditions. Conclusion For all those reasons, I conclude that the MHA does not permit either the FtT or the Secretary of State to impose conditions amounting to detention or a deprivation of liberty upon a conditionally discharged restricted patient. It follows that this appeal must be dismissed. The making of a hospital order under section 37 of the Mental Health Act 1983, coupled with a restriction order under section 41, is a power given to the senior criminal courts (the Crown Court) in relation to offenders convicted of offences which carry sentences of imprisonment. The power is designed to provide an alternative to (probably but not invariably lengthy) imprisonment in the case of an offender who is mentally disordered. A restriction order can be imposed only, as section 41 explicitly says, where it is necessary for the protection of the public from serious harm, that is to say where the offender poses a risk of serious harm to the public: R v Birch (1989) 90 Cr App R 78. No one doubts that the machinery now in place for the making of this combination of orders, and for subsequent review by the FTT, complies with the requirements of article 5 of the European Convention on Human Rights. That article, as is well known, specifically contemplates legitimate detention both of persons convicted before a criminal court (article 5(1)(a)) and of those who are of unsound mind, whether convicted or not (article 5(1)(e)). The prime purpose of this combination of orders is thus the protection of the public. Another is, plainly, the treatment and if possible rehabilitation of the offender, since then the risk of serious harm to the public may be reduced or, sometimes, eventually removed. Recovery and rehabilitation are, inevitably, very likely to be progressive and/or partial, rather than instantaneous or complete. If the treatment progresses to the point where the nature of the detention can be relaxed, consistently with the continued protection of the public, it is very plainly in the public interest that it should be. The mechanism contemplated by the Mental Health Act for this relaxation, where it is appropriate, is conditional discharge. The irony so cogently pointed out by Lady Hale at para 24 is that in this case the contention which invokes article 5 ECHR has the result, if it is correct, that a restricted patient who has made sufficient progress for his conditions of detention to be relaxed but not entirely removed, cannot be conditionally discharged to a less severe form of detention. He will, very likely, instead remain in detention in hospital, because in the absence of conditions ensuring public safety it will not be possible for the FTT to say that it is not satisfied that his condition warrants his detention there (section 72(1)(b)(i) and (ii) as applied to restricted patients by section 73(1)(a)). This will be so, on the argument of the Secretary of State, even if everyone is agreed that the protection of the public would sufficiently be safeguarded by the relaxed conditions, and even if, as here, the offender actively seeks the relaxed form of detention. The two arguments which Lady Hale finds lead inevitably to this unsatisfactory result are one of legality and the other of practical construction of the scheme of the Mental Health Act. If they do indeed lead inevitably to this result, then of course they must prevail. It does not seem to me that they do. Lord Hoffmanns celebrated formulation of the rule of legality in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115 at 131 must not be watered down. Fundamental rights are not to be taken away by a side- wind, or by ambiguous or unspecific words. The right to liberty is a paradigm example. But what is in question here is not the removal of liberty from someone who is unrestrained. The restricted patient under consideration is, by definition, deprived of his liberty by the combination of hospital order and restriction order. That deprivation of liberty is lawful, and Convention-compliant. If he is released from the hospital and relaxed conditions of detention are substituted by way of conditional discharge, he cannot properly be said to be being deprived of his liberty. On the contrary, the existing deprivation of liberty is being modified, and a lesser deprivation substituted. The authority for his detention remains the original combination of orders, from the consequences of which he is only conditionally discharged. This was the reasoning of the Upper Tribunal in Secretary of State for Justice v RB [2010] UKUT 454 (AAC), in the passage set out by Lady Hale at para 21. It seems to me that it was clearly right. It might be otherwise if the proposed conditions to be attached to discharge were to amount to a greater level of detention than is authorised by the hospital and restriction orders. If one were to hypothesise an improbable scenario in which a FTT were to be asked to impose a condition which amounted, for example, to solitary and isolated confinement, such a question might arise, and with it the application of the Simms principle. But the present case is not suggested to involve any potential conditions which are other than a relaxation of the detention to which MM is otherwise subject in the hospital. The position of a restricted patient subject to a court order for detention in a secure hospital is not comparable to that of the unconvicted defendant in Buzadji v Moldova, 5 July 2016 (Application No 23755/07). There is no reason to doubt that a deprivation of liberty is involved if a defendant awaiting trial is given, in effect, the choice whether to be remanded in custody or to avoid such remand by consenting to house arrest. Such a defendant is otherwise at liberty. A restricted patient who seeks relaxation of his detention conditions is not. It is necessary to confront the suggested practical and textual objections. (a) The Act specifically provides for conditional discharge. (b) For the reasons given by Lady Hale at paras 19 and 20 discharge in the context of a restricted patient must mean discharge from the hospital in which he is currently detained. (c) Everyone agrees that the power to order conditional discharge enables the FTT (or the Secretary of State) to impose conditions beyond that of liability to recall. Such conditions might include co-operation with treatment, attending appointments and keeping in touch with supervisors, the regular taking of medicine, perhaps keeping away from specified people or places or abstaining from specified practices. The only issue is whether if the conditions (considered outwith the context of an existing restriction order) meet the Cheshire West test of deprivation of liberty, they become impermissible (Surrey County Council v P; Cheshire West and Chester Council v P [2014] AC 896). (d) There clearly is a risk that a patient who initially professed his consent to conditions meeting the Cheshire West test might subsequently change his mind. That may well be a particular risk with a patient who is mentally disordered. There are indeed no specific provisions in the Mental Health Act, if this happens, for taking him into custody and restoring him to the place where his conditions require him to live. But what the Act does do is to authorise the Secretary of State to recall him to hospital (section 73(4)(a)). If he is recalled, that triggers the express provision in section 42(4)(b) which treats him henceforth as absent without leave, and then the various provisions of the Act for his being taken into custody and returned to the hospital come into operation. Whether or not the Act might have provided additional powers, these are perfectly viable and rational remedies for the risk of failure to comply with conditions. It may well be that it was not thought appropriate to vest in those managing some place of lesser security where the patients conditions required him to live, the same powers as those possessed by a secure hospital. (e) Moreover, the same risk of later refusal to comply with conditions will exist where the conditions do not approach the Cheshire West threshold, and it is met with the same remedy or sanction. If the patient, having initially professed himself keen to comply with medication rules, or anxious to avoid contact with particularly vulnerable persons, then decides not to comply with the conditions, then what the Act contemplates is that his case will be assessed by the Secretary of State who will either decide to recall him, or will decline to do so. If he does recall him, there are then ample powers to enforce the recall. Short of that, there are no powers to compel him to obey the conditions; no criminal offence is committed and he cannot physically be compelled to obey. The position is thus the same for conditions which meet the Cheshire West test and for those which do not. (f) Some reliance was placed upon the fact that the interval stipulated in the Act in which application to the FTT can be made is greater for a restricted patient who has been conditionally discharged than for a restricted patient who has not. The latter is entitled to apply within the period 6-12 months from the making of the hospital and restriction orders, and thereafter at 12- month intervals: section 70. The conditionally discharged patient is subject to a longer interval, namely within the period 12-24 months of discharge and bi-ennially thereafter: section 75(2). If, however, a conditionally discharged restricted patient is recalled to hospital, his entitlement to apply to the tribunal reverts to the same intervals as before his discharge: section 75(1). This can be said to be some indication that Parliament did not think that a conditionally discharged restricted patient needed the same protection by way of entitlement to make further application to the tribunal as a patient who either had not made any previous application or whose applications for discharge, conditional or otherwise, had been refused. But that is not surprising, given the difference between the two cases. The conditionally discharged prisoner will, by definition, have had a recent determination of the tribunal relaxing his manner of detention. It is going further than is justified to read into this difference a Parliamentary assumption that the conditions applied on conditional discharge could never amount to ones which, if considered without the background of an extant order for detention in hospital, would meet the Cheshire West test for detention. Whilst this consideration is of some limited weight, I do not think that it can prevail against the scheme of the Act as set out above, for relaxation of detention by means of conditions attached to discharge. Nor do I think that any help can be derived from the intervals prescribed for the different case of a non-restricted hospital order patient, which apply equally to those still actually detained and those on leave of absence. For these reasons it seems to me that the FTT does indeed have the power, if it considers it right in all the circumstances, to impose conditions upon the discharge of a restricted patient which, if considered out of the context of an existing court order for detention, would meet the Cheshire West test, at least so long as the loss of liberty involved is not greater than that already authorised by the hospital and restriction orders. Whether it is right to do so in any particular case is a different matter. The power to do so does not seem to me to depend on the consent of the (capacitous) patient. His consent, if given, and the prospect of it being reliably maintained, will of course be very relevant practical considerations on the question whether such an order ought to be made, and will have sufficient prospect of being effective. Tribunals will at that stage have to scrutinise the reality of the consent, but the fact that it is given in the face of the less palatable alternative of remaining detained in hospital does not, as it seems to me, necessarily rob it of reality. Many decisions have to be made to consent to a less unpalatable option of two or several: a simple example is where consent is required to deferment of sentence, in a case where the offence would otherwise merit an immediate custodial sentence. I would, myself, for those reasons, allow this appeal.
UK-Abs
Under the Mental Health Act 1983 (MHA) a Crown Court may impose upon a mentally disordered offender a hospital order together with a restriction order, if this is considered necessary to protect the public from serious harm. Such a patient is liable to indefinite detention and can only be discharged by the respondent Secretary of State or the First tier Tribunal (FtT). A discharge may be conditional, such that the patient remains subject to recall to hospital as well as to the conditions. The issue in this case is whether the conditions imposed can, if the patient consents, be so restrictive as to amount to a deprivation of liberty within the meaning of article 5 of the European Convention on Human Rights. MM has a diagnosis of mild learning disabilities, autistic spectrum disorder and pathological fire setting. In 2001, when aged 17, he was convicted of arson offences. He was made the subject of a hospital order and a restriction order. Apart from a period of conditional discharge from December 2006 to April 2007, he has been detained in hospital ever since. He is considered to represent a serious risk of fire setting and of behaving in a sexually inappropriate way towards women. MM applied to the FtT for conditional discharge in May 2015. He was prepared to consent to a care plan that required him to live at a particular place, from which he would not be free to leave and would not be allowed out without an escort. The FtT ruled it had no power to impose conditions on discharge which themselves amounted to a deprivation of liberty. The Upper Tribunal held that it had, but the Court of Appeal held that it did not. MM appealed to the Supreme Court, arguing that if this condition cannot be imposed, he will have to remain in conditions of greater security in hospital, and the MHAs rehabilitative purpose will be frustrated. The Supreme Court by a majority of 4 to 1 (Lord Hughes dissenting) dismisses MMs appeal. It holds that the MHA does not permit either the FtT or the Secretary of State to order a conditional discharge of a restricted patient subject to conditions which amount to detention or a deprivation of liberty. Lady Hale (with whom Lord Kerr, Lady Black, and Lord Lloyd Jones agree) gives the main judgment. The Secretary of State has complete control over the conditions imposed on restricted patients and whether the patient should be recalled to hospital. The MHA does not specify what conditions may be imposed. In practice, the conditions usually require residence at a stated address and for both clinical and social supervision [11 12]. The purpose of conditional discharge is to enable the patient to make a safe transition from the institutional setting of a hospital to the community [14]. The word discharge in sections 42(2) and 73(2) MHA, when referring to the conditional discharge of restricted patients, must mean actual discharge from the hospital in which the patient is currently detained, as he remains liable to be detained [20]. Although there is nothing in the MHA which expressly prohibits a condition which amounts to a detention or deprivation of liberty in another setting, there are compelling reasons not to construe ss 42(2) and 73(2) in this way: It is difficult to see why the patients consent would be required for the exercise of a power to impose such a condition, yet all parties agree that consent is needed [30]. The power to deprive a person of his liberty is an interference with a fundamental right. The principle of legality means express language is required. Parliament was not asked to consider whether the general terms of ss 42(2) and 73(2) MHA included a power to impose a different form of detention, without prescribed criteria for such detention or, if imposed by the Secretary of State, any procedural safeguards [31]. As a practical matter, there is always a concern that the patients willingness to comply with the proposed condition is motivated more by his desire to get out of hospital and that he might then withdraw his consent and demand to be released. The patient would not be bound by his consent to comply with the condition [32]. Most compellingly, such a power would be contrary to the whole scheme of the MHA, which provides in detail for only two forms of detention (in a place of safety for up to 36 hours, or in a hospital), each with associated specific powers to convey a patient there, to detain him and to retake him if he absents himself from such detention without leave. There is no equivalent express power to convey a conditionally discharged restricted patient to the place where he is required to live or to detain him there, nor is he liable to be taken into custody and returned anywhere unless and until he is recalled to hospital by the Secretary of State [33 36]. The fact that a conditionally discharged restricted patient can apply far less frequently than a hospital patient to the FtT for his release indicates that Parliament did not consider that such patients might be subject to conditions which required the same degree of protection as those deprived of their liberty [37]. Accordingly, the MHA does not permit either the FtT or the Secretary of State to impose conditions amounting to detention or a deprivation of liberty upon a conditionally discharged restricted patient and MMs appeal is dismissed [38]. Lord Hughes, dissenting, would have held that the FtT did have the power, if it considered it right in all the circumstances, to impose conditions on the discharge of a restricted patient so long as the loss of liberty involved was not greater than that already authorised by the hospital and restriction orders. If the treatment of the patient had progressed to the point where the nature of the detention could be relaxed, it was plainly in the public interest that it should be, and he did not consider that the MHA prohibited such arrangements [39 49].
This appeal relates to personal independence payment, which is a non means tested allowance paid to certain people with long term health problems or disability. The appeals focus is upon one of the markers used to determine whether a claimants ability to live his or her daily life is limited, by his or her physical or mental condition, to such an extent as to generate an entitlement to personal independence payment (PIP). Various daily living activities are examined as markers, and the one in question here is engaging with other people face to face. The general scheme of the Welfare Reform Act 2012 and the Social Security (Personal Independence Payment) Regulations 2013 PIP is dealt with in Part 4 of the Welfare Reform Act 2012 (the Act). Section 77 introduces the allowance and establishes that a person may be entitled to one or both of its two components, namely the daily living component and the mobility component. This case is concerned with the daily living component. Entitlement is dealt with in section 78, which also points the way to other relevant provisions contained in Part 4 and in the regulations made under it. The component can be paid at either the standard rate (which is what is in question here) or, for those whose ability is more limited, the higher enhanced rate. By section 78(1), there are two requirements which the claimant must satisfy in order to be entitled to the daily living component at the standard rate, namely the requirement in section 78(1)(a) (which I will refer to as the limited ability requirement), and the required period condition in section 78(1)(b). So far as is material, the section reads: 78. Daily living component (1) A person is entitled to the daily living component at the standard rate if (a) the persons ability to carry out daily living activities is limited by the persons physical or mental condition; and the person meets the required period (b) condition. [entitlement to enhanced rate] (2) [meaning of standard and enhanced rate] (3) In this Part daily living activities means such (4) activities as may be prescribed for the purposes of this section. (5) See sections 80 and 81 for provision about determining (a) whether the requirements of subsection (1)(a) or (2)(a) above are met; (b) whether a person meets the required period condition for the purposes of subsection (1)(b) or (2)(b) above. (6) This section is subject to the provisions of this Part, or regulations under it, relating to entitlement to the daily living component Section 80 provides that the question whether a persons ability to carry out daily living activities is limited by the persons physical or mental condition (the limited ability requirement in section 78(1)(a)) is to be determined in accordance with regulations, and that the regulations must provide for that question to be determined, except in prescribed circumstances, on the basis of an assessment (or repeated assessments) of the person. The question of whether the person meets the required period condition for the purposes of section 78(1)(b) is similarly to be determined in accordance with regulations. The Social Security (Personal Independence Payment) Regulations 2013 (the Regulations) prescribe the activities which are daily living activities for section 78 as those set out in column 1 of the table in Part 2 of Schedule 1 to the Regulations. The table lists ten activities. Column 2 focuses in some detail on the ability of the claimant (referred to throughout the Regulations as C) to carry out each activity, on a scale ranging from being able to carry out the activity unaided to being unable to do it. For example, activity 1 in the list is Preparing food, and there are six levels of ability in column 2 ranging from a. Can prepare and cook a simple meal unaided to f. Cannot prepare and cook food. Each sub paragraph in column 2 is called a descriptor. In column 3, points are attributed, according to the level of ability measured by the descriptors; the greater the difficulty experienced by the claimant, the greater the number of points awarded. So, a claimant who can prepare and cook a simple meal unaided has no points attributed, whereas, at the other end of the scale, eight points are attributed where the claimant cannot prepare and cook food. There are gradations between the two; for example, a claimant who needs prompting to be able to prepare or cook a simple meal has two points attributed, as does a claimant who needs to use an aid or appliance to do so. The same ascending scale of difficulty, reflected in increasing numbers of points, can be seen in relation to each of the activities in the table. Regulation 5 provides that the points attributed for each activity in the table are added together and, if the total is at least eight but less than 12, the claimant has limited ability to carry out daily living activities, and is entitled to PIP at the standard rate, whereas if the total is 12 points or more, the claimant will be classed as having severely limited ability and is entitled to the enhanced rate. Regulation 4(2A) provides some more detail as to how the assessment of ability is approached, providing that: C is to be assessed as satisfying a descriptor only if C can do so safely; to an acceptable standard; repeatedly; and (a) (b) (c) (d) within a reasonable time period. Regulation 4(4) defines these concepts as follows: repeatedly means as often as the activity being (a) safely means in a manner unlikely to cause harm to C or to another person, either during or after completion of the activity; (b) assessed is reasonably required to be completed; and (c) reasonable time period means no more than twice as long as the maximum period that a person without a physical or mental condition which limits that persons ability to carry out the activity in question would normally take to complete that activity. The assessment of the claimant is more than just a snapshot of ability, given that the required period condition has to be satisfied, see section 78(1)(b). Section 81 dictates the shape of the regulations about this condition, providing (so far as material) that they: must provide for the question of whether a person meets the required period condition to be determined by reference to (a) whether, as respects every time in the previous three months, it is likely that if the relevant ability had been assessed at that time that ability would have been determined to be limited by the person's physical or mental condition; and (b) whether, as respects every time in the next nine months, it is likely that if the relevant ability were to be assessed at that time that ability would be determined to be limited by the persons physical or mental condition. For present purposes, the relevant ability is, of course, the ability to carry out daily living activities (section 81(2)). Section 81(3) deals with the reckoning of the periods of three and nine months, providing that the previous three months means the three months ending with the prescribed date and the next nine months means the nine months beginning with the day after that date. The Regulations make provision as required by section 81, including establishing what the prescribed date is, and also dealing with further issues to do with the required period. The detail does not matter for the issue presently under consideration. What is important is to recognise that it is not just the claimants situation on one day of assessment that is under consideration, but his or her situation over a period of 12 months. Furthermore, it is clear from the Regulations that some degree of fluctuation in the claimants presentation is anticipated. Regulation 7, which is entitled Scoring: further provision, sets out how to choose which descriptor applies to a claimant in relation to each activity in the table. It involves looking to see which descriptors are satisfied on over 50% of the days of the required period, and from that information, working out which descriptor is to be applied. Regulation 7(1)(a) (which deals with the most straightforward situation) will serve as an example; it provides that where one descriptor is satisfied on over 50% of the days of the required period that descriptor applies to the claimant. The provision under consideration in the present case It is Activity 9 in the table in Part 2 of Schedule 1 to the Regulations which gives rise to the issues in this appeal. In relation to this activity, the table provides: Column 1 Activity 9. Engaging with other people face to face. Column 3 Points 0 2 4 8 Column 2 Descriptors a. Can engage with other people unaided. b. Needs prompting to be able to engage with other people. c. Needs social support to be able to engage with other people. d. Cannot engage with other people due to such engagement causing either (i) overwhelming psychological distress to the claimant; or (ii) the claimant to exhibit behaviour which would result in a substantial risk of harm to the claimant or another person. Difficulty has arisen over descriptor 9c, and in particular over what is meant by social support, and how it differs from prompting in descriptor 9b so as to justify descriptor 9c attracting four points, whereas descriptor 9b only attracts two points. A subsidiary issue that arises is whether social support only covers help given whilst actually engaging with other people face to face, or whether help given in advance is also relevant. Definitions are provided for the purpose of Schedule 1 by Part 1 of the Schedule, including the following: In this Schedule aided means with (a) (b) the use of an aid or appliance; or supervision, prompting or assistance; assistance means physical intervention by another person and does not include speech; communication support means support from a person trained or experienced in communicating with people with specific communication needs, including interpreting verbal information into a non verbal form and vice versa; engage socially means interact with others in a contextually and (a) socially appropriate manner; (b) understand body language; and establish relationships; (c) prompting means reminding, encouraging or explaining by another person; psychological distress means distress related to an enduring mental health condition or an intellectual or cognitive impairment; social support means support from a person trained or experienced in assisting people to engage in social situations; supervision means the continuous presence of another person for the purpose of ensuring Cs safety; unaided means without (a) (b) the use of an aid or appliance; or supervision, prompting or assistance. There is no definition of engaging with other people face to face or of engage. As can be seen, Part 1 provides, instead, a definition of engage socially, a term which does not appear anywhere else in the Schedule. It is thought that this is an error, arising when Activity 9, which was originally entitled engaging socially, was refined following consultation on the provisions. The settled position in the tribunals (endorsed by the Court of Appeal in Hickey v Secretary of State for Work and Pensions [2018] EWCA Civ 851; [2018] 4 WLR 71, para 9) is that factors set out in relation to engaging socially are nevertheless relevant to the consideration of a persons ability to engage with other people face to face, and there does not appear to be any reason to disrupt that approach. The context in which the present issues arise The respondent is a man in his forties. He made a claim for PIP relying, inter alia, upon the effects that his mental health has upon his ability to engage with other people. When his claim was refused because he had not been awarded the required eight points, he appealed unsuccessfully to the First tier Tribunal (FTT). A central issue in the appeal was the number of points that should be attributed to him under Activity 9. The FTT considered that the decision maker had correctly found him to fall within descriptor 9b (prompting), rather than 9c (social support). Explaining this, the FTT Judge simply said: Two points have been awarded in respect of 9b. From the activities of daily living and our findings in fact above we consider that this is the appropriate descriptor. The appellant did not require social support as defined to be able to engage with other people nor did engaging with other people cause him overwhelming psychological distress or to exhibit behaviour which would result in a substantial risk of harm to himself or another person. Two points are due as awarded. The respondent appealed to the Upper Tribunal, contending that he should have been awarded four points under 9c, which would have qualified him to receive PIP. The appeal was allowed on the basis that the FTT had given an inadequate explanation of why 9b had been selected rather than 9c, and that it had failed to make adequate findings of fact going to that issue. The Upper Tribunal judge remitted the case to the FTT for rehearing, providing directions as to how the tribunal should approach Activity 9. The essence of the directions might be said to be as follows: i) what is envisaged as social support is emotional or moral support and perhaps also physical support, and other interventions which could include everything in the definition of prompting provided it can only be accepted by the claimant if given by a qualified person; ii) qualified people are those who are trained or experienced in assisting people to engage in social situations and friends or family can come within that category; iii) support. the qualified person needs to be present or available to provide the The Secretary of State appealed to the Inner House of the Court of Session. The Upper Tribunals decision to set aside the FTTs determination and to remit the matter for rehearing was not challenged, but the directions which were to govern the FTTs approach were. The grounds of appeal were that the Upper Tribunal should have directed the FTT that the social support must be contemporaneous with the social engagement being supported, and that social support requires something more substantial than prompting. The Inner House refused the appeal. It rejected the argument that the support had to be contemporaneous with the social engagement, considering that there might be situations in which a qualified person could provide sufficient support in anticipation of the claimant meeting people face to face, without the supporter actually having to be present during the meeting. However, although there was, in the Inner Houses view, no justification for a requirement that the support must be given during or immediately before the engagement, there did have to be a temporal or causal link of some sort between the help given and the activity in respect of which the help is needed (para 51 of the Inner Houses opinion). As to the nature of social support, the Secretary of States position was encapsulated by the Inner House in this way (at para 53 of its opinion): the exercise suggested is, in effect, to treat prompting and social support as mutually exclusive, deduct everything that amounts to prompting and see what, if anything, you are left with which, if sufficient in quantity, might amount to social support. This approach had found favour with a number of Upper Tribunal judges (in CPIP/1861/2015 UKUT(AAC) (unreported) 12 April 2016; CSPIP/203/2015 and CSPIP/210/2015 UKUT (AAC) (unreported) 11 March 2016; AH v Secretary of State for Work and Pensions [2016] UKUT 276 (AAC); EG v Secretary of State for Work and Pensions [2017] UKUT 101 (AAC)). In the view of the Inner House, however, the Secretary of States approach failed to recognise the potential for overlap between the prompting and the social support categories (para 54 ibid). It held that they are not mutually exclusive categories. As the Inner House saw it, the critical distinction between descriptor 9b prompting and descriptor 9c support lay not in a difference in the nature of the help provided but in the fact that, with social support, there is a necessity for the help to come from a person trained or experienced in assisting people to engage in social situations (para 55). Having given the example of psychological support given by someone trained in psychology, which would clearly count as social support, it went on to say: But there may be cases where the support is in the nature of encouragement or explanation but, because of the claimants mental state, will only be effective if delivered by someone who is trained or experienced in delivering that type of support to that individual. In such a case there will not be a qualitative difference in the help given, but the help can be regarded as support because of the necessity for it to be provided by someone trained or experienced in delivering it. The Inner House slightly modified the Upper Tribunal judges direction to the FTT, setting out its own formulation, at para 56, as follows: Encouragement or any other sort of prompting can qualify as social support if, to render it effective or to increase its effectiveness, it requires to be delivered by someone trained or experienced in assisting people to engage in social situations. The case was remitted to the FTT for determination in accordance with the guidance given in the Inner Houses opinion. The Secretary of State then appealed to this court, challenging the Inner Houses interpretation of social support (termed by the parties the qualitative issue), and its conclusion that it need not be contemporaneous with the engagement being supported (the timing issue). The respondent, who made his claim for PIP in February 2015, meanwhile continues to await the factual findings and ruling in the FTT that is necessary to resolve whether or not he is entitled to any payment. He maintains that the Inner Houses ruling is substantially correct. Mind was given permission to intervene and has provided helpful submissions, both in writing and orally. It considers the respondents position in relation to the timing issue to be correct, but invites the court not to decide that issue, on the basis that it is unnecessary and undesirable to do so in the circumstances of this case. It concentrates its submissions on the qualitative issue, aligning itself with the respondent and the courts below. The Secretary of States argument: the qualitative issue Contrary to the position taken below, in this court the Secretary of State accepts that social support for the purposes of descriptor 9c may consist of prompting, but submits that the prompting involved in social support is different by virtue of the fact that, in accordance with the definition of social support, the support needed has to be support from a person trained or experienced in assisting people to engage in social situations. If a person trained or experienced were to be narrowly construed, denoting someone who has such training or experience by virtue of their professional training or occupational history, there would be no difficulty in identifying situations within 9c, but the Secretary of State adheres to the assurance given during the consultation process that a friend or family member who knows the claimant well, and can offer support, can also be included as a relevantly experienced person. So, the Secretary of State submits, the key feature that distinguishes social support is that, as it is put in the written case: the help needs to be given by [the] trained or experienced person by reason of their training or experience. Familiarity is not enough. The Secretary of States concern (as articulated in the written case) is that the Inner Houses direction risks generating confusion: between the persons who require support from a person because of their relevant experience (which might include experience gained in the course of being friends or family), and those who require support from a friend or family member solely because of that relationship It is very common for a person to only respond well to someone they know and trust. However, the need for help from someone familiar or trusted on its own does not turn prompting into social support. There will be a qualitative difference, the Secretary of State says, in the help given by a helper using his or her training or experience as opposed to other help. The trained or experienced person will understand what is lacking in the claimants social engagement and be able to overcome this, or enable the claimant to do so, whereas an inexperienced person would not necessarily be able to see what was lacking, anticipate a difficulty, or know how to remedy it. Discussion: the qualitative issue The difference between the Secretary of States interpretation and that of the Inner House (supported by the respondent and the intervener) is somewhat nebulous, and appears as if it might, in fact, be limited. Rather than risk confusing the issue by indulging in a comparison of the two positions, it might be better to return directly to the text of Activity 9. It is well to bear in mind, when considering the ambit of the various limbs of Activity 9, that engaging with people face to face is an activity that can take many differing forms. As was pointed out in the course of oral argument, face to face interactions will range from engagements such as formal interviews and medical examinations to establishing and furthering close personal relationships. Similarly, the sort of assistance that enables the engagement to occur will take many differing forms. The obvious starting point, in determining which of the Activity 9 descriptors applies, is to establish what help the particular person needs in order to be able to engage with other people face to face, remembering that this is not about the help the person is actually receiving, but about the help that they need, although the one may of course inform the other. It is worth stressing that the provisions are not concerned with support that the person would like to have, or would appreciate as generally comforting; the particular support has to be needed to enable the activity to take place. Having assembled the facts in this way, one can start to consider whether the help needed is of a type that falls within the ambit of social support for the purposes of descriptor 9c. Early in the oral argument, the Secretary of State sought to confine the scope of social support by adopting a rather technical construction of the Activity 9 descriptors. The starting point was that descriptor 9a concerns a person who can engage with other people unaided. The submission flowing from this had the following elements: it can be inferred that, in contrast to those within 9a who can manage i) unaided, claimants falling within 9b and 9c all need to be aided; ii) aided is a term defined in Part 1 of the Schedule (see para 13 above), and involves the use of an aid or appliance, or supervision, prompting or assistance; iii) iv) is meant by social support in 9c. so 9b and 9c claimants will all require aid in one of these forms; and other forms of support are therefore irrelevant in considering what There are difficulties with this proposed interpretation, but there is nothing to be gained in elaborating them. It suffices to say that, in my view, such a narrow and technical approach would introduce an unwarranted limitation of the broad word support which has been used in descriptor 9c. This would be inconsistent with the governments objectives in introducing the new disability benefit provisions, including PIP, which included simplifying matters, and creating a benefit that was easier to understand, and reached those in need of extra support to live independently and participate in everyday life. In practice, support might take many forms, responding, no doubt, to the varied needs of claimants, and the varied forms of face to face engagement. The examples provided by Mind underline the wide variation in the help people have/require in order to engage with other people. Prompting is one form of support, as is now accepted, but there will be other forms, and they may well not fall within the definition of aided. The use of an aid or appliance might not often be relevant, supervision is about ensuring safety rather than directed at Activity 9, and the only other form of aid included in the definition is assistance which means physical intervention not includ[ing] speech, and might play a part, but is unlikely to sweep up all other available forms of support. I would accordingly reject the argument that only support that falls within the definition of aid is relevant, although acknowledging that a consideration of the various forms of prompting and of the other sorts of aid identified in the Regulations could assist in lending some colour to the concept of support. I return, therefore, to the central question of what differentiates the claimant who needs social support and is entitled to four points under descriptor 9c, from the claimant who is only entitled to two points, because he or she only needs prompting in the form covered by descriptor 9b. It is inherent in the scheme that, broadly speaking, descriptor 9c reflects a greater degree of disability than descriptor 9b, so attracting increased points. Responding to the greater degree of disability requires the attention not just of another person (as in the case of prompting simpliciter), but of a person trained or experienced in assisting people to engage in social situations. That is what differentiates prompting for the purposes of 9b from prompting which is social support for the purposes of 9c. And where the support takes a form other than prompting, it will similarly only qualify for 9c if the claimant needs it to come from a person so trained or experienced. The Secretary of States anxiety that the provision will be taken to include the sort of confidence boosting and reassurance that occurs in most close relationships can be allayed by keeping the focus very firmly on the twin requirements of necessity and relevant training or experience. Applied in the family/friends setting, to qualify for points under 9c, the claimant has to need support from someone who is not just familiar with him or her, but who is also experienced in assisting engagement in social situations. It is the training/experience of the helper upon which the claimant depends in order to enable the face to face engagement with others to take place, not simply the close and comforting relationship that may exist between the claimant and the helper. Having dispatched the idea that prompting can never constitute social support, the words of descriptor 9c, taken with the definition of social support, clearly define the ambit of the category and distinguish it from descriptor 9b. There is no need to complicate them. As the Inner House observed in para 55 of its opinion (see the passage quoted at para 20 above), the nature of the support provided might not differ between 9b and 9c. What brings the claimant into 9c rather than 9b is that, to be able to engage with others, he or she needs that support to come from someone trained or experienced in assisting people to engage in social situations. As the Inner House helpfully put it, the support will only be effective if delivered by someone who is trained or experienced. I would express a word of caution about the Inner Houses statement (at para 56) that help can qualify as social support if, to render it effective or to increase its effectiveness (my italics), it requires to be delivered by a trained or experienced person. It is useful to ask oneself what is required to render help effective in enabling the social engagement to take place, as I have observed in my preceding paragraph. But I cannot endorse the addition of the italicised words. Descriptor 9c revolves around what the claimant needs, and need is not a relative term. The claimant either needs or does not need trained/experienced help in order to be able to engage with other people. If only trained/experienced help will be effective in achieving the objective, the claimant can be said to need it. If what could be called, for want of a better shorthand, lay help would enable the claimant to engage, the claimant does not fall within 9c, but might fall within 9b. And, of course, if not even trained/experienced help would work, the claimant might fall within 9d. There will, inevitably, be cases in which it is not immediately evident whether descriptor 9c applies, and it is only after scrutinising the facts particularly carefully that the decision maker will be able to reach a determination. Although the provision is concerned with the help the claimant needs, rather than with the help which he or she is actually getting in practice, it seems likely that, in many family/friends cases, someone will already be carrying out the supportive role in face to face engagements. Where this is so, the assessment/decision making process will be assisted by looking at the elements of the support that they actually provide, how they have come to know what to do, whether or not the sort of help that they provide could be provided by any well meaning friend or family member, and what additional help (if any) is required. Exploring these issues will no doubt be a sensitive task. Mind points out that people often struggle to convey the relevant information or they put it in terms which are misunderstood. Claimants are likely to be handling their applications for PIP themselves, or with assistance only from family and friends. Here, for example, the respondent and his partner attended the hearing before the FTT, both gave evidence, and the partner acted as the respondents representative. During the application process, whether it be upon the first request for payment or in the tribunal system upon appeal, it may be necessary to probe what is being said in support of the claim so as to establish the elements of the help that is required to enable the face to face engagement to take place and the characteristics of the person who will need to provide it in order for it to be effective. By way of example, if a claimant says, I need to have someone I trust with me when I meet people face to face, a number of questions are likely to be required to follow this up, and to determine whether the claimant comes within descriptor 9b or 9c. Everything will depend on the facts of the particular case, but they might include questions (sensitively put, of course) such as why is that?, who would you trust in that role?, what sort of things could they do to help you engage?, how would they know what to do?, what would happen if that person was not there? The Secretary of States argument: the timing issue The Secretary of State submits that social support needs to be contemporaneous with the face to face engagement being supported, and that it does not include help provided in advance of it. The contrary interpretation would, submits the Secretary of State, leave matters so open that it would inevitably generate inconsistencies and arbitrariness in decision making. The reasons given in support of the narrow approach include: i) The assessment is a calibration of the claimants functional limitations at the date of the claim with the application of the qualifying periods; it is an assessment of actual disability during the activity. ii) Descriptor 9c uses the present tense: needs. This suggests presence during the activity, for example to do the reminding, encouraging or explaining involved in prompting. iii) Supporting the face to face engagement requires that the supporter perceives the full context of the engagement and has the ability to react to what is done by the person with whom the claimant is seeking to engage. iv) Descriptor 9c is concerned with an intensity of need on the part of the claimant (as reflected in the need for a trained/experienced supporter) which is such as to make it unrealistic to contemplate sufficient support being given without the supporter actually being present during the engagement. v) Social support would be in an anomalous position if it could occur in advance of the engagement, whereas other descriptors require support to be contemporaneous. The Secretary of State invites comparison with, for example, communication support (relevant to Activity 7) which it is submitted would, by its nature, have to be provided at the time of the communication. vi) It would be very difficult to apply the provision if support in advance would qualify. How would the moral, social and emotional support which is an ordinary incident of family relationships and friendships, be distinguished from assistance that would qualify for 9c? vii) As for psychological support, the Secretary of State would say that it is not within the scope of social support at all, but if it were, the problem would be to know how far back one should go, and whether to include counselling sessions the day before the engagement, or a week before, or a year before. Discussion: the timing issue It might be helpful to consider the timing issue having in mind some examples of the practical ways in which a person can be helped to engage face to face with others. Given that no findings of fact have yet been made in relation to the respondents circumstances, it is desirable to avoid focusing particularly on him, but in the course of his counsels submissions, examples were given of the sort of support that an experienced family member might give. Preparation might occur prior to the engagement which enables it to occur without, for example, overwhelming psychological distress. One technique that can be deployed is to look together, in advance of the meeting, at the worst case scenario. During the meeting, with knowledge of the claimant, the supporter can watch out for things that are known to trigger his or her anxiety, and redirect the conversation. Where memory is a problem, the supporter can remind the claimant of things they have forgotten. Private signs of reassurance can be given where required. And, where required, the supporter might recognise the need to remove the person from the meeting. It is important to remember that each claimant is an individual with individual needs, and that different techniques might help in different cases, or at different times in the life of the same person. It seems to me that the Secretary of States insistence on it being necessary for the supporter to be present with the claimant during the face to face engagement would stand in the way of other means of support which work for the particular claimant, and would also be likely to impede attempts to improve the claimants abilities to handle matters without support at all, or with diminished support. It is not difficult to contemplate a situation in which the trained or experienced supporter is aiming to make progress so that a claimant, who initially cannot manage without the supporter physically present during the face to face engagement, learns in stages to manage with the supporter at the door of the room, next door, leaving the building for a short period during the meeting, bringing the claimant to the meeting and collecting him after it, and so on. Discussion before (and possibly after) engagements, and also practical exercises, might be deployed, in order to equip the claimant to deal with encounters without the physical presence of the supporter. At some point in the progress, the claimant will cease to qualify under 9c, but, looking at things entirely practically, rather than legalistically, it would be hard to say that, in all cases, from the moment in the continuum when the supporter is no longer in the room with the claimant, he no longer needs social support to be able to engage with people. It is also relevant to consider the sensitivity of some of the face to face engagements that a claimant may need to undertake. Social support by physical presence with a claimant during a medical examination, or what was called during the hearing a romantic engagement, might be counter productive, whereas social support which did not involve actual presence might enable the claimant to engage when that would not otherwise have been possible. For example, it is easy to contemplate that the claimant and the experienced supporter might have a discussion in advance of a medical examination, going through every element of the procedure and exploring how the claimant might respond to it, the claimant might then allow him or herself to be accompanied to the door of the consultation room and given into the care of the doctor or nurse, and the necessary continuing reassurance might come from the knowledge that the supporter was nearby in the waiting room. It is undesirable to construe the provision in a way that runs counter to these sorts of considerations, unless that is dictated by the provision itself, or by something in its legal context. There is nothing in the wording of descriptor 9c, or the definition of social support, to require actual presence of the supporter during the engagement, nor yet to require that the support is timed to coincide with the engagement, rather than being provided in advance, or indeed afterwards. The use of the present tense (needs) does not carry the Secretary of State this far. It does dictate that the claimant actually needs the support as respects every time over the course of the 12 months made relevant by the required period condition (see para 9 above). The need has to be a continuing one, not one that has been addressed or otherwise ceased, and I would certainly agree with the Inner House when they said (para 49) that descriptor 9c (and for that matter descriptor 9b) would not apply to a case: where, as a result of a successful psychiatric or psychological intervention in the past, the person being assessed was now able to engage with other people satisfactorily and without further help. He would not be able to say, on the strength of that previous intervention, that he continued to fall within Activity 9, descriptor c. But the requirement that there should be a current need at all relevant times does not, of itself, exclude the possibility of assistance given outside the confines of the engagement itself. This is perhaps most easily demonstrated by an example: if social support includes, say, advice and discussion prior to a face to face engagement, it could perfectly properly be said of a claimant, who can only engage if that sort of help is provided, that he needs social support. The Secretary of States interpretation would only be made out if social support is confined to that which is provided on the spot, and there is nothing in the definition of it to confine it in that way. In the absence of express wording dictating contemporaneity, the Secretary of States argument must depend upon inferences drawn from elsewhere in the Regulations and/or from the likely circumstances of claimants. Comparisons with other daily living activities where presence is required during the activity are unhelpful, in my view, because all the various activities are different in nature, and the ways of overcoming difficulties in carrying them out will inevitably be different. Nor am I persuaded by the submissions based upon the intensity of the claimants need and the supposed need for the supporter to perceive and react to the engagement as it unfolds. Sometimes these factors will dictate that the supporter can only provide effective help if actually present, but I see no reason to assume that this will always be the case, and no reason to limit the scope of descriptor 9c so as to exclude cases where support is required from a person trained or experienced in assisting people to engage in social situations but which do not fall within this model. In short, I do not consider that descriptor 9c is limited to cases where a claimant needs social support actually during the face to face engagement. Given that social support is likely to take many different forms, depending on the individual needs of the claimant, it is undesirable to attempt to prescribe, in the abstract, which other forms of support will be sufficient. It will be a question of fact and degree, and is something that will have to be worked out on a case by case basis, by those with expertise in making assessments and decisions in relation to claims, keeping the wording of the provision firmly in mind. I am hopeful that it will prove possible to do this without the Secretary of States fears of inconsistent and arbitrary decisions being realised. Before concluding, I should say something about the Inner Houses acceptance that what was required was a temporal or causal link of some sort between the help given and the activity in respect of which the help is needed (para 51). This is not a formulation that should, in my view, be adopted. A detailed explanation of why not is unlikely to be of assistance, and one illustration of the problem will perhaps suffice. The formulation contemplates two separate ways in which the requisite link could exist, expressed as alternatives, namely a link by virtue of timing (temporal link) and a link by virtue of being instrumental in securing the engagement (causal link). It is difficult to envisage how support which is linked in time to a face to face engagement but has no causal link to what occurs could have any relevance. Sometimes, explaining and elaborating upon a provision confuses rather than assists, and this might be one of those situations. The answer is more likely to be found, in any given case, by close attention to the words of descriptor 9c, as defined in the Regulations, and to the required period condition. This exercise, paying close attention in particular to the requirement that the claimant needs the support (see para 43 above), should serve to confine the scope of descriptor 9c within appropriate time boundaries. Conclusion I would allow the appeal in the limited sense that I would interpret the relevant legal provisions slightly differently from the Inner House, as I have explained above.
UK-Abs
This appeal concerns the assessment of claimants for personal independence payment (PIP), a non means tested allowance paid to certain people with long term health problems or disability. The appeals focus is on one of the markers used to determine the extent to which the ability of claimants to carry out daily living activities is limited by their physical or mental condition. The particular activity in question is engaging with other people face to face and the issue is the interpretation of descriptor 9c found in Part 2 of Schedule 1 to the Social Security (Personal Independence Payment) Regulations 2013 (the Regulations). The Regulations are made under Part 4 of the Welfare Reform Act 2012 (the Act). Descriptor 9c reads: Needs social support to be able to engage with other people. The respondent is a man in his forties. He made a claim for PIP in February 2015. His entitlement to the daily living component of the allowance at the standard rate depended on whether he satisfied descriptor 9c, which would give him 4 points towards the required score of at least 8 points overall under regulation 5. His claim was rejected on the ground that his ability to engage with other people face to face only satisfied descriptor 9b, Needs prompting to be able to engage with other people, which gave him a score of 2 points. The respondent appealed unsuccessfully to the First tier Tribunal (FTT). His appeal to the Upper Tribunal was allowed on the ground that the FTT had given an inadequate explanation of why he satisfied descriptor 9b rather than 9c. The case was remitted to the FTT for rehearing and directions were given as to the interpretation of descriptor 9c. The appellant Secretary of State appealed to the Inner House of the Court of Session in relation to the directions. The Inner House refused the appeal while modifying some of the directions. The Secretary of State appealed to the Supreme Court. Before the Supreme Court the Secretary of State accepted that the social support required for descriptor 9c may consist of prompting, as with 9b, but for this descriptor the support had to be from a person trained or experienced in assisting people to engage in social situations. Whilst he accepted that a friend or family member who knows the claimant well could have the relevant training or experience, he argued that a need for help simply from someone familiar or trusted was not sufficient (the qualitative issue). He also argued that the social support needed to be contemporaneous with the face to face engagement, ie that the person offering the social support had to be physically present (the timing issue). The Supreme Court unanimously allows the appeal in the limited sense of interpreting the relevant legal provisions differently from the Inner House. The respondents claim will now return to the FTT for determination in accordance with this interpretation. The judgment is given by Lady Black. The qualitative issue The activity of engaging with people face to face can take many differing forms, as can the form of the assistance that is needed for the claimants engagement to occur [29 30]. A narrow and technical approach to the words social support in descriptor 9c is unwarranted; it is inconsistent with the governments objective of creating a benefit which is easier to understand and reaches those who need extra support to live independently and participate in everyday life [32]. What brings the claimant within descriptor 9c rather than 9b is that, to be able to engage with others, he or she needs the support to come from someone trained or experienced in assisting people to engage in social situations i.e. the support will only be effective if delivered by someone who is not just familiar with the claimant, but also trained/experienced in assisting engagement in social situations [34 35]. Careful scrutiny of the facts will sometimes be necessary in order to determine whether descriptor 9c applies, including probing the information provided by sensitive questions [38] and, where support is already being provided by family/friends, exploring how they have come to know what to do, whether that help could come from any well meaning friend or family member, and what additional help (if any) is required [37]. The timing issue It is helpful to consider examples of practical ways in which a person can be helped to engage face to face with others. For instance, preparation prior to the engagement might avoid overwhelming psychological distress, and, during the engagement, a supporter might be able to give the claimant reminders, direct the conversation away from topics that trigger anxiety, give private signs of reassurance, or recognise the need to remove the claimant from the meeting [40]. The Secretary of States insistence on it being necessary for the supporter to be present at the engagement would stand in the way of means of support which do not involve physical presence and would be likely to impede attempts to improve the claimants abilities to handle matters in future with less support [41]. It would be undesirable to construe descriptor 9c in a way that runs counter to these considerations, and there is nothing in the wording of the descriptor to require that. The word needs indicates a continuing need, to be found as respects every time over the 12 month period made relevant by s 81 of the Act, but it does not, of itself, exclude the possibility of assistance outside the confines of the engagement [43] and nor is there anything else to dictate such an interpretation [45]. Given that social support is likely to take many different forms, depending on the individual needs of the claimant, it is undesirable to attempt to prescribe in the abstract which other forms of support will be sufficient. It will be a question of fact and degree [46], addressed with close attention to the words of the descriptor and the required period condition [48]. The Inner Houses acceptance that a temporal or causal link was required between the help given and the activity should not be adopted. It is difficult to see how support which is linked in time to a face to face engagement but has no causal link to what occurs could have any relevance [47].
The Investigatory Powers Tribunal (IPT) is a special tribunal established under the Regulation of Investigatory Powers Act 2000 (RIPA) with jurisdiction to examine, among other things, the conduct of the Security Service, the Secret Intelligence Service and the Government Communications Headquarters (the intelligence services). Section 67(8) provides: Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards, orders and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. The genesis of this subsection can be traced back to the Interception of Communications Act 1985. Section 7(8) provided in relation to the tribunal established by that Act (the predecessor of the IPT): The decisions of the Tribunal (including any decisions as to their jurisdiction) shall not be subject to appeal or liable to be questioned in any court. There is an obvious parallel with the ouster clause considered by the House of Lords in the seminal case of Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 (Anisminic). Section 4(4) of the Foreign Compensation Act 1950 provided: The determination by the commission of any application made to them under this Act shall not be called in question in any court of law. The House of Lords decided by a majority that these words were not effective to exclude review by the courts of the legal basis of the Commissions decision. In summary they held (in the words of the headnote): that the word determination in section 4(4) of the Act of 1950 should not be construed as including everything which purported to be a determination but was not in fact a determination because the commission had misconstrued the provision of the Order defining their jurisdiction. Accordingly, the court was not precluded from inquiring whether or not the order of the commission was a nullity. It will be necessary later to examine in more detail the reasoning in Anisminic, and its treatment in later cases, culminating in the major reappraisal of the relationship of courts and tribunals by the Supreme Court in R (Cart) v Upper Tribunal (Public Law Project intervening) [2012] 1 AC 663 (Cart). Reduced to its core the central issue in the present case is: what if any material difference to the courts approach is made by any differences in context or wording, and more particularly the inclusion, in the parenthesis to section 67(8), of a specific reference to decisions relating to jurisdiction? The statutory provisions The legislative scheme established by RIPA replaced three earlier statutes dealing with the oversight of the security services. Its enactment was closely linked to that of the Human Rights Act 1998 (HRA), which was brought into force at the same time. The Explanatory Notes stated (paras 3 4): The main purpose of the Act is to ensure that the relevant investigatory powers are used in accordance with human rights. These powers are: the interception of communications; the acquisition of communications data (eg intrusive surveillance (on residential premises/in billing data); private vehicles); operations; covert surveillance in the course of specific the use of covert human intelligence sources (agents, informants, undercover officers); access to encrypted data. For each of these powers, it was said, the Act would ensure that the law would clearly cover the purposes for which they could be used, by whom and with whose authority, the use that could be made of the material gained, and also independent judicial oversight, and means of redress for individuals. The statutory provisions governing the composition, jurisdiction and procedures of the IPT are complex. There is a comprehensive account in the judgment of Sir Brian Leveson P in the Divisional Court (paras 5 to 15) ([2017] EWHC 114 (Admin)). For present purposes it is enough to note the principal features. Section 65(1) and Schedule 3 deal with its composition. The number of members is set by Her Majesty by Letters Patent (section 65(1)). The President must have held high judicial office, and the other members must have held high judicial office or meet specified legal qualifications. In the present case the tribunal consisted of five members presided over by Burton J (President) and Mitting J (Vice President), the others all being leading counsel. As to its jurisdiction section 65(2) provides: (2) The jurisdiction of the tribunal shall be (a) to be the only appropriate tribunal for the purposes of section 7 of the Human Rights Act 1998 in relation to any proceedings under subsection (1)(a) of that section (proceedings for actions incompatible with Convention rights) which fall within subsection (3) of this section; (b) to consider and determine any complaints made to them which, in accordance with subsection (4), are complaints for which the tribunal is the appropriate forum; (c) to consider and determine any reference to them by any person that he has suffered detriment as a consequence of any prohibition or restriction, by virtue of section 17, on his relying in, or for the purposes of, any civil proceedings on any matter; and (d) to hear and determine any other such proceedings falling within subsection (3) as may be allocated to them in accordance with provision made by the Secretary of State by order. The remainder of section 65 provides further details of these four categories of jurisdiction, which are not material in the present case. It is to be noted that the jurisdiction of the IPT may depend on uncertain issues of law or fact. For example, in C v The Police IPT/03/32/H the IPT considered a complaint by a retired police officer alleging that there had been unlawful covert surveillance in breach of article 8 of the European Convention on Human Rights (the Convention) by his former police force. The essential facts were agreed, but the IPT held that it had no jurisdiction to consider his complaint because there was no directed surveillance which satisfied the definition of conduct to which Chapter II of Part I of RIPA applied (see para 74 of the determination; RIPA section 65(3)(d), (5)(c)). In some cases the jurisdiction of the IPT may overlap with that of the ordinary courts: see, for example, AKJ v Comr of Police of the Metropolis [2014] 1 WLR 285 (parallel claims under HRA section 7, and in tort, in respect of damage suffered as a result of the actions of two undercover police officers). Section 67 is headed Exercise of the Tribunals jurisdiction. Subsection (1) provides that it shall be the duty of the Tribunal to hear and determine proceedings, or to consider and determine complaints or references, brought before it under section 65(2). Subsections (2) and (3) provide, among other things, that the tribunal shall apply the same principles as would be applied by a court on an application for judicial review. Subsections (4) (6) make provision in relation to frivolous and vexatious claims, limitation, and the power to make interim orders. Subsection (7) sets out the powers of the tribunal on determining any proceedings, complaint or reference to make any such award of compensation or other order as they think fit. It also gives examples of such orders, including (a) an order quashing or cancelling any warrant or authorisation, and (b) an order requiring the destruction of any records of information which (i) has been obtained in exercise of any power conferred by a warrant or authorisation; or (ii) is held by any public authority in relation to any person. Subsection (8) has been set out above (para 1). As there seen, it allowed for an appeal to be provided for by order of the Secretary of State, but that power has never been exercised. Subsection (9) goes further, imposing a duty on the Secretary of State to secure an order allowing for an appeal to a court against any exercise by the tribunal of their jurisdiction under section 65(2)(c) or (d); but that subsection has not been brought into force. Subsections (10) (12) make provision as to the contents of, and procedure for making, such an order were the power ever to be exercised. After the commencement of these proceedings there was enacted (by section 242 of the Investigatory Powers Act 2016) a new section 67A providing for an appeal on a point of law to the Court of Appeal or Court of Sessions against certain decisions of the tribunal. That was brought into force on 31 December 2018 by regulation 2 of the Investigatory Powers Act 2016 (Commencement No 10 and Transitional Provision) Regulations 2018/1397, but it does not apply to any decision or determination of the IPT made before this date. It is therefore not material to the present appeal. Until 31 December 2018, when they were replaced by the Investigatory Powers Tribunal Rules 2018 (SI 2018/1334), the procedure before the IPT was governed by the Investigatory Powers Tribunal Rules 2000 (SI 2000/2665) (made under section 69(1)). Notable are the power to conduct proceedings in private and at certain stages in the absence of the complaining party (rule 9), and the duty under rule 6(1): The Tribunal shall carry out their functions in such a way as to secure that information is not disclosed to an extent, or in a manner, that is contrary to the public interest or prejudicial to national security, the prevention or detection of serious crime, the economic well being of the United Kingdom or the continued discharge of the functions of any of the intelligence services. The European Court of Human Rights has held that the Act and the rules provide an effective and compliant remedy for complaints in respect of interception with communications, for the purposes of article 13 of the Convention (Kennedy v United Kingdom (2011) 52 EHRR 4). The proceedings below The background of the present proceedings was described in the judgment of the IPT dated 12 February 2016. It was a hearing of preliminary issues of law, whose purpose was to establish: whether, if the Second Respondent (GCHQ) carries on the activity which is described as CNE (Computer Network Exploitation), which may have affected the claimants, it has been lawful. The Tribunal described the now well established procedure for it to make assumptions as to the significant facts in favour of claimants and reach conclusions on that basis, and thereafter, if the assumed facts were held to render the respondents conduct unlawful, to consider the position in closed session. This procedure, it was said, had enabled the tribunal on a number of occasions: to hold open inter partes hearings, without possible damage to national security, while preserving, where appropriate, the respondents proper position of Neither Confirmed Nor Denied (NCND). The issue arises under section 5 of the Intelligence Services Act 1994 which empowers the Secretary of State to issue a warrant authorising the taking of such action as is specified in the warrant in respect of any property so specified if he considers, among other things, that such action is necessary for the purpose of assisting the intelligence services in carrying out their functions. According to the appellants case, the significance of that provision became apparent when the Intelligence Services Commissioner (Sir Mark Waller) disclosed in his 2014 Report that the intelligence services were using it to authorise CNE activity, and expressed concern that this interpretation of the section might arguably be too broad. Their case before the tribunal was that section 5 did not permit the issue of so called thematic warrants authorising activity in respect of a broad class of property. They argued, inter alia, that the section needed to be construed against the background of the long established aversion of the common law to general warrants, recognised in cases going back to Entick v Carrington (1765) 2 Wils KB 275. The tribunal heard inter partes oral argument at a public hearing in early December 2015, and gave judgment on 12 February 2016 dismissing the claim (Privacy International v SSFCA [2016] UKIP Trib 14_85 CH). Their discussion of the interpretation of section 5 comes at paras 31 to 47 of the judgment. In relation to the argument based on general warrants they said: 18th century abhorrence of general warrants issued without express statutory sanction is not in our judgment a useful or permissible aid to construction of an express statutory power given to a Service, one of whose principal functions is to further the interests of UK national security, with particular reference to defence and foreign policy. The issue as to whether the specification is sufficient in any particular case will be dependent on the particular facts of that case . (paras 37 38) They concluded on this aspect: In our judgment what is required is for the warrant to be as specific as possible in relation to the property to be covered by the warrant, both to enable the Secretary of State to be satisfied as to legality, necessity and proportionality and to assist those executing the warrant, so that the property to be covered is objectively ascertainable. (para 47) Sales LJ in the Court of Appeal [2017] EWCA Civ 1868; [2018] 1 WLR 2572 commented on the significance of this question: This is potentially of legal significance in two ways. First, if action of GCHQ to interfere with property is not protected by a warrant issued under section 5, it is likely that GCHQ would commit torts of interference with that property which would sound in damages. Secondly, if GCHQ takes such action to hack computers in circumstances where it is not protected by a warrant, it is likely that it would be liable in law for breaches of its obligation under section 6 of the Human Rights Act 1998 to act compatibly with Convention rights, since it would not be able to show that any interferences with rights to respect for the home, correspondence and private life were in accordance with the law, as required by article 8(2) of the European Convention on Human Rights (as scheduled to the Human Rights Act as a Convention right). (para 16) This passage again highlights the extent to which issues arising before the IPT may overlap with the common law or human rights jurisdictions of the ordinary courts. On 17 June 2016 Lang J granted the appellant permission to apply for judicial review, while expressing doubts whether the High Court had jurisdiction to determine the substantive claim. She directed that the issue of jurisdiction should be heard as a preliminary issue. On 2 February 2017 the Divisional Court gave judgment answering that question in the negative for reasons given by the President. He held that section 67(8) prohibited judicial review of the decision. Since (by contrast with Anisminic) the tribunal was already exercising a supervisory jurisdiction over the actions of public authorities and exercising powers of judicial review, he saw no compelling reasons for insisting that a decision of the tribunal is not immune from challenge (para 42). Further, the legislation authorised the Secretary of State to create a right of appeal (albeit that the power had never been exercised), so that the presumption that Parliament could not have intended to make a statutory tribunal wholly immune from judicial oversight was not engaged (paras 43, 45). Leggatt J, while not formally dissenting, was inclined to a different view. He thought that the case was governed by the reasoning in Anisminic: The only potentially relevant difference in the wording of section 67(8) is that it contains the words in brackets (including as to whether they have jurisdiction). But I find it hard to see how these words can make a critical difference in the light of Anisminic. It seems to me that on a realistic interpretation that case did not decide that every time a tribunal makes an error of law the tribunal makes an error about the scope of its jurisdiction. Rather, it decided that any determination based on an error of law, whether going to the jurisdiction of the tribunal or not, was not a determination within the meaning of the statutory provision. That reasoning, and the underlying presumption that Parliament does not intend to prevent review of a decision which is unlawful, is just as applicable in the present case and is not answered by pointing to the words in brackets. (para 55) The Court of Appeal gave judgment on 23 November 2017 dismissing the appeal. Sales LJ (with whom Floyd and Flaux LJJ agreed) considered that both the language and the context were materially different from Anisminic. As to the language he said: the drafter of section 67(8) has expressly adverted to the possibility of the IPT making an error of law going to its jurisdiction or power to act, by the words in parenthesis in that provision: including decisions as to whether they have jurisdiction. Therefore, at least so far as the word decision is concerned, it is not tenable to apply the simple distinction relied upon in Anisminic in the context of section 4(4) of the 1950 Act between a determination and a purported determination, in the sense of a determination made without jurisdiction. In section 67(8), the word decision is stated to include a decision which (if judicial review or an appeal were available) might be found to have been made without jurisdiction because of an error of law on the part of the IPT that is to say, if one wants to use this phrase, a purported decision. (para 34) In support of this view, he noted the very high quality of the IPT in terms of judicial expertise and independence (para 38), and the statutory context: It is clear that Parliaments intention in establishing the IPT and in laying down a framework for the special procedural rules which it should follow, including the Rules, was to set up a tribunal capable of considering claims and complaints against the intelligence services under closed conditions which provided complete assurance that there would not be disclosure of sensitive confidential information about their activities. (para 42) Finally he relied by analogy on the decisions of the Court of Appeal and Supreme Court in R (A) v Director of Establishments of the Security Service [2009] EWCA Civ 24; [2009] UKSC 12; [2010] 2 AC 1 (R (A)). It was held that section 65 of RIPA conferred on the IPT exclusive jurisdiction to hear claims under section 7 of the HRA against any of the intelligence services. In the Court of Appeal Dyson LJ noted that the rules were carefully drafted to achieve a balance between fairness to a complainant and the need to safeguard the relevant security interests; he thought it inherently unlikely that Parliament, having provided for such an elaborate set of rules to govern proceedings against an intelligence service, yet contemplated that such proceedings might be brought before the courts without any rules (para 48). That approach was approved in the Supreme Court. Although the effect of section 67(8) was not in issue, Lord Brown, giving the leading judgment, in the course of a review of this part of the Act, spoke of it as an unambiguous ouster of the courts jurisdiction. While accepting that this expression of view was obiter Sales LJ considered it to fit closely with Lord Browns analysis of the regime. He added: Unless section 67(8) is interpreted as Lord Brown indicated, it would permit the special procedural regime established for the IPT to be bypassed at the stage when judicial review proceedings in respect of its decisions are brought in the High Court, as explained above. That would undermine the coherence of Lord Browns reasoning at para 14 of his judgment. In my view, Lord Browns view at para 23 about the proper interpretation and effect of section 67(8) is of powerful persuasive authority. I agree with it. (para 48) The submissions in this court Two issues are identified in the agreed statement: i) whether section 67(8) of RIPA 2000 ousts the supervisory jurisdiction of the High Court to quash a judgment of the Investigatory Powers Tribunal for error of law? ii) whether, and, if so, in accordance with what principles, Parliament may by statute oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction? On the first issue, counsel for the appellant led by Dinah Rose QC (with Professor Sir Jeffrey Jowell QC) rely principally on the long established principle that a statute should not be interpreted as ousting judicial review of a statutory tribunal of limited jurisdiction if there is a tenable construction which would preserve the supervisory jurisdiction of the High Court. In the present case, the formula used in section 67(8) is not materially different from that which the House of Lords held not to oust judicial review in Anisminic, and must be taken to have the like effect. Lord Browns comment in R (A) was obiter, against the background of a concession by the appellant that judicial review was not available (R (A) at p 23D). This did not mean that the reference in parenthesis to jurisdiction was without effect. Ms Rose refers for example to the distinction drawn in the cases depending on whether the legislature has or has not entrusted to the tribunal the power to determine the existence of the preliminary state of facts necessary to its jurisdiction (see R v Comrs for Special Purposes of the Income Tax (1888) 21 QBD 313, 319, per Lord Esher MR). At the time of the drafting of what became the 1985 Act, the difference between issues of fact and law in the context of jurisdiction had been highlighted by the House of Lords in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74. It was held that the power of the Home Office to remove an illegal entrant did not depend simply on the reasonable belief of the immigration officer that the person was an illegal entrant. As Lord Scarman said (at p 110): where the exercise of executive power depends upon the precedent establishment of an objective fact, the courts will decide whether the requirement has been satisfied. The words in parenthesis in section 67(8), it is submitted, can be read as designed, as respects the IPT, to put such decisions on issues of fact going to jurisdiction beyond the scope of review, but not issues of law. She submits that the Court of Appeals reliance on the security and intelligence context to support their view was mistaken. The High Court has ample powers on judicial review to ensure that sensitive information is protected (see now R (Haralambous) v Crown Court at St Albans [2018] UKSC 1; [2018] AC 236). Similar concerns might have been said to arise in respect of the Special Immigration Appeals Commission (SIAC), but neither that factor, nor the relatively high status of the judges of that Commission, was held sufficient to oust judicial review (R (U) v SIAC [2011] QB 120 DC, paras 82 86 per Laws LJ). Furthermore, the tribunals jurisdiction is not limited to sensitive claims against the intelligence services. Ms Rose gives as examples such issues as the use by local authorities of CCTV and checks by directed surveillance on whether a child lives in the catchment area of a local school. She also points out that the issue can work both ways. For example, if the Tribunal were unlawfully to order the security and intelligence services to disclose material (such as the identity of an agent) which would risk harming national security, they would have no remedy. More generally, it cannot have been intended that the IPT should be immune from challenge even where it blatantly disregarded limits to its powers: for example, if it decided not to follow a binding decision of the Supreme Court on the interpretation of the RIPA, or if it purported to determine a claim for unfair dismissal allocated by statute exclusively to the Employment Tribunal. These submissions were supported by Mr Chamberlain QC (with Mr Heaton), appearing for the intervener Liberty. He emphasised the very broad jurisdiction of the IPT, not limited to reviewing the conduct of the intelligence services, but extending to surveillance and other activities undertaken for policing, economic and other purposes by a range of public authorities. It is, he submitted, objectionable in principle, and inimical to the rule of law, that a body with such broad jurisdiction should be entirely immune from challenge, save only in the Strasbourg court in respect of compliance with the Convention. He also pointed to the considerable overlap between the jurisdiction of the IPT and that of the ordinary courts. As he submits it could be a question of happenstance whether a determination on a particular issue is immune from review by the UK courts, if determined by the IPT, or subject to appeal through the appellate courts, if determined by the ordinary courts. Counsel for the interested parties, led by Sir James Eadie QC, generally supported the reasoning of the Court of Appeal. In agreement with Sales LJ, he submitted that the language of section 67(8), by the words in parenthesis, and in contrast to the section under consideration in Anisminic, was designed in terms to address the possibility of the IPT making an error of law going to its jurisdiction or power to act. He drew attention to particular features of the statutory context, including the special allocation of judicial responsibility to the IPT in the national security context under a single legislative regime together with the HRA; the bespoke nature of the IPT system set up by RIPA, with provision to make its own rules and procedures, allowing the IPT to deal with sensitive national security matters through closed material procedures not available at common law; the placing of the IPT on equal footing with the High Court in respect of judicial review; and the provision for the possibility of a right of appeal from IPT decisions in specified cases. The fact that the latter provisions had not been brought into effect did not detract from their relevance to the presumed intention of Parliament at the time of enactment (see Bennion on Statutory Interpretation (6th ed), p 654). He relied also on the continuing endorsement of the IPT by the Strasbourg court, most recently in Big Brother Watch v United Kingdom (2018) (Application Nos 58170/13, 62322/14 and 24960/15), in which the court commented for example on the special role of the IPT as the sole body capable of elucidating the general operation of a surveillance regime (and) the sole body capable of determining whether that regime requires further elucidation. (para 255) More generally he submitted that there was nothing constitutionally offensive about legislative arrangements whereby Parliament reallocates the High Courts judicial review jurisdiction to a judicial body that is both independent of the Executive and capable of providing an authoritative interpretation of the law. Judicial supervision of inferior courts and tribunals The authorities Before considering these submissions, it is necessary to set them in the context of the historical development through the authorities of the relationship between the High Court and other adjudicative bodies, culminating for present purposes in the Supreme Court judgments in Cart. The Kings (or Queens) Bench The supervisory role of the Kings court (curia regis), or the Kings or Queens Bench Division of the High Court as it became, has a long history. A scholarly account, tracing it back to the time of William I, is given in the judgment of Laws LJ in the Divisional Court in Cart ([2011] QB 120, paras 44ff). As he says (para 45) the Kings Bench was established by the end of the 13th century, and remained at the centre of the English judicial system until its powers were transferred to the High Court in 1873. As to its status, he cites, for example (paras 48 49), Groenwelt v Burnell (1700) 1 Salk 144, 90 ER 1000 per Holt CJ: no court can be intended exempt from the superintendency of the King in this Court of Kings Bench. It is a consequence of every inferior jurisdiction of record, that their proceedings be removable into this court, to inspect the record, and see whether they keep themselves within the limits of their jurisdiction; To similar effect he quotes Blackstones Commentaries on the Laws of England book III, Chapter 4, p 41 2 (written in 1768), describing the Kings Bench as the supreme court of common law in the kingdom, and as keeping all inferior jurisdictions within the bounds of their authority. It is of interest to note also a later passage (op cit p 112), in which Blackstone discussed the writ of prohibition, including its use to ensure general conformity with the law of the land. He described the wide variety of courts subject to this supervision (ranging from inferior courts of common law, to the courts Christian or the university courts, the court of chivalry, or the court of admiralty) and its application: where they concern themselves with any matter not within their jurisdiction or if in handling matters clearly within their cognizance they transgress the bounds prescribed to them by the laws of England else the same question might be determined different ways, according to the court in which the suit is depending: an impropriety which no wise government can or ought to endure, and which is, therefore, a ground of prohibition. That supervisory role was preserved by section 16 of the Judicature Act 1873 which vested the common law powers of the Queens Bench in the newly created High Court. Those powers were in turn preserved by section 19 of the Senior Courts Act 1981. Ouster clauses Authorities dating back at least to the 17th century (see eg Smith, Lluellyn v Comrs of Sewers (1669) 1 Mod 44, 86 ER 719) leave no doubt as to the hostile attitude of the High Court to attempts by statute to restrict its supervisory role. In such cases, conventional principles of statutory interpretation, based on the ordinary meaning of the words used by Parliament, have yielded to a more fundamental principle that no inferior tribunal or authority can conclusively determine the limits of its own jurisdiction. It is difficult, for example, to think of a statutory ouster clause in clearer terms than that considered in R v Cheltenham Comrs (1841) 1 QB 467, 113 ER 1211. The case concerned a challenge to a decision of the Quarter Sessions on an appeal against a rate set by the respondent Commissioners. The Commissioners objection to the admission of certain evidence had been rejected by a majority of 11 magistrates to eight. The decision was challenged on the grounds of apparent bias (in modern terms), in that three of the 11 magistrates were partners in a company which owned a property affected by the rate. The statute provided That no order, verdict, rate, assessment, judgment, conviction, or other proceeding touching or concerning any of the matters aforesaid, or touching or concerning any offence against this Act, or any by law or order to be made in pursuance thereof, shall be quashed or vacated for want of form only, or be removed or removable by certiorari, or any other writ or process whatsoever, into any of His Majestys Courts of Record at Westminster; any law or statute to the contrary thereof in anywise notwithstanding. Upholding the challenge, Lord Denman CJ said of the ouster clause: the clause which takes away the certiorari does not preclude our exercising a superintendence over the proceedings, so far as to see that what is done shall be in pursuance of the statute. The statute cannot affect our right and duty to see justice executed: and, here, I am clearly of opinion that justice has not been executed. (p 1214) A possible justification of that principle was given by Farwell LJ in R v Shoreditch Assessment Committee, Ex p Morgan [1910] 2 KB 859, 880: Subjection . to the High Court is a necessary and inseparable incident to all tribunals of limited jurisdiction; for the existence of the limit necessitates an authority to determine and enforce it: it is a contradiction in terms to create a tribunal with limited jurisdiction and unlimited power to determine such limit at its own will and pleasure such a tribunal would be autocratic, not limited and it is immaterial whether the decision of the inferior tribunal on the question of the existence or non existence of its own jurisdiction is founded on law or fact (Emphasis added) This passage was cited with approval in Anisminic itself by both Lord Pearce ([1969] 2 AC 147, 197), and Lord Wilberforce (ibid pp 208 209), the latter describing it (perhaps somewhat grudgingly) as language which, though perhaps vulnerable to logical analysis, has proved its value as guidance to the courts, He put the same idea in his own words: The courts, when they decide that a decision is a nullity, are not disregarding the preclusive clause. For, just as it is their duty to attribute autonomy of decision of action to the tribunal within the designated area, so, as the counterpart of this autonomy, they must ensure that the limits of that area which have been laid down are observed . In each task they are carrying out the intention of the legislature, and it would be misdescription to state it in terms of a struggle between the courts and the executive. What would be the purpose of defining by statute the limit of a tribunals powers if, by means of a clause inserted in the instrument of definition, those limits could safely be passed? (p 208B) More recent authority has affirmed the continuing relevance of this strong interpretative presumption against the exclusion of judicial review, other than by the most clear and explicit words (Cart [2011] QB 120, para 31, per Laws LJ; citing Denning LJ in R v Medical Appeal Tribunal, Ex p Gilmore [1957] 1 QB 574, 583, and Lord Phillips MR in R (Sivasubramaniam) v Wandsworth County Court [2003] 1 WLR 475, para 44). As those cases show, this presumption has been applied without distinction to decisions of inferior courts (such as the County Court) and of tribunals, even if designated as superior courts of record (like the Upper Tribunal). Errors of law In so far as those authorities were concerned with errors going to jurisdiction in the traditional sense, they were relatively uncontroversial. The review of errors of law was more problematic. Professor Paul Craig (Administrative Law 8th ed (2016), para 16 001) identifies three phases in the extension of the inherent powers of the High Court to review of decisions for error of law: The courts from the 16th to the 20th century used either the collateral fact doctrine or the theory of limited review to determine the extent of control. Both theories were premised on a distinction between jurisdictional and non jurisdictional issues, although they drew the divide differently. The assumption was that a jurisdictional error of law was reviewable, but a non jurisdictional error of law was not, unless the error of law was on the face of the record. The divide between jurisdictional and non jurisdictional error was, however, always fraught with difficulty The modern approach, which dates from the latter part of the 20th century, rejected the jurisdictional/non jurisdictional divide. The starting assumption is that all errors of law are subject to judicial review and that the reviewing court will substitute judgment for that of the primary decision maker on such issues. This approach avoids the difficulties of the jurisdictional/non jurisdictional divide. There are, however, difficulties with the modern approach. It is based on the twin assumptions that reviewing courts should substitute judgment on all such legal issues and that this is the only way to maintain control over the organs of the administrative state. The courts have more recently signalled variation in the test for review primarily in the context of decisions made by tribunals. The first phase is now of no more than historical interest. The second refers to the major change brought about by Anisminic itself, as interpreted in later cases. The last sentence, as I understand it, refers to the evolution of a more nuanced approach exemplified by the Supreme Courts decision in Cart. I will consider them in turn in the next sections of this judgment. Before doing so, I should note the important difference between control respectively of administrative action and of the functions of lower courts or tribunals. As Robert Craig points out in an article in Public Law (Ouster clauses, separation of powers and the intention of Parliament [2018] PL 570, 572), separation of powers dictates that administrative bodies should not be determining the answers to questions of law that frame their decision making process. He cites the succinct statement of the proper constitutional relationship of the executive with the courts by Nolan LJ in M v Home Office [1992] QB 270, 314H 315A: the courts will respect all acts of the executive within its lawful province, and the executive will respect all decisions of the courts as to what its lawful province is. That simple contrast cannot readily be applied to control of courts or tribunals. Craig distinguishes: the conceptually different question of what the attitude of the courts is and should be, to the entirely separate category of cases where there are ouster clauses protecting the exercise of judicial functions. Accordingly, where an ouster clause can be interpreted as not excluding judicial supervision but reallocating its exercise to a different form of court or tribunal, a different constitutional analysis may be required. That indeed was the view taken of RIPA section 65(2)(a) (in relation to claims under the HRA) by Lord Brown in R (A) para 23, when dismissing a suggested parallel with Anisminic: Nor does Anisminic assist A. The ouster clause there under consideration purported to remove any judicial supervision of a determination by an inferior tribunal as to its own jurisdiction. Section 65(2)(a) does no such thing. Parliament has not ousted judicial scrutiny of the acts of the intelligence services; it has simply allocated that scrutiny (as to section 7(1)(a) HRA proceedings) to the IPT . That passage was concerned solely with the allocation of the special jurisdiction under the HRA, and against the background of clear Strasbourg authority that article 6 of the Convention does not guarantee a right of appeal (see Bochan v Ukraine (No 2) (2015) 61 EHRR 14, paras 44 45). It says nothing about the correct approach to the IPTs jurisdiction more generally. From Anisminic to Cart Anisminic the decision The claim in Anisminic arose from the sequestration of the claimants property by the Egyptian authorities at the time of the Suez crisis in 1956. Their claim under the relevant Foreign Compensation Order (under the Foreign Compensation Act 1950) was rejected by the Commission on the grounds that they had subsequently sold their property to an Egyptian institution, which was to be regarded as their successor in title within the meaning of the Order. On its face, at least to modern eyes, that was a straightforward issue of interpretation of the Order. It was ultimately decided in the claimants favour by the House of Lords. However, the process by which the case arrived at that point was far from straightforward. The procedural and legal background is described in an illuminating discussion of the case by Professor Feldman (Anisminic in perspective, in Juss and Sunkin (ed) Landmark cases in public law (Oxford 2017) pp 63ff). He explains in particular (p 70) the significance, in the absence of a reasoned decision by the Commission, of the choice of an action for a declaration, rather than certiorari: to challenge Anisminic decided the provisional determinations in an action in the High Court seeking various declarations to the effect that they were erroneous in law and nullities. Unlike an application for certiorari, this did not require the court's leave, which would almost certainly have been refused because Anisminic was unable to point to any evidence that the Commission had erred in law. The action compelled the Commission to plead its defence, which eventually disclosed an error of law. There were disadvantages to Anisminic in pursuing a declaration rather than certiorari. First, there was no precedent for using a declaration as a remedy in such a case; the Commission argued that allowing declarations to be used in that way might make certiorari redundant Secondly, it forced Anisminic to argue that any unlawfulness the company could assert made the determination void, not merely voidable, as a voidable determination would be effective unless quashed by certiorari By the time the case came to the courts, as Lord Pearce noted (p 199F), the problem of showing an error of law on the record had been overtaken by the production by the Commission of a minute of adjudication relied in the particulars of the defence. There were differences of emphasis between the various speeches in the House of Lords. However, for modern purposes they are less important than the interpretation of the decision in later cases. Looked at from that perspective, the case can be taken as confirming or establishing three distinct but related propositions: i) That there is (at the least) a strong presumption against statutory exclusion of review by the High Court of any decision of an inferior court or tribunal treated as made without jurisdiction and so a nullity. ii) That for this purpose there is no material distinction between an excess of jurisdiction at the outset, and one occurring in the course of proceedings. iii) That a decision which is vitiated by error of law (whether or not on the face of the record) is, or is to be treated as, made without jurisdiction and so a nullity. The first proposition, as apparent from the cases referred to above, was little more than a confirmation of well established principles. The second could be seen as a logical step forward, or at least a clarification of the previous law (see Wade & Forsyth Administrative Law 11th ed, p 217: The original jurisdiction fallacy). The third, however, was a much more radical development, in so far as a mere error of law came in due course to be treated as an excess of jurisdiction which rendered the decision not simply open to legal challenge but void or a nullity. Hitherto it had generally been assumed that a mere error of law by a court or tribunal in respect of an issue otherwise falling within its jurisdiction might be subject to correction on appeal, but did not take the decision outside its powers. For example, Lord Reid himself had said in a recent case: If a magistrate or any other tribunal has jurisdiction to enter on the inquiry and to decide a particular issue, and there is no irregularity in the procedure, he does not destroy his jurisdiction by reaching a wrong decision. If he has jurisdiction to go right he has jurisdiction to go wrong. Neither an error in fact nor an error in law will destroy his jurisdiction. (R v Governor of Brixton Prison, Ex p Armah [1968] AC 192, 234 emphasis added) In Anisminic (at p 171E F) he implicitly acknowledged an apparent discrepancy between that statement and the reasoning in instant case, which he sought to explain by reference to differences between narrow and broader meanings of the word jurisdiction. Consideration of Lord Reids judgment is best begun by reference to his own summary of the respective arguments and his response to them (pp 169 170): The respondent maintains that these are plain words only capable of having one meaning. Here is a determination which is apparently valid: there is nothing on the face of the document to cast any doubt on its validity. If it is a nullity, that could only be established by raising some kind of proceedings in court. But that would be calling the determination in question, and that is expressly prohibited by the statute. The appellants maintain that that is not the meaning of the words of this provision. They say that determination means a real determination and does not include an apparent or purported determination which in the eyes of the law has no existence because it is a nullity. Or, putting it in another way, if you seek to show that a determination is a nullity you are not questioning the purported determination you are maintaining that it does not exist as a determination. It is one thing to question a determination which does exist: it is quite another thing to say that there is nothing to be questioned. Lord Reid considered the application of such an ouster provision to the simple case of an order made by someone appointed on the basis of a forged qualification, and asked whether the court would be required to treat the order as valid. He continued: It is a well established principle that a provision ousting the ordinary jurisdiction of the court must be construed strictly meaning, I think, that, if such a provision is reasonably capable of having two meanings, that meaning shall be taken which preserves the ordinary jurisdiction of the court. Statutory provisions which seek to limit the ordinary jurisdiction of the court have a long history. No case has been cited in which any other form of words limiting the jurisdiction of the court has been held to protect a nullity. If the draftsman or Parliament had intended to introduce a new kind of ouster clause so as to prevent any inquiry even as to whether the document relied on was a forgery, I would have expected to find something much more specific than the bald statement that a determination shall not be called in question in any court of law. Undoubtedly such a provision protects every determination which is not a nullity. But I do not think that it is necessary or even reasonable to construe the word determination as including everything which purports to be a determination but which is in fact no determination at all. And there are no degrees of nullity. There are a number of reasons why the law will hold a purported decision to be a nullity. I do not see how it could be said that such a provision protects some kinds of nullity but not others: if that were intended it would be easy to say so. He went on to give a list of examples of the ways in which a decision of a tribunal, acting within its original jurisdiction may be treated as a nullity: It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word jurisdiction has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the inquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the inquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive. But if it decides a question remitted to it for decision without committing any of these errors it is as much entitled to decide that question wrongly as it is to decide it rightly (p 171B E) It is noteworthy that the list did not include a simple error of law or misconstruction of the statute. It must have been a misconstruction of the provisions giving it power to act, as a result of which it has decided some question which was not remitted to it or based its decision on some matter which it had no right to take into account. Later in the speech he applied that approach to the instant case. The Commission had construed the order (wrongly as it was held) as requiring them, having identified the original owner, to inquire whether he had a successor in title. Lord Reid explained how that error of law could render the decision a nullity: But if, on a true construction of the Order, a claimant who is an original owner does not have to prove anything about successors in title, then the commission made an inquiry which the Order did not empower them to make, and they based their decision on a matter which they had no right to take into account if they reach a wrong conclusion as to the width of their powers, the court must be able to correct that not because the tribunal has made an error of law, but because as a result of making an error of law they have dealt with and based their decision on a matter with which, on a true construction of their powers, they had no right to deal. they are doing something which they have no right to do and, if the view which I expressed earlier is right, their decision is a nullity (pp 173H 174E emphasis added) Lord Pearce adopted a similar approach. As he put it: If the commission by misconstruing the Order in Council which gave them their jurisdiction and laid down the precise limit of their duty to inquire and determine, exceeded or departed from their mandate, their determination was without jurisdiction (p 201C) Lord Wilberforce, who gave the only other substantive speech on this issue, also looked for something beyond a simple error of law. This was against the background that, as he put it: In every case, whatever the character of a tribunal, however wide the range of questions remitted to it, however great the permissible margin of mistake, the essential point remains that the tribunal has a derived authority, derived, that is, from statute: at some point, and to be found from a consideration of the legislation, the field within which it operates is marked out and limited.(p 207D) The error had to be one which took the tribunal outside its permitted field, leading to the decision being a nullity (a term which he thought convenient as a word of description rather than as in itself a touchstone) and so outside the reach of the ouster clause (p 208A B). In the instant case the statute had enabled the Order in Council to make provision for defining the persons qualified to make applications for the purpose of establishing claims and prescribing the matters to be established by them. Such definitions and prescribed matters, in his view, would be architectural directions binding the commission, departure from which would mean that it would be acting beyond its powers (p 211D G). Having examined the Order in detail, and explained why, on a proper construction, all the relevant conditions had been satisfied, he concluded: As all these conditions were fulfilled to the satisfaction of the commission, the appellants claim was in law established; the commission by seeking to impose another condition, not warranted by the Order, was acting outside its remitted powers and made no determination of that which alone it could determine. (p 214E) Anisminic interpretation and comment As Professor Feldman observes (op cit pp 92 93), the significance later attached to the decision in Anisminic, and in particular to the statement in Lord Reids judgment of the matters leading to nullity, may not have been apparent at the time: The ratio of the House of Lords decision was relatively narrow , but what landmark cases decide and what they are later regarded as authority for may be very different. Lord Reids statement had been particularly influential as the basis for extending the theory and practice of judicial review well beyond anything justified by the ratio. He also argues with some force that the passage reflects an uncharacteristic gap in logic: Lord Reid leapt, apparently without noticing, from uncontroversial general propositions about circumstances in which certiorari would be available to quash a decision in the absence of any provision excluding the courts jurisdiction, to a judgment about the effect of a very particular sort of error (denying eligibility for compensation for failing to comply with a condition which the legislation had not imposed) in a case where, because a declaration rather than certiorari was sought and, because of the effect of section 4(4) of the 1950 Act, it was essential to show that the challenged determination was not merely erroneous but null. Whatever doubts there may have been initially or since as to the interpretation or practical implications of Lord Reids words, and of the other majority speeches in Anisminic, such doubts have been dispelled by a series of statements in subsequent cases at the highest level, led by Lord Diplock. Professor Feldman (p 94) notes that at an early stage Lord Diplocks own views of the case, as expressed extra judicially, had progressed from a relatively cautious response in 1971 to a much more absolute view, as expressed in a 1974 lecture, that the decision had render(ed) obsolete the technical distinction between errors of law which go to jurisdiction and errors of law which do not. He also notes the influence of successive Junior Treasury Counsel in set(ting) the tone for arguments advanced to the courts on behalf of Government Departments (see also para 80 below). Sir Stephen Sedley has spoken in similar terms of the contribution of Treasury Counsel, and of the process by which a consensus has emerged: It has come about neither by legislation nor by precedent but by an organic process in which the laws practitioners and its exponents have agreed on which way the common law should be travelling and have found a serviceable if not particularly suitable vehicle to transport it. (Sedley The lion behind the throne: the law as history [2016] JR 289, paras 14, 22) The problem is that this move outside the limitations carefully set by the Anisminic speeches may have undermined much of their conceptual basis. I shall return to this problem when addressing the second issue. OReilly v Mackman and after It was not until 1982 that the broader view was given unambiguous judicial endorsement by the House of Lords, when Lord Diplock summarised the effect of Anisminic in OReilly v Mackman [1983] 2 AC 237, 279) in a speech agreed by the other members of the House: The breakthrough that the Anisminic case made was the recognition by the majority of this House that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it had found them, it must have asked itself the wrong question, ie, one into which it was not empowered to inquire and so had no jurisdiction to determine. Its purported determination, not being a determination within the meaning of the empowering legislation, was accordingly a nullity. In other words, a determination arrived at on an erroneous view of the relevant law was not a determination within the meaning of an ouster clause such as in Anisminic. Arguments about differences between jurisdictional and non jurisdictional errors of law had become redundant. Later cases have confirmed this interpretation. Thus in R v Hull University Visitor, Ex p Page [1993] AC 682, concerning a challenge to the decision of a University Visitor, Lord Browne Wilkinson said (at pp 701 702): Anisminic rendered obsolete the distinction between errors of law on the face of the record and other errors of law by extending the doctrine of ultra vires. Thenceforward it was to be taken that Parliament had only conferred the decision making power on the basis that it was to be exercised on the correct legal basis: a misdirection in law in making the decision therefore rendered the decision ultra vires. To similar effect, in Boddington v British Transport Commission [1999] 2 AC 143, 158D E, which related to the validity of a by law, Lord Irvine LC said: The Anisminic decision established, contrary to previous thinking that there might be error of law within jurisdiction, that there was a single category of errors of law, all of which rendered a decision ultra vires. No distinction is to be drawn between a patent (or substantive) error of law or a latent (or procedural) error of law. An ultra vires act or subordinate legislation is unlawful simpliciter and, if the presumption in favour of its legality is overcome by a litigant before a court of competent jurisdiction, is of no legal effect whatsoever. Lord Browne Wilkinson agreed (p 164), subject to reservations as to the legal consequences of such an ultra vires act during the period between the doing of that act and the recognition of its invalidity by the court (as to which see De Smiths Judicial Review 8th ed (2018), paras 4 067ff: The effect of a judgment that a decision is unlawful). More recently, Lord Irvines words were in turn cited by Lord Dyson (Lumba v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245, para 66) to support the statement: The importance of Anisminic is that it established that there was a single category of errors of law, all of which rendered a decision ultra vires. It is right to note the reservations expressed about this simple statement by some other members of the court in Lumba. Thus Lord Walker (para 193), while acknowledging Anisminic as a seminal case in the development of modern public law, observed that its full implications are still open to debate. However, his main concern was the extension of that concept to the far removed context of a private law claim for damages for false imprisonment, as was in issue in Lumba. I do not read his remarks as throwing doubt on Lord Dysons summary, when applied to review of the legality of subordinate decisions as in the present case. It must be acknowledged in any event that the Anisminic principle, however defined, has not been treated as necessarily applicable outside its particular context. An example is In re McC [1985] AC 528. The issue was whether the justices, in deciding to detain a juvenile without first informing him of his right to legal aid, had acted without jurisdiction or in excess of jurisdiction within the meaning of section 15 of the Magistrates Courts (Northern Ireland) Act 1964, so as to remove their immunity from civil liability for false imprisonment. Although this question was answered in the affirmative on the facts of the case, this did not depend on any application of Anisminic. Lord Bridge commented on the many different shades of meaning in different contexts acquired by the word jurisdiction, noting at one end of the spectrum the majority decision in Anisminic (p 536B H). He regarded it as irrelevant to the section before him, however valuable it might be in ensuring that the supervisory jurisdiction of the superior courts over inferior tribunals is effective to secure compliance with the law (p 546G). The evolving role of the High Court In considering the development of the law since Anisminic it is necessary to take account both of the major changes in the supervisory role of the High Court as respects public bodies of all kinds (both administrative and judicial or quasi judicial), including the 1979 reforms which established judicial review in its modern form; and also of the changes in the relationship between the traditional courts and specialist tribunals. The development in this period of judicial review is well described in De Smith op cit para 4 006 7: Over the last 40 years its scope has developed dramatically. It has grown from being little more than a method of correcting the errors of law of inferior courts to its present eminence as the remedy for protecting individuals against unlawful action by the Government and other public bodies. In the early 1970s this was the staple diet of the Divisional Court of the Bench Division of the High Court. This Court alone had the power to grant the prerogative remedies of certiorari, mandamus and prohibition. The importance attached to this power was demonstrated by the fact that the Divisional Court was usually presided over by the Lord Chief Justice of the day sitting with two other High Court Judges. The Court had direct historical links to the role of the High Court Judges of the Queens Bench Division who, from the Middle Ages, exercised the authority of the monarch to keep the peace and uphold law and order. The prerogative writs together with inherent jurisdiction derived from their association with the monarch gave them wide discretionary powers. Those powers still play a role in claims for judicial review today. As a result of reforms in 1979, in addition to the prerogative orders being available to the judges of the new Court, the judges hearing cases on the Crown Office List (the progenitor of the Administrative Court created in 2000) were also able to grant the declarations and injunctions which were the tools used by the judges of the Chancery Division when supervising the activities of public bodies. Declarations and injunctions, like the prerogative orders, were discretionary remedies. The powers to provide both sets of remedies meant that judicial review became a very effective method of upholding the rights of the individual against public bodies. This also meant that the technicalities relating to the grant of the prerogative remedies receded in importance. Anisminic also proceeded against the background of a reasonably clear division in the legal hierarchy between, on the one hand, the unlimited supervisory jurisdiction of the High Court, exercised by the Divisional Court usually presided over by the Lord Chief Justice, and, on the other, the limited jurisdictions of inferior courts or tribunals (or other adjudicative bodies, such as the Foreign Compensation Commission). For this purpose, no distinction was drawn in the authorities between the different forms of limited jurisdiction, or in particular between courts below the High Court and statutory tribunals. However, the period between Anisminic and the decision of the Supreme Court in Cart saw major changes in this traditional relationship between the High Court and other adjudicative bodies. Racal Communications It is convenient at this point to refer to the decision of the House of Lords in In re Racal Communications Ltd [1981] AC 374 (Racal), to which Lord Sumption attaches some importance. As I understand it, he sees it and related cases as illustrating the proposition, which he derives from Lord Wilberforces speech in Anisminic (at p 207), that the key issue when considering the scope of an ouster clause is to define the the permitted field of the relevant adjudicative body, that being identified by a careful analysis of the interpretative power conferred by the enabling Act. Racal itself concerned a challenge to the decision of a High Court judge exercising a statutory jurisdiction (under the Companies Act 1948 section 441) to authorise inspection by the Director of Public Prosecutions of company books for the purpose of investigating a suspected offence. Section 441(3) provided that the decision of the High Court judge on such an application shall not be appealable. The judge had dismissed an application by the Director on legal grounds, but the Court of Appeal had reversed his decision holding that it was entitled to do so because he had made an error of law which went to his jurisdiction. The House of Lords allowed the companys appeal. The case has attracted some attention for the distinction drawn by Lord Diplock in the context of ouster clauses between, on the one hand, administrative tribunals and authorities and, on the other, courts of law. Having confirmed that as respects the former the decision in Anisminic had effectively abolished the old distinction between errors of law that went to jurisdiction and errors of law that did not, he continued: But there is no similar presumption that where a decision making power is conferred by statute upon a court of law, Parliament did not intend to confer upon it power to decide questions of law as well as questions of fact. Whether it did or not and, in the case of inferior courts, what limits are imposed on the kinds of questions of law they are empowered to decide, depends upon the construction of the statute unencumbered by any such presumption (p 383) He went on to refer more specifically to the position of the High Court, as in the instant case. There was an obvious distinction between such a jurisdiction conferred by statute on a court of law of limited jurisdiction, and one conferred on the High Court or a judge of the High Court acting in his judicial capacity: The High Court is not a court of limited jurisdiction and its constitutional role includes the interpretation of written laws. Judicial review is available as a remedy for mistakes of law made by inferior courts and tribunals only. Mistakes of law made by judges of the High Court acting in their capacity as such can be corrected only by means of appeal to an appellate court; and if, as in the instant case, the statute provides that the judges decision shall not be appealable, they cannot be corrected at all. (p 384) As I see it, this distinction is of no assistance to the case of the Interested Parties, since there is nothing to suggest that Lord Diplock would have regarded the IPT, notwithstanding its distinguished composition, as anything more than an administrative tribunal within his classification. On that assumption Lord Diplocks speech supports the widest reading of the Anisminic decision as later confirmed in OReilly v Mackman. In any event I do not see that part of his reasoning as having majority support. As I read the speeches overall, it was the latter point, turning on the position of the High Court, rather than of courts more generally, which provided the ratio of the Houses decision. Although Lord Keith agreed without qualification with Lord Diplocks reasoning, his suggested distinction between courts in general and tribunals was not expressly endorsed by the other members of the House. Lord Edmund Davies made no specific reference to this point. Lord Salmon spoke of the decision in Anisminic as confined to decisions made by commissioners, tribunals or inferior courts, drawing no distinction between them. He based his decision on the fact that the jurisdiction of the Court of Appeal was defined by statute, which gave it no jurisdiction to make a judicial review of a decision of the High Court (p 386). To similar effect, Lord Scarman (at p 393) relied on the fact that the Court of Appeals jurisdiction over the High Court was the creature of statute, and in no way analogous to the supervisory jurisdiction of the High Court over inferior tribunals. Ms Rose goes as far as to submit that this part of the speech was not only obiter but per incuriam. There is force in this submission. As far as appears from the Appeal Cases report, the suggested distinction between courts and tribunals was not raised in argument and no relevant authorities were referred to in support, either by counsel or by Lord Diplock. His approach seems out of line with the long series of authorities cited by Laws LJ in his historical review in Cart, where it was emphasised that the jurisdiction of the Kings Bench Division extended to all inferior jurisdictions without distinction, including courts: a view well illustrated by Blackstones description of the range of courts within the scope of the writ of prohibition (paras 31 32 above). As Laws LJ said (commenting in terms on the speeches in Racal): The true contrast is between the High Court of the one hand and courts of limited jurisdiction on the other (Cart [2010] 2 WLR 1012 at para 68) On this approach no principled distinction can be drawn between the Foreign Compensation Commission and the IPT, or indeed the Upper Tribunal in Cart. All were or are inferior jurisdictions, equally subject to the supervision of the High Court. It is true that this part of Lord Diplocks speech has been cited with approval in later cases: see per Lord Browne Wilkinson in R v Hull University Visitor, Ex p Page [1993] AC 682, 703 (relating to University Visitors), and more recently per Lord Mance in Lee v Ashers Baking Co Ltd [2018] 3 WLR 1294, paras 85 87. But this point was not essential to the reasoning in either case. In Page, Lord Browne Wilkinson held that the High Court could not review a university visitors decision for a non jurisdictional error of law. However, he did so on the basis of common law principles that treat the visitor as equivalent to an arbitrator designated by the internal governance arrangements of a university (p 607, citing Holt CJ in Philips v Bury, (1694) Holt 715, 723 726). Lee also was concerned with a quite different issue: that is, the finality of the statutory appellate jurisdiction of the Northern Ireland Court of Appeal on appeal from the County Court. It had nothing to do with the exclusion of the original jurisdiction of the High Court in respect of inferior courts or tribunals. As Lord Mance explained (para 88) it turned on the construction of article 61(1) and (7) of the County Courts (Northern Ireland) Order 1980, which provided for the decision of the Court of Appeal on a case stated relating to the correctness of the decision of a county court judge upon any point of law to be final wording which was focused on the decision on the point of law, not on the regularity of the proceedings leading to it. He therefore found no difficulty in holding that the exclusion would not extend to a challenge to the fairness or regularity of the courts process. Lord Sumption also attaches importance to the fact that in Racal there was majority approval (Lords Diplock, Keith and Edmund Davies) of the dissenting judgment of Geoffrey Lane LJ in Pearlman v Keepers and Governors of Harrow School [1979] QB 56, 76C D. The same passage had recently been cited with approval by the Privy Council (including Lord Edmund Davies) in South East Asia Fire Bricks Sdn Bhd v Non Metallic Mineral Products Manufacturing Employees Union [1981] AC 363. In Pearlman the Court of Appeal by a majority allowed an appeal from the County Court in a case turning on the construction of a particular phrase (structural alteration or addition) in the Housing Act 1974. This was in the face of a provision of that Act by which the decision of the County Court was to be final and conclusive, and a provision (section 107) of the County Courts Act 1959 that no judgment or order of any judge of county courts . shall be removed by appeal, motion, certiorari or otherwise into any other court whatever It is a difficult case, not least because the majority judgments seem to have borne little relationship to the arguments as presented. The scope of the argument, as Geoffrey Lane LJ noted, had been constrained by concessions made on either side (without specific reference to Anisminic): on the one hand by counsel for the landlord that the section did not affect the power of the High Court to quash a decision of the county court made in excess of jurisdiction, although it did exclude the power to quash for errors of law on the record; and on the other by counsel for the tenant that the particular decision had been made within the judges jurisdiction (see pp 60G, 62D, 74A, 76H). There seems therefore to have been only limited reference to Anisminic in argument (see p 64G). However, in the leading judgment, Lord Denning MR took his own view of the construction of the no certiorari clause in the County Courts Act, holding that it applied only to decisions under jurisdiction conferred by that Act (p 68H). He also took the opportunity for an extended discussion of the difficulties of interpretation arising from Anisminic, concluding: The way to get things right is to hold thus: no court or tribunal has any jurisdiction to make an error of law on which the decision of the case depends. If it makes such an error, it goes outside its jurisdiction and certiorari will lie to correct it. (p 70E) Eveleigh LJ (pp 76ff) gave a judgment in substance agreeing with Lord Denning MRs interpretation of Anisminic and of the no certiorari clause in the County Courts Act. It was in this context (evidently in response to the judgments of his colleagues rather than the arguments of counsel) that Geoffrey Lane LJ reviewed the speeches in Anisminic, and concluded (in the passage later cited with approval by the Privy Council and the House of Lords): I am, I fear, unable to see how that determination, assuming it to be an erroneous determination, can properly be said to be a determination which he was not entitled to make. The judge is considering the words in the Schedule which he ought to consider. He is not embarking on some unauthorised or extraneous or irrelevant exercise. All he has done is to come to what appears to this court to be a wrong conclusion upon a difficult question. It seems to me that, if this judge is acting outside his jurisdiction, so then is every judge who comes to a wrong decision on a point of law. (p 76C D) These references do not in my view materially assist the arguments in the present case on either side. All three cases (Pearlman, South East Asia and Racal) were products of their time. They came at a relatively early stage in the evaluation by the courts of the Anisminic principle. They also reflected a degree of tension between different levels of the judiciary as to the way forward. In this respect Lord Dennings proposed interpretation seems closer to subsequent authority than that of the dissenting judgment, although his interpretation of the ouster clause seems more questionable, and the minority view might be supported on other grounds (discussed below, under the second issue). Specialist tribunals By the time of Racal it was in any event difficult to make a principled distinction between courts and tribunals by reference only to nomenclature. Parliament had already blurred the distinction when establishing in 1975 the Employment Appeal Tribunal presided over by a High Court judge, with a jurisdiction limited to appeals on points of law (Employment Protection Act 1975 sections 87 88). It was designated in terms as a superior court of record (Schedule 6 paragraph 10). In this respect as in others it followed the precedent of the National Industrial Relations Court (Industrial Relations Act 1971 Schedule 3 paragraph 13). As is apparent from the authorities cited by Laws LJ in Cart (paras 61 62) the accepted wisdom for many years, indeed until the decision of the Divisional Court in that case, was that such designation as a superior court of record was in itself sufficient to exclude judicial review by the High Court. He cites, for example, R v Regional Office of the Employment Tribunals (London North), Ex p Sojirin (unreported) 21 February 2000, in which Sedley LJ (with whom Brooke LJ and Sir Christopher Staughton agreed) stated: So far as the Employment Appeal Tribunal is concerned, it is a superior court of record against which judicial review simply does not lie. The same thinking was initially assumed to apply to the Upper Tribunal. Laws LJ cited De Smith Judicial Review 6th ed (2007), para 1 093: The Administrative Court will have no role at all in relation to decisions of the Upper Tribunal, which as [a] superior court of record falls entirely outside the supervisory jurisdiction. Indeed, (as Lord Dyson noted in Cart in the Supreme Court [2012] 1 AC 663 at para 117), Sir Andrew Leggatt in his report Tribunals for Users One System, One Service (2001) (at para 6.31 34), had identified this as one possible means of excluding judicial review. This was not his preferred solution, principally because he saw it as an artificial way of tackling the problem, which would blur the clear distinction we wish to achieve between the courts and the Tribunals System. His preference was for exclusion of judicial review by express statutory provision. It was not until Cart itself in the Divisional Court that this view of designation as a superior court of record was rejected as a constitutional solecism, when set against the principle that the supervisory jurisdiction of the High Court (if it can be ousted at all) can only be ousted by the most clear and explicit words (para 37 above). Laws LJ did however accept that the Upper Tribunal was for relevant purposes, an alter ego of the High Court, and that as such it: satisfies the material principle of the rule of law: it constitutes an authoritative, impartial and independent judicial source for the interpretation and application of the relevant statutory texts. (para 94) This led him to propose a limited form of judicial review not extending to a mere legal mistake by the tribunal within the field ascribed to it. As will be seen, this solution was not adopted by the Supreme Court. However, the proposition that designation as a superior court was sufficient in itself to exclude judicial review was not further pursued in this appeal. Laws LJs rejection of that proposition was accepted as correct by this court (see per Lady Hale para 30). I shall return to other passages in Laws LJs judgment in the context of the second issue in the appeal. Error of law and nullity in the modern law The process of refinement of the Anisminic principle discussed above raised serious questions as to the need for continued reliance on concepts such as ultra vires or nullity as justifications for the intervention by the court. As Lord Reid himself had recognised (pp 170 171), the approach adopted in that case might be thought difficult to reconcile with a case such as Smith v East Elloe Rural District Council [1956] AC 736. That related to a statutory right within six weeks to challenge the confirmation of a compulsory purchase order on the grounds that it was not empowered to be granted, subject to which the order shall not be questioned in any legal proceedings whatsoever . It was held that the ouster clause was effective even where there was an allegation of fraud. In an often cited passage, Lord Radcliffe (pp 769 770) commented on the argument that an order made in bad faith was a nullity and therefore incapable of having any effect: But this argument is in reality a play on the meaning of the word nullity. An order even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders. In R v Secretary of State for the Environment, Ex p Ostler [1977] QB 122 the Court of Appeal held that it was bound by this decision; the availability of a statutory right to challenge within a specified time limit, among other points, provided a sufficient basis for distinguishing Anisminic. This case also provides an interesting example of the influence of successive Junior Treasury Counsel in moulding the law (noted by Professor Feldman: above para 52 above). Lord Denning MR treated the statutory expression not within the powers of this Act as in effect embracing the familiar Wednesbury grounds, including error of law. This approach, following that of Lord Radcliffe (dissenting) in Smith v East Elloe Rural District Council, had been adopted by the Court of Appeal on the basis of a concession by counsel for the Minister (Nigel Bridge) in Ashbridge Investments Ltd v Minister of Housing and Local Government [1965] 1 WLR 1320; and in Ostler itself was not disputed by counsel for the Secretary of State (Harry Woolf). As Lord Denning said: It has been repeatedly followed in this court ever since and never disputed by any Minister. So it is the accepted interpretation (p 133G 134A) The concession was no doubt well advised, since without it there might have been difficulty in defending a time limited right of challenge confined to excess of powers in the narrower sense. On the relevance of the concept of nullity as used in Anisminic, Professor Paul Craig (op cit para 16 015) refers to the extra judicial observations of Sir John Laws (Illegality: The Problem of Jurisdiction in Supperstone and Goudie Judicial Review 1st ed (1992)): Sir John Laws argued that once the distinction between jurisdictional and non jurisdictional errors was discarded, there was no longer any need for the ultra vires principle as such, since the courts were in reality intervening to correct errors of law. The rationale for the judicial persistence with the principle is that it provides a legitimating device for the exercise of the courts power. Sir John Laws captures this idea Ultra vires is, in truth, a fig leaf; it has enabled the courts to intervene in decisions without an assertion of judicial power which too nakedly confronts the established authority of the Executive or other public bodies. The fig leaf was very important in Anisminic; but fig leaf it was. And it has produced the historical irony that Anisminic, with all its emphasis on nullity, nevertheless erected the legal milestone which pointed towards a public law jurisprudence in which the concept of voidness and the ultra vires doctrine have become redundant. (This important chapter, written in 1992 at about the time of the authors transition from Junior Treasury Counsel to High Court judge, also marked the beginning of a lively academic debate over the place of nullity and ultra vires in judicial review: see the corresponding chapter in the 6th ed of the same work (2017), and De Smith op cit, para 4 050 1.) I see considerable force in these observations, at least as applied to review for errors of law. Taking the present case, it is highly artificial, and somewhat insulting, to describe the closely reasoned judgment of this eminent tribunal as a nullity, merely because there is disagreement with one aspect of its legal assessment. I will return to this point later in connection with the second issue. Professor Craig concludes that the scope of judicial review is not self defining and it is not capable of being answered by linguistic or textual analysis of the statute alone. The critical question, he says, is whose relative opinion on the relevant question should be held to be authoritative, and the answer must ultimately be based on a value judgment, the precise content of which will not necessarily be always the same (para 16 016). To similar effect, but adopting a different metaphor, the editors of De Smith 8th ed comment: The distinction between jurisdictional and non jurisdictional error is ultimately based upon foundations of sand. Much of the superstructure has already crumbled. What remains is likely quickly to fall away as the courts rightly insist that all administrative action should be simply, lawful, whether or not jurisdictionally lawful. (De Smith para 4 054) The same passage in a previous edition was cited with approval by Lord Dyson in Cart para 111, who described the distinction between jurisdictional error and other error as artificial and technical. I agree. As will be seen in the next section, the reasoning of the Supreme Court in Cart does not turn on such sharp distinctions, but reflects a more evaluative approach, such as envisaged by Professor Craig, but starting from certain fundamental principles. Cart in the Supreme Court I now turn to the judgments in the Supreme Court in Cart, which in my view provide the essential background to the resolution of the issues in the present appeal. The reform of the tribunals system, under the Tribunals, Courts and Enforcement Act 2007, effected a fundamental change in the traditional relationship between courts and tribunals. The background to the reforms, and the nature of the changes made by and under the Act, were described in Lady Hales leading judgment (agreed by the other members of the court). She noted in particular the new judicial structure, presided over by the Senior President (normally a Lord Justice of Appeal), and including not only the specialist tribunal judges, but also all the judges of the ordinary courts, up to and including the Court of Appeal (para 22). She also noted the designation by section 3(5) of the Upper Tribunal as a superior court of record (para 24); the major innovation of the power of the Upper Tribunal to exercise a jurisdiction equivalent to judicial review (para 25); and probably most important the right of appeal with permission to the Upper Tribunal from the First tier Tribunal on points of law (para 26). The principal decision under review in Cart was one by the Upper Tribunal (as it happens, presided over by myself as Senior President of Tribunals) giving the claimant only limited permission to appeal against a decision of the First tier Tribunal relating to child maintenance. It was the common view of the courts at all three levels that the decision itself was unimpeachable on its merits, but the case gave the opportunity for detailed consideration of the principles which should govern such review in future cases. As Lady Hale explained (paras 31 34), both the Divisional Court and the Court of Appeal, albeit by slightly different legal routes, had held that, while judicial review was in principle available, its exercise should be narrowly confined. Under the heading The field of choice for this court (paras 37ff), Lady Hale regarded three points as clear from the oral arguments: first, that there was nothing in the 2007 Act to exclude judicial review of unappealable decisions of the Upper Tribunal; secondly, that it would be inconsistent with the new structure to draw a distinction for this purpose between different jurisdictions there gathered together; and thirdly that: the scope of judicial review is an artefact of the common law whose object is to maintain the rule of law that is to ensure that, within the bounds of practical possibility, decisions are taken in accordance with the law, and in particular the law which Parliament has enacted, and not otherwise. Both tribunals and the courts are there to do Parliaments bidding. But we all make mistakes. No one is infallible Against the background the question as she saw it was what machinery is necessary and proportionate to keep such mistakes to a minimum? In particular, should there be any jurisdiction in which mistakes of law are, either in theory or in practice, immune from scrutiny in the higher courts? Three possible approaches had been identified in the course of oral argument: First, we could accept the view of the courts below in the Cart and MR (Pakistan) cases that the new system is such that the scope of judicial review should be restricted to pre Anisminic excess of jurisdiction and the denial of fundamental justice (and possibly other exceptional circumstances such as those identified in the Sinclair Gardens case [2006] 3 All ER 650). Second, we could accept the argument, variously described in the courts below as elegant and attractive, that nothing has changed. Judicial review of refusals of leave to appeal from one tribunal tier to another has always been available and with salutary results for the systems of law in question. Third, we could adopt a course which is somewhere between those two options namely that judicial review in these cases should be limited to the grounds upon which permission to make a second tier appeal to the Court of Appeal would be granted. (para 38) Earlier in the judgment (para 27) she had recorded that the Lord Chancellor had exercised the power under section 13(6) to apply the second appeal criteria as already applied in the Court of Appeal, to the effect that permission shall not be granted unless: (a) the proposed appeal would raise some important point of principle or practice; or (b) there is some other compelling reason for the relevant appellate court to hear the appeal. She considered the three options in turn. The first (the exceptional circumstances approach) would she thought lead back to the distinction between jurisdictional and other errors which had been effectively abandoned after Anisminic. She saw a number of other objections. In particular (echoing in some ways the concerns of Blackstone in the 18th century: para 32 above) she saw a risk of specialist tribunals, in contrast to the ordinary courts, developing their own local law, a risk which was increased by the power of the Upper Tribunal to set precedent often in a highly technical and fast moving area of law, combined with its ability to refuse permission to appeal, and the likelihood that the same question of law will not reach the High Court or the Court of Appeal by a different route: There is therefore a real risk of the Upper Tribunal becoming in reality the final arbiter of the law, which is not what Parliament has provided. Serious questions of law might never be channelled into the legal system (as Sedley LJ put it at [2011] QB 120, para 30) because there would be no independent means of spotting them. High Court judges may sit in the Upper Tribunal but they will certainly not be responsible for all the decisions on permission to appeal, nor is it possible for the Upper Tribunal to review its own refusals, even when satisfied that they are wrong in law. (para 43) In respect of the second (The status quo ante but which?) she noted that the courts had already adopted principles of judicial restraint when considering decisions of expert tribunals. She referred (inter alia) to her own comments (Cooke v Secretary of State for Social Security [2001] EWCA Civ 734; [2002] 3 All ER 279, paras 15 17) on the need for appropriate caution in giving permission to appeal from the Social Security Commissioners because of their particular expertise in a highly specialised area of the law, but observed that other contexts (such as asylum) might require a different approach. The real question was: what level of independent scrutiny outside the tribunal structure is required by the rule of law There must be a principled but proportionate approach. (para 51) As to the third option (The second appeals criteria), having noted the possible objections, she said: But no system of decision making is perfect or infallible. There is always the possibility that a judge at any level will get it wrong. Clearly there should always be the possibility that another judge can look at the case and check for error. That second judge should always be someone with more experience or expertise than the judge who first heard the case. But it is not obvious that there should be a right to any particular number of further checks after that. The adoption of the second tier appeal criteria would lead to a further check, outside the tribunal system, but not one which could be expected to succeed in the great majority of cases. (para 56) She concluded that the adoption of the second tier appeals criteria would be a a rational and proportionate restriction, which would recognise that the new tribunal structure deserved: a more restrained approach to judicial review than has previously been the case, while ensuring that important errors can still be corrected. It was a test which the courts were now very used to applying, and one which was capable of encompassing: both the important point of principle affecting large numbers of similar claims and the compelling reasons presented by the extremity of the consequences for the individual (para 57) Of the other judgments I note that Lord Phillips (paras 91 92) was a relatively late convert to the need for even a restricted form of judicial review: My initial inclination was to treat the new two tier tribunal system as wholly self sufficient. It is under the presidency of a judge who is likely to be a member of the Court of Appeal, and High Court judges can and will sit in the Upper Tribunal. There is considerable flexibility in the system in relation to the administration and composition of the Upper Tribunal. Can it not be left to the Senior President, in consultation with the President of the Queens Bench Division and other judicial colleagues to ensure that the tribunal judiciary is so deployed as to ensure the appropriate degree of judicial scrutiny of decisions of the lower tier? However, having considered the other judgments he had been persuaded that, at least until we have experience of how the new tribunal system is working in practice, there was a need for some overall judicial supervision of the decisions of the Upper Tribunal to guard against the risk that errors of law of real significance slip through the system (para 92). Lord Brown, agreeing with the other judgments, saw nothing contrary to principle in the proposed limitation on the scope of review. As he said: The rule of law is weakened, not strengthened, if a disproportionate part of the courts resources is devoted to finding a very occasional grain of wheat on a threshing floor full of chaff. (para 100) To similar effect Lord Clarke agreed that the real question was the level of independent scrutiny required by the rule of law, adding: It is, as I see it, a matter for the courts to determine what that scrutiny should be. I am not persuaded that judicial review requires the same degree of scrutiny in every case. All depends upon the circumstances. (para 102) Lord Dyson, also agreeing with Lady Hale, noted that Parliament had not accepted the Leggatt recommendation to exclude judicial review. He commented: The fact that Parliament did not accept the recommendation to exclude judicial review of unappealable decisions of the Upper Tribunal does not mean that it rejected the committees view that there had been a significant change in the structure of the tribunal system such as might justify a reappraisal of the scope of the judicial review jurisdiction. It merely means that Parliament was not willing to adopt the controversial suggestion that judicial review should be excluded altogether. (para 118) He referred to the Government White Paper: Transforming Public Services: Complaints, Redress and Tribunals presented to Parliament in July 2004 (Cm 6243), which (at para 7.28) had described complete exclusion of the courts from their historic supervisory role (as) a highly contentious constitutional proposition. Instead there was said to be merit in providing as a final form of recourse a statutory review on paper by a judge of the Court of Appeal. Lord Dyson agreed with the Leggatt report and the 2004 White Paper that the strategic reorganisation of the tribunals system demanded a reappraisal of the scope of judicial review. Parliament having refused to undertake it, the task of deciding the scope of the judicial review jurisdiction, and the extent of any restrictions fell to be performed by the courts. Accepting that any restrictions called for justification, he said: there is no principle more basic to our system of law than the maintenance of [the] rule of law itself and the constitutional protection afforded by judicial review. But the scope of judicial review should be no more (as well as no less) than is proportionate and necessary for the maintaining of the rule of law. (paras 119 122) Having discussed the implications of the second appeals criteria, and experience of their use in the courts since 2000, he concluded: Parliament has shown a liking for the second appeal criteria in second appeals and in particular in the tribunal context of appeals from the UT to the Court of Appeal. It can at least be said that to import those criteria into the judicial review jurisdiction in the present context does not go against the grain of the TCEA. More positively, in my view the second tier appeals approach provides a proportionate answer to the question: what scope of judicial review of unappealable decisions of the UT is required to maintain the rule of law? (para 133) Finally, for completeness I note that all the justices expressed agreement with the corresponding reasoning of Lord Hope in the linked Scottish case of Eba v Advocate General [2012] 1 AC 710. Comment on Cart I have referred at some length to the judgments in Cart because they represented a major reappraisal of the approach of the supervisory functions of the High Court as respects specialist tribunals. The case has attracted some academic controversy (see the discussion in Joanna Bell, Rethinking the Story of Cart v Upper Tribunal and its implications for Administrative Law Oxford Journal of Legal Studies Vol 39 No 1 (2019) pp 74 99). For example, Professor Forsyth describes the reasoning of the court as pragmatic but not principled, adding: It may portend the abandonment of jurisdiction as the organising principle of administrative law and its replacement by the court allowing judicial review on discretionary basis when it is rational and proportionate to do so (which would be a revolutionary change) (Wade & Forsyth, pp 222 223) Certainly the judgments show how far the law has evolved since the somewhat technical debates in Anisminic itself. In particular, against the background of the Divisional Court judgment, they reaffirm in no uncertain terms the continuing strength of the fundamental presumption against ousting the supervisory role of the High Court over other adjudicative bodies, even those established by Parliament with apparently equivalent status and powers to those of the High Court. Instead such status (as adjudicative bodies rather than executive agencies) is to be respected and taken into account, not by exclusion of review, but by the careful regulation of the courts power to grant or refuse permission for judicial review. Furthermore, setting the principles by which that is to be done, in the absence of specific statutory provision, is a matter properly within the province of the appellate courts. I shall return below, under the second issue, to the question in what circumstances if any Parliament could exclude review altogether. There is no doubt that, if it is to be done, nothing less than the clearest wording will suffice (see De Smith para 1 027). As has been seen, that principle has been a central theme of the authorities since well before Anisminic, and was reaffirmed in emphatic terms by the Divisional Court in Cart (para 37 above). The principle can be seen as an application of the principle of legality as explained by Lord Hoffmann in R (Simms) v Secretary of State for the Home Department [2000] 2 AC 115 at p 131F: the principle of legality means that Parliament must squarely confront what it is doing and accept the political cost. The practical importance of that principle was vividly illustrated by the fate of perhaps the most extreme form of ouster clause promoted by government in modern times: clause 11 of the Asylum and Immigration (Treatment of Claimants etc) Bill 2003. Not content with an express prohibition (in proposed clause 108A(1) and (2)) of any form of supervisory jurisdiction or questioning by the courts of tribunal decisions, the drafter had gone on to spell out precisely the intended consequence: Subsections (1) and (2) (a) prevent a court, in particular, from entertaining proceedings to determine whether a purported determination, decision or action of the Tribunal was a nullity by reason of (i) lack of jurisdiction, (ii) irregularity, (iii) error of law, (iv) breach of natural justice, or (v) any other matter The clause attracted powerful objections from within and outside Parliament. The reaction of the Constitutional Affairs Committee was typical: An ouster clause as extensive as the one suggested in the Bill is without precedent. As a matter of constitutional principle some form of higher judicial oversight of lower Tribunals and executive decisions should be retained. (Second Report of the 2003 2004 Session para 708) In response to this pressure the clause was withdrawn. Other common law jurisdictions For completeness I should make clear that I have not overlooked the many authorities to which we have been helpfully referred from other common law jurisdictions, where similar issues have been discussed at the highest level, not always with the same results. All these decisions need to be read within the differing legal and constitutional arrangements of the jurisdictions concerned. For that reason, and without disrespect to the depth of learning and analysis there shown, I have not been persuaded that they add materially to the assistance available in the present context from the relevant domestic authorities and textbooks. For example, the High Court of Australia has arrived at similar results by a broadened concept of jurisdiction (see Boughey and Burton Crawford Reconsidering [Cart] and the rationale for jurisdictional error [2017] Public Law 1). Thus, in Kirk v Industrial Court of New South Wales [2010] HCA 1, the court held that an ouster clause expressed in apparently far reaching terms was ineffective to exclude review in relation to a particular error of law held to be jurisdictional. The court took an expansive view of the concept of jurisdiction, quoting the opinion expressed in an article by Professor Jaff (Judicial Review: Constitutional and Jurisdictional Fact (1957) 70 Harvard Law Review pp 953, 963): that denominating some questions as jurisdictional is almost entirely functional: it is used to validate review when review is felt to be necessary. If it is understood that the word jurisdiction is not a metaphysical absolute but simply expresses the gravity of the error, it would seem that this is a concept for which we must have a word and for which use of the hallowed word is justified. The court noted the line of House of Lords authorities under which the difficulties had been overcome by holding that any error of law by a decision maker rendered the decision ultra vires, commenting: But that is a step which this court has not taken (para 64). More generally the court observed that there can be no automatic transposition of principles from one jurisdiction to the other because the constitutional context is too different (para 66). The present appeal the first issue Against that background I can state my conclusions on the first issue relatively briefly. I remind myself of the terms of section 67(8): Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. The provision for the Secretary of State to provide a route of appeal adds nothing to the arguments, in my view. Not only has it not been exercised, but in any event a power entirely in the gift of the executive does nothing to weaken the case for ultimate control by the courts. As Ms Rose submits, our interpretation of the subsection, whether in its present form or as originally drafted in 1985, must be informed by the close parallel with the provision under review in Anisminic. At least by that date, following Lord Diplocks explanation in OReilly v Mackman (1983), the drafter can have had no serious doubt about the far reaching effect of that decision. A determination vitiated by any error of law, jurisdictional or not, was to be treated as no determination at all. It therefore fell outside the reference in the ouster clause to a determination of the commission. In other words, the reference to such a determination was to be read as a reference only to a legally valid determination. On the other side, Sir James Eadie submits that the task of interpretation is to be approached, by reference, not simply to a general presumption against ouster clauses of any kind, but rather to careful examination of the language of the provision, having regard to all aspects of the statutory scheme, and the status or the body in question, in order to discern the policy Parliament intended in the legislation (R (Woolas) v Parliamentary Election Court [2012] QB 1, para 54 per Thomas LJ). The special character and functions of the IPT, combined with the specific references to decisions relating to jurisdiction, show a clear intention to protect it from any form of review by the ordinary courts, even in cases to which the Anisminic principle would otherwise have applied. The main flaw in this argument, in my view, is that it treats the exercise as one of ordinary statutory interpretation, designed simply to discern the policy intention of Parliament, so downgrading the critical importance of the common law presumption against ouster. In that respect it echoes the unsuccessful argument of the Commission in Anisminic. Lord Reid did not dispute that the plain words of the subsection in that case were apt to exclude any form of challenge in the courts; but this ordinary meaning had to yield to the principle that such a clause will not protect a nullity and that there are no degrees of nullity (see paras 46 47 above). Following OReilly v Mackman the concept of nullity for these purposes is extended to any decision which is erroneous in law, and in that sense legally invalid. If one applies that approach to section 67(8), ignoring for the moment the words in parenthesis, the exclusion applies, not to all determinations, awards or other decisions whatever their status, but only to those which are legally valid in that sense. Thus, if the IPTs decision in the present case were found to have been reached on an erroneous interpretation of section 5 of the Intelligence Services Act 1994, those words would not save it from intervention by the courts. Does the specific reference to decisions as to whether they have jurisdiction make any difference? It would be odd if it did. As has been seen the relevant decision in this case raised a short point of law, turning principally on the reading of the word specified in section 5. On no ordinary view could it be regarded as a decision as to whether [the IPT] had jurisdiction, nor even as a decision as to jurisdiction under the apparently broader language of the 1985 Act. Although the arguments before us have proceeded on the basis that the change of wording made no material difference, the present wording seems designed if anything to emphasise that the exclusion is directed specifically at decisions about jurisdiction made by the IPT itself. If, however, those words are read in the language of Anisminic there is no problem. The exclusion applies only to a legally valid decision relating to jurisdiction. In the parenthesis, as in the remainder of the subsection, a decision which is vitiated by error of law, whether as to jurisdiction or otherwise, is no decision at all. While of course respect is due to the contrary view expressed obiter by Lord Brown in the A case (para 19 above), the point was not in issue and there was no argument on it. This does not necessarily mean that the words in parenthesis are otiose. As Ms Rose points out, at the time of the 1985 Act, the potential significance of the distinction between issues of fact and law, in the context of jurisdiction, had been highlighted by the House of Lords in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74. Closer to home the decision of the IPT itself in C v The Police (see para 7 above) is an example of the kind of decision as to jurisdiction which might well involve issues of fact to which the exclusion could be said to apply without engaging the presumption against ouster. However, whether that is a likely interpretation of Parliaments intentions, or indeed whether or not the parenthesis is redundant, is in my view beside the point. Judicial review can only be excluded by the most clear and explicit words (Cart, para 31). If Parliament has failed to make its intention sufficiently clear, it is not for us to stretch the words used beyond their natural meaning. It may well be that the promoters of the 1985 Act thought that their formula would be enough to provide comprehensive protection from jurisdictional review of any kind. (If so, as Lord Wilson observes, they would have gained support from the distinguished author of the notes to the 1985 Current Law Statutes.) But one is entitled to ask why they did not use more explicit wording. With OReilly v Mackman in mind, the natural focus of attention would have been, not on potential challenges to the tribunals own decisions as to jurisdiction, but on jurisdictional or legal challenges to its substantive decisions generally. A more explicit formula might perhaps have anticipated the extreme wording of the bill presented in 2003 (para 101 above), excluding challenges to any determination or purported determination as a nullity by reason of lack of jurisdiction, error of law, or any other matter. The reason for not adopting that course may simply be that, as in 2003, it might not have been expected to survive Parliamentary scrutiny. So far as concerns the features of the IPT regime on which the Court of Appeal relied, I agree generally with Ms Roses responses (paras 24 25 above). I am unimpressed by arguments based on the security issues involved in many (though not all) of the IPTs cases. As this case shows, the tribunal itself is able to organise its procedures to ensure that a material point of law can be considered separately without threatening any security interests. The Administrative Court can also ensure that the grant of permission is limited to cases raising points of general significance, and that its proceedings are conducted without risk to security concerns. Further, in the case of the IPT, the potential for overlap with legal issues which may be considered by the ordinary courts (see paras 7 and 14 above) makes it all the more important that it is not able to develop its own local law without scope for further review. The second issue The second issue poses the question whether, and, if so, in accordance with what principles, Parliament may by statute oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction? The conclusion I have reached on the first issue makes it strictly unnecessary to go further in this appeal. However, as is apparent from the submissions under the second issue, the principles discussed in this judgment have important implications beyond the form of ouster clause under consideration in this case, on which some comment may be of value. The essence of Ms Roses submission can be simply stated. It is in short that a clause purporting to oust the supervisory role of the High Court to correct errors of law cannot properly be upheld because it would conflict with the rule of law, a principle which is as fundamental to our constitution as the principle of Parliamentary sovereignty. She emphasises that she does not in this appeal seek to question the principle of Parliamentary sovereignty itself, but rather to explain its boundaries, and why the laws of a sovereign Parliament require an independent interpreter of unlimited jurisdiction to ensure those laws are faithfully implemented. That independent arbiter must she says be a court of unlimited jurisdiction, such as the High Court in England and Wales, or the Court of Session in Scotland; and its decisions must in turn be capable of correction by the appellate courts. For the interested parties, Sir James Eadie does not question the need for an independent, authoritative interpreter of legislation, as a fundamental requirement of the rule of law (in his words); but he submits that the High Court is not the only body capable of performing that function. The IPT is of equivalent judicial status. Nor is there any absolute constitutional requirement for a right of appeal to the higher courts (see per Lord Brown in R (A), para 24). The balance between the correction of judicial error and the policy considerations in favour of finality is a judgement properly for the legislature. Both parties find support in the judgment of Laws LJ in Cart [2011] QB 120, paras 36 40 (a passage cited with approval by Lady Hale in the Supreme Court: [2012] 1 AC 663, para 30). Ms Rose relies on his affirmation of the need under the rule of law for statute law to be mediated by an authoritative source, the paradigm being the High Court as the principal constitutional guardian of the rule of law , and further that the need for such an authoritative judicial source cannot be dispensed with by Parliament. This is not a denial of legislative sovereignty, but an affirmation of it (para 38) On the other side, Sir James relies on Laws LJs acceptance in Cart that Parliament could entrust that supervisory role to a body properly regarded as the alter ego of the High Court, such as in that case the Upper Tribunal (paras 39, 94). He also relies on Laws LJs acknowledgment in the same passage (at para 40) of Parliaments power to modify, sometimes radically the procedures by which statute law is mediated; exemplified by the many cases in which Parliament has, without objection, replaced the High Courts common law powers with time limited statutory powers of review (as seen in Ex p Ostler: para 80 above). Thus, he says, there is no constitutional principle to preclude such legislative choices about which such judicial body is to have the power to make final decisions, and subject to what limitations. As will be seen from these summaries, the area of disagreement even on the second issue is relatively narrow, but of considerable constitutional significance. It is useful to start by identifying those matters which appear not presently to be in dispute. First, both parties start from the premise that the relationship between Parliament and the courts is governed by accepted principles of the rule of law. Unsurprisingly, there is no challenge to the proposition (per Lord Dyson, quoted at para 96 above) that there is no principle more basic to our system of law than the maintenance of the rule of law itself and the constitutional protection afforded by judicial review. We are not therefore concerned with the difficult constitutional issues which might arise if Parliament were to pass legislation purporting to abrogate or derogate from those accepted principles: see eg Jackson v Attorney General [2005] UKHL 56; [2006] 1 AC 262, para 102 per Lord Steyn; and the succinct but masterly discussion of the competing views, academic and judicial, by Lord Bingham in The Rule of Law (2010): Chapter 12 The Rule of Law and the Sovereignty of Parliament. Further, as noted earlier in this judgment (para 33), Parliament itself has affirmed (most recently in the Senior Courts Act 1981) the long established common law powers of the High Court, as a court of unlimited jurisdiction, including its role in keeping inferior courts and tribunals within the law. Equally important, though of more recent origin, is the express statutory recognition of the rule of law in section 1 of the Constitutional Reform Act 2005. That provides: The rule of law This Act does not adversely affect the existing constitutional principle of the rule of (a) law This court has recognised the special status of such constitutional statutes, in particular their immunity from implied repeal: a status which (in the words of Laws LJ in another case) preserves the sovereignty of the legislature and the flexibility of our uncodified constitution. It accepts the relation between legislative supremacy and fundamental rights is not fixed or brittle: rather the courts (in interpreting statutes and, now, applying the Human Rights Act 1998) will pay more or less deference to the legislature, or other public decision maker, according to the subject in hand. (Thoburn v Sunderland City Council [2003] QB 151, paras 63 64, approved in Miller v Secretary of State for Exiting the European Union [2018] AC 61, para 66) In his introduction to The Rule of Law, Lord Bingham underlined the significance of section 1 of the 2005 Act to his general discussion of the concept. He attributed the absence of a statutory definition to the probable recognition by parliamentary counsel of the extreme difficulty of devising a pithy definition suitable for inclusion in a statute, and their wish instead to leave it to the judges to rule on what the term means if and when the question arises for decision, so enabling the concept to evolve over time in response to new views and situations (op cit pp 7 8). Whatever the explanation, Parliament having recognised this existing constitutional principle, and provided no definition, there is nothing controversial in the proposition that it is for the courts, and ultimately the Supreme Court (created by the same Act), to determine its content and limits. Secondly, it is not I believe in dispute, and indeed was clearly established by the time of Anisminic, that there are certain fundamental requirements of the rule of law which no form of ouster clause (however clear and explicit) could exclude from the supervision of the courts. The first relates to what I would call excess of jurisdiction: that is, a decision arrived at by a tribunal of limited jurisdiction through a process which goes outside those limits whether at the inception or at any stage of the proceedings. On this category there was no disagreement in Anisminic. It is sufficient to quote Lord Morris, who dissented on the main issue: The control cannot be exercised if there is some provision (such as a no certiorari clause) which prohibits removal to the High Court. But it is well settled that even such a clause is of no avail if the inferior tribunal acts without jurisdiction or exceeds the limit of its jurisdiction. (p 182C emphasis added) The conceptual basis for this rule is not far to seek. As Lord Wilberforce said in Anisminic (see para 36 above): What would be the purpose of defining by statute the limit of a tribunals powers if, by means of a clause inserted in the instrument of definition, those limits could safely be passed? The same approach can in my view be applied to what I would term abuse of jurisdiction: that is, a decision made within the limits prescribed by Parliament but in breach of basic principles governing the making of such decisions. In Anisminic, Lord Wilberforce spoke of certain fundamental assumptions, which without explicit restatement in every case, necessarily underlie the remission of power to decide such as the requirement that a decision must be made in accordance with principles of natural justice and good faith. The principle that failure to fulfil these assumptions may be equivalent to a departure from the remitted area must be taken to follow from the decision of this House in Ridge v Baldwin [1964] AC 40. (p 207E) It can be seen as a short step from excess of jurisdiction to abuse in this sense. To deny the effectiveness of an ouster clause is again a straightforward application of existing principles of the rule of law. Consistently with those principles, Parliament cannot entrust a statutory decision making process to a particular body, but then leave it free to disregard the essential requirements laid down by the rule of law for such a process to be effective. Clear and long established authority to that effect is to be found in R v Cheltenham Comrs (para 35 above, in relation to a decision affected by apparent bias); see also Attorney General v Ryan [1980] AC 718 PC at p 730 per Lord Diplock (decision in breach of natural justice). I note that in the present case Sales LJ treated section 67(8) as excluding review in certain cases of alleged unfairness, such as a decision of the IPT as to whether a member of the panel should recuse himself for appearance of bias, or as to what fairness or natural justice requires in relation to some aspect of its procedure. He commented: It is implicit in reading section 67(8) in this way that Parliament considered that the IPT can be trusted to make sensible decisions about matters of this kind and on questions of law which arise and need to be decided for the purpose of making determinations on claims or complaints made to it. There is nothing implausible about this. The quality of the membership of the IPT in terms of judicial expertise and independence is very high, as set out in Schedule 3 to RIPA, so it is a fair inference that Parliament did intend that this should be the position. (paras 37 38) Sir James Eadie cited this passage as an illustration of the courts proper function of interpreting such ouster provisions with regard to their statutory context. I do not read this passage as suggesting that the residual jurisdiction in respect of the rules of natural justice would be wholly excluded, however gross the breach. Nor did I understand Sir James to go so far. There are useful parallels with Laws LJs discussion (Cart, paras 96ff) of the exceptional circumstances in which a county court judgment may be reviewable, under the principles established in R (Sivasubramaniam) v Wandsworth County Court [2002] EWCA Civ 1738; [2003] 1 WLR 475. As Laws LJ said, complaints of unfairness in the course of a hearing are legion, and very various, and need to be approached with caution. Citing an earlier judgment of his own (R (Strickson) v Preston County Court [2007] EWCA Civ 1132, para 32) he drew a distinction between a case where the judge simply gets it wrong and one where the judicial process itself has been frustrated or corrupted, including substantial denial of the right to a fair hearing or in other words a wholly exceptional collapse of fair procedure: something as gross as actual bias on the part of the tribunal. In the Court of Appeal in the present case there appears to have been no reference to this part of Laws LJs judgment, nor to the kind of cases that he was discussing. However, I would be surprised if Sales LJ, even on his interpretation of section 67(8), would have treated it as excluding altogether the possibility of review in such extreme cases, however unlikely they might be in a tribunal of the distinction of the IPT. In accordance with established principles, the ultimate safeguard of judicial review remains essential if the rule of law is to be maintained. The special status of the IPT (like that of the Upper Tribunal) may be a reason for restricting the grant of permission for judicial review, but not for excluding it altogether. I turn to the area of dispute in the present appeal. We are concerned, not with excess or abuse of jurisdiction in any of the senses discussed above, but with a straightforward question of legal interpretation on a point directly within the apparent scope of the IPTs statutory remit. There is no disagreement as to the need for independent judicial interpretation of such a question. The dispute is as to the power of the legislature, consistently with the rule of law, to entrust that task to a judicial body such as the IPT, free from any possibility of review by the ordinary courts (including the appellate courts). In that respect in my view the discussion needs to move beyond the legal framework established by Anisminic, and the cases which followed it. Those decisions established the principle that, if a tribunal goes wrong on any such question of law, it exceeds its jurisdiction, so that the resulting decision is a nullity, and (subject to an effective ouster clause) liable to be so declared by the High Court. Although this principle is now unquestioned, its conceptual basis, 35 years on from OReilly v Mackman, remains obscure. Anisminic itself does not assist. As has been seen (paras 48 50), the majority judgments did not go as far as to treat simple mistake of law as a cause of nullity. For Lord Reid the mistake must have been such as to lead the tribunal to (fail) to deal with the question remitted to it, or to (decide) some question which was not remitted to it. For Lord Wilberforce the mistake must have related to the architecture of the provisions. They were both able, after elaborate analysis, to find that the Commissions mistake of law satisfied these tests. Whether the same could be said of the alleged error in the present case is at best doubtful. As already observed, the nullity analysis seems highly artificial, as applied to a legal decision such as that of the IPT in this case. It is also difficult to reconcile with the acceptance by the courts of the familiar statutory ouster of challenges to planning and similar decisions after a six week time limit (as in Smith v East Elloe, and Ostler: see para 81 above), leading to the anomaly that such a nullity is mysteriously validated at the end of that period. Nor has the expanded understanding of the Anisminic principle been consistently applied in other statutory contexts, as In re McC [1985] AC 528 illustrates (para 58 above). These examples show that the courts have not adopted a uniform approach, but have felt free to adapt or limit the scope and form of judicial review, so as to ensure respect on the one hand for the particular statutory context and the inferred intention of the legislature, and on the other for the fundamental principles of the rule of law, and to find an appropriate balance between the two. Even if this was not always the way in which the decisions were justified at the time, it may be seen as providing a sounder conceptual basis. Thus in the planning cases, it having been accepted that the statutory grounds cover all the traditional ground of judicial review, there is no difficulty in holding that the six week time limit provides a proportionate balance between effective judicial review, and the need for certainty to enable such decisions to be acted on with confidence. That more flexible approach to the relationship between the legislature and the courts is in my view wholly consistent with the modern constitutional settlement, as confirmed by the 2005 Act, and recognised by this court in Miller. Against that background, the judgments of this court in Cart point the way to an approach which (pace Professor Forsyth see para 98 above) is both pragmatic and principled. The critical step taken by this court in Cart was to confirm, what was perhaps implicit in some of the earlier cases, that it is ultimately for the courts, not the legislature, to determine the limits set by the rule of law to the power to exclude review. This proposition should be seen as based, not on such elusive concepts as jurisdiction (wide or narrow), ultra vires, or nullity, but rather as a natural application of the constitutional principle of the rule of law (as affirmed by section 1 of the 2005 Act), and as an essential counterpart to the power of Parliament to make law. The constitutional roles both of Parliament, as the maker of the law, and of the High Court, and ultimately of the appellate courts, as the guardians and interpreters of that law, are thus respected. The question in any case is the level of scrutiny required by the rule of law, set on a basis which as stated in Cart is both principled and proportionate (para 51 per Lady Hale), or in Lord Dysons words (para 133): what scope of judicial review is required to maintain the rule of law; it being a matter for the courts to determine what that scrutiny should be (para 102 per Lord Clarke). Some forms of ouster clause may readily satisfy such a test, as in the planning cases mentioned above. Similarly, in Racal, review limited to a High Court judge could reasonably have been justified as providing a sufficient and proportionate level of protection in the narrow statutory context of the grant of authority to inspect company books. In a different context a similarly balanced assessment could be used to support the outcome of the dissenting judgment in Pearlman. Here again judicial thinking has moved on, recognising that the division between fact and law is not always clear cut, and that a more pragmatic approach may sometimes be required (per Lord Hope, Jones v First tier Tribunal [2013] UKSC 19, para 16). The assessment of whether particular works involve a structural alteration or addition is substantially a factual issue, which can properly and economically be left to the trial judge at County Court level. An ouster provision designed to achieve that effect should be respected. On the other hand such a clause should not be treated as excluding the possibility of review in an exceptional case where the judge can be shown (in Geoffrey Lane LJs words) to have been embarking on some unauthorised or extraneous or irrelevant exercise. It is significant that this judgment (later approved by the Privy Council), like that of the Court of Appeal in Sivasubramaniam (para 125 above), implicitly recognised that even in a very restrictive statutory context the possibility of judicial review could not be excluded altogether in an exceptional case. Lord Sumption finds support for his contrary view in a part of Lady Hales judgment in Cart, where she said: as Lord Wilberforce pointed out (Anisminic at p 207) it does of course lie within the power of Parliament to provide that a tribunal of limited jurisdiction should be the ultimate interpreter of the law which it has to administer: the position may be reached, as the result of statutory provisions, that even if they make what the courts might regard as decisions wrong in law, these are to stand. But there is no such provision in the 2007 Act. There is no clear and explicit recognition that the Upper Tribunal is to be permitted to make mistakes of law (para 40, emphasis added) I do not believe with respect that this passage bears the weight which Lord Sumption places on it. It comes as part of a section of the judgment (para 39) in which Lady Hale was explaining her reasons for not following the courts below by reintroducing the distinction between jurisdictional and other errors, which had been effectively abandoned in Anisminic. She was not addressing the present issue as to the circumstances in which review could be excluded altogether. Similarly, the relevant passage of Lord Wilberforces speech was not a considered treatment of the subject. It was no more than part of his introduction to the more detailed discussion, in which he was explaining the high legal standing of the Commission, and its consequences for his approach to interpretation. The full passage reads as follows: It is now well established that specialised tribunals may, depending on their nature and on the subject matter, have the power to decide questions of law, and the position may be reached, as the result of statutory provision, that even if they make what the courts might regard as decisions wrong in law, these are to stand. The Foreign Compensation Commission is certainly within this category; its functions are predominantly judicial; it is a permanent body, composed of lawyers, with a learned chairman. and there is every ground, having regard to the number and the complexity of the cases with which it must deal, for giving a wide measure of finality to its decisions. There is no reason for giving a restrictive interpretation to section 4(4) which provides that its determinations are not to be called in question in courts of law. (p 207B D, emphasis added) The italicised words to which Lady Hale referred did not purport to be a reasoned discussion. Further, they must be read in the context of the common assumption at the time (not dispelled until OReilly v Mackman) that the ouster clause in that case would be effective in respect of an error of law which was not in some sense jurisdictional. Returning to the present case, Sir James Eadie accepts the need for judicial review by a court or tribunal which is both independent and authoritative, but submits that the IPT is well suited to perform that role. The test of such independence and competence, he submits, is not the source of the powers of review, but rather the institutional features of the body created to exercise the power of review. In my view that is too narrow a focus. It pays no regard to the need to ensure that the law applied by the specialist tribunal is not developed in isolation (a local law), but conforms to the general law of the land. At least since the time of Blackstone (para 32 above), this has been a central part of the function of the High Court as constitutional guardian of the rule of law. It formed an important part of the reasoning of the Supreme Court in Cart. It applies with particular force in the present context where there is a significant overlap between jurisdictions of the IPT and of the ordinary courts. The present case is a good example. The legal issue decided by the IPT is not only one of general public importance, but also has possible implications for legal rights and remedies going beyond the scope of the IPTs remit. Consistent application of the rule of law requires such an issue to be susceptible in appropriate cases to review by ordinary courts. It may seem anomalous that the route to review by the ordinary courts is the grant of permission by the High Court, whose judges may arguably be less well equipped for this purpose than the judges of the IPT. But the same could have been said of the relationship between the Upper Tribunal and the High Court in Cart itself. Although Lady Hale acknowledged (para 56) that the review should in principle be by a judge with more experience or expertise, this would be met by the possibility that, if the case were channel(ed) into the legal system, it would enable where appropriate onward transmission to the appellate courts. The high status of the Upper Tribunal was a reason for a restricted approach to the grant of permission, but not for excluding it altogether. It also has to be remembered that until the 1979 reforms the review jurisdiction would have been exercised by the full Divisional Court of the Queens Bench, generally presided over by the Lord Chief Justice. In the modern system, the courts powers of case management can ensure that the matter comes before a court of suitable composition (as happened in this case). There is a distinct issue whether the rule of law requires such decisions to be susceptible to review also by the appellate courts. Unlike the original common law jurisdiction of the High Court, the jurisdictions of the Court of Appeal, and now of the Supreme Court, are the creation of statute. In Racal it was assumed that if the relevant statutes provided that the decision of the High Court was unappealable, it could not be corrected at all (see para 64 above). In R (A) Lord Brown accepted as correct the concession that there is no constitutional (or article 6) requirement for any right of appeal from an appropriate tribunal (para 23). As applied to article 6 of the Convention, which was in issue in R (A), that proposition may be uncontroversial, given that the ultimate arbiter of Convention law is in Strasbourg rather than the courts of this country. In the context of a domestic law challenge, it is more debatable. Arguably, following the logic of the reasoning in Cart, it may be thought implicit in the constitutional framework for the rule of law, as established by the Senior Courts Act 1981 and the Constitutional Reform Act 2005, that legal issues of general importance should be reviewable by the appellate courts; and that an ouster clause which purports to exclude that possibility cannot, consistently with the rule of law, be upheld. The only authority referred to by Lord Brown was Farley v Secretary of State for Work and Pensions (No 2) [2006] 1 WLR 1817. That case was concerned with a provision that, on an application by the Secretary of State to the magistrates court to enforce a maintenance assessment, the assessment itself was immune from challenge. The effectiveness of that ouster was upheld, but that depended on it being shown that there was another suitable means of challenging the assessment. The issue does not arise directly in the present context. If the decisions of the IPT are in principle susceptible to judicial review by the High Court, there is nothing in RIPA or any other statute to exclude onward appeal from the decisions of the High Court itself in the ordinary way. We have not heard detailed argument on this aspect, and I decline therefore to express a concluded view. In conclusion on the second issue, although it is not necessary to decide the point, I see a strong case for holding that, consistently with the rule of law, binding effect cannot be given to a clause which purports wholly to exclude the supervisory jurisdiction of the High Court to review a decision of an inferior court or tribunal, whether for excess or abuse of jurisdiction, or error of law. In all cases, regardless of the words used, it should remain ultimately a matter for the court to determine the extent to which such a clause should be upheld, having regard to its purpose and statutory context, and the nature and importance of the legal issue in question; and to determine the level of scrutiny required by the rule of law. Conclusion Accordingly, for the reasons given under the first issue, I would allow the appeal and hold, in answer to the preliminary issue, that the judicial review jurisdiction of the High Court is not excluded by section 67(8). Although that is the limit of the issue before the court, it will be clear from what I have said about the significance of the substantive legal issue, that this is a case where, if judicial review is available, permission should be granted. LORD LLOYD JONES: Two issues arise on this appeal. The first is the specific issue whether section 67(8) of the Regulation of Investigatory Powers Act 2000 (RIPA 2000) must be taken as purporting to oust the supervisory jurisdiction of the High Court to quash a judgment of the Investigatory Powers Tribunal (the IPT) for error of law. The second is the more general issue of whether, and, if so, in accordance with what principles, Parliament has the power by statute to oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction. On the first issue, I agree with the judgment of Lord Carnwath. In view of the importance of the issue, I add some brief comments of my own. The IPT was created by section 65(1) of RIPA 2000. Its jurisdiction and procedures are described in the judgment of Lord Carnwath and I simply draw attention to the following matters. Section 65(2) includes provision that it is the only appropriate tribunal for hearing proceedings falling within section 65(3) (which includes proceedings against any of the intelligence services) for actions incompatible with Convention rights under section 7 of the Human Rights Act 1998 (section 65(2)(a)). Section 67 provides that it shall be the duty of the Tribunal to hear and determine proceedings or to consider and determine complaints or references, brought before it under section 65(2). Section 67(2) provides that where the IPT hears any proceedings by virtue of section 65(2)(a), they shall apply the same principles for making their determination in those proceedings as would be applied by a court on an application for judicial review. At all material times the Investigatory Powers Tribunal Rules 2000 govern procedure before the IPT. It has the power to conduct proceedings in private and, in certain circumstances, in the absence of the complaining party. Rule 6(1) provides: The Tribunal shall carry out their functions in such a way as to secure that information is not disclosed to an extent, or in a manner, that is contrary to the public interest or prejudicial to national security, the prevention or detection of serious crime, the economic well being of the United Kingdom or the continued discharge of the functions of any of the intelligence services. Section 67(8) of RIPA 2000 provided at the relevant time: Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. An earlier version of this provision was section 7(8) of the Interception of Communications Act 1985 (the 1985 Act) which provided in relation to the Tribunal which it created and which was a predecessor of the IPT: The decisions of the Tribunal (including any decisions as to their jurisdiction) shall not be subject to appeal or liable to be questioned in any court. Considered with the benefit of hindsight, it can be seen that Anisminic initiated a process of fundamental change in the approach of the courts to judicial review which was to lead to their abandoning the distinction between errors of law going to jurisdiction and those that did not. Whereas previously an error of law was reviewable only if it was a jurisdictional error or if it was an error on the face of the record, all errors of law were to become reviewable. However, as Professor Feldman has observed (Anisminic Ltd v Foreign Compensation Commission [1968]: In Perspective, in Juss and Sunkin (eds) Landmark Cases in Public Law (Oxford, 2017) pp 92 93), this was not immediately apparent from the speeches in Anisminic [1969] 2 AC 147 itself. On the contrary, they maintained the distinction between jurisdictional and non jurisdictional errors of law and the decision turns on a particularly broad notion that the tribunal did not have the power to take certain decisions. Thus, for example, Lord Reid (at p 171B F) distinguished between those errors of law or procedure by a tribunal which render a decision a nullity and other cases where its decision is equally valid whether it is right or wrong subject only to the power of the court in certain circumstances to correct an error of law. Similarly, Lord Wilberforce (at p 210D E) considered that a tribunal may quite properly validly enter upon its task and in the course of carrying it out may make a decision which is invalid not merely erroneous and referred to a crucial distinction which the court has to make between doing something which is not in the tribunals area and doing something wrong within that area. By addressing whether the appellants had a successor in title and its nationality, the Foreign Compensation Commission had asked the wrong question and had taken account of irrelevant considerations with the result that its decision was a nullity. In the cases which followed Anisminic, however, the implications of the extremely broad approach to jurisdictional error of law taken in that case soon became apparent. If, as Anisminic suggests, addressing the wrong question renders the decision a nullity, it is possible to present almost any error of law as the result of such an error of approach. Different views on this subject were aired in the judgments in the Court of Appeal in Pearlman v Keepers and Governors of Harrow School [1979] QB 56. Lord Denning MR (at pp 69G 70E) considered that the resulting distinction between jurisdictional and non jurisdictional error was very fine, was being eroded and should be abandoned. In his view the correct approach was to hold that no court or tribunal has any jurisdiction to make an error of law on which the decision of the case depends. Geoffrey Lane LJ, however, (at p 76C), assuming for this purpose that the judge had made an error of law in concluding that the works did not constitute structural alterations, considered this an error within jurisdiction. It could not be said to be a determination the judge was not entitled to make. Although the approach of Geoffrey Lane LJ was approved by the Judicial Committee of the Privy Council in South East Asia Fire Bricks Sdn Bhd v Non Metallic Mineral Products Manufacturing Employees Union [1981] AC 363 and by the House of Lords in In re Racal Communications Ltd [1981] AC 374, Lord Dennings approach was to prevail. In Racal, Lord Diplock acknowledged the true significance of Anisminic, observing that the break through made by Anisminic had been that, as respects administrative tribunals and authorities, the old distinction between errors of law that went to jurisdiction and errors of law that did not had for practical purposes been abolished. Accordingly, any error of law that could be shown to have been made by administrative tribunals or authorities in the course of reaching a decision on matters of fact or of administrative policy would result in their having asked themselves the wrong question with the result that the decision they reached would be a nullity (at p 383C D). Two years later, in OReilly v Mackman [1983] 2 AC 237 Lord Diplock referred in similar vein to: the landmark decision of this House in Anisminic Ltd v Foreign Compensation Commission , and particularly the leading speech of Lord Reid, which has liberated English public law from the fetters that the courts had theretofore imposed upon themselves so far as determinations of inferior courts and statutory tribunals were concerned, by drawing esoteric distinctions between errors of law committed by such tribunals that went to their jurisdiction, and errors of law committed by them within their jurisdiction. The breakthrough that the Anisminic case made was the recognition by the majority of this House that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it had found them, it must have asked itself the wrong question, ie, one into which it was not empowered to inquire and so had no jurisdiction to determine. Its purported determination, not being a determination within the meaning of the empowering legislation, was accordingly a nullity. (at p 278D F) Thereafter, a series of decisions in the House of Lords established that there is a single category of errors of law, all of which render a decision ultra vires (R v Hull University Visitor, Ex p Page [1993] AC 682 per Lord Browne Wilkinson at p 701; Boddington v British Transport Police [1999] 2 AC 143, at p 158D E per Lord Irvine of Lairg LC; R (Lumba) v Secretary of State for the Home Department [2012] 1 AC 245 per Lord Dyson JSC at para 66). In R (Cart) v Upper Tribunal (Public Law Project intervening) [2012] 1 AC 663 Baroness Hale considered (at para 18) that in Anisminic the House of Lords effectively removed the distinction between error of law and excess of jurisdiction. It is, however, necessary to consider whether the Anisminic principle applies equally to decision making by both administrative and judicial bodies. Anisminic itself had been concerned with a decision of the Foreign Compensation Commission (FCC). It is significant that in that case Lord Wilberforce considered that the functions of the FCC were predominantly judicial, with the power to decide questions of law and he observed that there was every ground, having regard to the number and the complexity of the cases with which it must deal, for giving a wide measure of finality to its decisions. Accordingly, there was no reason for giving a restrictive interpretation to section 4(4) which provided that its determinations were not to be called into question in any court of law (at p 207C D). Nevertheless, he came to his conclusion on the basis that, as he put it, the decision was made outside the permitted field. By contrast, in Racal Lord Diplock observed (at p 382G) that in Anisminic the House of Lords had been concerned with decisions of administrative tribunals. He explained that Anisminic proceeds on the presumption that where Parliament confers on an administrative tribunal or authority, as distinct from a court of law, power to decide particular questions defined by the Act conferring the power, Parliament intends to confine that power to answering the question as it has been so defined (at pp 382H 383A). Furthermore, while Parliament could confer upon administrative tribunals or authorities power to decide questions of law as well as questions of fact and administrative policy, this requires clear words because there is a presumption that, where a decision making power is conferred on a tribunal or authority that is not a court of law, Parliament did not intend to do so (at p 383B C). He then proceeded to contrast the position of a court of law. But there is no similar presumption that where a decision making power is conferred by statute upon a court of law, Parliament did not intend to confer upon it power to decide questions of law as well as questions of fact. Whether it did or not and, in the case of inferior courts, what limits are imposed on the kinds of questions of law they are empowered to decide, depends upon the construction of the statute unencumbered by any such presumption. In the case of inferior courts where the decision of the court is made final and conclusive by the statute, this may involve the survival of those subtle distinctions formerly drawn between errors of law which go to jurisdiction and errors of law which do not that did so much to confuse English administrative law before Anisminic ; but upon any application for judicial review of a decision of an inferior court in a matter which involves, as so many do, interrelated questions of law, fact and degree the superior court conducting the review should not be astute to hold that Parliament did not intend the inferior court to have jurisdiction to decide for itself the meaning of ordinary words used in the statute to define the question which it has to decide. (at p 383E G) In this way, Lord Diplock raised the possibility that the distinction between jurisdictional and non jurisdictional errors of law may survive in the case of decisions by judicial bodies and that, in the latter case, they may be immune from judicial review. (It should be noted that the decision that judicial review was not available in Racal is also explicable on Lord Diplocks alternative ground: because the body concerned was the High Court, not a court of limited jurisdiction, there was no room for error going to jurisdiction.) The decision of the House of Lords in R v Hull University Visitor, Ex p Page lends support to the approach followed by Lord Diplock in Racal. On the other hand, however, it should be noted that Lord Diplocks formulation of the Anisminic principle in OReilly v Mackman, two years after the decision in Racal, cited above, appears to be applicable without distinction to inferior courts and statutory tribunals. Furthermore, in R v Greater Manchester Coroner, Ex p Tal [1985] QB 67 Robert Goff LJ, delivering the judgment of the Divisional Court concluded (at p 81G 83B) that Lord Diplock in Racal had not intended to say that the Anisminic principle did not extend to inferior courts as well as tribunals. Goff LJ considered that, historically, inferior courts had always been subject to what was now called judicial review, although originally only in cases of error going to the jurisdiction and error of law within the jurisdiction which appeared on the face of the record: Since Anisminic, the requirement that an error of law within the jurisdiction must appear on the face of the record is now obsolete. It follows that today, in principle, inferior courts as well as tribunals are amenable to the supervisory jurisdiction of the High Court under sections 29 and 31 of the Supreme Court Act 1981. (at p 82D E) Referring to Lord Diplocks statement of the law in OReilly v Mackman, he concluded that inferior courts as opposed to tribunals are not excluded from the Anisminic principle. There is, moreover, no trace of such a distinction in the Supreme Courts consideration of the Upper Tribunal in Cart where there is no suggestion that courts of limited jurisdiction might have power to err as to law within their jurisdiction. This leads Professor Forsyth to observe: This suggests that all courts except presumably the High Court as a court of unlimited jurisdiction stray outside their jurisdiction when they make errors of law and are, in principle, subject to judicial review, save that the Supreme Court will determine, as it did in Cart, the actual extent of judicial review allowed. (Wade and Forsyth, Administrative Law, 11th ed, (Oxford: 2014), p 223.) The distinction between administrative tribunals and courts of law suggested by Lord Diplock in Racal is likely to be an arid one in the present context. Quite apart from the difficulties which are likely to be encountered in drawing such a distinction in individual cases, what matters here is whether a body is charged with performing a judicial function. If it is, then, as Laws LJ observed in the Divisional Court in Cart (at para 68), the true contrast is between the High Court on the one hand and courts of limited jurisdiction on the other. In the present case the IPT is undoubtedly charged with performing a judicial function. The issue for decision in this case must therefore be approached on the basis that the statute makes provision as to the status of decisions of a judicial body. I wholeheartedly endorse the exposition by Laws LJ in the Divisional Court in Cart (at paras 36 40) of the principle that it is a necessary corollary of the sovereignty of Parliament that there should exist an authoritative and independent body which can interpret and mediate legislation made by Parliament: The interpreters role cannot be filled by the legislature or the executive: for in that case they or either of them would be judge in their own cause, with the ills of arbitrary government which that would entail. Nor, generally can the interpreter be constituted by the public body which has to administer the relevant law: for in that case the decision makers would write their own laws. The interpreter must be impartial, independent both of the legislature and of the persons affected by the texts application, and authoritative accepted as the last word, subject only to any appeal. Only a court can fulfil the role. (at para 37) He goes on to explain that this is not a denial of legislative sovereignty but an affirmation and a condition of it. The paradigm for such an authoritative source is the High Court but it is not the only possible source: To offer the same guarantee of properly mediated law, any alternative source must amount to an alter ego of the High Court; (at para 39) and he identifies as examples the Courts Martial Appeal Court and the Restrictive Practices Court. In the same way Parliament may modify the procedures by which statute law is mediated, inter alia by the creation of new judicial bodies. It seems to me that central to the first issue in the present appeal is whether it was the intention of Parliament to do precisely this in the case of the IPT. I accept that in the case of a judicial body, by contrast with a purely administrative body, there is no presumption that Parliament did not intend to confer a power to decide questions of law as well as questions of fact. (See Racal per Lord Diplock at p 383E.) It is, rather, a matter of the interpretation of the legislation concerned in each case, unencumbered by such a presumption. Nevertheless, if the jurisdiction of the High Court is to be displaced or varied in some way, this is a matter of great importance and clear words will be required to achieve that result. Notwithstanding the disapproval by the House of Lords in Racal of the decision of the majority in the Court of Appeal in Pearlman, the following observation of Lord Denning MR (at p 70D) remains valid as a general proposition: The High Court has, and should have, jurisdiction to control the proceedings of inferior courts and tribunals by way of judicial review. When they go wrong in law, the High Court should have power to put them right. Not only in the instant case to do justice to the complainant. But also so as to secure that all courts and tribunals, when faced with the same point of law should decide it in the same way. This jurisdiction cannot be varied by implication. Once again, I turn to the judgment of Laws LJ in the Divisional Court in Cart where it was submitted that the judicial review jurisdiction of the High Court was impliedly excluded by provisions designating the Upper Tribunal and Special Immigration Appeals Commission respectively a superior court of record. 31. In my judgment the proposition that judicial review is excluded by sections 1(3) and 3(5) is a constitutional solecism. The supervisory jurisdiction (to the extent that it can be ousted at all: itself a question to which I will return) can only be ousted by the most clear and explicit words: see per Denning LJ in R v Medical Appeal Tribunal, Ex p Gilmore [1957] 1 QB 574, 583. The learning discloses a litany of failed attempts to exclude judicial review. In R (Sivasubramaniam) v Wandsworth County Court [2003] 1 WLR 475, after citing Lord Dennings dictum in Ex p Gilmore, Lord Phillips of Worth Matravers MR giving the judgment of the court continued, at para 44: All the authorities to which we have been referred indicate that this remains true today. The weight of authority makes it impossible to accept that the jurisdiction to subject a decision to judicial review can be removed by statutory implication. I need not multiply citations. A conspicuous case is the 32. seminal authority of Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 which abolished (for most purposes) the distinction between errors of law within and without jurisdiction, ushering in the modern constitutional rule that any error of law by a public decision maker is beyond his jurisdiction. Older instances include Cardiffe Bridge (1700) 1 Salk 146; Berkley v Bragge (1754) 1 Keny 80; R v Cheltenham Comrs (1841) 1 QB 467 and R v Bradlaugh, Ex p (1878) 3 QBD 509. More recent instances include R v Secretary of State for the Home Department, Ex p Al Fayed (No 1) [1998] 1 WLR 763, 771B 773C. Against this background it cannot be supposed that judicial review may be ousted by an implication, far less one contained in a formula which amounts in effect to a deeming provision. But that is the sum of the defendants case. It has been suggested, on the basis of Racal, that while section 67(8) does not exclude judicial review on other grounds such as a lack of subject matter jurisdiction or want of natural justice, that section excludes the jurisdiction of the High Court to entertain a challenge to the Tribunals decisions on the merits ie it excludes judicial review on grounds which would be tantamount to an appeal on the merits. It seems to me, however, that this places more weight on Racal than that authority can bear. It provides an insecure foundation because, as is demonstrated by the later decisions referred to above, at the date of Racal the legal principles in play were still evolving. As a result, it is not appropriate to allow the reasoning of Lord Diplock in Racal to influence the issue of interpretation in the present case. Turning to the issue of interpretation of section 67(8), I accept that the role of the IPT is judicial. As a result, there is no presumption in favour of restricting its field or of restricting its power to decide issues of law. However, if the jurisdiction of the High Court can be excluded at all, it requires the most clear and explicit words. As Lord Reid observed in Anisminic (at p 170C D): It is a well established principle that a provision ousting the ordinary jurisdiction of the court must be construed strictly meaning, I think, that, if such a provision is reasonably capable of having two meanings, that meaning shall be taken which preserves the ordinary jurisdiction of the court. Subject to one point, the wording of section 67(8) closely resembles that of section 4(4) of the Foreign Compensation Act 1950 which was the subject of Anisminic: The determination by the Commission of any application made to them under this Act shall not be called in question in any court of law. There, the House of Lords held that determination in section 4(4) did not include everything which purported to be a determination, but which was not in fact a determination because the Commission had misconstrued the statutory provision defining its jurisdiction. Reference has been made above to the way in which the law subsequently developed so as to remove the distinction between jurisdictional and non jurisdictional errors of law. By 1985, when section 7(8) of the Interception of Communications Act 1985 was enacted, it would have been entirely clear from the judgment of Lord Diplock in OReilly v Mackman that a determination founded on an error of law, whether it would previously have been characterised as jurisdictional or not, was not to be regarded as a determination at all. Having regard to this ground breaking development at common law, if it had been the intention of Parliament to exclude the jurisdiction of the High Court in respect of such decisions, it could be expected to have employed language which excluded jurisdiction not only in respect of determinations, awards and other decisions of the Tribunal but also in respect of purported determinations, awards and other decisions. It is a striking feature of section 67(8) and its predecessor that it failed to do so. The one point of distinction between section 4(4) of the Foreign Compensation Act 1950, on the one hand, and section 67(8) on the other, is the inclusion in the latter of the words in parenthesis (including decisions as to whether they have jurisdiction). To my mind, however, these words are not apt to extend the exclusion of the jurisdiction of the High Court to what purport to be decisions but in law are not to be so regarded. While it is now established that a decision based on an error of law is not to be regarded as a decision for this purpose, this notion does not easily fit within the description of a decision as to whether it has jurisdiction. If the IPT takes a decision which is founded on an error of law, it is not in any real sense taking a decision as to whether it has jurisdiction. If the intention was to exclude the jurisdiction of the High Court from purported decisions founded on an error of law, it was necessary to say so in clear terms. Clause 11 of the Asylum and Immigration (Treatment of Claimants etc) Bill 2003, to which Lord Carnwath refers at para 101 of his judgment, is a more recent example of an attempt to achieve the required degree of clarity if such a provision is to be effective. That provision, which was not enacted, can at least be said to have squarely confronted what it sought to achieve as required by the principle of legality. To my mind, section 67(8) does not satisfy this requirement. It may be that the explanation of the words in parenthesis is, as submitted by Ms Dinah Rose QC on behalf of the appellant, that they were intended to refer to determinations of precedent fact, a matter which was highly topical in 1985 following the decision of the House of Lords in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74. On this basis the words in parenthesis in section 67(8) could be considered to have the effect that decisions of the IPT on issues of precedent fact going to its jurisdiction, but not issues of law, would be beyond the scope of review. However, it is not necessary to come to a concluded view on this point. For present purposes it is sufficient that the words employed in section 67(8) do not make provision with sufficient clarity for the exclusion of the review jurisdiction of the High Court in respect of errors of law. In coming to this conclusion, I have taken full account of the various features of the statutory scheme to which Sir James Eadie QC has drawn attention in support of the respondents case. He is correct in his submission that there is here a special allocation of judicial responsibility to the IPT in the national security context (section 67(3)(a)). Similarly, the IPTs rules and procedures create a bespoke system particularly well suited to the adjudication of controversial issues in the context of national security and directed to protecting the public interest. Furthermore, there can be no doubt as to the outstanding judicial quality of the members of the IPT. However, the exclusion of the review jurisdiction of the High Court in cases of error of law, if achievable at all, would require a provision of much greater clarity making abundantly clear that that was what it sought to achieve. For these reasons, I would allow the appeal against the decision of the Court of Appeal on the first issue. It is, accordingly, unnecessary to express any view on the second issue. LORD SUMPTION: (dissenting) (with whom Lord Reed agrees) The Investigatory Powers Tribunal is a specialist tribunal established in 2000 under the Regulation of Investigatory Powers Act 2000. Its principal functions are to determine proceedings against the intelligence services in respect of breaches of human rights and complaints about the interception of communications, in a way which enables these claims to be examined judicially without the risk of disclosure of secret matters. The Tribunal effectively replaced the Interception of Communications Act Tribunal, the Security Services Act Tribunal and the Intelligence Services Act Tribunal, which had been established under earlier enactments, as well as taking over the operation of the complaints provisions of Part III of the Police Act 1997. The appellant, Privacy International, complained that Government Communications Headquarters (GCHQ), one of the intelligence services, had carried out unlawful computer hacking. Computer hacking by the intelligence services requires the authority of a warrant of the Secretary of State under section 5 of the Intelligence Services Act 1994. The relevant activities of GCHQ were said to be unlawful on the ground that the warrants authorising them included what has been called (not entirely accurately) thematic warrants. A thematic warrant means a warrant authorising a class of activity in respect of a class of property. The appellants case before the Tribunal was that section 5(2) of the Intelligence Services Act 1994 empowered the Secretary of State to issue a warrant authorising specified acts in respect of specified property, and did not extend to thematic warrants. Alternatively, they submitted that if the Act did authorise such warrants, it was in that respect incompatible with articles 8 and 10 of the Human Rights Convention. The Tribunal held an open hearing to determine a number of preliminary issues of law. In a judgment issued on 12 February 2016, it held that thematic warrants were lawful. The appellant began proceedings for judicial review, seeking an order quashing that decision on the ground that the Tribunals construction of section 5(2) of the Act of 1994 was wrong in law. Section 67(8) and (9) of the Regulation of Investigatory Powers Act 2000 provide: (8) Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards, orders and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. (9) It shall be the duty of the Secretary of State to secure that there is at all times an order under subsection (8) in force allowing for an appeal to a court against any exercise by the Tribunal of their jurisdiction under section 65(2)(c) or (d). The Secretary of State has not exercised his power to make exceptions from subsection (8) and the duty referred to in subsection (9) has not arisen because section 65(2)(c) and (d) has not been brought into force. The present position, therefore, is that subsection (8) stands unqualified. Section 242 of the Investigatory Powers Act 2016 has changed that by amending the Act of 2000 so as to introduce a new section 67A, allowing for appeals to the Court of Appeal in England and Wales or the Court of Session in Scotland. That section came into force on 31 December 2018, but will not apply to the Tribunals determination in these proceedings. The question at issue on this appeal is whether an application for judicial review on the ground that the Tribunal has decided an issue on a wrong view of the law, is available having regard to section 67(8) of the Act. The Divisional Court and the Court of Appeal have both held that it is not. I agree with them. I shall need to examine the law in some detail, but my reason can be shortly summarised. The effect of section 67(8) is simply to exclude the jurisdiction of the High Court to entertain a challenge to the Tribunals decisions on the merits. In other words, it excludes judicial review on grounds which would be tantamount to an appeal. The Investigatory Powers Tribunal acts as a court. Its function is to exercise powers of judicial review over (among others) the intelligence services, which would otherwise have been exercisable by the High Court, and to do so on the same basis as the High Court. The purpose of judicial review is to maintain the rule of law. But the rule of law is sufficiently vindicated by the judicial character of the Tribunal. It does not require a right of appeal from the decisions of a judicial body of this kind. For this reason section 67(8) is not an ouster of any jurisdiction which constitutional principle requires the High Court to have. Ouster clauses: origins Historically, the legal basis of judicial review was the concept of excess of jurisdiction. Bodies deriving their powers from statute or grant under the royal prerogative were amenable to certiorari in the Kings Bench if they exceeded the formal or implicit limits of the grant. Strictly speaking, excess of jurisdiction was confined to want of legal competence. But the limitations of this approach led the courts in some cases artificially to expand the concept of jurisdiction to cover varieties of public law wrong that did not readily fall within established categories. In particular, it was extended to broad categories of unreasonable conduct which the grant of the relevant power was assumed not to have authorised without specific words: for example, bad faith or disregard of the rules of natural justice. The artifice became unnecessary after the decision of the House of Lords in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, in which the majority of the Appellate Committee put the grounds of judicial review on a broader basis and held that it extended generally to the exercise of justiciable public powers, including those which were not the subject of any statutory or other grant. But the historical roots of English public law have continued to influence its development, notably in the area of ouster clauses. It has been recognised since the 17th century that a statute can remove the supervisory jurisdiction of the courts over inferior tribunals and administrative bodies only by clear words. In Smith, Lluellyn v Comrs of Sewers (1669) 1 Mod 44, the Commissioners purported to exercise a penal power to impose fines which they did not have. Sir John Kelynge, Chief Justice of Kings Bench, declined to treat a statutory provision that orders of the Commissioners should be valid unless revoked by the Commissioners themselves as excluding the jurisdiction of the courts to issue certiorari. You cannot oust the jurisdiction of this court without particular words in Acts of Parliament, he said; there is no jurisdiction that is uncontrollable by this court. Lord Mansfield made the same point, nearly a century later, in R v Moreley (1760) 2 Bur 1041, when he said that the jurisdiction of this court is not to be taken away unless there be express words to take it away. In the course of the 19th century, this proposition was applied so as to treat a statutory exclusion of the High Courts power to issue certiorari to inferior tribunals as inapplicable to cases in which the tribunal had purported to exercise a power which it did not have, or a condition precedent to the existence of a power was absent, or the court was not properly constituted. In keeping with the jurisdictional approach to judicial review, these were all cases in which the court lacked legal competence, with the result that its acts were nullities. Cases of this kind give rise to a conceptual problem that goes beyond mere construction of the statute. Where a statute confers a power on an administrative or judicial body to do some class of acts, and ousts the jurisdiction of the High Court to review its acts, the threshold question is always whether it is a body or an act to which the statute applies. If not, then the ouster clause can have no application to it. As Cockburn CJ observed in Ex p Bradlaugh (1878) 3 QBD 509, 513, the section does not apply where the application for the certiorari is on the ground that the inferior tribunal has exceeded the limits of its jurisdiction. Otherwise, a body exercising limited statutory powers would be at liberty to determine what its limits were. As Mellor J pointed out in the same case, a metropolitan magistrate could make any order he pleased without question. If a superior court is precluded from deciding whether the statute applies to the relevant body or act, it would follow, as Lord Justice Clerk Boyle pointed out in the early Scottish case of Campbell v Young (1835) 13 S 535, that because a party says that he acts under the statute, he is to do as he pleases. His description of that suggestion as monstrous would be adopted by any modern public lawyer. Implicit in this approach was a distinction between excesses of jurisdiction ascertained at the point where a public body embarks on the relevant function, and errors of fact or law committed in the course exercising it; and a related distinction between errors of law or fact going to the decision makers legal competence, and errors within competence. Lord Coleridge CJ expressed the orthodoxy of his time when he observed in R v Justices of the Central Criminal Court (1886) 17 QBD 598, 602, that where a Court has jurisdiction to entertain an application, it does not lose its jurisdiction by coming to a wrong conclusion, whether it is wrong in point of law or of fact. The only power to quash a decision within jurisdiction was the ancient and sui generis power of the Kings Bench to quash for error of law on the face of the record in a case where the error was disclosed in decision makers reasons, if he gave any. Anisminic v Foreign Compensation Commission [1969] 2 AC 147 The Foreign Compensation Commission was a statutory body created by the Foreign Compensation Act 1950. The Act empowered Her Majesty in Council to make provision for the Commission to distribute money received by the Crown under the royal prerogative from foreign governments under international law, by way of compensation for losses suffered by British subjects in the territory of those governments. Section 4(4) of the Act provided: The determination by the commission of any application made to them under this Act shall not be called in question in any court of law. An Order in Council provided for the Commission to distribute compensation payments made by the Egyptian government after the Suez crisis. It was held to have misconstrued the provisions of the order governing Anisminics eligibility, and thus erroneously treated Anisminics claim as ineligible. The decision is a landmark in the development of English public law, for three reasons. First, it reaffirmed the principle, which had been well established since the 17th century, that a statutory ouster clause such as section 4(4) of the Foreign Compensation Act 1950, if sufficiently clearly expressed, was effective to oust judicial review of any decision that was not a nullity. But it was not effective to prevent the courts from quashing a decision which was in law a nullity, ie one which, in Lord Reids words, does not exist as a determination, unless the clause was framed in terms which were incapable of meaning anything else. Secondly, it established that a tribunal acts without jurisdiction not only where it lacks legal competence to enter upon the inquiry in question at all, but also where although the tribunal had jurisdiction to enter upon the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity: per Lord Reid at p 171. Thirdly, the acts or omissions which served to make the decision a nullity include errors of law if they led the tribunal to conduct an enquiry which differed from the one that it was empowered to conduct, for example by making its decision dependent on the answer to a legally irrelevant question. This was what the Commission was found to have done in Anisminics case. It had dismissed Anisminics claim because it considered that those who claimed to have lost their property in Egypt as a result of acts of the Egyptian state during the Suez crisis had to show that not only they but their successors in title were British. Since Anisminic had been forced to sell their Egyptian assets at an undervalue to an Egyptian company, its claim had been rejected. In the view of the Appellate Committee, the status of successors in title was, on the true construction of the Order in Council, irrelevant. Lord Reid, at p 171, gave some illustrations of errors on the part of the tribunal which, without going to legal competence in its strict sense, would nevertheless invalidate the decision: It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word jurisdiction has been used in a very wide sense, and I have come to the conclusion that it is better not to use the term except in the narrow and original sense of the tribunal being entitled to enter on the inquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the inquiry, it has done or failed to do something in the course of the inquiry which is of such a nature that its decision is a nullity. It may have failed in the course of the inquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive. But if it decides a question remitted to it for decision without committing any of these errors it is as much entitled to decide that question wrongly as it is to decide it rightly. I understand that some confusion has been caused by my having said in R v Governor of Brixton Prison, Ex p Armah [1968] AC 192, 234 that if a tribunal has jurisdiction to go right it has jurisdiction to go wrong. So it has, if one uses jurisdiction in the narrow original sense. If it is entitled to enter onthe inquiry and does not do any of those things which I have mentioned in the course of the proceedings, then its decision is equally valid whether it is right or wrong subject only to the power of the court in certain circumstances to correct an error of law The question what had been remitted to the Commission by Parliament depended on the construction of its enabling Act and of Orders in Council made pursuant to it. So, turning to Anisminics complaint, Lord Reid concluded, at p 174: If, on a true construction of the Order, a claimant who is an original owner does not have to prove anything about successors in title, then the commission made an inquiry which the Order did not empower them to make, and they based their decision on a matter which they had no right to take into account. If one uses the word jurisdiction in its wider sense, they went beyond their jurisdiction in considering this matter. It cannot be for the commission to determine the limits of its powers if they reach a wrong conclusion as to the width of their powers, the court must be able to correct that not because the tribunal has made an error of law, but because as a result of making an error of law they have dealt with and based their decision on a matter with which, on a true construction of their powers, they had no right to deal. If they base their decision on some matter which is not prescribed for their adjudication, they are doing something which they have no right to do and, if the view which I expressed earlier is right, their decision is a nullity. Lord Morris of Borth y Gest was at one with his colleagues on the test to be applied, although he dissented on its application to the facts. At p 182, he expressed it in this way: In all cases similar to the present one it becomes necessary, therefore, to ascertain what was the question submitted for the determination of a tribunal. What were its terms of reference? What was its remit? What were the questions left to it or sent to it for its decision? What were the limits of its duties and Lord Pearce made the same distinction between errors of law which led the tribunal to address questions which it was not within their powers to determine, and other errors. At p 195, he observed: powers? Were there any conditions precedent which had to be satisfied before its functions began? If there were, was it or was it not left to the tribunal itself to decide whether or not the conditions precedent were satisfied? If Parliament has enacted that provided a certain situation exists then a tribunal may have certain powers, it is clear that the tribunal will not have those powers unless the situation exists. The decided cases illustrate the infinite variety of the situations which may exist and the variations of statutory wording which have called for consideration. Most of the cases depend, therefore, upon an examination of their own particular facts and of particular sets of words. It is, however, abundantly clear that questions of law as well as of fact can be remitted for the determination of a tribunal. Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any jurisdiction to embark on an inquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or in the intervening stage while engaged on a proper inquiry the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction. It would turn its inquiry into something not directed by Parliament and fail to make the inquiry whichParliament did direct. Any of these things would cause its purported decision to be a nullity The courts have, however, always been careful to distinguish their intervention whether on excess of jurisdiction or error of law from an appellate function. If the tribunal is intended on a true construction of the Act to inquire into and finally decide questions within a certain area, the courts supervisory duty is to see that it makes the authorised inquiry according to natural justice and arrives at a decision whether right or wrong. They will intervene if the tribunal asks itself the wrong questions (that is, questions other than those which Parliament directed it to ask itself). But if it directs itself to the right inquiry, asking the right questions, they will not intervene merely because it has or may have come to the wrong answer, provided that this is an answer that lies within its jurisdiction. Common to all the speeches in Anisminic was the view that the extent to which the decision makers errors amount to an excess of his jurisdiction depended on the breadth of the power committed to it by the statute as a matter of construction. Lord Wilberforce agreed but proposed, at p 207, a more nuanced analysis of the effect of ouster clauses, which eschewed the language of jurisdiction and nullity with its binary test, and is perhaps more in keeping with the modern laws aversion to rigid categorisation: It is now well established that specialised tribunals may, depending on their nature and on the subject matter, have the power to decide questions of law. and the position may be reached, as the result of statutory provision, that even if they make what the courts might regard as decisions wrong in law, these are to stand. The Foreign Compensation Commission is certainly within this category; its functions are predominantly judicial; it is a permanent body, composed of lawyers, with a learned chairman, and there is every ground having regard to the number and the complexity of the cases with which it must deal, for giving a wide measure of finality to its decisions. There is no reason for giving a restrictive interpretation to section 4(4) which provides that its determinations are not to be called in question in courts of law. In every case, whatever the character of a tribunal, however wide the range of questions remitted to it, however great the permissible margin of mistake, the essential point remains that the tribunal has a derived authority, derived, that is, from statute: at some point, and to be found from a consideration of the legislation, the field within which it operates is marked out and limited. There is always an area, narrow or wide, which is the tribunals area; a residual area, wide or narrow, in which the legislature has previously expressed its will and into which the tribunal may not enter. Equally, though this is not something that arises in the present case, there are certain fundamental assumptions, which without explicit restatement in every case, necessarily underlie the remission of power to decide such as (I do not attempt more than a general reference, since the strength and shade of these matters will depend upon the nature of the tribunal and the kind of question it has to decide) the requirement that a decision must be made in accordance with principles of natural justice and good faith. The principle that failure to fulfil these assumptions may be equivalent to a departure from the remitted area must be taken to follow from the decision of this House in Ridge v Baldwin [1964] AC 40. Although, in theory perhaps, it may be possible for Parliament to set up a tribunal which has full and autonomous powers to fix its own area of operation, that has, so far, not been done in this country. The question what is the tribunals proper area is one which it has always been permissible to ask and to answer, and it must follow that examination of its extent is not precluded by a clause conferring conclusiveness, finality, or unquestionability upon its decisions. These clauses in their nature can only relate to decisions given within the field of operation entrusted to the tribunal. They may, according to the width and emphasis of their formulation, help to ascertain the extent of that field, to narrow it or to enlarge it, but unless one is to deny the statutory origin of the tribunal and of its powers, they cannot preclude examination of that extent. It is sometimes said, the argument was presented in these terms, that the preclusive clause does not operate on decisions outside the permitted field because they are a nullity. There are dangers in the use of this word if it draws with it the difficult distinction between what is void and what is voidable, and I certainly do not wish to be taken to recognise that this distinction exists or to analyse it if it does. But it may be convenient so long as it is used to describe a decision made outside the permitted field, in other words, as a word of description rather than as in itself a touchstone. He added, at pp 209 210: The extent of the interpretatory power conferred upon the tribunal may sometimes be difficult to ascertain and argument may be possible whether this or that question of construction has been left to the tribunal, that is within the tribunals field, or whether, because it pertains to the delimitation of the tribunals area by the legislature, it is reserved for decision by the courts. Sometimes, it will be possible to form a conclusion from the form and subject matter of the legislation. I think that we have reached a stage in our administrative law when we can view this question quite objectively, without any necessary predisposition towards one that questions of law or questions of construction, are necessarily for the courts. In the kind of case I have mentioned there is no need to make this assumption. In another type of case it may be apparent that Parliament is itself directly and closely concerned with the definition and delimitation of certain matters of comparative detail and has marked by its language the intention that these shall accurately be observed. Lord Wilberforce considered that the Commissions error of law lay outside the permitted field assigned to it by Parliament. The reason, in summary, was that the Act in terms required the Commission to act in accordance with rules governing limitations laid down in the Order in Council regarding the definition of proper claimants and the matters to be established in support of their claims: see p 211F H. Implicit in the decision of the House in Anisminic was that invalidity for error of law no longer depended on the error being patent on the face of the record. But it will be apparent from all of the speeches that the Appellate Committee did not reject in principle the distinction between errors of law going to jurisdiction and errors of law within jurisdiction. Instead, they broadened the concept of jurisdiction to embrace not just legal competence but also legal relevance, ie addressing the right questions. All of them recognised that there would be some errors of law which did not go to jurisdiction even in this enlarged sense, and which would not therefore invalidate the decision. However, dicta of high authority in subsequent cases have consistently interpreted the decision as authority for an approach to errors of law which is both broader and more absolute than the speeches themselves warrant. In particular, they suggested that all errors of law were to be regarded as beyond jurisdiction. Thus in OReilly v Mackman [1983] 2 AC 237, 278, Lord Diplock regarded Anisminic as authority for the proposition that if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as it had found them, it must have asked itself the wrong question, ie one into which it was not empowered to inquire and so had no jurisdiction to determine. In R v Hull University Visitor, Ex p Page [1993] AC 682, 701 702, Lord Browne Wilkinson, endorsing this summary, took it that thenceforth, it was to be taken that Parliament had only conferred the decision making power on the basis that it was to be exercised on the correct legal basis: a misdirection in law in making the decision therefore rendered the decision ultra vires. In R (Lumba) v Secretary of State for the Home Department (JUSTICE intervening) [2012] 1 AC 245, para 66, Lord Dyson considered that it established that there was a single category of errors of law, all of which rendered a decision ultra vires. Finally, in R (Cart) v Upper Tribunal [2012] 1 AC 663, para 18, Baroness Hale observed that in Anisminic the House of Lords effectively removed the distinction between error of law and excess of jurisdiction. Although none of these statements were part of the ratio of judgments in which they appeared, they have been followed by the courts for many years and have been assumed to state the modern law by Parliamentary draftsmen including (as I shall show) the draftsman of the Regulation of Investigatory Powers Act 2000. In my opinion, it is now too late to revert to the subtler distinctions in the speeches in Anisminic, even if it were thought desirable to do so. However, the speeches in Anisminic remain authority for the proposition, which may be thought self evident, that the extent of a tribunals jurisdiction depends on the construction of its enabling Act or, in Lord Wilberforces words, on the breadth of its permitted field. Errors of law by judicial bodies The categorisation of errors of law as excesses of jurisdiction is the result of the unsystematic way in which English public law has developed over the past three centuries. Its effect is to create what is nominally a power of review, but is in substance a right of appeal on points of law going to the merits. The implications of this are very different, according as the decision under review was made by an administrative or executive body on the one hand or a judicial one on the other. A right of access to a court or similar judicial body to review the lawfulness of administrative or executive acts is an essential part of the rule of law. But the rule of law does not require a right of appeal from such a body or a right to call for a review of its decisions. In England, appellate jurisdiction is wholly statutory, and may be absent, restricted or wholly excluded. This is well established as a matter of both law and legislative practice: see R (A) v Director of Establishments of the Security Service [2010] 2 AC 1, para 24 (Lord Brown of Eaton under Heywood). It has also been persistently recognised in the case law of the European Court of Human Rights: see Bochan v Ukraine (No 2) (2015) 61 EHRR 14, paras 44 45. For this reason the development since Anisminic of a legal principle which made excesses of jurisdiction of all errors of law has been accompanied by a recognition that the reasons for strictly construing ouster clauses may be more or less powerful, depending on the nature of the decision and the decision maker. In particular, the principle may have to be adapted to the decisions of judicial bodies. This is because a judicial body, depending on its status and functions, is more likely to have a wider permitted field, extending to the conclusive resolution of issues of law (or indeed fact) and including an unrestricted interpretative power. The analysis starts with the speech of Lord Wilberforce in Anisminic itself, from which I have already quoted. Lord Wilberforce regarded the Foreign Compensation Commission as a body whose functions were predominantly judicial (p 207C), from which it followed that there was no reason to give a restricted interpretation to section 4(4) of the Foreign Compensation Act 1950. That, however, was not the end of the matter. In his view, the effectiveness of the ouster clause depended on the extent of the interpretatory power which, as a matter of construction, Parliament must be taken to have conferred on the decision maker. Only errors of law lying outside what he called the permitted field were reviewable in the face of an ouster clause such as section 4(4): see pp 208A B, 209F G, 210C E. As I have pointed out, Lord Wilberforces view that the Foreign Compensation Commissions error of law lay outside the permitted field was based on a careful analysis of the interpretative power conferred on it by its enabling Act, which was limited to applying the Order in Council according to its true legal meaning. In South East Asia Fire Bricks Sdn Bhd v Non Metallic Mineral Products Manufacturing Employees Union [1981] AC 363, the Privy Council had to consider whether the decision of the Industrial Court of Malaysia, a judicial body, could be reviewed in the High Court on the ground of error of law on the face of the record. The statute from which the Industrial Court derived its jurisdiction provided that its awards shall be final and conclusive, and no award shall be challenged, appealed against, reviewed, quashed or called in question in any court of law. The Board held the judicial review did not lie. Lord Fraser of Tullybelton, delivering the advice of the Privy Council, distinguished Anisminic, at p 370, on the ground that if the inferior tribunal has merely made an error of law which does not affect its jurisdiction, and if its decision is not a nullity for some reason such as breach of the rules of natural justice, then the ouster will be effective. The Board did not expressly address the distinction between judicial and other decision makers, but since the judicial character of the Industrial Court was the only distinction between the case before them and Anisminic, that must have been the basis of the decision. Some light is thrown on this question by the speeches in In re Racal Communications [1981] AC 374, which addressed this very question, and were delivered a week later by an Appellate Committee comprising two of the same law lords, Lord Edmund Davies and Lord Keith. In re Racal Communications arose out of an application to the High Court under section 441 of the Companies Act 1948 to inspect the books of a company. Section 441(3) provided that the decision of the High Court on such an application shall not be appealable. The Court of Appeal had received the appeal on the ground that the ouster of its appellate jurisdiction was ineffective, relying on the decision in Anisminic. The House of Lords held that the Court of Appeal had been wrong to receive it in the face of the statutory exclusion of appeals. The leading speech was delivered by Lord Diplock. Having concluded that the House was bound by the statutory exclusion of appeals, he then turned to: the question of the availability of judicial review instead of appeal as a means of correcting mistakes of law made by a court of law as distinct from an administrative tribunal or other administrative authority, however described, when it is exercising quasi judicial functions. It is important to appreciate that Lord Diplock gave two independent reasons for holding that judicial review was not available. The first and principal reason was that the presumption against a statutory ouster of judicial review did not apply to the decisions of a judicial body. The second was that it could not in any event apply to decisions of the High Court. It is with the first reason that we are presently concerned. Unlike Lord Wilberforce, who had regarded the Foreign Compensation Commission as a body exercising judicial functions, Lord Diplock considered it to be an administrative tribunal. He distinguished (pp 382 383) between the two on the basis that the presumption against the ouster of judicial review depended on the scope of the decision makers functions, as a matter of construction of its enabling statute. The essential question was therefore the same as the one posed by Lord Wilberforce in Anisminic. Has the enabling Act conferred on the tribunal in question a general power to decide the questions in issue, or is its power limited to answering the questions defined in the Act? This did not mean that Anisminic had no application to the decisions of judicial bodies, only that the question of construction was not burdened by the same presumptions in their case. The law, he said: proceeds on the presumption that where Parliament confers on an administrative tribunal or authority, as distinct from a court of law, power to decide particular questions defined by the Act conferring the power, Parliament intends to confine that power to answering the question as it has been so defined. By comparison, there is no similar presumption that where a decision making power is conferred by statute upon a court of law, Parliament did not intend to confer upon it power to decide questions of law as well as questions of fact. Whether it did or not and, in the case of inferior courts, what limits are imposed on the kinds of questions of law they are empowered to decide, depends upon the construction of the statute unencumbered by any such presumption. In the case of inferior courts where the decision of the court is made final and conclusive by the statute, this may involve the survival of those subtle distinctions formerly drawn between errors of law which go to jurisdiction and errors of law which do not, that did so much to confuse English administrative law before Anisminic [1969] 2 AC 147; but upon any application for judicial review of a decision of an inferior court in a matter which involves, as so many do, interrelated questions of law fact and degree the superior court conducting the review should not be astute to hold that Parliament did not intend the inferior court to have jurisdiction to decide for itself the meaning of ordinary words used in the statute to define the question which it has to decide. Lord Diplocks reasoning on his first point does not depend on the fact that the decision sought to be reviewed was a decision of the High Court, and thus of a court of coordinate jurisdiction. Nor can it be brushed aside as depending on a distinction between a court and a judicial body of some other kind. The relevant distinction was between a judicial and an administrative body, Parliament being in principle more likely to confer on a judicial body a power to decide wider questions of law. Of particular interest in this context are the grounds on which the Appellate Committee overruled the decision of the Court of Appeal in Pearlman v Keepers and Governors of Harrow School [1979] 1 QB 56. In that case, the Court of Appeal, by a majority, had quashed a decision of an inferior court, namely the county court, on an application under the Housing Act 1974 to adjust the rateable value of tenanted premises, holding that the judge had erroneously construed the adjustment provisions of the Act. It had held, citing Anisminic in support, that a provision that the county courts decision should be final and conclusive was ineffective to oust judicial review. Lord Diplock (p 384) approved the dissenting judgment of Geoffrey Lane LJ, in which he had said (p 76): I am, I fear, unable to see how that determination, assuming it to be an erroneous determination, can properly be said to be a determination which he was not entitled to make. The judge is considering the words in the Schedule which he ought to consider. He is not embarking on some unauthorised or extraneous or irrelevant exercise. All he has done is to come to what appears to this court to be a wrong conclusion upon a difficult question. It seems to me that, if this judge is acting outside his jurisdiction, so then is every judge who comes to a wrong decision on a point of law. Accordingly, I take the view that no form of certiorari is available to the tenant. This analysis represents the majority view of the Appellate Committee. Lord Edmund Davies appears to have agreed with Lord Diplock on both of his grounds. Critically for present purposes, he agreed that Pearlman was wrongly decided and expressly endorsed the dissenting judgment of Geoffrey Lane LJ, from which I have cited. Lord Keith agreed generally with Lord Diplock. Only Lord Salmon and Lord Scarman may be thought to have decided the matter on narrower grounds. Lord Salmon decided it solely on the second of Lord Diplocks two grounds, and Lord Scarman decided it only on the question whether the decision was appealable without considering the availability of judicial review. I decline to accept that these judgments can be explained away on the ground that a tribunal is to be distinguished from a court. The Appellate Committee was concerned with a court, but the distinctive feature of a court which made its observations pertinent was that it was a judicial body. Almost all tribunals are obliged in some respects to act judicially, for example in acting fairly and without bias. But not all tribunals are judicial bodies. What matters is not the nomenclature of the decision maker but its statutory functions. On an issue which is agreed on all sides to turn on the requirements of the rule of law, it would in my view be absurd to suggest that there is no distinction to be made between a statute providing for an administrative authoritys decisions to be conclusive and a statute making corresponding provision for the decisions of a judicial body. As I shall explain, the Investigatory Powers Tribunal is indistinguishable from a court in every respect that matters to the present issue. More recently, in Lee v Ashers Baking Co Ltd [2018] 3 WLR 94, Racal was considered and applied by this court. The issue was whether a statutory provision making the decision of the Court of Appeal of Northern Ireland final, precluded a further appeal when the Court of Appeal had failed to refer a devolution issue to the Supreme Court as it had been bound to do. That question was answered by Lord Mance (with whom the rest of this court agreed). His judgment is relevant for two reasons. First, at para 86, he adopted Lord Diplocks analysis, in particular his distinction between the presumptions to be applied to an ouster clause where the decision is that of a judicial body and those which apply where the decision is that of administrative tribunal. Secondly, he held that as a matter of construction the same language could in principle be sufficient to exclude an appeal on the merits but not an appeal on the ground that the court below had committed a procedural error or failed to perform the function with which Parliament had charged it. At para 88, he said: The Court of Appeal in Northern Ireland is a superior court, but the underlying question of construction remains, whether the legislature has by article 61(7) of the 1980 Order, set out in para 63 above, excluded any right of appeal in circumstances such as the present. Article 61(1) and (7), read together, provide for the decision of the Court of Appeal on a case stated relating to the correctness of the decision of a county court judge upon any point of law to be final. They contemplate the finality of the Court of Appeals decision with regard to the correctness of the county court judges decision on the point of law raised by the case stated. The finality provision in article 61(7) is therefore focused on the decision on the point of law, not on the regularity of the proceedings leading to it. It would require much clearer words and they would, clearly, be unusual and surprising words to conclude that a focused provision like article 61(7) was intended to exclude a challenge to the fairness or regularity of the process by which the Court of Appeal had reached its decision on the point of law. Suppose the Court of Appeal had refused to hear one side, or the situation was one where some apparent bias affected one of its members. This sort of situation cannot have been contemplated by or fall within article 61(7). R (Cart) v Upper Tribunal [2011] QB 120 and [2012] 1 AC 663 In view of the weight placed on this decision by the appellants, it is necessary to analyse the judgments with some care, although it must be borne in mind throughout that it is not direct authority on the question before us because it was not a case about ouster clauses. There was no ouster clause in the relevant statutes. In the Divisional Court the issues were (i) whether the mere designation of a judicial body (in that case the Special Immigration Appeals Tribunal and the Upper Tribunal) as a superior court of record took it outside the scope of the High Courts review jurisdiction even in the absence of an ouster; and (ii) whether the scheme of the statutes from which these bodies derived their powers was inconsistent with its decisions being reviewable in the High Court even in the absence of an ouster. In an impressive judgment, Laws LJ, delivering the judgment of the Divisional Court held that the answer to (i) was No and the answer to (ii) was Yes. On issue (i), he held that the special status of the High Court as exercising a jurisdiction to keep other bodies within their powers meant that a superior court of record other than the High Court was not, simply by virtue of that status, immune from the review jurisdiction of the High Court. For present purposes, however, what matters is Laws LJs treatment of issue (ii). He accepted that some courts and tribunals might be immune from the High Courts review jurisdiction. He expressed the basic principle as follows: 37. The principle I have suggested has its genesis in the self evident fact that legislation consists in texts. Often and in every case of dispute or difficulty the texts cannot speak for themselves. Unless their meaning is mediated to the public, they are only letters on a page. They have to be interpreted. The interpreters role cannot be filled by the legislature or the executive: for in that case they or either of them would be judge in their own cause, with the ills of arbitrary government which that would entail. Nor, generally, can the interpreter be constituted by the public body which has to administer the relevant law: for in that case the decision makers would write their own laws. The interpreter must be impartial, independent both of the legislature and of the persons affected by the texts application, and authoritative accepted as the last word, subject only to any appeal. Only a court can fulfil the role. 38. If the meaning of statutory text is not controlled by such a judicial authority, it would at length be degraded to nothing more than a matter of opinion. Its scope and content would become muddied and unclear. Public bodies would not, by means of the judicial review jurisdiction, be kept within the confines of their powers prescribed by statute. The very effectiveness of statute law, Parliaments law, requires that none of these things happen. Accordingly, as it seems to me, the need for such an authoritative judicial source cannot be dispensed with by Parliament. This is not a denial of legislative sovereignty, but an affirmation of it: as is the old rule that Parliament cannot bind itself. The old rule means that successive Parliaments are always free to make what laws they choose; that is one condition of Parliaments sovereignty. The requirement of an authoritative judicial source for the interpretation of law means that Parliaments statutes are always effective; that is another. 39. As I have said, the paradigm for such an authoritative source is the High Court, which is independent of the legislature, the executive, and any other decision makers acting under the law; and is the principal constitutional guardian of the rule of law. In section IV(2)(a) below I discuss the historic primacy of the High Courts predecessor, the Court of Kings Bench. To offer the same guarantee of properly mediated law, any alternative source must amount to an alter ego of the High Court; and indeed there are instances where the authoritative source is another court, such as the Courts Martial Appeal Court and the Restrictive Practices Court: see the reference, at para 71, below to R v Cripps, Ex p Muldoon [1984] QB 68. But the general principle is clear. The rule of law requires that statute should be mediated by an authoritative and independent judicial source; and Parliaments sovereignty itself requires that it respect this rule. Turning to the position of the SIAC and the Upper Tribunal, he observed: 78. The answer to these questions requires a closer look at what I have described as the overriding foundation for the grant of judicial review: an excess of jurisdiction by the subject court. This concept possesses (at least) two different meanings. The first denotes the case where a court travels into territory where it has no business. Thus a court whose jurisdiction is limited to claims of a pleaded value of 5,000 or less would exceed its jurisdiction if it entertained a claim pleaded at 10,000; or if it adjudged a suit arising in Derbyshire though its jurisdiction was limited to County Durham. The second meaning of excess of jurisdiction denotes the case where, acting within the field ascribed to it, the court gets the law wrong. The first of these meanings is almost always unproblematic. The territory of a court's jurisdiction conferred by statute will depend, plainly, on the terms of the statute. (The same is of course true of the reach of executive power conferred by statute on a minister or other public decision maker.) The territorys edge will usually be sharp enough. 79. But the second meaning of excess of jurisdiction has given rise to more difficulty. A court acts in excess of jurisdiction by getting the law wrong if it is not the final judge (subject to any statutory appeal) of the law it has to apply. If it is not, it exceeds its jurisdiction if it makes a legal error, and in that case the High Court as successor to the Kings Bench may issue a certiorari (nowadays, a quashing order) to correct the error. By contrast if the court in question is the last judge of the applicable law (subject as I have said to any right of appeal) it will not exceed its jurisdiction by perpetrating a legal error, and the High Court will have no corrective or supervisory role. 81. We may see, then, that the question whether SIAC or UT is amenable to the judicial review jurisdiction has more than one layer. (1) Is either body reviewable for excess of jurisdiction in the first sense of the term (transgression beyond the boundaries of its permitted subject matter)? (2) Is either reviewable for excess of jurisdiction in the second sense, as being liable to correction for error of law, albeit committed within those proper boundaries? Or is it a court possessing the final power (subject to appeal) to interpret for itself the law it must apply? Applying that test, he held that the SIAC was but the Upper Tribunal was not amenable to judicial review in the High Court. The difference between them was that the Upper Tribunal was the alter ego of the High Court, but the SIAC was not. This was because the Upper Tribunal was itself exercising a power of judicial review equivalent to that of the High Court. The distinction is encapsulated in Laws LJs observations at para 94: In my judgment UT is, for relevant purposes, an alter ego of the High Court. It therefore satisfies the material principle of the rule of law: it constitutes an authoritative, impartial and independent judicial source for the interpretation and application of the relevant statutory texts. It is not amenable to judicial review for excess of jurisdiction in the second sense: the case where, albeit acting within the field ascribed to it, the court perpetrates a legal mistake. It is a court possessing the final power to interpret for itself the law it must apply And it must, I think, be obvious that judicial review decisions of UT could not themselves be the subject of judicial review by the High Court. In the Court of Appeal the position of the SIAC was no longer in issue. Sedley LJ, delivering the judgment of the court, rejected the suggestion that the Upper Tribunal was the alter ego of the High Court and denied that that was the test. In his view (para 20) all courts other than the High Court itself were in principle amenable to judicial review in the High Court in the absence of a sufficiently clear ouster clause. But he thought that while the Upper Tribunal was amenable to judicial review, the scope of review of a body such as the Upper Tribunal was limited, because the scheme of the Tribunals, Courts and Enforcement Act 2007 required the tribunal system to be treated as autonomous. It therefore implicitly provided (para 42) for the correction of legal error within rather than outside the system. It followed that judicial review extended only to what Sedley LJ called outright excess of jurisdiction, ie the exercise of powers that the tribunal did not have. At paras 36 37, he expressed the distinction thus: 36. It seems to us that there is a true jurisprudential difference between an error of law made in the course of an adjudication which a tribunal is authorised to conduct and the conducting of an adjudication without lawful authority. Both are justiciable before the UT if committed by the FTT, but if committed by the UT will go uncorrected unless judicial review lies. The same of course is true of errors of law within jurisdiction; but these, in our judgment, reside within the principle that a system of law, while it can guarantee to be fair, cannot guarantee to be infallible. Outright excess of jurisdiction by the UT and denial by it of fundamental justice, should they ever occur, are in a different class: they represent the doing by the UT of something that Parliament cannot possibly have authorised it to do. 37. Thus if for some reason the UT made an order giving a money judgment which it had no power to give, with the possibility of enforcement under its section 25 powers, it would be inimical to the rule of law if the High Court could not step in, should the appellate system for some reason not do so. Similarly if a member of the UT were to sit when ineligible or disqualified by a pecuniary interest, or if the UT conducted a hearing so unfairly as to render its decision a nullity, the High Court ought to be able to quash the determination. We do not mean this list to be exhaustive but to be illustrative of the kind of error, rare as it will be, which would take the UT outside the range of its decision making authority. Such a division is, we consider, one of legal principle which can properly form the basis of judicial policy. It applies only to the UT, since it is the role of the UT itself to correct errors of every kind, including outright excesses of jurisdiction and fundamental denials of justice, in the FTT. The Court of Appeal accepted that this might mean that the Upper Tribunal had the potential to develop a legal culture which is not in all respects one of lawyers law. In the Supreme Court the sole issue was whether this implicit limitation on the scope of the jurisdiction to review decisions of the Upper Tribunal was justified. As Baroness Hale pointed out at para 37 (and again at paras 29 and 40), the starting point was that there is nothing in the 2007 Act which purports to oust or exclude judicial review of the unappealable decisions of the Upper Tribunal. Clear words would be needed to do this and they are not there. Any limitation therefore had to be implicit, as the Court of Appeal had held it was. The Supreme Court accepted that a restrained approach should be taken to the granting of leave, but rejected the Court of Appeals distinction between errors of law and outright excess of jurisdiction. It is important to appreciate that both the Court of Appeal and the Supreme Court regarded the question whether there was an implicit limitation of the scope of judicial review as a question of judicial policy. The difference between them was about what the relevant policy considerations were. In the Supreme Courts view, the main policy consideration was the undesirability of allowing the Upper Tribunal to become (in Lady Hales words) the final arbiter of the law, in case inferior courts should undermine the coherence of the law by developing their own local law (para 43). This concern, which was mentioned by the Court of Appeal but had not troubled them, was central to the reasoning of this court. Nothing in this courts analysis suggests that policy considerations of this kind would have been relevant, let alone decisive, if the issue had been the meaning and effect of an ouster clause. Nothing in the judgments promotes the undesirability of local laws from an interpretative presumption to a constitutional principle. The real significance for present purposes of this courts decision in Cart lies in its recognition that the rule of law does not necessarily require that the decisions of an inferior tribunal be subject to a power of review, even where they are unappealable: see in particular paras 89 90 (Lord Phillips of Worth Matravers), and paras 122 124 (Lord Dyson). Lord Dyson (with whom the rest of the court all agreed) referred to the status of the Upper Tribunal as a court performing functions equivalent to those of the High Court, and observed at para 122: Prima facie, judicial review should be available to challenge the legality of decisions of public bodies. Authority is not needed (although much exists) to show that there is no principle more basic to our system of law than the maintenance of rule of law itself and the constitutional protection afforded by judicial review. But the scope of judicial review should be no more (as well as no less) than is proportionate and necessary for the maintaining of the rule of law. The status and functions of the Upper Tribunal to which I have already referred are important here. The Investigatory Powers Tribunal It follows from the modern authorities that the approach to be taken to section 67(8) of the Regulation of Investigatory Powers Act 2000 depends on the character of the Tribunals functions, the nature of the error of law of which it is accused by the appellant, and the construction of section 67(8) as applied to alleged errors of that kind. The functions of the Investigatory Powers Tribunal are defined by section 65 of the Act. Section 65(2) is in the following terms: (2) The jurisdiction of the Tribunal shall be (a) to be the only appropriate tribunal for the purposes of section 7 of the Human Rights Act 1998 in relation to any proceedings under subsection (1)(a) of that section (proceedings for actions incompatible with Convention rights) which fall within subsection (3) of this section; to consider and determine any complaints made (b) to them which, in accordance with subsection (4) are complaints for which the Tribunal is the appropriate forum; (c) to consider and determine any reference to them by any person that he has suffered detriment as a consequence of any prohibition or restriction, by virtue of section 17, on his relying in, or for the purposes of, any civil proceedings on any matter; and (d) to hear and determine any other such proceedings falling within subsection (3) as may be allocated to them in accordance with provision made by the Secretary of State by order. The jurisdiction invoked by the present appellant is founded on sections 65(2)(a) and (b). Proceedings falling within subsection (2)(a) are, in summary, proceedings in respect of alleged contraventions of the Human Rights Convention against the intelligence services or those acting on their behalf, or against the authorities empowered to require the disclosure of electronic encryption keys. It also applies to the authorisation under statutory powers of what would otherwise be unlawful conduct by such bodies. The Tribunal has exclusive jurisdiction in respect of these proceedings and, under section 67(1)(a), a duty to hear and determine them. Complaints under subsection (2)(b) are, in summary, proceedings challenging the interception of communications by the intelligence services and other investigatory authorities, or warrants authorising such interception. Under section 67(1)(b), the Tribunal has a duty to consider and determine them, but its jurisdiction in respect of these complaints is not exclusive. Section 67 regulates the manner in which the Tribunals jurisdiction is to be exercised. It provides, so far as relevant: (2) Where the Tribunal hear any proceedings by virtue of section 65(2)(a), they shall apply the same principles for making their determination in those proceedings as would be applied by a court on an application for judicial review. (3) Where the Tribunal consider a complaint made to them by virtue of section 65(2)(b), it shall be the duty of the Tribunal (a) to investigate whether the persons against whom any allegations are made in the complaint have engaged in relation to (i) the complainant, (ii) any of his property, (iii) any communications sent by or to him, or intended for him, or (iv) his use of any postal service, telecommunications or telecommunication system, service in any conduct falling within section 65(5); (b) to investigate the authority (if any) for any conduct falling within section 65(5) which they find has been so engaged in; and in relation to the Tribunals findings from their (c) investigations, to determine the complaint by applying the same principles as would be applied by a court on an application for judicial review. The importance of ensuring the confidentiality of secret material is implicit in the kind of matters with which it deals, and is reflected in a number of provisions of the Act. In the first place, section 69(3) imposes a duty on the Tribunal to carry out its own investigation of complaints brought before it, and section 68 empowers it to call for the assistance of the services in question and their officials. This is an inquisitorial power in whose exercise the complainant does not participate. Secondly, section 69 empowers the Secretary of State to make rules for the Tribunal, having regard in particular to the need to secure that they are properly heard and considered and that information is not disclosed to an extent or in a manner which is contrary to the public interest or prejudicial to national security, the prevention or detection of serious crime, the economic well being of the United Kingdom or the continued discharge of the functions of any of the intelligence services. Thirdly, section 66 empowers the Secretary of State by order to allocate further proceedings to the Tribunal, having regard in particular to the same matters. Fourthly, section 68(4) provides that in notifying to the complainant its determination of any proceedings or complaints, the Tribunal is to say only that they have made a determination in his favour or that they have not done so. It is plain that Parliament considered that ordinary proceedings in the High Court presented an unacceptable risk that secret material would be disclosed, contrary to the public interest, and that a major factor in the decision to allocate proceedings to the Tribunal was that its special procedures would reduce that risk. It was submitted to us that Parliaments concerns on this score were unjustified, because as the law was (wrongly) understood in 2000, closed material procedure was available in High Court proceedings. This submission is in my view misconceived. For the purpose of construing the Act, what matters is whether Parliament had those concerns, not whether they were justified. The terms of the Act are themselves enough to show that it did. The Investigatory Powers Tribunal is a judicial body. Schedule 3 to the Act provides that its President must hold or have held high judicial office, and its other members must either have held high judicial office or have had a relevant legal qualification for at least seven years. It is a tribunal of limited jurisdiction which enjoys neither the status nor all of the powers of the High Court. But for this purpose, as I have observed, what matters is not the label but the statutory functions of the Tribunal. Those functions are judicial in an altogether more significant sense than those of the Foreign Compensation Commission. The critical point is that the Tribunal exercises a power of judicial review which would otherwise be exercised by the High Court. By section 67(2), it is required to apply the principles which would be applied by the High Court on an application for judicial review. In relation to proceedings under section 65(2)(a) complaining of a contravention of human rights, this jurisdiction is exclusive, displacing that of the High Court. In relation to complaints under section 65(2)(b), it is a concurrent jurisdiction, but is likewise required by section 67(3)(c) to apply the principles which would be applied by the High Court on an application for judicial review. In these respects the Tribunal is not an inferior tribunal. Its adjudicative jurisdiction is coordinate with that of the High Court. In R (A) v Director of Establishments of the Security Service, supra, at para 23, Lord Brown of Eaton under Heywood, observed of the provision of section 65(2)(a) conferring exclusive jurisdiction on the Tribunal over human rights claims that the exclusion of the High Courts review jurisdiction has not ousted judicial scrutiny of the intelligence services; it has simply allocated that scrutiny (as to section 7(1)(a) HRA proceedings) to the IPT. Lord Brown adopted the statement of Laws LJ in the Court of Appeal that section 65 was among a class of: statutory measures which confide the jurisdiction to a judicial body of like standing and authority to that of the High Court, but which operates subject to special procedures apt for the subject matter in hand, may well be constitutionally inoffensive. The IPT . offers . no cause for concern on this score. This was also the essence of the reasoning of Laws LJ in Cart. He regarded the Upper Tribunal as an alter ego of the High Court, in the sense that while lacking the status of the High Court, it performed within its subject area the same functions in the same judicial fashion as the High Court. It therefore satisfied the material principle of the rule of law: see para 94 of his judgment. The Court of Appeal and the Supreme Court regarded that as insufficient to warrant implying a limitation of the scope of judicial review, and nothing that I say is intended to undermine their view. But Laws LJs analysis is an illuminating explanation of the difference between an ouster of judicial review and a limitation of its scope to controlling the purported exercise of powers that the decision maker did not have. That analysis is of considerable value in a case (unlike Cart) where an express statutory provision excludes judicial review of the legal merits of a tribunals decisions, without impinging on the High Courts traditional jurisdiction to review outright excesses of jurisdiction. The next question, to which I now turn, is whether that is the effect of section 67(8) of the Regulation of Investigatory Powers Act. Section 67(8) It is agreed on all sides that the meaning of this provision is a question of construction. It is also agreed that clear words are required if it is to be regarded as ousting the review jurisdiction of the High Court. However, we must not lose sight of the reason why clear words are required. The reason is, as all the authorities (and indeed Lord Carnwath in his judgment in the present case) agree, that Parliament is presumed not to legislate contrary to the rule of law. As Lord Hoffmann pointed out in R (Simms) v Secretary of State for the Home Department [2000] 2 AC 115, p 131, that Parliament must squarely confront what it is doing and accept the political cost. The degree of elaboration called for in a statutory provision designed to achieve a given effect must depend on how anomalous that effect would be. In this case, the words must be sufficiently clear to authorise a departure from the normal state of affairs, which is that the High Court has jurisdiction by way of review over the acts of lower courts. That is not the same as saying that the words must be such as to authorise a departure from the rule of law. There is nothing inconsistent with the rule of law about allocating a conclusive jurisdiction by way of review to a judicial body other than the High Court. The presumption against ouster clauses is concerned to protect the rule of law, which depends on the availability of judicial review. It is not concerned to protect the jurisdiction of the High Court in some putative turf war with other judicial bodies on whom Parliament has conferred an equivalent review jurisdiction. It was because Lord Brown found nothing constitutionally offensive in the allocation of specified disputes to the Investigatory Powers Tribunal that he had no difficulty in recognising in R (A) v Director of Establishments of the Security Service, supra, at para 23, that section 67(8) was an ouster (and indeed unlike that in Anisminic, an unambiguous ouster) of any jurisdiction of the courts over the IPT. This was no more than a dictum, on a point which was not argued. But in my opinion what Lord Brown said as a matter of impression was also correct as a matter of analysis, at any rate as applied to challenges to the Tribunals determinations on the merits. My reasons are as follows. In the first place, the jurisdiction of the Tribunal defined in section 65(2) is to adjudicate on proceedings, complaints, references and on other matters allocated to them by the Secretary of State. By adjudicate I refer compendiously to the various expressions used in sections 65(2) and 67(1) (3) to describe the Tribunals resolution of matters before it (hear and determine, consider and determine, determine, etc). The Tribunals permitted field (to use Lord Wilberforces phrase) plainly extended to determining questions of law arising in the course of any proceedings or complaint. In particular, it extended to determining the construction of the various enactments, such as the Intelligence Services Act 1994, under which the bodies subject to review by the Tribunal operated. There is nothing in the Act which lays down the test to be applied to any of these matters. Nor is there anything corresponding to the prescriptive regime in the Order in Council considered in Anisminic. The Act simply confers on the Tribunal the adjudicatory powers which would otherwise be exercised by the High Court acting as a court of review. Secondly, turning to the language of section 67(8) itself, it is common ground that it falls to be construed against the background of the law declared in Anisminic and in subsequent decisions interpreting and applying it. The draftsman has deliberately chosen substantially the same formula as was considered in Anisminic (shall not be liable to be questioned in any court). But it is clear that the draftsman did not intend the same result as in Anisminic. This is because he has modified the formula by adding the bracketed words (including decisions as to whether they have jurisdiction). The effect of the bracketed words is to extend the ouster to the precise class of decisions which the House of Lords in that and subsequent cases had held not to be covered by the Anisminic formula, namely decisions in excess of jurisdiction. I do not, however, think that the intention was to extend it to all such decisions. The key lies in another addition to the Anisminic formula, namely the reference to an appeal. The Tribunals decisions shall not be subject to appeal or be liable to be questioned in any court. At common law, it was well established that the fact that a judicial decision was unappealable did not bar judicial review on all the usual grounds: see R (Cart) v Upper Tribunal [2012] 1 AC 663, paras 16 21 (Baroness Hale). In framing section 67(8) as it did, Parliaments concern was plain. It was to ensure that the barring of appeals was not rendered nugatory by applications for judicial review on grounds which amounted to the same thing. Because the courts, in interpreting Anisminic, had categorised error, at any rate of law, as an excess of jurisdiction, this could be achieved only by extending the ouster clause so as to cover errors in the treatment of the merits notwithstanding that they were treated in Anisminic as an excess of jurisdiction. Thirdly, it is true that a right to apply for judicial review is conceptually different from an appeal even if, in relation to an alleged error of law, they amount in practice to the same thing. But the concept of a judicial review by the High Court of a tribunal which is itself exercising a power of judicial review equivalent to that of the High Court, might be thought surprising. The rational course for Parliament to have adopted, if it intended to allow judicial review on the ground of error, would have been to provide for an appeal. Parliament has in fact made such provision. But under section 67(9) it has done so unconditionally only in relation to cases falling within section 65(2)(c) and (d), which are not yet in force. In other cases, including those relevant to the present proceedings, the introduction of a right of appeal is left to the discretion of the Secretary of State under section 67(8). It would in my view be wrong in principle to construe the Act as allowing for judicial review on grounds indistinguishable from an appeal on the merits, when Parliament has so carefully circumscribed the conditions on which an appeal is available. Fourthly, as Lord Wilberforce observed in Anisminic (p 209), conclusions about the Tribunals permitted field may be derived from the form and subject matter of the legislation. The main subject matter of this legislation is secret intelligence whose disclosure would be contrary to an obvious and powerful public interest. I have drawn attention above (at para 196) to the numerous indications to that effect in the Act. Its provisions, as Lord Brown of Eaton under Heywood pointed out in R (A) v Director of Establishments of the Security Service [2010] 2 AC 1, para 14, are designed to ensure that, even in the most sensitive of intelligence cases, disputes can be properly determined. The public interest engaged was pointed out in forceful terms by Sales LJ in his judgment in the Court of Appeal: see, in particular, para 7. It needs no further emphasis from me. There is accordingly an entirely rational reason, whose significance is apparent throughout the relevant parts of the Act, why Parliament should have wished to confine the examination of these matters to a secure Tribunal and to prevent resort to the High Court, whether by way of appeal or review. The whole object of the Act in creating the Tribunal was to make resort to the High Court unnecessary by providing an alternative but equivalent right of recourse to a judicial body performing the same function. It is right to add that section 68(4), which requires the Tribunal to give an unreasoned Yes or No answer to the questions before it, would make judicial review by the High Court exceptionally difficult in most cases. In future cases, governed by the Investigatory Powers Act 2016, there will be a right of appeal, in specified circumstances, and section 68(4) will be modified so as to be subject to the Tribunal Rules. Rules made under that Act allow for more extensive disclosure of the Tribunals reasons. But by the time that the 2016 Act was passed the position regarding the security of information deployed in forensic litigation had been transformed by the Justice and Security Act 2013, with its elaborate provisions for closed material procedure in civil proceedings in the High Court. The courts below regarded this as a decisive consideration. I think that there are a number of decisive considerations, but this is certainly one of them. Finally one is bound to ask forensically, if section 67(8) when read as a whole does not exclude a challenge to the merits of the Tribunals decisions by way of judicial review, then what else can it mean? Ms Rose implicitly accepted that if it is to have any effect at all it must oust judicial review in relation to something. She was driven to arguing that it did so only in relation to alleged errors of fact. She referred to R v Secretary of State for the Home Department, Ex p Khawaja [1984] 1 AC 74, as authority for the proposition that the factual basis of the challenged decision would otherwise have been open in principle to challenge by way of judicial review, and suggested that that was the problem to which section 67(8) was directed. I do not accept this. The question is always whether the tribunals decision falls within its permitted field. If, as Ms Rose submits, the Act on its true construction does not allow the Tribunal to err, then there is no reason to distinguish between errors of law and fact. They are both in excess of jurisdiction. In In re Racal Communications [1981] AC 374, Lord Diplock (with whom Lord Keith agreed) explicitly rejected (p 382C) a similar distinction which had been suggested by Lord Denning MR in Pearlman. Analysing that decision (at pp 383 384) he deprecated attempts to read into ouster clauses an implicit dissection of propositions of law from their application to facts. Lord Edmund Davies made the same point at p 390. Judicial review commonly involves interrelated questions of fact and law, and such distinctions tend to lead to arbitrary and technical subtleties of a kind which Parliament is unlikely to have intended. Certainly, there is no trace of such a distinction in section 67(8) or anywhere else in the Act. Ms Roses principal argument, however, was a reductio ad absurdum. If, she said, section 67(8) excludes judicial review, then the Tribunals decisions could not be reviewed even if it embarked on a dispute which was not within its subject matter competence, or was improperly constituted, or affected by the grossest bias. This submission would require us to take an all or nothing view of section 67(8) which I regard as wrong in principle. The process of construction involved in identifying a judicial bodys permitted field depends, as the House of Lords pointed out in Anisminic, on an analysis of the enabling legislation to ascertain the breadth of the interpretative power conferred on it. The legislation may be more prescriptive in some respects than in others. Or it may be silent on some points, thus implicitly leaving unaffected basic common law principles such as natural justice. The Regulation of Investigatory Powers Act 2000 contains express provisions governing the constitution of the Tribunal and its subject matter competence. It contains rules governing the Tribunals procedure, and authorises the making of further rules by the Secretary of State. Nothing that I have said should be taken to suggest that breach of these requirements is unreviewable. The terms of the Act place them outside the Tribunals permitted field. The same is true of principles of natural justice (such as those relating to bias), so far as they are not modified in terms by the Act. Lord Diplock in Racal, at pp 382 383, envisaged that in the case of a court charged with the resolution of questions of law it was necessary to distinguish between errors of law going to jurisdiction in the pre Anisminic sense and errors of law within jurisdiction. As Lord Mance pointed out, applying this principle in Lee v Ashers Baking Co Ltd [2018] 3 WLR 1294, para 88 (cited above), a statutory ouster clause may be clear enough to oust review of a judicial bodys substantive decisions but not its procedural failings. In my opinion, section 67(8) is a provision of that kind. It ousts any kind of merits review of the Tribunals decisions but nothing more than that. This is the narrowest meaning consistent with the language and manifest purpose of the subsection. It does not oust review of those procedural failings which if made out would deprive the Tribunal of its adjudicatory competence. The appellants complaint is that the Tribunal misconstrued section 5(2) of the Intelligence Services Act 1994 by holding that it authorised thematic warrants. If this was an error, then it seems to me to be clear that it was an error within the permitted field of interpretative power which Parliament has conferred on the Tribunal. Whether or not it is correctly described as an excess of jurisdiction is not the point, for the statute empowers the Tribunal to act within its permitted field irrespective of whether or not its act is so described. I conclude that the effect of section 67(8) of Investigatory Powers Act 2000 is that the High Court had no jurisdiction to entertain a challenge to the Tribunals decision in the present case, whether by way of appeal or judicial review. The alternative case: unconstitutionality In the Statement of Facts and Issues, the alternative case is formulated as follows: whether, and, if so, in accordance with what principles, Parliament may by statute oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction. As framed, the alternative case seeks an answer to an examination question posed in wholly general terms. I do not think that it would be either appropriate or wise for this court to answer it in wholly general terms, for the answer may vary according to the statutory context. We have to address the question in the context of the particular statute before us. For that purpose, it is important to be clear about the assumption on which the issue arises. The assumption is that as a matter of construction section 67(8) of the Regulation of Investigatory Powers Act excludes judicial review of the Tribunals decisions on the merits of matters coming before it. That is the only point on which the decision of the Tribunal is sought to be reviewed in these proceedings, and section 67(8) is the only basis on which such a review is said to be excluded. The appellants case is that if section 67(8) is clear enough to oust judicial review of the Tribunals decisions on the law, then not even Parliament could effectually enact it. An argument of this kind may take one or other of two forms. In its more radical form, the argument limits the sovereignty of Parliament in the name of a higher law, ascertained and applied by the court. What is said is that the rule of law is the foundation of the constitution and the source of the legitimacy of all legislation and that judicial review is its procedural embodiment. For this reason, Parliament is not competent to legislate contrary to the rule of law. This was the view tentatively expressed in an obiter dictum of Lord Steyn in R (Jackson) v Attorney General [2006] 1 AC 262, para 102, and less tentatively by Lord Hope in his observations, also obiter, in the same case, at paras 104 108. It was robustly rejected by Lord Bingham in the same case (para 9) and more fully in Chapter 12 of his book The Rule of Law (2010). I did not understand Ms Rose to be arguing that case. In its less radical form, the argument is that judicial review is necessary to sustain Parliamentary sovereignty. This is because Parliament can express its will only by written texts, to which effect can be given only if there is a supreme interpretative and enforcing authority. That authority by its nature resides in courts of law. This is the view suggested by Laws LJ in the Court of Appeal in R (Cart) v Upper Tribunal [2011] QB 120, paras 34 38. Like the principle that Parliament cannot bind itself, Parliaments lack of competence to oust judicial review is on this view conceptual rather than normative. The point was well put by Farwell LJ in R v Shoreditch Assessment Committee, Ex p Morgan [1910] 2 KB 859 when he observed, at p 880, that it is a contradiction in terms to create a tribunal with limited jurisdiction and unlimited power to determine such limit at its own will and pleasure such a tribunal would be autocratic, not limited. The rule of law applies as much to the courts as it does to anyone else, and under our constitution, that requires that effect must be given to Parliamentary legislation. In the absence of a written constitution capable of serving as a higher source of law, the status of Parliamentary legislation as the ultimate source of law is the foundation of democracy in the United Kingdom. The alternative would be to treat the courts as being entitled on their own initiative to create a higher source of law than statute, namely their own decisions. In R (Miller) v Secretary of State for Exiting the European Union (Birnie intervening) [2018] AC 61, at para 20, the Divisional Court accepted that: the most fundamental rule of UK constitutional law is that the Crown in Parliament is sovereign and that legislation enacted by the Crown with the consent of both Houses of Parliament is supreme Parliament can, by enactment of primary legislation, change the law of the land in any way it chooses. There is no superior form of law than primary legislation, save only where Parliament has itself made provision to allow that to happen. In this court, sitting in banc for the first and only time, the proposition was common ground between the majority and the dissenting minority. The joint judgment of the eight judges of the majority recognised (para 43) that Parliamentary sovereignty was a fundamental principle of the UK constitution, and adopted the celebrated statement of A V Dicey (Introduction to the Study of the Law of the Constitution, 8th ed (1915), 38, that it comprised the right to make or unmake any law whatever; and, further, that no person or body is recognised by the law of England as having a right to override or set aside the legislation of Parliament. Ms Rose would therefore have had a mountain to climb if she had based her alternative case on the more radical form of the argument. In fact, she was wise enough not to do this. Her case was firmly based on the conceptual inconsistency between an ouster clause and the existence of limits on the jurisdiction of the Investigatory Powers Tribunal. I therefore turn to the less radical version of the argument as it was addressed to us. I would accept it up to a point. In reality, it is a variant of the appellants primary case about Parliamentary intention. If Parliament on the true construction of an enactment has created a tribunal of legally limited jurisdiction, then it must have intended that those limits should have effect in law. The only way in which a proposition can have effect in law, is for it to be recognised and applied by the courts. Parliaments intention that there should be legal limits to the tribunals jurisdiction is not therefore consistent with the courts lacking the capacity to enforce the limits. Ms Rose, correctly to my mind, described this as giving effect to the sovereignty of Parliament, not limiting it. In order to escape this conceptual difficulty, Parliament would have to create a tribunal of unlimited jurisdiction or one with unlimited discretionary power to determine its own jurisdiction. A sufficiently clear and all embracing ouster clause might demonstrate that Parliament had indeed intended to do that. But it would be a strange thing for Parliament to intend, and although conceptually possible, it has never been done. These theoretical considerations are, however, a long way from the problem presently before us. No one contends that section 67(8) of Act makes Investigatory Powers Tribunal a tribunal of unlimited jurisdiction or that it has an unlimited discretionary power to determine its own jurisdiction. The question is how to reconcile the limited character of its jurisdiction with the language of section 67(8). For the reasons which I have given, the reconciliation is that section 67(8) does no more than exclude review by the High Court of the merits of decisions made by a tribunal performing, within its prescribed area of competence, the same functions as the High Court. It is in substance an exclusion of appeals on the merits and other proceedings tantamount to an appeal on the merits. The bracketed words referring to jurisdiction have been added because the draftsman intended that the decisions of the tribunal on the merits should be treated as within its jurisdiction notwithstanding that it was erroneous. The intention was that the exclusion of appeals on the merits and equivalent proceedings should apply notwithstanding that Anisminic had categorised some errors going to the merits as excesses of jurisdiction. None of this gives rise to the conceptual problem described above. Section 67(8) does not exclude or limit the jurisdiction of the High Court to enforce the statutory limits on the Tribunals powers or subject matter competence, or the statutory and other rules of law regarding its constitution. In my opinion, Parliament does not contradict itself by enacting that notwithstanding Anisminic a decision on the merits by a judicial tribunal of limited jurisdiction exercising the same review function as the High Court is to be conclusive. As Baroness Hale put it in Cart (para 40), adopting the approach of Lord Wilberforce in Anisminic: it does of course lie within the power of Parliament to provide that a tribunal of limited jurisdiction should be the ultimate interpreter of the law which it has to administer: the position may be reached, as the result of statutory provisions, that even if they make what the courts might regard as decisions wrong in law, these are to stand. But there is no such provision in the 2007 Act. There is no clear and explicit recognition that the Upper Tribunal is to be permitted to make errors of law. Disposal I would accordingly dismiss the appeal. LORD WILSON: (dissenting) There are two questions: (1) Does section 67(8) of RIPA (the 2000 Act) mean that there can be no judicial review of the determinations of the IPT? (2) determinations? If so, is it open to Parliament to exclude judicial review of its The second question, which questions the legality of part of an Act of our Parliament, supreme under our constitutional arrangements, could scarcely be of greater fundamental importance and sensitivity. So there is a temptation to insinuate into the answer to the first question matters which in truth are relevant only to the answer to the second question, with a view to answering no to the first question and thus avoiding the need to answer the second question. In my respectful view this is the temptation to which in analogous circumstances in the Anisminic case the appellate committee gave way in 1968. I agree with Sir John Laws see para 81 above that the committee there picked a fig leaf with which it attempted to hide the essence of its reasoning. For proper recourse to the presumed intention of Parliament cannot justify straining the meaning of statutory words too far. The committee thereby set up 50 years of linguistic confusion for all of us who have been heirs to its decision. We should finally dispel that confusion but, in doing so, should, in answer to the first question, strive not to set up other strained meanings productive of different confusion for those who will wrestle with todays judgments. Omitting at this stage its strengthening words in parenthesis, section 67(8) says that, save as the Secretary of State may by order otherwise provide, decisions of the IPT should not be subject to appeal or be liable to be questioned in any court. On the face of it, what could be clearer? The obvious place for them to be questioned is the High Court in the exercise of its jurisdiction to conduct judicial review. Those words appear to exclude judicial review. Parliament recognised, however, that, contrary to their appearance, they alone were not enough to exclude it. The problem was the decision in the Anisminic case. Section 4(4) of the Foreign Compensation Act 1950 (the 1950 Act) provided, in terms which were to that extent identical to those in section 67(8), that the determination by the [Foreign Compensation Commission] of any application made to them under this Act shall not be called in question in any court of law. The commission had made a determination that the company was not entitled to compensation for the sequestration of its property in Egypt because of its failure to have complied with one of the perceived conditions of entitlement prescribed by an Order in Council. A majority of the appellate committee held that the commission had misconstrued the condition and upheld a declaration that the company was entitled to compensation. With respect to the distinguished members who formed the majority of the committee, I find it impossible to disagree with the dissenting conclusion of Lord Morris of Borth y Gest at p 194 that the commissions error, albeit one of law, was not in excess of its jurisdiction as properly understood. In what follows it will be convenient to describe that sort of error as an ordinary error of law. The majority, however, held otherwise. Relying heavily on the policy reasons in favour of judicial supervision of some of the commissions determinations, they worked backwards to the meaning of the word determination in section 4(4). As Lord Carnwath, borrowing a point made by Professor Feldman, observes in para 42 above, the companys claim was only for a declaration rather than for an order of certiorari to quash the commissions determination; so, if the claim was to prevail, the majority needed to conclude that the determination was a nullity and could thus be so declared. At all events they held that the word determination in the subsection did not include a mere purported determination. In describing it they deployed different terms which in my view amount to the same thing. Lord Reid at pp 170, 174 and 175 preferred to describe it as a nullity. He observed at p 171 that it was preferable not to use the word jurisdiction except in the narrow sense of a disentitlement to embark on the inquiry but then at p 174 he used that word in the wide sense in holding that the commission had exceeded it. Lord Pearce described it at pp 195 and 201 as a determination made in excess of jurisdiction, as did Lord Pearson at p 215. Lord Wilberforce suggested at p 207 that the words jurisdiction, error and nullity created problems and at p 208 he expressed a preference for describing it as a decision made outside the permitted field. There is no difficulty in understanding the decision of the majority in the Anisminic case that, by section 4(4), Parliament had not precluded review of determinations which were truly nullities, in excess of jurisdiction or outside the permitted field. They might well have reached that conclusion irrespective of the meaning of the words in the subsection: see para 236 below. Had they studied in greater detail the institutional features of the commission, they might also have held that, again irrespective of the meaning of the subsection, Parliament had not even precluded review of its ordinary errors of law, such as the one before them: see paras 237 to 252 below. The problems arise from the fact that they chose to reach their decision by construction of the word determination in the subsection; and from the way in which they strained the meaning of the words null, in excess of jurisdiction and outside the permitted field so as to extend them to ordinary errors of law which, on no previous understanding of those words, would have fallen within them. Lord Pearce at p 195 gave examples of lack of jurisdiction which demonstrate the strain: or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction [and] would cause its purported decision to be a nullity. Some have welcomed the extended meaning. I deprecate it. On 25 November 1982 the appellate committee decided the appeals in OReilly v Mackman [1983] 2 AC 237. For present purposes the facts are irrelevant. The relevance of the decision lies in the part of the speech of Lord Diplock quoted in para 54 above. The decision in the Anisminic case, he said, was that, if a statutory tribunal made an error of law, it must have asked itself the wrong question, ie one which it had no jurisdiction to determine. I, for my part, do not regard Lord Diplock as having there significantly misconstrued or oversimplified that decision. He praised it. No doubt in one sense anything which enables a judicial system to overcome obstacles to its elimination of legal error deserves praise. And he evidently saw no reason to temper his praise by reference to the confusing use of language in which the decision in the Anisminic case had been cast. On 14 February 1985 the Bill which became the Interception of Communications Act 1985 (the 1985 Act) was published. By section 7, Parliament established a tribunal to investigate complaints that a communication sent to or by a complainant had been unlawfully intercepted. There was an ouster of judicial supervision of the tribunals decisions but in terms more comprehensive than those in section 4(4) of the 1950 Act which had failed to exclude the supervision that the majority in the Anisminic case had held to have survived. For section 7(8) provided: The decisions of the Tribunal (including any decisions as to their jurisdiction) shall not be subject to appeal or liable to be questioned in any court. The IPT has replaced the tribunal set up by the 1985 Act; but, subject to the exception added to the beginning of it, section 67(8) of the 2000 Act is in terms which, for practical purposes, are identical to those of section 7(8) of its predecessor. We can now address the specific question central to the overall answer to the first question: what is the meaning of the words including decisions as to whether they have jurisdiction, written in parenthesis in section 67(8), in effect by way of repetition of words introduced by Parliament in an analogous provision in 1985? I, for my part, am in no doubt about the answer to the specific question. In 1985 Parliament, including its drafter of the 1985 Act, was aware that its attempted ouster of judicial oversight in section 4(4) of the 1950 Act had failed. In the Anisminic case the majority of the appellate committee had used different terms to describe the sort of decisions of which judicial oversight survived the ouster. But they had been collected by Lord Diplock in the OReilly case into one word, namely decisions made without jurisdiction. Lord Diplock had delivered his speech less than three years prior to publication of the bill which became the 1985 Act. Necessarily considered in their context, the meaning of the words in parenthesis in section 7(8) of the 1985 Act, now replicated in section 67(8) of the 2000 Act, is surely to encompass within the exclusion of judicial supervision all the decisions of the IPT in relation to its jurisdiction; and to ascribe to that word the strained extension of its effect adopted in the Anisminic case so as to cover ordinary errors of law as well, of course, as errors in the proper sense of it. The initial presumption that Parliament did not intend such an exclusion and the need in consequence for a strict construction of the subsection have to yield to what I consider to be the only reasonable meaning of its words, which is to the contrary. Support for the above comes from a distinguished source. At the time of the passing of the 1985 Act Professor David Foulkes wrote the notes to it for Current Law Statutes. Of section 7(8), he wrote: This subsection will be of interest. It is intended to and appears to be effective in making the Tribunal decisions wholly judge proof. The reference to jurisdiction excludes even the Anisminic line of argument. It follows that, with regret, I cannot subscribe to the interpretation of the words in parenthesis in section 67(8) favoured by Lord Carnwath. His argument is in the alternative. His first argument, set out in para 108 above, is predicated on what I have described as the proper sense of the word jurisdiction in the words in parenthesis. He says correctly that the appellants contention is that the IPT made an ordinary error of law. So, he says, it escapes the exclusion of decisions in relation to jurisdiction provided by the words in parenthesis. But why would it escape the exclusion in the earlier words of the subsection? Where would be the logic in excluding from judicial oversight errors of jurisdiction in the proper sense, but not ordinary errors of law? Lord Carnwaths alternative argument, set out in para 109 above, with which Lord Lloyd Jones agrees in para 165 above, is predicated on the extended sense ascribed to the word jurisdiction in the Anisminic case. Here his argument is that decisions made without jurisdiction in that extended sense are not decisions at all so are not excluded from judicial oversight by a subsection which refers both inside and outside the parenthesis only to decisions. In my opinion the argument is characteristically ingenious but too strained. It also proves too much, as becomes clear when in para 110 above Lord Carnwath seeks to ascribe some meaning to the words in parenthesis. He cites a decision of the IPT, namely C v The Police IPT/03/32/H in which, as I agree, the applicant failed because he failed to establish a fact upon which the existence of its jurisdiction depended (a jurisdictional fact). Lord Carnwath suggests that the words in parenthesis might exclude judicial oversight of the IPTs determination of the absence (or presence?) of a jurisdictional fact. But why would that not be a decision made without jurisdiction in the extended sense of that word, as well of course as in its proper sense? In any event I see no basis for confining the wide words in parenthesis to that narrow area of the IPTs decision making. Indeed why should such a determination have been singled out as fit for exclusion from any judicial inquiry into the existence of evidence which entitled the IPT to make it? Then, in para 111 above, Lord Carnwath observes that, irrespective of whether either of his constructions of section 67(8) is correct or whether the words in parenthesis are redundant, the words of the subsection are insufficiently clear to exclude judicial review of the IPTs errors of law; and his observation echoes his earlier suggestion in paras 107 and 108 above that the only clear exclusion achieved by the subsection is of legally valid determinations. With respect, I consider the words of the subsection to be totally clear in excluding judicial review of all the IPTs decisions; and an exclusion of judicial review in relation only to legally valid determinations seems to me to make no sense. It also follows that, with equal regret, I cannot subscribe to the interpretation of the words in parenthesis in section 67(8) favoured by Lord Sumption in para 201 above, which he had foreshadowed in para 172 above. The effect of Lord Sumptions interpretation is in my view further to extend the meaning of the word jurisdiction beyond that favoured in the Anisminic case. The effect of that case had been to draw into the concept of an absence of jurisdiction ordinary errors of law as well, of course, as errors of jurisdiction in the proper sense. Lord Sumption interprets the word jurisdiction in the words in parenthesis so as to relate only to ordinary errors of law and so as no longer to include errors of jurisdiction in the proper sense. His argument depends upon the words which immediately follow the parenthesis, namely the words shall not be subject to appeal. He observes that ordinary errors of law could in principle be the subject of an appeal and, by some alchemy if I may respectfully say so, he reasons that these words which exclude an appeal therefore limit the meaning of the word jurisdiction in the parenthesis to ordinary errors of law. In my opinion the argument is again characteristically ingenious but too strained. Had Parliaments intention been to allow judicial review of the IPTs errors of jurisdiction in the proper sense, it would not have borrowed from the 1985 Act words in parenthesis which, on any conventional construction of them, so obviously appear to exclude it. It is worth noting that the exclusion of an appeal achieved by the words upon which Lord Sumption relies is subject to the exception in the opening words of section 67(8), namely the words Except to such extent as the Secretary of State may by order otherwise provide . It is significant that, even prior to its recent insertion into the 2000 Act of section 67A, Parliament considered that there should be, or at least could properly be, a facility for appeal against the decisions of the IPT, including no doubt against its jurisdictional decisions as well as its ordinary decisions of law. Parliament recognised however that any facility for appeal required the establishment of a confined structure apt to the sensitivity of the subject matter of the IPTs decisions. It thus provided in section 67(10) that any order made by the Secretary of State pursuant to the opening words of section 67(8) might include various types of provision. These include provisions at (a) for establishing a body to hear such appeals or at (c) for conferring jurisdiction to hear them on an existing court or tribunal and, in either event, at (d) for making rules in relation to the conduct of the appeals corresponding to the rules of the IPT. At that time, however, Parliament decided, as the opening words make plain, to confer upon the Secretary of State a discretion whether to establish the structure which would have enabled the appeals to be brought; and, for reasons unexplained, he has never exercised his discretion to do so. Nevertheless, for the drafter of section 67(8), it was important not to permit an appeal from the IPT to be brought outside the confined structure which Parliament envisaged. So it was essential first to retain the general exclusion of an appeal which had been provided in section 7(8) of the 1985 Act and then to subject it to the limited exception reflected in the opening words of the subsection. I find it hard to imagine that Parliament countenanced the facility for some other review of the decisions of the IPT outside the confined structure for which it was making provision. Driven, as I am, to the view there is no defensible escape from giving to the first question the answer yes, I am required to proceed to address the second question; and, in doing so I must exercise a degree of caution apt to its constitutional delicacy. At this stage, however, it is crucial to bear in mind that the complaint of which the appellant seeks judicial review is that the IPT made an ordinary error of law. The appellant does not complain that the IPT lacked jurisdiction (in its proper sense) to determine its claim. Nor does it complain that the IPT denied to it the right to a fair hearing. A denial of a fair hearing, in particular of natural justice, is either an example of an absence of jurisdiction (Attorney General v Ryan, cited in para 123 above, p 730) or should at any rate be placed in that class for present purposes (the Cart case, Supreme Court, [2011] UKSC 28, [2012] 1 AC 663, para 38). Had the complaint been one of lack of jurisdiction, it would have been necessary for me to undertake, albeit more slowly, the journey which Lord Carnwath valuably, albeit for his purposes unnecessarily, undertakes in paras 114 to 126 above. The modern signpost most helpful to me would surely have been found in the classic judgment of Laws LJ in the Cart case, Divisional Court, [2009] EWHC 3052 (Admin), [2011] QB 120, in particular in para 38, which Lord Sumption sets out in para 190 above. In section 65(2) of the 2000 Act Parliament has specified the limits of the IPTs jurisdiction. So the question would have become whether, when it chooses to make a law which sets the limits of a jurisdiction, Parliament can elsewhere deprive it of an essential element of a law, namely that observance of its limits will be enforced in the courts. At first sight there is much to be said for Lord Carnwaths answer in paras 119 to 126 above that it cannot do so. But in my view such an answer is far less easily given to the second question if recast so as to address only Parliaments exclusion of judicial review of an ordinary error of law. In relation to this more limited question Lord Carnwath, albeit for his purposes again unnecessarily, reasons in para 131 above that it is ultimately for the courts, not the legislature, to determine the limits set by the rule of law to the power to exclude review; and he observes in para 144 above that it should remain ultimately a matter for the court to determine the extent to which, in the light of its purpose and context and the nature and importance of the legal issue in question, a statutory ouster of review of an ordinary error of law should be upheld. One objection to Lord Carnwaths observation might be that, although constructed upon the rule of law, it fails to identify any robust criterion by reference to which the courts decision in any particular case could be foretold. At all events, for the more fundamental reasons which follow, I respectfully disagree with it. Every legal system has to identify some end point beyond which there can be no challenge or further challenge to a judicial decision; and it may well identify different end points for decisions in different areas of the law and, within any one area of it, perhaps different end points for challenges to decisions of fact, to decisions allegedly vitiated by an ordinary error of law and to decisions allegedly made in excess of jurisdiction in the proper sense. Our system will usually provide for some, perhaps circumscribed, right to bring an appeal against, or to seek other review of, an initial judicial decision (in other words not one made on appeal or review). But it will not always do so. There is no constitutional requirement that such a right should exist: see Lord Brown of Eaton under Heywood in R (A) v Director of Establishments of the Security Service, cited in para 19 above, para 23. Nor is it required as part of the right to a fair trial conferred by article 6 of the European Convention on Human Rights: Delcourt v Belgium (1970) 1 EHRR 355. In In re Racal Communications Ltd, cited in para 62 above, the appellate committee addressed a statute which empowered a judge of the High Court both to authorise inspection and to require production of company books reasonably believed to contain evidence of the commission of a criminal offence. The statute also provided that the judges decision should not be appealable. The complaint was that the judge had made an ordinary error of law: see the speeches of Lord Diplock at p 384 and of Lord Edmund Davies at p 388. The committee held that the Court of Appeal had had no power to reverse the judges decision on appeal. Lord Diplock said at p 384: Judicial review is available as a remedy for mistakes of law made by inferior courts and tribunals only. Mistakes of law made by judges of the High Court acting in their capacity as such can be corrected only by means of appeal to an appellate court; and if, as in the instant case, the statute provides that the judges decision shall not be appealable, they cannot be corrected at all. In Pearlman v Keepers and Governors of Harrow School, cited in para 69 above, the Court of Appeal had addressed a statute which empowered a county court judge to determine whether improvements made by a tenant to his leasehold property qualified for adjustment of its rateable value. The statute also provided that the determination should be final and conclusive. The Court of Appeal, by a majority, allowed an appeal by the tenant. But in the Racal case its decision was overruled: see the speeches of Lord Diplock at p 384 and of Lord Edmund Davies at p 390. In the Pearlman case it is therefore the dissenting judgment of Geoffrey Lane LJ which, so the appellate committee there held, provides the correct analysis of it. He said at p 74: the only circumstances in which the court can correct what is to my mind the error of the judge is if he was acting in excess of his jurisdiction as opposed to merely making an error of law in his judgment And he explained at p 76 that the tenants complaint was that the county court judge had made no more than an ordinary error of law. In R v Hull University Visitor, Ex p Page, cited in para 55 above, the appellate committee considered a complaint by a lecturer at Hull University that his dismissal had contravened its statutes and so been unlawful. The Queen, who was the visitor of the university and was acting by the Lord President of the Privy Council, had rejected his complaint. The appellate committee decided by a majority that the Divisional Court, which had quashed Her Majestys decision in the course of conducting a judicial review, had lacked jurisdiction to entertain it. Lord Browne Wilkinson, for the majority, explained at p 702 that the university statutes were not the general law of the land. But his conclusion at p 704 remains useful and was as follows: Judicial review does not lie to impeach the decisions of a visitor taken within his jurisdiction (in the narrow sense) on questions of either fact or law. Judicial review does lie to the visitor in cases where he has acted outside his jurisdiction (in the narrow sense) or abused his powers or acted in breach of the rules of natural justice. Lord Griffiths, at pp 693 694, gave a wide interpretation to the decision in the Racal case. He said that it shows that Parliament can by the use of appropriate language provide that a decision on a question of law whether taken by a judge or by some other form of tribunal shall be considered as final and not be subject to challenge either by way of appeal or judicial review. [Emphasis supplied] In the Cart case the challenge was to a refusal on the part of the Administrative Appeals Chamber of the Upper Tribunal to grant permission to appeal to it. Parliament, which had designated the tribunal as a superior court of record, had excluded a right of appeal against its refusal of permission. Could there, however, be a judicial review of it? Parliament had not expressly excluded it. The complaint was of an ordinary error of law on the part of the tribunal. The Divisional Court, cited in para 116 above, and the Court of Appeal, [2010] EWCA Civ 859; [2011] QB 120, had both held, for slightly different reasons, that the institutional features of the Upper Tribunal were such that its unappealable decisions could be the subject of judicial review when, but only when, they were said to be in excess of jurisdiction. By the time when the case reached the Supreme Court, cited in para 76 above, the government had accepted that analysis: see Lord Dyson, para 108. So by that time the only remaining question was whether judicial review could extend to ordinary errors of law alleged to have been perpetrated by the tribunal in making unappealable decisions. This courts answer was that there could be judicial review of such errors in limited circumstances not present in the case before it. For current purposes the great importance of the decision lies in the observations of Lady Hale, in a judgment with which all the other members of the court agreed, at para 40. Lord Sumption has quoted them in para 211 above. Lady Hale there recognised that, although it had not done so, Parliament might successfully have ousted judicial review of ordinary errors of law made by a tribunal of limited jurisdiction such as the Upper Tribunal. We therefore see that the High Court judge in the Racal case, the county court judge in the Pearlman case and the Upper Tribunal in the Cart case can, in the course of making unappealable decisions, make ordinary errors of law of which Parliament has power to exclude judicial review. Does the IPT stand so differently from them as to mandate a different conclusion? The answer is to be collected from examination of its institutional features, of which I now offer a brief summary. The President of the IPT must hold or have held high judicial office: the 2000 Act, Schedule 3, paragraph 2(2). At present the incumbent is Singh LJ. Its other members must either hold or have held high judicial office or must be UK lawyers of at least seven years standing: Schedule 3, paragraph 1(1). At present the other members are two High Court judges in England and Wales, a former High Court judge in Northern Ireland, and six other distinguished Queens Counsel including a practitioner in Scotland. In exercising its jurisdiction the IPT is required to apply the principles which a court would apply on an application for judicial review: section 67(2) and (3)(c) of the 2000 Act. So the function of judicial review of the lawfulness of the actions of the intelligence services has therefore been allocated to it and, so this court held in the A case, exclusively so. The need for the allocation reflects the sensitivity of any inquiry into the lawfulness of such actions and therefore the unique raft of provisions devised for the conduct of the IPT, as set out in section 68 of the 2000 Act and in the Investigatory Powers Tribunal Rules, first those dated 2000 (2000 No 2665) and now those dated 2018 (2018 No 1334), made under section 69 of it. These provisions reflect its investigative duty under section 67(3)(a) and (b) and include, by section 68(1), a right, subject to the rules, to determine its own procedure and thus to adopt an inquisitional process and, by rule 13(1) of the current rules, freedom from rules of evidence. Disclosure of the nature of the complaint and of any information or document provided to it from any source is closely circumscribed by what is now rule 7, as is the content of the notification to the complainant of its ultimate determination under section 68(4) and what is now rule 15. In the Big Brother Watch case, cited in para 28 above, the European Court of Human Rights said at para 255: the IPT, as the only tribunal with jurisdiction to obtain and review below the waterline [ie closed] material, is not only the sole body capable of elucidating the general operation of a surveillance regime: it is also the sole body capable of determining whether that regime requires further elucidation. The IPT does not form part of Her Majestys Courts and Tribunal Service. In effect it has total autonomy. In his Report of the Review of Tribunals dated March 2001 Sir Andrew Leggatt said at para 3.11 that the IPTs concern with security required it to be separate from all other tribunals and that the Senior President of Tribunals would not be in a position to take charge of it. Parliament has therefore conferred both independence and authority upon the IPT. In the A case Lord Brown, with whom all other members of the court agreed, endorsed at para 23 the conclusion of Laws LJ in the court below that the IPT was a judicial body of like standing and authority to that of the High Court. In the above circumstances I conclude that Parliament does have power to exclude judicial review of any ordinary errors of law made by the IPT. My answer to the second question posed at the outset of this judgment, if limited to the sort of determination relevant to this case, namely to an ordinary determination of law, is yes. So I would have dismissed the appeal.
UK-Abs
The Investigatory Powers Tribunal (IPT) is a specialist tribunal established under the Regulation of Investigatory Powers Act 2000 (RIPA). It has jurisdiction to examine, among other things, the conduct of the Security Service, the Secret Intelligence Service and the Government Communications Headquarters. Section 67(8) of RIPA provides: Except to such extent as the Secretary of State may by order otherwise provide, determinations, awards and other decisions of the Tribunal (including decisions as to whether they have jurisdiction) shall not be subject to appeal or be liable to be questioned in any court. On a preliminary issue in a claim brought by the appellant, the IPT ruled that section 5(2) of the Intelligence Services Act 1994 (the 1994 Act), which empowers the Secretary of State to issue a warrant authorising the taking of such action as is specified in the warrant in respect of any property so specified, extends to warrants authorising a class of activity in respect of a class of property so called thematic warrants. The appellants applied for judicial review, but the High Court ruled that section 67(8) of RIPA prohibits judicial review of that decision. The Court of Appeal dismissed the appellants appeal against that ruling. The two issues before the Supreme Court are: i) Whether section 67(8) of RIPA ousts the supervisory jurisdiction of the High Court to quash a judgment of the IPT for error of law. ii) Whether, and, if so, in accordance with what principles, Parliament may by statute oust the supervisory jurisdiction of the High Court to quash the decision of an inferior court or tribunal of limited statutory jurisdiction. The Supreme Court allows the appeal by a majority. Lord Carnwath gives the lead judgment, with which Lady Hale and Lord Kerr agree. Lord Lloyd Jones gives a separate concurring judgment. The majority allow the appeal on the first issue, as they conclude that section 67(8) does not oust the supervisory jurisdiction of the High Court for errors of law. Lord Sumption (with whom Lord Reed agrees) and Lord Wilson give dissenting judgments. (i) Whether section 67(8) of RIPA ousts the supervisory jurisdiction of the High Court Lord Carnwath holds that the interpretation of section 67(8) must be informed by the close parallel with the provision under review by the House of Lords in Anisminic v Foreign Compensation Commission [1969] 2 AC 14. By the time the predecessor to RIPA was drafted in 1985, following Lord Diplocks explanation in OReilly v Mackman [1983] 2 AC 237, the drafter can have had no doubt that a determination vitiated by any error of law, jurisdictional or not, was to be treated as no determination at all. The reference to a determination was to be read as a reference only to a legally valid determination [105]. The exercise is not one of ordinary statutory interpretation, as there is a common law presumption against ousting the jurisdiction of the High Court. The plain words of the subsection must yield to the principle that such a clause will not protect a decision that is legally invalid. Therefore the exclusion in section 67(8) of RIPA applies only to determinations, awards or other decisions that are not erroneous in law [107]. The relevant decision in this case raised a short point of law, which on no ordinary view could be regarded as a decision as to whether [the IPT] had jurisdiction [108]. If read in the context of Anisminic, those words in parenthesis in section 67(8) apply only to a legally valid decision relating to jurisdiction [109]. This does not mean the words in parenthesis are otiose, as some decisions as to jurisdiction will involve issues of fact to which the exclusion could be said to apply without engaging the presumption against ouster [110]. Moreover, judicial review can only be excluded by the most clear and explicit words. A more explicit formula might have excluded challenges to any determination or purported determination [111]. The features of the IPT regime, on which the Court of Appeal relied, do not change the interpretation of section 67(8). As this case shows, the IPT can organise its procedures to ensure that a material point of law can be considered without threatening any security interests. Further, the potential for overlap with legal issues considered by ordinary courts makes it important that the IPT is not able to develop its own local law without scope for further review [112]. Lord Lloyd Jones agrees with Lord Carnwath. He adds that it is a necessary corollary of the sovereignty of Parliament that there should exist an authoritative and independent body which can interpret and mediate legislation made by Parliament. Central to the appeal is whether it was the intention of Parliament to modify the procedures by which statute law is mediated [160]. He finds it a striking feature of section 67(8) and its predecessor that it failed to exclude purported determinations, awards and other decisions, in light of the judgment of Lord Diplock in OReilly v Mackman [164]. The words in parenthesis do not extend the exclusion of the jurisdiction of the High Court to what purport to be decisions but in law are not to be so regarded [165]. Lord Sumption, dissenting, concludes that the effect of section 67(8) is to exclude the jurisdiction of the High Court to entertain a challenge to the IPTs decisions on the merits. The rule of law is sufficiently vindicated by the judicial character of the IPT and it does not require a right of appeal from the decisions of a judicial body of this kind [172]. If the IPTs construction of section 5(2) of the 1994 Act was an error, then it was an error within the permitted field of interpretive power which Parliament has conferred on the IPT. Therefore, the effect of section 67(8) is that the High Court had no jurisdiction to entertain a challenge to the IPTs decision in the present case [206]. Lord Wilson, dissenting, concludes that the meaning of the words in parenthesis in section 67(8) encompass within the exclusion of judicial supervision all the decisions of the IPT in relation to its jurisdiction. He ascribes to that word the strained extension of its effect adopted in Anisminic, such that the exclusion in section 67(8) covers both ordinary errors of law as well as errors of jurisdiction in the proper sense of the word. The presumption that Parliament did not intend such an exclusion has to yield to the only reasonable meaning of its words [224]. (ii) Whether Parliament may by statute oust the supervisory jurisdiction of the High Court Lord Carnwath states that his conclusion on the first issue makes it strictly unnecessary to consider the second issue [113]. He nonetheless comments that it is ultimately for the courts, not the legislature, to determine the limits set by the rule of law to the power to exclude review [131]. This proposition is a natural application of the constitutional principle of the rule of law and an essential counterpart to the power of Parliament to make law. The question in any case is the level of scrutiny required by the rule of law [132]. Some forms of ouster clause may readily satisfy such a test, as in the six week time limit for planning cases [133]. Lord Carnwath sees a strong case for holding that binding effect cannot be given to a clause which purports wholly to exclude the supervisory jurisdiction of the High Court to review a decision of an inferior court or tribunal, whether for excess or abuse of jurisdiction, or error of law. It should remain a matter for the court to determine the extent to which such a clause should be upheld, having regard to its purpose and statutory context, and the nature and importance of the legal issue in question [144]. Lord Sumption does not think it would be appropriate or wise to answer the second issue in wholly general terms. It should be addressed in the context of the statute in this case, and of the assumption that section 67(8) excludes judicial review of the IPTs decisions on merits [207]. He accepts that Parliaments intention that there should be legal limits to a tribunals jurisdiction is not consistent with the courts lacking the capacity to enforce those limits [210]. The question here, however, is how to reconcile the limited character of the IPTs jurisdiction with the language of section 67(8). The reconciliation is that section 67(8) does no more than exclude review by the High Court of the merits of decisions made by a tribunal performing the same functions as the High Court. It is in substance an exclusion of appeals on the merits and other proceedings tantamount to an appeal on the merits [211]. Lord Wilson recasts the second issue to address only Parliaments exclusion of judicial review of an ordinary error of law [237]. He concludes that Parliament has conferred both independence and authority upon the IPT and, in those circumstances, Parliament does have the power to exclude judicial review of any ordinary errors of law made by it [252 253].
These two appeals were heard together by the Court of Appeal and raise common issues as to the scope of the principle in Ruiz Zambrano v Office national de lemploi (Case C 34/09) [2012] QB 265 (Zambrano). In Zambrano, the Court of Justice of the European Union (the CJEU) held that a third country (ie non member state) national parent (TCN parent), of a Union citizen child resident in Union territory, was entitled to a right of residence to avoid the child being deprived of the genuine enjoyment of the substance of their Union citizenship rights on removal of the TCN parent. The principle extends to dependents who are not children, and has been applied even where the Union citizen has not exercised their right of free movement. The right of residence is a derivative right, that is, one derived from the dependent Union citizen. A key to this derivative right is the deprivation of the benefits of the Union citizenship as a result of the Union citizen being compelled, by the TCNs departure, to leave Union territory. This case is about the nature or intensity of that compulsion. The derivative residence right was implemented in UK law by regulation 15A(4A) of the Immigration (European Economic Area) Regulations 2006. At the material time, this provided a TCN, P, with a derivative right to reside where: (a) P is the primary carer of a British Citizen (the relevant British citizen); (b) Kingdom; and (c) the relevant British citizen would be unable to reside in the UK or in another EEA State if P were required to leave. the relevant British citizen is residing in the United So the relevant wording of the domestic legislation is unable to reside. These words must be interpreted so far as possible compatibly with EU law. This depends upon the jurisprudence of the CJEU. In the first appeal, the appellant, Mr Nilay Patel, for whom Mr Thomas Roe QC appears, is a TCN with no right to remain in the UK. He has Indian nationality. He cares for his parents, both of whom are British citizens and both of whom are ill. His father suffers from end stage kidney disease and needs dialysis for some eight hours per day. Mr Patel, though not medically qualified, is able through training and experience to administer this. His mother is also ill and immobile. Mr Patels case is that that his parents are dependent on him. The First tier Tribunal (FTT) accepted that they were dependent on him. However, it could not be said with confidence that the medication required for the dialysis which Mr Patel performed for his father was available in India. The FTT found that in those circumstances his father would not in fact return with his son but would remain in the UK and be provided with a social services care package and appropriate medical treatment, although this might not give him the same quality of life as he would have if Mr Patel continued to provide him with dialysis and other primary care in his own home. Mr Patels subsequent appeals to the Upper Tribunal (UT) and the Court of Appeal were similarly unsuccessful. Mr Patel had sought to establish a right to remain under article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (the Convention) but his claim was dismissed. On this appeal, Mr Roe submits that, in determining whether the parents would be compelled to leave, the tribunals and Court of Appeal approached the issue of compulsion with excessive rigidity and should have taken into account that Mr Patels father could not be treated in the UK with the same level of care if Mr Patel were no longer here. In the second appeal, Mr Shah, a Pakistani national, is the primary carer of his infant son, who is a British citizen. His wife also has British nationality. Mr and Mrs Shah and their son all live together. Mrs Shah is in full time work outside the home to earn an income for the family. While she is at work, the son remains with Mr Shah, who has no right to live or work in the UK. If Mr Shah were to return to Pakistan, Mrs Shah, on the findings of the FTT, would not remain in the UK but would accompany her husband to Pakistan, and the child would have no option but to go too. In those circumstances the FTT and UT in Mr Shahs case found that the child would be compelled to leave Union territory and that Mr Shah was, therefore, entitled to a derivative residence card. The Court of Appeal came to a different conclusion. They considered that Mrs Shah would be able to look after their son in the UK and so the requirement for compulsion to leave the UK was not satisfied. Zambrano jurisprudence The CJEU has effectively adopted an incremental approach to the development of the derived right of residence in a member state that may be enjoyed by a TCN, taking one step at a time in a number of cases which it has decided. It has consolidated much of that jurisprudence in the recent case of KA v Belgium (Case C 82/16) [2018] 3 CMLR 28, which was decided after the Court of Appeal gave its judgment. This court can therefore go to that case, although the facts are not relevant as they concern the compatibility with EU law of entry bans on TCN carers of Union citizen children. The case considered the application of article 20 of the Treaty on the Functioning of the European Union (the TFEU), and articles 7 and 24 of the Charter of Fundamental Rights of the European Union (the Charter), and so it is convenient to set those provisions out first. Article 20 TFEU provides: Article 20 (ex article 17 TEC) 1. Citizenship of the Union is hereby established. Every person holding the nationality of a member state shall be a citizen of the Union. Citizenship of the Union shall be additional to and not replace national citizenship. 2. Citizens of the Union shall enjoy the rights and be subject to the duties provided for in the Treaties. They shall have, inter alia: the right to move and reside freely within the a) territory of the member states; The right to EU citizenship is, therefore, a Treaty right. It lies at the heart of the European legal architecture. In UK law, prominence is not generally given to the distinction between citizenship of, and nationality within, the UK. The concept of EU citizenship is perhaps more easily understood in the context of countries where the borders have altered or been created in recent times, and the population includes peoples of different nationalities, such as Romania. The purport of the TFEU is that a person may have both EU citizenship and member state nationality. EU citizenship is a Treaty right and it is to be anticipated that it may be treated as a dynamic concept. This court has held that article 20 does not confer any rights on a TCN: R (Agyarko) v Secretary of State for the Home Department [2017] 1 WLR 823, para 62. Articles 7 and 24 of the Charter provide: Article 7 Respect for private and family life Everyone has the right to respect for his or her private and family life, home and communications. Article 24 The rights of the child 1. Children shall have the right to such protection and care as is necessary for their well being. They may express their views freely. Such views shall be taken into consideration on matters which concern them in accordance with their age and maturity. 2. In all actions relating to children, whether taken by public authorities or private institutions, the childs best interests must be a primary consideration. Article 7 reflects article 8 of the Convention. Article 24 does not, however, have an equivalent standalone right in the Convention although the best interests of the child may require to be considered in appropriate cases under specific articles, such as article 8. Needless to say, adults cannot rely on article 24. There is a further right in article 25 of the Charter. This sets out the rights of the elderly and provides that: The Union recognises and respects the rights of the elderly to lead a life of dignity and independence and to participate in social and cultural life. Passing to the CJEUs analysis in KA [2018] 3 CMLR 28, it is also convenient to set out its own summary of the relevant holdings in para 76 of its judgment, which was as follows: It follows from paras 64 to 75 of this judgment that article 20 TFEU must be interpreted as meaning that: where the Union citizen is an adult, a relationship of dependency, capable of justifying the grant to the third country national concerned of a derived right of residence under article 20 TFEU, is conceivable only in exceptional cases, where, in the light of all the relevant circumstances, any form of separation of the individual concerned from the member of his family on whom he is dependent is not possible; where the Union citizen is a minor, the assessment of the existence of such a relationship of dependency must be based on consideration, in the best interests of the child, of all the specific circumstances, including the age of the child, the childs physical and emotional development, the extent of his emotional ties to each of his parents, and the risks which separation from the third country national parent might entail for that childs equilibrium. The existence of a family link with that third country national, whether natural or legal, is not sufficient, and cohabitation with that third country national is not necessary, in order to establish such a relationship of dependency. Importantly, the CJEU drew a distinction between the case of a Union citizen who is an adult and one who is a child. The CJEUs process of reasoning leading up to the conclusions in para 76 began with article 20 TFEU. The CJEU emphasised the importance of the right to Union citizenship, being a Treaty right. The CJEU explained that a TCN might acquire a purely derived right of residence if their removal might deprive a Union citizen of the benefits of their Union citizenship [2018] 3 CMLR 28: 47. It must be recalled, first, that, in accordance with the courts settled case law, article 20 TFEU confers on every individual who is a national of a member state citizenship of the Union, which is intended to be the fundamental status of nationals of the member states (see, inter alia, Grzelczyk v Centre public daide sociale Ottignies Louvain la Neuve (Case C 184/99) [2002] ICR 566, para 31; Ruiz Zambrano, para 41 and Rendn Marn v Administracin del Estado (Case C 165/14) [2017] QB 495, para 69 and the case law cited). 48. Citizenship of the Union confers on each Union citizen a primary and individual right to move and reside freely within the territory of the member states, subject to the limitations and restrictions laid down by the Treaty and the measures adopted for their implementation (Rendn Marn, para 70 and the case law cited). In that context, the court has held that article 20 TFEU 49. precludes national measures, including decisions refusing a right of residence to the family members of a Union citizen, which have the effect of depriving Union citizens of the genuine enjoyment of the substance of the rights conferred by virtue of their status (Ruiz Zambrano, para 42; O v Maahanmuuttovirasto (Joined Cases C 356/11 and C 357/11) [2013] Fam 203, para 45 and Chavez Vilchez v Raad van bestuur van de Sociale verzekeringsbank (Case C 133/15) [2018] QB 103, para 61). 50. On the other hand, the Treaty provisions on citizenship of the Union do not confer any autonomous right on third country nationals. Any rights conferred on third country nationals are not autonomous rights of those nationals but rights derived from those enjoyed by a Union citizen. The purpose and justification of those derived rights are based on the fact that a refusal to allow them would be such as to interfere, in particular, with a Union citizens freedom of movement (Chavez Vilchez, para 62 and the case law cited). The CJEU explained that in very specific situations a TCN may have a right of residence if the Union citizen would otherwise be obliged to leave Union territory. Those limits are very important in considering these appeals because Charter rights are not engaged unless an EU law right is triggered. As stated, the TCNs derived right of residence is only given in order that the Union citizens rights should be effective. That would be the limit of the entitlement under EU law of the TCN to reside in the Union. Moreover, there must be a relationship of dependency between the Union citizen and the TCN: 51. In this connection, the court has previously held that there are very specific situations in which, despite the fact that secondary law on the right of residence of third country nationals does not apply and the Union citizen concerned has not made use of his freedom of movement, a right of residence must nevertheless be granted to a third country national who is a family member of that Union citizen, since the effectiveness of Union citizenship would otherwise be undermined, if, as a consequence of refusal of such a right, that citizen would be obliged in practice to leave the territory of the European Union as a whole, thus depriving him of the genuine enjoyment of the substance of the rights conferred by that status (see, to that effect, Ruiz Zambrano, paras 43 and 44 and Chavez Vilchez, para 63). 52. However, a refusal to grant a right of residence to a third country national is liable to undermine the effectiveness of Union citizenship only if there exists, between that third country national and the Union citizen who is a family member, a relationship of dependency of such a nature that it would lead to the Union citizen being compelled to accompany the third country national concerned and to leave the territory of the European Union as a whole (see, to that effect, Dereci v Bundesministerium fr Inneres (Case C 256/11) [2012] All ER (EC) 373, paras 65 to 67; O, para 56 and Chavez Vilchez, para 69). The distinction noted between dependence in the case of an adult Union citizen and that of a Union citizen child is then explored. A TCN could have a relationship of dependency with an adult Union citizen capable of justifying a derived right of residence under article 20 TFEU only in exceptional circumstances [2018] 3 CMLR 28: 65. As regards, first, the cases in the main proceedings where the respective applicants are KA, MZ and BA, it must, at the outset, be emphasised that, unlike minors and a fortiori minors who are young children, such as the Union citizens concerned in the case that gave rise to the judgment Ruiz Zambrano, an adult is, as a general rule, capable of living an independent existence apart from the members of his family. It follows that the identification of a relationship between two adult members of the same family as a relationship of dependency, capable of giving rise to a derived right of residence under article 20 TFEU, is conceivable only in exceptional cases, where, having regard to all the relevant circumstances, there could be no form of separation of the individual concerned from the member of his family on whom he is dependent. (Emphasis added) Mr David Blundell, who appeared for the Secretary of State, emphasises that in order for a TCN to have a derived right pursuant to article 20 TFEU the case must fall within one of the categories of very specific situations discussed in KA and the circumstances must be such that if the TCN is removed the Union citizen would in fact depart with them. These points are illustrated by a case to which the CJEU had already referred, namely Dereci v Bundesministerium fr Inneres (Case C 256/11) [2012] All ER (EC) 373. In that case, Mr Dereci, a Turkish national, applied for a residence permit to live in Austria so that he could live there with his Austrian wife and had three children. He applied for a residence permit, but this was refused. The CJEU held that the refusal would not breach EU law so long as it did not deprive his family of the genuine enjoyment of the substance of their rights, which was a question for the referring court to determine. The Union citizen children lived with their mother and so were not emotionally dependent on Mr Dereci, although he gave them financial support. It was not enough that it was desirable for him to live with his wife and family for economic reasons or reasons of family unification [2012] All ER (EC) 373: 66. [It follows that] the criterion relating to the denial of the genuine enjoyment of the substance of the rights conferred by virtue of European Union citizen status refers to situations in which the Union citizen has, in fact, to leave not only the territory of the member state of which he is a national but also the territory of the Union as a whole. 67. That criterion is specific in character inasmuch as it relates to situations in which, although subordinate legislation on the right of residence of third country nationals is not applicable, a right of residence may not, exceptionally, be refused to a third country national, who is a family member of a member state national, as the effectiveness of Union citizenship enjoyed by that national would otherwise be undermined. 68. Consequently, the mere fact that it might appear desirable to a national of a member state, for economic reasons or in order to keep his family together in the territory of the Union, for the members of his family who do not have the nationality of a member state to be able to reside with him in the territory of the Union, is not sufficient in itself to support the view that the Union citizen will be forced to leave Union territory if such a right is not granted. The CJEU held that any interference with Mr Derecis right to a family life would have to be raised under the Convention, not the Charter. The CJEU held that the Charter right to respect for private and family life did not extend further than the Convention in any event. Nor did the Charter extend the application of EU law beyond the powers of the Union because of article 51(1), which so provides. The CJEU did not discuss the jurisprudence of the European Court of Human Rights on this point, but this court has already held, on the basis of that jurisprudence, that article 8 does not give non settled TCNs a general right to avoid the application of immigration control (see R (Agyarko) v Secretary of State for the Home Department [2017] 1 WLR 823). Thus, the CJEU went on to hold [2012] All ER (EC) 373: 70. As a preliminary point, it must be observed that in so far as article 7 of the Charter of Fundamental Rights of the European Union (the Charter), concerning respect for private and family life, contains rights which correspond to rights guaranteed by article 8(1) of the [Convention], the meaning and scope of article 7 of the Charter are to be the same as those laid down by article 8(1) of the [Convention], as interpreted by the case law of the European Court of Human Rights (McB v E (Case C 400/10PPU) [2011] Fam 364, para 53). 71. However, it must be borne in mind that the provisions of the Charter are, according to article 51(1) thereof, addressed to the member states only when they are implementing European Union law. Under article 51(2), the Charter does not extend the field of application of European Union law beyond the powers of the Union, and it does not establish any new power or task for the Union, or modify powers and tasks as defined in the Treaties. Accordingly, the court is called upon to interpret, in the light of the Charter, the law of the European Union within the limits of the powers conferred on it (McB, para 51, see also criminal proceedings against Gueye (X intervening) (Joined Cases C 483/09 and C 1/10) [2012] 1 WLR 2672, para 69). 72. Thus, in the present case, if the referring court considers, in the light of the circumstances of the disputes in the main proceedings, that the situation of the applicants in the main proceedings is covered by European Union law, it must examine whether the refusal of their right of residence undermines the right to respect for private and family life provided for in article 7 of the Charter. On the other hand, if it takes the view that that situation is not covered by European Union law, it must undertake that examination in the light of article 8(1) of the [Convention]. Mr Blundell placed considerable reliance on Dereci in relation to the Patel appeal. He submits that in the light of the evidence the required level of compulsion to leave under Zambrano was not reached because it can only be said that it is desirable that Mr Patel should reside in the UK to be with his parents. His father could be given treatment in the UK in the absence of his son, albeit not in the comfort of his own home and among his family. The rights of Mr Patels parents under the Charter could not extend the right conferred by EU law: see article 51(2) of the Charter, summarised in para 16 above, and see also R (HC) v Secretary of State for Work and Pensions (The AIRE Centre intervening) [2017] 3 WLR 1486 (especially at paras 27 to 28). Therefore, the appellant was not entitled to a derivative residence card. Mr Roes response to that was to rely on the parents right to family life and their rights under article 25 of the Charter. He contends that they should have been given greater weight. He relies on the decision in Chavez Vilchez v Raad van bestuur van de Sociale verbekeringsbank (Case C 133/15) [2018] QB 103 (Chavez Vilchez), which was decided shortly before the Court of Appeal decided these appeals. That decision relates to a Union child and, as explained, different considerations apply to a child. The CJEU relied on Dereci in both Chavez Vilchez (paras 63 and 69 of the judgment) and KA (see para 16 of this judgment) as one of the authorities for the requirement of compulsion, so it is clear that Dereci remains unqualified by its decisions in Chavez Vilchez and KA. Moreover, the Charter cannot extend the application of EU law, which imposes limits on entitlement to derivative residence rights, as explained above. What lies at the heart of the Zambrano jurisprudence is the requirement that the Union citizen would be compelled to leave Union territory if the TCN, with whom the Union citizen has a relationship of dependency, is removed. As the CJEU held in O v Maahanmuuttovirasto (Joined Cases C 356/11 and C 357/11) [2013] Fam 203, it is the role of the national court to determine whether the removal of the TCN carer would actually cause the Union citizen to leave the Union. In this case, the FTT found against Mr Patel and concluded that his father would not accompany him to India. That means that, unless Chavez Vilchez adopts a different approach to compulsion, Mr Patels appeal must fail. There is no question of his being able to establish any interference with his Convention right to respect for his private and family life as he has failed already in that regard. As explained, in KA, the CJEU drew a distinction between an adult Union citizen and a Union citizen who is a child. In the case of children, it is first necessary to determine who the primary carer is, and whether there is a relationship of dependency with the TCN or the national parent. 70. As regards, on the other hand, the actions in the main proceedings brought by MJ, NNN, OIO and RI, it must be recalled that the court has already held that factors of relevance, for the purposes of determining whether a refusal to grant a derived right of residence to a third country national parent of a child who is a Union citizen means that that child is deprived of the genuine enjoyment of the substance of the rights conferred on him by that status, by compelling that child, in practice, to accompany the parent and therefore leave the territory of the European Union as a whole, include the question of who has custody of the child and whether that child is legally, financially or emotionally dependent on the third country national parent (see, to that effect, Chavez Vilchez, para 68 and the case law cited). 71. More particularly, in order to assess the risk that a particular child, who is a Union citizen, might be compelled to leave the territory of the European Union and thereby be deprived of the genuine enjoyment of the substance of the rights conferred on him by article 20 TFEU if the childs third country national parent were to be refused a right of residence in the member state concerned, it is important to determine, in each case at issue in the main proceedings, which parent is the primary carer of the child and whether there is in fact a relationship of dependency between the child and the third country national parent. As part of that assessment, the competent authorities must take account of the right to respect for family life, as stated in article 7 of the Charter, that article requiring to be read in conjunction with the obligation to take into consideration the best interests of the child, recognised in article 24(2) of the Charter (Chavez Vilchez, para 70). 72. The fact that the other parent, where that parent is a Union citizen, is actually able and willing to assume sole responsibility for the primary day to day care of the child is a relevant factor, but it is not in itself a sufficient ground for a conclusion that there is not, between the third country national parent and the child, such a relationship of dependency that the child would be compelled to leave the territory of the European Union if a right of residence were refused to that third country national. In reaching such a conclusion, account must be taken, in the best interests of the child concerned, of all the specific circumstances, including the age of the child, the childs physical and emotional development, the extent of his emotional ties both to the Union citizen parent and to the third country national parent, and the risks which separation from the latter might entail for that childs equilibrium (Chavez Vilchez, para 71). 73. Accordingly, the fact that the third country national parent lives with the minor child who is a Union citizen is one of the relevant factors to be taken into consideration in order to determine whether there is a relationship of dependency between them, but is not a prerequisite (see, to that effect, O, para 54). 74. On the other hand, the mere fact that it might appear desirable to a national of a member state, for economic reasons or in order to keep his family together in the territory of the Union, for the members of his family who do not have the nationality of a member state to be able to reside with him in the territory of the European Union, is not sufficient in itself to support the view that the Union citizen will be compelled to leave the territory of the European Union if such a right is not granted (see, to that effect, Dereci, para 68 and O, para 52). It is not necessary to cite further passages from KA. It will be observed that in KA the CJEU drew on its earlier decision in Chavez Vilchez. That case concerned several TCN mothers, whose children were Dutch and who claimed a derivative right to reside in The Netherlands. The Dutch Government rejected these claims on the basis that the fathers of the children were also Dutch. Some of the fathers had a degree of involvement in their childs upbringing but they lived apart from the childs mother and were not the primary carer. The CJEU held that it was not a sufficient answer to the mothers claim for residence that the father could in theory become the childs carer. The Dutch court had to assess whether the child would be compelled to leave the Union, and in making that decision the national court had to take into account all the circumstances, including the best interests of the child. The CJEU held [2018] QB 103: 70. In this case, in order to assess the risk that a particular child, who is a Union citizen, might be compelled to leave the territory of the European Union and thereby be deprived of the genuine enjoyment of the substance of the rights conferred on him by article 20 TFEU if the childs third country national parent were to be refused a right of residence in the member state concerned, it is important to determine, in each case, which parent is the primary carer of the child and whether there is in fact a relationship of dependency between the child and the third country national parent. As part of that assessment, the competent authorities must take account of the right to respect for family life, as stated in article 7 of the Charter of Fundamental Rights of the European Union, that article requiring to be read in conjunction with the obligation to take into consideration the best interests of the child, recognised in article 24(2) of that Charter. 71. For the purposes of such an assessment, the fact that the other parent, a Union citizen, is actually able and willing to assume sole responsibility for the primary day to day care of the child is a relevant factor, but it is not in itself a sufficient ground for a conclusion that there is not, between the third country national parent and the child, such a relationship of dependency that the child would be compelled to leave the territory of the European Union if a right of residence were refused to that third country national. In reaching such a conclusion, account must be taken, in the best interests of the child concerned, of all the specific circumstances, including the age of the child, the childs physical and emotional development, the extent of his emotional ties both to the Union citizen parent and to the third country national parent, and the risks which separation from the latter might entail for that childs equilibrium. The final sentence of para 71 of the CJEUs judgment in Chavez Vilchez identifies the matters which the national court must take into account when deciding whether the requirement for compulsion is fulfilled. Chavez Vilchez has to be read in the light of the particular facts before the CJEU, which were of separated parents where the Union citizen parent was not the primary carer and where the national court might well conclude that, having regard to the childs best interests and the extent of their ties to their mother, the relevant relationship of dependency on the mother was made out. There is no direct analogy with a case, such as the Shah appeal, where the family is living together. In that situation, where the TCN is the primary carer and the parent with whom the child has the relevant relationship of dependency and the Union parent will stay with them so as to keep the family together, it will be in the childs best interests to remain with both parents. Because Mr Shah was the primary carer, the need for a relationship of dependency with the TCN was fulfilled. Moreover, the quality of that relationship is under the jurisprudence of the CJEU a relevant factor in determining whether the child is compelled to leave the jurisdiction (see Chavez Vilchez, para 71; KA, para 70). It is argued that the reference to the need to consider the childs best interests points to a shift in the law, and that the CJEU refined or diminished the requirement that there has to be compulsion to leave the Union. It is said that that diminution would enable consideration to be given to desirability of the family remaining together and to respect for family life, even in the case of adults. In that way, in judging when a person was compelled to leave the Union, regard would be had to a persons family life and what he would have to do to maintain that family life. I do not consider that this deduction can be made. In Chavez Vilchez, the CJEU were concerned with the case of a child and it is clear from KA that the case of a child is quite separate from that of an adult and that in the case of an adult it will only be in exceptional circumstances that a TCN will have a derivative right of residence by reference to a relationship of dependency with an adult Union citizen. An adult Union citizen does not have a right to have his family life taken into account if this would diminish the requirement to show compulsion to leave. It must be recalled that in KA the CJEU effectively reaffirmed the need to show compulsion even after making it clear that the decision in Chavez Vilchez was good law. Accordingly, Chavez Vilchez does not relax the level of compulsion required in the case of adults, and thus provides no assistance to Mr Patel, whose appeal must therefore fail. Nor does Chavez Vilchez in fact have any impact on the Shah appeal. The outcome of that appeal depends on the findings of fact by the FTT and on whether the Court of Appeal correctly identified the relevant findings for the purposes of the test of compulsion. The FTT found as a fact that Mr Shah was the primary carer of his infant son and that he, rather than the mother, had by far the greater role in his sons life (para 15). Accordingly, the child had the relevant relationship of dependency with Mr Shah. The FTT was entitled to make this finding on the facts, because the mothers evidence that Mr Shah was the primary carer of her child and that she could not assume full responsibility for him because she worked full time was not challenged. The mothers evidence that if Mr Shah was not allowed to stay in this country they would move as a family was also unchallenged. The FTT went on to reach what it called an inescapable conclusion that the son would have to leave with his parents and that accordingly the requirement for compulsion was met. The Court of Appeal [2018] 1 WLR 5245, however, introduced into the question of whether the son was compelled to leave the fact that the mothers decision to leave was her own choice, and that she, like her husband, would have been perfectly capable of looking after the child (para 79). The Court of Appeal considered that it followed that there was no question of compulsion. Mr Blundell sought to uphold this conclusion, submitting that the mother simply wished to keep the family together and that reliance on a desire for family reunification was on the authorities not sufficient to justify a derivative right of residence (see Dereci, para 68; O, para 52; and KA, para 74). I do not accept that submission. The overarching question is whether the son would be compelled to leave by reason of his relationship of dependency with his father. In answering that question, the court is required to take account, in the best interests of the child concerned, of all the specific circumstances, including the age of the child, the childs physical and emotional development, the extent of his emotional ties both to the Union citizen parent and to the third country national parent, and the risks which separation from the latter might entail for that childs equilibrium (Chavez Vilchez, para 71). The test of compulsion is thus a practical test to be applied to the actual facts and not to a theoretical set of facts. As explained in para 28 of this judgment, on the FTTs findings, the son would be compelled to leave with his father, who was his primary carer. That was sufficient compulsion for the purposes of the Zambrano test. There is an obvious difference between this situation of compulsion on the child and impermissible reliance on the right to respect for family life or on the desirability of keeping the family together as a ground for obtaining a derivative residence card. It follows that the Court of Appeal was wrong in this case to bring the question of the mothers choice into the assessment of compulsion. It is likewise not relevant, contrary to the submission of Mr Blundell, that, had Mrs Shah remained in the UK with the child, Mr Shah could have had no derivative right of residence. On the facts as found by the FTT, the relevant relationship of dependency with Mr Shah was made out and that was not going to happen. In those circumstances I consider that the Court of Appeal made an error of law when it treated as determinative what could happen to Mr and Mrs Shahs son if the father left the UK, rather than what the FTT had found would happen in that event. In other words, it was not open in law to the Court of Appeal to hold that Mr Shah had no derivative right of residence because the mother could remain with the child in the UK even if the father was removed. For these reasons I would allow the Shah appeal and dismiss the Patel appeal.
UK-Abs
These two appeals raise common issues regarding the scope of the Ruiz Zambrano v Office national de lemploi (Case C 34/09) [2012] QB 265 (Zambrano) principle. Zambrano states that a non member state national (TCN) parent of a European Union (EU) citizen child resident within the EU is entitled to reside in the EU. This is solely to avoid the EU citizen child being deprived of the substance of their Union citizenship rights on removal of the TCN parent from the EU [1]. The first appeal is Mr Patels. Mr Patel is an Indian national who has no right to remain in the UK. He cares for his parents, who are British citizens. Mr Patel has been trained to help with his fathers kidney dialysis, and he cares for his immobile mother. Mr Patels parents are reliant on him. The medication required for dialysis may not be available in India. The First tier Tribunal (FTT) found that Mr Patels father would not return to India with Mr Patel; instead, he would continue to receive medical treatment in the UK, although that would not give him the same quality of life as Mr Patels care. Mr Patel was unsuccessful in invoking the Zambrano principle in the FTT, the Upper Tribunal (UT) and Court of Appeal (CA) [5]. Mr Patel appeals. The second appeal is Mr Shahs. Mr Shah is a Pakistani national. He is the primary carer of his British citizen infant son. Mr Shahs wife is also a British national. Mr and Mrs Shah live with their son. Mrs Shah works full time. Whilst Mrs Shah works, Mr Shah cares for their son. The FTT found that if Mr Shah were to return to Pakistan, Mrs Shah would not remain in the UK; she would accompany her husband to Pakistan. Their child would also leave the UK. As a result, the FTT and UT found that Mr Shah was entitled to remain. The CA disagreed and held that Mrs Shah could look after the son in the UK; the requirement for compulsion to leave the UK was therefore not satisfied [6]. Mr Shah appeals. The Supreme Court unanimously allows Mr Shahs appeal and dismisses Mr Patels appeal. Lady Arden writes the sole judgment [33]. Article 20 of the Treaty on the Functioning of the European Union (TFEU) provides for a right to EU citizenship. This lies at the heart of the EU legal architecture [9]. Article 20 alone does not confer any rights on a TCN (see R (Agyarko v Secretary of State for the Home Department [2017] 1 WLR 623) [10]. However, the CJEU in KA v Belgium (Case C 82/16) [2018] 3 CMLR 28 (KA) emphasised the importance of the right to EU citizenship and stated that a TCN might acquire a derived right of residence if their removal could deprive an EU citizen of their citizenship rights (KA, paras 47 50) The TCNs derived right of residence is only provided to ensure that the EU citizens rights are effective. This limits the entitlement of a TCN to reside in the EU. There must be a relationship of dependency between the EU citizen and the TCN [16]. KA draws a distinction between the case of an EU citizen who is an adult and one who is a child (KA, para 76) [13] [14], [23]. A TCN can have a relationship of dependency with an adult EU citizen sufficient to justify a derived right of residence only in exceptional circumstances (quoting KA, para 65) [17]. What lies at the heart of the Zambrano jurisprudence is the requirement that the EU citizen be compelled to leave the EU territory if the TCN, with whom the EU citizen has a relationship of dependency, is removed [22]. With that context, the judgment examines Mr Patel and Mr Shahs respective cases in turn. Regarding Mr Patel, the FTT concluded that Mr Patels father would not accompany him to India. Unless Mr Patel could argue that some case law from the CJEU, including Chavez Vilchez v Raad van Bestuur van de Sociale verzekeringsbank (Case C 133/15) [2018] QB 103 (Chavez Vilchez), relaxes the level of compulsion required in the case of adults, and thus provides assistance to Mr Patel, his appeal must fail. However, any possible qualification Chavez Vilchez makes to the general principle of compulsion does not apply in the case of adults. Chavez Vilchez is about children. KA makes clear that children and adults are treated separately and a TCN will only have a derivative right of residence by reference to a dependant relationship with an adult EU citizen in exceptional circumstances. Chavez Vilchez does not relax the level of compulsion required in the case of adults. It is of no assistance to Mr Patel. His appeal must fail as his parents would not be compelled to leave the UK [27]. Chavez Vilchez does not impact Mr Shahs appeal. That appeal depends on the FTTs findings of fact and whether the CA correctly identified the relevant findings for the purposes of the compulsion test. The FTT found that Mr Shah was the primary carer of his son; as such, the child had the relevant relationship of dependency with Mr Shah. Further, Mrs Shahs evidence was that if Mr Shah were removed from the UK then the family would move out of the EU. This was accepted by the FTT, who held that it was an inescapable conclusion that the son would have to leave with his parents. Therefore, the FTT found the requirement of compulsion was met [28]. The CA used the fact that Mrs Shahs decision to leave the EU was voluntary and she could look after the child without Mr Shah to justify holding that there was no question of compulsion [29]. The Supreme Court disagreed. The overarching question is whether the son would be compelled to leave with his father, who was his primary carer, because of his dependency on his father. In answering that question, the Supreme Court had to take into account the childs bests interests and his relationship with each parent, as explained in Chavez Vilchez, para 71. The compulsion test is practical. It is to be applied to the actual facts. The FTT found the son would be compelled to leave. That is sufficient compulsion for the purposes of Zambrano [30]. Therefore, Mr Shahs appeal was allowed [32] [33].
This case concerns a challenge by the respondent (Mr Wright) to the grant of planning permission by the local planning authority (the second appellant: the Council) for the change of use of land at Severndale Farm, Tidenham, Gloucestershire from agriculture to the erection of a single community scale 500kW wind turbine for the generation of electricity (the development). Mr Wright is a local resident. The first appellant (Resilient Severndale) was the successful applicant for the planning permission. In its application for planning permission, Resilient Severndale proposed that the wind turbine would be erected and run by a community benefit society. The application included a promise that an annual donation would be made to a local community fund, based on 4% of the societys turnover from the operation of the turbine over its projected life of 25 years (the community fund donation). In deciding to grant planning permission for the development the Council expressly took into account the community fund donation. The Council imposed a condition (condition 28) that the development be undertaken by a community benefit society with the community fund donation as part of the scheme. Mr Wright challenged the grant of planning permission on the grounds that the promised community fund donation was not a material planning consideration and the Council had acted unlawfully by taking it into account. Mr Wright succeeded in his challenge before Dove J at first instance. The Court of Appeal dismissed an appeal by Resilient Severndale and the Council. They now appeal to this court. The issue on the appeal is whether the promise to provide a community fund donation qualifies as a material consideration for the purposes of section 70(2) of the Town and Country Planning Act 1990 as amended (the 1990 Act) and section 38(6) of the Planning and Compulsory Purchase Act 2004 (the 2004 Act). These are very familiar provisions in planning law. There is also a subsidiary issue whether the Council was entitled to include condition 28 in the planning permission. Section 70(1) of the 1990 Act provides in relevant part: Where an application is made to a local planning authority for planning permission they may grant planning permission, either unconditionally or subject to such conditions as they think fit Section 70(2) of the 1990 Act provides: In dealing with an application for planning permission or permission in principle the authority shall have regard to the provisions of the development plan, so far as (a) material to the application, (aza) a post examination draft neighbourhood development plan, so far as material to the application, (aa) any considerations relating to the use of the Welsh language, so far as material to the application; (b) any local finance considerations, so far as material to the application, and (c) any other material considerations. Section 38(6) of the 2004 Act provides: If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise. Policy background The land in question is agricultural and is not designated for development in the development plan for the area. The proposed development is not in accordance with the development plan. force at the relevant time (NPPF) states: Paragraph 97 of the National Planning Policy Framework (March 2012) in To help increase the use and supply of renewable and low carbon energy, local planning authorities should recognise the responsibility on all communities to contribute to energy generation from renewable or low carbon sources. They should: Have a positive strategy to promote energy from renewable and low carbon sources; Design their policies to maximise renewable and low carbon energy development while ensuring that adverse impacts are addressed satisfactorily, including cumulative landscape and visual impacts; Consider identifying suitable areas for renewable and low carbon energy sources, and supporting infrastructure, where this would help secure the development of such sources; Support community led initiatives for renewable and low carbon energy, including developments outside such areas being taken forward through neighbourhood planning Planning Policy Guidance has been issued to expand upon the guidance in the NPPF regarding renewable and low carbon energy (reference ID: 5 004 20140306, revision date 6 March 2014 the PPG) as follows: What is the role for community led renewable energy initiatives? Community initiatives are likely to play an increasingly important role and should be encouraged as a way of providing positive local benefit from renewable energy development. Further information for communities interested in developing their own initiatives is provided by the Department of Energy and Climate Change. Local planning authorities may wish to establish policies which give positive weight to renewable and low carbon energy initiatives which have clear evidence of local community involvement and leadership. Neighbourhood plans are an opportunity for communities to plan for community led renewable energy developments. Neighbourhood Development Orders and Community Right to Build Orders can be used to grant planning permission for renewable energy development. To support community based initiatives a local planning authority should set out clearly any strategic policies that those producing neighbourhood plans or Orders will need to consider when developing proposals that address renewable energy development. Local planning authorities should also share relevant evidence that may assist those producing a neighbourhood plan or Order, as part of their duty to advise or assist. As part of a neighbourhood plan, communities can also look at developing a community energy plan to underpin the neighbourhood plan. In October 2014, the Department of Energy and Climate Change published a document containing general guidance with the title, Community Benefits from Onshore Wind Developments: Best Practice Guidance for England (the DECC Guidance). The object of the DECC Guidance was to set out principles of good practice applicable through the preparation and planning phases and on to the operational phase for onshore wind energy developments, with the aim of securing local community acceptance and support for such developments. It was published alongside a document entitled Best Practice Guidance on Community Engagement. The Ministerial foreword to the DECC Guidance included the following: Communities hosting renewable energy play a vital role in meeting our national need for secure, clean energy and it is absolutely right that they should be recognised and rewarded for their contribution. The Introduction stated: Communities have a unique and exciting opportunity to share in the benefits that their local wind energy resources can bring through effective partnerships with those developing wind energy projects. Under the heading What are community benefits?, the Introduction continued as follows: Community benefits can bring tangible rewards to communities which host wind projects, over and above the wider economic, energy security and environmental benefits that arise from those developments. They are an important way of sharing the value that wind energy can bring with the local community. Community benefits include: 1. Community benefit funds voluntary monetary payments from an onshore wind developer to the community, usually provided via an annual cash sum, and 2. Benefits in kind other voluntary benefits which the developer provides to the community, such as in kind works, direct funding of projects, one off funding, local energy discount scheme or any other non necessary site specific benefits. In addition to the above, there can also be: 3. Community investment (Shared ownership) this is where a community has a financial stake, or investment in a scheme. This can include co operative schemes and online investment platforms. 4. Socio economic community benefits job creation, skills training, apprenticeships, opportunities for educational visits and raising awareness of climate change. 5. Material benefits derived from actions taken directly related to the development such as improved infrastructure. This document contains guidance on community benefit funds and benefits in kind (points 1 and 2). The provision of these community benefits is an entirely voluntary undertaking by wind farm developers. They are not compensation payments. Material and socio economic benefits will be considered as part of any planning application for the development and will be determined by local planning authorities. They are not covered by this guidance Prior to October 2014, many onshore wind developers already provided voluntary contributions in various forms over the lifetime of their projects. The DECC Guidance stated: The wind industry through RenewableUK has consolidated this voluntary approach by coming together to produce a protocol which commits developers of onshore wind projects above 5MW (megawatts) in England to provide a community benefit package to the value of at least 5,000 per MW of installed capacity per year, index linked for the operational lifetime of the project. Community benefits offer a rare opportunity for the local community to access resources, including long term, reliable and flexible funding to directly enhance their local economy, society and environment The best outcomes tend to be achieved when benefits are tailored to the needs of the local community It referred to a number of case studies where community benefit funds have been set up by wind farm developers, eg by RWE Innogy UK in respect of the Farr Wind Farm in Scotland (3.5m over the lifetime of the wind farm). However, the DECC Guidance makes clear the relationship between the guidance it gives in the context of renewable energy policy, and the planning regime. Under the heading Preparation phase guidance: Background to community benefits, it states: This document contains guidance on community benefit funds and benefits in kind. The provision of these community benefits are entirely voluntary undertakings by wind farm developers and should be related to the needs of the local community. These community benefits are separate from the planning process and are not relevant to the decision as to whether the planning application for a wind farm should be approved or not ie they are not material to the planning process. This means they should generally not be taken into account by local planning authorities when deciding the outcome of a planning application for a wind [farm] development. Currently the only situation in which financial arrangements are considered material to planning is under the Localism Act as amended (2011), which allows a local planning authority to take into account financial benefits where there is a direct connection between the intended use of the funds and the development. And Planning Practice Guidance [the PPG] states that, Local planning authorities may wish to establish policies which give positive weight to renewable and low carbon energy initiatives which have clear evidence of local community involvement and leadership. Socio economic and material benefits from onshore wind developments are types of benefit that can be taken into consideration when a planning application is determined by the local planning authority and are not covered by this Guidance. This explanation is in accordance with the general object of the DECC Guidance, which is to set out ways in which the support of local communities for wind energy development in their area might be promoted, rather than to provide policy guidance regarding the operation of the planning system. The distinction was emphasised again later in the document, under the heading Planning phase guidance: Planning and the role of local authorities: Local authorities can play an important role in supporting community benefit negotiations by supporting the development of neighbourhood, community or parish plans and having positive local plan policies. Community benefits should be considered separately from any actions or contributions required to make a development acceptable in planning terms. The primary role of the local planning authority in relation to community benefits is to support the sustainable development of communities within their jurisdiction and to ensure that community benefits negotiations do not unduly influence the determination of the planning application. There is a strict principle in the English planning system that a planning proposal should be determined based on planning issues, as defined in law. Planning legislation prevents local planning authorities from specifically seeking developer contributions where they are not considered necessary to make the development acceptable in planning terms. Within this context, community benefits are not seen as relevant to deciding whether a development is granted planning permission. As will be seen below, I consider that this is an accurate statement of the conventional and well established rule of planning law, which stems from the interpretation of the relevant planning statutes. Factual background The Resilience Centre Ltd (Resilience Centre) was established in 2009 to focus on the provision and use of capital to generate social benefits as well as financial returns. It aims to help build resilience in society in the context of climate change and limited natural resources, with a view to improving local economies. To these ends, the Resilience Centre has developed a model for investment in community energy projects. This involves the Resilience Centre and the landowner obtaining planning permission for a project, in this case the erection of a wind turbine to generate electricity, but with a commitment to open up the project to individual investors from the local community once permission has been obtained. However, according to the proposal in the present case, there would still be a commercial return for the Resilience Centre and the landowner. Since the Cooperative and Community Benefit Societies Act 2014 came into force on 1 August 2014, the Resilience Centres legal structure of choice has been to involve a community benefit society registered under that Act. This has tax advantages. By section 2(2)(a)(ii) of that Act, it is a condition of registration of such a society that its business is conducted for the benefit of the community. In the present case, the Resilience Centre says that the development will provide various benefits for the local community. These include the opportunity for individuals in the community to invest in the project by subscribing for shares in the proposed community benefit society, with estimated returns of 7% pa, and the community fund donation. The money donated is to be allocated to community causes by a panel of local people. On 29 January 2015 Resilient Severndale, using the Resilience Centre as its agent, applied to the Council for planning permission for the development, relying amongst other things on these benefits for the local community. The application focused on the benefits of renewable wind energy and the policy emphasis, including in the DECC Guidance, on the engagement of local people in the energy process. An officers report dated 7 July 2015 advised the Councils Planning Committee (the Committee) that the community benefit fund was not a material consideration that could be taken into account when considering the planning application, because (i) there were no clear controls and/or enforcement measures that could ensure the benefit was delivered, and in any event, (ii) the fund could be used to finance projects that were unconnected to low carbon energy generation. Resilient Severndale submitted further observations to the Council, which resulted in consideration of the application being deferred. Further submissions were then made, to the effect that the project would commit up to 1.1m in direct community benefits (ie 4% of turnover, together with 600,000 that it was estimated would be earned by the turbine over and above the community benefit societys commitments which, under the terms of the society, would also be dedicated to the community), and referring to a successful appeal to an inspector in relation to Alvington Wind Farm. Further officer reports were then produced. The final report dated 11 August 2015 concluded that the community benefit fund was a material consideration in favour of the development. The same day, 11 August 2015, the Committee resolved to approve the application. It is common ground that its members had included the local community donation fund as a material consideration in favour of the proposals as part and parcel of the basket of socio economic benefits which were relied upon by Resilient Severndale. On 30 September 2015, the planning application was granted subject to a number of conditions, including condition 28, as follows: The development is to be undertaken via a Community Benefit Society set up for the benefit of the community and registered with the Financial Conduct Authority under the Co Operative and Community Benefit Societies Act 2014. Details of the Society number to be provided to the local planning authority prior to commencement of construction. Reason: to ensure the project delivers social, environmental and economic benefits for the communities of Tidenham and the broader Forest of Dean. The fund, once set up, was to be allocated by a panel of local individuals established for that task. The objects of the fund would include any community project. Evidence in the proceedings indicates that a similar fund in relation to a wind turbine at St Briavels had been distributed for (amongst other things) the creation of a village handyman service, the maintenance of publicly accessible defibrillators in the village, the purchase of waterproof clothing to enable young members of the community to participate in scheduled outdoor activities in inclement weather, and to provide a meal at a local public house for the members of a lunch club for older people in the village and club volunteers. Mr Wright challenged the decision to grant planning permission by way of judicial review, on the ground that the community benefit fund donation was not a material consideration for planning purposes. He submitted that it did not serve a planning purpose, it was not related to land use, and it had no real connection to the proposed development. At first instance Dove J accepted those submissions and made an order quashing the permission. He applied what he took to be settled law regarding what constitutes a material consideration for the purposes of the planning statutes derived from a series of authorities, in particular Newbury District Council v Secretary of State for the Environment [1981] AC 578 (Newbury), Westminster City Council v Great Portland Estates Plc [1985] AC 661 (Westminster), R v Plymouth City Council, Ex p Plymouth and South Devon Co operative Society Ltd (1993) 67 P & CR 78 (Plymouth), Tesco Stores Ltd v Secretary of State for the Environment [1995] 1 WLR 759 (Tesco) and R (Sainsburys Supermarkets Ltd) v Wolverhampton City Council [2010] UKSC 20; [2011] 1 AC 437. The Council and Resilient Severndale appealed. Their appeal was dismissed by the Court of Appeal in a judgment by Hickinbottom LJ, with which McFarlane and Davis LJJ agreed. Hickinbottom LJ agreed with the reasons given by Dove J. He relied on the same case law and also on Elsick Development Co Ltd v Aberdeen City and Shire Strategic Development Planning Authority [2017] UKSC 66; [2017] PTSR 1413 (Aberdeen), a decision which post dated Dove Js judgment but which, in the view of Hickinbottom LJ, confirmed that the judges approach was correct. Davis LJ gave a short concurring judgment to emphasise that the question was not whether the proffered benefits were desirable, but whether in planning terms they were material and whether they satisfied the criteria of materiality set out in the speech of Viscount Dilhorne in Newbury at p 599H (the Newbury criteria). Davis LJ also expressed agreement with the judgment of Dove J. The Council and Resilient Severndale now appeal to this court. They contend that Dove J and the Court of Appeal erred in their approach to the question of what counts as a material consideration for the purpose of section 70(2) of the 1990 Act and section 38(6) of the 2004 Act and that they should have found that the community benefits to be derived from the development constitute a material consideration which the Committee was entitled to take into account when it decided to grant planning permission for the development. The main burden of presenting the oral argument for the appellants was assumed by Mr Martin Kingston QC, for Resilient Severndale. The Secretary of State for Housing, Communities and Local Government was given permission to intervene orally and in writing. He was represented by Mr Richard Kimblin QC. Mr Kimblin made submissions which were supportive of the arguments for the appellants. He invited the court to update Newbury to a modern and expanded understanding of planning purposes. Discussion Planning permission is required for the carrying out of any development of land: section 57(1) of the 1990 Act. So far as is relevant, development is defined in section 55(1) to mean the making of any material change in the use of any buildings or other land. Section 70(2) of the 1990 Act requires a planning authority to have regard to the development plan and certain other matters so far as material to the application and to any other material considerations: that is to say, material to the change of use which is proposed. Similarly, in relation to an application for planning permission, the material considerations referred to in section 38(6) of the 2004 Act are considerations material to the change of use which is proposed. In Newbury at pp 599 601 Viscount Dilhorne treated the scope of the concept of material considerations in section 29(1) of the Town and Country Planning Act 1971 (which corresponds to what is now section 70(2) of the 1990 Act) as the same as the ambit of the power of a local planning authority (in what is now section 70(1)(a) of the 1990 Act) to impose such conditions as they think fit on the grant of planning permission. It had been established in Pyx Granite Co Ltd v Ministry of Housing and Local Government [1958] 1 QB 554 (Pyx Granite), Fawcett Properties Ltd v Buckingham County Council [1961] AC 636 (Fawcett Properties) and Mixnams Properties Ltd v Chertsey Urban District Council [1965] AC 735 (Mixnams Properties) that the power to impose conditions was not unlimited. Viscount Dilhorne referred to the following statement by Lord Denning in Pyx Granite at p 572, approved in Fawcett Properties and Mixnams Properties: the law says that those conditions, to be valid, must fairly and reasonably relate to the permitted development. The planning authority are not at liberty to use their powers for an ulterior object, however desirable that object may seem to them to be in the public interest. Viscount Dilhorne referred to other authority as well and set out the Newbury criteria at p 599H as follows: the conditions imposed must be for a planning purpose and not for any ulterior one, and they must fairly and reasonably relate to the development permitted. Also they must not be so unreasonable that no reasonable planning authority could have imposed them Lord Edmund Davies agreed with the speech of Viscount Dilhorne. Lord Fraser of Tullybelton approved the same three fold test in his speech at pp 607 608, as did Lord Scarman at pp 618 619 and Lord Lane at p 627. The view of the law lords was that a condition attached to the grant of planning permission for the change of use of two hangars to use as warehouses on condition that they were removed at the end of a specified period of time did not fairly or reasonably relate to the permitted development and was therefore void. The equation of the ambit of material considerations with the ambit of the power to impose planning conditions is logical, because if a local planning authority has power to impose a particular planning condition as the basis for its grant of permission it would follow that it could treat the imposition of that condition as a material factor in favour of granting permission. The relevance of the Newbury criteria to determine the ambit of material considerations in what is now section 70(2) of the 1990 Act and section 38(6) of the 2004 Act is well established and is not in contention on this appeal. The Westminster case was concerned with the lawfulness of a policy adopted by the City of Westminster as part of its local plan to promote and preserve certain long established industries in central London and to limit the grant of planning permission for office development to exceptional cases. The House of Lords applied the same test for whether a matter was a material consideration in the preparation of a local plan as in relation to the grant or refusal of planning permission (under provisions of the Town and Country Planning Act 1971 which have been re enacted in the 1990 Act), and held that the policy was concerned with a genuine planning purpose, namely the continuation of industrial use important to the character and functioning of the city, and hence was lawful. Lord Scarman gave the sole substantive speech, with which the other members of the appellate committee agreed. He referred at p 669 to the statement by Lord Parker CJ in East Barnet Urban District Council v British Transport Commission [1962] 2 QB 484, at p 491, that when considering whether there has been a change of use of land what is really to be considered is the character of the use of the land, not the particular purpose of a particular occupier. Lord Scarman pointed out (p 670) that development plans are concerned with development, a term of art in the planning legislation which includes now, and has always included, the making of a material change in the use of land. He held that Lord Parkers dictum applies to the grant or refusal of planning permission, to the imposition of conditions and also to the formulation of planning policies and proposals, and said (p 670): The test, therefore, of what is a material consideration in the preparation of plans or in the control of development is whether it serves a planning purpose: see [Newbury], 599 per Viscount Dilhorne. And a planning purpose is one which relates to the character of the use of land. It has long been recognised that a consequence of this approach of relying on the Newbury criteria to identify material considerations is that planning permission cannot be bought or sold. In City of Bradford Metropolitan Councils v Secretary of State for the Environment (1986) 53 P & CR 55, at 64, Lloyd LJ said that this was axiomatic. In Plymouth this was taken to be a correct statement of the law (at p 83, per Russell LJ; p 84, per Evans LJ; and p 90, per Hoffmann LJ). Plymouth was concerned with whether a developers agreement to provide certain off site benefits could properly be regarded as fairly and reasonably related to the development for which permission was sought, so as to constitute a material consideration which the local planning authority was entitled to take into account when granting permission. The Newbury criteria were applied in order to answer that question. On the facts, a sufficient connection with the proposed development was found to exist. That was also the case in relation to certain off site benefits taken into account in Tesco: see pp 782 783 per Lord Hoffmann, as he had become. In both cases, there was a sufficiently close nexus between the off site benefits to be provided and the proposed change in the character of the use of the land involved in the proposed development. However, in Plymouth Hoffmann LJ made reference at p 90 to a general principle that planning control should restrict the rights of landowners only so far as may be necessary to prevent harm to community interests and referred to the concept of materiality in that regard, because there is a public interest in not allowing planning permissions to be sold in exchange for benefits which are not planning considerations or do not relate to the proposed development. This statement was not qualified in Tesco. Therefore, a condition or undertaking that a landowner pay money to a fund to provide for general community benefits unrelated to the proposed change in the character of the use of the development land does not have a sufficient connection with the proposed development as to qualify as a material consideration in relation to it. A principled approach to identifying material considerations in line with the Newbury criteria is important both as a protection for landowners and as a protection for the public interest. It prevents a planning authority from extracting money or other benefits from a landowner as a condition for granting permission to develop its land, when such payment or the provision of such benefits has no sufficient connection with the proposed use of the land. It also prevents a developer from offering to make payments or provide benefits which have no sufficient connection with the proposed use of the land, as a way of buying a planning permission which it would be contrary to the public interest to grant according to the merits of the development itself. In this court in Aberdeen these points were emphasised by Lord Hodge (with whom the other members of the court agreed) at paras 43 46. In that case, planning obligations imposed on developers to make contributions to assist with development of infrastructure around Aberdeen were found to be unlawful because they were not related to the use of the land for which the developers sought planning permission. At para 43, Lord Hodge cited with approval a passage from the judgment of Beldam LJ in Tesco Stores Ltd v Secretary of State for the Environment (1994) 68 P & CR 219, at 234 235, including the following: Against the background that it is a fundamental principle that planning permission cannot be bought or sold, it does not seem unreasonable to interpret [subsection 106(1)(d) of the 1990 Act] so that a planning obligation requiring a sum or sums to be paid to the planning authority should be for a planning purpose or objective which should be in some way connected with or relate to the land in which the person entering into the obligation is interested. At para 44 Lord Hodge continued: A planning obligation, which required as a pre condition for commencing development that a developer pay a financial contribution for a purpose which did not relate to the burdened land, could be said to restrict the development of the site, but it would also be unlawful. Were such a restriction lawful, a planning authority could use a planning obligation in the context of an application for planning permission to extract from a developer benefits for the community which were wholly unconnected with the proposed development, thereby undermining the obligation on the planning authority to determine the application on its merits. Similarly, a developer could seek to obtain a planning permission by unilaterally undertaking a planning obligation not to develop its site until it had funded extraneous infrastructure or other community facilities unconnected with its development. This could amount to the buying and selling of a planning permission. Section 75, when interpreted in its statutory context, contains an implicit limitation on the purposes of a negative suspensive planning obligation, namely that the restriction must serve a purpose in relation to the development or use of the burdened site. An ulterior purpose, even if it could be categorised as a planning purpose in a broad sense, will not suffice. It is that implicit restriction which makes it both ultra vires and also unreasonable in the Wednesbury sense for a planning authority to use planning obligations for such an ulterior purpose. The protection for landowners on the one hand and for the public interest on the other has been held to be established by Parliament through statute, as interpreted by the courts. Parliament has itself in this way underwritten the integrity of the planning system. In Tesco Lord Hoffmann pointed out that the question of whether something is a material consideration is a question of law: p 780. Statute cannot be overridden or diluted by general policies laid down by central government (whether in the form of the NPPF or otherwise), nor by policies adopted by local planning authorities. As Lord Hodge said in Aberdeen at para 51, The inclusion of a policy in the development plan, that the planning authority will seek a planning obligation from developers [to contribute money for purposes unconnected with the use of the land], would not make relevant what otherwise would be irrelevant. The same point can be made about the policy statements in the DECC Guidance. In any event, as set out above, that document itself explains that the guidance it contains has to be read subject to the established legal position regarding what qualifies as a material consideration for the purposes of the grant of planning permission. In the present case, the community benefits promised by Resilient Severndale did not satisfy the Newbury criteria and hence did not qualify as a material consideration within the meaning of that term in section 70(2) of the 1990 Act and section 38(6) of the 2004 Act. Dove J and the Court of Appeal were right so to hold. The benefits were not proposed as a means of pursuing any proper planning purpose, but for the ulterior purpose of providing general benefits to the community. Moreover, they did not fairly and reasonably relate to the development for which permission was sought. Resilient Severndale required planning permission for the carrying out of development of the land in question, as that term is defined in section 55(1) of the 1990 Act. The community benefits to be provided by Resilient Severndale did not affect the use of the land. Instead, they were proffered as a general inducement to the Council to grant planning permission and constituted a method of seeking to buy the permission sought, in breach of the principle that planning permission cannot be bought or sold. This is so whether the development scheme is regarded as commercial and profit making in nature, as Hickinbottom LJ thought it was (para 39), or as a purely community run scheme to create community benefits. For the appellants, Mr Kingston submitted that the planning statutes had to be regarded as always speaking so far as concerns what counts as a material consideration, and that this meant that the meaning of this concept should be updated in line with changing government policy. I do not agree. The meaning of the term material consideration in section 70(2) of the 1990 Act and section 38(6) of the 2004 Act is not in doubt and updating the established meaning of the term is neither required nor appropriate. To say that the meaning of the term changes according to what is said by Ministers in policy statements would undermine the position, as explained above, that what qualifies as a material consideration is a question of law on which the courts have already provided authoritative rulings. The interpretation given to that statutory term by the courts provides a clear meaning which is principled and stable over time. I note that Parliament has considered it necessary to amend section 70(2) when it wishes to expand the range of factors which may be treated as material for the purposes of that provision, for instance in relation to the Welsh language: subparagraph (aa). Mr Kingston relied on statements in Fawcett Properties which he maintained showed that policies do inform the meaning of the statutory term material consideration, and suggested that since this authority was referred to and relied upon by the House of Lords in Newbury the interpretation of material consideration taken from the latter case had to be read as subject to what was said about this in Fawcett Properties. However, in my view, nothing said in Fawcett Properties supports Mr Kingstons submission. In that case, a local planning authority had granted permission for the building of two cottages on green belt land subject to a condition that their occupation was limited to persons whose employment is or was in agriculture, forestry or an industry related to agriculture, and their dependants. At the time of imposing the condition the local planning authority had issued a draft outline development plan which indicated that its object in relation to the area where the cottages were to be built was to maintain the normal life of an agricultural district. When imposing the condition the authority stated that the reason for doing so was that it would not be prepared to permit the erection of dwelling houses on this site unconnected with the use of the adjoining land for agriculture or similar purposes. The appellants later acquired the freehold and brought proceedings to challenge the validity of the condition on various grounds, including that (i) the imposition of a condition according to the personality of the occupier rather than with reference to the user of the premises was outside the power of the local planning authority to impose such conditions as it thought fit and (ii) the condition bore no reasonable relation to the policy in the outline plan or to any other sensible planning policy. Lord Jenkins described the first challenge as the broad ultra vires claim and the second as the narrow ultra vires claim: pp 683 684. The nature of these challenges was explained clearly by Romer LJ in the Court of Appeal ([1959] Ch 543 at 572 573 and 568 572, respectively), in a judgment approved by the House of Lords on these points. The House of Lords dismissed the challenge and upheld the condition. It is ground (i) which is relevant for present purposes. On that, Romer LJ held that a condition framed with reference to the occupation of the inhabitants of the cottages was sufficiently linked to the user of the land in question as to be permissible: [1959] Ch 543, 572 573; and to similar effect see 558 559 per Lord Evershed MR and 578 579 per Pearce LJ. This reasoning was upheld in the House of Lords: p 659 (Lord Cohen), p 667 (Lord Morton of Henryton), p 675 (Lord Keith of Avonholm), p 679 (Lord Denning) and pp 683 684 (Lord Jenkins). The reasoning in the Court of Appeal and in the House of Lords on this point is fully in line with Viscount Dilhornes statement of the first two of the Newbury criteria. It offers no support for the submission that the statutory concept of a material consideration varies according to the content of planning policy documents. Mr Kingston, however, in seeking to advance that submission, sought to rely on passages in the speeches in the House of Lords which were directed not to ground (i) and the question whether the condition related to the development permitted, in the sense of being sufficiently connected with the proposed change in use of the land, but rather to ground (ii): pp 660 661 (Lord Cohen), 674 675 (Lord Keith), 679 (Lord Denning) and 684 685 (Lord Jenkins). Ground (ii) was concerned with a different question, arising under the third of what were later called the Newbury criteria, namely whether the condition was rationally connected, not with the proposed change in use of the land, but with the policy in the outline plan or any other sensible planning policy (pp 660 661 per Lord Cohen). The Court of Appeal dismissed this challenge, on the basis that there was a sufficient rational connection between the condition and the policy in the outline plan. All members of the appellate committee of the House of Lords came to the same conclusion. Contrary to the submission of Mr Kingston, their reasoning in that regard does not indicate that the statutory concept of a material consideration varies according to the content of planning policy documents. Mr Kingston also sought to gain support for his argument from a series of cases in which policy was relied upon in order to justify the imposition of conditions or, he submitted, to identify material considerations for the purposes of the planning statutes. Again, however, on proper analysis these authorities do not help him. In R (Copeland) v London Borough of Tower Hamlets [2010] EWHC 1845 (Admin) a local planning authority had to consider whether to grant planning permission for a fast food outlet near a school, which was said to conflict with government policy on healthy eating for children. The authority proceeded on the footing that this was not capable of being a material consideration. However, at the hearing the authoritys counsel accepted that whether the site was used for a fast food outlet was a matter which relates to the use of land and is thus capable of being a planning consideration (para 25) and the decision was quashed, because the planning committee had not appreciated, as they should have done, that this was a matter capable of being a material consideration to which they could give consideration. The concession made by counsel was clearly correct: whether or not the property was used as a fast food outlet was very directly a matter concerning its use. The policy did not affect that one way or the other. It was relevant to a different question, whether in policy terms the grant of planning permission would be justified or not. The same analysis applies in relation to the other authorities on which Mr Kingston relied. In each case, a condition was imposed or planning permission was refused on the basis of a consideration which directly related to the use of the land in question and hence which satisfied the second of the Newbury criteria. The policy justification for the condition or for treating the consideration as having significant weight was a distinct matter, as in Fawcett Properties, and it was in relation to this that reference to policy guidance was significant. Contrary to the submission of Mr Kingston, the policy guidance did not affect the meaning of the term material consideration in the planning statutes. In R v Hillingdon London Borough Council, Ex p Royco Homes Ltd [1974] QB 720 the Court of Appeal held in relation to the grant of planning permission for a residential development that the imposition of conditions that the houses built should be occupied by persons on the planning authoritys housing waiting list was ultra vires, on the basis that the conditions were a fundamental departure from the rights of ownership and were so unreasonable that no local planning authority, appreciating its duty and properly applying itself to the facts, could have imposed them: the imposition was found to be Wednesbury unreasonable (see pp 731 732 per Lord Widgery CJ, referring to Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). The result was that the planning permission was quashed. Mr Kingston rightly points out that later national planning policy guidance contemplated that use of land for the provision of affordable housing would be a desirable policy objective and that conditions in relation to residential developments requiring a proportion of dwellings to be made available for affordable housing are now accepted as lawful and are very common. However, this is because the alteration in national policy has made it clear that a reasonable local planning authority, acting within the parameters of the Wednesbury decision, can properly find such a condition to be justified in terms of planning policy. Contrary to Mr Kingstons submission, the change in the legal position has not occurred because the meaning of the statutory term material consideration has been altered by reason of the promulgation of new national planning policy. Mr Kingstons submission again confuses two different questions. This point is borne out by the decision of the Court of Appeal in Mitchell v Secretary of State for the Environment (1995) 69 P & CR 60, on which Mr Kingston also relied. In that case, a developer applied for planning permission to convert a building from use for multiple occupation by way of bedsitting rooms to a small number of self contained flats. There was a draft development plan of the local planning authority which set out a policy to resist such changes of use, on grounds of the local need for affordable housing in the authoritys area. The authority refused permission for the development, relying on the policy in the draft plan as a material consideration. The developer appealed to the Secretary of State. The Secretary of State dismissed the appeal and refused planning permission, treating the need for affordable housing as a material consideration as the authority had done. The developer challenged the Secretary of States decision, contending that the policy of the authority was not a material consideration, and was successful at first instance in having the decision quashed. The Court of Appeal allowed the Secretary of States appeal. Saville LJ (with whom the other members of the court agreed) observed at p 62 that the proposed change from multiple occupation to self contained flats was a change in the character of the use of the land within the guidance given by Lord Scarman in Westminster at p 670 (see above). He held that the need for affordable housing in a particular area was a relevant policy consideration which justified the Secretary of State in deciding to refuse to grant permission for the development in question. Balcombe LJ gave a short concurring judgment, referring to planning policy guidance regarding the desirability of provision of affordable housing. There was no question in the case as to whether what was in issue sufficiently related to the proposed use of the land itself: clearly, the configuration of the accommodation in the property directly related to the use of the land. The question was whether there was sufficient policy justification for insisting that the use of the land should be consistent with the draft development plan policy to promote affordable housing, and it was held that there was. Balcombe LJ regarded it as material to that question that national planning policy guidance had been issued stating that this should be treated as a material planning consideration. R (Welcome Break Group Ltd) v Stroud District Council [2012] EWHC 140 (Admin) concerned the grant of planning permission to develop land as a motorway service area upon condition of the acceptance of obligations by the developer and site owner in an agreement made under section 106 of the 1990 Act which included that a local employment and training policy should be submitted for the approval of the local planning authority and that reasonable endeavours would be used to stock goods and produce from local producers for sale at the site. A challenge to quash the grant of planning permission, including on the ground that the condition and obligations were immaterial to the merits of the proposed development, was dismissed. The judge implicitly found at paras 50 and 53 that there was a sufficient connection between the obligations and the proposed development (that is to say, the proposed use of the land) so that these were matters capable of falling within the statutory concept of material considerations, and separately held that there was sufficient policy justification for the authority to be entitled to impose the condition as a matter of planning judgment (paras 49 53). It was in relation to this latter issue that he took into account national planning policy guidance and the relevant regional policy dealing with support for the sustainable development of the regional economy. So, again, this authority provides no support for Mr Kingstons submission. The same points apply as regards Verdin (t/a The Darnhall Estate) v Secretary of State for Communities and Local Government [2017] EWHC 2079 (Admin). The case concerned a challenge to a decision of the Secretary of State refusing planning permission for residential development. The claimant was successful on a number of grounds, including that the Secretary of State had wrongly rejected, without giving adequate reasons, a proposed condition requiring local firms to be used for the development and a proposed condition requiring local procurement as part of the proposed development. However, there was no issue regarding whether these conditions sufficiently related to the proposed use of the land. It seems to have been common ground that they did. Rather, the grounds of challenge were analysed in relation to the distinct question whether there was a sufficient policy basis on which these conditions could be said to be material considerations. It was in relation to that question that the judge had regard to national policy in the NPPF and the development plan regarding sustainable economic development: see paras 92 98 and 108 114, respectively. The two conditions were potentially material in terms of policy, and the Secretary of State had not given adequate reasons to explain why he had rejected them. Finally, Mr Kingston relied on R (Working Title Films Ltd) v Westminster City Council [2016] EWHC 1855 (Admin). This concerned a challenge to the grant of planning permission for erection of a building for mixed uses, including the provision within it of a community hall in accordance with a planning obligation undertaken by the developer. A ground of challenge relied on was that the local planning authority was wrong to have had regard to the community benefit from provision of the community hall as something which compensated for under provision of affordable housing in the residential part of the development. The judge rejected the challenge, holding that this was a planning judgment which the authority was entitled to make: para 25. Again, the case provides no support for Mr Kingstons submission. The planning obligation clearly related to the use of the land, and this was not in issue. The discussion related to the policy justification for accepting such a planning obligation. Conclusion For the reasons given above, I would dismiss this appeal. I would resist Mr Kimblins invitation on behalf of the Secretary of State that we should update Newbury. In deciding to grant planning permission for the development, the Council relied on matters which do not qualify as material considerations for the purposes of section 70(2) of the 1990 Act and section 38(6) of the 2004 Act. That means that the grant of planning permission has rightly been quashed. It is unnecessary to give separate consideration to condition 28. The imposition of that condition cannot make an immaterial consideration into a material consideration within the meaning of the statutory provisions.
UK-Abs
The case concerns a challenge by way of judicial review by the respondent, Mr Wright, to the grant of planning permission by the second appellant (the Council) to the first appellant (Resilient) for the change of use of land at a farm in Gloucestershire from agriculture to the erection of a wind turbine. In its application for planning permission, Resilient proposed that the turbine would be built and run by a community benefit society and that an annual donation would be made to a local community fund. The Council took this donation into account in granting planning permission and made the permission conditional on the development being undertaken by the community benefit society and the provision of the donation. In doing so, the Council had regard to government policy to encourage community led wind turbine developments. Mr Wright challenged the grant of permission on the grounds that the donation was not a material planning consideration and the Council had acted unlawfully by taking it into account. He succeeded at first instance and in the Court of Appeal. Resilient and the Council now appeal to this court. The Secretary of State for Housing, Communities and Local Government was given permission to intervene and made submissions in support of the appeal. The issue on the appeal is whether the promise to provide a community fund donation qualifies as a material consideration for the purposes of section 70(2) of the Town and Country Planning Act 1990 as amended (the 1990 Act) and section 38(6) of the Planning and Compulsory Purchase Act 2004 (the 2004 Act). The Supreme Court unanimously dismisses the appeal. Lord Sales gives the judgment, with which all members of the Court agree. Planning permission is required for development of land, which includes the making of any material change in use (sections 57(1) and 55(1) of the 1990 Act). The planning authority must have regard to the development plan and any other considerations material to the proposed change of use (section 70(2) of the 1990 Act and section 38(6) of the 2004 Act) [31]. A three fold test for material considerations is found in Newbury District Council v Secretary of State for the Environment [1981] AC 578 (Newbury). This requires that the conditions imposed: (1) be for a planning purpose and not for any ulterior purpose; (2) fairly and reasonably relate to the development; and (3) must not be so unreasonable that no reasonable planning authority could have imposed them [32 33]. It is logical to equate the ambit of material considerations with the scope of the power to impose planning conditions, because if the planning authority has the power to impose a condition it follows that it could treat the imposition of that condition as a material factor in favour of granting permission. The relevance of the Newbury criteria to determine the ambit of material considerations in the 1990 and 2004 Acts is well established and is not in contention on this appeal [34]. It is a fundamental principle of the planning system that planning permission cannot be bought or sold. A principled approach to identifying material considerations in line with the Newbury criteria is important to protect landowners and the public interest, since it prevents a planning authority from extracting money or other benefits unrelated to the proposed use of the land as a condition for granting permission and from deciding whether to grant permission by reference to such matters rather than by reference to the planning merits of the proposed development in issue [39]. This protection has been established by Parliament through statute, as interpreted by the courts, and cannot be overridden by general policies laid down by central government [42]. In the present case, the community benefits promised by Resilient did not satisfy the Newbury criteria and therefore did not qualify as a material consideration under either the 1990 or the 2004 Act. The benefits were not proposed to pursue a proper planning purpose, but rather for the ulterior purpose of providing general benefits to the community. They did not fairly and reasonably relate to the development for which permission was sought; the community benefits did not affect the use of the land but were instead proffered as a general inducement to the Council to grant planning permission, in breach of the principle that planning permission cannot be bought or sold [44]. The statutory concept of a material consideration as interpreted by the courts does not vary according to government guidance and policy statements [45 49]. On the other hand, a change in national policy can affect the issue of whether a decision satisfies the third limb of the Newbury test, by making it clear that a reasonable local planning authority can properly consider that a particular condition is justified in terms of planning policy [53].
The central issue in this case is whether Ms Tamara Gubeladze (the respondent), a Latvian national living in the United Kingdom, is entitled to receive state pension credit, a means tested benefit. She relies on regulation 5(2) of the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (the 2006 Regulations), which implements article 17(1)(a) of Directive 2004/38/EC (the Citizens Directive), as a worker or self employed person who has ceased activity. By a Treaty signed at Athens on 16 April 2003 (the Athens Treaty), ten Accession States became member states of the EU with effect from 1 May 2004. The Act of Accession, annexed to the Athens Treaty, set out the conditions of admission and the adjustments to the [EU] Treaties on which the Union is founded, entailed by such admission (article 1(2)). The Act of Accession permitted the existing member states to apply national measures regulating access to their labour markets by nationals of the eight most populous Accession States (the A8 States) which included Latvia. Annex VIII of the Act of Accession required the existing member states to apply for an initial period of two years from the date of accession national measures or those resulting from bilateral agreements, regulating access to their labour markets by Latvian nationals. The existing member states were permitted to continue to apply such measures until the end of the five year period following the date of the accession (para 2). An existing member state maintaining national measures or measures resulting from bilateral agreements at the end of the five year period was permitted, in case of serious disturbances of its labour market or threat thereof and after notifying the Commission to continue to apply these measures until the end of the seven year period following the date of accession (para 5). Other annexes contained identical provisions in respect of nationals of the other A8 States. The Act of Accession was given effect in the domestic law of the United Kingdom by the European Union (Accessions) Act 2003 and the Accession (Immigration and Worker Registration) Regulations 2004 (SI 2004/1219) (the 2004 Regulations). The 2004 Regulations established the Worker Registration Scheme (WRS) which obliged any national of an A8 State to register before starting employment and before taking up any new employment. Each registration incurred a fee of 90 and the obligation to register continued until the worker had worked for 12 months. Failure to register work in accordance with the WRS would mean that the individual would not derive from that work a right to reside in the United Kingdom. The WRS ran initially for five years, from 1 May 2004 to 30 April 2009. In Zalewska v Department for Social Development (Child Poverty Action Group intervening) [2008] UKHL 67; [2008] 1 WLR 2602, the House of Lords considered the legality of the WRS. The House of Lords held unanimously that any requirements of the WRS were imposed pursuant to provisions permitting derogation from EU rights and so had to be proportionate to a legitimate aim. It held further, by a majority, that the requirements of the WRS met that test and were, therefore, lawful. In 2009 HM Government asked the Migration Advisory Committee (MAC) to advise it in relation to the continuation of the WRS. In the light of the MACs advice, the Government decided to exercise the power conferred by the Act of Accession to extend the derogations applicable to nationals of the A8 States for a further two years. Having notified the Commission, it made the Accession (Immigration and Worker Registration) (Amendment) Regulations 2009 (SI 2009/892) (the Extension Regulations) which extended the operation of the WRS for a period of two years from 1 May 2009 to 30 April 2011. The respondent is a national of Latvia who came to the United Kingdom in 2008 and worked for various employers here between September 2009 and November 2012. In the periods when she was not working she was a jobseeker. She was issued with a registration certificate under the WRS on 20 August 2010. Her employment before that date was not covered by the certificate. On 24 October 2012, the respondent made a claim for state pension credit. Entitlement was conditional on her having a right to reside in the United Kingdom. The basis of her claim was that she had a right of residence in the United Kingdom under regulation 5(2) of the 2006 Regulations as a person who had retired, having pursued activities as a worker for at least a year in the United Kingdom, and having resided continuously in the United Kingdom for three years. The Secretary of State for Work and Pensions (the Secretary of State) rejected her claim on the ground that the requirement of three years continuous residence required three years continuous legal residence which meant a right of residence under the Citizens Directive. Since the respondents asserted right of residence during that time was as a worker, but she had not been registered under the WRS for part of that period, the Secretary of State considered that she had not resided in the United Kingdom pursuant to a right of residence conferred by the Citizens Directive and therefore did not meet the three year residence requirement in regulation 5(2) of the 2006 Regulations. Her claim for state pension credit was accordingly refused. The respondents appeal to the First tier Tribunal was dismissed on jurisdictional grounds. On appeal to the Upper Tribunal, it held that the First tier Tribunal had had jurisdiction to hear the appeal but, with the consent of the parties, the Upper Tribunal retained the appeal and itself re made the substantive decision. It allowed the respondents appeal on two grounds. First, it held that article 17 of the Citizens Directive, and therefore regulation 5(2)(c) of the 2006 Regulations, did not require that the three years continuous residence be in exercise of rights under the Citizens Directive. Actual residence was sufficient. Secondly, the decision to extend the WRS in 2009 was disproportionate and therefore unlawful. Accordingly, the respondent was not disqualified by her failure to meet the requirements of the WRS from demonstrating three years continuous residence with a right of residence under the Citizens Directive. The Secretary of State appealed to the Court of Appeal (Rupert Jackson, Lindblom and Peter Jackson LJJ) which on 7 November 2017 dismissed the appeal [2017] EWCA Civ 1751; [2018] 1 WLR 3324: (1) The Secretary of State succeeded on the construction of the Citizens Directive. The word reside in article 17(1)(a) meant legally reside which in this context meant residence in the exercise of rights under the Citizens Directive. As a result, the Court of Appeal did not need to rule on a new argument advanced by the respondent for the first time in the Court of Appeal, namely that even if resided in article 17(1)(a) of the Citizens Directive means legally resided, that word has a wider meaning in regulation 5(2)(c) of the 2006 Regulation where it means actual residence, with or without any right to remain. The Court of Appeal was, however, inclined to the view that resided in regulation 5(2)(c) of the 2006 Regulations has the same meaning as in the Citizens Directive. (2) There was no error of law in the Upper Tribunals conclusion that the extension of the WRS was disproportionate and therefore incompatible with EU law. On 19 June 2018 the Supreme Court granted permission to appeal on condition that the Secretary of State pay the respondents costs in any event. Permission to the Secretary of State to appeal included permission to argue a new ground which had not been advanced in the Court of Appeal, namely that a national measure adopted pursuant to a transitional provision in the Act of Accession is not subject to proportionality review at all. So to hold would involve departing from the reasoning of the House of Lords in Zalewska. Accordingly, a seven Justice panel has been convened for this appeal. The following issues therefore arise for decision on this appeal: Is the decision to extend the WRS open to challenge on grounds of (1) proportionality? (2) If the decision to extend the WRS is open to challenge on grounds of proportionality, did the Upper Tribunal and the Court of Appeal err in their approach and conclusion on this issue? (3) If the Secretary of State succeeds on Issue (1) or Issue (2), does article 17(1)(a) of the Citizens Directive require a person to show that, throughout the period of continuous residence, she enjoyed a right of residence under the Citizens Directive? (4) actual residence sufficient for the purposes of the 2006 Regulations? If article 17 of the Citizens Directive requires lawful residence, is Relevant EU instruments Treaty establishing the European Community At the material time, the Treaty establishing the European Community (TEC) provided in relevant part: Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited. 1. Citizenship of the Union is hereby established. Every person holding the nationality of a member state shall be a citizen of the Union. Citizenship of the Union shall complement and not replace national citizenship. Article 12 Article 17 2. Citizens of the Union shall enjoy the rights conferred by this Treaty and shall be subject to the duties imposed thereby. 1. Every citizen of the Union shall have the right to move and reside freely within the territory of the member states, subject to the limitations and conditions laid down in this Treaty and by the measures adopted to give it effect. Article 18 Article 39 Freedom of movement for workers shall be secured 1. within the Community. Such freedom of movement shall entail the abolition of 2. any discrimination based on nationality between workers of the member states as regards employment, remuneration and other conditions of work and employment. 3. It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health: to accept offers of employment actually made; to move freely within the territory of member (a) (b) states for this purpose; (c) to stay in a member state for the purpose of employment in accordance with the provisions governing the employment of nationals of that state laid down by law, regulation or administrative action; (d) to remain in the territory of a member state after having been employed in that state, subject to conditions which shall be embodied in implementing regulations to be drawn up by the Commission. Article 49 Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of member states who are established in a state of the Community other than that of the person for whom the services are intended. Regulation (EEC) No 1612/68 Regulation (EEC) No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community (Regulation 1612/68) sets out in articles 1 to 6 within Title I EU rules on eligibility for employment. Within Title II (Employment and Equality of Treatment) article 7 provides in relevant part: Article 7 1. A worker who is a national of a member state may not, in the territory of another member state, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and should he become unemployed, reinstatement or re employment; The Accession Treaty The Athens Treaty states in the sixth recital that the Contracting States: HAVE DECIDED to establish by common agreement the conditions of admission and the adjustments to be made to the Treaties on which the European Union is founded, Article 1(1) provides that the Accession States: hereby become members of the European Union and Parties to the Treaties on which the Union is founded as amended or supplemented. Article 1 continues: 2. The conditions of admission and the adjustments to the Treaties on which the Union is founded, entailed by such admission, are set out in the Act annexed to this Treaty. The provisions of that Act shall form an integral part of this Treaty. 3. The provisions concerning the rights and obligations of the member states and the powers and jurisdiction of the institutions of the Union as set out in the Treaties referred to in paragraph 1 shall apply in respect of this Treaty. Article 2(2) provides that the Treaty shall enter into force on 1 May 2004. The Act of Accession annexed to the Athens Treaty provides in relevant part: From the date of accession, the provisions of the original Treaties and the acts adopted by the institutions and the European Central Bank before accession shall be binding on the new member states and shall apply in those states under the conditions laid down in those Treaties and in this Act. The application of the original Treaties and acts adopted by the institutions shall, as a transitional measure, be subject to the derogations provided for in this Act. Article 2 Article 10 Article 24 The measures listed in Annexes V, VI, VII, VIII, IX, X, XI, XII, XIII and XIV to this Act shall apply in respect of the new member states under the conditions laid down in those Annexes. Annex VIII to the Act of Accession sets out the transitional measures in respect of Latvia. Section 1 of Annex VIII, which deals with free movement of persons, provides in relevant part: 1. Article 39 and the first paragraph of article 49 of the EC Treaty shall fully apply only, in relation to the freedom of movement of workers and the freedom to provide services involving temporary movement of workers as defined in article 1 of Directive 96/71/EC between Latvia on the one hand, and [the existing member states] on the other hand, subject to the transitional provisions laid down in paragraphs 2 to 14. 2. By way of derogation from articles 1 to 6 of Regulation (EEC) No 1612/68 and until the end of the two year period following the date of accession, the present member states will apply national measures, or those resulting from bilateral agreements, regulating access to their labour markets by Latvian nationals. The present member states may continue to apply such measures until the end of the five year period following the date of the accession. Latvian nationals legally working in a present member state at the date of accession and admitted to the labour market of that member state for an uninterrupted period of 12 months or longer will enjoy access to the labour market of that member state but not to the labour market of other member states applying national measures. Latvian nationals admitted to the labour market of a present member state following accession for an uninterrupted period of 12 months or longer shall also enjoy the same rights. The Latvian nationals mentioned in the second and third subparagraphs above shall cease to enjoy the rights contained in those subparagraphs if they voluntarily leave the labour market of the present member state in question. Latvian nationals legally working in a present member state at the date of accession, or during a period when national measures are applied, and who were admitted to the labour market of that member state for a period of less than 12 months shall not enjoy these rights. 3. Before the end of the two year period following the date of accession the Council shall review the functioning of the transitional provisions laid down in paragraph 2, on the basis of a report from the Commission. On completion of this review, and no later than at the end of the two year period following the date of accession, the present member states shall notify the Commission whether they will continue applying national measures or measures resulting from bilateral agreements, or whether they will apply articles 1 to 6 of Regulation (EEC) No 1612/68 henceforth. In the absence of such notification, articles 1 to 6 of Regulation (EEC) No 1612/68 shall apply. 4. Upon Latvias request one further review may be held. The procedure referred to in paragraph 3 shall apply and shall be completed within six months of receipt of Latvias request. 5. A member state maintaining national measures or measures resulting from bilateral agreements at the end of the five year period indicated in paragraph 2 may, in case of serious disturbances of its labour market or threat thereof and after notifying the Commission, continue to apply these measures until the end of the seven year period following the date of accession. In the absence of such notification, articles 1 to 6 of Regulation (EEC) No 1612/68 shall apply. The Citizens Directive The preamble to the Citizens Directive provides in material part: Citizenship of the Union confers on every citizen of the Union a primary and individual right to move and reside freely within the territory of the member states, subject to the limitations and conditions laid down in the Treaty and to the measures adopted to give it effect. (recital (1)) The free movement of persons constitutes one of the fundamental freedoms of the internal market, which comprises an area without internal frontiers, in which freedom is ensured in accordance with the provisions of the Treaty. (recital (2)) Union citizenship should be the fundamental status of nationals of the member states when they exercise their right of free movement and residence. It is therefore necessary to codify and review the existing Community instruments dealing separately with workers, self employed persons, as well as students and other inactive persons in order to simplify and strengthen the right of free movement and residence of all Union citizens. (recital (3)) Enjoyment of permanent residence by Union citizens who have chosen to settle long term in the host member state would strengthen the feeling of Union citizenship and is a key element in promoting social cohesion, which is one of the fundamental objectives of the Union. A right of permanent residence should therefore be laid down for all Union citizens and their family members who have resided in the host member state in compliance with the conditions laid down in this Directive during a continuous period of five years without becoming subject to an expulsion measure. (recital (17)) In order to be a genuine vehicle for integration into the society of the host member state in which the Union citizen resides, the right of permanent residence, once obtained, should not be subject to any conditions. (recital (18)) Certain advantages specific to Union citizens who are workers or self employed persons and to their family members, which may allow these persons to acquire a right of permanent residence before they have resided five years in the host member state, should be maintained, as these constitute acquired rights, conferred by Commission Regulation (EEC) No 1251/70 of 29 June 1970 on the right of workers to remain in the territory of a member state after having been employed in that state and Council Directive 75/34/EEC of 17 December 1974 concerning the right of nationals of a member state to remain in the territory of another member state after having pursued therein an activity in a self employed capacity. (recital (19)) The Directive lays down the conditions governing the exercise of the right of free movement and residence within the territory of the member states by Union citizens and their family members, their right of permanent residence in the territory of the member states and the limits placed on these rights on grounds of public policy, public security or public health (article 1). Within Chapter III, article 6 confers a right of residence on the territory of another member state for up to three months without any conditions or any formalities other than the requirement to hold a valid identity card or passport. Article 7 confers on all Union citizens the right of residence on the territory of another member state for a period of longer than three months if, inter alia, they are workers or self employed persons in the host member state. Article 14 provides that Union citizens and their family members shall have the right of residence provided for in article 6, as long as they do not become an unreasonable burden on the social assistance system of the host member state (article 14(1)), and the right of residence provided for in article 7 as long as they meet the conditions set out therein (article 14(2)). Article 16 provides: General rule for Union citizens and their family members 1. Union citizens who have resided legally for a continuous period of five years in the host member state shall have the right of permanent residence there. This right shall not be subject to the conditions provided for in Chapter III. Article 16 Article 17 provides in material part: Article 17 2. Paragraph 1 shall apply also to family members who are not nationals of a member state and have legally resided with the Union citizen in the host member state for a continuous period of five years. 3. Continuity of residence shall not be affected by temporary absences not exceeding a total of six months a year, or by absences of a longer duration for compulsory military service, or by one absence of a maximum of 12 consecutive months for important reasons such as pregnancy and childbirth, serious illness, study or vocational training, or a posting in another member state or a third country. 4. Once acquired, the right of permanent residence shall be lost only through absence from the host member state for a period exceeding two consecutive years. Exemptions for persons no longer working in the host member state and their family members 1. By way of derogation from article 16, the right of permanent residence in the host member state shall be enjoyed before completion of a continuous period of five years of residence by: (a) workers or self employed persons who, at the time they stop working, have reached the age laid down by the law of that member state for entitlement to an old age pension or workers who cease paid employment to take early retirement, provided that they have been working in that member state for at least the preceding 12 months and have resided there continuously for more than three years. Article 18 provides: Article 18 Acquisition of the right of permanent residence by certain family members who are not nationals of a member state Without prejudice to article 17, the family members of a Union citizen to whom articles 12(2) and 13(2) apply, who satisfy the conditions laid down therein, shall acquire the right of permanent residence after residing legally for a period of five consecutive years in the host member state. In order to understand the Citizens Directive it is also relevant to set out certain parts of Commission Regulation (EEC) No 1251/70 on the right of workers to remain in the territory of a member state after having been employed in that state (Regulation 1251/70), which is one of the instruments referred to in recital (19) to the Citizens Directive. Regulation 1251/70 provides as follows: Whereas it is important, in the first place, to guarantee to the worker residing in the territory of a member state the right to remain in that territory when he ceases to be employed in that state because he has reached retirement age or by reason of permanent incapacity to work; whereas, however, it is equally important to ensure that right for the worker who, after a period of employment and residence in the territory of a member state, works as an employed person in the territory of another member state, while still retaining his residence in the territory of the first state (recital (4)) Article 1 The provisions of this Regulation shall apply to nationals of a member state who have worked as employed persons in the territory of another member state and to members of their families, as defined in article 10 of Council Regulation (EEC) No 1612/68 on freedom of movement for workers within the Community. Article 2 1. The following shall have the right to remain permanently in the territory of a member state: (a) a worker who, at the time of termination of his activity, has reached the age laid down by the law of that member state for entitlement to an old age pension and who has been employed in that state for at least the last 12 months and has resided there continuously for more than three years; Article 4 1. Continuity of residence as provided for in article 2(1) may be attested by any means of proof in use in the country of residence. It shall not be affected by temporary absences not exceeding a total of three months per year, nor by longer absences due to compliance with the obligations of military service. Regulation 1251/70 was repealed by Commission Regulation (EC) No 635/2006 of 25 April 2006 (Regulation 635/2006) with effect from 30 April 2006, in anticipation of the implementation of the Citizens Directive into national laws with effect from the following day. We set out recital (1) to Regulation 635/2006 in our discussion of Issue (3) below. Relevant domestic legislation The Accession (Immigration and Worker Registration) Regulations 2004 The 2004 Regulations, as in force on 30 April 2007, provided in relevant part: 2. accession state worker Accession state worker requiring registration (1) Subject to the following paragraphs of this regulation, requiring registration means a national of a relevant accession state working in the United Kingdom during the accession period. (2) A national of a relevant accession state is not an accession state worker requiring registration if on 30 April 2004 he had leave to enter or remain in the United Kingdom under the 1971 Act and that leave was not subject to any condition restricting his employment. 4. Right of residence of work seekers and workers from relevant acceding states during the accession period (1) This regulation derogates during the accession period from article 39 of the Treaty establishing the European Community, articles 1 to 6 of Regulation (EEC) No 1612/68 on freedom of movement for workers within the Community and Council Directive 2004/38/EC of the European Parliament and of the Council on the right of citizens of the Union and their family members to move and reside freely within the territory of the member states, insofar as it takes over provisions of Council Directive (EEC) No 68/360 on the abolition of restrictions on movement and residence within the Community for workers of member states and their families. (2) A national of a relevant accession state shall not be entitled to reside in the United Kingdom for the purpose of seeking work by virtue of his status as a work seeker if he would be an accession state worker requiring registration if he began working in the United Kingdom. (3) Paragraph (2) is without prejudice to the right of a national of a relevant accession state to reside in the United Kingdom under the 2006 Regulations as a self sufficient person whilst seeking work in the United Kingdom. (4) A national of a relevant accession state who is seeking employment and an accession state worker requiring registration shall only be entitled to reside in the United Kingdom in accordance with the 2006 Regulations as modified by regulation 5. 5. Application of 2006 Regulations in relation to accession state worker requiring registration (1) The 2006 Regulations shall apply in relation to a national of a relevant accession state subject to the modifications set out in this regulation. (2) A national of a relevant accession state who is seeking employment in the United Kingdom shall not be treated as a jobseeker for the purpose of the definition of qualified person in regulation 6(1) of the 2006 Regulations and an accession state worker requiring registration shall be treated as a worker for the purpose of that definition only during a period in which he is working in the United Kingdom for an authorised employer. 7. Requirement for an accession state worker requiring registration to be authorised to work (1) By way of derogation from article 39 of the Treaty establishing the European Community and articles 1 to 6 of Regulation (EEC) No 1612/68 on freedom of movement for workers within the Community, an accession state worker requiring registration shall only be authorised to work in the United Kingdom for an authorised employer. (2) An employer is an authorised employer in relation to a worker if (c) the worker has received a valid registration certificate authorising him to work for that employer and that certificate has not expired under paragraph (5); Regulation 7(5)(b) provided that a registration certificate expired on the date on which the worker ceased working for that employer. The Immigration (European Economic Area) Regulations 2006 The 2006 Regulations transposed some of the provisions of the Citizens Directive into domestic law. At the relevant time they provided in material part: Worker or self employed person who has ceased 5. activity (1) In these Regulations, worker or self employed person who has ceased activity means an EEA national who satisfies the conditions in paragraph (2), (3), (4) or (5). (2) A person satisfies the conditions in this paragraph if he terminates his activity as a worker or self (a) employed person and has reached the age at which he is (i) entitled to a state pension on the date on which he terminates his activity; or (ii) in the case of a worker, ceases working to take early retirement; (b) pursued his activity as a worker or self employed person in the United Kingdom for at least 12 months prior to the termination; and (c) the United Kingdom in resided continuously for more than three years prior to the termination. 15. Permanent right of residence (1) The following persons shall acquire the right to reside in the United Kingdom permanently (c) a worker or self employed person who has ceased activity; The State Pension Credit Act 2002 provides for conditions of entitlement to state pension credit, including a condition that the claimant is in Great Britain (section 1(2)(a)). The State Pension Credit Regulations 2002 (SI 2002/1792) made under that Act set out detailed provisions regarding who qualifies as a person in Great Britain for these purposes. According to those Regulations, so far as relevant, a person so qualifies if she is habitually resident in the United Kingdom pursuant to a right to reside which is not expressly excluded as a relevant right (regulation 2). A right of residence arising pursuant to article 17 of the Citizens Directive is not excluded. Accordingly it is common ground that if the respondent enjoyed a right of permanent residence pursuant to article 17 she would be entitled to claim state pension credit. Issue (1): Is the decision to extend the WRS open to challenge on grounds of proportionality? It is common ground between the parties that decisions to apply transitional measures under the Act of Accession, such as the decision to extend the WRS, cannot be challenged by A8 nationals as a disproportionate restriction on their free movement rights under the EU Treaties or legislation made under them. That is not the basis of the respondents case. On the contrary, she seeks to challenge the proportionality of the measures adopted by the United Kingdom within the context of the transitional provisions established in EU law. In particular, she challenges as disproportionate the decision of the United Kingdom in April 2009 to make the residence rights of A8 nationals contingent on compliance with the WRS beyond the expiry of the initial five year accession period. Before the Court of Appeal, it was accepted on behalf of the Secretary of State in the light of Zalewska that the decision to extend the requirement of compliance with the WRS was subject to proportionality review. However, before the Supreme Court and with its permission Mr Martin Chamberlain QC, who has argued the case for the Secretary of State with great skill and determination, now maintains that the decision cannot be challenged on grounds of proportionality and identifies this as the central question in this appeal. He accepts that the transitional provisions in Annex VIII were designed to protect the labour markets in the existing member states from the impact of large numbers of nationals arriving from the eight most populous new member states and that this was to be achieved by a derogation from the ordinary application of the relevant Treaty provisions on free movement of workers (Vicoplus SC PUH v Minister van Sociale Zaken en Werkgelegenheid (Joined Cases C 307/09 to C 309/09) [2011] ECR I 453 at para 34; Prefeta v Secretary of State for Work and Pensions (Case C 618/16) [2019] 1 WLR 2040 at para 41). As a result, the Accession Treaty established a carefully calibrated and comprehensive suite of derogations from the ordinary operation of the provisions in the EU Treaties governing free movement of workers. However, he submits, nationals of the A8 States had never enjoyed rights under the Treaties or under EU legislation and the effect of the derogations was to place substantive limits, which in some cases depended on decisions by member states, on the rights they would acquire by virtue of accession. In circumstances where the primary provisions of EU law did not apply to nationals of the new member states, they had, for the purposes of EU law, no protected interest in that respect during the transitional period. Accordingly, he submits, the extension of the WRS did not interfere with or derogate from any pre existing protected interest and it was, therefore, not subject to any requirement of proportionality. It was sufficient that it fell within the scope of the permitted derogation in paragraph 5 of Annex VIII to the Act of Accession and was notified to the Commission. The respondent submits that the Secretary of States submission is wrong as a matter of EU law and of national law. The decision to extend the WRS is a national decision to limit fundamental EU law rights of free movement pursuant to a transitional provision in the Act of Accession and is, therefore, subject to proportionality review as a matter of EU law. In addition, the decision to limit enjoyment of state pension credit for those who would otherwise enjoy it, by reason of extension of the WRS, is a discriminatory infringement of the rights to property of an A8 national, and falls to be justified under article 14 of the European Convention of Human Rights (ECHR) read with article 1 Protocol 1 to that Convention (A1P1) by virtue of section 6 of the Human Rights Act 1998. The Secretary of States submission is in direct conflict with the decision of the House of Lords in Zalewska v Department for Social Development which upheld the legality of the WRS in the initial phase of its operation from 2004. That appeal related to the provisions in Annex XII to the Act of Accession concerning national measures regulating access to labour markets within existing member states by Polish nationals. The House of Lords approached the matter on the basis that derogation by the United Kingdom from article 39 pursuant to paragraph 2 of Part II of Annex XII to the Act of Accession precluded direct reliance on article 39 by nationals of Poland and instead required compliance during the transitional period with the national measures governing such access. However, the House unanimously concluded that the powers in the United Kingdom to impose conditions on Polish nationals were required to be exercised in accordance with the Community principle of proportionality. It proceeded on the basis that the UK measures were a derogation from the rights which would otherwise be enjoyed. Lord Hope of Craighead stated the matter in the following terms (at para 30): The proposition that I cannot accept however is that the national measures that the United Kingdom selects have nothing to do with Community law, so the issue as to whether they are proportionate is irrelevant. The only authority that the United Kingdom has to introduce national measures to give access to nationals of an A8 state to its labour market in place of article 39 EC and Title I of Council Regulation (EEC) No 1612/68 is that which is given to it by paragraph 2 of Part 2 of Annex XII. As article 10 of the Act of Accession makes clear, this derogation from the application of the original Treaties and Acts adopted by the institutions of the Community was agreed to by the member states under the umbrella of Community law. Furthermore, the fact that the derogation does not extend to article 7 of the Regulation shows that where the national measures of an existing member state give the status of worker to an A8 state national he is entitled to all the rights in that state that Community law gives to workers. It is not possible to detach the opportunity that is given to the member states to apply national measures from its Community law background. The conclusion that any national measures that the member states introduce under the authority of paragraph 2 must be compatible with the authority given to them by the Treaty of Accession and with the Community law principle of proportionality seems to me to be inescapable. Similarly, Baroness Hale of Richmond explained (at para 46) that the appeal was concerned with the restrictive effect of national measures implementing EU law on the fundamental right of free movement of workers. The national implementing regulations had been made under section 2(2) of the European Communities Act 1972 for the purpose of implementing Community law and in the exercise of powers conferred by section 2 of the European Union (Accessions) Act 2003, which is headed Freedom of movement for workers. As a result, any national measures had to be compatible with the principle of proportionality in EU law. The House held by a bare majority that the national measures there under consideration (namely, requirements under the WRS that nationals of A8 accession states apply for a registration certificate for their first employment in the United Kingdom and re register if they changed employment within a stipulated period) were not disproportionate. Mr Chamberlain does not shrink from submitting that Zalewska was wrongly decided. He does not suggest, as was submitted in Zalewska, that the national measures have nothing to do with EU law. He accepts that the national measures fall within the scope of EU law and that they are required to comply with the terms of the derogations permitted by EU law. He suggests, rather, that Lord Hopes underlying premise in para 30 of his speech, set out above, is flawed in that the EU principle of proportionality can have no application where there is no antecedent interest requiring protection. On his case, nationals of the A8 States enjoyed no rights at all under the EU Treaties at the point of accession and the only rights they enjoyed in this regard during the transitional period were those permitted by the UK measures. On this basis he submits that it is circular to argue that the national measures affect the interests of Latvian nationals in free movement and entitlement to social security payments as workers because these are not conferred until the requirements of the national measures have been met. Mr Chamberlain is correct in his submission that the principle of proportionality necessarily involves, as an essential component, an assessment of the degree to which the impugned measure interferes with a protected interest. Thus, in R (British Sugar plc) v Intervention Board for Agricultural Produce (Case C 329/01) [2004] ECR I 01899 the Court of Justice of the European Union observed (at para 59): It cannot be maintained that rules which do not themselves interfere with protected interests are capable of infringing the principle of proportionality. As a result, a measure the sole purpose of which was to allow the correction of errors did not give rise to any interference with the manufacturers interests in issue in that case and could not, therefore, constitute a breach of the principle of proportionality. The British Sugar case was referred to by Lord Reed and Lord Toulson in R (Lumsdon) v Legal Services Board [2015] UKSC 41; [2016] AC 697 (at para 25) where they reiterated that the principle of proportionality only applies to measures interfering with protected interests. The point is also well made by Professor Tridimas in The General Principles of EU Law (2nd ed, OUP: 2006) where he states (at p 139): The court assesses the adverse consequences that the measure has on an interest worthy of legal protection and determines whether those consequences are justified in view of the importance of the objective pursued. Similarly, Professors Craig and De Brca in EU Law: Text, Cases, and Materials (6th ed, OUP: 2015) state (at p 551): In any proportionality inquiry the relevant interests must be identified, and there will be some ascription of weight or value to those interests, since this is a necessary condition precedent to any balancing operation. The question arises whether the Act of Accession created relevant protectable interests by conferring rights of EU citizenship on the new EU citizens from the A8 States subject to initial, tapering exceptions imposed by the existing member states, or whether it should be regarded as providing for only such rights as may be conferred by the existing member states during the transitional period. This question lies at the heart of Issue (1). The House of Lords in Zalewska took the former view. This reading is supported by the scheme of the relevant instruments. The Treaty of Accession provides (article 1(1)) that the Accession States hereby become members of the European Union and Parties to the Treaties on which the Union is founded as amended or supplemented. The Act of Accession provides (article 2) that [f]rom the date of accession, the provisions of the original Treaties shall be binding on the new member states and shall apply in those states under the conditions laid down in those Treaties and in this Act. Article 10 of the Act of Accession then provides that [t]he application of the original Treaties and acts adopted by the institutions shall, as a transitional measure, be subject to the derogations provided for in this Act. Article 24 provides that the measures listed in Annex VIII shall apply in respect of Latvia under the conditions there laid down. Paragraph 1 of Annex VIII provides that articles 39 and 49(1) TEC shall fully apply only, in relation to the freedom of movement of workers and the freedom to provide services involving temporary movement of workers as defined in article 1 of Directive 96/71/EC between Latvia and the existing member states, subject to the transitional provisions laid down in paragraphs 2 to 14. Paragraph 2 then provides that, during the initial two year period, the existing member states will apply national measures, or those resulting from bilateral agreements regulating access to their labour markets by Latvian nationals [b]y way of derogation from articles 1 to 6 of Regulation (EEC) No 1612/68. The use of the word derogation in this context is itself an indication that A8 nationals are regarded as having significant relevant interests under EU law from the moment of accession, subject to limitation only by action taken by member states which will be subject to the general principle of proportionality in the usual way. The transitional provisions are a derogation from the principle that the provisions of EU law apply immediately and fully to new member states and their nationals (see Vicoplus per Advocate General Bot at para 46). The provisions of the Citizens Directive are also relevant in this regard. The preamble emphasises in recitals (1) to (3) that citizenship of the Union confers on every citizen of the Union a primary and individual right to move and reside freely within the territory of the member states, subject to the limitations and conditions laid down in or pursuant to the Treaty; that such a right of free movement is one of the fundamental freedoms of the internal market; and that Union citizenship should be the fundamental status of nationals of the member states as regards the exercise of their right of free movement and residence. Every A8 national became a citizen of the EU on 1 May 2004 and these recitals indicate that it is by virtue of their status as such that EU law contemplates that they have a protectable interest which came into existence on that date so far as concerns rights of free movement. The Directive lays down the conditions governing the exercise of the right of free movement and residence within the territory of the member states by Union citizens and their family members (article 1). It seems clear, therefore, that the effect of Annex VIII to the Act of Accession is, during the transitional period, to derogate from the rights which Latvian nationals would otherwise enjoy in their newly established status as EU citizens. The application of these derogating provisions is clearly subject to the principle of proportionality in EU law. The same conclusion is arrived at when one has regard to the substance of the matter. Nationals of the A8 States were to enjoy rights as EU citizens from accession, subject to the derogating transitional provisions. The purpose of the transitional provisions was to protect labour markets in existing member states from the impact of large numbers of workers arriving from the eight most populous new member states. This aim was to be achieved by requiring or permitting existing member states to derogate temporarily from the normal application of EU rules on free movement of workers. There was no intention to confer an unfettered right to derogate from general principles of freedom of movement. On the contrary, derogation must be subject to the principle of proportionality in EU law. In the course of his submissions, Mr Chamberlain placed considerable reliance on the decision of the CJEU in Vicoplus, which post dated the decision of the House of Lords in Zalewska and which, he maintained, demonstrated that the EU principle of proportionality had no application in circumstances such as the present. That case concerned Annex XII to the Act of Accession, relating to Poland, which was materially identical to Annex VIII. The appellants had been fined for posting Polish workers to the Netherlands without having first obtained work permits. On a reference for a preliminary ruling the Raad van State (Netherlands) asked whether, with a view to protecting the domestic labour market, the requirement of a work permit under national law for the provision of a service consisting in making workers available was a proportionate measure in the light of articles 56 and 57 TFEU, in view also of the reservation in Chapter 2, paragraph 2 of Annex XII to the Act of Accession with regard to the free movement of workers. At paras 21 25 of its judgment the Second Chamber of the CJEU reformulated the question. It explained (at para 24) that if national legislation is justified pursuant to that transitional measure in Annex XII, the question of compatibility with articles 56 and 57 TFEU can no longer arise. It observed (at para 25) that it was therefore necessary to examine whether legislation such as that at issue in the main proceedings is covered by that transitional measure. The Chamber considered that an undertaking which was engaged in making labour available, although a supplier of services, carried on activities which were specifically intended to enable workers to gain access to the labour market of the host member state. In its view, it followed that the national legislation in issue must be considered to be a measure regulating access of Polish nationals to the labour market of the Netherlands within the meaning of Chapter 2, paragraph 2 of Annex XII. Moreover, a purposive interpretation of that provision led to the same conclusion. Mr Chamberlain submits that notwithstanding a reference clearly framed in terms of proportionality, the CJEU reformulated the question and failed entirely to address the issue of proportionality. This, he submits, demonstrates that proportionality has no part to play when deciding whether the subject matter was covered by that transitional measure. In his submission it is simply necessary to determine that the measure falls within the scope of the derogating provision. The difficulty with this submission is that, although the question referred to proportionality, the case seems to have had nothing to do with proportionality. The essential question was whether the express exception in Chapter 2, paragraph 2 of Annex XII to the Act of Accession permitted an existing member state to make the hiring out of manpower on its territory conditional on having a licence during the transitional period. The CJEU focused on this issue and concluded that the derogation extended so as to permit both measures with regard to employment and measures with regard to the provision of services which made labour available. It was assumed in the circumstances of that case that if the Dutch measure fell within the scope of the derogation, as properly interpreted, then it was of a character which would satisfy the principle of proportionality. This explains the shift in the language used in the judgment from explaining that the referring court was unsure whether the permit regime for Polish workers can be justified in the light of [the derogation in Chapter 2, paragraph 2 of Annex XII] (para 23) and the statement (in para 24) that if national legislation is justified pursuant to that transitional derogation then the question of the compatibility of that legislation with articles 56 and 57 TFEU can no longer arise, to asking (in para 25) whether the legislation in question is covered by that transitional derogation. The word justified indicates that the Chamber in fact considered that a usual process of justification according to the principle of proportionality is applicable, whereas the language used in para 25 indicates that it assumed that in the circumstances of the particular case the justification issue would be resolved if the Dutch regime fell within the scope of the transitional derogation, as properly interpreted. In this respect the judgment follows the approach of Advocate General Bot in his opinion. The case was concerned with the compatibility of a work permit regime with the transitional provision in Chapter 2, paragraph 2 of Annex XII. A work permit regime is inherently capable of having a major effect as a national measure restricting or preventing access to the labour market of the host member state which adopts it, by contrast with the monitoring regime adopted by the UK. The Advocate General treated the case as concerned simply with the interpretation of Chapter 2, paragraph 2 of Annex XII (see points 3 5, 25 and 57 of his opinion) and in addressing that question emphasised that both in the case of direct access to the employment market of member states of A8 nationals as workers and in the case of the access of such nationals to that market through their employment by an undertaking which hires out manpower there are potentially large movements of workers which, following new accessions, risk disturbing the employment market of the member states and that the transitional provision should be interpreted as covering both kinds of access in order to preserve its effectiveness (points 51 52). The judgment and the Advocate Generals opinion give no support to the submission that there is no scope for the application of the principle of proportionality in the context of adoption of national measures by a member state in reliance on the transitional derogating provisions in the Annexes to the Act of Accession. In particular, neither the judgment nor the opinion refers to the absence of any relevant protectable interest. If it had been the intention of the CJEU or the Advocate General to rule that the principle of proportionality had no part to play in the context of derogation under the transitional provisions in the Annexes to the Act of Accession, they would surely have said so in terms and would have explained that that was why the question referred proceeded on a false basis. The Secretary of State also relies on a passage in the judgment of the Second Chamber of the CJEU in Valeko v Klagenfurt (Case C 140/05) [2006] ECR I 10025. That case concerned another provision in the Act of Accession which provided a transitional derogation from EU Treaty provisions and legislation governing excise duties. Austrian legislation purportedly made under that derogation limited the exemption for the import of cigarettes in personal luggage to 25 cigarettes. On a preliminary reference, the Independent Finance Tribunal, Klagenfurt Division, asked whether the Austrian legislation was compatible with Treaty provisions governing the free movement of goods and customs duties (now contained in articles 28, 30 and 31 TFEU). Mr Chamberlain places particular reliance on the following passage in the judgment of the court (at para 74): Since that national legislation is justified in the light of one of the measures referred to in article 24 of the Act of Accession, in this case the transitional measure provided for in section 6(2) of Annex XIII to that Act, the question of the compatibility of that legislation with other provisions of primary law, such as articles 23 EC, 25 EC and 26 EC, can no longer arise. Here, the court was saying no more than that once national legislation is justified for the purposes of the derogating transitional measures, it is not necessary to justify it in addition in the wider context of the principles governing free movement of goods. Again, we consider that the courts use of the word justified is significant. It indicates that the court contemplated that a usual process of justification under EU law, including by reference to the principle of proportionality, would be required in relation to reliance on the transitional provision referred to. We were also referred by Mr Chamberlain to the decision of the Supreme Court in Mirga v Secretary of State for Work and Pensions [2016] UKSC 1; [2016] 1 WLR 481. There the claimants failed to establish that domestic regulations violated their rights under article 18 and article 21(1) TFEU, respectively. Lord Neuberger of Abbotsbury, with whom the other members of the Supreme Court agreed, held that those rights were qualified and, in particular, that those of Ms Mirga under article 21(1) were subject to the limitations and conditions laid down in the Treaties and the measures adopted to give them effect. Those measures included the 2003 Accession Treaty and the Citizens Directive. Clearly, the more general Treaty provisions must be read subject to those qualifications or derogations arising under transitional provisions such as those in the Act of Accession. Lord Neuberger then rejected a further submission founded on a lack of proportionality. Mr Chamberlain drew our attention in particular to the following passage (at para 69): Where a national of another member state is not a worker, self employed or a student, and has no, or very limited, means of support and no medical insurance , it would severely undermine the whole thrust and purpose of the [Citizens] Directive if proportionality could be invoked to entitle that person to have the right of residence and social assistance in another member state, save perhaps in extreme circumstances. It would also place a substantial burden on a host member state if it had to carry out a proportionality exercise in every case where the right of residence (or indeed the right against discrimination) was invoked. As appears from its final words, however, this passage appears in the context of a submission by the claimants that the determination of the authorities, courts and tribunals below had failed to give consideration to the proportionality of refusing each of them social assistance on a case by case basis, taking into account all the particular circumstances of their respective cases. It has no bearing on the issue of whether national legislation derogating from rights or prospective rights under EU law is required to be proportionate and it provides no support for the Secretary of States case on this issue. Mr Chamberlain is correct in his submission that, if a national measure is adopted pursuant to a transitional provision in the Act of Accession, no question of its compatibility with any provision of EU primary law can arise. In the present case, the compatibility of national measures with EU law will have to be assessed, not in the wider context of the principles of free movement of workers, but in the particular context of the transitional provisions. However, it does not follow that the national measure does not have to satisfy the EU principle of proportionality. On the contrary, measures adopted pursuant to a temporary derogation from the law and the rights of EU citizens which would otherwise apply do require to be justified in accordance with the principle of proportionality. Furthermore, there is no basis for the submission on behalf of the Secretary of State that this would confer in substance the same rights of free movement which the Act of Accession provides do not apply during the transitional period; rather, it will simply require that the measure is suitable and necessary to achieve the particular objective identified by the provision authorising the transitional derogation and that the burden imposed is, having regard to that specific objective, not excessive. We consider, therefore, that there is no good reason to depart from the decision of the House of Lords in Zalewska as regards the applicability of the principle of proportionality in the present context. As Lord Reed and Lord Toulson pointed out in their judgment in the Lumsdon case, at para 24, proportionality is a general principle of EU law. There is no basis for saying that it has no application in the context of reliance by a member state on a derogating provision such as that in paragraph 5 of Annex VIII. We consider that it is clear to the acte clair standard that the measures taken by the United Kingdom in issue in this case are required to satisfy the EU principle of proportionality. In these circumstances there is no need to address the respondents alternative submission based on article 14 of the ECHR, A1P1 and the Human Rights Act 1998. Issue (2): If the decision to extend the WRS is open to challenge on grounds of proportionality, did the Upper Tribunal and the Court of Appeal err in their approach and conclusion on this issue? In April 2009 the Secretary of State had a limited, binary choice to make pursuant to paragraph 5 of Annex VIII. The UK had instituted the WRS at the time the Accession Agreements came into effect as its sole relevant national measure regulating access to its labour market under paragraph 2 of Annex VIII, by way of derogation from articles 1 to 6 of Regulation 1612/68. The UK had exercised its discretion under paragraph 2 of Annex VIII to continue to apply that measure until the end of the five year period following the date of the accession and had notified the EU Commission of this under paragraph 3 of that Annex. It is common ground that in 2009 there were serious disturbances of the UKs labour market or threat thereof, owing to the financial crisis. Accordingly, pursuant to paragraph 5 of Annex VIII the Secretary of State had to consider whether to continue to apply the WRS for an additional two years, as the sole relevant national measure in place at the time, or not. The question of the proportionality of the WRS as extended in 2009 has to be assessed in this context, as Judge Ward in the Upper Tribunal and the Court of Appeal correctly understood. The WRS had originally been introduced in 2004 as a measure to allow the monitoring of the impact of migration into the UK of workers who were A8 nationals and to safeguard the UKs social security system from exploitation by people who wished to come to the UK not to work but to live off benefits: see Zalewska at paras 34 35 per Lord Hope. It was as a measure having those objectives that it was held to be proportionate and lawful by a bare majority in the House of Lords in the Zalewska case. However, in 2009 the Secretary of State had to consider under paragraph 5 of Annex VIII whether the WRS could properly be maintained in place for an additional two years as a measure to address and ameliorate serious disturbances of the UKs labour market or the threat thereof. Put shortly, in 2009 did the WRS have a deterrent effect to moderate the in flow of A8 nationals as workers which might exacerbate the serious disturbance of the labour market then being experienced and, if so, would it be proportionate to continue to maintain it in place for that purpose? In the context of the decision to be made pursuant to paragraph 5 of Annex VIII, Mr Chamberlain accepts that the protection of the benefits system was not itself any longer a valid objective. Although the MAC in its report stated that it thought there might be a small impact of savings in spending on benefits if the WRS was retained, it also made it clear that its recommendation that the WRS be retained was not based on this. It is significant that for her case on proportionality of the extension of the WRS in 2009 for two years, the Secretary of State has simply relied upon what is said in the MAC report of April 2009. In effect she has adopted the MACs reasoning. She has not filed evidence to explain any distinct reasoning of her own as to why the extension of the WRS was justified, nor to point to any additional relevant factors other than those taken into account by the MAC in its report. This poses problems for the Secretary of State. The MAC was not asked to consider whether an extension of the WRS would be proportionate in terms of EU law and it expressed no view about that. Instead, the MAC was asked to consider, first, whether there was at the time a serious disturbance to the UK labour market. It concluded that there was a serious disturbance, as the UK economy was in recession and there had been a rise in unemployment and redundancies. That conclusion is not put in issue in these proceedings. The MAC was also asked to consider what the likely labour market impact of relaxing transitional measures [for A8 nationals] would be and whether it would be sensible to do so. In addressing these questions the MAC summarised its views at the start of its report as follows (pp 6 7): Would retaining the WRS help to address the disturbance? A8 immigration has increased rapidly since the date of accession and studies show that its impact on UK employment and unemployment rates to date has been negligible. These studies relate to a period of sustained economic growth prior to the current recession. Examination of the potential labour market impacts and review of the evidence available suggests that removing the WRS would not result in substantial increases in flows of A8 immigrants. It is, however, plausible to argue that it would probably result in a small positive impact on immigration flows relative to what would happen otherwise. In the current economic climate, we are concerned that these additional flows would have a small negative impact on the labour market, thus exacerbating the serious labour market disturbance already occurring. We emphasise that any effects of ending the WRS would be small in relation to the overall negative labour market consequences of the economic downturn. Nonetheless, we believe that it would be sensible to retain the WRS for two more years due to the possibility of small but adverse labour market impacts from abolishing it. In the body of the report the MAC emphasised problems with the available evidence base and the difficulties this posed for analysis of what was likely to happen if the WRS was not extended (para 5.3). However, it considered that there was sufficient information available for it to draw broad conclusions regarding the advisability, or otherwise, of retaining the WRS (para 5.4). At para 5.16 the MAC said this: In conclusion, it is very unlikely that removing the WRS would result in any substantial change in A8 immigrant inflows. However, it is possible that some factors, including the 90 registration fee, could have a small effect at the margin. The effect of maintaining the WRS will be to slightly reduce flows relative to what would otherwise be observed. We argue in this report that this slight dampening effect on flows is a positive phenomenon in the current economic circumstances, which is why we have not given detailed consideration to the option of relaxing the WRS by keeping the scheme but abolishing the 90 fee. It is right to observe that the conclusion of the MAC regarding the impact of removal of the WRS on the flow of workers into the UK from the A8 States was tentative and hedged about with qualifications. But on a fair reading of the report the MAC was clear that such removal would have a small effect in increasing the likely flow of such workers into the UK and that this would exacerbate the prevailing serious disturbance of the labour market. The MAC was a body with the relevant experience and expertise to make an assessment of this kind. This was a legitimate conclusion for it to reach. Although the WRS had originally been introduced for the purpose of monitoring rather than deterring the flow of workers from the A8 States, that does not mean that in the circumstances obtaining in 2009 the scheme was incapable of having the small deterrent effect which the MAC found that it did. In Chapter 6 of the report, entitled Conclusions, the MAC stated that it recognised that the Government would want to weigh the slight reduction in the inward flow to the UK of A8 nationals as workers if the WRS were retained against the longer term aim of free movement of labour within the EU and the spirit of the Treaty of Accession (para 6.7). It also said (para 6.8): it is clear that the WRS creates burdens for employers and immigrants. While we do not wish to trivialise these, they need to be assessed against the benefits of the scheme. This was not an exercise the MAC attempted to undertake itself. The Secretary of State has not adduced any evidence as to how she sought to balance the small impact on the labour market in the UK from retention of the WRS against the significant detriments resulting from the continued implementation of the WRS for employers and A8 nationals in the UK as workers. Whilst we do not consider that this disables the Secretary of State from contending that the retention of the WRS is to be regarded as a proportionate measure, it does mean that it is difficult to say that any significant weight or respect should be given to the Secretary of States (unexplained) assessment that it was right to extend the WRS when conducting a proportionality review. The leading decision of this court on the principle of proportionality in EU law is now Lumsdon. The judgment of Lord Reed and Lord Toulson, with which the other members of the court agreed, authoritatively sets out the approach to be adopted. At para 33 Lord Reed and Lord Toulson summarised the test of proportionality in EU law as follows: Proportionality as a general principle of EU law involves a consideration of two questions: first, whether the measure in question is suitable or appropriate to achieve the objective pursued; and secondly, whether the measure is necessary to achieve that objective, or whether it could be attained by a less onerous method. There is some debate as to whether there is a third question, sometimes referred to as proportionality stricto sensu: namely, whether the burden imposed by the measure is disproportionate to the benefits secured. In practice, the court usually omits this question from its formulation of the proportionality principle. Where the question has been argued, however, the court has often included it in its formulation and addressed it separately, as in R v Minister for Agriculture, Fisheries and Food, Ex p Fedesa (Case C 331/88) [1990] ECR I 4023. For reasons which appear below, it should be emphasised that Lord Reed and Lord Toulson in this passage have made it clear that the third question, regarding proportionality stricto sensu, does indeed constitute an aspect of the EU law principle of proportionality. It is identified as such by the Court of Justice whenever it is necessary for it to do so. Lord Reed and Lord Toulson then went on at paras 34 and following to give guidance regarding the appropriate intensity of review in applying the proportionality standard. This depends on context. It ranges from intervening on the basis that a measure is manifestly inappropriate (the usual standard applied in proportionality review of measures taken by EU institutions or of national measures implementing EU measures, at least where these reflect political, economic or social choices and a complex assessment of such factors: paras 40 and 73 respectively) to more demanding standards of review which may be relevant in relation to national measures falling within the scope of EU law which derogate from fundamental freedoms, including free movement of workers (paras 50 72). Also, as Lord Reed and Lord Toulson point out at para 74, where a member state relies on a reservation or derogation in a Directive in order to introduce a measure which is restrictive of one of the fundamental freedoms guaranteed by the Treaties, the measure is likely to be scrutinised in the same way as other national measures which are restrictive of those freedoms. As a result of this analysis, at paras 75 82 Lord Reed and Lord Toulson were critical of the reasoning of the English Court of Appeal in R (Sinclair Collis Ltd) v Secretary of State for Health [2011] EWCA Civ 437; [2012] QB 394, in which the less intrusive manifestly inappropriate standard of review was applied in relation to a national measure restricting the free movement of goods. As we have held above, Judge Ward correctly concluded that it was necessary to conduct a proportionality review of the 2004 Regulations at the time when they were given extended effect in 2009 for a further two years. His judgment was delivered before the decision in the Lumsdon case was handed down. In the section of his judgment in which he carried out this review, Judge Ward first considered at paras 82 to 103 the appropriate intensity of review to be applied, particularly in the light of the decision of the Court of Appeal in the Sinclair Collis case. Following the guidance given by Lord Neuberger MR in that case regarding factors which affect the intensity of proportionality review, Judge Ward characterised the decision as one involving economic or social choice, as a factor tending to expand the area of discretion available to the Secretary of State under the proportionality test, albeit the choice was limited in its range by the binary nature of the decision to be made and was not one involving a political dimension to any significant degree (since the Secretary of State had in effect sub contracted consideration of the issue of extension of the WRS to a technical body, the MAC, and there was only limited Parliamentary scrutiny of the extension decision under the negative resolution procedure) (para 98); and the judge had regard to the difficulties of assessment of the evidence regarding the effects of maintaining the WRS in place, as a factor again tending to expand the area of discretion for the Secretary of State (para 99). But Judge Ward also took into account a series of factors which in his view tended to reduce that area of discretion: that the measure was adopted by delegated legislation and subject only to the negative resolution procedure, and in reliance on a report which the MAC itself considered to be rushed (para 100); that the Secretary of State adduced no evidence of having conducted his own proportionality analysis, despite the limitations in the question put to the MAC and the need, identified by the MAC, for its answer to the Secretary of State to be weighed against other factors (para 101); and the fact that the measure in question was a national measure in derogation from the principle of the free movement of workers, in relation to which a court should be astute to ensure that the national government has not unduly sought to favour its national interest at the expense of EU principles (para 102). His conclusion was that the relevant degree of intensity of review was not confined to the manifestly appropriate test which appears in some cases, but was significantly more intrusive than that, albeit with allowance for some margin of appreciation for the Secretary of State (para 103). In the next section of his judgment, at paras 104 to 121, Judge Ward considered whether the Extension Regulations promulgated in 2009 in relation to the WRS passed the proportionality test. He came to the conclusion that the fee and registration requirements in those Regulations were disproportionate and contrary to EU law. He reached this conclusion on two distinct grounds: i) the fee was set to defray the costs of an administrative scheme aimed at monitoring migrant inflows which does not itself materially help to address the disturbance [of the labour market], so the WRS could not be regarded as an appropriate tool for proportionality purposes for addressing the serious disturbance to the UK labour market in that it relies effectively on payment of a sum of money by A8 nationals, while not otherwise affecting their access to it (para 112). Therefore, the Secretary of States case on proportionality failed to satisfy the first stage of the proportionality test; and in any event, even if that was wrong, ii) the WRS failed to comply with proportionality stricto sensu, at the third stage of the test. Regulation 9 of the 2004 Regulations created a criminal offence if an employer employed an A8 national who was not registered as required under the WRS, subject to certain defences. Accordingly, the judge found that the WRS created a burden on employers, even if little research had been done to examine its scale (para 114). In addition, the judge referred at para 115 to the impact of the WRS in relation to A8 nationals who came to work in the UK, paid taxes here and participated actively in UK society. He noted that the MAC report indicated that for language and other reasons there was a significant rate of non registration by A8 nationals working in the UK which could be up to 33%, and further noted that failure by an A8 national to register under the WRS had significant adverse consequences for such a person in terms of exclusion from welfare benefits, no matter how unforeseeable the circumstances which have caused them to be in need of them, and it prevented them from relying on time spent working in the UK whilst unregistered as a contribution to the five years needed to establish a right of permanent residence here under article 16 of the Citizens Directive. The judge found that these detriments constituted a very real downside for A8 nationals who did not register, noting that this had been characterised as severe by Baroness Hale at para 57 of her speech in Zalewska. Moreover, for those A8 nationals who did comply with the registration requirement under the WRS, the fee they had to pay was a sum equivalent to around 1% of annual gross pay for someone working at the national minimum wage for a 35 hour week for 48 weeks (as noted in para 5.9 of the MAC report). The judge found that the small and speculative advantage in respect of reducing the inward flow of A8 nationals as workers from extending the WRS was wholly outweighed by the disadvantage to A8 nationals and employers in the UK and the limitation on Treaty principles of free movement (para 117). That was the judges view in light of the conclusion he had reached at para 103 regarding the appropriate intensity of review, as referred to above. But he went on to hold that even if the appropriate standard of review was the manifestly inappropriate test, which allows a wider margin of discretion to the relevant decision maker, he would have come to the same conclusion (para 118). The Secretary of State challenged this assessment in the Court of Appeal. The Lumsdon judgment had now been handed down and the Court of Appeal analysed the position with reference to the guidance it contains. Rupert Jackson LJ gave the leading judgment, with which the other members of the court agreed. At paras 57 to 63 he accepted a submission for the Secretary of State that Judge Ward at para 98 of his judgment had gone too far in discounting the political aspect of the decision to promulgate the Extension Regulations when he assessed the intensity of review to be applied; but Rupert Jackson LJ still held that whilst the degree of scrutiny should not be intense, it was not a case in which the more generous manifestly disproportionate test applied (para 63). In the event, the modest difference between Rupert Jackson LJ and Judge Ward regarding the precise intensity of review to be applied was immaterial, because Judge Ward had come to the view that the Extension Regulations were disproportionate even if the manifestly disproportionate test was applied. Rupert Jackson LJ pointed out that the Upper Tribunal is a specialist tribunal whose decision deserves respect, and that it can only be interfered with if the tribunal has erred in law: see section 13 of the Tribunals, Courts and Enforcement Act 2007. He set out paras 111 to 115 in the judgment of Judge Ward and said that he could find no fault with his reasoning in those paragraphs. Therefore, Rupert Jackson LJ dismissed the Secretary of States challenge to the Upper Tribunals assessment that the Extension Regulations were disproportionate. The Secretary of State appeals to this court on this issue. Mr Chamberlain submits that Judge Ward erred in relation to both the grounds on which he found that the Extension Regulations were disproportionate and that the Court of Appeal erred in endorsing his assessment. We consider that there is force in Mr Chamberlains criticism of the first ground relied on by Judge Ward at paras 112 and 113 of his judgment, in relation to the first question that arises on a proportionality review (whether the measure is suitable or appropriate to achieve the objective pursued). Mr Chamberlain submits that, as found by the MAC in its report, extending the WRS in 2009 would have a small effect in reducing the inward flow of workers as compared to what would happen if it were not extended, and to that (admittedly small) extent it would prevent the then existing serious disturbance of the labour market from getting worse. Therefore, the extension of the WRS pursuant to paragraph 5 of Annex VIII was a measure appropriate to achieve the relevant objective, namely alleviation of the disturbance in the labour market as compared with the position which would obtain if the WRS were not extended, even if only to a small degree. Moreover, under paragraph 5 of Annex VIII, by virtue of the binary choice that it imposed on the UK in 2009, that was the only measure available to the Secretary of State to take at that time to alleviate the general disturbance in the national labour market. It could not be said that there was any less onerous method of achieving that objective. Mr Thomas de la Mare QC for the Interveners submitted that in order for the Secretary of State to satisfy the first stage of the proportionality test he had to be able to show that the extension of the WRS was materially capable of tackling or mitigating the serious disturbances to the labour market referred to in paragraph 5 of Annex VIII. He further submitted that the Secretary of State could not show that this was the case. We did not understand Mr Chamberlain to dispute the first of these submissions, save that he emphasised that the idea of materiality in this context is not a demanding one, and would only exclude measures which were immaterial or wholly de minimis in relation to their effect in tackling or mitigating the serious disturbances to the labour market in question. We agree. Mr Chamberlain took issue with the second submission. He was right to do so. The MAC report showed that extending the WRS would have a material, though small, effect in mitigating the serious disturbances to the UK labour market by reducing the flow of workers from A8 States which would otherwise occur, which would have the effect of exacerbating those disturbances. However, we cannot accept Mr Chamberlains wider submission that Judge Ward and the Court of Appeal erred in their assessment regarding the third stage of the proportionality analysis (proportionality stricto sensu). The position was stark. The extension of the WRS would have only a small and rather speculative mitigating effect in relation to the serious disturbances in the UKs labour market, as found by the MAC, whereas the burdens and detriments it would impose on employers and A8 nationals working in the UK were substantial and serious. We should say that we have some reservations about whether Rupert Jackson LJ was right to criticise the level at which Judge Ward pitched the intensity of review which he considered to be appropriate in this case. Although, obviously, Judge Ward did not have the benefit of the analysis by this court in Lumsdon when he made his assessment, we think that in broad terms the level of intensity he judged to be appropriate in this case is compatible with the guidance given in Lumsdon. In particular, the extension of the WRS was rightly regarded by Judge Ward as a national measure which was restrictive of the fundamental freedom of movement for A8 nationals as protected by the Treaties, taken in reliance on a reservation or derogation in an EU instrument, in relation to which a relatively demanding intensity of review is appropriate: see Lumsdon at para 74. However, this is not a case which turns on the precise calibration of the intensity of review to be applied in relation to the decision to extend the WRS in 2009. Both Judge Ward and the Court of Appeal considered that this measure failed to pass muster even if the markedly more generous manifestly inappropriate test was applied. In our view, they were plainly entitled to come to that conclusion in the circumstances of this case, particularly in the absence of any attempt by the Secretary of State to explain why the very limited and rather speculative benefits associated with the extension of the WRS in addressing labour market disturbances outweighed the considerable detriments for employers and workers from A8 States associated with the scheme. We agree with their conclusion. In arriving at this view, we have noted that in the Zalewska case in the House of Lords it was held, by a majority, that it was not disproportionate for the WRS to be introduced and implemented from 2004 as a monitoring measure in the initial phase of the expansion of the European Union by the accession of the A8 States. That conclusion does not provide a relevant guide for the outcome of the proportionality analysis in the present case. By contrast with the proportionality review in Zalewska, the analysis in this case has to be undertaken in the very different legal context set out in paragraph 5 of Annex VIII. In order to justify the extension of the WRS in 2009, the Secretary of State has to be able to say that this is a measure which is proportionate having regard to the objective of mitigating serious disturbances in the labour market. Factors which were relevant to the assessment in the Zalewska case, including a desire to protect against additional and inappropriate demands on the UKs social security system (see paras 35 36 per Lord Hope), are no longer relevant in the present context. In Zalewska, the Governments position was that the WRS was intended to be a monitoring measure and was not expected to be a barrier to those who wanted to work (see para 34 per Lord Hope), whereas in the present context this position is reversed: the justification of the extension of the WRS is said to be that it does provide, to a degree, a barrier to A8 nationals who might otherwise come to work in the UK and the justification does not rely upon the effect of the WRS as a monitoring measure. The result of the analysis relevant in the present case is that the extension of the WRS in 2009 was a disproportionate measure which was unlawful under EU law. As we have come to the clear conclusion that the decision to extend the WRS in 2009 was required to conform with the principle of proportionality in EU law and as the CJEU would take the view that the application of that principle to the facts is a matter for the national court, these matters are acte clair and this court is not required to make a preliminary reference to the CJEU. Issue (3): If the Secretary of State succeeds on Issue 1 or Issue 2, does article 17(1)(a) of the Citizens Directive require a person to show that, throughout the period of continuous residence, she enjoyed a right of residence under that Directive? The conclusion on the proportionality issue above means that the Secretary of States appeal falls to be dismissed, as happened in the Court of Appeal. However, Ms Helen Mountfield QC on behalf of the respondent contends that there is another, alternative reason why the Secretary of States appeal should be dismissed, even if the extension of the WRS in 2009 was proportionate and lawful. On her alternative case the respondent submits that as a result of her residence in the UK from 2008 and working here from 14 September 2009 she had acquired the right of permanent residence by virtue of article 17(1)(a) of the Citizens Directive and regulation 5(2)(c) of the 2006 Regulations by the time she made her claim for state pension credit on 24 October 2012 and was for that reason entitled to claim that benefit. Although, on the hypothesis that the extension of the WRS was lawful, she did not qualify as a worker with a right of residence under article 7 of the Citizens Directive in the period before she registered for a certificate to work on 20 August 2010, that does not matter. Article 17(1)(a) confers the right of permanent residence on workers or self employed persons who reach the age of retirement provided that they have been working in that member state for at least the preceding 12 months and have resided there continuously for more than three years; the relevant requirement of residence in this provision is residence in fact, rather than residence pursuant to the provisions set out in the Citizens Directive; and the respondent can show that by the time of her claim for state pension credit she had resided in the UK for more than three years. The Secretary of State disputes this alternative argument of the respondent. She submits that the concept of residence in article 17(1)(a) is to be read in the light of article 16(1) of the Citizens Directive, from which it is said to derogate. Article 16(1) provides that Union citizens who have resided legally in a host member state for a stipulated continuous period will acquire a right of permanent residence there. Similarly, although article 17(1)(a) uses the term resided without the adverb legally, it should be taken to be referring to the same concept of legal residence. The case law of the CJEU has established that legal residence in the context of article 16(1) means residence in accordance with article 7 of the Citizens Directive: see, in particular, the judgment in Ziolkowski v Land Berlin (Joined Cases C 424/10 and C 425/10) EU:C:2011:866; [2014] All ER (EC) 314, paras 31 51. The respondent cannot show that her period of residence in the UK was legal in this sense; in particular, since she did not comply with the requirement of registration under the WRS until 20 August 2010, she cannot show that before that date she was resident here as a worker or self employed person within the scope of article 7(1)(a) of the Citizens Directive. On this issue, Judge Ward accepted the submission of the respondent, whereas the Court of Appeal accepted the submission of the Secretary of State. Resolution of the dispute on this issue is not necessary for the determination of the present appeal, because the Secretary of State has lost on the proportionality issue in relation to the extension of the WRS. However, since the issue regarding the interpretation of article 17(1)(a) may be important in other cases and we are of the view the Court of Appeal has erred on this point, we consider that we should deal with it. It is unnecessary to decide whether the position is acte clair, because by reason of our conclusion on the proportionality issue there is no need for a reference to the CJEU. Recital (17) to the Citizens Directive explains the purpose of article 16. Recital (19) explains the purpose of article 17. Recital (17) is explicit in stating that the right of permanent residence which article 16 provides for should be laid down for all Union citizens and their family members who have resided in the host member state in compliance with the conditions laid down in this Directive during a continuous period of five years . Recital (19) is in different terms. It does not refer to residence in compliance with the conditions laid down in the Citizens Directive. It refers to, among others, workers who have resided in the host member state who have acquired rights under Regulation 1251/70. Article 1 of Regulation 1251/70 stipulates that the Regulation shall apply to nationals of a member state who have worked as employed persons in the territory of another member state, and it uses the term worker in this sense. Article 2(1)(a) of Regulation 1251/70 provides for a right to remain permanently in the territory of a host member state for a worker who satisfies certain conditions, including where she has been employed in that state for at least the last 12 months and has resided there continuously for more than three years. Article 4 provides that continuity of residence may be attested by any means of proof in use in the country of residence. Accordingly, Regulation 1251/70 uses the term worker in a simple factual sense and similarly refers to continuous residence in a simple factual sense. By contrast with the Citizens Directive, the Regulation contains no reference to lawful residence which could be taken to inform the meaning of continuous residence. The reference in Recital (19) to the Citizens Directive to rights of permanent residence acquired under Regulation 1251/70 is a strong indication that the EU legislature intended the concept of continuous residence as used in article 17(1)(a) of the Directive to reflect the concept of continuous residence as used in article 2(1)(a) of the Regulation. Accordingly, both in its text, which contrasts with the text of recital (17), and by reason of its reference back to rights acquired under Regulation 1251/70, Recital (19) indicates that the concept of residence as referred to in article 17(1)(a) is factual residence, as the respondent contends. We consider that recital (3) to the Citizens Directive reinforces this interpretation of article 17(1)(a). It explains that the EU legislature intended to codify and review the existing EU instruments dealing with workers and others in order to simplify and strengthen the right of free movement and residence of all Union citizens. Thus, it was part of the purpose of the Directive to enhance existing rights of free movement and residence, such as those which had arisen under Regulation 1251/70, and not to subject them to new restrictive conditions. The same point emerges from recital (1) to Regulation 635/2006, which repealed Regulation 1251/70, as follows: [The Citizens Directive] consolidated in a single text the legislation on the free movement of citizens of the Union. Article 17 thereof includes the main elements of [Regulation 1251/70] and amends them by granting beneficiaries of the right to remain a more privileged status, namely that of the right of permanent residence. There are in addition two textual features of article 17(1)(a) which in our view point strongly in favour of the interpretation arrived at by Judge Ward. First, the text in article 17(1) essentially tracks that in article 2 of Regulation 1251/70, with appropriate minor modifications. Secondly, the language used in article 17 (residence; have resided continuously) is in marked contrast to that used in article 16 and again in article 18 (have resided legally and after residing legally). This has every appearance of being deliberate, and the underlying purpose of article 17 as set out in recital (19) and the correspondence of its text with article 2 of Regulation 1251/70 confirms that impression. It is also noteworthy that in the CJEUs analysis in the Ziolkowski judgment of the meaning of legal residence in article 16 and article 18, which itself turns on a close textual analysis of the Directive, the court did not suggest that the term residence in article 17 had to be interpreted as having the same meaning. Furthermore, since article 17(1) is concerned with preserving and protecting rights already acquired under Regulation 1251/70, it seems impossible to read it as referring to legal residence in the sense given by the Ziolkowski judgment. When the Citizens Directive first came into force in 2004 and when it was first implemented at national level throughout the EU within two years after that as required by article 40, no one could have built up any period of continuous residence pursuant to their rights under article 7 of the Directive, let alone the three years of continuous residence referred to in article 17(1)(a). Yet individuals could in principle have rights under article 17(1) as soon as implementation of the Directive took effect. Accordingly, it seems necessary to interpret the concept of continuous residence in article 17(1)(a) as referring to factual residence rather than legal residence as that term is used in article 16. The meaning of continuous residence in article 17 cannot change over time, so it is no answer to the respondents claim to be entitled to a right of permanent residence in the UK under article 17(1)(a) that she had not herself acquired rights under Regulation 1251/70 in the UK prior to the coming into force of the Citizens Directive and the domestic regulations which implemented it in domestic law. Mr Chamberlain emphasised the introductory sentence in article 17(1), which states that the provision applies By way of derogation from article 16 and refers to acquisition of a right of permanent residence before completion of a continuous period of five years of residence by the persons then specified in the sub paragraphs. He submitted that the reference back to article 16 meant that residence in article 17(1) was being used in the same sense as residence in article 16, that is to say legal residence. However, we do not consider that the opening words of article 17(1) can bear the weight which Mr Chamberlain sought to place on them. In itself the use of the word residence in the opening part of article 17(1) is neutral on the question of what form of residence is referred to in the sub paragraphs which follow. It is those sub paragraphs which set out positively the conditions which have to be satisfied for an individual to acquire the right of permanent residence under that provision. For a right of permanent residence to arise under article 16(1) a five year period of residence which has the quality of being legal in the requisite sense is required. In order to indicate that article 17(1) sets out a right of permanent residence which departs from, and is more generous than, the right conferred under article 16(1), it was sufficient for the drafter to state that the right under article 17(1) arises where there is a period of residence of less than five years, without needing to refer also to whether the residence in question had to be legal or not. Further, it is natural for the drafter simply to speak of residence in the opening words of article 17(1) if it is the concept of factual residence rather than legal residence which is employed in the following sub paragraphs in that provision. In any event, the indications from the text of article 17(1) and its purpose as set out in recital (19), as discussed above, appear to us to have far greater weight than any indication to be derived from the opening words of the provision. Mr Chamberlain also relied on other judgments of the CJEU, but they were not concerned with the interpretation of article 17(1), nor did they involve any attempt to examine the purpose of that provision. In particular, Mr Chamberlain referred to the judgments in Alarape v Secretary of State for the Home Department (Case C 529/11) [2013] 1 WLR 2883 and in FV (Italy) v Secretary of State for the Home Department and B v Land Baden Wrttenberg (Joined Cases C 424/16 and C 316/16) [2019] QB 126. However, these judgments do not support his interpretation of article 17(1). In the Alarape case the CJEU addressed the question whether periods of residence completed pursuant to article 12 of Regulation 1612/68, which provides a right for the child of a worker to be admitted to educational courses in the host member state, could count towards the five years of legal residence required for acquisition of a right of permanent residence under article 16(1) of the Citizens Directive. The CJEU applied its ruling in the Ziolkowski judgment regarding the meaning of legal residence in article 16(1) and held that residence pursuant to article 12 of Regulation 1612/68, but which did not comply with article 7 of the Citizens Directive, did not count for the purposes of article 16(1). In our view, this does not support Mr Chamberlains interpretation of article 17(1) of the Citizens Directive. If anything, it tends to support Judge Wards interpretation of that provision. That is because, following the guidance in the judgments in Ziolkowski and Alarape, residence in a host member state pursuant to rights under Regulation 1251/70 and Directive 75/34/EEC likewise would not count as legal residence for the purpose of article 16(1) of the Citizens Directive; but it is rights acquired by residence pursuant to Regulation 1251/70 and Directive 75/34/EEC which are intended to be respected and protected by article 17 of the Citizens Directive: see recital (19) to that Directive. FV (Italy) concerned the interpretation of article 28(3)(a) of the Citizens Directive, which provides for enhanced protection against expulsion of EU citizens if they have resided in the host member state for the previous ten years: in such a case the host member state may only decide to expel them on imperative grounds of public security. The CJEU held that article 28 had to be read as a whole, as creating steadily increasing protection for EU citizens according to their integration in the society of the host member state. Therefore, the protection in article 28(3) was to be taken to be conditional on the EU citizen having a right of permanent residence in the host member state, as referred to in article 28(2): see paras 40 61 in the judgment. In answer to the first question referred by this court, the CJEU held at para 61 that article 28(3)(a) must be interpreted as meaning that it is a prerequisite of eligibility for the protection against expulsion provided for in that provision that the person concerned must have a right of permanent residence within the meaning of article 16 and article 28(2) of [the Citizens] Directive. Again, the ruling in Ziolkowski regarding the interpretation of article 16(1) was applied: see para 59. In FV (Italy) there was no question of acquisition of a right of permanent residence pursuant to article 17 of the Citizens Directive, so the question referred did not mention that provision: see para 39. The CJEU made no reference to it in its judgment. Since article 28(2) refers in general terms to Union citizens or their family members who have the right of permanent residence, if an individual had acquired such a right by virtue of article 17 rather than by virtue of article 16 of the Citizens Directive it seems entirely possible that by extension of its reasoning in FV (Italy) the CJEU would hold that such an individual likewise enjoys enhanced protection under article 28(3)(a). The important point, however, is that the judgment in FV (Italy) does not support Mr Chamberlains submission regarding the proper interpretation of article 17(1). Mr Chamberlain also relied on observations by Advocate General Trstenjak in her opinion in Secretary of State for Work and Pensions v Lassal (Case C 162/09) [2011] 1 CMLR 31, at points 68 69, to the effect that article 16(1) and article 17(1) of the Citizens Directive are closely connected and that therefore it must in principle be assumed that the two factual elements whose wording is almost identical a continuous period of five years of residence in the host member state in article 16(1) of the Directive and resided continuously in the host member state for more than two years in article 17(1)(b) of the Directive are to be interpreted in the same way. However, this part of the Advocate Generals reasoning was not endorsed by the CJEU in its judgment. Moreover, as Judge Ward pointed out in his judgment at para 58, the Advocate Generals recitation of the text in the two provisions contains an unfortunate and highly significant misquotation, in that she omits the critical phrase, have resided legally, in article 16(1). Also, the Advocate Generals view is not supported by any positive reasoning, other than to point out the linkage between article 16 and article 17(1) which appears from the opening sentence of article 17(1) as to which, see above. Accordingly, we do not consider, with respect, that Advocate General Trstenjaks opinion on this point represents a sound guide to the interpretation of article 17(1). For the reasons set out above, in our judgment the Court of Appeal erred in its interpretation of article 17(1). Judge Ward arrived at a correct interpretation of that provision, in holding that residence in article 17(1) refers to factual residence rather than legal residence as required under article 16(1), as interpreted by the CJEU in the Ziolkowski judgment. Issue (4): If article 17 of the Citizens Directive requires legal residence in the relevant sense, is actual residence sufficient for the purposes of the 2006 Regulations? As we would hold that the term residence in article 17(1)(a) has the meaning set out above, no question arises regarding a possible difference of meaning between article 17(1)(a) and regulation 5(2)(c) of the 2006 Regulations which implements that article in domestic law by using the phrase resided in the United Kingdom continuously for more than three years prior to the termination [of employment or self employment]. Therefore the fourth issue on the appeal does not arise. Conclusion For the reasons we have set out, we would dismiss the Secretary of States appeal.
UK-Abs
By a Treaty signed at Athens on 16 April 2003 (the Athens Treaty), ten Accession States became member states of the EU. The Act of Accession, annexed to the Athens Treaty, permitted the existing member states to apply national measures regulating access to their labour markets by nationals of the eight most populous Accession States (the A8 States) which included Latvia. It required the existing member states to apply measures, for an initial period of two years from the date of accession, regulating access to their labour markets by Latvian nationals. The existing member states were permitted to continue to apply such measures until the end of the five year period following the date of the accession. An existing member state maintaining such measures at the end of the five year period was permitted, in case of serious disturbances of its labour market or threat thereof and after notifying the Commission to continue to apply these measures until the end of the seven year period following the date of accession. The Act of Accession was given effect in the domestic law of the UK by the European Union (Accessions) Act 2003 and the Accession (Immigration and Worker Registration) Regulations 2004 (SI 2004/1219) (the 2004 Regulations). The 2004 Regulations established the Worker Registration Scheme (WRS) which obliged any national of an A8 State to register before starting employment and before taking up any new employment. Each registration incurred a fee of 90 and the obligation to register continued until the worker had worked for 12 months. Failure to register work in accordance with the WRS would mean that the individual would not derive from that work a right to reside in the UK. In 2009 HM Government asked the Migration Advisory Committee (MAC) to advise it in relation to the continuation of the WRS. In the light of the MACs advice, the Government decided to extend the measures applicable to nationals of the A8 States for a further two years. The central issue in this case is whether Ms Tamara Gubeladze (the respondent), a Latvian national living in the UK, is entitled to receive state pension credit. The respondent came to the UK in 2008 and worked for various employers between September 2009 and November 2012. In the periods when she was not working she was a jobseeker. She was issued with a registration certificate under the WRS on 20 August 2010. Her employment before that date was not covered by the certificate. On 24 October 2012, the respondent made a claim for state pension credit. The basis of her claim was that she had a right of residence in the UK under regulation 5(2) of Immigration (European Economic Area) Regulations 2006 (SI 2006/1003), (the 2006 Regulations), which implement article 17(1)(a) of Directive 2004/38/EC (the Citizens Directive), as a person who had retired, having pursued activities as a worker for at least a year in the UK, and having resided continuously in the UK for three years. The Secretary of State for Work and Pensions (the Secretary of State) rejected her claim on the ground that the requirement of three years continuous residence required three years continuous residence which meant a right of residence under the Citizens Directive. Since the respondents asserted right of residence during that time was as a worker, but she had not been registered under the WRS for part of that period, the Secretary of State considered that she had not resided in the UK pursuant to a right of residence conferred by the Citizens Directive and therefore did not meet the three year residence requirement in regulation 5(2) of the 2006 Regulations. The respondents appeal to the First tier Tribunal was dismissed on jurisdictional grounds. On appeal to the Upper Tribunal, it held that the First tier Tribunal had had jurisdiction to hear the appeal and it re made the substantive decision. It allowed the respondents appeal on two distinct grounds. First, it held that article 17 of the Citizens Directive, and therefore regulation 5(2)(c) of the 2006 Regulations, did not require that the three years continuous residence be in exercise of rights under the Citizens Directive. Actual residence was sufficient. Secondly, it held that the decision to extend the WRS in 2009 was disproportionate and therefore unlawful. On that footing, the respondents residence in the UK at the relevant time had not involved any breach of any applicable valid domestic law and so was to be regarded as legal residence for the purposes of the 2006 Regulations. The Secretary of State appealed to the Court of Appeal which dismissed the appeal. In the Court of Appeal, the Secretary of State succeeded in her appeal in relation to the first point, with the Court holding that the word reside in article 17(1)(a) of the Citizens Directive meant legally reside in the requisite sense; but the Court held that the extension of the WRS was disproportionate and therefore incompatible with EU law. The Secretary of State appealed to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Lloyd Jones and Lord Sales give the sole judgment with which the other Justices agree. (1) Is the decision to extend the WRS open to challenge on grounds of proportionality? The Secretary of State submits that the extension of the WRS did not interfere with or derogate from any pre existing protected interest, so it was not subject to any requirement of proportionality under EU law [27]. The Court considers that the question at the heart of this issue is whether the Act of Accession created relevant protectable interests by conferring rights of EU citizenship on the new EU citizens from the A8 States subject to initial, tapering exceptions imposed by the existing member states, or whether it should be regarded as providing for only such rights as may be conferred by the existing member states during the transitional period. The House of Lords in Zalewska v Department for Social Development [2008] UKHL 67 took the former view [32]. The Court agrees. It considers that there was no intention under the Act of Accession to confer an unfettered right to derogate from general principles of freedom of movement. On the contrary, derogation from those principles must be subject to the principle of proportionality in EU law [35]. This conclusion is supported by the scheme of the relevant instruments [33] and the purpose of the measures [35]. (2) If the decision to extend the WRS is open to challenge on grounds of proportionality, did the Upper Tribunal and the Court of Appeal err in their approach and conclusion on this issue? It is significant that the Secretary of State has simply relied upon what is said in the MAC report of April 2009. She has not filed evidence to explain any distinct reasoning as to why the extension of the WRS was justified, nor to point to any additional relevant factors other than those taken into account by the MAC in its report [49]. This poses problems for the Secretary of State because the MAC was not asked to consider whether an extension of the WRS would be proportionate in terms of EU law and it expressed no view about that [50]. The leading decision of this Court on the principle of proportionality in EU law is now R (Lumsdon) v Legal Services Board [2015] UKSC 41 [57]. This explains that the principle applies according to a three stage test. As regards the first stage of this test, the Court considers that the continuation of the WRS is suitable or appropriate to achieve the objective pursued [66]. The MAC report showed that extending the WRS would have a material, though small, effect in mitigating the serious disturbances to the UK labour market by reducing the flow of workers from A8 States which would otherwise occur [68]. No issue arises in relation to the second stage. However, the Court finds that the third stage of the proportionality analysis (sometimes called proportionality stricto sensu) is not satisfied. According to the assessment in 2009 the extension of the WRS would have only a small and rather speculative mitigating effect in relation to the serious disturbances in the UKs labour market, as found by the MAC, whereas the burdens and detriments it would impose on employers and A8 nationals working in the UK were substantial and serious [70]. The result is that the extension of the WRS in 2009 was a disproportionate measure which was unlawful under EU law [74]. On the basis of the Courts rulings on Issues 1 and 2, the appeal falls to be dismissed. (3) If the Secretary of State succeeds on Issue 1 or Issue 2, does article 17(1)(a) of the Citizens Directive require a person to show that, throughout the period of continuous residence, she enjoyed a right of residence under that Directive? Although resolution of this issue is not necessary for the determination of the present appeal, the Court considers that it should deal with it since the interpretation of article 17(1)(a) may be important in other cases [79]. The Court concludes that, on a textual interpretation of the relevant provisions, the concept of residence as referred to in article 17(1)(a) is factual residence [81]. This interpretation is reinforced by the purpose of the Citizens Directive, which is to enhance existing rights of free movement and residence and not to subject them to new restrictive conditions [82]. For these reasons, the Upper Tribunal arrived at a correct interpretation of article 17(1) in holding that residence in article 17(1) refers to factual residence rather than legal residence in the specific sense which that term bears in the context of the Citizens Directive [92]. (4) If article 17 of the Citizens Directive requires legal residence in the relevant sense, is actual residence sufficient for the purposes of the 2006 Regulations? As the Court holds that the term residence in article 17(1)(a) has the meaning set out above, this issue does not arise [93]. For the reasons set out in the judgment, the Court would dismiss the Secretary of States appeal [94].
The factual background to this appeal is set out in the judgments of this Court in Belhaj v Straw [2017] AC 964. In short summary, the first Appellant, Mr Belhaj, was a political opponent of the government of Colonel Gadaffi in Libya. He and his wife Ms Boudchar (the second Appellant) contend that they were abducted and maltreated by agents of Malaysia, Thailand and the United States, and eventually rendered to the Libyan authorities, by whom they were imprisoned, tortured, and subjected to other serious maltreatment. The Appellants allege that this was done with the connivance of the British Secret Intelligence Service and in particular that of Sir Mark Allen, who is said to have been a senior officer of that service. We make no finding about that, any more than the courts below did. Her Majestys Government has neither confirmed nor denied that Sir Mark was involved in these events, and references to him in this judgment should be read in that light. In parallel proceedings, the Appellants have sued the British Government for damages. The present appeal arises out of an investigation commenced by the Metropolitan Police in 2012 into possible criminal offences committed in the course of this history. On 9 June 2016, the Director of Public Prosecutions announced her decision not to bring any prosecutions. That decision was based on a decision of Ms Hemming, a senior prosecutor at the Crown Prosecution Service and on detailed advice given to Ms Hemming by First Senior Treasury Counsel that there was insufficient evidence to prosecute for any offence subject to the criminal jurisdiction of the United Kingdom. In communicating her decision to the Appellants representatives, Ms Hemming pointed out that the security marking of the potential evidence in this case is such that I am unable to provide you with a summary of the material submitted to us. The Appellants applied for an internal review of the decision under the Victims Right of Review procedure. The case was accordingly referred to another senior CPS prosecutor, Mr Gregor McGill, who reached the same conclusion for substantially the same reasons. On 20 October 2016, the Appellants issued the present proceedings, seeking judicial review of the failure to prosecute Sir Mark Allen. The application is made on three grounds: misdirection in law, procedural unfairness and inconsistency with the evidence. Only the last of these grounds is relevant to the present issues. The Appellants contend that it is irrational because, they say, the material in the public domain is alone enough to make good the elements of the relevant offences. The Director takes issue with this. She says that the Appellants contention is based on the very limited documentation available to them, whereas the decision not to prosecute was supported by an examination of some 28,000 pages of statements, exhibits and other documents which were considered by the CPS and Treasury Counsel but could not be disclosed to Appellants because of its classification (TOP SECRET STRAP 2). The Appellants response is that neither the decision itself nor the Directors evidence in support of it adequately discloses her reasoning on this question. The issue on this appeal is whether on the hearing of the application for judicial review, it would be open to the Court to receive closed material disclosed only to the court and a special advocate but not to the Appellants. As will appear, this depends on whether the judicial review proceedings are proceedings in a criminal cause or matter. Closed material procedure is a derogation from ordinary principles of forensic justice because it necessarily limits the ability of a litigant or a defendant in criminal proceedings to deploy his case. The degree of limitation will depend on the arrangements made to represent his interests in some other way, although no one suggests that these arrangements can entirely make good the adverse effect on him. There are nonetheless cases in which, notwithstanding that closed material procedure represents imperfect justice, the alternative is no justice at all. For that reason, the European Court of Human Rights has held that closed material procedure may be justified in some cases. In A v United Kingdom (2009) 49 EHRR 29, para 205. the Court observed that even in proceedings under article 6 for the determination of guilt on criminal charges, there may be restrictions on the right to a fully adversarial procedure where strictly necessary in the light of a strong countervailing public interest, such as national security, the need to keep secret certain police methods of investigation or the protection of the fundamental rights of another person. There will not be a fair trial, however, unless any difficulties caused to the defendant by a limitation on his rights are sufficiently counterbalanced by the procedures followed by the judicial authorities (see, for example, Doorson v Netherlands (1996) 22 EHRR 330, para 70; Van Mechelen v Netherlands (1998) 25 EHRR 647; para 58, Reports 1997 III; Jasper v United Kingdom [GC] (2000) 30 EHRR 441, paras 51 53; SN v Sweden, No 34209/96, para 47, ECHR 2002 V; and Botmeh and Alami v United Kingdom (2008) 46 EHRR 31, para 37. The Strasbourg court in that case held that the use of closed material procedure before the Special Immigration Appeals Commission could be consistent with the Convention, provided that it was strictly necessary in the interests of national security. It considered that the interests of the complainant were sufficiently protected by the use of a special advocate, in those cases where the defendant was given enough information about the allegations against him to enable him to give meaningful instructions to the special advocate. More recent Strasbourg jurisprudence has softened the latter requirement in a case where, even in the absence of such disclosure, resort to closed material procedure was proportionate and the proceedings as a whole were fair: Kennedy v United Kingdom (2011) 52 EHRR 4, paras 184 187, as applied in Tariq v Home Office (JUSTICE intervening) [2012] 1 AC 452. However, the mere fact that the use of closed material procedure may represent a fair balance between national security and the demands of procedural justice does not mean that the courts have power to adopt it. The rule at common law is that, with very limited exceptions, no material can be put before the court in litigation, civil or criminal, without being disclosed to the parties. The rule was reaffirmed for criminal cases in R v Davis [2008] 1 AC 1128 in the special context of the anonymisation of witness evidence. In civil proceedings it was reaffirmed in Al Rawi v Security Service (JUSTICE intervening) [2012] 1 AC 531, which concerned the use of closed material procedure in the context of allegations somewhat similar to those made by the Appellants in the present case. These decisions are authority for the proposition that the adoption of closed material procedure is not within the inherent jurisdiction of the courts and requires specific statutory authority. Closed material procedure has been authorised by statute for proceedings before certain specialised tribunals. It was authorised in proceedings before the SIAC by sections 5 and 6 of the Special Immigration Appeals Commission Act 1997, and provision was made for its use by the Investigatory Powers Tribunal under section 69(4) of the Regulation of Investigatory Powers Act 2000. However, until the enactment of the Justice and Security Act 2013, the High Court had no general statutory power to receive closed material. The background to the Act of 2013 is explained in the Justice and Security Green Paper Cm 8194/2011. There had been a growing number of cases in which civil claims for damages had been brought against the Government or the security agencies or their personnel, which were untriable except at unacceptable cost to the national interest, because of the disclosure of secret material that would have been required. The Government had been obliged to buy off these claims in order to avoid that damage. This was seen as unsatisfactory, because it was costly and deprived the public of answers which litigation might have provided. A more general authorisation of closed material procedure was conceived to be a way of enabling substantial justice to be done on the basis of a full examination of any relevant secret material, even if it was not in all respects seen to be done. Part 2 of the Justice and Security Act 2013 authorised the use of closed material procedure in civil proceedings on certain conditions. The first step in the statutory procedure is an application to a court seized of relevant civil proceedings for a declaration that the proceedings are proceedings in which a closed material application may be made to the court: section 6(1), (2) of the Act. Section 6(3) (5) provide: (3) The court may make such a declaration if it considers that the following two conditions are met. (4) The first condition is that (a) a party to the proceedings would be required to disclose sensitive material in the course of the proceedings to another person (whether or not another party to the proceedings), or a party to the proceedings would be required to (b) make such a disclosure were it not for one or more of the following (i) the possibility of a claim for public interest immunity in relation to the material, (ii) the fact that there would be no requirement to disclose if the party chose not to rely on the material, (iii) section 17(1) of the Regulation of Investigatory Powers Act 2000 (exclusion for intercept material), (iv) any other enactment that would prevent the party from disclosing the material but would not do so if the proceedings were proceedings in relation to which there was a declaration under this section. (5) The second condition is that it is in the interests of the fair and effective administration of justice in the proceedings to make a declaration. Relevant civil proceedings are defined by section 6(11) as any proceedings (other than proceedings in a criminal cause or matter) before (a) (b) (c) (d) the High Court, the Court of Appeal, the Court of Session, or the Supreme Court. Sensitive material is defined in the same subsection as material the disclosure of which would be damaging to national security. The making of a section 6 declaration is the necessary precondition for an application under CPR Part 82, made under powers conferred by section 8 of the Act. Part 82.6 provides for the court to sit in private and in the absence of any party and his legal representatives, inter alia for the purpose of securing that information is not disclosed where disclosure would be damaging to the interests of national security. The Act and rules made under it contain a number of safeguards. First, section 7 requires the court to keep a section 6 declaration under review and to revoke it if it considers that the declaration is no longer in the interests of the fair and effective administration of justice in the proceedings. A formal review must in any event be conducted once pre trial disclosure has been completed: section 7. Secondly, the law officers may appoint a special advocate under section 9, and generally will. Thirdly, section 14(2)(c) provides that nothing in sections 6 to 13 is to be read as requiring a court or tribunal to act in a manner inconsistent with article 6 of the Human Rights Convention. Fourthly, the Secretary of State is required by section 13 to appoint a reviewer to review and report on the operation of these provisions. The parallel proceedings (Belhaj v Straw) brought in support of the Appellants claim to damages are unquestionably relevant civil proceedings. Popplewell J, to whom they have been assigned, has made a section 6 declaration in relation to them. In his judgment on the application for the declaration, he said, [2017] EWHC 1861 (QB), para 60(5) (6): Whilst this is a matter for more detailed consideration at the section 8 stage, it appears to me to be very unlikely that the material could be put into open or made available to the claimants or their legal representatives in a way which would better promote a fair and effective trial than a closed material procedure. As I have observed, much of the material can only properly be understood and weighed in the context of a substantial part of the material as a whole, such that gisting is unlikely to provide a realistic solution in most instances. Sittings in private and/or the use of confidentiality rings are unlikely to provide a satisfactory solution, both because of the risk of disclosure, even inadvertent, and because of the hobbling effect on the conduct of the claimants case if, as is almost inevitable, they were themselves to be excluded from the confidentiality ring These claims are brought not only against the Government, but against two named individuals who both wish to have a real and fair opportunity to defend themselves, but who cannot do so unless there is a closed material procedure. That judgment has not been appealed. In the judicial review proceedings, the Appellants application for permission to apply for review came before Jeremy Baker J on paper. He ordered that it should be adjourned to a rolled up hearing at which both permission and the substantive claim would be considered. The Secretary of State for Foreign and Commonwealth Affairs then applied for a section 6 declaration. His application concerned a narrower range of material than that covered by Popplewell Js declaration in the civil action. It related in practice to three documents: the full decision letters of Ms Hemming and Mr McGill and the advice of Treasury Counsel. It is clear from the letters in which the CPS decisions were communicated to the Appellants that the analysis of the evidence in those three documents was substantially based on secret material. However, the Secretary of States application was met with a challenge to the courts jurisdiction on the ground that the judicial review proceedings were proceedings in a criminal cause or matter. The Divisional Court (Irwin LJ and Popplewell J) dealt with that challenge as a preliminary issue [2017] EWHC 3056 (Admin). They held that the present proceedings were not proceedings in a criminal cause or matter. Their reasons can fairly be summarised in two propositions. First, proceedings by way of judicial review of a prosecutorial decision do not decide criminal liability. They are a means of holding the executive, in the form of the prosecuting authorities, to account. Such proceedings should properly be categorised as civil, even if their subject matter is a potential criminal prosecution. Secondly, the alternative to closed material procedure was likely to be a successful application by the Secretary of State for public interest immunity, with the result that the sensitive material would be entirely removed from the scrutiny of the court, instead of being available on the basis of limited disclosure. That was an outcome which would probably be unjust to one or other party. The Divisional Court certified the following point of public importance suitable for consideration by this court: Does a case where claimants seek judicial review of a decision by the Director of Public Prosecutions not to prosecute an individual constitute proceedings in a criminal cause or matter, within the meaning and for the purposes of section 6(1) and 6(11) of the Justice and Security Act 2013? As a consequence, is there jurisdiction in such a case to entertain an application for a declaration under section 6 of that Act, that a closed material application may be made to the court? Mr Jaffey QC, who appeared for the Appellants, took it as his starting point that closed material procedure represents a curtailment of fundamental common law rights. Therefore, it was said, in accordance with the principle of legality, any statutory provision relied upon as authorising it should be given the narrowest possible construction: R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, 131 (Lord Hoffmann). The principle is that general or ambiguous words cannot normally be taken to authorise a curtailment of fundamental rights because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. Parliament must squarely confront what it is doing and accept the political cost. Valuable as that principle is, I do not think that it helps to resolve the question at issue on this appeal. The Justice and Security Act 2013 made significant and acknowledged inroads into the common law principle as applied to relevant civil proceedings. It did this, subject to specific safeguards, on the ground that the interests of justice might well require the withholding of evidence from a party if the dispute cannot otherwise be tried fairly and consistently with the demands of national security. As the House of Lords held in Al Rawi, the existence and extent of the courts jurisdiction to adopt closed material procedure is a matter for Parliament. That involves a balance between the potentially conflicting interests of national security and justice, which Parliament has drawn in the Act of 2013 by authorising the procedure subject to the statutory safeguards. This leaves little scope for any presumption that Parliament does not intend to curtail fundamental common law rights. Parliament plainly did intend to curtail them in what it conceived to be a wider public interest. The only questions are on what conditions and in what proceedings. Those questions must be answered on ordinary principles of construction, without presumptions in either direction. In R (Sarkandi) v Secretary of State for Foreign and Commonwealth Affairs [2016] 3 All ER 837, para 58, Richards LJ, delivering the only reasoned judgment in the Court of Appeal, put the point in terms on which I cannot improve: The 2013 Act is one of those in which Parliament has stipulated that a closed material procedure may be permitted by the court. It represents Parliaments assessment of how, in relevant civil proceedings, the balance is to be struck between the competing interests of open justice and natural justice on the one hand and the protection of national security on the other, coupled with express provision in section 14(2)(c) to secure compliance with article 6. It is certainly an exceptional procedure, and in the nature of things one would expect it to be used only rarely, but the conditions for its use are defined in detail in the statute. In the circumstances there is, in my judgment, no reason to give the statutory provisions a narrow or restrictive construction, save for any reading down that may be required, in accordance with the terms of the statute itself, for compliance with article 6. Subject to that point, the provisions should be given their natural meaning and applied accordingly. In my opinion, the Appellants are entitled to succeed on this appeal because in its ordinary and natural meaning proceedings in a criminal cause or matter include proceedings by way of judicial review of a decision made in a criminal cause, and nothing in the context or purpose of the legislation suggests a different meaning. The first point to be made is perhaps the most obvious one, namely that although the High Court has only very limited original criminal jurisdiction, it has an extensive criminal jurisdiction by way of review. It is a feature of English criminal procedure that many decisions made in the course of criminal proceedings or in relation to prospective criminal proceedings are subject to judicial review in the High Court, mainly but not only in cases where there is no statutory avenue of appeal. The High Courts review jurisdiction extends in principle to the exercise of any officials functions in relation to the criminal process. These include police decisions to investigate or charge (R v Comr of Police of the Metropolis, Ex p Blackburn [1968] 2 QB 118) or to administer cautions (R (Aru) v Chief Constable of Merseyside Police [2004] 1 WLR 1697); decisions of prosecutors whether or not to prosecute (R (Corner House Research) v Director of the Serious Fraud Office (JUSTICE Intervening) [2009] 1 AC 756, para 30), or of the Director of Public Prosecutions whether to consent to a prosecution (R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326); and decisions of the Attorney General whether to take over a prosecution or enter a nolle prosequi (Mohit v Director of Public Prosecutions of Mauritius [2006] 1 WLR 3343). It also exercises an analogous jurisdiction by way of writ of habeas corpus over the detention of suspects. The High Courts supervisory jurisdiction over the criminal process is not limited to the decisions of officials. It extends to the decisions of magistrates courts and to those of the Crown Court other than in relation to trial on indictment. For this purpose the Crown Court, although a superior court of record, is treated as if it were an inferior tribunal: see sections 28(2) and 29(3) of the Senior Courts Act 1981. The categories of case giving rise to judicial review of the Crown Court include a variety of orders held not to have been made in relation to trial on indictment, such as orders in proceedings against a person found unfit to plead, orders binding over an acquitted defendant; or orders made in the exercise of the Crown Courts appellate jurisdiction. The main categories are reviewed by Lord Browne Wilkinson in R v Manchester Crown Court, Ex p Director of Public Prosecutions [1993] 1 WLR 1524, 1530. The High Courts powers of review have also been held to extend to any excess of jurisdiction by the Crown Court, even in relation to a trial on indictment: R v Maidstone Crown Court, Ex p Harrow London Borough Council [2000] QB 719. It follows that judicial review as such cannot be regarded as an inherently civil proceeding. It may or may not be, depending on the subject matter. What is clear is that it is an integral part of the criminal justice system, whose availability is in many cases essential to the fairness of the process and its compliance with article 6 of the Human Rights Convention. It is against this background that one must construe the phrase proceedings in a criminal cause or matter as it appears in section 6(11) of the Justice and Security Act 2013. The phrase itself is of some antiquity. It has been used since the Supreme Court of Judicature Act 1873 to define a category of appeals which were excluded from the jurisdiction of the Court of Appeal. Under section 47 of that Act, there was no relevant right of appeal to the Court of Appeal from a decision of the High Court in a criminal cause or matter. The corresponding provision today is section 18(1)(a) of the Senior Courts Act 1981. Section 151 of the 1981 Act, which substantially reproduces the relevant definitions in section 100 of the Act of 1873 and section 225 of the Supreme Court of Judicature (Consolidation) Act 1925, provides that cause means any action or any criminal proceedings, and matter means any proceedings in court not in a cause. Thus defined, these words have been held to refer to the proceedings which supply the subject matter of the relevant decision: Ex p Alice Woodhall (1888) 20 QBD 832. The phrase, in the words of Lord Esher MR, at p 836 of the report of that case applies to a decision by way of judicial determination of any question raised in or with regard to proceedings, the subject matter of which is criminal, at whatever stage of the proceedings the question arises. This decision was approved by the House of Lords in Provincial Cinematograph Theatres Ltd v Newcastle upon Tyne Profiteering Committee (1921) 90 LJ (KB) 1064, in particular at pp 1067 1068 (Lord Birkenhead LC). Accordingly, in the former case the phrase embraced a decision concerning acts preliminary to criminal proceedings, including habeas corpus applications in extradition proceedings; and in the latter decisions concerning the resolution of a local authority to prosecute for profiteering under wartime regulations. These authorities, and others to the same effect have been carefully analysed by the Divisional Court and the exercise need not be repeated here. Their effect is sufficiently stated in the speech of Lord Wright in Amand v Secretary of State for Home Affairs [1943] AC 147. The case concerned a Dutch serviceman who had been arrested for desertion and brought before a magistrate who ordered him to be handed over to the Dutch military authorities under the Allied Forces Act 1940. An application for habeas corpus was rejected by a Divisional Court. The Court of Appeal held that they had no jurisdiction to entertain an appeal from the Divisional Court. Lord Wright said, at pp 159 160: The words cause or matter are, in my opinion, apt to include any form of proceeding. The word matter does not refer to the subject matter of the proceeding [before the Divisional Court], but to the proceeding itself. It is introduced to exclude any limited definition of the word cause. In the present case, the immediate proceeding in which the order was made was not the cause or matter to which the section refers. The cause or matter in question was the application to the court to exercise its powers under the Allied Forces Act and the order, and to deliver the appellant to the Dutch military authorities. It is in reference to the nature of that proceeding that it must be determined whether there was an order made in a criminal cause or matter. In other words, the matter before the Divisional Court was the order made by the magistrate to hand the Appellant over to the Dutch military authorities. Lord Wright went on, at p 162, to say: The principle which I deduce from the authorities I have cited and the other relevant authorities which I have considered, is that if the cause or matter is one which, if carried to its conclusion, might result in the conviction of the person charged and in a sentence of some punishment, such as imprisonment or fine, it is a criminal cause or matter. The person charged is thus put in jeopardy. Every order made in such a cause or matter by an English court, is an order in a criminal cause or matter, even though the order, taken by itself, is neutral in character and might equally have been made in a cause or matter which is not criminal. In other words, Lord Wright was treating the proceedings in the Divisional Court as an integral part of the matter before the magistrate. Since the latter was criminal in nature, so too was the former. Clearly, the principle thus stated has its limits. A decision on an application collateral to the exercise of criminal jurisdiction, such as an application for the release of documents referred to in court, will not necessarily itself be a decision in a criminal cause or matter. On that ground, the Court of Appeal held in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court [2011] 1 WLR 3253 that an application for judicial review of a courts refusal to provide the press with copies of documents referred to at a hearing of a criminal cause or matter was not a criminal cause or matter. The Director and the Secretary of State accept, as they must, that these decisions are unimpeachable authority for the proposition that the application for judicial review is a proceeding in a criminal cause or matter for the purpose of any right of appeal. Indeed, that is the basis on which the present question comes before us on appeal from the Divisional Court, instead of going to the Court of Appeal. The question is whether the decisions on rights of appeal are germane to the definition of relevant civil proceedings in the Justice and Security Act 2013. the House of Lords held that In Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402, It has long been a well established principle to be applied in the consideration of Acts of Parliament that where a word of doubtful meaning has received a clear judicial interpretation, the subsequent statute which incorporates the same word or the same phrase in a similar context, must be construed so that the word or phrase is interpreted according to the meaning that has previously been assigned to it. per Viscount Buckmaster at p 411; cf Lord Russell of Killowen at pp 441 442, Lord Macmillan at p 446. The effect of this principle is to treat certain hallowed formulae as terms of art, to be applied like statutory definitions, on the footing that Parliament must have intended to adopt them. The reason for Lord Buckmasters reference to a similar context is connected with his reference to words of doubtful meaning. The assumption is that the words are not self explanatory and have derived the meaning given to them on the earlier occasion from their statutory context. Hence the probability that Parliament intended, when it later used the same doubtful expression in the same statutory context, that the meaning would be supplied from the existing judicial dictionary. In R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (No 2) [2013] QB 618, doubts were expressed in the Court of Appeal about the force and value of the principle. But it is well established, and was recently endorsed by this court in R (N) v Lewisham London Borough Council [2015] AC 1259, para 53 (Lord Clarke). It remains good law, provided that one bears in mind that it is no more than a presumption, even in cases where the statutory context is similar in both enactments. The Barras principle is therefore of little assistance in construing the phrase criminal cause or matter in the very different context of the Justice and Security Act 2013. I nevertheless reach the same conclusion about the meaning of proceedings in a criminal cause or matter in the Justice and Security Act as Lord Esher and Lord Wright (among others) did when construing the statutory restrictions on the right of appeal. I do so because I think that their reasoning reflected the natural meaning of the words. Their reasoning was not primarily based on any special feature of the Judicature Acts. In Ex p Alice Woodhall, Lord Esher referred to the undesirable results of large numbers of appeals to the Court of Appeal in cases involving the prerogative writs which had arisen out of acts of inferior tribunals which were criminal rather than civil in nature. But the real basis of the decisions on appeals was that the phrase criminal cause or matter, read as a whole, spoke for itself. A cause is a proceeding, civil or criminal, actual or prospective, before a court. A matter is something wider, namely a particular legal subject matter, although arising in a different proceeding. That is why a criminal cause or matter in the Judicature Acts extends to a judicial review in the High Court of a decision made in relation to actual or prospective criminal proceedings: see R (Aru) v Chief Constable of Merseyside Police, supra. And it is why, as Mr Eadie QC, who appeared for the Secretary of State, felt bound accept, that even for the purpose of section 6 of the Act of 2013 a judicial review of an extradition order would be a proceeding in a criminal cause or matter. On that footing it seems to me to be impossible to contend that this judicial review was anything else. The reality of the Appellants application is that it is an attempt to require the Director of Public Prosecutions to prosecute Sir Mark Allen. That is just as much a criminal matter as the original decision of the Director not to prosecute him. I find it difficult to conceive that Parliament could have intended to distinguish between different procedures having the same criminal subject matter and being part of the same criminal process. This would have been a strange thing to do. But if the draftsman had intended it, he could have achieved it easily enough, for example by omitting the reference to a matter. The Divisional Court in the present case appear to have accepted this as a matter of language. But they considered that the statutory context of the phrase in the Act of 2013 and the purpose of that Act pointed to a different conclusion. I do not doubt the importance of context in construing statutes, but I think that they adopted the wrong approach to this question. Having decided that closed material procedure served the interests of justice better than any alternative procedure likely to be available in a case involving sensitive material, they concluded that the purpose of the Act required the narrowest possible meaning to be given to the exception for criminal causes or matters. I think that the real question is not what is the purpose of authorising closed material procedure, the answer to which is clear enough. The real question is what is the purpose of distinguishing in this context between proceedings in criminal causes or matters and other proceedings. The explanation of the distinction given in the Green Paper appears in a section at p 7 headed Criminal vs Civil: Why criminal proceedings are out of the scope of this Paper. This is relevant not as guide to the meaning of the words of a Bill which had not yet been published, but as evidence of the mischief behind the distinction between civil and criminal causes or matters. The difference between them lay in the degree of control exercisable by the executive in criminal cases. The Green Paper pointed out that the right to a fair trial under article 6 of the Human Rights Convention imports more onerous requirements in criminal cases, and the rules concerning the use and protection of sensitive evidence are different to those in civil cases. These words are a reference, as the text goes on to explain, to the rule that although the prosecution may choose to rely only on material whose disclosure would be consistent with the national interest, it must disclose any potentially exculpatory unused material. The prosecution may seek to limit the disclosure of unused material by the issue of a public interest immunity certificate, followed by an application for permission not to disclose it. But if that application fails, the state can as a last resort avoid disclosure by withdrawing the prosecution and allowing the defendant to be discharged. By comparison, in civil claims, where the government is a defendant, there is no possibility of withdrawal, so that the ability to protect sensitive material is entirely dependent on PII claims. There is no reason to doubt that this was indeed the rationale for the distinction between civil and criminal proceedings in section 6 of the Act. But it is not a rationale which requires closed material procedure to be available in an ancillary judicial review of a decision made as an integral part of the criminal justice process, when it would not be available for an actual trial. The executive can dispose of proceedings of either kind by withdrawing the prosecution. It is true that this assumes that the prosecution is duly launched. It does not take account, at any rate in terms, of the peculiar combination of factors which happens to be present in this case: ie (i) a decision by an independent prosecuting authority declining to prosecute; (ii) on the ground that there is insufficient evidence to warrant a prosecution; (iii) for reasons which cannot be disclosed without compromising secret material; (iv) followed by a third party challenge to the adequacy of those reasons by way of judicial review. However, I do not think that the rival interpretations of the Act advanced on this appeal can sensibly be tested by reference to this scenario. There is an obvious artificiality about claims made on that basis which makes it difficult to treat them as any part of the mischief against which the Act was directed. It is one thing for a court to say that a decision not to prosecute is based on a misdirection of law. It is not disputed that the legal basis of the two decisions of the Crown Prosecution Service is apparent from the letters in which the decision was communicated to the Appellants. It is quite another for a court to review the evidential material available to the prosecution with a view to requiring it to put forward as its own evidence secret material which it considers it to be contrary to the national interest to deploy. In the absence of its deployment by the prosecution, secret material could be relevant only on the footing that it was unused material potentially exculpatory of the defendant, something which was clearly the main concern of the promoters of the Bill but would be entirely inconsistent with the Appellants case on the proposed judicial review. On the assumption, which may or may not be justified, that this logical difficulty can be surmounted, the states obvious response, as Mr Eadie acknowledged, is a contents claim to public interest immunity. A claim to public interest immunity may well fail if the court considers that the balance of the public interest required its disclosure in the interest of the defence. But Parliament seems unlikely to have had in mind the rather fanciful risk that the Court would reject a PII claim on the ground that disclosure was necessary in the interests of the prosecution, least of all in a case where the prosecutor considered a prosecution to be unjustified anyway. I therefore see no reason to regard the statutory context or purpose as calling for any narrower view of criminal cause or matter than the words themselves suggest. I would accordingly allow the appeal, and declare that the present proceedings are proceedings in a criminal cause or matter for the purpose of section 6 of the Justice and Security Act 2013. LORD MANCE: This is a finely balanced case, as is evident from the judgments written in favour of allowing the appeal by Lord Sumption with whom Lady Hale agrees, and in favour of dismissing it by Lord Lloyd Jones with whom Lord Wilson agrees. I have come down in favour of allowing the appeal. I do so essentially for the same reasons as Lord Sumption. A challenge by judicial review to a decision to prosecute would seem to me to fall naturally within the concept of proceedings in a criminal cause or matter; and so too a challenge to a decision not to prosecute, the whole point of which would be to lead to a prosecution. Mr James Eadie QC for the Crown accepted, rightly, that an extradition hearing, to decide whether or not to surrender a person wanted for trial abroad, would be a proceeding in a criminal cause or matter. Like Lord Sumption, I find it difficult to see how a distinction could sensibly exist between such a case and the present. In considering the correct construction of the concept of proceedings in a criminal cause or matter, it is appropriate to look at the rationale for the distinction between proceedings which are civil in nature and which are in a criminal cause or matter. The primary purpose of introducing a closed material procedure in civil proceedings was to avoid situations in which there was relevant material which could not on public interest grounds be disclosed, with the result that one party (commonly the Crown) would be effectively unable to advance its case or the court might simply conclude that the whole case had become un triable (Carnduff v Rock [2001] EWCA Civ 680; [2001] 1 WLR 1786). The position in relation to criminal proceedings is different, for reasons explained in the Green Paper. While the Green Paper referred simply to criminal proceedings as outside the scope of any proposed legislation, the exclusion as introduced was expanded to extend to proceedings in a criminal cause or matter. The expansion must have been deliberate. But there is no reason to think that the rationale changed when the language of the exclusion was expanded. The rationale as explained in the Green Paper was, in substance, that criminal proceedings were outside the scope of the proposal because evidence relied on for conviction was never kept secret from an accused in criminal proceedings: The evidence that the prosecutor uses in court to secure a conviction is never withheld from the accused. Further: The prosecutor is required to disclose to the accused all relevant material obtained in an investigation (whether or not it is admissible as evidence) that might reasonably be considered capable of undermining the prosecution case or of assisting the case for the accused . Later, the Green Paper explained that criminal proceedings involve an accusation by the state, generally in respect of wrongs which affect the public as a whole, so that the public has an interest in their detection and punishment. In criminal proceedings, the position in relation to sensitive public interest material is addressed by the Public Interest Immunity (PII) procedure, whereby a judge is shown the material in the absence of the accused. The procedure ensures that the Crown must either disclose potentially exonerating material or withdraw the proceedings: see the discussion in Al Rawi v Security Service (JUSTICE intervening) [2011] UKSC 34; [2012] 1 AC 531 and Tariq v Home Office (JUSTICE intervening) [2011] UKSC 35; [2012] 1 AC 452. Judicial review proceedings challenging decisions whether or not to prosecute are not common. In the case of decisions to prosecute, a more appropriate forum for any challenge is usually the criminal process itself, in which the court has power to halt proceedings if they constitute an abuse. Nevertheless, challenges by potential defendants by way of judicial review to decisions to prosecute are probably more familiar than challenges by victims, interest groups or others by way of judicial review to decisions not to prosecute. In the present case, the challenge is to the Crowns decision not to prosecute, and the Crown seeks, while the applicants oppose, a closed material procedure in relation to a challenge to a decision not to prosecute. It is relevant to consider the applicability in this context of the rationale for introducing a closed material procedure in civil proceedings, while excluding proceedings in a criminal cause or matter. The rationale for the exclusion from the closed material procedure of proceedings in a criminal cause or matter is readily applicable or transposable to the context of a challenge by judicial review to a decision to prosecute. If there is material which could potentially exonerate a defendant, it should either be disclosed in the judicial review proceedings or, if the Crown is unwilling to disclose for public security reasons, the Crown should withdraw the charge. If there is material which could potentially incriminate the defendant but cannot, for public security reasons, be disclosed at trial, there would be no point in a closed material hearing to enable it to be deployed during the judicial review proceedings, when it could not subsequently be used at trial. There is no basis on which to detect or impute any Parliamentary intention to provide for a closed material procedure in this context. What then about the present context, the less familiar situation of a challenge by alleged victims by judicial review to a decision not to prosecute? The rationale stated in the Green Paper for the exclusion of any closed material procedure in proceedings in a criminal cause or matter was to protect the rights of the accused, not to facilitate the pursuit of criminal proceedings against them. If it had been the applicant who was seeking a closed material procedure with a view to identifying further incriminating material, there would seem no real point in such a procedure during judicial review proceedings, if this material could not for PII reasons be disclosed and used at trial. Nor can Parliament sensibly be taken to have had in mind the remote possibility that a closed material procedure might identify incriminating material, which was not the subject of PII immunity and on which the Crown had either not thought to rely, or the significance of which the Crown had failed sufficiently to appreciate. Here, however, it is the Crown which seeks a closed material procedure in relation to a third party challenge by alleged victims to a decision not to pursue charges. It does so on the basis that such a procedure it would enable the court to evaluate the decision in the light of all the available evidential material. The suggestion is presumably that there is or may be sensitive material, which cannot for public interest reasons be disclosed but which points away from the pursuit of any criminal charge. In criminal proceedings, the Crown can address this problem by simply refraining from pursuit of any charge, which will render irrelevant any complaint by any potential defendant about non disclosure of the material. It is less obvious how the Crown, having decided not to prosecute, can address a third party complaint that the material available does not appear on its face to justify its decision not to pursue a charge against a potential accused. One possibility, not explored in submissions, is that, since there is sensitive material on the basis of which the Crown had taken its decision not to prosecute but which cannot, on public interest grounds, be disclosed, the Crown would be entitled to the benefit of the presumption or regularity of its decision: see R (Haralambous) v Crown Court at St Albans (Secretary of State for the Home Department intervening) [2018] UKSC 1; [2018] 2 WLR 357, paras 47 to 52, citing inter alia R v Inland Revenue Comrs, Ex p Rossminster Ltd [1980] AC 952 and R v Inland Revenue Comrs, Ex p T C Coombs & Co [1991] 2 AC 283. Be that as it may, I do not consider that the relatively unusual situation which exists in the present case can serve as a reliable guide to Parliaments presumed intention when introducing the exception of proceedings in a criminal cause or matter. In my opinion, the present proceedings seeking judicial review are in a criminal cause or matter according to the natural sense of that phrase; and no real support is obtained for a narrower interpretation from a consideration of the rationale behind the introduction of a closed material procedure in civil proceedings and behind its exclusion in proceedings in a criminal cause or matter. I would have dismissed this appeal for the following reasons. LORD LLOYD JONES: (dissenting) (with whom Lord Wilson agrees) Interpretation The principle of legality On behalf of the Appellants, Mr Jaffey QC submits that closed material procedures are a serious curtailment of the fundamental rights to open and natural justice. He places at the forefront of his submissions the following observations by Lord Dyson in Al Rawi v Security Service (JUSTICE intervening) [2012] 1 AC 531, paras 47 48: In my view, it is not for the courts to extend such a controversial procedure beyond the boundaries which Parliament has chosen to draw for its use thus far. It is controversial precisely because it involves an invasion of the fundamental common law principles to which I have referred. The common law principles to which I have referred are extremely important and should not be eroded unless there is a compelling case for doing so. If this is to be done at all, it is better done by Parliament after full consultation and proper consideration of the sensitive issues involved. It is not surprising that Parliament has seen fit to make provision for a closed material procedure in certain carefully defined situations and has required the making of detailed procedural rules to give effect to the legislation. Relying on Lord Hoffmanns speech in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, Mr Jaffey submits that Parliament cannot be taken to have intended to abrogate fundamental rights with ambiguous, rather than express language. He submits that the principle of legality applies to the present case with the result that the courts should presume that, in the absence of clear express language or necessary implication, the use of general words is nevertheless intended to be subject to the basic rights of the individual. As a result, he submits, the words proceedings in a criminal cause or matter in section 6, Justice and Security Act 2013 should, if necessary, be given an expansive meaning so as to reduce the scope of availability of the closed material procedure. I readily accept that to hold a closed material hearing is a restriction of the common law principles of open justice and natural justice. As this court made clear in Bank Mellat v Her Majestys Treasury (No 2) [2014] AC 700 (per Lord Neuberger PSC, at paras 2 4, with whom Baroness Hale, Lord Clarke, Lord Sumption and Lord Carnwath JJSC agreed), a closed hearing offends the principle of open justice, which is fundamental to the dispensation of justice in a modern, democratic society, and, by denying a party a right to know the full case against him and the right to test and challenge that case fully, is even more offensive to the fundamental principle of natural justice. While these principles may, exceptionally, be required to yield if justice cannot otherwise be achieved, claims that adherence to these principles is not attainable in particular circumstances will always require the most intense scrutiny. I am, however, unable to accept that the principle of legality has any application to the specific issue raised on this appeal. In Al Rawi this court made clear that it was for Parliament and not the courts to determine whether, and if so to what extent and with what safeguards, closed material procedures should be permitted in order to accommodate the competing public interests. Part 2 of the Justice and Security Act 2013 is one of the instances in which Parliament has sought to perform this difficult exercise. It necessarily involves an attempt to balance competing interests which are, ultimately, irreconcilable. It comprises a detailed series of provisions which incorporate a number of important safeguards. A court seised of relevant civil proceedings may make a declaration that the proceedings are proceedings in which a closed material application may be made to the court (section 6(1)). The court may make such a declaration only if it is satisfied that a party to the proceedings would be required to disclose sensitive material or would be so required but for specific matters (the first condition) (section 6(4)) and that it is in the interests of the fair and effective administration of justice in the proceedings to make a declaration (the second condition) (section 6(5)). Sensitive material is defined in section 6(11) as material the disclosure of which would be damaging to the interests of national security. The court must not consider an application for a declaration by the Secretary of State unless satisfied that the Secretary of State has, before making the application, considered whether to make or to advise another person to make a claim for public interest immunity in relation to the relevant material (section 6(7)). The effect of section 6(1) and 6(11) is to exclude proceedings in a criminal cause or matter from the closed material procedure. Where a court has made a declaration under section 6 it must keep the declaration under review and may at any time revoke it if it considers that the declaration is no longer in the interests of the fair and effective administration of justice in the proceedings (section 7(2)). The court must undertake a formal review of the declaration once the pre trial disclosure exercise in the proceedings has been completed and must revoke it if it considers that the declaration is no longer in the interests of the fair and effective administration of justice in the proceedings (section 7(3)). Section 14(2)(c) provides that nothing in the statutory provisions establishing the closed material procedure is to be read as requiring a court or tribunal to act in a manner inconsistent with article 6 ECHR. In my view, this approach by the legislature leaves no scope for the application of the principle of legality. A restrictive interpretation to general words lest, as Lord Hoffmann put it in Simms (at p 131), the full implications of their unqualified meaning may have passed unnoticed in the democratic process, would be inappropriate here. On the contrary, the elaborate scheme of Part 2 of the Justice and Security Act 2013 demonstrates that Parliament was fully aware of the implications for civil liberties of the exercise it was attempting to perform. This is Parliaments assessment of the appropriate balance. There is, therefore, no call for a narrow or restrictive interpretation of these provisions, subject to the express provision in section 14(2)(c) requiring them to be read in a manner consistent with article 6 ECHR. Appropriate safeguards are already built into the structure of the legislation. (R (Sarkandi) v Secretary of State for Foreign and Commonwealth Affairs [2015] EWCA Civ 687; [2016] 3 All ER 837 per Richards LJ, at para 58.) As Popplewell J observed in the parallel civil proceedings brought by Mr Belhaj and Mrs Bouchar, Belhaj v Straw [2017] EWHC 1861 (QB) at para 26: A closed material procedure is in Parliaments view one which serves the fair and effective administration of justice, and for that reason consideration of the second condition cannot turn on the aspects of the process which are necessarily part of the incursion into the principles of public and natural justice which are inherent in the closed material procedure itself; consideration must focus on the particular nature of the proceedings and sensitive material in question. (See also McGartland v Attorney General [2015] EWCA Civ 686, per Richards LJ at para 35; F v Security Service [2013] EWHC 3402 (QB); [2014] 1 WLR 1699 per Irwin J at paras 36 and 41; Abdulbaqi Mohammed Khaled v Secretary of State for Foreign and Commonwealth Affairs [2017] EWHC 1422 (Admin) per Jay J at para 25.) The exclusion by section 6(1) and 6(11) of proceedings in a criminal cause or matter from the closed material procedure is intended by Parliament to operate as a safeguard. It will be necessary at a later point to consider how wide a reading of those words is required or effective to achieve that purpose. I am, however, unable to accept that the principle of legality can require a broad reading of this exception so as to restrict the scope of the procedure which is, in itself, Parliaments proposed solution to the problem. Interpretation the Barras principle The Appellants also rely on the principle of interpretation known as the Barras principle which, they submit, has the effect that where Parliament uses a word or phrase in legislation and it has received a clear judicial interpretation, it will be assumed that when the legislator subsequently chooses to use the same word or phrase in a similar context it is intended to have the same meaning. The principle takes its name from Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402 where Viscount Buckmaster stated at p 411: It has long been a well established principle to be applied in the consideration of Acts of Parliament that where a word of doubtful meaning has received a clear judicial interpretation, the subsequent statute which incorporates the same word or the same phrase in a similar context, must be construed so that the word or phrase is interpreted according to the meaning that has previously been assigned to it. This approach was endorsed, obiter, by a majority of the Supreme Court in R (N) v Lewisham London Borough Council [2014] UKSC 62; [2015] AC 1259. Lord Hodge (with whom Lord Wilson, Lord Clarke of Stone cum Ebony and Lord Toulson JJSC agreed) stated (at para 53): It suffices for me to say that where Parliament re enacts a statutory provision which has been the subject of authoritative judicial interpretation, the court will readily infer that Parliament intended the re enacted provision to bear the meaning that case law had already established: Barras v Aberdeen Steam Trawling and Fishing Co Ltd [1933] AC 402, 411 412, Viscount Buckmaster. Applying that in the present case, one can readily conclude, as I have, that the word dwelling in the phrase let as a dwelling in the [Protection from Eviction Act 1977] must bear the same meaning as it had in section 31 of the Rent Act 1965 and in the phrase let as a separate dwelling in the Rent Acts. (Cf Lord Carnwath at paras 83 88; Baroness Hale at para 167.) Lord Neuberger (at paras 142 147) accepted that, if Parliament has re enacted a statutory provision in identical words after it had been interpreted as having a certain meaning by the courts of record, there is some attraction in the notion that the Parliamentary intention was that the provision should have that meaning. However, he stated that he was far from convinced that the principle can be regarded as correct, at least in the absence of some additional factor in favour of maintaining the interpretation previously adopted. Here he referred to observations in Farrell v Alexander [1977] AC 59 and A v Hoare [2008] 1 AC 844. I share the reservations expressed by Lord Neuberger but, as will become apparent, it is unnecessary to come to a concluded view on this point in the present case. Mr Jaffey, on behalf of the appellants, draws attention to a line of judicial authority on routes of appeal in which the courts have interpreted the words criminal cause or matter in a succession of statutes starting with the Supreme Court of Judicature Act 1873. By section 4 of the 1873 Act, the Supreme Court was constituted in two divisions, the High Court of Justice and the Court of Appeal. Section 47 which addressed the business of the High Court provided in relevant part that no appeal shall lie from any judgment of the said High Court in any criminal cause or matter. Section 100 included the following definitions: Cause shall include an action, suit, or other original proceeding between a plaintiff and a defendant, and any criminal proceeding by the Crown. Action shall mean a civil proceeding commenced by writ, or in such other manner as may be prescribed by Rules of Court; and shall not include a criminal proceeding by the Crown. Matter shall include every proceeding in the Court not in a cause. This line of authority has been addressed in considerable detail in the judgment of the Divisional Court. It is not necessary to do so here as it is clear that, under the relevant legislation relating to routes of appeal including the current provision in section 18(1)(a), Senior Courts Act 1981, proceedings such as the instant proceedings would be classified as proceedings in a criminal cause or matter. Indeed, that is the basis on which the Supreme Court has heard this appeal from the Queens Bench Division, Divisional Court. For present purposes it is sufficient simply to refer to the following examples of the application of the words in that context. 1) In Ex p Pulbrook [1892] 1 QB 86 a judge in chambers gave permission pursuant to the Law of Libel Amendment Act 1888 to bring proceedings for criminal libel. The proposed defendant sought to appeal. This raised the question whether the order was made in criminal proceedings within the Rules of the Supreme Court. The Divisional Court, referring by analogy to section 47 of the 1873 Act, considered that the permission was granted in a criminal cause or matter within the meaning of that provision. 2) In Provincial Cinematograph Theatres Ltd v Newcastle Upon Tyne Profiteering Committee (1921) 90 LJ (KB) 1064 the Committee took a decision to institute criminal proceedings against the appellants for breach of regulations. The appellants attempted unsuccessfully to challenge that decision by certiorari. On appeal to the Court of Appeal that court held that the judgment under appeal had been delivered in a criminal cause or matter and that no appeal lay to the Court of Appeal by virtue of section 47 of the 1873 Act. The House of Lords upheld the Court of Appeal. Approving Pulbrook, Lord Birkenhead LC observed (at p 1067) that, although such an order is not necessarily followed by any proceedings, it had rightly been held that no appeal lay against the order to the Court of Appeal because it had been made in a criminal matter. 3) In Amand v Home Secretary [1943] AC 147 the House of Lords held that an application for habeas corpus, following the detention in England of a national of the Netherlands for being absent without leave from the Netherlands military, was an application in a criminal cause or matter within section 31(1)(a), Supreme Court of Judicature (Consolidation) Act 1925 and that, accordingly, the Court of Appeal had no jurisdiction to hear the appeal. 4) In R (Aru) v Chief Constable of Merseyside Police [2004] 1 WLR 1697 the Court of Appeal held that an official caution was a criminal matter within section 18(1)(a), Supreme Court Act 1981 and that the Court of Appeal had no jurisdiction to hear an appeal in judicial review proceedings challenging the caution. 5) Challenges by way of judicial review to decisions to prosecute or not to prosecute are heard by a Divisional Court and then, as a criminal cause or matter, any appeal lies directly to the House of Lords. (R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326; R (Corner House Research) v Director of Serious Fraud Office [2009] 1 AC 756. See also R (Pretty) v Director of Public Prosecutions [2002] 1 AC 800.) Although in none of these cases was any point taken on jurisdiction, this well established usage is clearly correct. Nevertheless, in my view the fact that the present proceedings are proceedings in a criminal cause or matter within section 18(1)(a), Senior Courts Act 1981 and previous legislation concerning routes of appeal does not assist the Appellants on this appeal for two reasons. First, the principle enunciated by the House of Lords in Barras applies only where, following a clear judicial interpretation of a word or phrase in an earlier statute, a later statute incorporates the same word or phrase in a similar context. This was expressly stated by Viscount Buckmaster in his formulation of the principle (at p 411) cited above. (See also Viscount Buckmaster at p 410; Lord Macmillan at p 446.) This presumption of interpretation applies where the same language is used in a subsequent statute dealing with the same subject matter. I also note that in Barras the circumstances which supported the presumption were particularly strong. The Merchant Shipping (International Labour Conventions) Act 1925 provided that a seaman should be entitled to receive wages in certain circumstances where his service was terminated by reason of the wreck or loss of a ship on which he was employed. The stated purpose of the Act was to give effect to a draft international convention, scheduled to the statute, which provided that the indemnity against unemployment arose only where unemployment resulted from the loss or foundering of the vessel. At the time of the passing of the 1925 Act seamen enjoyed wider and more extended rights under the Merchant Shipping Act 1894 in case of the wreck or loss of the ship, as judicially interpreted, than under the draft convention. As Viscount Buckmaster observed, at p 412, the conclusion was plain that the Act, while intending to embody the draft convention, did not intend to restrict or limit the rights which seamen already enjoyed under the 1894 statute. The context of the authorities on routes of appeal and the present context are so very different that I find it impossible to derive any assistance from those authorities. Moreover, it is apparent that there were strong reasons for giving the phrase in question a particularly broad meaning in the former context. As Irwin LJ observed in the Divisional Court in the present case (at para 75), historically the caution shown in interpreting these words must initially have been governed by the desire to avoid blurring the lines of appeal and encroaching upon longstanding, discrete criminal jurisdiction, recently subject to statutory reorganisation and reform. Furthermore, there was an understandable reluctance on the part of a civil court to entertain anything akin to an appeal in a criminal matter. Thus in Ex p Alice Woodhall (1888) 20 QBD 832 we find the following statement in the judgment of Lord Esher MR (at p 835): The result of all the decided cases is to shew that the words criminal cause or matter in section 47 should receive the widest possible interpretation. The intention was that no appeal should lie in any criminal matter in the widest sense of the term, this court being constituted for the hearing of appeals in civil causes or matters. (See also Ex p Schofield [1891] 2 QB 428 per Lord Esher MR at pp 430 431; Ex p Pulbrook per Mathew J at p 89.) Secondly, it is clear that the phrase criminal cause or matter need not have one meaning but may be interpreted differently depending on its statutory context. In R (Guardian News and Media Ltd) v City of Westminster Magistrates Court [2011] EWCA Civ 1188; [2011] 1 WLR 3253 a district judge had refused an application by the applicant newspaper that it be provided with copies of documents referred to but not read out in an open hearing in extradition proceedings. The applicant sought judicial review of the decision and appealed by way of case stated. The Divisional Court dismissed the claim and the appeal. The Court of Appeal, (Lord Neuberger MR, Jackson and Aikens LJJ) granting permission to appeal to the Court of Appeal, considered that the application had been wholly collateral to the extradition proceedings and that the district judges order had not involved an exercise of his criminal jurisdiction nor had it any bearing on the extradition proceedings. Accordingly, it held that the Divisional Courts judgment had not been made in a criminal cause or matter within section 18(1)(a) of the Senior Courts Act 1981. In R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (No 2) [2012] EWCA Civ 420; [2013] QB 618, the question arose whether the previous decision had any impact on the powers of the Criminal Procedure Rule Committee which under section 68 and 69 of the Courts Act 2003 are limited to making rules in relation to the Crown Court and the Magistrates Court when they are dealing with any criminal cause or matter. Hooper LJ concluded (at para 106): Mr Perry, rightly in my view, said that the words any criminal cause or matter must have a different meaning in section 68 of the Courts Act 2003 than they do in section 18(1) of the Senior Courts Act 1981. To give the words any criminal cause or matter in section 68 a narrow meaning would lead to the undesirable result that issues such as those dealt with in Part 5 of the Criminal Procedure Rules (and in other parts of the Rules) would have to be the subject of rule making by some other body. That cannot have been the intention of Parliament: Lord Neuberger MR agreed (at para 110): I agree with what is said in para 106 that criminal cause or matter in section 68(b) of the Courts Act 2003 does not necessarily have the same meaning as the identical expression in section 18(1) of the Senior Courts Act 1981, and that, if the expression in the 1981 Act has the meaning ascribed to it in the earlier decision in this case , then it has a different meaning in the 2003 Act. (See also Al Fawwaz v Secretary of State for the Home Department [2015] EWHC 468 (Admin) per Wyn Williams J at para 6.) If the basis of the Barras principle is that Parliament must be assumed to be aware of authoritative judicial decisions defining a particular word or phrase, it must, as a result of Guardian News (No 2), have been aware prior to the enactment of the Justice and Security Act 2013 that criminal cause or matter need not have one meaning but may be interpreted differently depending on its statutory context. To my mind, this is fatal to the Appellants reliance on the Barras principle. Interpretation in the context of Justice and Security Act 2013 Considering the words proceedings in a criminal cause or matter in their natural meaning and usage, it seems to me that cause is appropriate to cover criminal proceedings which will result in a conviction or acquittal of a criminal offence. The use of matter in the alternative may extend the scope of the exclusion beyond that to ancillary applications in such criminal proceedings, such as applications for disclosure, and to extradition proceedings which do not in themselves result in a conviction or acquittal but may be considered analogous to committal proceedings. In my view, however, these words in their natural meaning do not extend to include this judicial review. This is a public law challenge to a decision as to whether to initiate criminal proceedings. It involves the scrutiny of the legality of the decision on public law grounds and the application of principles of judicial review. The application is made and heard in the Administrative Court. It is extraneous to the criminal process. Even if it were to succeed, further steps would have to be taken before criminal proceedings might begin. It is at, at least, one remove from proceedings in a criminal cause or matter. It is, therefore, necessary to consider the words in the context of this particular statute and to consider the purpose of the exclusion of proceedings in a criminal cause or matter from this closed material procedure. Here, it is permissible to refer to the Justice and Security Green Paper Cm 8194/2011, which preceded the Justice and Security Act 2013 and to the Explanatory Notes to the Bill and the Act in order to cast light on the contextual setting and in order to give a purposive interpretation of the legislation (Fothergill v Monarch Airlines [1981] AC 251 per Lord Diplock at p 281; R (Westminster City Council) v National Asylum Support Service [2002] UKHL 38; [2002] 1 WLR 2956 per Lord Steyn at para 5). The Green Paper states that its proposals are aimed to better equip our courts to pass judgment in cases involving sensitive information and to protect UK national security by preventing damaging disclosure of genuinely national security sensitive material (Foreword). An indication of the purpose of the specific exclusion of proceedings in a criminal cause or matter from the new procedure is provided by the following passage (at p 7): Criminal vs Civil: Why criminal proceedings are out of scope for this Paper Civil and Criminal proceedings in England and Wales are fundamentally different. In civil cases, the courts adjudicate on disputes between parties under the civil law. In criminal cases, it is usually the state which prosecutes individuals for the commission of criminal offences; where defendants are convicted, they face criminal sanctions including imprisonment. Due to the understandably more onerous requirements of the right to a fair trial in criminal cases, the rules concerning the use and protection of sensitive evidence are different to those in civil cases. Criminal proceedings have the strictest requirements under article 6 of the ECHR regarding the disclosure of sensitive material. Long standing procedures, generally supported by all parties, are in place: The evidence that the prosecutor uses in court to secure a conviction is never withheld from the accused. The passage then refers to disclosure to an accused of all relevant material, the use of public interest immunity procedures, the power of the court to overrule a public interest immunity certificate and the discretion which would permit a prosecutor to withdraw a prosecution rather than disclose sensitive material. It then states: In civil claims, as [Her Majestys Government] is a defendant, there is no possibility of withdrawing from the case, so the ability to protect sensitive material is entirely dependent on PII claims. In addition, a glossary (at p 68) which distinguishes civil and criminal proceedings, reinforces the view that the purpose of the exclusion is to prevent its use in criminal proceedings: Civil proceedings For the purposes of this Green Paper any court or tribunal proceedings which are not criminal in nature are referred to as civil proceedings. Civil proceedings include, but are not limited to, areas such as public law (ie judicial review), negligence, family law, employment law, property law and commercial law. By contrast, criminal proceedings involve an accusation by the state (or in England, Wales and Northern Ireland, occasionally by way of private prosecution) that the accused has committed a breach of the criminal law which, if proved, would lead to conviction and the imposition of a sentence. Crimes are generally wrongs which affect the public as a whole, so that the public has an interest in their detection and punishment. It then concludes with the statement that: The proposals outlined in the Paper do not affect criminal proceedings (at p 68). The Explanatory Notes to the Justice and Security Bill, clause 6(7) provided: 51. Subsection (7) defines relevant civil proceedings. This sets the range of civil proceedings in which a declaration under subsection (1) may be made. Relevant civil proceedings are defined as proceedings in the High Court, the Court of Appeal or the Court of Session which are not criminal proceedings. The Explanatory Notes to the Justice and Security Act 2013 simply states: 67. Section 6 enables certain courts hearing civil (but not criminal) proceedings, namely the High Court, the Court of Appeal, the Court of Session or the Supreme Court, to make a declaration that the case is one in which a closed material application may be made in relation to specific pieces of material. I see the force of the point that if the full extent of the intention of Parliament had been that the new procedure should not affect criminal proceedings, it would have been open to it simply to exclude the use of this closed material procedure in criminal proceedings. Nevertheless, the Green Paper provides two compelling reasons why the new procedure should not be available in proceedings which may result in a conviction or an acquittal. First, the objections to a person being convicted of a criminal offence on the basis of secret evidence which has not been disclosed to him or his legal representatives are obvious. Secondly, the obligations of the United Kingdom under article 6 ECHR are more onerous in their application to criminal proceedings which may result in a conviction or acquittal. However, neither of these reasons has any application here and neither would justify denying the use of the new procedure in the present application for judicial review of the Directors decision. The Green Paper also draws attention to the fact that the Director has control over a criminal prosecution with the result that it is open to her to choose to discontinue a prosecution rather than disclose sensitive national security material. By contrast, the Director is the defendant in this judicial review and therefore has a responsive role; she has no power to withdraw these proceedings in order to prevent the disclosure of such material. Moreover, no reason of principle has been advanced as to why the closed material procedure should not be available when the Administrative Court hears the present application for judicial review. On the contrary, it is apparent that the conflict between the principles of open justice and natural justice, on the one hand, and the need to protect national security on the other, arises in a particularly acute form in judicial review proceedings to which the application of the detailed compromise drawn by Parliament in Part 2 of the Justice and Security Act 2013 is particularly appropriate. I should add that I do not share Lord Mances view that the rationale for the exclusion from the closed material procedure of proceedings in a criminal cause or matter is readily applicable or transposable to the context of a challenge by judicial review to a decision to prosecute, a hypothesis which he uses as a stepping stone to his conclusion. If there is material which is potentially incriminating, a closed material procedure would be pointless, as he accepts, as it could not be used at trial. If, on the other hand, there is material which is potentially exculpatory, a closed material procedure would be equally pointless because it would have to be disclosed at trial or the prosecution abandoned. This does not suggest any need to exclude the closed material procedure in a judicial review of a decision to prosecute in order to achieve the objective of the exclusion. On the other hand, as the present case shows, there may well be purpose in making the closed material procedure available in a challenge to a decision not to prosecute and the rationale for exclusion has no application here. I accept the submission of Mr James Eadie QC that the core concern which lies behind this provision is that this closed material procedure should not be available in any case where criminal guilt is being decided. The present proceedings, however, are at, at least, one remove from a criminal cause or matter and the court is performing the function of determining the legality of the conduct of the decision maker. (See the observations of Wyn Williams J in Al Fawwaz, at para 7, to similar effect.) These proceedings do not fall within the purpose of the exclusion. Here, proceedings challenging a decision not to prosecute are not themselves proceedings in a criminal cause or matter for the purpose of section 6 Justice and Security Act 2013. Accordingly, I would have dismissed this appeal.
UK-Abs
The appellants allege that they were abducted and mistreated by agents of foreign governments and then rendered to the Libyan authorities, by whom they were imprisoned and tortured. They allege that this occurred with the involvement of Sir Mark Allen, who is said to have been a senior officer of the British Secret Intelligence Service. After an investigation by the Metropolitan Police, the Director of Public Prosecutions (DPP) declined to bring any prosecutions. The DPP based her decision on a senior prosecutors decision and on legal advice that there was insufficient evidence to prosecute for any offence subject to the criminal jurisdiction of the United Kingdom. After an internal review by the Crown Prosecution Service (CPS) at the appellants request, another senior prosecutor reached the same decision. The CPS declined to disclose the potential evidence to the appellants, citing its security marking. In separate proceedings, the appellants have sued the British government for damages. On 20 October 2016, the appellants issued the present proceedings in the High Court, seeking judicial review of the failure to prosecute Sir Mark Allen, who is alleged to have been the primary suspect in the investigation. They argue, amongst other things, that the DPPs decision was inconsistent with the evidence. The DPP argues that her decision was based on a review of documents which cannot be released to the appellants. The Foreign Secretary applied to the court under section 6 of the Justice and Security Act 2013 for a declaration that the judicial review proceedings were proceedings in which a closed material application may be made to the court. A section 6 declaration is a prerequisite for an application to the Court for the use of closed material procedure under Part 82 of the Civil Procedure Rules, whereby the court may sit in private and without a party and his or her legal representative in order to prevent disclosures damaging to the interests of national security. A section 6 application may be made only to a court seized of relevant civil proceedings, which are defined as not including proceedings in a criminal cause or matter. The appellants resisted the section 6 application on the basis that these judicial review proceedings were in a criminal cause or matter. The Divisional Court rejected that argument but certified the issue as one of public importance, suitable for consideration by the Supreme Court. The proceedings were settled after argument before the Supreme Court, but the Court gives judgment in view of the importance of the legal issue. The Supreme Court allows the appeal by a majority of three to two. Lord Sumption gives the lead judgment, with which Lady Hale agrees. Lord Mance gives a concurring judgment. Lord Lloyd Jones gives a dissenting judgment, with which Lord Wilson agrees. The adoption of closed material procedure requires specific statutory authority. The Justice and Security Act 2013 gave the High Court a general statutory power, in certain circumstances, to receive closed material which is disclosed only to the court and to a special advocate. As explained in the 2011 Justice and Security Green Paper, the Act was a response to a growing number of civil claims for damages against which the government was unable to defend at trial except through the unacceptably damaging disclosure of secret material. Those claims instead had to be settled [6 7]. The ordinary and natural meaning of proceedings in a criminal cause or matter includes proceedings by way of judicial review of a decision made in a criminal cause, and nothing in the context or purpose of the legislation suggests a different meaning. In English criminal procedure many decisions made in ongoing or prospective criminal proceedings are subject to judicial review in the High Court. Judicial review therefore cannot be regarded as an inherently civil proceeding. It is an integral part of the criminal justice system [15 16]. Judicial interpretations of the phrase criminal cause or matter in the Judicature Acts primarily reflected the natural meaning of the words, rather than any special feature of the Acts. A cause is a proceeding, civil or criminal, actual or prospective, before a court. A matter is something wider, namely a particular legal subject matter, although arising in a different proceeding. The appellants application is an attempt to require the DPP to prosecute Sir Mark Allen. That is just as much a criminal matter as the original decision not to bring a prosecution. Parliament is unlikely to have intended to distinguish between different procedures having the same criminal subject matter and being part of the same criminal process; but the draftsman could have done so easily, for example by omitting the reference to a matter [17 20]. The Green Paper indicates that the distinction between criminal and civil proceedings in section 6 reflected the greater degree of control exercisable by the government in criminal cases, in which the prosecution can: (i) chose the material on which it relies, (ii) seek to limit the disclosure of unused material on the grounds of public interest immunity; and (iii) withdraw the prosecution. That rationale does not require closed material procedure to be available in an ancillary judicial review of a decision made as an integral part of the criminal justice process, when it would not be available for an actual criminal trial [22 24]. Lord Mance agrees that the appeal should be allowed, essentially for the same reasons as Lord Sumption [25 37]. Lord Lloyd Jones, with whom Lord Wilson agrees, would have dismissed the appeal. He concludes that the natural meaning and use of the word cause is appropriate to cover criminal proceedings which will result in a criminal conviction or acquittal, and that the word matter may extend beyond that to ancillary applications in such criminal proceedings (such as disclosure applications and extradition proceedings). They do not, however, naturally include this judicial review, which is a public law challenge extraneous to the criminal process. It is permissible to refer to the Green Paper in order to discern the purpose of the exclusion of proceedings in a criminal cause or matter from closed material procedure. The core concern behind the exclusion is to ensure that closed material procedure is unavailable where criminal guilt is being decided. These proceedings do not fall within the purpose of the exclusion [52 57].
This appeal is concerned with the liability of a local authority for what is alleged to have been a negligent failure to exercise its social services functions so as to protect children from harm caused by third parties. The principal question of law which it raises is whether a local authority or its employees may owe a common law duty of care to children affected by the manner in which it exercises or fails to exercise those functions, and if so, in what circumstances. The facts The claimants, who have been given anonymity for the purposes of these proceedings and whom I shall refer to as Colin and Graham (not their real names), seek damages for personal injuries suffered while they were children living in the area of the respondent council. There has been no investigation of the facts, but the matters on which they rely, as set out in the particulars of claim, can be summarised as follows. In May 2006 the claimants and their mother, whom I shall refer to as Amy (not her real name), were placed by the council in a house on an estate in Poole, adjacent to another family who to the councils knowledge had persistently engaged in anti social behaviour. Colin was then nine years old and Graham was seven. Colin is severely disabled both mentally and physically, and requires constant care. The council made extensive adaptations to the house in order to meet his needs, and provided him with a care package through its child health and disability team. He had an allocated social worker. The support provided in respect of Colin was kept under review over the relevant period by the child health and disability team together with Colins social worker. A core assessment of his needs was updated in November 2006. Following the placement an incident occurred when children belonging to the neighbouring family sat on Amys car and kicked a football against it. When she remonstrated with them they abused and threatened her. She reported the matter to the councils chief executive. As a result the police attended and issued a warning to the neighbouring family. This resulted in their targeting Amy and her family for harassment and abuse which persisted over a period of several years. It included vandalism of Amys car, attacks on the family home, threats of violence, verbal abuse, and physical assaults on Amy and Graham. These incidents were reported to the council. Various measures were taken against the neighbouring family, including eviction, the obtaining of injunctions, proceedings for contempt of court, anti social behaviour orders, and the imposition of sentences of imprisonment, but the harassment nevertheless continued. When Amys requests for assistance from the council and other agencies failed to bring the abuse to an end or to secure the rehousing of her family, she contacted councillors and Members of Parliament, prompting coverage by local and national media. This resulted in the Home Office commissioning an independent report, which was critical of the police and of the councils failure to make adequate use of powers available under anti social behaviour legislation. Graham expressed suicidal ideas during 2008, and in September 2009, aged ten, ran away from home leaving a suicide note. He was then provided with psychotherapy by the local health authority. A social worker undertook an initial assessment of his needs in October 2009, concluding that Amy should be referred to mental health services and that a core assessment of Grahams needs should be carried out by the councils family support team. That assessment was completed in February 2010. Graham was then allocated the same social worker as Colin. In May 2010 the strategic manager for childrens services acknowledged that the initial assessment had been flawed. In July 2010 a child protection strategy meeting decided that the risk of Grahams harming himself should be managed under a child in need plan rather than through the child protection system. The child in need plan was completed later that month. In November 2010 the council concluded that its assessment of Grahams needs had been flawed and that a revised core assessment should be undertaken by Grahams social worker. Following its completion in June 2011, the council decided to undertake an investigation in relation to Graham under section 47 of the Children Act 1989 (the 1989 Act). The following month a child protection conference decided to make Graham subject to a child protection plan. In the meantime it had been decided that the family should be rehoused away from the estate. A suitable house was identified, and the necessary adaptations were made. Amy and the children moved into their new home in December 2011. It is alleged that the abuse and harassment which the children underwent between May 2006 and December 2011 caused them physical and psychological harm. The history of the proceedings The claim form which instituted the present proceedings was issued on behalf of Amy and the children in December 2014, following the striking out of an earlier claim issued in 2012. The council is the sole defendant. Particulars of claim were served in April 2015. They advanced allegations under two limbs. The first was to the effect that the council, in the exercise of its housing functions, owed Amy and the children a duty of care to protect them from abuse and anti social behaviour by rehousing them. The second limb was to the effect that the council owed the children a duty of care in relation to the exercise of its functions under sections 17 and 47 of the 1989 Act, which are explained below, and failed to protect them from harm by allowing them to continue to live on the estate. In April 2015 the council applied for the claim to be struck out. On 2 October 2015 Master Eastman acceded to the application and struck out the claim. The main focus of the hearing before him was on the first limb of the claim, and he dealt relatively briefly with the second limb. Referring to X (Minors) v Bedfordshire County Council [1995] 2 AC 633 and to the discussion in Charlesworth & Percy on Negligence, 10th ed (2001), he concluded that no duty of care arose out of the statutory powers and duties of local authorities under the 1989 Act. The claimants appealed in relation to the second limb of the claim only. On 16 February 2016 Slade J allowed the appeal: [2016] EWHC 569 (QB); [2016] HLR 26. She considered that the principal issue arising was whether the decision of the Court of Appeal in D v East Berkshire Community NHS Trust [2003] EWCA Civ 1151; [2004] QB 558, in which it declined to strike out a childs claim against a local authority arising from action which it had taken to separate her from her father following a negligent investigation of suspected child abuse, had been impliedly overruled by the decisions of the House of Lords in Mitchell v Glasgow City Council [2009] UKHL 11; [2009] AC 874 and of this court in Michael v Chief Constable of South Wales [2015] UKSC 2; [2015] AC 1732. She concluded that it had not, and that there was no absolute bar to a negligence claim by a child against a local authority for failure to safeguard him or her against abuse. Whether a common law duty of care was owed by the council to the claimants would in her view depend upon a full examination of the facts. By an order of the same date she gave the claimants permission to amend their particulars of claim. Amended particulars of claim were served in March 2016. These allege both a common law duty of care owed by the council and a duty of care owed by its social workers, social work managers and other staff allocated to the claimants or tasked with investigating their situation, for the breach of which the council is said to be vicariously liable. It is said that the claimants rely in terms of the statutory backdrop giving rise to a common law duty of care on the statutory duty to safeguard the welfare and promote the upbringing of all children in a local authoritys geographical area, as set out in sections 17 and 47 of [the 1989 Act]. In relation to the council itself, it is said that it had a duty to protect children in its area, and in particular children reported to it as being at foreseeable risk of harm. Such a risk is alleged to have been communicated to the council in the present case from July 2006, placing it under a duty to investigate whether the claimants were at foreseeable risk of harm, and thereafter to take reasonable steps to protect them from any such risk. The council is said to have accepted a responsibility for the claimants particular difficulties in purporting to investigate the risk that the claimants neighbours posed to them and subsequently in attempting to monitor the claimants plight. It is said that in so far as such investigation is shown to have been carried out negligently and/or negligently acted on, the defendant is liable for breach of duty. In relation to vicarious liability, it is said that each of the social workers and social work managers who was allocated as the social worker or manager for the claimants or tasked with investigating their plight owed them a duty of care. That duty is said to have included a duty to protect them from physical and psychiatric damage, to monitor their welfare, to arrange for the provision of such medical treatment as they required, to visit them and ascertain their views, wishes, anxieties and complaints, to ascertain whether either of them was at risk of harm from which their mother was unable to protect them, and in the event of such risk to remove them from such risk using the discretion of the defendant to remove the claimants to a home where they would be safe. It is said that the social workers and social work managers knew or ought to have known that the claimants and their mother were being subjected to violence and abuse from which she was unable to protect them due mainly to her own position and vulnerability as a victim of such violence and abuse, that Colin was being targeted for mockery because of his disabilities, and that Graham was being assaulted and was threatening to commit suicide. In relation to breach of duty, it is said that the council failed to assess the ability of the claimants mother to protect her children from the level of abuse and violence they were subjected to, and failed to assess that the mother was unable to meet the claimants needs whilst she lived on the estate with them. As a result, it failed to remove the children from their home: On the balance of probabilities competent investigation at any stage would have led to the removal of the claimants from home. A child in need assessment should with competent care have been carried out in respect of each claimant by September 2006 at the latest. By September 2006 no competent local authority would have failed to carry out a detailed assessment and on the balance of probabilities such detailed assessment if carried out competently would and should have led to the conclusion that each of the claimants required removal from home if the family as a whole could not be moved. With the information obtained by competent assessment in September 2006 on application to the court the defendant would have obtained at least respite care and if necessary by (sic) interim care orders in respect of each claimant. Any competent local authority should and would have arranged for their removal from home into at least temporary care. The council appealed against Slade Js decision. On 21 December 2017 the Court of Appeal allowed the appeal: [2017] EWCA Civ 2185; [2018] 2 WLR 1693. Irwin LJ gave the main judgment, with which Davis and King LJJ agreed. Having considered the authorities in detail he concluded that two considerations in particular militated against liability. The first was the concern articulated in X (Minors) v Bedfordshire County Council and in Hill v Chief Constable of West Yorkshire [1989] AC 53 that liability in negligence will complicate decision making in a difficult and sensitive field, and potentially divert the social worker or police officer into defensive decision making. The second was the principle, illustrated by cases such as Mitchell v Glasgow City Council and Michael v Chief Constable of South Wales, that in general there is no liability for the wrongdoing of a third party, even where that wrongdoing is foreseeable. In his view, none of the exceptions to that general principle applied, since this was not a case in which the council, performing its social services functions, brought about the risk of harm or had control over the individuals representing the risk, nor had it assumed responsibility towards the claimants. The decision of the Court of Appeal in D v East Berkshire was in his view inconsistent with the subsequent decision of this court in Michael, where the majority had rejected an argument, based explicitly on D v East Berkshire, that the common law should be developed in order to achieve consistency with Convention rights. In his view the Court of Appeal was therefore not bound to follow its decision in the East Berkshire case, applying the doctrine of stare decisis as explained in Young v Bristol Aeroplane Co Ltd [1944] KB 718, 725 726. In those circumstances, there was no basis for holding the council liable for the wrongdoing of third parties. King LJ added, in relation to the pleading quoted at para 14 above, that there appeared to be no understanding of the statutory basis upon which an order resulting in the removal of the claimants from their mother could have been made. She explained that where a mother did not consent to the removal of her children from her care under an interim care order, the local authority must satisfy the court, pursuant to section 38(2) of the 1989 Act, that there were reasonable grounds for believing that the threshold criteria mentioned in section 31(2) were satisfied: in particular, that the child concerned was suffering, or likely to suffer, significant harm attributable to the care given to him not being what it would be reasonable to expect a parent to give to him. On the facts of the case it seemed highly unlikely that it could be shown that there were reasonable grounds to conclude that the threshold criteria could be satisfied. Further, numerous Court of Appeal decisions had made it clear that satisfaction of the threshold criteria should not be equated with satisfaction of the case for the removal of a child from its parent. A care plan for the immediate removal of a child from its parent should only be approved by the court if the child's safety demanded immediate separation: see for example In re G (Interim Care Order) [2011] EWCA Civ 745; [2011] 2 FLR 955. There was no such order as a respite care order. She added that the pleadings should have particularised the broad basis on which it was said that the threshold criteria were capable of being satisfied, and why the council would have been permitted to remove the children from their mother. Had that been done, it would have been apparent that the proposal that they should be removed from their mother was legally unsustainable. Davis LJ added at paras 117 118, in relation to the alleged duty to seek and obtain a care order under the 1989 Act: It was never said that the mother was an unfit mother. She loved and cared for her (vulnerable) children. They loved and needed her. Nothing she did or did not do caused them any harm: it was the harassment of the neighbours which did. In the circumstances of this case, there was no justification for potentially separating, without the mothers consent, mother from children, children from mother by use of care proceedings. To countenance care proceedings in the Family Court in order to overcome (or provide a subsequent remedy for) the problems caused by the neighbours on the estate would be, I would have thought, tantamount to an abuse of the process of that court. The legislative context The particulars of claim focus on sections 17 and 47 of the 1989 Act, although mention is also made of the Children Act 2004. No reliance is placed on the functions of local authorities under legislation relating to the provision of support to carers, the provision of housing, or protection from anti social behaviour. Section 17 appears in Part III of the 1989 Act, which is concerned with support for children and families. In particular, section 17 is concerned with the provision of services for children in need, their families and others. Section 17(10) defines a child in need: a child shall be taken to be in need if (a) he is unlikely to achieve or maintain, or to have the opportunity of achieving or maintaining, a reasonable standard of health or development without the provision for him of services by a local authority under this Part; (b) his health or development is likely to be significantly impaired, or further impaired, without the provision for him of such services; or (c) he is disabled Colin was a child in need as so defined, since he was disabled. Graham was also assessed to be a child in need in July 2010. Under section 17(1) it is the general duty of every local authority (a) to safeguard and promote the welfare of children within their area who are in need; and (b) so far as is consistent with that duty, to promote the upbringing of such children by their families, by providing a range and level of services appropriate to those childrens needs. For the purpose of facilitating the discharge of that general duty, every local authority has the specific duties and powers set out in Schedule 2. These include a duty to take reasonable steps to identify the extent to which there are children in need within their area, a duty to assess the needs of any child who appears to be in need, and a duty to take reasonable steps, through the provision of services under Part III of the Act, to prevent children suffering ill treatment or neglect: paragraphs 1, 3 and 4 respectively. Under section 17(6) the services provided under that section may include providing accommodation. Section 17(1) does not impose a duty to meet the needs of any particular child. Rather, it is to be read as imposing a duty on the local authority to provide a range and level of services appropriate to meet the various needs of children in its area: R (G) v Barnet London Borough Council [2003] UKHL 57; [2004] 2 AC 208, para 109. In relation to the provision of accommodation, it is necessary to bear in mind the observations of Lord Hope of Craighead in that case at paras 92 93, with which Lord Millett and Lord Scott of Foscote agreed: 92. Although the services which the authority provides may include the provision of accommodation (see section 17(6)), the provision of residential accommodation to rehouse a child in need so that he can live with his family is not the principal or primary purpose of this legislation. Housing is the function of the local housing authority, for the acquisition and management of whose housing stock detailed provisions are contained in the Housing Acts. Provisions of that kind are entirely absent from this legislation. 93. A reading of that subsection [section 17(1)] as imposing a specific duty on the local social services authority to provide residential accommodation to individual children in need who have been assessed to be in need of such accommodation would sit uneasily with the legislation in the Housing Acts. As Mr Goudie pointed out, it could have the effect of turning the social services department of the local authority into another kind of housing department, with a different set of priorities for the provision of housing Section 47 appears in Part V of the 1989 Act, which is concerned with the protection of children. In particular, section 47(1) imposes a duty on local authorities, where there is reasonable cause to suspect that a child . in their area is suffering, or is likely to suffer, significant harm, to make such enquiries as they consider necessary to enable them to decide whether they should take any action to safeguard or promote the childs welfare. Under section 47(3) those enquiries shall, in particular, be directed towards establishing (so far as material) (a) whether the authority should make any application to the court, or exercise any of their other powers under this Act with respect to the child. Compulsory powers of intervention are provided in Parts IV and V of the 1989 Act. In particular, an application can be made to the court under section 31 for a care order or a supervision order, but in terms of section 31(2) such an order can only be made by the court if it is satisfied (so far as material): that the child concerned is suffering, or is likely to (a) suffer, significant harm; and (b) that the harm, or likelihood of harm, is attributable to (i) the care given to the child, or likely to be given to him if the order were not made, not being what it would be reasonable to expect a parent to give to him An interim care order can be made under section 38 of the 1989 Act, but only if the court is satisfied that there are reasonable grounds for believing that the circumstances with respect to the child are as mentioned in section 31(2): section 38(2). Even if these tests are satisfied at what has become known as the threshold stage, it remains to be considered at the welfare stage whether an order ought to be made. The Court of Appeal has held that interim care orders should be made only where the childrens safety requires removal, and removal is proportionate in the light of the risks posed by leaving them where they are: In re G (Interim Care Order), para 22. In relation to care orders, the court must treat the welfare of the child as the paramount consideration, and any interference with article 8 rights must be proportionate: In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, paras 32, 73 and 194 195. Relevant developments in the law of negligence It is accepted that the provisions of the 1989 Act which impose duties on local authorities do not create a statutory cause of action. The question is whether local authorities may instead be liable at common law for breach of a duty of care in relation to the performance of their functions under the Act. In order to answer that question, it will be necessary to consider a number of authorities decided over the period between about 1995 and the present day. Before doing so, it may be helpful to begin with an overview, necessarily stated in general and simplified terms, of how legal thinking about the liabilities of public authorities in negligence developed over that period. As will become apparent, the period has been marked by shifting approaches by the highest court. In its recent case law this court has attempted to establish a clearer framework. As was explained in Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4; [2018] AC 736, paras 31 42, public authorities other than the Crown were traditionally understood to be subject to the same general principles of the law of tort, at common law, as private individuals and bodies: see, for example, Entick v Carrington (1765) 2 Wils KB 275 and Mersey Docks and Harbour Board v Gibbs (1866) LR 1 HL 93. That position might be altered by statute, by imposing duties whose breach gave rise to a statutory liability in tort towards private individuals, or by excluding liability for conduct which would otherwise be tortious at common law: see respectively Gorris v Scott (1874) LR 9 Ex 125 and Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430. In particular, as Lord Reid explained in Dorset Yacht Co Ltd v Home Office [1970] AC 1004, 1030, a person performing a statutory duty was liable for an act which, but for the statute, would be actionable at common law, if he performed the act carelessly so as to cause needless damage. His liability arose because the defence which the statute provided extended only to the careful performance of the act. The rationale, Lord Reid explained, was that: Parliament deems it to be in the public interest that things otherwise unjustifiable should be done, and that those who do such things with due care should be immune from liability to persons who may suffer thereby. But Parliament cannot reasonably be supposed to have licensed those who do such things to act negligently in disregard of the interests of others so as to cause them needless damage. Lord Reid added at p 1031 that the position was not the same where Parliament conferred a discretion. If the discretion was exercised lawfully, then the act in question would be authorised by Parliament: But there must come a stage when the discretion is exercised so carelessly or unreasonably that there has been no real exercise of the discretion which Parliament has conferred. The person purporting to exercise his discretion has acted in abuse or excess of his power. Parliament cannot be supposed to have granted immunity to persons who do that. Like private individuals, public bodies did not generally owe a duty of care to confer benefits on individuals, for example by protecting them from harm: see, for example, Sheppard v Glossop Corpn [1921] 3 KB 132 and East Suffolk Rivers Catchment Board v Kent [1941] AC 74. In this context I am intentionally drawing a distinction between causing harm (making things worse) and failing to confer a benefit (not making things better), rather than the more traditional distinction between acts and omissions, partly because the former language better conveys the rationale of the distinction drawn in the authorities, and partly because the distinction between acts and omissions seems to be found difficult to apply. As in the case of private individuals, however, a duty to protect from harm, or to confer some other benefit, might arise in particular circumstances, as for example where the public body had created the source of danger or had assumed responsibility to protect the claimant from harm: see, for example, Dorset Yacht Co Ltd v Home Office, as explained in Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15; [2004] 1 WLR 1057, para 39. This traditional understanding was departed from in Anns v Merton London Borough Council [1978] AC 728, where Lord Wilberforce laid down a new approach to determining the existence of a duty of care. It had two stages. First, it was necessary to decide whether there was a prima facie duty of care, based on the foreseeability of harm. Secondly, in order to place limits on the breadth of the first stage, it was necessary to consider whether there were reasons of public policy for excluding or restricting any such prima facie duty. These included, in the case of public authorities exercising discretionary powers, the supposed non justiciability of decisions falling into the category of policy as opposed to operations. That two stage approach had major implications for public authorities, as they have a multitude of functions designed to protect members of the public from foreseeable harm of one kind or another, with the consequence that the first stage inquiry was readily satisfied, and the only limits to liability became public policy, including the distinction between policy and operations. The Anns decision led to a period during which the courts struggled to contain liability, particularly for pure economic loss (ie, economic loss which was not the result of physical damage or personal injury) and for the failures of public authorities to perform their statutory functions with reasonable care. Clarification of the general approach to establishing a duty of care in novel situations was provided by Caparo Industries plc v Dickman [1990] 2 AC 605, but the decision was widely misunderstood as establishing a general tripartite test which amounted to little more than an elaboration of the Anns approach, basing a prima facie duty on the foreseeability of harm and proximity, and establishing a requirement that the imposition of a duty of care should also be fair, just and reasonable: a requirement that in practice led to evaluations of public policy which the courts were not well equipped to conduct in a convincing fashion. Although the decision in Anns was departed from in Murphy v Brentwood District Council [1991] 1 AC 398, its reasoning in relation to the liabilities of public authorities remained influential until Stovin v Wise [1996] AC 923, where a majority of the House of Lords reasserted the importance of the distinction in the law of negligence between harming the claimant and failing to confer a benefit on him or her, typically by protecting him or her from harm. The distinction between policy and operations was also rejected. The resultant position, as explained by Lord Hoffmann in a speech with which the other members of the majority agreed, was that [in] the case of positive acts, therefore, the liability of a public authority in tort is in principle the same as that of a private person but may be restricted by its statutory powers and duties (p 947: emphasis in original). In relation to failures to perform a statutory duty, Lord Hoffmann stated at p 952 that [i]f such a duty does not give rise to a private right to sue for breach, it would be unusual if it nevertheless gave rise to a duty of care at common law which made the public authority liable to pay compensation for foreseeable loss caused by the duty not being performed. Further clarification was provided by the decision in Gorringe v Calderdale Metropolitan Borough Council. In a speech with which the other members of the Appellate Committee agreed, Lord Hoffmann reiterated at para 17 the importance of the distinction between causing harm and failing to protect from harm, in the context of a highway authoritys alleged duty of care to provide warning signs on the road: It is not sufficient that it might reasonably have foreseen that in the absence of such warnings, some road users might injure themselves or others. Reasonable foreseeability of physical injury is the standard criterion for determining the duty of care owed by people who undertake an activity which carries a risk of injury to others. But it is insufficient to justify the imposition of liability upon someone who simply does nothing: who neither creates the risk nor undertakes to do anything to avert it. Lord Hoffmann also emphasised the difficulty of finding that a statutory duty or power generated a common law duty of care, observing at para 32 that it was difficult to imagine a case in which a common law duty can be founded simply upon the failure (however irrational) to provide some benefit which a public authority has power (or a public law duty) to provide. Lord Hoffmann stressed at para 38 that the House was not concerned with cases in which public authorities have actually done acts or entered into relationships or undertaken responsibilities which give rise to a common law duty of care. For example, [a] hospital trust provides medical treatment pursuant to the public law duty in the [National Health Service Act 1977], but the existence of its common law duty is based simply upon its acceptance of a professional relationship with the patient no different from that which would be accepted by a doctor in private practice. The duty in such a case rests upon a solid, orthodox common law foundation and the question is not whether it is created by the statute but whether the terms of the statute (for example, in requiring a particular thing to be done or conferring a discretion) are sufficient to exclude it. It took time for the significance of Stovin v Wise and Gorringe to be fully appreciated: they were not cited, for example, in Smith v Chief Constable of Sussex Police [2008] UKHL 50; [2009] AC 225. Confusion also persisted concerning the effect of Caparo until clarification was provided in Michael and Robinson. The long shadow cast by Anns and the misunderstanding of Caparo have to be borne in mind when considering the reasoning of decisions concerned with the liabilities of public authorities in negligence which date from the intervening period. Although the decisions themselves are generally consistent with the principles explained in Gorringe and later cases and can be rationalised on that basis, their reasoning has in some cases, and to varying degrees, been superseded by those later developments. For the purposes of the present case, it is necessary to consider a number of decisions of the House of Lords concerned with local authorities duties of care to children affected by their discharge of their statutory functions, together with some other cases in which the Court of Appeals decision in D v East Berkshire was considered, and the decisions in Mitchell, Michael and Robinson. X (Minors) v Bedfordshire County Council The first authority which is germane to the present case is X (Minors) v Bedfordshire County Council, decided by the House of Lords in 1995. The case concerned a number of claims against local authorities, some relating to their functions under child care legislation and others to their functions as education authorities. All of the claims had been struck out as disclosing no cause of action. In one of the child care appeals, the Bedfordshire case itself, five children brought claims for damages against the council for failing to exercise its statutory powers and duties (including those conferred or imposed by sections 17, 31 and 47 of the 1989 Act, and similar provisions in earlier legislation) so as to protect them from harm at the hands of their parents. In the other child care appeal, M (A Minor) v Newham London Borough Council, a child and her mother brought claims for damages against the council, the area health authority and a consultant psychiatrist employed by the latter. The case against the council was based on vicarious liability for the negligence of a social worker in its employment. It was alleged that he and the psychiatrist had been negligent when investigating allegations of child abuse. They interviewed the child without taking a full history of the mothers domestic circumstances, with the consequence that they mistakenly assumed, when the child referred to her abuser by his first name, that she was referring to the mothers partner, rather than to another man with the same first name who had previously lived at the mothers address. They then told the mother that her partner was the abuser, leading her to exclude her partner from her home. On the basis of the psychiatrists and social workers conclusion that the mother would be unable to protect the child from her partner, the child was taken into compulsory care and placed with foster parents, where she remained for almost a year. Eventually the mother obtained sight of a transcript of the interview, from which it was apparent that the child had not identified her partner as the abuser. She then informed the local authority, and the child was returned to her care. It should be noted at the outset that the Bedfordshire and Newham cases were radically different from one another. In the former case, the allegation was that the council had failed to protect the children from harm inflicted by third parties. The question therefore arose whether there were circumstances, such as an assumption of responsibility to protect the children from harm, which placed the council under a common law duty to protect them. That question did not arise in the Newham case. There, the allegation was that the councils employee had himself harmed the child, by negligently causing her to be removed from her home and detained against her will, with the result that she suffered a psychiatric disorder. Unlike in the Bedfordshire case, there was no need to establish an assumption of responsibility towards the child: that is not a necessary ingredient either of the tort of wrongfully depriving a person of her liberty, or of the tort of negligently inflicting a psychiatric injury. No such distinction was however drawn between the two claims. Lord Browne Wilkinson gave the leading speech, with which Lord Jauncey of Tullichettle, Lord Lane and Lord Ackner agreed. He began by dispelling confusion about some aspects of the law governing the liability of public authorities, concluding at pp 734 735 that in order to found a cause of action flowing from the careless exercise of statutory powers or duties, the plaintiff has to show that the circumstances are such as to raise a duty of care at common law. The mere assertion of the careless exercise of a statutory power or duty is not sufficient. He went on to explain at p 736 that the exercise of a statutory discretion could not be impugned unless it was so unreasonable as to fall outside the ambit of the discretion conferred: It is clear both in principle and from the decided cases that the local authority cannot be liable in damages for doing that which Parliament has authorised. Therefore if the decisions complained of fall within the ambit of such statutory discretion they cannot be actionable in common law. However if the decision complained of is so unreasonable that it falls outside the ambit of the discretion conferred upon the local authority, there is no a priori reason for excluding all common law liability. In these respects, Lord Browne Wilkinsons approach accords with more recent authorities, as well as the older authorities to which he referred. In relation to the Bedfordshire case, Lord Browne Wilkinson convincingly rejected the contention that the statutory provisions created a cause of action for breach of statutory duty. In considering whether the circumstances were such as to impose a duty of care on the council at common law, Lord Browne Wilkinson considered that questions arising from the policy/operational distinction could not be resolved at that preliminary stage. Nor could the question whether the council had acted in the reasonable exercise of its discretion. There remained the three issues mentioned in Caparo: whether the defendants could reasonably foresee that the claimants might be injured, whether their relationship with the claimants had the necessary quality of proximity, and whether it was in all the circumstances just and reasonable that a duty of care should be imposed. The first two of these issues were conceded. The only question which required to be decided was whether it was just and reasonable to impose a duty of care. In that regard, Lord Browne Wilkinson concluded at pp 749 751 that there were a number of reasons of public policy for denying liability: the multi disciplinary nature of the system of decision making, the delicacy and difficulty of the decisions involved, the risk that local authorities would respond to the imposition of liability by adopting a defensive approach to decision making, the risk of vexatious and costly litigation, and the availability of administrative complaints procedures. Lord Browne Wilkinson also noted that Caparo required that, in deciding whether to develop novel categories of negligence, the court should proceed incrementally and by analogy with decided categories. The nearest analogies, in his view, were the cases where a common law duty of care had been sought to be imposed upon the police, in relation to the protection of members of the public, and upon statutory regulators of financial dealings, in relation to the protection of investors. In neither of those situations had it been thought appropriate to impose a common law duty of care: Hill v Chief Constable of West Yorkshire and Yuen Kun Yeu v Attorney General of Hong Kong [1988] AC 175. No claim was made in the Newham case on the basis of direct liability. In relation to the question of vicarious liability raised by that case, and also potentially by the Bedfordshire case, Lord Browne Wilkinson accepted at p 752 that the social worker and the psychiatrist exercised professional skills, and that in general a professional duty of care is owed irrespective of contract and can arise even where the professional assumes to act for the plaintiff pursuant to a contract with a third party, as in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 and White v Jones [1995] 2 AC 207. The social worker and the psychiatrist had not, however, assumed any responsibility towards the claimants. Although the carrying out of their duties involved contact with or a relationship with the claimants, they were nevertheless employed or retained to advise the local authority and the health authority respectively, not to advise or treat the claimants. The position was not the same as in Smith v Eric S Bush [1990] 1 AC 831, where the purchaser of a house had foreseeably relied on the advice given by the surveyor to the building society which was going to lend money on the security of the property. Even if the advice tendered by the social worker to the local authority came to the knowledge of the child or his parents, they would not regulate their conduct in reliance on the report. The effect of the report would be reflected in the way the local authority acted. Nor was the position the same as in Henderson v Merrett Syndicates, where the duty of care to the claimants was imposed by the terms of the defendants contract with a third party; so also in White v Jones. Lord Browne Wilkinson concluded at p 753: In my judgment in the present cases, the social workers and the psychiatrist did not, by accepting the instructions of the local authority, assume any general professional duty of care to the plaintiff children. The professionals were employed or retained to advise the local authority in relation to the well being of the plaintiffs but not to advise or treat the plaintiffs. Lord Browne Wilkinson added that in any event, the same policy considerations which led to the view that no direct duty of care was owed by the local authority applied with at least equal force to the question whether it would be just and reasonable to impose a duty of care on the social worker and the psychiatrist. The psychiatrist also benefited from witness immunity. The fundamental problem with this reasoning, so far as relating to an assumption of responsibility, is that as explained in para 38 above, the liability of the social worker and the psychiatrist in the Newham case did not depend on whether they had assumed a responsibility towards the child. Lord Browne Wilkinsons conclusion that there was no assumption of responsibility in the child abuse cases can be contrasted with his conclusion in the education cases, which concerned failures to diagnose and address special educational needs. He concluded in the first of those cases (the Dorset case) that a direct claim could lie against the local authority on the basis that it was offering a service to the public, namely the provision of psychological advice, which the claimant had accepted. By holding itself out as offering a service, it came under a duty of care to those using the service, in the same way as a health authority conducting a hospital under statutory powers was under a duty of care to those whom it admitted. There could also be vicarious liability for negligence on the part of the educational psychologists which the local authority employed to provide the service, and on whose professional advice the claimants parents were said to have relied. The position was similar in the second education case (the Hampshire case), which was based on vicarious liability for the negligence of a headmaster and an advisory teacher. Lord Browne Wilkinson concluded that, whether it was operated privately or under statutory powers, a school which accepted a pupil assumed responsibility for his educational needs. The education of the pupil was the very purpose for which the child went to the school. The head teacher, being responsible for the school, came under a duty of care to exercise the reasonable skills of a headmaster in relation to such educational needs. The position was the same where an advisory teacher was brought in to advise on the educational needs of a specific pupil, whether he was consulted privately or was provided by the local authority. If he knew that his advice would be communicated to the pupils parents, he must foresee that they would rely on such advice. Therefore, in giving that advice, he owed a duty to the child to exercise the skill and care of a reasonable advisory teacher. Barrett v Enfield London Borough Council The next case in the House of Lords concerned with local authorities statutory responsibilities towards children was Barrett v Enfield London Borough Council [2001] 2 AC 550. The House declined to strike out a claim alleging that, in making or failing to make a number of decisions relating to a child who had been in its care throughout his childhood, a local authority had been in breach of a common law duty of care, and also alleging that social workers employed by the local authority had failed in a duty of care owed by them in carrying out its obligations to monitor the childs welfare. Most of the allegations concerned failures to confer benefits on the claimant. The critical difference from X (Minors) v Bedfordshire, as Lord Slynn of Hadley explained in a speech with which Lord Nolan and Lord Steyn agreed, was that the claim in Barrett v Enfield related to conduct occurring after the child had been taken into care. Lord Slynn drew on the analogy of a school which accepted a pupil and thereby assumed responsibility for his educational needs, giving rise to a duty of care, as Lord Browne Wilkinson had stated in X (Minors) v Bedfordshire, and that of a prison which had a prisoner in its custody, and consequently assumed responsibility for his physical wellbeing, again giving rise to a duty of care, as had been held in R v Deputy Governor of Parkhurst, Ex p Hague [1992] 1 AC 58. As Lord Hutton explained in his concurring speech, with which Lord Nolan and Lord Steyn agreed, the effect of taking the child into care was that the local authority assumed responsibility for his care. The statutory powers and duties might have provided the local authority with defences in respect of its specific acts or omissions, but that could not be decided without an investigation of the facts. The committee rejected the argument that to impose liability on local authorities for careless acts or omissions in relation to a child in their care would be contrary to public policy. Lord Slynn approved at p 568 an observation in the Court of Appeal that the argument that imposing a duty of care might lead to defensive conduct should normally be a factor of little, if any, weight. He also rejected the argument that the administrative remedies to which Lord Browne Wilkinson had referred in X (Minors) v Bedfordshire were likely to be as effective as the recognition of a duty of care. Phelps v Hillingdon London Borough Council In Phelps v Hillingdon London Borough Council [2001] 2 AC 619 an enlarged committee of the House of Lords considered a number of claims alleging negligence in the assessment of children with special educational needs, with the result that they did not receive the educational facilities which would otherwise have been provided. As in the Bedfordshire case, the claims were based on failures to confer a benefit. They were advanced both on the basis of the local authorities vicarious liability for breaches of a duty of care owed by teachers and educational psychologists in their employment, and also on the basis that the authorities were themselves in breach of a duty of care owed to the children. In the one case which had gone to trial (the Phelps case), it was established, contrary to the understanding on which the education cases had been decided in X (Minors) v Bedfordshire, that the local authority did not offer a psychology service open to the public, in the same way as a hospital is open for the purpose of treating patients. Instead, the psychology service was established to advise the local authority. Nevertheless Lord Slynn, with whose speech Lord Jauncey of Tullichettle, Lord Lloyd of Berwick, Lord Hutton and Lord Millett agreed, concluded at p 654 that where an educational psychologist is specifically called in to advise in relation to the assessment and future provision for a specific child, and it is clear that the parents acting for the child and the teachers will follow that advice, prima facie a duty of care arises. Lord Clyde, with whose speech Lord Jauncey, Lord Lloyd, Lord Hutton and Lord Millett also agreed, emphasised at p 675 that the psychologist in the Phelps case was advising the child through her parents, as well as the local authority, since it was clear that they were going to rely on the advice in question. As in X (Minors) v Bedfordshire, the question whether the child (through his or her parents) was the intended recipient of professional advice, or could be expected to rely on advice provided to the local authority, was the key to whether there was an assumption of responsibility giving rise to a duty of care. Lord Millett commented at p 677 that this reasoning was based on the Hedley Byrne principle (Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465). In addressing counter arguments based on public policy, the committee called into question much of the policy based reasoning advanced by Lord Browne Wilkinson in X (Minors) v Bedfordshire. The idea that the multi disciplinary nature of decision making was a good reason for denying the existence of a duty of care was rejected by Lord Slynn, Lord Nicholls and Lord Clyde at pp 655 656, 665 666 and 674 respectively. The risk of vexatious and costly litigation, and the availability of statutory complaints procedures, were also rejected by Lord Nicholls and Lord Clyde as reasons for refusing to recognise a duty of care, at pp 667 and 672 respectively. D v East Berkshire Community NHS Trust The case of D v East Berkshire Community NHS Trust, decided by the Court of Appeal in 2003, involved three appeals which were heard together. In the first appeal (East Berkshire), a mother claimed damages in respect of psychiatric injury alleged to have been suffered as a result of being falsely accused by doctors of suffering from Munchausen syndrome by proxy. In the second appeal (Dewsbury), a father and his daughter claimed for psychiatric injury and financial loss resulting from unfounded allegations by doctors and social workers of sexual abuse, which led to the father and daughter being prevented from seeing one another for about a fortnight. The daughters claim was thus analogous to that of the child in the Newham case considered in X (Minors) v Bedfordshire. In the third appeal (Oldham), parents claimed in respect of psychological distress suffered as a result of unfounded allegations by doctors of having inflicted injuries on their daughter, which led to the child being separated from her parents for almost a year. The Dewsbury appeal was thus the only case which concerned social workers and the local authority which employed them. The claims in the three appeals were brought against the local authority in the Dewsbury case, and the health authorities in the other two cases, on the basis of vicarious liability. In each case, the court of first instance had determined as a preliminary issue that no duty of care was owed. It was common ground in the appeals that the critical issue was whether the third element of the tripartite test understood to have been adopted in Caparo, that the imposition of a duty of care was fair, just and reasonable, was satisfied. In that regard, the Court of Appeal noted that several of the policy factors which Lord Browne Wilkinson relied on, in X (Minors) v Bedfordshire, had been questioned in Barrett v Enfield and Phelps v Hillingdon. Furthermore, the Human Rights Act 1998 had come into force since X (Minors) v Bedfordshire was decided. The effect of section 8 was to impose a potential liability on local authorities to compensate children where there was a failure to protect them from ill treatment and neglect which infringed their rights under article 3 of the European Convention on Human Rights, and to compensate children and their parents where the children were taken into care, or prevented from having contact with a parent, in circumstances which violated their rights under article 8. Litigation of a kind which in X (Minors) v Bedfordshire the House of Lords had considered it important to avoid as a matter of public policy had therefore become, under statute, a potential consequence of the conduct of those involved in taking decisions in child abuse cases. In those circumstances, the court stated at para 81, the reasons of policy that led the House of Lords to hold that no duty of care towards a child arises, in so far as those reasons have not already been discredited by the subsequent decisions of the House of Lords, will largely cease to apply. It concluded at para 84: It follows that it will no longer be legitimate to rule that, as a matter of law, no common law duty of care is owed to a child in relation to the investigation of suspected child abuse and the initiation and pursuit of care proceedings. It is possible that there will be factual situations where it is not fair, just or reasonable to impose a duty of care, but each case will fall to be determined on its individual facts. Although a duty of care might be owed to the child, the court considered that the position of the parents was different. In view of the potential conflict between the best interests of the child and the interests of the parents, there were in the courts view cogent reasons of public policy for concluding that, where child care decisions were being taken, no common law duty of care should be owed to the parents. Another way of expressing the point would have been to say that the imposition of a common law duty of care towards the parents would be inconsistent with the statutory framework, since it would interfere with the performance by the authority of its statutory powers and duties in the manner intended by Parliament. Applying those conclusions to the facts of the individual appeals, the court concluded that no duty of care was owed to the mother in the East Berkshire case, the father in the Dewsbury case, or the parents in the Oldham case. On the other hand, X (Minors) v Bedfordshire could no longer be regarded as precluding the claim by the child in the Dewsbury case against the local authority for negligence in the manner in which its employees contributed to the child protection investigation. The court did not need to consider whether there had been an assumption of responsibility towards the child, since the doctors and social workers were alleged to have harmed her, rather than to have failed to protect her from harm. The Court of Appeals reasoning effectively knocked away the public policy objection to liability. It did not, however, undermine some other aspects of the reasoning in X (Minors) v Bedfordshire. It remained the position that, where a decision under challenge was taken in the exercise of a statutory discretion, it was necessary to establish that the decision fell outside the ambit of the discretion and was not, therefore, authorised by Parliament. It also remained necessary, in circumstances where a duty of care depended on an assumption of responsibility, to establish that there had been such an assumption of responsibility, and that the duty contended for fell within its scope. The parents in D v East Berkshire appealed to the House of Lords. Their appeals were dismissed: [2005] UKHL 23; [2005] 2 AC 373. No issue was taken with the Court of Appeals decision concerning the child in the Dewsbury appeal, and it was conceded that the doctors in the other appeals owed a duty of care to the children. Like the Court of Appeal, the House of Lords considered that the duty of care admittedly owed to the child in any case of suspected abuse would be compromised by the imposition of a concurrent duty of care towards the parents, since the interests of the parents might conflict with those of the child. In those circumstances, no duty of care could be owed to the parents. Lord Nicholls, in a speech with which Lord Steyn, Lord Rodger of Earlsferry and Lord Brown of Eaton under Heywood agreed, observed at para 82 that the law had moved on since the decision in X (Minors) v Bedfordshire: There the House held it was not just and equitable to impose a common law duty on local authorities in respect of their performance of their statutory duties to protect children. Later cases mentioned by my noble and learned friend, Lord Bingham of Cornhill, have shown that this proposition is stated too broadly. Local authorities may owe common law duties to children in the exercise of their child protection duties. The latter sentence made it clear that the House of Lords accepted that a duty of care could be owed to the child. Later authorities The case of Kay v Lambeth London Borough Council [2006] UKHL 10; [2006] 2 AC 465 was not concerned with social services, but it raised a question as to whether there were circumstances in which lower courts might not be bound by decisions of the House of Lords, in the light of contrary decisions of the European Court of Human Rights. In a speech with which the other members of the committee expressed agreement on that aspect of the case, Lord Bingham concluded that lower courts should normally follow precedents which are binding on them under the domestic principles of stare decisis. He admitted one partial exception to that rule. Explaining that there were a number of considerations which made X v Bedfordshire a very exceptional case, he stated at para 45 that on these extreme facts the Court of Appeal was entitled to hold, as it did in para 83 of its judgment in D [v East Berkshire], that the decision of the House in X v Bedfordshire, in relation to children, could not survive the 1998 Act. The case of Mitchell v Glasgow City Council, decided by the House of Lords in 2009, concerned the question whether a local authority owed a duty of care to warn one of its tenants that he might be in danger when it responded to previous violent behaviour towards him by his neighbour by inviting the neighbour to a meeting and telling him that continued anti social behaviour could result in his eviction. Following the traditional approach re established in Stovin v Wise and Gorringe, the local authority was held not to be under a duty of care to protect its tenant from harm inflicted by a third party. It was accepted that there were particular situations where a duty of care could arise, such as where the defendant had created the source of the danger, or where the third party was under the defendants supervision or control, or where the defendant had assumed a responsibility to the claimant which lay within the scope of the duty alleged, but no such circumstances existed in the case at hand. No reference was made to the decision of the Court of Appeal in D v East Berkshire. The case of Michael v Chief Constable of South Wales Police, decided by this court in 2015, concerned the question whether the police owed a duty of care to a person who made an emergency call reporting threats of violence by a third party. Following essentially the same approach as in Stovin v Wise, Gorringe and Mitchell, this court decided by a majority that no duty of care was owed. It was recognised that liability for harm caused by a third party could arise in certain situations, such as where the wrongdoer was under the defendants control, or where the defendant had assumed a responsibility towards the claimant to protect her, but the situation in the case at hand was not considered to be of that kind. In Michael, the decision of the Court of Appeal in D v East Berkshire was relied on in support of an argument that the common law should be developed in harmony with the obligations of public authorities under the Human Rights Act. That argument was however rejected by Lord Toulson, who observed that the same argument had also been rejected by the House of Lords in Smith v Chief Constable of Sussex Police. The majority of the court agreed. As explained earlier, the reasoning of the Court of Appeal in the East Berkshire case was not that, because the European Court of Human Rights had found violations of the Convention, it followed that British courts should follow suit under the law of tort. Rather, the reasoning was that, since claims could be brought under the Convention, it followed that claims could also be brought under the Human Rights Act: a possibility which pulled the rug from under some of the policy based reasoning in X (Minors) v Bedfordshire. Most recently, the decision of this court in 2018 in the case of Robinson v Chief Constable of West Yorkshire Police drew together several strands in the previous case law. The case concerned the question whether police officers owed a duty to take reasonable care for the safety of an elderly pedestrian when they attempted to arrest a suspect who was standing beside her and was likely to attempt to escape. The court held that, since it was reasonably foreseeable that the claimant would suffer personal injury as a result of the officers conduct unless reasonable care was taken, a duty of care arose in accordance with the principle in Donoghue v Stevenson [1932] AC 562. Such a duty might be excluded by statute or the common law if it was incompatible with the performance of the officers functions, but no such incompatibility existed on the facts of the case. The court distinguished between a duty to take reasonable care not to cause injury and a duty to take reasonable care to protect against injury caused by a third party. A duty of care of the latter kind would not normally arise at common law in the absence of special circumstances, such as where the police had created the source of danger or had assumed a responsibility to protect the claimant against it. The decision in Hill v Chief Constable of West Yorkshire was explained as an example of the absence of a duty of care to protect against harm caused by a third party, in the absence of special circumstances. It did not lay down a general rule that, for reasons of public policy, the police could never owe a duty of care to members of the public. Robinson did not lay down any new principle of law, but three matters in particular were clarified. First, the decision explained, as Michael had previously done, that Caparo did not impose a universal tripartite test for the existence of a duty of care, but recommended an incremental approach to novel situations, based on the use of established categories of liability as guides, by analogy, to the existence and scope of a duty of care in cases which fall outside them. The question whether the imposition of a duty of care would be fair, just and reasonable forms part of the assessment of whether such an incremental step ought to be taken. It follows that, in the ordinary run of cases, courts should apply established principles of law, rather than basing their decisions on their assessment of the requirements of public policy. Secondly, the decision re affirmed the significance of the distinction between harming the claimant and failing to protect the claimant from harm (including harm caused by third parties), which was also emphasised in Mitchell and Michael. Thirdly, the decision confirmed, following Michael and numerous older authorities, that public authorities are generally subject to the same general principles of the law of negligence as private individuals and bodies, except to the extent that legislation requires a departure from those principles. That is the basic premise of the consequent framework for determining the existence or non existence of a duty of care on the part of a public authority. It follows (1) that public authorities may owe a duty of care in circumstances where the principles applicable to private individuals would impose such a duty, unless such a duty would be inconsistent with, and is therefore excluded by, the legislation from which their powers or duties are derived; (2) that public authorities do not owe a duty of care at common law merely because they have statutory powers or duties, even if, by exercising their statutory functions, they could prevent a person from suffering harm; and (3) that public authorities can come under a common law duty to protect from harm in circumstances where the principles applicable to private individuals or bodies would impose such a duty, as for example where the authority has created the source of danger or has assumed a responsibility to protect the claimant from harm, unless the imposition of such a duty would be inconsistent with the relevant legislation. Assumption of responsibility It is apparent from the cases so far discussed that the nature of an assumption of responsibility is of importance in the present context. That topic should be considered before turning to the circumstances of the present case. Although the concept of an assumption of responsibility first came to prominence in Hedley Byrne in the context of liability for negligent misstatements causing pure economic loss, the principle which underlay that decision was older and of wider significance (see, for example, Wilkinson v Coverdale (1793) 1 Esp 75). Some indication of its width is provided by the speech of Lord Morris of Borth y Gest in Hedley Byrne, with which Lord Hodson agreed, at pp 502 503: My Lords, I consider that it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise. It is also apparent from well known passages in the speech of Lord Devlin, at pp 528 529 and 530: I think, therefore, that there is ample authority to justify your Lordships in saying now that the categories of special relationships which may give rise to a duty to take care in word as well as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but include also relationships which in the words of Lord Shaw in Norton v Lord Ashburton [1914] AC 932, 972 are equivalent to contract, that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract. I shall therefore content myself with the proposition that wherever there is a relationship equivalent to contract, there is a duty of care. Where, as in the present case, what is relied on is a particular relationship created ad hoc, it will be necessary to examine the particular facts to see whether there is an express or implied undertaking of responsibility. Since Hedley Byrne, the principle has been applied in a variety of situations in which the defendant provided information or advice to the claimant with an undertaking that reasonable care would be taken as to its reliability (either express or implied, usually from the reasonable foreseeability of the claimants reliance upon the exercise of such care), as for example in Smith v Eric S Bush, or undertook the performance of some other task or service for the claimant with an undertaking (express or implied) that reasonable care would be taken, as in Henderson v Merrett Syndicates Ltd and Spring v Guardian Assurance plc [1995] 2 AC 296. In the latter case, Lord Goff observed at p 318: All the members of the Appellate Committee in [Hedley Byrne] spoke in terms of the principle resting upon an assumption or undertaking of responsibility by the defendant towards the plaintiff, coupled with reliance by the plaintiff on the exercise by the defendant of due care and skill. Lord Devlin, in particular, stressed that the principle rested upon an assumption of responsibility when he said, at p 531, that the essence of the matter in the present case and in others of the same type is the acceptance of responsibility. Furthermore, although Hedley Byrne itself was concerned with the provision of information and advice, it is clear that the principle in the case is not so limited and extends to include the performance of other services, as for example the professional services rendered by a solicitor to his client: see, in particular, Lord Devlin, at pp 529 530. Accordingly where the plaintiff entrusts the defendant with the conduct of his affairs, in general or in particular, the defendant may be held to have assumed responsibility to the plaintiff, and the plaintiff to have relied on the defendant to exercise due skill and care, in respect of such conduct. That approach is reflected in the cases previously discussed. In X (Minors) v Bedfordshire, the social workers were held not to have assumed any responsibility towards the claimants in the child abuse cases on the basis that they were not providing their professional services to the claimants, and it was not reasonably foreseeable that the claimants would rely on the reports which they provided to their employers. In the education cases, on the other hand, the local authority assumed responsibility for the advisory service which it was understood to provide to the public, since the public could reasonably be expected to place reliance on the advice; a school assumed responsibility for meeting the educational needs of the pupils to whom it provided an education; the headmaster came under a duty of care by virtue of his responsibility for the school; and an advisory teacher assumed responsibility for advice which he knew would be communicated to a childs parents and on which they would foreseeably rely. In Barrett v Enfield, the local authority assumed responsibility for the welfare of a child when it took him into its care. In Phelps v Hillingdon, the educational psychologist assumed responsibility for the professional advice which he provided about a child in circumstances where it was reasonably foreseeable that the childs parents would rely on that advice. It is convenient at this point to consider a submission advanced on behalf of the council in the present case, said to be supported by some recent decisions of the Court of Appeal, that a public authority cannot assume responsibility merely by operating a statutory scheme. The submission was based primarily on the judgment of Dyson LJ in Rowley v Secretary of State for Work and Pensions [2007] EWCA Civ 598; [2007] 1 WLR 2861, paras 51 55, where it was held that the Secretary of State, in carrying out his statutory duty to make an assessment of child support maintenance, did not assume a responsibility towards the parent with care of the children in question. Dyson LJ focused on the requirement that responsibility must be voluntarily accepted or undertaken, as Lord Devlin put it in Hedley Byrne at p 529: a requirement which, he held, was not met merely by the Secretary of States performance of his statutory duty under the legislation. That decision was followed in X v Hounslow London Borough Council [2009] EWCA Civ 286; [2009] 2 FLR 262, a case with similarities to the present case, where it was held that a local authoritys social services and housing departments had not assumed a responsibility to protect vulnerable council tenants and their children from harm inflicted by third parties. Sir Anthony Clarke MR, giving the judgment of the Court of Appeal, observed at para 60 that the case was not one of assumption of responsibility unless the assumption of responsibility could properly be held to be voluntary. That was because a public authority will not be held to have assumed a common law duty merely by doing what the statute requires or what it has power to do under a statute, at any rate unless the duty arises out of the relationship created as a result, such as in Lord Hoffmanns example [in Gorringe, para 38] of the doctor patient relationship. Since the claimants case amounted to no more than that the council had failed to move them into temporary accommodation in breach of its statutory duty or in the exercise of its statutory powers, it failed because none of the statutory provisions relied on gave rise to a private law cause of action. The correctness of these decisions is not in question, but the dicta should not be understood as meaning that an assumption of responsibility can never arise out of the performance of statutory functions. Dyson LJ based his reasoning in Rowley on the decision of the House of Lords in Customs and Excise Comrs v Barclays Bank plc [2006] UKHL 28; [2007] 1 AC 181, where the question was whether the bank had assumed responsibility to the Commissioners to prevent payments out of an account, by virtue of having been served with freezing orders. Dyson LJ cited Lord Binghams statement at para 14 that there was no assumption of responsibility by the bank: they had no choice. Lord Hoffmann considered the question more fully. He observed at para 38 that a duty of care is ordinarily generated by something which the defendant has decided to do: giving a reference, supplying a report, managing a syndicate, making ginger beer: It does not much matter why he decided to do it; it may be that he thought it would be profitable or it may be that he was providing a service pursuant to some statutory duty, as in Phelps v Hillingdon London Borough Council [2001] 2 AC 619 and Ministry of Housing and Local Government v Sharp [1970] 2 QB 223. He added at para 39: The question of whether the order can have generated a duty of care is comparable with the question of whether a statutory duty can generate a common law duty of care. The answer is that it cannot: see Gorringe v Calderdale Metropolitan Borough Council [2004] 1 WLR 1057. The statute either creates a statutory duty or it does not. (That is not to say, as I have already mentioned, that conduct undertaken pursuant to a statutory duty cannot generate a duty of care in the same way as the same conduct undertaken voluntarily.) But you cannot derive a common law duty of care directly from a statutory duty. Likewise, as it seems to me, you cannot derive one from an order of court. There are indeed several leading authorities in which an assumption of responsibility arose out of conduct undertaken in the performance of an obligation, or the operation of a statutory scheme. An example mentioned by Lord Hoffmann is Phelps v Hillingdon, where the teachers and educational psychologists assumption of responsibility arose as a consequence of their conduct in the performance of the contractual duties which they owed to their employers. Another example is Barrett v Enfield, where the assumption of responsibility arose out of the local authoritys performance of its functions under child care legislation. The point is also illustrated by the assumption of responsibility arising from the provision of medical or educational services, or the custody of prisoners, under statutory schemes. Clearly the operation of a statutory scheme does not automatically generate an assumption of responsibility, but it may have that effect if the defendants conduct pursuant to the scheme meets the criteria set out in such cases as Hedley Byrne and Spring v Guardian Assurance plc. The present case In the light of the cases which I have discussed, the decision in X (Minors) v Bedfordshire can no longer be regarded as good law in so far as it ruled out on grounds of public policy the possibility that a duty of care might be owed by local authorities or their staff towards children with whom they came into contact in the performance of their functions under the 1989 Act, or in so far as liability for inflicting harm on a child was considered, in the Newham case, to depend upon an assumption of responsibility. Whether a local authority or its employees owe a duty of care to a child in particular circumstances depends on the application in that setting of the general principles most recently clarified in the case of Robinson. Following that approach, it is helpful to consider in the first place whether the case is one in which the defendant is alleged to have harmed the claimant, or one in which the defendant is alleged to have failed to provide a benefit to the claimant, for example by protecting him from harm. The present case falls into the latter category. Understandably, the reasoning of Irwin LJ in the Court of Appeal in the present case did not follow the approach set out in Robinson, which was decided after the Court of Appeal had given its decision. The first consideration on which Irwin LJ placed particular emphasis, namely the concern expressed in X (Minors) v Bedfordshire and Hill v Chief Constable of West Yorkshire that liability in negligence would complicate decision making in a difficult and sensitive field, and potentially divert the social worker or police officer into defensive decision making, has not been treated as sufficient reason for denying liability in subsequent cases such as Barrett v Enfield, Phelps v Hillingdon and D v East Berkshire. His view that the decision of the Court of Appeal in D v East Berkshire had been implicitly overruled by Michael was mistaken: the decision in D v East Berkshire has not been overruled by any subsequent decision. In Michael, as explained earlier, this court rejected an argument which was said to be supported by D v East Berkshire, but it did not disapprove of the true ratio of that decision. More fundamentally, in cases such as Gorringe, Michael and Robinson both the House of Lords and this court adopted a different approach (or rather, reverted to an earlier approach) to the question whether a public authority is under a duty of care. That approach is based on the premise that public authorities are prima facie subject to the same general principles of the common law of negligence as private individuals and organisations, and may therefore be liable for negligently causing individuals to suffer actionable harm but not, in the absence of some particular reason justifying such liability, for negligently failing to protect individuals from harm caused by others. Rather than justifying decisions that public authorities owe no duty of care by relying on public policy, it has been held that even if a duty of care would ordinarily arise on the application of common law principles, it may nevertheless be excluded or restricted by statute where it would be inconsistent with the scheme of the legislation under which the public authority is operating. In that way, the courts can continue to take into account, for example, the difficult choices which may be involved in the exercise of discretionary powers. The second consideration on which Irwin LJ based his decision, namely the principle that in general there is no liability for the wrongdoing of a third party even where that wrongdoing is reasonably foreseeable, is plainly important but, as he recognised, not conclusive in itself. In Robinson, this court cited at para 34 a helpful summary by Tofaris and Steel, Negligence Liability for Omissions and the Police (2016) 75 CLJ 128, of the situations in which a justification commonly exists for holding that the common law imposes such a liability: In the tort of negligence, a person A is not under a duty to take care to prevent harm occurring to person B through a source of danger not created by A unless (i) A has assumed a responsibility to protect B from that danger, (ii) A has done something which prevents another from protecting B from that danger, (iii) A has a special level of control over that source of danger, or (iv) As status creates an obligation to protect B from that danger. The present case is not brought on the basis that the council was in the second, third or fourth of these situations. It was suggested in argument that a duty of care might have arisen on the basis that the council had created the source of danger by placing Amy and her family in housing adjacent to the neighbouring family. The difficulty of sustaining such an argument is however apparent from Mitchell, paras 41, 61 63, 76 77 and 81 82. As Lord Brown pointed out in the last of these passages, there is a consistent line of authority holding that landlords (including local authorities) do not owe a duty of care to those affected by their tenants anti social behaviour. It is also necessary to remember that there is no claim against the council based on its exercise of its functions under housing legislation. The claim against the council is based instead on an assumption of responsibility or special relationship. The particulars of claim state: In purporting to investigate the risk that the claimants neighbours posed to the claimants and subsequently in attempting to monitor the claimants plight as set out in the sequence of events above, the defendant had accepted a responsibility for the claimants particular difficulties and/or there was a special nexus or special relationship between the claimants and the defendant. The defendant purported to protect the claimants by such investigation and in as far as such investigation is shown to have been carried out negligently and/or negligently acted on the defendant is liable for breach of duty. The sequence of events referred to is a chronology of events. In relation to investigation and monitoring by the councils social services department, it refers to the assignment of social workers to the claimants, to the various assessments of their needs, and to meetings at which the appropriate response to Grahams behaviour was discussed. Irwin LJ rejected the contention that there was an assumption of responsibility by the council on the ground that there was an insufficient basis to satisfy the approach of the Court of Appeal in X v Hounslow London Borough Council and Darby v Richmond upon Thames London Borough Council [2017] EWCA Civ 252. I have also come to the conclusion that the particulars of claim do not provide a basis on which an assumption of responsibility might be established, for the following reasons. As Lord Browne Wilkinson explained in relation to the educational cases in X (Minors) v Bedfordshire (particularly the Dorset case), a public body which offers a service to the public often assumes a responsibility to those using the service. The assumption of responsibility is an undertaking that reasonable care will be taken, either express or more commonly implied, usually from the reasonable foreseeability of reliance on the exercise of such care. Thus, whether operated privately or under statutory powers, a hospital undertakes to exercise reasonable care in the medical treatment of its patients. The same is true, mutatis mutandis, of an education authority accepting pupils into its schools. In the present case, on the other hand, the councils investigating and monitoring the claimants position did not involve the provision of a service to them on which they or their mother could be expected to rely. It may have been reasonably foreseeable that their mother would be anxious that the council should act so as to protect the family from their neighbours, in particular by re housing them, but anxiety does not amount to reliance. Nor could it be said that the claimants and their mother had entrusted their safety to the council, or that the council had accepted that responsibility. Nor had the council taken the claimants into its care, and thereby assumed responsibility for their welfare. The position is not, therefore, the same as in Barrett v Enfield. In short, the nature of the statutory functions relied on in the particulars of claim did not in itself entail that the council assumed or undertook a responsibility towards the claimants to perform those functions with reasonable care. It is of course possible, even where no such assumption can be inferred from the nature of the function itself, that it can nevertheless be inferred from the manner in which the public authority has behaved towards the claimant in a particular case. Since such an inference depends on the facts of the individual case, there may well be cases in which the existence or absence of an assumption of responsibility cannot be determined on a strike out application. Nevertheless, the particulars of claim must provide some basis for the leading of evidence at trial from which an assumption of responsibility could be inferred. In the present case, however, the particulars of claim do not provide a basis for leading evidence about any particular behaviour by the council towards the claimants or their mother, besides the performance of its statutory functions, from which an assumption of responsibility might be inferred. Reference is made to an email written in June 2009 in which the councils anti social behaviour co ordinator wrote to Amy that we do as much as it is in our power to fulfil our duty of care towards you and your family, and yet we cant seem to get it right as far as you are concerned, but the email does not appear to have been concerned with the councils functions under the 1989 Act, and in any event a duty of care cannot be brought into being solely by a statement that it exists: ORourke v Camden London Borough Council [1998] AC 188, 196. I would therefore conclude, like the Court of Appeal but for different reasons, that the particulars of claim do not set out an arguable claim that the council owed the claimants a duty of care. Although X (Minors) v Bedfordshire cannot now be understood as laying down a rule that local authorities do not under any circumstances owe a duty of care to children in relation to the performance of their social services functions, as the Court of Appeal rightly held in D v East Berkshire, the particulars of claim in this case do not lay a foundation for establishing circumstances in which such a duty might exist. The council is also sought to be held liable on the basis of vicarious liability for the negligence of its employees. That is an aspect of the case to which the Court of Appeal did not give separate consideration. The particulars of claim state: Each of the social workers and/or social work managers and other staff employed by the defendant who was allocated as the social worker or manager for the claimants or tasked with investigating the plight of the claimants owed to the claimants a duty of care. It appears from the particulars of claim that social workers carried out assessments of the claimants needs on the councils instructions, and provided the council (and others who may have been involved in decision making) with information and professional advice about the children for the purpose of enabling the council to perform its statutory functions. There is no doubt that, in carrying out those functions, the social workers were under a contractual duty to the council to exercise proper professional skill and care. The question is whether, in addition, they also owed a similar duty to the claimants under the law of tort. That depends on whether the social workers assumed a responsibility towards the claimants to perform their functions with reasonable care. In considering that question, it may be helpful to compare the position of the social workers with the positions of the educational psychologists and the advisory teacher in X (Minors) v Bedfordshire, and the educational psychologists in Phelps v Hillingdon. In the former case, Lord Browne Wilkinson accepted in relation to the Dorset proceedings that the local authority could be vicariously liable for negligence on the part of its educational psychologists because they were providing professional advice to parents on which the parents had foreseeably relied. In the Hampshire proceedings, he accepted that an advisory teacher, brought in to advise on a pupils educational needs, owed a duty to the child to exercise reasonable skill and care provided he knew that his advice would be communicated to the pupils parents, and could therefore reasonably foresee that they would rely on such advice. In Phelps v Hillingdon, the duty of care of the educational psychologist towards the child was again based on the fact that it was reasonably foreseeable that the childs parents would rely on the advice provided. Those were all cases where the duty of care arose on the basis of the Hedley Byrne principle. In the present case, on the other hand, there is no suggestion that the social workers provided advice on which the claimants mother would foreseeably rely. As has been explained, however, the concept of an assumption of responsibility is not confined to the provision of information or advice. It can also apply where, as Lord Goff put it in Spring v Guardian Assurance plc, the claimant entrusts the defendant with the conduct of his affairs, in general or in particular. Such situations can arise where the defendant undertakes the performance of some task or the provision of some service for the claimant with an undertaking that reasonable care will be taken. Such an undertaking may be express, but is more commonly implied, usually by reason of the foreseeability of reliance by the claimant on the exercise of such care. In the present case, however, there is nothing in the particulars of claim to suggest that a situation of that kind came into being. The existence of an assumption of responsibility can be highly dependent on the facts of a particular case, and where there appears to be a real possibility that such a case might be made out, a court will not decide otherwise on a strike out application. In the circumstances which I have described, however, the particulars of claim do not in my opinion set out any basis on which an assumption of responsibility might be established at trial. Any uncertainty as to whether the case is one which can properly be struck out without a trial of the facts is eliminated by the further difficulties that arise in relation to the breach of duty alleged. The case advanced in the particulars of claim is that any competent local authority should and would have arranged for [the claimants] removal from home into at least temporary care. As King LJ explained, however, in order to satisfy the threshold condition for obtaining care orders under section 31(2) of the 1989 Act, it would be necessary to establish that the claimants were suffering, or were likely to suffer, significant harm which was attributable to a lack, or likely lack, of reasonable parental care. The threshold condition applicable to interim care orders requires the court to be satisfied that there are reasonable grounds for believing that the circumstances with respect to the child are as mentioned in section 31(2). Nothing in the particulars of claim suggests that those conditions could possibly have been met. The harm suffered by the claimants was attributable to the conduct of the neighbouring family, rather than a lack of reasonable parental care. There were simply no grounds for removing the children from their mother. Conclusion The particulars of claim in these proceedings do not disclose any recognisable basis for a cause of action. The complaint is that the council or its employees failed to fulfil a common law duty to protect the claimants from harm inflicted by their neighbours by exercising certain statutory powers. The relevant provisions do not themselves create a cause of action. Reliance is placed on an assumption of responsibility arising from the relationship between the claimants and the council or its employees, but there is nothing to suggest that those relationships possessed the necessary characteristics for an assumption of responsibility to arise. Furthermore, it is clear that the alleged breach of duty, namely a failure to remove the claimants from the care of their mother, has no possible basis. Although the court does not have before it all the evidence which might emerge at a trial, there is no reason to believe that the claimants could overcome these fundamental problems as to the legal basis of their claim. That being so, it is to the advantage of all concerned that the claim should not proceed to what would be a costly but inevitably fruitless trial. For these reasons, which differ from those of the Court of Appeal, I would dismiss the appeal.
UK-Abs
The claimants, who have been given anonymity, seek damages for personal injuries suffered while they were children living in the area of the defendant council. They maintain that the injuries were suffered as a result of the councils negligent failure to exercise its powers under the Children Act 1989 (the 1989 Act) so as to protect them from harm at the hands of third parties. The claimants allege that in May 2006 they and their mother were placed by the council in a house on an estate in Poole next to a family who, to the councils knowledge, persistently engaged in anti social behaviour. The claimants and their mother became the target of harassment and abuse at the hands of this family, which persisted over a period of several years until they were re housed in December 2011. This included vandalism of the mothers car, attacks on the family home, threats of violence, verbal abuse, and physical assaults on the mother and one of the claimants. As a result, the claimants suffered physical and psychological harm. During the period in question, both claimants were identified by the council as children in need as defined in the 1989 Act, and had social workers allocated to them. The claimants initially brought their claim on the basis that the council had been negligent in the exercise of both its housing functions and its functions under the 1989 Act. The claim was struck out by Master Edelman on the basis that no relevant duty of care towards the claimants arose out of the statutory powers and duties relied on. The claimants appealed in relation the councils functions under the 1989 Act only. The appeal was allowed by Mrs Justice Slade in the High Court. The Court of Appeal then allowed the councils further appeal. The claimants now appeal to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Reed, with whom the rest of the Court agrees, delivers the judgment. The claimants particulars of claim do not disclose any recognisable basis for a cause of action. The case should not proceed to trial. The claimants focus on section 17 and 47 of the 1989 Act, but it is accepted that the Act does not create a statutory cause of action. Therefore, the question is whether local authorities may be liable for breach of a common law duty of care in relation to the performance of their functions under the Act. [25] Public authorities do not owe a duty of care at common law merely because they have statutory powers or duties, even if, by exercising their statutory functions, they could prevent a person from suffering harm. However, they can come under a common law duty to protect someone from harm in circumstances where the principles applicable to private individuals or bodies would also impose such a duty, as for example where the authority has created the source of danger or assumed a responsibility to protect the claimant from harm, unless the imposition of such a duty would be inconsistent with the relevant legislation. [65] The present case is not one where the council is alleged to have harmed the claimants, but one in which the council is alleged to have failed to provide a benefit to the claimants by protecting them from harm. [74] The claimants case is that the council had assumed a responsibility towards them to take reasonable care in investigating and monitoring their position. If such care had been taken, the council would have exercised its powers under the 1989 Act to remove the claimants from their home into at least temporary care. The councils conduct in investigating and monitoring the claimants position did not, however, involve the provision of a service to them on which they or their mother could be expected to rely. It could not be said that the claimants and their mother had entrusted their safety to the council, or that the council had accepted that responsibility. Nor had the council taken the claimants into its care, and thereby assumed responsibility for their welfare. The council therefore did not assume a responsibility towards them. [80] [81] The claimants also advance an alternative claim on the basis that the council is vicariously liable for negligence by the social workers in its employment. There is no doubt that, in carrying out the councils statutory functions, the social workers were under a contractual duty to the council to exercise proper professional skill and care. The question is whether, in addition, they also owed a similar duty to the claimants under the law of tort. That depends on whether the social workers assumed a responsibility towards the claimants to perform their functions with reasonable care. [86] A defendant may assume responsibility to a claimant where he undertakes the performance of some task or the provision of some service for the claimant with an undertaking that reasonable care will be taken. Such an undertaking may be express but is more commonly implied, usually by reason of the foreseeability of reliance by the claimant on the exercise of such care. [88] In the circumstances of this case, however, the particulars of claim do not set out any basis on which such an assumption of responsibility might be established at trial. [89] Any uncertainty as to whether this case is one which can properly be struck out is eliminated by the further difficulties that arise in relation to the claimants case that the council breached its duty of care by failing to remove the claimants from their home into, at least, temporary care. In order to obtain a care order under the relevant provisions, it would have been necessary to establish that the claimants were suffering, or were likely to suffer, significant harm which was attributable to a lack, or likely lack, of reasonable parental care. The harm suffered by the claimants was attributable to the conduct of the neighbouring family, rather than a lack of reasonable parental care. There were simply no grounds for removing the children from their mother. [90]
This appeal concerns the relationship between two statutory provisions, one very old and the other very young. The old provision, which dates back to the inception of Income Tax during the Napoleonic Wars, but is now to be found in section 874 of the Income Tax Act 2007, requires a debtor in specific circumstances to deduct income tax from payments of yearly interest arising in the United Kingdom. The young provision, first made the subject of legislation in 1986 (and replacing previous judge made rules) but now to be found in rule 14.23(7) of the Insolvency Rules 2016, requires a surplus remaining after payment of debts proved in a distributing administration first to be applied in paying interest on those debts in respect of the periods during which they had been outstanding since the commencement of the administration. The short question, which has generated different answers in the courts below, is whether interest payable under rule 14.23(7) is yearly interest within the meaning of section 874, so that the administrators must first deduct income tax before paying interest to proving creditors. The question arises in connection with the administration of Lehman Brothers International (Europe) (LBIE) which, although it commenced at a time when LBIE was commercially insolvent due to the worldwide crash of the international group of companies of which it formed an important part, has nonetheless generated an unprecedented surplus after payment of all provable debts, in the region of 7 billion, of which some 5 billion is estimated to be payable by way of statutory interest (before any deduction of income tax). LBIE went into administration on 15 September 2008. It became a distributing administration in December 2009. A final dividend was paid to unsecured proving creditors (bringing the total dividends to 100p in the pound) on 30 April 2014. After the coming into effect of a scheme of arrangement, interest slightly in excess of 4 billion was paid to creditors, after deduction of a sufficient amount on account of tax to abide the outcome of these proceedings, on 25 July 2018. Thus the time which elapsed between the commencement of the administration and the payment of interest to creditors was slightly under ten years. The periods in respect of which interest was payable under rule 14.23(7) (and its predecessor) ranged from a little over four years (which expired when the first interim distribution to proving creditors was made in November 2012) and little over five and a half years, when the final dividend to creditors was made, as described above. Statutory Interest in Administration Rule 14.23(7) of the Insolvency Rules 2016, which replaced substantially identical provisions in rule 2.88(7) of the Insolvency Rules 1986, provides as follows: (7) In an administration (a) any surplus remaining after payment of the debts proved must, before being applied for any other purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the relevant date; (b) all interest payable under sub paragraph (a) ranks equally whether or not the debts on which it is payable rank equally; and the rate of interest payable under sub paragraph (c) (a) is whichever is the greater of the rates specified under paragraph (6) and the rate applicable to the debt apart from the administration. Rule 14.23(6) provides that the relevant rate of interest is that specified in section 17 of the Judgments Act 1838 (1 & 2 Vict c 110), which was, at the material time, 8% per annum. The relevant date referred to in rule 14.23(7)(a) is the date upon which the company entered administration; see rule 14.1(3). In In re Lehman Brothers International (Europe) (in administration) (No 6) [2015] EWHC Civ 2269 (Ch); [2016] Bus LR 17, para 149, David Richards J said this about statutory interest payable under the predecessor of rule 14.23(7): The right to interest out of a surplus under rule 2.88 is not a right to the payment of interest accruing due from time to time during the period between the commencement of the administration and the payment of the dividend or dividends on the proved debts. The dividends cannot be appropriated between the proved debts and interest accruing due under rule 2.88, because at the date of the dividends no interest was payable at that time pursuant to rule 2.88. The entitlement under rule 2.88 to interest is a purely statutory entitlement, arising once there is a surplus and payable only out of that surplus. The entitlement under rule 2.88 does not involve any remission to contractual or other rights existing apart from the administration. It is a fundamental feature of rule 2.88, and a primary recommendation of the Cork Committee that all creditors should be entitled to receive interest out of surplus in respect of the periods before payment of dividends on their proved debts, irrespective of whether, apart from the insolvency process, those debts would carry interest. In the present case, in the Court of Appeal [2018] Bus LR 730, after citing that passage in full, Patten LJ continued, at para 16: There is no doubt at all that statutory interest, as David Richards J explained, is not a continuing liability which accrues from day to day on a prospective basis over the period to which it relates. It is paid, as I have said, as statutory compensation for the loss which the creditors have suffered by being kept out of their money for the period of the administration. I agree. In In re Lehman Brothers International (Europe) (in administration) (Nos 6 and 7) [2017] EWCA Civ 1462; [2018] Bus LR 508, para 26, giving the judgment of the Court of Appeal, Gloster LJ said of the simple words of rule 2.88(7), when aggregated with the following two paragraphs (all in substantially the same terms as are now to be found in rule 14.23, as set out above): this simple formula constitutes, in our view, a complete and clear code for the award of statutory interest on provable debts. As [counsel] put it, it contains all you need to know. In the present case, at first instance, Hildyard J said at para 16: In my judgment, the statutory right to interest is sui generis and is not to be equated with a right to interest which accrues over time. Again, I agree with both those dicta (and was a party to the first of them). Yearly Interest under the Income Tax Legislation follows: Section 874 of the Income Tax Act 2007 provides (so far as is relevant) as (1) This section applies if a payment of yearly interest arising in the United Kingdom is made (a) by a company, (b) by a local authority, (c) by or on behalf of a partnership of which a company is a member, or (d) by any person to another person whose usual place of abode is outside the United Kingdom. (2) The person by or through whom the payment is made must, on making the payment, deduct from it a sum representing income tax on it at the basic rate in force for the tax year in which it is made. There is no definition of the phrase yearly interest anywhere in the 2007 Act. Nonetheless there is this deeming provision in section 874, added by Schedule 11 to the Finance Act 2013: (5A) For the purposes of subsection (1) a payment of interest which is payable to an individual in respect of compensation is to be treated as a payment of yearly interest (irrespective of the period in respect of which the interest is paid). This is unfortunately another case in which the full meaning of an apparently innocent looking simple statutory phrase can only be addressed by reference to the historical deployment of that phrase, or equivalent phrases seeking to express the same concept, in early legislation. Hildyard J set out in an Appendix to his judgment an admirable brief summary of the history of the statutory provisions about deduction of yearly interest, beginning with the introduction of income tax by Pitts Income Tax Act 1799 (39 Geo 3 c 13). In the present case, the main reason for needing an understanding of the statutory history is so that important decisions about the underlying concepts behind yearly interest can be reliably interpreted, by reference to the particular context of the use of the phrase in the statute then in force. As would appear, the earliest of those authorities was decided in 1854, and the latest in 1981. The concept of yearly interest first appeared within the income tax legislation in section 208 of Addingtons Income Tax Act 1803 (43 Geo 3 c 122). It appeared as part of the phrase: Annuities, yearly Interest of Money, or other annual Payments whether the same shall be received and payable half yearly, or at any shorter or more distant Periods. Section 208 both charged yearly interest to tax and authorised the payer to deduct an amount equal to the tax chargeable on the interest. When income tax was reintroduced by Sir Robert Peel in the Income Tax Act 1842 (5 & 6 Vict c 35), section 102 charged to tax: Annuities, yearly Interest of Money, or other annual Payments. And, as in 1803, provided for deduction at source by the payer, where paid out of taxed profits or gains. Deduction of yearly interest at source was continued in Gladstones Income Tax Act 1853 (16 & 17 Vict c 34), by section 40, while Schedule D brought into charge: All Interest of Money, Annuities, and other annual Profits and Gains. From 1888 until 1965, a succession of provisions to substantially the same effect made it compulsory to deduct tax at source and to account for it to the Revenue where interest of any kind was not wholly paid out of taxed income, but permitted the deduction of tax at source and its retention in respect of yearly interest which was wholly paid out of taxed income. In relation to yearly interest, this enabled the interest payer to be compensated for the fact that yearly interest paid out was not deductible in computing his own taxable profits or gains. This dichotomy was, between 1918 and 1952, achieved by rules 21 and 19 respectively of the General Rules Applicable to all Schedules of the Income Tax Act 1918 (the 1918 Rules). In short, rule 21 was about all types of interest, whereas rule 19 was concerned only with yearly interest. From 1952 until 1965 this dichotomy was preserved by sections 169 (concerning yearly interest) and 170 (concerning interest of any kind) of the Income Tax Act 1952. This dichotomy between the treatment of interest of any kind which is not paid out of profits or gains and yearly interest which is so made was progressively unwound, first for corporate taxpayers by the Finance Act 1965 and then generally by the Finance Act 1969. The regime for deduction of tax on interest at source which has continued, without substantial change, from 1969 is that set out in section 54 of the Income and Corporation Taxes Act 1970, then section 349(2) and (3) Income and Corporation Taxes Act 1988 and, latterly, section 874 of the Income Tax Act 2007. In summary, it provides only for the mandatory deduction at source of tax on yearly interest paid by companies as well as certain other categories of payers, or paid by any person to someone whose usual place of abode is outside the UK. The issues In order to make sense of what follows, it is convenient at this stage to provide a bare outline of what is and is not in issue, under the general question whether or not statutory interest payable by administrators out of a surplus is yearly interest. It has been common ground throughout this litigation that the payments are properly to be regarded as interest, not merely because they are so described in rule 14.23(7), but also within the meaning of the word as used in section 874(1). As will appear (and as the Court of Appeal concluded) that apparent concession by the administrators serves more to mask than to define the real issues. The main thrust of the administrators submissions (by Mr David Goldberg QC and Mr Daniel Bayfield QC in this court although Mr Goldberg did not appear below) has been to contrast the characteristics which the authorities show are required for the classification of interest as yearly interest with those of interest payable from a surplus in administration. The required characteristics are that the interest should derive from a source with the requisite degree of permanence and durability over time, and that the interest should accrue due over a period intended, or at least likely to last for a year or more. By contrast, it is submitted, statutory interest payable from a surplus in administration has, as its source, first the emergence of a surplus and second the decision of the administrators that it is time to pay it. It does not accrue due over any significant or likely period of time. Rather it is simply payable out of that surplus once it has been ascertained and turned into money, usually (and as here) by a single payment of a lump sum to each qualifying creditor. For HMRC it is submitted (by Mr Malcolm Gammie QC and Ms Catherine Addy QC) first, that it is unnecessary to identify a source for a statutory interest payment to qualify for deduction under section 874(1) and secondly, that it is not a requirement of yearly interest that it should accrue due over a period of time. Rather, the characteristic which satisfies the requirement that the interest should be yearly is that, once a surplus has been identified, the statutory interest is payable in respect of the period, commencing with the beginning of the administration, and ending with payment of the proving creditors debts in full, during which the creditors have been kept out of their money. If that period is, on the facts about a particular administration, in excess of a year, then the requirement for duration over time encapsulated in the word yearly is satisfied. Further, to the extent that the authorities made it a requirement that the source of the interest should be something in the nature of an investment, this was satisfied in relation to all LBIEs creditors, and regardless of the basis of their claims admitted to proof, because they were involuntary long term investors in LBIE by reason of the moratorium placed upon their claims by its administration. At first instance, Hildyard J was persuaded that the absence of any accrual over time (prior to the identification of a surplus and its quantification after payment of all proved debts in full) was fatal to the categorisation of statutory interest as yearly interest. By contrast, the Court of Appeal could discern no requirement from the authorities that yearly interest should accrue due over time. Since it was compensation for the proving creditors being kept out of their money for a substantial time, the interest had the requisite long term quality sufficient for it to be categorised as yearly. The Authorities The relevant authorities may broadly be divided into two groups. First, there are those which address the question whether interest which does accrue due over time is properly to be categorised as yearly interest or, in bankers jargon, short interest. Secondly, there are those authorities which address the question whether an entitlement to money described as interest, but which does not accrue due over time, can properly be regarded as yearly interest, or indeed interest at all, within the meaning of the income tax legislation. This second group is mainly concerned with interest payable as a result of a judicial decision, either when granting an equitable remedy or when exercising a discretion to award interest under statute. As will appear, it is this second group of authorities which, in my view, provides the answer to the questions raised by this appeal, albeit only by analogy because, as the judge himself observed, statutory interest payable from a surplus realised in a distributing administration is sui generis. Nevertheless it is convenient to take the first (generally earlier) group of authorities first. The earliest is Bebb v Bunny (1854) 1 K & J 216. The question was whether interest contractually payable upon the late completion of a contract for the purchase of land was yearly interest of money within the meaning of section 40 of the Income Tax Act 1853, so that it was payable subject to deduction of tax, either by the purchaser or by the court, even if paid into court gross as the condition for a decree of specific performance against the vendor. In deciding that it was yearly interest, Sir William Page Wood V C said, at pp 219 220: The whole difficulty is in the expression yearly interest of money; but I think it susceptible of this view, that it is interest reserved, at a given rate per cent per annum; or, at least, in the construction of this Act, I must hold that any interest which may be or become payable de anno in annum, though accruing de die in diem, is within the 40th section. I cannot make any solid distinction between interest on mortgage money and interest on purchase money. I consider the Act very singularly worded, yearly interest being used apparently in the same sense as annual payments; but I am clearly of opinion that it means at least all interest at a yearly rate, and which may have to be paid de anno in annum; such as interest on purchase money, as well as mortgage interest; and that, therefore, the purchaser is entitled to deduct the tax in this case. The reference to mortgage money, by way of analogy, becomes intelligible when it is understood that the drafting practice of the time was typically to make mortgage loans repayable, with interest, on a fixed date, usually less than a year after the making of the advance, even if the parties expectation was that the mortgage would endure for much longer, before redemption, with interest being payable periodically in the meantime. As the Vice Chancellor put it, at p 218: Most mortgage deeds contain only a covenant to pay the principal, with interest at a certain rate per annum, on a day certain. After that it accrues de die in diem, and the interest, without any particular reservation, ordinarily is received half yearly, from year to year. It is difficult to see the distinction between interest so reserved and paid, and that which by special agreement accrues on purchase money, which also goes on from day to day, and may run on for a year or stop at any time on payment of the purchase money, and which, in some shape or other, forms a lien on the property. Thus it was the propensity, rather than the intention or inevitability, for interest payable during a period of delayed completion to run on for more than a year which made it yearly interest, even though in many cases the delay in the completion of the purchase might well be much shorter. The potentially very wide interpretation of yearly interest in Bebb v Bunny was, in a series of later cases, significantly curtailed, albeit that in none of them was the decision held to have been wrong. On the contrary, it has remained the leading case. Goslings & Sharpe v Blake (1889) 23 QBD 324 was about a three months bankers loan, repayable with interest on a fixed date, interest being calculated by reference to a rate per annum, an example of what Lindley LJ called, at p 330: short loans by bankers. It establishes two principles relevant to the question whether interest is yearly interest (then within the meaning of section 40 of the Income Tax Act 1853). The first is that interest is not yearly interest merely because it is calculated by reference to a rate per annum: see per Lord Esher MR, at p 328. Secondly it establishes that the question whether the interest is yearly or short depends upon a business like rather than dry legal assessment of its likely duration. At p 330, speaking of the mortgage example used in Bebb v Bunny, Lindley LJ said: The difficulty is not lessened by the circumstance that most mortgages are loans for six months. The ordinary form of mortgage contains a covenant to repay the loan in six months, and if not then paid a covenant to pay interest until the loan is repaid. Those are short loans; but in fact, as men of business, we know perfectly well that, except in exceptional cases, money lent on mortgages is very seldom repaid at the end of six months, the mortgagee usually being content with his security and receiving his interest half yearly. In point of business, therefore, a mortgage is not a short loan; but a bankers loan at three months is a totally different thing. That is a short loan, it is intended and understood to be a short loan, and the difference in practice between the two is perfectly well known to every business man. The first relevant case about whether statutory (rather than contractual) interest can be yearly interest is In re Cooper [1911] 2 KB 550, in which objection was taken to the supposed failure of a judgment creditor to deduct tax from statutory interest due on the judgment relied on in a bankruptcy notice served on the judgment debtor. That depended upon whether the interest was yearly interest. In deciding that interest payable on a judgment debt under the Judgment Act was not yearly interest Cozens Hardy MR said this, at p 553: The words yearly interest are satisfied although the interest be not payable yearly but be payable quarterly or half yearly, and further, as in the case of a mortgage, although the money is covenanted to be paid six months after date in the ordinary course of a mortgage, the court treats that as being a transaction to the knowledge and the reasonable intendment of all parties, upon which yearly interest was payable in the understanding and contemplation of all parties, it being really in the nature of an investment.(my emphasis) He continued: Now in the present case I ask myself is it possible to suppose that this was a transaction in which anybody contemplated or intended anything permanent? It is quite impossible so to regard it. At first blush, this decision of the Court of Appeal might appear to suggest that statutory interest could never be yearly interest because it arose otherwise than pursuant to any agreement, transaction or common intention of the parties. Subsequent cases have shown that this is not so but the concept of addressing the yearly interest question by reference to a perception whether the source of the interest can properly be regarded as a form of investment has survived. A negative answer to that question in relation to statutory interest from a surplus in administration formed a major plank in the administrators submissions. A question deliberately left open in the Goslings case was whether interest on a short loan could nonetheless become yearly interest if the loan was left outstanding for more than a year. In Gateshead Corpn v Lumsden [1914] 2 KB 883 the plaintiff local authority had become entitled against the owners (including the defendant) of premises fronting a street which it had paved and made up, to a proportion of its costs, plus interest at 5% per annum. Although the Corporation had no settled practice of allowing these statutory debts to remain outstanding for periods of more than a year, it did so in relation to the defendant, who made payments on account of interest and capital from time to time. The Court of Appeal rejected a submission that the Corporations forbearance converted interest into yearly interest within the meaning of section 40 of the 1853 Act. Applying the principle which he extracted from In re Cooper, Lord Sumner said, at pp 889 890: applying the principle underlying that decision, I am unable to see how the words yearly interest can apply to this transaction. There is no agreement for a short loan or a long loan. The debt is due and repayment is not enforced; only in that sense is there a loan. Truly speaking there is simply a forbearance to put in suit the remedy for a debt. The repayment might have been enforced at any moment. The debt might have been paid by the debtor at any moment. Lord Sumner was careful to put on one side any case in which it might be established that the local authority had a settled practice of leaving statutory debts for street improvements outstanding for substantial periods of time. But the decision is good authority for the proposition that mere forbearance by a creditor who is entitled to statutory interest on a debt which is immediately due and payable does not bring that statutory interest within the confines of yearly interest. It serves as a caution against treating the words of Sir William Page Wood V C in Bebb v Bunny (quoted above) as meaning that the mere possibility that a stream of interest may endure for more than a year is sufficient in all cases to make it yearly interest. The investment test first enunciated in In re Cooper gains force from the analysis of Rowlatt J in Garston Overseers v Carlisle [1915] 3 KB 381. Persons claiming to be charitable trustees enjoyed a long standing arrangement with their bankers whereby credits on current accounts generated interest. The question was whether that was yearly interest within section 105 of the Income Tax Act 1842, qualifying for deduction at source. By concession, that phrase in section 105 was treated as having the same meaning as in section 40 of the Income Tax Act 1853. Referring to the case law on section 40, Rowlatt J said this, at p 386: The broad result of the decisions in those cases is, I think, that yearly interest means, substantially, interest irrespective of the precise time in which it is collected, interest on sums which are outstanding by way of investment as opposed to short loans or as opposed to moneys presently payable and held over or anything of that kind. He continued, at p 387: They (the overseers) are to levy rates as far as they can for their current expenditure. However, they must necessarily keep a small balance in hand, and they get interest upon it under the arrangements which the bank were willing to make. It is no doubt contemplated that the balance will continue for a long time; but what is the daily balance? It is not even a short loan; it is merely money at call, money payable on demand. Since those temporary balances could not be described as investments, the interest payable was not yearly interest. An attempt to reduce this jurisprudence to a concrete set of useful propositions was made by Lord Anderson, sitting in the Inner House (Second Division) of the Court of Session in Inland Revenue Comrs v Hay (1924) VIII TC 636 at 646. The case was about yearly interest within the meaning of section 27(1)(b) of the Income Tax Act 1918, but it was, again, common ground that the phrase had the same meaning as was under consideration in all the earlier cases, beginning with Bebb v Bunny. Lord Anderson said this: Now the authorities referred to by Crown Counsel seem to me to establish these propositions, five in number: (First), that interest payable in respect of a short loan is not yearly interest (Goslings ). (Second) that in order that interest payable may be held to be yearly interest in the sense of the Income Tax Acts, the loan in respect of which interest is paid must have a measure of permanence. (Third), that the loan must be of the nature and this is pretty well expressing the second proposition in another form that the loan must be of the nature of an investment (Garston Overseers). (Fourth), That the loan must not be one repayable on demand (Gateshead Corpn ). And (fifth) that the loan must have a tract of future time (per Lord Johnston in Scottish North American Trust Ltd, 1910 Session Cases 966, 973). These propositions are perhaps one proposition expressed in different forms, but they are the result of the authorities. I will refer these tests as the Hay tests. Some further support for the pre eminence of the investment test is to be found in the judgment of Lord Denning MR in Corinthian Securities Ltd v Cato [1970] 1 QB 377, at 382 383. After referring to Inland Revenue Comrs v Hay, he continued: The words short loan are not used in the statute: it is a mistake to place too much emphasis on them. The real question is whether the interest payable is yearly interest of money. Interest is yearly interest of money whenever it is paid on a loan which is in the nature of an investment no matter whether it is repayable on demand or not. After reviewing the Goslings case he continued: Looking at the agreement in this case, it is plain to me that this loan was made as an investment. Although payable on demand, it was unlikely that any demand would be made so long as the interest payments were kept up. It was a loan on the security of property, indistinguishable in principle from an ordinary loan or mortgage. The interest was yearly interest of money. Some cold water was cast upon the investment test by Sir John Donaldson MR in Cairns v MacDiarmid [1983] STC 178, at 181, as follows: It is well settled that the difference between what is annual and what is short interest depends on the intention of the parties. Thus interest payable on a mortgage providing for repayment of the money after six months, or indeed a shorter period, will still be annual interest if calculated at a yearly rate and if the intention of the parties is that it may have to be paid from year to year (Bebb v Bunny Corinthian Securities Ltd v Cato ). I would personally wish to avoid the use of the term investment as providing any sort of test in the context of whether interest is annual interest, notwithstanding its use in the latter case, because it is possible to have a short term and indeed a very short term investment, eg overnight deposits, and such an investment does not involve any annual interest, regardless of whether the interest is calculated at an annual rate. That was a case in which it had been found that the loan was never intended to last for more than a few days, although there was an entitlement to postpone repayment for two years. It had, as intended, been discharged within a week, by novation. In my view the difference in approach to the use of investment as a test between that case and those which preceded it has more to do with changes in what the financial world regards as an investment than with any change in the underlying tax law. I consider that the Hay tests remain the best convenient summary of the jurisprudence about the meaning of yearly interest, in the context of interest which accrues due over time, whether purely contractual or statutory in origin. I turn now to the second group of cases, all of which were concerned with interest payable after the event (and usually in one lump sum) as compensation for the payee being kept out of money or property during some earlier period. The common characteristic of these cases, shared with this case, is that the interest does not accrue due during the period in question. Rather, it is awarded after the period has ended, as compensation relating to that earlier period. Taking them chronologically, the first is Barlow v Inland Revenue Comrs (1937) 21 TC 354. In 1923 the appellant, who was a trustee of settlements in favour of his children, realised the trust investments and reinvested the proceeds in his own name in unauthorised securities which subsequently fell in value. Recognising that he acted in breach of trust, by a deed made in March 1930 he covenanted to pay his fellow trustees an amount equivalent to the proceeds of the realisation in 1923, together with compound interest at 5% per annum from the date of realisation until 1 January 1930. Finlay J, on appeal from the Special Commissioners, held that the interest element in the lump sum agreed to be paid by the deed was yearly interest. Following Vyse v Foster (1872) LR 8 Ch App 309 and Inland Revenue Comrs v Barnato [1936] 2 All ER 1176, he held that where a trustee agrees to pay principal and interest in respect of his breach of trust in relation to a period in the past, the interest element is properly to be regarded as interest (rather than damages) because the beneficiary has a right to elect between interest and an account of profits in respect of the period during which the trust property was mis applied. He held that it was yearly interest on the basis that it fell clearly within the definition as explained in Bebb v Bunny. Although he did not say so in terms, this must have been because of the lengthy period of over six years prior to the March 1930 deed in respect of which the trustee had been accountable. In the famous litigation known as Regal Hastings v Gulliver the House of Lords had, in an order made in February 1942 [1967] 2 AC 134; [1942] 1 All ER 378, found that the defendant directors were liable to account to their company for a profit made by them in 1935 from the use of information which they held as fiduciaries. Interest at 4% per annum was ordered to be paid from the dates in October and December 1935 when the defendants had made the relevant profits. In March 1942 the defendants paid what they regarded as owing to the company including interest, but they deducted income tax on the interest element. Cassels J held (1944) 24 ATC 297, that this was yearly interest, deductible either under rule 19 or under rule 21 of the 1918 Rules. Although rule 21 related to interest of all kinds, rule 19 related only to yearly interest. The outcome was therefore much the same as it had been in the Barlow case save that, whereas the trustee in that case had volunteered an account including interest to the beneficiary, the liability of the defendant trustees in Regal Hastings v Gulliver had only been ascertained, after lengthy litigation, in the House of Lords. It was sufficient for Cassels Js decision that the interest was yearly interest that it had been paid in respect of a period of accountability of some six and a half years, so that cases such as the Gosling case were plainly distinguishable. The next, and most important case, is Riches v Westminster Bank Ltd [1947] AC 390. Section 3(1) of the Law Reform (Miscellaneous Provisions) Act 1934 provides that: In any proceedings tried in any court of record for the recovery of any debt or damages, the court may, if it thinks fit, order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment. This discretion applies, as Viscount Simon said at p 397, regardless whether there is or is not a contractual right to interest which underlies the cause of action. He said that: The added amount may be regarded as given to meet the injury suffered through not getting payment of the lump sum promptly, but that does not alter the fact that what is added is interest. At p 398 he addressed a submission to the effect that an order for interest under section 3 could not be interest within the meaning of the Income Tax Acts because the added sum only came into existence when the judgment was given and from that moment had no accretions under the order awarding it. Viscount Simon said: But I see no reason why, when the judge orders payment of interest from a past date on the amount of the main sum awarded (or on a part of it) this supplemental payment, the size of which grows from day to day by taking a fraction of so much per cent per annum of the amount on which interest is ordered, and by the payment of which further growth is stopped, should not be treated as interest attracting income tax. It is not capital. It is rather the accumulated fruit of a tree which the tree produces regularly until payment. Addressing the submission that the payment under section 3 was, however described, in truth damages, Lord Wright said, at pp 399 400: The appellants contention is in any case artificial and is in my opinion erroneous because the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or conversely the loss he suffered because he had not that use. The general idea is that he is entitled to compensation for the deprivation. Later, at p 403, he said: It was said that the sum in question could not be interest at all because interest implies a recurrence of periodical accretions, whereas this sum came to existence uno flatu by the judgment of the court and was fixed once for all. But in truth it represented the total of the periodical accretions of interest during the whole time in which payment of the debt was withheld. The sum awarded was the summation of the total of all the recurring interest items. Lord Simonds addressed the same submission at p 410 as follows: It was further urged on behalf of the appellant that the interest ordered to be paid to him was not interest of money for the purpose of tax because it had no existence until it was awarded and did not have the quality of being recurrent or being capable of recurrence. This argument was founded on certain observations of Lord Maugham in Moss Empires Ltd v Inland Revenue Comrs [1937] AC 785, 795, in regard to the meaning of the word annual. It would be sufficient to say that we are here dealing with words in the Income Tax Act which do not include either annual or yearly, but in any case I do not understand why a sum which is calculated upon the footing that it accrues de die in diem has not the essential quality of recurrence in sufficient measure to bring it within the scope of income tax. It is surely irrelevant that the calculation begins on one day and ends on another. It is more important to bear in mind that it is income. In 1947 the income tax treatment of interest was still subject to the dichotomy described in paras 14 15 above. Tax on interest of any kind had to be deducted at source if not wholly paid out of taxed income, pursuant to rule 21 of the 1918 Rules. By contrast, rule 19 permitted the deduction (and retention) of tax at source where yearly interest was paid wholly out of taxed income. The Riches case was about rule 21 rather than rule 19 but the interest awarded under section 3 of the 1934 Act represented interest from June 1936 until May 1943, being the period since the arising of the cause of action during which the plaintiff had been kept out of his money. As Patten LJ observed in the present case (at para 54, referring back to para 25), the passage in Lord Simonds speech quoted above suggests that he would have regarded the statutory interest awarded in that case as both interest and yearly interest for the purposes of the Income Tax Acts. This is because he regarded the payment of a single lump sum by way of interest after the event, referable to an earlier period for which the claimant needed compensation for being kept out of his money, as having the requisite quality of recurrence. Recurrence over seven years is plainly sufficient for that purpose. Jefford v Gee [1970] 2 QB 130 was another case about an award of interest under section 3 of the 1934 Act. The award was made in June 1969 by way of addition to damages for personal injuries incurred by the plaintiff in a motor accident in November 1966. It therefore compensated the claimant for having been kept out of his money for some two and a half years. At p 146, addressing the principles applicable to an award of interest in personal injury cases under section 3 of the 1934 Act, Lord Denning MR said: Interest should not be awarded as compensation for the damage done. It should only be awarded to a plaintiff for being kept out of money which ought to have been paid to him. Later, under the heading Tax, at p 149, he continued: When the court awards interest on debt or damages for two, three or four years, the interest is subject to tax because it is yearly interest of money: see Riches v Westminster Bank [1947] AC 390. It has been suggested (for example by Hildyard J at para 71(2) of his judgment) that Lord Denning MR may have failed to appreciate that the Riches case was about interest rather than yearly interest. In my view this ignores Lord Denning MRs reference to the period of two, three or four years in respect of which interest is awarded. He was entitled to conclude that, even if the Riches case only established that the relevant payments were interest for tax purposes, they were nonetheless yearly interest because of the historical period of several years in respect of which the lump sum award of interest was made. Chevron Petroleum (UK) Ltd v BP Petroleum Development Ltd [1981] STC 689 is about the interest element in rolled up payments by way of contribution to expenses in a joint venture agreement for the exploitation of the Ninian oilfield in the North Sea. The participants made payments against the expenditure in accordance with their expected share of the production. Provision was made for each participating groups share to be adjusted in the light of later experience of actual production. After an accounting which added interest to the amounts expended, the participants were credited or debited with the differences between their contributions on account and their adjusted contribution liability. Thus the liability to make payments against debits was contingent upon share adjustments pending final calculations, and the interest element in them related to periods of time which had passed before any payment liability fell due. Nonetheless Sir Robert Megarry V C held that the interest element was yearly interest, and therefore subject to deduction at source. He said, at p 696: I cannot see why the contingency should deprive the so called interest of the quality of being true interest. If X lends 100 to Y, the loan to carry interest at 10% per annum, why should a provision for repayment and interest to be waived in certain events, or for repayment with interest to be made only in certain events, prevent the interest from being true interest if in the event it becomes payable? Later, at pp 696 697, commenting upon the Riches case and interest awarded under section 3 of the 1934 Act, he continued: Although the obligation to pay interest was created by the judgment, the award was made on the basis that the defendant ought to have paid the money sued for at an earlier date and had not done so. The interest awarded was interest in respect of the plaintiff having been wrongfully kept out of the money: . That was not so in the present case, where the operating parties had duly paid all that was due from them under the contract at the time when it was due. I do not think that this point, or, indeed, any other point, suffices to distinguish the Riches case. If a contract (eg with a builder) provides for specified payments to be made on account of the final liability, and for interest at a specified rate to be paid on any balance when the final accounts have been agreed, the fact that all the specified payments on account were punctually made does not, it seems to me, prevent the interest payable on the balance from being truly interest. Analysis The statutory interest in the present case shares many of the relevant features with the contractual provision for interest in the Chevron case. In both cases it cannot be known during the period in respect of which interest is calculated whether it will in fact be payable at all. In the Chevron case liability depended upon an adjustment of participants shares made in the light of actual production, after the relevant expenditure was incurred, which increased rather than reduced the relevant participants share of the liability to fund expenses. In this case it depends upon the realisation of a surplus after payment of proving creditors claims in full, necessarily after the commencement of the administration and indeed after the end of the period in respect of which interest is calculated, which ends upon payment of the creditors debts. In both cases there is no liability to pay interest during the period in respect of which it is calculated. In both cases the interest is not itself payable over a period of time. It is rolled up and payable in a single lump sum. In short the interest is not an income stream, payable over a period of a year or more, but it is nonetheless income rather than capital, as the Vice Chancellor was at pains to emphasise, at p 696. More generally the relevant features of the interest in this case have much more in common with the second group of cases about statutory interest under section 3 of the 1934 Act, and about interest ordered or agreed to be paid by a trustee or fiduciary in respect of a past loss or misapplication of trust property than they have with the first group of cases about interest accruing due and payable immediately, or over time, beginning with Bebb v Bunny. This is not because the interest is statutory rather than contractual. There are examples of each in both groups. It is first because in none of the second group is the interest actually due and payable during the period by reference to which it is calculated, nor can it be said with certainty during that period that it ever will become due. But the interest is nonetheless payable, after the event, as a form of compensation for the recipients being in some way out of their money during the period in respect of which it is calculated. In the cases about interest under the 1934 Act the recipients are (usually) compensated for that loss during the period when they have a cause of action for debt or damages, until a judgment gives them an enforceable right to payment. In the trust cases the beneficiary is compensated by payment of interest for the loss (if any) represented or caused by the trust fund being out of the monetary value of the trust property lost or misappropriated by the trustee, until the trustee accounts and pays that sum back into the trust fund. In the Chevron case the payment of interest by the participants who later incurred an increased contribution share compensated those participants who, in the light of production experience, turned out to have paid more than their fair share of the cost of generating it. In the present case, as Mr Goldberg was at pains to emphasise, it cannot generally be said from the commencement of an administration whether there will ever be generated a surplus out of which statutory interest will become payable. Such surpluses are in fact very rare indeed. It may be that, during that period, the process of asset recovery by the administrators will make a surplus more likely, but even then its amount and the timing of any interest payment will all depend upon countless contingencies, including (in this case) long drawn out litigation about the amount of creditors claims. Statutory interest is never due until after all proving creditors have been paid in full. There is always a risk that an administration will be followed by a winding up, with unfortunate (and probably unforeseen) consequences upon the availability of interest under rule 14.23, even if there is a surplus: see In re Lehman Brothers International (Europe) (in administration) (No 4) [2018] AC 465 per Lord Neuberger of Abbotsbury, at paras 117 to 121. Nonetheless, as rule 14.23 makes clear in the plainest terms, the interest once paid compensates proving creditors for being kept out of their proved debts from the commencement of the administration (which prevents them seeking any other form of recovery), until they are actually paid. Mr Goldberg sought to distinguish the trust cases on the basis that, pursuant to Vyse v Foster, a beneficiary had an enforceable right to interest from the moment when the trust property was lost or misapplied. For the reasons given by Patten LJ in the Court of Appeal, at paras 45 to 50, based upon Target Holdings Ltd v Redferns [1996] AC 421, this is not the correct analysis of the basis upon which the court awards interest in equity. It is discretionary, like interest under the 1934 Act, even though the discretion may be exercisable in accordance with well settled principles. It is true, as the administrators submitted, that some of the second group of cases were primarily concerned with the question whether payments described as interest were truly interest at all for income tax purposes, rather than whether they were yearly interest. In the Riches case this was because the question arose under a provision in the 1918 Rules relating to all types of interest. In Jefford v Gee it may be that Lord Denning MR was not overly concerned with whether the interest was yearly or not, although he certainly took notice of the fact that the plaintiff had been out of his money for several years. In the Chevron case the contrary argument was that the element in the rolled up payment described as interest was not interest at all. There may have been no dispute that, if it was, it was yearly interest. By contrast in the present case it has been common ground throughout that statutory interest under rule 14.23 is interest for the purposes of income tax. But those cases nonetheless provide the answer to the conundrum: what period of durability is to be identified for interest payable in a single lump sum as compensation for the payee being out of the money in the past, for the purpose of deciding whether it is to be treated as yearly interest, under the Hay principles? The simple answer, supplied by all the second group of cases, is that it is the period in respect of which the interest is calculated, because that is the period during which the loss of the use of money or property has been incurred, for which the interest is to be compensation. This appears also to have been the assumption made by the drafter of what is now section 874(5A), quoted above. It deems payment of interest to an individual in respect of compensation to be yearly interest irrespective of the period in respect of which the interest is paid. This suggests that, but for the deeming provision (introduced, so the court was told, to deal with compensation for mis selling of Payment Protection Insurance), the question whether the interest would or would not have been yearly interest would have depended upon the duration of the period in respect of which the compensatory interest was calculated. It may of course be said that this approach has nothing to do with the intentions of the payer and the payee, and that, for most of the relevant period it will not be known when it will end, or whether interest as compensation for that loss will ever be paid. This is true of all the second group of cases, just as in the present case. But this gives rise to no relevant uncertainty. The payer will always know what that period is by the time that the interest becomes due and will be able to deduct tax or pay gross accordingly. In the case of interest under the 1934 Act the judge is required to identify the period. In the trust cases the order for payment of interest will also be by reference to a defined period. In the present case the period is fixed by the date of commencement of the administration and the date (or dates) upon which the proving creditors are paid their debts. I must finally address the group of submissions deployed by the administrators under the heading source. These were not deployed with any prominence in, or at least addressed by, the Court of Appeal, but they were advanced at the forefront of Mr Goldbergs submissions in this court. The argument goes like this. Income Tax is, and always has been, levied by reference to the source of the relevant income. The only source from which interest under rule 14.23 can be said to derive, apart from the statutory provision itself, is the combination of a realised surplus and a decision by the administrators that it is time to pay it. Those elements cannot, either singly or together, be said to have the quality of durability over time sufficient to make the interest yearly interest for income tax purposes, applying the Hay tests. They are unpredictable, liable to evaporate in the event of a winding up, will generally not have existed for a year before payment, and cannot be regarded as being in the nature of an investment. The period of time in respect of which the statutory interest is calculated cannot itself be regarded as a source of the interest. If there has to be a search for any source of the statutory interest other than the surplus and the decision to pay, it can only be the contractual debts owed by LBIE to its creditors at the moment when it went into administration, but those debts were mainly short term in nature, lacking the requisite capacity to generate yearly interest. Furthermore for income to be taxable at all the source has to be in existence at the time when the income becomes due and payable. Neither those contractual debts, nor the provable debts which replaced them from the commencement of the administration, remained in existence when the statutory interest became payable. They had all by then been discharged by payment in full. The short answer to this submission is that, if it were correct, all the second group of cases would have been wrongly decided. In none of them did the interest under review have a source in the sense of some kind of durable investment. In the equity cases the beneficiaries received interest by way of compensation for part of their trust fund being lost or misappropriated. In the cases under the 1934 Act the plaintiffs were being compensated for the delayed payment of damages, in one case for the pain and suffering occasioned by a broken leg which had no doubt healed long before the interest became due. In the Chevron case one group of joint venturers were in substance being compensated, long after the event, for having contributed more than their fair share of the expenses. But the flaws in the submission are more fundamental than that. First, the obligation to deduct tax from interest under section 874 does not depend at all upon the question whether the interest is taxable in the hands of the recipient. If the payment is yearly interest, and the payers (or the circumstances) qualify, for example because the payer is a company, or the usual place of abode of the recipient is offshore, then tax must be deducted. There is no requirement to identify a source at all, in the case of statutory or other UK interest. At the most it may be said that the first group of cases can loosely be characterised as involving an examination of the source of the interest as part of the inquiry about whether the income in question was yearly interest of money. Secondly, it is artificial to regard the source of statutory interest as having anything to do with the realisation of the surplus, still less the decision of the administrators to pay it, even though the combination of those two factors may be said to have been the immediate cause of the interest becoming payable. Of course the interest may be said to derive from the surplus, in the sense of constituting the fund from which it came, but the concept of source in that literal sense had nothing whatever to do with the characterisation of the payments as yearly interest in any of the second group of cases or, for that matter, even in the first group. As for the decision of the administrators to pay, this broadly equates with the exercise of a judicial discretion, both in the equity cases and those under the 1934 Act. To the limited extent that it may be said to render the right to payment contingent, it is a much less formidable contingency than the exercise of judicial discretion. In truth the administrators have no real discretion at all. Thirdly, to the extent that it is instructive to look for a source of the statutory interest under rule 14.23, the obvious candidate is the status of the recipient as a proving creditor during the period between the commencement of the administration until payment of the principal amount by dividend. That is a statutory status created by the insolvency code laid down by the Insolvency Act and Rules, which (as we now know) replaces the creditors former contractual rights at the commencement of the administration. It precisely coincides with the period in respect of which the statutory interest is calculated and, for the reasons given above, amply fulfils the necessary quality of durability over time. Finally, if it were necessary to do so, I would regard the status of a proving creditor in a distributing administration as having the requisite character of being an investor, albeit an unwilling and involuntary one. It is no mere irony that LBIEs unsecured debt has, during that last ten years, turned out to be a very satisfactory long term investment, generating interest, payable in full, at a handsome 8%. For all those reasons, which do not differ in their essentials from those given by Patten LJ in the Court of Appeal, I would dismiss this appeal.
UK-Abs
This appeal concerns the final stage of the administration of Lehman Brothers International (Europe) (LBIE). It became commercially insolvent due to the worldwide crash of the Lehman group. LBIE went into administration on 15 September 2008. The administration generated an unprecedented surplus in the region of 7 billion. It is estimated that about 5 billion is payable as statutory interest. All unsecured creditors have already been repaid the principal sums owed, in full, by 30 April 2014. The question on appeal is whether interest payable under rule 14.23(7) of the Insolvency Rules 2016 (the 2016 Rules) is yearly interest within the meaning of section 874 of the Income Tax Act 2007 (the 2007 Act). If so, the administrators must deduct income tax before paying interest to creditors. In the High Court, Mr Justice Hildyard considered that statutory interest under rule 14.23(7) is not yearly interest for the purposes of the 2007 Act. This was because of the absence of any accrual of interest over time, before the surplus was identified and quantified. The Court of Appeal disagreed, allowing the appeal by the Commissioners (HMRC). It considered that interest under rule 14.23(7) is indeed yearly interest. It did not accept a requirement that yearly interest should accrue over time and considered that, because the statutory interest was compensation for the creditors, it had the required long term quality. The administrators now appeal to the Supreme Court. The Supreme Court dismisses the appeal. Lord Briggs gives the lead judgment, with which all members of the Court agree. Income tax must be deducted before payment of statutory interest to the creditors. Rule 14.23(7) of the 2016 Rules, which replaced substantially identical provisions in rule 2.88(7) of the Insolvency Rules 1986, requires a surplus after payment of proved debts in an administration to be used for payment of statutory interest [1]. Interest is paid as statutory compensation for the loss which the creditors have suffered by being kept out of their money during the administration [6]. Section 874 of the 2007 Act, which is a much more historic provision within the income tax legislation, requires a debtor to deduct income tax from payments of yearly interest arising in the UK [1, 11 15]. Historically, the income tax legislation adopted a dichotomy between the treatment of interest of any kind which is not paid out of profits or gains, on the one hand, and yearly interest, on the other hand [15]. The mandatory deduction at source of yearly interest remains in place for interest paid by companies as well as certain other categories of taxpayers, and interest paid by any person to someone whose usual place of abode is outside the UK [15]. There are two lines of English and Scottish case law that are relevant to this appeal. The first deals with whether interest which accrues over time is properly categorised as yearly interest [20]. The second is mainly concerned with interest payable as a result of a judicial decision, either when granting an equitable remedy or when exercising a discretion to award interest under statute [20]. However, statutory interest under rule 14.23(7) of the 2016 Rules does not strictly fall within either category. The answer to the question on appeal must thus be found by analogy [20]. In the first line of cases, a number of general tests for whether interest is yearly interest or not were laid down [21 29]. These were summarised by the Court of Session in Inland Revenue Comrs v Hay (1924) VIII TC 636 (the Hay tests). In summary: (1) interest payable on so called short loans is not yearly interest; (2) for interest to be yearly interest, there must be some element of permanence in the contractual arrangement under which it is payable; (3) the arrangement under which interest is payable must be in the nature of an investment; (4) the loan must not be one repayable on demand; and (5) there must be some tract of future time during which interest will continue to be payable [30]. The Hay tests remain the best convenient summary about the meaning of yearly interest in the context of interest which accrues over time [33]. In the second line of cases, the same question has been addressed in the context of interest usually payable in a single lump sum [34]. The most important case is the House of Lords decision in Riches v Westminster Bank Ltd [1947] AC 390 [36 42]. In most of these cases, interest became payable only after the event (and usually in one lump sum) upon the order of the court and it served as compensation for being deprived of money or property during a past period [34, 47 48]. Relevant examples include cases where a trustee has misused trust property and cases where the court has ordered interest to be paid on damages, such as for personal injury, until the date of judgment [34 48]. Where that period exceeds a year, interest was held to be yearly interest for income tax purposes [52]. Interest payable on a surplus in an administration is of a special type [49]. Such interest, once paid, compensates proving creditors for being kept out of their proved debts in respect of the period from the beginning of the administration until they are actually paid [49]. Consequently, the relevant analogy is to the second line of cases [47 48, 52]. This is because in both the present appeal and those cases there is no liability to pay interest during the period in respect of which it is calculated, and the interest is not itself payable over a period of time [47 48]. Moreover, in both cases, it cannot be known during the period of calculation whether interest will in fact be payable at all [47 48]. In both, the interest amounts to compensation for the recipients having been out of their money [48, 52]. There is no relevant uncertainty, because, like in the trust and personal injury cases, the taxpayer will know to which period the interest relates by the time it becomes due and thus make suitable tax deductions [54]. In the present case, the period is fixed by the date of commencement of the administration and the date (or dates) when the proving creditors are paid their debts [54]. Arguments based on the source of the relevant income conflict with the second line of cases [55 56]. Further, they are wrong in principle as: (1) the income tax deduction obligation under section 874 of the 2007 Act does not depend on whether the interest is taxable in the hands of the recipient; (2) it is artificial to regard the source of statutory interest as either the realisation of the surplus or the administrators decision to pay interest; and (3), if anything, the relevant status of the recipient is as a proving creditor between the start of the administration and payment of the principal debt [57 59]. On the present facts, the result is that the statutory interest payable is yearly interest [61]. Therefore, income tax is to be deducted at source pursuant to section 874 of the 2007 Act [61].
This case is about the employment status of district judges, but it could apply to the holder of any judicial office. The issue is whether a district judge qualifies as a worker or a person in Crown employment for the purpose of the protection given to whistle blowers under Part IVA of the Employment Rights Act 1996 (the 1996 Act). If a district judge does not on the face of it qualify for whistle blower protection, the further question is whether this is discrimination against her in the enjoyment of her right to freedom of expression under the European Convention on Human Rights. And if it is, what is the remedy? In section 230(3) of the 1996 Act, a worker is defined as an individual who has entered into or works under (or where the employment has ceased, worked under) (a) a contract of employment, or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual. The appellant does not claim that a judge works under a contract of employment within limb (a) of that definition, but contends that she does fall within limb (b) of the definition. The history of the case The appellant was appointed a district judge by the then Lord Chancellor, Lord Falconer of Thoroton, with effect from 6 February 2006. Under section 6 of the County Courts Act 1984, as it then stood, district judges were appointed by the Lord Chancellor. As it now stands, they are appointed by Her Majesty the Queen on the recommendation of the Lord Chancellor. In October 2005, the appellant had been sent a letter offering her appointment which talked in terms of her accepting that offer. The letter itself contained several stipulations as to the duration of her appointment, her salary, her pension on retirement, and other matters. Enclosed with the letter was a memorandum entitled District Judges Memorandum on conditions of employment and terms of service. This was a detailed document, which included terms as to sitting days, sick pay, maternity, paternity and adoption leave, training, the prohibition of legal practice, relations with the press and media, outside activities, and much more. The memorandum made it clear that the salary was taxed under Schedule E to the Income Tax Act and that the judge was an employed earner for the purpose of national insurance contributions. Although described as a life time appointment, a judge is required to vacate office on her 70th birthday (unless extended) and can resign before that date. The appellants Instrument of Appointment, signed by the Lord Chancellor on 27 January 2006, simply talked in terms of his approving her to sit at each of the county courts on the Wales and Chester circuit. In fact, she first sat at the Crewe County Court and in 2009 transferred to the Warrington County Court. In 2010, the Cheshire courts were transferred to the Northern Circuit and major cost cutting reforms were announced. In 2011, the Runcorn County Court was closed and the business transferred to Warrington, as were some tribunal sittings. The appellant raised a number of concerns relating to the cuts, in particular about the lack of appropriate and secure court room accommodation, the severely increased workload placed upon the district judges, and administrative failures. She raised these with the local leadership judges and senior managers in Her Majestys Courts and Tribunals Service and eventually in a formal grievance. She claims that her complaints fell within the definition of qualifying disclosures under section 43B of the 1996 Act, in particular as tending to show a failure to comply with legal obligations, that miscarriages of justice were likely, or that the health and safety of any individual had been, is being or is likely to be endangered. The disclosures were made to an employer or other responsible person within the meaning of section 43C of the 1996 Act and thus they were protected disclosures within the meaning of section 43A. Under section 47B(1) of the 1996 Act, a worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that the worker has made a protected disclosure. The appellant claims that she was subjected to a number of detriments as a result of her complaints: a significant delay in investigating her grievance; being seriously bullied, ignored and undermined by her fellow judges and court staff; being informed that her workload and concerns were simply a personal working style choice; and inadequate steps to support her in returning to work; she also claims that a severe degradation in her health, resulting in psychiatric injury and a disability under the Equality Act 2010, was such a detriment. The appellant was signed off work due to stress from the end of January 2013 but has recently returned. In February 2015 the appellant made a two part claim in the Employment Tribunal. Both parts of her claim depended upon her being a worker within the meaning of section 230(3) of the 1996 Act (or having the same protection as such a worker). One part of her claim was for disability discrimination under the Equality Act 2010, as a result of failure to make reasonable adjustments to cater for her disability. This claim is derived from European Union law. It is therefore accepted that, as a result of the decision of this court in OBrien v Ministry of Justice (formerly Department for Constitutional Affairs) [2013] UKSC 6; [2013] 1 WLR 522, in the light of the guidance given by the Court of Justice of the European Union in ((Case C 393/10) [2012] ICR 955), a judge is a worker for the purpose of European Union law and national law has to be interpreted in conformity with that. That case concerned discrimination against part time workers, but the same result was reached by the Court of Appeal for Northern Ireland in Perceval Price v Department of Economic Development [2000] IRLR 380, that tribunal judges were workers for the purpose of discrimination on grounds of sex. Hence the disability discrimination claim will continue in any event. The other part of her claim was under the whistle blowing provisions in Part IVA of the 1996 Act, inserted by the Public Interest Disclosure Act 1998. These provisions are not derived from European Union law and accordingly the definition of worker does not have to be read so as to conform to the requirements of EU law. This means that a judge may have a different status in employment law, depending upon whether or not the employment right in question is derived from EU law. In relation to the whistle blowing claim, the Ministry of Justice objected that the appellant was not a worker as defined by section 230(3)(b) of the 1996 Act. At a preliminary hearing, the Employment Tribunal judge held that she was not a worker, that accordingly she had no protection against infringement of her right to freedom of expression under article 10 of the ECHR, but that it was not possible to read or give effect to section 230(3)(b) so as to give her that protection. The Employment Appeal Tribunal also held that she was not a worker, but found that there were adequate safeguards in place to protect freedom of speech for judges and there was therefore no need to read section 230(3)(b) so as to bring a judge within it, but that in any event it was not possible to do so: [2017] ICR 404. The Court of Appeal also held that the appellant was not a worker. The appellant was permitted also to raise for the first time the argument that denying her whistle blowing protection was discrimination in the enjoyment of her right to freedom of expression and thus contrary to article 14 of the ECHR read with article 10. But she failed in that too: [2018] ICR 827. On appeal to this court, the appellant continues to argue that she is a worker within the meaning of section 230(3)(b) of the 1996 Act. She also raises for the first time a new argument, that she is in Crown employment within the meaning of section 191 of the 1996 Act. If she fails in each of those, she continues to argue that her exclusion from whistle blowing protection is a breach, either of her rights under article 10 or under article 14 read with article 10 of the ECHR and that either section 230(3)(b) or section 191 of the 1996 Act should be read and given effect so as to bring her within that protection. Is a judge a worker? It is not in dispute that a judge undertakes personally to perform work or services and that the recipient of that work or services is not a client or customer of the judge. The issue is whether that work or services is performed pursuant to a contract with the recipient of that work or services or pursuant to some different legal arrangement. Nor is it in dispute that judges hold a statutory office. In broad terms, an office has been defined (by Lord Atkin in McMillan v Guest [1942] AC 561, 564) as a subsisting, permanent, substantive position which had an existence independent of the person who filled it, and which went on and was filled in succession by successive holders. Office holders do not necessarily hold office pursuant to any kind of contract. As Lord Hoffmann explained in Percy v Board of National Mission of the Church of Scotland [2005] UKHL 75; [2006] 2 AC 28, para 54: The distinction in law between an employee, who enters into a contract with an employer, and an office holder, who has no employer but holds his position subject to rules dealing with such matters as his duties, the terms of his office, the circumstances in which he may be removed and his entitlement to remuneration, is well established and understood. One of the oldest offices known to law is that of constable. It is notorious that a constable has no employer. It required special provision in [section 17 of the Sex Discrimination Act 1975] to bring the office of constable within the terms of the Act and to deem the chief constable to be his employer. But there are many other examples of offices; public, ecclesiastical and private. However, it is also well established that an office holder may hold that office under a contract with the person or body for whom he undertakes to perform work or services. The obvious example is a director of a company, who may hold that office concurrently with a service contract. Percy itself was another example. Ms Percy was an ordained minister of the Church of Scotland who was appointed associate minister to a particular parish. This was undoubtedly an ecclesiastical office, but the House of Lords held, by a majority, that she also had a contract personally to execute work, thus enabling her to bring a claim for sex discrimination against the Board of Mission which had appointed her. It might be thought that there is a distinction between private or ecclesiastical offices, on the one hand, and public or statutory offices, on the other, and that the former may be held concurrently with a contract whereas the latter may not. After all, before the introduction of modern protection from unfair dismissal, public and statutory office holders might be better protected than others, under the line of cases beginning with Ridge v Baldwin [1964] AC 40. However, in Miles v Wakefield Metropolitan District Council [1987] AC 539, which concerned the statutory office of superintendent registrar of births, deaths and marriages, Lord Oliver of Aylmerton, at p 567, questioned whether the mere fact that the plaintiff was appointed to his office under the provisions of the [Registration Service Act 1953] necessarily precludes the existence of a parallel contract between him and the council for the carrying out of his statutory duties. As this court held in Preston (formerly Moore) v President of the Methodist Conference [2013] 2 AC 163, whether an office holder holds office under a legally binding contract depends upon the intentions of the parties: The mere fact that the arrangement includes the payment of a stipend, the provision of accommodation and recognised duties to be performed by the minister, does not without more resolve the issue. The question is whether the parties intended these benefits and burdens of the ministry to be the subject of a legally binding agreement between them (Lord Sumption, para 26). Earlier, when commenting on the Percy case, he had explained that The primary considerations are the manner in which the minister was engaged, and the character of the rules governing his or her service. But, as with all exercises in contractual construction, these documents and any other admissible evidence of the parties intentions fall to be construed against their factual background (para 10). Part of the background in that case was the spiritual purpose of the functions of a minister of religion, although it had been established in Percy that there was no presumption against the contractual character of their service. In Preston, there was no difference between the majority, led by Lord Sumption, and me, the sole dissenter, as to the nature of the exercise upon which we were engaged: we differed only in our interpretation of the facts. It is clear, therefore, what the question is: did the parties intend to enter into a contractual relationship, defined at least in part by their agreement, or some other legal relationship, defined by the terms of the statutory office of district judge? In answering this question, it is necessary to look at the manner in which the judge was engaged, the source and character of the rules governing her service, and the overall context, but this is not an exhaustive list. In looking at the manner in which the judge was engaged, it could be said that there was classic offer and acceptance: there was a letter offering appointment, upon the terms and conditions set out in the letter and accompanying memorandum, which the appellant was invited to accept and did accept. However, the manner of appointment is laid down in statute: under section 6 of the County Courts Act 1984, district judges are now appointed by Her Majesty on the recommendation of the Lord Chancellor; but under the Constitutional Reform Act 2005, the whole process of selection is in the hands of the Judicial Appointments Commission, applying the criteria laid down in that Act. Furthermore, there was nothing in the letter offering appointment or in the accompanying memorandum which was expressed in contractual terms: indeed, some provisions were expressed in terms of what the Lord Chancellor expected or regarded as essential rather than as contractually binding obligations. In looking at the content of the relationship, it could be said that the terms and conditions contained some provisions, for example, those relating to maternity and paternity and adoption leave, which are not derived from statute. It could also be said that deployment decisions, as in any other employment, may be the subject of some negotiation between the individual judge and the leadership judges in her area; but ultimately the Lord Chief Justice is responsible for the deployment of judges. The essential components of the relationship are derived from statute and are not a matter of choice or negotiation between the parties. Under section 6(5) of the 1984 Act, a district judge is to be paid such salary as the Lord Chancellor may determine with the concurrence of the Treasury, but this cannot later be reduced; nor, of course, can it be increased by individual negotiation, as opposed to later determination of what the remuneration for that office is to be. Judicial pensions are also governed by statute and are not a matter of individual negotiation. Under section 11 of the 1984 Act, district judges must leave office on reaching the age of 70 (with the possibility of extension thereafter); otherwise they hold office during good behaviour and may only be removed for misbehaviour or inability to perform the duties of the office by the Lord Chancellor with the concurrence of the Lord Chief Justice; disciplinary proceedings against them are governed by the Judicial Discipline (Prescribed Procedures) Regulations 2014 (SI 2014/1919). It is also noteworthy that the appellant had difficulty in identifying her employer. These proceedings were brought against the Ministry of Justice. However, the appellant was in fact appointed by the then Lord Chancellor, while later district judges are appointed by Her Majesty the Queen. Responsibility for the judiciary is in fact divided between the Lord Chancellor, as a Minister of the Crown, and the Lord Chief Justice, as Head of the Judiciary. Many of the matters of which the appellant complained related to deployment and workload and many of her complaints were directed towards the local leadership judges, although some were directed to senior officials in Her Majestys Courts and Tribunals Service. This fragmentation of responsibility has both statutory and constitutional foundations and highlights how different is the position of a judge from that of a worker employed under a contract with a particular employer. Finally, and related to that, there is the constitutional context. Fundamental to the constitution of the United Kingdom is the separation of powers: the judiciary is a branch of government separate from and independent of both Parliament and the executive. While by itself this would not preclude the formation of a contract between a Minister of the Crown and a member of the judiciary, it is a factor which tells against the contention that either of them intended to enter into a contractual relationship. Taken together, all of these factors point against the existence of a contractual relationship between a judge and the executive or any member of it. Still less do they suggest a contractual relationship between the judge and the Lord Chief Justice. Crown employment Section 191(1) of the 1996 Act provides that Subject to section 192 and 193, the provisions of this Act to which this section applies shall have effect in relation to Crown employment and persons in Crown employment as they have effect in relation to other employment and other employees or workers. Included among the provisions to which the section applies, in section 191(2)(aa), is Part IVA. There is a debate about whether including judges within Crown employment would bring with it all the listed protections given to employees and workers or only those given to limb (b) workers. Fortunately, it is not necessary for us to resolve that debate in order to decide this case. Section 191(3) provides that In this Act, Crown employment means employment under or for the purposes of a government department or any officer or body exercising on behalf of the Crown functions conferred by a statutory provision. Clearly, employment in this section cannot mean employment under a contract because it would then add nothing to the definition in section 230(3). The predecessor to section 191 was inserted into the Industrial Relations Act 1971 because historically Crown servants had not been seen to be employed under contracts of service and had not been able to complain of wrongful dismissal. The object was to enable them to complain of unfair dismissal and enjoy the other employment rights listed in section 191(2). Thus, argues the appellant, section 191 is apt to give her the protection of Part IVA even if she is not employed under a contract. The definition in section 191(3) has two limbs: employment under or for the purposes of a government department; and employment under or for the purposes of an officer or body exercising on behalf of the Crown functions conferred by a statutory provision. For the reasons given earlier, it is impossible to regard the judiciary as employed under or for the purposes of the Ministry of Justice. They are not civil servants or the equivalent of civil servants. They do not work for the ministry. It is slightly more plausible to regard them as working under or for the purposes of the Lord Chief Justice, who since the 2005 Act has had statutory responsibilities in relation to the judiciary: under section 7 of that Act, he is responsible for the maintenance of appropriate arrangements for the welfare, training and guidance of the judiciary of England and Wales (within the resources provided by the Lord Chancellor) and for their deployment and the allocation of work within the courts. As already noted, he also shares some responsibility for appointments, discipline and removal with the Lord Chancellor. But it is difficult to think that, by conferring these functions upon the Lord Chief Justice, the 2005 Act brought about such a fundamental change in the application of section 191. Judges do not work under and for the purposes of those functions of the Lord Chief Justice but for the administration of justice in the courts of England and Wales in accordance with their oaths of office. Mutatis mutandis, the same reasoning would apply to the identical definition of crown employment in article 236(3) of the Employment Rights (Northern Ireland) Order 1996. It is perhaps worth noting that section 83(2) and (9) of the Equality Act 2010, passed since the 2005 Act, defines employment as covering Crown employment as defined in section 191 of the 1996 Act. But it also makes express provision, in sections 50 and 51, prohibiting discrimination in relation to, among other things, appointment to public offices. These are defined to include officers appointed by or on the recommendation of a member of the executive (such as the Lord Chancellor) or by the Lord Chief Justice or Senior President of Tribunals. Thus judicial office holders are clearly protected by these provisions, which would have been quite unnecessary had they already been protected as persons in Crown employment. Sections 50 and 51 do not apply in Northern Ireland, but this does not affect the force of this point. Human rights The appellant first argued that the failure to extend the 1996 Acts protection against whistle blowing to judicial officers was a violation of her right to freedom of expression under article 10 of the ECHR. It is indeed possible to see that imposing certain detriments upon her as a result of her public interest disclosures would be an interference with her freedom of expression. It is not enough to say that judges are well protected against dismissal and other disciplinary action if they speak their minds. They are not so well protected against the sort of detriments which are complained about in this case bullying, victimisation and failure to take seriously the complaints which she was making. Be that as it may, however, there is a remedy for breach of the Convention rights, by way of an action under section 7(1) of the Human Rights Act 1998, which can result in an award of damages, if this is necessary to afford just satisfaction for the wrong done. But this would not have the effect of extending the specific protection of Part IVA of the 1996 Act to judicial or indeed other non contractual office holders. It would not enable the appellant to pursue the claim which she has made in the Employment Tribunal. The appellant also complains that the failure to extend the protection of Part IVA to judicial office holders is a violation of her rights under article 14 of the ECHR read with article 10. Article 14, it will be recalled, reads: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. This gives rise to four well known questions: (i) do the facts fall within the ambit of one of the Convention rights; (ii) has the applicant been treated less favourably than others in an analogous situation; (iii) is the reason for that less favourable treatment one of the listed grounds or some other status; and (iv) is that difference without reasonable justification put the other way round, is it a proportionate means of achieving a legitimate aim? The answer to question (i) is clearly yes. Indeed, not only do the facts fall within the ambit of the right to freedom of expression protected by article 10; unusually there may well have been a breach of that article in this case; but that is not required. The answer to question (ii) is also clearly yes. The applicant, and others like her, have been denied the protection which is available to other employees and workers who make responsible public interest disclosures within the requirements of Part IVA of the 1996 Act. She is denied protection from any detriment, which is much wider than protection from dismissal or other disciplinary sanctions. She is denied the possibility of bringing proceedings before the Employment Tribunal, with all the advantages those have for applicants. She is denied the right to seek compensation for injury to feelings as well as injury to her health. This is undoubtedly less favourable treatment than that afforded to others in the workplace employees and limb (b) workers who wish to make responsible public interest disclosures. It is no answer to this to say that, by definition, judicial office holders are not in an analogous situation to employees and limb (b) workers. That is to confuse the difference in treatment with the ground or reason for it. What matters is that the judicial office holder has been treated less favourably than others in relation to the exercise or enjoyment of the Convention right in question, the right to freedom of expression. She is not as well protected in the exercise of that right as are others who wish to exercise it. The answer to question (iii) is also clearly yes. An occupational classification is clearly capable of being a status within the meaning of article 14. Indeed, it is the very classification of the judge as a non contractual office holder that takes her out of the whistle blowing protection which is enjoyed by employees and those who have contracted personally to execute work under limb (b) of section 230(3). The constitutional position of a judge reinforces the view that this is indeed a recognisable status. The answer to question (iv) is also, in my view, clearly yes. The respondent argues that this is a case in which the courts should allow a broad margin of discretion to the choices made by Parliament, for two main reasons: first because this is an area of social policy in which the courts should respect the decisions of the democratically elected legislature unless they are manifestly without reasonable foundation; and second, because the status in question is not one of the particularly suspect grounds of discrimination, such as race or sex or sexual orientation, and the less favourable treatment is correspondingly easier to justify. There are several problems with this argument. The first is that, while it is well established that the courts will not hold a difference in treatment in the field of socio economic policy unjustifiable unless it is manifestly without reasonable foundation, the cases in which that test or something like it has been applied are all cases relating to the welfare benefits system: see R (RJM) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2008] UKHL 63; [2009] 1 AC 311 (income support disability premium); Humphreys v Revenue and Customs Comrs [2012] UKSC 18; [2012] 1 WLR 1545 (child tax credit); R (SG) v Secretary of State for Work and Pensions (Child Poverty Action Group intervening) [2015] UKSC 16; [2015] 1 WLR 1449 (benefit cap); Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47; [2015] 1 WLR 3250 (child disability living allowance); R (MA) v Secretary of State for Work and Pensions (Equality and Human Rights Commission intervening) [2016] UKSC 58; [2016] 1 WLR 4550 (bedroom tax); R (HC) v Secretary of State for Work and Pensions (AIRE Centre intervening) [2017] UKSC 73; [2017] 3 WLR 1486 (benefits for children of Zambrano carers); R (DA) v Secretary of State for Work and Pensions (Shelter Childrens Legal Services and others intervening) [2019] UKSC 21; [2019] 1 WLR 3289 (revised benefit cap). It is also in that context that the test has been articulated by the European Court of Human Rights: see Stec v United Kingdom (2006) 43 EHRR 47. This case is not in that category, but rather in the category of social or employment policy, where the courts have not always adopted that test: see, for example, In re G (A Child) (Adoption: Unmarried Couple) [2008] UKHL 38; [2009] 1 AC 173. The courts will always, of course, recognise that sometimes difficult choices have to be made between the rights of the individual and the needs of society and that they may have to defer to the considered opinion of the elected decision maker: see R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326, 381. But the second problem is that in this case there is no evidence at all that either the executive or Parliament addressed their minds to the exclusion of the judiciary from the protection of Part IVA. While there is evidence of consideration given to whether certain excluded groups should be included (such as police officers), there is no evidence that the position of judges has ever been considered. There is no considered opinion to which to defer. That leads on to the third problem, which is that no legitimate aim has been put forward for this exclusion. It has not been explained, for example, how denying the judiciary this protection could enhance judicial independence. Of course, members of the judiciary must take care, in making any public pronouncements, to guard against being seen to descend into the political arena. But responsible public interest disclosures of the sort which are protected under Part IVA do not run that risk. Indeed, the object of the protection was to give workers the confidence to raise malpractice within their organisation rather than placing them in a position where they feel driven to raise concerns externally. It is just as important that members of the judiciary have that confidence. They are just as vulnerable to certain types of detriment as are others in the workplace. To give the judiciary such protection might be thought to enhance their independence by reducing the risk that they might be tempted to go public with their concerns, because of the fear that there was no other avenue available to them, and thus unwillingly be drawn into what might be seen as a political debate. As no legitimate aim has been put forward, it is not possible to judge whether the exclusion is a proportionate means of achieving that aim, whatever the test by which proportionality has to be judged. I conclude, therefore, that the exclusion of judges from the whistle blowing protection in Part IVA of the 1996 Act is in breach of their rights under article 14 read with article 10 of the ECHR. Remedy The most difficult question in this case, therefore, is how to remedy the incompatibility of the exclusion of the judiciary from the protection of Part IVA of the 1996 Act with article 14 of the ECHR. In Ghaidan v Godin Mendoza [2004] UKHL 30; [2004] 2 AC 557, the House of Lords held that the interpretive duty in section 3 of the Human Rights Act 1998 was the primary remedy. Section 3(1) reads: So far as it is possible to do so, primary legislation must be read and given effect in a way which is compatible with the Convention rights. In Ghaidan v Godin Mendoza it was also established that what is possible goes well beyond the normal canons of literal and purposive statutory construction. Philip Sales QC, for the Government, argued (at p 563) that section 3(1) required a similar approach to the duty to interpret domestic legislation compliantly with EU law, so far as possible, citing Litster v Forth Dry Dock Engineering Co Ltd [1990] 1 AC 546. Both Lord Steyn (paras 45 and 48) and Lord Rodger (paras 118 and 121) agreed that what was possible by way of interpretation under EU law was a pointer to what was possible under section 3(1), citing Litster as well as Pickstone v Freemans Plc [1989] AC 66. Lord Nicholls referred to the unusual and far reaching character of the obligation (para 30). He also emphasised that it did not depend critically on the particular form of words used, as opposed to the concept (para 31). Lord Rodger, too, said that to attach decisive importance to the precise adjustments required to the language of the particular provision would reduce the exercise to a game (para 123). The limits were that it was not possible to go against the grain of the legislation in question (para 121) or to interpret it inconsistently with some fundamental feature of the legislation (Lord Nicholls, at para 33, echoing In re S (Minors) (Care Order: Implementation of Care Plan) [2002] UKHL 10; [2002] 2 AC 291). There are two provisions which might be candidates for such interpretation. Most obvious is section 230(3)(b), which, it will be recalled, relevantly defines a worker as: an individual who has entered into or works under (or where the employment has ceased, worked under) (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual. Not surprisingly, the appellant points out that the courts have found it possible to interpret this definition so as to include judicial office holders when required to do so by European Union law. In OBrien v Ministry of Justice (formerly Department for Constitutional Affairs), [2013] UKSC 6; [2013] 1 WLR 522, the question was whether part time judges were entitled to the protection against discrimination given to part time workers by the Part Time Workers Directive (Council Directive 97/81/EC) transposed into UK law by the Part Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551). The definition of worker in regulation 1(2) was identical to that in section 230(3) of the 1996 Act. Having determined that judges were workers for the purpose of European Union law, this court had no difficulty in holding that the Regulations applied to them. The respondent argues that to do this would cut across a fundamental feature or go against the grain of the 1996 Act. But it is hard to see why that should be so. To interpret section 230(3)(b) so as to include judicial office holders would not afford them all the rights afforded to workers under the 1996 Act, but only those rights afforded to limb (b) workers, most of which are inapplicable to judges. But in any event, the interpretation in this case would only relate to an exclusion which is incompatible with the Convention rights otherwise the section 3(1) power and duty does not apply. And the inclusion of judicial office holders within the Equality Act 2010, as well as within EU derived employment rights, shows that affording judges some of the rights of other workers does not offend against any fundamental constitutional principle. It is noteworthy that the Court of Appeal, in para 90, was inclined to think that: having regard to the strength of the interpretative obligation under section 3 of the 1998 Act it would be possible to read section 230(3) down so that it extended to an employment relationship of the kind found to exist in OBrien. It does not seem that the definition of a worker by reference to the existence of a contract, so as to exclude a mere office holder, is a fundamental feature of the legislation. I agree. It would not be difficult to include within limb (b) an individual who works or worked by virtue of appointment to an office whereby the office holder undertakes to do or perform personally any work or services otherwise than for persons who are clients or customers of a profession or business carried on by the office holder. The legislation contemplates disclosure to an employer or others responsible for the conduct in question, which in this case would be the leadership judges or the HMCTS or the Ministry of Justice, depending upon the nature of the conduct. It also prohibits both the employer and fellow employees from subjecting the whistle blower to any detriment, which again would have to embrace fellow judges and those in a position to inflict such detriments. None of this would go against the grain of the legislation. When considering whether the disclosures had been made in the public interest, it would of course be relevant to consider whether there were other more appropriate ways of trying to resolve the situation. This would include the judicial grievance procedures policies (currently, policy no 1 relates to grievances between judicial office holders and policy no 3 relates to grievances between judicial officer holders and HMCTS staff); however, the appellant did invoke the grievance procedure and the investigating judge, Tomlinson LJ, commented that it was not a suitable means of dealing with the sort of systemic failures which were being alleged. Bearing in mind, therefore, the parallel seen in Ghaidan v Godin Mendoza between section 3(1) and conforming interpretation in EU law, its strictures against attaching decisive importance to the precise adjustment needed to the language of the provisions, and the ease with which this court interpreted identical language to include judges as limb (b) workers in OBrien, I can reach no other conclusion than that the Employment Rights Act should be read and given effect so as to extend its whistle blowing protection to the holders of judicial office. The relevant provisions of the Employment Rights Act extend to both England and Wales and Scotland (section 244) but not Northern Ireland. However, the equivalent provisions of the Employment Rights (Northern Ireland) Order 1996 (as amended by the Public Interest Disclosure (Northern Ireland) Order 1998) are to the same effect: article 3(3) defines worker in the same times as section 230(3); articles 67A, 67B, 67C define protected disclosures, qualifying disclosures and those to whom such disclosures may be made in the same way as in Part IVA of the 1996 Act; and articles 70B and 71(1A) provide that a maker of a protected disclosure shall not be subjected to any detriment for doing so and for complaints to an employment tribunal. Those provisions, too, should be read and given effect so as to extend the protection given to whistle blowers to the holders of judicial office. I would therefore allow this appeal and remit the case to the Employment Tribunal on the basis that the appellant is entitled to claim the protection of Part IVA of the 1996 Act.
UK-Abs
The issue in the appeal is whether a District Judge qualifies as a worker or a person in Crown employment for the purpose of the protection given to whistle blowers under Part IVA of the Employment Rights Act 1996 (the 1996 Act). If not, is this discrimination against her in the enjoyment of her right to freedom of expression, protected by article 14 taken with article 10 of the European Convention on Human Rights (ECHR)? The appellant was appointed a District Judge by the Lord Chancellor with effect from 6 February 2006. The letter offering her appointment specified the duration, salary, pension and conditions of employment, including as to sitting days, sick pay, maternity leave and conduct. By an Instrument of Appointment the Lord Chancellor approved her to sit at county courts on the Wales and Chester circuit. Major cost cutting reforms took place after 2010. The appellant raised a number of concerns relating to the cuts, in particular the lack of appropriate and secure court room accommodation, her severely increased workload and administrative failures, initially with the local leadership judges and senior court managers, and eventually in a formal grievance. She claims that the handling of her complaints led to a severe degradation in her health, resulting in psychiatric injury and disability. In February 2015 she made a two part claim in the Employment Tribunal, both of which depended on her being a worker within the meaning of s 230(3) of the 1996 Act. Her claim for disability discrimination under the Equality Act 2010 is proceeding, as it is accepted that she is a worker for the purpose of European Union law, from which this claim is derived. Her claim under Part IVA of the 1996 Act is not so derived, and the Employment Tribunal determined as a preliminary issue that she was not a worker under domestic law for the purpose of the whistle blowing provisions. It accepted that she therefore had no protection against the infringement of her right to freedom of expression under article 10 ECHR, but that it was not possible to give effect to s 230(3) so as to give her that protection. Her appeals to the Employment Appeal Tribunal and to the Court of Appeal were dismissed. The Supreme Court unanimously allows the appeal and remits the case to the Employment Tribunal on the basis that the appellant is entitled to claim the protection of Part IVA of the 1996 Act. Lady Hale gives the judgment. Worker under domestic law The appellant argued that she is a limb (b) worker under the definition in s 230(3) of the 1996 Act: namely that she works under a contract whereby she undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business she is undertaking [2 3]. The issue is whether the appellants work is performed pursuant to a contract with the recipient of that work or services, or pursuant to some different legal arrangement. Judges hold a statutory office, and office holders do not necessarily hold office pursuant to a contract [12]. It depends on the intention of the parties, which is reflected in the manner of engagement, the source and character of the rules governing service and the overall context [16]. In the appellants case, the essential components of the relationship are derived from statute and not a matter for negotiation; it is difficult to identify her employer; and the separation of powers is a factor against a contract between a Minister of the Crown and a member of the judiciary. Taken together, these factors do not suggest a contractual relationship [17 21]. Nor are judges in Crown employment. They are not civil servants or the equivalent of civil servants. They do not work under or for the purposes of the functions of the Lord Chief Justice, but for the administration of justice in accordance with their oaths of office [22 25]. Human rights The imposition of detriments, such as the bullying, victimisation and failure to take complaints seriously which the appellant alleges, would be an interference with her right to freedom of speech under article 10 ECHR [26]. A claim under the Human Rights Act 1998 (the HRA) would not enable the appellant to seek the wider relief that a worker could under Part IVA of the 1996 Act [27, 30]. The failure to extend the Part IVA protections to judicial office holders is a violation of the appellants right under article 14 not to be discriminated against in her enjoyment of the rights under the ECHR: (i) the facts of her case are within the ambit of article 10; (ii) she has been treated less favourably than other employees and workers who make responsible public interest disclosures; (iii) her occupational classification is clearly a status within the meaning of article 14; and (iv) exclusion of judges is not a proportionate means of achieving a legitimate aim. There is no evidence that either the executive or Parliament addressed their minds to the exclusion of the judiciary from the protection of Part IVA and no legitimate aim has been put forward [28 37]. The remedy for the incompatibility of the exclusion of the judiciary from the protection of Part IVA of the 1996 Act with the rights under the ECHR is found in the obligation on the courts in s 3 of the HRA to read and give effect to primary legislation in a way which is compatible with those rights. It has been established that it is possible to interpret the definition of a limb (b) worker to include judicial office holders when required to do so by EU law, and it would not go against the grain of the 1996 Act to do so in respect of the protections of Part IVA. This interpretation should also apply to the equivalent provisions in the Employment Rights (Northern Ireland) Order 1996 [39 45]. Accordingly the appeal is allowed and the case is remitted to the Employment Tribunal on the basis that the appellant is entitled to claim the protection of Part IVA of the 1996 Act [46].
The issue in the appeal is the correct approach to determination of the rateable value of an office building (Mexford House), in circumstances where the evidence showed at the relevant time a general demand in the area for comparable office buildings, but no actual tenant willing to pay a positive price for the building itself. I can conveniently take the factual background from Henderson LJs judgment in the Court of Appeal: [2018] 1 WLR 3463, para 2. Mexford House is a substantial three storey block of offices in the North Shore area of Blackpool. It was purpose built in 1971, and was occupied continuously as Government offices from 1972, in part by the Department of Work and Pensions (the DWP) and in part by the Commissioners for Her Majestys Revenue and Customs (HMRC). By the material date, however, the property was vacant. Both HMRC (on 29 February 2008) and the DWP (on 13 March 2008) had given notice of their intention to vacate the property, and it was formally handed back to the lessor on 31 March 2009. It is uncertain when the process of vacating the premises was finally complete, but there is no dispute that the property was empty by 1 April 2010, that being the date on which the 2010 non domestic rating list for the area of Blackpool Borough Council first came into force by virtue of section 41(2) of the Local Government Finance Act 1988 (the 1988 Act). The valuation was made for the purposes of the new rating list, which came into force on 1 April 2010 (the material date). But the rateable value had to be determined by reference to the antecedent valuation date (or AVD) two years earlier, that is 1 April 2008: 1988 Act Schedule 6 paragraph 2(3), Rating Lists (Valuation Date) (England) Order 2008 (SI 2008/216) article 2. The rateable value initially entered by the valuation officer with effect from 1 April 2010 was 490,000. This reflected his view that there were in the area other office buildings of similar age and quality, occupied by public sector tenants at rents of the same order. As became common ground in the course of the appeal, the most closely comparable was Hesketh House in Fleetwood, a building of 8,403 square metres built in 1966. That had been assessed for rating purposes at 59 per square metre, which was taken also as the basis for the valuation officers final valuation before the Upper Tribunal at 370,000 (see below). Basic principles The basis of the valuation is set by paragraph 2 of Schedule 6 to the 1988 Act, which provided: (1) The rateable value of a non domestic hereditament shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year [on certain assumptions, including] (a) that the tenancy begins on the day by reference to which the determination is to be made Although the valuation was at the AVD, paragraph 2(5) of Schedule 6 provided that certain matters, listed in paragraph 2(7), were to be taken to be as they are assumed to be on the material date (1 April 2010). Those matters include: the mode or category of occupation of the hereditament, (a) matters affecting the physical state or physical enjoyment of the hereditament, (b) (d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are none the less physically manifest there, and (e) locality of the hereditament. the use or occupation of other premises situated in the The underlying principle is not in doubt. The valuation must be based on an estimate of the rent at which the hereditament might reasonably be expected to let from year to year . In short, the valuer must imagine a hypothetical negotiation between a willing landlord and a willing tenant and arrive at the rent which best represents the resulting compromise: You must assume a landlord willing to let, and a tenant willing to take by the year; and having done so, you must get in the best way you can at the rent which, under an agreement brought about by the compromise of the conflicting interests of the man who wants to receive as much as he can and the man who wants to pay as little as he can, would be arrived at under such circumstances. (Smith v The Churchwardens and Overseers of the Poor of the Parish of Birmingham (1888) 22 QBD 211, 219 per Wills J) In similar terms in Robinson Bros (Brewers) Ltd v Houghton and Chester le Street Assessment Committee [1937] KB 445, 470, Scott LJ said: The rent to be ascertained is the figure at which the hypothetical landlord and tenant would, in the opinion of the valuer or the tribunal, come to terms as a result of bargaining for that hereditament, in the light of competition or its absence in both demand and supply, as a result of the higgling of the market. I call this the true rent because it corresponds to real value. More contentious is how to apply those principles in a case where there is no evidence of actual demand for the particular property, by which to conduct this hypothetical exercise. I shall return to the authorities in more detail, having outlined the course of the proceedings below. The proceedings below The Upper Tribunal The hearing The Valuation Tribunal for England having reduced the rateable value to 1, the valuation officer appealed to the Upper Tribunal, before which the matter was dealt with by way of a full re hearing on fact and law. Both sides were then represented by the same counsel as have since appeared before the Court of Appeal and this court: Ms Hui Ling McCarthy QC (as she has since become) for the valuation officer, and Mr Richard Glover QC for Telereal. Expert evidence was presented to the tribunal in the form of written statements by Mr Hewitt himself, and Mr Baldwin for Telereal. On the first day of the hearing (28 April 2016), Mr Hewitt gave evidence and was cross examined. The tribunal summarised his evidence (UT paras 19 30). In his view, the building was not obsolete either in a functional or in a locational sense for reasons he explained. That Telereal had shared that opinion, he said, was shown by the fact that in 2002 they had taken a reversionary lease to run from September 2014 to March 2018, and that on the September 2007 rent review their own surveyor had put the rent at 341,000. However, in the course of his cross examination, as the tribunal recorded, he accepted that as at the AVD he could not identify in the real world any person who would put in a bid for a tenancy of Mexford House on the statutory terms; that there was no demand for such accommodation from the private sector; and that all public sector demands as at the AVD were being met by the occupation of other premises which the public sector already enjoyed. He accepted the opinion expressed by Mr Baldwin [Telereals surveyor] in paragraph 11.1 of Mr Baldwins first report, namely that vacant and to let at the AVD there would be no demand for Mexford House. (UT para 24) On the other hand, he pointed to the fact that there did exist at the AVD demand for other (occupied) properties which were comparable to Mexford House. He maintained his view that a substantial rateable value was appropriate, for reasons he explained: Leaving aside any detailed comparisons (some favourable some unfavourable) between Mexford House on the one hand and Hesketh House and the other comparables on the other hand, [Mr Hewitt] expressed the view that there was a quantity of broadly comparable office accommodation which was in beneficial occupation and for which substantial rents were paid at the AVD. He said that the fact that as at the AVD there was in the real world no demand for Mexford House (because all the demand had been absorbed in the other comparable properties) was not because of any intrinsic lack of merit (or obsolescence) in Mexford House as compared with these other properties but because Mexford House could be considered as unlucky not to have occupants in beneficial occupation when comparable office premises did have occupants in beneficial occupation. (UT para 29) On this basis, his final assessment of the rateable value of Mexford House was 370,000. Following the completion of Mr Hewitts evidence, counsel for both parties informed the tribunal of their view that, in the light of his evidence, the issue between them could be decided as a matter of law upon an agreed basis of fact (UT para 31). No other evidence was heard; in particular, Mr Baldwin was not called or cross examined. Following legal argument the hearing concluded, but the tribunal directed that the agreed position should be reduced to writing. Accordingly, on 3 May 2016 the parties lodged an agreed statement (the Joint Position Paper or JPP) in the following terms: 1. The parties are content that the issue can be decided as a point of law. 2. The respondent [Telereal] contends that the correct approach requires the valuer to consider whether, had the subject hereditament been on the market at the AVD (1 April 2008), anybody would have been prepared to occupy the property and pay a positive price. 3. The parties agree that had the subject hereditament been on the market at the AVD (1 April 2008), nobody in the real world would have been prepared to occupy the property and pay a positive price. Thus, if the correct approach under the rating hypothesis is as formulated in para 2 above, the appeal should be dismissed and the decision of the [VTE] confirmed. 4. The [Valuation Officer] accepts that there was nobody in the real world who would be prepared to pay or bid a positive price for Mexford House at 1 April 2008. 5. If, however, the correct approach is, as the [Valuation Officer] contends, that (notwithstanding the absence of anybody who would be prepared to pay or bid a positive price for Mexford House at 1 April 2008), the rating hypothesis: requires the existence of a hypothetical tenant to (a) be assumed and; (b) requires the rateable value to be assessed by reference to the general demand as evidenced by the occupation of other office properties with similar characteristics, then the parties agree that the appeal should be allowed and the [rateable value] determined at 370,000. 6. The respondent accepts the proposition at 5(a) but does not accept the proposition at 5(b). 7. 370k is confirmed. 8. value] of 1 is confirmed. If the respondent is right, the respondents [rateable If the [Valuation Officer] is right, [his rateable value] of Footnotes to paragraphs 2 and 3 noted that the factors in paragraph 2(7) of Schedule 6 were to be taken as they were at 1 April 2010. As the Court of Appeal observed (paras 25 26), the tribunal seems to have gone out of its way to make sure that the basis of the agreement was not in doubt. It commented on the state of the evidence at that point: We have received Mr Hewitts evidence which has been cross examined before us. We have received Mr Baldwins written evidence but he did not give any oral evidence and hence was not offered for cross examination. We pointed out that if we proceeded as invited we could not properly resolve any dispute of fact in so far as such was revealed in the evidence before us. The parties were both content with this position and considered that, in the light of the factual agreements contained in the Joint Position Paper, there was no need for any such resolution of disputed matters save for the point of law which they had identified. (para 33) It also mentioned the kind of factual matters on which (absent agreement) it would have expected to be addressed: including what steps were taken when and by whom to let Mexford House upon what terms; and whether Mexford House could have been let at a much lower rent, for example if the DWP or HMRC might have chosen to consolidate there on the hypothetical statutory terms at such a very much lower rent. It was told that these points did not need to be investigated, since the valuation officer did not seek to argue that in the real world Mexford House could at the AVD have been let at a positive price (UT paras 34 35). On the other side it was confirmed by Mr Glover for Trillium that it was unnecessary to explore differences between the comparables and Mexford House since it was accepted that if, as a matter of principle, the rateable value of Mexford House was to be assessed by reference to the general demand as evidenced by the occupation of other office properties with similar characteristics, then the respondent accepted that 59 per square metre was correct. (para 36) The tribunals reasoning I would pay tribute to the tribunals judgment, which is a painstaking review of the relevant principles, and their application to the present case on the limited basis permitted by the JPP. For present purposes it is unnecessary to set it out in full. The tribunal had conducted a detailed review of a number of authorities, to which I will need to return in more detail later in this judgment. It started its discussion by stating two propositions derived from that review (paras 96 97): It must be assumed that a hypothetical landlord and a hypothetical tenant will agree terms for such a letting. It is not permissible to conclude that no bidder can be found to take the tenancy. It is well established that the basic question to ask is: is the occupation (ie the occupation under the hypothetical tenancy) such as to be of value? A valuation for rating purposes is based upon the concept of the value of the occupation. As indicated by cross references to earlier paragraphs, the latter proposition was derived from various authorities, starting with London County Council v Church Wardens and Overseers of the Poor of the Parish of Erith in the County of Kent [1893] AC 562 (the Erith case); the former more specifically from Hoare (Valuation Officer) v National Trust [1998] RA 391, 422 per Sir Richard Scott VC. The core of the tribunals reasoning comes in the following paragraphs: 102. Having regard to the Joint Position Paper we are not concerned with any detailed comparisons between Mexford House on the one hand and Hesketh House and other comparables on the other hand. We proceed on the basis that as at the AVD there existed several broadly comparable office premises which were beneficially occupied and for which substantial rents were being paid. There is no reason to conclude that the public sector occupants of those comparable premises, if not already accommodated in those premises, would have been unable to enjoy beneficial occupation of Mexford House and find such occupation of substantial value. 103. It is necessary to consider the hypothetical negotiations for the tenancy on the statutory terms between the hypothetical landlord and the hypothetical tenant in circumstances where the hereditament was not intrinsically valueless and where comparable premises were being beneficially occupied at substantial rents. In such circumstances we do not consider a hypothetical landlord and hypothetical tenant, each acting prudently and making the best use it could of its bargaining position, would agree upon a rent of 1. 104. We consider the flaw in the respondents argument to be as follows. The respondent correctly accepts that it is not open to it to say that no hypothetical tenant would be prepared to take any tenancy at all. The respondent accepts that there has to be a tenancy granted on the statutory terms between the hypothetical landlord and the hypothetical tenant after negotiations. However, the respondent then (incorrectly in our view) attributes to the hypothetical tenant a characteristic which is not justified, namely the characteristic of not wanting the tenancy at all. The respondent seeks to justify this by saying that in the open market as a matter of fact no one would have been prepared to pay any positive price for Mexford House. We consider that it is only permissible to attribute this characteristic to the hypothetical tenant where the hereditament is intrinsically valueless (struck with sterility) or where the responsibilities are such that no beneficial occupation is possible in a commercial sense. It is impermissible to attribute this characteristic to the hypothetical tenant when the premises are capable of beneficial occupation and where comparable premises are beneficially occupied at substantial rents. 105. Mexford House was capable of beneficial occupation as at the AVD. It was in fact still occupied (anyhow partially) at that date. The property has its drawbacks having regard to its age of construction and parking provision and location but is deemed to be in repair in accordance with the statutory provisions. It is necessary to ask the question identified in [the Erith case] namely whether the occupation (ie occupation under the hypothetical tenancy) be such as to be of value? We conclude that the only answer that can be given to that question is: yes, the occupation is such as to be of value. 106. Once that answer is reached we conclude it is impossible to find that the yearly tenancy on the statutory terms would be granted in return for a nominal rent. Instead we conclude that the tenancy would be granted at a rent which was more than a nominal rent and which was a rent which represented the value of the occupation. This rent would be negotiated between the hypothetical tenant and the hypothetical landlord by reference to the general demand for such properties as evidenced by the occupation of other office properties with similar characteristics. Having regard to the Joint Position Paper it is not appropriate for us (or indeed open to us) to examine how such negotiations would go and whether the hypothetical tenant might be able to agree a rent at less than 370,000. The tribunal accordingly fixed the rateable value at the agreed figure of 370,000. Permission to appeal was granted by the tribunal itself on 3 August 2016 in the following terms: The appeal raises an issue of principle which is likely to recur in connection with substantial vacant buildings with significant rateable values. Where the evidence shows that there is no demand to occupy a hereditament which is capable of occupation, does the rating hypothesis require the valuer to assume demand that does not in reality exist? The Court of Appeal Telereal appealed to the Court of Appeal, which allowed the appeal and restored the VTEs assessment. Giving the sole judgment, Henderson LJ reviewed the authorities. He cited in particular (at paras 34 35) the judgment of Hoffmann LJ in Inland Revenue Comrs v Gray [1994] STC 360, for the proposition that [a]lthough the yearly letting is hypothetical, the open market in which it is assumed to take place is real, adding the comment: It can be seen, therefore, that the hypothetical purchaser, or in the present context the hypothetical lessee, embodies whatever was actually the demand for that property at the relevant time, and that the valuation is a retrospective exercise in probabilities, wholly derived from the real world. He referred also (para 36) to Hoare v National Trust [1998] RA 391 in which the Court of Appeal, overturning the decision of the Lands Tribunal, had ascribed only a nominal rateable value to two historic houses (Petworth House and Castle Drogo) owned by the National Trust. The court had emphasised the need to depart from reality no further than the statutory hypothesis requires: that is the principle of reality in the words of Peter Gibson LJ. He added: Peter Gibson LJ did not need to consider the more extreme position where, as in the present case, there was no potential bidder for the hypothetical lease; but the logic of the reality principle would appear to dictate that, in such circumstances, no hypothetical lease at a positive rent could have been concluded. In the light of the principles established by the authorities, he saw no real doubt about the answer in the present case: On the agreed factual basis that nobody in the real world would have been prepared to occupy Mexford House at the AVD and to pay a positive price for doing so, it is in my judgment impossible to say that there was any actual demand in the market for such occupation. In the absence of any actual demand, there is no principle of law which requires such demand to be assumed. The only relevant assumption inherent in the rating hypothesis is that an agreement will be reached between the notional lessor and the notional lessee, but this requirement is satisfied by assuming a letting at a nominal rent. It would be contrary to the reality principle, and to the repeated emphasis in the authorities on the need to examine the actual balance between supply and demand in the real market, if the requirement to assume a concluded letting were elevated into a requirement to assume such a letting at a substantial rent which nobody in the real world would ever have been willing to pay. The existence of any such supposed principle of law would also be impossible to reconcile with the cases which show that, in an appropriate factual context, application of the rating hypothesis to premises which are capable of beneficial occupation can nevertheless yield a rateable value of nil or a nominal amount. (para 41) He acknowledged the existence of broadly comparable office properties occupied by public sector tenants at rents comparable to that for which Mr Hewitt contended. However, there was no surplus public sector demand which would have enabled Mexford House to be re let; in other words the relevant market was saturated (para 42). Ms McCarthys arguments glossed over the critical point the saturation of the relevant market and the absence of any potential tenants in the real world for Mexford House. He added: In a saturated market, there is still a proper basis for a substantial rateable value while the existing tenant remains in occupation and pays a substantial rent for the hereditament; but that situation changes once the property becomes vacant, because there is no longer a potential tenant available to take it on the statutory terms required by the rating hypothesis. (para 43) He identified four respects in which the Upper Tribunal had erred (paras 46 50): First, the Upper Tribunal were wrongly influenced by passages in the speech of Lord Herschell LC in [the Erith case] which were directed to the logically prior question of whether the premises were in rateable occupation at all, which is not in issue in the present case, rather than by the guidance given by Lord Herschell LC about the rating hypothesis itself at p 588 Secondly, although the Upper Tribunal quoted at length from the judgment of Hoffmann LJ in Inland Revenue Comrs v Gray, their actual reasoning appears to be inconsistent with the concept of the actual open market described by Hoffmann LJ Thirdly, at para 102, the Upper Tribunal considered that the public sector occupiers of the comparable premises, if not already accommodated in them, would have been able to enjoy beneficial occupation of Mexford House, and to find such occupation of substantial value. That may have been so, but the actual position was that the other public sector tenants were already accommodated elsewhere, and they would not have been available as potential tenants for Mexford House on the actual market which existed at the relevant time. Furthermore, the effect of paragraphs 2(5) and (7) of Schedule 6 to the 1988 Act is that the valuer must assume that all the comparable properties were occupied and used on the material date by their existing tenants. Fourthly, the Upper Tribunal appear to have taken the view that a nominal rateable value is only permissible in law where the hereditament is either intrinsically valueless (struck with sterility) or where the tenants responsibilities are so onerous that no beneficial occupation of the property is possible in a commercial sense. I can find no warrant for treating these categories as exhaustive, or as precluding the same conclusion in a case where the evidence drawn from the market is that there was no tenant who would pay a positive rent for the relevant hereditament. The issues in the appeal The main issue in the appeal, as in the Upper Tribunal and the Court of Appeal, is narrowly constrained by the terms of the JPP. It is common ground that at the AVD nobody in the real world would have been prepared to occupy the property and pay a positive price, but that the rating hypothesis requires the existence of a hypothetical tenant to be assumed. The question is whether, against that agreed legal and factual background, the same hypothesis requires the rateable value to be assessed by reference to the general demand as evidenced by the occupation of other office properties with similar characteristics. If the answer is yes, it is agreed that the correct rateable value was 370,000; if no, 1. The submissions of the parties in this court largely repeat their submissions below, and are sufficiently indicated by the two judgments reviewed above. However, it is convenient at this point to deal with one possible difference between their respective interpretations of the JPP. In his written submissions, Mr Glover commented on the apparently conflicting views of the two valuers on the issue of obsolescence. As he explained, the view of his witness, Mr Baldwin, was that given the size, age and location of Mexford House and the clear evidence that the market had moved away from offices of that size, age and location, the hereditament had reached the end of its economic life and was economically obsolete. In support he took us to parts of Mr Baldwins written evidence (paragraphs 11.4 11.5) where he had spoken of the public sector being in the process of downsizing their estate in the Fylde, with the result that second hand office complexes dating from the 1960s and 1970s that became empty between 2000 and 2014 were either Demolished ; completely refurbished or redeveloped or remained empty pending lease expiry. He put Mexford House in the last category. Mr Glover noted the apparently contrasting view of Mr Hewitt that Mexford House was still physically capable of use as offices and had a general specification not too dissimilar from occupied buildings, and that it was neither functionally nor locationally obsolete. Mr Glover suggested that these uses of the term obsolete were not mutually contradictory: The qualifying adjective is critical. It was not a necessary part of the ratepayers case to show that Mr Hewitts propositions were wrong; so he was not cross examined on them. Similarly, after the agreement of the JPP, counsel for the valuation officer did not feel the need to challenge Mr. Baldwin on his proposition. (written submissions para 17) This submission, in my view, runs up against a difficulty inherent in the JPP itself. The bare agreement that nobody in the real world would have been prepared to pay a positive price to occupy the building tells one nothing about the reasons for that position. Mr Glovers summary highlights what in my view was a significant difference between the explanations given by the two valuers. Had Mr Baldwin been called as a witness, his alternative valuation of 1 would have been explored. The tribunal would no doubt have wished to examine the hypothetical possibilities mentioned in its judgment. There would also have been room for cross examination on the comparison with the valuation proposed by Telereals surveyor on the rent review. As it was, those differences were necessarily left unresolved. The tribunal recorded the valuation officers view that the property was not obsolescent in either sense, and that the lack of demand was due simply to all public sector demands being met by other properties; or as he put it later because all the demand had been absorbed in the other comparable properties not because of any intrinsic lack of merit (or obsolescence) . That was the limited context of his agreement with Mr Baldwins paragraph 11.1. (see paras 10 11 above, citing UT paras 24 and 29). His acceptance of the proposition in that paragraph cannot be read as extending to the matters set out in the following paragraphs of Mr Baldwins evidence. Apart from mentioning his report, the tribunal made no further reference to Mr Baldwins evidence, on this or any other issue. That was entirely understandable in view of the terms of the JPP. As far as concerned the submissions as recorded by the tribunal, the same limited view of Mr Hewitts concession was repeated and relied on in Ms McCarthys submissions (UT para 71). On the other side, there was no indication in Mr Glovers submissions (UT paras 82ff) that the issue of obsolescence, or Mr Baldwins views on it, formed any part of his case on behalf of Telereal following the JPP. Similarly, as has been seen (para 21 above), the Court of Appeals judgment proceeded on the basis that the lack of a tenant was due, not to obsolescence in any sense, but saturation of the relevant market. In this court, in my view, we must take the JPP as it stands. We cannot look beyond it to evidence which was not referred to by the tribunal, nor attempt to resolve issues which were by agreement left unresolved. However, that does not mean that the JPP has to be looked at in a vacuum. In so far as there are differences as to its interpretation we are entitled to look at the context in which it was arrived at, and the state of the evidence as recorded by the tribunal at that time. That includes, but does not go beyond, the agreement arrived at in the course of Mr Hewitts cross examination. The authorities General principles The tribunal took it as established by the authorities, first that It must be assumed that a hypothetical landlord and a hypothetical tenant will agree terms for such a letting. It is not permissible to conclude that no bidder can be found to take the tenancy. (para 96) and secondly that the basic question to ask is: is the occupation (ie the occupation under the hypothetical tenancy) such as to be of value? A valuation for rating purposes is based upon the concept of the value of the occupation. (para 97) As indicated by their cross references, the first proposition was derived from Hoare v National Trust [1998] RA 391, 422 per Sir Richard Scott VC (see UT para 62); the second from a number of authorities, including the Erith case, but perhaps most clearly stated in Poplar Metropolitan Borough Assessment Committee v Roberts (Poplar) [1922] 2 AC 93 HL (UT paras 48). I will need to look in more detail at the National Trust case, which was relied on by the Court of Appeal, and also by Mr Glover in submissions. It is convenient to refer first to the Poplar case, which provides an authoritative and, I believe, uncontentious statement of the general approach. The Poplar case concerned the rating of a tied house (including living accommodation) which was subject to statutory rent control, with the effect that the maximum recoverable rent was less than the value entered in the valuation list. The ratepayer appealed on the basis that the figure should be reduced to the maximum rent so recoverable. The House of Lords dismissed the appeal. It is sufficient for present purposes to refer to Lord Parmoors discussion of some of the fundamental principles which permeate the whole system of our rating law (pp 118ff). As he explained actual rents agreed between tenant and landlord are not the test of value for rating purposes, this being one aspect of the fundamental principle of equality: It has long been recognized, as a matter of principle in rating law, that to make actual rentals the basis of rateable value would contravene the fundamental principle of equality, both between the rate contributions from individual ratepayers, and between the totals of rate contributions levied in different contributory rating areas. In effect the result would be to make the amount on which the occupier of property is liable to pay rates dependent in many cases on the contractual relationship between a particular landlord and tenant, whereas it is dependent in all cases on a statutory direction applicable on the same principle to all hereditaments, and intended to insure equality of treatment as between the occupiers of rateable property and the rating authority. (p 119) As he acknowledged, it could be notoriously difficult in some instances to ascertain the correct figure, but the duty of the assessment committee was in all cases, to ascertain for this purpose as accurately as may be, the value of the beneficial or profitable occupation of the particular property, and then to make the statutory deductions. For that purpose account should be taken of all that can reasonably influence the judgment of an intending occupier (p 120). The underlying principle of equality (or the common yardstick, in Ms McCarthys words) was stated in similar terms more recently by Lord Pearce: Rating seeks a standard by which every hereditament in this country can be measured in relation to every other hereditament. It is not seeking to establish the true value of any particular hereditament, but rather its value in comparison with the respective values of the rest. Out of various possible standards of comparison it has chosen the annual letting value So one must assume a hypothetical letting (which in many cases would never in fact occur) in order to do the best one can to form some estimate of what value should be attributed to a hereditament on the universal standard, namely a letting from year to year (Dawkins (VO) v Ash Brothers and Heaton Ltd [1969] 2 AC 366, 381 388) It is right also to note the necessary qualification to that principle stated by Scrutton LJ in a familiar passage in the Ladies Hosiery case [1932] 2 KB 679. Having referred to the vital principle that the valuation should be fair and equal as between different classes of hereditaments, and as between different hereditaments in the same class, he added: but in my view there is a third important qualification, that the assessing authority should not sacrifice correctness to ensure uniformity, but, if possible, obtain uniformity by correcting inaccuracies rather than by making an inaccurate assessment in order to secure uniform error. (Ladies Hosiery and Underwear Ltd v West Middlesex Assessment Committee [1932] 2 KB 679, 688) The Erith case For the application of these principles to a case where there was no general market for the use in question, the tribunal relied on the Erith case [1893] AC 562, from which it extracted the proposition that in such a case the true test is whether the occupation is of value, contrasting the case where the land was struck with sterility in any and everybodys hands (para 43). The Court of Appeal thought that in this respect the tribunal had been wrongly influenced by passages directed to the logically prior question whether the premises were in rateable occupation at all (see para 23 above). In my view that criticism is misplaced. To understand why, it is necessary therefore to look in a little more detail at the case and its factual context. The Erith case concerned pumping stations and other installations occupied by the LCC, as part of the metropolitan sewerage system. The appeal proceeded by case stated on the basis that the net rateable value was fixed at 10,000 subject to resolution of the question of law identified in the case. It was agreed that, as used by the LCC they were incapable of yielding a profit; that if they had been in private ownership, the LCC would have been prepared to pay a rent sufficient to support the rateable value as fixed; but if disconnected from that system and in the hands of a tenant applied to any other use the rateable value should be 2,143 (p 565). The principal questions before the House were, first, whether they were rateable at all, and secondly, if so, whether for the purpose of assessing rateable value the LCC was to be considered as a possible hypothetical tenant. Both questions were answered in the affirmative. In the leading speech Lord Herschell LC dealt first with the authorities on the issue of rateability, concluding that the relevant law was in a most unsatisfactory condition. However the decision of the House in Jersey v Mersey Docks (1865) 11 HLC 443, mark[ing] an epoch in the law of rating, had exploded the basis of some of the early authorities, by determining that the circumstance that land is held by a public body for public purposes does not affect its rateability; land is rateable whenever its occupation is of value (pp 584 585). Having dealt with the issue of rateability, he turned then to consider that of assessment: upon what principle the assessment ought to be made, and what considerations are proper to be taken into account, questions which in his mind were involved in much greater difficulty (p 586). Having referred to the statutory definition of rateable value, designed for uniformity in the assessment of rateable property in the metropolis (p 587) he said: It has never been doubted that the rent which is actually being paid by the occupier does not necessarily indicate what is the rent which a tenant might reasonably be expected to pay, or that an owner who is in occupation, and who may not be willing to let on any terms, is none the less rateable. The tenant described by the statute has always been spoken of by the court as the hypothetical tenant. Whether the premises are in the occupation of the owner or not, the question to be answered is: Supposing they were vacant and to let, what rent might reasonably be expected to be obtained for them? (p 588) It was in this context that (at pp 590 592) he discussed the use in some of the earlier authorities of the expression struck with sterility. For example, in R v School Board for London (1886) 17 QBD 738, 942 (concerning rateability of a school), Bowen LJ had said: If land is by law struck with sterility when in any and everybodys hands, so that no profit can be derived from the occupation of it, it cannot be rated to the relief of the poor. But if the school house is not used by this school board for any profitable purpose, it by no means follows that the site of it must be sterile in every other persons hands. Lord Herschell commented: Now, if land is struck with sterility in any and everybodys hands, whether by law or by its inherent condition, so that its occupation is, and would be, of no value to any one, I should quite agree that it cannot be rated to the relief of the poor. But I must demur to the view that the question whether profit (by which I understand is meant pecuniary profit) can be derived from the occupation by the occupier is a criterion which determines whether the premises are rateable, and at what amount they should be assessed; and I do not think that a building in the hands of a school board is incapable of being beneficially occupied by them, and is not so occupied because they are prohibited from deriving pecuniary profit from its use. He cited with approval the words of Fry LJ, in the same case (at 17 QBD, p 770): The term sterility has been introduced into the cases because, as a general rule, a profit is produced; but it does not by any means follow that because there is no profit there is no value and commented: I think the learned judge here points to the true test; whether the occupation be such as to be of value and I have already said that the possibility of making a pecuniary profit is not in my opinion the test whether the occupation is of value. (p 591) It is clear in my view from a review of the speech as a whole that Lord Herschell was seeking to clarify the principles not only of rateability but also of assessment. The rateable value in his case was directly dependent on whether the LCC could be considered as a hypothetical tenant, since it was only on that basis that it would be appropriate to take account of the use of the pumping stations as part of the metropolitan sewerage system, rather than as a detached installation in private hands. As has been seen, they were the respective bases of the agreed alternative valuations. Accordingly, with respect, Henderson LJ was wrong to criticise the tribunals reliance on passages from this speech as directed solely to the issue of rateability. That may be true of its first reference (UT para 39) to his statement that land is rateable whenever its occupation is of value. However the tribunal went on to cite passages specifically directed to the issue of assessment, including the contrast with land struck with sterility and Lord Herschells adoption of Fry LJs true test, that is whether the occupation is of value. Indeed, in this as in other early authorities, the considerations relevant to rateability and valuation may often overlap (see eg Mersey Docks and Harbour Board v Birkenhead Union Assessment Committee [1901] AC 175, 184 185 per Lord Davey). The Court of Appeal authorities I turn first to Hoare v National Trust [1998] RA 391, on which both parties relied. As already noted this case concerned the assessment of rateable value of two historic houses (Petworth House and Castle Drogo) owned by the National Trust. I can conveniently adopt the present tribunals summary of the issue (UT para 62): The National Trust had produced figures to show that no profits could be made from the properties. They argued therefore that no hypothetical tenant would be prepared to offer any rent for them and that their rateable value was therefore nil. The Lands Tribunal broadly accepted that no profit could be made from the properties, but held that an overbid would be made by the National Trust, who could be treated as a hypothetical tenant, to reflect the great historical and cultural values of the houses notwithstanding that there was no money to be made out of being a tenant of them. The Tribunal calculated the amount of the rent by taking 3% of the gross receipts at each property. The Court of Appeal disagreed holding that a hypothetical tenant (whether regarded as the National Trust itself, or, as Sir Richard Scott V C thought preferable, a hypothetical person standing in as a hypothetical National Trust) would not have been prepared to make any overbid. As the tribunal noted at para 62, the court had recognised that the statutory formula demands that the hypothetical negotiations for the yearly tenancy should be successful. It cited the words to that effect of the Vice Chancellor (p 422): If only one potential bidder has been identified, a conclusion that the bidder would not be willing to take the yearly tenancy is not one that is permissible. The statutory formula insists that the tenancy is taken up. noting that the other judgments (of Schiemann and Peter Gibson LJJ) were to similar effect. As to the substance of the decision the tribunal cited the leading judgment of Schiemann LJ, but it might also have referred to the concurring judgment of the Vice Chancellor where the critical point is to my mind expressed most clearly: The question for the Tribunal was not, in my judgment, what annual rent the National Trust would have been willing to pay for the two properties, but what rent a hypothetical organisation whose purposes were the preservation of historic houses and whose resources were adequate for taking on these properties would have been prepared to pay. The answer to this question would have to take into account in respect of each property the net annual receipts that could be obtained from a reasonable exploitation of the propertys potential and the annual expenditure that would have to be undertaken in the maintenance, repair and general preservation of the property. It is, in my opinion, important to notice that the statutory formula, unlike its predecessor in section 19 of the General Rate Act 1967, places the burden of repair and maintenance on the hypothetical tenant. Each of the properties with which we are concerned appears to require an annual expenditure on repair and maintenance which would leave the hypothetical tenant heavily out of pocket. The facts as found by the Tribunal, regarding the annual receipts that might be obtained from each property and the annual expenditure currently being spent on the maintenance and repair of each property, make it quite unreal, in my judgment, to suppose that the hypothetical tenant would be prepared to pay any rent at all. The hypothetical tenant, the hypothetical National Trust, would be accepting the obligation to meet a considerable annual deficit. Why should any hypothetical tenant be willing to add to that deficit by paying a positive rent? Why would not the hypothetical landlord be willing to grant the yearly tenancy at a nil rent in order to escape the annual deficit resulting from the cost of keeping the property in repair? (pp 23 24) The tribunal saw that case as exemplifying the proposition that a nil value may be appropriate where occupation of the hereditament may be beneficial in the physical sense but where the responsibilities of a tenancy are so great as to result in the occupation being burdensome rather than beneficial in the commercial sense. (UT para 99) I agree. Henderson LJ thought this decision supported the opposite conclusion to that reached by the tribunal. He referred (para 37) to Schiemann LJs observation that the hypothetical landlord would be faced with a situation where there are no other bidders for the tenancy, pointing as he said to a nominal hypothetical rent. Henderson LJ thought that the same conclusion would seem to follow, a fortiori, if there were no potential bidder for the tenancy in the real world. However, that ignores the different context of Schiemann LJs observation. The lack of alternative bidders in that case was the consequence of the inherently burdensome nature of the property. Unlike the present case, there were no other comparable properties let at substantial rents. For similar reasons I do not consider that any assistance is to be gained from an earlier Court of Appeal authority to which Henderson LJ referred (para 38): Tomlinson v Plymouth Argyle Football Co Ltd (1960) 175 EG 1023. That concerned the respondents football ground, for which the Football Club was the sole potential tenant. Henderson LJ cited Pearce LJs warning against assuming hypothetical tenants for the hereditament if there is in respect of that particular hereditament no reasonable possibility of such tenants existing. However, that again was in the context that the absence of an alternative tenant was due, not to a surplus of similar properties in the market, but to the particular quality of the property and the heavy cost of maintenance (see p 703). Finally I should refer to the passage in Hoffmann LJs judgment in Inland Revenue Comrs v Gray [1994] STC 360, on which Henderson LJ placed some reliance. That concerned a different statutory regime, relating to the valuation of an estate for the purposes of capital transfer tax under the Finance Act 1975. Section 38 of that Act required the value at any time of any property to be taken as the price which the property might reasonably be expected to fetch if sold in the open market at that time. The courts reliance on this authority was perhaps more understandable if, as Henderson LJ recorded (para 33), the parties were in agreement that the open market to be assumed under that section was materially identical to the open market posited by the rating hypothesis. However, in my view the comparison was potentially misleading. I note that in Hoare v National Trust, Peter Gibson LJ mentioned this case as raising a similar requirement of a hypothetical transaction (p 18). That may be true, but it is only part of the story. There are at least two important differences. First, section 38 was expressly concerned with an imaginary sale in the open market; the 1988 Act calls simply for an estimate of the rent reasonably (to be) expected, without any reference in terms to a market (although such language can be found in some of the cases: eg the higgling of the market para 7 above). More importantly, the 1984 Act was concerned with the valuation of a single asset for capital transfer tax. There is no necessary comparison with any other properties or assets. By contrast, as has been seen, the purpose of rating assessment is much wider. It is to achieve a fair standard for comparable properties across the country as a whole. It is unnecessary to decide whether every part of Hoffmann LJs analysis was accurate in the statutory context to which it was directed. In the present context, however, in so far as it suggests that the identification of the hypothetical tenant is limited by whatever was the actual demand for that property at the relevant time, it is my view inconsistent with the statutory test, and the authorities to which I have referred. Lands Tribunal cases Of more direct relevance, as the tribunal rightly held, were two decisions of highly experienced surveyor members of the Lands Tribunal, which were not mentioned by the Court of Appeal. They were Lambeth London Borough v English Property Corpn Ltd and Shepherd (Valuation Officer) [1980] RA 279 LT (Mr J H Emlyn Jones FRICS) (see UT paras 55 57); and Shiel (Valuation Officer) v Borg Warner Ltd [1985] RA 36 LT (C R Mallett FRICS) (UT paras 58 60). They addressed directly the distinction depending on whether the lack of a tenant was attributable to an inherent characteristic of the property, or to a surplus in the market of comparable properties for which there was a general demand. The Lambeth case concerned the annual value for rating of a warehouse (Bridge House) which had been purpose built in 1933 with seven storeys but was unoccupied at the relevant date. The ratepayers argued that at the relevant date the warehouse had outlived its use and was unsuitable for warehousing purposes; that a tenant could have been found at the relevant date who would make use of the ground floor and some limited use of the first floor, but that the upper parts would have been surplus to requirements. The rating authority argued that the building could be let in the open market as a multi storey warehouse. The tribunal accepted that the evidence supported the tenants assessment of the potential use of the building, and that there was no demand for multi storey use or other valuable uses of the upper floors. The tribunal made clear that this conclusion did not depend on the fact that the upper parts of the building were unoccupied at the time: I accept the argument put forward by the appellant rating authority that the mere fact that premises are unoccupied does not of itself justify a lesser value than that applicable to similar premises which are occupied. As counsel for the rating authority expressed it, in a parade of shops where one shop remains unoccupied one would expect to find similar values applicable to all shops possessing similar characteristics. I think in principle that must be right, but that presupposes that the hereditaments are broadly identical (p 313) The member went on to explain why the other properties relied on by the authority were not truly comparable. This passage was applied by the Lands Tribunal in the second case, Shiel. The case concerned a large factory which was no longer required by the original occupiers and which was empty because an alternative occupier had yet to be found. The valuation court had reduced the assessment of rateable value to 50,000, but the Valuation Officer had appealed to the Lands Tribunal arguing for a figure of 200,000. The appeal failed. Citing the Lambeth case, the member accepted that the mere fact that premises are unoccupied does not of itself justify a lesser value than that applicable to similar premises which are occupied, and referred again to the example of a parade of shops where one shop remains unoccupied (p 43). However, he accepted the ratepayers case on the evidence that the appeal premises in their existing state had reached the end of their economic life, and that their future use appears to depend upon the creation of a hereditament, or hereditaments, different from the existing. As he put it, in rating terms the premises have ceased to have any value (p 45). I would respectfully endorse the distinction drawn in those decisions between a property which is unoccupied merely because of a surplus between supply and demand in the market, and a property which has reached the end of its economic life. I did not understand Mr Glover to argue otherwise. I may add that this is not an unfamiliar issue in rating practice, nor necessarily an easy one to resolve. Ms McCarthy referred to us to the Valuation Office Agencys document, Rating Manual section 3: valuation principles, issued in May 2017. Section 5, headed No demand obsolescence states that: 5.1 Existing buildings and hereditaments can become obsolete: technology moves on, demand changes, replacement buildings are constructed. Rating is a tax on rental value. Just because a hereditament exists does not mean it has a rental value demand may have gone. Having noted that this issue is to be considered by reference to the AVD subject to the statutory exceptions taken at the material date, it draws attention (para 5.4) to the possible difficulty for valuation officers in judging whether a property is actually obsolete or simply has not (yet) let. It lists a number of relevant considerations, including: was the property occupied at AVD? This is primary evidence of demand are there other similar properties in the locality that are occupied? Does this mean that the subject property has simply been unlucky, rather than there being no demand for the type and locality of the accommodation? A terrace of five shops or offices can be envisaged with four occupied. It may be there is only demand for four. This does not mean that the demand for the fifth, vacant one should be regarded as nil. It is the general demand for the mode and category of occupation in the locality that needs to be considered not the specific. The accuracy in law of that guidance is not of course before us in this case. In so far as it clearly relies on the approach of the Lands Tribunal in the two cases I have mentioned, it does not appear contentious. It does however usefully highlight the issues of fact which may become relevant in drawing the distinction in particular cases, but which, by agreement, the tribunal in the present case was not required to resolve. This important distinction seems with respect to have been overlooked by Henderson LJ when he said: In a saturated market, there is still a proper basis for a substantial rateable value while the existing tenant remains in occupation and pays a substantial rent for the hereditament; but that situation changes once the property becomes vacant, because there is no longer a potential tenant available to take it on the statutory terms required by the rating hypothesis. (para 43) Whether the hereditament is occupied or unoccupied, or an actual tenant has been identified, at the relevant date is not critical. Even in a saturated market the rating hypothesis assumes a willing tenant, and by implication one who is sufficiently interested to enter into negotiations to agree a rent on the statutory basis. As to the level of that rent, there is no reason why, in the absence of other material evidence, it should not be assessed by reference to general demand derived from occupation of other office properties with similar characteristics. Finally, for completeness I should mention Henderson LJs reliance for support of his approach on the requirement in paragraph 2(7)(e) of Schedule 6 to assume that all the comparable properties were occupied and used on the material date by their existing tenants. As I understand it, he saw this as relevant to the extent that: the other public sector tenants were already accommodated elsewhere, and they would not have been available as potential tenants for Mexford House on the actual market which existed at the relevant time. (para 49) Ms McCarthy criticises this use of paragraph 2(7)(e) as broadening its scope in a way which is incompatible with its purpose in the statutory scheme. As she submits, it is not dealing with the issue of demand in the hypothetical market, but is an aspect of the rebus sic stantibus principle, which requires physical condition and use to be taken as at the material day, both in respect of the hereditament itself and the locality: the actual conditions affecting the hereditament at the time when the valuation is made (see the cases reviewed by Lord Hodge in S J & J Monk (a firm) v Newbigin [2017] 1 WLR 851, paras 12ff). I did not understand Mr Glover seriously to quarrel with that submission. However, as he rightly said, this point was not essential to the Court of Appeals reasoning. For these reasons I would allow the appeal and restore the decision of the Upper Tribunal. LORD BRIGGS: (dissenting) (with whom Lady Black agrees) I would have dismissed the appeal. This is not because I differ from Lord Carnwath upon any aspect of the applicable legal principles. It is only because I have come to a different conclusion about the meaning and consequences of the highly artificial agreement about the facts made between the parties before the Upper Tribunal (UT), as set out in the JPP. This was that, although there was sufficient general demand for comparable properties in the locality to justify a substantial rateable value for them (para 5), there was nonetheless nobody in the real world who would be prepared to pay or bid a positive price for Mexford House as at the AVD (paras 3 and 4). The UT was in no doubt about the artificiality of that agreement about the facts. As they said (at paras 34(b) and 103 104), in the real world the existence of comparable properties at substantial rents would ordinarily have compelled an examination of the question whether one or more of the tenants in those properties would have been prepared to re locate to the subject property at a lower, but still more than nominal, rent. The JPP also required the UT to make a rather unreal choice between two supposedly conflicting principles of law, namely (i) that the valuer is only required to consider whether, had the subject hereditament been on the market at the AVD, anybody would have been prepared to pay a positive price, with a nil rateable value if not, or (ii) that, even if nobody would be prepared to pay a positive price, the rateable value is nonetheless to be assessed by reference to the general demand as evidenced by the occupation of other properties with similar characteristics (para 5(b)). It was, mercifully, common ground that, as a matter of law, the rating hypothesis required the existence of a hypothetical tenant to be assumed (paras 5(a) and 6). It is an unreal choice because, in the real world, the existence of evidence of general demand for comparable properties in the relevant locality will almost invariably lead to the conclusion that there will be someone prepared to pay at least some more than nominal rent for the subject property, even if actually (rather than merely hypothetically) vacant as at the AVD. I would summarise the legal principles applicable to the present unusual problem as follows. I do so briefly because I do not believe that they are in dispute, although I will expand upon them in due course: a. In following the express statutory requirement to identify the rent at which it is estimated the hereditament might reasonably be expected to let from year to year as at the AVD, the valuer is required to make a real world assessment of the demand in the market for a letting of the subject premises, departing from the real world only when the rating hypothesis compels the valuer to do so: Hoare v National Trust; Tomlinson v Plymouth Argyle. b. The rating hypothesis does require a hypothetical tenant to be assumed, willing to negotiate for a yearly tenancy, but this does not require it to be assumed that the tenant will pay more than a nominal rent. The concept of the hypothetical tenant prepared to pay only a nominal rent is the safety valve by which the necessary hypothesis that there is such a tenant is reconciled with a real world in which there may be, in fact, no demand for a letting of the property at all: Hoare v National Trust. c. The requirement to abide by the principle of equality does entail the same principles being applied to each property in the rating list, but not uniformity of outcome, where the evidence (or, I would interpolate, agreement about the facts) demonstrates otherwise: the Poplar and Ladies Hosiery cases. The ordinary approach of the valuer is to look at reliable evidence of rentals agreed for comparable properties (if there are any), and then to adjust them (or discount their evidential weight) by reference to relevant differences between the comparable and the subject properties. Those differences may typically be locational, or physical, and the passage of time between the date when a rental was agreed for a comparable and the AVD may require further adjustment or discount, where for example there has been a general movement in the market between the two dates. Thus the fact that a particular rent is still being paid for the comparable property as at the AVD may be of limited value if, for example, it was negotiated some time previously but is being paid (as it usually is) under a lease for a term of years, from which it would be impossible for the tenant to escape without payment of a prohibitive surrender premium. In valuers language, the comparable is simply over rented. It does not necessarily mean that there is demand even for the comparable property as at the AVD at the then passing rent, or at any particular rent, or even in some extreme cases at more than a nominal rent. If there has been a fall in the market since the rent for the comparable property was freely agreed, (ie otherwise than at an upward only rent review in a lease without a tenants break clause) then the fact that the agreed rent is still being paid tells you little about the continuing market for the comparable property as at the AVD. All these factors are then input into the assessment of the demand (if any) for a yearly letting of the subject property as at the AVD. They are not in any way part of some separate analysis of general demand which may in some way trump an evidence based or agreed conclusion that there is in fact no real world demand at all for the subject property at more than a nominal rent. In the overwhelming majority of cases a conclusion that there is demand for comparable properties which may be described as general will be sufficient evidence to prove to a reasonable valuer that there is some demand for the subject property at a more than nominal rent, if only because there will usually be a level of discounted rent which will be likely to tempt the tenant of an occupied comparable property to re locate, if free to do so without paying a prohibitive surrender premium. That is why the mere fact that the subject property is vacant at the AVD (eg in a row of identical properties all the rest of which are occupied) does not mean that the vacant property has only a nominal rental value. Demand for a letting of a particular property is not normally a binary, yes or no, question. The real question is, demand at what rent? In the present case the parties solemnly agreed that, even though there was general demand for comparable properties at a substantial rent, nonetheless (however improbably) there was no real world demand at all for a letting of the subject property as at the AVD, at anything more than a nominal rent. That is in my view what the phrase nobody in the real world who would be prepared to pay or bid a positive price actually means. This is also how the UT understood the JPP, as is apparent from the way in which, at the respondents invitation, the UT defined the appealable issue of law. They said: Where the evidence shows that there is no demand to occupy a hereditament which is capable of occupation, does the rating hypothesis require the valuer to assume demand that does not in reality exist (my italics). The appellant tried long and hard in this court to submit that this was not what the JPP meant. It was submitted that all it meant was that the parties were unable to identify an actual tenant who would be prepared to take a tenancy on the AVD itself. But the UT was best placed to construe it, since it was agreed in the middle of a contested hearing in which they had read all the relevant evidence, and heard part of it cross examined. A reading of that evidence confirms the UTs interpretation, although a transcript of the cross examination of Mr Hewitt was sadly lacking. As both the UT and Lord Carnwath explain, it followed a cross examination of Mr Hewitt in which he had, flatly contrary to his written evidence, agreed with paragraph 11.1 of Mr Baldwins expert report, which stated: The findings described in previous sections of this statement lead to the unequivocal conclusion that as vacant and to let at the AVD, there would be no demand for Mexford House (my italics). This paragraph followed a detailed examination of the market, the relevant comparables (including Hesketh House) and the reasons why, notwithstanding its locational and physical similarity, a tenant would not be found in the real world for Mexford House at more than a nominal rent. A primary reason for Mr Baldwins conclusion appears to have been that there had been a significant recent contraction in the requirement for office space in the locality on the part of the only (governmental) tenants likely to find it suitable for their needs, and that this requirement was fully accommodated in other premises. He regarded Mexford House as being economically obsolete. The agreement recorded in the JPP was not merely that there was no evidence to prove real world demand for a letting of Mexford House, but that the evidence positively showed that there was none. This flowed naturally from the fact that paragraph 11.1 of Mr Baldwins report (with which Mr Hewitt had agreed in cross examination) was itself based on detailed evidence. I do not mean that the JPP thereby amounted to an agreement about the reasons why there was no demand, but it was an agreement made in the context of evidence, rather than in an evidential vacuum. I therefore respectfully disagree with Lord Carnwaths premise (in para 8) that this is a type of case where there is merely no positive evidence of demand for the particular property. In such a case, evidence about demand for comparable properties (usually in the form of recently negotiated agreements) will be compelling, and usually conclusive. The UTs answer to the problem that it had been agreed that the evidence proved that there was no real world demand for a letting of Mexford House at more than a nominal rent was to conclude that the rating hypothesis required them to conclude otherwise, by a departure from the real world and the substitution of an assumed demand for the subject property, derived purely from an assessment of demand for the comparable properties. This appears from paras 100 to 106 of their carefully reasoned Decision. In their view the statutory requirement to assume a hypothetical tenant meant that, provided only that the premises were capable of beneficial occupation, taking into account the burdens of upkeep, it had to be assumed that the tenant would be prepared to pay more than a nominal rent, regardless of real world evidence or, as in this case, agreement to the contrary. I can find nothing in the authorities which supports this legal analysis. In short, it assumes a requirement to depart from the real world which is not justified by the statutory scheme. All that the scheme requires is an assumption that somebody would agree to take a yearly tenancy, but not necessarily at more than a nominal rent. In a case where the valuer is not hamstrung by an improbable agreement between the parties about the complete absence of demand (at more than a nominal rent) the real world will easily provide an evidential basis for a conclusion that the hypothetical tenant would pay something of substance, for all the reasons which I have set out above. Both the UT and Lord Carnwath rely upon a number of authorities in which a distinction is made between properties which lack intrinsic value, where a nil valuation may be justified, and those which have some intrinsic value to somebody, which therefore command some more than nominal hypothetical rent. I broadly agree with Lord Carnwaths analysis of them, including where it departs from that of the Court of Appeal. But in none of those cases was there a departure from a real world assessment of rental value, nor does the reasoning in any of them justify doing so in the present case. In the Erith case, the outcome turned on a real world conclusion that, if it needed to rent the pumping station from a private owner, a hypothetical LCC would be prepared to pay a substantial rent because it would be able to connect the pumping station with its sewage system, even though, viewed on its own, the pumping station could not be operated at a profit. The phrase struck with sterility was not being approved as a label for an exclusive class of case within which, alone, a nil rental value could be assessed. Rather, this important case is supportive of the requirement to assess demand, as far as possible, on a real world basis, rather than to depart from it. Lord Herschells conclusion that the use of the subject premises would be of value (even if not on its own profitable) was a stepping stone to a conclusion that, in the real world, there was demand for the pumping station at a more than a nominal rent. It was not a licence to depart from the real world assessment of demand required by the statute, in a case where it is proved or (as here) agreed that there was no demand at more than a nominal rent. I agree with Lord Carnwath that Hoare v National Trust was not a case in which there were comparable properties let at a substantial rent. In the absence of comparables the Court of Appeal therefore had to conduct a real world assessment of the economics of being a tenant of each of the stately homes in question, which proved that the hypothetical tenant would only pay a nominal rent. It contains a trenchant statement of the need not to depart from the real world further than the rating hypothesis compels (per Schiemann LJ at p 381). The Court of Appeal overruled the Lands Tribunal precisely because it departed from the real world, under the mis apprehension that the law required it to assume some kind of overbid, contrary to the facts. The case is a good example of the operation of the nominal rent as the safety valve which accommodates the statutory requirement to assume a willing tenant with the absence of any real world demand for the premises at more than a nominal rent. It is powerful authority against, rather than for, the proposition that where the evidence (or, as here, an agreement about the evidence) demonstrates that there is no such demand, the law requires the valuer to depart from the real world so as to create one which does not in reality exist. It is in my view no answer to say of the Hoare case that there were no comparables, or that the absence of demand was proved by reference to the economics of running the two buildings. That is true, and those economics were the real world reasons why there was nobody who would bid more than a nominal rent for either property. In this case that conclusion is an agreed fact, and the reasons for it do not therefore matter. I would make the same observation about Tomlinson v Plymouth Argyle Football Co Ltd. Pearce LJs warning against assuming hypothetical tenants where there is no real possibility of such tenants existing may have been based upon real world facts about the football ground, but it is a perfectly general and in my view correct statement of the law. In this case the absence of any such possibility (ie tenants prepared to pay more than a nominal rent) is an agreed fact, and the law does not compel the valuer to go behind it, into the non real world, merely because there is some general demand for other comparable properties. Again, I agree with Lord Carnwath that Inland Revenue Comrs v Gray is about a different kind of statutory valuation, but rating valuation is surely no less about an open market than the valuation of an estate for tax purposes. In my view the concession recorded by Henderson LJ in the Court of Appeal that the two valuation processes are substantially the same was rightly made. At p 372, speaking generally, Hoffmann LJ said: The valuation is thus a retrospective exercise in probabilities, wholly derived from the real world (my italics). Nor do I accept as a sufficient distinguishing characteristic the fact that rating valuation seeks to value numerous properties as at the same date, whereas estate valuation is a one off. It would be no less unusual (and potentially unsatisfactory) for identical houses in a terrace to receive hugely different values for IHT purposes when their owners died at roughly the same time, than apparently comparable properties in a rating list. But the statutory criterion in both cases is uniformity of the principles applied, not uniformity of outcome. Where as here the parties actually agree that, in fact, there is such a disparity in demand, the law does not require recourse to some non real world principle to trump or remove it. Turning to the Lands Tribunal cases, both Lambeth London Borough v English Property Corpn Ltd and Shepherd (Valuation Officer) and Shiel (Valuation Officer) v Borg Warner Ltd exemplify the plainly correct proposition that the mere fact that the subject property is unoccupied as at the AVD does not of itself mean that there is no real world demand for it. Both make use of the familiar example of the parade of shops, with one empty and the others in use. The conclusion that there is nonetheless some demand for the empty shop is a reasonable conclusion of fact which would be reached by most valuers, even in a saturated market where there are, say, five comparable properties, demand for only four, and the subject property is the only one which is vacant. But nothing in those cases suggests that where the facts show or (as here) it is agreed, for whatever reason, that there is in truth no demand at all for the empty shop, the law requires some notional general demand for comparable properties to be substituted. The agreement in the JPP was not merely that no hypothetical tenant could actually be identified as at the AVD, but that there was no demand at all for Mexford House. Nor does the passage in the Rating Manual, relied upon by Ms McCarthy and quoted by Lord Carnwath at para 56, take the matter any further. Read as a whole, all it advises is that general demand will usually be probative of specific demand for the subject property, and that the valuer should not become too focussed upon the subject property being vacant. It does not say that where the evidence (including that of general demand) shows, or it is agreed, that there is nonetheless no demand at all for the subject property, the general demand must be substituted for that evidence or agreement. I am however cautious about the reliability of the advice that occupation of the subject property as at the AVD is primary evidence of demand. It may well be prima facie evidence, but the continuing occupation may be attributable to a reason other than demand, such as the existence of a lease for a term of years from which the tenant has no economical means of escape. I am, like Lord Carnwath, puzzled by the view of the Court of Appeal about the effect of a property becoming vacant in a saturated market. As noted above, the fact that there is a tenant in a property paying a substantial rent may not be reliable evidence for open market demand for it, and certainly not at the then current rent, if the market has become saturated only after that rent was agreed, and the tenant has no economic means of escape from the tenancy. But I can envisage a situation where demand for a group of comparable properties has collapsed, and where the departure of one of a very small number of potential tenants from one of them, due to its reduced requirement for space of that type in the locality, renders the subject property economically obsolete. Even then that would only exceptionally mean that there was no demand for it at anything above a nominal rent, but that is what was agreed as a fact in the present case. The following familiar example illustrates the point. A shopping centre may have a row of shops whose economic viability is entirely dependant upon the presence of a nearby anchor tenant, such as a major supermarket or department store. The anchor tenant leaves, and there is no prospect of another anchor tenant being found. The row of shops will immediately become economically obsolete (ie no longer viable to a hypothetical incoming tenant at more than a nominal rent), but they will not all immediately fall vacant. For as long as leasehold terms continue, their tenants may be locked in, and only able to leave at the end of their terms. The row of shops will be subject to a lingering economic death. In such a case the evidence that rent is still being paid for some of them will not justify the inference that there is demand for those which have fallen vacant. In conclusion the question of law for which the UT gave permission to appeal in this case is: Where the evidence shows that there is no demand to occupy a hereditament which is capable of occupation, does the rating hypothesis require the valuer to assume demand that does not in reality exist. I would answer it in the negative. It will be a very rare case indeed where the evidence really does show that there is no demand at all for the subject property where there are comparables in the locality let at substantial rents. But if that is what the evidence shows, or that is what the parties have agreed, then the rating hypothesis does not require a departure from that real world conclusion, merely because the subject property is in theory capable of beneficial occupation.
UK-Abs
Mexford House is a substantial three storey block of offices in the North Shore area of Blackpool. It was purpose built in 1971 and was occupied continuously as Government offices from 1972. The property was vacant, however, by 1 April 2010, the date on which the non domestic rating list for the area of Blackpool Borough Council first came into force by virtue of section 41(2) of the Local Government Finance Act 1988 (the 1988 Act). A valuation was made for the purposes of the new rating list. The rateable value had to be determined by reference to the antecedent valuation date two years earlier. The rateable value initially entered by the valuation officer with effect from 1 April 2010 was 490,000. This reflected his view that there were other office buildings in the area of similar age and quality, occupied by public sector tenants at rent of the same order. However, the Valuation Tribunal for England reduced the rateable value of Mexford House to 1. The valuation officer appealed to the Upper Tribunal, before which the matter was dealt with by way of a full rehearing on fact and law. In cross examination, the valuation officer accepted that as at the antecedent valuation date he could not identify any person in the real would who would bid for the tenancy of Mexford House, although he noted that there was demand for other (occupied) properties that were comparable. In light of the comparable properties he gave a final assessment of the rateable value as 370,000. After the valuation officers evidence, counsel for both parties informed the Upper Tribunal that the issue between them could be decided as a matter of law upon an agreed basis of fact. No other evidence was heard. The parties lodged before the Upper Tribunal a Joint Position Paper, in which they agreed that at the time of the antecedent valuation date nobody in the real world would have been prepared to occupy the property and pay a positive price. They agreed that the rating hypothesis requires the existence of a hypothetical tenant to be assumed, but the question was whether the same hypothesis requires the rateable value to be assessed by reference to the general demand as evidenced by the occupation of other office properties with similar characteristics. It was agreed that, if the answer is yes, the correct rateable value was 370,000; if no, 1. The Upper Tribunal answered yes, so it allowed the valuation officers appeal and fixed the rateable value at 370,000. The Court of Appeal allowed Telereal Trilliums appeal and restored the Valuation Tribunal for Englands assessment of the value at 1, on the basis that there was no demand in the market for occupation of Mexford House. The valuation officer appeals to the Supreme Court, which considers the same question as the Upper Tribunal and the Court of Appeal. The Supreme Court allows the appeal by a majority of three to two. Lord Carnwath gives the judgment of the majority, with which Lord Reed and Lord Lloyd Jones agree. Lord Briggs gives a dissenting judgment, with which Lady Black agrees. Lord Carnwath notes that the court must take the Joint Position Paper as it stands. It cannot look beyond it to evidence which was not referred to by the tribunal, nor attempt to resolve issues which were left unresolved by agreement. However, in so far as there are differences as to its interpretation, the court is entitled to look at the context in which it was arrived at, and the state of the evidence as recorded by the tribunal at that time [31]. He approves of the Upper Tribunals reliance on London County Council v Church Wardens and Overseers of the Poor of the Parish of Erith in the County of Kent [1893] AC 562, from which it extracted the proposition that the true test is whether the occupation is of value, contrasted with land that was struck with sterility in any and everybodys hands [36 42]. Cases such as Hoare v National Trust [1998] RA 391 and Tomlinson v Plymouth Argyle Football Co Ltd (1960) 31 DRA 788, referred to by the Court of Appeal, do not assist the respondent as in those cases the absence of alternative tenants was due to the inherently burdensome nature of the properties, rather than the state of the market [46 48]. Lord Carnwath endorses the distinction drawn in previous Land Tribunal cases between a property which is unoccupied merely because of a surplus between supply and demand in the market, and a property which has reached the end of its economic life [55]. The Valuation Office Agencys guidance on whether a property is obsolete lists several relevant considerations, including whether the property was occupied at the antecedent valuation date, and whether there are other similar properties in the locality that are occupied [56]. This highlights the issues of fact which may become relevant in drawing the distinction in particular cases, but which, by agreement, the tribunal in the present case was not required to resolve [57]. Whether the building is occupied or unoccupied, or an actual tenant has been identified, at the relevant date is not critical. Even in a saturated market the rating hypothesis assumes a willing tenant, and by implication one who is sufficiently interested to enter negotiations to agree a rent on the statutory basis. There is no reason why, in the absence of other material evidence, the level of that rent should not be assessed by reference to general demand derived from occupation of other office properties with similar characteristics [58]. The majority therefore allows the appeal and restores the decision of the Upper Tribunal [61]. Lord Briggs, dissenting, comes to a different conclusion about the meaning and consequences of the Joint Position Paper. In the real world the existence of comparable properties at substantial rents would ordinarily have compelled an examination of whether one or more of the tenants in those properties would have been prepared to relocate to the subject property at a lower, but still more than nominal, rent [62]. It will be very rare that the evidence really does show that there is no demand at all for the subject property where there are comparable properties in the locality let at substantial rents. But if that is what the evidence shows (or what the parties have agreed), the rating hypothesis does not require a departure from that real world conclusion, merely because the subject property is in theory capable of beneficial occupation [83].
In 2007, the Mental Health Act 1983 (the MHA) was amended to introduce a new form of order, a community treatment order (a CTO). This was designed so that patients compulsorily detained in hospital for treatment might be released into the community by their responsible clinician (RC) but subject to conditions which would support their continuing to receive the treatment they needed. The simple question in this case is whether the RC can impose conditions in a CTO which amount to depriving the patient of his or her liberty, within the meaning of article 5 of the European Convention on Human Rights. The same question has arisen in the case of MM v Secretary of State for Justice [2018] UKSC 60, in relation to the conditions which may be imposed upon a restricted patient who is conditionally discharged from hospital either by a tribunal or by the Secretary of State for Justice. The two cases were heard and determined together in the Court of Appeal: M v Secretary of State for Justice, J v Welsh Ministers [2017] EWCA Civ 194; [2017] 1 WLR 4681. However, the statutory regime governing the conditional discharge of restricted patients is quite different from the statutory regime governing CTOs for non restricted patients. Accordingly, we have heard the cases separately and are giving judgment separately, while of course seeking to adopt a consistent approach to the principles involved. Our conclusion, differing from the Court of Appeal, is that under neither regime is it permissible to impose conditions which amount to a deprivation of liberty. The facts The patient, PJ, is 47 years old. According to his RC when making the CTO in 2011, he has mild to borderline learning disability He has also been assessed recently as having difficulties which fall within the autistic spectrum. This has been accompanied by abnormally aggressive and seriously irresponsible behaviour consisting of violent and sexual offending. That wording was no doubt chosen because a person with a learning disability cannot be compulsorily admitted to hospital for more than a short time or made the subject of a CTO unless that disability is associated with abnormally aggressive or seriously irresponsible conduct on his part (MHA, section 1(2A), (2B)). In 1999, PJ was convicted of assault occasioning actual bodily harm and threats to kill. The court imposed a hospital order under section 37 of the MHA (but not a restriction order). He was admitted to a medium secure unit and later discharged to a residential unit under a supervised discharge order (a predecessor to a CTO but to different effect). In 2007 that unit became a hospital, but PJ remained there voluntarily as an informal patient. In May 2009, he was compulsorily detained for treatment under the civil power in section 3 of the MHA. On 30 September 2011, he was discharged from hospital under a CTO and placed in a care home. This was a specialist facility for up to ten men with moderate to borderline learning disability and a history of challenging or offending behaviour. The CTO imposed the two conditions to which all CTO patients are required to be subject under section 17B(3) of the MHA: 1. The patient is to make himself or herself available for examination under section 20A as required. 2. If it is proposed to give a certificate under Part 4A in the patients case, the patient is to make himself or herself available for examination to enable the certificate to be given, as required. Section 20A provides for the duration and renewal of CTOs initially for six months, then a further six months, then for a year at a time. Before deciding to renew the CTO, the RC must examine the patient and decide whether the criteria for renewal exist (section 20A(4)). Part 4A deals with the medical treatment of patients on CTOs who have not been recalled to hospital. Certain treatments cannot be given, even if the patient consents to them, without a certificate having been given. The details need not concern us. The CTO also imposed three bespoke conditions under section 17B(2) of the MHA: 1. To reside at [the named care home with nursing] and adhere to rules of residence at [the care home]. 2. To abide by joint 117 care plan drawn up by multidisciplinary team. 3. To abide by risk management plans for community access with regard to levels of staff supervision. The reference to joint 117 care plan relates to section 117 of the MHA under which (in Wales) the Local Health Board and the local social services authority have a duty to provide after care services for, inter alia, patients subject to a CTO. The RC confirmed on the form that she considered these conditions to be necessary or appropriate for one or more of the following purposes (listed in section 17B(2)): to ensure that the patient receives medical treatment to prevent risk of harm to patients health or safety to protect other persons. his whereabouts were monitored at all times within the unit, with 15 It is common ground that the regime to which PJ was subject in the care home As required by section 17A of the MHA, an approved mental health professional (AMHP) agreed that the patient met the criteria for a CTO, that it was appropriate to make a CTO and that the conditions under section 17B(2) were necessary for one or more of the purposes specified. included: (i) minute observations; (ii) (iii) he was escorted by staff on all community outings, including when attending college and meeting his girlfriend; (iv) all unescorted leave had to be agreed by the RC and social supervisor; (v) at the time of the tribunal hearing, he was allowed 30 minutes per week unescorted leave for banking; 30 minutes for shopping; 30 minutes on two other occasions as long as safe to do so; and two to three nights with his mother every fortnight; there was a time out policy in operation; there was an absconding protocol allowing for restraint techniques to (vi) be used as a last resort; (vii) his alcohol use was limited to four units per week and he was breathalysed to secure compliance; any alcohol reading after home leave or contact with his brother would result in immediate suspension of home leave; (viii) unescorted leave would be stopped if risk factors increased. According to the psychiatrist who prepared a report for a hearing before the Mental Health Review Tribunal for Wales (the MHRT) in 2014, PJ knew what CTO stood for. His understanding of its effect was that in my language it means if you fuck up its goodbye everything. His understanding of the conditions was that he had to listen to staff and stick to the rules. That psychiatrist, along with the RC and others, considered that he had the capacity to consent to the care plan and to the conditions in the CTO. The evidence before the tribunal was that he was happy to stay at the care home and understood that the CTO brought benefits because he needed clear boundaries, but that he would like more freedom to see his family and his girlfriend. These proceedings At the MHRT hearing in May 2014, the case put on behalf of PJ was that the arrangements under the CTO amounted to an unlawful deprivation of liberty and he should therefore be discharged from it. The Tribunal found that he had significant time when he was not supervised and there was a flexible and progressive plan in place to enable more time to be spent unsupervised. Accordingly, he was not under continuous supervision and control and thus not deprived of his liberty within the meaning of article 5, as interpreted by this court in Cheshire West and Chester Council v P [2014] AC 896. Even if he was, the need for a CTO must take precedence over any human rights issues. The MHRT upheld the CTO. The Upper Tribunal heard the patients appeal in May 2015. The judge, Charles J, made an order joining the Welsh Ministers and the Secretary of State for Health as parties but they chose not to play any active part in the case. Indeed, they both applied for the joinder to be lifted, the Welsh Ministers stating that they had no particular legal or policy perspective on the appeal. Charles J declined to remove them as parties, so that they would be bound by the decision, and could receive the documents and consider what views to offer on the important issues raised. In his substantive decision, Charles J held that the MHRT had erred in their approach to whether or not PJ was deprived of his liberty: they had concentrated on the level of supervision, divorcing it from whether he was free to leave or to refuse to abide by the conditions. Charles J declined to decide whether or not PJ in fact had been deprived of his liberty, although he found it hard to see how further analysis would lead to the conclusion that he was not. He also held that the MHRT had been wrong to conclude that the CTO framework took precedence over the human rights issues: if PJ had been unlawfully deprived of his liberty the Tribunal could not allow the situation to continue. But he declined to remit the case to the MHRT because by that time PJ was no longer subject to a CTO. Implicit in the conclusions reached by Charles J is that whether a person is in fact deprived of his liberty has to be judged by the concrete situation of the person on the ground rather than by the enforceability of his regime; and that it would not be lawful to impose conditions in a CTO which had the practical effect of depriving the patient of his liberty. The Welsh Ministers (but not the Secretary of State) appealed to the Court of Appeal. No one sought to argue in that court that it had been open to the MHRT to hold that the conditions in the CTO did not amount to a deprivation of liberty. But the Court of Appeal concluded that by necessary implication the MHA permitted an RC to restrict the freedom of movement of the patient to such an extent that it amounted to a deprivation of liberty. The Court of Appeal also held that the MHRT had no power to discharge the CTO even if its terms meant that the patient was unlawfully deprived of his liberty. The patient now appeals to this court. Once again, the Secretary of State has played no part in the proceedings. The relevant Secretary of State would be the Secretary of State for Health, whereas the relevant Secretary of State in the case of MM is the Secretary of State for Justice. In the MM case, the Secretary of State has argued, successfully, that there is no power to impose conditions upon a conditionally discharged restricted patient which have the effect of depriving him of his liberty. In this case, the Welsh Ministers principal argument until shortly before the hearing in this court was that such conditions could be imposed in a CTO. It would, to say the least, have been helpful to this court to have the views of the Secretary of State for Health, no doubt after consultation with the Secretary of State for Justice, on an issue which affects England as much as it affects Wales. It may, however, be possible to deduce the views of the Secretary of State from the Mental Health Act Code of Practice, which he is required to draw up and lay before Parliament under section 118 of the MHA. The current edition (revised 2015) states quite clearly that The conditions must not deprive the patient of their liberty (para 29.31). However, shortly before the hearing, Mr Richard Gordon QC, on behalf of the Welsh Ministers, put forward an alternative and diametrically opposed argument. This was, in short, that because the conditions in a CTO cannot be enforced, they cannot amount to a deprivation of liberty and it is therefore permissible to impose them. The statutory regime The statutory regime governing the imposition and effect of a CTO is principally contained in sections 17A to 17F of the MHA, which are annexed to this judgment. The following features are particularly noteworthy: (i) The conditions are imposed by the RC, with the agreement of an AMHP, without any judicial input. The MHRT has no power to revoke or to vary the conditions. Its powers are limited to discharging the patient from the CTO: under section 72(1), it has power to do this in any case and a duty to do so if it is not satisfied that the legal criteria for making a CTO are made out. (ii) The conditions specified in a CTO are of two types. Under section 17B(3), the two conditions set out in para 4 above have to be specified in every order, and are normally referred to as the mandatory conditions. Under section 17B(2), other conditions may be imposed if the RC thinks them necessary or appropriate for the purpose of either ensuring that the patient receives medical treatment, or preventing the risk of harm to the patients health or safety, or protecting other persons; these are normally referred to as the non mandatory conditions. The conditions in issue in this case, set out in para 5 above, were of the non mandatory type. (iii) Under section 17D(2), while a patient remains subject to a CTO, (a) the power of the hospital managers to detain him in hospital is suspended, and (b) references to patients who are detained or liable to be detained do not include him. None of the elaborate provisions in the MHA, authorising the detention of patients and their recapture if they escape or go absent without leave, apply to community patients. (iv) The power to impose medical treatment upon a detained patient, contained in section 63 of the MHA, does not apply to a community patient who has not been recalled to hospital: see section 56(4). Medical treatment is widely defined in section 145(1) to include nursing, psychological intervention and specialist mental health habilitation, rehabilitation and care but this is qualified by section 145(4), which requires that references to medical treatment in relation to mental disorder be construed as references to medical treatment the purpose of which is to alleviate or prevent a worsening of the disorder or one or more of its symptoms or manifestations. There is only authority to treat a community patient in three circumstances, which reflect the circumstances in which it would be possible to treat him without a CTO, but with some extra procedural safeguards, the details of which need not concern us. The three circumstances are: first, where there is a valid consent, given either by a patient who has capacity to give it or, if he does not, by a donee of a lasting power of attorney or a deputy appointed by the Court of Protection who has power to give it, or by the Court of Protection (section 64C(2)); second, where the patient lacks capacity and it is possible to give him the treatment without using force (section 64D); or third, where emergency treatment is needed by a patient who lacks capacity (section 64G). Extra procedural safeguards are required for particular treatments, including long term medication and ECT. But there is nothing in the MHA to authorise the giving of medical treatment to a community patient who has the capacity to consent to it and does not give that consent. (v) There are no sanctions for failing to comply with the conditions in a CTO. Under section 17E(2), the RC may recall a community patient to hospital if he fails to comply with one of the mandatory conditions under section 17B(3) (see (ii) above). Under section 17E(1), the RC may also recall a community patient if in his opinion (a) the patient requires medical treatment in hospital for his mental disorder and (b) there would be a risk of harm to the health or safety of the patient or to other persons if he were not recalled to hospital for that purpose. Under section 17B(6), breach of the conditions may be taken into account in deciding whether these grounds exist. (vi) If a recalled patient fails to return to hospital voluntarily, he is treated as absent without leave and the MHA provisions for recapturing such patients apply. Once in hospital, the patient may be given medical treatment without his consent, by force if need be, under section 63. Under section 17F(4) and (5), the RC then has a choice between revoking the CTO and keeping the patient in hospital or releasing the patient under the CTO. Under section 68(7), the hospital managers must refer the case of a recalled CTO patient whose CTO has been revoked to the MHRT as soon as possible and the tribunal would have to discharge him if the grounds for detention did not exist. The Welsh Ministers new argument In effect, the Welsh Ministers now argue that the conditions imposed upon PJ cannot deprive him of his liberty because they cannot be enforced. There is no power to detain him, there is no power to impose medical treatment (widely defined) without his consent, there is no sanction for failing to comply with the care plan, other than the limited power of recall, and there is no power to recapture him if he absconds or otherwise goes missing from the care home. Hence, they argue, it is lawful to impose these conditions, because they do not amount to a deprivation of liberty. The Welsh Ministers are entirely correct in what they say about the legal effect of a CTO. But it does not follow that the patient has not in fact been deprived of his liberty as a result of the conditions to which he is subject. The European Court of Human Rights has said time and time again that the protection of the rights contained in the European Convention must be practical and effective. When it comes to deprivation of liberty, they and we must look at the concrete situation of the person concerned: has he in fact been deprived of his liberty? Otherwise, all kinds of unlawful detention might go unremedied, on the basis that there was no power to do it. That is the antithesis of what the protection of personal liberty by the ancient writ of habeas corpus, and now also by article 5 of the Convention, is all about. Since the judgment in the Upper Tribunal, this case has proceeded on the basis that the factual circumstances in which PJ found himself under the CTO conditions did amount to a deprivation of liberty. Charles J found that the MHRT had applied the wrong test, but neither made the determination for himself nor sent the case back for the MHRT to do so. But it is enough for our purposes to proceed on the basis that there was a deprivation of liberty on the ground. The question is whether the RC has power, under the MHA, to impose conditions which have that effect. Modifying Cheshire West If he fails on his new principal case, Mr Gordon argues that the acid test of a deprivation of liberty, decided by this court in Cheshire West, should be modified for cases of this sort where the object is to enhance rather than further curtail the patients freedom. He relies on cases such as Austin v United Kingdom (2012) 55 EHRR 14, where the European Court of Human Rights found that kettling demonstrators and passers by for some hours was not a deprivation of liberty in all the circumstances of the case. As the court explained, article 5(1) is not concerned with mere restrictions on liberty of movement, which are governed by article 2 of Protocol No 4. In order to determine whether someone has been deprived of his liberty within the meaning of article 5(1), the starting point must be his concrete situation and account must be taken of a whole range of criteria such as the type, duration, effects and manner of implementation of the measure in question. The difference between deprivation of and restriction upon liberty is one of degree or intensity, and not of nature or substance. (para 57) This is indeed the test which has been propounded by Strasbourg for many years, beginning with Guzzardi v Italy (1980) 3 EHRR 333. The jurisprudence was examined in detail in Cheshire West, where all members of the court agreed that the acid test of a deprivation of liberty was whether the person was under continuous supervision and control and not free to leave. The concrete circumstances of PJ in this case are much the same as those of P in the Cheshire West case, although PJ is not as seriously disabled as was P. And in both cases, the object of the care plan was to allow them as much freedom as possible, consistent with the need to protect their own health or safety or, at least in PJs case, that of others. But, as Lord Walker pointed out in the House of Lords in Austin v Comr of Police of the Metropolis [2009] AC 564, at para 43, It is noteworthy that the listed factors, wide as they are, do not include purpose. There is no reason to distinguish this case from Cheshire West and we are not and could not be as a panel of five asked to depart from it. And in any event, we are not being asked, any more than was the Court of Appeal, to decide whether PJ was in fact deprived of his liberty by the regime imposed upon him. We are asked to consider whether the MHA gives the RC power to impose conditions which have that effect. It is to that question which I now turn. Can the RC impose conditions in a CTO which have the effect of depriving the patient of his liberty? It is common ground that there is no express power in section 17B(2) of the MHA to impose conditions which have the effect of depriving a community patient of his liberty. The Court of Appeal nevertheless held that there was such a power by necessary implication. The purpose of a CTO, they said, is the gradual integration of the patient into the community (para 50). There must therefore be, by necessary implication, a power to provide for a lesser restriction of movement than detention in hospital which may nevertheless be an objective deprivation of liberty provided it is used for the specific purposes set out in the CTO scheme (para 51). The only limit was that the conditions could not impose a greater restriction than those applicable to detention in hospital (para 52). With the greatest of respect to the Court of Appeal, this approach puts the cart before the horse. It takes the assumed purpose of a CTO the gradual reintegration of the patient into the community and works back from that to imply powers into the MHA which are simply not there. We have to start from the simple proposition that to deprive a person of his liberty is to interfere with a fundamental right the right to liberty of the person. It is a fundamental principle of statutory construction that a power contained in general words is not to be construed so as to interfere with fundamental rights. The best known explanation for this principle is contained in Lord Hoffmanns opinion in R v Secretary of State for the Home Department, Ex p Simms [2000] 2 AC 115, at p 131: Fundamental rights cannot be overridden by general or ambiguous words. This is because there is too great a risk that the full implications of their unqualified meaning may have passed unnoticed in the democratic process. In the absence of express language or necessary implication to the contrary, the courts therefore presume that even the most general words were intended to be subject to the basic rights of the individual. In this way the courts of the United Kingdom, though acknowledging the sovereignty of Parliament, apply principles of constitutionality little different from those which exist in countries where the power of the legislature is expressly limited by a constitutional document. This famous passage was quoted by Lord Reed in AXA General Insurance Ltd v HM Advocate [2012] 1 AC 868, para 151. Lord Reed went on to explain, at para 152: The principle of legality means not only that Parliament cannot itself override fundamental rights or the rule of law by general or ambiguous words, but also that it cannot confer on another body, by general or ambiguous words, the power to do so. As Lord Browne Wilkinson stated in R v Secretary of State for the Home Department, Ex p Pierson [1998] AC 539, 575: A power conferred by Parliament in general terms is not to be taken to authorise the doing of acts by the donee of the power which adversely affect the basic principles on which the law of the United Kingdom is based unless the statute conferring the power makes it clear that such was the intention of Parliament. There is no need to labour the point. The very first case to be heard in this court, Ahmed v Her Majestys Treasury [2010] 2 AC 534, held that the very general words in the United Nations Act 1946 could not authorise the Treasury to make orders freezing peoples assets, which constituted an interference with their fundamental rights, without due process of law. The very general words in section 17B(2) cannot authorise the RC to impose conditions which deprive a patient of the fundamental right to liberty. In any event, as the Court of Appeal recognised, the test for a necessary implication is a strict one. As Lord Hobhouse put it in R (Morgan Grenfell & Co Ltd) v Special Comr of Income Tax [2003] 1 AC 563, para 45: necessary implication is not the same as a reasonable implication, as was pointed out by Lord Hutton in B (A Minor) v Director of Public Prosecutions [2000] 2 AC 428, at 481. A necessary implication is one which necessarily follows from the express provisions of the statute construed in their context. It distinguishes between what it would have been sensible or reasonable for Parliament to have included or what Parliament would, if it had thought about it, probably have included and what it is clear that the express language of the statute shows that the statute must have included. In fact, there is no reason to suppose that Parliament would have included such a power in the MHA had it been thought of. The purpose of a CTO is not necessarily or invariably the gradual integration of the patient into the community. The purpose is explained in the Mental Health Act Code of Practice, para 29.5, as follows: The purpose of a CTO is to allow suitable patients to be safely treated in the community rather than under detention in hospital, and to provide a way to help prevent relapse and any harm to the patient or to others that this might cause. It is intended to help patients to maintain stable mental health outside hospital and to promote recovery. The 2007 amendments to the 1983 Act were preceded by lengthy examination and consultation, by an expert committee chaired by Professor Genevra Richardson (Report of the Expert Committee: Review of the Mental Health Act, Department of Health, 1999) and then by government (Department of Health, Reform of the Mental Health Act 1983: Proposals for Consultation, Cm 4480; Draft Mental Health Bill, Cm 3558; Draft Mental Health Bill 2004, Cm 6305). The Royal College of Psychiatrists had long been pressing for some means of ensuring that detained patients kept up with their medication and did not get lost after being discharged from hospital. But there was vigorous opposition to any form of compulsory or forcible medical treatment outside the carefully controlled environment of a hospital. And, as explained earlier in para 16(iv), this cannot be imposed under a CTO. Indeed, that is one of the strong indications from the other provisions in the MHA that CTO conditions cannot be used to deprive a person of his liberty. If he cannot be made to take his medication, how can Parliament have intended an even greater interference with his fundamental rights? Another indication comes from the very precise language used when detention is authorised under the MHA. If a patient is admitted to hospital for treatment under the civil power in section 3 of the Act, for example, section 6 provides that a duly completed application is authority for certain people to take the patient and convey him to the hospital within certain periods of time and, if he reaches there in time, for the hospital to detain him in accordance with the provisions of the Act. These include provision for the grant of leave of absence to the patient and for his recapture if he is absent without leave. As Sir Thomas Bingham MR explained in In re S C (Mental Patient: Habeas Corpus) [1996] QB 599, p 603, because of the special problems presented by mental illness, Powers exist to ensure that those who suffer from mental illness may, in appropriate circumstances, be involuntarily admitted to mental hospitals and detained. But, and it is a very important but, the circumstances in which the mentally ill may be detained are very carefully prescribed by statute. Thus we find in the statute a panoply of powers combined with detailed safeguards for the protection of the patient. One reminds oneself that the liberty of the subject is at stake in a case of this kind, and that liberty may be violated only to the extent permitted by law and not otherwise. The provisions which do apply to a CTO make none of the sort of detailed rules which we would expect if a CTO were to authorise the detention of the patient in a community facility. If the MHA had contemplated detention or deprivation of liberty in a place outside hospital, one would have expected, for example, a definition of the types of setting in which a patient could be so placed and the regulatory regime attached to them. And one would have expected an express provision saying who was entitled to detain the patient and who was entitled to recapture him if he escaped or went absent without leave. I conclude, therefore, that the MHA does not give the RC power to impose conditions which have the concrete effect of depriving a community patient of his liberty within the meaning of article 5 of the European Convention. I reach that conclusion without hesitation and in the light of the general common law principles of statutory construction, without the need to turn further to the jurisprudence of the European Court of Human Rights or to resort to the obligation in section 3(1) of the Human Rights Act 1998 to read and give effect to legislation in a way which is compatible with the Convention rights. However, it is doubtful, to say the least, whether the European Court of Human Rights would regard the ill defined and ill regulated power implied into the MHA by the Court of Appeal as meeting the Convention standard of legality. The powers of the MHRT Having reached that conclusion, a subsidiary question arises as to the powers of the MHRT if it finds on the facts that a community patient is being deprived of his liberty. As already seen, the MHRT has no power to revoke or vary the conditions. Its only power is to discharge the patient, either immediately or at some future date. But the MHA gives the MHRT a general discretion to order discharge in any case, alongside a duty to do so if not satisfied that the statutory criteria for the CTO are made out. (Incidentally, the Schedule attached to the judgment of the Court of Appeal, setting out the relevant sections of the Act, does not state section 72(1)(c) accurately). It is argued for the patient that if he is indeed being deprived of his liberty unlawfully under the CTO, the MHRT should exercise its power to discharge him, either under the general discretion conferred by section 72(1), or because the tribunal cannot be satisfied that appropriate medical treatment is available for the patient. If the care plan amounts to unlawful detention, the treatment cannot be appropriate. If the patient is discharged but the grounds exist for his admission to hospital, then that can be arranged by an application for admission to hospital under section 2 (for assessment), in an emergency if necessary under section 4, or under section 3 (for treatment) in the usual way. If they do not, then there is no power under the MHA to deprive him of his liberty and he should be released. Mr Gordon, on the other hand, argues that the MHRT is concerned only with whether the patient should be discharged and not with the legality of the conditions. The appellants argument, he says, is a disguised way of conferring upon the tribunal a jurisdiction which it does not have. If the patient does need medical treatment which is available in hospital but cannot be given in the community, the proper course is for the RC to recall him to hospital, rather than for the tribunal to discharge him only to be re sectioned immediately. If the patient is being illegally detained, the proper remedy is judicial review. In my view, this problem is more theoretical than real. The MHRT has no jurisdiction over the conditions of treatment and detention in hospital, but these can be relevant to whether the statutory criteria for detention are made out, especially in borderline cases. The RCs report to the tribunal must cover, inter alia, full details of the patients mental state, behaviour and treatment; and there will also be a nursing report and a social circumstances report (Tribunals Judiciary, Practice Direction, First tier Tribunal Health Education and Social Care Chamber, Statements and Reports in Mental Health Cases, 2013). His treatment and care may well feature in the debate about whether he should be discharged. The tribunal may recommend that the RC consider a CTO and further consider the case if the recommendation is not complied with (section 72(3A)(a)). Similarly, the tribunal has no power to vary the care plan or the conditions imposed in a CTO, but the tribunal requires an up to date clinical report and social circumstances report, including details of any section 117 aftercare plan. The patients actual situation on the ground may well be relevant to whether the criteria for the CTO are made out. Furthermore, if the tribunal identifies a state of affairs amounting to an unlawful deprivation of liberty, it must be within its powers to explain to all concerned what the true legal effect of a CTO is. But the patient can only apply to the tribunal once during each period for which the CTO lasts (six months, six months, then once a year). If the reality is that he is being unlawfully detained, then the remedy is either habeas corpus or judicial review. Furthermore, once it is made clear that the RC has no power to impose conditions which amount to a deprivation of liberty, any conscientious RC can be expected not to do so. This is reinforced by section 132A(1) of the MHA, under which it is the duty of the hospital managers to take such steps as are practicable to ensure that a community patient understands the effect of the provisions of this Act applying to community patients. Those steps must include giving the information both orally and in writing. The Mental Health Act Code of Practice makes it quite clear that community patients must be informed in a manner which they can understand of the provisions of the Act under which they are subject to a CTO and the effect of those provisions and of the effect of the CTO, including the conditions which they are required to keep and the circumstances in which their RC may recall them to hospital (para 4.13). This information should be copied to the patients nearest relative, unless the patient requests otherwise (para 4.31). Patients should be told of this and there should be discussion with the patient as to what information they are happy to share and what they would like to be kept private (para 4.32). The upshot is that patients and (usually) their nearest relatives, as well as the hospital and RCs, and the tribunal, should understand the true legal position under a CTO, as explained in this judgment. Conclusion (1) The responsible clinician may by order in writing discharge a detained patient from hospital subject to his being liable to recall in accordance with section 17E below. (2) A detained patient is a patient who is liable to be detained in a hospital in pursuance of an application for admission for treatment. (3) An order under subsection (1) above is referred to in this Act as a community treatment order. (4) The responsible clinician may not make a community treatment order unless (a) (b) in his opinion, the relevant criteria are met; and an approved mental health professional states in writing (i) (ii) that he agrees with that opinion; and that it is appropriate to make the order. (5) The relevant criteria are the patient is suffering from mental disorder of a nature or (a) degree which makes it appropriate for him to receive medical treatment; (b) other persons that he should receive such treatment; it is necessary for his health or safety or for the protection of (c) subject to his being liable to be recalled as mentioned in paragraph (d) below, such treatment can be provided without his continuing to be detained in a hospital; (d) it is necessary that the responsible clinician should be able to exercise the power under section 17E(1) below to recall the patient to hospital; and (e) (6) In determining whether the criterion in subsection (5)(d) above is met, the responsible clinician shall, in particular, consider, having regard to the patient's history of mental disorder and any other relevant factors, what risk there would be of a deterioration of the patients condition if he were not detained in a hospital (as a result, for example, of his refusing or neglecting to receive the medical treatment he requires for his mental disorder). (7) appropriate medical treatment is available for him. In this Act community patient means a patient in respect of whom a community treatment order is in force; the community treatment order, in relation to such a patient, means the community treatment order in force in respect of him; and the responsible hospital, in relation to such a patient, means the hospital in which he was liable to be detained immediately before the community treatment order was made, subject to section 19A below. Section 17B Conditions (1) A community treatment order shall specify conditions to which the patient is to be subject while the order remains in force. (2) But, subject to subsection (3) below, the order may specify conditions only if the responsible clinician, with the agreement of the approved mental health professional mentioned in section 17A(4)(b) above, thinks them necessary or appropriate for one or more of the following purposes (a) ensuring that the patient receives medical treatment; (b) preventing risk of harm to the patients health or safety; (c) protecting other persons. (3) The order shall specify a condition that the patient make himself available for (a) examination under section 20A below; and (b) a condition that, if it is proposed to give a certificate under Part 4A of this Act [that falls within section 64C(4) below] in his case, he make himself available for examination so as to enable the certificate to be given. (4) The responsible clinician may from time to time by order in writing vary the conditions specified in a community treatment order. (5) He may also suspend any conditions specified in a community treatment order. If a community patient fails to comply with a condition specified in (6) the community treatment order by virtue of subsection (2) above, that fact may be taken into account for the purposes of exercising the power of recall under section 17E(1) below. (7) But nothing in this section restricts the exercise of that power to cases where there is such a failure. Section 17C Duration of community treatment order A community treatment order shall remain in force until the patient is discharged in pursuance of an order under section (a) the period mentioned in section 20A(1) below (as extended under any provision of this Act) expires, but this is subject to sections 21 and 22 below; (b) 23 below or a direction under section 72 below; (c) patient otherwise ceases to have effect; or (d) the application for admission for treatment in respect of the the order is revoked under section 17F below, whichever occurs first. Section17D Effect of community treatment order (1) The application for admission for treatment in respect of a patient shall not cease to have effect by virtue of his becoming a community patient. (2) But while he remains a community patient the authority of the managers to detain him under section 6(2) (a) above in pursuance of that application shall be suspended; and (b) reference (however expressed) in this or any other Act, or in any subordinate legislation (within the meaning of the Interpretation Act 1978), to patients liable to be detained, or detained, under this Act shall not include him. (3) And section 20 below shall not apply to him while he remains a community patient. (4) Accordingly, authority for his detention shall not expire during any period in which that authority is suspended by virtue of subsection (2)(a) above. Section 17E Power to recall to hospital (1) The responsible clinician may recall a community patient to hospital if in his opinion the patient requires medical treatment in hospital for his mental (a) disorder; and (b) there would be a risk of harm to the health or safety of the patient or to other persons if the patient were not recalled to hospital for that purpose. (2) The responsible clinician may also recall a community patient to hospital if the patient fails to comply with a condition specified under section 17B(3) above. (3) The hospital to which a patient is recalled need not be the responsible hospital. (4) Nothing in this section prevents a patient from being recalled to a hospital even though he is already in the hospital at the time when the power of recall is exercised; references to recalling him shall be construed accordingly. (5) The power of recall under subsections (1) and (2) above shall be exercisable by notice in writing to the patient. (6) A notice under this section recalling a patient to hospital shall be sufficient authority for the managers of that hospital to detain the patient there in accordance with the provisions of this Act. Section 17F Powers in respect of recalled patients (1) This section applies to a community patient who is detained in a hospital by virtue of a notice recalling him there under section 17E above. (2) The patient may be transferred to another hospital in such circumstances and subject to such conditions as may be prescribed in regulations made by the Secretary of State (if the hospital in which the patient is detained is in England) or the Welsh Ministers (if that hospital is in Wales). (3) If he is so transferred to another hospital, he shall be treated for the purposes of this section (and section 17E above) as if the notice under that section were a notice recalling him to that other hospital and as if he had been detained there from the time when his detention in hospital by virtue of the notice first began. (4) The responsible clinician may by order in writing revoke the community treatment order if in his opinion, the conditions mentioned in section 3(2) above (a) are satisfied in respect of the patient; and (b) an approved mental health professional states in writing (i) (ii) that he agrees with that opinion; and that it is appropriate to revoke the order. (5) The responsible clinician may at any time release the patient under this section, but not after the community treatment order has been revoked. (6) If the patient has not been released, nor the community treatment order revoked, by the end of the period of 72 hours, he shall then be released. (7) But a patient who is released under this section remains subject to the community treatment order. In this section (8) (a) the period of 72 hours means the period of 72 hours beginning with the time when the patient's detention in hospital by virtue of the notice under section 17E above begins; and (b) references to being released shall be construed as references to being released from that detention (and accordingly from being recalled to hospital). I would therefore allow this appeal and declare that there is no power to impose conditions in a CTO which have the effect of depriving a patient of his liberty. ANNEX (as referred to in para 16 above) Section 17A Community treatment orders
UK-Abs
A patient detained under the Mental Health Act 1983 (MHA) may be released from compulsory detention in hospital subject to a community treatment order (CTO). The question arising on this appeal is whether a patients responsible clinician (RC) may impose conditions in a CTO which amount to the deprivation of his liberty within the meaning of article 5 of the European Convention on Human Rights. The appellant, PJ, is 47. He has a mild learning disability and difficulties falling within the autistic spectrum. This has been accompanied by aggressive and irresponsible behaviour consisting of violent and sexual offending. He was convicted in 1999 of assault occasioning actual bodily harm and threats to kill, and the court imposed a hospital order on him under s 37 MHA. He was discharged from a medium secure unit to a unit which later became a hospital, where he remained voluntarily as an informal patient before, in May 2009, he was compulsorily detained for treatment under the civil power in s 3 MHA. In September 2011 he was discharged from hospital subject to a CTO, which required him to reside in a care home subject to close supervision, from which his absences were either escorted or subject to strict limits as to time, purpose and place. Before the Mental Health Review Tribunal (MHRT), PJ argued that the arrangements under the CTO amounted to an unlawful deprivation of his liberty and he should therefore be discharged from it. The MHRT held that they did not but, even if they had, the need for a CTO took precedence over any human rights issues. The Upper Tribunal held that this approach was wrong, but the Court of Appeal concluded that by necessary implication the MHA permitted such conditions in a CTO. It also held that the MHRT had no power to discharge the CTO even if its terms meant that the patient was unlawfully deprived of his liberty. The Supreme Court unanimously allows the appeal and declares that there is no power to impose conditions in a CTO which have the effect of depriving a patient of his liberty. Lady Hale, with whom all the other justices agree, gives the only reasoned judgment. CTOs were introduced into the MHA by amendment in 2007, as a new form of order which permitted patients to be released into the community subject to conditions which would support their continuing treatment [1]. The statutory regime is set out in ss 17A to 17F. The conditions in a CTO are imposed by a patients RC without judicial input. None of the elaborate provisions in the MHA authorising the detention of patients and their recapture if they escape or go absent apply to a community patient. There is no power to impose medical treatment on a community patient who has the capacity to consent to it and does not consent. There are no sanctions for failing to comply with the conditions in a CTO, but a patient may be recalled to hospital if he breaches certain conditions, or if he requires medical treatment and there would otherwise be a risk to his health or safety, or that of others [16]. The Welsh Ministers argued that as any conditions imposed in a CTO cannot be enforced they cannot therefore deprive a patient of his liberty [17]. This is indeed the legal effect of a CTO, but it does not mean that a patient has not in fact been deprived of his liberty. The focus is always on his concrete situation created by the conditions [18]. The fact that the purpose of the deprivation is to enhance rather than curtail the patients freedom does not affect this assessment [20 22]. There is no express power in s 17B(2) to impose conditions which have the effect of depriving a community patient of his liberty. It is a fundamental principle of statutory construction that a power expressed in general words should not be construed to interfere with fundamental rights such as the right to liberty of the person [24]. The test for a necessary implication is a strict one and there is no reason to suppose that Parliament would have included such a power in the MHA had it been thought of [26]. A strong indication to the contrary is the fact that CTO conditions cannot compel a patient to take his medication [27]; and the lack of detailed rules which the MHA would have provided had detention in a place outside hospital been contemplated [28]. If the MHRT finds on the facts that a community patient is being deprived of his liberty, it has no power to revoke or vary the conditions. The question therefore arises as to whether it should exercise its only power under the MHA to discharge the patient, or whether the patient must challenge his unlawful detention in an action for judicial review [30 32]. This problem is more theoretical than real for two reasons. First, although the MHRT has no jurisdiction over the conditions of treatment and detention in hospital, these can be relevant as to whether the statutory criteria for detention are made out; and the patients actual situation may well be relevant to whether the criteria for the CTO are made out. If, however, the patient needs to challenge his unlawful detention under a CTO other than by his right to make periodic applications to the MHRT, his remedy is either habeas corpus or judicial review [33]. Second, a conscientious RC can be expected not to impose conditions which this judgment makes clear are not permitted in a CTO, and this is reinforced by the duties to provide information to a patient and (usually) his nearest relative about the effect of a CTO [34].
Counsel for the respondent, Jonathan Crow QC, boldly asserted at the outset of his submissions that this case is in fact bristling with simplicity. The issue is certainly a simple one. The claim is brought by a company (through its liquidators) against its investment bank and broker for breach of the so called Quincecare duty of care. In Barclays Bank plc v Quincecare Ltd [1992] 4 All ER 363, Steyn J held that it was an implied term of the contract between a bank and its customer that the bank would use reasonable skill and care in and about executing the customers orders; this was subject to the conflicting duty to execute those orders promptly so as to avoid causing financial loss to the customer; but there would be liability if the bank executed the order knowing it to be dishonestly given, or shut its eyes to the obvious fact of the dishonesty, or acted recklessly in failing to make such inquiries as an honest and reasonable man would make; and the bank should refrain from executing an order if and for so long as it was put on inquiry by having reasonable grounds for believing that the order was an attempt to misappropriate funds. The issue in this case is whether such a claim is defeated if the companys instructions were given by the companys Chairman and sole share holder who was the dominant influence over the affairs of the company. Can his fraud be attributed to the company? And if so, is the claim then defeated, whether on grounds of illegality, of causation, or by an equal and opposite claim against the company in deceit? The background The respondent company, Singularis, is a company registered in the Cayman Islands, set up to manage the personal assets of a Saudi Arabian business man, Maan Al Sanea, separately from his business group. At all times material to this claim, Mr Al Sanea was its sole shareholder, a director and also its chairman, president and treasurer. There were six other directors, who were reputable people, but did not exercise any influence over the management of the company. Very extensive powers were delegated to Mr Al Sanea to take decisions on behalf of the company, including signing powers over the companys bank accounts. The company had a substantial and legitimate business, carried out over a number of years before the relevant events, for which it borrowed substantial sums of money under a variety of funding arrangements. The appellant, Daiwa, is the London subsidiary of a Japanese investment bank and brokerage firm. In 2007, it entered into a stock financing arrangement with Singularis. Daiwa provided Singularis with loan financing to enable it to purchase shares which were the security for the repayment of the loan. In June 2009, all the shares were sold, the loan was repaid, and Daiwa was left holding a cash surplus for the account of Singularis. Together with a sum of US$80m deposited by Singularis in June 2009, the total held to Singularis account was approximately US$204m. Between 12 June and 27 July 2009, Daiwa was instructed by Singularis to make eight payments, totalling approximately US$204,500,000, out of the money held to Singularis account. Five of those payments were to the Saad Specialist Hospital Company. Three of them were to or for the benefit of Saad Air (A320 No 2) Ltd and Saad Air (A340 600) Ltd (together, Saad Air). Those instructions were given with the approval of Mr Al Sanea who, as between Singularis and Daiwa, had authority to give instructions to make the payments. Daiwa made those payments. The judge held that each of the payments was indeed a misappropriation of Singularis funds because there was no proper basis for any of them. There has been no appeal against that finding. On 20 August 2009, Mr Al Sanea placed Singularis in voluntary liquidation. On 18 September 2009 the Grand Court of the Cayman Islands made a compulsory winding up order and joint liquidators were appointed. On 18 July 2014, Singularis, acting through its joint liquidators, brought a claim against Daiwa for the full amount of the payments (less any sums recovered either from Mr Al Sanea or the recipients of the payments). There were two bases for the claim: (1) dishonest assistance in Mr Al Saneas breach of fiduciary duty in misapplying the companys funds; and (2) breach of the Quincecare duty of care to the company by giving effect to the payment instructions. In the Chancery Division of the High Court, Rose J dismissed the dishonest assistance claim because Daiwas employees had acted honestly. However, she upheld the negligence claim, while making a deduction of 25% under the Law Reform (Contributory Negligence) Act 1945 to reflect the contributory fault of Mr Al Sanea and the companys inactive directors, for which the company was responsible: [2017] EWHC 257 (Ch); [2017] Bus LR 1386. Singularis did not appeal against the dismissal of the dishonest assistance claim. Daiwa did appeal against the finding of liability on the negligence claim. The Court of Appeal unanimously dismissed the appeal: [2018] EWCA Civ 84; [2018] 1 WLR 2777. In brief, it held (1) that Mr Al Saneas fraudulent state of mind could not be attributed to the company; but (2) even if it could, the claim would still have succeeded the banks negligence had caused the loss, it was not defeated by a defence of illegality, or by an equal and opposite claim by the bank for the companys deceit; and (3) the judges finding of 25% contributory negligence was a reasonable one. Daiwa now appeals to this Court on the question of attribution and its consequences. Two broad issues arise. (1) When can the actions of a dominant personality, such as Mr Al Sanea, who owns and controls a company, even though there are other directors, be attributed to the company? (2) If they are attributed to the company, is the claim defeated (i) by illegality; (ii) by lack of causation because the banks duty of care does not extend to protecting the company from its own wrongdoing or because the company did not rely upon its performance; or (iii) by an equal and countervailing claim in deceit? The starting point The starting point must be the judges findings, none of which is under appeal. She held that there was no good reason to make the payments to Saad Air and that it was a breach of fiduciary duty for Mr Al Sanea to direct Singularis to make them (para 120). She also held that the agreement made between Singularis and the hospital to pay the expenses of the hospital was a sham and the five payments were a misappropriation of the companys money by Mr Al Sanea in breach of his fiduciary duty (paras 121 127). As sole shareholder he was not entitled to ratify the misappropriation of company funds because he must have known that the company was on the verge of insolvency and his duty as director was to act in the best interests of the companys creditors. This precluded making gratuitous payments to other companies in the Saad group to the detriment of Singularis creditors (paras 128 137). She went on to hold that Daiwa was in breach of the Quincecare duty on the facts of the case. Any reasonable banker would have realised that there were many obvious, even glaring, signs that Mr Al Sanea was perpetrating a fraud on the company. He was clearly using the funds for his own purposes and not for the purpose of benefiting Singularis (para 192). First, Daiwa was well aware of the dire financial straits in which Mr Al Sanea and the Saad group found themselves at the end of May and in early June 2009 (paras 193 196). Second, it was aware that Singularis might have other substantial creditors with an interest in the money (para 197). Third, there was plenty of evidence to put Daiwa on notice that there was something seriously wrong with the way that Mr Al Sanea was operating the Singularis account (para 199). Fourth, it was alive to the possibility that the agreement with the hospital was a front or a cover rather than a genuine obligation (para 200). Fifth, there was a striking contrast between the way in which some payment requests were processed and how the disputed payments were handled (para 201). In short Everyone recognised that the account needed to be closely monitored But no one in fact exercised care or caution or monitored the account themselves and no one checked that anyone else was actually doing any exercising or monitoring either (para 202). On the basis of those findings, the judge held that there was a clear breach of Daiwas Quincecare duty of care to Singularis. That is incontrovertible. The issue for this Court, as in the courts below, is whether Daiwa has any defence to that claim. The issue of attribution has to be seen in the context of the possible defences to which it might give rise. Were attribution to be established, Daiwa raises three possible defences. It is worth giving a brief account of each of these before turning to the question of attribution. It will be seen that, even if attribution were established, none of them is a very promising basis for denying liability. Illegality Both the judge and the Court of Appeal rejected the illegality defence raised by Daiwa on two grounds: first, that Mr Al Saneas fraud could not be attributed to the company ie held to be the companys fraud for this purpose (Rose J, paras 208 to 215; CA, paras 50 to 60); and second, in any event, the test for a successful illegality defence, laid down by this Court in Patel v Mirza [2016] UKSC 42; [2017] AC 467, was not met (Rose J, paras 216 to 220; CA, paras 61 to 67). Patel v Mirza was a restitution claim. Mr Patel agreed to pay 620,000 to Mr Mirza on the basis that Mr Mirza would use it to bet on the price of shares using inside information that Mr Mirza expected to receive. This was a conspiracy to commit the offence of insider dealing contrary to section 52 of the Criminal Justice Act 1993. However, the inside information was not forthcoming and the bets were never placed. Mr Patel asked for his money back and Mr Mirza refused. He argued that the claim was barred by illegality because Mr Patel would have to prove the illegal agreement under which the money was paid in order to prove that the purpose had failed and he should get it back. A panel of nine Supreme Court Justices was convened to hear the appeal, because of the perceived conflict between the decisions of this Court in Hounga v Allen [2014] UKSC 47; [2014] 1 WLR 2889, Les Laboratoires Servier v Apotex Inc [2014] UKSC 55; [2015] AC 430, and Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23; [2016] AC 1. By a majority of six to three, the Court rejected the approach of the House of Lords in Tinsley v Milligan [1994] 1 AC 340, which depended on whether or not the claimant had to plead the illegal agreement in order to succeed. Instead it adopted the approach summed up by Lord Toulson, who gave the leading judgment, at para 120: The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. In that case, it was not contrary to the public interest to allow Mr Mirza to recover the money which he had paid for an illegal purpose but which had not been used for that purpose. In wanting it back he was seeking to unwind the arrangement, not to profit from it. In this case, the illegality relied on was, in relation to some of the payments, Mr Al Saneas provision of documents which he knew to be false and, in relation to all of the payments, his breach of his fiduciary duty towards Singularis. The judge held that the purpose of the prohibition of breach of fiduciary obligation was to protect the company from becoming the victim of the wrongful exercise of power by officers of the company. That purpose would certainly not be enhanced by preventing the company from getting back the money which had been wrongfully removed from its account. The purpose of the prohibition of making false statements was both to protect the bank from being deceived and the company from having its funds misappropriated. Although the purpose of protecting the bank would be enhanced by denial of the claim, that purpose was achieved by ensuring that the bank was only liable to repay the money if the Quincecare duty was breached: that duty struck a careful balance between the interests of the customer and the interests of the bank. It would not enhance the integrity of the law to undermine that balance by denying the claim on grounds of illegality in a case where, ex hypothesi, the exceptional circumstances needed for the duty to arise and be breached are found to be present. (para 218) Turning to whether there might be any other relevant public interests, she held that denial of the claim would have a material impact upon the growing reliance on banks and other financial institutions to play an important part in reducing and uncovering financial crime and money laundering. If a regulated entity could escape from the consequences of failing to identify and prevent financial crime by casting on the customer the illegal conduct of its employees that policy would be undermined (para 219). Finally, denial of the claim would be an unfair and disproportionate response to any wrongdoing on the part of Singularis. The possibility of making a deduction for contributory negligence on the customers part enables the court to make a more appropriate adjustment than the rather blunt instrument of the illegality defence (para 220). The Court of Appeal took the view that there was no error in the judges approach. Barring Singularis claim would serve to undermine the carefully calibrated Quincecare duty and would not be a proportionate response, particularly where Daiwas breaches were so extensive and the fraud was so obvious (para 66). Mr John McCaughran QC, who appears for Daiwa, argues that the judge went wrong at each stage of the analysis. The purpose of the prohibition of deceit is to encourage honest dealing. The integrity of the legal system is not enhanced by allowing fraudulent companies to recover damages in respect of their fraud. If this is adequately addressed by the carefully calibrated Quincecare duty, it leaves no room for the application of the illegality defence. As to the public policy of enlisting banks and financial institutions in the fight against financial crime and money laundering, there already existed important incentives in the regulatory regime for banks and brokers to detect financial crime. There was no need for a further incentive in the form of a damages claim by the company. Denying the claim would be a proportionate response to the companys wrongdoing. Daiwas arguments necessarily depend upon a finding that Mr Al Saneas fraud was the companys fraud, an issue which is discussed later. But even if it was, in my view the judges conclusion was correct for the reasons she gave. I should, however, record my reservations about the view expressed by the Court of Appeal as to the role of an appellate court in relation to the illegality defence: that an appellate court should only interfere if the first instance judge has proceeded on an erroneous legal basis, taken into account matters that were legally irrelevant, or failed to take into account matters that were legally relevant (para 65). Daiwa point out that applying the defence is not akin to the exercise of discretion (citing Lord Neuberger in Patel v Mirza, at para 175) and an appellate court is as well placed to evaluate the arguments as is the trial judge. It is not necessary to resolve this in order to resolve this appeal and there are cases concerning the illegality defence pending in the Supreme Court where it should not be assumed that this Court will endorse the approach of the Court of Appeal. Causation Daiwa argues that, if the fraud is attributed to the company, the companys loss is caused by its own fault and not by the fault of Daiwa. In Reeves v Comr of Police of the Metropolis [2000] 1 AC 360, at 368, Lord Hoffmann referred to the sound intuition that there is a difference between protecting people against harm caused to them by third parties and protecting them against harm which they inflict upon themselves People of full age and sound understanding must look after themselves and take responsibility for their actions. This was a case, argues Daiwa, in which the company inflicted the harm upon itself. Against that, Lord Hoffmann went on to say that This philosophy expresses itself in the fact that a duty to protect a person of full understanding from causing harm to himself is very rare indeed. But, once it is admitted that this is the rare case in which such a duty is owed, it seems to me self contradictory to say that the breach could not have been a cause of the harm because the victim caused it to himself. This is just such a case: the purpose of the Quincecare duty is to protect a banks customers from the harm caused by people for whom the customer is, one way or another, responsible. Hence Mr Crow argues that the loss was caused, not by the dishonesty, but by Daiwas breach of its duty of care. Had it not been for that breach, the money would still have been in the companys account and available to the liquidators and creditors. This was not a case where the companys act came after Daiwas breach of duty (unlike Reeves, where the prisoners suicide came after the polices breach of duty). The fraudulent instruction to Daiwa gave rise to the duty of care which the bank breached, thus causing the loss. Countervailing claim in deceit Daiwa argues that because it would have an equal and countervailing claim in deceit against the company, the companys claim in negligence should fail for circularity. They paid out because of the companys deceit and therefore have a claim against the company for any loss suffered by their exposure to Singularis claim. This cancels out the companys claim against them for negligence in failing to detect the fraud. This is a variant of the causation argument and the judge answered it by reference to two decisions of Evans Lombe J in Barings plc v Coopers & Lybrand (No 2) [2002] EWHC 461 (Ch); [2002] 2 BCLC 410 and [2003] EWHC 1319 (Ch); [2003] PNLR 34. These were proceedings brought by Barings against their auditors for failing to detect the dealings of Mr Nick Leeson which led to the downfall of the bank. The first decision concerned the allegation of the auditors that they had been deceived by Barings finance director into accepting figures which he knew to be false. That claim failed on the facts, but had it succeeded, the judge would have held that Barings were vicariously responsible for the deception and this would have defeated the negligence claim. The second decision concerned the activities of Mr Leeson. Fraudulent though they were, they did not defeat the banks claim because it was the very duty of the auditors to detect the fraud. Thus, in this case, the judge held that Daiwa owed Singularis a duty to guard against being misled into paying away Singularis money by just such fraudulent instructions. Their breach, and not Mr Al Saneas misrepresentations, is the cause of their exposure to the claim for Singularis loss (Rose J, para 228). Daiwa sought to distinguish Barings on the basis that Barings were merely vicariously liable for Mr Leesons fraud, whereas, if it is right about attribution, in this case the fraud is the fraud of the company itself and not just one of its employees. The Court of Appeal rejected this argument and upheld the reasoning of the judge: The existence of the fraud was a precondition for Singularis claim based on breach of Daiwas Quincecare duty, and it would be a surprising result if Daiwa, having breached that duty, could escape liability by placing reliance on the existence of the fraud that was itself a pre condition for its liability (CA, para 79). Attribution Daiwa argues that, as Singularis was effectively a one man company and Mr Al Sanea was its controlling mind and will, his fraud is to be attributed to the company, with the consequence that its Quincecare claim against Daiwa is defeated, either by illegality, or for lack of causation, or because of an equal and opposite claim for the companys deceit. To examine such an assertion, it is necessary to go back to basic principles. The starting point has to be the principle established by the House of Lords in Salomon v A Salomon and Co Ltd [1897] AC 22, that a properly incorporated company has an identity and legal personality quite separate from that of its subscribers, shareholders and directors. Mr Salomon had established the company, with his family, to buy his boot and shoe manufacturing business at a time when it was solvent. When it later became insolvent, he was entitled to enforce the debentures granted by the company in part payment of the price and he was not obliged to indemnify the company against the claims of its creditors. It is also worth recalling the words of Lord Macnaghten, at p 53, that It has become the fashion to call companies of this class one man companies. That is a taking nickname, but it does not help one much in the way of argument. Companies being fictional persons, they have of course to act through the medium of real human beings. So the issue is when the acts and intentions of real human beings are to be treated as the acts and intentions of the company. The classic exposition is to be found in the Opinion of the Judicial Committee of the Privy Council in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, delivered by Lord Hoffmann. He identified three levels of attribution (at pp 506 507). The primary rule is contained in the companys constitution, its articles of association, which will typically say that the decisions of the shareholders or of the board of directors are to be the decision of the company on certain matters. But this will not cover the whole field of the companys decision making. For this, the ordinary rules of agency and vicarious liability, which apply to natural persons just as much as to companies, will normally supply the answer. However there will be some particular rules of law to which neither of these principles supplies the answer. The question is not then one of metaphysics but of construction of the particular rule in question. In seeking to establish attribution in this case, Daiwa prays in aid the decision of the House of Lords in Stone & Rolls Ltd v Moore Stephens [2009] UKHL 39; [2009] 1 AC 1391. The claimant company was owned, controlled and managed by a Mr Stojevic, who had procured the company to engage in frauds upon banks. The company was sued for deceit by one of the banks and went into liquidation. The company then brought proceedings against its auditors, alleging that they had been negligent in failing to detect and prevent Mr Stojevics activities. The auditors applied to strike out the claim on the basis that Mr Stojevics fraud was to be attributed to the company. The trial judge refused to strike it out, on the basis that such fraud was the very thing that the auditors were employed to detect. The Court of Appeal held that, as the company had to rely upon the illegality to found its claim, the defence of illegality was made out (this was, of course, before Patel v Mirza). The House of Lords, by a majority, held that, as Mr Stojevic was the beneficial owner and directing mind and will of the company, knowledge of his fraudulent activities was to be attributed to the company, so the company could not complain that the auditors had failed to detect it. Lord Mance, dissenting, pointed out that this deprived the companys creditors of a remedy, as it was only the company which could sue the auditors for their negligence. It appears that what principally divided their lordships was whether the auditors had to have regard to the interests of creditors even though they owed them no duty of care. Stone & Rolls has prompted much debate and criticism. It was analysed in detail by a panel of seven Justices of this Court in Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23; [2016] AC 1. The company and its liquidators brought claims against its directors and others who were alleged to have dishonestly assisted the directors in a conspiracy to defraud the company. The claim was defended on the basis that the fraud of its directors was attributable to the company which could not then make a claim against the other conspirators relying on its own illegality. This court held unanimously that where a company has been the victim of wrongdoing by its directors, the wrongdoing of the directors cannot be attributed to the company as a defence to a claim brought against the directors and their co conspirators by the companys liquidator for the loss suffered by the company as a result of the wrongdoing. The court explained that the key to any question of attribution was always to be found in considerations of the context and the purpose for which the attribution was relevant. Where the purpose was to apportion responsibility between the company and its agents so as to determine their rights and liabilities to one another, the answer might not be the same as where the purpose was to apportion responsibility between the company and a third party. Stone & Rolls was a case between a company and a third party. Lords Toulson and Hodge, after analysing the judgments in detail, reached the conclusion (para 154) that it should be regarded as a case which has no majority ratio decidendi. It stands as authority for the point which it decided, namely that on the facts of that case no claim lay against the auditors, but nothing more. Lord Sumption identified three points for which it was authority (para 80), but Lord Neuberger, with whom Lord Clarke and Lord Carnwath agreed, agreed with only two of these (para 26). The first was that an illegality defence cannot be run by a third party against a company where there are innocent shareholders or directors. The second was that the defence was available, albeit only on some occasions, where there are no innocent directors or shareholders. Lord Mance agreed with the first of these but as to the second he commented that it appears [to be] a factually correct representation of the outcome of Stone & Rolls, though the present appeal does not raise the correctness in law of that outcome, which may one day fall for reconsideration (para 50). Subject to the two points with which he agreed, Lord Neuberger said this: [T]he time has come in my view for us to hold that the decision in Stone & Rolls should as Lord Denning MR graphically put it in relation to another case in In re King, decd [1963] Ch 459, 483, be put on one side in a pile and marked not to be looked at again. Without disrespect to the thinking and research that went into the reasoning of the five Law Lords in that case, and although persuasive points and observations may be found from each of the individual opinions, it is not in the interests of the future clarity of the law for it to be treated as authoritative or of assistance save as already indicated. (para 30) Unfortunately, the majoritys acceptance of the second point has been treated as if it established a rule of law that the dishonesty of the controlling mind in a one man company could be attributed to the company with the consequences discussed earlier whatever the context and purpose of the attribution in question. Thus there was much argument in this case about what was meant by innocent directors and whether this included innocent but inactive directors who should have been paying more attention to what Mr Al Sanea was doing. The judge found that Singularis was not a one man company in the sense that the phrase was used in Stone & Rolls and Bilta (Rose J, para 212). The company had a board of reputable people and a substantial business. There was no evidence to show that the other directors were involved in or aware of Mr Al Saneas actions. There was no reason why they should have been complicit in his misappropriation of the money (para 189). The Court of Appeal held that, on those findings of fact, she had made no error of law (CA, para 54). I agree. But in any event, in my view, the judge was correct also to say that there is no principle of law that in any proceedings where the company is suing a third party for breach of a duty owed to it by that third party, the fraudulent conduct of a director is to be attributed to the company if it is a one man company. In her view, what emerged from Bilta was that the answer to any question whether to attribute the knowledge of the fraudulent director to the company is always to be found in consideration of the context and the purpose for which the attribution is relevant (para 182). I agree and, if that is the guiding principle, then Stone & Rolls can finally be laid to rest. The context of this case is the breach by the companys investment bank and broker of its Quincecare duty of care towards the company. The purpose of that duty is to protect the company against just the sort of misappropriation of its funds as took place here. By definition, this is done by a trusted agent of the company who is authorised to withdraw its money from the account. To attribute the fraud of that person to the company would be, as the judge put it, to denude the duty of any value in cases where it is most needed (para 184). If the appellants argument were to be accepted in a case such as this, there would in reality be no Quincecare duty of care or its breach would cease to have consequences. This would be a retrograde step. Daiwa makes two further arguments essentially policy arguments against this conclusion. First, it argues that it is odd if the claim of a company arising out of the dishonest activities of its directing mind and will against a negligent auditor fails (as in Stone & Rolls and in Berg Sons & Co Ltd v Adams [1993] BCLC 1045) but a claim against a negligent bank or broker succeeds. But (quite apart from the difficulties of Stone & Rolls) this ignores the fact that the duties of auditors are different from the duties of banks and brokers. The auditors duty is to report on the companys accounts to those having a proprietary interest in the company or concerned with its management and control. If the company already knows the true position (as in Berg) then the auditors negligence does not cause the loss. Second, Daiwa argues that the law should not treat a company more favourably than an individual. In Luscombe v Roberts (1962) 106 SJ 373, a solicitors claim against his negligent accountants failed because he knew that what he was doing transferring money from his clients account into his firms account and using it for his own purposes was wrong. But companies are different from individuals. They have their own legal existence and personality separate from that of any of the individuals who own or run them. The shareholders own the company. They do not own its assets and a sole shareholder can steal from his own company. I therefore see nothing in those arguments to detract from the conclusion reached that, for the purpose of the Quincecare duty of care, the fraud of Mr Al Sanea is not to be attributed to the company. However, even if it were, for the reasons given earlier, none of the defences advanced by Daiwa would succeed. Conclusion In reaching this conclusion in such short order, I mean no disrespect to the lengthy arguments of counsel or to the impressive judgments in the courts below. But Mr Crow was correct to say that this case is bristling with simplicity. A company with a substantial business traded for some years and ran up debts in doing so. It also had a substantial sum of money standing to its credit, as a result of its legitimate business activities, with its broker bankers. When it appeared that the company was running into difficulties, its directing mind and sole shareholder fraudulently deprived the company of that money by directing Daiwa to pay it away. Daiwa should have realised that something suspicious was going on and suspended payment until it had made reasonable enquiries to satisfy itself that the payments were properly to be made. The company (and through the company its creditors) has been the victim of Daiwas negligence. This appeal should be dismissed and the judges order should stand.
UK-Abs
An implied term of the contract between a bank and its customer is that the bank owes a duty of care not to execute the customers order if it knows the order to be dishonestly given, or shuts its eyes to obvious dishonesty, or acts recklessly in failing to make inquiries. This is known as the Quincecare duty of care, following the 1992 case of Barclays Bank plc v Quincecare Ltd. The issue in this appeal is whether a claim against a bank for breach of the Quincecare duty is defeated if the customer is a company, and the fraudulent payment instructions are given by the companys Chairman and sole shareholder who is the dominating influence over the companys affairs. The respondent company (Singularis) is registered in the Cayman Islands. It was set up to manage the personal assets of Mr Maan Al Sanea. He was the sole shareholder, a director and the chairman, president and treasurer. There were six other directors but they did not exercise any influence over the management of Singularis. Sole signing powers over the companys bank accounts rested with Mr Al Sanea. In 2007 the appellant investment bank (Daiwa) provided Singularis with loan financing for the purchase of shares, which were the security for the repayment of the loan. In June 2009 the shares were sold, the loan was repaid, and Daiwa held a cash surplus of US$204m for the account of Singularis. Daiwa complied with instructions from Mr Al Sanea to pay out those funds to third parties. The payments were a misappropriation of Singularis funds and left Singularis unable to meet the demands of its creditors. On 18 September 2009 the Grand Court of the Cayman Islands made a compulsory winding up order and joint liquidators were appointed. On 18 July 2014 Singularis brought a claim against Daiwa for the full amount of the payments on the basis of (1) dishonest assistance in Mr Al Saneas breach of fiduciary duty and (2) breach of the Quincecare duty of care to Singularis by giving effect to the payment instructions. The High Court dismissed the dishonest assistance claim but held there was a clear breach of the Quincecare duty of care to Singularis, with a deduction of 25% by way of contributory negligence. Daiwas appeal against the finding of liability on the negligence claim was dismissed. Daiwa appealed to the Supreme Court. The Supreme Court unanimously dismisses Daiwas appeal and holds that the High Court order should stand. Lady Hale gives the only substantive judgment. Daiwa argued that, as Singularis was effectively a one man company, and Mr Al Sanea its controlling mind and will, his fraud should be attributed to the company, with the result that its Quincecare claim against Daiwa should fail for illegality, lack of causation or because of a countervailing claim for deceit [1]. Lady Hale agrees with the judge that whether or not Mr Al Saneas fraud was attributed to the company, those defences would fail in any event [12]: (i) Illegality The illegality relied on by Daiwa was Mr Al Saneas provision of false documents in relation to the payments and his breach of fiduciary duty towards Singularis. As the judge found, fiduciary duties are intended to protect a company from becoming the victim of the wrongful exercise of power by the companys officers. That purpose would not be enhanced by preventing the companys recovery of the money wrongfully removed from its account. The Quincecare duty strikes a careful balance between the interests of the customer and those of the bank and denying the claim would not enhance the integrity of the law [16]. Denial of the claim would undermine the public interest in requiring banks to play an important part in uncovering financial crime and money laundering [17]. It would also be an unfair and disproportionate response to any wrongdoing on the part of Singularis: the power to make a deduction for contributory negligence enables the court to make a more appropriate adjustment [18]. The judges conclusion on this issue was correct, whether or not the fraud was attributed to the company [21]. (ii) Causation Daiwa argued that if the fraud was attributed to the company, its loss was caused by its own fault and not that of the bank. However, the purpose of the Quincecare duty is to protect the banks customers from harm caused by people for whom the customer is responsible. The fraudulent instruction to Daiwa gave rise to the duty of care which Daiwa breached, thus causing the loss [23]. (iii) Countervailing claim in deceit This was a variant of the causation argument. The judge held that Daiwas breach of duty and not Mr Al Saneas misrepresentations was the cause of Daiwas exposure to the claim for Singularis loss [24]. Attribution Mr Al Saneas fraud should not however be attributed to the company for the purposes of the Quincecare claim. The basic principle was that a properly incorporated company has an identity and legal personality separate from that of its shareholders and directors. The company has to act through the medium of real human beings but the acts of those persons are only treated as the acts and intentions of the company in circumstances specified by its constitution, or the ordinary rules of agency and vicarious liability, or other particular rules of law [28]. As the judge noted, the answer to any question whether to attribute the knowledge of a fraudulent director to the company is always to be found in consideration of the context and purpose for which the attribution is relevant [34]. The context in this case is the breach of Daiwas Quincecare duty of care. To attribute the fraud of a trusted agent of the company to the company would denude the duty of any value in cases where it is most needed and be a retrograde step [35].
On Saturday 15 June 1974, in the late morning, an army patrol consisting of two military vehicles was travelling towards Benburb, County Tyrone. The vehicles contained members of the Life Guards regiment. The lead vehicle had six men on board. The commander of the patrol, who was travelling in that vehicle, was Dennis Hutchings, the appellant in this case. As the patrol rounded a left hand bend near a village called Eglish on what was a winding road, a young man came into view, standing on the left hand side of the road. He appeared to be looking into the hedge at the side of the road. His name was John Paul Cunningham. Mr Cunningham appeared startled and confused. He ran across the road in front of the lead vehicle and climbed a gate into a neighbouring field. He then ran towards a metal fence which bordered the field. The patrol came to a halt on the appellants command. Most of the soldiers dismounted from the vehicles and took up defensive positions. Three members of the patrol, the appellant and two others, who have been referred to as B and E, pursued Mr Cunningham. Mr Hutchings and soldier E went towards the same gate that Mr Cunningham had climbed over. Soldier B went to a gateway further down the road. A number of shouted commands to Mr Cunningham to stop went unheeded. It later transpired that he had limited intellectual capacity. His mental age was judged to be between six and ten years. In a report by the Historical Enquiries Team (HET) (of which more below at para 9) it was said that he was easily confused and may have had an inherent fear of men in uniform and armoured vehicles. The case made by the prosecution is that when Mr Cunningham failed to stop, shots were discharged by the appellant and the soldier referred to as B. Mr Cunningham was hit and died at the scene. At the time that he fell, he was close to the metal fence. It has been established that he was running towards his home. HET concluded, after investigation, that he was unarmed; that he was shot while running away from the soldiers; and that there was no evidence that he presented a threat to them or to anyone else. Background In 1974 there was much terrorist activity in Northern Ireland. A large part of that activity was generated by the Provisional Irish Republican Army (PIRA). There were regular attacks on the security forces, including the British Army. The attacks frequently involved the use of firearms and explosives. The Life Guards regiment was responsible in 1974 for security force operations in Cookstown, Dungannon and Armagh and surrounding districts. Cookstown and Dungannon are in County Tyrone, as are Benburb and Eglish. Benburb is some 18 miles from Cookstown and about eight miles from Dungannon. Eglish is a small village that lies between Dungannon and Benburb. It is about five miles from Dungannon to Eglish and approximately the same distance from Eglish to Benburb. An army report about the time that Mr Cunningham was killed stated that the threat level in these areas was particularly high. There were frequent army patrols of the roads between these various locations. Indeed, in the first two weeks of June 1974 some 38% of shooting incidents in the Life Guards operational zone occurred in the area of Eglish. One of those attacks resulted in the death of a soldier in the Life Guards regiment. Two days before Mr Cunningham was killed, members of the Life Guards, under the command of Mr Hutchings, came upon a group of men loading material into a vehicle. A firefight, as it was described in the reports of the incident, ensued. Arms and explosives were discovered in the vehicle. This had occurred about three and a half miles from where Mr Cunningham was killed. Following the killing of Mr Cunningham, a joint inquiry by the Royal Ulster Constabulary (RUC) and the Royal Military Police took place. The then Director of Public Prosecutions reviewed the statements that this inquiry generated and decided that there should be no prosecution of any of the military personnel involved. HET was a body created in 2005 to examine historical offences that were committed during the period of terrorist violence in Northern Ireland and the states reaction to it. It conducted an inquiry into Mr Cunninghams death. It concluded that this was an absolute tragedy that should not have happened. It recommended, however, that no further action be taken in relation to the incident. In 2015 a new body, the Legacy Investigation Branch, conducted a new investigation into Mr Cunninghams death. As a result of this, the appellant was arrested and taken to a police station in Northern Ireland where he was interviewed. He answered no comment to all questions put to him. He was subsequently charged with two offences: the attempted murder of Mr Cunningham and attempting to cause him grievous bodily harm. On 20 April 2016, the Director of Public Prosecutions issued a certificate pursuant to section 1 of the Justice and Security (Northern Ireland) Act 2007 directing that the appellant stand trial on these charges by a judge sitting without a jury. It is accepted that the certificate was issued without prior notice to the appellant. He was not given an opportunity to make representations as to whether it should be issued. The material and information which led to the issue of the certificate have not been disclosed to him. He was not informed of its having been issued until 5 May 2017. The statutory provisions relating to the issue of certificates and challenges to their The relevant parts of section 1 of the 2007 Act are these: Issue of certificate (1) This section applies in relation to a person charged with one or more indictable offences (the defendant). (2) The Director of Public Prosecutions for Northern Ireland may issue a certificate that any trial on indictment of the defendant (and of any person committed for trial with the defendant) is to be conducted without a jury if (a) he suspects that any of the following conditions is met, and (b) he is satisfied that in view of this there is a risk that the administration of justice might be impaired if the trial were to be conducted with a jury. (6) Condition 4 is that the offence or any of the offences was committed to any extent (whether directly or indirectly) as a result of, in connection with or in response to religious or political hostility of one person or group of persons towards another person or group of persons. (7) means hostility based to any extent on In subsection (6) religious or political hostility religious belief or political opinion, supposed religious belief or political (a) (b) opinion, or (c) the absence or supposed absence of any, or any particular, religious belief or political opinion. (8) In subsection (6) the references to persons and groups of persons need not include a reference to the defendant or to any victim of the offence or offences. The breadth of the power to direct that a trial be before a judge without a jury is immediately apparent from these provisions. The Director need only suspect that one of the stipulated conditions (in this case condition 4) is met and that there is a risk that the administration of justice might be impaired if there was a jury trial. The circumstances in which such a risk might materialise and the specific nature of the risk or the impairment to the administration of justice which might be occasioned are not specified. It can only be supposed that these matters were deliberately left open ended. The type of decision which the Director must take can be of the instinctual, impressionistic kind. Whilst the Director must of course be able to point to reasons for his decision, one can readily envisage that it may frequently not be based on hard evidence but on unverified intelligence or suspicions, or on general experience. It may partake of supposition and prediction of a possible outcome, rather than a firm conclusion drawn from established facts. The need, on occasions, for the Directors decision to depend on intuitive belief rather than studied analysis of evidence is also reflected in the fact that the circumstances covered by condition 4 are extremely wide. Offences committed to any extent (even if indirectly) in connection with or in response to religious or political hostility of one person or group of persons are covered. The PIRA campaign in Northern Ireland in the 1970s was based on that organisations political hostility to continuing British rule in that country. The incident that occurred a few days before Mr Cunningham was killed bore all the hallmarks of a PIRA operation. When this is considered with the incidence of terrorist activity in the area at the time, it is entirely unsurprising that the Director should have concluded that the offences with which the appellant is charged were connected (directly or indirectly) with or in response to the political hostility of members of PIRA against, as the Director put it in an affidavit, those who believed that Northern Ireland should remain a part of the United Kingdom. That the soldiers who fired on Mr Cunningham suspected that he was a member of PIRA seems inescapable. (I shall have more to say presently about the Directors reasons for issuing the certificate.) Section 7 of the Act provides: Limitation on challenge of issue of certificate (1) No court may entertain proceedings for questioning (whether by way of judicial review or otherwise) any decision or purported decision of the Director of Public Prosecutions for Northern Ireland in relation to the issue of a certificate under section 1, except on the grounds of (a) dishonesty, (b) bad faith, or (c) other circumstances (including exceptional circumstances relating to lack of jurisdiction or error of law). exceptional in particular (2) Subsection (1) is subject to section 7(1) of the Human Rights Act 1998 (claim that a public authority has infringed [a] Convention right). The other exceptional circumstances referred to in sub paragraph (c) of subsection (1) are not specified but they must take their flavour from the preceding provisions to the effect that challenges will be entertained on the grounds of bad faith and dishonesty and from the succeeding words of the sub paragraph, which particularise lack of jurisdiction or error of law. These are clear indications that, what has been described as the full panoply of judicial review superintendence (see In re Shukers and others applications for judicial review [2004] NIQB 20; [2004] NI 367 at para 25), is generally not available to challenge decisions by the Attorney General or the Director of Public Prosecutions as to the mode of trial for particular cases. By virtue of section 8(3) of the Act the provisions in sections 1 7 are applied to offences committed before the Act came into force. The offences with which the appellant has been charged are therefore covered by those provisions. Counsel for the appellant, Mr Lewis QC, drew our attention to the Explanatory Notes which accompany the 2007 Act. He pointed out that paragraph 7 of the Notes made it clear that it was anticipated that non jury trial would be ordered in a small number of exceptional cases and claimed that paragraphs 22 and 23, which dealt with condition 4 in section 1(6), indicated that that provision should be construed narrowly. These paragraphs read: 22. Condition 4 is set out in subsection (6). This covers circumstances where the offence occurred as a result of, or in connection with, sectarianism (ie in connection with religious belief or political opinion). Subsection (7) clarifies that religious belief and political opinion includes their absence and any assumptions made about religious beliefs or political opinions. Subsection (8) provides that the persons and groups of persons referred to in subsection (6) need not include the defendant or victim. 23. A case that falls within one of the conditions will not automatically be tried without a jury non jury trial will only happen if the DPP(NI) issues a certificate because he is satisfied that there is a risk that the administration of justice might be impaired. The judgment of the Divisional Court in the present case (Stephens LJ and Sir John Gillen [2017] NIQB 121) quoted from the Explanatory Notes see para 14. But at para 34 the court observed that reliance on the Notes had to be approached with some caution, quoting Lord Steyn in R (Westminster City Council) v National Asylum Support Service [2002] 1 WLR 2956 at para 6 where he said that it was impermissible to treat the wishes and desires of the government about the scope of the statutory language as reflecting the will of Parliament. Mr Lewis criticised this passage of the Divisional Courts judgment, suggesting that it unwarrantably abbreviated the relevant reasoning to be found in the speech of Lord Steyn. In particular, he focused on statements in para 5 of the speech where Lord Steyn said: In so far as the Explanatory Notes cast light on the objective setting or contextual scene of the statute, and the mischief at which it is aimed, such materials are therefore always admissible aids to construction. They may be admitted for what logical value they have. Used for this purpose Explanatory Notes will sometimes be more informative and valuable than reports of the Law Commission or advisory committees, Government green or white papers, and the like. After all, the connection of Explanatory Notes with the shape of the proposed legislation is closer than pre parliamentary aids which in principle are already treated as admissible: see Cross, Statutory Interpretation, 3rd ed (1995), pp 160 161. I find it unnecessary to embark on a discussion about the use to which the Explanatory Notes might be put in this instance because I consider that the language of the relevant statutory provisions is perfectly clear. Those provisions invest the Director of Public Prosecutions with wide powers for the reasons earlier discussed. If anything, the actual provisions are more precise in their formulation than the Explanatory Notes. Recourse to the latter is unnecessary for the proper interpretation and application of the pertinent parts of the statute. As it happens, of course, nothing in the Explanatory Notes detracts from the interpretation to be placed on the statutory provisions, if they are analysed on a purely textual basis. Mr Lewis suggested that the reference to sectarianism in paragraph 22 of the Notes indicated that condition 4 was designed to cover situations of strife between the different communities in Northern Ireland. I do not accept that argument. Sectarianism can, of course, have the connotation of bigoted adherence to a particular sect but that is by no means its only possible meaning. The qualifying words in paragraph 22 of the Notes, ie in connection with religious belief or political opinion, make it clear that sectarianism, as it is used in the Notes, is sufficiently wide to embrace the circumstances in which Mr Cunningham was killed. If Mr Hutchings and soldier B fired on Mr Cunningham, believing him to be a member of PIRA, that would be sufficient to satisfy the requirement that the offences which are alleged to be constituted by that shooting were in connection with or in response to political hostility of one person towards another group of persons, namely the British Army. And if the Director suspected that this was so (as, realistically, he was bound to, and indeed avers that he did), then the first requirement of section 1(2), in so far as it related to condition 4, was met. Furthermore, if the Director was satisfied that, by reason of this circumstance, there was a risk that the administration of justice might be impaired if the trial were to be conducted with a jury, the second requirement of the subsection would likewise be fulfilled. Mr Lewis invited this court to consider the legislative history of the 2007 Act, although he accepted that the conditions necessary for admission of ministerial statements, prescribed by the House of Lords in Pepper v Hart [1993] AC 593 were not fulfilled. It was permissible, indeed necessary, Mr Lewis argued, to look at ministerial statements in order to ascertain the legislative intent of the 2007 Act. He then took us to a number of statements made by the Parliamentary Under Secretary of State for Northern Ireland, Paul Goggins MP, during the passage through the House of Commons of the Bill that ultimately became the 2007 Act. The purpose of this exercise was to promote the theory that the powers of the Director of Public Prosecutions under section 1 were confined to cases involving sectarianism in the connotation which Mr Lewis sought to place on it. I find it unnecessary to set out the passages from Mr Goggins statements to which Mr Lewis referred us. It is quite clear that the minister was responding to particular issues on which other members of the House had expressed concern. He did not attempt to outline a comprehensive charter of all the circumstances in which the Directors powers might be invoked. True it may be that the examples cited by Mr Goggins were of situations that might be described as sectarian in the connotation which Mr Lewis suggested was the correct one, but the minister did not at any point suggest that they were exhaustive of the circumstances in which the Director might exercise his powers under section 1. In any event, for the reasons given earlier, the legislative intent of the provisions of that section is abundantly clear from its terms. It is not open to the appellant to put a gloss on that intent by reference to Parliamentary statements which might appear to be at odds with that clear intent. As to the second requirement of section 1, the Director of Public Prosecutions, Barra McGrory QC, deposed in his first affidavit that, in reaching his decision on that issue, he had taken into account judicial observations in In re Jordans Application and in In re McParlands Application. On the basis of his consideration of those cases, he pronounced himself satisfied that there was a risk such as is provided for in section 1(2)(b). The decision in the Court of Appeal in the Jordan case referred to by Mr McGrory is reported at [2014] NICA 76; [2016] NI 116 as In re Jordans Applications for Judicial Review. Mr McGrory also mentioned the decision of the High Court in that case but it is sufficient, I believe, for present purposes to focus on the judgment of the Court of Appeal delivered by Sir Declan Morgan LCJ. The case concerned (among other things) the risk of jury bias in an inquest into the shooting of Pearse Jordan by a member of the RUC in 1992. At para 90 of the judgment the following passage appears: There are formidable difficulties in being satisfied that the insidious nature of bias has been removed in security and terrorist type cases. It is necessary to confront directly the need to ensure that jury verdicts emerge unconstrained by tribal loyalties. A coroner must be satisfied that there will be a sensitively constructed distance between prejudice and justice. The existence of a real risk of a biased juror or jury will outweigh any other factor. Mere reduction of the risk is insufficient. The coroner must be satisfied that the steps taken have reduced that risk to a remote or fanciful possibility. Other factors which, the court considered, should be taken into account by a coroner in seeking to eliminate the risk of bias on the part of the inquest jury were mentioned in the Court of Appeal judgment but they are not directly relevant to the present case. The important point to be drawn from that decision, in relation to the present case, is that three Court of Appeal judges, all highly experienced in the administration of justice in Northern Ireland, stated unequivocally and unanimously that formidable difficulties attended the need to be satisfied that the risk of bias has been removed in security and terrorist type cases; that the reality that tribal loyalties could imperil the chances of a proper verdict had to be confronted; that the risk of a biased juror was the most important factor to be considered by the coroner; and that the real (as opposed to the remote or fanciful) possibility of jury bias should govern the coroners decision on the question. Mr Lewis suggested that an inquest and a criminal trial were not analogous in relation to the need to avoid jury bias. In the former, he suggested, a unanimous verdict was required, whereas a majority verdict could be returned in a criminal trial. Moreover, the system of empanelling juries introduced by the 2007 Act which abolished the right to peremptory challenge to possible jurors and disclosure of their names and addresses reduced the risk of jury tampering and partisanship. I do not accept these arguments. The fact that a majority verdict can be delivered in a criminal trial might reduce the risk of partisan verdicts; there is no reason to suppose that it will eliminate it. Likewise, the abolition of peremptory challenges and disclosure of jury panel members names and addresses. On the question of jury tampering (to which, more obviously, these measures were primarily directed) it is right to record that Mr Gerald Simpson QC, who appeared for the Director, confirmed that the possibility of jury tampering was not a concern in this case. It was the prospect of a partisan outcome to the case which underlay the Directors decision. The McParland case to which the Director referred is In re an application by Patrick McParland and John McParland for Judicial Review [2008] NIQB 1. It concerned a challenge to section 10 of the 2007 Act which had inserted a new provision (article 26A) into the Juries (Northern Ireland) Order 1996 (SI 1996/1141) restricting the disclosure of information about jurors. It was argued that the new arrangements in effect brought about trial of defendants by a secret tribunal and that this constituted a breach of article 6 of the European Convention on Human Rights and Fundamental Freedoms (ECHR) since it infringed the guarantees of a public hearing and of trial within a system containing sufficient guarantees of impartiality. The Divisional Court rejected that argument. At para 37, it observed, [t]he existence of the risks identified by the juries sub group of juror intimidation, of partisan juries and of perverse jury verdicts has not been seriously disputed by most commentators . Discussion of the statutory provisions relating to the issue of certificates The powers available to the Director of Public Prosecutions are unquestionably far reaching. It is unsurprising that this should be so. When one has regard to the difficulties described by the Court of Appeal in Jordan in eliminating the risk of bias and of being confident of having done so, the need for wide ranging powers is obvious. What were described by that court as tribal loyalties present a particular problem. These are often difficult to detect and may routinely be disavowed by most of the population. But experience has shown that they can operate to bring about unexpected, partisan outcomes. The dangers that they present to the achievement of a scrupulously fair trial are undeniable. Taking effective precautions against jury bias presents, as the Court of Appeal in Jordan said, formidable difficulties. These difficulties are particularly acute in cases which involve attacks on the security forces or where members of the security forces have fired on individuals. Such cases are almost invariably highly charged, and they give rise to strong feelings in both sides of the community. Apprehension that jury trial in such cases might put the goal of a fair trial in peril is unavoidable. It is important to focus on the need for a fair trial. Trial by jury is, of course, the traditional mode of trial for serious criminal offences in the United Kingdom. It should not be assumed, however, that this is the unique means of achieving fairness in the criminal process. Indeed, as the Court of Appeals statements in Jordan show, trial by jury can in certain circumstances be antithetical to a fair trial and the only assured means where those circumstances obtain of ensuring that the trial is fair is that it be conducted by a judge sitting without a jury. So called Diplock trials took place in Northern Ireland between 1973 and 2007. No one suggests that this mode of trial failed to deliver fairness of process, by reason of the fact that the trial took place before a judge sitting without a jury. Although article 6 of ECHR (which guarantees a right to a fair trial) is not prayed in aid by the appellant in this case, it is interesting to reflect that it has been held that this article does not require trial by jury. As the European Commission of Human Rights observed in X and Y v Ireland (Application No 8299/78) (1980) 22 DR 51, para 19, article 6 does not specify trial by jury as one of the elements of a fair hearing in the determination of a criminal charge. It is, of course, to be remembered that the system of trial introduced as a result of Lord Diplocks report (Report of the Commission to consider legal procedures to deal with terrorist activities in Northern Ireland (1972) (Cmnd 5185)), required the trial judge to give a reasoned judgment if the defendant was convicted. And that a defendant, upon conviction, was entitled to an automatic right of appeal, not only on points of law but on the factual conclusions reached and inferences drawn by the trial judge. These remain features of trials without a jury since the 2007 Act section 5(6) and (7). The statement made by Lord Judge CJ in R v Twomey [2010] 1 WLR 630 at para 10 (relied on by the appellant) that, [i]n this country trial by jury is a hallowed principle of the administration of criminal justice . properly identified as a right, available to be exercised by a defendant unless and until the right is amended or circumscribed by express legislation must be viewed against this background. In the first place, although the Lord Chief Justice described entitlement to trial by jury as a right, he did not suggest that this was an absolute right; indeed, he accepted that it could be constrained in certain circumstances. Secondly, and self evidently, the right has in fact been restricted by the express provisions of the 2007 Act. Finally, where trial by jury would place the fairness of the criminal justice process at risk, the right must yield to the imperative of ensuring that the trial is fair. In this context, the triangulation of interests identified by Lord Steyn in Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91, at p 118 is pertinent. He said this about the various interests which are served by a criminal trial: The purpose of the criminal law is to permit everyone to go about their daily lives without fear of harm to person or property. And it is in the interests of everyone that serious crime should be effectively investigated and prosecuted. There must be fairness to all sides. In a criminal case this requires the court to consider a triangulation of interests. It involves taking into account the position of the accused, the victim and his or her family, and the public. The requirements of a fair trial are not determined by having regard to a defendants interests exclusively. As Lord Steyn said, it is in the interests of everyone that serious crime be properly investigated and effectively prosecuted. Notably, of course, the appellant has not claimed that his trial for the offences with which he is charged will not be fair, if conducted by a judge sitting without a jury. Such a claim could not be sustained in light of the experience of trials before Diplock courts and of the safeguards which are in place by reason of section 5(6) and (7) of the 2007 Act. Consideration of the appellants claim that he should not be denied the right to a jury trial must therefore proceed on the basis that he will receive a fair trial or, at least, that if he does not, he will have an automatic right of appeal to the Court of Appeal where any suggestion that there has been unfairness can be fully ventilated and examined. This incontestable reality influences the approach to be taken, not only to the proper interpretation of section 1 of the 2007 Act, but also to the appellants argument that he was entitled to be given reasons for the issue of the certificate and to be consulted about the Directors proposed course of action before it was decided to issue the certificate. That is an argument to which I shall turn in paras 53 and following. The appellant argued that the Director of Public Prosecutions had been wrong in the claim that he made in his first affidavit, that it was the intention of Parliament that section 1(6) of the 2007 Act should be interpreted broadly. Mr Lewis pointed out that this was at odds with the judgment of the Divisional Court in an earlier Northern Ireland case, Arthurs (Brian and Paula) Application [2010] NIQB 75 where at para 31, Girvan LJ had said, [t]he strong presumption that a right to jury trial is not intended to be taken away will lead to a strict construction of any statutory restriction or limitation on the right to a jury trial. That statement appears to have been based on an argument addressed to the court by Raza Husain QC, appearing for applicants who challenged the issue by the Director of Public Prosecutions of a certificate that their trial on a series of fraud charges be conducted by a judge without a jury. Mr Husain had relied on the statement by Lord Judge CJ in a passage in the case of Twomey which appeared later in his judgment from that quoted at para 37 above. At para 16 of Twomey, Lord Judge CJ had said: The right to trial by jury is so deeply entrenched in our constitution that, unless express statutory language indicates otherwise, the highest possible forensic standard of proof is required to be established before the right is removed. That is the criminal standard. Of course, in Twomey the court was dealing with a case where the prosecution was seeking trial without a jury where it was claimed that there was a real danger of jury tampering and that is not the position here. But, if one proceeds on the premise that section 1(1) of the 2007 Act requires to be strictly or narrowly construed, this does not affect the interpretation which I consider the provision must be given. The Divisional Court in the present case dealt with this issue at para 41 of its judgment: In our view the assertion of the Director that it was the intention of Parliament to provide that the subsection should be broadly interpreted, whilst it could have been more felicitously worded, does not necessarily contradict the proposition put forward in Arthurs case that it is necessary to construe section 1 narrowly and strictly. The wording of condition 4 is such that Parliament clearly intended to include a broad reach of circumstances whilst at the same time recognising that any legislation removing jury trial needs to be tightly construed. There is certainly an argument that, contrary to the Divisional Courts view, the Directors assertion was at odds with what Girvan LJ said in Arthurs. But whether the Director erred is neither here nor there, provided he acted within the powers actually available to him and provided that, if he did indeed misapprehend the proper approach to the interpretation of section 1, that misapprehension was, in the event, immaterial to the decision that he took. On the true ambit of the Directors powers, what matters is the interpretation placed on the section by the courts. And the Divisional Court is unquestionably right that the wording of condition 4 invests the Director with a wide range of powers. Whether the section requires to be construed narrowly or broadly, the intrinsic breadth of the powers remains intact. Even if, therefore, the Director was wrong in his assertion that Parliament intended that the section should be interpreted broadly, there is no reason automatically to assume that this led to him exercising his powers in a manner that was not available to him on a proper construction of the provision. On the facts of this case, it is clear from the reasons that the Director has given for issuing the certificate that he was bound to have made the same decision if he had considered that section 1 required to be construed narrowly. If, indeed, it was an error on the part of the Director to consider that section 1 should be given a broad interpretation (on which I do not feel it necessary to express an opinion) it cannot be said that such an error would vitiate his decision for the reason that he was certain to reach the same decision, whatever view he took of the appropriate mode of interpretation of section 1. As to the reasons that he decided to issue the certificate, these were first conveyed to the appellants solicitors in a letter dated 10 May 2017 from the Directors office. It contained the following passages: I can advise you that the Director suspected that condition 4 in section 1 of the 2007 Act was satisfied on the basis of information provided by the police coupled with a commentary and assessment of that information, an analysis of the facts and circumstances of this case and the advice of senior counsel. In this way the Director formed the requisite suspicion. In view of the suspicion which he formed in relation to condition 4, the Director was satisfied that there was a risk that the administration of justice might be impaired if the trial were to be conducted with a jury. This risk arises from the possibility of a biased juror or jury, having regard to the particular circumstances of this case. The Director further considered whether the risk to the administration of justice could be mitigated by application to the court to screen the jury, sequester the jury or transfer the trial to a different venue. The Director was satisfied that there remained a risk that the administration of justice might be impaired on the basis that, even if granted, these measures might not be sufficiently effective in preventing or significantly reducing the potential risk posed to the administration of justice in this case. One may observe that it is extremely unfortunate that more than a year was allowed to pass before the issue of the certificate was brought to the attention of the appellant and his advisers. Quite apart from the obvious desirability of informing any defendant promptly of such a significant decision as to the mode of his trial, the challenge to his decision would, presumably, have materialised much sooner and the delay in the trial would have been greatly reduced. Mr Lewis suggested that the reference in the final paragraph of this letter to sequestration of the jury suggested that the possibility of jury tampering was present to the Directors mind but was not fully articulated. He argued that this, among other reasons, illustrated the inadequacy of the explanation given as to the basis on which the decision to issue the certificate was taken. This argument is more germane to the claim that the appellant should have been provided with reasons and been consulted before the decision was made to issue the certificate, an argument which I shall consider in the next section of the judgment. I should say, however, that I do not accept the argument. The nature of the risk is plainly stated in the second paragraph quoted above. It is that the possibility of a biased juror or jury existed. It might seem unusual to consider the question whether such a risk could be mitigated by sequestering the jury, but it is to be expected that the Director felt it prudent to examine every possibility before deciding to issue the certificate. It is certainly not untoward that he should advert to this before deciding that the only way in which to avert the risk that the administration of justice would be impaired was by issuing the certificate. On the question whether the Director acted within his powers, the letter sets out a clear basis on which to conclude that he did. He formed the necessary suspicion on the basis of information received from the police and commentary on that information. He also took the advice of senior counsel. These are all entirely conventional steps to allow him to consider the question whether he suspected that condition 4 was met. Likewise, the risk that the administration of justice would be impaired was directly addressed by the Director and a clear conclusion was arrived at. For the reasons given earlier, that conclusion was entirely unsurprising, in light of the circumstances described in the Jordan and McParland cases. Indeed, it is difficult to envisage how any other view could have been formed. The reasons for reaching his decision were again set out in two affidavits filed by the Director in the proceedings. In the first of these, he said that, in arriving at his conclusion, he recognised that there could be no suggestion that a soldier was any part of the sectarian divide in Northern Ireland, nor that he was involved in any proscribed organisation. He pointed out that the legislative framework makes it clear that references to persons and groups of persons need not include the defendant. He stated that he suspected that the offence was committed as a result of or in connection with or in response to the political hostility of one person or group of persons towards another person or group of persons; namely in connection with or in response to the political hostility of members (or suspected members) of PIRA towards those who believed that Northern Ireland should remain a part of the United Kingdom. In other words, the Director followed faithfully the wording and essence of the legislative provisions. This is completely in keeping with the terms of section 1 of the Act. On the second limb of section 1(2), the Director deposed that he had taken into account what had been said in the cases of Jordan and McParland and, having considered all the material with which he had been provided and having carefully analysed the facts, and having obtained senior counsels opinion, he was satisfied that there was a risk that the administration of justice might be impaired if the trial were to be conducted with a jury. All of this is unexceptionable and in compliance with the legislation. There is no reason to suppose that the Directors approach to the question whether the certificate should be issued was other than as prescribed by the statute. (The second affidavit filed by the Director relates to evidence which, he understood, was to be adduced by the prosecution on the trial of the appellant. It is not germane to the issues which arise on the appeal.) I have concluded, therefore that the Director acted within the powers conferred on him by the 2007 Act and that the appellants contention to the contrary must fail. The procedural argument The principal argument made on behalf of the appellant was that he ought to have been provided with the reasons that the Director of Public Prosecutions was minded to issue a certificate and with the material on which his consideration of that question was based. Further, it was claimed that the appellant should have been given the opportunity to make representations on whether a certificate should be issued, in advance of any decision on the matter. Section 7 of the 2007 Act sets the scene for any discussion of this argument. The exceptionality of a permissible challenge to the decision of the Director is prominent in the terms of the section. A curtailment of the full spectrum of judicial review challenge was obviously intended. It was expressly provided that a challenge was only admissible on grounds of bad faith, dishonesty or other exceptional circumstances. Bad faith and dishonesty clearly do not arise here. Where, then, does the appellants challenge find its place in the exceptional circumstances category? Mr Lewis seeks to place it there by reference to what he claims is the fundamental right to a jury trial. But, for the reasons earlier discussed, this will not do. The fundamental right is to a fair trial. There is a right to trial by jury, as Lord Judge CJ said in Twomey, but that alone is not enough to shift the appellants case into a condition of exceptionality particularly in the context of a statute whose very purpose is to prescribe the circumstances in which someone can be denied the right to a jury trial. This is pre eminently a situation where something is required beyond a claim that there is a right to a jury trial, if the circumstances of the individual case are to be regarded as exceptional. This point is reinforced by the examples of exceptional circumstances given in section 7(1)(c) of lack of jurisdiction or error of law. There is no question of lack of jurisdiction here, much less an error of law by the Director in having recourse to the powers that were available to him under section 1. To come within the rubric exceptional circumstances, it behoves the appellant to be able to point to something which truly distinguishes his case from the general. I consider that he has failed to do that. Quite apart from the statutory imperative requiring that there be exceptional circumstances in the absence of bad faith or dishonesty, the decision whether to issue a certificate is obviously one which should not be subject to the full spectrum of conventional judicial review challenge. Unlike most decisions taken in the public law arena, it is not founded exclusively on the evaluation and weighing of hard evidence. It will usually be motivated by sensitive information which cannot be disclosed. It is a decision which the Director of Public Prosecutions must take according to his personal reaction to the material with which he has been presented and his own estimation of the matters at stake. In sum, a decision to issue a certificate does not readily admit of scrutiny of the reasoning underlying it because it will usually be of the impressionistic and instinctual variety, for the reasons earlier explained. Many of these factors were in play in the Arthurs and Shuker cases. Arthurs was a case in which a challenge similar to that involved in the present appeal had been made. Girvan LJ, delivering the judgment of the Divisional Court, drew an analogy between this species of decisions and decisions whether to prosecute. At para 25 he brought together various authorities touching on this subject: In its reasoning [in Shuker] the court was heavily influenced by well established limitations on the review of the prosecutorial decisions by the DPP emerging from the authorities such as In re Adams [2001] NI 1, R v Director of Public Prosecutions, Ex p Treadaway The Times 31 October 1997 and R v Director of Public Prosecutions, Ex p Manning [2001] QB 330. The approach to the judicial review of prosecutorial decisions was subsequently succinctly stated by Lord Bingham and Lord Walker in Sharma v Brown Antoine [2007] 1 WLR 780, 788: It is . well established that judicial review of a prosecutorial decision, although available in principle, is a highly exceptional remedy. The language of the cases shows a uniform approach: rare in the extreme (R v Inland Revenue Comrs, Ex p Mead [1993] 1 All ER 772, 782); sparingly exercised (R v Director of Public Prosecutions, Ex p C [1995] 1 Cr App R 136, 140); very hesitant (Kostuch v Attorney General of Alberta (1995) 128 DLR (4th) 440, 449); very rare indeed (R (Pepushi) v Crown Prosecution Service [2004] Imm App R 549, para 49); very rarely: R (Bermingham v Director of the Serious Fraud Office [2007] 2 WLR 635, para 63.) In R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326, 371 Lord Steyn said: My Lords, I would rule that absent dishonesty or mala fides or exceptional circumstances, the decision of the Director to consent to the prosecution of the applicants is not amenable to judicial review. It is apparent that the statutory language in section 7 is inspired by the principle of exceptionality applicable in the context of prosecutorial decisions. Section 7 gives statutory recognition to the common law reticence in the scrutiny of decisions made in the field of prosecutorial decision making. The wording lends support to the contention put forward by Mr Maguire and Mr Perry [counsel for the Director of Public Prosecutions] that a decision made by the Director under section 1 of the 2007 Act is intended to fall within the band of prosecutorial decision making. The appellant contends that there is a fundamental difference between a decision whether to prosecute and a decision whether to issue a certificate under section 1 of the 2007 Act. It is submitted that there is no right not to be prosecuted unlike the right to be tried by a jury; that a person facing a decision as to whether he will be charged has not had legal machinery or process instigated against him whereas the decision to remove the right to trial by jury occurs when a person has already been charged and is under the jurisdiction of the court; that an individual under charge has a fundamental right to trial by jury, which the opposing party, the Director of Public Prosecutions, unilaterally changes without recourse to the court; that before a decision to prosecute is made the prosecutor will have given the putative defendant the opportunity on arrest (by way of caution), or at interview (by way of caution and questioning), of making representations as to why he should not be charged; that the decision whether to issue a certificate is statutory whereas a decision to prosecute is non statutory; that the difficult area of public interest is evaluated by the prosecutor when deciding to charge but there is no public interest component to the issue of a certificate under the 2007 Act; and that a decision to prosecute is a procedural step which is not adjudicatory of rights, while the decision to remove the right to a jury trial is adjudicatory. While some, at least, of these matters point up the differences between the mechanics of a decision whether to prosecute and a determination that the trial should take place before a judge sitting without a jury, they do not signify when one concentrates on the nature of the decision making process. A prosecutor faced with the task of deciding whether to initiate a prosecution must evaluate material not disclosable to the person who might be charged; similarly, the Director, in deciding whether to issue a certificate, will have recourse to materials which are not revealed to the person who will be affected by it. A decision whether to prosecute is dependent on an individuals reaction to and judgment on the material available as to the possible outcome of proceeding; likewise, the Directors decision on the possible consequences of proceeding with a trial with a jury. Both decisions may involve consideration of material which is not only non disclosable but which may be of a highly sensitive nature. As Girvan LJ said in para 24 of Arthurs, the parallels between the two species of decision are obvious. Moreover, it can be no coincidence that the 2007 Act, in imposing restrictions on the availability of judicial review adopted the language of Lord Steyn in R v Director of Public Prosecutions, Ex p Kebilene [2000] 2 AC 326, a decision relating to the permissibility of challenge to a decision to prosecute. In any event, I should say that at least three of the appellants vaunted points of distinction are not, in my view, valid. First, the question of whether the decision is made on foot of a statutory provision or on a non statutory basis is irrelevant. Secondly, it is plainly wrong to suggest that there is no public interest in the determination of whether the trial should proceed before a judge without a jury. To the contrary, it is a critical part of the decision about the issue of a certificate that the Director consider whether the administration of justice would be impaired. This may have a different focus from the public interest at stake in deciding whether to prosecute but both decisions plainly call on the prosecutors judgment as to where the public interest lies. Finally, the decision whether to issue a certificate is no more adjudicatory in nature than is the decision to prosecute. Neither involves a weighing of competing interests in the sense that an individuals wish not to be prosecuted or his wish to be tried by a judge and jury are pitted against the public interest in ensuring that the administration of justice is maintained. In this case, I can conceive of no circumstances which could be said to be exceptional coming within the use of that term in section 7(1)(c) of the 2007 Act. This is especially so since it is open to the appellant even now to make representations to the Director of Public Prosecutions. Mr Simpson, on behalf of the Director, confirmed to this court that if representations were received, these would be considered. Of course, the appellant complains that effective representations cannot be made in the absence of information about the material on which the Director made his decision and the reasons that he decided as he did. Quite apart from the statutory prohibition on a challenge to the failure to disclose explanations other than on the limited grounds contained in section 7(1)(c), there are two sound reasons that the appellant should not succeed in this argument. First, in many cases involving the issue of a certificate, information will have been received by the Director from the police or other members of the security services which must, for obvious reasons, remain confidential. Secondly, the nature of the decision that the Director takes, as I have already explained, will usually be of an instinctual or impressionistic character, not susceptible of ready articulation. But the truly important point to make here is that section 1 qualifies, if not indeed removes, the right to trial by a jury. Hence, the issue of a certificate does not itself remove the right (it is the statute which has done that). In reality the issue of a certificate under section 1 partakes of a case management decision aimed at ensuring the relevant end result of a fair trial. Viewed from this perspective, it is of obvious importance that elaborate, protracted challenges to the issue of a certificate under section 1 are wholly to be avoided, where possible. It is, no doubt, with this consideration in mind that section 7 circumscribed the opportunity for judicial review challenge. Such challenges have the potential to undermine the objective of the legislation to ensure that trials take place in accordance with the requirements of article 6 of ECHR (both as to fairness and to promptness). That is not to say that there will never be occasion where some information can be provided which would assist in the making of representations by a person affected by the issue of a certificate. I refrain from speculation as to how or when such an occasion might arise. I am entirely satisfied, however, that it does not arise in the present case. Conclusion The Divisional Court certified the following question for the opinion of this court: Does a true construction of section 4 of the 2007 Act [this should be condition 4 in section 1(1) of the Act], namely an offence or offences committed to any extent (whether directly or indirectly) as a result of, in connection with or in response to religious or political hostility of one person or group of persons towards another person or group of persons, include a member of the armed forces shooting a person he suspected of being a member of the IRA? The arguments on the appeal before this court have ranged well beyond the single issue raised in the certified question and, perhaps inevitably, this judgment has also dealt with matters outside its scope. But, for the reasons that I have given, I would answer the certified question, yes and dismiss the appeal.
UK-Abs
In 1974, there was much terrorist activity in Northern Ireland, a large part of which was generated by the Provisional Irish Republican Army (PIRA). On 13 June 1974, members of the Life Guards regiment of the British Army, under the command of the appellant, found a group of men loading material into a vehicle. A firefight ensued and arms and explosives were discovered in the vehicle. On 15 June 1974, a Life Guards patrol, also led by the appellant, was travelling on a road about 3.5 miles from the location of the firefight. They saw a man, Mr Cunningham, who appeared startled and confused. Mr Cunningham climbed a gate into a field and ran towards a fence. The appellant ordered the patrol to halt and three members, including the appellant, pursued Mr Cunningham. After shouting a number of commands to stop, the appellant and another soldier fired shots and Mr Cunningham was killed. It later transpired that he had limited intellectual capacity, that he was unarmed, and that he had been running towards his home. In 2015, the appellant was charged with the attempted murder of Mr Cunningham and with attempting to cause him grievous bodily harm. On 20 April 2016, the Director of Public Prosecutions (DPP) issued a certificate pursuant to section 1 of the Justice and Security (Northern Ireland) Act 2007 (the Act) directing that the appellant stand trial by a judge sitting without a jury. Section 1(2) of the Act provides that the DPP may issue such a certificate if he (a) suspects that any of the relevant conditions are met and (b) is satisfied that in view of this there is a risk that the administration of justice might be impaired if the trial were to be conducted with a jury. Condition 4 is defined by section 1(6) of the Act: Condition 4 is that the offence or any of the offences was committed to any extent (whether directly or indirectly) as a result of, in connection with or in response to religious or political hostility of one person or group of persons towards another person or group of persons. Section 7(1) of the Act reads: No court may entertain proceedings for questioning (whether by way of judicial review or otherwise) any decision or purported decision of the Director of Public Prosecutions for Northern Ireland in relation to the issue of a certificate under section 1, except on the grounds of (a) dishonesty, (b) bad faith, or (c) other exceptional circumstances (including in particular exceptional circumstances relating to lack of jurisdiction or error of law). The appellant was not made aware of the issue of the certificate until 5 May 2017. He sought to challenge the DPPs decision to issue the certificate by way of judicial review. He was unsuccessful before the Divisional Court, which certified the question of whether a true construction of condition 4 included a member of the armed forces shooting a person he suspected of being a member of the IRA. The appellant also seeks to challenge the DPPs decision on procedural grounds, arguing that he ought to have been provided with the reasons that the DPP was minded to issue a certificate and with the material on which his consideration of that question was based. He also claims that he should have been given the opportunity to make representations on whether a certificate should have been issued in advance of any decision on the matter. The Supreme Court unanimously dismisses the appeal. It holds that a true construction of condition 4 does include a member of the armed forces shooting a person he suspected of being a member of the IRA and it rejects the procedural challenges advanced by the appellant. Lord Kerr writes the judgment. The breadth of the power under section 1 of the Act is immediately apparent. The DPP need only suspect that one of the stipulated conditions is met and that there is a risk that the administration of justice might be impaired if there was a jury trial. These decisions can be of the instinctual, impressionistic kind. Whilst the DPP must be able to point to reasons for his decision, it may be based on unverified intelligence or suspicions, or on general experience, rather than on hard evidence [13]. The circumstances covered by condition 4 are also extremely wide. This covers offences committed to any extent (even if indirectly) in connection with or in response to religious or political hostility of one person or group of persons. The PIRA campaign in Northern Ireland was based on that organisations political hostility to continuing British rule and the incident which occurred a few days before Mr Cunningham was killed bore all the hallmarks of a PIRA operation. When this is considered, it is entirely unsurprising that the DPP should have concluded that the offences with which the appellant is charged were connected (directly or indirectly) with or in response to the political hostility of PIRA members against those who believe that Northern Ireland should remain a part of the UK [14]. The other exceptional circumstances referred to in section 7(1)(c) of the Act are not specified, but they must take their flavour from the preceding provisions and the succeeding words which particularise lack of jurisdiction and error of law. These are clear indications that the full panoply of judicial review superintendence is generally not available to challenge decisions under section 1 [16]. There is no need to consider the Explanatory Notes to the Act or the ministerial statements referred to by the appellant because the language of the relevant statutory provisions is clear [20] & [24]. Trial by jury should not be assumed to be the unique means of achieving fairness in the criminal process. Trial by jury can in certain circumstances be antithetical to a fair trial and the only assured means, where those circumstances obtain, of ensuring that the trial is fair is that it be conducted by a judge sitting without a jury.[34]. Further, although trial by jury has been referred to as a right, it is not an absolute right. Moreover, the right has been restricted by the express provisions of the Act and must yield to the need to ensure that a trial is fair [37]. Although it has been argued that the DPP erred in stating that section 1(1) should be broadly interpreted, this is irrelevant so long as (a) he acted within his powers and (b) any misapprehension was immaterial to the decision he took. On the facts of this case, it is clear that the DPP was bound to have made the decision even if he had considered that section 1 had to be construed narrowly [44]. As to whether he acted within his powers, the DPP took proper steps to allow him to consider whether he suspected that condition 4 was met [47]. He also addressed whether there was a risk that the administration of justice would be impaired and his conclusion was entirely unsurprising [48]. As to the procedural argument, section 7 expressly provides that a judicial review challenge is only admissible on grounds of bad faith, dishonesty, or other exceptional circumstances. This is not a case of bad faith or dishonesty [54]. Whilst the appellant claims that this case falls into the exceptional circumstances category because of the fundamental right to a jury trial, the fundamental right is to a fair trial. Whilst there is a right to a jury trial, this cannot make this case an exceptional one, particularly in the context of a statute whose purpose is to prescribe the circumstances in which someone can be denied the right to a jury trial [55]. There are no circumstances in this case which could be said to be exceptional within the terms of section 7(1)(c) of the Act [62].
reasonable reader of a Facebook post? Background The respondent to this appeal, Ronald Stocker, is the former husband of the appellant, Nicola Stocker. Their marriage ended in acrimony in 2012. Mr Stocker subsequently formed a relationship with Ms Deborah Bligh. On 23 December 2012 an exchange took place between Mrs Stocker and Ms Bligh on the Facebook website. In the course of that exchange, Mrs Stocker informed Ms Bligh that her former husband (now Ms Blighs partner) had tried to strangle her. It is now clear that the date on which this is alleged to have occurred is 23 March 2003. Mrs Stocker also said that her husband had been removed from the house following a number of threats that he had made; that there were some gun issues; and that the police felt that he had broken the terms of a non molestation order. These statements and the allegation that Mr Stocker had tried to strangle her were the basis on which he took proceedings against her for defamation. The allegations about threats, gun issues and the breach of a non molestation order are relevant to provide context to the statement that Mr Stocker had tried to strangle Mrs Stocker. They paint a picture of acute marital conflict and on that account set the scene for any reader of the Facebook post. That reader would know that Mrs Stockers statement that her former husband had tried to strangle her was made against the background that this had been, towards the end of its life, a most disharmonious marriage. The proceedings in the High Court Mr Stocker issued proceedings against his former wife, claiming that the statement that he had tried to strangle her was defamatory of him. He claimed that the meaning to be given to the words tried to strangle me was that he had tried to kill her. Mrs Stocker denied that the words bore that meaning. She claimed that, in the context of domestic violence, the words do not impute an intention to kill. What they would be understood to mean, she said, was that her husband had violently gripped her neck, inhibiting her breathing so as to put her in fear of being killed. Mr Stocker also claimed that the statement that he had uttered threats and breached a non molestation order was defamatory and was to be taken as implying that he was a dangerous and thoroughly disreputable man. Mrs Stocker refuted this. She said that it was not reasonable to infer that she had suggested that her husband was dangerous on account of his having been arrested a number of times. It is to be observed, however, that in the defence filed on her behalf, Mrs Stocker averred that the statement that her husband was dangerous and disreputable was justified. It seems likely that this was by way of alternative plea. In any event, for reasons that will later appear, this is immaterial because of the rule concerning the substantial truth of the statements made by the alleged defamer. At the start of the defamation proceedings, Mitting J, the trial judge, suggested that the parties should refer to the Oxford English Dictionarys definition of the verb, strangle. This provided two possible meanings: (a) to kill by external compression of the throat; and (b) to constrict the neck or throat painfully. The judge was asked by counsel for the appellant, Mr Price QC, to consider how the words, tried to strangle had been used in different contexts. Mr Price also sought to introduce legal definitions of the word strangle. These do not appear to have been taken into account by Mitting J and he did not refer to them in his judgment. Mr Stocker gave evidence that, on the occasion when the altercation which led to his wife accusing him of trying to strangle her took place, he had been standing on a stool or a chair while she was adjusting the length of a pair of his trousers. She had pricked him with a pin. He had sworn at her. She swore back at him and he placed his hand over her mouth to prevent her raised voice from waking their sleeping son. The judge rejected this account, saying, at para 43: I do not accept [Mr Stockers] account that he merely put one hand over [Mrs Stockers] mouth while he was standing on the stool or chair. His hand would have been at his thigh level. He could not have exerted more than momentary pressure on her mouth, from which she could instantly have escaped. Nor could he have left the reddening marks on her neck or throat which I am satisfied were seen by the police. I do not, however, believe that he threatened to kill her or did anything with his hands with that intention. I do not believe that he was capable even in temper of attempted murder. The most likely explanation about what happened is that he did in temper attempt to silence her forcibly by placing one hand on her mouth and the other on her upper neck under her chin to hold her head still. His intention was to silence, not to kill. This finding implicitly rejects Mrs Stockers account of the incident also. She had said that her husband had dismounted from the chair, had pushed her against a small sofa, put his hands around her neck and squeezed, causing her to believe that he would kill her. The judge accepted that some two hours after the incident, red marks on Mrs Stockers neck had been seen by police officers but he came up with a theory as to how those had come about which neither party had proposed. It is of course open to a trial judge, after considering all the evidence, to reach his or her own conclusions or to draw inferences which neither party has advanced or espoused. But there must be a sound basis for doing so. In this case, the judge accepted the police evidence that there were red marks on Mrs Stockers neck. Mr Stocker had agreed during a police interview that it was possible that he had put his hand around his wifes neck and, implicitly, that this had caused the red marks that were found there. He had also said that he had dismounted from the chair or stool on which he had been standing; had followed Mrs Stocker over to a chair and that it was possible that he had put his hand around her neck. Unsurprisingly, he was content to go along with a suggestion put to him by a police officer that he had not maliciously grabbed her around the throat or tried to assault her. At no point did Mr Stocker claim that he had grasped his wife by the throat in order to secure his hand covering her mouth or to prevent her from wrenching free from his grasp. Nor did he suggest that he could not have prevented her from shouting simply by placing his hand over her mouth. It is to be noted that he had admitted to police that he had alighted from the stool or chair. If that statement was accurate and truthful, he was therefore on the same level as his wife. Yet, the judge rejected Mr Stockers evidence that he had simply put his hand over his wifes mouth. Mitting J considered that a further hand (on the neck) was needed to secure the grip on Mrs Stockers mouth. This conclusion seems to have been premised on Mr Stocker remaining on the chair. (And, in fairness to the judge, it seems that Mr Stocker so claimed in evidence.) If other considerations had not supervened, there might well have been an issue as to whether it was open to the judge to reach the conclusion which he did, particularly because that conclusion is more benevolent to Mr Stocker than any version of the facts which he could reasonably have advanced. It seeks to explain the red marks on a basis which Mr Stocker has never argued for. In the event, however, it is unnecessary to deal with that matter because of the conclusions that I have reached on other issues and, since it had not been argued that the judges finding on this point was one which he should not have made, I say nothing more about it. The judge began his discussion about the meaning to be given to the statements said to be defamatory by referring to the well known case of Jeynes v News Magazines Ltd [2008] EWCA Civ 130 and cited the eight propositions made in that case by Sir Anthony Clarke MR in para 14. The judge also quoted the supplementary qualification to those propositions provided by Sharp LJ in Rufus v Elliott [2015] EWCA Civ 121, para 11. (Both authorities will be considered below.) Having considered these judicial pronouncements, Mitting J said that he did not understand that either authority indicated that, in order to confirm the meaning in ordinary usage of a single English word, it was impermissible to refer to an authoritative English dictionary such as the Oxford English Dictionary. He then referred to the two dictionary definitions which I have set out at para 7 above and continued at para 36: If the defendant had said he strangled me, the ordinary reader would have understood her to have used the word in the second sense for the obvious reason that she was still alive. But the two Facebook comments cannot have been understood to refer to trying to strangle her in that sense because, as she said, the police had found handprints on her neck. These could only have been caused by the painful constriction of her neck or throat. If understood in that sense, she could not have been taken to have said that the defendant had tried to strangle her because he had succeeded. The ordinary reader would have understood that the defendant had attempted to kill her by external compression of her throat or neck with his hands and/or fingers. It is clear from this passage of his judgment that the trial judge had confined the possible meaning of the statement, he tried to strangle me to two stark alternatives. Either Mr Stocker had tried to kill his wife, or he had constricted her neck or throat painfully. In the judges estimation, the fact that Mrs Stocker had said that her husband tried to strangle her precluded the possibility of her statement being taken to mean that he had constricted her neck painfully. This approach produces an obviously anomalous result. If Mrs Stocker had said, he strangled me, she should be understood to have meant that her husband had constricted her neck or throat painfully, on account of her having survived to tell the tale. But, because she said that he had tried to strangle her (in the normal order of things and in common experience a less serious accusation), she was fixed with the momentous allegation that her husband had tried to kill her. On this analysis, the use of the verb, to try assumes a critical significance. The possible meaning of constricting the neck painfully was shut out by what might be regarded as the adventitious circumstance that Mrs Stocker had said that her husband had tried to strangle her rather than that he had strangled her. This anomalous result was the product of confining the meaning of the words exclusively to two dictionary definitions. If tried to strangle did not fit with the notion of trying to constrict the neck or throat painfully (because of the prosaic fact that Mrs Stocker was still alive), the only possible meaning was that Mr Stocker had tried to kill. On the remainder of the claimed defamatory meaning the judges reasoning was closely allied to that on the first part. In the passage of his judgment which immediately succeeded that quoted at para 14 above, he said at para 36: That understanding [that her husband had tried to kill Mrs Stocker] would have informed the ordinary reader about the meaning of the remaining comments. They were that he had been arrested on at least two other occasions for gun issues and for breach of a non molestation order and possibly on a third for threats. In addition, he would have understood her to assert that the police believed that he had broken the terms of the non molestation order; in other words, that there was a basis beyond mere suspicion for doing so. The judge then dealt with an argument made on behalf of Mrs Stocker that all that she had done was to state that Mr Stocker had been arrested on more than one occasion and that this was not itself a defamatory statement. Of these claims, the judge said this at para 37: I agree that in principle the statement that a person has been arrested is not necessarily defamatory. But these statements, taken together, go well beyond that. They justify the claimants pleaded case that the reasonable inference to draw from the statement was that the defendant was dangerous, at least to any woman with whom he lived or had lived, that he was a man who tried to kill on one occasion, had been arrested for an offence involving firearms on another, and had given the police reason to believe that he had broken a non molestation order made against him. To describe him thus was defamatory. The meaning attributed by the judge to the statement that the claimant had been arrested, in the context of the other statements, therefore was that Mr Stocker was a man who was dangerous to any woman with whom he had lived or might live. Mrs Stocker had pleaded that her statements were substantially true and that she was therefore entitled to rely on the defence of justification. The judge dealt with that plea in para 54 of his judgment: The defendant has proved some justification for the words which she used in the Facebook postings. The claimant did commit an offence against her on 23 March 2003, at least common assault. He was arrested three times. There were gun issues. He had made threats, though not of immediate violence against her. But she has not met the sting of the postings that the claimant was a dangerous man. The impression given by the postings to the ordinary reader was a significant and distorting overstatement of what had in fact occurred. The Court of Appeal At para 17 of her judgment, Sharp LJ in the Court of Appeal said this about the use of dictionaries as a means of deciding the meaning to be given to a statement alleged to be defamatory: The use of dictionaries does not form part of the process of determining the natural and ordinary meaning of words, because what matters is the impression conveyed by the words to the ordinary reader when they are read, and it is this that the judge must identify. As it happened however no harm was done in this case. The judge told counsel during the course of submissions that he had looked at the OED definitions and what they said, so the parties had the opportunity to address him about it; the judge, as he then said, merely used the dictionary definitions as a check, and no more; those definitions were in substance the rival ones contended for by the parties, and in the event, the judges ultimate reasoning, not dependent on dictionaries, was sound. The suggestion that the judge told counsel in the course of submissions that he had looked at the dictionary definition may mislead. On the first day of the trial, before any evidence had been given, counsel for Mr Stocker, Mr Barca QC, had suggested to Mitting J that no time would be saved by asking him to deliver a preliminary ruling on meaning. The judge replied that he had a preliminary opinion about it which he was willing to disclose. Shortly thereafter, he suggested that counsel should look at the Oxford English Dictionary definitions and said, You might from that gain the primary and secondary definition and fit it (sic) into the context of a message that he tried to do something. All of this occurred before the judge heard any argument about meanings. This suggests that, contrary to Sharp LJs view, the judge was not using the dictionary definitions as a cross check. Plainly, he regarded those definitions as comprehensive of the possible meanings of the statement, he tried to strangle me. Sharp LJs statement that Mitting J merely used the dictionary definitions as a check may have been based on his comment in para 36 of his judgment that the authorities do not prohibit reference to an authoritative English dictionary such as the Oxford English Dictionary to confirm the meaning in ordinary usage of a single English word. I do not construe this statement as signifying that the judge was using the dictionary definitions as a cross check and, indeed, neither in his judgment nor in his exchanges with counsel, does he ever use the expression, check. Given that Mitting J had consulted the dictionary before the trial began and commended consideration of it to counsel, it seems to me plain that, far from using the definitions as a check, what the judge did was to regard the two definitions as the only possible meanings which he could consider or, at the very least, the starting point for his analysis, rather than a cross check or confirmation of the correct approach. Therein lies the danger of the use of dictionary definitions to provide a guide to the meaning of an alleged defamatory statement. That meaning is to be determined according to how it would be understood by the ordinary reasonable reader. It is not fixed by technical, linguistically precise dictionary definitions, divorced from the context in which the statement was made. Moreover, once the verb, strangle is removed from its context and given only two possible meanings before it is reconnected to the word, tried the chances of a strained meaning are increased. The words must be taken together so as to determine what the ordinary reasonable reader would understand them to mean. Mitting J examined the word strangle in conspicuous detail before considering it in conjunction with the word, tried. Having determined that strangle admitted of only two possible meanings, he then decided that tried could be applied to only one of these. Underpinning his reasoning is the unarticulated premise that to try is necessarily to try and fail. Since Mr Stocker had not failed to constrict his wifes throat, the judge concluded that the only feasible meaning of the words was that he had tried (and failed) to kill her. But that is not how the words are used in common language. If I say, I tried to regain my breath, I would not be understood to have tried but failed to recover respiratory function. On the meaning found by the judge at para 37 of his judgment (that Mr Stocker was dangerous to any woman with whom he lived), Sharp LJ at para 21 of her judgment said: The judges reference to the respondents dangerousness was merely his overall characterisation of the impression the [comments made by Mrs Stocker on Ms Blighs Facebook wall] conveyed, in the light of the discrete meanings he had found them to bear (the respondent had tried to kill etc). This was not a freestanding meaning therefore detached from the meanings complained of, nor was this a characterisation which founds an appeal that the judge was wrong; indeed to my mind, in the light of the meanings found by the judge, this overall characterisation of what was alleged was self evidently correct. (Emphasis added) Plainly, the Court of Appeal considered (as did, indeed, the judge) that that meaning was dependent, to some extent at least, on the correctness of Mitting Js conclusion as to the meaning to be given to the words, tried to strangle me. The passage quoted was in reaction to Mr Prices argument that the judge was wrong to have fastened on that meaning when it had not been advanced by Mr Stocker. Sharp LJ had observed of this argument that the judge was not bound to accept either partys contention on meaning; his task was to identify the single meaning of the words complained of within the relevant area of contention. For reasons that will appear, it is important to note the two aspects of Sharp LJs reasoning: first that the judge was entitled to fix on a meaning which had not been advanced by either party; and, secondly, that his choice of meaning was influenced by his findings in relation to the first defamatory meaning that Mrs Stockers words he tried to strangle me were to be taken as meaning that her husband had tried to kill her. Sharp LJ then turned to the question of justification. She referred to an argument advanced on behalf of Mrs Stocker that the judge had failed to advert to section 5 of the Defamation Act 1952 (which has now been replaced by section 2(3) of the Defamation Act 2013): In an action for libel or slander in respect of words containing two or more distinct charges against the plaintiff, a defence of justification shall not fail by reason only that the truth of every charge is not proved if the words not proved to be true do not materially injure the plaintiffs reputation having regard to the truth of the remaining charges. At para 25, Sharp LJ said: I can see why an issue in relation to section 5 might arise for consideration if the judge was wrong to conclude that the comments alleged the respondent had tried to kill the appellant by strangling her. In my view however, the failure of the principal argument on meaning deprives the argument on section 5 of any force that it might have had. The judge found in short that there was a real and substantial difference between the allegations made and those proved; and in my view he was entitled to reach that view on the evidence he heard. Having carefully appraised the evidence of justification and dealt with the essential points relating to that defence, the judge put the matter in this way. Though the appellant had proved some justification for the words she used, the allegations made in the comments were a significant and distorting overstatement of what had in fact occurred. His views were similarly expressed during the course of submissions. It is true that the judge found as a fact that during the course of an argument, the respondent had committed common assault at least, by placing his hand over the appellants mouth and putting his hand under her chin, to stop her speaking. However there is a material difference in gravity between such conduct, however unpleasant it may be, and an attempt to kill by strangulation; and it was plainly open to the judge to find, as he did, that what the appellant had proved in this and other respects, fell short by some measure of establishing a successful defence of justification, by reference to section 5 or otherwise. Again, it is to be noted that the finding of Mitting J about the meaning to be given to the words, he tried to strangle me was pivotal to the conclusion that section 5 could not be prayed in aid by Mrs Stocker. It is clear that, if it had been held that Mitting J was wrong to fix on the meaning of those words that he did, a markedly different view as to the applicability of section 5 would have been warranted. The single meaning rule Section 11 of the Defamation Act 2013 abolished the statutory right to trial by jury (in section 69(1) of the Senior Courts Act 1981). Under the previous dispensation, the judge would determine which meanings the allegedly defamatory words were capable of bearing and exclude those which she or he considered they were not capable of bearing. The judge would then put to the jury the various possible meanings and, with appropriate directions, invite the jury to decide which of those adumbrated meanings was the one to be attributed to the words said to be defamatory. The almost complete abolition of jury trial meant that the task of choosing a single meaning fell to the judge alone. The exercise of choosing a single immutable meaning from a series of words which are capable of bearing more than one has been described as artificial see, in particular, Diplock LJ in Slim v Daily Telegraph Ltd [1968] 2 QB 157, 172C. But the single meaning rule has had its robust defenders. In Oriental Daily Publisher Ltd v Ming Pao Holdings Ltd [2013] EMLR 7, Lord Neuberger of Abbotsbury, sitting as a judge of the Hong Kong Court of Final Appeal, said at para 138 that the criticism of the rules artificiality and (implicitly) its irrationality was misplaced. He suggested that the identification of a single meaning to be accorded a statement arose in many areas of law, most notably the interpretation of statutes, contracts and notices para 140. Whether the analogy between a single defamatory meaning and a sole meaning to be given to a contractual term, statutory provision or notice is apt (which I take leave to doubt), it is clear that the single meaning approach is well entrenched in the law of defamation and neither party in the present appeal sought to impeach it. And, whatever else may be said of it, it provides a practical, workable solution. Where a statement has more than one plausible meaning, the question of whether defamation has occurred can only be answered by deciding that one particular meaning should be ascribed to the statement. It is then for the judge to decide which meaning to plump for. Guidance as to how she or he should set about that mission was provided in Jeynes (mentioned in para 13 above). At para 14, Sir Anthony Clarke MR set out the essential criteria: (1) The governing principle is reasonableness. (2) The hypothetical reasonable reader is not nave, but he is not unduly suspicious. He can read between the lines. He can read in an implication more readily than a lawyer and may indulge in a certain amount of loose thinking, but he must be treated as being a man who is not avid for scandal and someone who does not, and should not, select one bad meaning where other non defamatory meanings are available. (3) Over elaborate analysis is best avoided. (4) The intention of the publisher is irrelevant. (5) The article must be read as a whole, and any bane and antidote taken together. (6) The hypothetical reader is taken to be representative of those who would read the publication in question. (7) In delimiting the range of permissible defamatory meanings, the court should rule out any meaning which, can only emerge as the produce of some strained, or forced, or utterly unreasonable interpretation (see Eady J in Gillick v Brook Advisory Centres approved by this court [2001] EWCA Civ 1263 at para 7 and Gatley on Libel and Slander (10th ed), para 30.6). (8) It follows that it is not enough to say that by some person or another the words might be understood in a defamatory sense. Neville v Fine Arts Co [1897] AC 68 per Lord Halsbury LC at 73. Sharp LJ added a rider to the second of these criteria in Rufus v Elliott when she said at para 11: To this I would only add that the words should not select one bad meaning where other non defamatory meanings are available are apt to be misleading without fuller explanation. They obviously do not mean in a case such as this one, where it is open to a defendant to contend either on a capability application or indeed at trial that the words complained of are not defamatory of the claimant, that the tribunal adjudicating on the question must then select the non defamatory meaning for which the defendant contends. Instead, those words are part of the description of the hypothetical reasonable reader, rather than (as) a prescription of how such a reader should attribute meanings to words complained of as defamatory: see McAlpine v Bercow [2013] EWHC 1342 (QB), paras 63 to 66. Clearly, therefore, where a range of meanings is available and where it is possible to light on one meaning which is not defamatory among a series of meanings which are, the court is not obliged to select the non defamatory meaning. The touchstone remains what would the ordinary reasonable reader consider the words to mean. Simply because it is theoretically possible to come up with a meaning which is not defamatory, the court is not impelled to select that meaning. All of this, of course, emphasises that the primary role of the court is to focus on how the ordinary reasonable reader would construe the words. And this highlights the courts duty to step aside from a lawyerly analysis and to inhabit the world of the typical reader of a Facebook post. To fulfil that obligation, the court should be particularly conscious of the context in which the statement was made, and it is to that subject that I now turn. Context The starting point is the sixth proposition in Jeynes that the hypothetical reader should be considered to be a person who would read the publication and, I would add, react to it in a way that reflected the circumstances in which it was made. It has been suggested that the judgment in Jeynes failed to acknowledge the importance of context see Bukovsky v Crown Prosecution Service [2017] EWCA Civ 1529; [2018] 4 WLR 13 where at para 13 Simon LJ said that the propositions which were made in that case omitted an important principle [namely] the context and circumstances of the publication . It may be that the significance of context could have been made more explicitly clear in Jeynes, but it is beyond question that this is a factor of considerable importance. And that the way in which the words are presented is relevant to the interpretation of their meaning Waterson v Lloyd [2013] EWCA Civ 136; [2013] EMLR 17, para 39. The fact that this was a Facebook post is critical. The advent of the 21st century has brought with it a new class of reader: the social media user. The judge tasked with deciding how a Facebook post or a tweet on Twitter would be interpreted by a social media user must keep in mind the way in which such postings and tweets are made and read. at para 35 said this about tweets posted on Twitter: In Monroe v Hopkins [2017] EWHC 433 (QB); [2017] 4 WLR 68, Warby J The most significant lessons to be drawn from the authorities as applied to a case of this kind seem to be the rather obvious ones, that this is a conversational medium; so it would be wrong to engage in elaborate analysis of a 140 character tweet; that an impressionistic approach is much more fitting and appropriate to the medium; but that this impressionistic approach must take account of the whole tweet and the context in which the ordinary reasonable reader would read that tweet. That context includes (a) matters of ordinary general knowledge; and (b) matters that were put before that reader via Twitter. I agree with that, particularly the observation that it is wrong to engage in elaborate analysis of a tweet; it is likewise unwise to parse a Facebook posting for its theoretically or logically deducible meaning. The imperative is to ascertain how a typical (ie an ordinary reasonable) reader would interpret the message. That search should reflect the circumstance that this is a casual medium; it is in the nature of conversation rather than carefully chosen expression; and that it is pre eminently one in which the reader reads and passes on. That essential message was repeated in Monir v Wood [2018] EWHC (QB) 3525 where at para 90, Nicklin J said, Twitter is a fast moving medium. People will tend to scroll through messages relatively quickly. Facebook is similar. People scroll through it quickly. They do not pause and reflect. They do not ponder on what meaning the statement might possibly bear. Their reaction to the post is impressionistic and fleeting. Some observations made by Nicklin J are telling. Again, at para 90 he said: It is very important when assessing the meaning of a Tweet not to be over analytical. Largely, the meaning that an ordinary reasonable reader will receive from a Tweet is likely to be more impressionistic than, say, from a newspaper article which, simply in terms of the amount of time that it takes to read, allows for at least some element of reflection and consideration. The essential message that is being conveyed by a Tweet is likely to be absorbed quickly by the reader. And Nicklin J made an equally important point at para 92 where he said (about arguments made by the defendant as to meaning), these points only emerge as a result of close analysis, or someone pointing them out. An ordinary reasonable reader will not have someone by his/her side making points like this. A similar approach to that of Nicklin J had been taken by Eady J in dealing with online bulletin boards in Smith v ADVFN plc [2008] EWHC 1797 (QB) where he said (at paras 13 to 16): 13. It is necessary to have well in mind the nature of bulletin board communications, which are a relatively recent development. This is central to a proper consideration of all the matters now before the court. 14. Particular characteristics which I should have in mind are that they are read by relatively few people, most of whom will share an interest in the subject matter; they are rather like contributions to a casual conversation (the analogy sometimes being drawn with people chatting in a bar) which people simply note before moving on; they are often uninhibited, casual and ill thought out; those who participate know this and expect a certain amount of repartee or give and take. 16. People do not often take a thread and go through it as a whole like a newspaper article. They tend to read the remarks, make their own contributions if they feel inclined, and think no more about it. Further discussion It will be clear from what I have said already that, in my view, Mitting J fell into legal error by relying upon the dictionary definition of the verb to strangle as dictating the meaning of Mrs Stockers Facebook post, rather than as (as Sharp LJ suggested) a check. In consequence, he failed to conduct a realistic exploration of how the ordinary reader of the post would have understood it. Readers of Facebook posts do not subject them to close analysis. They do not have someone by their side pointing out the possible meanings that might, theoretically, be given to the post. Anyone reading this post would not break it down in the way that Mitting J did by saying, well, strangle means either killing someone by choking them to death or grasping them by the throat and since Mrs Stocker is not dead, she must have meant that her husband tried to kill her no other meaning is conceivable. In view of the judges error of law, his decision as to the meaning of the Facebook post cannot stand, and this court must either determine the meaning for itself, or if that is not possible, remit the case for a rehearing. It is entirely appropriate in this case for us to take the former course, determining the meaning ourselves. I return to the ordinary reader of the Facebook post. Such a reader does not splice the post into separate clauses, much less isolate individual words and contemplate their possible significance. Knowing that the author was alive, he or she would unquestionably have interpreted the post as meaning that Mr Stocker had grasped his wife by the throat and applied force to her neck rather than that he had tried deliberately to kill her. Ironically, perhaps, this conclusion is reinforced by the consideration that only one meaning is to be attributed to the statement. Taking a broad, overarching view, and keeping in mind that only one meaning could be chosen, the choice to be made between the meaning of the words being that Mr Stocker grasped his wife by the neck or that he tried to kill her is, in my opinion, a clear one. If Mrs Stocker had meant to convey that her husband had attempted to kill her, why would she not say so explicitly? And, given that she made no such allegation, what would the ordinary reasonable reader, the casual viewer of this Facebook post, think that it meant? In my view, giving due consideration to the context in which the message was posted, the interpretation that Mr Stocker had grasped his wife by the neck is the obvious, indeed the inescapable, choice of meaning. I emphasise again that it is a legal error on the part of the judge that has opened the door to a redetermination of the meaning of Mrs Stockers words. This is not a case of the appellate court giving precedence to its view of meaning over that legitimately reached by the judge. To the contrary, it is the courts recognition that the meaning determined by the judge was reached via a route which was impermissible and having then to confront the question what meaning should properly be attributed to the relevant words. It is nevertheless appropriate to say something generally about the role of the appellate court in appeals concerning the meaning of avowedly defamatory words chosen by a trial judge. The role of the appellate court The question of when it was appropriate for an appellate court to substitute its view for that of a trial judge on the meaning of a claimed defamatory statement was addressed at some length in Bukovsky. At para 30 Simon LJ set out the competing contentions of counsel as to how this issue should be approached: [Counsel for the appellant] submitted that the relevant test on an appeal on meaning was whether the decision of the lower court was wrong: see CPR rule 52.11(3)(a), now CPR rule 52.21(3)(a). In contrast, [counsel for the respondent] submitted that this court should only reject the meaning found by the judge if it was clear that some other meaning applied. A passage in Duncan & Neill at para 33.03 describes both arguments in relation to the determination of meaning (a different approach is adopted in a determination made under paragraph 4 of CPR Practice Direction 53 that a statement is capable or incapable of bearing a particular meaning). I have added the letters A and B to para 33.03 so as to distinguish the two approaches: [A] A determination of the actual meaning of a statement is a determination of fact that an appeal court is bound to overturn if the judges determination was wrong. Since determination of meaning is often based on the consideration of a single document, an appellate court, it might be said, is as well placed as the first instance judge to decide the issue and should simply substitute its own view if it disagrees with the judge. [B] On the other hand, it might be said, determination of meaning is nevertheless an exercise that involves the evaluation and weighing of various parts of a statement, such that an appeal court should normally accord a degree of deference to the first instance judge and interfere only when quite satisfied that a judges determination of meaning was wrong and that some other meaning clearly applied. It appears that this more deferential approach is the one likely to be adopted. At para 31, Simon LJ observed that proposition B had been supported by a number of judgments of the Court of Appeal, including that of Sir Thomas Bingham MR in Skuse v Granada Television Ltd [1996] MLR 278, 287, where he said: The Court of Appeal should be slow to differ from any conclusion of fact reached by a trial judge. Plainly this principle is less compelling where his conclusion is not based on his assessment of the reliability of witnesses or on the substance of their oral evidence and where the material before the appellate court is exactly the same as was before him. But even so we should not disturb his finding unless we are quite satisfied he was wrong. (Emphasis added) As Simon LJ noted, however, when the Court of Appeal came to state its conclusion in Skuse, it merely said that it was satisfied that the natural and ordinary meaning which the judge gave to the material complained of was wrong. The satisfied/quite satisfied dichotomy featured again in Cruddas v Calvert [2013] EWCA Civ 748; [2014] EMLR 5, para 18 Longmore LJ summarised the claimants argument thus: [Counsel for the claimants] relied heavily on a supposed principle that the meaning of words was a jury question (and thus a question of fact) and that the judge was the best person qualified to reach the right conclusion which should not be second guessed by this court. He then referred to Skuse v Granada Television Ltd and to Cammish v Hughes [2012] EWCA Civ 1655; [2013] EMLR 13, where Arden LJ had said at para 31: As to the test that this court should apply, although this court has the same documents as were available to the judge, and the meaning depends on documents, we apply the dictum of Sir Thomas Bingham MR, [in Skuse]. The determination of meaning does not depend solely on the documents, but on an evaluation of those words in their context. In those circumstances, we consider that we should not depart from the judges meaning unless it is clear that some other meaning applies. (Emphasis added) Longmore LJ in Cruddas acknowledged the force of the submission that the Court of Appeal should not second guess the judge and said at para 19: 19. There is, of course, considerable force in this argument. On the other hand, imputations of criminal conduct are extremely serious and, if an appellate court thinks that an article just does not bear that imputation, it should say so. It is an important aspect of the law of libel that it should be open to a defendant to justify a lesser defamatory meaning than that alleged by a claimant if that is the right meaning to be given to the article. He concluded by saying that if, in order to come within Sir Thomas Binghams eighth principle in the Skuse case, he had to, he would say that he was not merely satisfied but quite satisfied. For my part, the difference in this context between being satisfied and being quite satisfied, if it can be discerned at all, is so ephemeral, so elusive a concept as to be of scant utility. Ultimately, the court in Bukovsky elected to steer a middle course between what Simon LJ had described as options A and B. At para 39, Simon LJ said: It seems to me that the better approach is for this court to adopt a position somewhere between Duncan & Neills propositions A and B. It should proceed cautiously before substituting its own views on meaning and only do so when satisfied that the judge is wrong, not least because meaning is very often a matter of impression, because experienced defamation judges are well practised at applying the relevant tests for determining meaning and because it is plainly undesirable for the Court of Appeal to approach the issue on appeal simply on the basis that they might have formed a different view from the judge. Of course, a reviewing court should be slow to disturb a finding of a trial judge as to the meaning of a claimed defamatory statement. This is mainly because it is a finding of fact, whereas the construction of a written contract is a question of law. It is well settled, outside the field of defamation, that an appellate court will not interfere with a finding of fact by a first instance judge merely because it takes a different view of the matter. The degree of restraint which the appellate court will exercise will depend upon whether the judge had the advantage of seeing and hearing the witnesses, whether the finding is an inference based upon the review of a large mass of primary factual material, and whether the finding is in the nature of an evaluation involving mixed fact and law. The following passage from the judgment of Lord Reed in McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477, paras 3 4 sufficiently covers the ground: 3. The reasons justifying that approach are not limited to the fact, emphasised in Clarkes case and Thomas v Thomas, that the trial judge is in a privileged position to assess the credibility of witnesses evidence. Other relevant considerations were explained by the United States Supreme Court in Anderson v City of Bessemer (1985) 470 US 564, 574 575: The rationale for deference to the original finder of fact is not limited to the superiority of the trial judges position to make determinations of credibility. The trial judges major role is the determination of fact, and with experience in fulfilling that role comes expertise. Duplication of the trial judges efforts in the court of appeals would very likely contribute only negligibly to the accuracy of fact determination at a huge cost in diversion of judicial resources. In addition, the parties to a case on appeal have already been forced to concentrate their energies and resources on persuading the trial judge that their account of the facts is the correct one; requiring them to persuade three more judges at the appellate level is requiring too much. As the court has stated in a different context, the trial on the merits should be the main event rather than a try out on the road For these reasons, review of factual findings under the clearly erroneous standard with its deference to the trier of fact is the rule, not the exception. 4. Furthermore, as was stated in observations adopted by the majority of the Canadian Supreme Court in Housen v Nikolaisen [2002] 2 SCR 235, para 14: The trial judge has sat through the entire case and his ultimate judgment reflects this total familiarity with the evidence. The insight gained by the trial judge who has lived with the case for several days, weeks or even months may be far deeper than that of the Court of Appeal whose view of the case is much more limited and narrow, often being shaped and distorted by the various orders or rulings being challenged. As to whether the appellate task needs to be described as one requiring caution, as Simon LJ suggested, I am doubtful. I would prefer to say that it calls for disciplined restraint. Certainly, the trial judges conclusion should not be lightly set aside but if an appellate court considers that the meaning that he has given to the statement was outside the range of reasonably available alternatives, it should not be deterred from so saying by the use of epithets such as plainly or quite satisfied. If it was vitiated by an error of law then the appellate court will have to choose between remitting the matter or, more usually in this context, determining the meaning afresh. But if the appellate court would just prefer a different meaning within a reasonably available range, then it should not interfere. This discussion is academic in the present case for I am of the view that Mitting Js use of the dictionary definitions to confine the possible meanings of the Facebook post involved an error of law and, on that account the Court of Appeal needed to approach the question of meaning afresh. Since it did not do so, that task falls to this court, with the consequence which I have described. Justification In light of my conclusion as to the correct meaning to be given to the words, tried to strangle me, section 5 of the Defamation Act 1952 must occupy centre stage. It is beyond dispute that Mr Stocker grasped his wife by the throat so tightly as to leave red marks on her neck visible to police officers two hours after the attack on her took place. It is not disputed that he breached a non molestation order. Nor has it been asserted that he did not utter threats to Mrs Stocker. Many would consider these to be sufficient to establish that he was a dangerous and disreputable man, which is the justification which Mrs Stocker sought to establish. Mitting J considered that the meaning of the statement that the claimant was arrested on numerous occasions, in the context of the other statements, was that he represented a danger to any woman with whom he might live. I see no warrant for adding that dimension to the actual words used by Mrs Stocker in her various Facebook postings. Even if all her allegations were considered not to have been established to the letter, there is more than enough to satisfy the provision in section 5 of the 1952 Act that her defence of justification should not fail by reason only that the truth of every charge is not proved, having regard to the truth of what has been proved. Conclusion I would allow the appeal, and subject to any submissions which the parties might wish to make, order that the costs of the appeal and the hearings before the lower courts be borne by the respondent.
UK-Abs
Nicola Stocker and Ronald Stocker were husband and wife. Their marriage ended in 2010. Subsequently, Mr Stocker formed a relationship with Ms Bligh. On 23 December 2012, an exchange took place between Mrs Stocker and Ms Bligh on Facebook. In this exchange, Mrs Stocker told Ms Bligh that Mr Stocker had tried to strangle her. Mrs Stocker also said that Mr Stocker had been removed from their home following a number of threats that he had made; that there were some gun issues; and that the police felt that he had broken the terms of a non molestation order. Mr Stocker brought defamation proceedings against Mrs Stocker. He claimed that the meaning of the words tried to strangle me were that he had tried to kill her. Mrs Stocker denied that the words bore that meaning. She claimed that the words would be understood to mean that Mr Stocker had grasped her by the neck and inhibited her breathing so as to put her in fear of being killed. At the start of the hearing, Mr Justice Mitting suggested that the parties should refer to the Oxford English Dictionary. This provided two possible meanings for the verb strangle: (a) to kill by external compression of the throat, and (b) to constrict the neck or throat painfully. During the trial, Mitting J heard evidence from both parties. He accepted that police officers had seen red marks on Mrs Stockers neck two hours after the incident and decided that: The most likely explanation about what happened is that [Mr Stocker] did in temper attempt to silence [Mrs Stocker] forcibly by placing one hand on her mouth and the other on her upper neck under her chin to hold her head still. His intention was to silence, not to kill. In his judgment, Mitting J referred to the dictionary definitions and said that if Mrs Stocker had used the phrase he strangled me, an ordinary reader would have understood her to mean strangle in the sense of a painful construction of the neck. The judge considered, however, that since Mr Stocker had succeeded in painfully constricting Mrs Stockers neck the phrase tried to strangle could not refer to strangle in that sense. He therefore concluded that the phrase tried to strangle meant that Mr Stocker had attempted to kill Mrs Stocker. Mrs Stockers defence of justification was not accepted. The Court of Appeal stated that use of dictionaries does not form part of the process of determining the natural and ordinary meaning of words. It nevertheless considered that no harm had been done in this case as Mitting J had only used the dictionary definitions as a check. It therefore dismissed Mrs Stockers appeal. The Supreme Court unanimously allows Mrs Stockers appeal. It holds that Mitting J erred in law by using dictionary definitions as the starting point of his analysis of meaning and in subsequently failing properly to take into account the context of the Facebook post. Lord Kerr writes the judgment, with which all members of the Court agree. Mitting Js approach produces an obviously anomalous result in that the phrase he strangled me on his analysis entails a less serious accusation than the phrase he tried to strangle me. This is the consequence of confining the meaning of the words exclusively to two dictionary definitions [16 17]. Contrary to the view of the Court of Appeal, Mitting J was not using the dictionary definitions as a check. He referred to these before hearing any argument about meaning and did not use the word check in his judgment or in his exchanges with the lawyers in the case. Instead, Mitting J regarded these definitions as the only possible meanings which he could consider or, at the very least, as the starting point for his analysis [23 24]. Where a statement has more than one plausible meaning, the question of whether defamation has occurred can only be answered by deciding which single meaning should be given to the statement [34]. The primary role of the court is to focus on how the ordinary reasonable reader would construe the words. To fulfil this obligation, the court should be particularly conscious of the context in which a statement is made [38]. The hypothetical reader should be considered to be a person who would read the publication [39]. The fact that this was a Facebook post is critical and it was necessary for the judge to keep in mind the way in which such postings are made and read [41]. It is unwise to search a Facebook post for its theoretical or logically deducible meaning. The search for meaning should reflect that this is a casual medium in the nature of a conversation rather than a carefully chosen expression [43]. People scroll through Facebook quickly and their reaction to posts is impressionistic and fleeting [44]. Through relying on the dictionary definitions, Mitting J fell into legal error. As a consequence of this, he failed to conduct a realistic exploration of how an ordinary reader of the Facebook post would have understood it [47]. As a result of this error of law, the decision on meaning cannot stand and it is appropriate for the Supreme Court to determine the meaning of the post itself [48]. An ordinary reader of the post would have interpreted the post as meaning that Mr Stocker had grasped Mrs Stocker by the throat and applied force to her neck [49]. In light of this, the defence of justification should succeed. Even if Mrs Stockers allegations were considered not to have been established to the letter, there is more than enough to demonstrate that that defence should not fail by reason only that the truth of every charge was not proved [61].
This appeal requires the court again to consider one of the most controversial questions which the law of human rights can generate. It relates to the ability of the UK to deport a foreign citizen who, while lawfully resident here, has committed a string of serious crimes. The reaction of many British citizens is likely to be: We dont want this man here. His response is: But I need to remain here. In this case he no longer casts his response under article 8 of the European Convention on Human Rights (the Convention) by reference to respect for his private and family life. Instead he wishes to cast it under article 3 of the Convention which provides: No one shall be subjected to torture or to inhuman or degrading treatment or punishment. For the appellant is HIV positive. He is a citizen of Zimbabwe and his contention, which for reasons which I will explain has not yet been fully developed still less tested, is that, if deported to Zimbabwe, he would be unable to access the medication which, here in the UK, prevents his relapse into full blown AIDS. So considerations of public policy on the one hand and of what is said to be private existential need on the other clash like warriors; and upon the courts lies a heavy burden in determining which should, under the law, prevail. Reliance by the appellant on rights under article 3 has arisen at a late stage in these proceedings, which encompass a challenge on his part, so far entirely unsuccessful, to a decision by the Secretary of State to refuse to revoke an order for his deportation. At the first and second stages of them, namely in his successive appeals to the Immigration and Asylum Chamber of the First tier Tribunal and then of the Upper Tribunal, the appellant relied only on rights under article 8. Before those tribunals he conceded that, in the light of the decision of the House of Lords in N v Secretary of State for the Home Department (Terrence Higgins Trust intervening) [2005] UKHL 31, [2005] 2 AC 296, his appeal could not succeed by reference to article 3. But, before the appellants further appeal to the Court of Appeal was heard, the Grand Chamber of the European Court of Human Rights (the ECtHR) delivered its judgment in Paposhvili v Belgium [2017] Imm AR 867. On advice, the appellant then formed the view that in that judgment the Grand Chamber had given an expanded interpretation of article 3 in the context of a situation such as his own; and so he decided to abandon his reliance on article 8 and to seek to obtain an order for a rehearing before one or other of the tribunals at which he could present a case under article 3. He recognised, however, that, even if, as a result of the judgment in the Paposhvili case, the decision of the House of Lords in the N case, cited in para 2 above, about the breadth of that article had become out of step with the jurisprudence of the ECtHR, that decision remained binding on the Court of Appeal: Kay v Lambeth London Borough Council [2006] UKHL 10, [2006] 2 AC 465. Accordingly he conceded before the Court of Appeal that, at that level, his appeal, newly formulated by reference to article 3, fell to be dismissed. On 30 January 2018 the Court of Appeal duly dismissed his appeal, together with another appeal against removal brought by a Jordanian citizen suffering from cancer: [2018] EWCA Civ 64, [2018] 1 WLR 2933. It is against its order that today the appellant appeals; and he asks us to do what he could not ask the Court of Appeal to do, namely to depart from the decision in the N case by reference to the judgment in the Paposhvili case and to remit his application for rehearing by reference to article 3. In his judgment in the Court of Appeal, with which Patten and Hickinbottom LJJ agreed, Sales LJ, as he then was, not only explained why that court was required to dismiss the appeals. He also offered an interpretation of the effect of the judgment of the Grand Chamber in the Paposhvili case which the Secretary of State commends to us as correct but with which the appellant, supported by the AIRE Centre which intervenes in the appeal, strongly takes issue. It goes without saying that the interpretation offered by Sales LJ deserves considerable respect; inevitably, however, it also demands close scrutiny. Background The appellant was born in Zimbabwe in 1987 and is now 33 years old. He lived there until 2000 when he came to the UK, where his mother was already living. He has lived here ever since. In 2004 he and his mother were granted indefinite leave to remain in the UK. Early in 2005, when aged almost 18, the appellant sustained his first criminal conviction. It was for battery. During the next two years he sustained further convictions, including for assault, for receiving stolen goods and, twice, for possession of sharp blades in public places. In November 2006, soon after a son was born to the appellant and his partner (to whom he has since become married), the Secretary of State issued a decision to deport him. In January 2007 his appeal against the decision was dismissed so, in March 2007, the order for his deportation was made. He was detained pending deportation but in 2008 he was released on bail. In May 2009 the appellant was convicted of further offences. The reason why he had not by then been deported is unclear. The further offences were very serious: they were for possession of a firearm and ammunition, for which he was sentenced to seven years, and for possession of heroin with intent to supply, for which he was sentenced to two years, to run consecutively. In 2012, while he remained in prison, the appellant, by solicitors, applied to the Secretary of State to revoke the order for deportation made in March 2007 by reference to his rights under article 8 of the Convention. In due course he forwarded to the Secretary of State a letter about his medical condition. He contended that it was relevant to his right to respect for his private and family life. The letter had been written by a nurse in the sexual health clinic of a hospital. She said that he had been diagnosed as HIV positive in 2003; that the diagnosis had not given rise to concern until 2011, when his CD4 blood count had begun to fall; that in 2012 he had undertaken antiretroviral therapy (ART) but initially with a drug which had given rise to intolerable side effects, later identified as vomiting, stomach cramps, dizziness and night sweats; that the clinic had then prescribed a different drug for him, namely Eviplera, which, during the year prior to the date of the letter, had not given rise to significant side effects and which had enabled his CD4 blood count to increase and his HIV viral load to become undetectable; that his treatment and the monitoring of his condition needed to continue; that it was doubtful whether he could access ART in Zimbabwe, without which his CD4 blood count would fall again; and that in that event he would be prey to opportunistic infections which, if untreated, would lead to his death. In 2013 the Secretary of State, by letter, announced her refusal to revoke the deportation order made against the appellant. She duly determined it by reference to his claim under article 8. But, having considered the evidence referable to his medical condition, including the letter from the nurse and a country information report that ART was in principle available in Zimbabwe, she observed in passing: It is not considered for the reasons given above that you have shown that your case meets the high threshold for article 3 to be engaged. Later in 2013 the appellant was released from prison on licence. Shortly afterwards, however, he was found guilty of bringing cannabis into the prison in the course of a visit. He was recalled to prison and ordered to serve an additional six months. He was therefore again in prison at the time of the hearing before Judge Cameron in the First tier Tribunal late in 2014. At that hearing the appellant was represented by counsel. She presented his case under article 8 by reference to a wide variety of factors, including his relationship with his wife and son and also his medical condition. In the latter respect counsel relied not only on the letter from the nurse but also on a more recent letter, dated 14 August 2014, from a consultant physician in the same clinic who had been treating him for four years. He reported that the treatment of the appellant with Eviplera was continuing satisfactorily. He added: However, there is no cure for HIV at present. It is vital for individuals on antiretroviral therapy to be maintained on lifelong HIV treatment. Should this gentleman stop his treatment or be denied access to his treatment, his HIV viral load will rise, his CD4 count will decrease and he will be at risk of developing opportunistic infections, opportunistic cancers and premature death. It is vital for individuals living with HIV to maintain regular specialist follow up, and access to effective antiretroviral therapy. Counsel pointed out to Judge Cameron that, in the country information report referable to Zimbabwe, the list of ART medications available there did not include Eviplera. In the course of his Determination Judge Cameron wrote, at paras 101 102: [Counsel for the appellant] specifically indicated that article 3 was not being raised. However for the avoidance of doubt notwithstanding that the appellant is suffering from HIV and also depression, I am not satisfied that he is currently at a critical stage of the illness nor that treatment could not be available in Zimbabwe on his return albeit that it does not appear the exact medication he is currently taking is available There is nothing on the papers before me which would indicate that the appellants current medical or mental health condition would be sufficient to reach the high threshold necessary to engage [article] 3. Jurisprudence It is necessary to chart the development of the jurisprudence in the ECtHR and in our domestic courts in relation to claims under article 3 to resist return by reference to ill health. There are six main authorities. The first is the decision of the ECtHR in D v United Kingdom (1997) 24 EHRR 423. The applicant was a citizen of St Kitts. He was convicted of attempting to smuggle cocaine into the UK. Following his release from prison, the Secretary of State sought to deport him. But he was suffering from AIDS. It was in an advanced stage. His CD4 cell count, which should have been more than 500, was below 10 so he was vulnerable to a wide range of infections. In June 1996 his life expectancy was assessed as no more than a year. By the time of the hearing in Strasbourg in February 1997, he was in hospital and his life appeared to be drawing to a close. There was no drug treatment for AIDS available on St Kitts. The ECtHR held that his deportation would violate article 3. The court referred in para 51 to the advanced state of his terminal illness; in para 52 to the dramatic consequences which would attend the abrupt withdrawal of the regime of medication and care for him in the UK and his removal to an island where apparently no care was available for him; and in para 54 to the exceptional circumstances and the compelling humanitarian considerations in his case. In summary the applicant in the D case was about to die; and the essence of the decision was not the absence of treatment on St Kitts but the inhumanity of, in effect, pulling a man off his deathbed. The second is the decision of the House of Lords in the N case, cited in para 2 above. The appellant was a citizen of Uganda, aged 30. She came to the UK and claimed asylum. Her claim was rejected and the Secretary of State sought to return her to Uganda. But she was HIV positive and had suffered AIDS defining illnesses. Her CD4 cell count had fallen to 10; but over the following years the administration to her in the UK of ART and of chemotherapy had enabled it to recover to 414 and had stabilised her condition. If the administration to her of ART and the monitoring of her were to continue, as it would in the UK, she would be likely to live for decades. But her ability to access the appropriate medication and facilities in Uganda was problematic; and the prospect of her survival there for more than two years was bleak. In the N case the House of Lords examined the determination in the ECtHR during the eight years following the D case of claims under article 3 to resist removal from contracting states by reference to ill health: see in particular the speech of Lord Hope of Craighead in paras 37 to 50. Lady Hale summarised their effect in para 68: As Lord Hopes analysis shows, the later cases have made it clear that it is the patients present medical condition which is the crucial factor. The difficulty is in understanding where conditions in the receiving country fit into the analysis. In the event, however, Lady Hale expressed her conclusion in terms which did make limited allowance, perhaps only a token allowance, for conditions in the receiving state. It was as follows: 69. In my view, therefore, the test, in this sort of case, is whether the applicants illness has reached such a critical stage (ie he is dying) that it would be inhuman treatment to deprive him of the care which he is currently receiving and send him home to an early death unless there is care available there to enable him to meet that fate with dignity. It was the unanimous conclusion of the House of Lords in the N case that, in the light of her stable condition, the appellants claim under article 3 had to be dismissed. It is clear that all members of the appellate committee viewed this result with discomfort: see, for example, the speech of Lady Hale at paras 67 and 71. Some of them also expressed unease at the distinction which the jurisprudence of the ECtHR had drawn. Lord Brown of Eaton under Heywood said in para 91: It is perhaps not, however, self evidently more inhuman to deport someone who is facing imminent death than someone whose life expectancy would thereby be reduced from decades to a year or so. And see, to similar effect, the speech of Lord Nicholls of Birkenhead at para 13. But it was Lord Brown himself who drew a significant distinction between the D case and the case of N then before the committee. He pointed out, in paras 88 and 93, that the appellant in the N case contended for an interpretation of article 3 which would cast upon the UK a positive obligation, namely to continue to treat her indefinitely; whereas, in the light of his imminent death, the applicant in the D case had secured an interpretation which had cast upon the UK only a negative obligation, namely not to deport him. Lord Brown also adverted in para 89 to the far reaching consequences for contracting states if they were unable to remove foreign citizens with no other right to remain there just because treatment for their life threatening conditions in their country of origin would be far less effective than that currently administered. The third is the decision of the Grand Chamber of the ECtHR in N v United Kingdom (2008) 47 EHRR 39. The appellant in the N case in the House of Lords had become the applicant in the N case in the ECtHR. Again she relied on article 3. But, by a majority, her application was rejected. The Grand Chamber observed in para 34 that, since the judgment in the D case 11 years previously, the court had never held that removal of an alien would violate the article on grounds of ill health; in para 42 that in the D case the applicant had appeared to be close to death and that a reduction in life expectancy in the event of removal had never in itself been held to amount to a violation of article 3; in para 43 that, although there might be other very exceptional cases in which the humanitarian considerations are equally compelling, the high threshold for violation set in the D case should be maintained; and in paras 44 and 45, much as Lord Brown had suggested, that an obligation to provide free and unlimited treatment for a serious condition, if of a standard unmet in the applicants country of origin, would place too great a burden on contracting states. In para O I8 of the dissenting Opinion the relevance of this last consideration to a claim under article 3 was challenged in trenchant terms. The fourth is the decision of the ECtHR in Yoh Ekale Mwanje v Belgium (2013) 56 EHRR 35. The applicant was a citizen of Cameroon. Belgium sought to return her there. But she was HIV positive. The administration to her in Belgium of ART had stabilised her condition. The seven members of the court held that her return to Cameroon would not violate her rights under article 3. It observed in para 80 that the case was indistinguishable from the decision of the Grand Chamber in the N case; in para 81 that it was improbable that the applicant would obtain the necessary medication in Cameroon and that, without it, her survival in the short or medium term (later described as for more than a year) was in doubt; but in para 83 that the chief consideration was the applicants condition prior to removal, which was stable. Nevertheless six of the seven judges added a concurring opinion which, at para OI 6, concluded as follows: We believe however that such an extreme threshold of seriousness to be nearing death is hardly consistent with the letter and spirit of article 3, an absolute right which is among the most fundamental rights of the Convention and which concerns an individuals integrity and dignity. In this regard, the difference between a person on his or her deathbed and a person who everyone acknowledges will die very shortly would appear to us to be minimal in terms of humanity. We hope that the Court may one day review its case law in this respect. The fifth is the decision of the Grand Chamber of the ECtHR in the Paposhvili case cited in para 3 above. The applicant was a citizen of Georgia who had lived in Belgium for 18 years with his wife and family. His application for asylum was rejected. He was convicted of various criminal offences, including robbery and, ultimately, involvement in an extortion racket for which he was sentenced to imprisonment for three years. Belgium resolved to deport him to Georgia. He sought to resist deportation by reference to his rights under article 8 of the Convention but also, in particular, under article 3 in light of his grave ill health. His application to the ECtHR was first considered by its Fifth Section, which held that his deportation would not violate his Convention rights. But the Grand Chamber accepted referral of his application. During the period when, following the hearing, the Grand Chamber was deliberating upon the application, the applicant died. Nevertheless it decided to proceed to judgment, which it delivered in December 2016. In the event the Grand Chamber held that, if carried out at the stage proposed by Belgium, his deportation would have violated his rights under article 3 and, in a section of the judgment which it is unnecessary to address, also under article 8 of the Convention. The principal feature of the applicants ill health in the Paposhvili case was chronic lymphocytic leukaemia, from which he had suffered for ten years. He had undergone extensive courses of chemotherapy but after five years his level of leukaemia had risen from Binet stage B to Binet stage C and in 2014 a different course of treatment had been considered necessary. Short term treatment with the medication Ibrutinib was prescribed for the applicant, in a dose costing about 6,000 per month; and the plan, in the event never implemented, was that the medication might swiftly improve his condition to the point where he could receive a donor blood stem cell transplant, at a cost of about 150,000. Shortly before the hearing in the Grand Chamber the applicant filed an up to date report by his haematology specialist. He explained that the Ibrutinib had stabilised the applicants condition; that, were it discontinued, he would be likely to die within six months; that the proposed donor transplant, albeit risky, offered the only prospect of a cure; and that neither Ibrutinib nor a transplant would be available to him in Georgia. The specialist also referred to a variety of collateral conditions from which the applicant suffered and which rendered treatment for his leukaemia even more difficult, including pulmonary tuberculosis, hepatitis C and a recent stroke which had permanently paralysed his left arm. Following a careful analysis of the decision in the D case and of its own decision in the N case, the Grand Chamber in the Paposhvili case expressed the view in para 182 that the approach hitherto adopted should be clarified. The Convention is a living instrument and when, however appropriately, the ECtHR charts its growth, it may generate confusion for it to claim to be providing only clarification. The court proceeded as follows: 183. The Court considers that the other very exceptional cases within the meaning of the judgment in N v The United Kingdom (para 43) which may raise an issue under article 3 should be understood to refer to situations involving the removal of a seriously ill person in which substantial grounds have been shown for believing that he or she, although not at imminent risk of dying, would face a real risk, on account of the absence of appropriate treatment in the receiving country or the lack of access to such treatment, of being exposed to a serious, rapid and irreversible decline in his or her state of health resulting in intense suffering or to a significant reduction in life expectancy. The Court points out that these situations correspond to a high threshold for the application of article 3 of the Convention in cases concerning the removal of aliens suffering from serious illness. This important exposition will require study in paras 27 to 31 below; but, again, it is hard to think that it is encompassed by the reference in the N case to other very exceptional cases because any application of the criterion in the quoted passage would be likely to have led to a contrary conclusion in the N case itself. It is also convenient at this stage to address the words although not at imminent risk of dying in the first long sentence of the paragraph. As was agreed by counsel, the words refer to the imminent risk of death in the returning state. So the Grand Chamber was thereby explaining that, in cases of resistance to return by reference to ill health, article 3 might extend to a situation other than that exemplified by the D case, cited in para 14 above, in which there was an imminent risk of death in the returning state. Its new focus on the existence and accessibility of appropriate treatment in the receiving state led the Grand Chamber in the Paposhvili case to make significant pronouncements about the procedural requirements of article 3 in that regard. It held in para 186 that it was for applicants to adduce before the returning (a) state evidence capable of demonstrating that there are substantial grounds for believing that, if removed, they would be exposed to a real risk of subjection to treatment contrary to article 3; (b) in para 187 that, where such evidence was adduced in support of an application under article 3, it was for the returning state to dispel any doubts raised by it; to subject the alleged risk to close scrutiny; and to address reports of reputable organisations about treatment in the receiving state; (c) in para 189 that the returning state had to verify on a case by case basis whether the care generally available in the receiving state was in practice sufficient to prevent the applicants exposure to treatment contrary to article 3; in para 190 that the returning state also had to consider the accessibility (d) of the treatment to the particular applicant, including by reference to its cost if any, to the existence of a family network and to its geographical location; and (e) in para 191 that if, following examination of the relevant information, serious doubts continued to surround the impact of removal, the returning state had to obtain an individual assurance from the receiving state that appropriate treatment would be available and accessible to the applicant. These procedural obligations on returning states, at first sight very onerous, will require study in paras 32 and 33 below. It was the failure of Belgium to discharge the suggested procedural obligations which precipitated the Grand Chambers conclusion in the Paposhvili case that deportation of the applicant to Georgia would have violated his rights under article 3. It seems from para 197 that it treated the doctors evidence as capable of demonstrating that there [were] substantial grounds for believing that deportation would expose him to a real risk of treatment contrary to article 3. Belgiums procedural obligations were therefore engaged but not discharged: see para 205. The sixth is the decision of the Fourth Section of the ECtHR in Savran v Denmark [2019] ECHR 651, given as recently as 1 October 2019. The applicant was a Turkish citizen who, in 1991 when aged six, had come with his family to live in Denmark and who had remained living there. In 2001 he was convicted of robbery and in 2008 he was convicted of acting with others in an assault which had led to the victims death. It seems that, by the time of his conviction (in fact reconviction) for the latter offence, he had been diagnosed with paranoid schizophrenia and so he was sentenced to committal to psychiatric care, to be followed by expulsion to Turkey. In 2014 a City Court in Denmark varied the sentence so as to permit the applicant to receive his psychiatric treatment as an outpatient. But the main issue before that court was whether the order for his expulsion should be revoked. In this regard the applicant relied not on his Convention rights but on a domestic statute which required its revocation if his state of health made expulsion of him conclusively inappropriate. The City Court revoked the order but the High Court reversed its decision, whereupon he applied to the ECtHR by reference to his rights under article 8 and in particular under article 3. In the Savran case the revocation proceedings in Denmark had been concluded prior to delivery by the Grand Chamber of its judgment in the Paposhvili case. But, as the Grand Chamber acknowledged, the Danish courts had considered in some detail the availability and accessibility of appropriate treatment for the applicant in Turkey, as later mandated for the purposes of article 3 by the judgment in the Paposhvili case. By that stage treatment of the applicant in Denmark took the form of the daily ingestion of Clozapine, which required monitoring in particular with blood tests, and of the fortnightly injection of Risperidone. There was evidence that both drugs were available in Turkey and could be supplied free of charge if appropriate. But his treating psychiatrist had also suggested to the Danish courts that other elements of the necessary treatment package were the presence of a regular contact person and a scheme for follow up and for his overall supervision, without which he would relapse and become dangerous; and, in deciding that on the present state of the evidence his removal to Turkey would violate his rights under article 3, the majority in the Fourth Section held in paras 63 to 65 that, crucially, there had been no evidence before the Danish courts about the accessibility of those elements. Of the seven judges in the ECtHR, three wrote a dissenting Opinion in which in para 9 they accused the majority of pushing the door into article 3 wide open in circumstances in which the Grand Chamber in the Paposhvili case had opened it only slightly; and in which in paras 11 to 14 they alleged that, had it applied what the minority described as the new criterion identified in para 183 of the judgment in the Paposhvili case by asking whether there was a real risk of the applicants exposure to a serious, rapid and irreversible decline in his health resulting in intense suffering, the majority could not have held that his rights under article 3 would be violated. In January 2020 the Grand Chamber accepted a request by Denmark for referral to it of the Savran case; and we are told that the UK has recently applied for leave to intervene in the proceedings. This court has not been invited to postpone delivery of its judgment until after the decision of the Grand Chamber in the Savran case; and it means no disrespect to the Grand Chamber by not postponing it. The Grand Chambers decision cannot be imminent; and, so this court is told, the determination of other urgent appeals to the tribunals awaits its judgment on this appeal. Analysis We need to analyse the effect of the decision in the Paposhvili case and, first, to survey the analysis of its effect conducted by the Court of Appeal. It was that courts view, at para 39, that the decision reflected only a very modest extension of the protection against return given by article 3 in cases of ill health. The Court of Appeal fastened in para 39(iv) upon the Grand Chambers questionable choice of language that the previous approach to such cases needed only to be clarified. And it buttressed its restrictive view of the effect of the decision by claiming in para 39(ii) that the Grand Chamber had noted that there had been no violation of article 3 in the N case and in para 40 that the Grand Chamber had plainly regarded that case as rightly decided. But the careful reader of paras 178 to 183 of the judgment in the Paposhvili case may find it hard to agree with the Court of Appeal in this respect. Of course the Grand Chamber noted that it had been held in the N case there had been no violation of article 3; but there is no express agreement on its part with that conclusion and, subject to the precise meaning of the new criterion in para 183 of the judgment (to which we should now turn), its application to the facts of the N case would suggest a violation. The Court of Appeal interpreted the new criterion in para 183 of the judgment in the Paposhvili case, at para 38 as follows: This means cases where the applicant faces a real risk of rapidly experiencing intense suffering (ie to the article 3 standard) in the receiving state because of their illness and the non availability there of treatment which is available to them in the removing state or faces a real risk of death within a short time in the receiving state for the same reason. In other words, the boundary of article 3 protection has been shifted from being defined by imminence of death in the removing state (even with the treatment available there) to being defined by the imminence (ie likely rapid experience) of intense suffering or death in the receiving state, which may only occur because of the non availability in that state of the treatment which had previously been available in the removing state. The criticism of the above passage made by the appellant and by the AIRE Centre largely relates to the second sentence. In relation, however, to the first sentence, they suggest that, irrespective of the precise meaning, in context, of a significant reduction in life expectancy in para 183 (as to which see para 31 below), the paraphrase of death within a short time favoured by the Court of Appeal may not be entirely accurate. In relation to the second sentence, their criticism is directed to the words the imminence (ie likely rapid experience) of death in the receiving state attributable to the non availability of treatment. They point out that the Grand Chamber was addressing exposure to a serious, rapid and irreversible decline in his or her state of health resulting in intense suffering or to a significant reduction in life expectancy (italics supplied); and they contend that the Court of Appeal has misinterpreted those words so as to refer to a serious, rapid and irreversible decline in his or her state of health resulting in intense suffering or in a significant reduction in life expectancy. The Secretary of State, for her part, rejects their criticism as narrow and syntactical, apt perhaps to the construction of a statute but inapt to the present context in which the meaning of para 183 should be informed by case law and realism. Her reference to case law turns out to be an indorsement of the questionable conclusion of the Court of Appeal that in the Paposhvili case the Grand Chamber approved its decision in the N case. What remains is her reference, rather undeveloped, to realism. There is, so I am driven to conclude, validity in the criticism of the Court of Appeals interpretation of the new criterion. In its first sentence the reference by the Grand Chamber to a significant reduction in life expectancy is interpreted as death within a short time. But then, in the second sentence, the interpretation develops into the imminence of death; and, as is correctly pointed out, this is achieved by attributing the words rapid decline to life expectancy when, as written, they apply only to intense suffering. The result is that in two sentences a significant reduction in life expectancy has become translated as the imminence of death. It is too much of a leap. It remains, however, to consider what the Grand Chamber did mean by its reference to a significant reduction in life expectancy in para 183 of its judgment in the Paposhvili case. Like the skin of a chameleon, the adjective takes a different colour so as to suit a different context. Here the general context is inhuman treatment; and the particular context is that the alternative to a significant reduction in life expectancy is a serious, rapid and irreversible decline in health resulting in intense suffering. From these contexts the adjective takes its colour. The word significant often means something less than the word substantial. In context, however, it must in my view mean substantial. Indeed, were a reduction in life expectancy to be less than substantial, it would not attain the minimum level of severity which article 3 requires. Surely the Court of Appeal was correct to suggest, albeit in words too extreme, that a reduction in life expectancy to death in the near future is more likely to be significant than any other reduction. But even a reduction to death in the near future might be significant for one person but not for another. Take a person aged 74, with an expectancy of life normal for that age. Were that persons expectancy be reduced to, say, two years, the reduction might well in this context not be significant. But compare that person with one aged 24 with an expectancy of life normal for that age. Were his or her expectancy to be reduced to two years, the reduction might well be significant. The Grand Chambers pronouncements in the Paposhvili case about the procedural requirements of article 3, summarised in para 23 above, can on no view be regarded as mere clarification of what the court had previously said; and we may expect that, when it gives judgment in the Savran case, the Grand Chamber will shed light on the extent of the requirements. Yet observations on them may even now be made with reasonable confidence. The basic principle is that, if you allege a breach of your rights, it is for you to establish it. But Convention proceedings do not in all cases lend themselves to a rigorous application of [that] principle : DH v Czech Republic (2008) 47 EHRR 3, para 179. It is clear that, in application to claims under article 3 to resist return by reference to ill health, the Grand Chamber has indeed modified that principle. The threshold, set out in para 23(a) above, is for the applicant to adduce evidence capable of demonstrating that there are substantial grounds for believing that article 3 would be violated. It may make formidable intellectual demands on decision makers who conclude that the evidence does not establish substantial grounds to have to proceed to consider whether nevertheless it is capable of demonstrating them. But, irrespective of the perhaps unnecessary complexity of the test, let no one imagine that it represents an undemanding threshold for an applicant to cross. For the requisite capacity of the evidence adduced by the applicant is to demonstrate substantial grounds for believing that it is a very exceptional case because of a real risk of subjection to inhuman treatment. All three parties accept that Sales LJ was correct, in para 16, to describe the threshold as an obligation on an applicant to raise a prima facie case of potential infringement of article 3. This means a case which, if not challenged or countered, would establish the infringement: see para 112 of a useful analysis in the Determination of the President of the Upper Tribunal and two of its senior judges in AXB v Secretary of State for the Home Department [2019] UKUT 00397 (IAC). Indeed, as the tribunal proceeded to explain in para 123, the arrangements in the UK are such that the decisions whether the applicant has adduced evidence to the requisite standard and, if so, whether it has been successfully countered fall to be taken initially by the Secretary of State and, in the event of an appeal, again by the First tier Tribunal. In the event that the applicant presents evidence to the standard addressed above, the returning state can seek to challenge or counter it in the manner helpfully outlined in the judgment in the Paposhvili case at paras 187 to 191 and summarised at para 23(b) to (e) above. The premise behind the guidance, surely reasonable, is that, while it is for the applicant to adduce evidence about his or her medical condition, current treatment (including the likely suitability of any other treatment) and the effect on him or her of inability to access it, the returning state is better able to collect evidence about the availability and accessibility of suitable treatment in the receiving state. What will most surprise the first time reader of the Grand Chambers judgment is the reference in para 187 to the suggested obligation on the returning state to dispel any doubts raised by the applicants evidence. But, when the reader reaches para 191 and notes the reference, in precisely the same context, to serious doubts, he will realise that any doubts in para 187 means any serious doubts. For proof, or in this case disproof, beyond all doubt is a concept rightly unknown to the Convention. This court is not actively invited to decline to adopt the exposition of the effect of article 3 in relation to claims to resist return by reference to ill health which the Grand Chamber conducted in the Paposhvili case. Although the Secretary of State commends the Court of Appeals unduly narrow interpretation of the Grand Chambers exposition, she makes no active submission that, in the event of a wider interpretation, we should decline to adopt it. Our refusal to follow a decision of the ECtHR, particularly of its Grand Chamber, is no longer regarded as, in effect, always inappropriate. But it remains, for well rehearsed reasons, inappropriate save in highly unusual circumstances such as were considered in R (Hallam) and R (Nealon) v Secretary of State for Justice (JUSTICE intervening) [2019] UKSC 2, [2020] AC 279. In any event, however, there is no question of our refusing to follow the decision in the Paposhvili case. For it was 15 years ago, in the N case cited at para 2 above, that the House of Lords expressed concern that the restriction of article 3 to early death only when in prospect in the returning state appeared illogical: see para 17 above. In the light of the decision in the Paposhvili case, it is from the decision of the House of Lords in the N case that we should today depart. Disposal As indicated above, the Secretary of State, the First tier Tribunal and the Upper Tribunal each specifically noted that the appellant was not making a claim under article 3. In the light of the decision of the House of Lords in the N case, no such claim could have prevailed, as, in passing, the Secretary of State and the First tier Tribunal each observed. By the time of the hearing in the Court of Appeal, however, the decision in the Paposhvili case had raised the prospect that we in this court might depart from the decision of the House of Lords in the N case. So the appellant began to express the wish to be allowed to cast his claim under article 3 instead of under article 8. He accepted, however, that such a claim could not succeed unless, on further appeal, he could persuade this court to depart from the decision in the N case. For that reason he did not, with whatever degree of difficulty at an appellate level, attempt to adduce before the Court of Appeal evidence in support of his proposed new claim under article 3. This, however, did not deter the Secretary of State from contending before the Court of Appeal, nor did it deter that court from accepting, that, even by reference to the decision in the Paposhvili case, the appellant would have no claim under article 3. For, from the evidence submitted by the appellant to the First tier Tribunal in support of his claim under article 8, the Secretary of State extracted the two medical reports summarised in paras 8 and 11 above; and she contended that they failed to cross the threshold required to be crossed by applicants pursuant to para 186 of the decision in the Paposhvili case, as set out in para 23(a) above. In the light of its erroneous opinion that the decision in the Paposhvili case required evidence of a real risk that either intense suffering or death would be imminent in the receiving state, it was not difficult for the Court of Appeal to conclude, in para 44, that the two medical reports were insufficient to cross that threshold. Apart from the fact that the Court of Appeals conclusion about the insufficiency of the reports was therefore, with respect, flawed, it is inappropriate to extract the medical reports from the other evidence submitted in furtherance of the claim under article 8 and to ask whether they cross the threshold now required of an applicant under article 3 pursuant to the decision in the Paposhvili case. The reports did not address that requirement, which did not exist when they were written. Indeed they were both written more than five years ago. So in my view this court should not address the argument presented to it by the appellant, and strongly disputed by the Secretary of State, namely that, upon application of this courts wider interpretation of the Grand Chambers decision, the reports suffice to cross the requisite threshold. The proper course is to allow the appeal and to remit the appellants proposed claim under article 3 to be heard, on up to date evidence properly directed to the Grand Chambers substantive and procedural requirements, by the Upper Tribunal and, if practicable, by a panel including its President.
UK-Abs
This appeal relates to the UKs ability to deport the appellant, a Zimbabwean citizen, who, while lawfully resident here, has committed serious crimes. He seeks to challenge the order for his deportation by reference to article 3 of the European Convention on Human Rights (the Convention), which provides: No one shall be subjected to torture or inhuman or degrading treatment or punishment. He is HIV positive and wishes to argue that if deported to Zimbabwe he would be unable to access the medication which he receives in the UK and which prevents his relapse into full blown AIDS. The appellant was born in Zimbabwe in 1987. He came to the UK in 2000 and was later granted indefinite leave to remain. He was convicted of battery and a deportation order was made against him. He was detained pending deportation but was released. He was then convicted of offences including possession of a firearm and ammunition and sentenced to further imprisonment. While in prison, he applied to the Secretary of State to revoke the deportation order. He invoked his right to respect for private and family life under article 8 of the Convention and argued that his medical condition was relevant. His evidence was as follows. He had been diagnosed as HIV positive. He had later undergone antiretroviral therapy (ART), initially with a drug that caused intolerable side effects but later with another drug, Eviplera, which had improved his condition without significant side effects. Whether he could access ART in Zimbabwe was doubtful; without it, he would be prey to infections which could lead to his death. After considering the evidence, the Secretary of State refused to revoke the order. The appellant appealed to the First tier Tribunal and then the Upper Tribunal, relying each time on article 8. He conceded that, in the light of the House of Lords decision in N v Secretary of State for the Home Department [2005] UKHL 31, [2005] 2 AC 296, his appeal could not succeed by reference to article 3. Before the hearing in his appeal to the Court of Appeal, the Grand Chamber of the European Court of Human Rights (the ECtHR) delivered its judgment in Paposhvili v Belgium [2017] Imm AR 867. The appellant formed the view that the judgment had expanded the scope of application of article 3 in cases like his and decided to seek a rehearing before a tribunal at which he could rely on it instead of article 8. He conceded in the Court of Appeal, however, that it was bound by the N case, even if that had become out of step with the ECtHRs case law as a result of Paposhvili. The Court of Appeal duly dismissed his appeal. He now appeals to the Supreme Court, asking it to depart from the N case by reference to Paposhvili and to remit his application for rehearing by reference to article 3. The Supreme Court unanimously allows the appeal. It remits the appellants claim under article 3 to be heard by the Upper Tribunal (and, if practicable, by a panel including its President) on up to date evidence properly directed to the substantive and procedural requirements set out by the Grand Chamber of the ECtHR. Lord Wilson gives the only judgment, with which the other Justices agree. In D v United Kingdom (1997) 24 EHRR 423, the ECtHR held that to remove a man who was on his deathbed to a state where no care was available for him would violate article 3; and it referred to the exceptional circumstances and compelling humanitarian considerations in his case [14]. In the N case, the House of Lords considered the ECtHRs decision in this case and others like it concerning article 3. It held that the test in such cases was whether the applicants illness had reached such a critical stage that it would be inhuman to deprive him of the care he was receiving and to send him to an early death in the receiving state, unless there was care available there to enable him to meet it with dignity [15 17]. In N v United Kingdom (2008) 47 EHRR 39, the ECtHR held that, although there might be other very exceptional cases in which the humanitarian considerations are equally compelling to those in the D case, a high threshold for violation of article 3 should be maintained [18]. In Paposhvili, the ECtHR reconsidered what those other very exceptional cases were. It held (at para 183) that they should now be taken to include cases in which there were substantial grounds for believing that the applicant, while not at imminent risk of dying, would face a real risk in the receiving country of being exposed either to a serious, rapid and irreversible decline in health resulting in intense suffering, or to a significant reduction in life expectancy [22]. According to the Court of Appeal in the present case, the test for violation of article 3 following Paposhvili is no longer whether death is imminent in the removing state, but whether intense suffering or death is imminent in the receiving state because treatment is unavailable there [29]. The Court of Appeal was, however, mistaken in taking the ECtHRs phrase, a significant reduction in life expectancy, to mean the imminence of death [30]. But what does the phrase mean? Significant here means substantial: only a substantial reduction in life expectancy would reach the level of severity required by article 3. In addition, a reduction in life expectancy to death in the near future is more likely to be significant than any other reduction [31]. In Paposhvili, the ECtHR also set out requirements (at paras 186 to 191) for the procedure to be followed in relation to applications under article 3 to resist return by reference to ill health [23, 32]. One requirement is for the applicant to adduce evidence capable of demonstrating that there are substantial grounds for believing that, if removed, he or she would be exposed to a real risk of being subjected to treatment contrary to article 3. That is a demanding threshold for the applicant. His or her evidence must be capable of demonstrating substantial grounds for believing that it is a very exceptional case because of a real risk of subjection to inhuman treatment. He or she must put forward a case which, if not challenged or countered, would establish a violation of the article [32]. If the applicant presents evidence to that standard, the returning state can seek to challenge or counter it. Paposhvili states that, in doing so, the returning state must dispel any doubts raised by the evidence; but any doubts here should be read to mean any serious doubts [33]. The court should only refuse to follow a decision of the ECtHR in highly unusual circumstances, and there is no question of the courts refusing to follow Paposhvili. In the light of that judgment, the court should now depart from the decision of the House of Lords in the N case [34]. The appellant first raised his article 3 claim in the Court of Appeal and, having accepted that it could not succeed at that level, he did not present evidence to support it. It was inappropriate for the Court of Appeal to extract medical reports from the evidence submitted in support of his article 8 claim, which did not address the Paposhvili requirements [36]. The court should not now determine whether the reports cross the threshold required of an applicant under article 3 following Paposhvili. The proper course is to allow the appeal and to remit the article 3 claim to be heard on up to date evidence [37].
On 23 August 2012 the m v RENOS was seriously damaged by an engine room fire while on a laden voyage in the Red Sea. On the same day, the owners appointed salvors under Lloyds Open Form 2011 (No Cure No Pay). The vessel was towed by the salvors to Adabiya, where her cargo was discharged, and then to Suez, where the salvage services came to an end. A tug was hired to stand by the vessel throughout the time when she was at Suez and to tow her to a place where she could be scrapped or repaired. These proceedings were brought in support of a claim against the hull underwriters for a constructive total loss. Notice of abandonment was served on the insurers on 1 February 2013, while the vessel was at Suez. The RENOS was insured at an agreed value of US$12m under a hull and machinery policy subscribed by the appellants (among others) and incorporating the Institute Time Clauses Hulls (1/10/83). The lead hull and machinery insurer was the first appellant, the Swedish Club. In addition, the Swedish Club alone subscribed an Increased Value Policy against the same risks covering certain charges so far as they exceeded those recoverable under the hull and machinery policy, up to a maximum of US$3m. At the trial of the action before Knowles J, it was common ground that there had been a loss by an insured peril. The sole issue was the measure of indemnity. The insurers acknowledged liability for a partial loss but declined the notice of abandonment and denied that the vessel was a constructive total loss. Knowles J held that there was a constructive total loss. The Court of Appeal agreed with both his conclusions and his reasons. The courts below addressed a number of issues, only two of which are before this court. Section 60(2)(ii) of the Marine Insurance Act 1906 provides that in the case of damage to a ship, there is a constructive total loss where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired. As a matter of practice, the cost of repair has always been treated as including salvage charges, and that is put beyond question by clause 19.2 of the Institute Time Clauses Hulls (1/10/83), which requires account to be taken of the cost of recovery and/or repair. Both of the issues before this court relate to the expenditure to be taken into account in computing that cost. The first issue is whether it includes expenditure already incurred before the service of notice of abandonment. The insurers say that none of this expenditure is to be taken into account. If they are right about that, the whole of the salvors remuneration will be excluded, together with the greater part of the cost of the standby tug and some other miscellaneous costs incurred at Suez. On that footing, the judge found that the cost of repairing the damage would be between US$9,079,533.05 and US$11,248,311.20, as against an insured value of US$12m. It is common ground that on these figures the insurers are liable for a partial loss only. The second issue is whether the relevant costs include charges payable to the salvors under the SCOPIC (Special Compensation, Protection and Indemnity) clause of Lloyds Open Form. The SCOPIC clause is a clause supplementary to the Form which entitles the salvors to additional remuneration for measures taken while performing the salvage services in order to prevent or minimise damage to the environment. The SCOPIC charges, like the rest of the salvors remuneration, were all incurred before the service of notice of abandonment, and will be disregarded if the insurers are right on the first issue. The judge found that if SCOPIC charges are excluded from the computation but other costs incurred before notice of abandonment are included, the cost of repairing the vessel ranged from US$11,820,260.05 to US$13,989,038.20 as against an insured value of US$12m. In that case, she may or may not have been a constructive total loss, depending on where in that range the true figure lay. Both issues were decided in the shipowners favour in the courts below. Costs incurred before notice of abandonment The relevant rules are codified by sections 60 63 of the Marine Insurance Act. They are in the following terms: 60. Constructive total loss defined (1) Subject to any express provision in the policy, there is a constructive total loss where the subject matter insured is reasonably abandoned on account of its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred. (2) In particular, there is a constructive total loss (i) Where the assured is deprived of the possession of his ship or goods by a peril insured against, and (a) it is unlikely that he can recover the ship or goods, as the case may be, or (b) the cost of recovering the ship or goods, as the case may be, would exceed their value when recovered; or (ii) In the case of damage to a ship, where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired. In estimating the cost of repairs, no deduction is to be made in respect of general average contributions to those repairs payable by other interests, but account is to be taken of the expense of future salvage operations and of any future general average contributions to which the ship would be liable if repaired; 61. Effect of constructive total loss Where there is a constructive total loss the assured may either treat the loss as a partial loss or abandon the subject matter insured to the insurer and treat the loss as if it were an actual total loss. 62. Notice of abandonment (1) Subject to the provisions of this section, where the assured elects to abandon the subject matter insured to the insurer, he must give notice of abandonment. If he fails to do so the loss can only be treated as a partial loss. (2) Notice of abandonment may be given in writing, or by word of mouth, or partly in writing and partly by word of mouth, and may be given in any terms which indicate the intention of the assured to abandon his insured insured unconditionally to the insurer. (3) Notice of abandonment must be given with reasonable diligence after the receipt of reliable information of the loss, but where the information is of a doubtful character the assured is entitled to a reasonable time to make inquiry. the subject matter interest in (4) Where notice of abandonment is properly given, the rights of the assured are not prejudiced by the fact that the insurer refuses to accept the abandonment. (5) The acceptance of an abandonment may be either express or implied from the conduct of the insurer. The mere silence of the insurer after notice is not an acceptance. (6) Where notice of abandonment is accepted the abandonment is irrevocable. The acceptance of the notice conclusively admits liability for the loss and the sufficiency of the notice. (7) Notice of abandonment is unnecessary where, at the time when the assured receives information of the loss, there would be no possibility of benefit to the insurer if notice were given to him. (8) Notice of abandonment may be waived by the insurer. (9) Where an insurer has re insured his risk, no notice of abandonment need be given by him. 63. Effect of abandonment (1) Where there is a valid abandonment the insurer is entitled to take over the interest of the assured in whatever may remain of the subject matter insured, and all proprietary rights incidental thereto. (2) Upon the abandonment of a ship, the insurer thereof is entitled to any freight in course of being earned, and which is earned by her subsequent to the casualty causing the loss, less the expenses of earning it incurred after the casualty; and, where the ship is carrying the owners goods, the insurer is entitled to a reasonable remuneration for the carriage of them subsequent to the casualty causing the loss. These provisions substantially restate the previous common law. Their effect is that unless notice of abandonment is waived by the insurer or the circumstances are such that there would be no possibility of benefit to the insurer if notice were given to him, it is a condition precedent to the assureds right to claim for a constructive total loss, that he should have given a valid notice of abandonment: see section 62(1). This is a true election, although it has some features which differentiate it from other cases in which the law requires a person to elect between inconsistent rights or remedies. In particular, it becomes irrevocable only if and when the insurer accepts the abandonment, in which case he is taken to admit both the validity of the notice and his own liability to pay on a total loss: section 62(6). He then becomes entitled to take over the assureds interest in the subject matter insured and all incidental proprietary rights: section 63. In practice, insurers hardly ever do accept an abandonment except as part of an overall settlement of the claim. But section 62(4) provides that the insurers refusal to accept the abandonment does not prejudice the assureds rights. The owners case on pre notice expenditure is straightforward. They say that the damage to which section 60(2)(ii) of the Act refers is the entire damage flowing from the casualty, and that the cost of recovery and repair is the entire cost, whenever incurred. The insurers dispute this. Their case is more elaborate. They say that the question whether there has been a constructive total loss falls to be decided as at the time when notice of abandonment is given, and by reference to the facts then existing, because the parties rights are, so to speak, crystallised at that point. This question is, as Mr Ashcroft QC put it, time sensitive, in that a ship may be a constructive total loss at one point of time and not at another, as events occur which alter the prospective cost of reinstatement. The assured has to elect between claiming a total loss or a partial loss on the basis of the options open to him at that time. Those options cannot be said to include the incurring of costs which he has already incurred. They are sunk costs, and his real choice is between incurring further costs in future and abandoning the ship to the insurer. Therefore, only the further costs can count. The financial and practical implications of this disagreement are considerable. It is often impossible to know with any confidence what it would cost to restore the vessel to serviceable condition after a casualty, until the damage has been professionally assessed. This is commonly possible only after salvors have brought her to a place of safety. The insurers argument, if it is correct, will in many cases have the effect of excluding salvage remuneration from the computation of repair costs for the purpose of ascertaining whether there has been a constructive total loss. Although the present question must have arisen in a high proportion of cases where a constructive total loss is alleged, there is very little assistance to be obtained either from the language of the Act or from authority. Dealing first with the language of the Act, I reject the submission that the references in section 60 to expenditure which would be incurred point only to future expenditure to be incurred after abandonment. Notice of abandonment is not mentioned in section 60, and if the section refers to future expenditure there is nothing to show from what point it must be future. More generally, it is clear that the word would reflects the hypothetical character of the whole exercise and not the chronology of the expenditure. I also reject the submission that the reference in the additional paragraph of section 60(2)(ii) to future salvage operations and general average contributions, points to expenditure following abandonment. Again, there is no indication of the point of time from which these costs must be future, except that it is implicitly from the time as at which the estimate is made, whenever that is. I am inclined to think, but do not need to decide, that the additional paragraph is concerned only with the treatment of general average contributions. Its effect is that in computing the owners cost of repairs (i) no account is to be taken of general average contributions receivable by him from other interests such as cargo or freight, whereas (ii) account is to be taken of future general average contributions payable by him to other interests. On that footing future salvage operations are being treated as included in the future general average contributions, and would be estimated looking forward from the general average sacrifice. There is much to be said for the view of the current editors of Arnoulds Law of Marine Insurance and Average, 19th ed (2018), para 29.34 that the result was to overrule the decision of the House of Lords in Kemp v Halliday (1866) LR 1 QB 520 that the owners cost of repairs had to be computed net of any liability of other interests to contribute in general average to salvage charges. But whether that be so or not, it seems to me to be clear that the reference to future liabilities was not intended as an implicit exclusion of past expenditure even for the purpose of general average, let alone more generally for the purpose of determining whether the ship is a constructive total loss. It has been said that the maxim expressio unius, exclusio alterius is often perilous: National Grid Co plc v Mayes [2001] 1 WLR 864, para 55 (Lord Hoffmann). I do not think that it will bear the weight which the appellants seek to place on it in this case. Turning to authority, there appears to have been no case in which the present question was considered before the passing of the Marine Insurance Act 1906, although we were referred to a number of earlier cases in which salvage charges incurred before notice of abandonment were allowed without discussion. They include Bradlie v Maryland Insurance Co (1838) 37 US 378, a decision of the United States Supreme Court in which the opinion of the court carried the considerable authority of Justice Story; and the English decisions in Holdsworth v Wise (1828) 7 B & C 794 and Rosetto v Gurney (1851) 20 LJCP 257. We were also pressed with the observations of Mr Carver QC at an international conference at Buffalo in 1899 in connection with an abortive project to draft common rules for marine insurance, in which he proposed that what happened before the giving of notice of abandonment should be ignored, adding that he was not sure that that has always been done: Report of the 18th Conference of the International Law Association held at Buffalo, USA (1900), 120. Since the passing of the Act, there have been two English decisions lending some support to the insurers case. In Hall v Hayman (1912) 17 Comm Cas 81, 90, Bray J accepted a concession that pre notice expenditure was irrelevant. Half a century later, in Helmville Ltd v Yorkshire Insurance Co Ltd (The MEDINA PRINCESS) [1965] 1 Lloyds Rep 361, 429, Roskill J accepted without discussion a submission in relation to one of a large number of disputed items of expenditure that it was inadmissible for the purposes of the constructive total loss claim because the work was done before the date of notice of abandonment. The lack of reasoning and apparent lack of argument make it difficult to attach much weight to either decision, and they are certainly not beyond controversy. Every edition of Arnoulds Law of Marine Insurance and Average from the 15th ed (1961) onward has taken the contrary view. The editors of the 12th ed of Lowndes & Rudolph, The Law of General Average and the York Antwerp Rules (1997), considered that the concession accepted by Bray J was correct in law, but the (different) editors of the 14th ed (2013) appear to resile from that view. In my opinion, the issue is better approached as a matter of principle than by trying to squeeze more juice from these rather dry lemons. The answer depends on some basic principles of insurance law and on an analysis of how those principles are affected by the requirement for a notice of abandonment. The first point to be made is that as a general rule, the loss under a hull and machinery policy occurs at the time of the casualty and not when the measure of indemnity is ascertained. A claim on an insurance policy is a claim for unliquidated damages. The obligation of the insurer is to hold the assured harmless against an insured loss, from which it follows that where the insurance is against physical damage to property the insurer is in breach of that obligation as soon as the damage occurs: Chandris v Argo Insurance Co Ltd [1963] 2 Lloyds Rep 65, 73 74; Firma C Trade SA v Newcastle Protection and Indemnity Association (The FANTI) [1991] 2 AC 1, para 35 (Lord Goff of Chieveley). As Megaw J pointed out in the former case, at p 74, the result is that it is not a condition precedent it is not a fact which must exist and be pleaded that the plaintiff has quantified the amount of his claim; or even that all the facts exist at the date of the writ which will enable the proper amount of the claim to be determined. These are matters of evidence, not prerequisites of a cause of action. The rule that the loss is suffered at the time of the casualty applies notwithstanding that the loss developed thereafter, unless it developed as a result of something that can be regarded as a second casualty, breaking the chain of causation between the first one and the loss. For that reason, it has been held that the fact that the policy expires before the loss has fully developed will not affect the assureds right to recover under it in full: Knight v Faith (1850) 15 QB 649, 667 (Lord Campbell CJ); Wasa International Insurance Co Ltd v Lexington Insurance Co [2010] 1 AC 180, para 39 (Lord Mance). For the same reason, as the editors of Arnould, 19th ed (2018) point out at para 29.07, if a casualty occurs within the policy period, and the loss develops after its expiry into one which is constructively total, there is still a constructive total loss under the policy. Constructive total loss is a legal device for determining the measure of indemnity. An insured loss is either total or partial, and any loss other than a total loss is a partial loss: see section 56(1) of the Act. A constructive total loss is not a sui generis kind of loss, conceptually distinct from these. It is a partial loss which is financially equivalent to a total loss, and may be treated as either at the election of the assured. The ordinary measure of indemnity under an insurance against damage to property is the depreciation in the value of the property attributable to the operation of the insured peril. Section 69 of the Marine Insurance Act provides that the measure of loss is the reasonable cost of repairs so far as these have been carried out and the reasonable depreciation arising from the unrepaired damage so far as they have not: see section 69. The reasonable cost of repairs which have been carried out is treated as the measure of the depreciation of the ships value. Therefore, if the reasonable cost of repairs exceeds the insured value, as the statutory definition of a constructive total loss envisages, the value of the ship is nil, and in financial though not physical terms the loss is total. Although section 60(1) of the Act refers to an actual total loss appearing to be unavoidable, it is not in doubt that the question whether there has been a constructive total loss depends on the objective facts. So far as they are future or unknown facts, a reasonable assessment of the probabilities must be made. But the test does not depend on the opinion or predictions of the owner, however reasonable. The rule was laid down by Lord Ellenborough in Bainbridge v Neilson (1808) 10 East 329, 341: The effect of an offer to abandon is truly this, that if the offer appear to have been properly made upon certain supposed facts, which turn out to be true, the assured has put himself in a condition to insist upon his abandonment: but it is not enough that it was properly made, upon facts which were supposed to exist at the time, if it turn out that no such facts existed, or that other circumstances had occurred which did not justify such abandonment. It follows from the objective character of the exercise and the fact that the loss is suffered at the time of the casualty notwithstanding its development thereafter, that the damage referred to in section 60(2)(ii) of the Act is in principle the entire damage arising from the casualty from the moment that it happens. The measure of that damage is its effect on the depreciation of the vessel, represented by the entire cost of recovering and repairing it. It cannot make any difference when that cost was incurred. This being the ordinary principle to be applied, the next question is whether it is affected by the legal requirement for a notice of abandonment. It would be surprising if it were. In the first place, a notice of abandonment is not always required, even in the case of a constructive total loss. Section 62 envisages two cases where it is not required: where it is waived by the insurer, and where there is no possibility of benefit to the insurer. Both exceptions reflect the fact that the requirement for notice of abandonment exists wholly for the benefit of the insurer. Its purpose is to enable him to exercise the rights which arise in his favour upon an effective abandonment. Thus where a total loss is constructive as opposed to actual, the insurer is entitled to take over what remains of the hull and to receive the freight in cases where it has been earned notwithstanding the casualty: section 63. Secondly, under section 61 of the Act, there must be a constructive total loss before any question can arise of an election to treat it as a partial or a total loss. For this reason, the House of Lords held in Robertson v Petros M Nomikos Ltd [1939] AC 371, that service of a notice of abandonment was a condition precedent not to the existence of a constructive total loss but only of the right to claim against the hull insurers on that basis. It followed that where recovery under the terms of an insurance on freight depended on the ship having become an actual or constructive total loss, the assured was entitled to recover notwithstanding that the shipowner had elected to treat the loss as partial and had not tendered notice of abandonment. Lord Wright, with whom Lord Atkin, Lord Thankerton and Lord Russell of Killowen agreed, went on to point out, at p 387, that the constructive total loss dated back to the time of the casualty. The freight insurers being liable upon the vessel becoming a constructive total loss: That liability accrues at once when the casualty happens, even if the exact position is not ascertained till later. If the assured has rightly given notice of abandonment of the ship, the loss dates back retrospectively to the date of the casualty. The mainstay of the insurers case is the proposition that the assured may not recover on the basis of a constructive total loss unless the loss is still total at the time of notice of abandonment. The proposition itself is not in doubt. It was established by a series of cases dating back to the decision of Lord Mansfield CJ in Hamilton v Mendes (1761) 2 Bur 1198. It is, however, important to appreciate the basis on which these cases were decided. They do not depart from the orthodoxy that a loss, including a constructive total loss, occurs at the time of the casualty and includes any development of the damage thereafter. Nor do they hold that a constructive total loss may cease to be regarded as one by reference to the facts existing at some later stage. They are concerned with the question what happens if the loss is, as it is put in the older cases, adeemed because something happens after the casualty to reverse it. The ratio of these cases is that even if the vessel is a constructive total loss, the character of the policy as a contract of indemnity requires the assured to be limited to his actual loss at the time when notice of abandonment is given. Exactly the same reasoning underlies the corresponding rule that he is limited to his actual loss at the time when the action is brought. In Hamilton v Mendes itself, the SELBY was captured by a French privateer in the Atlantic during the Seven Years War, and then recaptured from her French prize crew a few weeks later by a British man of war. News of the capture and recapture reached the assured simultaneously. He purported to give notice of abandonment. Lord Mansfield, sitting at Guildhall, held that the ship was never a constructive total loss, because it was never sufficiently clear that the loss arising from the original capture would be permanent. But on the footing that it was a constructive total loss, he held that the assured could recover only for a partial loss, arising from the prize due to the recaptors. His reason appears at p 1210 of the report: The plaintiffs demand is for an indemnity. His action, then, must be founded upon the nature of his damnification, as it really is at the time the action is brought. It is repugnant, upon a contract of indemnity, to recover as for a total loss, when the final event has decided that the damnification, in truth, is an average, or perhaps no loss at all. Whatever undoes the damnification, in whole or in part, must operate upon the indemnity in the same degree. It is a contradiction in terms, to bring an action for indemnity, when, upon the whole event, no damage has been sustained. Lord Mansfield (p 1214) left open the question what would have happened if news of the recapture had arrived after the notice of abandonment. That question was, however, resolved nearly half a century later in Bainbridge v Neilson (1808) 10 East 329, another case of capture and recapture, this time during the Napoleonic wars. In this case news of the recapture arrived between the tender of notice of abandonment and the commencement of the action. I have already referred to it as authority for the objective character of the factual enquiry involved. Lord Ellenborough held (p 344) that the recapture adeemed the loss so that: that which was supposed to be a total loss at the time of the notice of abandonment first given had ceased, and as only a small loss has been incurred in the salvage; that is the real amount of the damnification which the plaintiff is entitled to receive under this contract of indemnity. The leading modern case, which holds that the position was not altered by the Marine Insurance Act 1906, is the decision of the Court of Appeal in Polurrian Steamship Co Ltd v Young [1915] 1 KB 922. In Roura & Forgas v Townend [1919] 1 KB 189, the plaintiffs were the voyage charterers of the IGOTZ MENDI. They insured their anticipated profit on the voyage against the actual or constructive total loss of the vessel. The vessel was captured by a German cruiser in the Indian Ocean, as a result of which the profit was lost. But before action was brought against the insurer, the ship was stranded and abandoned on the coast of Denmark while in the charge of her German prize crew, and recovered by salvors employed by the shipowner. Roche J held that the plaintiffs were entitled to succeed. This was because the rule was that restoration precludes recovery, not because in such a case there never was a constructive total loss, but because an assured cannot, under a contract of indemnity, although he may at one time have suffered a loss, recover in respect of such loss if before action it has already been made good to him. (p 195) The recovery of the ship by her owners did not therefore mean that the vessel was no longer to be regarded as having suffered a constructive total loss. At p 196, he observed: I have already held that there was a constructive total loss of the Igotz Mendi by her capture, and before the ship was restored to the owners such capture resulted in a total loss to the plaintiffs of their rights and profit under the charter. In short, the event agreed upon as necessary to give a right to indemnity had happened, and had irrevocably caused the loss of the subject matter of the insurance. In these circumstances, as the restoration of the vessel itself to its owners did nothing to extinguish or minimise the plaintiffs loss, so also it cannot, in my judgment, operate to extinguish or to bar the plaintiffs claim. This decision was subsequently approved by the House of Lords in Robertson v Petros M Nomikos Ltd [1939] AC 371, 382 383 (Lord Wright), 395 (Lord Porter). If the principle in these cases is that although a constructive total loss has occurred, the assured is limited to his actual loss so far as reduced by subsequent events, it must follow that no expenditure of the owner himself by way of salvage or repair can be regarded as reducing the cost of repairing the damage. It does not reduce his loss. On the contrary, it is part of the measure of loss against which he is entitled to be indemnified, if not as part of the sum insured then as sue and labour charges. This was what the House of Lords decided in the Scottish appeal of Sailing Ship BLAIRMORE Co Ltd v Macredie [1898] AC 593. The BLAIRMORE was sunk by a storm while moored in San Franscisco Bay and abandoned to the insurers by her owner. The assured pleaded that the cost of raising and repairing the ship was such as to make her a constructive total loss at the time of the notice of abandonment. After the notice of abandonment the insurers raised her at their own expense and when sued for a total loss contended that by the time action was brought the loss was only partial: she would no longer have cost more to raise and repair than she was worth, because she had already been raised at their expense. This is substantially what the insurers are saying in the present case, when they argue that the position must be determined by reference to the situation of the vessel at the moment of abandonment, without regard to what has already been spent on reinstating her. The case came to the House on an issue as to relevancy. Lord Halsbury appears to have thought that there had been an actual total loss. But the other members of the Appellate Committee proceeded on the footing that there had been a constructive total loss. They held that the loss could not be reduced to a partial loss by the mere expenditure of money by the insurer. This, as Lord Watson explained at p 607, was because the insurers could not avoid their liability as for a total constructive loss by their intervening gratuitously and taking upon themselves part of the expenses which prim facie fall upon the assured, and would otherwise have been taken into account in estimating whether there has been such a total loss. In other words, if the assured had incurred the expenditure, it would not have reduced the amount of his loss, and it made no difference that instead of the assured incurring the expenditure and recovering it from the insurer, the insurer incurred it directly. In the present case, the cost of repairing the damage for the purpose of determining whether the vessel was a constructive total loss included all the reasonable costs of salving and safeguarding the RENOS from the time of the casualty onwards, together with the prospective cost of repairing her. The cost of repairing the damage was in no way adeemed because part of it had already been incurred at the time when notice of abandonment was given and action brought on the policy. These costs are therefore to be taken into account for the purposes of section 60(2)(ii) of the Act. On this point, I would affirm the decision of the courts below. SCOPIC costs As with the earlier issue concerning pre abandonment expenditure, the financial implications of this question are significant. The SCOPIC charges incurred by the RENOS were found by the judge to amount to about half of the total salvage remuneration, and if included in the calculation it might make the difference between recovery on a partial or total loss basis. In other cases, especially where a casualty involves an oil or chemical tanker, SCOPIC charges may be many times the remuneration attributable to the classic salvage services directed at saving the property. Salvage remuneration is payable under maritime law, independently of contract, but in practice has for many years been payable under Lloyds Open Form (No Cure No Pay) in its successive iterations, which provides for its assessment by arbitration in London. Historically, remuneration was payable only for services supplied for the salvage of property, ie the ship and her cargo. Salvors were not rewarded for any additional services supplied for any other purpose, such as preventing or minimising environmental damage. Indeed they exposed themselves in some cases to liability for such damage. After the grounding of the AMOCO CADIZ on the French Atlantic coast in 1978, special provision was made in the 1980 ed of Lloyds Open Form for an enhanced rate of remuneration to those supplying salvage services to laden oil tankers. But the general law was not modified until the International Convention on Salvage 1989, which has the force of law in the United Kingdom by virtue of section 224(1) of the Merchant Shipping Act 1995. Article 8(1)(b) of the Convention provided that in performing salvage services as traditionally understood, a salvor had a duty to exercise due care to prevent or minimise damage to the environment. Article 13(1) provides for the assessment of the salvors remuneration, and stipulates that it should reflect, inter alia, the skill and efforts of the salvors in preventing or minimising damage to the environment. Article 14(1) entitles the salvors to special compensation from the shipowner equivalent to the expenses incurred in performing the duty under article 8(1)(b). The Convention regime was not initially as successful in its object as had been hoped, mainly because article 14(1) did not provide for a profit element in respect of salvage services provided to safeguard the environment. In 1999, therefore, the SCOPIC clause was added to Lloyds Open Form, which provided for compensation to be based on commercial rates for the service supplied. In its current form, it is an addendum to the 2011 edition of the form, which is in almost universal use for the provision of salvage services. The 2011 Form provides by clause A for the provision of the classic salvage services, ie services to salve the property, being the vessel, her cargo, freight, bunkers and stores together with any property thereon (with specified exceptions), and to take the property to an agreed place or in the absence of agreement on the place, to a place of safety. It provides separately by clause B that while performing the salvage services the Contractors shall also use their best endeavours to prevent or minimise damage to the environment, and by clause C that unless otherwise agreed the SCOPIC clause is to be treated as incorporated. The critical parts of the SCOPIC clause for present purposes are clauses 5 and 6. Clause 5 provides for the assessment of the salvors remuneration for the totality of the services provided, including those required for the protection of the environment, in accordance with an elaborate tariff set out in Appendix A. Clause 6 provides that the salvors basic remuneration shall be assessed in accordance with article 13 of the Convention, but that so far as the remuneration calculated in accordance with clause 5 exceeds the amount payable under article 13, it will be payable in addition by the shipowners alone. In other words, it will not be shared with the other interests salved. This reflects the fact that SCOPIC remuneration is intended to avoid environmental damage which would be a liability of the shipowner, in respect of which he will be insured not under the hull and machinery policy but by the owners Protection and Indemnity insurer. Accordingly, clause 15 of SCOPIC, which deals with general average, provides: SCOPIC remuneration shall not be a General Average expense to the extent that it exceeds the article 13 Award; any liability to pay such SCOPIC remuneration shall be that of the Shipowner alone and no claim whether direct, indirect, by way of indemnity or recourse or otherwise relating to SCOPIC remuneration in excess of the article 13 Award shall be made in General Average or under the vessels Hull and Machinery Policy by the owners of the vessel. The RENOS was entered for these among other risks with the American Club, which ultimately paid the SCOPIC charges in this case. The insurers case is that the test for determining whether some item of expenditure is part of the cost of repairing the damage depends on the characterisation of the expenditure. They say that SCOPIC charges fall to be disregarded because they are not part of the cost of repairing the damage for the purpose of section 60(2)(ii) even on the footing (which is common ground) that that includes the cost of recovering the vessel. The assured, by comparison, say that the SCOPIC charges are part of the cost of repairing the damage because they were an integral part of the salvors remuneration. They had to be paid if the ship was to be salved, and she had to be salved if she was to be repaired. The assured accept that the shipowners could in theory have contracted with the salvors on terms which excluded the SCOPIC clause. But they say that the test is whether a prudent uninsured owner would have contracted on terms that the salvors remuneration included SCOPIC costs. There is no basis in the judges findings for concluding that the prudent uninsured owner would have contracted with the salvors on terms any different from those that these owners agreed. This submission was accepted by Knowles J and the Court of Appeal. I can travel a certain distance down the path favoured by the assured, but not as far as their destination. Although, on the face of it, the words the cost of repairing the damage describe a kind of expenditure, it is well established that they include some costs which are not directly expended on the actual reinstatement of the ship but are preliminary to that reinstatement. Salvage charges are the classic example. They are included in the cost of repairs because the vessel must be salved in order to be repaired. For the same reason, temporary repairs near the site of the casualty and towage to a repair yard are generally allowed if they are reasonable preliminaries to the repairs themselves. As Roskill J put it in The MEDINA PRINCESS [1965] 1 Lloyds Rep 361, 520, temporary repairs and towage to a repair yard may be part of what would have to be expended to put the ship right. This accords with the concept of a constructive total loss. The cost of repairs is the measure of the extent of the damage. The reason why section 60(2)(ii) requires a comparison between the cost of the repairs and the value of the ship when repaired, is to determine whether the ship is financially worth repairing. Expenses for a purpose which is an essential preliminary to repairing her necessarily enter into that comparison. Even if the actual repairs would cost less than the repaired value of the ship, if she cannot be got off the rocks or towed to a place where she can be repaired save at a cost which when added to the cost of the actual repairs will exceed her value, then she is not financially worth saving. For the same reason, the mere fact that the insurer would not, under the policy terms, be liable to indemnify the assured for some item of expenditure on a partial loss basis does not necessarily mean that it cannot be included in the comparison for the purpose of deciding whether there is a constructive total loss. It is still potentially relevant to the question whether the vessel is financially worth saving. The common feature of all the cases where the cost of steps preliminary to repairs have been included in the comparison is that their objective purpose was to enable the ship to be repaired. That will generally be true of salvage charges. The same goes for the cost of temporary repairs, towage, and other steps which are plainly preliminaries to carrying out permanent repairs. The objective purpose of SCOPIC charges was different. It was not to enable the ship to be repaired, but to protect an entirely distinct interest of the shipowner, namely his potential liability for environmental pollution. That purpose has nothing to do with the subject matter insured, namely the hull. It was no part of the measure of the damage to the ship, and had nothing to do with the possibility of repairing her. The point may be tested by asking what the position would have been if the shipowner, instead of making a single agreement with salvors to salve the ship and prevent or minimise environmental damage, had contracted with one enterprise to salve the ship and another to put floating booms around her with a view to preventing or minimising environmental damage. Mr Berry QC was inclined to accept that in that case the cost of the booms would not have entered into the comparison required by section 60(2)(ii). I think that his instinct was right. The money paid to the boom contractor would in no sense have been preliminary to the repairs. By comparison, the cost of temporary repairs or towage to the repair yard would have been preliminary to the repairs whether these tasks were undertaken by the salvors or by some other contractor. What this suggests is that the only reason why the SCOPIC charges are said to be part of the cost of repair is that the charges for environmental protection were owed to the same contractor as the charges for salving the property so that she could be repaired. Yet that is an entirely adventitious factor. Whether the same contractor or different contractors were used has nothing to do with the objective purpose of the expenditure or with the comparison required by section 60(2)(ii). I am prepared to assume that a prudent uninsured owner would have done what these owners did and contracted with the salvors for both the salving of the ship and protecting the environment. But I do not think that that makes any difference. The prudent uninsured owner test was first laid down by Lord Abinger CB in Roux v Salvador (1836) 3 Bing NC 266, 286 and endorsed by the House of Lords, adopting the advice of the judges of the Exchequer Chamber in Irving v Manning (1847) 1 HL Cas 287. It is a test for determining whether the subject matter insured is a constructive total loss in circumstances where the relevant facts are hypothetical or cannot be known. As applied to a damaged ship, the test is whether the prudent uninsured owner would have repaired her and if so how. Before the passing of the Marine Insurance Act 1906, there was a controversy about how far the prudent uninsured owner was assumed to take account of matters other than the cost of repair and the repaired value of the ship, such as the value of the wreck if sold to breakers. In Angel v Merchants Marine Insurance Co [1903] 1 KB 811, the Court of Appeal held that only the comparison between the repaired value of the ship and the cost of repair (including steps preliminary to repair) was relevant. In Macbeth & Co Ltd v Maritime Insurance Co Ltd [1908] AC 144, a case decided after the Act but by reference to the law as it stood before, the House of Lords overruled Angel, holding that the question fell to be decided by reference to whatever other considerations would have been taken into account by a prudent uninsured owner. These might include the financial benefits and detriments of not repairing, which in that case included the benefit of being able to sell the wreck. If that view had prevailed, it would have been relevant to ask whether the prudent uninsured owner would have been induced to repair notwithstanding that the cost of salvage and repair would exceed her repaired value, because of the potential liability for environmental pollution associated with abandoning her. But section 60(2)(ii) resolves that question in favour of the view taken in Angel, which was the leading authority at the time that the Act was drafted. The effect of that provision is that the prudent uninsured owner is assumed to be interested only in the comparison between the cost of repair and the repaired value, and his hypothetical choices are relevant only to the quantum of the repair costs. The statutory solution has sometimes been criticised as illogical, but the world of marine insurance has accommodated it and moved on. The classic division of risks between hull insurers and P&I insurers assigns environmental liabilities and associated sue and labour charges to P&I insurers, a state of affairs which is reflected in clause 15 of the SCOPIC clause. The old controversy about the value of the wreck has for many years been resolved by what is now clause 19.1 of the Institute Time Clauses Hulls (1/10/83), which excludes it from the constructive total loss comparison. The result is that it is necessary to identify the purpose of the expenditure which it is proposed to take into account, and to apply the prudent uninsured owner test only to expenditure for the purpose of repairing the ship in the larger sense which I indicated above. The fact that a prudent uninsured owner might have contracted with the same contractors for both the protection of the property and the prevention of environmental pollution does not show that both are part of the cost of repairing the damage. Neither does the fact that the charges under both heads are secured on the ship. The two heads of expenditure have quite different purposes, only one of which is related to the reinstatement of the vessel. If they were truly indivisible, this might not matter. But the whole scheme of the SCOPIC clause depends on their being separately identifiable, and the very fact that one is for the hull underwriters account and the other for the P&I insurers shows that they cannot be indivisible. In my opinion, SCOPIC charges are not part of the cost of repairing the damage for the purpose of section 60(2)(ii) of the Act or the cost of recovery and/or repair for the purpose of clause 19.2 of the Institute Clauses, because their purpose is unconnected with the damage to the hull or its hypothetical reinstatement. I would therefore allow the appeal on that point. Disposal I would make a declaration accordingly, set aside the order of Knowles J and remit the matter to him to determine in the light of this courts judgment whether the RENOS was a constructive total loss and what financial consequences follow from that.
UK-Abs
This appeal concerns which types of costs incurred in the salvage of a damaged shipping vessel qualify when assessing whether such a vessel is a constructive total loss or not for insurance purposes. Section 60(2)(ii) of the Marine Insurance Act 1906 (the Act) provides that in the case of damage to a shipping vessel, there is a constructive total loss where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired. On 23 August 2012, the Renos, was seriously damaged by an engine room fire while on a voyage in the Red Sea. On the same day, the owners appointed salvors under Lloyds Open Form 2011 (No Cure No Pay). The vessel was towed by the salvors to Adabiya, where her cargo was discharged, and then to Suez, where the salvage services ended. A tug was hired to stand by the vessel while she was at Suez and for onward towing. These proceedings were brought in support of a claim against the hull underwriters for a constructive total loss. Notice of abandonment was served on the insurers on 1 February 2013, while the vessel was at Suez. The Renos was insured at an agreed value of US$12m under a hull and machinery policy subscribed by the appellants (among others). The lead hull and machinery insurer was the first appellant, the Swedish Club. In addition, the Swedish Club alone subscribed an Increased Value Policy against the same risks covering certain charges so far as they exceeded those recoverable under the hull and machinery policy, up to a maximum of US$3m. In the High Court, it was agreed by both sides that there had been an insured loss. The only issue was the amount payable. The insurers acknowledged liability for a partial loss, but did not accept the notice of abandonment or a constructive total loss. Mr Justice Knowles (Knowles J) held that there was a constructive total loss. The Court of Appeal agreed with both his conclusions and his reasons. The insurers now appeal to the Supreme Court. Issue (1) is whether the cost of repairing the damage to the vessel under section 60(2)(ii) includes expenditure already incurred before the service of notice of abandonment. Issue (2) is whether the relevant costs include charges payable to the salvors under the SCOPIC (Special Compensation, Protection and Indemnity) clause of Lloyds Open Form. On issue (1), the insurers argue that any pre notice of abandonment expenditure is excluded. If correct, they would be liable for a partial loss only. As for issue (2), the SCOPIC charges were all incurred before the service of notice of abandonment. If the insurers are right on issue (1), these costs will be disregarded. The judge found that, if so, the repair costs might make the vessel a constructive total loss. The shipowners succeeded on both issues below. The Supreme Court unanimously allows the appeal in part (dismissing it on issue (1), but allowing it on issue (2)). Knowles Js order is set aside and the matter is remitted to him to determine whether there was a constructive total loss. Lord Sumption gives the lead judgment, with which all the Justices agree. Issue (1): Expenditure incurred before notice of abandonment The Supreme Court, agreeing with the courts below, does not accept that expenditure incurred before the service of the notice of abandonment falls outside the scope of costs under section 60(2)(ii). [19] First, as a matter of language, the references in section 60 to expenditure which would be incurred reflect the hypothetical character of the whole exercise and not the chronology of the expenditure [8]. Secondly, as a general rule, the loss under a hull and machinery policy occurs at the time of the casualty and not when the measure of indemnity is ascertained [10]. This rule applies even if the loss developed after the time of the casualty, unless it developed as a result of a second casualty breaking the chain of causation [10]. Constructive total loss is a legal device for determining the measure of indemnity [11]. It is a partial loss which is financially equivalent to a total loss and may be treated as either by the insured [11]. Whether there has been a constructive total loss depends on the objective facts [12]. It follows from this objective approach and the fact that the loss is suffered at the time of the casualty, that the damage referred to in section 60(2)(ii) is in principle the entire damage arising from the casualty from the moment that it happens [13]. The measure of that damage is its effect on the depreciation of the vessel, represented by the entire cost of recovering and repairing it [13]. Thus, it cannot make any difference when that cost was incurred [13]. Service of a notice of abandonment is thus irrelevant [14 18]. Applying this approach, the cost of repairing the damage included all the reasonable costs of salving and safeguarding the Renos from the time of the casualty onwards, together with the prospective cost of repairing her. These costs were not reduced by being incurred before the notice of abandonment and are therefore to be taken into account for the purposes of section 60(2)(ii) of the Act. [19] Issue (2): SCOPIC charges The SCOPIC clause is supplementary to the Lloyds Open Form. The law on salvage was modified by the International Salvage Convention 1989 (the Convention) [21]. Article 8(1)(b) provides that in performing salvage services, a salvor had a duty to exercise due care to prevent or minimise damage to the environment [21]. Article 14(1) entitles the salvors to special compensation from the shipowner amounting to the expenses from performing the article 8(1)(b) duty [21]. Clauses 5 and 6 are the critical parts of the SCOPIC clause. Clause 5 provides for the assessment of the salvors remuneration for the totality of the services provided, including for environmental protection [22]. Clause 6 reflects the fact that such remuneration is intended to avoid environmental damage which would be liability of the shipowner [22]. It is well settled that the cost of repairing the damage in section 60(2)(ii) includes some costs not spent directly on actual reinstatement [24]. The common feature of all the cases in which the cost of preliminary steps have been included is that their objective purpose was to enable the ship to be repaired [25]. That will generally be true of salvage charges, the cost of temporary repairs, towage and other steps plainly preliminary to permanent repair [25]. However, the objective purpose of SCOPIC charges is different. They protect an entirely distinct interest of the shipowner, namely potential liability for environmental pollution [25]. It is irrelevant that a prudent uninsured owner might contract with the same contractors for both purposes [25 26]. It follows that the courts below erred in holding that SCOPIC charges are part of the cost of repairing the damage in section 60(2)(ii) of the Act. [27 28]
The various appellants in each of two appeals, which have been heard together, challenge the lawfulness of provisions relating to what is known as the revised benefit cap. The original benefit cap was introduced by section 96(1) of the Welfare Reform Act 2012 (the 2012 Act). Pursuant to it, the Housing Benefit Regulations 2006, SI 2006/213, (the 2006 Regulations) were amended so as to provide, in regulation 75A, that, if a households total entitlement to specified welfare benefits were otherwise to exceed an annual limit, its entitlement should be capped at that limit. The original cap came into force on 15 April 2013. In R (SG) v Secretary of State for Work and Pensions [2015] UKSC 16, [2015] 1 WLR 1449, this court, by a majority of three to two, dismissed an appeal by three lone mothers and three of their children against a decision that provisions relating to the original cap did not discriminate against women in the enjoyment of their possession of welfare benefits and so were not unlawful. I will refer to the SG case as the first benefit cap case. In its manifesto for the general election which took place on 7 May 2015 the Conservative Party proposed that any Conservative government would introduce legislation for a revised benefit cap which would cap specified benefits at a lower level. Following the partys victory in that election the government introduced, and Parliament enacted, the Welfare Reform and Work Act 2016 (the 2016 Act). By making amendments to the 2012 Act, the 2016 Act introduced the revised cap, which came into force on 7 November 2016. In making provision for the original cap, the earlier version of the 2012 Act had, in section 96(5) to (7), provided for the annual limit, at which the welfare benefits were to be capped, to be specified in regulations and to be determined by reference to the estimated average net earnings of a working household in Britain; and the amended 2006 Regulations had specified that, for couples and lone parents, the annual limit was 26,000, being a figure apparently determined in that way. But the amendments wrought by the 2016 Act have replaced those provisions; and, for the purposes of the revised cap, they identify the annual limits in the 2012 Act itself, namely in a new section 96(5A). The effect of the subsection, when read with a new regulation 75CA inserted into the 2006 Regulations by regulation 2(3) of the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016 (SI 2016/909) (the 2016 Regulations) is that, for couples and lone parents, the annual limits are reduced to 23,000 if they reside in Greater London and to 20,000 if they reside elsewhere. How were these reduced figures calculated? Clearly the yardstick of average net earnings of a working household was abandoned otherwise the figures would not have come down. The governments Impact Assessment dated August 2016 relating to the 2016 Act (the IA) suggested that the reduced figures were calculated by reference to the fact that 40% of households earn less than them. But, say the appellants, the only arguably relevant figures would relate to the total income of those households, inclusive in particular of benefits. The amendments made in 2016 provide no automatic adjustment of the limits for inflation; and the reduced figures have already lost 5% of their real value. But a new section 96A of the 2012 Act requires the Secretary of State to review them at least once during each Parliament. The welfare benefits subject to the cap, which prior to the amendments to the 2012 Act were left to be specified in regulations, are also now specified in the Act itself, namely in section 96(10). Among others, the benefits there specified include child benefit, child tax credit, housing benefit and income support. Various features of the scheme which applied to the original cap have been retained for application to the revised cap. By regulation 75D of the 2006 Regulations, it is for the local authority to implement the cap by reducing payment of housing benefit accordingly. By regulation 75F, those in receipt of certain benefits (now including, pursuant to amendment by the 2016 Regulations, a carers allowance and a guardians allowance) are exempt from the cap even if they also receive benefits which are specified in section 96(10) as being subject to it. And, most importantly, by regulation 75E(2), those entitled to working tax credit are exempt from the cap. Under regulation 4(1) of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 (SI 2002/2005) a single person (which here includes a lone parent) is entitled to working tax credit if, among other things, she or he undertakes work for at least 16 hours each week. A couple, on the other hand, is entitled to it if, among other things, they undertake work for at least 24 hours each week, provided that one of them does so for at least 16 of those hours. three aims: (a) to improve the fairness of the social security system and to increase public confidence in its fairness, particularly in relation to the governments objective not to reward a non working family with an income in the form of welfare benefits which exceeded that of an average working family; In the IA the government stated that its introduction of the revised cap had to make fiscal savings which would enable the government to redirect (b) its limited resources for better deployment elsewhere; and (c) to incentivise the parents or parent in a non working family to obtain work on the basis in particular that an ethic of work within a family inculcated better outcomes for its children. The IA identified the incentivisation of work as the main aim. The ability of parents to escape the cap by undertaking work for not less than the specified number of hours is described by the government as a key exemption and is therefore central to the design of the scheme. The basic argument on behalf of the appellants is that, in introducing the revised cap, the government, through Parliament, has unlawfully discriminated both against the lone parents of young children, whose ability to work is severely curtailed by their childcare obligations, and against the young children of lone parents. In the DA case there are five appellants. Three of them are lone parent mothers. They all care for children of various ages. At the outset of the proceedings the children of two of the mothers included a child aged under two. Those two children then aged under two are the other appellants. Those two mothers had each suffered a reduction in benefits as a result of the revised cap. At the outset of the proceedings the third mother was pregnant. In the DS case there are eleven appellants. Two of them are lone parent mothers. They both care for children of various ages. The first mother cares for five children, each of whom is an appellant. The second cares for four children, each of whom is also an appellant. At the outset of the proceedings none of these nine children was aged under two but three of them were aged under five. Both of the mothers had suffered a reduction in benefits as a result of the revised cap. Both sets of appellants primarily cast their claim of unlawful discrimination under the Human Rights Act 1998 (the 1998 Act). Their secondary challenge to the scheme for the revised cap is that, in its application to them, it is irrational at common law; but, if the primary claim fails, the application of the scheme to them will not be irrational so the secondary challenge will not further be addressed. In the DA case the appellant mothers contend (a) that their entitlement to welfare benefits falls within the ambit of their rights both under article 1 of protocol 1 (article 1 p 1) of the European Convention on Human Rights (the Convention) and under article 8 of the Convention; (b) that, in that they have the status of lone parents of children aged under two, they have the right under article 14 of the Convention to claim that their rights under article 1 p 1 and article 8 have not been secured without discrimination; that under the scheme they are subject to the same treatment as other (c) adults who are in a relevantly different situation from them and that, unless the same treatment of them is justified, the law requires them to have different treatment; and (d) that the government has failed to justify their subjection to the same treatment as those other adults and that therefore it has unlawfully discriminated against them. In the DA case the appellant children contend (a) within the ambit of the childrens own rights under article 8; (b) that, in that they have the status of children aged under two of lone parents, they have the right under article 14 to claim that their rights under article 8 have not been secured without discrimination; (c) that under the scheme they are subject to the same treatment as other children who are in a relevantly different situation from them and that, unless the same treatment of them is justified, the law requires them to have different treatment; and (d) that, in particular in the light of an alleged breach on its part of article 3 of the UN Convention on the Rights of the Child 1989 (Cm 1976) (the UNCRC), the government has failed to justify their subjection to the same treatment as those other children and that therefore it has unlawfully discriminated against them. that their mothers have an entitlement to welfare benefits which falls that their entitlement to welfare benefits falls within the ambit of their In the DS case the appellant mothers contend (a) rights both under article 1 p 1 and under article 8; (b) that, in that they have the status either of lone parents or, as a fall back, of lone parents of children aged under five, they have the right under article 14 to claim that their rights under article 1 p 1 and article 8 have not been secured without discrimination; (c) that under the scheme they are subject to such different treatment in comparison with other adults, particularly with dual care parents or with lone parents all of whose children are aged at least five, that, unless the different treatment of them is justified, the law requires them to have the same treatment; and (d) that the government has failed to justify their subjection to such different treatment and that therefore it has unlawfully discriminated against them, whether directly or indirectly. In the DS case the appellant children contend (a) that they have an interest in the welfare benefits to which their mothers are entitled and that it falls within the ambit of their own rights under article 8 or, if not, under article 1 p 1; (b) that, in that they have the status of children of lone parents or, in the case of three of them and as a fall back, that they have the status of children aged under five of lone parents, they have the right under article 14 to claim that their rights under article 8 or, if not, under article 1 p 1 have not been secured without discrimination; (c) that under the scheme they are subject to such different treatment in comparison with other children, particularly children of dual care parents or children aged at least five of lone parents, that, unless the different treatment of them is justified, the law requires them to have the same treatment; and (d) that, in particular in the light of an alleged breach on its part of article 3 of the UNCRC, the government has failed to justify their subjection to such different treatment and that therefore it has unlawfully discriminated against them, whether directly or indirectly. In response to the above contentions the government concedes only that the entitlement of the two sets of appellant mothers to welfare benefits falls within the ambit of their rights under article 1 p 1. It disputes every other contention. Unlike the DS case, the DA case has been the subject of adjudication on the merits in the lower courts. By an order dated 22 June 2017, [2017] EWHC 1446 (Admin), [2017] PTSR 1266, Collins J upheld the claims of the DA claimants by declaring that the 2006 Regulations, as amended by the 2016 Regulations, unlawfully discriminated against lone parents of children aged under two and against children aged under two of lone parents. But, by an order dated 15 March 2018, [2018] EWCA Civ 504, [2018] PTSR 1606, the Court of Appeal (Sir Patrick Elias who gave the main judgment and Sir Brian Leveson, President of the Queens Bench Division, who gave a short concurring judgment; McCombe LJ dissenting) set aside the order of Collins J. In effect the court dismissed the claims and granted permission to appeal to the Supreme Court. On 26 March 2018, thus 11 days after the order of the Court of Appeal in the DA case, Lang J heard the DS case. Mr Drabble QC, on behalf of the DS claimants, submitted to her that the dismissal of their claims was not strictly mandated by the Court of Appeals decision in the DA case but he conceded that it placed significant hurdles in their way. In light of the fact that the decision in the DA case was to be reviewed in the Supreme Court, he persuaded the judge to dismiss their claims without inquiry into their merits and to grant a leap frog certificate under section 12 of the Administration of Justice Act 1969 to the effect that an application on their part to the Supreme Court for leave to appeal directly to it would be justified. In due course such an application was made to this court and granted. The consequence is that there has been no lower court review of the evidence filed in the DS case. Although the law of discrimination is inherently difficult, it is impossible to avoid the conclusion that, for various reasons, the courts examination of the issues raised in these appeals has been unnecessarily cumbersome and complicated. (a) The judgments of each of the five members of the court in the first benefit cap case, all of alleged relevance, proceed in all for 269 paragraphs and their combined effect has been a matter of acute and protracted debate in this court and elsewhere. (b) The three judgments of the Court of Appeal in the DA case, now before this court, proceed for 184 paragraphs. (c) The written cases presented to this court in the two appeals by the three principal parties and the three interveners, all of high legal quality, proceed across 357 pages. (d) The evidence filed in both appeals proceeds across more than 3,000 pages. (e) 119 authorities are presented to the court for consideration. (f) The oral argument has continued for two and a half days. In the above circumstances the compilation of this judgment has had to be surgical. Reference to all the arguably relevant evidence and submissions would have submerged it. As it is, I am disappointed with myself in having failed to contain it within fewer than 91 paragraphs. Evidence The impact of the revised cap has been broadly as follows: (a) As at August 2017, the benefits of 68,000 households had been reduced by reference to the revised cap. (b) 52,000 (ie 77%) of those households would not have suffered reduction by reference to the original cap; so the revision of the cap has had a substantial effect. (c) Of the 68,000 households which suffered the revised cap, 49,000 (ie 72%) were lone parent households. (d) Since 90% of lone parents are women, 44,000 (ie 65%) of the households which suffered the revised cap were lone female parent households. (e) Of the 68,000 households which suffered the revised cap, 37,000 (ie 54%) were lone parent households with a child aged under five and, of those, 17,000 (ie 25% of the total) were lone parent households with a child aged under two. The cap has therefore had a major impact on the former group, of which the latter are a significant subgroup. (f) Families with multiple children, thus in receipt of higher amounts of child benefit and child tax credits, are more likely to be capped. As at February 2018, 74% of capped households (not here differentiated between dual care and lone parent households) had at least three children. Has the revised cap incentivised those on benefits to work? The government accepts that the statistical evidence is sparse; and it is inappropriate to address it in detail. It suffices to say: (a) In putting forward its expectations for the revised cap in the IA, the government suggested that 41% of those potentially subject to it would be more likely to work in order to escape it than those not potentially subject to it. (b) But the statistic turns out to mean that the number of those more likely to work in order to escape the cap is 41% larger than the already small group, namely only 11% of all capped households, who would have moved into work in any event. Translated into numbers, it means that only about one capped household out of 20 such households (ie 5%) was considered likely to move into work in order to escape it. In relation, however, to that one capped household out of 20, the appeals require the court to consider whether it was more likely to be a dual care household than a lone parent household, in particular a lone parent household with a child aged under five or indeed aged under two. So, in relation to incentivisation, the government relies less on statistics and more on what are said to be the obvious financial advantages of working. These advantages are scarcely in dispute. Evidence on behalf of the appellants in the DS case suggests, by way of example in relation to one of the mothers, that, when capped, her annual household benefits were 20,000 but that, were she to have worked for 16 hours each week earning 17,000 net, her net annual income would have risen to 32,000 because her benefits would have been reduced by only 5,000. Irrespective, however, of the financial advantages for a parent who works hours sufficient to claim working tax credit and thus to escape the cap, how practicable is it for a lone parent, in particular a lone parent of a child aged under five or indeed aged under two, to do so? Is it reasonable to divert the lone parent from caring for such Is it reasonable to take her out of the home if she is a nursing mother? In any event can she find local part time work with set hours at a (a) children? (b) (c) reasonable time during the day? (d) Can she find a carer in a practicable location who can offer care at the necessary times and, if she has to pay the carer, can she afford to do so? (e) As state regulations about minimum staff ratios appear to recognise, do children aged under two need more intensive and therefore more expensive care than older children? (f) less practicable for her to work? If the lone parent also has a number of other, older children, is it even Central to the governments response to these questions is its provision, on certain conditions, of free childcare for 30 hours per week during term time under the Childcare (Early Years Provision Free of Charge) (Extended Entitlement) Regulations 2016 (S1 2016/1257). The IA stressed its availability and estimated it to be worth about 5,000 pa per child. The trouble is that the provision extends to free care only for three and four year olds and also, albeit limited to 15 hours per week, for certain two year olds in families in receipt of specified benefits. This, no doubt, explains why in the DA case the appellants are members of families which include a child aged under two. Mr Wise QC on their behalf therefore points to the grave difficulty which confronts lone parents in that group in accessing care so that they can work. To this the government responds that the financial advantages of escaping the cap by work are so substantial, as explained above, that these lone parents, if in work, can afford to pay for childcare out of their overall income inclusive of benefits and that they are substantially assisted in doing so in the computation of their working tax credit. But Mr Wise draws a wider point from the limited extent of the provision for free childcare: it betokens (he says) a considered governmental conclusion that it is not in the interests of lone parents of children aged under two, nor in particular in the interests of those children, that their parents should be diverted from caring for them. Here Mr Wise and Mr Drabble join in making an allied point. It relates to the conditions attached to the receipt of income support, which is likely to be a major constituent of the welfare benefits paid to a lone parent. The aim of the conditions is to make it easier for her to find work when (but only when) her youngest child has attained the age of five. One condition relates to the period when she has a child aged one or two and it requires her to attend work focussed interviews about every six months. Another relates to the period when she has a child aged three or four and it requires her to engage in some training or other work related activity in preparation for future work. The sanction for failing to comply with a condition is a reduction in income support. Once all her children have attained the age of five, in other words are of school age, the lone parent not in work must claim jobseekers allowance instead of income support and, to that end, must demonstrate that she is available to do a limited amount of work and that she is actively seeking it. The point made on behalf of all the appellants is that at the heart of the carefully calibrated regime of attaching conditions to the receipt by lone parents of income support is a recognition by the government that it is wrong to expect them actually to work until all their children have attained school age; and that to cap their benefits for failure to work before all their children have attained school age flies in the face of that policy decision. The governments defence of its application of the revised cap to lone parents in the circumstances identified in these appeals relates in significant part to the provision for the possible making to them of a Discretionary Housing Payment (a DHP). Provision for DHPs is made in section 69 of the Child Support, Pensions and Social Security Act 2000 and in regulations made under it. A power to make a DHP is conferred on local authorities and, as the title implies, it must relate to housing costs. So, when a cap requires a local authority to reduce housing benefit below, or further below, the level of the recipients rent, there is the facility for it to make a DHP to cover the balance. Central government provides local authorities both with an annual fund out of which to make DHPs and with a guidance manual in relation to their distribution of them. A broad discretion is conferred upon the local authorities. There is no appeal against a refusal to make a DHP but there is, with whatever degree of difficulty, an opportunity to challenge it by way of judicial review. DHPs are intended to cover many more situations of hardship than those created by the cap, including in particular hardship created by the provisions addressed by this court in R (MA) v Secretary of State for Work and Pensions [2016] UKSC 58, [2016] 1 WLR 4550 (the bedroom tax case); and it is clear that they are mainly intended to alleviate temporary hardship and, for those subject to the cap, are intended, in the words of the IA, to manage the transition for various customers whilst they make the necessary changes to adapt to the application of the benefit cap. The manual however now includes within a list of possible recipients a household which contains a child under two years of age where childcare is a barrier to getting work. In the light in particular of the provision within the scheme for the exercise of discretion on the part of local authorities in the making of DHPs, how far should this court rely on them for alleviation of the worst effects of the cap on lone parents within the appellant groups? The government refers powerfully to the fact that five out of the six appellant mothers in these appeals have at one stage been in receipt of DHPs. The problem is that, as the government accepts, there is limited data about the extent to which capped households are rescued by DHPs. Both the appellants in the DA case and Shelter, as an Intervener in the appeals, present evidence of divergence in (a) authorities surround the making of an application for a DHP; (b) the time which they take to process it; (c) the period for which, subject only to some further award, they agree to make a DHP in order to alleviate a cap, awards of indefinite duration being unknown and most being subject to a maximum of 12 weeks; and (d) shortfall in housing benefit imposed by the cap. the degree of complexity, sometimes bewildering, with which local the extent to which any award of a DHP is large enough to cover the Similar concerns led Henderson J in Burnip v Birmingham City Council [2012] EWCA Civ 629, [2013] PTSR 117, at paras 46 and 47, to reject the attempt by local authorities to rely on DHPs as justifying less favourable treatment of the disabled in the computation of housing benefit. Of the other two aims of government in introducing the revised cap, that of making fiscal savings has scarcely been pressed. The IA forecast that in the year just past (2018 19) the revised cap would save the state 110m. But the figure did not include the operational cost of implementing the cap nor the cost of the support, in particular through DHPs, otherwise provided to capped claimants, all now estimated at 68m this year. In context the net figure appears to be 0.03% of the states overall annual expenditure on welfare benefits for those of working age. Does the revised cap inflict poverty on those subject to it? The answer is hotly contested. But since the government cannot sensibly argue that the computation of welfare benefits is intended to provide a family with more than it needs, it follows that a reduction of those benefits will provide it with less than it needs. Of course the concept of needs is to some extent elastic: they can be assessed with somewhat greater or lesser stringency. But the government does not seek to argue that the lower figures set for the revised cap have been reached by reference to any scale of needs. Equally, in a speech in 2016 relied on by the government, Mr Cameron, then the Prime Minister, acknowledged that the effect of welfare benefits was to push peoples incomes just above the poverty line. It follows that a substantial reduction in them pulls their incomes well down below the poverty line. In my view there are sound reasons for accepting the evidence given by the Child Poverty Action Group in the DS case that the effect of the cap is to reduce a family well below the poverty line, judged by the generally accepted measure of less than 60% of median UK income equivalent to the size of the household. There ensues striking evidence adduced on behalf of the DA appellants about the effect on children of an early life of poverty. Professor Atkinson, the former Childrens Commissioner for England, echoing evidence from Jonathan Bradshaw, Professor of Social Policy at York University, offers this summary: Living in poverty has a serious impact on childrens lives, negatively affecting their educational attainment, health, and happiness as well as having long term adverse consequences into adulthood Even a few years of poverty can have negative consequences for a childs development and is especially harmful from the ages of birth to five. Issue 1: The ambit of article 8 AC 91, Lord Nicholls observed in para 14 that In M v Secretary of State for Work and Pensions [2006] UKHL 11, [2006] 2 the more seriously and directly the discriminatory provision or conduct impinges upon the values underlying the particular substantive article, the more readily will it be regarded as within the ambit of that article It cannot seriously be disputed that the values underlying the right of all the appellants to respect for their family life include those of a home life underpinned by a degree of stability, practical as well as emotional, and thus by financial resources adequate to meet basic needs, in particular for accommodation, warmth, food and clothing. In Petrovic v Austria (2001) 33 EHRR 14 the European Court of Human Rights (the ECtHR) held that a refusal to pay a father, as opposed to a mother, a parental leave allowance fell within the ambit of his rights under article 8 because, as explained in para 27, the allowance enabled a parent to stay at home to look after the children and so affected the way in which family life was organised. In Okpisz v Germany (2006) 42 EHRR 32 it held that a decision no longer to pay child benefits to certain aliens fell within the same ambit. In the bedroom tax case, cited at para 30 above, this court held at para 49 and unanimously, that the so called bedroom tax, by which housing benefit was capped by reference to rules about the number of bedrooms which a family needed, fell within the same ambit. Earlier, in the first benefit cap case, the court had no need to consider whether the original cap fell within the ambit of article 8. Nevertheless the government relies on doubts about it which Lord Reed expressed in para 79. The difficulty is that, as the Intervener, Just Fair, suggests, Lord Reed there seems to have equated the ambit of article 8 with interference with rights under it, which, with respect, may not be the usual analysis. In the DA case Collins J and the Court of Appeal both held that the revised cap fell within the ambit of the rights under article 8 of the claimant mothers and children. I have no doubt that they were correct and of course the same applies to the claimants in the DS case. The effect of the provisions for the cap may be that the mother goes to work and escapes it; if so, her children below school age have to be cared for in some other way. Or the effect may be that the cap is imposed, with a variety of possible results: that, as expressly suggested by the government to be an option, the family, no doubt with great difficulty, has to move to cheaper accommodation; or that the mother builds up rent arrears and so risks eviction or otherwise falls into debt; or that, like one of the DA mothers, she has to cease buying meat for the children; or, as in cases recorded by Shelter, that she has to go without food herself in order to feed the children or has to turn off the heating. Whatever their individual effect, provisions for a reduction of benefits to well below the poverty line will strike at family life. Issue 2: Status The government argues, if faintly, that in the DA case the Court of Appeal was wrong to conclude that the claimants, in other words both the lone parents and the children, had a status on the ground of which they might seek to complain under article 14 of discrimination in the enjoyment of their substantive Convention rights. The government submits, for example, that the parents are women, who admittedly enjoy a status under article 14, and that it is therefore inappropriate for them to seek to shoehorn themselves into some other status. The submission is difficult to understand: it is of the essence of the parents case in the DA appeal and of what I regard as a significant part of their case in the DS appeal that they are lone parents of children aged under two or under five, and that the discrimination lies in the difference between their situation and that of others subject to the cap. The government proceeds to submit that the situation of the appellants can be transitory in that a parent may not be a lone parent for ever and that a child will not remain aged under two (or under five) for long. But there is no ground for concluding that a status for the purpose of article 14 has to be permanent. Some of the examples of status given in article 14 itself can change religion, political opinion, even sex. In Mathieson v Secretary of State for Work and Pensions [2015] UKSC 47, [2015] 1 WLR 3250, this court referred in para 21 to previous authority that the concept of status generally comprised personal characteristics and that inquiry into it should concentrate on what somebody is, rather than what he is doing or what is being done to him; it observed in para 22 that, if the complaint of discrimination fell within the ambit of a Convention right, the ECtHR was reluctant to conclude that the complainant had no relevant status; and it held in para 23 that, as a severely disabled child in need of lengthy in patient hospital treatment, the appellants deceased son had had a status within the meaning of article 14. In R (Stott) v Secretary of State for Justice [2018] UKSC 59, [2018] 3 WLR 1831, this court recently conducted a detailed examination of the meaning of other status in article 14. In the event all members of the court other than Lord Carnwath confirmed that its meaning was broad; and they proceeded to hold that a prisoner subject to a particular type of sentence thereby had the status which under article 14 enabled him to allege that its effect had been to discriminate against him in the enjoyment of his rights under article 5 of the Convention. The present appellants assert statuses more obviously composed of personal characteristics than were those recognised in the cases of Mathieson and Stott; and I have no doubt that all of them have the requisite status in the terms set out in paras 13(b), 14(b), 15(b) and 16(b) above. Issue 3: Formulation of the complaints In R (A) v Secretary of State for Health [2017] UKSC 41, [2017] 1 WLR 2492, I noted in para 29 that the claimants complained that they should have been treated in the same way as a specified group but in para 30 that they had turned their argument inside out in complaining alternatively that they should have been treated in a different way from another specified group. I added in para 31 that in that case the alternative presentation added only an extra level of unwelcome complexity. Nevertheless the concept of discrimination is, as Sir Patrick said in para 17 of his judgment in the DA case, underpinned by the fundamental principle not only that like cases should be treated alike but also that different cases should be treated differently. And in some cases, unlike the A case but exemplified by that in the ECtHR of Thlimmenos v Greece (2000) 31 EHRR 12, the natural formulation of the complaint is indeed that the complainants have been treated similarly to those whose situation is relevantly different, with the result that they should have been treated differently. I have sought to describe in paras 13(c), 14(c), 15(c) and 16(c) above the way in which the various appellants before the court formulate their complaints of discrimination. The DA appellants primarily complain that, in applying the revised cap (a) to lone parents of children aged under two and (b) to children aged under two of lone parents (together, the DA cohorts), the government has treated them similarly to others to whom it has applied the cap but whose situation is relevantly different from theirs. So the DA appellants say that, unless the similar treatment can be justified, the government should have treated them differently by exempting them from the cap. But, like the appellants in the A case, the DA appellants can also turn their complaint inside out. They can point to the exemption from the cap granted to those in receipt of a carers allowance (paid to those who for at least 35 hours a week care for an adult on specified benefits) and of a guardians allowance (paid to those who bring up a child of deceased parents). So in the alternative the DA appellants can complain that, in applying the cap to themselves, the government has treated them differently from carers and guardians to whom it has not applied the cap but whose situation is relevantly similar to theirs. So, the DA appellants can say that, unless the different treatment can be justified, the government should have treated them similarly by exempting them from it. Although the alternative formulation of the complaint of the DA appellants has arguable merit, I have no doubt that the natural way of analysing their complaint accords with their primary formulation of it: it is of discrimination of the type explained in the Thlimmenos case, namely that, by subjecting them to the revised cap, the government has treated the DA cohorts similarly to a specified group whose situation is relevantly different from theirs and thus that, subject to justification, it should have treated them differently from it. I confess that I have found it less easy to understand the way in which the DS appellants formulate their complaint. They contend that the revised cap represents discrimination, both direct and indirect, which violates the Convention rights of all lone parents (and/or women because 90% of lone parents are women) and of all children of lone parents. A group of all lone parents would of course include lone parents with children all aged between five and 18, ie all of school age; and so too a group of all children of lone parents would include children of school age. But the evidence of the DS appellants has scarcely been directed to the effect of the cap on households with children all of school age. Mr Drabble is no doubt entitled, by reference to the statistics set out in para 22 above, to complain of the particular effect of the cap on all lone parents and thus on women; but, insofar as they are lone parents of children all of school age, it is already obvious that the government can justify it. In my view the complaint of the DS appellants which the court should proceed to address is their fall back complaint, namely that the cap violates the Convention rights (a) of all lone parents with a child aged under five and (b) of all children aged under five of lone parents (together, the DS cohorts). Although, for reasons unclear, the DS appellants formulate their fall back complaint only reluctantly in accordance with the Thlimmenos case, such seems to me to be, as in the DA case, its natural formulation, namely that, by subjecting them to the revised cap, the government has treated the DS cohorts similarly to a specified group whose situation is relevantly different from theirs and thus that, subject to justification, it should have treated them differently from it. Issue 4: Comparators The question then arises: what is the specified group which the government is said to have treated similarly to the DA and the DS cohorts? As here, the identification of a comparator group can be difficult. In the present case is the proper comparator (a) dual care parents with a child aged under two or under five; or (b) lone parents without a child aged under two or under five; or (c) all others subjected to the revised cap? All three answers are tenable. Collins J favoured comparison with the group at (c); and McCombe LJ found no reason to disagree with him see paras 155, 156 and 173 of his judgment. Sir Patrick and Sir Brian favoured comparison with the group at (b) see paras 115 and 183 of their judgments. Mr Drabble commends comparison with the group at (a). This courts experience is that, of the various tenable comparators in any particular case, adroit advocates will commend the one which would best serve their purpose in relation to the issues which follow. In AL (Serbia) v Secretary of State for the Home Department [2008] UKHL 42, [2008] 1 WLR 1434, Lady Hale said at para 28: so much argument has been devoted in this case, and in too many others, to identifying the precise characteristics of the persons with whom these two young men should be compared. This is an arid exercise. Blessed is simplicity. The complaint made by the appellants is that their cohorts should not have been subjected to the revised cap. The natural corollary is, as Mr Wise contends, that they are comparing their cohorts with all others subjected to the cap: so the natural comparator is the group at (c). Nevertheless, in arguing that there has been an objectionable similarity of treatment between the DA and the DS cohorts, on the one hand, and all others subjected to the cap, on the other, the appellants may seek to highlight their objection by reference to subgroups, such as those at (a) and (b), whose situations are alleged to be relevantly different. Issue 5: Different situations In DH v Czech Republic (2008) 47 EHRR 3 the Grand Chamber of the ECtHR said in para 175 that discrimination means treating differently, without an objective and reasonable justification, persons in relevantly similar situations. Re cast to cover the type of discrimination recognised in the Thlimmenos case, the proposition is that it means treating similarly, without an objective and reasonable justification, persons in relevantly different situations. In Carson v United Kingdom (2010) 51 EHRR 13 the Grand Chamber explained in para 61 what was meant by the absence of objective and reasonable justification: in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised. Clarity of language aids clarity of thought. It is worthwhile to stress, as the court did in the Mathieson case in para 24, that the frequent reference to justified discrimination in the domestic discussion of the concept is, as a matter of law, the expression of a contradiction in terms. As the terminology long favoured by the Grand Chamber shows, justification negatives the very existence of discrimination. In the DH case the Grand Chamber proceeded to explain in para 177 that, once the applicant had shown a difference in treatment of persons in relevantly similar situations, the burden of proof lay on the state to establish that it was justified; and in para 178 that what shifted the burden on to the state was prima facie evidence. There is clear prima facie evidence that in the terms of the re cast proposition the DA and the DS cohorts are in a relevantly different situation from those others who have been treated similarly to them by their common subjection to the revised cap. For it appears (a) that, in the case of a lone parent of a child below school age, in particular of a child below the age of two, it is contrary to the interests both of herself, of her child and of the family as a whole that she should in effect be constrained to work also outside the home; (b) that, by the conditions which it has attached to the receipt of income support, the government has itself decided that it is contrary to their interests; (c) that, irrespective of whether it is contrary to their interests for her to be so constrained, the extra difficulty, beyond that faced by others subjected to the cap, which confronts such parents in finding not only suitable work but also suitable childcare is plain; (d) childcare further increases that difficulty; (e) that the incidence of failure of those represented by the DA and the DS cohorts to escape the cap, namely in the case of the wider DS cohort 54%, and in the case of the narrower DA cohort 25%, of all those who suffer it, demonstrates its disproportionate impact upon them; and (f) that, while the effect of the cap on all households who suffer it is to reduce their income below the poverty line, poverty has a disproportionate effect on the young children within these cohorts, stunting major aspects of their development in the long term as well as in the short term. that, in the case of a child aged under two, the absence of any free Issue 6: Focus of justification In the first benefit cap case Lord Reed said in para 14: the cap affects a higher number of women than men because of differences in the extent to which the sexes take responsibility for the care of children following the break up of relationships. Whether that differential effect has an objective and reasonable justification depends on whether the legislation governing the cap, which brings about that differential effect, has a legitimate aim and is a proportionate means of realising that aim. May I suggest, with respect, that Lord Reed may there have identified the focus of the justification too widely? He described it as the legislation governing the cap. In A v Secretary of State for the Home Department [2004] UKHL 56, [2005] 2 AC 68, Lord Bingham of Cornhill stated in para 68: What has to be justified is not the measure in issue but the difference in treatment between one person or group and another. In the first benefit cap case Lady Hale in para 188 of her dissenting judgment cited Lord Binghams statement and concluded: It is not enough for the Government to explain why they brought in a benefit cap scheme. That can readily be understood. They have to explain why they brought in the scheme in a way which has disproportionately adverse effects on women. I conclude that what the government has to justify in the present case is its failure to amend the 2006 Regulations so as to provide for exemption of the DA and DS cohorts from the revised cap. The Secretary of State does not appear to challenge this conclusion. Issue 7: Test of justification This court has been proceeding down two different paths in its search for the proper test by which to assess the justification under article 14 for an economic measure introduced by the democratically empowered arms of the state. In retrospect this duality has been unhelpful. I regret having contributed to it. The considerations which have informed the mapping of both paths is best explained by two citations. First, from the judgment of Lord Hope of Craighead in In re G (Adoption: Unmarried Couple) [2008] UKHL 38, [2009] AC 173, para 48: Cases about discrimination in an area of social policy will always be appropriate for judicial scrutiny. The constitutional responsibility in this area of our law resides with the courts. The more contentious the issue is, the greater the risk that some people will be discriminated against in ways that engage their Convention rights. It is for the courts to see that this does not happen. It is with them that the ultimate safeguard against discrimination rests. Second, from the judgment of Lord Reed in the first benefit cap case: 92. Finally, it has been explained many times that the Human Rights Act 1998 entails some adjustment of the respective constitutional roles of the courts, the executive and the legislature, but does not eliminate the differences between them: differences, for example, in relation to their composition, their expertise, their accountability and their legitimacy. It therefore does not alter the fact that certain matters are by their nature more suitable for determination by Government or Parliament than by the courts. In so far as matters of that nature have to be considered by the courts when deciding whether executive action or legislation is compatible with Convention rights, that is something which the courts can and do properly take into account, by giving weight to the determination of those matters by the primary decision maker. 93. That consideration is relevant to these appeals, since the question of proportionality involves controversial issues of social and economic policy, with major implications for public expenditure. The determination of those issues is pre eminently the function of democratically elected institutions. It is therefore necessary for the court to give due weight to the considered assessment made by those institutions . Lord Reed then completed para 93 by adding Unless manifestly without reasonable foundation, their assessment should be respected. The appropriateness of an inquiry into whether the adverse effects of certain measures are manifestly without reasonable foundation is firmly rooted in the jurisprudence of the ECtHR. In James v United Kingdom (1986) 8 EHRR 123, in which it rejected the challenge to the legislation in England and Wales for leasehold enfranchisement, that court, in plenary session, held at para 46 that it should respect the judgment of the national legislature as to what was in the public interest unless it was manifestly without reasonable foundation. And in Stec v United Kingdom (2006) 43 EHRR 47, para 52, which it repeated word for word in Carson v United Kingdom (2010) 51 EHRR 13, para 61, the Grand Chamber, addressing complaints of discrimination arising out of the rules for entitlement to social security benefits, held that it should respect the national legislatures determination of where the public interest lay when devising economic or social measures unless it was manifestly without reasonable foundation. It explained that this more benign approach to the establishment of justification for the adverse effects of a rule flowed from the margin of appreciation which was wide in this area of decision making. I now accept that the weight of authority in our court mandates inquiry into the justification of the adverse effects of rules for entitlement to welfare benefits by reference to whether they are manifestly without reasonable foundation. In Humphreys v Revenue and Customs Comrs [2012] UKSC 18, [2012] 1 WLR 1545, the court rejected a complaint that a rule for entitlement to child tax credit discriminated against men on the basis that the different treatment of men which resulted from the rule was not manifestly without reasonable foundation. In her judgment, with which the other members of the court agreed, Lady Hale said in para 19 that in the context of state benefits the normally strict test for justification of the effect of a rule alleged to be discriminatory on grounds of sex gives way; but she added in para 22 that it did not follow that such a rule should escape careful scrutiny. The possible mapping of a different path emerged in the judgment of Lord Mance in In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3, [2015] AC 1016. But the subject matter was not the entitlement to welfare benefits. It was a proposed bill in the National Assembly of Wales for costs incurred by NHS Wales to be cast upon identified groups. The courts decision was that the bill fell outside the assemblys legislative competence. But Lord Mance proceeded to consider, in passing, whether the bill would have infringed the rights of the groups under article 1 p 1. This required him to consider how the court should assess whether a deprivation of property was justified. In this regard he referred in para 45 to the four stages of a conventional inquiry into justification. In para 52 he held that the first three stages (which require the establishment of a legitimate aim of the measure, of a rational connection of the measure to the aim and of an inability to achieve it less intrusively) could be addressed by whether the contentions in support of the measure were manifestly without reasonable foundation; but that the fourth stage (which requires the establishment of a fair balance between all the interests in play) fell for decision by the court, although it might pay significant respect to the balance favoured by those responsible for the measure. A month after delivery of its judgments in the Wales case the court delivered its judgments in the first benefit cap case. It proceeded on the agreed basis that, if the analysis reached the stage at which the effect of the impugned provisions fell to be justified, the appellants had to establish that it was manifestly without reasonable foundation; and, by a majority, the court held that they had failed to satisfy this agreed criterion. In their dissenting judgments Lady Hale and Lord Kerr duly applied the agreed criterion, albeit with opposite results. But in para 209 of her judgment Lady Hale referred to para 52 of Lord Mances judgment in the Wales case and observed that a benefit cap closely resembled a deprivation of property; and in para 210 she floated the idea that, in the absence of agreement upon the criterion, it might have been possible to limit its application to the stages of the conventional inquiry referable to the aim of the provisions and to exclude its application to the final stage referable to its fair balance and overall proportionality. Almost two years later the court delivered its judgments in the bedroom tax case, cited in para 30 above. Two of the three conjoined appeals concerned claims that the effect of rules for the computation of housing benefit was to discriminate against disabled people in the enjoyment of their rights under article 8 and/or article 1 p 1. Giving the main judgment, Lord Toulson recorded in para 28 the primary contention of the claimants in the first appeal as having been that the Court of Appeal had erred in asking whether the treatment of which they complained was manifestly without reasonable foundation. In paras 29 to 38 he then at length set out reasons in support of his conclusion, in which all the other members of the court concurred, that the Court of Appeal had not erred when, in assessing justification for the effect of the rules on the claimants, it had asked itself that single question. Several months after delivery of the judgments in the bedroom tax case, the court delivered its judgments in the A case cited in para 40 above. The case concerned not welfare benefits but the governments refusal, partly on grounds of cost, to exercise its power to require the NHS in England to provide free abortion services to women usually resident in Northern Ireland. One of the arguments on behalf of the women was that the effect of its refusal was to discriminate against them in the enjoyment of their rights under article 8 of the Convention. I gave a judgment, with which Lord Reed and Lord Hughes agreed, in which I rejected the argument. Lady Hale and Lord Kerr gave judgments in which they upheld it. It was in the course of my judgment, in para 33, that I cited the judgment of Lord Mance in the Wales case and asserted it to have become clear that, of the four aspects of an inquiry into justification under the Convention of the effect of a measure of economic or social policy, the fourth, relating to a fair balance, fell to be answered by the court for itself and not by reference to whether it was manifestly without reasonable foundation. We may put aside consideration of whether the government decision impugned in the A case was of a character, unlike its rules of entitlement to welfare benefits, which made my suggested approach to its justification sound in law. For, even if so, I expressed myself too widely. Even though none of the other members of the court, including those in dissent, took issue with what I said, I take sole responsibility for it. Probably also emboldened by Lady Hales observations in the first benefit cap case, I reached too quickly for the observations of Lord Mance in the Wales case. For by then there was and there still remains clear authority both in the Humphreys case and in the bedroom tax case for the proposition that, at any rate in relation to the governments need to justify what would otherwise be a discriminatory effect of a rule governing entitlement to welfare benefits, the sole question is whether it is manifestly without reasonable foundation. Let there be no future doubt about it. How does the criterion of whether the adverse treatment was manifestly without reasonable foundation fit together with the burden on the state to establish justification, explained in para 50 above? For the phraseology of the criterion demonstrates that it is something for the complainant, rather than for the state, to establish. The rationalisation has to be that, when the state puts forward its reasons for having countenanced the adverse treatment, it establishes justification for it unless the complainant demonstrates that it was manifestly without reasonable foundation. But reference in this context to any burden, in particular to a burden of proof, is more theoretical than real. The court will proactively examine whether the foundation is reasonable; and it is fanciful to contemplate its concluding that, although the state had failed to persuade the court that it was reasonable, the claim failed because the complainant had failed to persuade the court that it was manifestly unreasonable. Issue 8: Content of UNCRC rights Article 3 of the UNCRC provides: 1. In all actions concerning children, whether undertaken by courts of law, administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration. A move is afoot, exemplified by Lord Kerrs judgment in the first benefit cap case at paras 247 to 257, for UK courts to treat the UNCRC, which the UK has ratified, as being, exceptionally, part of our domestic law. At present, however, it forms no part of it. What does the concept of the best interests of the child in article 3.1 encompass? In the Mathieson case, at para 39, this court approved a suggestion which Lord Carnwath had made in para 105 of the first benefit cap case to the effect that authoritative guidance was to be found in para 6 of General Comment No 14 (2013) of the UN Committee on the Rights of the Child. There the committee had suggested that the concept had three dimensions: (a) a substantive right of the child to have his or her best interests assessed as a primary consideration when different interests are being considered in order to reach a decision on the issue at stake; (b) an interpretative principle, irrelevant to the present appeals; and importantly; (c) a rule of procedure that, whenever a decision is to be made that will affect an identified group of children, the decision making process must include an evaluation of the possible impact of the decision on them. In the light in particular of the Mathieson case, the government cannot deny that the committees analysis is authoritative guidance in relation to the dimensions of the concept in article 3.1. It can submit only, and correctly, that the guidance is not binding even on the international plane and that, while it may influence, it should, as mere guidance, never drive a conclusion that the article has been breached. The UNCRC also provides: (a) under article 26(1) that States Parties shall recognize for every child the right to benefit from social security and shall take the necessary measures to achieve the full realization of this right in accordance with their national law; (b) under article 27(1) that States Parties recognize the right of every child to a standard of living adequate for the childs physical, mental, spiritual, moral and social development; and (c) under article 27(3), having at (2) cast upon parents the primary responsibility for securing living conditions necessary for their childs development, that States Parties, in accordance with national conditions and within their means, shall take appropriate measures to assist parents to implement this right and shall in case of need provide material assistance particularly with regard to nutrition, clothing and housing. Issue 9: Relevance of UNCRC rights The ECtHR has made it clear that, where relevant, the content of another international convention, in particular one relating to human rights such as the UNCRC, should inform interpretation of the Convention: Neulinger v Switzerland (2010) 54 EHRR 1087, paras 131 and 132. It follows that, when relevant, the content of the UNCRC can inform inquiry into the alleged violation of article 14 of the Convention, when taken with one of its substantive rights. But in what circumstances is any breach of article 3.1 of the UNCRC relevant to an alleged violation of article 14? The question was addressed by each of the five members of this court in the first benefit cap case, in which the suggested violation of article 14 lay in the caps alleged discrimination against women in the enjoyment of their right to possession of welfare benefits under article 1 p 1. The answers were as follows: (a) Lord Reed assumed, rather than held, in para 88 that the cap breached article 3.1 of the UNCRC but held at para 89 that such breach was irrelevant to the alleged discrimination against women. (b) Lord Carnwath held in paras 122 to 128 that the cap did breach the article but held in paras 125 to 131 that such breach was irrelevant to the alleged discrimination. (c) Lord Hughes held in para 146 that any such breach was irrelevant to the alleged discrimination and in paras 148 to 155 that in any event the cap did not breach the article. (d) Lady Hale held in para 224 that any breach of the article was relevant to the alleged discrimination and in paras 226 to 229 that the cap did breach it. (e) Lord Kerr, like Lady Hale, held in para 262 that the cap did breach the article and in paras 263 to 268 that the breach was relevant to the alleged discrimination. In the present case the complaint of discrimination differs from the complaint in the first benefit cap case. The adult victims of the alleged discrimination are now cast not merely as women but as lone parents of children below school age. Moreover these children are now cast as further victims of it in their own right. And, although the lone parents repeat their complaint of discrimination in the enjoyment of their rights under article 1 p 1 of the Convention, both they and their children now complain of it in relation to the enjoyment of their respective rights to respect for their family life under article 8. In explaining in the first benefit cap case that a breach, if any, of article 3.1 was irrelevant to the alleged discrimination, Lord Reed, Lord Carnwath and Lord Hughes each stressed in the paragraphs cited above that in their view the alleged discrimination could not be said to be directed against children. It is clear that the government cannot import their reasoning into the present proceedings. Equally it undertakes a mammoth task in maintaining the argument that, in setting the terms of the revised cap, it was not taking an action concerning children within the meaning of article 3.1. If valid in relation to the revised cap, the argument would have been valid in relation to the original cap. But it was rejected by Lord Carnwath, Lady Hale and Lord Kerr; and it was specifically upheld neither by Lord Reed nor by Lord Hughes. In para 107 Lord Carnwath referred further to General Comment No 14, namely to para 19 in which the committee explained that the duty under article 3.1 applies to all decisions on the part of public authorities which directly or indirectly affect children. Insofar as in the present appeals the children themselves claim a violation of rights of their own under article 14, taken with article 8, their rights should be construed in the light of the UNCRC as an international convention which identifies the level of consideration which should have been given to their interests before subjecting their households to the revised cap. But can the lone parents themselves also claim that their own rights under article 14, taken with article 8, must be construed in the light of the provision in the UNCRC for consideration of their childrens interests? The interests of the lone parents in play in the present appeals are indistinguishable from the interests of their children below school age. Their claim is as parents: so, without their children, it would not exist. Indeed their claim is as lone parents: so responsibility for their children in effect rests solely upon them. And their claim is to defend furtherance of their family life from the effects of a cap on benefits specifically computed by reference to the needs of their children and themselves taken together. Never more apt than to the present appeals is the observation of Lady Hale in Beoku Betts v Secretary of State for the Home Department [2008] UKHL 39, [2009] AC 115, in para 4 that: The right to respect for the family life of one necessarily encompasses the right to respect for the family life of others, normally a spouse or minor children, with whom the family life is enjoyed. The claims of all the appellant cohorts under article 14, taken with article 8, therefore require the court to proceed to assess whether, in setting the terms of the revised cap, the government breached article 3.1 of the UNCRC. Were the court to hold that it had done so, what would the effect of it be? The overarching inquiry is whether its decision not to exempt the appellant cohorts from the cap was manifestly without reasonable foundation. As McCombe LJ observed, albeit more forcefully, in para 178 of his dissenting judgment in the DA case, a foundation for the decision not made in substantial compliance with article 3.1 might well be manifestly unreasonable. Issue 10: Breach of UNCRC rights In deciding upon the terms of the revised cap, did the government have regard, as a primary consideration, to the best interests of children below school age of lone parents and did it evaluate the possible impact of its decision upon them? In answering this question within its overarching inquiry into the alleged violation of Convention rights, the court can, without constitutional impropriety, have regard to Parliamentary materials which explain the background to the governments decision and in particular its policy objectives: Wilson v First County Trust Ltd (No 2) [2003] UKHL 40, [2004] 1 AC 816, paras 61 to 66. It is worthwhile to preface an attempted answer to the question by adverting to two features of the Parliamentary discussion of the Bill which introduced the original cap, both briefly noted by Lord Reed in his judgment in the first benefit cap case at paras 29 and 40. (a) In May 2011 Ms Buck MP tabled an amendment before the Public Bill Committee of the House of Commons to the effect that households should be exempt from the cap if childcare costs outweighed earnings. She referred in particular to lone parents with four or five children, of whom one was aged under five. The government opposed the amendment, which Ms Buck withdrew. (b) In November 2011 the Lord Bishop of Ripon tabled an amendment before the Lords Grand Committee that lone parents of children aged under five should be exempt from the cap. He said: The exemption of lone parents with children under five is particularly important. The current system recognise[s] that those additional commitments make it hard for them to move into work and, indeed, recognise[s] that they are not expected to seek work it seems unreasonable to place a cap on the benefits that they should receive when we acknowledge that they should not be put under pressure to seek work. The government opposed the amendment on the basis that encouragement to work did not equate to a requirement to work and that there had to be a limit to the amount of a households benefits. In the end the bishop did not press his amendment. On 8 September 2015, following presentation to Parliament of the Bill which included provision for the revised cap, the government published its Memorandum to the Joint Committee on Human Rights, in which, pursuant to its duty under section 19 of the 1998 Act, it stated that in its view the provision was compatible with Convention rights. In the memorandum the government accepted in para 18 that the provision fell within the ambit of article 1 (a) p 1 and arguably of article 8; (b) noted in para 19 the decision of this court in the first benefit cap case; (c) accepted in para 19 that 60% of those capped under the original scheme had been lone parents; (d) contended in para 21 that, to the extent that the revised cap impacted upon them disproportionately to its impact on others, its impact was justified in the interest of the economic well being of the UK and of incentivising people to work; and (e) claimed in para 77 that, in the light of this courts decision in the first benefit cap case, it had, in relation to the proposed revision of the cap, fully considered what it described as its obligations under the UNCRC because the best interests of children overall were promoted when their parents were in work and because work remained the surest route out of poverty. On 10 September 2015 Gingerbread made representations to the Public Bill Committee of the House of Commons in respect of the proposed revision of the cap. Its policy director said: Over 60% of people capped so far have been single parents; 70% of them have children under five and 34% have children under two the younger the child is when the parent is capped, the harder it is for them to get into work we really also need to be looking at the contradiction between the benefit cap and the conditionality policy that exists. If you are capping up to 20,000 single parents who have children under two, there is no childcare support available for that group at present. There is also a real shortage of childcare available, so there are really clear reasons why that group of single parents will not be able to go into work. [The governments] research, again, has shown that where those people who are capped do not find work, it is likely that 40,000 more children would be pushed into poverty. When we are looking at the benefit cap we need to look at the circumstances of the family and the age of the child. On 17 September 2015 Ms Thornberry MP, then the shadow minister of state for employment, tabled before the same committee an amendment to the Bill to the effect that the revised cap should not apply to persons responsible for the care of a child aged below two. The group proposed to be exempted was therefore close to the DA cohorts. But it was not identical in that Ms Thornberrys amendment appeared to exempt dual care parents as well as lone parents, although at one point in the discussion she seemed to suggest otherwise. In arguing for her amendment Ms Thornberry suggested that the original cap had overwhelmingly applied to people who were recognised within the benefits system itself as being unable to work. She referred to the evidence which the committee had heard a week earlier, including no doubt that of Gingerbread, and she explained that the narrow exemption which she proposed was for a group that was perhaps the most acutely vulnerable and the least able to change its circumstances. But the committee rejected the amendment by ten votes to five. Between November 2015 and February 2016 the House of Lords in debates and in committee considered in detail the provision for the revised cap. In summary (a) Baroness Lister suggested that it was not reasonable to expect a lone parent with a child aged under one to work. She suggested that the government had not properly assessed the best interests of different groups of children pursuant to its obligation under article 3.1 of the UNCRC. that (b) Baroness Manzoor suggested disproportionately affect single parents with a child aged under five. (c) Baroness Hollis suggested that lone parents with children aged under three were effectively out of the labour market. She tabled an amendment to exempt carers of children aged under nine months from the cap. lower cap would the But the amendment proposed by Baroness Hollis failed; and the government did not act on the various suggestions. Lord Freud on its behalf stressed the importance of the message that work pays and that households on benefits should not receive more than working households; and he declared that the way to address hard cases was by DHPs, to which the government would allocate 870m over the following five years. The governments Equality Analysis dated September 2016 in relation to the 2016 Regulations, like its IA dated August 2016, claimed that the government had taken the UNCRC into account. It stated that it was not in the best interests of children to live in workless households and referred to studies which concluded that children in such households exhibited greater behavioural problems from the age of seven and poorer academic attainment. It recognised that lone parents might find it hard to work as a result of childcare responsibilities but pointed out that measures of mitigation, in particular free childcare and DHPs, had been put in place. By a narrow margin I am driven to conclude that, in relation to its refusal to amend the 2006 Regulations so as to exempt the appellant cohorts from the revised cap, the government did not breach article 3.1 of the UNCRC in either of the relevant dimensions of its concept of the best interests of a child. The Parliamentary and other materials to which I have referred demonstrate that it did evaluate the likely impact of the revised cap on lone parents with young children; and that it did assess their best interests at a primary level of its overall consideration. This court must impose on itself the discipline not, from its limited perspective, to address whether the governments evaluation of its impact was questionable; nor whether its assessment of the best interests of young children was unbalanced in favour of perceived long term advantages for them at the expense of obvious short term privation. Issue 11: Conclusion on justification I am also driven to conclude that the governments decision to treat the appellant cohorts similarly to all others subjected to the revised cap was not manifestly without reasonable foundation. In this regard, for reasons which I will not rehearse, the DA cohorts have a stronger case than have the DS cohorts; but, again by a narrow margin, even the stronger case fails. The appellants have not entered any substantial challenge to the governments belief that there are better long term outcomes for children who live in households in which an adult works. The belief may not represent the surest foundation for the similarity of treatment in relation to the cap; but it is a reasonable foundation, in particular when accompanied by provision for DHPs which are intended on a bespoke basis to address, and which on the evidence are just about adequate in addressing, particular hardship which the similarity of treatment may cause. Disposal There has been no Convention related discrimination. The appeals must be dismissed. Had discrimination existed, the court would have proceeded to consider whether to make a declaration that the failure to include the appellant cohorts in the list of exemptions in the 2006 Regulations was incompatible with their Convention rights. A declaration is a discretionary remedy; and to decide whether to exercise the discretion would have precipitated substantial inquiry into the institutional propriety for this court to make a declaration in relation to decisions about entitlement to welfare benefits made by the government in Parliament following protracted debate. But it is this same crucial, if sometimes problematic, concept of institutional propriety which informs the test of justification, generous to the government, of a measure such as that of the revised cap; and it is therefore at that stage that, in relation to such a measure, the concept will usually play its part. Postscript These appeals were rightly brought. The arguments raised in them have been of such weight as to attract this courts most careful and sympathetic consideration; and they have led two members of the court to enter a powerful dissent from the majoritys dismissal of the appeals. On 12 March 2019, shortly prior to the delivery today of these judgments and long after our hearing of the appeals, the Work and Pensions Committee of the House of Commons published its report on The Benefit Cap, 24th Report of Session 2017 19, HC 1477. Although in form a study of the effect of the original as well as of the revised cap, the report inevitably focusses on the current, more severe, effects of the revised cap. It addresses, although in far greater detail, all the factors to which I have referred in paras 22 to 34 above under the heading Evidence; as well, of course, as many more relevant factors. In the report the committee calls on the government urgently to conduct a full audit of the policy behind the benefit cap; to reconsider the limits at which benefits are capped; and in particular to disapply the cap to those who, by reference to the conditions attached to the receipt of income support, are not yet expected to look for work. The fact that a committee of the House of Commons is at this present time calling for urgent review of the provisions of the revised cap would in my view have fortified a decision, had the need to make it been reached, that institutional propriety militated against the grant of a declaration of incompatibility at this stage: R (Nicklinson) v Ministry of Justice [2014] UKSC 38, [2015] AC 657, paras 113 118 (Lord Neuberger of Abbotsbury PSC). LORD CARNWATH: (with whom Lord Reed and Lord Hughes agree) I agree with Lord Wilson that the appeal should be dismissed, for the reason that the approach adopted by the government, even if in other respects meeting the tests for discrimination under article 14, was not, as he says, manifestly without reasonable foundation. However, having been a member of the majority in the related case of SG, I add some comments on the relationship between the two cases, and some remaining points of difference (or difference of emphasis). The benefit cap imposes a cap on the total amount of annual welfare benefits that a given household can receive. The legality of the previous scheme under the Welfare Reform Act 2012 was upheld by this court (by a majority) in R (SG) v Secretary of State for Work and Pensions [2015] 1 WLR 1449. Although the scheme was agreed to be discriminatory against women for the purposes of articles 14 and A1P1, it was held to be justified because (in the words of the headnote): the legislatures policy choice in relation to general measures of economic or social strategy, including welfare benefits, would be respected unless it was manifestly without reasonable foundation; that the view of the Government, endorsed by Parliament, that achieving the legitimate aims of fiscal savings, incentivising work and imposing a reasonable limit on the amount of benefits which a household could receive was sufficiently important to justify making the Regulations despite their differential impact on men and women, had not been manifestly without reasonable foundation. That to my mind is an accurate summary of the leading judgment of Lord Reed, agreed in terms by Lord Hughes, and implicitly by myself. Furthermore the majority held that the case was not strengthened by reference to article 3.1 of the UNCRC. It is convenient again to refer to the summary in the headnote: even on an assumption (per Lord Reed and Lord Hughes JJSC) or an acceptance (per Lord Carnwath JSC) that the Secretary of State had failed to show how the Housing Benefit Regulations 2006 were compatible with the article 3.1 obligation to treat the best interests of children as a primary consideration, such failure did not have any bearing on whether the legislation unjustifiably discriminated between men and women in relation to their enjoyment of A1P1 property rights In this respect also, there was full agreement between the members of the majority on the legal principles to be applied, articulated most fully by Lord Reed (at paras 78 91). In short, while article 3.1 is not a source of substantive rights or duties under the European Convention, it may where appropriate be taken into account as an aid to interpretation of those rights or duties. Although we differed as to whether article 3.1 had been in fact been complied with, we were agreed that it had no relevance to the issue then before us of discrimination under article 14 in relation to the A1/P1 property rights of women. The benefit cap legislation was politically controversial and subject to vigorous debate in Parliament, directed to both the principle and the detail. The difficulty posed by the legal issues in that appeal is apparent from the division of opinion within the court, and from the time taken to reach a decision (almost 11 months). However, it must be taken as settling the issues of principle, absent a challenge to the reasoning of the majority, some material change in the relevant legislation or the circumstances of the individual cases, or some new argument of substance which was not addressed. The present challenge is to the amended scheme under the Welfare Reform and Work Act 2016. By section 8 of the 2016 Act, the applicable cap was reduced from 26,000 per annum for all families to 23,000 for families living in Greater London, and 20,000 for families living outside London (the Revised Benefit Cap). A significant change is that the amount of the cap is embodied in primary legislation, rather than regulations, as is the list of benefits to which it applies, including child benefits and child tax credit (section 96(10)). It is rightly not suggested that these aspects of scheme, as now incorporated in primary legislation, are in themselves open to review or incompatible with the Convention. To that extent the scope for challenge has been reduced. The 2012 Act gave the Secretary of State the power to make detailed provision for the implementation of a benefit cap by way of regulations. Under section 96(4)(c) of the 2012 Act, this includes a discretion to make exceptions to the application of the cap. The Benefit Cap (Housing Benefit) Regulations 2012 (SI 2012/2994) provide, inter alia, that adults who are entitled to working tax credit are not subject to the benefit cap. In the case of a lone parent, receipt of working tax credit requires that he or she engages in work for at least 16 hours per week. It is the regulations which are the focus of the present attack. In summary the appellants argue that their parental responsibilities, combined with the lack of adequate care support, make it in effect impracticable for them to achieve the 16 hours of work necessary to qualify for exemption. It is argued that failure to make an appropriate exception for them under the regulations involved unjustified discrimination contrary to article 14 of the ECHR. Apart from the change in legislation, there appear to be three main differences from the arguments as presented in the earlier cases: i) Article 8 Particular emphasis has been placed on article 8 of the Convention (rather than article 1 of Protocol 1 (A1P1) which was the main focus of attention in SG), and its relevance to the best interests test under the UNCRC; ii) Status The focus has shifted to the so called Thlimmenos principle, and the groups allegedly discriminated against have been recalibrated and re defined in various ways: (DS appellants) (i) lone parents, (ii) lone parents with children under the age of five (iii) children of parents in groups (i) or (ii); (DA appellants) (iv) lone parents with children under two (v) children of such parents. iii) Test for justification It is argued that in the light of more recent Supreme Court authority, the manifestly without reasonable foundation criterion applied in SG, has been superseded by a broader fair balance test. I will consider each of these points in turn before explaining my conclusions in the present appeals. (i) Article 8 As I noted in SG (para 99) article 8 had been mentioned by Mr Wise in his printed case, not as a free standing claim, but as an alternative route into article 14, or as supporting his best interests claim in respect of the children under article 3.1 of the UNCRC. I noted that article 8 was not relied on by Mr Drabble QC, then appearing for the Child Poverty Action Group. I was not at that time persuaded that either of Mr Wises formulations adds anything of substance to the claim based on A1P1. It may be in retrospect that we should have given more attention to this aspect of Mr Wises submissions. In any event, there is no doubt that the main weight of the argument at that time, and the reasoning of the majority, were directed to A1P1 rather than article 8. Lord Hughes in particular drew a clear distinction between the two in the particular context of the best interests principle under article 3.1 of the UNCRC: 146. If the rights in question are the A1P1 property rights of women, and their associated derivative right not to be discriminated against in relation to those rights, it is an impermissible step further to say that there is any interpretation of those rights which article 3 of the UNCRC can inform. In the case of article 8, the childrens interests are part of the substantive right of the parent which is protected, namely respect for her family life. In the case of A1P1 coupled with article 14, the childrens interests may well be affected (as here), but they are not part of the womans substantive right which is protected, namely the right to be free from discrimination in relation to her property. There is no question of interpreting that article 14 right by reference to the childrens interests This approach is also consistent with established authority on the application of the best interest principle in the context of article 8. As Lord Hodge said for the court in Zoumbas v Secretary of State for the Home Department [2013] UKSC 74; [2013] 1 WLR 3690, para 10: The best interests of a child are an integral part of the proportionality assessment under article 8 of the Convention. Accordingly the present appeal has required us to look in more detail at the application of article 8. As to the application of article 14 in connection with article 8, it is unnecessary to repeat Lord Wilsons review of the relevant Strasbourg authorities under his issue 1. In agreement with him I am satisfied that the present claims fall within the ambit of article 8 so as to engage the issue of discrimination under article 14. I also agree with him that in that context the best interests principle under article 3.1 is potentially relevant. I have more difficulty with the issue of status to which I now turn. Identifying the relevant group or status (ii) Although the Thlimmenos principle is now well established, it does not in my view materially change the nature of the inquiry from that undertaken in SG. In particular it does not diminish the need under article 14 to show that the alleged discrimination arose from a relevant status, and to identify a relevant comparator with whose treatment that of the claimant group can be compared (Lord Wilsons issues 2 and 4). In Thlimmenos v Greece the applicant was a Jehovahs Witness who had been convicted of insubordination under the Military Criminal Code for refusing to wear a military uniform at a time of general mobilisation. He was subsequently refused appointment as a Chartered Accountant under rules which excluded those convicted of serious crimes. He argued that the lack of an appropriate exception for those whose conviction was due to religious considerations constituted unlawful discrimination under article 14 taken with article 9 of the Convention. The argument was accepted by the Grand Chamber. Having noted that article 14 had hitherto been applied to differential treatment of persons in analogous situations without objective and reasonable justification, the court continued: However, the court considers that this is not the only facet of the prohibition of discrimination in article 14. The right not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is also violated when states without an objective and reasonable justification fail to treat differently persons whose situations are significantly different. (para 44) Although the courts formulation of the principle does not refer to status as a criterion, it is apparent from the preceding discussion that this point was not in issue. In that respect the applicants argument as recorded by the court relied on his position as a Jehovahs Witness: The class of persons to which the applicant belonged, namely male Jehovahs Witnesses whose religion involved compelling reasons for refusing to serve in the armed forces, was different from the class of most other criminal offenders. The Governments failure to take account of this difference amounted to discrimination not tolerated by article 14 of the Convention taken in conjunction with article 9. (para 34) That aspect of his case was not challenged. It is also clear that an important feature of the case was the close link between the alleged discrimination and the protected religious rights under article 9. The Thlimmenos formulation has been often repeated and is not in doubt. However, there are few illustrations of its practical scope and application. An example is EB v Austria (Application No 31913/07, judgment of November 7, 2013), in which the First Section found that the principle required an exception to the general rule that convictions remained on the persons record even if the offence in question had since been abolished. In that case, there was a violation of article 14 taken with article 8 as convictions for homosexual acts, later found to be incompatible with the ECHR, remained on the applicants criminal records. We were referred to no Strasbourg case in which the principle has been applied in the context of social welfare legislation such as is in issue in this case. Although there is no reason to exclude its operation in this context, the absence of successful cases in Strasbourg may reflect the courts recognition in this context of the need for national rules to be framed in broad terms (SG para 15 per Lord Reed citing Carson v United Kingdom (2010) 51 EHRR 13 para 62), and the consequent difficulty of challenging the treatment of particular groups. I must accept (as Lord Wilson says: para 39) that in R (Stott) v Secretary of State for Justice the majority of this court adopted a relatively broad view of the concept of status. On that basis I would agree that lone parents can properly be regarded as having a status within the Thlimmenos principle. In agreement with Lord Hodge, I am much more doubtful as to the appropriateness of the other narrower forms of status relied on in this case. In particular I find it hard to see any basis for defining the parents and the children as distinct groups; the adverse effects are on the families, in which the interests of parents and children are jointly affected. However, in the absence of any directly relevant Strasbourg authority on these points, it is difficult to reach a concluded view. Like Lord Hodge I am content to assume for present purposes that the status requirement is satisfied in respect of each such group. The relevant issues therefore are whether those groups or sub groups are sufficiently different from other comparable groups to have required separate treatment under the Thlimmenos principle to avoid interference with their article 8 rights, and whether a failure in that regard can be justified. (iii) Test for Justification The argument that a less demanding test should be applied than manifestly without reasonable foundation (or its hard to escape acronym MWRF) was most fully articulated by Mr Wise QC for DA. For the reasons given by Lord Wilson (issue 7) I agree with him that this argument must be rejected, and that the application of the MWRF should be regarded as beyond future doubt. However, since this view is not accepted by all the members of the court, I feel it necessary to add some comments of my own on Mr Wises arguments. He started from the four stage approach as summarised by Lady Hale in R (Tigere) v Secretary of State for Business, Innovation and Skills [2015] UKSC 57; [2015] 1 WLR 3820, para 33: (i) does the measure have an legitimate aim sufficient to justify the limitation of a fundamental right; (ii) is the measure rationally connected to that aim; (iii) could a less intrusive measure have been used; and (iv) bearing in mind the severity of the consequences, the importance of the aim and the extent to which the measure will contribute to that aim, has a fair balance been struck between the rights of the individual and the interests of the community? He accepted that the MWRF test was adopted by this court in Humphreys v Her Majestys Revenue and Customs Comrs [2012] UKSC 18; [2012] 1 WLR 1545 (alleged discrimination in respect of state benefits), following the ECHR decision in Stec v United Kingdom (2006) 43 EHRR 1017, and in other more recent cases. However, in those cases, as he submitted (in his written case) the Supreme Court did not distinguish between the different elements of the justification analysis and, in particular, did not distinguish between the questions whether a discriminatory measure (i) pursued a legitimate aim or aims and (ii) was proportionate in the sense of striking the requisite fair balance. At the latter stage, he argued, MWRF has no application. For this he relied on what was said by Lord Mance, with the agreement of the majority of the court in the Welsh Asbestos case, and repeated in R (A) v Secretary of State for Health (as Lord Wilson has explained: paras 61, 64). With respect to those members of the court who think otherwise, it is clear in my view that the MWRF test remains the appropriate test in the present context. There is nothing in the later cases to support a departure from the position, as accepted by all parties, and adopted by the court in the SG case. It is useful to begin by reference to what was said by Lady Hale (with the agreement of the rest of the court) in the Humphreys case itself: 17. The phrase manifestly without reasonable foundation dates back to James v United Kingdom (1986) 8 EHRR 123, para 46, which concerned the compatibility of leasehold enfranchisement with article 1 of the First Protocol. In the Stec case 43 EHRR 1017, the court clearly applied this test to the states decisions as to when and how to correct the inequality in the state pension ages, which had originally been introduced to correct the disadvantaged position of women. Similarly, the decision to link eligibility for the reduced earnings allowance to the pension system was reasonably and objectively justified, given that this benefit is intended to compensate for reduced earning capacity during a persons working life (para 66). The Grand Chamber applied the Stec test again to social security benefits in Carson v United Kingdom (2010) 51 EHRR 369, para 61, albeit in the context of discrimination on grounds of country of residence and age rather than sex. 18. The same test was applied by Lord Neuberger of Abbotsbury (with whom Lord Hope of Craighead, Lord Walker of Gestingthorpe and Lord Rodger of Earlsferry agreed) in R (RJM) v Secretary of State for Work and Pensions [2009] 1 AC 311, which concerned the denial of income support disability premium to rough sleepers. Having quoted para 52 of the Stec case he observed, at para 56, that this was an area where the court should be very slow to substitute its view for that of the executive, especially as the discrimination is not on one of the express, or primary grounds. He went on to say that it was not possible to characterise the views taken by the executive as unreasonable. He concluded at para 57: The fact that there are grounds for criticising, or disagreeing with, these views does not mean that they must be rejected. Equally, the fact that the line may have been drawn imperfectly does not mean that the policy cannot be justified. Of course, there will come a point where the justification for a policy is so weak, or the line has been drawn in such an arbitrary position, that, even with the broad margin of appreciation accorded to the state, the court will conclude that the policy is unjustifiable. 19. Their Lordships all stressed that this was not a case of discrimination on one of the core or listed grounds and that this might make a difference. In R (Carson) v Secretary of State for Work and Pensions; [2006] 1 AC 173, both Lord Hoffmann and Lord Walker drew a distinction between discrimination on grounds such as race and sex (sometimes referred to as suspect) and discrimination on grounds such as place of residence and age, with which that case was concerned. But that was before the Grand Chambers decision in the Stec case . It seems clear from Stec, however, that the normally strict test for justification of sex discrimination in the enjoyment of the Convention rights gives way to the manifestly without reasonable foundation test in the context of state benefits. The same principles were applied to the sex discrimination involved in denying widows pensions to men in Runkee v United Kingdom [2007] 2 FCR 178, para 36. If they apply to the direct sex discrimination involved in the Stec and Runkee cases, they must, as the Court of Appeal observed at para 50, apply a fortiori to the indirect sex discrimination with which we are concerned As that passage shows, authority at the highest level in this country for the application of the MWRF test goes back at least to the House of Lords in RJM. Also noteworthy is her reference to the distinction drawn by the House of Lords between the core grounds such as race and sex, and other grounds; and her acceptance that, even in the core context of sex discrimination, the normally strict test for justification gives way to the MWRF test in the context of state benefits. In the SG case itself the discrimination was said to be against women, and thus within one of the core grounds. As one moves further away from those concepts to the more distant groups identified in the present case, there is still less reason to depart from the MWRF approach. SG was argued in April 2014 but not decided until March 2015. As already noted, there was no disagreement between the parties as to the application of the MWRF test. By that time the decision in the Welsh Asbestos case had been given (and was mentioned by Lady Hale: para 209); but it was not treated by the majority, or indeed the parties, as requiring any qualification of the MWRF test. Nor was there any such departure or qualification in the Tigere case itself (decided in July 2015). The case concerned discrimination in relation to eligibility for student loans. There was a disagreement between the members of the court over the appropriate test on the facts of that case, but not on the correctness of the MWRF as applied in the cases of Humphreys or SG. Lords Sumption and Reed would have applied the MWRF test. Lord Hughes concluded that the appeal should be allowed whatever the test. Lady Hale (paras 27 29, with the agreement of Lord Kerr) referred to those judgments without adverse comment, saying education is rather different. She went on to cite the Strasbourg decision in Ponomaryov v Bulgaria (2011) 59 EHRR 799, including in particular to observation of the court that unlike some other public services, education is a right that enjoys direct protection under the Convention . As Lord Wilson says (para 63), the issue was in any event put beyond reasonable argument by the seven justice court (including Lady Hale and Lord Mance) in the bedroom tax case (R (MA) v Secretary of State for Work and Pensions). Giving the leading judgment (with the agreement on this point of all members of the court), Lord Toulson noted the submission that, because in Humphreys the unsuccessful appellant had not argued for anything other than the Stec test, it was appropriate to ask whether there was good reason to depart from what Lady Hale had said (para 31). As he then pointed out (para 32): The fundamental reason for applying the manifestly without reasonable foundation test in cases about inequality in welfare systems was given by the Grand Chamber of the European Court of Human Rights in Stec, para 52. Choices about welfare systems involve policy decisions on economic and social matters which are pre eminently matters for national authorities. He quoted the relevant passage from Lady Hales judgment in Humphreys and noted her comment that the less stringent test did not mean that the justifications put forward should escape careful scrutiny. Having commented in detail on the parties submissions, and the more recent Strasbourg authorities, he concluded by simply affirming what had been said in that passage (para 38). In her judgment in the present case, as I understand it, Lady Hale does not seek to question the application of the MWRF principle in these appeals, but suggests that the court may need to return to it in the future. I cannot with respect agree. She accepts that the decision in MA was reached following a wholesale attack on the MWRF principle, but observes that there was no discussion of a more nuanced approach along the lines suggested by Lord Mance in the Welsh Asbestos case. I do not see that this in any way diminishes the authority of the decision. It is to be noted that, in spite of the presence of Lord Mance, and although the Welsh Asbestos case was included in the list of authorities cited, neither he nor anyone else seems to have regarded it as relevant in that context. That may well have been because the context in which the issue was considered was quite different from MA (and from the present case): not social security benefits, but compensation for asbestos related disease; and not article 14 discrimination, but interference with property rights under A1P1. Indeed in Welsh Asbestos there had been no reference to Stec or Humphreys in either the judgment or in the submissions. Lord Kerr goes further and would hold, in agreement with Mr Wises submission, that the MWRF test should not be applied to the final stage of the proportionality analysis. Although he does not in terms explain how he feels able to disregard the authority of MA, he emphasises that the technique applied to that question by the national court is to be distinguished from that applied in Strasbourg at the supra national level. However, the fact that the Strasbourg court uses the MWRF test when applying the margin of appreciation and that the same margin of appreciation does not necessarily apply at the national level does not entail that domestic courts cannot also use the MWRF test. It is being used as a means of allowing the political branches of the constitution an appropriately generous measure of leeway when assessing the proportionality of measures concerning economic and social policy. The seven justice decision in MA surely settled the point for the foreseeable future. Conclusion In conclusion I adopt with respect what was said by Sir Patrick Elias in the Court of Appeal in DA (which related solely to the group said to be constituted by lone parents with children aged under two): No one should underestimate the very real hardships caused by the imposition of the cap, and the particular circumstances of the individual claimants in this case bear witness to the harsh circumstances in which they and those similarly placed live, as does detailed evidence from Shelter. But they are difficulties which have to be borne by all non working households to a greater or lesser extent; they are not unique to this cohort, nor does the cap necessarily bear more harshly on them. There is no linear relationship between the financial impact on families caused by the cap and the age of the children. Indeed, it is obvious that households with a greater number of children will typically suffer more, whatever the age of their children, simply because the parent or parents have more mouths to feed and are likely to need larger accommodation . It follows that the proper focus in this case must be whether the problems faced by the particular cohort of parents in securing effective and affordable child care are sufficiently different from problems facing other lone parents to entitle the court to conclude that it is manifestly without reasonable foundation to fail to exempt them from the operation of the cap (paras 105 106) Although the number of possible groups has been extended in the appeals as they have come to this court, the thrust of that passage remains valid. It is necessary to distinguish between the general impact of the cap, which is undoubtedly harsh, but is inherent in the scheme as approved by Parliament, and particular effects on an identifiable group which can properly be the subject of a distinct claim under article 14. Applying that approach, I ask whether there are factors in the present cases which require the court to reach a different overall conclusion from that reached in SG. I have noted that in some respects the task facing the appellants is more difficult. The amount of the cap, and the benefits to which it applies (including child benefit) are enshrined in primary legislation, which is admittedly not open to challenge. Although I have accepted that the various groups identified by the claimants can be regarded as meeting the status requirement for the purposes of article 14, they are far from the core grounds to which special protection is given under that article, and in relation to which the court should be especially slow to substitute its view for that of the executive (see para 113 above, citing RJM para 57). On the other side, I have accepted that, in contrast to the position in SG, the claimants are able to pray in aid the best interests principle under article 3.1 of the UNCRC. However, in that respect the extracts from the Parliamentary debates quoted by Lord Wilson show that careful consideration was given, not only by the executive, but also by Parliament, to the extent to which further exceptions should be enacted, and in particular to the interests of the children potentially affected. I agree with him that it has not been shown that the failure to enact further exemptions involved any breach of that principle. My contrary conclusion on that issue in SG was narrowly based on the deficiencies in the Secretary of States evidence on this aspect (paras 110 112, 127 128), and has no relevance to the present appeals. Overall I agree with Lord Wilson that the approach ultimately adopted by the executive, with the support of Parliament, was not manifestly without reasonable foundation, and that the appeals must accordingly be dismissed. As a final comment, and without disrespect for the care and skill with which the cases have been presented to the court, I observe that the dangers of departing from the restrictive approach laid down by Lord Toulson in MA are amply demonstrated by the experience of this appeal. We have been faced with detailed submissions based on conflicting factual and statistical evidence, much of it produced for the first time in this court. Some of this evidence has come in support of submissions from interveners. Their experience of the practical implications of the legal issues can be of great value, but the court must be careful to ensure that such interventions do not lead to the introduction of new evidence which has not been fully tested, and which cannot be properly tested within the limitations of this courts proper function. At times it has seemed as though the court were being invited to take on the task of a Parliamentary Select Committee, undertaking a review of the policy and factual basis of the legislation. That is not our role. LORD HODGE: (with whom Lord Hughes agrees) I agree with Lord Wilson that the appeals should be dismissed for the reasons which he gives. I wish to add only one qualification to my agreement and that relates to the question of status. In this regard I share the doubts which Lord Carnwath expresses on this issue in para 108 of his judgment. I also agree with Lord Carnwaths view on justification (the MWRF test) in paras 110 118 of his judgment, which tallies with that of Lord Wilson. As Lord Kerr states, the precise reason why the ECtHR adopted the MWRF test does not apply to the domestic court. But it is open to a domestic court to adopt that test in relation to socio economic policy decisions of the executive in recognition of the institutional constraints on and the constitutional role of the judiciary. That is what both the House of Lords and the Supreme Court have done in the cases of R (RJM), Humphreys, SG and MA, as Lord Carnwath demonstrates in his judgment. For the purposes of these appeals I am content to assume that each of the claimants has the required status to mount a challenge under article 14 of ECHR. But this appeal, like the appeal which this court heard in R (Stott) v Secretary of State for Justice [2018] UKSC 59; [2018] 3 WLR 1831, raises questions on the boundaries of other status in article 14, a subject on which there is, as yet, little clarity. Some may argue that the requirement of status is not an important hurdle for a claimant to overcome and that the Convention requires the state to justify any failure to treat differently people whose situation is relevantly different. But as national rules on social security benefits are required to be expressed in broad terms which will affect different people differently, the lack of clarity as to the entitlement of groups and sub groups to challenge is a mischief. I do not therefore wish to endorse the view that each of the cohorts of claimants has the necessary status. In these appeals, the DA appellants assert a status as lone parents of children aged under two and as children aged under two of lone parents. The adult DS appellants assert a status as either lone parents or, as a fall back, as lone parents with children aged under five. The children who are DS appellants assert a status as children of lone parents or, as a fall back, as children aged under five of lone parents. Thus, the court faces the question whether lone parents of children of any age, lone parents of children aged under five, lone parents with children aged under two, and their respective children each enjoy a separate status under article 14. When one considers an arrangement which requires someone in a household to work for a minimum number of hours per week in order to escape the benefit cap, it is not difficult to see that a lone parent household is in a different situation from a two parent household. Indeed, the government recognizes that difference by setting a lower minimum number of hours of work per week for the lone parent household. But, as Lord Wilson points out, there will be many within this cohort of lone parents whose children are all of school age. It is, as he states (para 45), a simpler task for the government to justify the requirement that a lone parent with children all of school age should work at least 16 hours per week to escape the benefit cap than it is to justify that requirement for lone parents with children under school age. When children are under school age, a lone parents ability to work at least 16 hours per week is dependent on the availability of the support of others in child care. Lone parents with babies and toddlers can be expected to have greater difficulty in working those hours without such childcare support. But where does one draw the line or lines? Is there not a sliding scale? The governments rules on the availability of financial support for childcare supports the view of the policy director of Gingerbread: the younger the child is when the parent is capped, the harder it is for them to get into work (see Lord Wilsons judgment para 83 above). But the age of the youngest child is not the only variable which influences how hard it is for a lone parent to obtain work. The availability of part time work, the proximity of family or friends who can provide child care, and the availability and funding of childcare facilities are equally important variables. Ill health and other adverse circumstances of the parent or children in a large family may militate against a lone parents ability to work, regardless of the age of the youngest child. Looking more broadly, the difficulty in escaping from the benefit cap is only one feature of the cap. Other circumstances are also relevant to the burden which the cap imposes on parents. As Sir Patrick Elias stated in his leading judgment in the Court of Appeal (para 105), there is no linear relationship between the age of the children and the financial impact on families caused by the cap. The greater the number of dependent children of whatever age there is within a household, the more mouths there are to feed and larger is the accommodation that the family needs. I am left with some doubt as to whether the age of a lone parents youngest child is the basis for giving the parent and child a status for the purpose of article 14 in the circumstances of this challenge. The people with the strongest case for having their circumstances recognised as giving rise to a status, it seems to me, are the DA cohort of lone parents with children aged under two and those children, having regard both to the degree of dependence of the child and the manner in which the government recognises that dependence both in the non provision of free child care to most two year olds (para 28 above) and in the conditions set for the receipt of income support which are graduated by reference to the age of the child (para 30 above). But I am content to leave the question of status to future dialogue with the ECtHR. LADY HALE: (dissenting) It is indeed regrettable that there is a variety of opinions among the judges who have considered these cases and accordingly that it has taken this court so long to produce its judgment: regrettable but not at all surprising. These are cases about equality and equality is the most complicated and difficult of all the fundamental rights, even without the delicate context of entitlement to welfare benefits. A professional lifetime of struggling with equality issues has persuaded me that some degree of complexity is inevitable and we should not apologise for it. The law may be complicated and sometimes difficult to apply but for the most part it does not lack clarity. There is no difference of opinion between Lord Wilson and me as to the legal principles applicable: we disagree only on the application of the principle of justification to the facts of these cases. The delicacy arises because these are cases about equality in an area, not principally of social policy, but of economic policy. Constitutionally, economic policies are decided by those organs of government which are directly accountable to the people. The courts cannot make those decisions for them. But that does not mean that the courts have no role to play. In a constitution which respects and protects fundamental rights, it is the role of the courts to protect individuals from unjustified discrimination in the enjoyment of those fundamental rights. There are no no go areas. The courts might very well have declared that denying certain widows benefits to widowers was incompatible with the Convention rights, had the Strasbourg court not got there first: see Willis v United Kingdom (2002) 35 EHRR 547. More recently, this court has declared the denial of widowed parents allowance to a surviving parent who was not married to the deceased parent of their children incompatible with the Convention rights: see In re McLaughlin [2018] 1 WLR 4250. But those examples are more clear cut than these. Nor do they mean that the courts will not recognise that the government is both constitutionally and institutionally more competent than the courts to make the delicate judgments involved: see, for example, R (Hooper) v Secretary of State for Work and Pensions [2005] 1 WLR 1681. The argument before us now is very different from the argument which was before us in R (SG) v Secretary of State for Work and Pensions [2016] 1 WLR 1449, although that too concerned the benefit cap, albeit in its original and less draconian version. In SG the complaint was of indirect discrimination against lone parent women. It was indirect because the benefit cap applied equally to all lone parents, men and women. But the government acknowledged that it had a disproportionate impact upon women because the overwhelming majority of lone parents are women. The debate was about whether it could be justified and about the relevance of the United Kingdoms international obligations under the United Nations Convention on the Rights of the Child (UNCRC) to that question. A majority of this court concluded that the government had not complied with its obligation, under article 3.1 of UNCRC, to treat the best interests of the children concerned as a primary consideration. But a majority also concluded that this was not relevant to whether the indirect discrimination against women was justified. Although I disagreed with that conclusion, I found it completely understandable. The children of lone parents were hit equally hard by the benefit cap whether their parents were men or women. The relevance of their interests to the alleged sex discrimination was therefore questionable. Indeed, as I had said in Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545, a case alleging indirect sex discrimination in the rules governing entitlement to child benefit, which did not allow the benefit to be split between shared carers (para 20): The reality is that the complaint would be exactly the same if it did not discriminate between the sexes. Mothers who share the care of their children for a shorter period each week while living on subsistence level benefits have exactly the same problem. The real object of the complaint is the discrimination between majority and minority shared carers. The reason why I disagreed with the majority in SG was that, in indirect discrimination, it is the measure itself, rather than its discriminatory impact, which has to be justified. (This is the case in domestic law and I see no reason why it should not also be the case in Convention law. If the discrimination is direct, of course, it is the discriminatory impact which has to be justified.) The best interests of the children affected were, in my view, undoubtedly relevant to the justification for the measure itself. But I agree with McCombe LJ, in the DA case, that SG does not give us the answer to the very different cases we now have to consider. In these cases, the basic complaints are of discrimination between, on the one hand, lone parents and their children and, on the other hand, dual parents and their children. In DA, it is narrowed down to a complaint of discrimination against lone parents with a child or children under the age of two and their children, whether compared with dual parents with children under two or other lone parents. Both complaints are easier to grasp than the complaints in SG. Article 14 of the European Convention on Human Rights (ECHR), as is well known, provides: The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. In deciding complaints under article 14, four questions arise: (i) Does the subject matter of the complaint fall within the ambit of one of the substantive Convention rights? (ii) Does the ground upon which the complainants have been treated differently from others constitute a status? (iii) Have they been treated differently from other people not sharing that status who are similarly situated or, alternatively, have they been treated in the same way as other people not sharing that status whose situation is relevantly different from theirs? (iv) Does that difference or similarity in treatment have an objective and reasonable justification, in other words, does it pursue a legitimate aim and do the means employed bear a reasonable relationship of proportionality to the aims sought to be realised (see Stec v United Kingdom (2006) 43 EHRR 1017, para 51)? There is nowadays no doubt that entitlement to state benefits, even non contributory means tested benefits, is property for the purpose of article 1 of the First Protocol (A1P1), which protects property rights. Indeed, the benefit cap can be seen as a species of deprivation of property, as it takes away rights which the claimants would otherwise have. But, as Lord Wilson explains (para 36), benefits which enable a family to enjoy a home life underpinned by a degree of stability, practical as well as emotional, and thus the financial resources adequate to meet basic needs, in particular for accommodation, warmth, food and clothing are clearly one of the ways (modalities) whereby the state manifests its respect for family life and therefore fall within the ambit of article 8 (see Petrovic v Austria (2001) 33 EHRR 14 and Okpisz v Germany (2006) 42 EHRR 32). That we are concerned here, not only with the right to property, but also with the right to respect for family life is clearly relevant to the issue of justification. Status The governments argument that, because the claimants are women, who already have a status under article 14, they should not seek to shoehorn themselves into some other status (see para 39 above) is clearly unsustainable. Men also have a status under article 14, but they often qualify for some other status, such as being married or unmarried (In re G (Adoption: Unmarried Couple [2009] 1 AC 173), disabled or not disabled (R (RJM) v Secretary of State for Work and Pensions [2009] 1 AC 311) or serving an extended sentence of imprisonment or some other sentence (R (Stott) v Secretary of State for Justice [2018] 3 WLR 1831). In any event, the DA claimants are not complaining of discrimination because they are women. A male lone parent could have brought exactly the same complaint. And that also applies to the DS claimants (although they also revive the indirect sex discrimination claim in SG). Lone parent is clearly a status within the meaning of article 14. And I agree with Lord Wilson and Lord Kerr that it can be sub divided according to the ages of the children, and in particular that having a child or children under compulsory school age is obviously a status for this purpose, just as being a disabled child who needed more than 84 days hospital in patient care was a status in Mathieson v Secretary of State for Work and Pensions [2015] 1 WLR 3250 and indeed being a particular type of prisoner was a status in R (Stott) v Secretary of State for Justice, above. Differences or similarities in treatment I agree with Lord Wilson and Lord Kerr that the natural way to formulate the DA complaint is that these lone parents, and their children, should have been treated differently from other lone parents, and from dual parent families, because their situation is relevantly different from the situation of other families who are subject to the benefit cap: that is, discrimination within the meaning of Thlimmenos v Greece (2000) 31 EHRR 12. I also agree that the natural way to formulate the DS complaint is of Thlimmenos type discrimination, whether it extends to lone parents of children of up to school leaving age or only to lone parents of children under compulsory school age. As already explained, I think that any attempt to formulate the DS complaint as one of indirect discrimination against women would run into the same difficulties as were encountered in SG. In both cases, the natural comparator is a dual parent family with children of the same age. But this is complicated because dual parent families are, in at least two respects, less favourably treated than lone parent families: they are subject to the same cap on their benefits although they have one more adult mouth to feed; and they can only escape if between them they work outside the home for a total of 24 hours a week. Although this does not necessarily present insuperable problems, these do not arise if the DS complaints are limited to those with a child or children under five. Then both the DA and the DS claimants can compare themselves with lone parents who only have older children. It can immediately be seen that the situation of these claimants is relevantly very different from the situation of lone parents with children of school age. Lord Wilson has summarised this with great clarity in para 51 above. I would lay particular stress in what he says at para 51(a), which is worth repeating: that, in the case of a lone parent of a child below school age, in particular of a child below the age of two, it is contrary to the interests both of herself, of her child and of the family as a whole that she should in effect be constrained to work also outside the home. (My emphasis) It is dangerous for a judge to indulge in moral indignation but few mothers (and indeed few lone fathers) who have chosen to work also outside the home while their children are very young can have escaped being made to feel guilty that they may have been harming their childrens healthy development by doing so. We were brought up on John Bowlbys classic work, Child Care and the Growth of Love, the foundation of modern attachment theory. Children need to form stable and healthy attachments early in life in order to be able to lead healthy lives and form stable attachments of their own in the future. The foundation for this is stable, consistent and loving care from a parent or parents (or parent substitutes) who have bonded early with the child. No one who has sat as a judge in the family courts can have escaped hearing constant evidence about the risks of significant harm to children who are denied such healthy attachments. This is not to say that children cannot also thrive if their parents do go out to work. Such work may bring psychological as well as financial benefits to their parents, as well as to society, and this may also benefit their children. But for this the children need good, stable and consistent alternative care arrangements, preferably in familiar surroundings: children develop attachments to places as well as people. Such arrangements are in short supply and very expensive. The availability of help towards the cost of up to 15 hours child care for some of these children does not necessarily fit this bill. The government itself has recognised that parents of very young children should not be obliged to seek work outside the home, both by the conditions they have set for eligibility for state benefits and by the limits they have set for free child care. The psychological risks to children whose lone parents are obliged to work outside the home in order that their children may have enough to live on, whether or not this is in their childrens best interests, have to be set against the psychological risks to children who grow up in benefit claiming families, risks to which the government has attached so much importance. Of course, those risks will be less if the parent can find suitable work as well as suitable child care. She may be lucky enough, for example, to find some evening shifts in a very local supermarket and have a willing grandparent or neighbour to look after the children while she does so. But any lone parent who has small children will face considerable difficulties in finding suitable work which will fit in with her child care arrangements and also, in many cases, with her commitments to her other children. Justification The one matter on which the law may be open to debate relates to the standard by which the governments justification for discriminatory measures such as this is to be judged. In Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545, this court, in a judgment of mine with which the other Justices agreed, adopted the manifestly without reasonable foundation standard derived from the Strasbourg Grand Chamber decision in Stec v United Kingdom (2006) 43 EHRR 47, albeit with the qualification that this did not mean that the justification advanced should escape careful scrutiny (para 22). But that test was not disputed in Humphreys, any more than it had been in R (RJM) v Secretary of State for Work and Pensions [2009] 1 AC 311. However, Lord Kerr is surely right to question whether the test which the Strasbourg court will apply in matters of socio economic policy should also be applied by a domestic court. The Strasbourg court applies that test, not because it is necessarily the proper test of proportionality in this area, but because it will accord a wide margin of appreciation to the national authorities in deciding what is in the public interest on social or economic grounds. The national authorities are better able to judge this because of their direct knowledge of their society and its needs (see Stec, para 52). It does not follow that national courts should accord a similarly wide discretion to national governments (or even Parliaments). The margin of appreciation is a concept applied by the Strasbourg court as part of the doctrine of subsidiarity. The standard by which national courts should judge the measures taken by national governments is a matter for their own constitutional arrangements. Not only that, it has been noted that, in Stec, the Grand Chamber cited James v United Kingdom (1986) 8 EHRR 123 as authority for its manifestly without reasonable foundation standard. But in James, it is fairly clear that the Strasbourg court drew a distinction between two questions: first, was the measure in the public interest for the purpose of A1P1 (or, in article 8 terms, does it pursue a legitimate aim); and second, was there a reasonable relationship of proportionality between the means employed and the aim sought to be realised. This latter requirement had been expressed in Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35, at para 69, as whether a fair balance was struck between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights (see James, para 50). The manifestly without reasonable foundation standard was applied to the first but not the second question. When discussing (albeit strictly obiter) whether the imposition of charges for NHS treatment for asbestos related diseases caused by employers breach of duty was compatible with the A1P1 rights of employers and their insurers, in In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] AC 1016, para 51, Lord Mance noted that our domestic law had also drawn a distinction between whether the aims are legitimate and whether a fair balance had been struck. Both Lord Hope and Lord Reed had adopted this approach in AXA General Insurance Ltd v HM Advocate [2012] 1 AC 868. Even in relation to the fair balance question, of course, domestic courts cannot act as primary decision makers and principles of institutional competence and respect indicate that they must attach appropriate weight to the informed legislative choices at each stage of the Convention analysis: see the AXA case, para 131 (Asbestos, para 54). I pause only to note that if Lord Hope, Lord Mance and Lord Reed were correct in separating the issues of legitimate aim and fair balance in A1P1 cases, and applying a different standard to each, it would be wrong to apply a different approach to those same questions when they come up in the context of discrimination in the enjoyment of the right to respect for family life. The principles applicable when, say, insurance companies challenge interferences with their property rights should not be more favourable to them than the principles applicable when children challenge discrimination in their right to respect for their family lives. In R (MA) v Secretary of State for Work and Pensions [2016] 1 WLR 4550, the so called bedroom tax case, a wholesale attack was mounted upon the manifestly without reasonable foundation test. The attack was rejected in favour of the continued application of the Humphreys approach (para 38). There was no discussion of a more nuanced approach along the lines suggested by Lord Mance in Asbestos. Even applying Humphreys the removal of the spare room subsidy was found to be without justification in two respects. I agreed with that judgment (para 81). It seems to me that the court may well have to return to this difficult question in another context at some point in the future. But this is neither the case nor the context to do so. Nor is it necessary. The government has put forward three aims for the revised benefit cap: (i) fairness as between those in work and those on benefits, in that those in work should always be better off than those who are not, and with it the maintenance of public confidence in the benefits system; (ii) fiscal savings; and (iii) incentivising work outside the home. These are indeed legitimate aims, whatever the standard by which they are judged. However, it is also an essential element in justification that the measures adopted should be rationally related to their legitimate aims (see, among many, Lord Reed in Bank Mellat v HM Treasury (No 2) [2014] AC 700, para 76). This is another way of putting the requirement in European Union law that a measure be suitable to achieving its aims. It seems to me that it has been comprehensively demonstrated by the mass of evidence before the trial judge in DA, Collins J, and summarised by Lord Wilson and Lord Kerr, that the revised benefit cap is not suitable to achieving any of its declared aims. It does not achieve fairness as between those in work and those on benefits, because those in work will always be better off than those who are not. The fiscal savings are very small and liable to be offset by increased costs in other budgets. These include discretionary housing payments and the cost of housing and rehousing families made homeless as a result of the cap, as well as the costs resulting from the harm done to children by the disruption to their lives and education, as well as by living in poverty, in their early years: the fact that these costs will mainly fall upon local authorities rather than central government makes no difference in principle. There will be other costs if the lone parent is driven to take work outside the home, but it has not been shown that the benefit cap has this effect on this particular group of lone parents. But even if it could be shown that the benefit cap does have some effect in fiscal savings overall and inducing lone parents of young children to work outside the home, the question of a fair balance between the benefits to the community and the detriment to the children and their parents would still arise. The government is under an obligation in international law to treat the best interests of the children concerned as a first priority. It has been held on several occasions that whether it has fulfilled that obligation is relevant to whether it has acted compatibly with the Convention rights of the children concerned: see ZH (Tanzania) v Secretary of State for the Home Department [2011] 2 AC 166, H (H) v Deputy Prosecutor of the Italian Republic, Genoa [2013] 1 AC 338, Zoumbas v Secretary of State for the Home Department [2013] 1 WLR 3690. In showing that a fair balance has been struck, it is not enough for the government to show that it was aware of the concerns raised by many in and outside Parliament about the effect of the revised benefit cap on the welfare of children in lone parent families. Awareness is not the same as taking the best interests of those children seriously into account. Even taking them into account is not the same as giving them first priority which is an intrinsic part of striking a fair balance where childrens rights are concerned. Striking a fair balance would have set the very limited benefits to the public interest against the damage done to the family lives of young children and their lone parents if either their parents are forced to work outside the home in order to have enough for themselves and their children to live on or they are unable or unwilling to work outside the home and are thus forced to attempt to live on less than the state has decided that they need. In particular, there is little or no evidence that proper account has been taken of the risks of psychological harm to very young children if they are separated from their primary carers, or the multiple risks to the health, development and life chances of children living in poverty in their early years. There is little or no evidence that these very real and well documented risks have been fairly balanced against the much more speculative risks of spending those very early years in a household dependent on welfare benefits we are talking here of children who are below compulsory school age, whose understanding of where the money to live on comes from will be limited, although of course there may be older children in the same household. Once all the children are of school age, there will be ample incentive for their parents to try and find work outside the home if they can. Therefore, with the greatest respect for the institutional competence of the government as primary decision maker in these matters, this seems to me a clear case where the weight of the evidence shows that a fair balance has not been struck between the interests of the community and the interests of the children concerned and their parents. I would therefore allow the appeals and make the declaration made by Collins J in DA, amended to include families with children under compulsory school age in DS, as follows: The Housing Benefit Regulations 2006, as amended by the Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016, are unlawful insofar as they apply to lone parents with a child or children under the age of five, in that: a. They involve unjustified discrimination against lone parents of children under the age of five, contrary to article 14 of the ECHR read with (i) article 1 of the First Protocol and (ii) article 8 of the ECHR; b. They involve unjustified discrimination against children under the age of five with lone parents, contrary to article 14 of the ECHR read with article 8 of the ECHR in the light of article 3 of the United Nations Convention on the Rights of the Child. LORD KERR: (dissenting) There is much in the judgment of Lord Wilson with which I completely agree. Indeed, the areas of disagreement between us, although important, are relatively few. It is right that I should express my admiration for his judgment and my indebtedness to Lord Wilson for his distillation of the many complex issues that arise in this difficult appeal. In particular, I agree with Lord Wilson, for the reasons which he gives in paras 35 and 36 of his judgment, that the appellants claims fall within the ambit of article 8 of ECHR; that all the appellants have the requisite status to advance claims under article 14 paras 38 and 39; and that the natural way to analyse the complaints of the DA appellants is as discrimination of the type explained in the Thlimmenos case para 40. I also agree that, in relation to the DS appellants, the court should address the fall back complaint (ie that relating to lone parents of children under five) and should again do so as a Thlimmenos complaint paras 44 and 45. In paras 46 and 47 of his judgment, Lord Wilson explains why he considers that the natural comparators to the cohorts whom the appellants represent are all others subject to the revised benefit cap. I agree with his analysis, and I also agree with his conclusion that it is open to the appellants, in advancing the argument that there has been an objectionable similarity of treatment of the DA and DS cohorts and all who have been subject to the cap, to draw particular attention to the marked difference between their situation and those in sub groups (a) and (b), namely dual care parents with a child under two or under five, and lone parents without a child under two or under five. Treating the DA and DS cohorts in precisely the same way as the members of those groups when there are significant differences in their respective circumstances sounds directly on the issue of justification. It follows from what I have said in the previous paragraph that I agree with Lord Wilson that there is clear prima facie evidence that the appellants are in a relevantly different situation from others who are subject to the revised benefit cap para 51 of his judgment. The factors identified in sub paras (e) and (f) of para 51 are of especial significance. Justification As Lord Wilson has pointed out in para 53 of his judgment, the authoritative statement on what requires to be justified is found in the speech of Lord Bingham in A v Secretary of State for the Home Department [2004] UKHL 56; [2005] 2 AC 68, para 68. What requires to be justified is the difference in treatment between one group and another. That requirement translates in the present case to justification of the same treatment to two disparate groups where their circumstances differ to the extent that they plainly call for differential treatment. Specifically, what must be justified here is the decision not to make provision for exemption of the DA and DS cohorts by amending the 2006 Regulations. In para 55, Lord Wilson adverts to two different paths which this court has followed in its pursuit of the proper test against which justification is to be measured where what is involved is an economic measure introduced by the democratically empowered arms of the state. Lord Wilson considers that this duality has been unhelpful and expresses regret for having contributed to it. In my view, there is no reason for regret and, while the divergence of opinion on this issue might be considered unfortunate, it is, I am afraid, unavoidable and cannot be swept away. The divergence centres on the question of the use of the formula commonly known as manifestly without reasonable foundation, when examining the proportionality of measures devised by government or the legislature in the fields of economic or social policy. This principle, if it is appropriate to describe it as such, is the creature of the European Court of Human Rights (ECtHR). Its provenance is the margin of appreciation which ECtHR accords to decisions of national authorities in the fields of economic and social policy particularly. Thus, as Lord Wilson observed in para 58, in the cases of James and Carson the Strasbourg court held that respect should be shown to the national legislatures decision on matters of public interest when devising economic or social measures unless it was manifestly without reasonable foundation. It is significant that, as Lord Wilson explained, what he described as this more benign approach flowed from the margin of appreciation. The manifestly without reasonable foundation formula should be recognised as a fundamental element of the margin of appreciation doctrine, therefore. This much is clear from the decision of the Grand Chamber in Stec v United Kingdom (2006) 43 EHRR 47. In that case ECtHR endorsed the manifestly without reasonable foundation approach in assessing whether a measure of economic policy, said to offend article 14 of the Convention, was justified. But this was expressly linked to the application of the margin of appreciation principle. At para 52 the court explained the reason for its reluctance to interfere in this way: Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is in the public interest on social or economic grounds . The interconnectedness between the manifestly without reasonable foundation rubric and the margin of appreciation doctrine is therefore clear. On that account, a failure to acknowledge that rubric as an element or sub set of the margin of appreciation principle can lead to an unwitting importation of a quasi margin of appreciation approach into the national courts consideration of the proportionality of a measure. This is impermissible even in the fields of economic or social policy. There may have been a tendency to do precisely that, however, in some earlier decisions of this court. Thus, for instance, in MA [2016] UKSC 58; [2016] 1 WLR 4550, para 32, Lord Toulson adopted for the purposes of national courts review the standard prescribed by Strasbourg when he said: The fundamental reason for applying the manifestly without reasonable foundation test in cases about inequality in welfare systems was given by the Grand Chamber of the European Court of Human Rights in Stec, para 52. Choices about welfare systems involve policy decisions on economic and social matters which are pre eminently matters for national authorities. But there is plenty of authority which acknowledges that measures falling within the United Kingdoms margin of appreciation, when viewed from the supra national perspective of ECtHR, will not necessarily survive judicial scrutiny on the national stage. In In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] UKSC 3; [2015] AC 1016, para 54 Lord Mance said: At the domestic level, the margin of appreciation is not applicable, and the domestic court is not under the same disadvantages of physical and cultural distance as an international court. The fact that a measure is within a national legislatures margin of appreciation is not conclusive of proportionality when a national court is examining a measure at the national level: In re G (Adoption: Unmarried Couple) [2009] AC 173; R (Nicklinson) v Ministry of Justice (CNK Alliance Ltd intervening) [2015] AC 675, per Lord Neuberger PSC at p 781, para 71, Lord Mance JSC at p 805, para 163 and Lord Sumption JSC at pp 833 834, para 230. However, domestic courts cannot act as primary decision makers, and principles of institutional competence and respect indicate that they must attach appropriate weight to informed legislative choices at each stage in the Convention analysis: see the AXA case, para 131, per Lord Reed JSC, and R (Huitson) v Revenue and Customs Comrs [2012] QB 489, para 85. But again, and in particular at the fourth stage, when all relevant interests fall to be evaluated, the domestic court may have an especially significant role. Lord Neuberger picked up this theme in Nicklinson [2014] UKSC 38; [2015] AC 657 where, at para 74, he said: In an interesting passage in para 229 below, Lord Sumption suggests that, where an issue has been held by the Strasbourg court to be within the margin of appreciation, the extent to which it is appropriate for a UK court to consider for itself whether the Convention is infringed by the domestic law may depend on the reason why the Strasbourg court has concluded that the issue is within the margin. I agree that the reasoning of the Strasbourg court must be taken into account and accorded respect by a national court when considering whether the national law infringes the Convention domestically, in a case which is within the margin of appreciation just as in any other case as section 2(1)(a) of the 1998 Act recognises. However, both the terms of the 1998 Act (in particular sections 2(1) and 4) and the principle of subsidiarity (as expounded for instance in Greens and MT v United Kingdom [2010] ECHR 710, para 113) require United Kingdom judges ultimately to form their own view as to whether or not there is an infringement of Convention right for domestic purposes. (Emphasis added) The importation of the test manifestly without reasonable foundation to all aspects of the national courts consideration of proportionality imperils the proper discharge of its duty. This was a technique devised by the Strasbourg court in order to promote the proper application of the margin of appreciation. In my view, it has no place in the national courts consideration of whether a measure which interferes with a Convention right is proportionate, since, as Lord Mance observed in the In re Recovery of Medical Costs case, at the domestic level, the margin of appreciation is not applicable. Indeed, in the national setting, this court, in a number of cases, has articulated an approach to examination of the proportionality of the interference where consideration of the question whether it was manifestly without reasonable foundation is conspicuously absent. As Lord Reed said in Bank Mellat (No 1) [2013] UKSC 39; [2014] AC 700, pp 789 790, para 71: One important factor in relation to the Convention is that the Strasbourg court recognises that it may be less well placed than a national court to decide whether an appropriate balance has been struck in the particular national context. For that reason, in the Convention case law the principle of proportionality is indissolubly linked to the concept of the margin of appreciation. That concept does not apply in the same way at the national level, where the degree of restraint practised by courts in applying the principle of proportionality, and the extent to which they will respect the judgment of the primary decision maker, will depend upon the context, and will in part reflect national traditions and institutional culture. For these reasons, the approach adopted to proportionality at the national level cannot simply mirror that of the Strasbourg court. (Emphasis added) This is an important statement. It emphasises that not only is the technique adopted by the national court to the question of the proportionality of a measure different from that of the Strasbourg court but the basis on which there should be reticence on the part of a national court to interfere is also different. In Strasbourg it is recognised that the court may be less well placed than a national court to decide whether an appropriate balance has been struck. By contrast, the national court may consider itself constrained by national traditions and institutional culture. One can quite see how the concept of manifestly without reasonable foundation assists in the examination by the Strasbourg court of the proportionality of a measure. Very different considerations arise when the national court examines proportionality. The steps in the proportionality analysis at the national level are well settled. When considering whether legislative measures which interfere with a Convention right satisfy the requirements of proportionality, four questions generally arise, as Lord Wilson explained in R (Aguilar Quila) v Secretary of State for the Home Department [2012] 1 AC 621, para 45. These were discussed by Lord Reed in Bank Mellat at paras 20ff: (a) is the legislative objective sufficiently important to justify limiting a fundamental right?; (b) are the measures which have been designed to meet it rationally connected to it?; (c) are they no more than are necessary to accomplish it?; and (d) do they strike a fair balance between the rights of the individual and the interests of the community? Has the manifestly without reasonable foundation formula any part to play in the answer to be given to any of these questions? In R (SG (previously JS)) v Secretary of State for Work and Pensions [2015] UKSC 16; [2015] 1 WLR 1449, paras 209 and 210, Lady Hale addressed this issue: 209. The references cited for the manifestly without reasonable foundation test were James v United Kingdom (1986) 8 EHRR 123, para 46, and National & Provincial Building Society v United Kingdom (1997) 25 EHRR 127, para 80, both cases complaining of a violation of article 1 of the First Protocol. In AXA General Insurance Ltd v HM Advocate [2011] UKSC 46; [2012] 1 AC 868, both Lord Hope of Craighead DPSC at para 31, and Lord Reed JSC at para 124, treated this test as directed towards whether the measure is in the public interest, in other words to whether it has a legitimate aim. They dealt separately with whether the interference with property rights was proportionate. They relied upon cases such as Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301, para 38, where the Strasbourg court appears to have regarded this as a separate question: An interference with the peaceful enjoyment of possessions must strike a fair balance between the demands of the general interest of the community and the requirements of the protection of the individuals fundamental rights. In particular, there must be a reasonable relationship of proportionality between the means employed and the aim sought to be realised by any measure depriving a person of his possessions. (p 75) (See also In re Recovery of Medical Costs for Asbestos Diseases (Wales) Bill [2015] 2 WLR 481, para 52). In this case, the complaint is of discrimination in interfering with the peaceful enjoyment of possessions rather than of deprivation of possessions as such. Nevertheless, the benefit cap does come close to a deprivation of possessions, given that it removes, by reference to a fixed limit, benefit to which the claimants would otherwise be entitled by virtue of their needs and, more importantly, the needs of their children. 210. When it comes to justifying the discriminatory impact of an interference with property rights, a distinction might similarly be drawn between the aims of the interference and the proportionality of the discriminatory means employed. However, it has been accepted throughout this case that the manifestly without reasonable foundation test applies to both parts of the analysis; but that, as this court said in Humphreys v Revenue and Customs Comrs [2012] 1 WLR 1545, para 22, the fact that the test is less stringent than the weighty reasons normally required to justify sex discrimination does not mean that the justifications put forward for the rule should escape careful scrutiny. I was one of those who accepted in the SG case that the manifestly without reasonable foundation test applied to all of the stages in the proportionality analysis. I was wrong to have done so. In the In re Recovery of Medical Costs case Lord Mance in para 46 had drawn a distinction between the first three stages of the proportionality assessment and the final stage: Initially, in Handyside v United Kingdom (1976) 1 EHRR 737, para 62, followed in Marckx v Belgium (1979) 2 EHRR 330, para 63, the court said that the state was the sole judge of necessity for the purposes of deciding whether a deprivation of property was in the public interest. That no longer represents the position on any view. But the Counsel General for Wales and Mr Fordham disagree as to the current position. The Counsel General submits that the court will at each of the four stages of the analysis respect the legislatures judgment as to what is in the public interest unless that judgment be manifestly without reasonable foundation: James v United Kingdom (1986) 8 EHRR 123, para 46. Mr Fordham on the other hand submits that this passage was or, at least in subsequent authority, has been restricted in application to the first or at all events the first to third stages. In my opinion, Mr Fordham is basically correct on this issue, at least as regards the fourth stage which presently matters, although that does not mean that significant weight may not or should not be given to the particular legislative choice even at the fourth stage. At para 51 Lord Mance referred to the Axa case and pointed out that both Lord Hope and Lord Reed had treated the questions of legitimate aim and whether the measure was proportionate separately. The question of whether the measure pursued a legitimate aim was to be determined on the basis that it should be considered to have done so unless the claim that it did was manifestly unreasonable. But in relation to proportionality, as Lord Mance observed, Lord Hope applied the fair balance test, citing Sporrong and Lnnroth v Sweden (1982) 5 EHRR 35 and Pressos Compania Naviera SA v Belgium (1995) 21 EHRR 301. It is clear from this that, even in the supra national context of Strasbourg review, a distinction is to be drawn between, on the one hand, the pursuit of a legitimate aim for the measure and, on the other, the balancing of the interests of the state against the impact which a measure interfering with a Convention right has on those affected by it. The inaptness of applying the manifestly without reasonable foundation standard when the matter of where the balance lies is being considered by a national court is all the more obvious. I have concluded, therefore, that, certainly so far as concerns the final stage in the proportionality analysis, the manifestly without reasonable foundation standard should not be applied. Quite apart from the imperative provided by the authorities, I consider that to impose on the appellants the obligation of showing that a measure is manifestly without reasonable foundation is objectionable for two reasons: firstly, it requires proof of a negative; secondly, and more importantly, much, if not all, of the material on which a judgment as to whether there is a reasonable foundation for the measure will customarily be in the hands of the decision maker and not readily accessible to the person who seeks to challenge the proportionality of the measure which interferes with their Convention rights. The proper test to apply in relation to the final stage of the proportionality assessment is whether the government has established that there is a reasonable foundation for its conclusion that a fair balance has been struck. In para 67 of his judgment, Lord Wilson says that a move is afoot, as exemplified by observations made by me in the SG case, for UK courts to treat the UNCRC as part of our domestic law. So far as I am aware, the statements that I made there have not been taken up by any court and I make clear that, for the purposes of this case, I do not rely on the view that I there expressed, nor do I wish to reopen a debate on that issue. I am content to adopt Lord Wilsons approach to the significance of UNCRC in the resolution of this case. In particular, I agree with his description (in para 68) of the elements of the concept of the best interests of the child in article 3.1. As Lord Wilson says, authoritative guidance is to be found in para 6 of General Comment No 14 (2013) of the UN Committee on the Rights of the Child. This was recognised by Lord Carnwath in the SG case and endorsed by this court in the Mathieson case. Lord Wilson has suggested, and I agree, that the concept has three dimensions. The most important of these, so far as concerns the present case, is the third, namely, that, whenever a decision is to be made that will affect an identified group of children, the decision making process must include an evaluation of the possible impact of the decision on them. That obligation, when allied to the duty of the government to reach a decision which is proportionate, according to the principles earlier discussed, means that the respondent must assess the impact on the children in a way that balances their interests against the interests of the community. It must, moreover, be satisfied that the decision strikes a fair balance and must be in a position, when challenged, to establish that it has a reasonable foundation. The provisions in articles 26 and 27 of UNCRC, set out by Lord Wilson in para 70 of his judgment, provide an essential backdrop to that exercise. Thus, the states duty is to take necessary measures to ensure that childrens right to social security benefits is fully realised; to recognise childrens entitlement to an adequate standard of living; and to take measures to assist parents to implement the right to a proper standard of living, particularly with regard to nutrition, clothing and housing. Even if these provisions are not directly binding on the government (which is the premise on which I am prepared to proceed in the present case), they are central to the judgment which the state must make in introducing social security measures which will affect the living conditions of children. Moreover, they provide an indispensable yardstick against which the proportionality of the measures under attack in this appeal falls to be examined. For the reasons given by Lord Wilson in paras 75 and 76, the government cannot assert that the measures under attack are not directed at children. And I agree with his conclusion in para 78 that the interests of the lone parents in the present appeals are indistinguishable from the interests of their children below school age. The issue which is then starkly exposed as critical to the outcome of this appeal is the effect of article 3.1 on the proportionality of the governments decision not to exempt from the revised benefit cap the cohorts whom the appellants represent. I say the effect of article 3.1 on proportionality advisedly. Lord Wilson has carried out (in paras 81 86) a comprehensive review of the Parliamentary materials and other policy documents which disclose the background to the governments decision and its objectives. I have nothing to add to that review. Where I part company with Lord Wilson, however, is in his concentration on the question whether the government has acted in breach of article 3 of UNCRC. Lord Wilson concludes by a narrow margin that the government did not breach article 3.1 by its refusal to amend the 2006 Regulations so as to exempt the appellant cohorts from the revised cap. As I understand his judgment, largely on that account, he considers that the appeal must be dismissed. In a telling sentence in para 87 he says: This court must impose on itself the discipline not, from its limited perspective, to address whether the governments evaluation of its impact was questionable; nor whether its assessment of the best interests of young children was unbalanced in favour of perceived long term advantages for them at the expense of obvious short term privation. I do not agree that the questionability of the governments decision or its avowed lack of balance should not be addressed by this court. Conclusions on those matters will not at least, not necessarily be determinative of the appeal. But, inasmuch as they sound on the question of the proportionality of the governments decision, they are matters to be taken into account. I will return to this theme in paras 188 190 of this judgment. In the meantime, it is important to deal with the significance to be attached to a finding that the government has not acted in breach of article 3 of UNCRC. One may begin by recognising that, of course, if the government was found to have acted in breach of that provision, this would go a long way towards showing that the decision not to exempt the appellant cohorts from the revised cap was disproportionate, if indeed it would not be conclusive on that issue. But a finding that no breach of article 3 arose does not establish the converse. But I query the premise (which I believe to be implicit in Lord Wilsons judgment) that the question of whether the government was in breach of the article is pivotal to the issue of proportionality. UNCRC contains a number of enjoinders to those countries which subscribe to it. Some of these are expressed in imperative terms. The duty of the state is to keep faith with the spirit of the Convention. Whether it has discharged that duty is not to be answered solely on whether it can be said to be in technical breach of its terms. The proportionality of a government measure which has an impact on the best interests of children is not to be judged by a mechanistic approach to the question whether there has been technical compliance with article 3. It must be assessed on the basis of whether, given the injunctions in UNCRC, the governments decision, taking into account where the best interests of children lie, represents a balanced reaction to those interests and the aims which a particular measure seeks to achieve. I should say, however, if the proportionality of the governments decision not to exempt the appellants from the benefit cap depended on whether there was a failure to comply with it, I would have held that the government was in breach of article 3. I will discuss the reasons for that conclusion later in this judgment. Article 3 (and articles 26 and 27) provide a context as well as a backdrop to the governments decision as to those who should be covered by the cap. That decision is not insulated from challenge on proportionality grounds by the governments claim that it took representations into account, nor even that it carried out an evaluation of their weight and persuasiveness. The government must show that it reached a balanced conclusion, taking into account the impact which the refusal to exempt the cohorts whom DA and DS represent has had upon them, when weighed against the interests of society which the conclusion is said to protect. The impact of the decision not to exempt the DA and DS groups is well described in the submissions of Gingerbread made to the Public Bill Committee of the House of Commons in September 2015, referred to in para 83 of Lord Wilsons judgment. No real answer to the criticisms of the scheme has been provided by the government. Its principal defence is its reliance on the DHP scheme. The shortcomings of that scheme have been vividly described in paras 30 and 31 of Lord Wilsons judgment. Quite apart from the myriad of difficulties to which he there refers, the fundamental point to be made is that DHPs are not tailored to deal with the spectrum of difficulties which the appellants face, merely one aspect of them: housing costs. They do nothing to alleviate problems with childcare costs and complications in obtaining childcare, even if it could be afforded. And, of course, there is, as Lord Wilson pointed out in para 31, scant, indeed, virtually no, information as to the extent by which the difficulties encountered by the DA and DS cohorts are mitigated by DHPs. There is simply no warrant for the claim that refusal to extend exemption from the cap to the DA and DS cohorts will improve the fairness of the social security system or increase public confidence in its fairness. That sweeping statement partakes of a declamation for which no tangible evidence is proffered. To the contrary, a proper understanding of the impact on those whom the appellants represent, so far from increasing public confidence in the social security system, is likely to lead any right thinking person to the opposite conclusion. The other two professed aims of government, to incentivise parents in a non working family to obtain work and to achieve fiscal savings have been decisively refuted by the evidence. One can only incentivise parents to obtain work if that is a viable option. The evidence in this case overwhelmingly shows that in most cases in the DA and DS cohorts, this is simply not feasible. In particular, lone parents are placed in an impossible dilemma. If they go out to work, they must find the resources for childcare. Those in the DA and DS groups will routinely find it impossible to obtain employment which will remunerate them sufficiently to make this a sensible choice. They also face the difficulty of obtaining suitable childcare, irrespective of whether they can afford it. As to the fiscal savings that might be achieved, Lord Wilson has dealt summarily and conclusively with that argument in para 32 of his judgment. I agree entirely with what he has had to say there and need not repeat it. The application of the proportionality test to this case The enjoinder in article 3.1 of UNCRC that, in all actions concerning children undertaken by administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration sets the scene for an examination of whether the failure to exempt the DA and DS cohorts from the cap is a proportionate interference with their ECHR rights. It is to be noted that the best interests of the child must be a primary consideration. Where those interests conflict with other considerations, although they will not inevitably prevail, their primary status must be respected. Ephemeral aspirations, however high sounding or apparently noble, will not suffice to displace them. The entitlement of children, enshrined in articles 26 and 27 of UNCRC, to have the state take necessary measures to ensure that their right to social security benefits is fully realised; and that this comprises an adequate standard of living; and that measures must be taken to assist parents to implement that right all contribute to the importance that UNCRC places on the welfare of children. Where measures are adopted by a state which have a demonstrable adverse effect on children, the hurdle faced by government in showing that these factors have been properly taken into account is correspondingly heightened. Government, if it is to adhere to its obligations under UNCRC, must have a clear sighted understanding of the impact on children that a proposed measure curtailing their entitlement to social security benefits will have. It must also carry out a defensible weighing of their interests against the objectives which it proposes will be achieved by a curtailment of the rights. The preponderance of evidence in this case strongly supports the conclusion that this is not the way in which the respondent approached the decision under challenge in this appeal. True it is that it considered the representations made. But I do not conclude that a proper weighing of the particular interests of the DA and DS cohorts against what was likely to be achieved in their case was carried out. It is not enough that notice was taken of the various submissions made, or that the amendments proposed to the scheme came to the attention of the government. There must be a frank and objective assessment of whether depriving these particular individuals of the benefit of exemption from the cap would conduce in a material way to the realisation of the avowed aims of the scheme. For the reasons that I have given, I do not consider that such an exercise was undertaken. Further, I believe that, if it had been, the case for the inclusion of the DA and DS cohorts in the exemption should have been found to be irresistible. As I have said, I do not consider that breach of article 3 of UNCRC is an essential prerequisite to a finding that there has been a disproportionate interference with the appellants ECHR rights. But, if such a breach required to be found, I would have concluded that it was present. The evidence in this case unmistakably points to the inference that, while the impact on childrens rights was considered, it was not given a primacy of importance which article 3 requires. Had it been, the conclusion that the exemption should not be extended to the DA and DS cohorts would not have been reached. Lord Wilson has amply demonstrated that government and Parliament were alive to the states obligation under article 3 of UNCRC. Where, regretfully, I must disagree with him is on his conclusion that taking into account the representations made amounted to a discharge of that obligation. Conclusion I would allow the appeal and make a declaration that the regulations represent an unjustifiable interference with the appellants article 1, Protocol 1 and article 8 rights, taken in combination with article 14 of ECHR.
UK-Abs
These appeals are brought on behalf of various lone parent mothers and their young children to challenge the legislative provisions known as the benefit cap. These provisions originally capped specified welfare benefits at a total of 26,000 per household. But by the Welfare Reform and Work Act 2016 the government and Parliament reduced the cap to 23,000 for a household in London, 20,000 elsewhere. Single people (including lone parents) are exempt from the revised cap (the cap) if they work for 16 hours each week. The aim of the cap is to incentivise work. The appellants argue that in introducing the cap, the government, through Parliament, has discriminated against lone parents of young children, whose childcare obligations severely curtail their ability to work, and against the children themselves. In the DA case the appellants are three lone parent mothers two of whom had a child under two at the outset of proceedings, and those two children themselves. In DS, the appellants are two lone parent mothers with nine children, three of whom were under five, and those nine children themselves. On 22 June 2017 the High Court held in the DA case that the benefit cap unlawfully discriminated against the children under two and their mothers, but on 15 March 2018 the Court of Appeal set aside the High Courts order. On 26 March 2018 Lang J formally dismissed the DS claimants claims but granted a leap frog certificate so that they could apply to appeal directly to the Supreme Court. The Supreme Court dismisses the appeal by a majority of 5 2. Lord Wilson (with whom Lord Hodge agrees) gives the main judgment. Lord Carnwath (with whom Lord Reed and Lord Hughes agree) and Lord Hodge (with whom Lord Hughes agrees) give concurring judgments. Lady Hale agrees with Lord Wilson on the principles, but not the outcome. Lord Kerr disagrees with him about both. Lord Wilson acknowledges that the cap has had a major impact on lone parent households with a child aged under five and in particular under two [22]. It does incentivise them to try to find work for at least 16 hours per week, but this was argued to fly in the face of the governments own policy of providing no free childcare for children under two and of replacing income support with job seekers allowance only after a lone parents youngest child has reached school age. The governments funding of Discretionary Housing Payments (DHPs) may alleviate the impact of the cap on such lone parent households but the evidence on this could be stronger. The cap saves little public money, but it can take the families it affects well below the poverty line. Living in poverty has a particularly adverse impact on the development of children under five [23] [34]. The caps reduction of benefits to well below the poverty line engages the claimant mothers and childrens right under Article 8 of the European Convention on Human Rights (ECHR) to respect for their family life [35] [37]. Each of the four classes of claimants has a separate status under Article 14 (for example, lone parents of children under two) on grounds of which status, they might complain they face discrimination in the enjoyment of that right [38] [39]. Their complaint, for which there is prima facie evidence, would be that despite being in a relevantly different situation from others subjected to the cap, they are treated the same way see Thlimmenos v Greece (2000) 31 EHRR 12 [40] [51]. The government must objectively justify this discrimination in this case, its failure to exempt the DA and DS cohorts from the cap [52] [54]. The test for whether the government can justify a discriminatory rule governing the distribution of welfare benefits is whether the rule is manifestly without reasonable foundation (MWRF). Once the government has put forward a foundation, the court will proactively examine whether it is reasonable [55] [66]. The United Nations Convention on the Rights of the Child (UNCRC) requires the public authorities to treat the childs best interests as a primary consideration. It forms no part of our domestic law, but aids interpretation of the ECHR, as to whether the government unjustifiably discriminated against the children and their parents in their enjoyment of their right under Article 8. The evidence shows that the government did, as a primary consideration, evaluate the likely impact of the cap on lone parents with young children [67] [87]. Furthermore, the governments belief that there are better long term outcomes for children in households where an adult works is a reasonable foundation for treating the DA and DS cohorts similarly to all others subjected to the cap [88]. Lord Carnwath and Lord Hodge both express reservations on the issue of status, but agree with Lord Wilson on the relevance of the UNCRC and also on the application of the MWRF test. They agree with him that the executive and Parliament both gave proper consideration to the interests of the children affected [89] [123], [124] [131]. Lady Hale agrees with Lord Wilson on the legal principles but not their application. She holds that the government failed to strike a fair balance between the very limited public benefits of the cap and the severe damage done to the family lives of young children and their lone parents if the parents must choose between working outside the home and not having enough for the family to live on [132] [157]. Lord Kerr considers the MWRF test to have derived from the margin of appreciation which is afforded to decisions of national authorities in the European Court of Human Rights. He would not import this approach into the national courts consideration of a measures proportionality. The steps in the proportionality analysis at the national level are well settled in the case law [164] [172]. The MWRF standard should not be applied as part of this analysis instead, the question should be whether the government has established that there is a reasonable foundation for its conclusion that a fair balance has been struck [173] [177]. In relation to the UNCRC, Lord Kerr does not agree with Lord Wilson that the key question is whether the government has acted in breach of Article 3 of the UNCRC [183]. A finding that Article 3 has not been breached does not establish the proportionality of the measure [186]. The evidence in this case shows that, while the impact on childrens rights was considered, it was not given a primacy of importance which Article 3 requires [196].
This is another appeal which concerns the doctrine against restraint of trade. If a covenant falls within what I will simply call the doctrine, it is unenforceable against the covenantor unless it is reasonable. Last year, in Egon Zehnder Ltd v Tillman [2019] UKSC 32, [2020] AC 154, the court was required to address aspects of the doctrine. In para 29 it considered what it called the outer reaches of the doctrine, by reference in particular to the decision of the House of Lords in Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269. But, as it explained in para 30, there was no need for any closer study of those outer reaches in the light of the facts of that case. The present appeal permits no such escape. A developer of a shopping centre leases part of it to a well known retailer. He covenants with the retailer that he will not allow any substantial shop to be built on the rest of the centre in competition with the retailer. In due course he assigns his interest in the centre to a company. The company considers that the centre is ailing and that the covenant is stunting its ability to revive it. In these proceedings brought against the retailer, the company seeks a declaration that the covenant by which it is currently bound engages the doctrine; that it is unreasonable; and that it is therefore unenforceable. To date the courts have addressed only the first question raised by the companys claim: does the covenant engage the doctrine? Yes, ruled the Court of Appeal in Northern Ireland (Stephens LJ, who delivered the judgment of the court, Sir Ronald Weatherup and Sir Richard McLaughlin) on 9 February 2018, [2018] NICA 7, when proceeding to remit the case to the High Court to consider whether the covenant was reasonable. So it is the retailer which now appeals to this court against that ruling. Mr Shortall is a property developer. In 1979, in his own name, he bought land in Springtown, Londonderry, which, for planning purposes, had been zoned for retail use. At that time Londonderry was, in his own words, an economic and political wasteland. The site comprised about five and a half acres, defined, for land registry purposes, as Folio 25992 County Londonderry. In 1980 he obtained planning permission to develop the site so as to yield 32,000 square feet of gross retail space. Mr Shortall sought an anchor tenant, a substantial and prestigious retail company which would lease a significant part of the site and whose presence would persuade other retailers to lease other parts of it, thus making the proposed centre as attractive as possible to shoppers. To this end, he approached Dunnes Stores (Dunnes), which comprised a group of companies based in Dublin and which operated a number of substantial retail outlets of high repute throughout Ireland. Early in 1980 Mr Ben Dunne met Mr Shortall at the site and expressed reservations about the economic viability of establishing a retail unit there. But at a further meeting in about May 1980 they orally agreed outline terms. These were that Mr Shortall would grant Dunnes a long lease of part of the site in consideration of its payment to him of a premium of 50,000 and a nominal ground rent. But Mr Dunne required Mr Shortall to promise not to cause or permit the establishment on any other part of the site of a unit measuring more than about 3,000 square feet for the sale of food or textiles. Mr Shortall agreed. In his evidence he said: I had little or no choice but to grab the offer made by Mr Dunne with both hands, as it was the only deal in town. In November 1980 Mr Shortall and Dunnes signed Heads of Agreement. Dunnes decided that its Belfast company, Dunnes Stores (Bangor) Ltd, which is the appellant in this appeal, should sign the Heads and take the proposed lease. The main terms recorded in the Heads were that Dunnes should take a lease of the part of the site there delineated; that it should bear the cost of building its retail unit there; that Mr Shortall should construct at least six units on the rest of the site; and that Dunnes should contribute one third of the cost of constructing the roads, footpaths and car park on the site. Nothing turns on the omission from the Heads of Mr Shortalls promise not to establish on the rest of the site any substantial unit in competition with Dunnes. On 2 February 1981 the proposed lease was duly executed. Attached to it was a map of the land in Folio 25992, on which the area subject to the lease was edged in red. The area was said to comprise just in excess of an acre so the rest of the site will have comprised about four and a half acres. The lease was for 999 years in consideration of a premium of 50,000 (which Dunnes paid) and of an annual ground rent of 100. It was Mr Shortall, by his solicitors, who had proposed a term of that length. Upon the area subject to the lease Dunnes covenanted to erect a retail unit measuring at least 15,000 square feet at ground floor level within two years of the grant of detailed planning permission. As provided in the Heads of Agreement, it also covenanted to contribute one third of the cost of the construction of the common areas, in particular of the car park. In the lease, as also foreshadowed in the Heads of Agreement, Mr Shortall covenanted to construct at least six shop units in an enclosed mall in a specified location adjoining the area subject to the lease. He also entered into the restrictive covenant which is the subject of these proceedings. The covenant, as I will call it, is in the following terms: That any development on the Lessors lands comprised in the Lessors folio and on his other lands adjoining the premises shall not contain a unit in size measuring three thousand square feet or more for the purpose of trading in textiles Provisions or groceries in one or more units. The reference to Mr Shortalls other lands adjoining the premises is a reference to a small, rectangular piece of land which adjoins the western end of the area leased to Dunnes but which for some reason was not comprised in Folio 25992. In what follows it can be ignored. Mr Shortall also covenanted that, were he to assign any interest in any part of the land in Folio 25992, he would ensure that the assignee would, for the benefit of Dunnes, covenant to observe all his covenants in the lease. Dunnes duly constructed its store. Acting through one of his companies, Mr Shortall duly constructed the shop units in the mall; and he found tenants for them. He also constructed the car park, to the cost of which Dunnes duly contributed. In October 1982 the shopping centre opened. At first it was a great success. Peninsula Securities Ltd (Peninsula), the respondent to this appeal, is another of Mr Shortalls companies. Of the 100 issued shares in it, he holds 99 and his wife holds the other. He is also its managing director. It is a property holding company. By transfer registered on 27 April 1983, Mr Shortall assigned to Peninsula his freehold interest in all the land in Folio 25992, thus including not only his reversionary interest in the land leased to Dunnes but also his interest in all the other land in the folio which was subject to the covenant. The success of the shopping centre at Springtown has declined. The reasons for its decline are disputed and, at any rate at this stage, are irrelevant. Peninsula blames the covenant for causing the decline and for stunting its ability to reverse it. Dunnes disagrees. Proceedings In 2010 Peninsula made a reference to the Lands Tribunal pursuant to the Property (Northern Ireland) Order 1978 (SI 1978/459) (the 1978 Order). It asked the tribunal to declare under article 4 of the order that the covenant represented an impediment to enjoyment of its land and, in that (so Peninsula said) the impediment was unreasonable, to order under article 5 that it should be modified or extinguished. The suggested modification was to substitute for the reference in the covenant to 3,000 square feet a reference to 55,000 square feet. But Peninsula also included in its reference to the tribunal a claim for a declaration that the covenant was unenforceable at common law as being in unreasonable restraint of trade. In due course Peninsula accepted that the tribunal lacked jurisdiction to determine its common law claim. So instead it made the claim in proceedings which it brought in the Queens Bench Division of the High Court of Justice in Northern Ireland. By successive amendments to its statement of claim, it added two further claims to the court proceedings. The first was a claim that the covenant was void under section 2 of the Competition Act 1998. On receipt of Dunnes expert evidence in answer, Peninsula withdrew that claim and substituted its claim, already made to the Lands Tribunal, under the 1978 Order, which accordingly had to be recast so as to fall within article 6 of it. But Peninsula there made clear that it relied on its claim under the 1978 Order only in the event of the failure of its common law claim. By its amended Defence, Dunnes disputed both claims and counterclaimed that, in the event of any modification or extinguishment of the covenant under the 1978 Order, it should be awarded compensation. The proceedings in the Lands Tribunal have therefore come to an end. It was therefore agreed that Peninsulas claim at common law should be determined in advance of its claim under the 1978 Order. In relation to the common law claim, it seems that it was McBride J herself, at first instance ([2017] NIQB 59), who raised the question whether, in particular in relation to an assignee such as Peninsula, the covenant engaged the doctrine at all. Such was the only question which she proceeded to address and which therefore the Court of Appeal addressed. No court has yet addressed the question whether, if the covenant engages the doctrine, the restraint is unreasonable and is therefore unenforceable by Dunnes against Peninsula. It follows that, were it to be determined on this appeal either that the covenant did not engage the doctrine even at the time when Mr Shortall entered into it or that, although it initially engaged the doctrine, it ceased to engage it when Peninsula became subject to it, the High Court would proceed to hear the claim and counterclaim under the 1978 Order. In her judgment dated 25 May 2017, [2017] NIQB 59, McBride J sought faithfully to apply the decision in the Esso case, cited (as there will be no need to repeat) in para 1 above. She correctly took the view that, in the opinion of a majority in the appellate committee, a covenant restrictive of the use of land engaged the doctrine only if the covenantor had, by entry into it, surrendered a pre existing freedom to use the land as he wished. She reasoned that, from the date in 1979 of his purchase of the land in the folio until the date in 1981 of the lease to Dunnes, Mr Shortall had, subject only to planning permission, been free to build retail units of any size on the land and therefore that he had, by entry into the covenant, surrendered a pre existing freedom. She therefore concluded that, while the land had been held by Mr Shortall, the covenant had engaged the doctrine. She noted however that Peninsula had become bound by the covenant at the same time as it had begun to hold the land and she therefore concluded that it had not, by subjecting itself to the covenant, surrendered a pre existing freedom. She therefore held that from then onwards the covenant had no longer engaged the doctrine. On Peninsulas appeal, the Court of Appeal, at para 56, agreed with McBride J that Mr Shortall had surrendered a pre existing freedom and therefore, in accordance with the decision in the Esso case, that, while the land had been held by him, the covenant had engaged the doctrine. But at para 45 it disagreed with her conclusion that, upon the assignment of the land to Peninsula, the covenant had ceased to engage the doctrine. It conceded at para 43 that a literal application of the decision in the Esso case would yield her conclusion. But it questioned why in logic the doctrine should at the point of assignment no longer be engaged. It asked at para 44 whether, and if so why, it would no longer be engaged if, instead of assigning the covenant, the original covenantor died or became bankrupt. The court had reminded itself at para 37 that the doctrine was based on public policy; and, observing at para 45 that public policy was a surer foundation for inquiry into the continuing engagement of the doctrine following the assignment of the covenant to Peninsula, it held that there was no reason of public policy why it should not have continued to be engaged. In this court our duty is to look more closely at the decision in the Esso case in the light of the questions of logic and public policy on which the Court of Appeal touched. That court applied its questions only to the later part of the history: why, in terms of logic and public policy, should Peninsula not have continued to enjoy the benefit of the doctrine just because it had surrendered no pre existing freedom? But we are required also to ask: why, in terms of logic and public policy, should Mr Shortall have enjoyed the benefit of the doctrine in the first place just because he had surrendered a pre existing freedom? So we confront an awkward question: is the surrender of a pre existing freedom an acceptable criterion for engagement of the doctrine? At the hearing before us, no doubt fortified by early judicial encouragement, Mr Humphreys QC on behalf of Dunnes presented a preliminary argument. It was founded on the fact that Mr Shortall was and is a property developer and that Peninsula was and is a property holding company. Neither of them was or is a trader. How then, ran the argument, could any restraint on them amount to a restraint of trade? On analysis, however, the argument appears to be too narrow. In para 64 below Lord Carnwath argues persuasively that, notwithstanding its conventional description, the doctrine extends to restraints not only of trade but also, more generally, of business, thus including that of a developer. In any event, however, the covenant does restrain trade because it restrains Peninsula (and still also Mr Shortall under the law of contract) from causing or permitting a trade in specified goods in a retail unit of a specified size on the site. In, for example, The British Motor Trade Association v Gray 1951 SC 586 the Inner House of the Court of Session addressed a covenant which the petitioning association required its trade members to extract from all purchasers of new cars. Following the Second World War there was a shortage of new and nearly new cars; and speculators were operating a black market in them. In an attempt by the trade association to combat it, the requisite covenant obliged ordinary members of the public who purchased a new car not to sell it for the first two years. But ordinary members of the public were not traders in cars. So one question was whether their covenant was in restraint of trade. Lord Russell at p 602 expressed the opinion, with which Lord Keith at p 604 was inclined to agree, that the covenant did restrain the trade of dealers in second hand cars; but, forming the majority, they proceeded to hold that it was in any event reasonable. Petrofina The prelude to the Esso case was the decision of the Court of Appeal in Petrofina (Gt Britain) Ltd v Martin [1966] Ch 146. The owners of a petrol filling station in Chesterfield had entered into a covenant to buy from Petrofina all the petrol to be sold at the station (a solus agreement) and to require any purchaser of the site to covenant likewise. They agreed to sell the site to Mr Martin, who proposed to form a company to own it and to operate the filling station. He entered into an identical covenant with Petrofina and began to operate the station. Within less than two months, however, he had begun to sell petrol which instead he had bought from Esso. Once his company was incorporated, he agreed to sell the site to it. Petrofinas claim for an injunction against Mr Martin and his company failed on the ground that the covenant was in restraint of trade and that Petrofina had failed to establish that it was reasonable. It is not easy to identify within the three judgments a common basis for the courts conclusion that Mr Martins covenant engaged the doctrine. But the law reporter was probably correct to suggest in the headnote that its basis was that the covenant restricted the ability to trade on land in which Petrofina had no interest by way of mortgage, lease or sale. That such was the basis of the decision seems to follow in particular from passages in the judgment of Harman LJ at p 177 (where he also explained that a reference to the covenantees interest in the case of a sale related only to a situation in which the vendor retained other land which could benefit from the restraint) and at p 178; and in the judgment of Diplock LJ at pp 179 and 187. We should note therefore that, in the case of a restriction on the use of land, the focus of the decision was on the covenantee, namely whether Petrofina retained an interest in the use of the land; and also that the doctrine was held to apply to the covenant even though neither Mr Martin nor his company had enjoyed any pre existing freedom to trade at the site. In the Esso case Mr Harper (or possibly Mr and Mrs Harper) owned the site of a filling station in Stourport. At first Mr Harper himself operated the trade in petrol there; and in due course he entered into a solus agreement with Esso. Later he allowed the respondent company, which he and his wife owned, to operate it; and so the company entered into the solus agreement. In 1962 the company entered into a revised agreement with Esso for the supply, at a price to be fixed by Esso, of all petrol to be sold there for 21 years. One term of it, similar to a term of the agreement in the Petrofina case, was that the company should keep the filling station open at all reasonable hours throughout the period of the agreement; the effect of it was that, even if it was trading at a loss, the company had to continue to trade there unless it found a purchaser willing to assume its obligations under the agreement. Mr Harper wanted to sell the site to the company. Esso lent to the company funds which enabled it to make the purchase; and the company granted to Esso a mortgage over the site, in which the terms of the solus agreement were repeated. In 1963 the company bought both the site and the business of a second filling station, which was near Kidderminster. The vendor had entered into a solus agreement with Esso on similar terms. At the time of the companys purchase the agreement was to subsist for about five further years; and the company agreed to be bound by it for that remaining period. The company soon repudiated the solus agreements in respect of both filling stations and Esso sought an injunction to require it to abide by them. The trial judge held that the doctrine was not engaged by covenants which restrained the use of land and he granted the injunction. The Court of Appeal, constituted by the three judges who had decided the Petrofina case, allowed the companys appeal. It reasoned that, apart from the incorporation of the terms of the solus agreement in the mortgage on the Stourport property, which, so it held, should not affect its conclusion, such a result was mandated by its earlier decision. Upon Essos appeal the appellate committee of the House of Lords agreed with the Court of Appeal that the companys covenants engaged the doctrine. But it held that, whereas the restraint for 21 years on the Stourport property had not been shown to be reasonable and was therefore unenforceable, the restraint for about five years on the Kidderminster property had been shown to be reasonable and that, to that extent, the trial judges injunction should therefore be restored. Counsel for Esso submitted to the appellate committee that the trial judge had been correct to rule that restraints on the use of land did not engage the doctrine. It was a powerful argument because counsel were able to point to the long history whereby, in the interests of other land which they retained, vendors of land had required their purchasers to covenant not to use it for a specified purpose, including not to trade there whether in specified respects or indeed at all; and whereby lessors had required lessees to enter into analogous covenants. It was common ground that such covenants did not engage the doctrine. But their argument went further. For they were able to cite a common situation somewhat akin to the solus agreements in issue: it was that of the tied public house, in which a brewery company leased, or occasionally sold, premises to the publican on terms which disabled him from selling any beer there other than beer which it had sold to him itself. It was, again, common ground that the tie of a public house did not engage the doctrine. It is clear that, because of what it perceived to be the oppressive nature of the restraints in many solus agreements relating to the sale of petrol, including in the agreement relating to the Stourport property, the appellate committee was minded to hold that they engaged the doctrine and therefore that, unless they were reasonable, they were unenforceable. But how was the committee to rationalise their engagement of the doctrine in circumstances in which restrictive covenants on the part of purchasers and lessees of land, and in particular the ties to which publicans bound themselves when leasing or buying pubs, did not engage it? In the Petrofina case the Court of Appeal had focussed upon the position of the covenantee: it was when he retained an interest in the land that the doctrine was not engaged. the position of the covenantor. Lord Reid said at p 298: In the Esso case, by contrast, the majority of the committee focussed upon It is true that it would be an innovation to hold that ordinary negative covenants preventing the use of a particular site for trading of all kinds or of a particular kind are within the scope of the doctrine of restraint of trade. I do not think they are. Restraint of trade appears to me to imply that a man contracts to give up some freedom which otherwise he would have had. A person buying or leasing land had no previous right to be there at all, let alone to trade there, and when he takes possession of that land subject to a negative restrictive covenant he gives up no right or freedom which he previously had. I think that the tied house cases might be explained in this way, apart from Biggs v Hoddinott [1898] 2 Ch 307, where the owner of a freehouse had agreed to a tie in favour of a brewer who had lent him money In the present case the respondents before they made this agreement were entitled to use this land in any lawful way they chose, and by making the agreement they agreed to restrict their right by giving up their right to sell there petrol not supplied by the appellants. So the criterion favoured by Lord Reid for distinguishing between restraints on land which engage the doctrine and those which do not do so has come to be called the pre existing freedom test. It is clear that this is the test which enjoyed majority support within the committee and so constitutes the basis of its decision. Lord Morris of Borth y Gest said at p 309: There is a clear difference between the case where someone fetters his future by parting with a freedom which he possesses and the case where someone seeks to claim a greater freedom than that which he possesses or has arranged to acquire. As examples of the latter case Lord Morris referred to incoming lessees and to purchasers of part of a vendors land. Lord Hodson said at pp 316 317: All dealings with land are not in the same category; the purchaser of land who promises not to deal with the land he buys in a particular way is not derogating from any right he has, but is acquiring a new right by virtue of his purchase. The same consideration may apply to a lessee who accepts restraints upon his use of land; on the other hand, if you subject yourself to restrictions as to the use to be made of your own land so that you can no longer do what you were doing before, you are restraining trade and there is no reason why the doctrine should not apply. In the Esso case what criterion did Lord Pearce favour? In Cleveland Petroleum Co Ltd v Dartstone Ltd [1969] 1 WLR 116, decided less than two years after the decision of the appellate committee, the Court of Appeal of England and Wales, at pp 118 119, regarded Lord Pearce as having subscribed to the pre existing freedom test, which that court then proceeded loyally to apply. It may be, however, that his subscription to it was less than comprehensive. It is true that he said at p 325: It seems clear that covenants restraining the use of the land imposed as a condition of any sale or lease to the covenantor (or his successors) should not be unenforceable. But it seems that Lord Pearce was less confident that the converse applied when the covenantor surrendered a pre existing freedom to use the land. For he added, also at p 325: It may be, however, that when a man fetters with a restraint land which he already owns or occupies, the fetter comes within the scrutiny of the court. In the case of a surrender by covenant of a pre existing freedom, Lord Pearce appears to have favoured a further test. For he said at p 328: The doctrine does not apply to ordinary commercial contracts for the regulation and promotion of trade during the existence of the contract, provided that any prevention of work outside the contract, viewed as a whole, is directed towards the absorption of the parties services and not their sterilisation. So the criterion probably favoured by Lord Pearce has come to be called the sterilisation of capacity test. In the Esso case Lord Wilberforce gave the fifth and final speech. It is clear that he did not subscribe to the pre existing freedom test. He said at p 331 that the common law had often thrived on ambiguity; that, even if it were possible, it would be mistaken to try to crystallise the rules of the doctrine into neat propositions; and that the doctrine had to be applied to factual situations with a broad and flexible rule of reason. He observed at pp 332 333 that provisions of contracts which reflected the accepted and normal currency of commercial relations had come to fall outside the scope of the doctrine because, moulded under the pressures of negotiation, competition and public opinion, they had assumed a form which satisfied the test of public policy as understood at that time. Then, adverting to restrictive covenants imposed on the sale or lease of land, and in particular to the ties imposed on publicans, he said at p 335: I think one can only truly explain them by saying that they have become part of the accepted machinery of a type of transaction which is generally found acceptable and necessary, so that instead of being regarded as restrictive they are accepted as part of the structure of a trading society. So the criterion favoured by Lord Wilberforce has come to be called the trading society test. Since the covenant in issue in this court today was made by a lessor, it is worthwhile to note that, in his analysis of covenants in relation to land which had generally been found acceptable and necessary, Lord Wilberforce referred at pp 334 335 to covenants by lessors, and by vendors in relation to land retained by them, as well as by lessees and purchasers in relation to the land leased or conveyed to them. Indeed, as an example of a lessors covenant, he cited Hinde v Gray (1840) 1 Man & G 195. There the defendant leased a brewery in Sheffield to the claimants. The defendant, who also owned and operated a public house in Sheffield called The Punch Bowl, covenanted that he would not sell beer in that pub other than as supplied to him by the claimants; and, when later he granted a lease of the pub, he caused the lessee to covenant likewise. One of the claims made in an action brought by the claimants in the Court of Common Pleas was of a breach of that covenant. That claim was rejected because the claimants had failed to establish that the beer sold in The Punch Bowl had not been supplied by them at least indirectly even if not directly. There was no suggestion that the covenant engaged the doctrine and so was required to be reasonable. There is nothing in the jurisprudence, ancient or modern, to indicate that covenants by lessors, and by vendors in relation to retained land, engage the doctrine by reference to any criterion different from that which applies to covenants by lessees and purchasers. An intriguing question, irrelevant to the search for legal principle, is why, by reference to the criteria which they favoured, their lordships in the Esso case unanimously held that both of the solus agreements entered into by the company engaged the doctrine. In relation to the Kidderminster property, what was the basis on which the majority considered that the company had enjoyed a pre existing freedom to trade there? In relation to the Stourport property, what was the basis on which they considered that the company had enjoyed a pre existing freedom to trade there or, if such was their thinking, that it sufficed that Mr Harper had enjoyed that freedom? Indeed, when Lord Reid observed at p 304 that, while he did not subscribe to all of the Court of Appeals reasoning, its decision in the Petrofina case had been correct, what was the basis on which he considered that either Mr Martin or his company had enjoyed a pre existing freedom to trade at the Chesterfield property? How did Lord Pearce persuade himself that the effect of the solus agreements in favour of Esso had been not to absorb the companys services but, rather, to sterilise them? And, in the light of the evidence, noted by Lord Hodson at p 315, that, out of 36,000 filling stations in the UK, 35,000 had become subject to solus agreements with oil companies, how did Lord Wilberforce feel able to conclude that, on balance (as he said at p 337), the agreements in issue had not become acceptable and necessary as part of the structure of a trading society? Our task in this court is, however, to analyse the validity in principle of the pre existing freedom test favoured by the majority of our distinguished predecessors. They had alighted upon a distinction which served their purpose: for its effect was, for example, that a tie accepted by a publican upon entry into a lease remained excluded from the doctrine but that a solus agreement with which the operator of a filling station burdened his premises was brought within it. But was the distinction consonant with the doctrine? Or did it mask an attempt to square a circle? The trouble is that the majority did not explain why a covenant restrictive of the use of land is more likely to offend public policy when the covenantor enjoyed a pre existing freedom in relation to its use than when he enjoyed no such freedom. It is an explanation for which we must therefore search. Is there a ground for concluding, for example, that a covenantors pre existing freedom places him in a weaker bargaining position than otherwise or in some other way renders his covenant more deserving of legal intervention? Reaction to Esso Less than two years after the decision of the appellate committee in the Esso case, Mr J D Heydon, then a lecturer at Oxford University, wrote a coruscating criticism of it in an article entitled The Frontiers of The Restraint of Trade Doctrine (1969) 85 LQR 229. Later the author, who ultimately became a justice of the High Court of Australia, wrote a book entitled The Restraint of Trade Doctrine, now in its 4th ed published in 2018, in which he has consistently repeated much of what he said in the article. At p 281 of the article he suggested that the pre existing freedom test reflected a distinction based purely on form and not on substance at all. He developed his suggestion as follows: If all the landowners in Yorkshire agree not to trade on their Yorkshire land, the restraint of trade doctrine would apply because the landowners are fettering a pre existing freedom, and the agreement would certainly be held unenforceable. But if X buys all the land in Yorkshire, covenanting with each seller not to trade on the land, the Esso test prevents the doctrine applying, so that the covenants are all enforceable. In each case the public and the parties restricted are equally damaged. Why should the common law be prevented from controlling this in the second case? Again, if X, who owns two shops, sells one to A and A and X mutually covenant that neither shop shall be used as a butcher shop, the restraint of trade doctrine will apply to Xs obligations but not to As; Xs may be held unenforceable but not As. The majority test thus leads to gross anomalies. Mr Heydon thereupon undertook an analysis of the criterion favoured by Lord Pearce, which he described at p 245 as mystical. He then turned to that favoured by Lord Wilberforce, which he described at p 246 as reflecting a relatively inert acceptance by the courts of the status quo. In that connection he observed that public opinion may be incapable of seeing the evils of the restrictions and that commercial men may all be interested in keeping the system going. Mr Heydon concluded at pp 250 251 with the controversial suggestion that it would be preferable for the doctrine to have universal application to all restraints of trade in order to address a wide range of evils. Until today neither the appellate committee nor, more recently, this court has had an opportunity to reconsider the committees decision in the Esso case. Indeed, apart from in the Cleveland Petroleum case, cited in para 25 above, it has received little attention even in the intermediate appeal courts of the UK. As so often, however, contributions of real value to us in this court are to be found in the judgments of other senior courts in the common law world. New Zealand and Ireland The early decision of the Court of Appeal of New Zealand in Robinson v Golden Chips (Wholesale) Ltd [1971] NZLR 257 and the decision of the Supreme Court of Ireland in Sibra Building Co Ltd v Ladgrove Stores Ltd [1998] 2 IR 589 suggest that the pre existing freedom test has been adopted in the law of both jurisdictions. Canada There are two Canadian decisions of great relevance. They even replicate the circumstances of the case before us, namely a covenant by the owner of a shopping centre in favour of a lessee of part of it. In Russo v Field [1973] SCR 466 the third defendant company was the owner of a shopping centre in Toronto. It leased part of it to the claimants. In consideration of their covenant to conduct business as a hairdresser and beauty salon at those premises, the company covenanted not to permit any other store in the centre to conduct that business. The company then leased adjoining premises to the second defendant, Mrs Field, who had notice of the covenants and who commenced a business (which she ultimately discontinued) of selling wigs. In a judgment of the court delivered by Spence J, the Supreme Court of Canada held that the trial judge had been entitled to find that the sale of wigs had become an integral part of the business of a hairdresser and beauty salon; that he had rightly awarded damages to the claimants against both the company and Mrs Field; and, in that she had discontinued the business only later, he had also rightly enjoined her from continuing it. Spence J addressed the doctrine against restraint of trade at pp 486 487 as follows: It has been said that covenants such as those under consideration in this action are covenants in the restraint of trade and therefore must be construed restrictively. I am quite ready to recognize that as a general proposition of law and yet I am of the opinion that it must be considered in the light of each circumstance in each individual case. The mercantile device of a small shopping centre in a residential suburban area can only be successful and is planned on the basis that the various shops therein must not be competitive if the limited number of prospective purchasers are faced in the same small shopping centre with several prospective suppliers of the same kind of goods or service then there may not be enough business to support several suppliers. They will suffer and the operator of the shopping plaza will suffer. I am therefore of the opinion that the disposition as a matter of public policy to restrictively construe covenants which may be said to be in restraint of trade has but little importance in the consideration of the covenants in the particular case. Although the passage is equivocal, I incline to the view that the Supreme Court was there holding that for practical purposes the companys covenant did not engage the doctrine rather than holding that, although it did engage it, the covenant was reasonable. In F W Woolworth Co Ltd v Hudsons Bay Co, Zellers Inc and Burnac Leaseholds Ltd (1985) 61 NBR (2d) 403 the developer of a shopping mall in New Brunswick had, in the course of granting a lease of premises in it to Woolworths, covenanted that no other premises in the mall would be used as a junior department store, which meant a low price value store such as Woolworths itself. Zellers, a junior department store in competition with Woolworths, took an assignment of premises in the mall. The New Brunswick Court of Appeal held that the developers covenant should be enforced by injunction against both it and Zellers. Hoyt JA, giving judgment on behalf of the court, quoted at para 31 from the speech of Lord Wilberforce in the Esso case and at para 35 the passage set out above in the judgment of Spence J in the Russo case. Hoyt JA continued as follows: 39. In the present case there was no inequality of bargaining power nor was there evidence of bad faith on the part of Woolworth All the evidence touching on the point indicated that such covenants are common, if not universal, in leases for space in such developments or, to use Lord Wilberforces words at p 337 in Esso, the provision is one which by the pressure of negotiation and competition, has passed into acceptance or into a balance of interest between the parties and their customers . 40. In my view, the restriction in the Woolworth lease does not, in these circumstances, fall within the category of contract known as one in restraint of trade. Had he applied the pre existing freedom test, to which he also referred, Hoyt JA would have been required to conclude, by contrast, that the developers covenant did engage the doctrine. Australia Five Australian authorities will help us; and we should address them in chronological order. The first is the decision of the High Court in Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288. By a majority the court held that a solus agreement entered into by the owner of a proposed filling station in favour of Amoco engaged the doctrine and was unreasonable and so unenforceable. When entering into the agreement, the owner had leased the property to Amoco and had taken back an underlease of it. The majority rejected Amocos contention that the owner had therefore enjoyed no pre existing freedom to trade. In concluding that the covenant engaged the doctrine the majority therefore applied Lord Reids test in the Esso case. Nevertheless there were murmurs of doubt about it. Walsh J at p 304 expressed reluctance to accept that it provided a valid criterion for excluding covenants from engagement with the doctrine; and Gibbs J at p 313 expressly left that question open. The second is the decision of the High Court in Quadramain Pty Ltd v Sevastapol Investments Pty Ltd [1975 1976] 133 CLR 390. X owned adjacent parcels of land in New South Wales. On the first parcel it operated a hotel. It sold the second parcel to Y for use as part of a shopping centre. Y covenanted on behalf of itself and its successors not to apply for a liquor licence there. X assigned the first parcel to Quadramain, which continued to operate the hotel. Sevastapol became the lessee of the second parcel and it applied for a liquor licence there. By a majority the court held that Ys covenant did not engage the doctrine and should be enforced against Sevastapol. Y had surrendered no pre existing freedom to use the second parcel; and the majority was willing to reach its conclusion by reference to Lord Reids test. But there were further murmurs of discontent about it, louder than in the Amoco case. Gibbs J, with whom Stephen and Mason JJ agreed, observed at p 401 that Lord Wilberforces test was more flexible than the pre existing freedom test and might in time come to be preferred; and, in a dissenting judgment with which Murphy J agreed, Jacobs J suggested at p 414 that the distinction which formed the basis of the pre existing freedom test presented difficulties unmatched in Lord Wilberforces test. The third is the decision of the Full Federal Court of the Australian Capital Territory in Australian Capital Territory v Munday [2000] FCA 653. Mr Munday traded in articles of waste. The public authority which operated a waste disposal tip changed the contractual terms of his admission to the tip so as to rescind his licence to solicit members of the public to give articles to him before they abandoned them there. The court rejected his claim that the rescission was in restraint of trade and unenforceable. Application of the pre existing freedom test might well have yielded a conclusion that the doctrine was engaged. But, in a careful judgment with which the other members of the court agreed, Heerey J, after addressing the Amoco and Quadramain cases and also the Woolworth case in Canada, concluded at para 105 that the trading society test should be adopted; and that it yielded a conclusion that the term which prohibited Mr Munday from soliciting for articles did not engage the doctrine. The fourth is the decision of the High Court in Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126. The respondents, which manufactured ice cream across Australia, sold their business in Western Australia to the appellant. They covenanted not to sell any ice cream in Western Australia which they had manufactured. The court upheld a ruling that the covenant was in restraint of trade and unenforceable. Although the covenant did not relate to the use of land, the decision is interesting. For the appellant argued that the covenant absorbed, rather than sterilised, the respondents capacity to service the market for ice cream and that, by application of Lord Pearces test in the Esso case, it therefore failed to engage the doctrine. In a joint judgment Gleeson CJ and Gummow, Kirby and Hayne JJ held at para 35 that Lord Pearces test involved the application of criteria of particular indeterminacy and at para 39 that it should not be accepted in Australian common law. In passing the judges had also, at para 22, noted criticisms of the pre existing freedom test, including in Treitel on The Law of Contract, 10th ed (1999), p 434. Indeed four months later, in Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181, three of those four judges, in the course of holding that a confidentiality agreement had been in restraint of trade, suggested at para 55 that the court in the Peters case had gone so far as to reject the pre existing freedom test. The fifth is the decision of the Supreme Court of Victoria, Court of Appeal, in Specialist Diagnostic Services Pty Ltd v Healthscope Ltd (2012) 41 VR 1. The case is of particular interest because its subject was a covenant by a lessor of part of its premises in relation, among other things, to the use of other parts of them. The appellant conducted a pathology business. It took a lease of premises within two hospitals owned by the predecessors of the first respondent and within a third hospital owned by the second respondent. In granting the leases the owners of the hospitals covenanted (a) not to be concerned in a business similar to that which the appellant was to conduct in the hospitals and (b) not to grant any right to occupy any other part of the hospitals to any third party for the conduct of such business. The respondents breached the covenants. In upholding the appeal the court found that the covenants were reasonable and should be enforced against the respondents. But, perhaps unnecessarily in the light of that finding, the court proceeded to consider whether the covenants engaged the doctrine. By reference to the Australian jurisprudence it resolved to assume that the issue fell to be decided by application of the trading society test. It held as follows: 64. It may be accepted that, ordinarily, the alienor of part of the land may be able to bind himself or herself with respect to the use of the balance of the land retained after a partial alienation. As [the appellant] submits, such provisions are common in leases of individual retail premises within shopping centres or other stand alone facilities. 65. We were not, however, referred to any persuasive authority which extends the postulated exception from the restraint of trade doctrine to all covenants in restraint of trade made by a landlord. 72. As his honour recorded, there was no evidence before him of accepted practice relating to restraint of trade provisions in tenancy agreements concerning pathology facilities within hospitals. Further, his Honour was correct to conclude that no simple analogy should be drawn between exclusivity provisions in shopping centre leases and the case with which he was concerned. Thereupon the court identified four reasons why the covenants engaged the doctrine, of which the first was that those at (a) extended beyond the land retained by the respondents. Discussion The passage of half a century since the appellate committee in the Esso case established the pre existing freedom test has not generated a reasoned defence of it. Mr Heydons early criticisms of it remain unrebutted. The commentary on it in the 10th ed (1999) of Treitel on The Law of Contract, quoted in the judgment of the majority in the Peters case cited at para 41 above, is replicated, almost word for word, in the 15th ed (2020) of the book at para 11 151, which reads as follows: it is submitted that the reasoning is hard to reconcile with the emphasis placed on the Esso case itself on the element of public interest; for restrictions on the use of land may cause harm to the public where they are imposed at the time when the land is acquired, no less than where they are imposed later. The analysis of the Australian jurisprudence in paras 38 to 42 above demonstrates that there the early murmurs of concern about the test have reached a crescendo at which Australia can be heard to have rejected it. In terms of public policy, which is the foundation of the doctrine, there is no explanation why a restraint should engage the doctrine if the covenantor enjoyed a pre existing freedom but why an identical restraint should not engage it if he did not do so. Surely our conclusion, respectful to our predecessors yet also firm, has to be that the test does not deserve its place in the doctrine. But is the trading society test any more defensible? At first sight it appears unattractive. It seems to concede that the law follows where many might expect it to lead. Is the law (one might ask) to be determined as if by a weathercock which answers only to the direction of the wind? But such criticisms fail to recognise the nature of the common law. It is a law built by the judges on behalf of the people over seven centuries. It has been generated from below, not imposed from above. Over time bits have been added here, discarded there; enlarged here, confined there; strengthened here, diluted there. Bits have been re interpreted; bits have withered away as a result of disuse; and bits have been abrogated by statute. In Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 Lord Goff of Chieveley said at p 377: the common law is a living system of law, reacting to new events and new ideas, and so capable of providing the citizens of this country with a system of practical justice relevant to the times in which they live. In these circumstances the common law is inevitably a patchwork; and in it we will search in vain for perfect congruity. This is a truth which Lord Wilberforces pragmatic test recognises. Although criticised, the phrase trading society aptly describes the test. For it reflects the importance attached on the one hand to freedom to trade and on the other to the enforceability of contracts in the interests of trade. It is the former which generates the doctrine and the latter which keeps it within bounds. Under the trading society test a covenant which restrains the use of land does not engage the doctrine if, in the words of Lord Wilberforce in the Esso case at p 333, it is of a type which has passed into the accepted and normal currency of commercial or contractual or conveyancing relations and which may therefore be taken to have assumed a form which satisfies the test of public policy. But the proper rooting of Lord Wilberforces test in public policy itself generates a need to qualify it. In giving the judgment of the Judicial Committee of the Privy Council in Vancouver Malt and Sake Brewing Co v Vancouver Breweries Ltd [1934] AC 181 Lord Macmillan observed at p 189: It is no doubt true that the scope of a doctrine which is founded on public policy necessarily alters as economic conditions alter. Public policy is not a constant. More especially is this so where the doctrine represents a compromise between two principles of public policy; in this instance, between, on the one hand, the principle that persons of full age who enter into a contract should be held to their bond and, on the other hand, the principle that every person should have unfettered liberty to exercise his powers and capacities for his own and the communitys benefit. Lord Wilberforce himself recognised, also at p 333, that a change in societys circumstances might precipitate a change in public policy which would require re examination of whether a type of covenant should continue not to engage the doctrine or (I would add) whether, by contrast, it should continue to engage it. I conclude that, unlike the pre existing freedom test, the trading society test is consonant with the doctrine. This conclusion places this court in an acutely uncomfortable position. In 1966 the appellate committee recognised a facility for it to depart from one of its previous decisions: Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. This court has inherited the facility to do so. Nevertheless in the Practice Statement Lord Gardiner, the Lord Chancellor, stressed the importance of certainty in the law. A sudden change in the law is likely to destabilise it. Negotiations for contractual restraints on the use of land may well have been conducted with the pre existing freedom test in mind. Past litigants, actual or potential, whose contentions failed or would have failed by virtue of that test would rightly resent a departure from it which would have given them saliency. Future such litigants, whose contentions would fail by virtue of departure from it, would resent it in equal measure. Subsequent opinions of the appellate committee stressed the high degree of caution with which it should address a request for departure. In Horton v Sadler [2007] 1 AC 307 Lord Bingham of Cornhill said at para 29: Over the past 40 years the House has exercised its power to depart from its own precedent rarely and sparingly. It has never been thought enough to justify doing so that a later generation of Law Lords would have resolved an issue or formulated a principle differently from their predecessors. The form to be used as a Notice of Appeal to this court asks in particular: Are you asking the Supreme Court to depart from one of its own decisions or from one made by the House of Lords? The purpose of the question is to enable the court, if granting permission to appeal, to decide in particular whether the appeal should be heard by a panel of more than the conventional number of five justices. But, in its Notice, Dunnes ticked no. It was only when at a late stage it filed its written case, and in particular when Mr Humphreys presented its oral argument, that it became clear that Dunnes was inviting the five of us to depart from the pre existing freedom test which had formed the basis of the decision in the Esso case. It is therefore with appropriate hesitation that I propose that this court should depart from the test favoured by the majority in the Esso case. To adapt Lord Binghams words, the objection to it is not just that the issue in the Esso case should have been resolved differently or the principle formulated differently there. Apart from the fact that even at the time Lord Wilberforce chose not to associate himself with it, the objections to the test are that it has no principled place within the doctrine; that it has been consistently criticised for over 50 years and, although in some quarters loyally applied, the reasoning behind it has, to the best of my knowledge, scarcely been defended; and that the common law has been limping between the continuing authority of the test in our jurisdiction and its rejection in Australia and in parts of Canada. The application of the trading society test to the facts of the present case is straightforward; there is no need to remit the case for inquiry into it. At para 39 of her judgment McBride J addressed the evidence of Mr Crothers, the chartered surveyor who gave evidence on behalf of Dunnes. She said: He set out the difficult marketing conditions which prevailed in Northern Ireland in the 1970s and described the bringing of Dunnes to Derry as a great achievement as Dunnes was a highly sought after anchor tenant. In his view it was not uncommon to find negative covenants in leases in favour of anchor tenants. This was especially so in long leases as the landlord, having received a premium, had no financial interest thereafter in how the centre traded. It was therefore the tenant who had everything to lose if the landlord put in competition. In this case he stated it would have been unpalatable and commercially offensive for the landlord to put direct competition on Dunnes doorstep as Dunnes had come to an untested location and had invested significant sums in buying the site, building the store and contributing to the costs of the car park. It is not obvious that Peninsula even called evidence to the contrary. And, from the study in paras 35 and 36 above of the Russo case and of the Woolworth case in Canada, and in para 42 above of the Specialist Diagnostic Services case in Australia, we derive confirmation that across the common law world it has long been accepted and normal for the grant of a long lease in part of a shopping centre to include a restrictive covenant on the part of the lessor in relation to the use of other parts of the centre. There is no ground for considering that social changes require re examination of the conclusion that, by reference to the trading society test, the covenant has at no time engaged the doctrine. It will be recalled that an interesting question caused division between McBride J and the Court of Appeal. It was whether, if a covenant were to engage the doctrine because the covenantor (Mr Shortall) enjoyed a pre existing freedom, it would continue to engage it following an assignment of the burden of the covenant to an assignee (Peninsula) which enjoyed no such freedom. It follows that, were my colleagues to agree with this judgment, the question would no longer arise. common law claim should be dismissed. I propose that Dunnes appeal should be allowed and that Peninsulas Postscript: The 1978 Order The possible availability to Peninsula of an alternative remedy in relation to the covenant has played no part in the conclusion that it has at no time engaged the doctrine. But the conclusion is fortified by the possibility of relief pursuant to Peninsulas alternative claim under the 1978 Order, which should now proceed to be heard. Nothing in this judgment should be taken to influence the determination of any issue which will then arise. The 1978 Order is loosely based on section 84 of the Law of Property Act 1925 which, by section 209(3), extends only to England and Wales. Section 84 is entitled Power to discharge or modify restrictive covenants affecting land. In its report entitled Making Land Work: Easements, Covenants and Profits Prendre (2011) (Law Com No 327) the Law Commission of England and Wales explained the background to section 84 as follows: 7.3 In the 19th century, and well into the 20th, land was sold off from large estates so as to facilitate urban expansion, but frequently subject to extensive restrictive covenants. These covenants had an important social function in the era before public planning control and often served to preserve the amenity of an area, controlling building and land use and ensuring consistent development. However, social needs change over time Landowners and developers may wish to discharge, or at least modify, covenants on the basis that they are no longer serving a useful purpose but their presence on the title to the land is impeding a change of use or a development. It seems that the lack of jurisdiction in the court prior to 1925 to modify or extinguish such a covenant enabled a covenantee to hold a covenantor to ransom even when the covenant was for practical purposes obsolete. The 1978 Order confers a wider, more flexible, jurisdiction than that conferred by section 84 even as amended. If Peninsula were to establish that the covenant represents an impediment to the enjoyment of land under article 3 and that the impediment was unreasonable under article 5(1), the court under article 6(2)(a), like the Lands Tribunal under article 5(1), would have a wide discretion whether to make an order modifying or extinguishing the impediment and, if so, whether under article 5(6) to substitute a different impediment and/or to award compensation to Dunnes. Article 5(5) requires the discretion whether to make the order to be exercised by reference to seven specified factors and to any other material circumstances. It would be absurd to consider that the doctrine against restraint of trade would have represented a vehicle for the resolution of the issues between Peninsula and Dunnes as satisfactory as that represented by the 1978 Order. It is this Order which properly reflects modern public policy in relation to the covenants to which it applies. LORD CARNWATH: I begin by paying tribute to Lord Wilsons characteristically compelling judgment, tinged with regret that this is likely to be his last substantive contribution to the jurisprudence of this court. It has been a privilege to work with him. I adopt with gratitude his clear and concise exposition of the legal and factual background, and of the relevant authorities. This enables me to express my own views relatively briefly. I do so in recognition of the importance of the case, and out of respect for the Court of Appeal whose decision we will be reversing. I agree entirely with his analysis of the Esso Petroleum Company Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269 case, and that, for the reasons he gives, we should finally discard the much criticised pre existing freedom test. I also agree with his reasons for considering that this departure is within the scope and spirit of the 1966 Practice Statement. I note that many of the later criticisms had been foreshadowed at the time in the powerful reply of Robert Megarry QC before the House (pp 288 289). He had observed that the test now put forward by the respondents was wholly novel: It appears in no previous case, and was not argued below, but appeared for the first time in the course of the respondents argument here This test draws a sharp distinction between covenants made by the grantor and those made by the grantee, with highly capricious results. He illustrated those capricious results by reference to cases of lease and lease back and other examples, similar to those cited in later commentaries. It is unfortunate that these criticisms were not effectively addressed in any of the majority speeches. I also agree with Lord Wilson in preferring Lord Wilberforces so called trading society approach: whether the restrictive covenants in question have become part of the accepted machinery of a type of transaction which is generally found acceptable and necessary. (p 335C) In a later passage he referred to such restrictions being upheld where they have become part of the accepted pattern or structure of a trade, as encouraging or strengthening trade, rather than as limiting trade. (p 336B) It is true that this formulation is no more than an imprecise guide; and, as Lord Wilson observes (para 28), it raises the question why Lord Wilberforce did not think the test to be satisfied on the facts of the case. On the evidence the vast majority of filling stations in the UK were subject to solus agreements with oil companies. Lord Wilberforces answer seems to have turned both on the nature of the agreements and the fact that the restrictions were not sufficiently well established in form or time. Thus, in giving his reasons for holding that the agreements were on balance within the category of restraints which required justification, he noted (at p 337C G): This is not a mere transaction in property, nor a mere transaction between owners of property: it is essentially a trade agreement between traders. Having discussed the various restrictive elements he concluded: Finally the agreement is not of a character which, by the pressure of negotiation and competition, has passed into acceptance or into a balance of interest between the parties or between the parties and their customers; the solus system is both too recent and too variable for this to be said. (Emphasis added) One may detect an implicit contrast with the brewery cases, where, as he had explained, contractual clauses tying a leased public house to the lessors beers had been known, and commonly current, at least since the early 19th century (p 333G), and with other forms of restrictive covenants treated as acceptable more than a century before that (p 334G). Lord Wilson (para 51) regards the application of Lord Wilberforces trading society test in the present case as straightforward, having regard to the unchallenged evidence of their not infrequent use in leases in favour of anchor tenants. On the other hand the parallels discussed by Lord Wilberforce might appear to suggest that he had in mind the need for a longer historical pedigree than that implied by the limited evidence in this case. However, as the passage cited above makes clear, the practice had to be looked at in the context of what was essentially a trade agreement between traders, rather than a transaction in property. Less important than history is whether, in the light of established practice, there is in the relevant context any public policy reason for interfering in the free process of negotiation between the parties, or seeking to redress the balance of interests between them. The doctrine is an exception to the ordinary principles of freedom of contract, and should not be extended without good justification beyond those categories already established by the case law, or indistinguishable in principle from them. That approach is also consistent with the underlying approach of the majority in the Esso case. The case itself establishes no more than that a restraint may attract the doctrine even if it relates to the use of land. According to the majority in Esso, if the trader is giving up an existing freedom to trade, it matters not whether the covenant is a purely personal restraint or a restraint on the use of a particular piece of land. As Lord Reid explained (at pp 297G 298A), dismissing the argument that the respondents were left free to trade anywhere else: But in many cases a trader trading at a particular place does not have the resources to enable him to begin trading elsewhere as well, and if he did he might find it difficult to find another suitable garage for sale or to get planning permission to open a new filling station on another site. As the whole doctrine of restraint of trade is based on public policy its application ought to depend less on legal niceties or theoretical possibilities than on the practical effect of a restraint What matters therefore is the practical effect of the restriction in the real world, and its significance in public policy terms. The present case is quite different from Esso, or any of the other trading cases. The agreement is not in essence an agreement between traders, but a transaction in land. The only trade which might be inhibited is that of a potential future occupier, seeking to trade in textiles, provisions or groceries in some other part of the development. None of the authorities suggest that there is any public policy reason or legal basis for protecting that mere possibility. I accept, as Lord Wilson says (paras 17 18), that the mere fact that the Peninsula is a developer, rather than a trader in the conventional sense, is not necessarily determinative. Common formulations of the doctrine refer to any restraints on the free exercise of (a persons) trade or business (see eg Petrofina (Great Britain) Ltd v Martin [1966] Ch 146, 169C per Lord Denning MR). So it is necessary to focus on the nature of any restriction on Peninsulas own business as a developer. We have been referred to no case in which the doctrine has been held to apply to a restriction accepted by a developer as part of a development scheme such as the present. This is not surprising. The business of developing a shopping centre as in this case inevitably involves doing deals to regulate the use of the relevant land, and balance the competing interests, to advance the success of the centre as a whole. That was rightly recognised in the Canadian cases to which Lord Wilson has referred (paras 35 36). As is shown by those cases, along with the evidence in this case, there is nothing unusual in special terms being required to secure an appropriate anchor tenant. Indeed, if Dunnes had had reason to think that the covenant would prove unenforceable in law, the likely result would have been its withdrawal from the development, and the failure of the scheme. Thus, the ability to offer such terms does not restrict, but rather facilitates, the developers business. It can be seen, in Lord Wilberforces words, as encouraging or strengthening , rather than as limiting that business. There is no public policy reason for interfering with such an arrangement. There is a parallel between Mr Shortalls position and that of the prospective lessee faced with choice of taking premises subject to a covenant, as Lord Morris explained it in the Esso case. He said at p 309B C: If one who seeks to take a lease of land knows that the only lease which is available to him is a lease with a restriction, then he must either take what is offered (on the appropriate financial terms) or he must seek a lease elsewhere. No feature of public policy requires that if he freely contracted he should be excused from honouring his contract. In no rational sense could it be said that if he took a lease with a restriction as to trading he was entering into a contract that interfered with the free exercise of his trade or his business or with his individual liberty of action in trading. Like that hypothetical lessee, Mr Shortall was faced with a free but limited choice: to take Dunnes on the terms offered, or not to have an anchor tenant at all. As in the case of the lessee, in no way could it be said that the exercise of that choice interfered with the free exercise of his business as a developer or with his individual liberty of action. It was rather an intrinsic part of that business. In Lord Morris words: No feature of public policy requires that if he freely contracted he should be excused from honouring his contract. For these reasons, I agree with Lord Wilson that the appeal should be allowed, and Peninsulas common law claim dismissed. I do so the more readily having regard to the existence in the 1978 Order, of an alternative, and in many ways more satisfactory, vehicle for the resolution of the issues between the parties.
UK-Abs
The appeal relates to a restrictive covenant given by the developer of a shopping centre in a lease that it granted to a retailer over part of the centre. In giving the covenant the developer and later the respondent (Peninsula) each undertook not to allow any substantial shop to be built on the rest of the centre in competition with the appellant (Dunnes). Peninsula now argues that the covenant engages the doctrine of restraint of trade (the doctrine); that it is unreasonable; and that it is therefore unenforceable. This appeal concerns whether the covenant engages the doctrine. The developer, Mr Shortall, wished to develop a shopping centre on land that he owned in Londonderry. He wanted an anchor tenant there in order to attract other retailers, and so he granted a lease to Dunnes, a subsidiary in a Dublin based group of retail companies. In the lease he covenanted that any development on the site would not contain a unit of 3,000 square feet or more whose purpose was the sale of food or textiles. Dunnes built its store and the centre opened. Mr Shortall later assigned his freehold interest in the land, together with the burden of the covenant, to the respondent (Peninsula), a property holding company which he managed and which he and his wife owned. The success of the shopping centre subsequently declined. Peninsula brought a claim in the High Court of Northern Ireland seeking (among other things) a declaration that the covenant was unenforceable at common law. McBride J dismissed the claim. She observed that, following the decision of the House of Lords in Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269 (Esso), it was necessary, in order to determine whether the covenant engaged the doctrine, to ask whether Mr Shortall or Peninsula had, on entry into the covenant, surrendered a pre existing freedom of theirs to use the land. She held that Mr Shortall had surrendered such a freedom, but that Peninsula had not; and that the covenant had therefore engaged the doctrine only until the assignment to Peninsula had occurred. The Court of Appeal allowed Peninsulas appeal, holding that the doctrine had been engaged both before and after the assignment. Dunnes now appeals to the Supreme Court. The Supreme Court unanimously allows the appeal and dismisses Peninsulas common law claim. Lord Wilson gives the lead judgment, with which Lord Lloyd Jones, Lady Arden and Lord Kitchin agree. Lord Carnwath gives a concurring judgment. Lord Wilson observes that the courts duty in this appeal is to examine the decision in Esso in the light of questions of logic and public policy and to ask whether the surrender of a pre existing freedom is an acceptable criterion for engagement of the doctrine [16]. Dunnes made a preliminary argument that, as neither Mr Shortall, a developer, nor Peninsula, a property holding company, was a trader, no restraint on them could be a restraint of trade. That argument appears to be too narrow. The covenant does restrain trade because it restrains Peninsula from causing or permitting a trade in specified goods in a retail unit of a specified size on the site [17]. The Esso case concerned a type of covenant under which the owner of a petrol station undertakes to buy from a particular supplier all the petrol to be sold at the station (a solus agreement). The respondent had entered into two solus agreements with Esso, each in respect of a different petrol station [19]. The respondent later repudiated the agreements and Esso sought an injunction requiring it to abide by them [20]. In the House of Lords, Lord Reid, with the support of the majority, formulated what has become known as the pre existing freedom test: he stated that a covenant restraining the use of land would engage the doctrine if, on entering into it, the person doing so (the covenantor) gives up some freedom which otherwise he would have had [23 24]. He held, again with majority support, that in relation to both agreements the doctrine was engaged [28]. Lord Wilberforce put forward a different test, known as the trading society test, under which a covenant restraining the use of land does not engage the doctrine if it is of a type which has passed into the accepted and normal currency of commercial or contractual or conveyancing relations and which may therefore be taken to have assumed a form which satisfies the test of public policy [26, 46]. Applying this test, he, too, concluded that the solus agreements engaged the doctrine [28]. The pre existing freedom test has received intense academic criticism [31]. In terms of public policy, which is the foundation of the doctrine, there is no explanation why a restraint should engage the doctrine if the covenantor enjoyed a pre existing freedom but why an identical restraint should not engage it if he did not do so [44]. The trading society test, by contrast, is consonant with the doctrine [47]. The court should therefore make use of its ability, recognised in the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234, to depart from a previous decision of the House of Lords, and should depart from the pre existing freedom test formulated in the Esso case [49 50]. The objections to the test are that it has no principled place within the doctrine; that it has been criticised for over 50 years but scarcely defended; and that courts in Australia and parts of Canada have rejected it [32 43, 50]. Application of the trading society test to the facts of this case is straightforward and so there is no need to send the matter back to a lower court. For it has long been accepted and normal for the grant of a lease in part of a shopping centre to include a restrictive covenant on the part of the landlord in relation to the use of other parts of the centre. It follows that the covenant in this case has at no time engaged the doctrine [51]. So the question of whether the assignment of the burden of the covenant to Peninsula affected the engagement of the doctrine no longer arises [52]. Peninsula seeks an alternative remedy under the Property (Northern Ireland) Order 1978, which gives the Lands Tribunal or the High Court the power to make an order modifying or extinguishing the covenant if it constitutes an impediment to the enjoyment of land. That is a more satisfactory vehicle for resolution of the issues in this case. Peninsulas claim under the Order should now proceed to be heard [54 57]. In his concurring judgment Lord Carnwath agrees that the pre existing freedom test should be discarded in favour of the trading society test and that the appeal should be allowed [59 60, 68]. As an exception to ordinary principles of freedom of contract, the doctrine should not be extended without justification beyond established categories [61]. What matters is the practical effect of the restriction in the real world, and its significance in public policy terms [62].This case is different from Esso and the other trading cases: for the agreement is not in essence an agreement between traders but a transaction in land. The only trade which might be inhibited by it is that of a potential future occupier. None of the authorities suggests that there is any public policy reason or legal basis for protecting that mere possibility [63]. The covenant in this case does not restrict, but rather facilitates, the developers business [65].
The common law has long protected the liberty of the subject, through the machinery of habeas corpus and the tort of false imprisonment. Likewise, article 5 of the European Convention on Human Rights begins: 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. In Storck v Germany (2005) 43 EHRR 6, paras 74 and 89, confirmed by the Grand Chamber in Stanev v Bulgaria (2012) 55 EHRR 22, paras 117 and 120, and adopted by this court in Surrey County Council v P; Cheshire West and Chester Council v P [2014] UKSC 19; [2014] AC 896 (commonly known as Cheshire West), para 37, the European Court of Human Rights held that there were three components in a deprivation of liberty for the purpose of article 5: (a) the objective component of confinement in a particular restricted place for a not negligible length of time; (b) the subjective component of lack of valid consent; and (c) the attribution of responsibility to the State. At the same time, the common law and equity have long recognised the authority of parents over their minor children, now encapsulated in the concept of parental responsibility in the Children Act 1989. Likewise, article 8 of the European Convention on Human Rights begins Everyone has the right to respect for his private and family life, his home and his correspondence; and, as this court recognised in Christian Institute v Lord Advocate [2016] UKSC 51; 2017 SC (UKSC) 29, paras 71 to 74, the responsibility of parents to bring up their children as they see fit, within limits, is an essential part of respect for family life in a western democracy. This case is about the interplay between the liberty of the subject and the responsibilities of parents, between the rights and values protected by article 5 and the rights and values protected by article 8, and between the relationship of parent and child at common law and the Convention rights. The principal issue can be simply stated: is it within the scope of parental responsibility to consent to living arrangements for a 16 or 17 year old child which would otherwise amount to a deprivation of liberty within the meaning of article 5? But this principal issue cannot sensibly be addressed without also considering further issues. What difference, if any, does it make that the child lacks the mental capacity to make the decision for himself? What difference, if any, does it make that the holder of parental responsibility is a public authority rather than an individual? Furthermore, although the concentration in this case is upon 16 and 17 year old children, similar issues would arise in a case concerning a child under 16. A further issue was raised by the court after the hearing: do the restrictions on placing children in accommodation provided for the purpose of restricting liberty, arising from section 25 of the Children Act 1989, apply to the sort of living arrangements in question here? We are grateful to the parties for their written submissions on this complicated issue. It is addressed by Lady Black at paras 91 to 115 of her judgment, with which I agree. The history The child in question, D, was born on 23 April 1999, and so is now aged 20 and an adult. Nevertheless, the importance of the issues is such that this court gave the Official Solicitor, who acts for him as his litigation friend, permission to appeal from the decision of the Court of Appeal. D was diagnosed with attention deficit hyperactivity disorder at the age of four, Aspergers syndrome at seven, and Tourettes syndrome at eight. He also has a mild learning disability. His parents struggled for many years to look after him in the family home, despite the many difficulties presented by his challenging behaviour. Eventually, in October 2013 when he was 14, he was informally admitted to Hospital B for multi disciplinary assessment and treatment. Hospital B provided mental health services for children between the ages of 12 and 18. He lived in a unit in the hospital grounds and attended a school which was integral to the unit. The external door to the unit was locked and D was checked on by staff every half hour. If he left the site, he was accompanied by staff on a one to one basis. His visits home were supervised at all times. In 2014, the Hospital Trust issued an application under the inherent jurisdiction of the Family Division of the High Court relating to children, seeking a declaration that it was lawful for the Trust to deprive D of his liberty and that this was in his best interests. In March 2015, Keehan J held: first, that the conditions under which D lived amounted to depriving him of his liberty (by which he meant confinement under limb (a) of Storck v Germany, para 1 above); the fact that he enjoyed living in the unit made no difference; second, that it was within the zone of parental responsibility for his parents to agree to what would otherwise be a deprivation of liberty; it was a proper exercise of parental responsibility to keep an autistic 15 year old boy who had erratic, challenging and potentially harmful behaviours under constant supervision and control; but third, once he reached 16 he would come under the jurisdiction of the Court of Protection and the different regime there, largely contained in the Mental Capacity Act 2005: In re D (A Child) (Deprivation of Liberty) [2015] EWHC 922 (Fam); [2016] 1 FLR 142. By then, the clinical team had agreed that D should be discharged from Hospital B to a residential placement. Birmingham City Council took the lead in making the arrangements for D to move to Placement B. His parents agreed to the move. On 23 April 2015, his 16th birthday, proceedings were issued in the Court of Protection. Birmingham sought a declaration that D would not be deprived of his liberty at Placement B because his parents could consent to it. On 20 May 2015, Keehan J made an order for Ds transfer from Hospital B to Placement B. This took place on 2 June 2015. D was accommodated there under section 20 of the Children Act 1989 and thus became a looked after child within the meaning of section 22(1) of that Act. It has always been common ground between the parties to this case that the arrangements under which D lived at Placement B would have amounted to a deprivation of liberty were it not for his parents consent to them. Placement B was a large house set in its own grounds, with 12 residential units in the grounds, each with its own fenced garden. D lived with three other young people in House A. The external doors were locked. If he wanted to go out into the garden, he had to ask for the door to be unlocked. He was not allowed to leave the premises except for a planned activity, such as attending his school, which was also on the site, swimming and leisure activities. He received one to one support during waking hours and staff were in constant attendance overnight. The application was heard by Keehan J in the Court of Protection in November 2015. In January 2016, he held: first, that the parents could no longer consent to what would otherwise be a deprivation of liberty now that D had reached 16; his principal reasons for doing so were that Parliament had, on numerous occasions, distinguished the legal status of those who had reached the age of 16 from that of those who had not; and that the Mental Capacity Act 2005 applied to people who had reached the age of 16. He also held that this deprivation of liberty was attributable to the state, a matter which is no longer in dispute: Birmingham City Council v D (by his litigation friend, the Official Solicitor) [2016] EWCOP 8; [2016] PTSR 1129. Birmingham City Council appealed to the Court of Appeal. Before the hearing, D was transferred to Placement C, where the arrangements were not materially different from those in Placement B. Once again, his parents agreed to his being accommodated under section 20 of the 1989 Act, to the arrangements themselves and to the restrictions on Ds liberty which they entailed. On 23 November 2016, Keehan J authorised the placement and the deprivation of liberty. There has never been any doubt that both placements were in Ds best interests but that D himself did not have the capacity to consent to them. The appeal was heard in February 2017, but judgment was not given until 31 October 2017. In the meantime, D had reached the age of 18 and parental responsibility for him ceased. However, by virtue of his age, it was now possible for a deprivation of liberty in a hospital or care home to be authorised under the deprivation of liberty safeguards in Schedule A1 to the Mental Capacity Act 2005 (which applied only to those aged 18 or over), as well as by the Court of Protection. The Court of Appeal agreed with Keehan J that Ds accommodation in Placement B and Placement C was attributable to the State. However, the appeal was allowed on the ground that Keehan J had been wrong to hold that a parent could not consent to what would otherwise be a deprivation of the liberty of a 16 or 17 year old child who lacked the capacity to decide for himself. Sir James Munby P, in a typically erudite judgment, traced the development of the common law responsibilities of parents in great detail. He concluded, first, that the approach of Keehan J did not give effect to the fundamental principle, established by the majority of the House of Lords in Gillick v West Norfolk and Wisbech Area Health Authority [1986] AC 112, that the exercise of parental responsibility comes to an end, not on the childs attaining a fixed age, but on his attaining Gillick capacity; and second, that none of the statutory provisions upon which Keehan J had relied had a bearing on the matter in hand (para 125). The position of each party to this appeal The Official Solicitor now appeals to this court on Ds behalf. The Official Solicitors primary case is that, whatever may once have been the position at common law, no person can consent to the confinement of a child who has reached the age of 16 and lacks the capacity to decide for himself. If such a child is confined, and that confinement is attributable to the state, he is deprived of his liberty within the meaning of article 5 and there must be safeguards to ensure that the deprivation is lawful. The Mental Capacity Act 2005 provides a complete decision making framework for the care and treatment of people aged 16 and above who lack the capacity to decide for themselves. His alternative case is that, even if such consent is within the scope of parental responsibility, the person giving it should apply the principles and procedure for deciding whether the arrangements are in the childs best interests set out in section 4 of the Mental Capacity Act 2005. Birmingham City Councils case is that it is within the scope of a parents lawful exercise of parental responsibility to authorise the confinement of a 16 or 17 year old child who is not Gillick competent to consent. The common law as to the scope of parental responsibility in this respect has not been eroded by the Mental Capacity Act 2005 or by any other legislation. If it affects the exercise of parental responsibility at all, it does so only by substituting the concept of lack of capacity within the meaning of the Act for the concept of lack of competence within the meaning of Gillick (to the extent that these two may differ an issue which does not arise on this appeal). The Equality and Human Rights Commission have been given permission to intervene in this court, as they did in the Court of Appeal. Their case is that, while parental responsibility can in principle extend to the age of 18, whether it applies in particular circumstances has to be judged in the light, not only of the common law, but also of statute, the European Convention on Human Rights and other international instruments. Parents should not be able to consent to the confinement of a 16 or 17 year old child, thereby removing the protections given by article 5 of the European Convention. Further, to remove those protections from a child who lacks Gillick competence because of a disability, while according them to a competent child, is unjustified discrimination on the ground of his or her disability. The Secretaries of State for Education and for Justice did not intervene in the Court of Appeal but have been given permission to intervene jointly in this court. The Secretary of State for Education has policy responsibility for children and young people and depriving them of liberty; the Secretary of State for Justice has overall policy responsibility for the Mental Capacity Act 2005 and in relation to parental responsibility generally. Their case is, first, that a child will only be confined if the restrictions on his liberty go beyond those which would be imposed upon a child of the same age and relative maturity who is free from disability; and second, that even if a child is confined, a person with parental responsibility may provide a valid consent to that confinement if the child is not Gillick competent to make the decision for himself; however, a person with parental responsibility must be acting in the best interests of the child for there to be a proper exercise of that responsibility. The Secretaries of State agree with both the Official Solicitor and Birmingham City Council that a local authority with parental responsibility by virtue of a care order or interim care order, or with any other statutory responsibilities for a child, cannot supply a valid consent to the confinement of a child (as Keehan J held in In re AB (A Child) (Deprivation of Liberty: Consent) [2015] EWHC 3125 (Fam), [2016] 1 WLR 1160; see also In re K (A Child) (Secure Accommodation Order: Right to Liberty) [2001] Fam 377, para 35 below). Only a natural person with parental responsibility can do so. Quite what the basis is for distinguishing between the content of parental responsibility according to the person who holds it is not explained: the Children Act 1989, which both defines and governs the allocation of parental responsibility, makes no such distinction. Parental responsibility This case turns on the inter relationship between the concept of parental responsibility, as defined by the Children Act 1989, the common law and other relevant statutory provisions, and the obligation of the State to protect the human rights of children under the European Convention on Human Rights. The one cannot supply an answer without reference to the other. It makes sense, therefore, to begin with parental responsibility. Parental responsibility is defined in the Children Act 1989 as all the rights, duties, powers, responsibilities and authority which by law a parent of a child has in relation to the child and his property (section 3(1)). By law obviously refers to the common law, but also includes those statutory provisions which give rights etc to parents, such as the Marriage Act 1949, which gives them the right to withhold consent to the marriage of a 16 or 17 year old child (section 3). As Lady Black explains in more detail in paras 55 to 68 of her judgment, the common law and equity recognised the parental power of a father over his legitimate minor children (the mother did not acquire equal rights and authority with the father until the Guardianship Act 1972): see the valuable account of the history by P H Pettitt, Parental Control and Guardianship in R H Graveson and FR Crane, A Century of Family Law (1957, Sweet & Maxwell). The high water mark of this was the well known case of In re Agar Ellis (No 2) (1883) 24 Ch D 317, at 326, where the Master of the Rolls declared: the law of England is, that the father has the control over the person, education and conduct of his children until they are 21 years of age. That is the law. However, as Sachs LJ explained in Hewer v Bryant [1970] 1 QB 357, at 372, in passages quoted in full at para 55 of Lady Blacks judgment, a distinction was drawn between custody in the narrow sense of the right to physical possession of the child and custody in the wider sense of the right to control every aspect of the childs life, including his religion, education and property. The common law courts would enforce the former by way of the writ of habeas corpus. But they would refuse to do this against the wishes of the child, once he or she had reached the age of discretion. In the 19th century, this was regarded as fixed at 14 for boys and 16 for girls (the latter by reference to the Abduction Acts of 1557 and 1828). The Court of Chancery would enforce all parental powers and authority, but by way of the Crowns parens patriae jurisdiction rather than by way of enforcing the parents rights, potentially up to the age of majority. Parental rights were never absolute and became increasingly subject to the overriding consideration of the childs own welfare. This was put on a statutory footing by the Guardianship of Infants Act 1925, which famously declared that Where in any proceedings before any court the custody or upbringing of an infant, or the administration of any property belonging to or held in trust for an infant, or the application of the income thereof, is in question, the court, in deciding that question, shall regard the welfare of the infant as the first and paramount consideration (section 1). That remains the guiding principle in section 1(1) of the Children Act 1989, which provides that the childs welfare shall be the courts paramount consideration. Section 1, of course, deals with the position if a case about a childs upbringing gets to court. But what about the powers and authority of holders of parental responsibility before a case gets to court? Two 20th century cases show how, whatever may have been the earlier position, the common law is capable of moving with the times. In Hewer v Bryant [1970] 1 QB 357, the issue was the meaning of in the custody of a parent in the Limitation Act 1954. The High Court had held that a child remained, by law, in the custody of his father until the age of majority, applying In re Agar Ellis. The Court of Appeal held that a 15 year old living away from home and working as an agricultural trainee was not in the custody of a parent for this purpose. Custody in the Limitation Act meant the actual exercise of powers of control. But both Lord Denning MR and Sachs LJ recognised that the parents legal powers of physical control diminished as the child got older. Sachs LJ expressly referred to the parents ability to restrict the liberty of the person, which lasted until the age of discretion, and distinguished between the parental power and the courts power, which lasted until the age of majority (p 372). Lord Denning MR put it this way: the legal right of a parent to the custody of a child is a dwindling right which the courts will hesitate to enforce against the wishes of the child, and the more so the older he is. It starts with a right of control and ends with little more than advice. That dictum was approved by the majority of the House of Lords in Gillick v West Norfolk and Wisbech Area Health Authority [1986] AC 112, at pp 172, 186, 195. The issue was whether it was lawful to give contraceptive advice and treatment to a child under 16 without her parents consent if she herself was capable of giving that consent. The Court of Appeal had held that this would be infringing the inalienable and legally enforceable rights of parents relating to the custody and upbringing of their children which, except in emergencies, could only be overridden by a court. A girl under 16 was incapable either of consenting to treatment or prohibiting a doctor from seeking the consent of her parents. The House of Lords, by a majority, disagreed. The earlier age of discretion cases had established the principle that children could achieve the capacity to make their own decisions before the age of majority. It was no longer, if it ever had been, correct to fix that at any particular age, rather than by reference to the capacity of the child in question: it had already been established that a child below the age of 16 could consent to sexual intercourse so that it was not rape (R v Howard [1966] 1 WLR 13) or to being taken away so that it was not kidnapping (R v D [1984] AC 778). Parental rights and authority existed for the sake of the child, to enable the parent to discharge his responsibilities towards the child, and not for the sake of the parent. Lord Scarman put it thus (p 185): The principle is that parental right or power of control of the person and property of his child exists primarily to enable the parent to discharge his duty of maintenance, protection, and education until he [the child] reaches such an age as to be able to look after himself and make his own decisions. The consequence was that (p 188): as a matter of law the parental right to determine whether or not their minor child below the age of 16 will have medical treatment terminates if and when the child achieves a sufficient understanding and intelligence to enable him or her to understand fully what is proposed. As Lady Black explains in paras 69 to 72 of her judgment, the Gillick case is not directly relevant to the issue before us now. It had to do with medical treatment and not with deprivation of liberty. It was concerned with whether a child might acquire the capacity, and the right, to make such decisions for herself before she reached the common law age of discretion, not with whether parental authority endured beyond that age if the child lacked the capacity to decide for herself. And as Lady Black has shown, it is, to say the least, highly arguable that such authority did not extend to depriving such a child of her liberty once she had reached the age of discretion. Some support for that conclusion is supplied by the earliest legislation dealing specifically with people with mental disabilities, the Mental Deficiency Act 1913. Section 6(3) provided both for detention in an institution and admission to guardianship. Section 10(2) provided that an order that a person be placed under guardianship conferred upon the person named as guardian such powers as would have been exercisable if he had been the father of the defective and the defective had been under the age of 14. That provision remained in force until repealed by the Mental Health Act 1959, under which the powers of a guardian were defined, by section 34(1), in materially identical terms. (The powers of a guardian are now more narrowly defined in the Mental Health Act 1983.) It is highly likely that it was contemplated that a guardian might have to accommodate the person under his guardianship in conditions which deprived him of his liberty. The fact that the guardian was therefore given the powers of the father of a child under 14, rather than the powers of the father of a child of any age, suggests that it was not then thought that a father had the right to deprive a child of any age of his liberty if the child lacked the capacity to make his own decisions. Many of the people falling within the definition of mental defective would lack that capacity. Statute has also intervened to make specific provision for children who have reached the age of 16. In the Court of Protection, Keehan J referred to the following (para 64) although not in the same terms or the same order: (i) Section 8(1) of the Family Law Reform Act 1969 provides that the consent of a child of 16 to any surgical, medical or dental treatment shall be as effective as it would be if he were of full age and that where a child has given an effective consent it is not necessary to obtain the consent of a parent or guardian. That is why the discussion in Gillick related to children below that age. However, subsection (3) provides that Nothing in this section shall be construed as making ineffective any consent which would have been effective if this section had not been enacted. Lord Fraser of Tullybelton saw this as recognising that the consent of a child below that age might also be effective. Whether the consent of a parent remains effective even if a child, with capacity, has refused consent is a more controversial question (which fortunately does not arise in this case). (ii) Section 131(2) of the Mental Health Act 1983 provides that subsections (3) and (4) apply to a child of 16 who has the capacity to consent to arrangements for his own informal admission to hospital for treatment for mental disorder. Subsection (3) provides that if he does consent, those arrangements may be made even though there is someone with parental responsibility for him; and subsection (4) provides that if he does not consent, then the arrangements cannot be made on the basis of parental consent. Subsection (5) provides that capacity is to be read in accordance with the Mental Capacity Act 2005. (iii) Section 2(5) of the Mental Capacity Act 2005 provides that the powers which may be exercised under that Act in relation to a person who lacks, or is reasonably believed to lack, capacity cannot be exercised in relation to a person under 16 (although there is an exception for powers in relation to their property and affairs if it is likely that the incapacity will continue past majority: section 18). This means that the Act, including the presumption of capacity in section 1(2) and the test for incapacity in sections 2(1) and 3, applies to a person who has reached 16. The Act gives protection for people acting in connection with the care and treatment of a person whom they reasonably believe to lack capacity if they reasonably believe that it will be in that persons best interests (section 5(1)). However, the Act does not authorise any person to deprive another person of his liberty except in accordance with an order of the court or if authorised under the deprivation of liberty safeguards in Schedule A1 (section 4A). Schedule A1 only applies to people aged 18 or over. After these events, a new Schedule AA1 (not yet in force) has been inserted applying to those aged 16 and above. (iv) Section 9(6) of the Children Act 1989 provides that no court may make a child arrangements, specific issue or prohibited steps order under section 8 of the Act which is to have effect after the child reaches 16 unless the circumstances are exceptional. (v) Section 31(3) of the Children Act 1989 provides that a care or supervision order may not be made in respect of a child of 17 (or of 16 who is married). However, an order made before this point can last until the child reaches 18 (section 92(12)). (vi) Section 20(11) of the Children Act 1989 provides that a child of 16 or 17 may agree to being accommodated by a local authority even if his parents object or wish to remove him. The age of 16 is significant for various other purposes, such as leaving school, joining the armed forces or getting married (albeit that parental consent is usually required). So Keehan J was correct to suggest that the law accords children who have reached 16 a status which is in some respects different from that of children under that age. However, Sir James Munby P was also correct to hold that these provisions do not supply the answer to the issues in this case. Items (iv) and (v) are concerned with the limits on making court orders. Items (i) and (ii) relate only to children who have the capacity to make a decision for themselves, and it is quite possible that item (vi) is also so limited. Furthermore, as Gillick holds, a child may acquire the capacity to make certain decisions for himself before the age of 16. We are concerned with the extent of parental responsibility for a child who lacks the capacity to make the decision for himself. It may well be that, as a general rule, parental responsibility extends to making decisions on behalf of a child of any age who lacks the capacity to make them for himself. This would always be subject to the courts powers of intervention, whether at the behest of another parent or individual in private law proceedings under Part 2 of the Children Act 1989, or at the behest of a local authority in public law proceedings under Part 4 on the ground that the child is suffering or likely to suffer significant harm as a result of the parents decisions. The question, however, is whether there are any limits to that general rule, and in particular whether it is within the scope of parental responsibility to make arrangements which have the effect of depriving a child of his liberty. In view of the conclusion which I have reached as to the effect of article 5 of the European Convention on Human Rights, and the interaction between parental responsibility and the childs rights under article 5, it is strictly unnecessary to reach a concluded view on that question. But I acknowledge the force of the conclusion reached by Lady Black at para 90 of her judgment. As she says, it reinforces the conclusion which I have reached for other reasons. The European Convention on Human Rights Article 1 of the European Convention on Human Rights requires the High Contracting Parties to secure to everyone within their jurisdiction the rights and freedoms set out in the Convention. There can be no doubt that everyone includes minor children, or indeed that the Convention rights may require adaptation to cater for their special needs as children: see, for example, the case of Thompson and Venables dealing with the fair trial rights of children accused of serious crime: T v United Kingdom (1999) 30 EHRR 121. We are here concerned with article 5, which, as already stated, accords to everyone the right to liberty and security of person. No one shall be deprived of his liberty save in the [listed] cases and in accordance with a procedure prescribed by law. That this applies to children is made clear by article 5(1)(d) which permits the detention of a minor by lawful order for the purpose of educational supervision . That it applies to people who lack the capacity to make decisions for themselves is made clear by article 5(1)(e) which permits the lawful detention of persons of unsound mind. Article 5(1) contains within it the requirement that decisions made under it are not arbitrary and accord with the Convention concept of legality: see, for example, HL v United Kingdom (2005) 40 EHRR 32. Article 5 also contains various specific procedural safeguards, including article 5(4), which requires that 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. Prima facie, therefore, article 5 protects children who lack the capacity to make decisions for themselves from being arbitrarily deprived of their liberty. All parties to this case agree that this means that a local authority which has parental responsibility for a child cannot deprive the child of his liberty without the authority of a court. But, say Birmingham City Council and the Secretaries of State, the position is different if the parents or other individuals with parental responsibility such as special guardians agree to it. Why should that be? The facts of RK v BCC, YB and AK [2011] EWCA Civ 1305; [2012] COPLR 146, were remarkably similar to the facts of this case. A young woman aged 17 suffered from autism, attention deficit hyperactivity disorder and severe learning difficulties, as well as epilepsy. She had been looked after at home for nearly 16 years but was then accommodated by the local authority under section 20 of the Children Act 1989 in a private care home. In proceedings brought by her mother in the Court of Protection, the Official Solicitor raised concerns that her living arrangements might amount to a deprivation of liberty. Mostyn J held: first, that the provision of accommodation under section 20 could never amount to a deprivation of liberty because the parents must have agreed to it; and second, that in any event the restrictions authorised by her parents did not amount to a deprivation of liberty. In relation to the first, the Court of Appeal upheld the consensus reached at the Bar (para 14): that an adult in the exercise of parental responsibility may impose, or may authorise others to impose, restrictions on the liberty of the child. However, restrictions so imposed must not in their totality amount to deprivation of liberty. Deprivation of liberty engages the article 5 rights of the child and a parent may not lawfully detain or authorise the deprivation of liberty of a child. However, the Court of Appeal went on to hold that the restrictions imposed did not amount to a deprivation of liberty: they were no more than what was reasonably required to protect RK from harming herself or others within her range (para 27). That decision was, of course, before the Supreme Courts decision in Cheshire West, which clarified the objective elements of a deprivation of liberty (limb (a) of Storck v Germany, para 1 above). The acid test is that a person is under continuous supervision and control and not free to leave. The fact that such restrictions may be necessary in order to prevent a person from harming himself or others makes no difference. Nor does the fact that the persons living arrangements are as close to a normal home life as they could possibly be. It seems likely, therefore, that the conditions under which RK was living would now be regarded as depriving her of her liberty. But it is not clear why that should make any difference to the validity of the consensus reached at the Bar and endorsed by the court as to the scope of parental responsibility. The basis for that consensus was said to be the case of Nielsen v Denmark (1988) 11 EHRR 175 in the European Court of Human Rights, together with the Court of Appeal decision in In re K (A Child) (Secure Accommodation Order: Right to Liberty) [2001] Fam 377. It is worth looking at the case of Nielsen v Denmark in some detail. It concerned a 12 year old child of unmarried parents. The mother alone had custodial rights over him. Nevertheless, at the age of eight he had refused to return to his mother after a holiday with his father and then disappeared to live in hiding with his father for more than three years. He re appeared with his father during proceedings in which his father was attempting to obtain a change in custody. His father was arrested and his mother requested that the boy be admitted to the State Hospitals child psychiatric ward as it was clear that he did not want to stay with her. He was eventually discharged after six months and went to live with another family. However, five months after that, the Danish Supreme Court awarded custody to the father. The boy complained to the European Court of Human Rights that his rights under article 5(1) and 5(4) of the European Convention had been breached. The European Commission found, by 11 votes to one, that there had been a breach of article 5(1) and by ten votes to two that there had been a breach of article 5(4). However, the Court found, by nine votes to seven, that there had been no breach. It is not easy to identify how the majoritys decision fits into the tri partite scheme of later decisions such as Storck v Germany and Stanev v Bulgaria. The majority held that article 5 was not applicable in so far as it is concerned with deprivation of liberty by the state (para 64), a conclusion which was strongly disputed by the dissenters who pointed out that the boy was detained in a State Hospital, with the agreement of the responsible psychiatrist, and was returned to hospital by the police when he disappeared on the day that he was due to be discharged into his mothers care. Nevertheless, the majority went on to consider whether article 5 was applicable in regard to such restrictions on the applicants liberty as resulted from the exercise of the mothers parental rights (para 64). This can only be explained on the basis that, again as the minority observed, article 5 imposes a positive obligation upon the state to protect individuals from being deprived of their liberty by private persons. The majority went on to consider the boys actual situation. They found that he was in need of medical treatment for his nervous condition. The treatment did not involve medication, but consisted of regular talks and environmental therapy. The restrictions on his freedom of movement and contact with the outside world were not much different from restrictions which might be imposed on a child in an ordinary hospital. In general conditions in the ward were said to be as similar as possible to a real home (para 70). The restrictions to which the boy was subject were no more than the normal requirements for the care of a child of 12 years of age receiving treatment in hospital. They were not in principle different from those in many hospital wards where children with physical disorders were treated. The boy was still at an age at which it would be normal for a decision to be made by the parent even against the wishes of the child (para 72). Accordingly, the hospitalisation of the applicant did not amount to a deprivation of liberty within the meaning of article 5, but was a responsible exercise by his mother of her custodial rights in the interest of the child (para 73). The minority considered that the placing of a 12 year old boy who was not mentally ill for several months in a psychiatric ward was a deprivation of liberty for which the state was accountable. Whether one agrees with the majority or the minority assessment of the facts of the case, the majority judgment clearly turned on the comparative normality of the restrictions imposed upon the freedom of a 12 year old boy. In In re K (A Child) (Secure Accommodation Order: Right to Liberty), the Court of Appeal was faced with an argument that the regime for authorising the placement of a child in secure accommodation, under section 25 of the Children Act 1989, was incompatible with the right to liberty in article 5. The first issue was whether such a placement was indeed a deprivation of liberty, even though it was agreed to by the local authority, which had parental responsibility under an interim care order, as well as by the childs parents. Dame Elizabeth Butler Sloss P and Judge LJ held that it clearly was. Butler Sloss P recognised the force of the principles in Nielsen (and Family T v Austria, 64 DR 176, which followed it). Nevertheless, There is a point, however, at which one has to stand back and say: is this within ordinary acceptable parental restrictions upon the movements of a child or does it require justification? (para 28) Judge LJ was to the same effect: In short, although normal parental control over the movements of a child may be exercised by the local authority over a child in its care, the implementation of a secure accommodation order does not represent normal parental control (para 102). (They went on to hold that section 25 was not incompatible with article 5 as it fell within article 5(1)(d).) That, as it seems to me, is the crux of the matter. Do the restrictions fall within normal parental control for a child of this age or do they not? If they do, they will not fall within the scope of article 5; but if they go beyond the normal parental control, article 5 will apply (subject to the question of whether parental consent negates limb (b) of the Storck criteria, see para 42 below). Quite clearly, the degree of supervision and control to which D was subject while in Placement B and Placement C was not normal for a child of 16 or 17 years old. It would have amounted to a deprivation of liberty in the case of a child of that age who did not lack capacity. The question then arises what difference, if any, does Ds mental disability make? The answer to that question lies in the illuminating discussion by Lord Kerr in Cheshire West: 77. The question whether one is restricted (as a matter of actuality) is determined by comparing the extent of your actual freedom with someone of your age and station whose freedom is not limited. Thus a teenager of the same age and familial background as MIG and MEG is the relevant comparator for them. If one compares their state with a person of similar age and full capacity it is clear that their liberty is in fact circumscribed. They may not be conscious, much less resentful, of the constraint but, objectively, limitations on their freedom are in place. 78. All children are (or should be) subject to some level of restraint. This adjusts with their maturation and change in circumstances. If MIG and MEG had the same freedom from constraint as would any child or young person of similar age, their liberty would not be restricted, whatever their level of disability. As a matter of objective fact, however, constraints beyond those which apply to young people of full ability are and have to be applied to them. There is therefore a restriction of liberty in their cases. Because the restriction of liberty is and must remain a constant feature of their lives, the restriction amounts to a deprivation of liberty. Indeed, the principal point of Cheshire West was that the living arrangements of the mentally disabled people concerned had to be compared with those of people who did not have the disabilities which they had. They were entitled to the same human rights, including the right to liberty, as any other human being. The fact that the arrangements might be made in their best interests, for the most benign of motives, did not mean that they were not deprived of their liberty. They were entitled to the protection of article 5, precisely so that it could be independently ascertained whether the arrangements were indeed in their best interests. It follows that a mentally disabled child who is subject to a level of control beyond that which is normal for a child of his age has been confined within the meaning of article 5. Limb (a) of the three Storck criteria for a deprivation of liberty (see para 1 above) has been met. There was, however, an argument that the consent of Ds parents supplied a substitute for the consent of the person confined, so that limb (b) was not met. It suited counsel in Cheshire West (as recorded in the last sentence of para 41) to argue that Nielsen should be regarded as a case of substituted consent, because no person has the right to give such consent on behalf of a mentally incapacitated adult. But, as also pointed out in Cheshire West, it is striking that the European Court of Human Rights has consistently held that limb (b) can be satisfied despite the consent of a person with the legal right to make decisions on behalf of the person concerned: see Stanev v Bulgaria (2012) 55 EHRR 696, DD v Lithuania [2012] MHLR 209, Kedzior v Poland [2013] MHLR 115, Mihailovs v Latvia, unreported, and now Stankov v Bulgaria [2015] 42 ECtHR 276. In Stanev, the court did observe, in passing, that there are situations where the wishes of a person with impaired mental facilities may be validly replaced by those of another person acting in the context of a protective measure and that it is sometimes difficult to ascertain the true wishes or preferences of the person concerned (para 130). However, as Keehan J observed in the Court of Protection (para 118) that is very far from adopting a general principle of substituted consent. The consent of a legal guardian may have been sufficient to make the confinement lawful in the domestic law of the country concerned, but that did not prevent its being a deprivation of liberty, or guarantee that it fulfilled the Convention requirement of legality. In the cases where limb (b) has been held to be satisfied, it is because the evidence showed that the person concerned was willing to stay where he or she was and was capable of expressing that view. Parental consent, therefore, cannot substitute for the subjective element in limb (b) of Storck. As already mentioned, limb (c) of Storck is no longer disputed and rightly so. Not only was the State actively involved in making and funding the arrangements, it had assumed statutory responsibilities albeit not parental responsibility towards D by accommodating him under section 20 of the Children Act 1989, thereby making him a looked after child. Even without all this, it is clear that the first sentence of article 5 imposes a positive obligation on the State to protect a person from interferences with liberty carried out by private persons, at least if it knew or ought to have known of this: see, for example Storck, para 89. In conclusion, therefore, the accommodation of D in Placement B and Placement C did amount to a deprivation of liberty within the meaning of article 5 and the fact that his parents agreed to them did not rob the arrangements of this quality. The procedural requirements of article 5 applied. (As it happens, both placements were authorised by a High Court Judge sitting in the Court of Protection and it is common ground that they were in Ds best interests. His rights under article 5 have not, in fact, been violated.) This conclusion is consistent with the whole thrust of Convention jurisprudence on article 5, which was examined in great detail in Cheshire West. But it is reinforced by the consideration that it is also consistent with the principle of non discrimination in article 2.1 of the United Nations Convention on the Rights of the Child, which requires that the rights set out in the Convention be accorded without discrimination on the ground of, inter alia, disability, read together with article 37(b), which requires that no child shall be deprived of his liberty unlawfully or arbitrarily, and article 37(d), which requires the right to challenge its legality. It is also consistent with article 7.1 of the United Nations Convention on the Rights of Persons with Disabilities, which requires all necessary measures to ensure the full enjoyment by children with disabilities of all human rights and fundamental freedoms on an equal basis with other children. Parental responsibility and human rights But what is the relationship between holding that the placement did deprive D of his liberty within the meaning of article 5 and the view that it might otherwise have been within the scope of parental responsibility? Parental responsibility is about the relationship between parent and child and between parents and third parties: it is essentially a private law relationship, although a public authority may also hold parental responsibility. As Irwin LJ correctly pointed out (para 157) human rights, on the other hand, are about the relationship between individuals (or other private persons) and the state. It is, however, now agreed that any deprivation of liberty in Placement B or Placement C was attributable to the state. So is there any scope for the operation of parental responsibility to authorise what would otherwise be a deprivation of liberty? There are two contexts in which a parent might attempt to use parental responsibility in this way. One is where the parent is the detainer or uses some other private person to detain the child. However, in both Nielsen and Storck it was recognised that the state has a positive obligation to protect individuals from being deprived of their liberty by private persons, which would be engaged in such circumstances. The other context is that a parent might seek to authorise the state to do the detaining. But it would be a startling proposition that it lies within the scope of parental responsibility for a parent to license the state to violate the most fundamental human rights of a child: a parent could not, for example, authorise the state to inflict what would otherwise be torture or inhuman or degrading treatment or punishment upon his child. Likewise, section 25 of the Children Act 1989 recognises that a parent cannot authorise the State to deprive a child of his liberty by placing him in secure accommodation. While this proposition may not hold good for all the Convention rights, in particular the qualified rights which may be restricted in certain circumstances, it must hold good for the most fundamental rights to life, to be free from torture or ill treatment, and to liberty. In any event, the state could not do that which it is under a positive obligation to prevent others from doing. In conclusion, therefore, it was not within the scope of parental responsibility for Ds parents to consent to a placement which deprived him of his liberty. Although there is no doubt that they, and indeed everyone else involved, had Ds best interests at heart, we cannot ignore the possibility, nay even the probability, that this will not always be the case. That is why there are safeguards required by article 5. Without such safeguards, there is no way of ensuring that those with parental responsibility exercise it in the best interests of the child, as the Secretaries of State acknowledge that they must. In this case, D enjoyed the safeguard of the proceedings in the Court of Protection. In future, the deprivation of liberty safeguards contained in the Mental Capacity Act 2005 (as amended by the Mental Capacity (Amendment) Act 2019) will apply to children of 16 and 17. I would therefore allow this appeal and invite the parties submissions on how best to incorporate this conclusion in a declaration. Logically, this conclusion would also apply to a younger child whose liberty was restricted to an extent which was not normal for a child of his age, but that question does not arise in this case. The common law may draw a sharp distinction, in relation to the deprivation of liberty, between those who have reached the age of 16 and those who have not, but the extent to which that affects the analysis under the Human Rights Act is not clear to me and we have heard no argument upon it. I therefore prefer to express no view upon the question. Nor would I express any view on the extent of parental responsibility in relation to other matters, such as serious and irreversible medical treatment, which do not entail a deprivation of liberty. Some reference to this was made in the course of argument, but it does not arise in this case, which is solely concerned with depriving 16 and 17 year olds of their liberty. It follows that I agree with what Lady Black says about those last two points in para 90 of her judgment. LADY BLACK: The purpose of this judgment is two fold. It addresses the question of whether the restrictions, in section 25 of the Children Act 1989, on placing children in accommodation provided for the purpose of restricting liberty apply to the sort of living arrangements in question here. It also provides an opportunity to explain a little further why I agree with Lady Hales conclusion that the consent of Ds parents to his confinement cannot operate as a substitute for Ds own consent. Lady Hale bases this conclusion, essentially, on there being no room for substituted consent in cases such as the present, for reasons she sets out commencing at para 42 of her judgment; I agree with her on this point and I do not seek to detract from what she says there. My comments are directed at the prior issue of whether it is actually within the scope of parental responsibility to consent to living arrangements for a 16 or 17 year old child which would otherwise amount to a deprivation of liberty within the meaning of article 5. Like Sir James Munby P (at para 50 of the Court of Appeal judgment), I consider that, in order to answer this question, it is necessary to look to the domestic law, set in its proper historical context. Before us, the parties have not dwelt on the legal history in relation to parental responsibility. This is no doubt because the Official Solicitor accepts that the Court of Appeal was entitled to hold that, immediately following the decision in Gillick v West Norfolk & Wisbech Area Health Authority [1986] AC 112 (Gillick), parental responsibility was, in principle, exercisable to authorise the confinement of a 16 or 17 year old child who, for whatever reason, lacked capacity. The Official Solicitors argument is that that position has changed since Gillick with the passage of the Mental Capacity Act 2005 and the trends in international rights norms. Notwithstanding the Official Solicitors approach, I have gone back to look in detail at the old authorities, many of them signposted in the Presidents judgment. The President observed that the domestic law is far from straightforward, an observation which I have no difficulty in endorsing. At para 62 below, I have summarised an explanation given by Bowen LJ in In re Agar Ellis (No 2) (1883) 24 Ch D 317 of the terminology used in this area of the law, which might help a little in understanding the earlier authorities. Lady Hale sets out, in para 21, the themes which are to be found in the old cases. I do not disagree with what she says, but merely seek to add a little more detail to the picture and to explain that, as will become apparent (particularly from paras 88 to 90), I have reached a firmer conclusion than she has on this aspect of the case. It might be useful to set the scene by citing the passage from Sachs LJs judgment in Hewer v Bryant [1970] 1 QB 357, at 372 373, which, after his own study of the earlier authorities, the President found (para 65) to be an accurate analysis of the position: Before proceeding further, it is essential to note that among the various meanings of the word custody there are two in common use in relation to infants which are relevant and need to be carefully distinguished. One is wide the word being used in practice as almost the equivalent of guardianship: the other is limited and refers to the power physically to control the infant's movements. In its limited meaning it has that connotation of an ability to restrict the liberty of the person concerned to which Donaldson J referred in Duncans case, at p 762. This power of physical control over an infant by a father in his own right qua guardian by nature and the similar power of a guardian of an infants person by testamentary disposition was and is recognised at common law; but that strict power (which may be termed his personal power) in practice ceases upon the infant reaching the years of discretion. When that age is reached, habeas corpus will not normally issue against the wishes of the infant. Although children are thought to have matured far less quickly in the era when the common law first developed, that age of discretion which limits the fathers practical authority (see the discussion and judgment in R v Howes (1860) 3 El & El 332) was originally fixed at 14 for boys and 16 for girls (see per Lindley LJ in Thomasset v Thomasset [1894] P 295, 298). This strict personal power of a parent or guardian physically to control infants, which is one part of the rights conferred by custody in its wider meaning, is something different from that power over an infants liberty up to the age of 21 which has come to be exercised by the courts on behalf of the Crown as parens patriae, to use the phraseology in A Century of Family Law, 1857 1957 (1957), p 68. It is true that in the second half of last century that power was so unquestionably used in aid of the wishes of a father that it was referred to as if its resultant exercise was a right of the father. Indeed in the superbly Victorian judgments in the Agar Ellis case 24 Ch D 317, it seems thus to be treated: for the purpose, however, of the present issues it is sufficient to observe that if those judgments are to be interpreted as stating as a fact that fathers in practice personally had in 1883 strict and enforceable power physically to control their sons up to the age of 21, then as my Lord, the Master of the Rolls, has already indicated they assert a state of affairs that simply does not obtain today. In truth any powers exercised by way of physical control in the later years of infancy were not the fathers personal powers but the more extensive ones of the Crown (see Lindley LJ in Thomassets case [1894] P 295, 299); and hence the fathers right was really no more than that of applying to the courts for the aid he required as guardian. The reason for emphasising the word power appears later in this judgment. In its wider meaning the word custody is used as if it were almost the equivalent of guardianship in the fullest sense whether the guardianship is by nature, by nurture, by testamentary disposition, or by order of a court. (I use the words fullest sense because guardianship may be limited to give control only over the person or only over the administration of the assets of an infant.) Adapting the convenient phraseology of counsel, such guardianship embraces a bundle of rights, or to be more exact, a bundle of powers, which continue until a male infant attains 21, or a female infant marries. These include power to control education, the choice of religion, and the administration of the infants property. They include entitlement to veto the issue of a passport and to withhold consent to marriage. They include, also, both the personal power physically to control the infant until the years of discretion and the right (originally only if some property was concerned) to apply to the courts to exercise the powers of the Crown as parens patriae. It is thus clear that somewhat confusingly one of the powers conferred by custody in its wide meaning is custody in its limited meaning, namely, such personal power of physical control as a parent or guardian may have. It is, of course, custody in what Sachs LJ called its limited meaning that is material in the present appeal. In this sense, it is concerned with, as he put it, an ability to restrict the liberty of the person concerned, otherwise described as a power of physical control over an infant, and even physical possession. There are a number of earlier cases, notably Rex v Greenhill (1836) 4 Ad & E 624, R v Maria Clarke (In the Matter of Alicia Race) (1857) 7 E & B 186, and R v Howes (1860) 3 El & El 332, which deal with the common law position in relation to this aspect of custody. The context in each case is a habeas corpus application by a parent. What is important about the decisions for present purposes is that they establish, as the common law position, that (i) up to the age of discretion, the parents right to restrict the childs liberty was absolute (subject to some very limited exceptions), (ii) once the child reached the age of discretion, that right disappeared, and (iii) reaching the age of discretion was a matter of attaining the requisite chronological age, and not a matter of mental capacity. It is necessary to begin with Rex v Greenhill, although it is only in the subsequent cases that its import becomes clear. It concerned children who were all under six years of age and were with their mother. Their father obtained an order for them to be delivered up to him and their mother applied for that to be set aside. She was unsuccessful, a father being entitled to custody in the absence of any sufficient reason to separate the children from him. The four judges each gave separate short judgments, from which the following are extracts: When an infant is brought before the court by habeas corpus, if he be of an age to exercise a choice, the court leaves him to elect where he will go. If he be not of that age, and a want of direction would only expose him to dangers or seductions, the court must make an order for his being placed in proper custody. (Lord Denman CJ) The practice in such cases is that, if the children be of a proper age, the court gives them their election as to the custody in which they will be; if not, the court takes care that they be delivered into the proper custody. (Littledale J) In general, where the party brought up by habeas corpus is competent to exercise a discretion on [custody], the court merely takes care that the option shall be left free But where the age is not such as to allow the exercise of a discretion, and there is a controversy as to the custody, the court must decide (Williams J) A habeas corpus proceeds on the fact of an illegal restraint. When the writ is obeyed, and the party brought up is capable of using a discretion, the rule is simple, and disposes of many cases, namely, that the individual who has been under the restraint is declared at liberty; and the court will even direct that the party shall be attended home by an officer, to make the order effectual. But, where the person is too young to have a choice, we must refer to legal principles to see who is entitled to the custody (Coleridge J) Rex v Greenhill was relied upon in R v Maria Clarke (In the matter of Alicia Race) (1857) where Lord Campbell CJ interpreted it as having: laid down the rule that, where a young person under the age of 21 years of age is brought before the court by habeas corpus, if he be of an age to exercise a choice, the court leaves the infant to elect where he will go, but, if he be not of that age, the court must make an order for his being placed in the proper custody. The issue in the Maria Clarke case was whether the ten year old girls widowed mother, as her guardian for nurture, had a legal right to custody against the wishes of the girl, however intelligent she was, or whether the court was bound to examine the child to ascertain whether she had the mental capacity to make a choice. There was no argument but that children under seven were delivered to the guardian without any such examination; the argument was about those between the ages of seven and 14 (when guardianship for nurture ended). The court held that the guardian was absolutely entitled to the custody of the child until the age of 14, irrespective of the childs capacity. Lord Campbell said: Lord Denman, Littledale J, Williams J and Coleridge J all make age the criterion, and not mental capacity, to be ascertained by examination. They certainly do not expressly specify the age: but they cannot refer to seven as the criterion; and there is no intervening age marking the rights or responsibility of an infant till 14, when guardianship for nurture ceases, upon the supposition that the infant has now reached the years of discretion. In R v Howes (1860) 3 El & El 332, a father sought the delivery to him of a girl of 15 who was unwilling to return to him, and had been brought into court in obedience to a writ of habeas corpus and interviewed privately by the judges before they heard argument. Cockburn CJ, giving the judgment of the court, said: Now the cases which have been decided on this subject shew that, although a father is entitled to the custody of his children till they attain the age of 21, this court will not grant a habeas corpus to hand a child which is below that age over to its father, provided that it has attained an age of sufficient discretion to enable it to exercise a wise choice for its own interests. The whole question is, what is that age of discretion? We repudiate utterly, as most dangerous, the notion that any intellectual precocity in an individual female child can hasten the period which appears to have been fixed by statute for the arrival of the age of discretion; for that very precocity, if uncontrolled, might very probably lead to her irreparable injury. The Legislature has given us a guide, which we may safely follow, in pointing out 16 as the age up to which the fathers right to the custody of his female child is to continue; and short of which such a child has no discretion to consent to leaving him. The reference to the guide given by [t]he Legislature is no doubt a reference to the statutes making it an offence to take a female unmarried child under the age of 16 out of the possession of the childs father or mother. In re Agar Ellis (No 2) (1883) 24 Ch D 317 concerned a girl of 16 who wanted to spend time with her mother, contrary to her fathers directions. She and her mother argued that, given her age, her father had no right to the control or custody of her. Their petition failed at first instance and they appealed. This was not a habeas corpus application because, said Sir William Brett MR, the child is not away from her father the child is under the control of her father. It was, as Lindley LJ described it the following year in Thomasset v Thomasset (see below), an attempt to remove a girl over 16 from the care of her father. Therefore, although the habeas corpus cases were considered, they were found to be inapplicable. The court was concerned, rather, with an exercise of what Cotton LJ described as the jurisdiction which the Court of Chancery has always exercised, delegated probably from the Crown as parens patriae. The law was declared to be that the father had, as the Master of the Rolls put it, control over the person, education, and conduct of his children until they are 21 years of age. Exercising its Chancery jurisdiction, the court proceeded on the basis that it could interfere with the discretion of the father, but would not do so except in very extreme cases, of which this was not one. It is to be noted that this might have been seen by some as an overly narrow application of the Chancery approach, see the judgment of Kay LJ in R v Gyngall [1893] 2 QB 232. Sachs LJ commented, in the passage I have quoted above from Hewer v Bryant, on the use during the second half of the 19th century of the parens patriae jurisdiction unquestionably in aid of the wishes of the father, citing Agar Ellis (No 2) as an example of this, but pointing out that any powers exercised by way of physical control in the later years of infancy were not in fact the fathers personal powers but the more extensive ones of the Crown. And in Gillick, Lord Scarman referred to In re Agar Ellis (No 2) and an earlier decision concerning the same family (In re Agar Ellis (1878) 10 Ch D 49), as the horrendous Agar Ellis decisions (p 183E of Gillick). Bowen LJs judgment in In re Agar Ellis (No 2) includes an interesting explanation of how confusion had been caused by earlier law books making distinctions which were no longer adhered to. He explained that the strict common law gave the father guardianship of his children during the age of nurture and until the age of discretion (14 for a boy, and 16 for a girl), and thereafter, apart from in the case of the heir apparent (in relation to whom he was guardian by nature until 21), he had no guardianship. But he said that, for a great number of years, more especially in the courts of equity, the term guardian by nature had not been confined to heirs apparent, so that there was a natural paternal jurisdiction between the age of discretion and the age of 21, which the law will recognise. The distinction between the common law jurisdiction (concerned to declare rights between the parties) and the broader jurisdiction of the Courts of Chancery is made very clear in R v Gyngall (supra). The father of the child in that case (a girl of about 15) was dead and it was the mother who was the guardian, it seems by operation of the Guardianship of Infants Act 1886. The decision of the first instance court not to return the girl to her mother, despite there being no misconduct on the part of the mother derogating from her right to custody, was interpreted as an exercise of the Chancery jurisdiction, taking into account the welfare of the child, rather than an exercise of the common law habeas corpus jurisdiction. It is worth looking at the case of Thomasset v Thomasset, the following year, because the Court of Appeal there set out its understanding of the position that the law had now reached. Dealing first with the approach of the Courts of Common Law, Lindley LJ said (at p 298) that the father had a legal right to custody of his child until the child attained 21, but the child would not be forced to remain with the father after he or she had attained the age of discretion. He quoted the passage from Coleridge J in Rex v Greenhill which is set out above, and continued: The age at which a child is deemed to have a discretion is 14 in the case of a boy, and 16 in the case of a girl After a child has attained the age of discretion, a Court of Common Law will set it free if illegally detained, but will not force a child against his or her will to remain with his or her father or legal guardian Although the Court of Chancery would be in the same position as the Courts of Common Law when dealing with a writ of habeas corpus, Lindley LJ emphasised that it also had its much more extensive parens patriae jurisdiction. This had been exercised in aid of fathers and guardians of children who had attained the age of discretion, and also to control the rights of fathers and guardians in order to secure the welfare of infants, and it was available to the Divorce Court since the Judicature Acts. However, whilst the Divorce Court could make orders respecting the custody, maintenance, and education of infants during the whole period of infancy, that is up to 21, both members of the court expressed caution on the subject. Lindley LJ said (p 303): I do not say that a child who has attained years of discretion can, except under very special circumstances, be properly ordered into the custody of either parent against such childs own wishes. Lopes LJ said (p 306): No doubt a writ of habeas corpus could not go to compel a child over the age of 16 to return to the custody of the parent when such child was unwilling to submit to such custody It is not easy for us, accustomed to a legal system which has changed very considerably since Victorian times, to reach a perfect understanding of these cases, and I do not pretend to have done so. Like Sir James Munby P, I would settle for Sachs LJs summary, quoted at para 55 above. How does this historical perspective, as summarised by Sachs LJ, inform the present issue? It can be seen from the old cases that the mere fact that a parent had guardianship of a child did not give him a free hand to make decisions about that childs life. The extent of his ability to dictate depended upon the circumstances. At common law, the ability to restrict the liberty of the child lasted only until the age of discretion, and the age of discretion was fixed chronologically, and not by considering the attributes of the particular child. Equity had wider powers to govern a childs behaviour, but this was essentially by stepping in as the parent, and making decisions for the welfare of the child, rather than by enforcing the parents rights. Terminology has changed, of course, and what was referred to as guardianship in those days has been translated into todays parental responsibility, but I do not see this older chapter in the evolution of the scope of parental authority as irrelevant in the search for the rights, duties, powers, responsibilities and authority which by law a parent of a child has in relation to the child and his property (section 3(1) of the Children Act 1989). Equally, it is not the end of the investigation, because the common law can evolve. I turn therefore to the important case of Gillick decided in 1985. The President took the view (see in particular paras 85 and 125 of his judgment) that the fixed age of discretion, encountered in the old cases, has been replaced by a test of, as he termed it, Gillick capacity to determine when the exercise of parental responsibility comes to an end. I will look in more detail at Gillick below, but it may help to preface this examination by explaining that I do not share the Presidents confidence that the Gillick test extends to the aspect of parental responsibility with which the present case is concerned. The issue in Gillick was different in at least two important ways. First, it was not about restricting the physical liberty of the child, but concerned decision making in the sphere of medical treatment. Secondly, the question was whether the parent could lose his or her exclusive decision making powers before the child reached the age of 16, if the child was capable of making his or her own decision, not whether the parent was entitled to continue to make decisions after the child reached 16, if the child was not capable. As to the first of these differences, the considerations in relation to decisions about physical liberty are not the same as those involved in other spheres where parental responsibility may operate. In particular, article 5 of the European Convention on Human Rights was not material in the Gillick decision, but is of central importance to the present case, as can be seen from Lady Hales judgment. Moreover, it is not only in the Convention, and the cases decided by the European Court of Human Rights, that one can find special attention being given to liberty, whether of a child or a vulnerable adult. It is evident in the older habeas corpus authorities to which I have referred. And it has been firmly engrained in domestic law in certain statutes, notably in the Children Act 1989 in the secure accommodation provisions, with which I deal later in this judgment, and in the Mental Capacity Act 2005 which, by section 4A, marks out deprivation of liberty for special treatment, with more attendant safeguards than other acts performed in relation to a person who lacks capacity. Turning to the second of the differences, it has a number of components, one of which is the pivotal age of 16. Although not determinative of the question before us, I think it is far from irrelevant that, as Lady Hale puts it at para 27 (after listing various statutory provisions in her para 26), the law accords to children who have reached the age of 16 years a status which is in some respects different from children below that age. Of the provisions listed, I would single out section 2(5) of the Mental Capacity Act 2005 (para 26(iii) of Lady Hales judgment). I cannot accept the Official Solicitors case that the 2005 Act constitutes a complete decision making framework for the care and treatment of those aged 16 and above who lack capacity, not least because there is an obvious overlap between the reach of the Children Act 1989 and that of the 2005 Act, and I can find nothing in the 2005 Act that could be said to indicate a general rule to the effect that, where it applies, it does so to the exclusion of other common law and statutory provisions. However, it does seems to me that the deliberate choice of the legislature to include children of 16 to 18 years within the scope of the 2005 Act, and now (by virtue of the recent amendment to the Act, see para 49 of Lady Hales judgment) to extend a regime of administrative deprivation of liberty safeguards to them, indicates an appreciation of the different needs of this particular age group. At risk of underlining the obvious, another important element in this second difference is that Gillick was about contracting the boundary of parental responsibility and empowering the child at an earlier age, whereas the present case is about extending the boundary of parental responsibility beyond the age at which, in relation to the particular matter in issue, it would have been taken, at common law, to have ended. As can be seen from Sachs LJs analysis, the common law position at the time of Hewer v Bryant, in 1969, was that the power of physical control over an infant ended at the age of discretion. For present purposes I would take that age as 16. The common law, even in 1969, might have balked at continuing to treat a boy as reaching the age of discretion at 14, but a girl as having to wait until 16, and, if an issue about this had come up, would no doubt have evolved to iron out the difference. It is pointless to worry, in the present context, about whether it would have equalised up or down, because we are dealing here with the position of a child between the ages of 16 and 18. If the age of discretion had been raised above 16, thus extending the parents power of physical control into the age group with which we are concerned, that would have been of considerable significance to the debate, but I have seen nothing to suggest that that was done, and it would be extremely surprising if it had been. So to the detail of Gillick. Lady Hale deals with the case in para 23 of her judgment. I propose to refer to some further passages, in order to provide some substance for the views that I have just expressed about it. The Family Law Reform Act 1969 had provided that the consent of a minor who has attained the age of 16 years to medical treatment was as effective as if the child were of full age, and rendered it unnecessary to obtain consent from the parent or guardian. It was the position of a child of under 16 that was in question, and in particular whether such a child could, herself, provide the necessary consent for contraceptive treatment. It will be recalled that Mrs Gillick was arguing (see p 168D of the report) that the custody that parents have of a minor under the age of 16 necessarily involves the right to veto contraceptive advice or treatment being given to the girl, and that she failed in this argument. Giving the first speech, Lord Fraser of Tullybelton, one of the three members of the House in the majority, spoke in terms of parental rights to control a child, which he held (p 170D) existed for the benefit of the child, not the parent, and were justified only in so far as they enabled the parent to perform his duties towards the child, and towards other children in the family. Understandably, given the issue in the case, his speech is directed at diminishing control on the part of a parent as a child ages, rather than at the opposite problem of the child who needs parental input for a longer than usual period, although I accept that some of what he said is in general terms and could be applied to either situation. He spoke (p 171E) of wise parents relaxing their control gradually as the child develops, and of the degree of parental control actually exercised over a particular child varying according to his understanding and intelligence. He looked at R v Howes, In re Agar Ellis, and Hewer v Bryant (see above). As to R v Howes, where the court declined to consider a child having discretion to consent to leaving the father before she reached 16, he said that the view that the childs intellectual ability is irrelevant cannot now be accepted. He endorsed the criticism that had been heaped on Agar Ellis, dismissed the concept deployed in that case of absolute paternal authority continuing until a child attains majority as so out of line with present day views that it should no longer be treated as having any authority, and shared Lord Dennings view that the legal right of a parent to custody of a child was a dwindling right, as the child approached majority. He said (p 173D): Once the rule of the parents absolute authority over minor children is abandoned, the solution to the problem in this appeal can no longer be found by referring to rigid parental rights at any particular age. The solution depends upon a judgment of what is best for the welfare of the particular child. This abandonment of the rule of the parents absolute authority led to the conclusion that a doctor could prescribe contraceptive treatment to a girl of under 16 without the consent of her parents, provided that, amongst other things, she would understand his advice. Lord Scarman agreed with Lord Fraser but added his own speech. Having considered the earlier case law, he enunciated what he had found to be the principle of law (hereafter in my discussion of his speech the principle), saying (pp 183 184): Parental rights clearly do exist, and they do not wholly disappear until the age of majority. Parental rights relate to both the person and the property of the child custody, care, and control of the person and guardianship of the property of the child. But the common law has never treated such rights as sovereign or beyond review and control. Nor has our law ever treated the child as other than a person with capacities and rights recognised by law. The principle of the law, as I shall endeavour to show, is that parental rights are derived from parental duty and exist only so long as they are needed for the protection of the person and property of the child. The principle has been subjected to certain age limits set by statute for certain purposes: and in some cases the courts have declared an age of discretion at which a child acquires before the age of majority the right to make his (or her) own decision. But these limitations in no way undermine the principle of the law, and should not be allowed to obscure it. Later in his speech, Lord Scarman formulated the principle in slightly different ways. At p 185E, the following formulation can be found: parental right or power of control of the person and property of his child exists primarily to enable the parent to discharge his duty of maintenance, protection, and education until he reaches such an age as to be able to look after himself and make his own decisions. And at p 186D, Lord Scarman put it this way: parental right yields to the childs right to make his own decisions when he reaches a sufficient understanding and intelligence to be capable of making up his own mind on the matter requiring decision. Understandably, in his consideration of the common laws understanding of the nature of parental right, Lord Scarmans focus was upon the particular type of parental right/duty that was in issue there, as the following passage from his speech makes clear (p 184F): It is abundantly plain that the law recognises that there is a right and a duty of parents to determine whether or not to seek medical advice in respect of their child, and, having received advice, to give or withhold consent to medical treatment. The question in the appeal is as to the extent, and duration, of the right and the circumstances in which outside the two admitted exceptions to which I have earlier referred [order of a competent court, and emergency] it can be overridden by the exercise of medical judgment. Although varying ages of discretion had been fixed by statute and case law for various purposes, Lord Scarman found it clear that (p 185F): this was done to achieve certainty where it was considered necessary and in no way limits the principle that parental right endures only so long as it is needed for the protection of the child. In modern times, statute had intervened in respect of a childs capacity to consent to medical treatment from the age of 16 onwards, but neither statute nor case law had ruled on the extent and duration of parental right in respect of children under the age of 16. So, Lord Scarman said, it was open to the House to formulate a rule (p 185H). He was influenced, in so doing, by the fact that the law relating to parent and child is concerned with the problems of growth and maturity of the human personality. This disposed him against the fixed age limit of 16 (below which a girl could not give valid consent) that had commended itself to the Court of Appeal. He observed (p 186B): If the law should impose upon the process of growing up fixed limits where nature knows only a continuous process, the price would be artificiality and a lack of realism in an area where the law must be sensitive to human development and social change. He found the earlier cases no guide to the application of the principle in the conditions of today. He dealt specifically with the habeas corpus cases in these terms (p 187B): The habeas corpus age of discretion cases are also no guide as to the limits which should be accepted today in marking out the bounds of parental right, of a childs capacity to make his or her own decision, and of a doctors duty to his patient. Nevertheless the age of discretion cases are helpful in that they do reveal the judges as accepting that a minor can in law achieve an age of discretion before coming of full age The principle underlying them was plainly that an order would be refused if the child had sufficient intelligence and understanding to make up his own mind. A passage from the judgment of Cockburn CJ in R v Howes (1860) 3 El & El 332 [quoted at para 10 above] illustrates their reasoning and shows how a fixed age was used as a working rule to establish an age at which the requisite discretion could be held to be achieved by the child The principle is clear: and a fixed age of discretion was accepted by the courts by analogy from the Abduction Acts (the first being the Act of 1557, 4 & 5 Ph & M c8). While it is unrealistic today to treat a 16th century Act as a safe guide in the matter of a girls discretion, and while no modern judge would dismiss the intelligence of a teenage girl as intellectual precocity, we can agree with Cockburn CJ as to the principle of the law the attainment by a child of an age of sufficient discretion to enable him or her to exercise a wise choice in his or her own interests. After citing from R v D [1984] AC 778 (an appeal relating to the conviction of a father on indictment of kidnapping his five year old daughter) on the subject of parental right and a childs capacity to give or withhold a valid consent, Lord Scarman concluded (p 188H) that: as a matter of law the parental right to determine whether or not their minor child below the age of 16 will have medical treatment terminates if and when the child achieves a sufficient understanding and intelligence to enable him or her to understand fully what is proposed. It will be a question of fact whether a child seeking advice has sufficient understanding of what is involved to give a consent valid in law. Until the child achieves the capacity to consent, the parental right to make the decision continues save only in exceptional circumstances. The third member of the majority, Lord Bridge, agreed with what Lord Fraser and Lord Scarman had said, without adding further reasoning of his own. What the President drew from the speeches of Lord Fraser and Lord Scarman was, as he set out at paras 83 to 85, that the attainment of Gillick capacity is child specific, to be decided as a matter of fact in relation to each particular child. He said: 84. This has an important corollary. Given that there is no longer any magic in the age of 16, given the principle that Gillick capacity is child specific, the reality is that, in any particular context, one child may have Gillick capacity at the age of 15, while another may not have acquired Gillick capacity at the age of 16 and another may not have acquired Gillick capacity even by the time he or she reaches the age of 18: cf, In re R (A Minor) (Wardship: Consent to Treatment) [1992] Fam 11, at 24 and 26. Therefore, he said (para 85), after Gillick, the position of domestic law in relation to the aspect of custody described in Hewer v Bryant as, inter alia, the ability to restrict the liberty of the person was that: The parental power was precisely as described by Sachs LJ subject only to the substitution, when applying the principles set out by Sachs LJ in relation to the concept of the age of discretion, of the test of what we now call Gillick capacity in place of the previous fixed ages. So, the President concluded, Keehan J was wrong to decide that a parent of an incapacitous 16 year old may not consent to confinement which would otherwise amount to a deprivation of liberty (para 115 of Keehan Js judgment) because (para 125 of the Presidents judgment), none of the statutory provisions upon which he relied assisted on the matter and: his approach does not give effect to the fundamental principle established by Gillick: namely that, in this context (see paras 79 85 above), the exercise of parental responsibility comes to an end not on the attaining of some fixed age but on attaining Gillick capacity. In effect, Keehan J would have us go back to the approach of Cockburn CJ and Parker LJ. As I have explained (see above at para 69 et seq), I do not share the Presidents confidence that the Gillick test extends to the aspect of parental responsibility with which the present case is concerned, or that the Gillick decision can, without more, be treated as regulating the situation where the objective is not to contract the boundaries of parental responsibility, but to extend them. In my view, as I said above, it is of real significance that in Gillick, the House of Lords were dealing with a materially different issue. The respondent recognises that the focus of Gillick was specific to the issue of consent to medical treatment of children under 16, but invites this court to conclude that the test laid down there applies beyond that scope and up to the age of majority. I accept that certain things that were said in Gillick were capable of being interpreted as applying to a situation such as the present, but it would not, in my view, be appropriate to interpret them in that way, so as to draw into the Gillick net a situation which is diametrically opposed to that with which the House was concerned (not the tempering of parental responsibility in relation to the under 16 age group, but its expansion in relation to those aged 16 and 17 so as to give it a role which would not otherwise be afforded by the common law). My unwillingness to adopt this interpretation is reinforced by what I perceive to be the distinct, and rather special, features of the field of deprivation of liberty with which we are here concerned. It follows that the rights of a parent in relation to restricting the liberty of a child remain, at common law, as described in Hewer v Bryant. The inescapable result of that is, I think, that it is not within the scope of parental responsibility for parents to give authority for their 16 year old child to be confined in a way which would, absent consent, amount to a deprivation of liberty. In so saying, I do not intend in any way to water down the important changes brought about by Gillick or to alter the way in which it has been applied in many spheres of family law. I have only been concerned to consider its application in the very specific context of confinement of children of the ages of 16 to 18. The position in relation to the confinement of children who are under 16 might be different for a variety of reasons. It could be argued, for example, that the Gillick decision is more readily applicable to under 16s than to over 16s, given that this was the age group with which the House was concerned. It would then be arguable that the position in relation to that group was as the President set out at para 85 of his judgment (quoted above) ie that the parental ability to restrict a childs liberty continues to be as described by Sachs LJ in Hewer v Bryant, but with a Gillick test rather than the previous fixed ages. But the effect of this, applied to a child who lacked capacity, would not be to leave a gap in the parents powers to cater for the particular needs of a child with disability. On the contrary, the child not having attained Gillick capacity, there would be nothing to bring to an end the parents common law power to confine the child as required in the childs interests. To put it in the terms used in this appeal, it would remain within the ambit or zone of the parents parental responsibility. However, there would, no doubt, be other arguments to be aired on the point, and I have not formed even a preliminary view about it. In summary, therefore, I would hold that as a matter of common law, parental responsibility for a child of 16 or 17 years of age does not extend to authorising the confinement of a child in circumstances which would otherwise amount to a deprivation of liberty. For me, this reinforces the conclusion to which Lady Hale has come by the route she sets out in paras 42 to 49 of her judgment. She concludes, in para 50, by saying that logically her conclusion would also apply for a younger child, but I would prefer to leave this separate question entirely open, to be decided in a case where it arises. I should also stress, before moving on to the discrete issue in relation to section 25 of the Children Act 1989 and its potential application to living arrangements such as Ds, that I have been looking specifically at the common law power of a parent in relation to a childs liberty. I have not intended to cast doubt on any existing understanding about the operation of parental responsibility in different spheres of a childs life. And nothing that I have said is intended to cast any doubt on the powers of the courts, recognised in the early cases to which I have referred, and still available today in both the parens patriae jurisdiction and under statute, notably the Children Act 1989, to make orders in the best interests of children up to the age of majority, with due regard to their wishes and those of their parents, but not dictated by them. Does section 25 of the Children Act 1989 apply to living arrangements such as Ds? Where it applies, section 25 of the Children Act 1989 regulates the circumstances in which children can be placed and kept in accommodation provided for the purpose of restricting liberty and dictates that, save for very short periods, the courts authorisation of the arrangements is required. If the section applies to living arrangements like Ds, making court authorisation obligatory, the debate as to whether it falls within the scope of parental responsibility to authorise a childs confinement would be of far less practical significance. In order to set that debate in its proper context, the scope of section 25 was therefore explored. In the light of this exploration, it appears likely that a significant number of children living in confined circumstances will be outside the ambit of the section, although clearly each case will depend upon its own facts. Accordingly, the parental responsibility issue has a real practical importance. The reasons for this provisional conclusion are set out below. They deal with the law as it applies to accommodation in England; there is a separate statutory and regulatory regime where the accommodation is in Wales, albeit in similar terms. Section 25 provides as follows, omitting provisions concerned solely with Scotland: 25. Use of accommodation for restricting liberty (1) Subject to the following provisions of this section, a child who is being looked after by a local authority in England or Wales may not be placed, and, if placed, may not be kept, in accommodation in England or Scotland provided for the purpose of restricting liberty (secure accommodation) unless it appears (a) that he has a history of absconding and is (i) likely to abscond from any other description of accommodation; and if he absconds, he is likely to suffer (ii) significant harm, or (b) that if he is kept in any other description of accommodation he is likely to injure himself or other persons. (2) The Secretary of State may by regulations (a) specify a maximum period (i) beyond which a child may not be kept in secure accommodation in England or Scotland without the authority of the court; and for which the court may authorise a child (ii) to be kept in secure accommodation in England or Scotland; (b) empower the court from time to time to authorise a child to be kept in secure accommodation in England or Scotland for such further period as the regulations may specify; and (c) provide that applications to the court under this section shall be made only by local authorities in England or Wales. (3) It shall be the duty of a court hearing an application under this section to determine whether any relevant criteria for keeping a child in secure accommodation are satisfied in his case. (4) If a court determines that any such criteria are satisfied, it shall make an order authorising the child to be kept in secure accommodation and specifying the maximum period for which he may be so kept. (5) On any adjournment of the hearing of an application under this section, a court may make an interim order permitting the child to be kept during the period of the adjournment in secure accommodation. (5A) (6) No court shall exercise the powers conferred by this section in respect of a child who is not legally represented in that court unless, having been informed of his right to apply for the provision of representation under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and having had the opportunity to do so, he refused or failed to apply. (7) The Secretary of State may by regulations provide that (a) this section shall or shall not apply to any description of children specified in the regulations; (b) this section shall have effect in relation to children of a description specified in the regulations subject to such modifications as may be so specified; (c) such other provisions as may be so specified shall have effect for the purpose of determining whether a child of a description specified in the regulations may be placed or kept in secure accommodation in England or Scotland. (d) a child may only be placed in secure accommodation that is of a description specified in the regulations (and the description may in particular be framed by reference to whether the accommodation, or the person providing it, has been approved by the Secretary of State or the Scottish Ministers). (8) The giving of an authorisation under this section shall not prejudice any power of any court in England and Wales or Scotland to give directions relating to the child to whom the authorisation relates. (8A) (9) This section is subject to section 20(8). Where applicable, the section operates to prevent a child being placed or kept in secure accommodation unless one of the two conditions set out in section 25(1)(a) and (b) is satisfied. The initial placement need not involve the court, but regulations made under section 25(2) provide that a child may not be kept in secure accommodation without court authority for more than 72 hours in any period of 28 consecutive days (regulation 10, Children (Secure Accommodation) Regulations 1991 (SI 1991/1505), hereafter the 1991 Regulations). There are limits on the period that can be authorised by the court, being three months in the first instance, and a further period of up to six months thereafter (regulations 11 and 12). There is a misconception that section 25 applies only to children who are being looked after by a local authority. These are the children to whom section 25(1) refers, but section 25(7) gives the Secretary of State power to provide, by regulations, that the section shall or shall not apply to other descriptions of children, and he did so in the 1991 Regulations. Various categories of children are excluded from the operation of the section including, by regulation 5(1), a child who is detained under the provisions of the Mental Health Act 1983, and, by regulation 5(2)(a), a child who is being accommodated under section 20(5) of the Children Act 1989 (which relates to certain accommodation in a community home of people who are over 16 but under 21 years of age). In contrast, regulation 7 widens the reach of section 25, extending it to children other than those looked after by a local authority. It provides: (1) Subject to regulation 5 and paras (2) and (3) of this regulation section 25 of the Act shall apply (in addition to children looked after by a local authority) (a) to children, other than those looked after by a local authority, who are accommodated by health authorities, National Health Service trusts established under section 5 of the National Health Service and Community Care Act 1990, NHS foundation trusts or local authorities in the exercise of education functions or who are accommodated pursuant to arrangements made by the Secretary of State, the National Health Service Commissioning Board or a clinical commissioning group under the National Health Service Act 2006, and to children, other than those looked after by a (b) local authority, who are accommodated in care homes or independent hospitals. Regulation 7(2) and (3) modify the wording of section 25 so as to reflect its widened scope in the cases covered by regulation 7(1). With regulation 7 casting the section 25 net beyond looked after children, the possibility that a child is in secure accommodation cannot be dismissed simply on the basis that the child is not being looked after by the local authority. Furthermore, the inclusion within section 25 of children in hospitals and care homes demonstrates that the traditional view that secure accommodation has a punitive quality (see for example In re AB (A Child) (Deprivation of Liberty: Consent) [2015] EWHC 3125 (Fam); [2016] 1 WLR 1160, para 31) will not always be valid, so that cannot be used as a reliable hallmark of secure accommodation either. Deprived of obvious insignia such as these, how is it to be determined whether a particular childs circumstances are covered by section 25? As established by section 25(1), the concern of the section is a child who is placed, and if placed, kept in accommodation provided for the purpose of restricting liberty (secure accommodation). This definition, which is mirrored in regulation 2(1) of the 1991 Regulations, is the only definition of secure accommodation, so the hallmark by which such accommodation has to be identified is that it is accommodation provided for the purpose of restricting liberty. The Secretaries of State argue that identification is simplified in the case of childrens homes because, they say, Parliament has provided a mechanism for determining which childrens homes have the nature of being secure accommodation. The mechanism suggested derives from regulation 3 of the 1991 Regulations. This provides that [a]ccommodation in a childrens home shall not be used as secure accommodation unless it has been approved by the Secretary of State for that use. It seems that the Secretaries of State argue that where the accommodation in question is in a childrens home, it will count as secure accommodation only if it has been approved by the Secretary of State for that use. The logical corollary of that would appear to be that no matter what the living arrangements of a child in an unapproved childrens home, he or she is not placed/kept in accommodation provided for the purpose of restricting liberty and therefore not within section 25. This argument might owe something to the regime in relation to local authority homes which was discussed in R v Secretary of State for the Home Department, Ex p A [2000] 2 AC 276 (see later). It is not necessary to determine, in the present case, whether it is correct in the different context of section 25, but it should be acknowledged that it does give rise to some questions. Whilst it can readily be accepted that the intention is that only properly authorised childrens homes are to be used as accommodation for the purpose of restricting liberty, it does not necessarily follow that, in practice, a child could not find him or herself placed or kept in a childrens home which, but for the fact that it does not have the Secretary of States approval, has every appearance of being secure accommodation. If the argument advanced by the Secretaries of State is right, such children might be doubly prejudiced ie placed in an unapproved childrens home and outside the protective regime of section 25. Given the shortage of approved secure childrens homes, highlighted by the Court of Appeal in In re T (A Child) [2018] EWCA Civ 2136, this is a risk which cannot be ignored. In In re T, the appellant was 15 years old and subject to a full care order. The local authority proposed that she be detained in a unit which was not an approved childrens home, and sought authority from the High Court for the restriction of the childs liberty, relying upon the inherent jurisdiction. It is evident from the judgment of the President of the Family Division (with whom the other members of the court agreed) that such applications are not uncommon. At para 5, he said that there are many applications being made to place children in secure accommodation outside the statutory scheme laid down by Parliament, expressing concern about the situation (see also paras 88 and 89). No question seems to have been raised as to whether it is proper for the High Courts inherent jurisdiction to be used to authorise the restriction of a childs liberty in an unapproved childrens home. This might, perhaps, have been because the childs accommodation was not in fact in a childrens home as defined for the 1991 Regulations (see regulation 2) and therefore not covered by the prohibition in regulation 3, but given the limited details available about the childs circumstances, it is impossible to know. In any event, even if the approach commended by the Secretaries of State is correct, it would not serve to identify secure accommodation in all its various settings, but only in so far as childrens homes are concerned, and it would leave unanswered questions in relation to many other children. Accordingly, there being no reliable and universally applicable shortcuts to identifying secure accommodation, it is necessary to look more closely at the wording of section 25(1) in order to determine what circumstances fall within it. The parties rightly stress the need to interpret the section with an eye to the whole scheme in which it takes its place. Local authorities have far reaching welfare obligations towards children. Notably, under section 20 of the Children Act 1989, they have a duty to provide accommodation for children in need, and they must also address the accommodation and other needs of children in relation to whom care orders have been made. The children who require help will present with all sorts of different problems, and there will be those whose care needs cannot be met unless their liberty is restricted in some way. But by no means all of these children will fall within the criteria set out in section 25(1)(a) and (b), which are the gateway to the authorisation of secure accommodation. It seems unlikely that the legislation was intended to operate in such a way as to prevent a local authority from providing such a child with the care that he or she needs, but an unduly wide interpretation of secure accommodation would potentially have this effect. It is possible to imagine a child who has no history, so far, of absconding, and who is not likely actually to injure himself or anyone else, so does not satisfy section 25(1)(a) or (b), but who, for other good reasons to do with his own welfare, needs to be kept in confined circumstances. If section 25 applies whenever a childs liberty is restricted, local authorities will not be able to meet the welfare needs of children such as this. And, of course, it is similarly possible to envisage children in hospitals and care homes who need a degree of confinement, but do not satisfy either of the limbs of section 25(1). Putting it another way, the criteria set for the placing or keeping of a child in secure accommodation might be taken to reveal something of the problems which it was anticipated that children in secure accommodation would present. This, in turn, could be taken as a pointer towards the characteristics that one could expect to find in secure accommodation being used to meet those problems. It is also worth noting, when considering how section 25 fits into the statutory scheme, that a court determining an application under the section does not have the childs welfare as its paramount consideration, as would normally be the case when the court determines any question with respect to the upbringing of a child (section 1 of the Children Act 1989). If any of the relevant criteria for keeping a child in secure accommodation are satisfied, the court is obliged to make the order authorising the child to be kept in secure accommodation (section 25(4)). It would be surprising if section 25 were intended to be interpreted in such a way as to extend this displacement of the courts welfare role beyond a relatively circumscribed group of children whose circumstances make this unavoidable. Underlining this, it is worth noting that where the position of a child of 16 or 17 is being considered in the Court of Protection under the Mental Capacity Act 2005, welfare is the touchstone, as deprivation of liberty will only be endorsed where it is in the best interests of the child. So, the challenge is to interpret section 25 in such a way as to provide the protection intended by the legislature, without getting in the way of meeting the varied needs of the children for whom hospitals, care homes, and local authorities (in the exercise of their social services and education functions) have responsibility. We are grateful to the parties for the valuable detailed written submissions they have all made to assist with this process; as, for the most part, they traverse similar ground, it is unnecessary to attribute submissions in what follows. It is unnecessary also to address all the arguments advanced, given that we are not making a definitive decision as to the operation of section 25. It is submitted that the focus should be on the accommodation and the purpose for which it is provided, rather than upon the regime within the accommodation. This would be consistent with section 25(1)(a) and (b) which, in setting the criteria for the use of secure accommodation, stipulate that the child may not be placed/kept in secure accommodation unless it appears that he is likely to abscond from any other description of accommodation or to injure himself or others if he is kept in any other description of accommodation. This contrast of secure accommodation with any other description of accommodation can be read as supporting the notion that secure accommodation is a description of accommodation, rather than a description of a regime of care. This is an interpretation which also gains support from R v Secretary of State for the Home Department, Ex p A [2000] 2 AC 276. The 15 year old offender in that case had been remanded to a local authority childrens home which was not approved by the Secretary of State for the purpose of restricting liberty, but he was subject to a curfew and other conditions whilst there. The issue was whether he should be given credit, in serving his sentence of detention in a young offender institution, for his period in the local authority accommodation. That depended on whether it was covered by section 67(1A)(c) of the Criminal Justice Act 1967 which entitled an offender to have his sentence reduced by: (c) any period during which, in connection with the offence for which the sentence was passed, he was remanded or committed to local authority accommodation by virtue of an order under section 23 of the Children and Young Persons Act 1969 or section 37 of the Magistrates Courts Act 1980 and in accommodation provided for the purpose of restricting liberty. The legislative scheme with which the House was concerned was, of course, different from the provisions which concern us. Broadly speaking, by virtue of (inter alia) section 23 of the Children and Young Persons Act 1969, a court remanding a child or young person who had committed, or was alleged to have committed, a criminal offence could release him on bail or remand him to local authority accommodation, in either case with or without conditions. In the case of certain offenders who had reached 15 years of age, the court could require [the designated local] authority to comply with a security requirement, that is to say, a requirement that the person in question be placed and kept in secure accommodation (section 23(4)). Section 23(12) defined secure accommodation as accommodation which is provided in a community home, a voluntary home or a registered childrens home for the purpose of restricting liberty, and is approved for that purpose by the Secretary of State. It will be noted that this definition differs from that in section 25 of the Children Act, in that it makes approval by the Secretary of State an integral part of the definition of secure accommodation, whereas the section 25 definition makes no reference to such approval which is, instead, the subject of regulation 3 of the 1991 Regulations. The local authority home in which the offender was accommodated on remand was not approved by the Secretary of State, so did not qualify as secure accommodation as such. But it was argued that section 67(1A)(c) was satisfied anyway, by virtue of the restrictions placed upon him whilst he was living there. A useful review of the history of the provisions as to secure accommodation in the civil and the criminal spheres can be found in the speech of Lord Clyde (with whom all the other members of the House agreed), commencing at p 285, although inevitably the law has moved on again since the decision. Then, at p 287, dealing with the construction of the phrase and in accommodation provided for the purpose of restricting liberty at the end of section 67(1A)(c), Lord Clyde said: The use of the expression accommodation provided in the statutory phraseology is to my mind significant. The word accommodation refers to the place where the person is to be accommodated. The phrase designates a particular class or kind of accommodation. It is accommodation which has been provided for a particular purpose. The phrase does not refer to any accommodation where the liberty of a person may be restricted. The reference intended by the language used is in my view not simply to a regime of some kind whereby the persons liberty is restricted, but to the nature of the accommodation itself. The phrase is looking to a category of accommodation, namely accommodation which has been provided for the stated purpose. The obvious category of accommodation which can be identified as having been provided for the purpose of restricting liberty is that which came to be referred to as secure accommodation. The same point can be taken from the repeated use of the word in which appears in relation to police detention in paragraph (a), to custody in paragraph (b) and to accommodation in paragraph (c). It is the place in which the person is situated, and in particular its nature, rather than any controls over his movements, to which the subsection is looking. Similarly, Lord Hope (with whom the members of the Appellate Committee other than Lord Clyde agreed) said, at p 282, that: the words provided for the purpose of restricting liberty appear to direct attention to the nature of the accommodation and the purpose for which it is provided, not to the effect on the persons liberty of any conditions to which he may be subjected under section 23(7) of the Act of 1969. Thus the additional requirement indicated by the word and is that the accommodation to which the person was committed must have been for that purpose and of that character. Both Lord Clyde and Lord Hope were persuaded not only by the wording of the provision but also by practical considerations that this construction was correct. By focusing on whether the offender was in what Lord Clyde called qualifying accommodation (p 289E), the institution detaining the offender would be able to apply the appropriate credit against the sentence without having to form judgments about the precise conditions under which the individual offender had been held there (see Lord Hope at p 283 and Lord Clyde at p 289). Lord Clyde was clearly equating qualifying accommodation for section 67(1A)(c) purposes with secure accommodation as defined in section 23(12), as he envisaged that all that was necessary to ascertain whether the offender had been in qualifying accommodation was to see whether it had been approved by the Secretary of State as secure accommodation. It would not be right to regard R v Secretary of State for the Home Department, Ex p A as determinative of the ambit of section 25 of the Children Act 1989. Although the phrase considered by the House of Lords there also features in section 25, the context is obviously different. There, by training the lens on the accommodation itself, the House was able to ensure that there was a simple means of identifying relevant periods on remand, merely by looking to see whether or not the particular local authority accommodation had the Secretary of States approval. Focusing on the accommodation itself does not, however, provide such a simple answer to the problem of what is secure accommodation within section 25. Section 25 extends well beyond local authority homes, and undoubtedly encompasses secure accommodation which does not have to be approved by the Secretary of State. Furthermore, the purpose of the provisions considered by the House of Lords was very different from the purpose of section 25. They were concerned with a scheme which conferred power on a court remanding a child to local authority accommodation to dictate that the child should be kept in secure accommodation as narrowly defined by section 23(4) of the Children and Young Persons Act, and confined credit for time spent in local authority accommodation to that type of accommodation. In contrast, what section 25 has to say about secure accommodation is of much wider application. It does not set out to dictate where a local authority must place/keep a particular child, but to regulate, in both local authority and non local authority settings, the circumstances in which a child can be placed/kept in secure accommodation as defined in the section. Nevertheless, given that the House of Lords were concerned with the same phrase as features in section 25, their interpretation must carry weight. Coming closer to home, we are invited to endorse the approach that Wall J took to the phrase accommodation provided for the purpose of restricting liberty in In re C (Detention: Medical Treatment) [1997] 2 FLR 180 at p 193. The case concerned a 16 year old girl suffering from anorexia nervosa. The local authority made an application for an order under the inherent jurisdiction authorising her detention in a clinic for medical treatment. Wall J was faced with the question whether the courts powers under the inherent jurisdiction were ousted by the scheme laid down by Parliament in section 25, and in addressing that issue, he needed to determine whether the clinic was, in fact, secure accommodation within section 25. Having reviewed three earlier authorities (R v Northampton Juvenile Court, Ex p London Borough of Hammersmith and Fulham [1985] FLR 193, South Glamorgan County Council v W and B [1993] 1 FLR 574, and A Metropolitan Borough Council v DB [1997] 1 FLR 767) he said (p 193): Whilst I respectfully agree that premises which are not designed as secure accommodation may become secure accommodation because of the use to which they are put in the particular circumstances of individual cases, it does seem to me that the more natural meaning of the words provided for the purpose of restricting liberty is designed for, or having as its primary purpose the restriction of liberty. The circumstances in which section 25 operates are based on the premise that the child has a history of absconding and is likely to abscond from any other description of accommodation. The alternative premise, that if he is kept in any other description of accommodation he is likely to injure himself or others once again envisages a secure regime designed to prevent self harm. I therefore prefer to look at the clinic, and ask myself: is it accommodation provided for the purpose of restricting liberty? This is, of course, as Cazalet J indicates, a question of fact. Having said that, he went on to examine the regime operated by the particular clinic, before finding that it was not secure accommodation. In his view, the purpose of placement of a child in the clinic is to achieve treatment: the accommodation provides a structure for that treatment. The fact that there was a degree of restriction on the patients liberty was an incident of the treatment programme, and the fact that steps could be taken to prevent the child from leaving the premises did not, of itself, render the clinic secure accommodation. Section 25 has played no direct role in the proceedings in the present case, and the bulk of the argument about it has occurred in writing after the conclusion of the hearing in this court. Nothing that we say about it will conclusively resolve the difficult questions that arise as to its scope and operation, and that is as it should be, because it would be undesirable that final views should be formed, without there having been an opportunity for oral argument. Furthermore, it would be better that such issues as there are about the scope of section 25 should be resolved in a case where the relevant facts have been found, so that the section can be interpreted with reference to a real factual situation. Because the issue was not under consideration at all before the appeal arrived in this court, factual findings have not been made in relation to all the matters relevant to the application of section 25 in Ds case. As, by virtue of his age, D is now no longer within the scope of the Children Act, there would be absolutely no point in remitting the case for evidence to be heard, particularly as none of the parties contends that this is a section 25 case. The exercise in which we have engaged has, however, been sufficient to persuade us that section 25 is not intended to be widely interpreted, so as to catch all children whose care needs are being met in accommodation where there is a degree of restriction of their liberty, even amounting to a deprivation of liberty. There is much force in the argument that it is upon the accommodation itself that the spotlight should be turned, when determining whether particular accommodation is secure accommodation, rather than upon the attributes of the care of the child in question. This fits with the language used in section 25(1), when read as a whole. It is also consistent with the objective of ensuring that the section is not so widely drawn as to prejudice the local authoritys ability to offer children the care that they need, and it ought to make it more straightforward to apply than would be the case if the issue were dependent upon the features of a childs individual care regime, so that the child might be found to be in secure accommodation in all manner of settings. A restrained construction of the section is also justified by the fact that, far from being concerned with the routine sort of problems that might require a childs freedom to be curtailed, the section has a last resort quality about it. It is concerned with accommodation which has the features necessary to safeguard a child with a history of absconding who is likely to abscond from any other description of accommodation or to prevent injury where the child in question would be likely to injure himself or others if kept in any other description of accommodation. Of course, training the spotlight on the accommodation itself does not provide a complete answer to the question as to what falls within the definition of secure accommodation. Some secure accommodation will be readily recognisable from the fact that it is approved as such by the Secretary of State, but that is by no means a universal hallmark, as that approval is not needed for all types of secure accommodation. Moreover, given that it is contemplated that secure accommodation might be provided in places such as hospitals, it seems likely that there will not infrequently be more than one purpose of the child being in the accommodation, and there is much to commend Wall Js approach to such a situation, that is to count within the definition of secure accommodation designed for or having as its primary purpose the restriction of liberty. Equally, the section will have to be interpreted in such a way as to allow for situations where only a part of the premises is made over to restricting liberty. LADY ARDEN: I agree with the judgment of Lady Hale on the effect of article 5 of the European Convention on Human Rights (the Convention). She has held that parental consent to a childs living circumstances is not effective to prevent a child, who has mental disabilities and cannot give any relevant consent to those circumstances, from being deprived of their liberty for the purposes of article 5 if their living circumstances mean that they are not free and the restrictions on them go beyond those which are normal for a child of their age. In this case, the child, D, is over 16 years of age. I agree with Lady Hale (para 50) that it is unnecessary in this case to express any view on the question whether there would be a deprivation of liberty for the purposes of article 5 if a child who has not yet attained that age has their liberty restricted to an extent that is not normal for a child of their age. Likewise I express no view on the question of parental consent for medical treatment or other matters outside article 5. The key case on article 5 in this context is Nielsen v Denmark (1988) 11 EHRR 175, which Lady Hale analyses at paras 34 to 38 above. As Lady Hale explains, it is the normality of the parents control over the child, as compared with arrangements for children of a similar age, that is the key to understanding this difficult decision of the European Court of Human Rights (the Strasbourg court). In the present case, the position can simply be compared with the position of other children in the UK. It might in future be necessary to have regard to the practice in other contracting states to the Convention, but that does not arise in this case. I have one qualification. Article 5 is not a qualified right and there is no scope for holding that the denial of a persons liberty engages article 5 but does not amount to a violation because it serves a legitimate aim and is proportionate and necessary in a democratic society. Exceptionally there are situations where the Strasbourg court finds that in effect those tests were met but it can only do so by holding that there is no deprivation of liberty for article 5 purposes. Thus, in Austin v United Kingdom 35 EHRR 14, the complainants were demonstrators who had been kettled by the police, that is, kept against their will within a police cordon. The Strasbourg court held that there was no violation because the need for the police to maintain order in this situation meant the denial of liberty was not a deprivation of liberty for article 5 purposes. So, too, in Nielsen, the Strasbourg court had held that there was no deprivation of liberty for article 5 purposes. It follows that there will be cases where a person loses their liberty but the acid test in Cheshire West, as Lady Hale describes it, does not apply. That conclusion is shown by observing that Ds case is about living arrangements. It is not about a child, or anyone else, needing life saving emergency medical treatment. For the reasons which the Court of Appeal (McFarlane LJ, Sir Ross Cranston and myself) gave in R (Ferreira) v Inner South London Senior Coroner [2018] QB 487, the situation where a person is taken into (in that case) an intensive care unit for the purpose of life saving treatment and is unable to give their consent to their consequent loss of liberty, does not result in a deprivation of liberty for article 5 purposes so long as the loss of liberty is due to the need to provide care for them on an urgent basis because of their serious medical condition, is necessary and unavoidable, and results from circumstances beyond the states control (para 89). I pass on to section 25 of the Children Act 1989 and to the judgment of Lady Black. So far as section 25 is concerned, this was unfortunately dealt with only on written submissions. I have read the judgment of Lady Black, in which Lady Hale concurs, with admiration. I have read it as laying down a marker for the future. I have read it conscious of the depth of experience which Lady Black and Lady Hale bring to bear in the field of family law, and particularly the circumstances in those childrens cases which may be affected by a ruling on section 25. It is evident that there is a very serious issue here, but I do not express any final view until a case arises which raises this very question. I am far from disagreeing with them, but I would like to reach a final view against the facts of an actual case. I express no view on the other issues as to the common law in Lady Blacks judgment for the same reason. It follows that I would allow this appeal. LORD CARNWATH: (dissenting) (with whom Lord Lloyd Jones agrees) Introduction As Lady Hale says, this case is about the limits of parental responsibility in the case of a young person who has reached the age of 16, but does not have the mental capacity to make decisions for himself. This arises in the context of article 5 of the European Convention on Human Rights by which: 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. As she also explains (para 1), and as is common ground, the application of article 5 is to be tested by reference to three components: (a) the objective component of confinement in a particular restricted place for a not negligible length of time; (b) the subjective component of lack of valid consent; and (c) the attribution of responsibility to the State. This is the effect of Storck v Germany (2005) 43 EHRR 6 (Storck), followed by this court in Surrey County Council v P; Cheshire West and Chester Council v P [2014] UKSC 19; [2014] AC 896 (Cheshire West). It is further common ground that on the facts of this case, components (a) and (c) are satisfied. The area of debate is about component (b): whether on the facts of this case the exercise of parental responsibility could make up for the lack of consent by D himself. That it could do so while he was under the age of 16 was not in dispute in the courts below. That was supported by reference to the decision of the Strasbourg court in Nielsen v Denmark (1988) 11 EHRR 175 (see Lady Hale para 34). It is worth stating at the outset the reasons for this view, as stated by Keehan J, and adopted by Sir James Munby P giving the leading judgment in the Court of Appeal (para 108): The parents of this young man are making decisions, of which he is incapable, in the welfare best interests of their son. It is necessary for them to do so to protect him and to provide him with the help and support he needs. I acknowledge that D is not now cared for at home nor in a home setting. His regime of care and treatment was advised by his treating clinicians and supported by his parents. They wanted to secure the best treatment support and help for their son. They have done so. It has proved extremely beneficial for D who is now ready to move to a new residential home out of a hospital setting. What other loving and caring parent would have done otherwise? Those arrangements are and were made on the advice of the treating clinicians. All professionals involved in his life and in reviewing his care and treatment are agreed that these arrangements are overwhelmingly in Ds best interests. On the facts of this case, why on public policy or human rights grounds should these parents be denied the ability to secure the best medical treatment and care for their son? Why should the state interfere in these parents role to make informed decisions about their sons care and living arrangements? I can see no reasons or justifications for denying the parents that role or permitting the state to interfere in Ds life or that of his family. I accept the position might well be very different if the parents were acting contrary to medical advice or having consented to his placement at Hospital B, they simply abandoned him or took no interest or involvement in his life thereafter. The position could not be more different here. Ds parents have regular phone calls with him. They regularly visit him at the unit. Every weekend D has supported visits to the family home. He greatly enjoys spending time at home with his parents and his younger brother. In my judgment, on the facts of this case, it would be wholly disproportionate, and fly in the face of common sense, to rule that the decision of the parents to place D at Hospital B was not well within the zone of parental responsibility. (paras 58 64) The good sense of that appraisal has not, as I understand it, been challenged by any of the parties to this court. Nor is it suggested that, when D became 16, anything changed in practical terms, whether in respect of his own needs and best interests, or of his relationship with his parents or the public agencies involved. However, Keehan J was persuaded by the Official Solicitor that there was a fundamental change in the legal position so that the approval of the court was now required. The Court of Appeal disagreed. That view is challenged in this court by the Official Solicitor, with the support of the Equality and Human Rights Commissioner as first intervener. The Court of Appeals approach is defended by the Council as the statutory authority responsible for safeguarding Ds interests. They are supported by the Secretaries of State for Education and Justice. They have intervened as having policy responsibility respectively for the Mental Capacity Act 2005 (MCA 2005) and the Children Act 1989, and for the Court Service. They are concerned that the outcome of the appeal could have significant implications for a large number of 16 and 17 year olds, who are being held in care across a variety of settings, ranging from foster care placements to residential holiday schemes for disabled children. They also point out that the appeal takes place against the background of the Law Commissions review of the law of Mental Capacity and Deprivation of Liberty, and in particular the deprivation of liberty safeguards (DoLS) (Law Com No 372). As the Commission explained in its Consultation Paper (CP No 222, paras 2.39 40), that review was prompted by the massive and unanticipated increase in cases requiring to be dealt with under the DoLS arrangements (from 11,300 in 2013 4 to 113,300 in 2014 5), following the decision of this court in the Cheshire West case. Their review has been followed more recently by the consideration by Parliament of the Mental Capacity (Amendment) Bill (now the Mental Capacity (Amendment) Act 2019). That provides for the replacement of DoLS by a new scheme of safeguards (the Liberty Protection Safeguards) for those who lack capacity under the MCA and who are deprived of their liberty, which will extend to 16 and 17 year olds. The background to the 2019 Act was described in the Explanatory Notes: 6. In 2014 the decision of the Supreme Court in the case of Cheshire West gave a significantly wider interpretation of deprivation of liberty than had been previously applied in the health and social care context. This increased considerably the number of people treated as being deprived of liberty, and correspondingly increased the obligations on public authorities (primarily local authorities) in connection with authorising, and providing safeguards for, these extra deprivations of liberty. 7. Following Cheshire West, the Government asked the Law Commission to review this area of law. The Commissions final report, which included a draft Bill, called for the DoLS to be replaced as a matter of pressing urgency and set out a replacement scheme. The new scheme was intended to establish a proportionate and less bureaucratic means of authorising deprivation of liberty. The Law Commission noted that its remit had been limited to children of 16 or over (para 7.20). It also noted the complicating factor that in the Nielsen case the Strasbourg court had recognised the right of parents in certain cases to consent to what would otherwise be a deprivation of liberty for their children; but it also noted that Keehan J (in the present case, decided since the consultation paper) had limited that approach to children under 16 (para 7.22). When what became the 2019 Act was presented to Parliament it was limited to those over 18, but it was later extended to those over 16. That followed an amendment proposed in the House of Lords by (inter alios) Baroness Thornton. It is of interest that she referred to evidence of the Royal College of Psychiatrists which has pointed out that case law has established that the parents of children under 16 may give consent to what would otherwise constitute a deprivation of a childs liberty where the matter falls within the zone of parental responsibility, but it has been held that a parent cannot give equivalent consent for a 16 to 17 year old. It therefore argues that the Bill should be extended to 16 to 17 year olds to provide them with better safeguards, as they are not served well at present. (HL Committee Stage Day 1 Volume 792 Column 1832) It seems therefore that the fixing of the age threshold in the new Act at 16 was directly related to the then understanding of the scope of parental responsibility as reflected in the judgment of Keehan J in the present case. Parental responsibility There is no dispute about the importance of the principle of parental responsibility in the common law. As Sir James Munby P said in In re H B (Contact) [2015] EWCA Civ 389; [2015] 2 FCR 581, para 72: parental responsibility is more, much more than a mere lawyers concept or a principle of law. It is a fundamentally important reflection of the realities of the human condition, of the very essence of the relationship of parent and child. Parental responsibility exists outside and anterior to the law. Parental responsibility involves duties owed by the parent not just to the court. First and foremost, and even more importantly, parental responsibility involves duties owed by each parent to the child. Not surprisingly a corresponding principle is recognised under the European Convention on Human Rights. As the Strasbourg court said in Nielsen v Denmark (1988) 11 EHRR 175, family life in the Contracting States encompasses a broad range of parental rights and responsibilities in regard to care and custody of minor children. The care and upbringing of children normally and necessarily require that the parents or an only parent decide where the child must reside and also impose, or authorize others to impose, various restrictions on the childs liberty. Family life in this sense, and especially the rights of parents to exercise parental authority over their children, having due regard to their corresponding parental responsibilities, is recognized and protected by the Convention, in particular by article 8. Indeed the exercise of parental rights constitutes a fundamental element of family life The common law principle is given specific statutory recognition in section 3 of the Children Act 1989, which defines parental responsibility as encompassing all the rights, duties, powers, responsibilities and authority which by law a parent of a child has in relation to the child and his property. A child in this context means a person under the age of 18 (section 105(1)). Neither definition is in terms modified by anything in the MCA 2005 or the 2019 Act. The judgments below The judges conclusion that the legal position changed when D became 16 turned principally on his view of the change in the statutory framework applicable to such children. He said: 103. I am entirely persuaded that Parliament has on numerous occasions, , chosen to distinguish the legal status of those who have not attained the age of 16 years, those aged 16 and 17 and, finally, those who have attained their majority. 104. I am particularly persuaded by the fact that Parliament chose to include incapacitous 16 and 17 year olds within the remit of the Mental Capacity Act 2005. An incapacitous young person under the age of 16 years is specifically excluded from the provisions of the Act: see section 2(5) (subject to the exceptions referred to [above] ). The President disagreed. As to the correct approach to article 5, and in particular the effect of Nielsen, he extracted the following propositions from the judgments in Cheshire West of Lady Hale and Lord Neuberger: 105. In the premises, and whilst acknowledging that parents still have parental responsibility for their 16 and 17 year old children, I accept that the various international Conventions and statutory provisions referred to, the United Nations Convention on the Rights of the Child and the Human Rights Act 1998, recognise the need for a greater degree of respect for the autonomy of all young people but most especially for those who have attained the age of 16 and 17 years. Accordingly, I have come to the clear conclusion that however close the parents are to their child and however co operative they are with treating clinicians, the parent of a 16 or 17 year old young person may not consent to their confinement which, absent a valid consent, would amount to a deprivation of that young persons liberty. i) Nielsen is, fundamentally, a case about Storck component (b); or, to be more precise, about the proper ambit of Storck component (b) and the extent and limit of parental authority, which between them determine whether Storck component (c) arises for consideration. ii) Whatever its implications in relation to adults, a matter which is not before us and which is not free from difficulty, Nielsen is good authority in relation to children. iii) In accordance with Nielsen, there are circumstances in which the consent by a holder of parental authority in domestic terms, someone with parental responsibility will provide a valid consent for the purposes of Storck component (b) to something which is a confinement for the purposes of Storck component (a). Those circumstances, although extensive, are not unlimited. (para 37) This led him to a discussion of the scope of parental responsibility in the context of Storck component (b), which in his view was governed by domestic law: 50. For the purpose of applying the Nielsen principle one first has to identify what are the relevant rights of the holder of parental authority, and that, in my judgment, is plainly a matter to be determined by the relevant domestic law. Understanding of the issues arising in relation to ground (1) therefore requires consideration of our domestic law before one can turn to consider the application of article 5 and the Strasbourg jurisprudence (para 50) There followed a comprehensive review of the authorities culminating in the leading modern authority in Gillick v West Norfolk and Wisbech Area Health Authority [1986] AC 112. From an extended discussion of the speeches in Gillick (paras 74ff) he derived three propositions: (in very brief summary) first, that parental rights exist for the benefit of the child not the parent; secondly, that parental rights are to be exercised in the best interests of the children, and subject to the control of the court by reference to general community standards; thirdly, the rejection of the rule that the age of discretion was fixed and the substitution of what it has now become customary to refer to as the acquiring of Gillick capacity (para 79). He concluded his discussion of Gillick with this summary: What for convenience, and in accordance with settled practice, I shall refer to as Gillick capacity or Gillick competence is not determined by reference to the characteristic development trajectory of some hypothetical typical or normal child (whatever those expressions might be understood as meaning). Whether a particular child has Gillick capacity is determined by reference to the understanding and intelligence of that child The attainment of Gillick capacity is, and has always been, treated as being child specific. This has an important corollary. Given that there is no longer any magic in the age of 16, given the principle that Gillick capacity is child specific, the reality is that, in any particular context, one child may have Gillick capacity at the age of 15, while another may not have acquired Gillick capacity at the age of 16 and another may not have acquired Gillick capacity even by the time he or she reaches the age of 18. (paras 83 84) He thought that the judges approach was inconsistent with the Gillick principle, and unsupported by the statute: On this point, in my judgment, Keehan J was wrong in law. I say this for two reasons. First, because his approach does not give effect to the fundamental principle established by Gillick: namely that, in this context , the exercise of parental responsibility comes to an end not on the attaining of some fixed age but on attaining Gillick capacity Secondly, because none of the statutory provisions upon which he relied bears either expressly or by implication upon the matter in hand which, to emphasise the obvious, is to do with the ambit and extent of parental responsibility and nothing else. It was therefore, with great respect to Keehan J, beside the point for him to observe (para 103) that: Parliament has on numerous occasions chosen to distinguish the legal status of those who have not attained the age of 16 years, those aged 16 and 17 and, finally, those who have attained their majority. No doubt, but, I ask rhetorically, where does that take us? given the rejection by the House of Lords in Gillick of this courts reliance in the same case on what was essentially the same line of thought. (para 125) In relation to the 2005 Act itself he made two points First, that in general terms the 2005 Act does not make specific provision in relation to those aged 16 or 17. Secondly, and even more important for present purposes, that with only two (in the present context irrelevant) exceptions, the 2005 Act makes no statutory provision for the role of those exercising parental responsibility. Precisely so: the matter is left to the common law, in other words to the operation of the Gillick principles. (para 127, his emphasis) He concluded that in the present context, parental responsibility is, in principle, exercisable in relation to a 16 or 17 year old child who, for whatever reason, lacks Gillick capacity (para 128). The Official Solicitors case In this court the Official Solicitor submits that the President was wrong to treat Nielsen as relevant only to limb (b) of the Storck test, having regard to the later authorities reviewed in the judgment of Keehan J. To do justice to the argument, I cannot do better than quote from the written submissions advanced by Mr Setright QC and his team. He suggests that argument about the scope of limb (a) (confinement) is to some extent, a sterile one since it is the nuancing of the meaning of confinement that allows the balance to be struck between consideration of the rights of the parents (whether under the common law or article 8 ECHR) to exercise parental control over their children as an aspect of their caring responsibilities, and consideration of the rights of the child to be recognised as an independent legal actor, those latter rights gaining greater strength the closer the child gets to adulthood (and irrespective of their disability). In the remainder of his case he puts the main emphasis on developments in the law since Gillick, in particular the 2005 Act. Indeed he accepts that the Presidents approach was undoubtedly correct as a statement of the operation of Gillick competence at common law in 1985 , but argues that it has been overtaken by developments in the law, in particular, the passage of the 2005 Act, and also the trends in international human rights norms (Case para 65). He argues that these changes justify a change in the approach of the courts: If as the Official Solicitor submits section 5 MCA 2005 provides a complete framework for the delivery of care and treatment to those aged 16 above lacking capacity, then he submits that, by operation of conventional principles, it should be seen as ousting the place of the common law. As set out above, it has already been held that, where section 5 MCA 2005 applies, the common law defence of necessity has no application. [citing Comr of Police for the Metropolis v ZH [2013] 1 WLR 3021.] The Official Solicitor submits that the same analysis applies equally to the (common law) position in relation to those aged 16 and 17 with impaired capacity. Even if the court considers that the common law has not been ousted by the passage of the MCA 2005, the great virtue of the common law is that it can respond to changing circumstances. The Official Solicitor prays in aid by analogy the approach adopted by the Supreme Court in Montgomery v Lanarkshire Health Board [2015] AC 1430 In the circumstances, the Official Solicitor respectfully submits that good practice in the clinical and caring context now recognises very considerable limits upon the ability of parents to consent to beneficent, but either coercive or very serious, interventions in relation to their children The Official Solicitor would respectfully submit that this can, and should, be the point at which the Supreme Court expressly confirms as a matter of common law that the power of a parent to consent on behalf of a 16/17 year old with impaired capacity simply does not exist, as (1) there is no requirement for it to exist; and (2) it does not reflect contemporary understandings of the rights of children; (Case paras 65.3 4) This argument is resisted by the City Council. Discussion Parental authority and the MCA 2005 Without disrespect I can deal relatively shortly with the central argument in the Official Solicitors case, because I agree essentially with the reasons given by the President for rejecting the corresponding part of the judges reasoning. Like the President I see nothing in the 2005 Act which detracts from the common law principle or from section 3 of the 1989 Act. There is a presumption that Parliament does not change the common law by implication. Certainly in respect of a concept as basic and sensitive as parental responsibility one would expect clear words to indicate the nature of the change and its practical consequences. Not only is there nothing in the 2005 Act itself to indicate such a change, but, as the Secretary of State has shown (without challenge), there is nothing in the background to the Act to indicate such an intention. On the contrary it was made clear by the Law Commission and in Ministerial statements to Parliament, that there would be an overlap between the proposed regime and the 1989 Act. That position has been reinforced by the lack of anything in the 2019 Act to undermine the common law position, as reflected in the 1989 Act. In the absence of any specific legislative change I do not see how unincorporated international instruments can add anything to the argument. I am also satisfied that this is not an area in which it would be appropriate for this court to accept the invitation to develop the law to fill a supposed gap left by the legislation, or otherwise to reflect contemporary understandings of the rights of children, as the Official Solicitor invites us to do. There is no parallel with the Montgomery case (Montgomery v Lanarkshire Health Board [2015] 1432) where a seven justice court had been convened specifically to consider whether to depart from the controversial and much criticised reasoning of the majority in Sidaway v Board of Governors of the Bethlem Royal Hospital and the Maudsley Hospital [1985] AC 871. Not only does the Secretary of State, who is responsible for legislative policy in this area, resist such a development, but the treatment of mentally incapacitated 16 or 17 year olds has been subject of Parliamentary scrutiny in connection with legislation passing through Parliament during the course of this appeal. In addition the experience of the Cheshire West decision should lead us to extreme caution in this difficult and sensitive area of the law. Nielsen On the question whether Nielsen was a case about Storck limb (a) or (b), I accept that, as the case was decided before the identification of the Storck components, it is a little artificial to attempt to fit the reasoning of the majority directly into that scheme. It is enough to say that, on the authorities as they stood before him, I see no error in Sir James Munby Ps approach. He referred to two passages in Cheshire West to support his view. The first (para 26) was from Lady Hale: I start with Baroness Hale of Richmond DPSC, who said this about Nielsen v Denmark (1988) 11 EHRR 175 (para 30): The seven dissenting judges considered that placing a 12 year old boy who was not mentally ill in a psychiatric ward for several months against his will was indeed a deprivation of liberty. It would appear, therefore, that the case turns on the proper limits of parental authority in relation to a child. As already mentioned (para 4 above) there is no equivalent in English law to parental authority over a mentally incapacitated adult. She added (para 41): Although Nielsen 11 EHRR 175 has not been departed from, it is to be regarded as a case of substituted consent, and thus not fulfilling component (b). The second (para 35) was from Lord Neuberger, who said of Nielsen (at para 73): The case involved a child, and was decided on the basis that his mother was exercising her article 8 rights responsibly, in good faith and on the basis of medical advice: see para 71 There was some discussion before us whether the second passage in the quotation from Lady Hale was an expression of her own opinion, or simply a recitation of counsels submission. Either way I can see nothing in the remainder of her judgment to indicate disagreement with that proposition, which also seems to me consistent with the first passage, and with the passage quoted from Lord Neubergers judgment. It also seems to me the more natural interpretation. If Storck component (a) is directed to the objective quality of confinement, it is difficult to see how that quality is affected by whether or not it has been sanctioned by the parent. It is true that the attributes of confinement may vary in relation to children of different ages, as explained by Lord Kerr in Cheshire West paras 77 79 (a passage quoted by the Lady Hale: para 38). However, I am not persuaded that the clarity of the concept would be improved by further nuancing as the Official Solicitor suggests. In this case, as I have said, it is not in dispute that component (a) is satisfied. Lady Hales judgment I need to deal separately with Lady Hales judgment in the present appeal. She takes a rather different approach from that advocated by any of the parties before us, and perhaps for that reason finds it unnecessary to address in any detail the reasoning of the Court of Appeal. She deals relatively briefly with the majority judgment in Nielsen, which she treats as turning on the comparative normality of the restrictions imposed on the freedom of a 12 year old boy (para 38). Later in the judgment (para 42), she discounts suggestions in Cheshire West that Nielsen was a case of substituted consent, because it had suited counsel so to argue. Instead she relies on later Strasbourg authorities as showing that limb (b) (that is, lack of valid consent) can be satisfied despite the consent of a person with the legal right to make decisions on behalf of the person concerned, the only exceptions being where the evidence showed that the person concerned was willing to stay where he or she was and was capable of expressing that view. She concludes accordingly that parental consent cannot substitute for the subjective element of limb (b) of Storck. Later in her judgment (para 48) she reinforces that view by equating deprivation of liberty with other fundamental human rights such as the right to life or freedom from torture. She argues that it would be a startling proposition that it lies within the scope of parental responsibility to authorise violation of such rights. I say at once, with respect, that I am not persuaded that such comparisons are fair or helpful. Ds parents were not authorising the state to commit torture or anything comparable to it. They were doing what they could, and what any conscientious parent would do, to advance his best interests by authorising the treatment on which all the authorities were agreed. That this involved a degree of confinement was an incidental but necessary part of that treatment, and no more than that. On the Presidents view, with which I agree, they were not authorising a violation of his rights, but rather exercising their parental responsibility in a way which ensured that there was no such violation. More importantly, I do not accept that the majority reasoning in Nielsen, nor indeed what was said about it in Cheshire West, can simply be brushed aside. It was not just about the relative normality of the confinement (although some might share the minoritys doubts about that description of the forcible confinement of a 12 year old child for five months in a locked psychiatric ward). As has been seen (para 147 above), in Cheshire West Lady Hale herself described it as turning, not on the normality of the arrangements, but on the proper limits of parental authority in relation to a child. More specifically Lord Neuberger said that it was decided on the basis that his mother was exercising her article 8 rights responsibly, in good faith and on the basis of medical advice . Sir James Eadie QC, on behalf of the Secretaries of State, has helpfully analysed the majority judgment in Nielsen in terms which I would in substance endorse. He accepts that, not surprisingly in a case decided before Storck, there may be some overlap between the categories. But, in agreement with the President, he sees it as primarily about limb (b). He points to the emphasis given by the majority at the outset to family life under the Convention, encompassing the broad range of parental rights and responsibilities in regard to the care and custody of minor children (para 61). He notes the following points from the judgment (paras 68 72): i) The mothers decision to have the applicant hospitalized was a lawful exercise of parental powers under Danish law and was also well founded. The Danish courts found that the hospitalization decision fell within the mothers competence as holder of parental rights. ii) The mother had taken her decision on the basis of medical advice from her family doctor and a professor, and had as her objective the protection of the applicants health. This was a proper purpose for the exercise of parental rights. iii) The mothers decision was approved by the relevant social services authorities. iv) There was no suggestion that the treatment given at the hospital and the conditions under which it was administered were inappropriate in the circumstances. The applicant was in need of medical treatment for his condition and the treatment administered to him was curative. v) There was no evidence of bad faith on the part of the mother. Hospitalization was decided upon by her in accordance with expert medical advice. It must be possible for a child to be admitted to hospital at the request of the holder of parental rights, a case which was not covered by para 1 of article 5. That the court based its reasoning principally on the exercise of parental responsibility seems to me put beyond doubt by its concluding comment: the hospitalization of the applicant did not amount to a deprivation of liberty within the meaning of article 5, but was a responsible exercise by his mother of her custodial rights in the interests of the child. Accordingly, article 5 is not applicable in the case. (para 73) In context, that comment is clearly designed to take the reader back to where this discussion began (para 61), that is to the broad range of parental rights and responsibilities recognised by the Convention under the concept of family life. The Secretaries of State further submits (without contradiction) that the Strasbourg court has not departed from Nielsen in the three decades since the judgment was delivered. That submission is confirmed by the exhaustive review by Keehan J of the Strasbourg authorities relied on by the Official Solicitor before him (paras 44 61). The case has been consistently explained by the court itself as a case about the responsible exercise by the applicants mother of her custodial rights: see Koniarski v United Kingdom (Application No 33670/96) 30 EHRR CD 139 and DG v Ireland (Application No 39474/98) (2002) 35 EHRR 33. (Notably, the fact that both those cases related to 17 year olds was not cited as a ground of distinction). In HL v United Kingdom (2004) 40 EHRR 761, it was cited with approval, but distinguished on the basis that no one had legal authority to act on the adult HLs behalf in the same way as Jon Nielsens mother (para 93). It was also cited with approval by the Grand Chamber in Stanev v Bulgaria (2012) 55 EHRR 696, where it was explained as the exercise of exclusive custodial rights over a child who was not capable of expressing a valid opinion (para 122). Keehan J (para 42) noted some doubts about the case expressed by Lord Walker in Austin v Comr of Police [2009] 1 AC 564, para 42. But no such doubts appear to have found their way into the Strasbourg jurisprudence. It was and remains the leading Grand Chamber decision on the scope of such parental rights and responsibilities in the context of article 5. It is unnecessary in my view to decide whether the case is to be regarded as a case of substituted consent so as to bring it directly with Storck limb (b) (as was hinted at in Stanev v Bulgaria [2012] 55 EHRR 22, para 130), or whether it is simply an exception to the Storck categorisation, justifiable in its own terms by reference to the scope of family life under article 8. For the present purposes, it provides amply sufficient support in Strasbourg case law for the Presidents reliance on equivalent domestic law principles to determine the present case. Lady Blacks judgment Lady Black, while agreeing with Lady Hale, has introduced a new line of reasoning based on a review of the common law authorities preceding Gillick. This leads her to reject the Presidents view of the relevance of that case to decisions relating to detention. Instead she reads those authorities as showing that in this context reaching the age of discretion was a matter of attaining the requisite chronological age, and not a matter of mental capacity (para 56, 68). As I understand her judgment (paras 71 72), she would regard 16 as the appropriate age in the modern law, taking account inter alia of the recognition by the legislature in successive Acts of that age as a pivotal turning point, most recently in the 2019 Act. This line of reasoning was not subject to detailed argument at the hearing. For the moment I remain unconvinced that the earlier cases can be relied on to limit the scope of the judgments in Gillick in the way she proposes, or that the Presidents conclusions are undermined. However, I acknowledge that this approach, if correct, may have advantages for the certainty and coherence of the law, particularly if taken with another important point which emerges from her review of the earlier cases. That is the willingness of the courts since the 19th century to take guidance from the legislature as to where to draw the lines in relation to the limits of parental responsibilities (see para 60, citing Cockburn CJ in R v Howes (1860) 3 El & El 332). In the present case there is the added consideration that, as noted above (para 130), the exclusion of those under 16 from the new legislative scheme appears at least in part to be a reflection of the legislatures understanding of the law following Keehan Js judgment, which to that extent may be seen as having the implicit endorsement of Parliament. I note with some concern that Lady Hale (para 50) has raised a question as to the logic of the differential treatment of those under 16, at least in the context of article 5 taken on its own. That does not reflect any issue between the parties. Keehan Js application of parental responsibility to those under 16 has not been questioned by any of the parties in the Court of Appeal or in this court. Nor does Lady Hale, as I understand it, suggest that there is anything in the Strasbourg law as it stands which invalidates that aspect of Keehan Js judgment. For the time being his reasoning remains the law, and as such appears to fit well with the new legislative scheme. I have nothing to add to what Lady Black says in respect of section 25 of the Children Act 1989, with which I agree. Conclusion For the reasons stated earlier in this judgment, in substantial agreement with the reasoning of the Court of Appeal, I would have dismissed the appeal.
UK-Abs
The issue in this appeal is whether it is within the scope of parental responsibility to consent to living arrangements for a 16 or 17 year old child which would otherwise amount to a deprivation of liberty within the meaning of article 5 of the European Convention of Human Rights (ECHR), in particular where the child lacks the mental capacity to make the decision for himself. D was born in 1999. He was diagnosed with attention deficit hyperactivity disorder, Aspergers syndrome and Tourettes syndrome, and has a mild learning disability. When he was 14 he was admitted to a hospital providing mental health services, for assessment and treatment. He lived in the hospital grounds and attended a school which was integral to the unit. The external door was locked and D was accompanied whenever he left the site. The hospital trust applied to the High Court for a declaration that it was lawful for the trust to deprive D of his liberty in this way. The judge, Mr Justice Keehan, held that D was so deprived but that it was a proper exercise of parental responsibility to consent to his constant supervision and control while he was under 16. By then, with his parents agreement, and with Birmingham City Council (the Council) accommodating him under s 20 Children Act 1989, D had been discharged from hospital to a residential placement, where he was similarly under constant supervision and not allowed to leave the premises except for a planned activity. On his 16th birthday proceedings were issued in the Court of Protection for a declaration that the consent of Ds parents meant that he was not deprived of his liberty at the placement. Keehan J held that his parents could no longer consent to what would otherwise be a deprivation of liberty once D had reached 16, and that the provisions of the Mental Capacity Act 2005 (MCA) now applied. He authorised the placement, and a subsequent transfer to another similar placement, as being in Ds best interests. When D reached the age of 18 his deprivation of liberty could be authorised under the deprivation of liberty safeguards in the MCA. The Councils appeal to the Court of Appeal was allowed, on the ground that parents could consent to what would otherwise be a deprivation of liberty of a 16 or 17 year old child who lacked the capacity to decide for himself, and the MCA had no bearing on this. The Supreme Court by a majority of 3 to 2 (Lord Carnwath and Lord Lloyd Jones dissenting) allows the appeal. Lady Hale gives the main judgment. Lady Black gives an additional judgment, dealing also with the issue of secure accommodation which arose during the hearing. Lady Arden agrees with Lady Hale on the effect of article 5 in a further judgment. Lord Lloyd Jones agrees with Lord Carnwaths dissenting judgment. The case turns on the inter relationship between the concept of parental responsibility, as defined by the Children Act 1989, the common law and other relevant statutory provisions, and the obligation of the State to protect the human rights of children under the ECHR [19]. Historically, parental rights under domestic law were never absolute and became increasingly subject to the overriding consideration of the childs own welfare. The power of physical control was a dwindling right as the child acquired sufficient understanding and intelligence to make his or her own decisions the age of discretion which could be before the age of majority (known as Gillick competence after the case of Gillick v West Norfolk and Wisbech AHA [1986] 1 AC 112) [21 23]. Gillick is not directly relevant to the question of whether parental authority endures beyond the age of discretion, if the child lacks capacity to make decisions [24, 69 72]. The MCA does not override other common law and statutory provisions relating to 16 and 17 year old children, but it does indicate an appreciation of the different needs of this age group [27, 71]. Lady Black would hold that as a matter of common law, parental responsibility for a child of 16 or 17 does not extend to authorising a confinement of the child in circumstances amounting to a deprivation of liberty [88 90]. Lady Hale prefers not to express a concluded view on this question but agrees that it reinforces the conclusion reached under the ECHR [28]. Article 5 ECHR protects children who lack the capacity to make decisions for themselves from being arbitrarily deprived of their liberty. Clearly the degree of supervision to which D was subject at the placements was not normal for a child of 16 or 17 [39]. Ds living arrangements had to be compared with those of children of the same age without disabilities, and the fact that they were made in his best interests did not mean he was not deprived of his liberty [41]. Parental consent could not substitute for the subjective requirement under article 5 for valid consent to the deprivation [42]. The procedural requirements of article 5 applied (and had in fact been complied with by the court authorisations) [44]. Human rights are about the relationship between private persons and the state, and Ds deprivation of liberty in the placements was attributable to the state [46]. There is no scope for the operation of parental responsibility to authorise what would otherwise be a violation of a fundamental human right of a child [49]. The question was raised in the hearing of whether the provisions of s 25 Children Act 1989, regarding the placing of children in accommodation provided for the purpose of restricting liberty, apply to Ds living arrangements. Lady Black addresses this issue in her judgment, concluding that a narrow construction of s 25 is needed to ensure local authorities can meet the welfare needs and best interests of children who for good reasons need to be kept in confined circumstances, but that s 25 does not play a direct role in Ds case [100, 113 115]. Lord Carnwath, dissenting, would have agreed with the Court of Appeal that nothing in the MCA detracts from the common law principle of parental responsibility in respect of 16 and 17 year olds [145]. He further considers that the case law of the European Court of Human Rights on article 5 recognises that the proper exercise of parental responsibility can include consent to confinement of a child such as D [155].
This appeal is concerned with the entitlement of a taxpayer to deduct input VAT and claim repayment of surplus input VAT. It concerns the interpretation of articles 167 and 168(1) of Council Directive (EC) 2006/112/EC of 28 November 2006 on the common system of value added tax (the Principal VAT Directive or the PVD) and the case law of the Court of Justice of the European Union (CJEU) relating to those articles. In short, the question is whether a taxpayer can deduct as input tax the VAT which it has incurred in purchasing entitlements to an EU farm subsidy, the Single Farm Payment (SFP). The taxpayer has used those entitlements to annual subsidies over several years and intends to use money resulting from the receipt of those subsidies to fund its current and future business activities, which currently involve only taxable supplies. The factual background to this appeal involves an interesting business model. Frank A Smart & Son Ltd (FASL) is a Scottish company which carries on a farming business in Aberdeenshire. FASL is wholly owned by Mr Frank Smart, who is its sole director. Mr Smart and his wife are the partners in a partnership which owns Tolmauds Farm, a farm of about 200 hectares which the partnership leases to FASL for a rent of 30,000 per year. FASL produces beef cattle and certain crops at Tolmauds Farm. FASLs whole output from its business was and is taxable under the VAT regime. FASL received SFPs from the Scottish Government. SFPs were agricultural subsidies which between 2005 and 2014 were paid to farmers who had eligible land at their disposal on 15 May of each year and who met the requirements of ensuring plant and animal health and maintaining the land in question in Good Agricultural and Environmental Condition (GAEC). The farmer did not have to cultivate the land or stock it with animals in order to meet the GAEC requirement. When the scheme was initiated in 2005, farmers in the United Kingdom were allocated initial units of entitlement to single farm payments (SFPEs) for no consideration. The SFPEs were tradeable and a market in them developed over time. FASL took advantage of the market in SFPE units to accumulate a fund for the development of its business. With the assistance of bank funding, it spent about 7.7m between 2007 and 2012 on purchasing 34,477 SFPE units in addition to its initial allocation of 194.98 units for Tolmauds Farm. In this period FASL paid VAT on the SFPE units which it purchased and it has sought to deduct that VAT as input tax. In order to receive the SFPs to which the purchased SFPE units entitled it, FASL leased a further 35,150 hectares of land under seasonal lets. FASL did not cultivate or stock this land. The leases were typically qualified by an agreement, entered into after the lease, which allowed the landlord to stock the land or cultivate it himself, provided that the ground was kept in GAEC. This was done to preserve FASLs entitlement to SFPs. The rent payable for the seasonal lets was generally about 1 per acre but could be up to 10 per acre. The result of this business model was that between 2010 and 2013 (in each case FASLs financial year ending on 30 September) FASLs income from subsidies, which were principally SFPs, dwarfed its income from cattle sales from Tolmauds Farm. FASL received SFPs of 1,166,290 in 2010, 1,761,205 in 2011, 2,488,949 in 2012 and 3,285,650 in 2013. The parties presented the court with agreed figures derived from the profit and loss accounts of FASL in those financial years: Cattle Sales Cattle subsidies (incl SFPs) Costs of Sales SFP Amortisation Net Profits 2010 99,284 1,202,908 2011 48,601 1,795,589 2012 2013 97,530 280,997 2,515,057 3,312,597 (53,925) (1,141,159) (38,666) (111,885) (1,766,118) (1,835,693) (275,389) (917,840) (37,079) 534,910 2,499,085 (41,812) During the years 2010 to 2013, Mr Frank Smart was paid no directors salary or bonus but FASL paid him dividends of 20,000 in each of 2010 and 2012 and of 15,000 in each of 2011 and 2013. None of the SFPs have been withdrawn from FASLs bank account for Mr Smarts personal use or for his benefit. The First tier Tribunal (FTT), to whom FASL appealed against HMRCs refusal to allow it to deduct VAT of 1,054,852.28 in its quarterly VAT returns between December 2008 and June 2012, made important findings of fact (in para 38 of its decision) which have a bearing on the outcome of this appeal. The FTT found that when it purchased the SFPE units, FASL intended to apply the income which it received from the SFPs to pay off its overdraft and to develop its business operations. The SFPs were accumulated in FASLs bank account and have been used to pay off its overdraft. Tolmauds Farm was worked during the relevant period by Mr Smart and one of his sons, Roderick, on a full time basis and another son assisted for part of that period. FASL had no other employees. During the relevant period FASL did not increase its stock numbers on the farm significantly. But FASL had been contemplating three principal developments of its business. First, from about 2011, FASL was considering establishing a windfarm. It spent over 119,000 on preliminary investigations, including technical information and costings, on investigating community responses and on a planning application and enquiries. Secondly, other proposed developments have included the construction of further farm buildings, including cattle courts and a Dutch barn. FASL has undertaken site preparation works for an additional cattle court and has made the needed planning applications. Thirdly, FASL has been considering the purchase of neighbouring farms, which were expected to come on to the market for sale. Based on those findings of fact, the FTT concluded (para 39) that the acquisition of the SFPE units was a funding exercise which related to FASLs business overheads in its farming enterprise. FASL had raised finance for its future economic activities as a whole. There was a direct and immediate link between the expenditure and FASLs future taxable supplies. The FTT stated the conclusion based on its findings of primary fact that the funding opportunity afforded by the purchase of the SFPE units did not form a separate business activity of FASL but was a wholly integrated feature of the farming enterprise and not a separate enterprise (para 42). The FTT therefore allowed FASLs appeal. HMRC appealed to the Upper Tribunal (Lord Tyre), which confirmed the FTTs findings of fact, which were by then uncontroversial, and refused the appeal, finding that the FTT had not erred in law. HMRC then appealed with the permission of the Upper Tribunal to the Inner House of the Court of Session. An Extra Division of the Inner House (Lord Menzies, Lord Brodie and Lord Drummond Young) in a judgment delivered by Lord Drummond Young dated 8 December 2017 ([2017] CSIH 77) dismissed HMRCs appeal. HMRC now appeals to this court with its permission. The VAT system Before setting out HMRCs challenge it may be useful to discuss the basic structure of the VAT system so far as relevant. In order to understand the case law, which I will discuss, it is necessary also to set out relevant provisions of the PVD as they show the central importance to the question of deductibility, which arises in this appeal, of the connection between input expenditure and the economic activity which a taxable person is carrying on or intends to carry on. Article 2(1) of the PVD imposes VAT on: the supply of goods for consideration within the territory (a) of a member state by a taxable person acting as such (c) the supply of services for consideration within the territory of a member state by a taxable person acting as such; Article 9(1) of the PVD defines taxable person and economic activity: 1. Taxable person shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity. Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as economic activity. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity. In the provision of goods or services for consideration there is often a chain of production or supply from raw material to finished product. At its simplest, VAT is a tax on the value added by a supplier of goods to its purchases of raw materials or goods upon sale of the product. The same principle extends to the supply of services. Under the common system of VAT in the United Kingdom and throughout the European Union, the taxation of the value so added by the particular supplier is achieved by calculating the tax due on the output of the supplier at the specified rate (output tax) and deducting from that sum the VAT which that supplier has paid on the components of that output or on general overheads of the business which are cost components of its taxable outputs (input tax). The principle is articulated in article 1(2) of the PVD which provides: The principle of the common system of VAT entails the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, however many transactions take place in the production and distribution process before the stage at which the tax is charged. On each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components. The mechanism, by which the deductions mentioned in article 1(2) are effected, is set out, so far as relevant, in articles 167 and 168, which provide: Article 167 A right of deduction shall arise at the time the deductible tax becomes chargeable. Article 168 In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the member state in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay: (a) the VAT due or paid in that member state in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person If a taxable person uses goods and services, on which it has paid VAT, both for its own transactions in respect of which VAT is deductible and for its own transactions in respect of which VAT is not deductible, article 173 provides that only the proportion of the VAT that is attributable to the former transactions may be deducted. The PVD and its predecessor directives have been implemented in the United Kingdom by the Value Added Tax Act 1994, which in section 1(1) charges VAT on the supply of goods and services in the United Kingdom. Section 4 provides: (1) 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. (2) A taxable supply is a supply of goods or services in the United Kingdom other than an exempt supply. Sections 24 to 26 implement the regime for deduction of input tax which is now set out in the PVD. Section 24 provides: (1) Subject to the following provisions of this section, input tax, in relation to a taxable person, means the following tax, that is to say (a) VAT on the supply to him of any goods or services; being goods or services used or to be used for the purpose of any business carried on or to be carried on by him. (2) output tax, in relation to a taxable person, means VAT on supplies which he makes (5) Where goods or services supplied to a taxable person are used or to be used partly for the purposes of a business carried on or to be carried on by him and partly for other purposes (a) VAT on supplies shall be apportioned so that only so much as is referable to the taxable persons business purposes is counted as that persons input tax Section 25(2) empowers the taxable person to take credit at the end of each prescribed accounting period for the input tax which is allowable under section 26 and to deduct that amount from any output tax due from it. The prescribed accounting periods are quarterly. Section 26 provides: (1) The amount of input tax on which a taxable person is entitled to credit at the end of any period shall be so much of the input tax for that period (that is input tax on supplies, acquisitions and importations in the period) as is allowable by or under regulations as being attributable to supplies within subsection (2) below. (2) The supplies within this subsection are the following supplies made by the taxable person in the course or furtherance of his business taxable supplies (a) Accordingly, the VAT legislation provides for the taxable person to make taxable supplies, the cost components of which may give rise to input tax which is deductible from the output tax due on those taxable supplies. The taxable person may also make exempt supplies, defined in section 31 and Schedule 9, which do not give rise to a right to deduct input tax. Further, the taxable person may engage in activities which are not economic activities under article 9 of the PVD and are outside the scope of the VAT regime. VAT incurred by the taxable person on supplies which are used as components of such non economic activities are not deductible. With that introduction, I turn to HMRCs challenge. HMRCs challenge HMRC submit that the Inner House erred in law because, on a proper analysis, FASL acquired the SFPE units to generate the receipt of SFPs, which was a form of investment income outside the scope of VAT. The receipt of the SFPs was a non economic activity. Input tax incurred in acquiring the SFPE units was not recoverable because there was a direct and immediate link between the expenditure on those units and the receipt of the SFPs. There was no direct and immediate link between the acquisition of the SFPE units and a taxable output transaction by FASL. Secondly, HMRC submit that the Inner House erred in treating the VAT incurred on the purchase of the SFPE units as deductible on the basis that it was a general overhead of FASLs business. This is again because the expenditure was directly and immediately related to the receipt of the SFPs, which was outside the scope of the VAT system. Thirdly, HMRC submit that the FTT, the Upper Tribunal and the Inner House each erred in taking into account an irrelevant consideration, namely the evidence of Mr Smarts intention, as the director of FASL, to use the funds generated by the receipt of the SFPs to fund the development of FASLs business which would involve the making of taxable supplies in future. Mr Kieron Beal QC, who presented the case for HMRC skilfully, makes two central submissions. First, he relies on the judgment of the CJEU in BLP Group plc v Customs and Excise Comrs (Case C 4/94) [1996] 1 WLR 174 (BLP) in support of the proposition that VAT which a taxable person has paid on costs incurred directly and immediately in relation to an exempt supply cannot be reclaimed as input VAT even if the outcome of the expenditure is to produce funds which are used or will be used to subsidise the taxable persons downstream taxable activities. Secondly, he submits that there is no reason in fact or law for reaching a different conclusion in relation to costs incurred directly and immediately in relation to a transaction which is outside the scope of VAT. If there is any doubt on this matter, HMRC invite the court to refer a question or questions to the CJEU under article 267 of the Treaty on the Functioning of the European Union (the TFEU). FASLs response Mr David Small, advocate, in a succinct and skilful submission, founds on the principle of neutrality: the VAT system gives fully taxable traders, in other words people, such as FASL, who make only taxable supplies, a right to recover all input tax incurred in raising finance for their business so long as (i) the finance which they raise is spent on funding the business which goes on to make further taxable supplies and (ii) the financing exercise itself remains outside the scope of VAT because it does not involve the taxable person in making any taxable or exempt supplies. FASL does not dispute that if it were in the future to use part of the funds, which it has obtained through the receipt of SFPs and kept in its bank account, on downstream activities which were outside the scope of VAT, that use would restrict the input tax to which it had been entitled and might give rise to an obligation to repay a proportionate part of any deduction which it had made or any repayment of VAT which it had received from HMRC. Disagreeing with HMRC, FASL submits that the case law of the CJEU is clear and supports its position. Discussion (i) Overview I am persuaded that Mr Small is correct in his submission that FASL is entitled to deduct input VAT incurred in its acquisition of the SFPE units and that the tribunals and the Inner House did not err in law in so concluding. Because the answer to the question lies in an analysis of the jurisprudence of the CJEU in relevant cases, and because HMRC submit that the matter is not acte clair, it is necessary to examine the relevant cases with care. Before turning to the cases about which there is a dispute, it is necessary to set the scene by considering Mohr v Finanzamt Bad Segeberg (Case C 215/94) [1996] ECR I 959; [1996] STC 328, in which the CJEU held that an undertaking by a farmer to discontinue milk production, for which he received compensation, did not constitute a supply of services by him to the EC institutions or the competent national authorities with the result that the compensation was not subject to VAT. The CJEU in its judgment (paras 19 23) observed that VAT was a tax on consumption, and that the authorities on payment of compensation obtained no goods or services for their own use from the farmer but acted in the common interest of promoting the proper functioning of the Communitys milk market. It is not contested in this appeal that the sales on the market of the SFPE units to FASL were transactions which fell to be treated as taxable supplies. It is also not contested that a farmers actions to qualify himself to receive SFPs did not amount to the provision of a service to the relevant authorities and that the receipt of SFPs was outside the scope of VAT. The central question in the appeal therefore is whether the receipt of the SFPs, which were transactions outside the scope of VAT, prevented FASL from deducting the VAT which it has paid on the purchase of the SFPE units. (ii) The disputed case law In BLP a management holding company sold shares in a subsidiary company and sought to recover as input tax the VAT which it had paid on invoices for professional services connected to the sale. The share sale was an exempt transaction. But BLP argued that it was entitled to deduct the VAT as input tax because the purpose of the sale was to raise funds to pay off debts which had arisen as a result of its taxable transactions. The legal question turned on the interpretation of the predecessors of articles 1(2), 168 and 173 of the PVD, namely article 2(2) of EC Council Directive 67/227 (the First Directive) and article 17(2) and (5) of the EC Council Directive 77/388 (the Sixth Directive) and in particular the words goods and services are used for the purposes of his taxable transactions in article 17(2), which remain in article 168 of the PVD (para 15 above). The CJEU held in para 19 of its judgment: The use [in article 17(5)] of the words for transactions shows that to give the right to deduct under [article 17(2)], the goods or services in question must have a direct and immediate link with the taxable transactions, and that the ultimate aim pursued by the taxable person is irrelevant in that respect. The CJEU went on to point out that the Sixth Directive provided a right to deduct VAT on goods and services used for exempt transactions only by way of exception. It recognised (para 25) that if BLP had taken out a bank loan, instead of selling shares, it would have been able to deduct VAT on accountants professional services required for that purpose because the costs of those services would form part of the companys overheads and hence of the cost components of its products. Thus it held (in para 28): article 2 of the First Directive and article 17 of the Sixth Directive are to be interpreted as meaning that, except in the cases expressly provided for by those Directives, where a taxable person supplies services to another taxable person who uses them for an exempt transaction, the latter person is not entitled to deduct the input VAT paid, even if the ultimate purpose of the transaction is the carrying out of a taxable transaction. It is clear that this ruling in terms relates only to the use of services on exempt transactions. But as HMRC set great store by this case and submit that its reasoning extends to services used on a form of fund raising which is outside the scope of VAT, it is necessary also to cite para 24 of the CJEUs judgment in BLP, which suggests that policy considerations might point to a wider exclusion of the right to deduct: Moreover, if BLPs interpretation were accepted, the authorities, when confronted with supplies which, as in the present case, are not objectively linked to taxable transactions, would have to carry out inquiries to determine the intention of the taxable person. Such an obligation would be contrary to the VAT systems objectives of ensuring certainty and facilitating application of the tax by having regard, save in exceptional cases, to the objective character of the transaction in question. In BLP, the objective character of the transactions was that the services were used for an exempt transaction, namely the sale of shares in a subsidiary by a holding management company. When addressing the subsequent case law of the CJEU I will have to consider how, when a taxable person legitimately claims that costs of services are part of its overheads, the tax authorities are to ascertain that those costs are eventually cost components of its products or activities in taxable transactions. In Midland Bank plc v Customs and Excise Comrs (Case C 98/98) [2000] 1 WLR 2080, the bank was the representative member of a group of companies, one of which, Samuel Montagu & Co Ltd, provided taxable services to one of its clients in relation to a proposed corporate takeover and engaged a firm of solicitors to provide legal services in that connection. To simplify matters I will present Samuel Montagu & Co Ltd as the bank because the group was treated as a single person for the purposes of VAT. In a dispute in relation to the proposed takeover, the bank was sued for damages for negligence and the bank engaged the same firm of solicitors to represent it in the legal proceedings. The bank then sought to deduct as input tax the whole of the VAT which it paid in respect of its legal fees on the ground that it was to be attributed to its taxable supplies to its client in the takeover. The Customs and Excise Commissioners (CEC) argued that the VAT incurred on the legal fees relating to the claim for damages was attributable to the banks business generally and, as the bank made both taxable and exempt supplies, fell to be apportioned in accordance with article 17(5) of the Sixth Directive (now article 173 of the PVD). The dispute gave rise to questions (i) whether there needed to be a direct and immediate link between a particular input transaction and particular output transactions in order to entitle the taxable person to deduct VAT as input tax and (ii) if so, what was the nature of that link. In relation to the first question the CJEU applied BLP but (in paras 22 and 23) confirmed, as an exception to the rule in BLP, that: entitlement to deduct, once it has arisen, is retained even if the economic activity envisaged does not give rise to taxed transactions or the taxable person has been unable to use the goods or services which gave rise to the deduction in the context of taxable transactions by reason of circumstances beyond his control. In support of that exception it cited Intercommunale voor Zeewaterontzilting (INZO) v Belgian State (Case C 110/94) [1996] ECR I 857, paras 20 and 21 and Belgian State v Ghent Coal Terminal NV (Case C 37/95) [1998] ECR I 1, para 24. It held (in para 24 and dispositif (1) of its judgment) that: in principle, the existence of a direct and immediate link between a particular input transaction and a particular output transaction or transactions giving rise to entitlement to deduct is necessary before the taxable person is entitled to deduct input VAT and in order to determine the extent of such entitlement. In relation to the second question the CJEU declined to define what amounted to a direct and immediate link because of the diversity of professional and commercial transactions and left it to national courts to apply the test to the facts of the individual case. But it stated (para 33 and dispositif 2) that a taxable person which carries out taxable and non taxable transactions could deduct the entirety of VAT as input tax only if it could show by objective evidence that the expenditure involved in the acquisition of the services was part of the various cost components of the taxable output transaction. In Abbey National plc v Customs and Excise Comrs (Case C 408/98) [2001] 1 WLR 769, a life assurance company, Scottish Mutual Assurance plc (SM), in addition to its life assurance business, carried on business leasing premises for professional and commercial use. SM opted to charge VAT on the rent received from its commercial tenants. SM later sold a property in Aberdeen to a third party in a transaction which CEC, in accordance with domestic legislation, treated as a transfer as a going concern so that no supply of goods or services had taken place. As a result, the transfer was not a taxable transaction. SM sought to deduct as input tax the whole of the VAT which it had paid on professional services relating to the sale, while CEC took the view that only part of the tax was deductible and sought to apportion the VAT in accordance with article 17(5) of the Sixth Directive. The case is important because, like the present appeal, it concerns a claim to deduct as input tax VAT incurred on a transaction outside the scope of VAT. In his opinion Advocate General Jacobs contrasted the CJEUs approach in BLP in relation to an exempt transaction with other case law which recognised a right to deduct as input tax VAT incurred as part of the overheads of a taxable persons business. In his view, what mattered was whether the taxed supply was a cost component of a taxable output, and not whether the most closely linked transaction was itself taxable. It was inherent in an exempt transaction that it broke the chain between a supply and the taxable persons taxable economic activities. As a result, VAT incurred on supplies used by the taxable person for an exempt transaction could not be deducted from VAT paid on a subsequent output supply by that person (para 35). Where no supply of goods or services had taken place in a transaction outside the scope of VAT, the chain between a supply to the taxable person and that persons subsequent taxable economic activity was not broken. One was required to look beyond the immediate transaction to see whether the supply, in respect of which a claim to deduct VAT was made, formed a cost component of some other taxable transaction, including in the form of general overheads (paras 38, 42 and 46). I will consider below whether Mr Small is correct in his contention that the CJEU has in its later case law adopted the reasoning of the Advocate General. To simplify the later discussion of the case law concerning fund raising transactions, I will refer to the transaction on which the supply was used, such as the sale of the subsidiary in BLP, the transfer of the office in Abbey National, and the purchase of SFPEs and the steps taken to obtain the SFPs in this case as the initial transaction and, adopting the phrase which Mr Small derived from later CJEU case law, will call the taxable persons subsequent transaction or transactions, of which he asserts the relevant supply is a cost component, as the downstream transaction. It is, admittedly, a simplification to speak of subsequent transactions because, as the Advocate General recognised, there may not always be such a chronological sequence in economic reality or inherent in the VAT system (para 41). But it is nonetheless the norm. The CJEU in its judgment did not expressly adopt the Advocate Generals distinction between the chain breaking effect of the use of a supply in an initial transaction which is an exempt transaction and the absence of that break in an initial transaction outside the scope of VAT. But the CJEUs reasoning in this case is not only consistent with the Advocate Generals approach but also difficult to reconcile with its reasoning in BLP unless it was accepting his approach. In particular, the court rejected the principal position of the United Kingdom Government (para 20) that, since the costs incurred to effect the transfer were used for the purposes of an initial transaction which was not taxable, there was no right to deduct the input VAT paid on those costs. The CJEUs reasoning started (para 24) with the principle of neutrality, namely that the deduction system is meant to relieve the taxable person entirely of the burden of the VAT payable or paid in the course of all his economic activities (ie his activities that are themselves subject in principle to VAT paid by the recipient of his goods or services and accounted to the tax authorities by the taxable person). Referring to BLP and Midland Bank, the CJEU held (para 28) that the right to deduct VAT borne by goods and services presupposed that the expenditure incurred in acquiring them was part of the cost components of taxable output transactions (ie including taxable downstream transactions). The CJEU found no direct and immediate link between the professional services and one or more taxable outputs because it rejected Abbey Nationals arguments, including that the transfer of the property should be treated as if it were a taxable transaction. But that was not the end of the matter as the CJEU held that the costs of the professional services formed part of the taxable persons overheads and as such were cost components of the products of a business. The services used by SM for the purposes of the transfer thus had a direct and immediate link with the whole economic activity of that taxable person (para 36). As the taxable person effected downstream transactions which were subject to VAT and exempt transactions, it could only deduct (under article 17(5) of the Sixth Directive) the proportion of the VAT which was attributable to the taxable transactions (para 42 and dispositif). The CJEU thus looked through the initial transaction and recognised a right to deduct by reference to such downstream transactions as were economic activities. In Kretztechnik AG v Finanzamt Linz (Case C 465/03) [2005] 1 WLR 3755; [2005] ECR I 4357, an Austrian company, which developed and distributed medical equipment, raised capital by a share issue on the Frankfurt Stock Exchange. The Austrian tax authority disallowed a deduction of input tax which Kretztechnik had paid on the supply to it of services linked to the share issue, which the national tax authority treated as exempt from VAT. The company challenged the assessment to tax and this gave rise to questions whether the share issue was within the scope of In his opinion Advocate General Jacobs repeated the analysis which he had VAT and, if not, whether there was a right to deduct input tax on the ground that the services in respect of which the deduction of input tax was claimed were used for the purposes of the companys downstream taxable transactions. As I will show, the CJEU treated the share issue as being outside the scope of VAT and supported the right to deduct the VAT charged on the expenses incurred for the supplies acquired in connection with a share issue. adopted in his opinion in Abbey National (paras 35 and 46). He stated: 73. if a trader uses the services of a broker or valuator when acquiring a commodity, the cost of those services may be said to be directly, immediately and exclusively linked to the acquisition. That does not however determine whether the VAT on the services is deductible. The right to deduct must be determined by the output transactions for the purposes of which the services are used. The transactions in question will usually be the onward supply of the commodity or the goods or services for which it is used or in which it is incorporated. The right to deduct will depend on whether that supply is taxed or not. 74. Thus, if the transaction with which the input is most closely linked is one which falls entirely outside the scope of VAT because it is in any event not a supply of goods or services, it is irrelevant for the purpose of determining deductibility. What matters is the link, if any, with such output supplies, and whether they are taxed or exempt 75. The question to be asked in [Kretztechniks] case is therefore whether the capital raised by the share issue was used for the purposes of one or more taxed output transactions. The CJEUs judgment on the deductibility of VAT on the services provided to Kretztechnik is wholly consistent with the Advocate Generals approach in its disregard for an initial transaction which is outside the scope of the VAT system. The court stated: 34. The deduction system is meant to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities. The common system of VAT consequently ensures complete neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject in principle to VAT: see, to that effect Rompelman v Minister van Financin (Case C 268/83) [1985] ECR 655 para 19; Belgian State v Ghent Coal Terminal NV para 15; Gabalfrisa [SL v Agencia Estatal de Administracin Tributaria] (Joined Cases C 110/98 to C 147/98) [2000] ECR I 1577, para 44; the Midland Bank case [2000] 1 WLR 2080, 2097 2098, para 19, and the Abbey National case [2001] 1 WLR 769, 785, para 24. 35. It is clear from the last mentioned condition that, for VAT to be deductible, the input transactions must have a direct and immediate link with the output transactions giving rise to a right of deduction. Thus, the right to deduct VAT charged on the acquisition of input goods or services presupposes that the expenditure incurred in acquiring them was a component of the cost of the output transactions that gave rise to the right to deduct (see the Midland Bank case, para 30, and the Abbey National case, para 28, and also Cibo Participations SA v Directeur regional des impts du Nord Pas de Calais (Case C 16/00) [2001] ECR I 6663, para 31). In this case, regard being had to the fact that, first, a 36. share issue is an operation not falling within the scope of the Sixth Directive and, second, that operation was carried out by [Kretztechnik] in order to increase its capital for the benefit of its economic activity in general, it must be considered that the costs of the supplies acquired by that company in connection with the operation concerned form part of its overheads and are therefore, as such, component parts of the price of its products. Those supplies have a direct and immediate link with the whole economic activity of the taxable person (see the BLP Group case para 25; the Midland Bank case, para 31; the Abbey National case, paras 35 and 36, and the Cibo Participations case, para 33). The CJEU, disregarding the share issue itself, held that article 17(1) and (2) of the Sixth Directive conferred the right to deduct in its entirety the VAT charged on the expenses incurred by a taxable person for the various supplies acquired by him in connection with a share issue, provided that all the transactions undertaken by the taxable person in the context of his economic activity constitute taxed transactions (para 38 and dispositif 2). The next relevant case in chronological sequence was Investrand BV v Staatssecretaris van Financin (Case C 435/05) [2007] ECR I 1315 which concerned the sale by a company in 1989 of a substantial shareholding in another company (company A). The CJEU decided the case without the assistance of an opinion from the Advocate General and followed its decisions in Midland Bank, Abbey National and Kretztechnik. The sale of the shares was treated as an activity outside the scope of VAT and the central question was whether the relevant costs were overheads related to the taxpayer companys economic activity as a whole (para 24). It is nonetheless of interest because in my view it casts light on later judgments of the CJEU and I will return to the case in this judgment. The consideration for the 1989 sale was a fixed sum and a further sum which depended upon the profits earned by company A between 1989 and 1992. At the time of the sale and until 1 January 1993 the taxpayer company was a passive holding company which took no part in the management of the companies in which it invested. From 1 January 1993 the taxpayer company provided management services to company A. A dispute arose between the taxpayer company and the purchaser of company A over the calculation of the sum due by reference to company As profits. The taxpayer company incurred professional costs in an arbitration on that matter and sought to deduct the VAT which it paid on those costs in the financial year 1996, which was at a time that it was carrying on economic activity. The CJEU rejected the taxpayers claim in essence because the taxpayer company would have incurred the professional costs whether or not it had commenced economic activity after 1 January 1993 (paras 32 33). It distinguished Kretztechnik on the basis that in that case the costs were incurred in relation to a share issue intended to increase the taxable persons capital for the benefit of its economic activity (paras 35 37). Accordingly, the CJEU held (para 38 and dispositif): the costs for advisory services which a taxable person obtains with a view to establishing the amount of a claim forming part of his companys assets and relating to a sale of shares prior to his becoming liable to VAT do not, in the absence of evidence establishing that the exclusive reason for those services is to be found in the economic activity, within the meaning of [the Sixth] Directive, carried out by the taxable person, have a direct and immediate link with that activity and, consequently, do not give rise to a right to deduct the VAT charged on them. In other words, the VAT on inputs which were incurred in relation to a companys non economic activity and which had no link to its subsequent economic activities would not be deductible. The CJEU returned to the issue of deductibility of VAT in the context of fund raising by a taxable person in Securenta Gttinger Immobilienanlagen und Vermgensmanagement AG v Finanzamt Gttingen (Case C 437/06) [2008] ECR I 4177; [2008] STC 3473. In this case the taxpayer company, Securenta, carried out both economic and non economic activities. It acquired capital for its business by the issue of shares and atypical silent partnerships and sought to deduct the input tax which it had paid for services relating to its raising of capital in this way. A dispute about the extent of its entitlement to deduct resulted in a reference to the CJEU. The relevant question, as reformulated by the court, was how the right to deduct input tax was to be determined in the case of a taxpayer who carries out both economic and non economic activities. The CJEU observed (para 26) that Securenta carried on three downstream activities, namely (i) non economic activities outside the scope of VAT, (ii) economic activities which were within the scope of the Sixth Directive but were exempt and (iii) taxed economic activities. The court repeated its ruling (in Abbey National para 28 and other cited cases) that in order for the input VAT to give rise to a right to deduct the expenditure incurred on the fund raising must be a component of the cost of the output transactions that gave rise to the right to deduct (para 27). If Securentas downstream activities had been solely economic activities, the supplies of services would have had a direct and immediate link with those economic activities, but part of Securentas downstream activities were non economic (para 29). The CJEU therefore held (para 31 and dispositif 1): where a taxpayer simultaneously carries out economic activities, taxed or exempt, and non economic activities outside the scope of the Sixth Directive, deduction of the VAT relating to expenditure connected with the issue of shares and atypical silent partnerships is allowed only to the extent that that expenditure is attributable to the taxpayers economic activity within the meaning of article 2(1) of that Directive. More recently, the CJEU has called into question its ruling in BLP in the light of its developing jurisprudence attributing input expenditure on the raising of capital to the general overheads of an undertaking. In Skatteverket v AB SKF (Case C 29/08) [2009] ECR I 10413; [2010] STC 419 (SKF), the parent company which managed an industrial group proposed to sell a wholly owned subsidiary and a minority stake in another company, which had formerly been a wholly owned subsidiary, to obtain funds to finance other activities of the group. It proposed to engage professional services in the sale and sought a ruling from the Swedish Revenue Law Commission on whether it would be entitled to deduct input VAT paid on those services. The tax authority challenged the affirmative answer given by the Commission and the Swedish Court made a reference to the CJEU. In his opinion, Advocate General Mengozzi endorsed the distinction which Advocate General Jacobs made in Abbey National between the chain breaking effect of an exempt transaction and the absence of such an effect where the fund raising transaction is outside the scope of VAT (paras 69 and 79). He opined (para 89(3)) that where the taxable person acquires supplies of services in order to carry out a share disposal which is an exempt transaction, he does not have the right to deduct input VAT on those services, even when the disposal of shares is a transaction which contributes to the restructuring of the taxable persons industrial activities. The CJEU disagreed with his conclusion in relation to an exempt transaction involving a sale of shares in circumstances which were analogous to the facts of the case and held (para 73) that there was a right to deduct input VAT paid on services acquired for the purposes of a disposal of shares if there is a direct and immediate link between the costs associated with the input services and the overall economic activities of the taxable person. It held that the referring court should take account of all the circumstances surrounding the transactions to determine whether the costs incurred were likely to be incorporated in the price of the shares sold or whether they were among only the cost components of transactions within the scope of the taxable persons economic activities. The CJEUs reasoning, based on prior case law, on the way to this conclusion is instructive. It reasoned: i) The right of deduction is an integral part of the VAT scheme and is necessary to achieve neutrality of taxation of all economic activities (paras 55 56); ii) In principle there needs to be a direct and immediate link between a particular input transaction and a particular output transaction or transactions giving rise to an entitlement to deduct before a taxable person is entitled to deduct input VAT to determine the extent of that entitlement: the expenditure incurred in acquiring the supplies must be a component of the cost of the output transactions that gave rise to the right to deduct (para 57); iii) But, absent that link between an input transaction and specific output transactions, the taxable person has a right to deduct where the costs of the services in question are part of his general costs and, as such, components of the price of the goods or services which he supplies, there thus being a direct and immediate link between the costs and the persons economic activity as a whole (para 58); iv) On the other hand, where the taxable person acquires goods or services and uses them for the purposes of transactions that are exempt or do not fall within the scope of VAT, no output tax can be collected or input tax deducted (para 59). The CJEU stated (para 60): It follows that whether there is a right to deduct is determined by the nature of the output transactions to which the input transactions are assigned. Accordingly, there is a right to deduct when the input transaction subject to VAT has a direct and immediate link with one of more output transactions giving rise to the right to deduct. If that is not the case, it is necessary to examine whether the costs incurred to acquire the input goods or services are part of the general costs linked to the taxable persons overall economic activity. In either case, whether there is a direct and immediate link is based on the premise that the cost of the input services is incorporated either in the cost of particular output transactions or in the cost of goods or services supplied by the taxable person as part of his economic activities. Applying this reasoning to the circumstances of SKFs proposed transaction, the CJEU advised that the referring court would have to ascertain whether the costs incurred were likely to be incorporated in the price of the shares which SFK intended to sell or whether they were only among the cost components of SKFs products (para 62). It referred to the cases which I have discussed (Midland Bank, Abbey National, Kretztechnik and Securenta), acknowledging that they concerned financial output transactions which were outside the scope of VAT. But it went on to observe that the main difference between an exempt share sale and a share sale which was outside the scope of VAT was whether the taxable company was or was not involved in the management of the companies whose shares were being sold. There was therefore a risk of infringement of the principle of fiscal neutrality through treating objectively similar transactions differently for tax purposes. It held (para 68) that if the costs relating to the disposals of shareholdings are considered to form part of a taxable persons general costs in cases where the disposal itself is outside the scope of VAT, the same tax treatment must be allowed where the disposal is classified as an exempt transaction. In my view it is implicit in the CJEUs reasoning that it accepted the distinction which Advocate General Jacobs made in his opinions in Abbey National and Kretztechnik but recognised the need to modify the result for the purpose of VAT of an exempt initial transaction in order to avoid discriminatory fiscal treatment. It is important to consider further the statement in para 59 of the judgment, summarised in para 44(iv) above. It was that in contrast to the circumstance where the costs of services are part of a taxable persons general costs and components of the price of the goods and services which he supplies (para 58). where goods and services acquired by a taxable person are used for purposes of transactions that are exempt or do not fall within the scope of VAT, no output tax can be collected or input tax deducted (para 59) In order to be consistent with the CJEUs reasoning outlined above, that statement, when applied in the context of a fund raising transaction such as a sale of shares, must be a reference to the downstream transactions of which the input costs form a cost component, and not the initial fundraising transaction, unless the cost of the inputs was a component of the price of the shares in the initial transaction. It is also noteworthy that the cases to which the CJEU referred in para 59 of its judgment as vouching its proposition of law did not involve an initial fund raising transaction and a downstream transaction. Proceedings brought by Uudenkaupungin kaupunki (Case C 184/04) [2006] ECR I 3039; [2008] STC 2329 concerned the costs of a building which was initially used in a non taxable activity but later was used in a taxable activity. The relevant questions concerned the meaning of article 20 of the Sixth Directive and, in particular, whether during the adjustment period for which it provided the taxable person could seek to deduct input tax, when there was no entitlement to deduct at the outset. In Hausgemeinschaft Jrg und Stephanie Wollny v Finanzamt Landshut (Case C 72/05) [2006] ECR I 8297; [2008] STC 1617, a household business had constructed a building as a business asset and made private use of rooms within the building. The business had deducted as input tax the VAT it had paid on its construction and the dispute with the German tax authorities was over the mechanism for calculating the liability to VAT for the private use under articles 6(2)(a) and 11A(1)(c) of the Sixth Directive. Vereniging Noordelijke Land en Tuinbouw Organisatie v Staatssecretaris van Financin (Case C 515/07) [2009] ECR I 839; [2009] STC 935 concerned an organisation which promoted the interest of the agricultural sector, a non taxable activity, and provided taxable services to its members. The case concerned the extent to which VAT relating to the goods and services which the organisation acquired could be deducted from the VAT which it paid on its taxable services. In my view, it is clear that in SFK the CJEU has not extended the reasoning of BLP to apply it to fund raising transactions which are outside the scope of VAT. On the contrary, in order to avoid discriminatory treatment of taxable persons, it has extended the reasoning in the cases about share disposals that are outside the scope of VAT to share disposals which are exempt, by requiring an examination as to whether the costs associated with the input services are incorporated in the price of the shares sold in the initial transaction or in the prices of the taxable persons products in downstream transactions. If the latter, the costs would be among only the cost components of transactions within the scope of the taxable persons economic activities. The next case which I have to consider is also important because it vouches the direct and immediate link between an input incurred in the context of an initial transaction, which is not an economic activity, and the taxable persons general economic activity in downstream transactions. It also confirms the CJEUs approach to that link where there is a significant time lapse between the input transaction and the downstream activity. In Sveda UAB v VMI (Case C 126/14) EU:C:2015:712; [2016] STC 447, a Lithuanian company, Sveda, entered into an agreement with the Lithuanian Ministry of Agriculture in which it undertook to construct a Baltic mythology recreational and discovery path and to offer it to the public free of charge. The Ministry undertook to pay 90% of the construction costs and Sveda was to pay the balance. Sveda undertook to provide the path to the public free of charge for five years. Sveda sought to deduct as input tax VAT which it paid on the acquisition or production of capital goods for the construction of the path. The Lithuanian tax authorities refused to allow the deduction and Sveda appealed that decision. On appeal the Supreme Administrative Court found that Sveda intended to carry out economic activities in the future as it would sell food or souvenirs to visitors to the recreational path. It referred to the CJEU the question (as re formulated by the CJEU) whether article 168 of the PVD must be interpreted as granting a taxable person the right to deduct input VAT paid for the production or acquisition of capital goods, for the purposes of a planned economic activity related to rural and recreational tourism, which (i) are directly intended for use by the public free of charge, and (ii) may be a means of carrying out taxed transactions. The CJEU answered the question in the affirmative, provided that a direct and immediate link is established between the expenses associated with the input transactions and an output transaction or transactions giving rise to the right to deduct or with the taxable persons economic activity as a whole and stated that this was a matter for the referring court to determine on the basis of objective evidence (para 37 and dispositif). In reaching this conclusion, the CJEU stated (para 19) that a taxable person may be acting for the purposes of an economic activity within the meaning of article 9(1) of the PVD when it acquires goods for the purposes of an economic activity even if the goods are not used immediately for that economic activity. If the taxable person is so acting, the right to deduct arises immediately when the goods or services are delivered (para 20), but their use in an economic activity may occur some time later. The CJEU continued (para 21): Whether a taxable person acts as such for the purposes of an economic activity is a question of fact which must be assessed in the light of all the circumstances of the case, including the nature of the asset concerned and the period between the acquisition of the asset and its use for the purposes of the taxable persons economic activity (see inter alia, to that effect, the judgment in Klub OOD v Direktor na Direktsia Obzhalvane I upravlenie na izpalnenieto Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Case C 153/11), paras 40 and 41 and the case law cited). It is for the referring court to make that assessment. The CJEU held that the court has to determine whether there is a direct and immediate link between the particular input transaction and either (i) a particular output transaction or transactions, or (ii) the taxable persons economic activity as a whole because the expenditure incurred on the input transaction is part of its general costs and as such is a component of the price of the goods or services which it supplies in a downstream transaction. In so doing, the court must consider all the circumstances and take account only of transactions that are objectively linked to the taxable persons economic activity (paras 27 29). See also Finanzamt Kln Nord v Becker (Case C 104/12) EU:C:2013:99 (21 February 2013, unreported), paras 22, 23, 33 and 35. The CJEU (para 23) concluded from the Lithuanian courts findings of fact that Sveda acquired or produced capital goods for the recreational path with the intention, confirmed by objective evidence, of carrying out an economic activity and did, consequently, act as a taxable person within the meaning of article 9(1) of the Directive. It also recorded (para 30) the finding of fact by the Lithuanian court that Svedas expenditure incurred on the construction of the recreational path would come partly within the price of the goods and services which it would provide in the context of its planned economic activity. The CJEU went on to comment on the doubts of the referring court whether there was a direct link between the input transactions and the planned economic activity as a whole because the path was intended to be used by the public free of charge. It stated: 32. In that regard, the case law of the court makes it clear that, where goods or services acquired by a taxable person are used for purposes of transactions that are exempt or do not fall within the scope of VAT, no output tax can be collected or input tax deducted (judgment in Eon Aset Menidjmunt OOD v Direktor na Direktsia Obzhalvane I upravlenie na izpalnenieto Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Case C 118/11) EU:C:2012:97, para 44 and the case law cited). In both cases, the direct and immediate link between the input expenditure incurred and the economic activities subsequently carried out by the taxable person is severed. 33. First, in no way does it follow from the order for reference that the making available of the recreational path to the public is covered by any exemption under the VAT Directive. Second, given that the expenditure incurred by Sveda in creating that path can be linked, as is apparent from para 23 of this judgment, to the economic activity planned by the taxable person, that expenditure does not relate to activities that are outside the scope of VAT. 34. Therefore, immediate use of capital goods free of charge does not, in circumstances such as those in the main proceedings, affect the existence of the direct and immediate link between input and output transactions or with the taxable persons economic activities as a whole and, consequently, that use has no effect on whether a right to deduct VAT exists. 35. Thus, there does appear to be a direct and immediate link between the expenditure incurred by Sveda and its planned economic activity as a whole, which is, however, a matter for the referring court to determine. I observe that in para 32 the CJEU repeated the interpretation, which it gave in SKF at para 59, which I have discussed in paras 47 and 48 above and to which I return below. The CJEU also recognised that a taxable person having obtained a deduction might later use the goods or services acquired in the input transaction for purposes other than its economic activity. If that were shown to have occurred, the taxable person would have to repay the relevant input VAT to the tax authorities (para 36). The final case which I must consider is Direktor na Direktsia Obzhalvane i danacho osiguritelna praktica Sofia v Iberdrola Inmobiliaria Real Estate Investments EOOD (Case C 132/16) EU:C:2017:683; [2017] BVC 39 (Iberdrola). In this case the property developer, Iberdrola, which wished to construct 300 apartments in a holiday village, entered into an undertaking with the municipality to reconstruct a wastewater pump station, which the municipality owned, to serve both its proposed development and the wider holiday village. Without that reconstruction, Iberdrola would not have been able to connect its development to the pump station. A dispute arose with the Bulgarian tax authorities as to whether Iberdrola could deduct as input tax the VAT which it incurred on paying a third party construction company for the works on the pump station. The CJEU held that a taxable person has the right to deduct input VAT in respect of a supply of services consisting of the construction or improvement of a property owned by a third party when that third party enjoys the results of those services free of charge and when those services are used both by the taxable person and the third party in the context of their economic activity, in so far as those services do not exceed that which is necessary to allow that taxable person to carry out the taxable output transactions and where their costs are included in the price of those transactions (para 40 and dispositif). In so holding, the CJEU followed its reasoning in SKF and Sveda in recognising that there could be a direct and immediate link between an input and either (i) particular output transactions or (ii) the taxable persons economic activity as a whole. This link would exist if the cost of the input was in the first case a cost component of the particular transactions and in the second case if it was a cost component of the price of goods and services which it supplies (paras 27 32). In this review of the CJEUs case law I have sought to set out the development of the jurisprudence and have focussed attention on the proposition recorded in SKF (para 59) and Sveda (para 32) that where goods or services acquired by a taxable person are used for purposes of transactions that are exempt or do not fall within the scope of VAT, no output tax can be collected or input tax deducted. This is because Mr Beal invites the court to make a reference to the CJEU under article 267 of the TFEU if it disagrees with his submission which I have recorded in paras 21 and 22 above. He supports that invitation by referring to the judgment of the Court of Appeal of England and Wales in Revenue and Customs Comrs v Chancellor, Masters and Scholars of the University of Cambridge [2018] EWCA Civ 568; [2018] STC 848, in which the court decided to make a reference to the CJEU because it concluded that the correct approach to be taken to the issue of attribution in that case was not acte clair. I am satisfied that there is no need for a reference in the present appeal. This is because, as I will seek to show, there are findings of fact that entitled the FTT to conclude that FASL when it acquired the SPFEs was acting as a taxable person because of its aim of accumulating sums to develop its taxable business through capital expenditure on assets which it would use to generate taxable output transactions. The statements in para 59 of SKF and para 32 of Sveda are wholly consistent with the principle of the neutrality of VAT enshrined in article 2(2) of the PVD. Thus in Investrand, which I discussed in para 39 above, the expenditure on the arbitration related to a financial claim arising out of a transaction carried out while Investrand was not a taxable person and the fact that the costs relating to the arbitration were incurred after it had become a taxable person was irrelevant because the expenditure had no connection with Investrands activities as a taxable person. Similarly, on the facts in Uudenkaupungin kaupunki (para 48 above), absent the arrangements under article 20 of the Sixth Directive, the intention to use and initial use of the building for a non taxable activity would have prevented the recovery as input tax of VAT incurred on its construction notwithstanding the later decision to use it for a taxable activity because when the costs were incurred they were not incurred by a taxable person acting as such. Similarly, in Wellcome Trust Ltd v Customs and Excise Comrs (Case C 155/94) [1996] ECR I 3013; [1996] STC 945, it was because the purchase and sale of shares by a charitable trust was not an economic activity that the VAT paid on the fees for professional services relating to those transactions were not recoverable; there was no downstream economic activity to which the costs could be linked. Since the hearing in this appeal and the preparation of this judgment in draft, the Eighth Chamber of the CJEU has issued its judgment on the Court of Appeals reference in the University of Cambridge case on 3 July 2019 (Case C 316/18) EU:C:2019:559. As the CJEU records (para 9) the university is a not for profit educational institution whose principal activity is the provision of educational services, which are VAT exempt, but which also makes taxable supplies including commercial research, the sale of publications, etc. The universitys activities are financed in part by charitable donations and endowments, which it places in a fund and invests. The university has claimed a right to deduct input VAT relating to fees which it has paid to third party managers of the fund on the basis that the income generated by the fund has been used to finance the whole range of its activities. The CJEU (para 19) interpreted the questions of the Court of Appeal in the reference as asking, in essence: whether article 168(a) of the VAT Directive must be interpreted as meaning that a taxable person that (i) is carrying out both taxable and exempt activities, (ii) invests the donations and endowments that it receives by placing them in a fund, and (iii) uses the income generated by that fund to cover the costs of all of those activities is entitled to deduct, as an overhead, input VAT paid in respect of the costs associated with that investment. The CJEU answered that question in the negative. Its reasoning is as follows. First, the collection of donations and endowments is not an economic activity and is outside the scope of the PVD. VAT paid in respect of costs incurred in connection with such collection is not deductible, regardless of the reason for the receipt (para 29). Secondly, the activity of collection and the activity of the investment of the collected funds are treated for VAT purposes as one non economic activity as the investment is merely a direct continuation of the non economic activity of collection. Accordingly, input VAT paid in respect of costs associated with the investment is also non deductible (para 30). Thirdly, and in my view critically, the CJEU distinguished the case on its facts from the line of authority which I have discussed and of which Kretztechnik is a part. It stated (para 31): It is true that the fact that costs are incurred in the acquisition of a service in the context of a non economic activity does not, in itself, preclude those costs giving rise to a right to deduct in the context of the taxable persons economic activity, if they are incorporated into the price of particular output transactions or into the price of goods and services provided by the taxable person in the context of that economic activity (see, to that effect, judgment of 26 May 2005, Kretztechnik, C 465/03, EU:C:2005:320, para 36). But, referring to the documents before the court, it concluded that the costs of management of the funds were not incorporated into the price of a particular output transaction. It also concluded, by reference to those documents, that the costs were incurred to generate resources to finance all of the universitys output transactions, thereby allowing the price of its goods and services to be reduced. The costs therefore were not components of the price of goods and services provided by the university and could not form part of its overheads. The VAT therefore was not deductible (para 32). In my view, the ruling that the income was used to reduce all of the costs of the universitys goods and services prevented the fund managers fees from being a component of the costs of those goods and services and thus part of the universitys overheads, which is the second alternative in Kretztechnik. The University of Cambridge judgment, which the CJEU has delivered without requiring an opinion from an Advocate General, is therefore an application of established CJEU jurisprudence which I have discussed above and summarise below. (iii) Summary of the case law case law: I derive the following propositions which are relevant to this appeal from the i) As VAT is a tax on the value added by the taxable person, the VAT system relieves the taxable person of the burden of VAT payable or paid in the course of that persons economic activity and thus avoids double taxation. This is the principle of deduction set out in article 1(2) and operated in article 168 of the PVD and vouched, for example, in Rompelman v Minister van Financien (Case C 268/83) [1985] ECR 655, para 19; Abbey National, para 24; Kretztechnik, para 34 and SKF, paras 55 56. ii) There must be a direct and immediate link between the goods and services which the taxable person has acquired (in other words the particular input transaction) and the taxable supplies which that person makes (in other words its particular output transaction or transactions). This link gives rise to the right to deduct. The needed link exists if the acquired goods and services are part of the cost components of that persons taxable transactions which utilise those goods and services: see for example Midland Bank, paras 24 and 30; Abbey National, para 28; Kretztechnik, para 35; Securenta, para 27; SFK, para 57 and HMRC v University of Cambridge, para 31. iii) Alternatively, there must be a direct and immediate link between those acquired goods and services and the whole of the taxable persons economic activity because their cost forms part of that businesss overheads and thus a component part of the price of its products: see for example BLP, para 25; Midland Bank, para 31; Abbey National, paras 35 and 36; Kretztechnik, para 36; SKF, para 58 and HMRC v University of Cambridge, para 31. iv) Where the taxable person acquires professional services for an initial fund raising transaction which is outside the scope of VAT, that use of the services does not prevent it from deducting the VAT payable on those services as input tax and retaining that deduction if its purpose in fund raising, objectively ascertained, was to fund its economic activity and it later uses the funds raised to develop its business of providing taxable supplies. See, for example, Abbey National, paras 34 36; Kretztechnik, paras 36 38; Securenta, paras 27 29 and SKF, para 64. The same may apply if an analogous transaction involving the sale of shares is classified as an exempt transaction: SKF, para 68. v) Where the cost of the acquired services, including services relating to fund raising, are a cost component of downstream activities of the taxable person which are either exempt transactions or transactions outside the scope of VAT, the VAT paid on such services is not deductible as input tax. See for example Securenta, paras 29 and 31; SKF, paras 58 60 and Sveda, para 32. Where the taxable person carries on taxable transactions, exempt transactions and transactions outside the scope of VAT, the VAT paid on the services it has acquired has to be apportioned under article 173 of the PVD. vi) The right to deduct VAT as input tax arises immediately when the deductible tax becomes chargeable: article 167 of the PVD, Securenta, paras 24 and 30 and SKF, para 55. As a result, there may be a time lapse between the deduction of the input tax and the use of the acquired goods or services in an output transaction, as occurred in Sveda. Further, if the taxable person acquired the goods and services for its economic activity but, as a result of circumstances beyond its control, it is unable to use them in the context of taxable transactions, the taxable person retains its entitlement to deduct: Midland Bank, paras 22 and 23. vii) The purpose of the taxable person in carrying out the fund raising is a question of fact which the court determines by having regard to objective evidence. The CJEU states that the existence of a link between the fund raising transaction and the persons taxable activity is to be assessed in the light of the objective content of the transaction: Sveda, para 29; Iberdrola, para 31. The ultimate question is whether the taxable person is acting as such for the purposes of an economic activity. This is a question of fact which must be assessed in the light of all the circumstances of the case, including the nature of the asset concerned and the period between its acquisition and its use for the purposes of the taxable persons economic activity: Eon Aset Menidjmunt OOD v Direktor na Direktsia Obzhalvane I upravlenie na izpalnenieto Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Case C 118/11) EU:C:2012:97; [2012] STC 982, para 58; Klub OOD v Direktor na Direktsia Obzhalvane I upravlenie na izpalnenieto Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Case C 153/11) EU:C:2012:163; [2012] STC 1129, paras 40 41 and Sveda, para 21. Application to the facts of this case I have set out the factual background in paras 2 7 above. There was objective evidence that FASL when carrying out its fund raising activity was carrying out a taxable business and was contemplating using the funds raised on three principal developments a windfarm, the construction of further farm buildings and the acquisition of neighbouring farmland. I do not detect in the jurisprudence of the CJEU any basis for distinguishing expenditure incurred in a fund raising exercise which takes the form of a sale of shares from a fund raising exercise that involves the receipt of a subsidy over several years. The fact that the subsidies were included in FASLs profit and loss account and counted as the businesss income for income tax purposes is not a basis for distinguishing the share sale cases such as Kretztechnik and Securenta. I do not view the annual payment of the subsidies under the SFP scheme as a separate transaction from the acquisition of the entitlement to those subsidies which is capable of breaking the link between the purchase of the SFPE units and the deployment of the net proceeds of the subsidies in FASLs subsequent economic activities. In any event the FTT was not bound to hold that the acquisition of the SFPE units and the receipt of the subsidies were separate transactions. On the FTTs findings of fact, the purchase of the SFPE units was part of an exercise raising funds for FASLs economic activities. The underlying principle is the principle of neutrality which relieves the taxable person of the burden of VAT payable and paid in the course of all its economic activities: Rompelman, para 19; Belgian State v Ghent Coal Terminal NV, para 15; Gabalfrisa SL v Agencia Estatal de Administracin Tributaria (Cases C 110/98 to C 147/98) EU:C:2000:145; [2000] ECR I 1577; [2002] STC 535, para 44. While it is not clear from the FTTs findings when any of FASLs projects will come to fruition, I am persuaded that the FTT was entitled to conclude that FASL when it incurred the costs of the purchase of the SFPE units was acting as a taxable person because it was acquiring assets in support of its current and planned economic activities, namely farming and the windfarm. On that basis FASL was entitled to an immediate right of deduction of the VAT paid on the purchase of the SFPE units and is entitled to retain that deduction or repayment so long as it uses the SFPs which it received as cost components of its economic activities. A start up business can acquire goods and services to support its future taxable supplies and claim VAT paid on those acquisitions as input tax; so too in principle can an existing business which proposes to expand its economic activity. On the facts found, FASL does not carry out and does not propose to carry out downstream non economic activities or exempt transactions. Therefore, no question of apportionment under article 173 of the PVD arises. The task for HMRC I recognise that a claim for deduction which depends on the future behaviour of the taxable person, such as the claim in this case, may create practical difficulties for HMRC in administering the VAT system fairly and, in particular, in avoiding unwarranted repayments of VAT. But it is an established part of the VAT system that a taxable person is entitled to an immediate deduction of the VAT which it has paid (para 60(vi) above). It is also well established that a taxable person can claim to deduct as input tax VAT which it has paid on the acquisition of goods or services although it will not use those goods and services as components of taxable transactions immediately: Rompelman, para 22; Lennartz v Finanzamt Mnchen III (Case C 97/90) [1991] ECR I 3795, paras 13 16 and Sveda, para 20. The recognition that fund raising costs may, where the evidence permits, be treated as general overheads of a taxable persons business means that the taxable person must be able to provide objective evidence to support the connection between the fund raising transaction and its proposed economic activities. The taxpayer also needs to maintain adequate banking arrangements and records to vouch the later use of the funds so raised to demonstrate its entitlement to deduct and to retain the deduction, if investigated. As the CJEU recorded in Sveda (para 36) the taxpayer will have to repay input VAT if it does not use the input goods or services for the purposes of its economic activity. HMRC has power to charge VAT under regulation 3 of the Value Added Tax (Supply of Services) Order 1993 (SI 1993/1507), where a taxable person uses services supplied to it for its business for a purpose other than a business use, by treating that use as a supply of services in the course of its business. This may involve HMRC in more investigations than the CJEU envisaged in BLP (para 24). But this supervision of the subsequent use of the raised funds, with which the services were associated, seems to me to be an inevitable consequence of the CJEUs interpretation of the PVD. Conclusion I would dismiss the appeal.
UK-Abs
This appeal is concerned with the entitlement of a taxpayer to deduct input value added tax (VAT) and claim repayment of surplus input VAT. It concerns the interpretation of articles 167 and 168(1) of Council Directive (EC) 2006/112/EC of 28 November 2016 on the common system of value added tax (the Principal VAT Directive) and the case law of the Court of Justice of the European Union (CJEU) relating to those articles. In short, the question is whether a taxpayer can deduct as input tax the VAT which it has incurred in purchasing entitlements to an EU farm subsidy, the Single Farm Payment (SFP). The taxpayer has used those entitlements to annual subsidies over several years and intends to use money resulting from the receipt of those subsidies to fund its current and future business activities, which currently involve only taxable supplies. Frank A Smart & Son Ltd (FASL) is a Scottish company which carries on a farming business in Aberdeenshire. FASL is wholly owned by Mr Frank Smart, who is its sole director. Mr Smart and his wife are the partners in a partnership which owns Tolmauds Farm, which it leases to FASL. FASL received SFPs from the Scottish Government. SFPs were agricultural subsidies which between 2005 and 2014 were paid to farmers who met certain requirements. When the scheme was initiated, farmers in the United Kingdom were allocated initial units of entitlement to single farm payments (SFPEs) for no consideration. The SFPEs were tradeable and a market in them developed. FASL took advantage of the market in SFPE units to accumulate a fund for the development of its business. It spent about 7.7m between 2007 and 2012 on purchasing 34,377 SFPE units in addition to its initial allocation of 194.98 units for Tolmauds Farm. In this period FASL paid VAT on the SFPE units which it purchased and it has sought to deduct or claim repayment of that VAT as input tax. HMRC refused to allow FASL to deduct VAT of 1,054,852.28 in its returns between December 2008 and June 2012. FASL appealed to the First tier Tribunal (FTT). The FTT allowed the appeal. The FTT found that, when it purchased the SFPE units, FASL intended to apply the income which it received from the SFPs to pay off its overdraft and to develop its business operations. FASL was also contemplating three principal developments of its business, including establishing a windfarm, constructing further farm buildings and purchasing neighbouring farms. Based on those findings, the FTT concluded that the funding opportunity afforded by the purchase of the SFPE units did not form a separate business activity of FASL but was a wholly integrated feature of the farming enterprise. HMRC appealed to the Upper Tribunal (Lord Tyre), which refused the appeal. HMRC appealed to the Inner House of the Court of Session. An Extra Division of the Inner House (Lord Menzies, Brodie and Drummond Young) dismissed the appeal. HMRC appealed to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Hodge gives the sole judgment with which the other Justices agree. The Supreme Court considered the Principal VAT Directive [11 16], the Value Added Tax Act 1994 [17 19] and the relevant CJEU case law [25 64]. It derived the following propositions [65]: (1) As VAT is a tax on the value added by the taxable person, the VAT system relieves the taxable person of the burden of VAT payable or paid in the course of that persons economic activity and thus avoids double taxation. (2) There must be a direct and immediate link between the goods and services which the taxable person has acquired (in other words the particular input transaction) and the taxable supplies which that person makes (in other words its particular output transaction). This link gives rise to the right to deduct. The needed link exists if the acquired goods and services are part of the cost components of that persons taxable transactions which utilise those goods and services. (3) Alternatively, there must be a direct and immediate link between those acquired goods and services and the whole of the taxable persons economic activity because their cost forms part of that businesss overheads and thus a component part of the price of its products. (4) Where the taxable person acquires professional services for an initial fund raising transaction which is outside the scope of VAT, that use of the services does not prevent it from deducting the VAT payable on those services as input tax and retaining that deduction if its purpose in fund raising, objectively ascertained, was to fund its economic activity and it later uses the funds raised to develop its business of providing taxable supplies. The same may apply if an analogous transaction involving the sale of shares is classified as an exempt transaction. (5) Where the cost of the acquired services, including services relating to fund raising, are a cost component of downstream activities of the taxable person which are either exempt transactions or transactions outside the scope of VAT, the VAT paid on such services is not deductible as input tax. Where the taxable person carries on taxable transactions, exempt transactions and transactions outside the scope of VAT, the VAT paid on the services it has acquired has to be apportioned. (6) The right to deduct VAT as input tax arises immediately when the deductible tax becomes chargeable. As a result, there may be a time lapse between the deduction of the input tax and the use of the acquired goods or services in an output transaction. Further, if the taxable person acquired the goods and services for its economic activity but, as a result of circumstances beyond its control, it is unable to use them in the context of taxable transactions, the taxable person retains its entitlement to deduct. (7) The purpose of the taxable person in carrying out the fund raising is a question of fact which the court determines by having regard to objective evidence. The existence of a link between the fund raising transaction and the persons taxable activity is to be assessed in the light of the objective content of the transaction. The ultimate question is whether the taxable person is acting as such for the purposes of an economic activity. This is a question of fact which must be assessed in the light of all the circumstances of the case, including the nature of the asset concerned and the period between its acquisition and its use for the purposes of the taxable persons economic activity. In light of the foregoing, the Court considers that FASL, when it incurred the costs of the SFPE units, was acting as a taxable person because it was acquiring assets in support of its current and planned economic activities, namely farming and the windfarm. On that basis, FASL was entitled to an immediate right of deduction of the VAT paid on the purchase of the SFPE units and is entitled to retain that deduction or repayment so long as it uses the SFPs which it received as cost components of its economic activities. Moreover, on the facts founds, FASL does not carry out and does not propose to carry out downstream non economic activities or exempt transactions. Therefore, no question of apportionment arises [68].
On 22 September 2015, Bernadette Hilton was convicted at Belfast Magistrates court on her plea of guilty of three offences contrary to section 105A of the Social Security Administration (Northern Ireland) Act 1992. One of the offences related to her failure to notify the Social Security Agency of a change in her circumstance which would have affected her entitlement to claim Income Support. The other two offences involved the making of false statements in order to obtain Income Support. Following her conviction, Ms Hilton was committed to the Crown Court and that court was asked to make a confiscation order under section 156 of the Proceeds of Crime Act 2002. This application was heard by His Honour Judge Miller QC on 20 October 2016. It had been calculated that Ms Hilton had wrongly obtained a total sum of 16,517.59 as a result of her crimes. The judge assessed the benefit that she had gained to be that sum. The only property held by Ms Hilton at the time of the hearing before Judge Miller was a house which was owned jointly with a former partner. She contended that the value of her half share in the property, after deduction of an outstanding mortgage was 10,263.50. The judge accepted that contention. He assessed the available amount as that sum and made a confiscation order in respect of it. Ms Hilton was ordered to pay that amount within three months. In default of its payment, it was directed that she serve six months imprisonment. Ms Hilton appealed. Although not included in her original grounds of appeal, before the Court of Appeal she argued that Judge Miller had failed to comply with the requirements of section 160A(2) of the 2002 Act because neither the co owner nor the mortgagee had been given the opportunity to make representations about the making of the confiscation order. It transpired that neither Ms Hiltons former partner nor the building society which was the mortgagee was aware of the criminal proceedings or the application for a confiscation order. The proceedings in the Court of Appeal Deeny J in an extempore judgment gave the decision of the court (Gillen LJ, Deeny J and Keegan J) on 12 May 2017: [2017] NICA 73. The principal issue which concerned the court (and which is the only matter involved in the appeal before us) was in relation to the requirements of section 160A(2) of the 2002 Act and whether the judges order contravened those requirements. Two other matters were argued before the Court of Appeal, namely, whether a reduction in the amount to be recovered should have been made in order to reflect the costs of the sale of the property and whether article 8 of the European Convention of Human Rights (ECHR) should have been taken into account at the time of the making of the confiscation order, as opposed to the making of an order for its enforcement. It is not necessary to say anything on either issue. The Court of Appeal decided that section 160A(2) required that, at the time of making a confiscation order, the Crown Court must give to anyone who is thought to hold or who, it is considered, may hold an interest in the property an opportunity to make representations on whether a confiscation order should be made and, if so, in what amount. Deeny J observed that the subsection had not been drawn to the attention of Judge Miller but, in any event, the failure to give Ms Hiltons estranged partner and the building society the chance to make representations was fatal to the decision of the judge (para 7 of the Court of Appeal judgment). The Director of Public Prosecutions applied for permission to appeal to this court and for a certificate that a point of law of general public importance arose on the appeal. On 6 March 2018, the Court of Appeal refused permission to appeal but certified the following points of law of general public importance: 1. Where property is held by the defendant and another person, in what circumstances is the court making a confiscation order required by section 160A of the Proceeds of Crime Act 2002, in determining the available amount, to give that other person reasonable opportunity to make representations to it at the time the order is made? If section 160A does so require, does a failure to give 2. that other such an opportunity render the confiscation order invalid? The 2002 Act There are or, at least, there can be two stages to confiscation proceedings: the first is the making of the confiscation order itself and the second the order securing its enforcement. The first stage is provided for in sections 156 to 163B. That stage is triggered in the manner described in section 156. The obligation to make an order arises once the conditions in subsections (2) and (3) are satisfied. These are fairly routine. The order must be made if a defendant has been convicted of an offence before the Crown Court or is committed to that court with a view to a confiscation order being made subsection (2); and if the prosecutor asks for such an order to be made or the court believes it appropriate to make it subsection (3). The relative ease with which these conditions can be satisfied suggests that it was envisaged that the making of a confiscation order (as opposed to its enforcement) should be straightforward, indeed quasi automatic. If satisfied that the order should be made, the court is directed how to proceed by section 156(4) and (5), the relevant parts of which, so far as concerns the present case, are these: (4) The court must proceed as follows (c) if it decides that [the defendant] does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct. (5) If the court decides under subsection (4) (c) that the defendant has benefited from the conduct referred to it must (a) decide the recoverable amount, and (b) make an order (a confiscation order) requiring him to pay that amount. [A footnote to sub paragraph (b) was inserted on 1 June 2015 by the Serious Crime Act 2015 (the 2015 Act) (c 9), section 88(3)(b), Schedule 4 paragraph 46; regulation 3(2)(b). It is to the following effect: Paragraph (b) applies only if, or to the extent that, it would not be disproportionate to require the defendant to pay the recoverable amount.] Section 157 deals with the calculation of the recoverable amount. The starting point is that the recoverable amount is an amount equal to the defendants benefit from the conduct concerned subsection (1). But if the defendant shows that the available amount is less than the benefit obtained, the recoverable amount is duly adjusted subsection (2). The available amount is defined in section 159 of the Act. For present purposes it is sufficient to refer to subsection (1)(a) of section 159 which stipulates that the recoverable amount is the total of the values (at the time the confiscation order is made) of all the free property then held by the defendant minus the total amount payable in pursuance of obligations which then have priority. It was by dint of the operation of section 157(2) in tandem with section 159(1)(a) that the recoverable amount in Ms Hiltons case was found to be the sum which, it was considered, could be obtained from the sale of the property which she jointly owned. It is to be noted that section 159(1)(a) specifies that the recoverable amount is the total of the values of all the free property then held by the defendant minus the amount payable for debts which have priority. The emphasis is on property which the defendant holds. Section 227(3), which makes provision for determining a propertys value, again makes clear that it is the market value of the defendants interest in the property, rather than the overall value of the property which dictates the amount to be specified in the confiscation order. Having made those preliminary observations, one must turn then to the section which is pivotal to this appeal section 160A. (It was also inserted on 1 June 2015 by the 2015 Act (c 9), sections 24, 88(3)(a), The Serious Crime (2015 Act) (Commencement) Regulations (Northern Ireland) 2015 (SR 2015/190), regulation 3(1)(a)). Section 160A(1) provides: Where it appears to a court making a confiscation order that (a) there is property held by the defendant that is likely to be realised or otherwise used to satisfy the order, and (b) hold, an interest in the property, a person other than the defendant holds, or may the court may, if it thinks it appropriate to do so, determine the extent (at the time the confiscation order is made) of the defendants interest in the property. Clearly, in this case, the judge formed a view as to the extent of Ms Hiltons interest in the jointly owned property. The critical question is whether he determined the extent of that interest under section 160A, so as to preclude any further representations by persons other than Ms Hilton who held or may hold an interest in the property. Ms Hiltons complaint is that he did and further that he failed to advert to subsection (2) of section 160A which provides: The court must not exercise the power conferred by subsection (1) unless it gives to anyone who the court thinks is or may be a person holding an interest in the property a reasonable opportunity to make representations to it. The significance of a determination under section 160A which precludes representations from third parties is clear from subsection (3) which provides: (3) A determination under this section is conclusive in relation to any question as to the extent of the defendants interest in the property that arises in connection with (a) the realisation of the property, or the transfer of an interest in the property, with a view to satisfying the confiscation order, or (b) of any such realisation or transfer. any action or proceedings taken for the purposes A determination of the extent of the interest of the person subject to the confiscation order on the basis that no further representations may be made by third parties thus becomes immutable, unless there is an appeal to the Court of Appeal section 181(4), (5) and (6). The question whether a confiscation order has been made on foot of such a determination is therefore critical. But it is also critical that that question be addressed with the two stage process involved in the making of the order and securing its enforcement firmly in mind. Before turning to that, however, it should be recalled that making a determination as to the extent of a persons interest which precludes later representations by third parties (as opposed to forming a preliminary view about that interest) is conditional on the courts considering it appropriate to do so. Since section 160A(2) requires that the court should give to anyone who may be a person holding an interest in the property a reasonable opportunity to make representations to it, by definition, it could not be appropriate to make a determination affecting such a persons interest without giving him or her that opportunity. Unless the Crown Court judge is confident that the third partys interest will not be affected, he or she should not make a determination under section 160A(1) which effectively extinguishes the opportunity for third parties to make later representations. The judge is not prohibited, however, from forming a view as to the extent of the interest of the person subject to the confiscation order for the purpose of computing what is, in effect, a statutory debt see R v Ahmed (Mumtaz) [2005] 1 WLR 122, discussed below at para 19. This is particularly so because of the provisions relating to the quite distinct exercise involved in the realisation of the order or payment of the sum due and it is to those provisions that I now turn. Section 198 makes provision for the circumstances where a confiscation order has been made but has not been satisfied. It is in these terms: (1) This section applies if (a) (b) (c) a confiscation order is made, it is not satisfied, and it is not subject to appeal. (2) On the application of the prosecutor the Crown Court may by order appoint a receiver in respect of realisable property. It is to be noted that the exercise of the power under this section is dependent on a confiscation order having been made. This reflects the two stage approach: the first the making of the confiscation order and the second the realisation or enforcement of that order. As the appellant submits, if the interests of third parties are not considered and disposed of at the confiscation stage, they must be dealt with at the enforcement stage. This is the effect of various provisions in section 199. The first relevant provision in section 199 is subsection (2). It provides that the court may confer on a receiver (appointed under subsection (1)) a number of powers in relation to the realisable property. These include the power to manage or otherwise deal with the property (subsection 2(b)) and the power to realise the property, in such manner as the court may specify (subsection 2(c)). Subsection (6) makes provision for the courts power to order a person holding an interest in realisable property to make a payment to a receiver in respect of a beneficial interest held by the defendant and, on the payment being made, order the transfer, grant or extinguishment of any interest in the property. proviso in section 199(8), however. It provides: Importantly, recourse to subsections (2) and (6) is subject to an important (8) The court must not confer the power mentioned in subsection (2)(b) (a) or (c) in respect of property, or (b) (6) in respect of property, exercise the power conferred on it by subsection unless it gives persons holding interests in the property a reasonable opportunity to make representations to it. This is important because the section was retained in the legislation, despite the introduction of section 160A. It can be safely assumed, therefore, that Parliament intended that the two stage process of (i) the making of the confiscation order, and (ii) its enforcement or realisation at a later point should be preserved. Indeed, there can be no doubt about this because a new subsection 8B was introduced by the 2015 Act (c 9), sections 27, 88(3)(a) (SR 2015/190), regulation 3(1)(a). It provides: Representations that a person is entitled to make by virtue of subsection (8) do not include representations that are inconsistent with a determination made under section 160A, unless (a) the person was not given a reasonable opportunity to make representations when the determination was made and has not appealed against the determination, or (b) it appears to the court that there would be a serious risk of injustice to the person if the court was bound by the determination; and the determination does not bind the court if paragraph (a) or (b) applies. This provision proceeds on the premise that section 160A and section 199 continue, in relevant circumstances, to co exist. Third party representations are forbidden, subject to the qualifications in sub paras (a) and (b), if a determination under section 160A has been made. If such a determination has not been made, however, there is no inhibition to the making of third party representations. Put simply, section 160A does not purport to occupy the field. The opportunity to make representations at the enforcement stage continues to apply either because a determination under section 160A has not been made or because the conditions in section 199(8B) are met. The fundamental point is that, at the enforcement stage, third party rights may continue to be considered either because the Crown Court did not make a section 160A determination, or because it did so without affording a person with an interest in property the opportunity to make representations when the determination was made. Discussion The distinct two stage process in (i) the making a confiscation order; and (ii) the enforcement of that order, was an inevitable feature of proceeds of crime applications before the introduction of section 160A to the 2002 Act by the 2015 Act. In R v Ahmed (Mumtaz) and R v Qureshi (Ghulam) [2005] 1 WLR 122, after dealing with the question of whether the defendants had benefited from their criminal activities, Latham LJ turned to the nature of the exercise involved in the making of a confiscation order. At paras 11 and 12, he said: 11. The court is merely concerned with the arithmetic exercise of computing what is, in effect, a statutory debt. That process does not involve any assessment, in our judgment, of the way in which that debt may ultimately be paid, any more than the assessment of any other debt. 12. Different considerations, will, however arise if the debt is not met and the prosecution determine to take enforcement action, for example by obtaining an order for a receiver. As the House of Lords explained in In re Norris [2001] 1 WLR 1388 this is the stage of the procedure in which a third partys rights can not only be taken into account but resolved. A third partys rights were not considered at the confiscation order stage. This was and still may be a computation exercise to decide how much the defendant has benefited from his or her criminal activity and to assess what assets they have that might be recoverable. Whether those assets were in fact realisable was left to the enforcement stage. The crucial question to be determined in the present appeal is whether, and in what circumstances, that division of functions can still occur where there are third party interests at stake. The circumstance that the confiscation stage did not involve any consideration of how the debt might be realised was reinforced by the fact that, as Latham LJ put it, it was akin to a statutory debt and it was owed in personam. The significance of this is explained in Millington and Sutherland Williams on The Proceeds of Crime, 5th ed (2018), chapter 16, para 16.53: A confiscation order is an in personam order against the convicted defendant and not an in rem order against specific items of property. The consequence of this, prior to 1 June 2015, was that third parties who held an interest in realisable property did not have a right to be heard at the confiscation hearing in the Crown Court or to have counsel make representations to the court on their behalf. If the defendant wished the third party to be called as a witness on his behalf for the purpose of establishing the extent of his interest in realisable property, he could of course do so. Following the introduction of section 10A of POCA [in Northern Ireland section 160A] the position has been modified. The extent of the modification is contained in section 160A(2) which stipulates that the Crown Court must give to anyone who is thought to hold or who, it is considered, may hold an interest in the property an opportunity to make representations on whether a confiscation order should be made and, if so, in what amount see para 6 above. What has not been modified, in my opinion, in cases where third party interests have been identified, is the opportunity available to the Crown Court, to make a confiscation order other than under section 160A. In such circumstances, the confiscation stage of proceedings remains separate from the enforcement stage. In the present case, the Court of Appeals judgment is premised on the proposition that on every occasion that third party interests arise, the court must proceed under section 160A. The consequence of that approach would be that there would be an inevitable collapse of the traditional two stages into one hearing with all the panoply of investigation of the merits of the rights of third parties, such as a former partner and the building society in the present appeal. This would inevitably introduce a cumbersome procedure to the making of the confiscation order. Conventionally, as in the present instance, those with some interest in the property which might become available at the realisation stage, such as former partners and mortgagees, are not made parties to the application for a confiscation order. If, in every case where third party interests were potentially at stake, a full section 160A investigation had to be undertaken at the stage of making the confiscation order, the case would have to be adjourned; those with possible interests would have to be put on notice; and the making of a confiscation order would have to be postponed. I am satisfied that this was not intended. The making of a confiscation order would no longer be straightforward, much less quasi automatic (see para 8 above) if section 160A had to be applied in all its rigour in every case where third party interests arose. The enactment of the section was designed to streamline the system, not to complicate it. In my view, its purpose was to combine the confiscation and enforcement stages in simple cases where there could be no sensible debate about how the confiscation order should be enforced. This conclusion is supported by consideration of academic commentary and case law which predates the introduction of section 160A. In Blackstones Guide to The Proceeds of Crime Act 2002, 5th ed (2015), the authors note at para 2.197 that traditional advice for third parties wishing to protect property in their possession was to await enforcement proceedings. Of course, during the determination hearing itself, the defendant himself might call the third party as a witness in order to prove an interest which reduced the amount of the defendants available property. However, there has never been any procedure allowing for third parties to make their own freestanding representations at that stage. Dicta in In re Norris [2001] UKHL 34; [2001] 1 WLR 1388 underscore the distinction between the confiscation order and the order for its enforcement. The House of Lords emphasised the in personam nature of a confiscation order: The order which it makes is an order which is directed against the defendant only, and it is simply an order for the payment of a sum of money. The question of realisation, if the exercise of powers by a receiver is needed in order to make good the order which the defendant is required to satisfy, is reserved for the High Court (para 5). It was further emphasised that the structure of the 2002 Act reflected the engrained distinction between the courts criminal jurisdiction and their civil jurisdiction, and the division of responsibility and function between the Crown Court exercising the criminal jurisdiction and the High Court exercising the civil jurisdiction. The criminal jurisdiction is concerned alone with what order to make under sections 1 to 4 of the Act. The procedure of the criminal court is solely concerned with the parties before it, the prosecution and the defendant (para 23). There is now, of course, a procedure allowing third parties to make representations at the confiscation stage of proceedings but only where the Crown Court is minded to make a determination under section 160A. Indeed, this is the combined effect of sections 160A(2) and (3) and section 199(8)(b) see paras 12 14 and 17 above. It is evident, therefore, that it was open to Judge Miller to make a confiscation order other than under section 160A. Having read the transcript of the hearing of the application for a confiscation order and the order which the judge made, it is clear to me that no determination under that section was made. It was not mentioned during the submissions that were made to the judge nor in the order of the court. The hearing of the application for a confiscation order was principally concerned with the relevance of the costs of the sale of the property to the calculation of the realisable amount. The possible significance of third party interests was not referred to by any party. It seems likely that the judge was completely unaware of these. Section 160A has no bearing on this case, therefore, unless the judge was bound to make an order under its provisions. For the reasons that I have given, he was not. Having considered the transcript of the hearing before him, I am satisfied that he did not. Conclusion I consider that the answer to the first question certified, namely, Where property is held by the defendant and another person, in what circumstances is the court making a confiscation order required by section 160A of the Proceeds of Crime Act 2002, in determining the available amount, to give that other person reasonable opportunity to make representations to it at the time the order is made? should be that this question does not arise on the present appeal because a determination under section 160A was not made. The same answer must be given to the second certified question. The appeal is therefore allowed and the learned County Court judges order is restored. It will be open to the third parties to make representations at the enforcement stage of the proceedings. Likewise, at that stage, it will be open to Ms Hilton to canvass the matters adverted to in para 5 above.
UK-Abs
On 22 September 2015 Bernadette Hilton was convicted of three offences contrary to section 105A of the Social Security Administration (Northern Ireland) Act 1972. Following conviction, Ms Hilton was committed to the Crown Court and that court was asked to make a confiscation order under section 156 of the Proceeds of Crime Act 2002. The application was heard by His Honour Judge Miller QC on 20 October 2016. He made a confiscation order in respect of 10,263.50, which was the equivalent of Ms Hiltons half share of her matrimonial home. Ms Hilton appealed against the order. The Court of Appeal decided that Section 160A(2) of the Proceeds of Crime Act 2002 required that, at the time of making a confiscation order, the Crown Court must give to anyone who is thought to hold an interest in the property an opportunity to make representations on whether a confiscation order should be made and, if so, in what amount. The failure to give Ms Hiltons estranged partner and the building society the chance to make representations was fatal to the decision of the judge and the confiscation order was thus invalid. The Director of Public Prosecution appeals to this Court. The Court of Appeal certified the following points of law of general public importance: 1. Where property is held by the defendant and another person, in what circumstances is the court making a confiscation order required by section 160A of the Proceeds of Crime Act 2002, in determining the available amount, to give that other person reasonable opportunity to make representations to it at the time the order is made? 2. If section 160A does so require, does a failure to give that other such an opportunity render the confiscation order invalid? The Supreme Court unanimously allows the appeal. It holds that the questions certified do not arise on the present appeal because a determination under section 160A was not made. Lord Kerr gives the judgment. The Proceeds of Crime Act 2002 provides for two stages to confiscation proceedings: the first is the making of the confiscation order itself and the second the order securing its enforcement. The first stage is dealt with in sections 156 and 163B and envisages that the making of a confiscation order should be straightforward, indeed quasi automatic [8]. Section 160A of the Act provides that (1) Where it appears to a court making a confiscation order that (a) there is property held by the defendant that is likely to be realised or otherwise used to satisfy the order, and (b) a person other than the defendant holds, or may hold, an interest in the property, the court may, if it thinks it appropriate to do so, determine the extent (at the time the confiscation order is made) of the defendants interest in the property. (2) The court must not exercise the power conferred by subsection (1) unless it gives to anyone who the court thinks is or may be a person holding an interest in the property a reasonable opportunity to make representations to it. (3) A determination under this section is conclusive in relation to any question as to the extent of the defendants interest in the property that arises in connection with (a) the realisation of the property, or the transfer of an interest in the property, with a view to satisfying the confiscation order, or (b) any action or proceedings taken for the purposes of any such realisation or transfer. The critical question is whether, at the stage of making the order, the Crown Court judge made a determination of the extent of Ms Hiltons interest in the jointly owned property under section 160A. If made on foot of such a determination, the confiscation order becomes immutable unless there is an appeal [11 14]. A determination under section 160A therefore effectively extinguishes the opportunity for third parties to make later representations. On the other hand, the judge can at this stage form a view of the extent of the interest of the person in question, here Ms Hilton, without making a determination under section 160A. Parliament intended this to be the case, as is evident from the provisions relating to the second, enforcement stage of a confiscation order [14]. In particular, section 199(8) provides that a court must not order enforcement unless it gives persons holding interests in the property a reasonable opportunity to make representations. This section is important because it was retained in the legislation despite the introduction of section 160A. Furthermore, subsection 8B to section 199 proceeds on the premise that section 160A and section 199 continue, in relevant circumstances, to co exist [16 18]. Reading these sections together, it is clear that section 160A does not purport to occupy the field. The opportunity to make representations at the enforcement stage continues to apply either because a determination under section 160A has not been made or because the conditions in section 199(8B) are met. The fundamental point is that, at the enforcement stage, third party rights may continue to be considered [18]. Essentially, therefore, where the court makes a section 160A determination, third parties must be afforded the chance to make representations at the stage of making the confiscation order, as provided for by section 160A(2). But where the court does not make a section 160A determination and rather simply forms a view, at this first stage of the process, of the extent of the interest of the person in question, it will have to give third parties the chance to make representations at the enforcement stage. Where the court does not make a section 160A determination, therefore, it is not incumbent upon it to give third parties the chance to make representations at the first stage of the process (the making of the order) because they will have the chance to do so at the second stage (enforcement) before the confiscation order is enforced. The Court of Appeals judgment is premised on the proposition that on every occasion that third party interests arise, the court must proceed under section 160A. This is contrary to the conclusion reached that the introduction of section 160A has not modified the opportunity available to the Crown Court to make a confiscation order other than under section 160A. The consequence of the Court of Appeals approach would involve a collapse of the traditional two stages the making of an order and the enforcement of it into one hearing with all the panoply of investigation of the merits of the rights of third parties, such as a former partner and the building society in the present appeal. This would inevitably introduce a cumbersome procedure to the making of the confiscation order [23]. This was not intended. The making of a confiscation order would no longer be straightforward, much less quasi automatic (see para [8]) if section 160A had to be applied in all its rigour in every case where third party interests arose [24]. The enactment of the section was designed to streamline the system, not to complicate it. section 160A simply introduces a procedure allowing third parties to make representations at the confiscation stage, but only where the Crown Court makes a determination under section 160A [27]. No determination under section 160A was made here [28]. For this reason, the answer to the questions certified is that they do not arise on the present appeal. The appeal is therefore allowed [29].
The short point in this appeal is whether the appellant county council, as local planning authority, correctly understood the meaning of the word openness in the national planning policies applying to mineral working in the Green Belt, as expressed in the National Planning Policy Framework (NPPF). The Court of Appeal ([2018] EWCA Civ 489), disagreeing with Hickinbottom J ([2017] EWHC 442 (Admin)) in the High Court, held that, in granting planning permission for the extension of a quarry, the council had been misled by defective advice given by their planning officer. In the words of Lindblom LJ, giving the leading judgment: It was defective, at least, in failing to make clear to the members that, under government planning policy for mineral extraction in the Green Belt in para 90 of the NPPF, visual impact was a potentially relevant and potentially significant factor in their approach to the effect of the development on the openness of the Green Belt, (para 49, per Lindblom LJ) He thought that, having regard to the officers own assessment, it was quite obviously relevant, and therefore a necessary part of the assessment. The court quashed the permission. In this court, the council, supported by the quarry operator (the third respondent), argues that the Court of Appeals reasoning was based on misunderstandings both of the relevant policies and of the officers report, and that the permission should be reinstated. The first and second respondents (collectively referred to as Samuel Smith) seek to uphold the decision and reasoning of the Court of Appeal. Green Belt policy History and aims Although we are directly concerned with the policies in the NPPF (in its original 2012 version), Green Belt policies have a very long history. It can be traced back to the first national guidance on Green Belts in Circular 42/55 (issued in August 1955). More recently Planning Policy Guidance 2: Green Belts (published in 1995 and amended in 2001) (PPG2) confirmed the role of Green Belts as an essential element of planning policy for more than four decades; and noted that the purposes of Green Belt policies and the related development control policies set out in 1955 remain valid today with remarkably little alteration (para 1.1). The NPPF itself, as appears from ministerial statements at the time, was designed to consolidate and simplify policy as expressed in a number of ministerial statements and guidance notes, rather than to effect major policy changes (see Redhill Aerodrome Ltd v Secretary of State for Communities and Local Government [2014] EWCA Civ 1386; [2015] PTSR 274, paras 16ff, 22 per Sullivan LJ). In the NPPF the concept of openness first appears in the introduction to section 9 (Protecting Green Belt land) which gives a statement of the fundamental aim and the purposes of Green Belt policy: 79. The Government attaches great importance to Green Belts. The fundamental aim of Green Belt policy is to prevent urban sprawl by keeping land permanently open; the essential characteristics of Green Belts are their openness and their permanence. 80. Green Belt serves five purposes: to check the unrestricted sprawl of large built up areas; another; encroachment; to prevent neighbouring towns merging into one to assist in safeguarding the countryside from to preserve the setting and special character of historic towns; and the recycling of derelict and other urban land. to assist in urban regeneration, by encouraging This statement of the fundamental aim of the policy and the five purposes is unchanged from PPG2. The PPG included a fuller statement of certain objectives for the use of land within defined Green Belts, including (for example) providing opportunities for access to open countryside, and retaining and enhancing attractive landscapes (para 1.6), but adding: The extent to which the use of land fulfils these objectives is however not itself a material factor in the inclusion of land within a Green Belt, or in its continued protection. For example, although Green Belts often contain areas of attractive landscape, the quality of the landscape is not relevant to the inclusion of land within a Green Belt or to its continued protection. The purposes of including land in Green Belts are of paramount importance to their continued protection, and should take precedence over the land use objectives. (para 1.7) It is clear therefore that the visual quality of the landscape is not in itself an essential part of the openness for which the Green Belt is protected. Control of development in Green Belts Key features of development control in Green Belts are the concepts of appropriate and inappropriate development, and the need in the latter case to show very special circumstances to justify the grant of planning permission. In R (Lee Valley Regional Park Authority) v Epping Forest District Council [2016] EWCA Civ 404; [2016] Env LR 30 (the Lee Valley case), Lindblom LJ explained their relationship: 18. A fundamental principle in national policy for the Green Belt, unchanged from PPG2 to the NPPF, is that the construction of new buildings in the Green Belt is inappropriate development and should not be approved except in very special circumstances, unless the proposal is within one of the specified categories of exception in the closed lists in paras 89 and 90. The distinction between development that is inappropriate in the Green Belt and development that is not inappropriate (ie appropriate) governs the approach a decision maker must take in determining an application for planning permission. Inappropriate development in the Green Belt is development by definition, harmful to the Green Belt harmful because it is there whereas development in the excepted categories in paras 89 and 90 of the NPPF is not. These concepts are expressly preserved in the policies for the control of development set out in paras 87ff of the NPPF: As with previous Green Belt policy, inappropriate development is, by definition, harmful to the Green Belt and should not be approved except in very special circumstances. Very special circumstances will not exist unless the potential harm the Green Belt by reason of inappropriateness, and any other harm, is clearly outweighed by other considerations. (paras 87 88) Paragraph 89 indicates that construction of new buildings is to be regarded as inappropriate with certain defined exceptions. The exceptions include, for example, buildings for agriculture and forestry, and (relevant to authorities discussed later in this judgment): provision of appropriate facilities for outdoor sport, outdoor recreation and for cemeteries, as long as it preserves the openness of the Green Belt and does not conflict with the purposes of including land within it; the partial or complete redevelopment of previously developed sites (brownfield land), whether redundant or in continuing use (excluding temporary buildings), which would not have a greater impact on the openness of the Green Belt and the purpose of including land within it than the existing development. infilling or limited Paragraph 90, which defines forms of development regarded as not inappropriate is directly in issue in the present case: 90. Certain other forms of development are also not inappropriate in Green Belt provided they preserve the openness of the Green Belt and do not conflict with the purposes of including land in Green Belt. These are: mineral extraction; engineering operations; local transport infrastructure which can demonstrate a requirement for a Green Belt location; the re use of buildings provided that the buildings are of permanent and substantial construction; and development brought forward under a Community Right to Build Order. (Emphasis added. I shall refer to the words so emphasised as the openness proviso) Paragraphs 89 90 replace a rather fuller statement of policy for Control of Development in section 3 of PPG2. Paragraphs 3.4 3.6 (New buildings), and paras 3.7 3.12 (Re use of buildings, and, under a separate heading, Mining operations, and other development) cover substantially the same ground, respectively, as NPPF paras 89 and 90, but in rather fuller terms. The policy for Mining operations, and other development was as follows: 3.11 Minerals can be worked only where they are found. Their extraction is a temporary activity. Mineral extraction need not be inappropriate development: it need not conflict with the purposes of including land in Green Belts, provided that high environmental standards are maintained and that the site is well restored. Mineral and local planning authorities should include appropriate policies in their development plans. Mineral planning authorities should ensure that planning conditions for mineral working sites within Green Belts achieve suitable environmental standards and restoration 3.12 The statutory definition of development includes engineering and other operations, and the making of any material change in the use of land. The carrying out of such operations and the making of material changes in the use of land are inappropriate development unless they maintain openness and do not conflict with the purposes of including land in the Green Belt (Emphasis added) It will be noted that a possible textual issue arises from the way in which the PPG2 policies have been shortened and recast in the NPPF. In the PPG the openness proviso is in terms directed to forms of development other than mineral extraction (it also appears in the section on re use of buildings: para 3.8). By contrast, mineral extraction is not expressly subject to the proviso, but may be regarded as not inappropriate, subject only to high environmental standards and the quality of restoration. In the shortened version in the NPPF these categories of potentially appropriate development have been recast in para 90, and brought together under the same proviso, including the requirement to preserve openness. I do not read this as intended to mark a significant change of approach. If that had been intended, one would have expected it to have been signalled more clearly. To my mind the change is explicable as no more than a convenient means of shortening and simplifying the policies without material change. It may also have been thought that, whereas mineral extraction in itself would not normally conflict with the openness proviso, associated building or other development might raise greater problems. A possible example may be seen in the Europa Oil case discussed below (para 26). Other relevant policies Mineral policies A later part of the NPPF (section 13, headed Facilitating the sustainable use of minerals) deals with mineral development generally. It emphasises the importance of ensuring a sufficient supply of minerals to support economic growth (para 142); and gives advice on the inclusion of mineral policies in local plans (para 143), and on the determination of planning applications (para 144). The latter includes (inter alia) a requirement to ensure that there are no unacceptable adverse impacts on the natural and historic environment , and that provision is made for restoration and aftercare at the earliest opportunity to be carried out to high environmental standards . No issue arises under these policies in the present case, but they show that development which is appropriate in Green Belt may be found unacceptable by reference to other policy constraints. Local plan policies The proposal was also subject to Green Belt and other policies in the local plan (the Selby District Core Strategy Local Plan). These are summarised by Lindblom LJ (para 9). It is not suggested by either party that these materially affect the legal issues arising in the present appeal. The application and the officers report The application was for an extension to the operational face of Jackdaw Crag Quarry, a magnesian limestone quarry owned and operated by the third respondent, Darrington Quarries Ltd. The quarry, which extends to about 25 hectares, is in the Green Belt, about 1.5 kilometres to the south west of Tadcaster. It has been operated by Darrington Quarries for many years, planning permission for the extraction of limestone having first been granted in July 1948 and subsequently renewed. The proposed extension is for an area of about six hectares, expected to yield some two million tonnes of crushed rock over a period of seven years. The application had received planning permission in January 2013, but that permission was quashed because of failings in the environmental impact assessment. The application came back to the county councils Planning and Regulatory Functions Committee on 9 February 2016, when the committee accepted their officers recommendation that planning permission be granted. Following completion of a section 106 agreement planning permission was granted on 22 September 2016. The officers report, prepared by Vicky Perkin for the Corporate Director, Business and Environmental Services, was an impressively comprehensive and detailed document, running to more than 100 pages, and dealing with a wide range of planning considerations. Under the heading Landscape impact, the report summarised the views of the councils Principal Landscape Architect, who had not objected in principle to the proposal, but had drawn attention to the potential landscape impacts and the consequent need to ensure that mitigation measures are maximised (paras 4.118, 7.42 5). For present purposes the critical part of the report comes under the heading Impacts of the Green Belt (paras 7.117ff). Having summarised the relevant national and local policies, she referred (para 7.120) to the consultation response from Samuel Smith stating that: the application site falling within the Green Belt is critical in the determination of the proposal and added that mineral extraction remains inappropriate development in the Green Belt unless it can be demonstrated that the proposal both preserves the openness of the Green Belt and doesnt conflict with the purposes of including land within the Green Belt. The objector also stated that one of the aims of the Green Belt, in assisting in urban regeneration will be materially harmed by the development (her italics) The officer commented: 7.121 When considering applications within the Green Belt, in accordance with the NPPF, it is necessary to consider whether the proposed development will firstly preserve the openness of the Green Belt and secondly ensure that it does not conflict with the purposes of including land within the Green Belt. 7.122 It is considered that the proposed development preserves the openness of the Green Belt and does not conflict with the purposes of including land within the Green Belt. Openness is not defined, but it is commonly taken to be the absence of built development. Although the proposed development would be on existing agricultural land, it is considered that because the application site immediately abuts the existing operational quarry, it would not introduce development into this area of a scale considered to conflict with the aims of preserving the openness of the Green Belt. 7.123 In terms of whether the proposed development does not conflict with the purposes of including land within the Green Belt, the proposed quarrying operations are not considered to conflict with the purposes of including land within the Green Belt. Equally, it is not considered that the proposed development would undermine the objective of safeguarding the countryside from encroachment as it should be considered that the site is in conjunction with an operational quarry which will be restored. The proposed development is a temporary use of land and would also be restored upon completion of the mining operations through an agreed [restoration plan]. 7.124 The purposes of including land within the Green Belt to prevent the merging of neighbouring towns and impacts upon historic towns are not relevant to this site as it is considered the site is adequately detached from the settlements of Stutton, Towton and Tadcaster. It is also important to note that the A64 road to the north severs the application site from Tadcaster. 7.125 As mentioned in the response from [Samuel Smith], one of the purposes of the Green Belt is assisting in urban regeneration which the objector claims will be undermined by the proposed development. Given the situation of the application site, adjacent to an existing operational quarry and its rural nature, and the fact that minerals can only be worked where they are found, it is considered that the site would not, therefore, undermine this aim of the Green Belt. 7.126 The restoration scheme is to be designed and submitted as part of a section 106 Agreement, it is considered that there are appropriate controls to ensure adequate restoration of the site. Due to the proposed restoration of the temporary quarry and the fact that it is considered the proposal doesnt conflict with the aims of the Green Belt, it is considered that the proposed development would not materially harm the character and openness of the Green Belt, and would, therefore, comply with Policy SP3 and SP13 of the Selby District Core Strategy Local Plan and NPPF. Section 8 of the report gives the planning officers conclusion: 8.4 It is considered that the proposed screening could protect the environment and residential receptors from potential landscape and visual impacts. 8.5 Due to the proposed restoration of the temporary quarry and the fact that it is considered the proposal doesnt conflict with the aims of the Green Belt, it is considered that the proposed development would not materially harm the character and openness of the Green Belt. Legal principles Much time was taken up in the judgments below, as in the submissions in this court, on discussion of previous court authorities on the relevance of visual impact under Green Belt policy. The respective roles of the planning authorities and the courts have been fully explored in two recent cases in this court: Tesco Stores Ltd v Dundee City Council (Asda Stores Ltd intervening) [2012] UKSC 13; [2012] PTSR 983, and Hopkins Homes Ltd v Secretary of State for Communities and Local Government [2017] UKSC 37; [2017] 1 WLR 1865. In the former Lord Reed, while affirming that interpretation of a development plan, as of any other legal document, is ultimately a matter for the court, also made clear the limitations of this process: Although a development plan has a legal status and legal effects, it is not analogous in its nature or purpose to a statute or a contract. As has often been observed, development plans are full of broad statements of policy, many of which may be mutually irreconcilable, so that in a particular case one must give way to another. In addition, many of the provisions of development plans are framed in language whose application to a given set of facts requires the exercise of judgment. Such matters fall within the jurisdiction of planning authorities, and their exercise of their judgment can only be challenged on the ground that it is irrational or perverse (para 19) In the Hopkins Homes case (paras 23 34) I warned against the danger of over legalisation of the planning process. I noted the relatively specific language of the policy under consideration in the Tesco case, contrasting that with policies: expressed in much broader terms [which] may not require, nor lend themselves to, the same level of legal analysis The concept of openness in para 90 of the NPPF seems to me a good example of such a broad policy concept. It is naturally read as referring back to the underlying aim of Green Belt policy, stated at the beginning of this section: to prevent urban sprawl by keeping land permanently open . Openness is the counterpart of urban sprawl and is also linked to the purposes to be served by the Green Belt. As PPG2 made clear, it is not necessarily a statement about the visual qualities of the land, though in some cases this may be an aspect of the planning judgement involved in applying this broad policy concept. Nor does it imply freedom from any form of development. Paragraph 90 shows that some forms of development, including mineral extraction, may in principle be appropriate, and compatible with the concept of openness. A large quarry may not be visually attractive while it lasts, but the minerals can only be extracted where they are found, and the impact is temporary and subject to restoration. Further, as a barrier to urban sprawl a quarry may be regarded in Green Belt policy terms as no less effective than a stretch of agricultural land. It seems surprising in retrospect that the relationship between openness and visual impact has sparked such legal controversy. Most of the authorities to which we were referred were concerned with the scope of the exceptions for buildings in para 89 (or its predecessor). In that context it was held, unremarkably, that a building which was otherwise inappropriate in Green Belt terms was not made appropriate by its limited visual impact (see R (Heath and Hampstead Society) v Camden London Borough Council [2007] EWHC 977 (Admin), upheld at R (Heath and Hampstead Society) v Vlachos [2008] EWCA Civ 193; [2008] 3 All ER 80). As Sullivan J said in the High Court: The loss of openness (ie unbuilt on land) within the Green Belt or Metropolitan Open Land is of itself harmful to the underlying policy objective. If the replacement dwelling is more visually intrusive there will be further harm in addition to the harm by reason of inappropriateness (para 22) To similar effect, in the Lee Valley case, Lindblom LJ said: The concept of openness here means the state of being free from built development, the absence of buildings as distinct from the absence of visual impact. (para 7, cited by him in his present judgment at para 19) Unfortunately, in Timmins v Gedling Borough Council [2014] EWHC 654 (Admin) (a case about another familiar Green Belt category cemeteries and associated buildings), Green J went a stage further holding, not only that there was a clear conceptual distinction between openness and visual impact, but that it was: wrong in principle to arrive at a specific conclusion as to openness by reference to visual impact. (para 78, emphasis in original) This was disapproved (rightly in my view) in Turner v Secretary of State for Communities and Local Government [2016] EWCA Civ 466; [2017] 2 P & CR 1, para 18. This concerned an inspectors decision refusing permission for a proposal to replace a mobile home and storage yard with a residential bungalow in the Green Belt. In rejecting the contention that it was within the exception for redevelopment which would not have a greater impact on the openness of the Green Belt, the inspector had expressly taken account of its visual effect, and that it would appear as a dominant feature that would have a harmful impact on openness here. The Court of Appeal upheld the decision. Sales LJ said: The concept of openness of the Green Belt is not narrowly limited to the volumetric approach suggested by [counsel]. The word openness is open textured and a number of factors are capable of being relevant when it comes to applying it to the particular facts of a specific case. Prominent among these will be factors relevant to how built up the Green Belt is now and how built up it would be if redevelopment occurs and factors relevant to the visual impact on the aspect of openness which the Green Belt presents. (para 14) Before us there was no challenge to the correctness of this statement of approach. However, it tells one nothing about how visual effects may or may not be taken into account in other circumstances. That is a matter not of legal principle, but of planning judgement for the planning authority or the inspector. The only case referred to in argument which was directly concerned with mineral extraction as such was Europa Oil and Gas Ltd v Secretary of State for Communities and Local Government [2013] EWHC 2643 (Admin); [2014] 1 P & CR 3 (upheld at [2014] EWCA Civ 825; [2014] PTSR 1471). That concerned an application for permission for an exploratory drill site to explore for hydrocarbons in the Green Belt, including plant and buildings. The inspector had considered the potential effect of the development on the Green Belt: I consider Green Belt openness in terms of the absence of development. The proposal would require the creation of an extensive compound, with boundary fencing, the installation of a drilling rig of up to 35 metres in heating, a flare pit and related buildings, plant, equipment and vehicle parking on the site. Taking this into account, together with the related HGV and other traffic movements, I consider that the Green Belt openness would be materially diminished for the duration of the development and that there would be a conflict with Green Belt purposes in respect of encroachment into the countryside over that period. (quoted by Ouseley J at para 16) He refused permission, taking the view that it did not fall within the exception for mineral extraction, and that there were no very special circumstances to out weigh the harm to the Green Belt identified in that passage. It was held that he had erred in failing to treat the proposal as one for mineral extraction, and therefore potentially within the exception in NPPF para 90. Ouseley J noted the special status of mineral extraction under Green Belt policy. As he said: 67. One factor which affects appropriateness, the preservation of openness and conflict with Green Belt purposes, is the duration of development and the reversibility of its effects. Those are of particular importance to the thinking which makes mineral extraction potentially appropriate in the Green Belt. Another is the fact that extraction, including exploration, can only take place where those operations achieve what is required in relation to the minerals. Minerals can only be extracted where they are found 68. Green Belt is not harmed by such a development because the fact that the use has to take place there, and its duration and reversibility are relevant to its appropriateness and to the effect on the Green Belt . The key point, in my judgment, is that the inspector approached the effect on Green Belt openness and purposes on the premise that exploration for hydrocarbons was necessarily inappropriate development since it did not come within any of the exceptions. He was not considering the application of the proviso to para 90 at all: on his analysis, he did not get that far. Had he been assessing the effect on Green Belt openness and purposes from the point of view of the proviso, it would have been on the very different premise that exploration for hydrocarbons on a sufficient scale to require planning permission is nevertheless capable in principle of being appropriate development. His mind set would have been different, or at least it might well have been different However, he made clear that it remained necessary for the decision maker to consider the proposal under the proviso to para 90. Affirming his decision in the Court of Appeal, Richards LJ said (para 41): Although the decision turned principally on a legal issue as to the meaning of mineral extraction, it is significant that the impact on the Green Belt identified by the inspector (including a 35 metre drill rig and related buildings) was not thought necessarily sufficient in itself to lead to conflict with the openness proviso. That was a matter for separate planning judgement. Material considerations Section 70(2) of the Town and Country Planning Act 1990 (the Act) required the council in determining the application to have regard to the development plan and any other material consideration. In summary Samuel Smiths argument, upheld by the Court of Appeal, is that the authority erred in failing to treat the visual effects, described by the officer in her assessment of Landscape impact (para 17 above) as material considerations in its application of the openness proviso under para 90. The approach of the court in response to such an allegation has been discussed in a number of authorities. I sought to summarise the principles in Derbyshire Dales District Council v Secretary of State for Communities and Local Government [2009] EWHC 1729 (Admin); [2010] 1 P & CR 19. The issue in that case was whether the authority had been obliged to treat the possibility of alternative sites as a material consideration. I said: 17. It is one thing to say that consideration of a possible alternative site is a potentially relevant issue, so that a decision maker does not err in law if he has regard to it. It is quite another to say that it is necessarily relevant, so that he errs in law if he fails to have regard to it 18. For the former category the underlying principles are obvious. It is trite and long established law that the range of potentially relevant planning issues is very wide (Stringer v Minister of Housing and Local Government [1970] 1 WLR 1281); and that, absent irrationality or illegality, the weight to be given to such issues in any case is a matter for the decision maker (Tesco Stores Ltd v Secretary of State for the Environment and West Oxfordshire District Council [1995] 1 WLR 759, 780). On the other hand, to hold that a decision maker has erred in law by failing to have regard to alternative sites, it is necessary to find some legal principle which compelled him (not merely empowered) him to do so. I referred to the discussion of this issue in a different context by Cooke J in the New Zealand Court of Appeal, in CreedNZ Inc v Governor General [1981] 1 NZLR 172, 182 (adopted by Lord Scarman in the House of Lords in In re Findlay [1985] AC 318, 333 334, and in the planning context by Glidewell LJ in Bolton Metropolitan Borough Council v Secretary of State for the Environment and Greater Manchester Waste Disposal Authority (1991) 61 P & CR 343, 352): 26. Cook J took as a starting point the words of Lord Greene MR in the Wednesbury case [1948] 1 KB 223, 228: If, in the statute conferring the discretion there is to be found expressly or by implication matters which the authority exercising the discretion ought to have regard to, then in exercising the discretion it must have regard to those matters. He continued: What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the authority as a matter of legal obligation that the court holds a decision invalid on the ground now invoked. It is not enough that it is one that may properly be taken into account, nor even that it is one which many people, including the court itself, would have taken into account if they had to make the decision . (Emphasis added) In approving this passage, Lord Scarman noted that 27. Cook J had also recognised, that in certain circumstances there will be some matters so obviously material to a decision on a particular project that anything short of direct consideration of them by the ministers would not be in accordance with the intention of the Act. (In re Findlay at p 334) It seems, therefore, that it is not enough that, in the 28. judges view, consideration of a particular matter might realistically have made a difference. Short of irrationality, the question is one of statutory construction. It is necessary to show that the matter was one which the statute expressly or impliedly (because obviously material) requires to be taken into account as a matter of legal obligation. Mutatis mutandis, similar considerations apply in the present case. The question therefore is whether under the openness proviso visual impacts, as identified by the inspector, were expressly or impliedly identified in the Act or the policy as considerations required to be taken into account by the authority as a matter of legal obligation, or alternatively whether, on the facts of the case, they were so obviously material as to require direct consideration. The reasoning of the courts below Hickinbottom J in the High Court held in summary that consideration of visual impact was neither an implicit requirement of the openness proviso, nor obviously relevant on the facts of this case. He said: 64. I stress that we are here concerned with differential impact, ie the potential adverse visual impact over and above the adverse spatial impact. On the facts of this case it is difficult to see what the potential visual impact of the development would be over and above the spatial impact, which, as Mr Village concedes, was taken into account. In any event, even if there were some such impact, that does not mean that openness would be adversely affected; because, in assessing openness, the officers would still have been entitled to take into account factors such as the purpose of the development, its duration and reversibility, and would have been entitled to conclude that, despite the adverse spatial and visual impact, the development would nevertheless not harm but preserve the openness of the Green Belt. In this case, the potential visual impact of the 65. development falls very far short of being an obvious material factor in respect of this issue. In my judgment, in the circumstances of this case, the report did not err in not taking into consideration any potential visual impact from the development. Indeed, on the facts of this case, I understand why the officers would have come to the view that consideration of visual impact would not have materially added to the overarching consideration of whether the development would adversely impact the openness of the Green Belt. Lindblom LJ took the opposite view. He summarised the visual impacts described by the officer: 42. The proposed development was a substantial extension to a large existing quarry, with a lengthy period of working and restoration. As the Principal Landscape Architect recognized in her response to consultation, and the officer acknowledged without dissent in her report, there would be permanent change to the character of the landscape (paras 4.109 and 4.115 of the report). The quality of the Locally Important Landscape Area as a whole would be compromised (para 7.41). The exposed face of the extended quarry would be as visible as that of the existing quarry, if not more so (paras 4.111 and 7.42). Long distance views could be cut off by the proposed bunding and planting. Agricultural land would ultimately be replaced by a deep lower level landscape of grassland (para 4.113). The character and quality of the landscape would be permanently changed and the impact cannot be described as neutral (paras 4.115 and 7.44). Concluding her assessment of Landscape Impact, the officer was satisfied that the proposed screening could protect the environment and residential receptors from potential landscape and visual impacts, and that with the proposed mitigation measures the development would comply with national and local policy (paras 7.47 and 8.4). 43. That assessment did not deal with the likely effects of the development on the openness of the Green Belt as such, either spatial or visual. It does show, however, that there would likely be or at least could be effects on openness in both respects, including the closing off of long distance views by the bunding and planting that would screen the working (para 4.111 of the officers report). The officers conclusion overall (in para 7.47) was, in effect, that the proposed screening would be effective mitigation, without which the development would not be acceptable. But this was not followed with any discussion of the harmful effects that the screening measures themselves might have on the openness of the Green Belt. (Emphasis added) He then directed particular attention to para 7.122 of the report, which he understood to encapsulate her views on the application of the openness proviso under NPPF para 90: 45. So it is to para 7.122 that one must look, at least in the first place, to see whether the officer considered the relevance of visual impact to the effect of this development on the openness of the Green Belt. Did she confront this question, and bring the committees attention to it? I do not think she did. She neither considered, in substance, the likely visual impact of the development on the openness of the Green Belt nor, it seems, did she ask herself whether this was a case in which an assessment of visual impact was, or might be, relevant to the question of whether the openness of the Green Belt would be preserved. Indeed, her observation that openness is commonly taken to be the absence of built development seems deliberately to draw the assessment away from visual impact, and narrow it down to a consideration of spatial impact alone. And the burden of the assessment, as I read it, is that because the further extraction of limestone would take place next to the existing quarry, the scale of the development would not fail to preserve the openness of the Green Belt. This seems a somewhat surprising conclusion. But what matters here is that it is a consideration only of spatial impact. Of the visual impact of the quarry extension on the openness of the Green Belt, nothing is said at all. That was, it seems to me, a significant omission, which betrays a misunderstanding of the policy in para 90 of the NPPF. 46. One must not divorce para 7.122 from its context. The report must be read fairly as a whole. The question arises, therefore: did the officer address the visual impact of the development on the openness of the Green Belt in the remaining paragraphs of this part of her report, or elsewhere? I do not think she did. Her consideration of the effects of the development on the purposes of including land in the Green Belt, in paras 7.123 to 7.125, is unexceptionable in itself. However, she did not, in these three paragraphs, revisit the question of harm to the openness of the Green Belt, either in spatial or in visual terms. The conclusion to this part of the report, in para 7.126, is that the character and openness of the Green Belt would not be materially harmed by the development a conclusion repeated in para 8.5 and that the proposal would therefore comply with Policy SP3 and Policy SP13 of the local plan and the NPPF. But I cannot accept that this conclusion overcomes the lack of consideration of visual impacts on openness in the preceding paragraphs. It seems to treat character as a concept distinct from openness. Even if these two concepts can be seen as related to each other, and however wide the concept of character may be, there is no suggestion here that the officer was now providing a conclusion different from that in para 7.122, or additional to it. 47. The same may also be said of the officers earlier discussion of Landscape Impact in paras 7.41 to 7.47. Her assessment and conclusions in that part of her report are not imported into para 7.122, or cross referred to as lending support to her conclusion there . (Emphasis added) This led to the overall conclusion in para 49 (quoted in part at the beginning of this judgment): 49. I can only conclude, therefore, that the advice given to the committee by the officer was defective. It was defective, at least, in failing to make clear to the members that, under government planning policy for mineral extraction in the Green Belt in para 90 of the NPPF, visual impact was a potentially relevant and potentially significant factor in their approach to the effect of the development on the openness of the Green Belt, and hence to the important question of whether the proposal before them was for inappropriate development in the Green Belt and, indeed, in implying that the opposite was so One can go further. On the officers own assessment of the likely effects of the development on the landscape, visual impact was quite obviously relevant to its effect on the openness of the Green Belt. So the consideration of this question could not reasonably be confined to spatial impact alone. (Emphasis added) Although it is necessary to read the discussion in full, I have highlighted what seem to me the critical points in Lindblom LJs assessment of the failure to take account of visual effects; in summary: i) In paras 42 and 43, he extracts from the officers own landscape assessment the observation that the exposed face of the extended quarry would be as visible as that of the existing quarry, if not more so and that long distance views could be cut off by the proposed bunding and planting. This leads to the view that: there would likely be or at least could be effects on openness in both respects, including the closing off of long distance views by the bunding and planting that would screen the working. ii) In para 7.122, where the officer purported to address the issue of openness, she failed to consider the likely effect of such visual impact nor its relevance to whether the openness of the Green Belt would be preserved. Instead, by in effect equating openness with absence of built development, she tended to narrow the issue down to a consideration of spatial impact alone. That betrayed a misunderstanding of the policy in para 90 of the NPPF. iii) The subsequent paragraphs dealt with other aspects of the effect on the purposes of the Green Belt, and were unexceptionable in themselves; but they did not revisit the question of visual impact or so make up for the deficiency in para 7.122. iv) The officers advice was defective in this respect. Further on her own assessment visual effect was quite obviously relevant to the issue of openness, and the committee could not reasonably have thought otherwise. I hope I will be forgiven for not referring in detail to the arguments of counsel before this court, which substantially reflected the reasoning respectively of the High Court and the Court of Appeal. I note that Mr Village QC for Samuel Smith made a further criticism of para 7.122, not adopted by Lindblom LJ, that the officer treated the fact that the site abutted the existing quarry as reducing its impact on openness. Discussion With respect to Lindblom LJs great experience in this field, I am unable to accept his analysis. The issue which had to be addressed was whether the proposed mineral extraction would preserve the openness of the Green Belt or otherwise conflict with the purposes of including the land within the Green Belt. Those issues were specifically identified and addressed in the report. There was no error of law on the face of the report. Paragraph 90 does not expressly refer to visual impact as a necessary part of the analysis, nor in my view is it made so by implication. As explained in my discussion of the authorities, the matters relevant to openness in any particular case are a matter of planning judgement, not law. Lindblom LJ criticised the officers comment that openness is commonly equated with absence of built development. I find that a little surprising, since it was very similar to Lindblom LJs own observation in the Lee Valley case (para 23 above). It is also consistent with the contrast drawn by the NPPF between openness and urban sprawl, and with the distinction between buildings, on the one hand, which are inappropriate subject only to certain closely defined exceptions, and other categories of development which are potentially appropriate. I do not read the officer as saying that visual impact can never be relevant to openness. As to the particular impacts picked out by Lindblom LJ, the officer was entitled to take the view that, in the context of a quarry extension of six hectares, and taking account of other matters, including the spatial separation noted by her in para 7.124, they did not in themselves detract from openness in Green Belt terms. The whole of paras 7.121 to 7.126 of the officers report address the openness proviso and should be read together. Some visual effects were given weight, in that the officer referred to the restoration of the site which would be required. Beyond this, I respectfully agree with Hickinbottom J that such relatively limited visual impact which the development would have fell far short of being so obviously material a factor that failure to address it expressly was an error of law. For similar reasons, with respect to Mr Villages additional complaint, I see no error in the weight given by the officer to the fact that this was an extension of an existing quarry. That again was a matter of planning judgement not law. Conclusion For these reasons, I would allow the appeal and confirm the order of the High Court dismissing the application.
UK-Abs
This issue in this appeal is whether the Appellant, as local planning authority, properly understood the meaning of the word openness in the national planning policies applying to mineral working in the Green Belt, as expressed in the National Planning Policy Framework (NPPF). Paragraph 90 of the NPPF (in its original 2012 form) provides: Certain other forms of development are not inappropriate in the Green Belt provided that they preserve the openness of the Green Belt and do not conflict with the purposes of including land in the Green Belt. These are: mineral extraction; The application in issue in this case was for the extension of the operational face of Jackdaw Crag Quarry. This is a magnesian limestone quarry 1.5 kilometres to the south west of Tadcaster, North Yorkshire, owned and operated by the Third Respondent, Darrington Quarries. The Appellants Planning and Regulatory Functions Committee on 9 February 2016 accepted their officers recommendation that planning permission be granted. The officers report detailed a wide range of planning considerations. Under the heading Landscape impact the report summarised the views of the Appellants Principal Landscape Architect, who did not object in principle to the proposal, but drew attention to the potential landscape impacts and the consequent need to ensure that mitigation measures were maximised. In a section headed Impacts of the Green Belt the report referred to the consultation response from the First Respondent, including comments addressing the openness of the Green Belt. The First and Second Respondent brought judicial review proceedings of the decision to grant planning permission. They said, among other things, that the officers report erred in its analysis of openness in paragraph 90 of the NPPF in that it did not consider visual impact. The High Court (Hickinbottom J) found no error as the officers report was not required to take into account visual impact from the development. Disagreeing, the Court of Appeal (Lindblom and Lewison LJJ) held that the officers report was defective at least in failing to make clear that, under para 90 of the NPPF, visual impact was potentially relevant; and, further, that on the officers findings visual impact was quite obviously relevant and therefore a necessary part of the assessment. The planning permission was quashed. The Supreme Court unanimously allows the Appellant and Third Respondents appeal. Lord Carnwath gives the sole judgment, with which the other Justices agree. On a proper reading of the NPPF in its proper historic context visual quality of landscape is not in itself an essential part of openness for which the Green Belt is protected [5]. While the text of paragraph 90 of the NPPF has changed from that in Planning Policy Guidance 2: Green Belts (published 1995, amended in 2001), there has been no significant change of approach [12]. The concept of openness in paragraph 90 of the NPPF is a broad policy concept which is the counterpart of urban sprawl and is linked to the purposes to be served by the Green Belt. Openness is not necessarily a statement about the visual qualities of the land, nor does it imply freedom from all forms of development [22]. The question is, therefore, whether visual impact was a consideration which, as a matter of law or policy, was necessary to be taken into account, or was so obviously material as to require such direct consideration [32]. Whether the proposed mineral extraction would preserve the openness of the Green Belt or otherwise conflict with the purposes of including land within the Green Belt was specifically identified and addressed in the officers report. Paragraph 90 of the NPPF does not expressly or impliedly mandate the consideration of visual impact as part of such an analysis [39]. The officers report does not suggest that visual impact can never be relevant to openness [40]. The relevant paragraphs of the officers report addressing openness must be read together. Some visual effects were given weight in the consideration of the restoration of the site. The relatively limited visual impact fell far short of being so obviously material that failure to address it expressly was an error of law, as did the fact that the proposed development was an extension to the quarry. These were matters of planning judgement and not law [41].
Does the Scottish Parliament have power to legislate for the continuity of laws relating to devolved matters in Scotland which are now the subject of European Union (EU) law but which will cease to have effect after the United Kingdom (UK) withdraws from the EU? That is the principal subject matter of a reference by the Attorney General and the Advocate General for Scotland (the UK Law Officers) to this court under section 33 of the Scotland Act 1998 as amended (the Scotland Act). This is the judgment of the court. Factual background On 29 March 2017 the UK Government notified the European Council of its decision that the UK would withdraw from the EU in accordance with article 50 of the Treaty on European Union (article 50 and TEU). Subject to the judgment of the Court of Justice of the European Union (CJEU) on the reference by the Inner House of the Court of Session on the revocability of article 50 or unless a withdrawal agreement were to provide otherwise or there were to be unanimous agreement of the member states of the EU to an extension of the time limit for withdrawal set out in article 50, the UK will cease to be a member of the EU on 29 March 2019. So long as the UK is a member of the EU, EU law governs matters within its sphere in each of the jurisdictions of the UK without differentiation. When the Scotland Act was enacted, the power to amend EU law, the body of rights and obligations which are binding on all EU member states, resided with the EU institutions. It still so resides. But on the UKs withdrawal from the EU (UK withdrawal), and subject to any agreement to the contrary, EU law will cease to bind the UK and its constituent jurisdictions. Many of our laws are the product of EU legislation through directly applicable EU Regulations, decisions and tertiary legislation, or are derived from EU law, for example by the implementation in our domestic legal systems of EU obligations such as those contained in EU Directives. To achieve legal continuity and to promote legal certainty it is considered necessary to incorporate direct EU legislation into domestic law and to preserve the effect of EU derived domestic legislation after UK withdrawal. On 13 July 2017 the UK Government introduced in the House of Commons the European Union (Withdrawal) Bill (the UK Bill) to repeal the European Communities Act 1972 and to achieve legal continuity within each of the jurisdictions of the UK after withdrawal from the EU. That Bill was not passed by both Houses of Parliament until 20 June 2018. It received Royal Assent on 26 June 2018, becoming the European Union (Withdrawal) Act 2018 (the UK Withdrawal Act). Both before and during the passage through Parliament of the UK Bill, the UK Government discussed its terms with representatives of devolved institutions in the UK. After proposed amendments to the UK Bill, which the Scottish Government supported, were defeated in the House of Commons, the Scottish Government introduced the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill (the Scottish Bill) in the Scottish Parliament on 27 February 2018. In accordance with section 31 of the Scotland Act 1998 both the Deputy First Minister of the Scottish Government (John Swinney MSP), who introduced the Bill, and the Presiding Officer of the Scottish Parliament (Rt Hon Kenneth Macintosh MSP) issued statements on the legislative competence of the Scottish Bill when it was introduced to the Scottish Parliament. The Scottish Government expressed the view that the Bill would be within the legislative competence of the Scottish Parliament. The Presiding Officer expressed the view that it would not, because the Bill, which would be enacted before the UK withdrew from the EU, would not be compatible with EU law at the time when the Scottish Parliament passed the legislation. In short, the Presiding Officer opined that the Scottish Parliament could not seek to exercise competence before that competence had been transferred to it and that provisions in the Bill, which postponed the legal effect of the legislation until UK withdrawal, did not alter the Parliaments competence at the time when the legislation was passed. The Scottish Parliament passed the Scottish Bill on 21 March 2018. This resulted in the reference to this court under section 33(1) of the Scotland Act which provides that the Advocate General, the Lord Advocate or the Attorney General may refer the question of whether a Bill or any provision of a Bill would be within the legislative competence of the Parliament to the Supreme Court for decision. The reference was made within four weeks of the passing of the Scottish Bill in accordance with section 33(2) of the Scotland Act. The Lord Advocate has responded to the reference and has submitted that the Scottish Bill would be within the legislative competence of the Scottish Parliament. The Scottish Parliament was not the only devolved legislature that sought to pass legislation to provide for domestic legal continuity after the UKs withdrawal from the EU on exit day. After the UK Parliament did not accept amendments to the UK Bill which the First Minister of Wales supported, the Welsh Assembly passed legislation to similar effect as the Scottish Bill in the Law Derived from the European Union (Wales) Bill (the Welsh Bill). This resulted in a reference by the Attorney General to this court under section 112(1) of the Government of Wales Act 2006 in relation to the Welsh Bill. But, after agreement was reached between the Welsh Government and the UK Government on 24 April 2018 which resulted in amendments to clause 11 of the UK Bill (now section 12 of the UK Withdrawal Act) and the Welsh Assembly gave legislative consent to the UK Bill, the Attorney General has withdrawn that reference. The Law Derived from the European Union (Wales) Act 2018 received the Royal Assent on 6 June 2018 and came into force on the following day by virtue of section 21. Nonetheless, the questions which this reference raises have implications not only for the Scottish Parliament but also for the other devolved legislatures of the UK. The Counsel General to the Welsh Government and the Attorney General for Northern Ireland have therefore appeared as interveners and have addressed the court. We are very grateful to them for their assistance. The role of this court Withdrawal from the EU will result in legislative powers, which are currently vested in EU institutions, being transferred to institutions in the UK. There has been and is a political debate as to which institutions within the UK should best exercise those powers in the public interest. It is not the role of this court to form or express any view on those questions of policy, which are the responsibility of our elected representatives and in which the wider civil society has an interest. Our role is simply to determine as a matter of law whether and to what extent the Scottish Bill would be within the legislative competence of the Scottish Parliament. That question is answered, as we explain below, by analysing the provisions of the Scotland Act. The Scotland Act Since the Scottish Parliament commenced its work on 2 July 1999, the courts have had occasion to interpret the law by which it is governed. The main principles may be summarised as follows. The powers of the Scottish Parliament, like those of Parliaments in many other constitutional democracies, are delimited by law. The Scottish Parliament is a democratically elected legislature with a mandate to make laws for people in Scotland. It has plenary powers within the limits of its legislative competence. But it does not enjoy the sovereignty of the Crown in Parliament; rules delimiting its legislative competence are found in section 29 of and Schedules 4 and 5 to the Scotland Act, to which the courts must give effect. And the UK Parliament also has power to make laws for Scotland, a power which the legislation of the Scottish Parliament cannot affect: section 28(7) of the Scotland Act. The Scotland Act must be interpreted in the same way as any other statute. The courts have regard to its aim to achieve a constitutional settlement and therefore recognise the importance of giving a consistent and predictable interpretation of the Scotland Act so that the Scottish Parliament has a coherent, stable and workable system within which to exercise its legislative power. This is achieved by interpreting the rules as to competence in the Scotland Act according to the ordinary meaning of the words used. These statements of the law can be found in Whaley v Lord Watson 2000 SC 340, 348 349 per the Lord President (Lord Rodger); Martin v Most [2010] UKSC 10; 2010 SC (UKSC) 40, para 52 per Lord Walker of Gestingthorpe; AXA General Insurance Ltd v Lord Advocate [2011] UKSC 46; 2012 SC (UKSC) 122; [2012] 1 AC 868, paras 45 46 per Lord Hope of Craighead, paras 146 147 per Lord Reed; Imperial Tobacco Ltd v Lord Advocate 2012 SC 297, para 58 per Lord Reed, [2012] UKSC 61; 2013 SC (UKSC) 153, paras 6 and 12 15 per Lord Hope; Attorney General v National Assembly for Wales Commission [2012] UKSC 53; [2013] 1 AC 792, paras 78 81 per Lord Hope; and In re Agricultural Sector (Wales) Bill [2014] UKSC 43; [2014] 1 WLR 2622, para 66 per Lord Reed and Lord Thomas of Cwmgiedd CJ. Section 28 of the Scotland Act provides that, subject to section 29, the Scottish Parliament may make laws. Section 29 delimits the legislative competence of the Scottish Parliament. It provides, so far as relevant: (1) An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. (2) A provision is outside that competence so far as any of the following paragraphs apply (b) (c) (d) it relates to reserved matters, it is in breach of the restrictions in Schedule 4, it is incompatible with EU law, (3) For the purposes of this section, the question whether a provision of an Act of the Scottish Parliament relates to a reserved matter is to be determined, subject to subsection (4), by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. There are therefore three principal restrictions which are relevant to this reference. First, a provision is outside competence if it is incompatible with EU law (section 29(2)(d)). This restriction is what caused the Presiding Officer of the Scottish Parliament to express his view which we discussed in para 7 above. Secondly, a provision is outside competence if it relates to reserved matters (section 29(2)(b) and (3)). Section 30 and Schedule 5 define reserved matters, which include foreign affairs etc, including relations with the EU, in paragraph 7 of Schedule 5. Thirdly, a provision is outside competence if it is in breach of the restrictions in Schedule 4 (section 29(2)(c)). Schedule 4 lists enactments and rules of law which are protected from modification by an Act of the Scottish Parliament or by subordinate legislation created on its authority. It is necessary in this overview of the Scotland Act also to mention three other provisions. First, section 101 governs the approach to the interpretation of Acts of the Scottish Parliament or subordinate legislation which could be read as to be outside competence. Section 101(2) provides Such a provision is to be read as narrowly as is required for it to be within competence, if such a reading is possible, and is to have effect accordingly. Since the cases to which we referred in para 13 above were decided, the UK Parliament, in the Scotland Act 2016, has enacted two important amendments to the Scotland Act, which are designed to entrench the role of the Scottish Parliament and Scottish Government in the UK constitution. Thus, secondly, it is provided in section 63A (inserted by section 1 of the 2016 Act): (1) The Scottish Parliament and the Scottish Government are a permanent part of the United Kingdoms constitutional arrangements. (2) The purpose of this section is, with due regard to the other provisions of this Act, to signify the commitment of the Parliament and Government of the United Kingdom to the Scottish Parliament and the Scottish Government. (3) In view of that commitment it is declared that the Scottish Parliament and the Scottish Government are not to be abolished except on the basis of a decision of the people of Scotland voting in a referendum. Thirdly, in the same Act the UK Parliament has given statutory recognition to the Sewel convention by inserting into section 28 of the Scotland Act (by section 2 of the 2016 Act), immediately after the subsection preserving the power of the UK Parliament to make laws for Scotland, the following subsection: (8) But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament. In R (Miller) v Secretary of State for Exiting the European Union (Birnie intervening) [2017] UKSC 5; [2018] AC 61 (paras 136 137) this court explained that, although the Sewel convention cannot be enforced by the courts, it nonetheless plays an important role in facilitating harmonious relationships between the UK Parliament and the devolved legislatures. The Convention is embodied in a Memorandum of Understanding between the UK Government and the devolved governments which, in para 14 of the current memorandum (published in October 2013), states: the UK Government will proceed in accordance with the convention that the UK Parliament would not normally legislate with regard to devolved matters except with the agreement of the devolved legislature. The devolved administrations will be responsible for seeking such agreement as may be required for this purpose on an approach from the UK Government. The mechanism in Scotland for agreeing to such legislation by the UK Parliament is by a legislative consent motion which is put to a vote in the Scottish Parliament. As Lord Hope stated in Imperial Tobacco para 6, disputes between the Scottish Parliament and the UK Parliament as to legislative competence have been avoided, partly by the use of legislative consent motions passed by the Scottish Parliament and partly by the care which officials within the Scottish Parliament have taken to ensure that measures which the Scottish Parliament passes are within competence. On this occasion the Scottish Government opposed the enactment of the UK Bill without the amendments which it had supported and on 15 May 2018 the Scottish Parliament voted to refuse a legislative consent motion in relation to it. That vote does not affect the legal validity of the UK Withdrawal Act. But there is now a conflict between that Act and the Scottish Bill. This is the first occasion in the 19 years since the Scottish Parliament commenced its work that there has been a challenge by Law Officers of the UK Government to a Bill of the Scottish Parliament on the ground that it is outside legislative competence. The reference and the structure of this judgment The reference poses four principal questions, together with subordinate questions. The enactment of the UK Withdrawal Act poses two further questions. In this judgment we address those questions in the following manner: (1) We consider the UK Law Officers submission that the Scottish Bill in its entirety is outside competence principally because it relates to the reserved matter of relations with the EU (paras 23 36). (2) We address the challenge that section 17 of the Scottish Bill, which seeks to make the consent of the Scottish Ministers a pre condition for the legal effect of certain future subordinate legislation by Ministers of the Crown containing devolved provision which affects the operation of retained EU law, is outside competence (paras 37 65). (3) We consider whether section 33 of and Schedule 1 to the Scottish Bill, which purport to repeal references to EU law in the Scotland Act on the ground that they are spent after UK withdrawal, are outside competence (paras 66 79). (4) We address the challenge that various provisions of the Scottish Bill are outside competence because (i) they are incompatible with EU law, (ii) modify the European Communities Act 1972, and/or (iii) are contrary to the rule of law (paras 80 90). (5) We consider whether it is competent for this court to consider the effect of the UK Withdrawal Act on the legality of the Scottish Bill in the context of this reference (paras 91 97). (6) Finally, we address the extent to which the UK Withdrawal Act has put provisions of the Scottish Bill outside the legislative competence of the Scottish Parliament (paras 98 124). (1) Whether the Scottish Bill as a whole is outside the legislative competence of the Scottish Parliament The first question referred is stated in the Reference as follows: Whether the Scottish Bill as a whole is outside the legislative competence of the Scottish Parliament because: Paragraph 7 of Part 1 of Schedule 5 provides: It is contrary to the constitutional framework (a) underpinning the devolution settlement; and/or (b) It relates to the reserved matter of relations with the European Union set out in paragraph 7(1) of Part 1 of Schedule 5, falling under section 29(2)(b) of the Scotland Act; and/or (c) certainty and legality. It is contrary to the rule of law principles of legal including relations with 7(1) International relations, territories outside the United Kingdom, the European Union (and their institutions) and other international organisations, regulation of international trade, and international development assistance and co operation are reserved matters. (2) Sub paragraph (1) does not reserve (a) observing and implementing international obligations, obligations under the Human Rights Convention and obligations under EU law, assisting Ministers of the Crown in relation to (b) any matter to which that sub paragraph applies. We begin by explaining the scope of this question as it was developed in argument, and its relationship to other referred questions. The Scottish Parliament is a legislature of unlimited legislative competence subject to the limitations in sections 28 and 29 of the Scotland Act, and in particular the five exclusions from its competence specified in section 29(2). The most significant of these exclusions are (b), (c) and (d). They are very different in nature. Exclusions (c) and (d) are concerned with specific inconsistencies, in the case of (c) with specified UK legislation or rules of law identified in Schedule 4, and in the case of (d) with the Human Rights Convention or EU law. By comparison, the effect of case (b) is to prevent the Scottish Parliament from legislating about reserved matters at all, even if there is no inconsistency between its proposed legislation and any of these UK wide sources of law. The UK Law Officers attack the Scottish Bill at two levels, one general and the other particular. The general attack, which is the subject of Question 1, is based mainly on the contention that the entire Scottish Bill relates to international relations. As a result, it is said to be beyond the competence of the Scottish Parliament quite apart from any specific inconsistency between its terms and any UK wide source of law. The UK Law Officers seek to reinforce this point by arguing that a broad view must be taken of the nature of the relationship between the Scottish Bill and relations with the EU which will serve to bring it within section 29(2)(b). This is, first, because under section 29(3) the question whether a provision of a Scottish Act relates to a reserved matter must be determined by reference to the purpose of the provision, having regard (among other things) to its effect in all the circumstances. The purpose, it is said, of the Scottish Bill is to deal with relations with the EU in a manner specific to Scotland, whereas the assumption underlying Schedule 5, Part 1, paragraph 7 is that they will be dealt with on a UK wide basis, necessarily by the UK Parliament. Secondly, so it is submitted, it is because the Scottish Bill is open to review on more general grounds than those set out in section 29 of the Scotland Act, including its alleged inconsistency with the constitutional framework underpinning the devolution settlement or with the rule of law principles of legality and legal certainty. The argument is that the Scottish Bill cuts across the attempts of the UK Parliament and government to deal in a way that applies coherently and consistently across the whole of the UK with a matter within their reserved competence, namely the legal consequences of withdrawal from the EU. It is also said that the existence of parallel legislation on the same subject matter in Scotland and in the UK as a whole, undermines legal certainty. The starting point in considering these arguments is the proper scope of a reference under section 33 of the Scotland Act. There is a difference between a want of legislative competence and more general grounds for judicial review on public law grounds. The result of a want of legislative competence is that a Scottish enactment is a nullity (not law): see section 29(1) of the Scotland Act. A Scottish enactment which is held by a court to be unlawful on more general public law grounds is not necessarily a nullity. In AXA General Insurance Ltd v Lord Advocate Lord Hope at para 47 and Lord Reed at paras 149 153, with whom the rest of the court agreed, observed that since the Scottish Parliament is a statutory body owing its powers and duties to an Act of the UK Parliament, section 29 is not exhaustive of the grounds on which its legislation may be reviewed. Other grounds of challenge such as inconsistency with fundamental rights may in principle be available. They were, however, dealing with proceedings by way of judicial review on appeal from the Court of Session. It is clear, in particular from the observations of Lord Hope, that that was the context of these particular statements. A reference to this court under section 33 of the Scotland Act is concerned only with the extent of the Scottish Parliaments legislative competence: see section 33(1). This is a term of art in the Scotland Act. It refers back to section 29, which provides that a provision is outside the legislative competence of the Scottish Parliament in the five cases specified in subsection (2). For the purposes of a reference under section 33, they are exhaustive. It follows that the only relevant issue under Question 1 is whether the Scottish Bill relates to reserved matters, specifically relations with the EU, within the meaning of section 29(2)(b). Consistency with the rule of law or the constitutional framework underpinning the devolution settlement is relevant only so far as it assists in resolving that issue. They are not independent grounds of challenge available in these proceedings. In order to relate to a reserved matter, a provision of a Scottish bill must have more than a loose or consequential connection with it: Martin v Most at para 49 (Lord Walker). In Imperial Tobacco Ltd v Lord Advocate at para 26, Lord Hope observed that the question required one first to understand the scope of the matter which is reserved and, secondly, to determine by reference to the purpose of the provisions under challenge (having regard among other things to their effect in all the circumstance) whether those provisions relate to the reserved matter. The purpose of an enactment for this purpose may extend beyond its legal effect, but it is not the same thing as its political motivation. There can be no doubt about the purpose of the Scottish Bill or its effect if valid. It is accurately stated in section 1(1): (1) The purpose of this Act is to make provision (a) in connection with the prospective withdrawal of the United Kingdom from the EU in consequence of the notification given under section 1 of the European Union (Notification of Withdrawal) Act 2017 (UK withdrawal), and (b) for ensuring the effective operation of Scots law (so far as within devolved legislative competence) upon and after UK withdrawal. The decisive issue in these proceedings is accordingly the scope of the reservation for international relations. Before broaching that issue, it is necessary to say something about the legal context of the reservation for international relations. Three broad points need to be made about it: (1) In the eyes of the outside world a state is a subject of international law and as such a unitary entity. Other states or international organisations are not concerned with its internal distribution of powers, duties or competences. The UK is a member state of the EU and has all the international rights and obligations attaching to that status. Scotland is not as such a member state. It participates in the EU as an integral part of the UK. The UK is of course free to provide domestically for the observation and implementation of its EU and other international obligations by the devolved administrations and legislatures. But they remain the UKs international obligations, and the UK remains responsible at the international level for their proper discharge. (2) As a matter of domestic law, the conduct of the UKs international relations is a prerogative power of the Crown. It requires legislative authority only insofar as statute so provides, expressly or by implication. Ministers of the Crown cannot alter the law of any part of the UK by the exercise of that prerogative power. For that reason, where a treaty requires changes to the law of the UK, the long standing practice of Her Majestys Government has been to obtain legislative authority for those changes before ratifying any international engagement and thereby committing the UK internationally. (3) Reserved matters as defined in Schedule 5 are excluded from the legislative competence of the Scottish Parliament by virtue of section 29(2)(b), and also by virtue of section 29(2)(c), since Schedule 4, Part 1, paragraph 2 prevents it from legislating to modify the law on reserved matters. But it is important to appreciate that the statutory provisions for reserved matters are not only a limitation on the competence of the Scottish Parliament. Reserved matters are also excluded from the devolved competence of the Scottish Ministers by virtue (primarily) of section 54. Under section 54(3), the Scottish Ministers cannot exercise any function which it would not be competent for the Scottish Parliament to confer on them by legislation. The effect of this last provision is that the transfer from Ministers of the Crown to the Scottish Ministers of the function of exercising the prerogative powers of the Crown, which is effected generally by section 53, does not extend to the prerogative power to conduct international relations. This feature of the statutory scheme is particularly important in the case of the reservation for international relations, since the conduct of international relations is a matter for the executive, in which legislation generally plays an ancillary or implementing role. Schedule 5, Part 1, paragraph 7, distinguishes between (i) international relations, including relations with the EU, which are reserved; and (ii) the observation and implementation of international obligations and obligations under the Human Rights Convention and EU law, which are not reserved. For this purpose, EU law means all those rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the EU Treaties and all those remedies and procedures from time to time provided for by or under the EU Treaties: section 126(9). The observation and implementation of EU law is accordingly within the domestic competence of the Scottish Parliament and the Scottish Ministers unless it falls within another reserved matter, but subject always to the provisos that under section 29(2)(d) the legislature has no competence to legislate incompatibly with EU law and that under section 57(2) the Scottish Ministers have no competence to act incompatibly with EU law. The Scottish Bill is not within the carve out from the reserved matter for the observation or implementation of obligations under EU law. It has nothing to do with the observation or implementation of those obligations. If the Scottish Bill becomes law, its provisions will not affect the law of Scotland until after withdrawal, ie at a time when the UK has no EU law obligations. This point is more fully addressed at paras 80 to 90 below. The Scottish Bill is concerned with the purely domestic rules of law which at that point will replace EU law. The fact that those domestic rules may be substantially the same as the rules which previously applied as a matter of EU law does not make them obligations under EU law. Their juridical source is purely domestic. If the Scottish Bill is not within the carve out for the observation or implementation of EU law, does it fall within the general reservation for relations with the EU? The distinction between the observation or implementation of obligations under EU law and other aspects of relations with the EU means that the reservation in Schedule 5, Part 1, paragraph 7 is in practice likely to be relevant mainly to acts of the Scottish Ministers. There is relatively little scope for Scottish legislation to relate to international relations other than by way of implementation of international obligations, unless such legislation were to purport to deal with the power of Ministers of the Crown to exercise its prerogative in foreign affairs, or to create a state of law in Scotland which affected the effectual exercise of that power. An example might perhaps be the purported imposition of sanctions in Scotland on foreign countries for political purposes. It is particularly difficult to envisage Scottish legislation relating to relations with the EU other than by way of implementation of EU law obligations. This is because for as long as the UK remains in the EU they are comprehensively regulated by provisions of the European Communities Act 1972 which are protected enactments under Schedule 4, Part 1, paragraph 1(2)(c). In our judgment, the Scottish Bill does not relate to relations with the EU. It will take effect at a time when there will be no legal relations with the EU unless a further treaty is made with the EU. The Bill does not purport to deal with any legal rule affecting the power of Ministers of the Crown to negotiate such a treaty or otherwise to conduct the UKs relations with the EU. It does not purport to affect the way in which current negotiations between the UK and the EU are conducted. It simply regulates the legal consequences in Scotland of the cessation of EU law as a source of domestic law relating to devolved matters, which will result from the withdrawal from the EU already authorised by the UK Parliament. This is something that the Scottish Parliament is competent to do, provided (i) that it does it consistently with the powers reserved in the Scotland Act to the UK Parliament, and with legislation and rules of law protected under Schedule 4, and (ii) that its legislation does not relate to other reserved matters. Parts of the argument of the UK Law Officers appear to suggest a wider objection that separate Scottish legislation about the consequences of withdrawal is legally untidy, politically inconvenient or redundant in the light of the corresponding UK legislation. But we are not concerned with supposed objections of this kind, which go to the wisdom of the legislation and not to its competence. Different considerations may arise if and when further legislation is required to implement any agreement which Ministers of the Crown may negotiate with the EU governing the terms of withdrawal or the subsequent relations of the UK with the EU. But that is a matter which will have to be addressed when that legislation comes to be proposed. The UK Law Officers case on these points is not assisted by reference to the constitutional framework underlying the devolution settlement or the principles of legal certainty and legality. The constitutional framework underlying the devolution settlement is neither more nor less than what is contained in the Scotland Act construed on principles which are now well settled. And there is nothing legally uncertain or otherwise contrary to the rule of law about the enactment of legislation governing the domestic legal consequences of withdrawal at both the UK and the Scottish level, provided that they do not conflict, a question which is addressed below. Accordingly, the answer to Question 1 is No, subject in the case of Question 1(a) to the remaining questions referred. (2) Whether section 17 of the Scottish Bill is outside the legislative competence of the Scottish Parliament The second question is stated in the reference as follows: Section 17 of the Bill is headed Requirement for Scottish Ministers consent to certain subordinate legislation. Subsection (1) defines the subordinate legislation to which the section applies: Whether section 17 of the Scottish Bill is outside the legislative competence of the Scottish Parliament because: (a) It modifies sections 28(7) and 63(1) of the Scotland Act and is accordingly in breach of the restriction in paragraph 4(1) of Schedule 4, falling under section 29(2)(c) of the Scotland Act; and/or (b) It relates to the reserved matter of the Parliament of the United Kingdom set out in paragraph 1(c) of Part 1 of Schedule 5, falling under section 29(2)(b) of the Scotland Act. (1) This section applies to subordinate legislation made, confirmed or approved by a Minister of the Crown or any other person (other than the Scottish Ministers) if it contains devolved provision (whether or not it (a) also contains other provision), (b) affects the operation of the devolved provision modifies or otherwise (i) retained (devolved) EU law, or (ii) anything that would be, on or after exit day, retained (devolved) EU law, it is made, confirmed or approved under a (c) function (i) (ii) modified in accordance with subsection (3), conferred, or by or under an Act of the Parliament of the United Kingdom enacted after the date on which this section comes into force, and (d) it does not apart from this section require the consent of the Scottish Ministers before it is made, and (e) it is made by statutory instrument. Subsection (3) explains what is meant in subsections (1)(b) and (1)(c)(ii) by modifies and modified: (3) A function is modified in accordance with this subsection if it is modified in a way that enables or requires the subordinate legislation to contain devolved provision that it could not previously contain. Subsection (4) defines the expression devolved provision: (4) For the purposes of this section, devolved provision means provision that would be, if it were contained in an Act of the Scottish Parliament, within the legislative competence of the Scottish Parliament. Subsection (1) having defined the ambit of section 17, and subsections (3) and (4) having defined some of the expressions employed, the operative provision of the section is set out in subsection (2): (2) The subordinate legislation, to the extent that it contains devolved provision, is of no effect unless the consent of the Scottish Ministers was obtained before it was made, confirmed or approved. Section 28(1) of the Scotland Act confers on the Scottish Parliament the power to make laws known as Acts of the Scottish Parliament, subject to section 29. Section 28(7) provides: (7) This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. That provision makes it clear that, notwithstanding the conferral of legislative authority on the Scottish Parliament, the UK Parliament remains sovereign, and its legislative power in relation to Scotland is undiminished. It reflects the essence of devolution: in contrast to a federal model, a devolved system preserves the powers of the central legislature of the state in relation to all matters, whether devolved or reserved. Section 29(1) provides that an Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament. Section 29(2) provides that a provision is outside that competence so far as, inter alia: (c) it is in breach of the restrictions in Schedule 4. Schedule 4 provides, in paragraph 4(1): (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, this Act. Subsequent provisions in paragraph 4 create a number of exceptions to that general prohibition, but there is no exception relating to section 28(7). It follows that a provision in an Act of the Scottish Parliament is outside legislative competence in so far as it purports to modify section 28(7). Section 17 of the Bill, if it received Royal Assent, would therefore be outside legislative competence in so far as it purported to do so. (a) Would section 17 of the Bill modify section 28(7) of the Scotland Act? It is submitted on behalf of the UK Law Officers that section 17 of the Bill would modify section 28(7) of the Scotland Act, since it would impose a condition limiting the power of the UK Parliament to make laws for Scotland in relation to devolved matters. Any law which the UK Parliament makes, conferring on Ministers of the Crown or other persons the power to make subordinate legislation falling within the scope of section 17, would be of no effect unless the Scottish Ministers consent to the subordinate legislation in question in accordance with that section. That would be inconsistent with the sovereign power of the UK Parliament to legislate for Scotland. Section 17 would therefore limit the continuing effect of, and thus modify, section 28(7) of the Scotland Act, in breach of the limit on legislative competence imposed by section 29(2)(c) of the Scotland Act, read together with paragraph 4(1) of Schedule 4. In response, the Lord Advocate advances a number of arguments. First, he submits that a distinction should be drawn between a provision which expressly or implicitly alters a provision in a protected enactment, and so modifies it, and one which merely adds further provision in the same field of law. Similar arguments are also advanced by the Attorney General for Northern Ireland and on behalf of the Counsel General for Wales. Counsel for the Counsel General submits that where the UK Parliament passes legislation for Wales, there is no reason in principle why the Welsh Assembly cannot legislate to the effect of adding a requirement (for example, for consultation), although no such requirement appears in the legislation enacted by Parliament. The devolution legislation recognises this, and deals with the situation by giving the UK Parliament the option of entrenching legislation by protecting it from modification. It is, he submits, inconsistent with that structure to say that legislating to add to or detract from what Westminster had enacted (or might wish to enact in the future) was itself outside legislative competence. In support of his submission, the Lord Advocate cites Martin v Most at para 110, where Lord Rodger of Earlsferry in his dissenting judgment described a provision in an Act of the Scottish Parliament which enabled sheriffs to impose a maximum sentence of imprisonment of 12 months on persons convicted on summary complaint as superseding, and so modifying, a provision in UK road traffic legislation which stipulated that the maximum term of imprisonment for a specified conviction on summary complaint was six months. The UK provision was not amended or repealed, but it was superseded in its application to Scotland, and so modified, by a provision which was inconsistent with it. The Lord Advocate also cites the judgments of the Inner House, and of this court, in Imperial Tobacco Ltd v Lord Advocate. The relevant issues in that case arose under paragraph 2(1) of Schedule 4 to the Scotland Act, which provides that an Act of the Scottish Parliament cannot modify the law on reserved matters, an expression which is defined in paragraph 2(2) as meaning any enactment or rule of law the subject matter of which is a reserved matter. One question which arose was whether provisions in an Act of the Scottish Parliament which restricted the display of tobacco products, and prohibited their sale by vending machines, modified existing UK Regulations which prohibited the sale of tobacco for oral use and the sale of cigarettes with high tar yields. The creation of additional offences was held not to modify the existing Regulations. In the Inner House, Lord President Hamilton distinguished at para 17 between a provision which, expressly or implicitly, alters another provision and one which adds a further specific restriction or restrictions to existing specific restrictions, albeit in the same field of law. The latter, he said, did not modify an existing enactment. In this court Lord Hope stated at para 44: [The provisions in question] do not seek to amend or otherwise affect anything that is set out in those Regulations. In that sense they cannot be said to modify them at all. As Lord Reed said [in the Inner House] the Regulations continue in force as before. Proceeding on that basis, the Lord Advocate advances three reasons why section 17 would not modify section 28(7) of the Scotland Act. First, he submits, Parliaments power to make laws for Scotland would remain unaffected. The subordinate legislation to which section 17 of the Bill would apply would not be made by Parliament itself, but by Ministers and other persons. To similar effect, the Attorney General for Northern Ireland submits that section 17 would not touch, far less modify, Parliaments power to enact: all it would affect was what Ministers of the Crown and other persons might do pursuant to a power that Parliament might give them. Secondly, the Lord Advocate submits that section 17 of the Bill would not modify section 28(7) of the Scotland Act because it would remain within the power of the UK Parliament subject, he submits, to the Sewel convention, set out in section 28(8) of the Scotland Act to disapply section 17 of the Bill, or to repeal it altogether. Thirdly, the Lord Advocate submits that since section 17 would not prevent the UK Parliament from conferring powers on Ministers to make subordinate legislation for Scotland, and would not affect the formal validity of any subordinate legislation made in the exercise of such powers, but is directed merely at the legal effect of such legislation, it follows that section 17 would not affect the UK Parliaments power to make laws for Scotland, and therefore would not modify section 28(7) of the Scotland Act. In that regard, the Lord Advocate draws an analogy with the distinction between a laws being on the statute book and its being in force. Considering first the meaning of modification, the expression modify is defined in section 126(1) of the Scotland Act as follows: modify includes amend or repeal. This clearly strikes at the express amendment or repeal of any provision which is protected against modification. The Lord Advocate accepts, however, that it is not confined to express amendment or repeal: a provision may also be held to modify another provision if it has the effect of amending or repealing it. He submits that, where there is no express amendment or repeal, the issue can be tested by asking whether there is an inconsistency between the provision under consideration and the protected enactment or rule of law. As appears from the authorities cited by the Lord Advocate, one enactment does not modify another merely because it makes additional provision in the same field of law. If it did, the important distinction between the protection of enactments from modification under Schedule 4 to the Scotland Act, and the inability of the Scottish Parliament to legislate in relation to reserved matters under Schedule 5, would become obscured. When the UK Parliament decides to reserve an entire area of the law to itself, it does so by listing the relevant subject matter in Schedule 5. When it has not taken that step, but has protected a particular enactment from modification by including it in Schedule 4, it is not to be treated as if it had listed the subject matter of the enactment in Schedule 5. Where the only relevant restriction on the legislative power of the Scottish Parliament is the protection of an enactment from modification under Schedule 4, the Parliament has the power to enact legislation relating to the same subject matter as the protected enactment, provided it does not modify it. Without attempting an exhaustive definition, a protected enactment will be modified by a later enactment, even in the absence of express amendment or repeal, if it is implicitly amended, disapplied or repealed in whole or in part. That will be the position if the later enactment alters a rule laid down in the protected enactment, or is otherwise in conflict with its unqualified continuation in force as before, so that the protected enactment has to be understood as having been in substance amended, superseded, disapplied or repealed by the later one. Applying that approach, we are unable to accept the Lord Advocates submission that section 28(7) of the Scotland Act would not be modified by section 17 of the Bill. As the Lord Advocate acknowledges, the power of the UK Parliament to make laws for Scotland includes the power to make laws authorising the making of subordinate legislation by Ministers and other persons. An enactment of the Scottish Parliament which prevented such subordinate legislation from having legal effect, unless the Scottish Ministers gave their consent, would render the effect of laws made by the UK Parliament conditional on the consent of the Scottish Ministers. It would therefore limit the power of the UK Parliament to make laws for Scotland, since Parliament cannot meaningfully be said to make laws if the laws which it makes are of no effect. The imposition of such a condition on the UK Parliaments law making power would be inconsistent with the continued recognition, by section 28(7) of the Scotland Act, of its unqualified legislative power. Thus, in order for section 17 of the Bill and section 28(7) of the Scotland Act to operate concurrently, the former would have to be treated as impliedly amending the latter, so that it read: (7) Subject to section 17 of the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Act 2018, this section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland. That conclusion is not altered by the other arguments advanced by the Lord Advocate. In relation to the first argument (para 47 above), a provision which made the effect of laws made by the UK Parliament for Scotland conditional on the consent of the Scottish Ministers, unless it disapplied or repealed the provision in question, would for that very reason be inconsistent with the continued recognition of its unqualified sovereignty, and therefore tantamount to an amendment of section 28(7) of the Scotland Act. In relation to the second argument (para 48 above), the question before the court is whether, if the Bill were to receive Royal Assent, section 17 would be law. If not, there would be no question of its having to be disapplied or repealed by the UK Parliament: it would be of no legal effect whatsoever (not law, in terms of section 29(1) of the Scotland Act). It is therefore no answer to an argument that section 17 of the Bill would be outside legislative competence, to say that it could be disapplied or repealed. In relation to the third argument (para 49 above), this submission resembles the Lord Advocates first argument, and for similar reasons we are unable to accept it. A provision which imposes a condition on the legal effect of laws made by the UK Parliament, in so far as they apply to Scotland, is in conflict with the continuation of its sovereign power to make laws for Scotland, and is therefore equivalent to the amendment of section 28(7) of the Scotland Act. The suggested analogy reinforces the point. If a provision of a Bill passed by the Scottish Parliament were to prevent legislation enacted by the UK Parliament from coming into force without the Scottish Ministers consent, that provision would undoubtedly limit the UK Parliaments power to make laws for Scotland. For these reasons, we conclude that section 17 of the Bill would modify section 28(7) of the Scotland Act, contrary to section 29(2)(c) and paragraph 4(1) of Schedule 4. Having reached that conclusion, it is unnecessary for us to consider whether section 17 of the Bill would also breach the restriction in paragraph 4(1) of Schedule 4 by modifying section 63(1). (b) Does section 17 relate to the reserved matter of Parliament? The remaining question, in relation to section 17 of the Bill, is whether it relates to the reserved matter of the Parliament of the United Kingdom, set out in paragraph 1(c) of Part 1 of Schedule 5 to the Scotland Act, to which effect is given by section 29(2)(b). Reserved matters are set out in Schedule 5. Paragraph 1 is headed The Constitution, and provides: the Union of the Kingdoms of Scotland and the Crown, including succession to the Crown The following aspects of the constitution are reserved matters, that is (a) and a regency, (b) England, the Parliament of the United Kingdom, (c) (d) the continued existence of the High Court of Justiciary as a criminal court of first instance and of appeal, (e) as a civil court of first instance and of appeal. the continued existence of the Court of Session Paragraph 1 is qualified by paragraphs 2 to 5, but none of the qualifications affects paragraph 1(c). It is submitted on behalf of the UK Law Officers that section 17 of the Bill relates to the reserved matter of the Parliament of the United Kingdom. Its purpose is to achieve what the Scottish Government failed to achieve during the passage of the UK Withdrawal Act through Parliament, namely the enactment of a requirement that subordinate legislation made under the Act, affecting matters devolved to Scotland, would be subject to a requirement that the consent of the Scottish Government must be obtained. That purpose is made plain by the Scottish Government in the Policy Memorandum which was published to accompany the Bill, at paras 68 69: 68. While it may prove efficient or beneficial to be able to make provision on a UK wide basis, the Scottish Government considers that this should only be possible with the consent of the Scottish Ministers. Amendments to the [European Union (Withdrawal) Bill] to this effect were jointly proposed by the Scottish and Welsh Governments but were not accepted by the UK Government. 69. In order to ensure the involvement of devolved Scottish institutions in devolved Scottish law making, the Bill therefore creates a default procedural requirement under which UK Ministers must obtain the consent of the Scottish Ministers before they make, confirm or approve secondary legislation relating to devolved matters which modifies, or would modify, any retained (devolved) EU law. The effect of section 17 is consistent with that purpose. It would give the Scottish Ministers the power to prevent subordinate legislation made by a Minister of the Crown from having effect in Scotland by withholding their consent. Section 17 thus seeks to impose on a power to be granted by Parliament a limitation that Parliament itself had chosen not to impose. It is inconsistent with the power of a sovereign Parliament. In response, the Lord Advocate submits that the reservation of the Parliament of the United Kingdom is narrower in scope than the argument advanced on behalf of the UK Law Officers assumes. It comprises such matters as the existence of Parliament, its composition and its procedures. Section 17 of the Bill has no impact on any of these matters, or on the powers of Parliament. The argument advanced by the UK Law Officers fails to recognise that it is not, in general, outside the legislative competence of the Scottish Parliament to amend or repeal legislation enacted by the UK Parliament. Similar submissions are also made on behalf of the Counsel General for Wales and by the Attorney General for Northern Ireland. We are not persuaded that section 17 of the Bill relates to the matter reserved by paragraph 1(c) of Schedule 5. In deciding what that provision is intended to reserve, it is necessary to take account of its statutory context, including the heading of paragraph 1: Imperial Tobacco, para 17. As we have mentioned, paragraph 1 is headed The Constitution. It reserves five aspects of the constitution. They are all fundamental elements of the constitution of the UK, and of Scotlands place within it: the Crown, the Union, the UK Parliament, and the existence of Scotlands higher civil and criminal courts. Considered in that context, the reservation in paragraph 1(c) encompasses, amongst other matters, the sovereignty of Parliament, since that is an attribute of Parliament which is relevant indeed, fundamental to the constitution. On the other hand, the reservation in paragraph 1(c) cannot have been intended, ordinarily at least, to protect legislation enacted by Parliament from the effects of legislation passed by the Scottish Parliament, since that purpose is effected by other provisions of the Scotland Act, which reserve matters to the UK Parliament and thereby prevent the Scottish Parliament from legislating on those matters, or which protect enactments made by the UK Parliament from modification by legislation passed by the Scottish Parliament. It follows that, if the Scottish Parliament legislates in order to give effect in Scotland to a policy which has been rejected by the UK Parliament, it does not, as a general rule, thereby infringe the reservation created by paragraph 1(c). Neither the purpose nor the effect of such legislation impinges upon the constitutional functions, powers or privileges of Parliament. The point can be illustrated by the case of In re Agricultural Sector (Wales) Bill which concerned a Bill passed by the Welsh Assembly, as emergency legislation, in order to establish a scheme for setting minimum wages for agricultural workers in Wales, shortly after the previous scheme, covering England and Wales, had been abolished by an Act of Parliament. The Bill was challenged by the Attorney General on the ground that it did not relate to the devolved matter of agriculture, and was therefore outside the legislative competence of the Assembly. No challenge was brought on the ground that, since the Bill gave effect to a policy which had been rejected by the UK Parliament, the Bill therefore related to the reserved matter of the UK Parliament. Nor was there any suggestion in the judgment that such a challenge might have been brought. Similarly in the present case, the fact that section 17 of the Bill gives effect to a policy rejected by the UK Parliament does not mean that it relates to the reserved matter of Parliament. Nor are we persuaded that section 17 impinges upon the sovereignty of Parliament. Section 17 does not purport to alter the fundamental constitutional principle that the Crown in Parliament is the ultimate source of legal authority; nor would it have that effect. Parliament would remain sovereign even if section 17 became law. It could amend, disapply or repeal section 17 whenever it chose, acting in accordance with its ordinary procedures. The preferable analysis is that although section 17, if it became law, would not affect Parliamentary sovereignty, it would nevertheless impose a condition on the effect of certain laws made by Parliament for Scotland, unless and until Parliament exercised its sovereignty so as to disapply or repeal it. It would therefore affect the power of the Parliament of the United Kingdom to make laws for Scotland, and so modify section 28(7) of the Scotland Act. Conclusion in relation to section 17 For the foregoing reasons, the answer to Question 2(a) is Yes. Section 17 of the Bill would not be within the legislative competence of the Scottish Parliament, because it would modify section 28(7) of the Scotland Act, contrary to section 29(2)(c). The answer to Question 2(b) is no. (3) Whether section 33 of and Schedule 1 to the Scottish Bill are outside the legislative competence of the Scottish Parliament Section 33 of the Scottish Bill purports to repeal spent references to EU law in the Scotland Act. It provides: (1) In section 29(2)(d) of the Scotland Act 1998 (no competence for Scottish Parliament to legislate incompatibly with Convention rights or EU law) the words or with EU law are repealed. (2) In section 57(2) of that Act (no power for members of the Scottish Government to act incompatibly with Convention rights or EU law), the words or with EU law are repealed. (3) Schedule 1 contains further repeals of provisions in that Act which are spent as a consequence of the UKs withdrawal from the EU. Schedule 1 provides for the repeal of provisions in the Scotland Act concerning EU parliamentary elections, references to the Court of Justice of the EU (CJEU), obligations under EU law, and EU law. The UK Law Officers submit that these provisions are outside legislative competence because they modify provisions of the Scotland Act which Schedule 4 to that Act prohibits the Scottish Parliament from modifying. Paragraph 4 of Schedule 4 states: (1) An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, this Act. That prohibition is subject to exceptions listed in the remaining sub paragraphs of paragraph 4; but, as the UK Law Officers submit, of the provisions which Schedule 1 to the Scottish Bill would repeal, only sections 12(4)(a) and 82(1) fall within the listed exceptions. The other provisions, it is submitted, are protected from modification. The UK Law Officers fundamental objection to section 33 and Schedule 1 is that it is for the UK Parliament to amend the terms of the devolution settlement in the Scotland Act; it is not for the Scottish Parliament to determine its own competence. They refer to the statement of the Judicial Committee of the Privy Council in Bribery Comr v Ranasinghe [1965] AC 172, 197: A legislature has no power to ignore the conditions of law making that are imposed by the instrument which itself regulates its power to make law. The UK Law Officers point out that the repeals in section 33(1) and (2) would alter provisions (sections 29 and 57(2)) which define the competence of the Scottish Parliament and the Scottish Government. The UK Law Officers advance a second argument addressing paragraph 7 of Schedule 4 to the Scotland Act, which contains another exception to the prohibition against modification of the Scotland Act. It provides that Part 1 of Schedule 4 (which includes paragraph 4 of that Schedule) does not prevent an Act of the Scottish Parliament (b) repealing any spent enactment, or conferring power by subordinate legislation to do so. The UK Law Officers submit that the statutory references to EU law in the Scotland Act cannot be spent until the European Communities Act 1972 (the 1972 Act) has been repealed. They submit that the effect of section 33 is not suspended by section 1(2) of the Scottish Bill. That section provides: In so far as any provision of this Act, or any provision made under it, would, if it were in effect before the relevant time, be incompatible with EU law, the provision is to have no effect until the relevant time. Section 1(3) defines relevant time in section 1(2) as the time when the relevant provision of EU law ceases to have effect in Scots law as a consequence of the withdrawal of the UK from the EU. Because the repeals to be effected by section 33 of and Schedule 1 to the Scottish Bill would not by themselves be incompatible with EU law, section 1(2), it is argued, cannot have the effect of postponing the repeals until after UK withdrawal. Further, the fact that a provision has not been brought into force does not prevent it from being outside legislative competence: reference is made to the judgment of this court in Christian Institute v Lord Advocate [2016] UKSC 51; 2017 SC (UKSC) 29, para 109, in which this court held that legislation, which was not within the legislative competence of the Scottish Parliament, could not be brought into force. Finally, and in any event, the UK Law Officers submit that even if references to EU law were to be seen as spent because they were meaningless after UK withdrawal, there are other provisions which are not. They refer to section 34 of the Scotland Act, which enables the Scottish Parliament to reconsider a Bill if the Supreme Court, on considering a reference under section 33, decides to make a reference to the CJEU for a preliminary ruling. Such a provision would be rendered redundant by the repeal of the European Communities Act 1972 and might then require to be repealed. But because the provision was not rendered meaningless, it could not be treated as spent. We are not able to accept those submissions. The constitutional principle in Ranasinghe is not breached if there is a provision in the Scotland Act which allows the Scottish Parliament to repeal provisions in that Act which regulate its competence. The Lord Advocate submits that paragraph 7 of Schedule 4 is such a provision, arguing that the provisions of the Scotland Act, which section 33 of and Schedule 1 to the Scottish Bill would repeal, will be spent on UK withdrawal and that it is within the competence of the Scottish Parliament to provide in advance for UK withdrawal. The central question therefore is whether he is correct in that submission. We have concluded that he is. We do not accept that the power in paragraph 7 of Schedule 4 to repeal any spent enactment is restricted to a statutory provision which is literally meaningless, as the UK Law Officers suggest. Synonyms for the adjective, spent, include exhausted, finished, used up, and no longer active. Something is spent if it has been used and is unable to be used again. In a legal context of paragraph 7 of Schedule 4 to the Scotland Act, the adjective spent means a statutory provision which has no continuing legal effect. EU law is defined in section 126(9) of the Scotland Act as (a) all those rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the EU Treaties, and (b) all those remedies and procedures from time to time provided for by or under the EU Treaties. The constraints which EU law, so defined, place on the competence of the Scottish Parliament and the Scottish Government under sections 29(2)(d) and 57(2) of the Scotland Act will cease to have effect on UK withdrawal. Similarly, the provisions of the Scotland Act which refer to elections to the European Parliament and to procedures available to the Scottish Parliament when this court makes a reference to the CJEU under article 267 of the Treaty on the Functioning of the EU (TFEU) will cease to have legal effect on UK withdrawal. The UK Law Officers do not suggest that it would be incompatible with EU law for the Scottish Parliament now to enact section 33 of and Schedule 1 to the Scottish Bill. On the contrary, they submit that, because that would be compatible with EU law, section 1(2) of the Scottish Bill does not protect those provisions by postponing the repeal of the provisions of the Scotland Act until after the UK has withdrawn from the EU. We agree with that submission. But there is another mechanism by which the Scottish Parliament has provided for the postponement of the coming into force of section 33 and Schedule 1. Section 36(1) of the Scottish Bill provides that specified provisions of the Bill come into force on the day after Royal Assent. Those provisions do not include section 33. That section falls under section 36(2), which provides that the other provisions of the Bill come into force on such day as the Scottish Ministers may by regulations appoint. If read in isolation, section 36(2) would allow the Scottish Ministers to bring section 33 into force before the UK withdraws from the EU. But a statutory provision should not be interpreted in such isolation from its statutory context. As we have seen, section 1(1) of the Scottish Bill provides: The purpose of this Act is to make provision in connection with the prospective withdrawal of (a) the United Kingdom from the EU in consequence of the notification given under section 1 of the European Union (Notification of Withdrawal) Act 2017 (UK withdrawal), and (b) for ensuring the effective operation of Scots law (so far as within devolved legislative competence) upon and after UK withdrawal. This provides the context both for the interpretation of section 33 and for the exercise by the Scottish Ministers of the section 36(2) power. The provisions which section 33 and Schedule 1 would repeal would not be spent until UK withdrawal. The power of the Scottish Ministers in section 36(2) to make regulations to bring section 33 of the Scottish Bill into force is therefore restricted by the terms of section 33. If the Scottish Ministers were to make regulations to bring section 33 into force before UK withdrawal, they would be acting in excess of their powers as section 33 repeals provisions which are spent as a consequence of the UKs withdrawal from the EU, and those provisions will not be spent until the UK withdraws from the EU. Furthermore, if it were necessary in order to avoid a breach of paragraph 4(1) of Schedule 4 to the Scotland Act, section 101(2) of the Scotland Act, which we have set out in para 16 above, requires the court to read section 36(2) narrowly so that the apparently general power of the Scottish Ministers to bring into force provisions of the Scottish Bill can be exercised in relation to section 33 only when it is competent to do so, that is to say once the UK has withdrawn from the EU and the provisions to be repealed have become spent. Finally, we do not accept the submission that this courts judgment in Christian Institute points to the conclusion that the legislative competence of a devolved legislature must always be assessed by reference to an impugned provision of a Bill which has been passed whether or not that provision has been brought into force. In that case this court held that the information sharing provisions in Part 4 of the Children and Young People (Scotland) Act 2014 were incompatible with the rights of children, young persons and parents under article 8 of the European Convention on Human Rights both because they were not in accordance with the law as that article requires and because they might result in a disproportionate interference with those persons article 8 rights. The case was not concerned with legislation which was addressing a contingency outside the control of the Scottish Parliament which would occur on a future date. The timing of the bringing into force of the impugned provisions of the 2014 Act was irrelevant to the challenge mounted in Christian Institute. By contrast, the Scottish Bill makes provision for the contingency of UK withdrawal, which will occur on 29 March 2019 unless steps are taken by the UK Government and, through the European Council, the governments of the other 27 member states of the EU to extend the period before the UK exits the EU. It enables the Scottish Ministers to bring into force the relevant provisions from the date when that contingency occurs. We therefore conclude that section 33 of and Schedule 1 to the Scottish Bill would not be outside the legislative competence of the Scottish Parliament under section 29(2)(c) of the Scotland Act on the ground that they breach paragraph 4(1) of Schedule 4 to that Act. But this does not mean that those provisions of the Scottish Bill, if it were to receive Royal Assent, would be within the legislative competence of the Scottish Parliament. This is because we have yet to consider the application of section 29(2)(c) in the light of the enactment of the UK Withdrawal Act which, in paragraph 21(2)(b) of Schedule 3, has amended Schedule 4 to the Scotland Act by adding the UK Withdrawal Act to the statutes which the Scottish Parliament cannot modify. We address this matter in paras 98 124 below. (4) Whether various provisions of the Scottish Bill are outside competence because (i) they are incompatible with EU law, (ii) modify section 2(1) of the European Communities Act 1972, and/or (iii) are contrary to the rule of law It is argued on behalf of the UK Law Officers that provisions of the Scottish Bill are not law because they are incompatible with EU law and therefore outside the competence of the Scottish Parliament by virtue of section 29(2)(d) of the Scotland Act or because they entail a prohibited modification of section 2(1) of the European Communities Act 1972 (the 1972 Act), contrary to section 29(2)(c) of and Schedule 4 paragraph 1(2)(c) to the Scotland Act. The UK Law Officers further submit that those provisions are contrary to the rule of law. The provisions which are said not to be law on those grounds are those (i) which incorporate or empower the Scottish Ministers to incorporate into Scots law directly applicable EU law (sections 3 5 and 13), (ii) which disapply mandatory principles of EU law (sections 6 8 and 10), (iii) which empower the Scottish Ministers to make regulations to modify retained (devolved) EU law (section 11), or (iv) which are in whole or in part parasitic upon one or more of the previously mentioned provisions (sections 13A 16, 18 19, 21, 22 and 36A in relation to sections 11 and 13, and sections 23 26 and 34 and Schedule 2 in relation to sections 3 5). These submissions rest on the premise that the Scottish Parliament does not at present have legislative competence to pass an Act containing provisions which cannot be brought into effect until current restraints on legislative competence are removed at a future date. If the provisions had come into effect on the date when the Bill was passed by the Scottish Parliament they would be outside that competence. Postponement of the coming into effect of such provisions, it is argued, does not affect legislative competence as legislative competence and legal effect are separate questions. It is submitted that the court would be placed in an impossible position if it had to assess the competence of the Scottish Parliament by reference to the future legal effect of a provision. Similar arguments that the Scottish Bill by legislating for the removal of the obligations (i) to legislate compatibly with EU law and (ii) prohibiting the modification of section 2(1) of the 1972 Act, wrongly assumes that the Scottish Parliament can make provision now for the exercise of powers which it is possible the Parliament will acquire in the future, influenced the Presiding Officer when he made his careful statement on legislative competence. The Lord Advocate in reply submits that the impugned provisions are not incompatible with EU law because they will not come into force until the TEU and the TFEU cease to apply to the UK, thereby removing the supremacy of EU law. He submits that it is not contrary to EU law and it is consistent with legal certainty for a member state, such as the UK, to pass anticipatory legislation to address the consequences to its statute book of the proposed withdrawal from the EU, provided that that is done in a way which respects the supremacy of EU law until withdrawal. A devolved legislature, such as the Scottish Parliament, may likewise enact such legislation consistently with EU law. In addressing this challenge we refer to the purpose of the Scottish Bill which is stated in section 1(1), which we have quoted in paras 28 and 76 of this judgment: it is to make provision in connection with the prospective UK withdrawal and to ensure the effective operation of Scots law so far as within devolved competence on or after that withdrawal. Section 1(2) is a critical provision. As we have seen, it provides: (2) In so far as any provision of this Act, or any provision made under it, would, if it were in effect before the relevant time, be incompatible with EU law, the provision is to have no effect until the relevant time. Subsection (3) defines the relevant time: (3) In subsection (2), the relevant time, in relation to any provision of this Act or any provision made under it, means the time at which the provision of EU law with which it would be incompatible ceases to have effect in Scots law as a consequence of UK withdrawal. The effect of these provisions is that none of the sections of the Bill to which we have referred in para 80 above can have legal effect until the provision of EU law with which it is incompatible has ceased to have effect as a consequence of the UK withdrawal. Absent such legal effect, there is no incompatibility with EU law. The challenge under section 29(2)(d) of the Scotland Act therefore fails. Similarly, the postponement of the legal effect of the impugned provisions prevents there being any modification of section 2(1) of the 1972 Act, which incorporates EU law into our domestic laws, because the UK withdrawal, which is the precondition of the bringing into legal effect of the provisions, will involve the repeal of section 2(1) of the 1972 Act. Prospective legislative provision for the consequences of the repeal of the 1972 Act, which has no legal effect until such repeal, entails no modification of that Act. The challenge under section 29(2)(c) of the Scotland Act therefore fails. The residual challenge based on the rule of law is, with respect, misconceived. The principles of legal certainty and legality when applied to the competence of the Scottish Parliament operate within the statutory framework of the Scotland Act. The rule of law in relation to the legislative competence of the Scottish Parliament is maintained through the operation of section 29 of and Schedules 4 and 5 to the Scotland Act and the scrutiny by this court under section 33 of that Act relates to the application of those provisions. That scrutiny involves an assessment whether legislation by the Scottish Parliament complies with the limitations imposed by section 29 of the Scotland Act. As we have stated (para 35 above) there is nothing legally uncertain or contrary to the rule of law about the enactment of legislation by both the UK Parliament and the Scottish Parliament, provided that they do not conflict. The remit of this court under section 33 of the Scotland Act to scrutinise Bills of the Scottish Parliament does not extend to addressing arguments which are either complaints about the quality of the drafting of a Bill or seek to raise uncertainties about the application of a Bills provisions in future circumstances which may or may not arise and which, should they occur, may require amending legislation. In our view, the Lord Advocate is correct in his submission that the possibility of the need to amend legislation to take account of changed future circumstances does not alter the competence of that legislation now. While that is a complete answer to this challenge, it is appropriate briefly to discuss one more detailed argument under this heading. The UK Law Officers assert that the mechanism by which sections 2 5 of the Scottish Bill, which are concerned with the retention of devolved EU law and devolved EU rights after exit day, may be brought into effect by regulations made by the Scottish Ministers under section 36 of the Bill involves a breach of the constitutional structure of the devolution settlement. The argument appears to be that there is uncertainty as to when the entirety or parts of the TEU and TFEU will cease to apply to the UK because that will depend on any transitional arrangements which are negotiated by the UK and the EU. The retention of existing EU law by those sections takes effect only on exit day and there is no provision for the scrutiny of the decision by the Scottish Ministers to bring those provisions into effect using their regulation making power under section 36 of the Scottish Bill. Again, we are not able to accept this submission. Section 28 of the Scottish Bill defines exit day as follows: (1) In this Act, exit day means the day that the United Kingdom leaves the EU. [sic] Where the United Kingdom leaves the EU at a (3) specific time on exit day, references in this Act to before, after or on that day, or to beginning with that day, are accordingly to be read as references to before, after or at that time on that day or (as the case may be) to beginning with that time on that day. [sic] For the purposes of this section, the United (4) Kingdom leaves the EU when the Treaty on the European Union and the Treaty on the Functioning of the European Union cease to apply to the United Kingdom as a consequence of UK withdrawal. This provision, which when introduced into the Scottish Parliament empowered the Scottish Ministers to specify by regulations what was exit day but which was subsequently amended, was enacted on the understanding that it was expected that the UK would cease to be a member of the EU at 11 pm on 29 March 2019 in accordance with the timescale set down in article 50(3) of the TEU, an understanding which was later enacted in the definition of exit day in section 20 of the UK Withdrawal Act. But it was recognised that the date could change depending on the outcome of any negotiations between the UK and the European Council. In our view, it is possible that the definition of exit day may have to be amended if, for example, in the light of negotiations between the UK and the EU, transitional arrangements were put in place so that not all of the provisions of the TEU and the TFEU ceased to have effect at the same moment. But that is of no consequence. The same may be true of the definition of exit day in the UK Withdrawal Act. What is relevant is that any power of the Scottish Ministers under section 36 of the Scottish Bill to bring into effect sections 2 to 5 will be overridden by section 1(2), which we have quoted in para 84 above. The legal validity of such subordinate legislation, if it failed to respect the restriction imposed by section 1(2), would be open to challenge by judicial review and thus subjected to the scrutiny of the courts. So also would subordinate legislation under sections 11 and 12 of the Scotland Bill to which the UK Law Officers referred in their submissions. There is no question of having to read down these provisions under section 101 of the Scotland Act. As discussed below however, there are other grounds for concern about section 11 of the Scottish Bill. Finally, the UK Law Officers assert that at the heart of the section 1(2) mechanism the Scottish Parliament is seeking to modify its own competence by making an assumption that at some future date its competence will be altered. This is said to breach constitutional principle. We do not accept that this is the effect of the Scottish Bill. Legislation by the UK Parliament has empowered the UK Government to serve a notice under article 50 of the TEU. The service of that notice currently has the consequence that the requirement that the Scottish Parliament legislate compatibly with EU law in section 29(2)(d) of the Scotland Act will cease on 29 March 2019. That will be the result of the article 50 notice unless future political decisions, such as the extension of the time limits of article 50, are made to alter the time limit. When the Scottish Parliament passed the Scottish Bill, the prospective removal of the restriction in section 29(2)(d) requiring its legislation to be compatible with EU law would enhance the legislative competence of the Scottish Parliament on 29 March 2019, unless supervening circumstances intervened. The Scottish Parliament has sought to provide for the continuity of Scots law on the UK withdrawal, by enacting provisions which can take effect only after that withdrawal thereby respecting the supremacy of EU law while it continues. That breaches no constitutional principle. (5) Whether this court can consider the effect of the UK Withdrawal Act in the context of this reference A question has arisen as to whether this court, in addressing the reference under section 33 of the Scotland Act, can have regard to the amendments made to the Scotland Act after the date on which the Scottish Parliament passed the Scottish Bill. The Attorney General for Northern Ireland submits that this court must examine both the Scottish Bill and the Scotland Act as each of them stood on 21 March 2018, when the Scottish Parliament passed the Scottish Bill. The repeated assertion by the UK Law Officers in their written case and supplementary case that the legislative competence of the Scottish Bill must be assessed as at that date is consistent with that submission. But the Advocate General for Scotland in his oral submissions presented an alternative case when he invited this court to address the effect of the UK Withdrawal Act on the Scottish Bill. We are satisfied that, when addressing the questions in the reference as to whether the Scottish Bill would be within legislative competence, this court must have regard to how things stand at the date when we decide those questions. Section 33 of the Scotland Act provides for the reference of the question of whether a Bill or any provision of a Bill would be within the legislative competence of the Parliament. The use of the conditional mood (would be) is significant as it points to the incomplete nature of a Bill as legislation until it receives Royal Assent. In our view, it is implicit in section 33 that this court is required to consider the competence of a Bill if it were to receive Royal Assent. In other words, section 33 instructs this court to decide whether a Bill or any provision of a Bill would be within legislative competence if the Bill were to receive Royal Assent. This interpretation is consistent with the legislative process set out in the Scotland Act. Legislation of the UK Parliament takes the form of Acts of the Crown in Parliament: Royal Assent is a necessary step in the legislative process. Section 28 of the Scotland Act uses a similar model. Subsection (2) provides: Proposed Acts of the Scottish Parliament shall be known as Bills; and a Bill shall become an Act of the Scottish Parliament when it has been passed by the Parliament and has received Royal Assent. Section 33 enables a reference to be made in the four weeks after the Scottish Parliament has passed the Bill. The Presiding Officer of the Scottish Parliament may not submit a Bill for Royal Assent at any time within that period or when a reference has been made to this court but has not been decided or disposed of: section 32(2)(a) and (b). He may not submit a Bill in its unamended form for Royal Assent if this court has decided that the Bill or any provision of it would not be within the legislative competence of the Parliament: section 32(3)(a). Section 29, which defines the legislative competence of the Scottish Parliament, governs the legality of an Act of the Parliament or a provision in such an Act and not a Bill, which in section 28(2) is a proposed Act. When this court applies section 29 in a section 33 reference, it assesses the legality of the Bill if it were to become an Act. The task of this court when deciding a question in a reference under section 33 is therefore to determine whether the Bill or provision of the Bill would be within legislative competence if it were to receive Royal Assent at the time of our decision. In the rare circumstance in which there is supervening legislation by the UK Parliament which amends the Scotland Act and thereby changes the legislative competence of the Scottish Parliament after the Scottish Parliament has passed a Bill, this courts decision may be different from what it would have been if the Scotland Act had not been so amended. The amendment of the Scotland Act by the UK Withdrawal Act is such a circumstance. (6) The effect of the UK Withdrawal Act on the legislative competence of the Scottish Parliament in relation to the Scottish Bill. It is submitted on behalf of the UK Law Officers that the entirety of the Scottish Bill would modify the UK Withdrawal Act. The Scottish Bill, which addresses matters within devolved competence, is modelled on the form of what became the UK Withdrawal Act and heavily overlaps with that Act. But the intention of Parliament was to create a single body of retained EU law across the UK on withdrawal from the EU and, it is submitted, the UK Parliament did not contemplate that there would be separate bodies of retained EU law governed by separate legal regimes. In their supplementary case the UK Law Officers state: The whole and evident purpose of inserting an enactment into paragraph 1(2) of the Schedule 4 [to the Scotland Act] list is so that the Scottish Parliament is not permitted to create its own version of the same regime. We are not able to accept these contentions. We agree with the submission of the Lord Advocate that they conflate the mechanism of paragraph 1 of Schedule 4 with that under Schedule 5 to the Scotland Act. As we have stated (in para 51 above) when the UK Parliament decides to reserve an area of law to itself, it lists the relevant subject matter in Schedule 5 as a reserved matter. Parliament has not done so in relation to the subject matter of the UK Withdrawal Act. Instead, by adding the UK Withdrawal Act to the list of provisions, in paragraph 1(2) of Schedule 4 to the Scotland Act, which are protected against modification, the UK Parliament has chosen to protect the UK Withdrawal Act against subsequent enactments under devolved powers which would alter a rule in the UK Withdrawal Act or conflict with its unqualified continuation in force. As we have stated, a protected enactment will be modified by a later enactment, even in the absence of express amendment or repeal, if it is implicitly amended, disapplied or repealed in whole or in part. It is necessary therefore to examine the individual provisions of the Scottish Bill to see whether they have that effect on provisions of the UK Withdrawal Act. To that end, we invited parties to produce a schedule setting out their contentions in relation to the provisions of the Scottish Bill. We are grateful to the UK Law Officers, the Lord Advocate and their legal representatives for cooperating in the production of that schedule which has greatly assisted our work. It is not necessary for this court to refer to the many provisions of the Scottish Bill which merely replicate provisions in the UK Withdrawal Act and which therefore involve no modification of the latter. We can confine our attention to those provisions which we are persuaded do amount to modifications and which are therefore not law in terms of section 29(1) and (2)(c) of the Scotland Act. In our view, the following provisions of the Scottish Bill would not be within legislative competence if the Scottish Bill were to receive Royal Assent. Section 2(2): Section 2 of the Scottish Bill would maintain the effect in Scots law of EU derived domestic legislation on and after exit day. Subsection (2) defines EU derived domestic legislation as including any enactment so far as relating otherwise to the EU or the EEA. Unlike section 2(2) of the UK Withdrawal Act, section 2 of the Scottish Bill does not exclude from its definition the 1972 Act. By contrast section 1 of the UK Withdrawal Act repeals the 1972 Act on exit day. This inconsistency is not removed by section 2(3) of the Scottish Bill, which defines devolved EU derived domestic legislation as EU derived legislation if and to the extent that it makes provision that is (or would be, if it were contained in an Act of the Scottish Parliament) within the legislative competence of the Scottish Parliament. That is because paragraph 1(2)(c) of Schedule 4 to the Scotland Act protects from modification only specified provisions of the 1972 Act with the result that the Scottish Parliament has power to maintain in effect in Scots law the remaining provisions of the 1972 Act. Section 5: This section would provide that the general principles of EU law and the Charter of Fundamental Rights (the Charter) would be part of Scots law on or after exit day so far as they have effect in EU law immediately before exit day and relate to EU law which sections 2, 3 and 4 would save or incorporate into Scots law. The Lord Advocate correctly conceded that this section was a modification of the UK Withdrawal Act. This is because section 5(4) of that Act provides that the Charter is not part of domestic law on or after exit day and paragraph 3 of Schedule 1 provides that there is to be no right of action based on a failure to comply with any of the general principles of EU law and no power to quash any enactment or conduct on the basis of incompatibility with any of such principles. This inconsistency, whether analysed as an implied repeal or a disapplication of those provisions of the UK Withdrawal Act, clearly amounts to a modification and section 5 therefore would not be law. Section 7(2)(b) and (3): Section 7(1) would provide that there is no right in Scots law on or after exit day to challenge any retained devolved EU law on the basis that, immediately before exit day, an EU instrument was invalid. This subsection is in identical terms to paragraph 1(1) of Schedule 1 to the UK Withdrawal Act except that it is confined to retained devolved EU law. As such, it involves no modification of the UK Withdrawal Act. But subsection (2)(b) empowers the Scottish Ministers to make regulations to describe or provide for challenges to the validity of retained (devolved) EU law to which the abolition in subsection (1) will not apply. Further, subsection (3) provides that, subject to provisions made by regulations under section 32, the abolition in subsection (1) does not apply in relation to any right of action accruing before exit day. Section 7(2)(b) of the Scottish Bill is inconsistent with and may be seen as an implied repeal or disapplication of paragraph 1(2) of Schedule 1 to the UK Withdrawal Act in which the abolition of the right of challenge in paragraph 1(1) is disapplied so far as (a) the European Court has decided before exit day that the instrument was invalid, or (b) a Minister of the Crown has made regulations to disapply the abolition in relation to a specified kind of challenge. Section 7(3) of the Scottish Bill also is similarly inconsistent with paragraph 1 of Schedule 1 to the UK Withdrawal Act, which does not preserve accrued rights of action. The Lord Advocate, correctly, conceded that these subsections were modifications because they provided for qualifications to the abolition of the right to challenge which were not contained in paragraph 1 of Schedule 1 to the UK Withdrawal Act. Section 8(2): Section 8(1) of the Scottish Bill would provide that there was no right in Scots law on or after exit day to damages in accordance with the rule in Francovich (see Francovich v Italian Republic (Joined Cases C 6/90 and C 9/90) [1995] ICR 722; [1991] ECR I 5357). This provision is materially identical to the provision in paragraph 4 of Schedule 1 to the UK Withdrawal Act. But subsection (2) disapplies the abolition of the rule in Francovich in relation to any right of action accruing before exit day, subject to provision made by regulations under section 32. This disapplication of the abolition has no equivalent in paragraph 4 of Schedule 1 to the UK Withdrawal Act and is therefore a modification of that provision. Again, the Lord Advocate correctly conceded this point. Section 9A: This section provides for the scrutiny of regulations made under section 7(2)(b). As such it is ancillary to a subsection which would not be law (paras 103 and 104 above), and it therefore itself would not be law. Section 9B: This section provides for consultation on draft proposals under section 7(2)(b) and would not be law for the same reason as section 9A. Section 10(2), (3)(a) and (4)(a): Section 10 would be concerned with the interpretation of retained (devolved) EU law. Subsection (2) provides that a court or tribunal exercising devolved jurisdiction must, where it considers it relevant for the interpretation of retained (devolved) EU law, have regard to (a) any principles laid down, or any judgments made, on or after exit day, by the European Court, and (b) anything done on or after exit day by another EU entity or the EU. The Lord Advocate correctly concedes that this, by creating a duty, is a modification of section 6(2) of the UK Withdrawal Act which makes similar provision but creates a power. Section 10(3)(a) provides: Any question as to the validity, meaning or effect of any retained (devolved) EU law is to be decided, so far as they are relevant to it (a) in accordance with any retained (devolved) EU case law. The equivalent UK provision in section 6(3)(a) of the UK Withdrawal Act provides for the decision to be taken in accordance with any retained case law and any retained general principles of EU law. The omission of reference to the retained general principles of EU law mandates a different approach to interpretation and amounts to an implied repeal of that part of section 6 of the UK Withdrawal Act. It is therefore a modification and would not be law. Section 10(4)(a) provides that subsection (3) is subject to (a) section 11(7), which permits the Scottish Ministers to provide by regulations that section 10(3) does not apply to any provision made by the regulations. This would enable the adoption by regulations of different rules of interpretation and would modify section 6 of the UK Withdrawal Act. Section 11: This section would empower the Scottish Ministers to remedy by regulations deficiencies in retained (devolved) EU law arising from the withdrawal of the United Kingdom from the EU. It is similar to section 8 of the UK Withdrawal Act but empowers the Scottish Ministers rather than a Minister of the Crown to make the regulations. The UK Withdrawal Act, in section 11 and Schedule 2, also confers powers on devolved authorities to make regulations. But Schedule 2 of the UK Withdrawal Act contains conditions and restrictions in paragraphs 3(4), 5(4), 6(1) and 7(2) on what devolved authorities may provide in regulations under those powers. Those conditions and restrictions are not mirrored in section 11 of the Scottish Bill which is prima facie the equivalent of an amendment or disapplication of Schedule 2 to the UK Withdrawal Act. The Lord Advocate submits that section 11 of the Scottish Bill would create a parallel regulation making power, which operates according to its own terms and does not modify the UK Withdrawal Act. He submits that the powers in section 11 of the Scottish Bill could, if necessary, be read down by the application of section 101(2) of the Scotland Act, which provides that a provision of an Act of the Scottish Parliament be read as narrowly as is required for it to be within competence, if such a reading is possible, and is to have effect accordingly. The Lord Advocate points out that section 30A of the Scotland Act, which was introduced by section 12 of the UK Withdrawal Act, prevents an Act of the Scottish Parliament from modifying or conferring power by subordinate legislation to modify, retained EU law so far as the modification is of a description specified in regulations made by a Minister of the Crown. If such regulations were made to limit the competence of the Scottish Parliament, they would limit the powers which the Scottish Ministers could exercise under section 11 of the Scottish Bill. Ministers of the Crown now have power under section 30A of the Scotland Act to curtail the modification of retained EU law by the Scottish Parliament or Scottish Ministers. But the difficulty with the Lord Advocates position is that unless a Minister of the Crown were to exercise that power, the Scottish Ministers would be able to exercise the parallel regulation making power in section 11 of the Scottish Bill free from conditions and restrictions which the UK Withdrawal Act has imposed. The existence of a power in a Minister of the Crown to neutralise a provision of the Scottish Bill does not alter the nature of that provision as a modification of the UK Withdrawal Act. Section 13B: This section would require the Scottish Ministers, in making provision in regulations under section 11(1), 12 or 13(1), to have regard to the guiding principles on the environment and animal welfare which are set out in subsection (3). In so far as this provision would be applied to section 11(1), which as a modification of the UK Withdrawal Act is not law, it must also be a modification but only to that extent. Section 14: This section would provide for the scrutiny by the Scottish Parliament of regulations made under sections 11, 12 and 13 of the Scottish Bill. In so far as the section would relate to regulations made under section 11 of the Scottish Bill, which as a modification is not law, it is ancillary to section 11 and itself is a modification of the UK Withdrawal Act but only to that extent. Section 14A: This section would require additional scrutiny by the Scottish Parliament of regulations made under sections 11, 12 and 13 of the Scottish Bill if the Committee on Delegated Powers and Law Reform of the Scottish Parliament so recommended. Again, in so far as the section would relate to regulations made under section 11 of the Scottish Bill, it is ancillary to the invalid section 11 and itself is a modification of the UK Withdrawal Act but only to that extent. Section 15: This section would require the Scottish Ministers to consult on the regulations which they proposed to make in response to a recommendation under section 14(5). Again, in so far as the section would apply to proposed regulations to be made under section 11 of the Scottish Bill, it is ancillary to the invalid section 11 and itself is a modification of the UK Withdrawal Act but only to that extent. Section 16: This section would require the Scottish Ministers to make explanatory statements when laying before the Scottish Parliament a Scottish statutory instrument or draft instrument containing regulations under section 11(1), 12 or 13(1) of the Scottish Bill. Again, only to the extent that the section would apply to regulations under section 11, it is ancillary to that section and is itself a modification of the UK Withdrawal Act. Section 17 does not involve a modification of the UK Withdrawal Act. But as we have explained in paras 37 65 above, this section is a modification of section 28(7) of the Scotland Act and is not law. Section 19(1): Section 19 would empower the Scottish Ministers to make regulations to provide for the charging of fees for functions which a Scottish public authority has as a result of provision made under sections 11(1), 12 and 13. Again, only to the extent as the section would apply to regulations under section 11, it is ancillary to that section and is itself a modification of the UK Withdrawal Act. Section 22: This section would provide that Part 4 of the Scottish Bill, which relates to financial matters, does not affect the power under section 11, 12 or 13 to require payment of or make other provision in relation to fees and charges. The reference to section 11 falls along with that section. Section 26A(6): Section 26A would impose a duty on the Scottish Ministers to prepare proposals on how regard is to be had to the guiding principles on the environment and on how to ensure that there continues to be effective and appropriate governance relating to the environment after the UK withdraws from the EU. Subsection (5) lists the familiar principles, such as the precautionary principle and that the polluter should pay to rectify environmental damage. Subsection (6) states: Those principles are derived from the equivalent principles provided for in article 191(2) in Title XX of the Treaty on the Functioning of the European Union and accordingly they are to be interpreted, so far as appropriate, in a manner consistent with the interpretation of those equivalent principles by the European Court from time to time. (Emphasis added) The words emphasised, by imposing a duty to give effect to the jurisprudence of the European Court, are inconsistent with section 6(1) of the UK Withdrawal Act which provides: A court or tribunal (a) is not bound by any principles laid down, or any decisions made, on or after exit day by the European Court, . The emphasised words amount to an implicit amendment of section 6(1)(a) of the UK Withdrawal Act as they disapply it in relation to the application of the environmental principles by Scottish public authorities, and as such are a modification of that section of the UK Withdrawal Act. Section 33 and Schedule 1 paragraphs 11(a) and 16: Section 33 would repeal spent references to EU law in the Scotland Act. Subsection (1) would remove the words or with EU law in section 29(2)(d) of the Scotland Act, so as to remove the existing restriction on the competence of the Scottish Parliament that it cannot legislate incompatibly with EU law. Subsection (2) would repeal the same words in section 57(2) of the Scotland Act which currently restricts the power of members of the Scottish Government by preventing them from acting incompatibly with EU law. Subsection (3) would refer to Schedule 1 which contains further repeals of spent provisions in the Scotland Act. Paragraph 11(a) of that Schedule would repeal the words or an obligation under EU law in section 106(5) of the Scotland Act. Section 106 is concerned with the power by subordinate legislation to facilitate the transfer of functions to the Scottish Ministers and provides in subsection (4) that the Scottish Ministers are to be consulted about such legislation if it modifies a function of observing or implementing an international obligation or an obligation under EU law to achieve a result by reference to a quantity which relates to the UK. Paragraph 16 of Schedule 1 to the Scottish Bill would repeal the words or with EU law in paragraphs 1(d) and (e) of Schedule 6 to the Scotland Act. Schedule 6 of the Scotland Act provides for the handling of devolution issues in legal proceedings and paragraph 1 of that Schedule defines devolution issue. These provisions involve modifications of the UK Withdrawal Act and therefore are not law. Section 33(1) of the Scottish Bill would be inconsistent with section 12(1) of the UK Withdrawal Act which not only removes the reference to EU law in section 29(2)(d) of the Scotland Act but replaces it with the words in breach of the restriction in section 30A(1) (ie the prohibition against modification of retained EU law so far as the modification is of a description specified in regulations by a Minister of the Crown). Section 33(1) could have effect only if it were brought into force before section 12(1) of the UK Withdrawal Act and would in effect be disapplying that provision of the UK Withdrawal Act in not inserting those replacement words into the Scotland Act. Section 33(2) similarly would not replace the repealed words in section 57 of the Scotland Act with the provisions set out in paragraph 1 of Schedule 3 to the UK Withdrawal Act which insert subsections (4) (15) into section 57 of the Scotland Act. Paragraphs 11(a) and 16 of Schedule 1 to the Scottish Bill (and therefore section 33(3) in giving Schedule 1 effect) also disapply provisions of the UK Withdrawal Act. Paragraph 11(a) does not replace the repealed words in section 106 of the Scotland Act with the words, a retained EU obligation which paragraph 17(2) of Schedule 3 to the UK Withdrawal Act inserts in their place. Paragraph 16 similarly does not insert into Schedule 6 to the Scotland Act the words which paragraph 23(2) and (4) of Schedule 3 to the UK Withdrawal Act insert as substitutes. Conclusion (i) The Scottish Bill as a whole would not be outside the legislative competence of the Scottish Parliament because it does not relate to reserved matters. (paras 23 36 above) (ii) Section 17 of the Scottish Bill would be outside the legislative competence of the Scottish Parliament because it would modify section 28(7) of the Scotland Act. (paras 37 65 above) (iii) Section 33 of and Schedule 1 to the Scottish Bill would not be outside the legislative competence of the Scottish Parliament on the basis that they would modify provisions of the Scotland Act. (paras 66 79 above) (iv) the specific provisions of the Scottish Bill listed in para 80 above would not be outside the legislative competence of the Scottish Parliament because (i) they are not incompatible with EU law, (ii) they do not modify the European Communities Act 1972, and (iii) they are not contrary to the rule of law. (paras 80 90 above) (v) As a result of the enactment of the UK Withdrawal Act the following provisions of the Scottish Bill would at least in part be outside the legislative competence of the Scottish Parliament: sections 2(2), 5, 7(2)(b) & (3), 8(2), 9A, 9B, 10(2), (3)(a) and (4)(a), 11, 13B, 14, 14A, 15, 16, 19(1), 22, 26A(6), 33(1), (2) & (3) and Schedule 1 paragraphs 11(a) and 16. (paras 98 124 above) We therefore answer the reference as follows:
UK-Abs
Section 29(1) of the Scotland Act 1998 (the Scotland Act) provides that any Act passed by the Scottish Parliament will not be law so far as any provision of the Act is outside the legislative competence of the Parliament. Section 29(2) says that a provision is outside of the legislative competence of the Scottish Parliament if, amongst other things: it relates to matters which are reserved to the UK Parliament (including international relations); is in breach of the restrictions in Schedule 4 of the Scotland Act (which specifies provisions of enactments passed by the UK Parliament which cannot be modified by the Scottish Parliament); or is incompatible with European Union (EU) law. On 29 March 2019, the UK is due to withdraw from the EU. On 13 July 2017, the UK Government introduced the European Union (Withdrawal) Bill (the UK Bill) in the House of Commons, to repeal the statute which had taken the UK into the EU and to make provisions to achieve legal continuity within each of the UKs constituent jurisdictions. On 26 June 2018, the UK Bill became an Act (the UK Withdrawal Act). The UK Withdrawal Act amended Schedule 4 to the Scotland Act to include itself within the prohibition against modification. On 27 February 2018, the Scottish Government introduced the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill (the Scottish Bill), to make its own provision for legal continuity following the UKs withdrawal from the EU. The Scottish Bill was passed by the Scottish Parliament on 21 March 2018. Section 17 of the Scottish Bill relates to subordinate legislation made by Ministers in the UK Government after withdrawal from the EU on matters of retained EU law which, if they were contained in a statute, would be within the legislative competence of the Scottish Parliament. The section provides that any such subordinate legislation will be of no effect unless the consent of the Scottish Ministers is obtained. Section 33 of and Schedule 1 to the Scottish Bill provide for the repeal of references to EU law and institutions of the EU in the Scotland Act. In accordance with section 33(1) of the Scotland Act, the Attorney General and the Advocate General for Scotland made a reference to the UK Supreme Court asking for a decision on whether the Scottish Bill is within the competence of the Scottish Parliament. The Supreme Court gives a unanimous judgment. It finds that the whole of the Scottish Bill would not be outside the legislative competence of the Scottish Parliament. However, section 17 would be outside the legislative competence of the Parliament because it would modify the Scotland Act and, at least in part, the sections referred to in the final paragraph below would be outside the competence of the Scottish Parliament because they would modify provisions of the UK Withdrawal Act. It is not for this Court to express any view on the question of which institutions of the UK should exercise the legislative powers currently held by EU institutions upon the UKs withdrawal. Instead, the role of the Court is to determine as a matter of law whether, and to what extent, the Scottish Bill would be within the legislative competence of the Scottish Parliament [11]. Is the Scottish Bill as a whole outside the legislative competence of the Scottish Parliament? The only relevant question is whether the Scottish Bill relates to relations with the EU (a reserved matter) [26]. To relate to a reserved matter, a provision must have more than a loose or consequential connection with it [27]. The Scottish Bill does not relate to relations with the EU. It simply regulates certain of the legal consequences of the cessation of EU law as a source of domestic law [33]. Is section 17 of the Scottish Bill outside the legislative competence of the Scottish Parliament? Under Schedule 4 to the Scotland Act, the Scottish Parliament does not have legislative competence to modify the Scotland Act [42]. An enactment is modified by a later enactment if it is implicitly amended, disapplied or repealed in whole or in part [51]. The UK Parliament has the power to authorise Ministers to make subordinate legislation, but the effect of section 17 would be to make the legal effect of such subordinate legislation conditional upon the consent of the Scottish Ministers. The imposition of this condition would be inconsistent with the recognition in section 28(7) of the Scotland Act that the UK Parliament has unqualified legislative power in Scotland. It would therefore have to be treated as impliedly amending (and thus modifying) section 28(7) of the Scotland Act [52]. Are section 33 of and Schedule 1 to the Scottish Bill outside the legislative competence of the Scottish Parliament? There is an exception to the rule that the Scottish Parliament does not have legislative competence to modify the Scotland Act, which allows the Parliament to repeal any enactment which is spent [69]. Spent means that the provision has no continuing legal effect [72]. The provisions which section 33 and Schedule 1 would repeal will not be spent until the UKs withdrawal from the EU [76]. However, the Scottish Ministers do not have power to bring section 33 into force until the UK has withdrawn, at which point the provisions to be repealed would have become spent [77]. As a result, section 33(1) and Schedule 1 do not breach Schedule 4 to the Scotland Act [79]. Are various provisions of the Scottish Bill outside the legislative competence of the Scottish Parliament because they (i) are incompatible with EU law, (ii) modify section 2(1) of the European Communities Act 1972 (ECA), and/or (iii) are contrary to the rule of law? None of the provisions which are challenged take legal effect until the provisions of EU law with which they are incompatible have ceased to have effect as a consequence of the UKs withdrawal from the EU. Without such legal effect, there is no incompatibility with EU law and no modification of section 2(1) of the ECA [84 85]. The challenge based on the rule of law is misconceived [86]. Can the Supreme Court consider the effect of the UK Withdrawal Act in the context of this reference? Yes, because the Courts task is to decide whether the Bill would be within the legislative competence of the Scottish Parliament if it received the Royal Assent at the time of the Courts decision [97]. What is the effect of the UK Withdrawal Act on the legislative competence of the Scottish Parliament in relation to the Scottish Bill? The UK Withdrawal Act is not a reserved matter but it is protected against modification under Schedule 4 [99]. Several provisions of the Scottish Bill in whole or in part amount to modifications of the UK Withdrawal Act. These are: section 2(2) [101]; section 5 [102]; section 7(2)(b) and 7(3) [103 104]; section 8(2) [105]; section 9A [106]; section 9B [107]; section 10(2), 10(3)(a) and 10(4)(a) [108 110]; section 11 [111 113]; section 13B, section 14, section 14A, section 15, section 16, section 19(1) and section 22 (to the extent that these provisions relate to section 11) [114 118, 120 121]; section 26A(6) [122]; and section 33 and Schedule 1 paragraphs 11(a) and 16 [123 124].
This appeal raises a point of pure statutory construction relating to the manner in which election expenses are required to be calculated and declared. It is important to appreciate that the point is raised not, as it might in other circumstances have been, on an application for judicial review or a declaration as to the law, but as a preliminary question in a criminal prosecution. The defendants face charges of knowingly making false declarations in relation to election expenses, or aiding and abetting or encouraging or assisting such offences. The parties asked the judge to determine the point on a preparatory hearing pursuant to Part III of the Criminal Procedure and Investigations Act 1996 (the 1996 Act). The criminal trial, although technically begun by the preparatory hearing, has yet to take place, and no jury has yet been sworn. No one can yet know what the real issues will turn out to be at that trial. No one can yet know what the evidence will be, still less which facts will be disputed and which common ground. The present question of statutory construction may arise at the trial, or it may not. If it does arise, it is unknown at this stage what its impact may be on the trial. For this reason it is important that this judgment is directed to the pure question of law, and that as little as possible is said about what the allegations are or what the facts may turn out to be, lest there be risk that the jurys consideration of the case is affected. It is also for this reason that there are automatic statutory restrictions in the 1996 Act upon reporting of preparatory hearings and any appeals therefrom. This judgment is public and can be reported in the usual way. But reporting must not go beyond what is in this document together with the formal details permitted by statute: see the section on reporting restrictions in para 31 at the end of this judgment. The Certified Question The question of law certified by the Court of Appeal (Criminal Division) as a point of law of general public importance was as follows: Do property, goods, services or facilities transferred to or provided for the use or benefit of a candidate free of charge or at a discount (as identified in section 90C(1)(a) of the Representation of the People Act 1983 (as amended)) only fall to be declared as election expenses if they have been authorised by the candidate, his election agent or someone authorised by either or both of them? Whilst that question might also arise in other contexts connected with elections, in the present case it is raised by one of the realities of modern campaigning. Political parties are often national in organisation. At a general election, a national party may typically field candidates standing as adherents to the party in all or many of the constituencies in the country. At such an election, the legislation imposes separate limits on the expenditure which is permitted to the candidate locally and to the party nationally. Both the constituency candidate and the national party are required to submit returns setting out their expenditure, and demonstrating that it falls within the limits applied to them. But national party activity will typically amount to some support for the constituency candidates standing in its interests. Especially if the constituency is regarded by a party as marginal, the activities of the national party in the constituency may well be extensive. So also they may if the constituency candidate is a leading member of the national party, or for that matter if one of the competing candidates is a prominent member of another party. The question will arise when expenditure undertaken by the national party falls to be accounted for as candidate expenditure, and to be limited by the ceiling applied to constituency candidates, and when it should be returned by the national party and governed by the different limit applied to national parties. An illustration of the question is given by what was described by the judge as the battlebus issue. If the national party sends a liveried coach containing activists into key constituencies and they there campaign for the party and/or its candidates, do the expenses fall to be accounted for nationally or locally? That is by no means the only possible example of the problem, nor is it the only one which may be in issue in the proposed trial in the present case. Anyone familiar with modern election campaigns will appreciate that there may be many other situations where work undertaken by national parties potentially overlaps with, or arguably amounts to, the support of one or more local candidates. The certified question which this court is called upon to answer is likewise only one of a number of technical questions of electoral law which may bear upon this potential overlap. This judgment is, however, confined to that certified question. The legislation Since the 19th century, legislation has imposed limits upon a candidates election expenses. The current statute is the Representation of the People Act 1983 (RPA 1983). Some of the rules and concepts in that Act effectively date from Victorian times; others have been added by successive modern adjustments, and amendments have continued since 1983. Until 2000 there were no rules about national expenditure by political parties. They were introduced by the Political Parties, Elections and Referendums Act 2000 (PPERA 2000). That Act also made some amendments to RPA 1983. The two statutes adopt similar general schemes to control expenses. The principal (but not the only) controls are these. (i) They list, in Schedules to the Acts, the kinds of expenditure which count as declarable expenses (and some kinds which do not). (ii) They prescribe who may incur those expenses, and thus fix responsibility on identifiable persons. In the case of constituency expenses, those persons are the candidate, his agent, and others if authorised by either of them. In the case of party expenses, those persons are the party treasurer and deputy treasurer, or others if authorised by either. Similarly, the statutes prohibit payment of expenses by persons other than those specified. (iii) They impose financial limits on the expenses which may be incurred and paid. (iv) They require a specified person to make a return of the expenses incurred. In the case of the constituency, that person is the appointed election agent of the candidate. In the case of party expenditure, it is the party treasurer. Moreover, the returns must be accompanied by formal declarations of accuracy. Those must be made by the person making the return and, in the case of the constituency, also by the candidate. (v) Each of the statutes contains a provision including in the expenses which must be declared, and which must fall within the relevant limit, the cost of things which are supplied either free of charge or at a discount to the candidate or party as the case may be, where that cost would, if paid for by the candidate or party, be election expenses. These are sometimes referred to, although not in all the statutes, as notional expenditure. As will be seen, the certified question in this case asks about the relationship between the second and fifth of these controls. It is a feature of the legislation that the two categories of expenses, local and national, whether or not they may in practice overlap, are treated as mutually exclusive. When PPERA 2000 introduced controls over party expenditure it labelled it in section 72 campaign expenditure, and defined it as: (2) Campaign expenditure, in relation to a registered party, means (subject to subsection (7)) expenses incurred by or on behalf of the party which are expenses falling within Part I of Schedule 8 and so incurred for election purposes. The meaning of election purposes in this subsection is wide: it is defined thus in subsection (4): For election purposes, in relation to a registered party, means for the purpose of or in connection with (a) promoting or procuring electoral success for the party at any relevant election, that is to say, the return at any such election of candidates (i) standing in the name of the party, or (ii) included in a list of candidates submitted by the party in connection with the election; or (b) otherwise enhancing the standing of the party, or (i) (ii) of any such candidates, with the electorate in connection with future relevant elections (whether imminent or otherwise). It follows that if the definition stopped there, all party activity which has the purpose of enhancing the standing of any of its candidates would count as campaign expenditure. The mutual exclusion of party expenses and local candidate expenses is, however, achieved by subsection (7), to which the foregoing definition is expressly made subject. That provides (as amended by section 20 of, and paragraph 5(2)(a) of Schedule 6 to, the Recall of MPs Act 2015): Campaign expenditure does not include anything which (in accordance with any enactment) falls to be included in (a) a return as to election expenses in respect of a candidate or candidates at a particular election, or (b) . [not here relevant]. The principal debate in this appeal centres on two provisions of RPA 1983, sections 90ZA and 90C. As the numeration suggests, both are additions to the statute as originally enacted. Section 90C was added with effect from July 2001 by section 134(1) of PPERA 2000. Section 90ZA was inserted by section 27(2) the Electoral Administration Act 2006 and came into force in September 2006. Section 90ZA of RPA 1983 contains the current meaning of election expenses (ie, in relation to general elections, those incurred by constituency candidates). It provides: 90ZA Meaning of election expenses (1) In this Part of this Act election expenses in relation to a candidate at an election means (subject to subsection (2) below and section 90C below) any expenses incurred at any time in respect of any matter specified in Part 1 of Schedule 4A which is used for the purposes of the candidates election after the date when he becomes a candidate at the election. (2) No election expenses are to be regarded as incurred by virtue of subsection (1) above or section 90C below in respect of any matter specified in Part 2 of Schedule 4A. (3) In this section and in section 90C below, for the purposes of the candidates election means with a view to, or otherwise in connection with, promoting or procuring the candidate's election at the election. (4) For the purposes of this Part of this Act, election expenses are incurred by or on behalf of a candidate at an election if they are incurred (a) by the candidate or his election agent, or (b) by any person authorised by the candidate or his election agent to incur expenses. (5) [not here relevant] (6) In this Part and in Part 3 of this Act, any reference (in whatever terms) to promoting or procuring a candidates election at an election includes doing so by prejudicing the electoral prospects of another candidate at the election. (7) Schedule 4A has effect. [Note: this schedule specifies the kinds of expenditure which are categorised as election expenses.] [not here relevant]. (8) Section 90C of RPA 1983 contains provision for things supplied to a candidate either free of charge or at a discount. It provides (as amended by section 74(1) of, and paragraph 117 of Schedule 1 to, the Electoral Administration Act 2006): 90C Property, goods, services etc provided free of charge or at a discount (1) This section applies where, in the case of a candidate at an election (a) either (i) property or goods is or are transferred to the candidate or his election agent free of charge or at a discount of more than 10% of the market value of the property or goods, or (ii) property, goods, services or facilities is or are provided for the use or benefit of the candidate free of charge or at a discount of more than 10% of the commercial rate for the use of the property or for the provision of the goods, services or facilities, and (b) the property, goods, services or facilities is or are made use of by or on behalf of the candidate in circumstances such that, if any expenses were to be (or are) actually incurred by or on behalf of the candidate in respect of that use, they would be (or are) election expenses incurred by or on behalf of the candidate. (2) Where this section applies (a) an amount of election expenses determined in accordance with this section (the appropriate amount) shall be treated, for the purposes of this Part of this Act, as incurred by the candidate, and (b) declaration of that amount, unless that amount is not more than 50. the candidates election agent shall make a This subsection has effect subject to Part 2 of Schedule 4A to this Act. (3) Where subsection (1)(a)(i) above applies, appropriate amount is such proportion of either the the market value of the property or goods (where (a) the property or goods is or are transferred free of charge), or (b) the difference between the market value of the property or goods and the amount of expenses actually incurred by or on behalf of the candidate in respect of the property or goods (where the property or goods is or are transferred at a discount), as is reasonably attributable to the use made of the property or goods as mentioned in subsection (1)(b) above. (4) Where subsection (1)(a)(ii) above applies, the appropriate amount is such proportion of either the commercial rate for the use of the property or (a) the provision of the goods, services or facilities (where the property, goods, services or facilities is or are provided free of charge), or (b) the difference between that commercial rate and the amount of expenses actually incurred by or on behalf of the candidate in respect of the use of the property or the provision of the services or facilities (where the property, goods, services or facilities is or are provided at a discount), as is reasonably attributable to the use made of the property, goods, services or facilities as mentioned in subsection (1)(b) above. (5) Where the services of an employee are made available by his employer for the use or benefit of a candidate, then for the purposes of this section the commercial rate for the provision of those services shall be the amount of the remuneration and allowances payable to the employee by his employer in respect of the period for which his services are so made available (but shall not include any amount in respect of any contributions or other payments for which the employer is liable in respect of the employee). (6) In this section market value, in relation to any property or goods, means the price which might reasonably be expected to be paid for the property or goods on a sale in the open market; and paragraph 2(6)(a) of Schedule 2A to this Act shall apply with any necessary modifications for the purpose of determining, for the purposes of subsection (1) above, whether property or goods is or are transferred to a candidate or his election agent. There are further provisions in the statutes for other kinds of elections, including referendums, and also for expenditure at elections by those who are neither candidates nor political parties, such as pressure groups. The latter expenditure is called controlled expenditure. These provisions are, like those relating to constituency candidates and central parties, relatively complex. It is not necessary to refer to them in detail, but it is relevant to note that in several respects they adopt forms of control parallel to those outlined at para 6 above, including provisions for notional expenditure. Controlled expenditure, campaign expenditure and candidates election expenses are, once again, made mutually exclusive, each with the others, by section 87(1) of PPERA 2000. For each type of regulated expenditure, the statutes require a return. In the case of election expenses by a candidate, the duty to make the return falls on the candidates appointed election agent. Section 81(1) RPA 1983 (as amended by section 24 of, and paragraph 27 of Schedule 4 to, the Representation of the People Act 1985 and by section 138(1) of, and paragraph 7(2) of Schedule 18 to, PPERA 2000) provides: 81. Return as to election expenses (1) Within 35 days after the day on which the result of the election is declared, the election agent of every candidate at the election shall deliver to the appropriate officer a true return containing as respects that candidate a statement of all election expenses incurred by (a) or on behalf of the candidate; and a statement of all payments made by the election (b) agent together with all bills or receipts relating to the payments. The return must, by section 82(1) and (2), be accompanied by declarations by both the agent and the candidate that it is accurate. The potential consequences of failure to deliver an accurate return and declaration are serious. By section 82(6) knowingly to make a false declaration is the criminal offence of corrupt practice, whilst by section 84 simple failure to make a correct return or declaration is the offence of illegal practice. The former carries imprisonment and a fine, by section 168. The latter carries a fine, by section 169. Both have the further notable effect, by section 173, of disqualification from the House of Commons or other elective office, subject, in the case of specified excuses and proof of good faith, to the courts power to relieve of that consequence (section 86). The rival submissions The Crowns case is that campaigning activity undertaken in a constituency by the central national party may be free or discounted services within section 90C, and thus be accountable for by the candidate, whenever: they were made use of by or on behalf of the candidate (section it amounts to services provided for the use or benefit of the (i) candidate (section 90C(1)(a)(ii)); and (ii) 90C(1)(b)); and they were so made use of in circumstances such that if any expenses (iii) were to be actually incurred by or on behalf of the candidate in respect of that use, they would be election expenses incurred by or on behalf of the candidate (section 90C(1)(b)). If those three conditions are met, say the Crown, section 90C(2) applies, and the expenses are to be treated as incurred by the candidate and must be declared as such by his election agent. The defendants contend that such campaigning by the national party cannot amount to election expenses for which the candidate has to account unless he or his agent, or someone authorised by either of them, has authorised the expenditure. Authorisation is, say the defendants, a central feature, throughout the legislation, of responsibility for electioneering expenses. Section 90ZA(4) so provides for a candidates election expenses, and says plainly that such expenses are only incurred (and thus declarable) if they are incurred by the candidate, or his election agent, or someone else authorised by either of them. Say the defendants, provisions essentially mirroring section 90ZA(4) are to be found throughout the legislation and are applied to all the various forms of electioneering expenses, such as the partys campaign expenditure, the controlled expenditure of pressure groups, and referendum expenditure. Both parties also relied on consequentialist arguments supporting the construction for which they contended. The Crown suggested that unless its construction is adopted the evasion of controls on expenditure would be encouraged. It also submitted that its construction is consistent with a desire to maintain equivalence between the position of a candidate supported by a national party and an independent candidate who has no national organisation behind him. For their part, the defendants contended that unless authorisation is kept firmly at the centre of responsibility for declaring expenses, the task of an election agent would become impossible wherever the national party undertakes campaigning activity which in fact benefits the local candidate, but which he has not sought out, required or authorised; that would apply, say the defendants, in a great number of constituencies, if not in most. Analysis It is plainly correct, as Ms Montgomery QC contended for the defendants, that the concept of authorisation of expenses is frequently resorted to in the legislation. In applying the control which restricts those who may incur constituency election expenses, section 75 RPA 1983 does so by making it an offence to incur such expenses unless one is the candidate, his election agent, or a person authorised in writing by the election agent to do so. Similar provisions are to be found in the controls relating to party campaign expenses (section 75(1) PPERA 2000) and to controlled expenditure by recognised third parties (section 90 PPERA 2000). The same concept is employed in what the defendants contend is the crucial section relating to constituency election expenses, namely section 90ZA(4) RPA 1983. That, as has been seen, addresses the question of when election expenses are to be regarded for the purposes of the Act as incurred by or on behalf of a candidate. This question has to be addressed because in several places the Act attaches consequences when expenses have been incurred by or on behalf of a candidate. The duty to make a return under section 81 arises when expenses are thus incurred, but not otherwise. The monetary limit on expenses imposed by section 76(1) of RPA 1983 is similarly imposed in relation to expenses incurred by or on behalf of the candidate. And section 73(1) of RPA 1983, which prohibits the payment of election expenses otherwise than via the election agent, speaks once again of prohibiting the payment of expenses which are incurred by or on behalf of the candidate. What section 90ZA(4) undoubtedly does is to say that actual (as distinct from notional) constituency election expenses are only incurred by or on behalf of the candidate if they are incurred either by the candidate himself, or by his election agent, or by someone authorised by either of them. It is no doubt correct that the effect of section 90ZA(4) is that authorisation (by candidate, election agent or person authorised by either) is ordinarily a necessary feature of constituency election expenses falling within that section and thus within the rules about monetary limit (section 76) and payment (section 73). It is also correct that there are broadly similar provisions in PPERA 2000 employing the concept of authorisation in the equivalent contexts of party campaign expenses and third party controlled expenses when it comes to monetary limits and the prohibition of payment by other people. The critical question, however, is whether this concept of authorisation also governs the notional expenditure provision in section 90C of RPA 1983, and for that matter its equivalents in PPERA 2000 for party campaign expenses and third party controlled expenses. The certified question (see para 2 above) asks in terms whether the conditions set out in section 90ZA(4) apply to notional expenditure within section 90C. The defendants contend that they do. The Court of Appeal was persuaded that they were right. In the end this depends on the words of the statute. Section 90C asks, by subsections (1)(a) and (b), three questions about the expenditure it is considering. If those questions are answered yes, then by subsection (2) it stipulates that the expenditure shall be treated as incurred by the candidate for the purposes of the Act. That is a deeming provision. If the conditions are satisfied, the notional expenditure becomes by statute the same as if it had been actually incurred by the candidate, even though it has not actually been incurred by him. The three questions can be simplified for present purposes by expressing them in terms of services, but of course the same applies to goods, property or facilities. The questions posed by subsections (1)(a) and (b) are: 1. Were the services provided for the use or benefit of the candidate either free of charge or at a discount of more than 10% of commercial value? (subsection (1)(a)) 2. Were they made use of by or on behalf of the candidate? (subsection (1)(b)) and 3. If the services had actually been paid for (expenses actually incurred) by or on behalf of the candidate, would those expenses be election expenses incurred by or on his behalf (and thus subject to the various controls imposed by the Act)? (also subsection (1)(b)). There is no room in this sequence of conditions or questions for an additional requirement that the provision of the services must have been authorised by the candidate or his election agent, or by someone authorised by either of them. The test is a different one from that in section 90ZA(4) for expenses actually incurred. The test is use, by or on behalf of the candidate (although see para 25 below). This analysis is confirmed by the express provision in section 90ZA(1) that the definition of election expenses there provided is subject to section 90C. What section 90ZA(4) does is to stipulate when election expenses, defined as subject to section 90C, are incurred by or on behalf of the candidate. But section 90C(2) includes also as expenses incurred by the candidate those which satisfy the conditions of section 90C(1)(a) and (b). In short, rather than section 90C incorporating the words of section 90ZA(4), it provides an additional category of expenditure which has to be included within subparagraph (a) of that latter subsection that is to say as expenses notionally incurred by the candidate. There is nothing in the Act (or for that matter in the equivalent provisions of PPERA 2000) which necessitates departure from this natural reading of section 90C. The third condition/question is an essential part of the operation of section 90C. Unless the services (etc) fall within one of the categories of election expenses caught by the Act, and particularly by Schedule 4A (as inserted by section 27(5) of the Electoral Administration Act 2006), and unless payment by the candidate himself, if made, would amount to election expenses, section 90C simply does not bite. It is not, however, necessary to adopt the defendants construction of the Act in order for the third condition/question to have content. It would appear to be true that one consequence of the addition of section 90C to the Act is to qualify the effect of a modest exemption for small expenditure, always in the Act and now contained in section 75(1ZA) (as inserted by section 131(3) of PPERA 2000) and (1ZZB) (as inserted by section 25(3) of the Electoral Administration Act 2006). Those provisions exempt from the rule that unauthorised persons may not incur expenses in support of a candidate small payments (now not exceeding 700) made independently of any similar ones. The effect of section 90C would appear to be that, although by section 75 the payer of such small sums is not guilty of the offence of making an impermissible payment, nevertheless services (etc) provided by someone who spends such a sum upon them may count as notional expenditure which must be declared and counted towards the statutory limit if (but only if) the services are made use of by the candidate or on his behalf. Those are, however, not necessarily inconsistent provisions. It is no doubt true that in practice it is difficult to envisage the transfer of property or goods, also covered by the notional expenditure provisions of section 90C, occurring without the concurrence of the candidate. That may be relevant to the proper construction of the expression made use of by or on behalf of the candidate, or for that matter to whether any declaration made is knowingly false, but it cannot be a reason to import into any part of section 90C the wording of section 90ZA(4). The Court of Appeal drew attention to the second condition/question set out in para 18 above, posed by section 90C(1)(b). It drew attention to the fact that the subsection is satisfied when the services (etc) are made use of by anyone, on behalf of the candidate, and that it is not limited to use by the candidate or his election agent. It is, however, important to observe that section 90C(1)(b) is not satisfied merely by the services (etc) being for the benefit of the candidate. There is a plainly deliberate difference of expression between subsections (1)(a)(ii) and (1)(b). The services (etc) have, by (1)(a)(ii) to be provided for the use or benefit of the candidate (emphasis added). But their cost only counts as notional expenditure if they are made use of by or on behalf of the candidate: subsection (1)(b). Mr Straker QC, for the Crown, was at pains to submit that making use of the services (etc) involves some positive activity by the candidate or someone on his behalf. Ordinarily, one would also expect that it would involve conscious activity. It is not enough that the services enure for the benefit of the candidate unless he or someone on his behalf makes positive use of them. Care will have to be taken upon the question of who may be found to be acting on behalf of the candidate in making positive use of such services, but the problem of who acts on behalf of a candidate, and when, is not an unfamiliar one in election law. It does not seem likely that use by a campaigner would be held to be by or on behalf of a candidate who had positively refused to accept the benefit of the services (etc). There may, on some facts, be a difference between the critical requirement for use by or on behalf of the candidate and the suggested one of authorisation, but in many cases those factual issues may well be closely related. The legislation contains provisions also for regulating donations. In RPA 1983 they are found in section 71A (as inserted by section 130(2) of PPERA 2000) and Schedule 2A (as inserted by section 130(3) of, and Schedule 16 to, PPERA 2000). In summary, donations must be made to the candidate or election agent, and must not be accepted unless made by a permissible donor, as defined in section 54 PPERA 2000. The provision of free or discounted services may also amount to a donation see paragraph 2(1)(e) of Schedule 2A. The maker of a donation may commit an offence if he makes it to someone other than the candidate or agent. The agent must include in the return required by section 81 the details of any donation accepted either by him or the candidate: Schedule 2A paragraphs 10 12. No doubt, ordinarily at least, acceptance of a donation will involve the awareness of the recipient, in the same way as a transfer of property or goods to either of them would. It may well follow that the agent or candidate could not be said to be a secondary party to a donors offence of impermissible donation unless they knew of it, and perhaps that a donation of which neither is aware has not been accepted for the purpose of inclusion in the return. That, as above, may help to throw light on the meaning of the expression in section 90C(1)(b) made use of by or on behalf of the candidate. But it affords no reason for importing the terms of section 90ZA(4) into section 90C. Rather, the donation provisions are broadly consistent with the construction of section 90C here set out. It is not necessary, in order to give effect to the plain reading of the Act here set out, to have resort to the Crowns consequentialist arguments, which do not in any event have great substance. There appears to be no particular reason why this reading of section 90C can alone deter deliberate evasion of the spending limits by the acceptance of services (etc) provided free or at a discount. Deliberate evasion would equally be deterred on the construction advanced by the defendants. It may well be that the problem of potentially overlapping campaigning by a national party and its local candidates does not apply to independent candidates who lack a national party behind them. But that independents do not have a national party behind them is a simple fact of electoral life, and applies whatever is the correct construction of section 90C. Moreover, independent candidates may in any event be offered services (etc) from supporters other than a national party, and section 90C, whatever its correct construction, needs to and does apply to them also. The plain reading of the Act here set out cannot be displaced by possibly inconvenient or even newly recognised consequences. It may or may not be true that the notional expenditure provisions, including section 90C, were directed principally at evasion of expenses controls by candidates (or parties) who might arrange for unregulated persons to provide goods, property, services or facilities for them either free or at a discount. It may or may not be true that the application of these provisions to the undoubtedly imprecise question of when expenditure is party expenditure and when it is candidate expenditure was not anticipated. It seems, from the material provided to this court, that the Electoral Commissions helpful guidance documents issued over several years, whilst they certainly both address the question of apportionment of expenditure between party and candidate, and deal with the concept of free or discounted services, nowhere appear to alert readers to the possible link between them, nor to the application of the notional expenditure rules to what must sometimes be a difficult exercise of separating local from national expenditure. The potential difficulties for election agents, and for that matter for candidates, in knowing what must and must not be included in their returns, are indeed likely to be increased by the complications of national and local expenditure which in practice may overlap but by statute have to be mutually exclusive. The fact that they are mutually exclusive does not, as the defendants at one point submitted, mean that all expenditure defaults to constituency expenses. Indeed, it is because the two have to be separated, and if necessary maybe apportioned, that the task of the election agent is made more difficult. The point that the candidate and election agent risk the commission of criminal offences is well made. Criminal liability is no small matter even if regulatory statutes sometimes invoke it as if it were less significant than it is. But the more serious offence of knowingly making a false declaration is committed only when there is a dishonest state of mind, and the defendant knows that the declaration ought to include something which it does not: see the judgment of Lord Bingham of Cornhill CJ in R v Jones and Whicher [1999] 2 Cr App R 253, especially at 259B, which decision Mr Gordon QC, on behalf of the Electoral Commission intervening in the present case, took care to underline, and which the Crown has not suggested calls for any qualification. The strict liability offence is of course different, but the Act stipulates in section 86 for a specific power to relieve from sanctions where the offence has been committed despite good faith. The potential difficulties faced by agents are in any event more the consequence of the difficulty of separating national from local expenditure than of the terms of section 90C. Conclusion For the reasons set out above, this appeal must be allowed and the question which was certified by the Court of Appeal (para 2 above) must receive the answer no. The test for the operation of section 90C is the threefold one set out above (see para 18). Reporting restrictions the offences charged, as summarised in this judgment; the names of counsel and solicitors engaged in the appeal; the identity of the court(s) and the name of the judge(s); the names, ages, home addresses and occupations of the accused and (a) (b) witnesses; (c) (d) (e) whether for the purposes of the appeal representation was provided to either of the accused under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012; and (f) this judgment. Section 37 of the Criminal Procedure and Investigations Act 1996 imposes statutory reporting restrictions in relation to the hearing of interlocutory appeals such as the present. The objective is to ensure that the jurys consideration of the evidence and issues put before it is not at risk of being affected by prior reporting, for example of the details of the allegations or of discussion of possible issues. Those restrictions apply to the hearing of this appeal. The court is satisfied that there is no reason to modify them in the present case, except to permit the reporting of this judgment. Until the conclusion of the trial, nothing may be reported except the following:
UK-Abs
This pre trial appeal concerns a point of pure statutory construction. The Respondents face charges of knowingly making false declarations in relation to election expenses, or aiding and abetting or encouraging or assisting such offences. The parties asked the judge to determine the point on a preparatory hearing, pursuant to Part III of the Criminal Procedure and Investigations Act 1996. The question of law certified by the Court of Appeal (Criminal Division) as a point of law of general public importance is as follows: Do property, goods, services or facilities transferred to or provided for the use or benefit of a candidate free of charge or at a discount (as identified in section 90C(1)(a) of the Representation of the People Act 1983 (as amended)) only fall to be declared as election expenses if they have been authorised by the candidate, his election agent or someone authorised by either or both of them? The Court of Appeal held that section 90C of the Representation of the People Act 1983 (the RPA 1983) requires authorisation of expenses before the need for them to be declared arises. The Supreme Court unanimously allows the appeal, answering the certified question in the negative. Lord Hughes gives the judgment with which the other justices agree. The concept of authorisation of expenses is frequently resorted to in the legislation [16]. The critical question is whether this concept also governs the notional expenditure provision in section 90C of RPA 1983 [17]. Section 90C asks, by subsections (1)(a) and (b), three questions about the notional expenditure it is considering. If the answer to all of these questions is yes, then subsection (2) stipulates that the expenditure shall be treated as incurred by the candidate for the purposes of the Act. The questions, which equally apply to goods, property or facilities, are: 1. Were the services provided for the use or benefit of the candidate either free of charge or at a discount of more than 10% of commercial value; 2. Were they made use of by or on behalf of the candidate; and 3. If the services had actually been paid for (expenses actually incurred) by or on behalf of the candidate, would those expenses be election expenses incurred by or on his behalf (and thus subject to the various controls imposed by the Act)? [18] There is no room in these questions for an additional requirement that the provision of services must have been authorised by the candidate or his election agent, or by someone authorised by either of them. The test is whether the goods, property or facilities are used by, or on behalf of, the candidate. This differs from the test in section 90ZA(4) of RPA 1983 for expenses actually incurred which does require authorisation. The ambit of the use test is not resolved by the question asked and will depend on the facts as they emerge in each case. [19, 25]. Section 90ZA(1) confirms this analysis by the express provision that the definition of election expenses therein is subject to section 90C. Rather than 90C incorporating the words of 90ZA(4), it imports an additional category of expenditure to be included in 90ZA(4), namely expenses notionally incurred by the candidate [20]. The plain reading of the Act cannot be displaced by possibly inconvenient or even newly recognised consequences [27 28]. The point that the candidate and election agent risk the commission of criminal offences is well made. The more serious offence of knowingly making false declarations requires a dishonest state of mind. While the strict liability offence is different, section 86 of the Act provides for relief from sanctions where the offence has been committed despite good faith [29].
This appeal concerns the Scots law of gratuitous alienations on insolvency. It raises three principal questions. First, there is a question as to the interpretation of the term adequate consideration in section 242(4)(b) of the Insolvency Act 1986 (the 1986 Act). Secondly, there is the question whether the Inner House was entitled to interfere with the Lord Ordinarys evaluation that the consideration given by Carnbroe Estates Ltd (Carnbroe) amounted to adequate consideration under that statutory provision. Thirdly, a question arose during the hearing as to the interpretation of the words in section 242(4) that empower the court to grant a remedy. The court invited and received written submissions from counsel for both parties. The question is whether the court has any discretion as to the remedy it may give. Factual background Grampian MacLennans Distribution Services Ltd (Grampian) was, as its name suggests, a distribution services company. It carried on business from a site at 9 Stroud Road, Kelvin Industrial Estate, East Kilbride (the Property). The Property, which was Grampians principal asset and centre of operations, consisted of a warehouse, a vehicle workshop and a yard with a gatehouse. Grampian purchased the Property in August 2005 for 630,000. The buildings on the Property had been constructed in the 1970s and by 2014 were in need of further maintenance, repair and upgrading. Grampians shareholders until June 2014 were Derek and Hazel Hunter, and Derek Hunter (Mr Hunter) was the sole director. In March 2013 DM Hall, chartered surveyors, (DM Hall) valued the Property at 1.2m on the open market with the valuation falling to 800,000 if one were to assume a restricted marketing period of 180 days. By early 2014 Grampian was in financial difficulty. In May 2014 Mr Hunter consulted an insolvency practitioner to obtain advice as to whether he should put Grampian in members voluntary liquidation. At that time Mr Hunter believed that the sale of the Property would enable Grampian to pay all its creditors and make a distribution to the shareholders. His belief was supported by the DM Hall valuation of March 2013. Shortly before the consultation in May 2014, Carnbroe had intimated through its solicitors an interest in purchasing the property for 950,000. In mid-2014, another company, Bullet Express Ltd, also expressed an interest in acquiring the Property at a price of 900,000. Mr and Mrs Hunter chose not to pursue those expressions of interest in the Property but instead sold their shares in Grampian to Mr Kevan Quinn (Mr Quinn), who became its sole shareholder and director with effect from about 16 June 2014. At this time, Grampians total liabilities marginally exceeded 1m. Sums in excess of 500,000 were due to HM Revenue and Customs (HMRC) and sums over 500,000 were due to National Westminster Bank plc (NatWest), which together were Grampians principal creditors. NatWest held a standard security over the Property in respect of a LIBOR loan, which I mention below. It also held a bond and floating charge over Grampians property and undertaking. Grampian had to pay monthly loan payments to NatWest of about 4,600. In his witness statement, which was accepted as his evidence in chief and truthful and on which he was not cross-examined, Mr Quinn explained that he had taken over Grampian in the hope that he could save it and make money out of it. He narrated that shortly after his takeover, Grampians invoice factor withdrew its factoring facility which caused the companys cash flow to collapse. He was not able to obtain alternative funding. He explained that once he realised how bad Grampians position was, he tried to deal with it in as responsible a way as he could. He sold off the companys trucks, which were on hire purchase, to reduce outgoings, and then sought to sell Grampians only other asset, the Property. With the collapse in its cash flow, Grampian could not pay the loan payments to NatWest, which fell into arrears. He sought to sell the Property to prevent it from being re-possessed by NatWest. Mr Quinn entered into discussions to sell the Property with James Gaffney (Mr Gaffney) who was a successful businessman whom he had known for over 30 years and with whom he had had business dealings throughout that time. Mr Gaffney tried to chisel the price by pointing out that the electrical system of the building needed immediate attention, and that there was an issue about the presence of asbestos which would have to be addressed at some time. Mr Gaffney was aware of Grampians predicament and mentioned that he could buy the Property after it had been repossessed. Mr Gaffney also gave evidence in a written witness statement which was accepted as truthful. He stated that Carnbroe was one of his family companies and that he negotiated with Mr Quinn on its behalf. Mr Quinn had explained to him Grampians financial difficulties on a number of occasions. Mr Quinn was looking for a quick sale because of mortgage arrears and the risk that the Property would be repossessed. The price of 550,000 reflected the quick sale. The buildings needed repairs and refurbishment, including re-wiring and asbestos removal. That is all the direct factual evidence that was led about the circumstances which led up to the sale of the Property to Carnbroe. The parties sought to adopt an economical and proportionate approach to the proof, which is to be commended. In a Joint Minute of Admissions the parties agreed as true the contents of the affidavits of the liquidators and two other witnesses to fact on their behalf. The reports of and other documents prepared by the two expert valuation witnesses, Mr Iain Prentice of Colliers International Valuation UK LLP, whom the liquidators called as a witness, and Mr Alastair Buchanan of J & E Shepherd, who gave evidence at Carnbroes request, were admitted as their evidence in chief. Both expert witnesses gave brief oral evidence in chief and were cross-examined in a succinct manner. The Joint Minute of Admissions also proposed detailed findings of fact on matters which were not in dispute. No evidence was led as to the likely price which NatWest could be expected to obtain if it had called up its standard security and sold the Property or which a liquidator of Grampian would be likely to have obtained on its sale in a winding up. Grampian transferred the Property to Carnbroe by a disposition dated 24 July 2014 in which the consideration was stated to be 550,000, having agreed an off- market sale. Entry was given to the Property on that date. Immediately before the sale, Grampian owed NatWest 473,604.68 under the LIBOR loan which was secured over the Property. Carnbroe did not pay the agreed consideration of 550,000 but instead, on 18 August 2014, its solicitors paid the sum of 473,604.68 to NatWest in repayment of the LIBOR loan to Grampian and to obtain a discharge of the standard security over the Property. Carnbroe did not pay the balance of the stated purchase price to Grampian until 9 June 2016, after the completion of the proof before the Lord Ordinary in this case. Carnbroe funded the purchase of the Property by a loan of 600,000 from the Bank of Scotland plc (the Bank). In support of its lending, the Bank obtained a report from DM Hall dated 23 June 2014, which confirmed the valuation in its March 2013 report, namely 1.2m on the open market and 800,000 on the assumption of a restricted marketing period of 180 days. On 28 July 2014, solicitors for the Bank questioned the discrepancy between the purchase price of 550,000 and the DM Hall valuation. Carnbroes solicitor replied by email to the effect that because NatWest were calling for payment under threat of enforcing their securities, there was no willing seller and no willing buyer for the Property and that Grampian did not have the option of a 180 day marketing period. The solicitor stated that he had spoken with DM Hall who had confirmed that, as a result, the assumptions made in their valuation did not apply. The Bank then made a loan of 600,000 to Carnbroe which was secured over the Property. The sale of the Property and the repayment of NatWests LIBOR loan left the other principal creditor, HMRC, unpaid. HMRC wrote to Grampian on 6 August 2014 requiring payment of tax that was due. On Grampians failure to pay, HMRC presented a petition for winding up Grampian founding on that debt. Mr MacDonald was appointed provisional liquidator on 12 September 2014 and on 21 November 2014 he and Ms Coyne were appointed as joint liquidators at a meeting of Grampian creditors. The liquidators raised the present proceedings on 28 November 2014. I can summarise the valuation evidence shortly. Mr Prentices evidence was that the open market value of the Property at the date of the transaction was 820,000. Mr Buchanans evidence of the open market value at that date was 740,000. The experts both made their valuations on the assumption that the bargain was between a willing seller and a willing buyer at arms length. They both assumed a proper period of marketing, which Mr Prentice thought would take between 12 and 24 months and Mr Buchanan thought would be 24 months. Both advised that it was appropriate to apply a discount of between 25% and 30% if there were a restricted marketing period of six months. Neither considered that a consideration of 550,000 was inappropriate if there were an immediate off-market sale by a financially distressed vendor, in accordance with the factual assumptions which Mr Buchanan was requested to address and addressed in his report. The question which has become of central importance in this case is whether there was an objective justification for such an urgent off-market sale, which caused so radical a reduction in the value of the Property in comparison with the open market value. The judgments of the Scottish Courts After a two-day proof, the Lord Ordinary held in an opinion dated 18 January 2017 ([2017] CSOH 8) that Carnbroe had established that the sale of the Property was made for adequate consideration. He recorded the submission which counsel made on behalf of Carnbroe that Grampian was fighting for its survival and that Mr Quinn had to make a quick decision. He continued: 30. While the purchase price fell short of the open market value, Grampian had very limited options. It was in a perilous financial position. It could not afford the leisure of a lengthy marketing period. NatWest was threatening to call up the standard security and to use other diligence against it in terms of the bond and floating charge it held. There was no other offer on the table. The earlier expressions of interest were just that. There was no solid proposal to accept. 31 Carnbroes offer presented an opportunity to obtain a quick sale. To place the property on the open market would have involved significant expense. There would have been advertising costs and an estate agency fee of 1% to 1.5%. There was no clear indication that a sale would be achieved within the standard marketing period of 12 to 24 months. According to the surveyors evidence, a stigma can attach to a property that remains on the market too long. It might be the subject of vandalism. He went on the state that Mr Quinn and Mr Gaffney were not associates in terms of the relevant legislative definition, but their long business relationship justified close scrutiny of the transaction. The expert surveyors had agreed that a price of 550,000 was not inappropriate if the Property had been marketed on a closed basis for six months. The liquidators appealed to the Inner House. In an opinion and interlocutor dated 23 January 2018 the First Division (the Lord President, Lord Drummond Young and Lord Malcolm) ([2018] CSIH 7) allowed the reclaiming motion, reduced the disposition of the Property and ordered Carnbroe to execute a disposition of the Property in favour of the liquidators. In the opinion of the Court, which Lord Drummond Young delivered, the First Division recorded its view (para 11) that the most important issue in the appeal was whether it was correct to assert that a quick sale was justified because Grampian had an immediate need for funds. The First Division concluded that it was not. Analysing the facts found by the Lord Ordinary, the Court identified four factors which were of central importance, namely Grampians severe financial difficulties when the finance house withdrew its invoice factoring facility, Grampians balance sheet insolvency, the sale of the trucks on which Grampian depended to provide its distribution service, and the sale of the Property which was its principal place of business and depot (paras 27-29). The First Division concluded that on an objective analysis there was no realistic prospect that Grampians business could continue in existence after the sale of those assets (para 30). In consequence, this was not a case in which the achievement of a quick sale of the Property would save the companys business. In its legal analysis of the principles of insolvency law the First Division (paras 12-20) stated that a person, once he or she became insolvent, owed a fiduciary duty to have regard to the interests of his or her creditors and as a result, if a debtor alienates property once he or she is insolvent, he or she must obtain full consideration for the property alienated. The First Division pointed out that under the current and prior statutory provisions relating to gratuitous alienations the burden of proving that full consideration had been given rested on the recipient of the insolvent debtors property. The same principles applied to a corporate insolvency in which directors of an insolvent company owed analogous fiduciary duties to have regard to the interests of the companys creditors as a body. As a result, the courts should take a relatively strict view of the adequacy of consideration (para 24). The First Division distinguished balance sheet insolvency (ie an excess of liabilities over assets) with cash flow insolvency (ie the inability of a trading entity to meet its debts as they fall due). It recognised both that an urgent forced sale, necessitated by a trading entitys need for cash to maintain liquidity in order to continue to trade, would generally result in a lower price than a sale in ordinary market conditions and that the need to maintain liquidity and stay in business could be a relevant factor in deciding whether the consideration paid was adequate. But if an insolvent trading entitys business was about to come to an end, there was no need to maintain liquidity and the paramount importance of the interests of the creditors prevailed over any need to pay debts as they fall due. The First Division stated (para 25): For these reasons we are of opinion that the need for a forced sale to provide immediate liquidity is not normally a factor that should be taken into account in determining the adequacy of consideration obtained for a sale of the debtors assets in any case where the debtor has ceased business or is about to cease business. As a result, if a trading entity sold its principal asset, such as its principal place of business, the court would have to scrutinize the companys commercial situation in order to determine whether it was realistic for it to continue to trade (para 26). Carnbroe appeals to this court with this courts permission. In presenting Carnbroes appeal, Lord Davidson of Glen Clova QC makes three submissions. He submits that the central issue is whether the insolvent companys financial distress justified an urgent sale and that the Lord Ordinary reached a conclusion which was open to him on the evidence. The First Division therefore erred in interfering with his evaluation. It erred in placing a gloss on the statutory words and requiring a strict approach to the assessment of any departure from open market value when the alternative facing Grampian was a sale by the standard security holder or a sale by a liquidator, both of which could be categorised as a forced sale. The Lord Ordinary made no findings as to the likely outcome of such sales, which were the appropriate comparators. Secondly, the First Division erred in identifying the applicable legal policy. Lord Davidson does not challenge the proposition that an insolvent company is in substance a trustee for its creditors but submits that a countervailing consideration is that the law should facilitate commercial transactions and promote commercial certainty. What the statute requires is the striking of a just balance between the creditors interests and the interests of those contracting at arms length with an insolvent company. The test of adequate consideration takes account of both interests. He refers by way of analogy to statutory provisions in English law (section 238 of the 1986 Act) and in Australian law (sections 588FB, 588FC and 588FF of the Corporations Act 2001) and submits that the test is whether the transaction was a commercial one which was satisfactory in all the circumstances rather than, as the First Division held, a strict approach to the words adequate consideration. Thirdly, he submits that the First Divisions judgment lacks commercial practicability: a purchaser in a commercial deal looks after its own interests and is entitled to exploit a vendors financial distress to obtain a favourable price in an arms length transaction. Sales at less than open market value are the norm where there are problems with liquidity. But the purchaser cannot know whether the vendor in pursuing an urgent sale has a realistic possibility of preserving its business or is otherwise acting in the interests of its creditors. If the First Divisions analysis were correct, prudence would require the purchaser to refuse to deal with a company in distress and instead wait to see if a formal insolvency eventuated which would enable it safely to purchase from a liquidator. Discussion i) The statutory provisions Section 242 of the 1986 Act enables among others the liquidator of a company to challenge a gratuitous alienation in Scotland if the alienation took place not earlier than two years before the commencement of the winding up or not earlier than five years before that date if the alienation favours an associate of the company. Subsection (4) provides: On a challenge being brought under subsection (1), the court shall grant decree of reduction or for such restoration of property to the companys assets or other redress as may be appropriate; but the court shall not grant such a decree if the person seeking to uphold the alienation establishes - (a) that immediately, or at any other time, after the alienation the companys assets were greater than its liabilities, or (b) consideration, or that the alienation was made for adequate Provided that this subsection is without prejudice to any right or interest acquired in good faith and for value from or through the transferee in the alienation. Several points may be made about the section 242. First, the liquidator or creditor is entitled to make the challenge if the alienation occurs at a date not less than two years before the commencement of the winding up or five years before that date if the transferee is an associate of the insolvent company: section 242(3). Secondly, subject to the next point, the court must give at least one of the remedies specified (section 242(4)). Thirdly, to prevent the court from giving such remedies, the transferee of the alienation must establish one of the listed circumstances (section 242(4)(a)-(c)). In this case the circumstance which Carnbroe asserts is that the alienation was made for adequate consideration. The burden is thus placed on the transferee to establish that the consideration given for the alienation was adequate. Fourthly, as I shall show when I discuss case law below, the test as to whether the consideration is adequate is an objective test. Fifthly, where a remedy is given against the transferee, the subsection protects any right or interest which a third party has acquired in good faith and for value from or through the transferee (the proviso in section 242(4)). This is relevant to the interest of the Bank in this case. Subsection (7) preserves the Scots common law of challenges to gratuitous alienations by providing that a liquidator and an administrator have the same right as a creditor has under any rule of law to challenge an alienation of a company made for no consideration or no adequate consideration. Section 242 of the 1986 Act applies to corporate insolvency a regime for challenging gratuitous alienations which was introduced in section 34 of the Bankruptcy (Scotland) Act 1985, which governs the bankruptcy of natural persons and partnerships in Scotland, following a recommendation of the Scottish Law Commission in their 1982 Report on Bankruptcy and Related Aspects of Insolvency and Liquidation (Scot Law Com No 68). The relevant provision in bankruptcy is now section 98 of the Bankruptcy (Scotland) Act 2016, but I will focus on the predecessor statute in discussing the genesis of the relevant provisions. Essentially the same regime was introduced into corporate insolvency by section 75 of and paragraph 20 of Schedule 7 to the Bankruptcy (Scotland) Act 1985 which inserted section 615A into the Companies Act 1985. Thereafter, it was replaced by the provision in the 1986 Act. I therefore refer to the new regime for gratuitous alienations as the 1985 statutory reforms. In chapter 12 of the report which led to the 1985 statutory reforms, the Scottish Law Commission set out its proposals to make more consistent the rules of Scots law, both common law and statutory, in relation to the challenges to gratuitous alienations and unfair preferences to creditors on insolvency. Scots common law has built on the principle of the actio Pauliana in Roman law which allowed a challenge to a gift made by an insolvent donor on the basis that the gift was a fraud upon his or her creditors. Under Scots common law it is not necessary to prove an intention to defraud if the creditor mounting the challenge can show three things: (i) the debtor was absolutely (ie balance sheet) insolvent at the time of the challenge and was either insolvent (in that sense) at the time of the alienation or was made insolvent by it, (ii) the alienation was made without onerous consideration, and (iii) the alienation prejudiced the challenging creditor. As it was difficult for a creditor to prove such insolvency at the date of the alienation, the Scottish Parliament by the 1621 Act (c 18) (the 1621 Act) strengthened the creditors position in challenges to alienations which an insolvent made to a conjunct and confident person (ie a close relative, business partner, employee etc to whom money or assets were often secretly transferred) without true, just and necessary causes by creating factual presumptions which the transferee had to rebut. The 1621 Act, which the Scottish courts interpreted liberally, had the effect that, if the creditor could establish that the debtor was insolvent at the date of the challenge, it was presumed both that the debtor had been insolvent at the date of the alienation and that the alienation was made without onerous consideration. It was not necessary that the alienation be wholly gratuitous as the challenge could be made to an alienation which was for a materially inadequate consideration in money or moneys worth. Under both the common law and the 1621 Act the challenger of the transaction did not have to prove that the debtor or the transferee was aware of the debtors insolvency or that the debtor was seeking to harm his creditors: McCowan v Wright (1852) 14 D 968, 970 per the Lord Justice-Clerk (Hope). Under the 1621 Act the challenger had to prove only the debtors insolvency at the date of challenge and that the challenger was prejudiced by the transaction if it was at an undervalue. Nor is it necessary when alleging fraud at common law, as a general rule, to prove that there was fraud or complicity on the part of the recipient of the alienation: McCowan v Wright (1853) 15 D 494, 496-504 per the Lord Justice-Clerk (Hope), 509 per Lord Cockburn, 512-515 per Lord Wood. A successful challenge led to the annulment of the alienation; where there had been a purchase at an undervalue there was no requirement that the retransfer of the property to the debtors estate was conditional upon the repayment of the consideration which the transferee had paid: Tennant v Miller (1897) 4 SLT 318. Both Scots common law and the 1621 Act protected a third party who took the alienated property from the transferee in good faith and for value; in such a circumstance the only remedy for the creditor or insolvency practitioner was to claim the sale proceeds from the transferee. The common law and the statutory provisions have been applied to companies as well as other debtors: Abram Steamship Co Ltd v Abram 1925 SLT 243; Bank of Scotland v R W Forsyth Ltd 1988 SC 245. Alongside these provisions concerning gratuitous alienations, Scots common law allowed creditors of an insolvent to challenge as fraudulent preferences voluntary preferences which the insolvent granted to a creditor during insolvency. Such fraudulent preferences could take the form of a grant of security for a prior debt or facilitating a creditors attempt to execute diligence or obtain a decree to enforce the debt. The common law was reinforced by another Act of the Scottish Parliament in the Act 1696 (c 5) (the 1696 Act), which nullified all deeds which a bankrupt granted within 60 days before or during his insolvency and which gave a preference to a creditor over other creditors. Like the 1621 Act, the courts gave this Act a broad interpretation. The Scottish Law Commissions expressed aim in promoting the reform proposals was to achieve a consistent and logical scheme for the annulment of alienations and unfair preferences. There is no suggestion of an intention fundamentally to alter the law in relation to gratuitous alienations on the repeal of the 1621 Act. Section 242 of the 1986 Act reflects many of the Commissions recommendations. The wording of the remedies which the court was empowered to give in section 242(4) tracks the Commissions recommendation in para 12.19 of the report but there is no discussion in the report of any prior case law on the nature of the remedy or remedies open to the court and no statement of policy to explain the recommendation. The report thus gives no guidance as to whether it was envisaged that the court would enjoy a discretion in devising a remedy. I return to this matter in paras 44 - 69 below. Both before and after the 1985 statutory reforms, the consequence of the annulment of an alienation by reduction was and is that the property is transferred back to the insolvents estate. If the court is not empowered to or does not impose conditions on the reduction, the transferee who has paid a substantial but inadequate consideration may only have a claim in unjustified enrichment against the insolvents estate for repayment of the consideration paid. In making that claim the transferee ranks as an ordinary creditor and may receive only a dividend or nothing at all, depending upon the balance between the insolvents assets and the debts due to secured creditors and other creditors. A claim for the recovery of the transferred asset itself or the proceeds of its sale ranks as a postponed debt: rule 4.66(2)(a) of the Insolvency (Scotland) Rules 1986 (SI 1986/1915), which has now been replaced by rule 7.27 of the Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 (SSI 2018/347). There are three principal innovations in the 1985 statutory reforms which are relevant in this case. The first is that the presumptions in the 1621 Act which applied only to alienations to conjunct and confident persons have been extended to all gratuitous alienations, including those in which a purchaser at arms length buys an asset from the insolvent at an undervalue. The second is the introduction of new time limits for the challenge: the difference between associates and other transferees now lies only in the provision of different time limits in section 242(3) (para 20 above). The third is the specification in section 242(4) of the different remedies available to the court in place of a statutory statement that the transaction was a nullity. ii) Adequate consideration As I have said, before the 1985 statutory reforms to the Scottish law of insolvency, an alienation could be challenged not only if it was wholly gratuitous but also if it was at an undervalue. What amounted to a relevant undervalue before 1985? The leading Scottish textbook on bankruptcy before the 1985 statutory reforms was Goudy, A Treatise on the Law of Bankruptcy in Scotland, 4th ed (1914), which provided a commentary on both the common law and the Bankruptcy (Scotland) Act 1913, which was repealed in 1985. Goudy answered the question by explaining what was not an undervalue. His analysis of the prior case law was that at common law consideration for an alienation was not an undervalue if it was fairly equivalent to what is received (p 25) and similarly, under the 1621 Act if, it was fairly adequate for what was given (p 47). Support for Goudys view can be found in Bells Commentaries on the Laws of Scotland, 7th ed (1870), vol ii, p 179 which, in a commentary on the 1621 Act, stated: In proving the consideration of the deed, every case must depend on its own circumstances. It may be observed, however, in general, 1. That it is not in all cases necessary to prove that the highest price possible has been got for the subject; but quite sufficient if what is commonly called a fair price has been received, ie a price, which, in the whole circumstances of the case, indicates a fair and bona fide transaction. The Lord Justice-Clerk (MacDonald) in the Second Division of the Inner House used the concept of fair consideration in Gorries Trustees v Gorrie (1890) 17 R 1051, 1054. See also Glencairn v Birsbane (1677) Mor 1011, in which a defence that adequate consideration had been given was held to be relevant in the face of an assertion by the pursuer that he would have paid more, and Millers Trustee v Shield (1862) 24 D 821, in which, in a challenge to an allegedly unfair preference under the 1696 Act, the First Division treated the transfer of goods for an adequate sum as causing no prejudice to the insolvents creditors (p 828 per Lord Curriehill). The courts have adopted a similar approach to adequate consideration since the 1985 statutory reforms. The leading Scottish authority on the meaning of adequate consideration in section 242 of the 1986 Act is the opinion of Lord Cullen, when he was a Lord Ordinary, in Lafferty Construction Ltd v McCombe 1994 SLT 858. Both the appellant and the respondents accepted his statement as the proper approach to adequacy under section 242(4)(b). He stated, at p 861: In considering whether alienation was made for adequate consideration, I do not take the view that it is necessary for the defender to establish that the consideration for the alienation was the best which could have been obtained in the circumstances. On the other hand, the expression adequate implies the application of an objective standpoint. The consideration should be not less than would reasonably be expected in the circumstances, assuming that persons in the position of the parties were acting in good faith and at arms length from each other. Lord Eassie expressed a similar opinion in relation to the identical term in the equivalent provision in section 34(4) of the Bankruptcy (Scotland) Act 1985 in Aitkens Trustee v Aitken, 26 November 1999, reported as Kerr v Aitken [2000] BPIR 278, in which he stated, at p 282: In my opinion the expression adequate consideration means the giving of a consideration which might objectively be described as being a reasonable prestation for the property conveyed by the bankrupt to the transferee had the transaction taken place between parties acting at arms length in ordinary commercial circumstances. The only qualification which I would make to Lord Eassies formulation is that I would not speak of ordinary commercial circumstances, but, like Lord Cullen, would look to the circumstances of the case, which might (as I discuss in para 34 below) in an appropriate case include the sellers need to obtain a prompt sale to protect its cash flow in a liquidity crisis. Both judges correctly emphasise the objective nature of the test and that regard must be had to the commercial justification of the transaction in all the circumstances on the assumption that hypothetical people in the position of the insolvent and the transferee would be acting in good faith and at arms length. In my view, the requirement that the hypothetical parties are acting at arms length means that the hypothetical purchaser would not have knowledge of the sellers financial distress unless the insolvents financial embarrassment was known in the relevant market. It would not be a relevant consideration that the actual vendor had disclosed its financial embarrassment to the purchaser and that the purchaser had exploited that disclosure in its negotiation of the purchase price. There is nothing to suggest that the 1985 statutory reforms sought to innovate in this regard. As a result, the statutory provisions apply during the specified period before formal insolvency (in this case liquidation) whether or not the insolvent is aware of his, her or its insolvency and whether or not the transferee or purchaser is so aware. One of the relevant circumstances is the fact of the bankrupts insolvency. As Lord Drummond Young records in para 13 of the Inner Houses opinion [2018] CSIH 7, by reference to Bells Commentaries, (above), (pp 171-172), the restoration to the bankrupts estate of assets gratuitously alienated is based on the principle that on the occurrence of insolvency, it is the creditors who have the real interest in the bankrupts assets and the bankrupt must manage those assets in such a way as to protect their interests. There is an analogous principle in United Kingdom company law which, on the occurrence of insolvency, requires company directors to have regard to and act in the interests of the companys creditors as part of their fiduciary duties owed to the company as a whole: West Mercia Safetywear Ltd v Dodds [1988] BCLC 250; Companies Act 2006, section 172(3). The mischief which led to the enactment of the 1621 Act was the practice of bankrupts of creating secret trusts in favour of family members or close associates to protect their assets from their creditors. That mischief remains relevant. But the current statutory regime and the common law extend to business transactions at arms length and require the insolvent vendor to obtain an adequate consideration for its assets in the interests of its creditors, if a successful challenge is to be avoided. Another relevant consideration, as the Inner House states, is the objective purpose of the sale. As is clear from the expert evidence in this case, there is generally a close relationship between the time which is spent on marketing a commercial property and the price at which it will sell. Such property, if sold in a hurry, will usually obtain a significantly lower price than if it were exposed to the market for a longer period. On the occurrence of insolvency, the requirement that the insolvent has regard to the interest of creditors points towards the hypothetical vendor in the objective assessment having to carry out an adequate marketing exercise to obtain a good price for the property. If the insolvents property is not exposed to the market but is disposed of by private sale, there is an obvious risk of an inadequate price. But there may be circumstances in which an insolvent, acting in the interests of its creditors, needs to achieve a quick sale. An example of such a sale is where the insolvent is facing a liquidity problem and needs to obtain cash to pay its debts promptly in the hope of trading out of insolvency and preserving its business as a going concern. In such a circumstance, it may be objectively reasonable for the insolvent to accept the lower price from a quick sale of an asset in order to gain the chance of saving the business, as that outcome is likely to be in the interests of its creditors. An analogous example is the case of John E Rae (Electrical Services) Linlithgow Ltd v Lord Advocate 1994 SLT 788, in which an insolvent company, in order to continue to trade, needed certificates from the Inland Revenue that exempted it from the requirement that persons who employed it as a contractor or subcontractor should deduct tax from payments made to it. To obtain those certificates from the Inland Revenue the company granted a bond in respect of past tax liabilities of an associated company, whose business had been transferred to the company, arising from underpayments of income tax and national insurance contributions in respect of payment made to subcontractors. The liquidator raised an action under section 242 of the 1986 Act in which he sought reduction of the bond and repayment of sums which had been paid to the Revenue under it on the basis that it was an alienation in favour of the associated company. But Lord Clyde rejected the liquidators challenge. Adequate consideration had been given because the company, in return for undertaking to pay the associated companys debt, had obtained in effect the right to continue trading and had thus staved off its imminent demise. That approach may be questioned where there is no evidence to show that the projected cash flow advantage, which the certificates gave the company, was measurable in money or moneys worth and, as so measured, was adequate as Lord Cullens formulation envisages. But if there is such evidence, that approach accords with the section. Where there is no question of a sale to preserve a companys liquidity or otherwise in the hope of enabling it to remain in business, and where the insolvent company is ceasing or has ceased to carry on business and is, in reality, winding up its business in an informal way without the involvement of a liquidator or an administrator, what is an adequate consideration? The answer, in the context of the objective exercise which the law mandates, will depend upon the circumstances of the insolvency. The aim of the common law and section 242 is to make sure that the creditors of the insolvent company are not prejudiced by an alienation by that company which brings into the insolvent estate materially less than would be obtained in an arms length transaction between bona fide commercial parties in the circumstances of the case. Where the directors of the insolvent company, mindful of their duty to creditors, have an opportunity to place a property on the market and carry out a proper marketing exercise to enhance the price which the property will command, adequate consideration should be measured against the likely result of such an exercise. Where the insolvent company is not able to support such a marketing exercise, the adequacy of the consideration achieved on a sale is to be measured by comparing the consideration which the insolvent company has accepted against the likely outcomes which a formal insolvency would achieve through the sale or other disposal of the asset by a liquidator or administrator, taking into account the fees which the insolvency practitioner would charge for effecting the sale. Where the asset in question is the subject of a security with a power of sale, it would be relevant also to consider the likely outcome of that sale. The aim of the common law and section 242 in that context is to make sure that the creditors of the insolvent company are not prejudiced by an alienation by that company which brings into the insolvent estate materially less than would be obtained by the formal insolvency process or the sale by the security holder. A liquidator is under a fiduciary duty to the company, and possibly its creditors as a class, to exercise the professional care and skill of an insolvency practitioner in realising the assets of an insolvent company: Hague v Nam Tai Electronics Inc [2008] UKPC 13; [2008] BCC 295; Oldham v Kyrris [2003] EWCA Civ 1506; [2004] BCC 111; see by analogy Lightman & Moss on the Law of Administrators and Receivers of Companies, 6th ed (2017), para 12-042. The liquidator must take reasonable care in choosing the time at which to sell the property and must also take reasonable care to obtain the best price that the circumstances of the case, as he reasonably perceives them, permit: In re Charnley Davies Ltd (No 2) [1990] BCLC 760, 775-776 per Millett J; Silven Properties Ltd v Royal Bank of Scotland plc [2003] EWCA Civ 1409; [2004] 1 WLR 997, para 25 per Lightman J. The holder of a standard security is under a statutory duty when selling the security subjects: to advertise the sale and take all reasonable steps to ensure that the price at which all or any of the subjects are sold is the best that can reasonably be obtained. (Conveyancing and Feudal Reform (Scotland) Act 1970, section 25) In my view, where the directors of an insolvent company are conducting an informal winding up by disposing of the companys assets and are unable as a result of circumstances beyond their control to carry out a full marketing exercise, the sale should be measured against that standard. Lord Davidson accepts the approach of comparing a private sale with a sale in a winding up or a sale by the holder of the standard security in his submission to the court that the Inner House has erred in adopting a comparison with the open market value. But it is necessary to have regard to these duties imposed on the insolvency practitioner and the holder of a standard security when making the comparison which he advocates. iii) The application of the law to the facts of this case It is clear from the evidence of Mr Quinn that after Grampians invoice factor withdrew its factoring facility, he was not able to obtain alternative funding and so disposed of the assets by which Grampian carried on its business. The sale of the Property, which was Grampians distribution centre, following the sale of its vehicles was in effect part of an informal winding up of the business. There is no justification for the off-market sale of the Property at a price so far below market value on the ground of urgency. There was no evidence that Grampian had sought NatWests agreement that it should place the property on the open market. Even if one can infer from Mr Quinns evidence that such a marketing exercise was not possible, Carnbroe has not established that there was adequate consideration as it led no evidence to support the view that a sale by NatWest or a sale by the liquidator with NatWests consent would have been likely to achieve a price net of expenses which was comparable to or less than the sale price which Grampian accepted. The Inner House was therefore entitled to interfere with the Lord Ordinarys assessment as to whether there had been adequate consideration. In reaching this view, I have sympathy for the predicament of the Lord Ordinary as Carnbroe ran its defence on the basis that an urgent sale was required to preserve Grampians business and it does not appear from the pleadings and written submissions which were provided to this court that the liquidators legal team challenged this submission. It does not appear that they argued, as they did in the Inner House, that the evidence did not support the justification of the discounted price on the basis of urgency because Grampians business was at an end. If there were such a failure, it might in other circumstances have justified a modification of an award of expenses. But in this case Carnbroes failure to pay the whole of the contracted purchase price until after the proof had been completed caused the Lord Ordinary to award expenses in favour of the liquidators, notwithstanding that they lost before him. There is therefore no basis for interfering in the award of expenses at first instance. Absent evidence that the 550,000 which Carnbroe eventually paid for the Property was equivalent to the price which NatWest or a liquidator would be likely to obtain for the Property after deduction of the likely expenses of sale and other costs incurred as a result of a delay in achieving the sale, Carnbroe failed to establish that the Property had been sold for adequate consideration. I therefore agree with the conclusion of the Inner House, albeit for reasons which are not precisely the same. That would be sufficient to dispose of the appeal if the question of remedies had not arisen in debate. I therefore turn to that question. iv) The statutory remedies To provide context for discussing the remedies which the court can give to reverse a gratuitous alienation, it may be useful to summarise the position. First, at common law and under the 1986 Act it is not a condition of a challenge to a transaction that either the transferor or the transferee has knowledge of the transferors insolvency. Where the alienation that is wholly gratuitous is made by an insolvent to his or her family or to a close business associate one would expect in the normal course that the insolvent transferor and the transferee would have some knowledge of the transferors financial difficulty. But no such knowledge need be proved. Secondly, the 1985 statutory reforms for the first time have imposed on a transferee, who is not an associate of the insolvent transferor, the burden of establishing the circumstances in section 242(4) which exclude the courts power to reverse the alienation. This is a point to which I will return in para 62 below. Thirdly, the test for adequate consideration is an objective test which takes account of all the circumstances, including circumstances of which one or both of the parties to the transaction may not have been aware, such as the transferors insolvency and the objective purpose of the transaction. There is therefore a significant risk that a bona fide purchaser without knowledge of the sellers insolvency or the reason why the seller is willing to sell at a price substantially below open market value may be exposed to a challenge which he or she cannot defend. It is not realistic in a commercial negotiation to expect a purchaser to ask a seller why he or she is not demanding a higher price. It was this concern that caused the court during the hearing to raise the question of the courts discretion in giving a remedy under section 242(4) of the 1986 Act. In response, counsel referred the court to three cases which addressed the equivalent provision in personal bankruptcy (section 34(4) of the Bankruptcy (Scotland) Act 1985), which provided that on a challenge being brought the court shall grant decree of reduction or for such restoration of property to the debtors estate or other redress as may be appropriate. In the first, Shorts Trustee v Chung 1991 SLT 472, a man purchased two flats at a significant undervalue from an insolvent and conveyed them for no consideration to his wife. The insolvents permanent trustee successfully challenged the sales as gratuitous alienations. Before the Lord Ordinary and on a reclaiming motion to the Second Division the wife, whose husband had died before the challenge, submitted that the court had a discretion under section 34(4) to make an appropriate order, which, she submitted, was not a reduction of the dispositions but an order for payment of the difference between the price which her husband had paid and the market value of the flats at the date of the alienation. It does not appear that the wife, who as the ultimate transferee was the defender of the action, argued that it was inequitable to reduce the dispositions because she would not be able to recover the (inadequate) consideration paid. This may be because her husband had paid the consideration and she had been a gratuitous disponee of the flats from him. It is not clear from the report that she had title to seek repetition of the price which he had paid. The argument of her counsel was that it was inequitable to reduce the dispositions (a) because the wife would rank as a postponed creditor in the insolvency under section 51(3)(c) of the Bankruptcy (Scotland) Act 1985, which governed her right to recover the properties or the proceeds of their sale and (b) because the properties had increased in value significantly since the date of the alienation. The Second Division (the Lord Justice-Clerk (Ross) and Lord McCluskey and Lord Sutherland) upheld the trustees contention that the section did not give the court a general equitable discretion and that the statutory words, or other redress as may be appropriate, were designed to enable the court to make an appropriate order in a case where reduction or restoration of the property was not available as a remedy. In the opinion of the court, which Lord Sutherland delivered, it is stated at p 476: The starting point in a case of this nature for interpretation of section 34(4) is that the original alienation has been avoided and the transaction has been vitiated. This is not a good starting point for an argument which is based solely on equity. It is in our opinion clear from a reading of section 34(4) that the general purpose is to provide that as far as possible any property which has been improperly alienated should be restored to the debtors estate. In the case of a disposition of heritable property this can easily be done by reduction of that disposition. We consider that the reference to other redress as may be appropriate is not intended to give the court a general discretion to decide the case on equitable principles but is designed to enable the court to make an appropriate order in a case where reduction or restoration of the property is not a remedy which is available. The Second Division (the Lord Justice-Clerk (Cullen) and Lord McCluskey and Lord Morison) confirmed this approach in the second case, Cays Trustee v Cay 1998 SC 780. In that case an insolvent transferred to his wife 34,885.11, which were the proceeds of sale of his share of a fishing licence. In response to a challenge by the insolvents permanent trustee, she argued (i) that she had given adequate consideration because she had undertaken in return to pay and had paid certain of his debts amounting to over 20,000 and had undertaken to use the balance of the sum transferred to pay household bills. The court accepted that the undertaking to pay 20,000 towards the insolvents debts was consideration but rejected the submission that the use of the balance to pay household bills could be treated as consideration as she was under a pre-existing statutory duty to aliment her insolvent husband. The court held that the undertaking to pay and payment of 20,000 was not adequate consideration and rejected her alternative argument that she was entitled to set off that sum against the demand for repayment of the sum which she had received, holding that section 34(4) did not confer a general equitable jurisdiction on the court. The court stated at p 788: We consider the court in Shorts Trustee v Chung correctly held that the section did not create any general discretion to decide on equitable principles to order something less than a full return of the alienated property. The third case, Baillie Marshall Ltd v Avian Communications Ltd 2002 SLT 189, is an opinion of Lord Kingarth in the Outer House on a challenge to an unfair preference under section 243 of the 1986 Act, in which subsection (5), providing for remedies, is in substantially the same terms as section 34(4) of the Bankruptcy (Scotland) Act 1985 and section 242(4) of the 1986 Act. In this case an insolvent company transferred its assets and business to the defender for a consideration which included the payment of the debts of the transferor companys trade creditors but not its other creditors. The liquidator did not seek to annul the alleged unfair preferences to recover funds from the trade creditors who had been paid their debts but concluded for payment by the defender of damages measured by the alleged loss to the remainder of the unsecured creditors. Lord Kingarth held that such a remedy was not available under section 243. Referring to Shorts Trustee v Chung and Cays Trustee v Cay, he stated, at para 22: It seems to me to be reasonably clear, notwithstanding the apparent width of the language of subsection (5) (in particular or other redress as may be appropriate) that the purpose of the section as a whole is to enable the liquidator (amongst others) to undo, so far as possible, what was done when the preference was created and, so far as possible, to restore the asset position of the company, diminished by the transaction which created the preference, for the benefit of the general body of creditors. There would appear to be no doubt that the primary remedies envisaged are reduction and restoration of property, and that the words or other redress as may be appropriate properly fall to be construed as relating to redress of the same character, and do not give the court a general equitable jurisdiction. I am satisfied that the provisions in the 1986 Act providing remedies against gratuitous alienations (section 242(4)) and unfair preferences (section 243(5)) and the equivalent provisions in the bankruptcy legislation do not confer a general equitable jurisdiction. It is clear from the law before the 1985 statutory reforms that the principal remedy available in challenges to both gratuitous alienations and unfair preferences was the annulment of the impugned transaction. That remains the primary remedy after the 1985 statutory reforms. There is a strikingly contrasting juxtaposition in the Bankruptcy (Scotland) Act 1985 of the remedies made available to reverse gratuitous alienations and unfair preferences (sections 34(4) and 36(5) respectively) and the wider power which section 35 conferred on the court to recall an order made against the insolvent on divorce for the payment of a capital sum. In contrast with sections 34(4) and 36(5), the court was enabled under section 35, when deciding whether to order the repayment of the whole or part of a sum paid or property transferred, to have regard to the whole circumstances including the financial and other circumstances of the person against whom the order would be made. This conferred a general equitable jurisdiction which the statutory remedies for gratuitous alienations and unfair preferences do not entail. It is also well established that the transferee of a gratuitous alienation or the recipient of an unfair preference cannot set off sums due to it by the insolvent for different purposes as that would defeat the purpose of sections 242 and 243 of the 1986 Act: Raymond Harrison & Cos Trustee v North West Securities Ltd 1989 SLT 718, 724E; John E Rae (Electrical Services) Linlithgow Ltd (above), 791; Cays Trustee (above), 787-788. But commentators on the statutory provisions have criticised the disproportionate consequence of annulling the transaction when the transferee has paid a significant albeit inadequate sum for the alienated property and is made to rank as an ordinary creditor in relation to his claim for unjustified enrichment: St Clair and Drummond Young, The Law of Corporate Insolvency in Scotland, 4th ed (2011), para 3.10. An order for the restoration of the property to the insolvent company, which leaves the transferee to prove in competition with other creditors for the price which it originally paid, not only is harsh on the transferee but also gives the general body of creditors an uncovenanted windfall as the company would not have received the price but for the impugned sale. Lord Davidson and Mr Brown in their written submission for Carnbroe point out the anomalous results to which Shorts Trustee can give rise. They set out four circumstances. First, if an insolvent dispones heritable property gratuitously to a transferee, who holds it when the liquidator mounts a challenge under section 242, reduction is available and the company receives back the property but obtains no windfall at the transferees expense. Secondly, if the gratuitous transferee sells the property to a bona fide third party for full value before the liquidators challenge, the court would grant other redress which would be an order to account to the liquidator for the value of the alienated property obtained in that sale. This would achieve essentially the same financial outcome as reduction in the first example. If, thirdly, the transferee paid a consideration for the property which was substantial but was not adequate consideration, reduction of the disposition would have the effects which I discussed in para 51 above: the creditors receive a windfall and the transferee is significantly worse off than if it had declined to purchase the property or if it had paid full value. Fourthly, if the purchaser/transferee in the third example has sold on to a bona fide third party for full value before the liquidator mounts a challenge, the court could only order other redress. The court would have the power to order the payment to the insolvent estate of the shortfall of consideration in the original sale; the court would not have to order the purchaser/transferee to disgorge the whole of the onward sale price and rank as an unsecured creditor for the repayment of the price which it had paid in the original sale. Is the court constrained to interpret section 242 of the 1986 Act so as to compel such a harsh and anomalous result as mentioned in para 51 above when there is a sale at an undervalue? In my view it is not. The words themselves (the court shall grant decree of reduction or for such restoration of property to the companys assets or other redress as may be appropriate) do not compel such an interpretation. The statutory phrase does not speak of the court granting remedy X, which failing remedy Y. I do not see the eiusdem generis principle as a helpful tool in this case where the list comprises only two specific decrees. Further, the use of or cannot have been intended to be exclusively disjunctive as there will be cases where an insolvency practitioner seeks the restoration of different types of property in the same action and may have conclusions for the reduction of dispositions and the reconveyance of heritable property as well as for payment of money which has been alienated. I would read or in its context as being both conjunctive and disjunctive (ie and/or). In my view the statutory words are broad enough to allow the court to take account of the consideration which a bona fide purchaser has paid the insolvent in devising an appropriate remedy. Mr McBrearty QC and Ms Ower for the liquidators in their post-hearing written submissions advance two principal arguments against this conclusion. First, they rely on rule 4.66 of the Insolvency (Scotland) Rules 1986, which has been re- enacted as rule 7.27 of the Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 for the contention that the transferee, which is subjected to a reduction of a disposition under section 242, is penalised by the designation of its claim for repetition of the purchase price which it has paid as a postponed debt, giving it the lowest priority in the distribution of an insolvent estate. In my view this assertion is misconceived. Paragraph 2(i) of the relevant rule provides that a postponed debt includes: a creditors right to any alienation which has been reduced or restored to the companys assets under section 242 or to the proceeds of sale of such an alienation. It is clear from the plain words of this provision that the postponed debt is the transferees right to reclaim the property which had been alienated or the proceeds of sale of that property. It addresses the right of a transferee to reclaim the property, which had been alienated and restored to the insolvent estate, if a surplus emerged in a winding up. It does not address the claim in unjustified enrichment of a transferee which has paid an inadequate consideration for the repetition of the sums which it has paid which is inconsistent with any right to a reconveyance of the property to the transferee. The provision therefore does not support a contention that Parliament intended to penalise the gratuitous alienee in relation to a claim for unjustified enrichment. Secondly, they submit that the Scottish Parliament has re-enacted the equivalent of section 242 in personal insolvency (section 34(4) of the Bankruptcy (Scotland) Act 1985), which was the subject of the decisions in Shorts Trustee and Cays Trustee, in section 98(5) of the Bankruptcy (Scotland) Act 2016 (the 2016 Act). Section 98(5) provides: On a challenge being brought under subsection (2), the court must grant decree - (a) of reduction, or (b) for such restoration of property to the debtors estate, or such other redress, as may be appropriate. The 2016 Act is a consolidation Act which follows on the Scottish Law Commissions Report on the Consolidation of Bankruptcy Legislation in Scotland (2013) (Scot Law Com No 232). It is intended to restate the law but not change it. Counsel for the liquidators submit that by re-enacting section 34(4) in these terms the Scottish Parliament should be presumed to have endorsed the Inner Houses approach in Shorts Trustee and Cays Trustee. They refer in this regard to the Barras principle: Barras v Aberdeen Steam Trawling and Fishing Co Ltd 1933 SC (HL) 21; [1933] AC 402 and R (N) v Lewisham London Borough Council [2015] AC 1259. The Barras principle is only a presumption and it is not without controversy. Lord Wilberforce and Lord Simon of Glaisdale doubted the validity of the principle in Farrell v Alexander [1977] AC 59, 74F-G and 90E-91C, Lord Neuberger of Abbotsbury has expressed strong reservations as to its propriety and its operation in R (N) (paras 143-148), and Lord Lloyd-Jones has expressed similar reservations in R (Belhaj) v Director of Public Prosecutions (No 1) [2019] AC 593, para 46. In any event, the principle cannot apply in this case as the 2016 Act is a consolidation Act: Haigh v Charles W Ireland Ltd 1974 SC (HL) 1, 40; [1974] 1 WLR 43, 57, per Lord Diplock; MacMillan v T Leith Developments Ltd [2017] CSIH 23, para 109 per Lord Drummond Young. In that paragraph Lord Drummond Young stated: If all that Parliament is doing in a consolidation statute is to reproduce the existing law, with no scope for significant change, it cannot be said that there is any genuine endorsement of any cases interpreting the statutes concerned. There is no power to do so. I agree with that statement; the re-presentation of the same statutory phrase in two sub-paragraphs in section 98(5) of a consolidation statute cannot amount to a parliamentary endorsement of prior case law. Even if such a presumption applied, I am not persuaded that it would be sufficient to support the liquidators case. It would be necessary to put in the balance against it both the harsh and anomalous results which I have mentioned and the mismatch between the interpretation in Shorts Trustee and Cays Trustee on the one hand and the established principled approach of Scots common law on the other, both of which are matters which the senior courts have not addressed. The general approach of the law is that when a person seeks to annul a transaction, for example on the basis that a contract was induced by fraudulent or innocent misrepresentation, the court will only grant decree of reduction if it is able to place the defender substantially in the position it would have been in if the parties had not entered into the impugned contract: Boyd & Forrest v Glasgow and South Western Railway Co 1915 SC (HL) 20, 28 per Lord Atkinson, 36-37 per Lord Shaw of Dunfermline. In Spence v Crawford 1939 SC (HL) 52 the House of Lords made it clear that the court has power to order monetary adjustments to restore the defender to its pre-contract position. Lord Wright stated at p 77: restoration is essential to the idea of restitution. To take the simplest case, if a plaintiff who has been defrauded seeks to have the contract annulled and his money or property restored to him, it would be inequitable if he did not also restore what he had got under the contract from the defendant. Though the defendant has been fraudulent, he must not be robbed nor must the plaintiff be unjustly enriched, as he would be if he both got back what he had parted with and kept what he had received in return. The purpose of the relief is not punishment, but compensation. It appears from the limited authorities that are available that the law before the 1985 statutory reforms provided as the only remedy the annulment of the gratuitous alienation if such annulment was possible. Where the alienation was wholly gratuitous, the question of restitution of the defender did not arise. But where the insolvent had sold at an undervalue the law did not provide for a general restitutio in integrum: Tennant v Miller (above). Similarly, in relation to fraudulent preferences, Bells Commentaries (above), (p 217), in addressing the 1696 Act (c 5) (viz para 25 above), stated: It may be questioned whether the success of the reduction is to be accompanied by a restitutio in integrum, so that the defender shall hold the same advantages when deprived of the security, which he would have enjoyed had he never accepted it. The answer seems to be, that a restitutio in integrum is no part of the reduction on the Act 1696, nor necessarily implied as a condition of it; but that as the creditors are entitled to reduce only in so far as the deed is prejudicial to them, their success will be limited to the effect of restoring them to the full benefit of the rights they would have enjoyed had the deed never been granted. Bell went on to state, as an example, that if a creditor had renounced a security which he had held over any part of the insolvents estate in exchange for the impugned security, he would be entitled to the full benefit of the old security when the new security was annulled, because it was only to the extent of the difference that the new security could be said to be prejudicial to prior creditors. Further, in Thomas v Thomson (1866) 5 M 198, which concerned an application by a trustee in bankruptcy to annul a security in the form of an ex facie absolute disposition on the ground that it was a fraudulent preference, the court ordered a partial reduction only, which preserved the security in so far as it secured a debt which was not a preference. The prior law was thus not wholly inflexible and allowed a partial restitutio in integrum in the context of the annulment of the document which effected the preference. Reduction was also not the only remedy under the prior law. Where the transaction could not be nullified, for example where property which an insolvent company had purchased from one of its directors at an overvalue had been sold to a third party in good faith and for value, the court allowed the liquidator to recover from the director a sum of money representing the difference between the inflated price paid and the true value of the property at the date of the transaction: Abram Steamship Co Ltd (above). In that context the remedy reflected the disadvantage which the companys creditors had suffered as a result of the impugned transaction and gave them no windfall. The law before the 1985 statutory reforms appears to have been a partial exception to the general principle that the annulment of a transaction necessarily involved restoring the defender to its pre-transaction position. But there is only very limited case law on the point, which the Scottish Law Commission did not discuss. The 1985 statutory reforms, by imposing on a purchaser, who is not an associate of the insolvent, the burden of proving adequate consideration was paid, have increased the risk that a bona fide purchaser may suffer injustice if there is no flexibility in the remedies which the court can give. Such an outcome would also deter rescue transactions involving the purchase of assets from distressed businesses and hamper the rescue culture which statutory insolvency law has sought to promote. These considerations point towards a more flexible interpretation of the remedies provided in section 242(4). But, as I have said, there is nothing in the Scottish Law Commissions report which explains the policy behind its recommendation which has found its way into section 242 of the 1986 Act. The court must therefore fall back on the statutory words, which are broad enough to allow the court in an appropriate case, and if justice requires it, to devise a remedy to protect the bona fide purchaser of property from a reversal of its purchase which would otherwise give the creditors of the insolvent a substantial windfall at its expense. The general approach to the annulment of transactions requires no more from a fraudster than that he or she compensate the victim, as Lord Wright stated in Spence v Crawford (para 58 above). Section 242(4) does not mandate restitutio in integrum in every case. But neither does it exclude such restitution as part of the appropriate remedy. It is not open to doubt that an insolvency operates adversely on the insolvents unsecured creditors who have paid for goods or services which they have not received or have provided goods or services and not been paid. Gratuitous alienations or unfair preferences by an insolvent can cause further harm to unsecured creditors. The pre-1985 law, by not requiring full restitutio in integrum, had the benefit of discouraging transferees from entering into transactions by which an insolvent person transfers his or her assets gratuitously or at an undervalue. Since the 1985 statutory reforms, there may be circumstances in which the court considers it appropriate to annul a transaction which was a gratuitous alienation without also ordering the repayment of the inadequate consideration, thus leaving the transferee to rank an unsecured claim for unjustified enrichment in the insolvency. For example, business associates of an insolvent might knowingly seek to obtain property at an undervalue to the prejudice of the insolvents creditors. The words of section 242(4) of the 1986 Act leave open that option to the court. But there would in my view need to be clear statutory words to require the court in all circumstances to penalise the purchaser of property who had no knowledge or incomplete knowledge of the circumstances of the insolvent and who was not colluding to remove assets from the reach of the insolvents creditors. There are no such words in the subsection. There will be cases in which, as the commentators have suggested, it would be wholly disproportionate and unfair to annul the property transfer without giving the bona fide purchaser credit for the consideration which it has paid. In my view, section 242(4) gives the court sufficient power to devise an appropriate remedy. This does not involve a general equitable jurisdiction to take account of the personal and financial circumstances of the defender such as was envisaged by section 35 of the Bankruptcy (Scotland) Act 1985 (now section 100 of the 2016 Act). Nor does this approach call into question Lord Kingarths conclusion that section 243 (and by analogy section 242) does not allow a liquidator to seek what was in substance damages from a defender. The question for the court is simply whether in devising a remedy for the gratuitous alienation by restoring property or value to the insolvents estate in a particular case it should order that credit be given in some way for the consideration which a bona fide purchaser has paid. In so far as Shorts Trustee v Chung and Cays Trustee v Cay held that the court did not have this power, I respectfully conclude that they were wrongly decided and should not be followed. The question of whether the subsection is consistent with article 1 of the First Protocol to the European Convention on Human Rights (A1P1) does not arise in this context. This is because there is no need to read down the words of section 242(4) to avoid a disproportionate result as there is nothing to prevent the court in a particular case from taking account of the consideration paid by the transferee in devising the remedy. Because of that determination, I also see no reason to question the conclusion which was reached in cases in the Outer House that Parliament acted within its wide margin of appreciation in providing for remedies against gratuitous alienations and unfair preferences in the 1985 statutory reforms without creating a general equitable jurisdiction that takes account of the defenders personal and financial circumstances: Accountant in Bankruptcy v Walker [2017] CSOH 78; 2017 SLT 890; Johnstons Trustee v Baird [2012] CSOH 117. There may also be cases where the purchase of the alienated property is wholly funded by borrowings and the bona fide third party lenders security is protected by the proviso to section 242(4), enabling it to recover its lending by calling up its security or by allowing the liquidator to realise the secured asset in the winding up without pursuing recovery from its borrower other than as a formality. In such case there would be no call for the court to qualify in any way its annulment of the transfer as the interested parties themselves can achieve substantive restitutio in integrum. Counsel for the liquidators inform the court that the liquidators have recognised the validity of the Banks security by virtue of the proviso to section 242(4). As a result, if the Bank still had a claim for the sums it had lent to Carnbroe, Grampians creditors would receive no windfall through the reduction of the disposition of the Property. But in written submissions since the hearing, backed by supporting documents, counsel for Carnbroe inform the court that Carnbroe repaid its borrowings for the purchase of the Property in July 2016. Counsel also explain that Carnbroe has recently re-financed and consolidated its borrowings by taking out a facility from Together Commercial Finance Ltd (TCFL). Counsel state that the Banks securities over the Property have been discharged and that there are now no securities covering the Property. But these are not, as yet, agreed facts, in part because Carnbroes lawyers have not authorised the Bank to confirm the position to the liquidators lawyers and in part because the re-financing by TCFL has occurred very recently. It ought to be straightforward for Carnbroe to provide documents to vouch these assertions to the liquidators and for the liquidators advisers to search in the Land Register and at Companies House to avoid further dispute about these facts. In the light of this judgment and the absence of agreed facts, it is necessary to afford the First Division an opportunity to consider whether it is appropriate in the circumstances of this case to qualify the remedy of reduction which it has given to take account of all or part of the consideration which Carnbroe gave for the purchase, for example by requiring the liquidators to pay a specified sum to Carnbroe as a condition of the reduction. Conclusion I would allow the appeal but only to the extent that I would remit the case to the First Division to consider what is the appropriate remedy under section 242(4) in the light of the courts power to give appropriate redress. I would allow the appeal but only to the extent that I would remit the case to the First Division to consider what is the appropriate remedy under section 242(4) in the light of the courts power to give appropriate redress.
UK-Abs
This appeal concerns a challenge to the sale by an insolvent Scottish company, Grampian MacLennans Distribution Services Ltd (Grampian), of its principal asset and place of business (the Property) at a value lower than could have been achieved on the open market. The parties dispute the proper interpretation of adequate consideration in section 242(4)(b) of the Insolvency Act 1986 (the 1986 Act) and whether the court has any discretion as to the remedy it may give under that section. In March 2013, chartered surveyors valued the Property at 1.2m on the open market and at 800,000 on a restricted marketing period of 180 days. The following year, Grampian fell into financial difficulty and was sold to Mr Quinn. At this time, Grampian owed more than 500,000 to each of National Westminster Bank plc (NatWest), which held a standard security over the Property, and HM Revenue and Customs (HMRC). Shortly after Mr Quinns takeover, Grampians cash flow collapsed and its monthly loan repayments to NatWest fell into arrears. Mr Quinn sold off Grampians trucks and entered into discussions to sell the Property with a businessman he had known for over 30 years, Mr Gaffney. Mr Gaffney negotiated on behalf of his family company, Carnbroe Estates Ltd (Carnbroe), to acquire the Property at a reduced price, citing the risk of repossession by NatWest and the fact that the buildings needed repairs and refurbishment. Mr Quinn and Mr Gaffney eventually agreed that Carnbroe would buy the Property for 550,000 in a quick, off market sale. Grampian transferred the Property to Carnbroe on 24 July 2014. However, instead of paying the agreed consideration to Grampian, Carnbroe repaid the NatWest loan directly to obtain a discharge of the standard security. Carnbroe then obtained a loan from the Bank of Scotland plc, which was secured against the Property. The sale of the Property and repayment of NatWests loan left Grampians other principal creditor, HMRC, unpaid. HMRC wrote to Grampian requiring payment of tax that was due. On Grampians failure to pay, HMRC presented a petition for winding up Grampian. The Respondents (Mr MacDonald and Ms Coyne) were appointed as joint liquidators of Grampian and commenced proceedings to challenge the sale. At first instance, the Lord Ordinary held that the sale of the Property was made for adequate consideration. However, on appeal, the Inner House (the Lord President, Lord Drummond Young and Lord Malcolm) reduced (annulled) the transaction and ordered Carnbroe to transfer the property to the Respondents. Carnbroe appealed to the Supreme Court. The Supreme Court unanimously allows the appeal only to the extent of remitting the case to the First Division of the Inner House to consider what is the appropriate remedy under section 242(4) of the 1986 Act. Lord Hodge gives the sole judgment with which the other Justices agree. The Supreme Court holds that the meaning of adequate consideration is to be determined according to an objective test, having regard to the commercial justification of the transaction in all the circumstances and assuming that the parties would be acting in good faith and at arms length [30 32]. As to the circumstances that would be relevant to this assessment, the Court considers that, unless the insolvent partys financial embarrassment is known in the relevant market, the hypothetical purchaser will not be assumed to have knowledge of it [32]. Accordingly, it is not relevant that Mr Quinn advised Mr Gaffney of Grampians financial difficulties. However, the fact of Grampians insolvency is, itself, a relevant circumstance, in that an insolvent vendor would be expected to manage its assets in such a way as to protect the interests of its creditors [33]. The objective purpose of the sale is also a relevant circumstance. Whilst an off market sale poses the obvious risk of obtaining an inadequate price, the Court recognises that a quick sale may sometimes be in the interest of the creditors, such as when the insolvent party faces liquidity issues and the sale would enable it to trade out of insolvency [34]. Where there is no prospect that the sale would enable the insolvent company to remain in business, the adequacy of the consideration will depend on whether there is prejudice to the insolvent companys creditors [37]. This involves comparing the outcomes which would have been available in the circumstances of the insolvency. In cases where a full marketing exercise would not have been possible, or where the asset was being sold as part of an informal winding up, the consideration achieved in the sale should not be measured against the open market price but against the price, net of expenses, that would have been obtained by a liquidator of the company, or else by the holder of any security over the asset, assuming their compliance with applicable legal duties [37 39]. In the present case, the sale of the Property was part of an informal winding up of Grampian. As such, the Court considers that there could be no justification for an off market sale at a price so far below market value on the ground of urgency [40]. Carnbroe has not established that there was adequate consideration as it has not led any evidence to support the view that a sale by NatWest (as the holder of a standard security over the Property), or else by the liquidators, would have been likely to achieve a comparable or lower net price than that which Grampian accepted [42]. As such, the Inner House was entitled to interfere with the Lord Ordinarys assessment of the adequacy of the consideration. As to the appropriate remedy, the liquidators argue that section 242(4) of the 1986 Act requires the courts to annul any transaction with an insolvent company for less than adequate consideration, save where such annulment is impossible. However, the Supreme Court considers that such a rule could produce harsh and disproportionate effects, since section 242(b) would capture sales to good faith, arms length purchasers for substantial (if not adequate) consideration [45]. If such a transaction were reversed, the good faith purchaser would be forced to compete as an unsecured creditor to recover the consideration it had paid, with the insolvent vendors general creditors receiving a windfall [51]. In a departure from previous decisions of the Inner House, the Supreme Court concludes that the statutory words of section 242(4) are broad enough to allow the courts, in appropriate cases, to devise a remedy to protect the good faith purchaser [53, 63, 65]. In the absence of agreed facts as to the impact of reversing the present transaction, the Court remits the case to the Inner House to determine whether it is appropriate to qualify the remedy it has given to take account of all or part of the consideration paid by Carnbroe for the purchase [69].
The principal issue in these two appeals relates to the circumstances in which the concept of statutory incompatibility will defeat an application to register land as a town or village green where the land is held by a public authority for statutory purposes. In R (Newhaven Port & Properties Ltd) v East Sussex County Council [2015] UKSC 7; [2015] AC 1547 (Newhaven) this court held that the duty under section 15 of the Commons Act 2006 did not extend to an area held under the specific statutes relating to the Newhaven Harbour. We are asked to decide whether the same principle applies to land held by statutory authorities under more general statutes, relating respectively (in these two cases) to education and health services. Although the two appeals raise similar issues, they were dealt with by different procedural routes. The first (Lancashire) is within the area of a pilot scheme under the Commons Registration (England) Regulations 2008, under which, where the registration authority (in this case Lancashire County Council LCC) has an interest in the land, applications are referred for determination to the Planning Inspectorate (regulations 27 28). The second case (Surrey) was not covered by the pilot scheme. The application was determined by Surrey County Council as registration authority, following a non statutory inquiry before a barrister appointed by the council. Modern greens development of the law As will be seen, in Newhaven the issue was described as one of statutory interpretation. Unfortunately, interpreting the will of Parliament in this context is problematic, because there is no indication that the concept of a modern green, as it has been developed by the courts, was part of the original thinking under the Commons Registration Act 1965. Lord Carnwath reviewed the earlier history, including the Report of the Royal Commission on Common Land 1955 1958 (1958) (Cmnd 462) which preceded the 1965 Act, in his judgments at first instance in R v Suffolk County Council, Ex p Steed (1995) 71 P & CR 463 (one of the first cases under the 1965 Act), and later in the Court of Appeal in Oxfordshire County Council v Oxford City Council [2006] Ch 43 (the Trap Grounds case). As he observed in the latter: 51. The concept of a modern class c green, as it has emerged in the cases since 1990, would, I think, have come as a surprise to the Royal Commissioners, and to the draftsman of the 1965 Act. There is no hint of it in the Royal Commission Report, or the Parliamentary Debates on the Bill. The commissioners terms of reference were directed to sorting out the problems of the past, not to creating new categories of open land, for which there was no obvious need. By this time, of course, there were numerous statutes conferring on public authorities modern powers for the creation and management of recreational spaces for the public. Lord Carnwath also noted, at para 52, that, as late as 1975, in New Windsor Corpn v Mellor [1976] Ch 380 (New Windsor), all three members of the Court of Appeal (including Lord Denning MR) had thought it natural to read the Act as referring to 20 years before the passing of the Act (at pp 391, 395) an interpretation which would have ruled out the possibility of a modern green being established by more recent use. It was not until the early 1990s that claims were first put forward based on 20 years use since the 1965 Act had come into force at the end of July 1970 (apparently following the advice of the Open Spaces Society in their publication Getting Greens Registered (1995)). When the first case came before the House of Lords in 1999 (R v Oxfordshire County Council, Ex p Sunningwell Parish Council [2000] 1 AC 335 Sunningwell), no one seems to have argued that the Act was directed to pre 1965 use only. In that case, the House of Lords, led by Lord Hoffmann, adopted a relatively expansive view of the new concept. He drew a parallel with the Rights of Way Act 1932, which he thought had reflected Parliaments view that the previous law gave too much weight to the interests of the landowner and too little to the preservation of rights of way which had been for many years in de facto use and the strong public interest in facilitating the preservation of footpaths for access to the countryside (p 359D E). He commented, at p 359E: in defining class c town or village greens by reference to similar criteria in 1965, Parliament recognised a similar public interest in the preservation of open spaces which had for many years been used for recreational purposes. That interpretation of Parliaments thinking would, with respect, have been difficult to deduce from the 1965 Act itself, or from anything said in Parliament or anywhere else at the time. However, when the issue came before the House again, in the Trap Grounds case [2006] 2 AC 674, Lord Hoffmann was able to claim implicit Parliamentary support in the debates which preceded the amendments made by the Countryside and Rights of Way Act 2000. As he said, at para 26: No one voiced any concern about the construction which the House in its judicial capacity had given to the 1965 Act. On the contrary, the only question raised in debate was whether the locality rule did not make it too difficult to register new village greens. By then, as he also noted (para 28) the new Commons Bill (the 2006 Act as it became) was before Parliament, providing a further opportunity for legislative reconsideration if thought appropriate. In Newhaven [2015] AC 1547, para 18, this fact was cited as a reason for not having given permission to reopen the general approach adopted in the Trap Grounds case. As to the attributes of a modern green, the 2006 Act itself, like the 1965 Act which preceded it, is very sparse in the information it gives. Section 1 of the 2006 Act requires each registration authority to maintain a register of town or village greens. Section 15 indicates that any person can apply to register land as a green where, in subsection (1)(a) a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, have indulged as of right in lawful sports and pastimes on the land for the period of at least 20 years As to the purpose of registration, section 2(2)(a) states simply that the purpose of the register is to register land as a town or village green. The Act offers no further guidance as to the interpretation of the section 15 formula, nor as to the practical consequences of registration. An unexplained curiosity is that section 10 of the 1965 Act, which provided that the register was conclusive evidence of the matters registered, as at the date of registration, is not repeated in the 2006 Act. As things stand the repeal of section 10 has been brought into effect only in the pilot areas. (Section 18 of the 2006 Act, headed Conclusiveness, which has effect in the pilot areas, does not on its face go so far as section 10.) In the Trap Grounds case, Lord Hoffmann had agreed (at para 43) with Lord Carnwaths analysis in the Court of Appeal [2006] Ch 43, para 100, that the 1965 Act created no new legal status, and no new rights or liabilities other than those resulting from the proper interpretation of section 10. It was on the rational construction of section 10 that he relied for his view that land registered as a town or village green can be used generally for sports and pastimes (para 50), and was also subject to section 12 of the Inclosure Act 1857 and section 29 of the Commons Act 1876 (para 56). None of the experienced counsel before us was able to offer an explanation for the disappearance of section 10, but none sought to argue that it had made any material difference to the rights following registration. Not without some hesitation, we shall proceed on that basis. Lord Hoffmann made clear that, following registration, the owner was not excluded altogether, but retained the right to use the land in any way which does not interfere with the recreational rights of the inhabitants, with give and take on both sides (para 51). That qualification was further developed in R (Lewis) v Redcar and Cleveland Borough Council [2010] UKSC 1; [2010] 2 AC 70 (Lewis), in which it was held that the local inhabitants rights to use a green following registration could not interfere with competing activities of the landowner to a greater extent than during the qualifying period. One important control mechanism which emerged from the cases was the need for the use to be as of right. It was established that these words, by analogy with the law of easements, imported the principle nec vi, nec clam, nec precario, or in other words the absence of any of the three characteristics of compulsion, secrecy or licence (per Scott LJ in Jones v Bates [1938] 2 All ER 237, 245, cited by Lord Hoffmann in Sunningwell [2000] 1 AC 335, 355). It followed that in practice an owner could prevent use qualifying under section 15 by making it sufficiently clear to those seeking to use the land (generally by suitable notices) either that their use was objected to, or that it was permissive. On the other hand, silent acquiescence in the use, or toleration, did not prevent it being as of right. More recently (from 25 April 2013) amendments made by the Growth and Infrastructure Act 2013 (embodied in new sections 15A and following of the 2006 Act) have provided some assistance to landowners, first by enabling a formal statement to be made to bring user as of right to an end, and secondly by defining certain planning related trigger events which suspend or extinguish the right to apply to register a green. In Wiltshire Council v Cooper Estates Strategic Land Ltd [2019] EWCA Civ 840; [2019] PTSR 1980, para 4, Lewison LJ said of these amendments: Ever since the Trap Grounds case the courts have adopted a definition of a TVG [town or village green] which goes far beyond what the minds eye would think of as a traditional village green. The consequence of this interpretation of the definition is that there have been registered as TVGs: rocks, car parks, golf courses, school playgrounds, a quarry, scrubland, and part of a working port. If land is registered as a TVG the effect of the registration is, for practical purposes, to sterilise land for development. This became a concern for the Government, because the criteria for registration did not take into account any planning considerations; and because it was thought in some quarters that applications for registration of TVGs were being used as a means of stopping development outside the planning system. The 2013 amendments are of no direct relevance to the issues in the present appeal, but they are relied on as showing that Parliament has given specific attention to the balance to be drawn between the rights of the various interests involved. We would draw two main lessons from the historical review. First, whatever misgivings one may have about the unconventional process by which the concept of a modern green became part of our law, the emphasis now should be on consolidation, not innovation. Secondly, the balance between the interests of landowners and those claiming recreational rights, as established by the authorities, and as now supplemented by the 2013 Act, should be respected. Our task in the present appeal is not to make policy judgments, but simply to interpret the majority judgment in Newhaven and apply it to the facts of these cases. The proceedings and the parties Lancashire The land at issue in the first appeal is known as Moorside Fields, in Lancaster. It lies adjacent to Moorside Primary School and extends to some 13 hectares. It is divided into five areas, referred to in the proceedings as Areas A to E, described (by the planning inspector) as follows: Area A, referred to as the meadow was, until recently, an undeveloped plot of land. It is adjacent to Moorside Primary School (the school) and is currently being used to facilitate the construction of an extension at the rear of the school. Area B is a mowed field, referred to as the school playing field and both it and Area A are currently surrounded by fencing. Areas C and D border Areas A and B. In the past they have been the subject of mowing tenancy agreements but these ceased in around 2001. They are separated from each other and from Areas A and B by hedges and in places are overgrown with brambles. Area E, also adjacent to the school, is currently overgrown and difficult to access. At some times of the year it contains a pond. Like the school the land is owned by LCC, the present appellant, which is both education authority and registration authority. On 9 February 2010 Ms Janine Bebbington, a local resident, applied to register the land as a town or village green. Her application was based on 20 years qualifying use up to the date of registration, or alternatively up to 2008. LCC, as local education authority, objected. Following a statutory inquiry, an inspector appointed by the Secretary of State (Ms Alison Lea, a solicitor) in a decision letter dated 22 September 2015 determined that four of the five areas (that is A to D, but not E) should be registered under the Act. She excluded Area E because she found insufficient evidence of its use over the 20 year period. LCC has postponed formal registration of Areas A to D, pending the outcome of the judicial review claim. LCC maintains that the land was acquired for and remains appropriated to educational purposes, in exercise of the LCCs statutory powers as education authority. The statutory provisions upon which LCC relied (or now rely) as showing incompatibility were: (1) section 8 of the 1944 Education Act which imposed a duty on local education authorities to secure that there shall be available for their area sufficient schools for providing primary and secondary education, sufficient in number, character and equipment; (2) sections 13 and 14 of the Education Act 1996 which require local authorities to contribute to the development of the community by securing efficient primary and secondary education; (3) section 542 of the 1996 Act which requires school premises to conform to prescribed standards, including (under regulation 10 of the School Premises (England) Regulations (SI 2012/1943)) suitable outside space for physical education and outside play; and (4) section 175 of the Education Act 2002 which requires the education authority to make arrangements for ensuring that their education functions are exercised with a view to safeguarding and promoting the welfare of children. (The issue of safeguarding does not appear to have been raised at the inquiry.) The inspector was not satisfied that the land was held for educational purposes (an issue to which we shall return below), but even on the assumption that it was she found no incompatibility: 119. Furthermore, even if the land is held for educational purposes, I agree with the applicant that that could cover a range of actual uses. LCC states that the landholding is associated with a specific statutory duty to secure a sufficiency of schools and that if LCC needed to provide a new school or extra school accommodation in Lancaster in order to enable it to fulfil its statutory duty, it would not be able to do so on the Application Land were it to be registered as a town or village green. However, Areas A and B are marked on LCCs plan as Moorside Primary School. The school is currently being extended on other land and will, according to Lynn MacDonald [a school planning manager for the county council], provide 210 places which will meet current needs. There is no evidence to suggest that the school wishes to use these areas other than for outdoor activities and sports and such use is not necessarily incompatible with use by the inhabitants of the locality for lawful sports and pastimes. 120. Areas C and D are marked on LCCs plan as Replacement School Site. However, there is no evidence that a new school or extra school accommodation is required on this site, or indeed anywhere in Lancaster. Lynn MacDonald stated that the Application Land may need to be brought into education provision at some time but confirmed that there were no plans for the Application Land within her five year planning phase. 121. Nevertheless, she pointed out there is a rising birth rate and increased housing provision in Lancaster, and that although there are surplus school places to the north of the river, no other land is reserved for school use to the south of Lancaster. Assets are reviewed on an annual basis and if not needed land can be released for other purposes. However there was no prospect that this would happen in relation to the Application Land in the immediate future. 122. I do not agree with LCCs submission that the evidence of Lynn MacDonald demonstrates the necessity of keeping the Application Land available to guarantee adequate future school provision in order to meet LCCs statutory duty. Even if at some stage in the future there becomes a requirement for a new school or for additional school places within Lancaster, it is not necessarily the case that LCC would wish to make that provision on the Application Land. She concluded (para 124): 124. It seems to me that, in the absence of further evidence, the situation in the present case is not comparable to the statutory function of continuing to operate a working harbour where the consequences of registration as a town or village green on the working harbour were clear to their Lordships [in Newhaven]. Even if it is accepted that LCC hold the land for educational purposes, there is no clear incompatibility between LCCs statutory functions and registration of the Application Land as a town or village green. Accordingly I do not accept that the application should fail due to statutory incompatibility. On the LCCs application for judicial review, the inspectors decision was upheld by Ouseley J [2016] EWHC 1238 (Admin), including her approach to the issue of statutory incompatibility. Surrey The second appeal relates to some 2.9 hectares of land at Leach Grove Wood, Leatherhead, owned by NHS Property Services Ltd (NHS Property Services), a company wholly owned by the Secretary of State for Health. The land adjoins Leatherhead Hospital, and is in the same freehold title. An application for registration under the Act was made by Ms Philippa Cargill on 22 March 2013, with the support of Mr Timothy Jones and others. They relied on use over a period of 20 years ending in January 2013 (when permissive signs were erected on the land). At the time of the application, the land was owned by the Surrey Primary Care Trust. By section 83(1) of the National Health Service Act 2006 primary care trusts were under a duty to provide, or to secure the provision of, primary medical services in their area. The land was held by the Trust pursuant to the statute, for those purposes. On the dissolution of the Trust in 2013, the freehold title of the land was transferred to NHS Property Services, which had been created by the Secretary of State for Health under his power to form companies to provide facilities or services to persons or bodies exercising functions, or otherwise providing services, under this Act (section 223(1) of the National Health Service Act 2006). Following the amendment of the National Health Service Act 2006 by the Health and Social Care Act 2012, functions previously exercised by the Secretary of State acting through a primary care trust fell to be exercised by a clinical commissioning group (CCG) in this case the Surrey Downs Clinical Commissioning Group. The principal statutory duties of a CCG are defined by section 3(1) of the National Health Service Act 2006; in summary they involve the provision of hospital accommodation and medical services to such extent as it considers necessary to meet the reasonable requirements of the persons for whom it has responsibility. Following a non statutory inquiry, the inspector, William Webster, barrister, in his report dated 9 June 2015, recommended refusal of registration. He rejected the companys objection based on statutory incompatibility (paras 175(d) (f)). He contrasted the case with Newhaven [2015] AC 1547 in which there had been an obvious and irreconcilable clash as between the conflicting statutory regimes: (e) The position of the NHS is quite different in that no positive duty (analogous to that imposed on the undertaker in Newhaven) arises on the part of the landowner to do anything in the case of the land (in contrast to Newhaven) and the general duty imposed on the Secretary of State to promote a comprehensive health service is wholly unaffected. (f) It seems to me that it is irrelevant that the land may be held under the same title as the remainder of the hospital site. The fact that the relevant NHS bodies had (and still has [sic]) the capacity to use the land for health and ancillary purposes is no different to any other public body holding land for a purpose which they do not choose to exercise for the time being. He also accepted that there had been sufficient qualifying use of the land by local inhabitants for more than 20 years, but he held that it was not in respect of a relevant locality or neighbourhood as required by section 15. Surrey County Council, as registration authority, did not accept his recommendation, but determined to register the land which was done on 5 October 2015. On the application for judicial review by NHS Property Services, on 13 July 2016 Gilbart J ([2016] EWHC 1715 (Admin); [2017] 4 WLR 130) quashed the registration, holding that the county council had failed properly to consider the question of statutory incompatibility. He had before him the judgment of Ouseley J in the Lancashire case ([2016] EWHC 1238 (Admin)), but distinguished it by reference to the wider powers conferred by the education statutes: 134. It is clear that there was no general power in any of the relevant bodies to hold land. Land could only be acquired or held if done so for the purposes defined in the relevant Acts. The defined statutory purposes do not include recreation, or indeed anything outside the purview of (in summary) the purposes of providing health facilities. Could the land be used for the defined statutory purposes while also being used as a town or village green? No one has suggested that the land in its current state would perform any function related to those purposes, and the erection of buildings or facilities to provide treatment, or for administration of those facilities, or for car parking to serve them, would plainly conflict with recreational use. 135. Indeed, it is very hard indeed to think of a use for the land which is consistent with those powers, and which would not involve substantial conflict with use as a village green. A hospital car park, or a clinic, or an administrative building, or some other feature of a hospital or clinic would require buildings or hard standing in some form over a significant part of the area used. By contrast, it is easy to think of functions within the purview of education, whereby land is set aside for recreation. Indeed, there is a specific statutory duty to provide recreational facilities, which may include playing fields, and other land, for recreation, the playing of games, and camping, among other activities see section 507A Education Act 1996. 136. It is not relevant to the determination of the issue that the land has not in fact been used for the erection of hospital buildings or used for other hospital related purposes. The question which must be determined is not the factual one of whether it has been used, or indeed whether there any plans that it should be, but only whether there is incompatibility as a matter of statutory construction. If the land is in fact surplus to requirements, then the use of the [2006 Act] is not the remedy. 137. Given those conclusions, it is my judgement that there is a conflict between the statutory powers in this case and registration. The Court of Appeal The appeals in both cases, respectively by LCC and the applicants for registration in the Surrey case, were heard together by the Court of Appeal (Jackson, Lindblom and Thirlwall LJJ). In a judgment dated 12 April 2018 ([2018] EWCA Civ 721; [2018] 2 P & CR 15), given by Lindblom LJ, with whom the others agreed, the court upheld the decision to register in both cases. On the issue of statutory incompatibility, he distinguished the Newhaven case [2015] AC 1547, for reasons which are sufficiently apparent from the following short extracts from the judgment: Lancashire 40. Crucially, as a matter of statutory construction there was no inconsistency of the kind that arose in Newhaven Port & Properties between the provisions of one statute and the provisions of the other. The statutory purpose for which Parliament had authorized the acquisition and use of the land and the operation of section 15 of the 2006 Act were not inherently inconsistent with each other. By contrast with Newhaven Port & Properties, there were no specific statutory purposes or provisions attaching to this particular land. Parliament had not conferred on the county council, as local education authority, powers to use this particular land for specific statutory purposes with which its registration as a town or village green would be incompatible. Surrey 46. As in the Lancaster case, therefore, the circumstances did not correspond to those of Newhaven Port & Properties. The land was not being used for any defined statutory purposes with which registration would be incompatible. No statutory purpose relating specifically to this particular land would be frustrated. The ownership of the land by NHS Property Services, and the existence of statutory powers that could be used for the purposes of developing the land in the future, was not enough to create a statutory incompatibility. The clinical commissioning group would still be able to carry out its statutory functions in the provision of hospital and other accommodation and the various services and facilities within the scope of its statutory responsibilities if the public had the right to use the land at Leach Grove Wood for recreational purposes, even if the land itself could not then be put to use for the purposes of any of the relevant statutory functions. None of those general statutory functions were required to be performed on this land. And again, it is possible to go somewhat further than that. Although the registration of the land as a village green would preclude its being developed by the construction of a hospital or an extension to the existing hospital, or as a clinic or administrative building, or as a car park, and even though the relevant legislation did not include a power or duty to provide facilities for recreation, there would be nothing inconsistent either in principle or in practice between the land being registered as a green and its being kept open and undeveloped and maintained as part of the Leatherhead Hospital site, whether or not with access to it by staff, patients or visitors. This would not prevent or interfere with the performance of any of the relevant statutory functions. But in any event, as in the Lancaster case, the two statutory regimes were not inherently in conflict with each other. There was no statutory incompatibility. Was the Lancashire land held for educational purposes? Before we turn to the main issue it is convenient to dispose of a preliminary issue which arises only in respect of the first appeal. For what purposes was the land held? The inspector recorded the evidence on which LCC relied as showing that the land was held for the relevant statutory purposes. 113. LCC has provided Land Registry Official copies of the register of title which show that LCC is the registered proprietor of the Application Land. Areas A, B and E were the subject of a conveyance dated 29 June 1948, a copy of which has been provided. It makes no mention of the purposes for which the land was acquired but is endorsed with the words Recorded in the books of the Ministry of Education under section 87(3) of the Education Act 1944. The endorsement is dated 12 August 1948. 114. Areas C and D were the subject of a conveyance dated 25 August 1961. Again the conveyance makes no mention of the purposes for which the land was acquired but the copy provided has a faint manuscript endorsement as follows Education Lancaster Greaves County Secondary School. 115. In addition LCC provided an instrument dated 23 February 1925 and a letter from LCC to the school dated 1991. The instrument records that the Council of the Borough of Lancaster has applied to the Minister of Health for consent to the appropriation for the purposes of the Education Act 1921 of the land acquired by the council otherwise than in their capacity as Local Education Authority. The land shown on the plan is the [Barton Road Playing Field (land also owned by LCC, to the immediate west of Areas C and D and separated from them by a shallow watercourse, but accessible from them via a stone bridge and also stepping stones)]. An acknowledgement and undertaking dated March 1949 refers to the transfer to the county council of the education functions of the City of Lancaster and lists deeds and documents relating to school premises and other land and premises held by the corporation. It lists the [Barton Road Playing Field]. The 1991 letter encloses a note from Lancashire Education Committee outlining a proposal to declare land surplus to educational requirements. This relates to the land adjacent to Area C which was subsequently developed for housing. As none of this documentation relates directly to the Application Land I do not find it of particular assistance. 116. At the inquiry LCC provided a print out of an electronic document headed Lancashire County Council Property Asset Management Information which in relation to Moorside Primary School records the committee as E. I accept that it is likely that this stands for Education. An LCC plan showing land owned by CYP education shows Areas A, B and E as Moorside Primary School and Areas C and D as Replacement School Site. In relation to Areas C and D the terrier was produced, and under committee is the word education. The whole page has a line drawn through it, the reason for which is unexplained. 117. LCC submits that the documentation provides clear evidence that the Application Land is held for educational purposes and that no further proof is necessary. However, no council resolution authorising the purchase of the land for educational purposes or appropriating the land to educational purposes has been provided. The conveyances themselves do not show for what purpose the council acquired the land, and although the endorsements on those documents make reference to education, the authority for them is unknown. Lynn MacDonald confirmed that the Application Land was identified as land which may need to be brought into education provision, but was unable to express an opinion about the detail of LCCs ownership of the land. 118. The information with regard to the purposes for which the Application Land is held by LCC is unsatisfactory. Although there is no evidence to suggest that it is held other than for educational purposes, it is not possible to be sure that The inspector stated her conclusions: LCCs statement that the Application Land was acquired and is held for educational purposes and was so held throughout the 20 year period relevant to the Application accurately reflects the legal position. In fairness to the inspector, we should note that this issue seems to have been raised rather the late in the day, and was less than fully explored in LCCs submissions before her (see Ouseley J [2016] EWHC 1238 (Admin), para 49, noting Ms Bebbingtons evidence as to what took place at the inquiry; the counsel who have appeared for LCC in the court proceedings did not act for it at the inquiry. Ouseley J indicated that, left to himself, he would have been likely to have reached a different view, at para 57: I rather doubt that, confined to the express reasoning in the DL [the decision letter], I would have reached the same conclusion as the inspector as to what could be inferred from the conveyances and endorsements on them in relation to the purpose of the acquisition of the various areas. I can see no real reason not to conclude, on that basis, that the acquisition was for educational purposes. No other statutory purpose for the acquisition was put forward; there was no suggestion that the parcels were acquired for public open space. I would have inferred that there were resolutions in existence authorising the acquisitions for that contemporaneously evidenced intended purpose, which simply had not been found at this considerable distance in time. It would be highly improbable for the lands to have been purchased without resolutions approving it. The presumption of regularity would warrant the assumption that there had been resolutions to that effect, and that the purpose resolved upon would have been the one endorsed on the conveyances. This is reinforced by the evidence in DL para 116, which shows the property, after acquisition, to be managed by or on behalf of the Education Committee. The actual use made of some of the land is of limited value in relation to the basis of its acquisition or continued holding. However, he was unwilling to conclude that the inspectors decision was irrational, at para 61: As I read the DL, the fundamental problem for the inspector in the LCC evidence was the absence of what she regarded as the primary sources for power under which the acquisition or appropriation of the land occurred: the resolutions to acquire or to appropriate it for educational purposes. She was entitled to regard those as the primary sources to prove the basis for the exercise of the powers of the authority she approached her decision, as I read it, knowing what transpired before her, not on the basis that resolutions related to acquisition might well have existed but could not be found at this distance in time, but on the basis that none had been produced despite proper endeavours to find them, endeavours which had nonetheless produced the conveyances, and other related documents. So she was not prepared to assume that resolutions in relation to acquisition had existed. That was entirely a matter for her, and cannot come close to legal error. The Court of Appeal in substance adopted Ouseley Js reasoning. In this court, Mr Edwards QC for LCC accepts that this issue was one of fact for the inspector. But he submits that her conclusion was unsupportable on the evidence before her, or was vitiated by error of fact (under the principles set out in E v Secretary of State for Home Department [2004] QB 1044). For good measure he submits that the courts below were wrong not to admit evidence, discovered after the inquiry, in the form of council minutes from February 1948 recording the resolution to acquire Areas A and B (and E) for a proposed primary school. He starts from the proposition that the LCC, as a statutory local authority, could only acquire land for the purposes of any of their [statutory] functions (see now the Local Government Act 1972, section 120(1)(a)); and that in normal circumstances the land would continue to be held for the purpose for which it was acquired unless validly appropriated for an alternative statutory purpose, when no longer required for the first (section 122). The inspector, he says, gave no weight to that statutory context. As regards Areas A, B and E, he submits, the evidence before the inspector was quite clear (even without the new evidence). The inspector properly noted that the acquisition had been Recorded in the books of the Ministry of Education under section 87(3) of the Education Act 1944. However, she failed to understand or give due weight to the significance of that note. As Mr Edwards explains, the effect of section 87 of the Education Act 1944 (headed Exemption of assurances of property for educational purposes from the Mortmain Acts) was to exempt from the Mortmain and Charitable Uses Act 1888 and related Acts, land transferred (inter alia) to a local education authority, if the land was to be used for educational purposes. (The law of Mortmain dating back to the Statutes of Mortmain in 1279 and 1290, was not finally abolished until 1960.) A copy of the conveyance or other document by which the transfer of such land was made was required, within six months of its taking effect, to be sent to the Education Minister. Section 87(3) provided that a record should be kept of any conveyance sent to the minister pursuant to the section. Accordingly, says Mr Edwards, the reference to the record under section 87(3) should have been treated by the inspector as clear evidence that the original purpose of the acquisition was for educational purposes, even in the absence of a contemporary resolution to that effect. Against that background, the lack of evidence of any competing purpose to which the land might have been appropriated over the subsequent years pointed to the inference that it continued to be held for its original purpose. As regards Areas C and D, Mr Edwards submits, the indication on the 1961 conveyance of an educational purpose, taken with the references in later documents to its being treated as educational land, and the lack of any evidence of a competing purpose, were sufficient to support the inference, on the balance of probabilities, that education was the purpose for which it had been acquired and subsequently held. Discussion Although Mr Edwards has accepted that this issue was one of fact for the inspector, that concession needs to be seen in context. The inspectors assessment was one depending, not so much on evaluation of oral evidence, but largely on the inferences to be drawn from legal or official documents of varying degrees of formality. In our view, Ouseley Js approach to the natural inferences to be drawn from the material before the inspector was correct, but he was wrong to be deflected by deference to the inspectors fact finding role. The main difference between them was in the weight given by the inspector to the absence of specific resolutions, from which she found it not possible to be sure that the land had been acquired and held for educational purposes. On its face the language appears to raise the threshold of proof above the ordinary civil test to which she had properly referred earlier in the decision. But even discounting that point, she was wrong in our view to place such emphasis on the lack of such resolutions. Her task was to take the evidence before her as it stood, and determine, on the balance of probabilities, for what purpose the land was held. On that approach, Ouseley Js own assessment ([2016] EWHC 1238 (Admin)) was in our view impeccable. The inspectors assessment was irrational, having regard to the relevant standard of proof and the evidence available. There was no evidence to support any inference other than that each part of the land had been acquired for, and continued during the relevant period to be held for, statutory educational purposes. An assessment made without any supporting evidence cannot stand: Edwards v Bairstow [1956] AC 14, 29. In respect of Areas A and B, furthermore, there was a clear error of law, in the inspectors failure to appreciate, or take account of, the significance of the reference to section 87(3) of the 1944 Act. This may be because she was given little assistance on the point by LCC at the inquiry. It is less clear why the point, having been clearly raised in submissions in the court proceedings (see Ouseley J, para 44), seems to have been ignored in the subsequent judgments. On any view, that reference, and the inferences to be drawn from it, went beyond a pure issue of fact, and were appropriate for review by the court. In agreement with Mr Edwards we would regard it as providing unequivocal support for the conclusion that the land comprising Areas A and B was acquired for educational purposes. There was no evidence to suggest that it had ever been appropriated to other purposes. In respect of Areas C and D, the evidence is less clear cut, but we agree with Mr Edwards submission that it is sufficient, on the balance of probabilities, to support the same conclusion and that, in the absence of any evidence to support any other view, it was irrational for the inspector to reach a different conclusion. Again, we think that Ouseley Js assessment of the facts was the correct one. In these circumstances it is unnecessary to consider whether Ouseley J erred in refusing to admit the new evidence. We note, however, that it does no more than support what was already a strong case in respect of Areas A and B; it does nothing to enhance the case for Areas C and D. Implied permission We can also deal more briefly with an issue that arises only in respect of the Surrey site: that is Mr Laurence QCs application for permission to argue (for the first time) that the publics use of the land for recreation should be treated as having implied permission from NHS Property Services or its predecessors, thus showing that the use was by right rather than as of right. This, as he accepts, is a departure from Sunningwell [2000] 1 AC 335, where it was held that mere toleration by a landowner of the publics use could not be taken as evidence that the landowner had impliedly consented to that use. He seeks to distinguish the position of land that is held for public purposes such as by his client. We quote his printed case: there is a critical distinction between (i) a private owner (such as the kindly rector in Sunningwell) tolerating use of land not held for public purposes which can provide no evidence of an implied permission and (ii) a public owner passively responding to recreational use in a statutory context which justifies the inference that that response to the publics use of the land is evidence of an implicit permission so long as the permitted use does not disrupt the public authoritys use of the land for its statutory purposes. In such a case it is irrelevant that in a non statutory, private context such a response might be characterised as toleration. He also relies on section 120(2) of the Local Government Act 1972, which authorises land acquired by agreement by a local authority for a particular purpose to be used, pending its requirement for that purpose, for any of the authoritys functions, which, he submits, would include recreational use. It can be inferred, accordingly, that any use by the public was permitted under that power, and as such was pursuant to the same kind of public law right, derived from statute, as was held in R (Barkas) v North Yorkshire County Council [2014] UKSC 31; [2015] AC 195 (Barkas) and Newhaven [2015] AC 1547 to give rise to implied permission. This submission seems to us to face two major difficulties. The first is that no such claim was made before the inspector. As he recorded: 174(f) No issue arises on as of right. There were no vitiating features in play which would preclude use as of right and the application land was at no time held by SCC [Surrey County Council] or by any of the various NHS bodies mentioned herein for purposes which conferred an entitlement on members of the public to use the land for informal recreation. For instance, there was no evidence of any overt act or acts on the part of the objector, or its predecessor, to demonstrate that, before January 2013, the landowner was granting an implied permission for local inhabitants to use the wood. In answer to this, Mr Laurence asserts that the issue is one of law rather than fact. Even if that were so, it would in our view be unfair to all those who took part in the five day inquiry in 2015 to allow the point to be taken for the first time four years later in this court. However, his main difficulty is that the submission is contradicted by clear authority. In R (Beresford) v City of Sunderland [2003] UKHL 60; [2004] 1 AC 889 Lord Walker had accepted the emphasis placed by Mr Laurence himself (appearing on that occasion for the supporters of registration) on the need for the landowner to do something (para 78); passive acquiescence could not be treated as having the same effect as permission communicated (whether in writing, by spoken words, or by overt and unequivocal conduct) (para 79). Later in the judgment (para 83) Lord Walker accepted that permission might be implied by (or inferred from) overt conduct of the landowner, such as making a charge for admission, or asserting his title by the occasional closure of the land to all comers, but he found no evidence in that case of overt acts (on the part of the city council or its predecessors) justifying the inference of an implied licence. Nothing in Barkas or Newhaven undermines the principle that passive acquiescence is insufficient. Mr Laurences then submission that the land owner must do something remains good law, even if there has been some qualification of the form of communication required to the public. The existence in each case of an overt act of the owner was emphasised in the majority judgment in Newhaven [2015] AC 1547, para 71: In this case, as in Barkas, the legal position, binding on both landowner and users of the land, was that there was a public law right, derived from statute, for the public to go onto the land and to use it for recreational purposes, and therefore, in this case, as in Barkas, the recreational use of the land in question by inhabitants of the locality was by right and not as of right. The fact that the right arose from an act of the landowner (in Barkas, acquiring the land and then electing to obtain ministerial consent to put it to recreational use; in this case, to make the Byelaws which implicitly permit recreational use) does not alter the fact that the ultimate right of the public is a public law right derived from statute (the Housing Act 1936 in Barkas; the 1847 Clauses Act and the 1878 Newhaven Act in this case). The law remains, as submitted by Mr Laurence in Beresford, that passive acquiescence, even by a statutory authority with power to permit recreational use, is not enough. Accordingly we would refuse permission for this additional ground of appeal. Statutory incompatibility We turn next to the central issue in the case, based on the Newhaven case. The majority judgment In the judgment of the majority (given by Lord Neuberger PSC and Lord Hodge JSC) the decision not to confirm the registration was supported by two separate lines of reasoning: implied permission and statutory incompatibility. Although the latter was unnecessary for the decision, it was clearly identified as a separate ground of decision (para 74). Lord Carnwath was alone in basing his decision on the implied permission issue alone (para 137), seeing considerable force in the contrary reasoning on the latter issue of Richards LJ in the Court of Appeal ([2014] QB 186). No one has argued that we should regard the majoritys reasoning on this issue as other than binding. Accordingly our decision in the present case depends to a large extent on the correct analysis of that reasoning, and its application to the facts of the two cases before us. The operation of Newhaven Harbour had been subject to legislation since at least 1731. At the relevant time the governing statutes included (inter alia) the Newhaven Harbour and Ouse Lower Navigation Act 1847, section 49 of which required the trustees to maintain and support the said harbour of Newhaven, and the piers, groynes, sluices, wharfs, mooring berths, and other works connected therewith and section 33 of the Harbours, Docks and Piers Clauses Act 1847, which provided that, subject to payment of rates the harbour, dock and pier shall be open to all persons for the shipping and unshipping of goods, and the embarking and landing of passengers. The land owned by the harbour company (NPP) included an area known as West Beach, described in the judgment as part of the operational land of the Harbour (para 8), although not currently used for any harbour purpose. As the judgment explained, at para 9: The Beach owes its origin to the fact that, in 1883, pursuant to the powers granted by the 1863 Newhaven Act, the substantial breakwater was constructed to form the western boundary of the Harbour. The breakwater extends just over 700 metres out to sea. After the construction of the breakwater, accretion of sand occurred along the eastern side of the breakwater, and that accretion has resulted in the Beach. Following an application by the Newhaven Town Council to register the Beach as a town or village green, and the holding of a public inquiry, it was found by the inspector that the beach had been used by residents of the locality for well over 80 years (save during the war periods) for recreation. On that basis the registration authority resolved to register the land. That decision was subject to an application for judicial review, which succeeded before Ouseley J, but was dismissed by the Court of Appeal. Their decision was in turn reversed by the Supreme Court. The judgment of this court in Newhaven In the part of their judgment directed to the statutory incompatibility issue, Lord Neuberger and Lord Hodge referred to case law on public rights of way, easements and servitudes by way of analogy, adopting a cautious approach (paras 76 90). Nonetheless, they found it did provide guidance. In English law, public rights of way are created by dedication by the owner of the land, and the legal capacity of the landowner to dedicate land for that purpose is a relevant consideration (para 78, referring in particular to British Transport Commission v Westmorland County Council [1958] AC 126; see also para 87). Similarly, in the English law of private easements, the capacity of the owner of the potential servient tenement to grant an easement is relevant to prescriptive acquisition, which is based on the fiction of a grant by that owner (para 79). The law of Scotland with respect of creation of public rights of way and private servitudes had also developed on the footing that the statutory capacity of a public authority landowner to allow the creation of such rights was a relevant matter. In particular, in Magistrates of Edinburgh v North British Railway Co (1904) 6 F 620 it was held that it was not possible that a public right of way which it would be ultra vires to grant can be lawfully acquired by user ([2015] AC 1547, paras 83 84); and in Ellices Trustees v Comrs of the Caledonian Canal (1904) 6 F 325 it was held that the commissioners of the canal did not have the power to grant a right of way which was not compatible with the exercise of their statutory duties, and that this also meant that no private right of way or servitude could arise by virtue of user of the land over many years by those claiming such a right of way (paras 85 86). Although the Scots law of prescription had been reformed by statute, Lord Neuberger and Lord Hodge still regarded the historic position as instructive. Their discussion of English law and Scots law in respect of dedication and prescription at paras 76 90 is significant for present purposes, because the reasoning in the cases in those areas regarding statutory incompatibility is general, and is not dependent on the narrower rule of statutory construction that a general provision does not derogate from a special one (generalia specialibus non derogant), to which they also later referred by way of analogy. There follows the critical part of the majority judgment, under the heading Statutory incompatibility: statutory construction, the material parts of which we should quote in full, at paras 91 96: 91. As we have said, the rules of prescriptive acquisition apply only by analogy because Parliament in legislating for the registration of town and village greens has chosen similar wording (indulging as of right in lawful sports and pastimes) in the 1965 and 2006 Acts. It is, none the less, significant in our view that historically in both English law and Scots law, albeit for different reasons, the passage of time would not give rise to prescriptive acquisition against a public authority, which had acquired land for specified statutory purposes and continued to carry out those purposes, where the user founded on would be incompatible with those purposes. That approach is also consistent with the Irish case, McEvoy v Great Northern Railway Co [1900] 2 IR 325, (Palles CB at pp 334 336), which proceeded on the basis that the acquisition of an easement by prescription did not require a presumption of grant but that the incapacity of the owner of the servient tenement to grant excluded prescription. 92. In this case if the statutory incompatibility rested only on the incapacity of the statutory body to grant an easement or dedicate land as a public right of way, the Court of Appeal would have been correct to reject the argument based upon incompatibility because the 2006 Act does not require a grant or dedication by the landowner. But in our view the matter does not rest solely on the vires of the statutory body but rather on the incompatibility of the statutory purpose for which Parliament has authorised the acquisition and use of the land with the operation of section 15 of the 2006 Act. 93. The question of incompatibility is one of statutory construction. It does not depend on the legal theory that underpins the rules of acquisitive prescription. The question is: does section 15 of the 2006 Act apply to land which has been acquired by a statutory undertaker (whether by voluntary agreement or by powers of compulsory purchase) and which is held for statutory purposes that are inconsistent with its registration as a town or village green? In our view it does not. Where Parliament has conferred on a statutory undertaker powers to acquire land compulsorily and to hold and use that land for defined statutory purposes, the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes. Where there is a conflict between two statutory regimes, some assistance may be obtained from the rule that a general provision does not derogate from a special one (generalia specialibus non derogant), which is set out in section 88 of the code in Bennion, Statutory Interpretation, 6th ed (2013), p 281: Where the literal meaning of a general enactment covers a situation for which specific provision is made by another enactment contained in an earlier Act, it is presumed that the situation was intended to continue to be dealt with by the specific provision rather than the later general one. Accordingly the earlier specific provision is not treated as impliedly repealed. While there is no question of repeal in the current context, the existence of a lex specialis is relevant to the interpretation of a generally worded statute such as the 2006 Act. 94. There is an incompatibility between the 2006 Act and the statutory regime which confers harbour powers on NPP to operate a working harbour, which is to be open to the public for the shipping of goods etc on payment of rates: section 33 of the 1847 Clauses Act. NPP is obliged to maintain and support the Harbour and its connected works (section 49 of the 1847 Newhaven Act), and it has powers to that end to carry out works on the Harbour including the dredging of the sea bed and the foreshore: section 57 of the 1878 Newhaven Act, and articles 10 and 11 of the 1991 Newhaven Order. 95. The registration of the Beach as a town or village green would make it a criminal offence to damage the green or interrupt its use and enjoyment as a place for exercise and recreation section 12 of the Inclosure Act 1857 or to encroach on or interfere with the green section 29 of the Commons Act 1876 See the Oxfordshire case [2006] 2 AC 674, per Lord Hoffmann, at para 56. 96. In this case, which concerns a working harbour, it is not necessary for the parties to lead evidence as to NPPs plans for the future of the Harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred. Such registration would clearly impede the use of the adjoining quay to moor vessels. It would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach. It might also restrict NPPs ability to alter the existing breakwater. All this is apparent without the leading of further evidence. We discuss this reasoning in detail below. Finally in this part of the majority judgment reference is made to cases in which registration of land held by public bodies had been approved by the court: New Windsor, the Trap Grounds case and Lewis [2010] 2 AC 70. The treatment of these cases by Lord Neuberger and Lord Hodge is also significant for present purposes. As regards New Windsor, they emphasised that the land was not acquired and held for a specific statutory purpose, so [n]o question of statutory incompatibility arose (para 98). They observed that in the Trap Grounds case, though the land was wanted for use as an access road and housing development there was no suggestion that [the city council] had acquired and held the land for specific statutory purposes that might give rise to a statutory incompatibility (para 99). With respect to Lewis they pointed out that [it] was not asserted that the council had acquired and held the land for a specific statutory purpose which would be likely to be impeded if the land were to be registered as a town or village green; hence [a]gain, there was no question of any statutory incompatibility (para 100). In relation to each of these cases, Lord Neuberger and Lord Hodge referred in entirely general terms to the statutory powers under which a local authority might hold land and were at pains to emphasise that the land in question was not in fact held in exercise of any such powers which gave rise to a statutory incompatibility. That was the basis on which they distinguished the cases. It is clearly implicit in this part of their analysis that they considered that land which was acquired and held by a local authority in exercise of general statutory powers which were incompatible with use of that land as a town or village green could not be registered as such. Their discussion concludes, at para 101: In our view, therefore, these cases do not assist the respondents. The ownership of land by a public body, such as a local authority, which has statutory powers that it can apply in future to develop land, is not of itself sufficient to create a statutory incompatibility. By contrast, in the present case the statutory harbour authority throughout the period of public user of the Beach held the Harbour land for the statutory harbour purposes and as part of a working harbour. Incompatibility the case for the appellants For LCC Mr Edwards submits that the decision in Newhaven is of general application to land held by a statutory authority for statutory purposes, whatever the nature of the Act. He points out that the statutory duties or powers in Newhaven were not specific to the beach itself, but rather applied to all of the land acquired and held, from time to time, by NPP and its predecessors for the operation of the Port. NPP had not, within living memory, used the Beach for its statutory harbour purposes. The critical passage in the majority judgment (para 93) refers generally to land which has been acquired by a statutory undertaker (whether by voluntary agreement or by powers of compulsory purchase) and which is held for statutory purposes It is not limited to statutory powers directed to a specific location or undertaking. No one has argued that the principle is limited to statutory undertakers, as opposed to public authorities in general. Nor is there any requirement for the land to be in actual use for statutory purposes at the point of registration; it simply has to be held for such purposes. In Newhaven the Beach had not been used for harbour purposes nor was there any fixed intention to do so at any particular time in the future (see para 96). In the present case, notwithstanding the inspectors findings, there was, he submits, clear incompatibility with LCCs functions in respect of the land. The effect of registration would be that there accrues a right vested in the inhabitants of Scotforth East Ward to use the land for lawful sports and pastimes of a variety of forms, including walking and dog walking. LCC could not restrict their entry onto the land, including Area B which was at the time of the inspectors decision used as a playing field by the school (see Decision Letter, para 10). Given the statutory safeguarding obligations towards primary school pupils, the use of that area for play could not continue. Any use of the land to provide a new or expanded school would be precluded. In substance, the land would be no longer available in any meaningful sense for use in fulfilment of the LCCs statutory duties as local education authority. Mr Laurence makes similar submissions in respect of the Surrey site, supported in that case by the conclusions of Gilbart J [2017] 4 WLR 130. Discussion In our judgment, the appeals should be allowed in both cases. On a true reading of the majority judgment in Newhaven on the statutory incompatibility point, the circumstances in each of these cases are such that there is an incompatibility between the statutory purposes for which the land is held and use of that land as a town or village green. This has the result that the provisions of 2006 Act are, as a matter of the construction of that Act, not applicable in relation to it. The principle stated in the key passage of the majority judgment at para 93 is expressed in general terms. The test as stated is not whether the land has been allocated by statute itself for particular statutory purposes, but whether it has been acquired for such purposes (compulsorily or by agreement) and is for the time being so held. Although the passage refers to land acquired by a statutory undertaker, we agree with Mr Edwards that there is no reason in principle to limit it to statutory undertakers as such, nor has that been argued by the respondents. That view is supported also by the fact that the majority felt it necessary to find particular reasons to distinguish cases such as New Windsor, the Trap Grounds case and Lewis, all of which involved local authorities rather than statutory undertakers. Accordingly, the appellants argue with force that the test is directly applicable to the land acquired and held for their respective statutory functions. The reference in para 93 to the manner in which a statutory undertaker acquired the land is significant. Acquisition of land by a statutory undertaker by voluntary agreement will typically be by the exercise of general powers conferred by statute on such an undertaker, where the land is thereafter held pursuant to such powers rather than under specific statutory provisions framed by reference to the land itself (as happened to be a feature of the provisions which were applicable in Newhaven itself). That is also true of land acquired by exercise of powers of compulsory purchase. In relation to the latter type of case, the majority said in terms that the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes (para 93). On our reading of the majority judgment, it is clear that in relation to both types of case Lord Neuberger and Lord Hodge took the view that an incompatibility between general statutory powers under which land is held by a statutory undertaker (or, we would add, a public authority with powers defined by statute) and the use of such land as a town or village green excludes the operation of the 2006 Act. This interpretation of the judgment is reinforced by the analysis it contains of the English and Scottish cases on dedication and prescription in relation to rights of way, easements and servitudes and the guidance derived from those cases (see paras 76 to 91): para 47 above. It is also reinforced by the way in which Lord Neuberger and Lord Hodge distinguished the New Windsor, Trap Grounds and Lewis cases: paras 49 and 50 above. The respondents in these appeals submit that the reasoning of Lord Neuberger and Lord Hodge is more narrowly confined, and depends upon identifying a conflict between a particular regime governing an area of land specified in the statute itself and the general statutory regime in the 2006 Act. In support of this interpretation the respondents point to the highly specific nature of the statutory provisions governing the relevant land in Newhaven and to the reference in para 93 to the rule of statutory construction that a general provision does not derogate from a special one (generalia specialibus non derogant). However, for the reasons we have set out above, this interpretation of the judgment does not stand up to detailed analysis. Lord Neuberger and Lord Hodge stated only that some assistance could be obtained from consideration of that rule of construction, not that it provided a definitive answer on the issue of statutory incompatibility. In other words, they treated it as a helpful analogy for the purposes of seeking guidance to answer the question they posed in para 93, just as they treated the English and Scottish cases on prescriptive acquisition as helpful. The way in which they posed the relevant question in para 93 shows that their reasoning is not limited in the way contended for by the respondents, as does their discussion of the prescriptive acquisition cases and the local authority cases of New Windsor, Trap Grounds and Lewis. We do not find the construction of the 2006 Act as identified by the wider reasoning of the majority in Newhaven surprising. It would be a strong thing to find that Parliament intended to allow use of land held by a public authority for good public purposes defined in statute to be stymied by the operation of a subsequent general statute such as the 2006 Act. There is no indication in that Act, or its predecessor, that it was intended to have such an effect. Lord Hoffmann in Sunningwell concluded that it could be inferred that Parliament intended to allow for the creation of new rights pursuant to the 1965 Act by reason of the public interest in the preservation of open spaces which had for many years been used for recreational purposes, but in doing so he recognised that [a] balance must be struck between rights attaching to private property and competing public interests of this character (p 359B E). It is natural to expect that where a public authority is holding land for public purposes defined by statute which are incompatible with the public interest identified by implication from the 1965 Act, and now the 2006 Act, that balance will be affected. The proper inference as to Parliaments intention is that the general public interest identified by Lord Hoffmann will in such a case be outweighed by the specific public interest which finds expression in the particular statutory powers under which the land is held. As Lord Neuberger and Lord Hodge appreciated, this general point can be made with particular force in relation to land purchased using compulsory purchase powers set out in statute. Such powers are generally only created for use in circumstances where an especially strong public interest is engaged, such as could justify the compulsory acquisition of property belonging to others. It seems highly unlikely that Parliament intended that public interests of such a compelling nature could be defeated by the operation of the general provisions in the 2006 Act. In construing the 2006 Act it is also significant that it contains no provision pursuant to which a public authority can buy out rights of user of a town or village green arising under that Act in relation to land which it itself owns. That is so however strong the public interest may now be that it should use the land for public purposes. Since in such a case the public authority already owns the land, it cannot use any power of compulsory purchase to eradicate inconsistent rights and give effect to the public interest, as would be possible if the land was owned by a third party. Although section 16 of the 2006 Act makes specific provision for deregistration of a green on application to the appropriate national authority, in relation to land which is more than 200 square metres in area the application must include a proposal to provide suitable replacement land: subsections (2), (3) and (5). This procedure is available to any owner of registered land, public or private; it is not designed to give effect to the public interest reflected in specific statutory provisions under which the land is held. Often it will be impossible in practice for a public authority to make a proposal to provide replacement land as required to bring section 16 into operation. Again, it would be surprising if Parliament had intended to create the possibility that the 2006 Act should in this way be capable of frustrating important public interests expressed in the statutory powers under which land is held by a public authority, when nothing was said about that in the 2006 Act. In our view, applying section 15 of the 2006 Act as interpreted in the majority judgment in Newhaven, LCC and NHS Property Services can show that there is statutory incompatibility in each of their respective cases. As regards the land held by LCC pursuant to statutory powers for use for education purposes, two points may be made. First, so far as concerns the use of Area B as a school playing field, that use engages the statutory duties of LCC in relation to safeguarding children on land used for education purposes. LCC has to ensure that children can play safely, protected from strangers and from risks to health from dog mess. The rights claimed pursuant to the registration of the land as a town or village green are incompatible with the statutory regime under which such use of Area B takes place. Secondly, however, and more generally, such rights are incompatible with the use of any of Areas A, B, C or D for education purposes, including for example construction of new school buildings or playing fields. It is not necessary for LCC to show that they are currently being used for such purposes, only that they are held for such statutory purposes (see Newhaven, para 96). The 2006 Act was not intended to foreclose future use of the land for education purposes to which it is already dedicated as a matter of law. Similar points apply in the Surrey case. Although the non statutory inspector found against the appellant on the statutory incompatibility issue, the registration authority failed to consider it. Gilbart J was satisfied that, within the statutory regime applicable in that case, there was no feasible use for health related purposes, and indeed none had been suggested. The Court of Appeal took a different view, but largely, as we understand it, on the basis that recreational use of the subject land would not inhibit the ability of NHS Property Services to carry out their functions on other land. We consider that Gilbart J was correct in his assessment on this point. The issue of incompatibility has to be decided by reference to the statutory regime which is applicable and the statutory purposes for which the land is held, not by reference to how the land happens to be being used at any particular point in time (again, see Newhaven, para 96). As Lady Arden and Lord Wilson take a different view regarding the effect of the majority judgment in Newhaven, we should briefly explain why, with respect, we are not persuaded by their judgments. We are all in agreement that the outcome of these appeals turns upon the proper interpretation of the majority judgment in Newhaven. We cannot accept their interpretation of that judgment. In our view, although the case might have been decided on narrower grounds, Lord Neuberger and Lord Hodge deliberately posed the relevant question in para 93 in wide terms, specifically in order to state the issue as one of statutory incompatibility as a matter of principle, having regard to the proper interpretation of the relevant statute pursuant to which the land in question is held. That is why the heading for the relevant section of their judgment is Statutory incompatibility: statutory construction. They say in terms in para 93, The question of incompatibility is one of statutory construction. Nowhere do they say it is a matter of statutory construction and an evaluation of the facts regarding the use to which the land has been put. According to their judgment, the issue of incompatibility is to be determined as a matter of principle, by comparing the statutory purpose for which the land is held with the rights claimed pursuant to the 2006 Act, not by having regard to the actual use to which the authority had put the land thus far or is proposing to put it in future. We consider that this emerges from the critical para 93, and also from the paragraphs which follow in their judgment. Thus, in para 94 they identify the relevant incompatibility as that between the 2006 Act and the statutory regime which confers harbour powers on NPP to operate a working harbour. In para 96, it is to that statutory incompatibility that they refer, not to incompatibility with any use to which NPP had as yet put the land in question or might in fact put it in the foreseeable future. As a matter of fact, the Beach had not been used for the applicable statutory purposes. Further, in our opinion, by stating in para 96 that it was not necessary for the parties to lead evidence as to NPPs plans for the future of the harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred, Lord Neuberger and Lord Hodge were seeking to emphasise, contrary to Lady Ardens and Lord Wilsons interpretation of their judgment, that what matters for statutory incompatibility to exist so as to prevent the application of the 2006 Act is a comparison with the relevant statutory powers under which the land is held, not any factual assessment of how the public authority might in fact be using or proposing to use the land. The same point can be made about para 97, where Lord Neuberger and Lord Hodge said that it was unnecessary to consider evidence about actual proposed use of the land on the facts, since they were able to determine by looking at the statutory powers that there is a clear incompatibility between NPPs statutory functions in relation to the Harbour, which it continues to operate as a working harbour [ie to hold under the statutory powers referred to in para 94], and the registration of the Beach as a town or village green. Their discussion at paras 98 to 100 of New Windsor, the Trap Grounds case and Lewis supports the same conclusion. In each of those cases the relevant land had been held for a very long period without actually being put to use which was inconsistent on the facts with use as a town or village green and without any proposal that it should be put to such use. The implication from what Lord Neuberger and Lord Hodge say about them is that if it had been shown that the land was held for specific statutory purposes which were incompatible with registration under the 2006 Act, that would have constituted statutory incompatibility which would have prevented registration. Their treatment of these cases cannot be reconciled with Lady Ardens and Lord Wilsons proposed interpretation of their judgment. We do not think that para 101 can be reconciled with that proposed interpretation either. In that paragraph Lord Neuberger and Lord Hodge contrast a case in which a public body might have statutory purposes to which it could in future appropriate the land (but has not yet done so) with the situation in Newhaven itself, where in the relevant period NPP held the Beach for the statutory harbour purposes and as part of a working harbour (ie under the statutory regime referred to in para 94). In our view they were there emphasising that what matters for a statutory incompatibility defence to arise is that the land in question should be held pursuant to statutory powers which are incompatible with registration as a town or village green. Nor, with respect, do we think that Lady Arden and Lord Wilson have offered any good answer to the points we have made at paras 61 to 64 above. We also consider that the reading of Newhaven proposed by Lady Arden and Lord Wilson would undermine the very clear test which Lord Neuberger and Lord Hodge plainly intended to state. Instead of focusing on the question of the incompatibility of the statutory powers under which the relevant land is held, Lady Arden and Lord Wilson would introduce an additional factual inquiry into the actual use to which the authority is putting the land or proposes to put the land in the foreseeable future. Thus, Lady Arden and Lord Wilson would adopt from the English case of Westmorland [1958] AC 126 a test of what use could reasonably be foreseen for the land in question, even though Lord Neuberger and Lord Hodge say nothing to support that in the relevant part of their judgment. They refer to both English and Scottish cases on prescriptive acquisition as being relevant to their assessment of the correct approach to be adopted in interpreting the 2006 Act, and in each case only by way of broad analogy, as they explain at para 91. The Scottish cases they cite do not employ any such test as in the Westmorland case and are consistent with the clear principled test, based on statutory construction, which we understand Lord Neuberger and Lord Hodge to have laid down. Future use Finally, for completeness, we should mention briefly an issue which does not strictly arise within the scope of the appeals, but has been the subject of some discussion. That is the question whether, notwithstanding registration, there might be scope for use by the appellants of the land for their statutory purposes. This arises from a suggestion put forward in Lord Carnwaths minority judgment in Newhaven. He noted that in the Trap Grounds case it had not been necessary to consider the potential conflict between the general village green statutes and more specific statutory regimes, such as under the Harbours Acts. He said, at para 139: It is at least arguable in my view that registration should be confirmed if the necessary use is established, but with the consequence that the 19th century restrictions are imported subject only to the more specific statutory powers governing the operation of the harbour. Mr Edwards, supported by Mr Laurence, seeks to build on that tentative suggestion, taken with the principle of equivalence adopted in the Lewis case [2010] 2 AC 70. As he submits, the Supreme Court accepted that there should be equivalence between the use of the land for lawful sports and pastimes in the qualifying period (in that case subject to concurrent use as a golf course) and the extent of rights vested in local inhabitants after registration. That approach was taken a stage further by the Court of Appeal in TW Logistics Ltd v Essex County Council [2019] Ch 243, holding that the 19th century statutes, as applied to a registered modern green, are not to be construed as interfering with the rights of the landowner to continue pre existing uses so far as not inconsistent with the uses which led to registration (per Lewison LJ, paras 63 82). This is not a suitable occasion to examine the scope of the principle of equivalence, so far as it can be relied on to protect existing uses by the landowner. Lewis was a somewhat special case. Lord Brown was able to draw on [his] own experience both as a golfer and a walker for over six decades (para 106) to attest to the feasibility of an approach based on give and take in that particular context. The same approach may not be so easy to apply in other contexts, and as applied to other forms of competing use. Permission has been granted for an appeal to this court in TW Logistics. That may, if the appeal proceeds, provide an opportunity for further consideration of this difficult issue. In any event, those cases were concerned with actual uses by the owners, not with potential uses for statutory purposes for which the land is held, as in the present cases. In view of our conclusion that the land in each appeal should not have been found to be capable of being registered under the Act, the issue of what uses might have been open to a statutory owner if it were so registered does not arise, and we prefer to say no more about it on this occasion. Conclusion For these reasons we would allow the appeals in both cases. LADY ARDEN: (partly dissenting) Identifying the difference of view My views differ from those of Lord Carnwath and Lord Sales on these appeals in an important respect. My conclusion is that the question of incompatibility between two sets of statutory provisions (on this appeal, the provisions of the Commons Act 2006 (the 2006 Act) and the statute authorising the holding of land by the public authority in question) involves an assessment of the facts as well as a proposition of law. The fact that a public authority holds land for statutory purposes which are incompatible with the use of the land as a town or village green (TVG), is not of itself sufficient to make the land incapable of being registered under the 2006 Act as a TVG. It must be shown that the land is in fact also being used pursuant to those powers, or that it is reasonably foreseeable that it will be used pursuant to those powers, in a manner inconsistent with the publics rights on registration as a TVG. That requirement in my judgment follows from R (Newhaven Port & Properties Ltd) v East Sussex County Council [2015] AC 1547. References in this judgment to public authorities exclude public authorities which are subject to a statutory duty to carry out a particular function on specified land, identified by statute, where such land is sought to be registered as a TVG. Such authorities are outside the scope of this judgment. Identifying the correct approach to questions of statutory inconsistency As a matter of constitutional principle, courts must approach the statute book on the basis that it forms a coherent whole. That means that, when interpreting legislation, courts must, in the absence of an indication of some other intention by Parliament, strive to ensure that the provisions work together and apply so far as possible to their fullest extent, such extent being judged according to the intention of Parliament demonstrated principally in the words used. (We have not been shown any other admissible evidence as to Parliaments intention, such as ministerial statements in Hansard.) The courts cannot simply decline to enforce parts of a statute because there may be a conflict with some other statute. It has to be shown that the part sought to be disapplied is irreconcilable with another part of it. If the two can stand together there is no statutory irreconcilability or inconsistency: compare, for example, The Tabernacle Permanent Building Society v Knight [1892] AC 298. One statute cannot be said to be incompatible with another if the two statutes can properly be read together. So, the test is: can the two statutes in question properly be interpreted so that they stand together and each has the fullest operation in the sense given above? In Newhaven, as I shall demonstrate by reference to the majority judgment in that case in the next section of this judgment, the point was that there was a risk that the statutory undertakings working harbour would be stymied in its operations if the Beach was held to be a TVG. It was not a case where a statutory authority has acquired land for a statutory purpose but, at the time of the proposed registration as a TVG, it is not likely that the land will be used for that purpose in the reasonably foreseeable future. Newhaven and the limits of this Courts decision in that case The judgments in Newhaven in my judgment should be approached on the basis that they are consistent with the principles explained in para 78 above, even though the members of this Court in that case did not articulate them. This court should read their decision, if this can properly be done as a matter of statutory interpretation, as leading to the result that where public authority ownership of land and registration as a TVG can co exist, that course will be available. As a matter again of constitutional principle, land should not be relieved of the burden of an Act of Parliament having (so far as relevant) unqualified application if there is an alternative, properly available interpretation which will lead to the two enactments in question standing together. On timing, the question whether there is any conflict between public authority powers and TVG legislation must be determined as at the date when the application for registration is made. At that point in time, the public authority may be holding land it has acquired under statutory powers for a particular purpose for which it is not yet required. It is not required to apply the land for that purpose and it may decide not to do so and for example to sell the land or use it for some other purpose. Moreover, even while holding the land for a particular purpose, the local authority may be using it for another purpose because it is not required for the statutory purpose for which it is appropriated at that point in time (Local Government Act 1972, section 120(2)). The factual scenario in Newhaven was different: the harbour company was already in operation and the beach was liable to be involved in its then current trading operations. The case shows that incompatibility is not a purely legal matter depending on the existence of statutory powers which if exercised would be inconsistent with use of the land as a TVG. It is necessary on the facts to be satisfied that that is likely to occur after registration. It requires a real world assessment of the situation. The court is not precluded from looking at the facts subsequent to the acquisition of the land any more than the determination as to the reasonableness of a landlords refusal to give a consent under a lease is restricted to the facts known to the parties at the date of the lease (see Ashworth Frazer Ltd v Gloucester City Council [2001] 1 WLR 2180). Interpreting the decision of this Court in Newhaven In the Newhaven case, the harbour company (NPP) had a statutory duty to maintain a harbour. The dispute concerned a tidal beach in one part of the harbour which as it happened was no longer operational. The Beach had been used for the past 80 years or so by members of the locality. The issue with which these appeals are concerned is the issue in that case as to whether the Beach could be registered as a TVG. This court held that the land in issue, namely the Beach, could not be registered as a TVG. In Newhaven, Lord Neuberger and Lord Hodge jointly gave the leading judgment. The other members of the Supreme Court agreed with them. Lord Carnwath also wrote a concurring judgment. On these appeals, Lord Carnwath and Lord Sales examine the leading judgment in detail. They conclude that Lord Neuberger and Lord Hodge held that, where a person applies to register as a TVG land which is held for statutory purposes which would be inconsistent with the land also being TVG, the land is not capable of being so registered, and that the question is purely one of statutory construction. Thus, Lord Neuberger and Lord Hodge formulated the relevant question as, at para 93: does section 15 of the 2006 Act apply to land which has been acquired by a statutory undertaker (whether by voluntary agreement or by powers of compulsory purchase) and which is held for statutory purposes that are inconsistent with its registration as a town or village green? Having stated that question, Lord Neuberger and Lord Hodge immediately answered it by the following sentence: In our view it does not. In that sentence, the word it, as I read it, refers to section 15 itself. The next sentence in the judgment of Lord Neuberger and Lord Hodge states (also at para 93): Where Parliament has conferred on a statutory undertaker powers to acquire land compulsorily and to hold and use that land for defined statutory purposes, the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes. That sentence makes it clear that Lord Neuberger and Lord Hodge regarded use as a critical issue. That clearly involves fact. Moreover, the expression continuing use also makes it clear that they regarded the operations of NPP as constituting use which was being perpetuated and that that was so even though the tidal beach which was in issue was in a part of the harbour which was not itself being used. It is further clear from that sentence, in my judgment, that the Supreme Court was not considering the question what would happen if the relevant use had never started or if the relevant land had become surplus to the obligation or power to carry out any particular activity which had been imposed by Parliament. We have not been shown any statutory requirement that a public authority should regularly consider the need for any land and if thought fit dispose of land which is not required for some purpose for which it was acquired, so it may end up holding land for which it has no further need. The local authority could voluntarily appropriate the land to some other purpose but, if it fails to reconsider the use for which it acquired land, or appropriates it to some other use, it is likely that the only basis on which the local authoritys decision or omission to act could be challenged would be on the basis that its decision attained the standard of irrationality, which is a high standard for an applicant to have to meet. Under the judgment of Lord Carnwath and Lord Sales, that land would remain immune from the accrual of rights leading to registration as a TVG even though there would not in fact be any irreconcilability between registration and the statutory power for which the land was conferred. It is not clear what on this basis would happen if the local authority accepts that the original purpose is spent and after the application is made decides to appropriate the land to some other statutory purpose. Furthermore, in Newhaven, para 96, Lord Neuberger and Lord Hodge held: 96. In this case, which concerns a working harbour, it is not necessary for the parties to lead evidence as to NPPs plans for the future of the Harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred. Such registration would clearly impede the use of the adjoining quay to moor vessels. It would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach. It might also restrict NPPs ability to alter the existing breakwater. All this is apparent without the leading of further evidence. It follows that they regarded it as important that the harbour in question was a working harbour and that there was a risk of a clash between the registration of the Beach and the use of the harbour for the statutory purposes. They considered that registration would inhibit the use of the adjoining quay to moor vessels. It would prevent the harbour authority from dredging the harbour in a way which affected the enjoyment of the Beach and restrict its ability to alter the existing breakwater. So, I deduce from that paragraph that Lord Neuberger and Lord Hodge also regarded it as important that there was factual evidence establishing the continuing use and the impact of registration on that use. There had to be real, not theoretical, incompatibility. Lord Neuberger and Lord Hodge continue at the end of that paragraph to observe: All this is apparent without the leading of further evidence. The word further confirms that the preceding analysis involved a consideration of the evidence on the ground. In fact the further evidence appears to have been evidence as to plans to upgrade the harbour and use it as a container terminal: see the judgment of Ouseley J in R (Newhaven Port & Properties Ltd) v East Sussex County Council [2012] 3 WLR 709, para 127. In para 97, Lord Neuberger and Lord Hodge continue by summarising further matters on which the harbour company relied, but it was not necessary in the light of the conclusion in para 96 to consider those matters. It is to be noted that in para 97, Lord Neuberger and Lord Hodge refer to an incompatibility between the proposed TVG registration and the statutory functions of NPP, which they add: continues to operate as a working harbour This is an express reference to the state of fact. It would clearly have been material if the harbour company held the land but had ceased its statutory functions. In paras 98 to 101, Lord Neuberger and Lord Hodge refer to previous leading cases to show that the question of statutory incompatibility had not previously had to be considered. But, importantly for my interpretation, they conclude that (at para 100): It was not asserted that the council had acquired and held the land for a specific statutory purpose which would be likely to be impeded if the land were to be registered as a town or village green. So, in a case concerned with future use, the court must consider if the statutory purpose would be likely to be impeded, not likely to be impeded if invoked. Lord Neuberger and Lord Hodge clearly envisaged that there would have to be a factual inquiry as to future use and that it would have to be shown that TVG registration would be likely to impede the exercise of those powers. Lack of impediment can logically be shown either by showing that the local authority has acquired the land for purposes (eg recreational purposes) which are not inconsistent with registration as a TVG, or by showing that there is no realistic likelihood of the land being used for the purposes for which it was acquired. held: In addition, at para 101 of their judgment, Lord Neuberger and Lord Hodge In our view, therefore, these cases do not assist the respondents. The ownership of land by a public body, such as a local authority, which has statutory powers that it can apply in future to develop land, is not of itself sufficient to create a statutory incompatibility. By contrast, in the present case the statutory harbour authority throughout the period of public user of the Beach held the Harbour land for the statutory harbour purposes and as part of a working harbour. In that paragraph, Lord Neuberger and Lord Hodge addressed the question of a future development of the land. The mere power to undertake such development would not itself be sufficient to create a statutory incompatibility. They contrasted that with the position in the Newhaven case. Lord Neuberger and Lord Hodge again referred to the evidence that the tidal beach was part of the working harbour. Paragraph 102 dealt with the separate issue of user as of right and para 103 was the summary of the conclusion, which does not take the matter further. For the avoidance of doubt, I agree that this court should apply statutory incompatibility, the concept sought to be employed in Newhaven, to determine the question of inconsistency between the provisions of the 2006 Act enabling registration of land in issue on these appeals as TVGs and the statutory provisions, also conferred by public general Acts of Parliament, empowering the acquisition and holding of land by the public authorities in both appeals. However, in my judgment, that concept is as a matter of constitutional principle to be interpreted as I have explained in para 78 above. Determination of incompatibility where the issue arises from a future use The use relied on by the local authority in the Lancashire case in relation to Areas A and B is, as in Newhaven, a current use, and my analysis of Newhaven detailed above does not lead to any different conclusion in relation to those Areas from that reached by Lord Carnwath and Lord Sales. I would accept the submission of Mr Douglas Edwards QC, for Lancashire County Council, that in practice the land could not be used by the primary school currently using it when there was unrestricted public access as this would not be consistent with the schools safeguarding obligations: this may be inferred from the fact that the site is currently fenced. Schools are responsible for creating and maintaining a safe environment for their pupils. Mr Edwards submission on this point was not challenged on these appeals. However, as I shall next explain, where the use is only a use which may occur in the future, my analysis makes it necessary to answer further questions before any conclusion about statutory incompatibility can be reached. This has a practical impact in relation to Areas C and D in the Lancashire case. Those Areas have never been used for the statutory purpose of education for which they were acquired and are now held. That raises the question, what test should apply if the case is only one of possible future use? Must it be shown that it is simply possible that the land may be used for the statutory purpose or must it be shown that it is reasonably likely or foreseeable that it will be so used? These questions did not directly arise in Newhaven. In answering these questions, I have found assistance in the decision of the House of Lords in British Transport Commission v Westmorland County Council [1958] AC 126, in which a railway company contended that it would have been inconsistent with the statutory powers conferred on it for the public to have a right of way over a bridge spanning the railway line (originally built for private benefit) and that accordingly its predecessor (another statutory company) could not have dedicated it to the public. In Newhaven, Lord Neuberger and Lord Hodge cited the judgment of Lord Keith of Avonholm in this case as authority for the proposition that incompatibility with an Act of Parliament is a question of fact, at para 87: In British Transport Commission [1958] AC 126, 164 165 Lord Keith of Avonholm commented on Lord Kinnears opinion in Magistrates of Edinburgh, suggesting that it would be going too far to hold that the public could never acquire a right of way over railway property but acknowledging that incompatibility with the conduct of traffic on the railway could bar a public right of passage. He opined at p 166, that incompatibility was a question of fact and that it was for the statutory undertaker to prove incompatibility. The other members of the House also treated it as a question of fact (see Viscount Simonds at p 144, Lord Morton of Henryton at p 149, Lord Radcliffe at p 156, Lord Cohen at p 163 and Lord Keith at p 166). Moreover, they held that, to show compatibility, it was not necessary to show that there were no circumstances in which a conflict could arise. That would make it impossible for members of the public ever to acquire a public right of way over land belonging to the railway company. The House also rejected the argument that a statutory company could not grant an easement over a footpath over its railway. To hold otherwise would be a grave impediment to public amenity (per Lord Radcliffe at p 153). It was unlikely on the facts that the railway company would ever need to pull the bridge down. The relevant question was whether a conflict, or incompatibility, was reasonably foreseeable. Thus, Viscount Simonds (at p 144), Lord Morton (at p 149) and Lord Keith (see p 166) rejected the following test: was it possible that land would be used in future for a certain purpose? They considered that the normal statutory burden should apply and be discharged, namely that it should be shown that the use was reasonably likely to occur. The House considered the question on a current basis and did not decide whether the critical time was the date of dedication or some other date (see for example pp 144 145). At all events it did not seek to determine the question as at the date of the incorporation of the statutory company when its statutory powers were conferred. In my judgment, the test of reasonable foreseeability is the correct test also to apply in this context, ie when asking whether there is incompatibility between registration of land as a TVG and the statutory powers of a public authority in relation to the same land where the relevant use that the public authority might make of the land under those powers is a potential future use which has not yet started. It is said by Lord Carnwath and Lord Sales that this test is not clear. It may not be easy to apply on the facts but that is necessarily so if the law applies a solution which is fact dependent rather than drawing a bright line as the majority does. Lord Neuberger and Lord Hodge refer to the Westmorland case at two points in their judgment. In the light of their conclusion that the evidence as to current use was sufficient it was not necessary for them to consider it in any further detail, but they would not have cited it if they did not approve of its approach. If I am right there is no question of the use of land being stymied by the 2006 Act (cf para 61 above). Circumstances may have moved on and the public authority may no longer require the land it is holding for any particular statutory purpose. Application of the principles to the facts of the appeals (1) The Lancashire appeal The issue of future use of the land arises on the Lancashire appeal in relation to Areas C and D. The local authority in the Lancashire appeal did not adduce evidence that it was reasonably likely that these Areas would be used for educational purposes in the future. There had in the past been a plan to relocate a school on this area but that was not proceeded with and there was no substitute. Moreover, those Areas had never been used for educational purposes. Accordingly, as I see it, those plots should have been registered as a village green. The only objection to doing so was one of statutory incompatibility and as I see it, that fails on the facts. The position is different in relation to Areas A and B which are currently used for educational purposes. Importantly, as I read the facts, the sites cannot be registered as TVGs and be school playgrounds at the same time for the reason that this would be inconsistent with the schools safeguarding duty. The school has an obligation to provide outdoor space as a playground under regulation 10 of the School Premises (England) Regulations 2012, and that is its current use. The inspector did not reach any conclusion on the question of the compatibility in fact of the current use of Areas A and B with their registration as TVGs, and she expressly left open the door to further evidence on incompatibility. (2) The Surrey appeal In the Surrey appeal, the result is different because the site in issue lies immediately next to the hospital. On the basis of my judgment, the correct legal test applying to future use was not applied. There have been no findings of fact as to whether it is reasonably foreseeable that even now the land will be used for the statutory purposes for which it is currently held. In those circumstances, in my judgment, this matter should be remitted to the registration authority for a decision on that issue. Restrictions on TVG registration in the Growth and Infrastructure Act 2013 Lord Carnwath and Lord Sales begin their judgment with an analysis of the development of the law on TVGs since the report of the Royal Commission on Common Land 1955 1958 (1958) (Cmnd 462), chaired by Sir Ivor Jennings QC, which led to the Commons Registration Act 1965. Undoubtedly that Act and its successor, the 2006 Act, have led to the registration of TVGs at a more significant level than can have been envisaged by the Royal Commission. Accordingly, it is now an inescapable fact that the actual use of the TVG legislation has, in the light of practical experience and the needs and expectations of local communities up and down the country, eclipsed the original conception of a more limited role for TVG registration. The clock cannot be turned back. Moreover, Parliament has essentially given its approval to that use in later legislation. The Growth and Infrastructure Act 2013 (the 2013 Act) introduced a package of measures designed to restore the balance between the public and landowners but retaining the same basic system of registration. The three main changes brought about by the 2013 Act in this connection can be summarised, and it will be seen that they were substantial: (1) The period within which a person may apply to register land as a TVG after the landowner has terminated the use by members of the public without permission has been reduced from three years to one year (2006 Act, section 15(3A) as amended). (2) The 2013 Act has inserted a new section 15C into the 2006 Act terminating the publics right to apply to register land as a town or village green after any one of a range of trigger events occurs. These include an application for planning permission. The right to apply for registration as a TVG will arise again if a terminating event occurs, namely (in the case of an application for planning permission) the planning application is withdrawn, is refused or expires, or the local planning authority (LPA) does not determine it. (Where the planning application is for a project of public importance under section 293A of the Town and Country Planning Act 1990, the right to make an application to register as a TVG does not arise where the LPA declines to determine it.) (3) Landowners have a new right to deposit statements with the appropriate registration authority with respect to any land and this will have the effect of terminating any existing or accruing rights to register that land as a TVG (2006 Act, section 15A, as amended). Landowners already had a right to apply to deregister land as a TVG, but comparable land must be offered in exchange (2006 Act, section 16). Lord Carnwath and Lord Sales are right to say that these changes are not directly relevant, and there is no information about any fall in the number of TVG registrations. However, these changes are important. It is open to public authorities to take advantage of these changes (and this is my core answer to the points that Lord Carnwath and Lord Sales make in para 64 above). They show, among other matters, that Parliament did not consider that there should be some special exemption applying in respect of all publicly held land. That may be a recognition of the fact that public bodies may be holding land which is surplus to their statutory requirements. While many statutes confer a power on statutory bodies to acquire and hold land, we have not been shown any provision requiring the body on which the power is conferred to sell it when it becomes clear that the land is not required or is no longer required for the purpose for which it was acquired. If a public authority took no action to dispose of land it did not need, it might well be difficult to obtain judicial review of its action as irrationality may have to be shown. Moreover, Parliament took no steps in the 2013 Act to revise the conditions for registration for TVGs. Judgment of Lord Wilson Since circulating the first draft of my judgment I have had the benefit of reading the judgment of Lord Wilson. He agrees with the approach of the Court of Appeal [2018] 2 P & CR 15. I have great admiration for his judgment and that of Lindblom LJ, with which Jackson and Thirlwall LJJ agreed. In particular, I agree with the three general points made by Lindblom LJ in para 36 of his judgment. In a sense my approach might be described as a halfway house between their judgments and that of Lord Carnwath and Lord Sales. The ten judges who have considered the issues on these appeals have unfortunately been very divided. For my own part, I do not consider that the view of the Court of Appeal addresses the effect on incompatibility of the possibility of future use of the sites sought to be registered as TVGs, or the intention of Parliament in such cases. However, if I am wrong on the approach I have taken, I would adopt that of Lord Wilson and the Court of Appeal in preference to that of Lord Carnwath and Lord Sales. Respectfully, their approach results in introducing into the legislation a blanket exemption for public authorities which Parliament has not itself expressly given. Parliament has instead provided all landowners with other measures which they can use to protect their position for the future. Limiting the issue of incompatibility to a desktop exercise of considering the statutory powers of the landowner, without reference to the facts on the ground, runs the risk, to borrow Lord Radcliffes words in British Transport Commission at p 153, of a grave impediment to public amenity. There will potentially be a loss of access by the public to land which they have used for very many years. Conclusion My approach to statutory incompatibility in my judgment strikes a fairer balance between the public interest in the use of land by the public authority for the appropriated statutory purpose and that of the public who are intended by the 2006 Act to have a right of access to recreational spaces than the approach of Lord Carnwath and Lord Sales. That is my principal answer to the points which they make in paras 61 to 64 and 67 to 71 above and my other responses to those paragraphs appear from this judgment. My judgment does not as suggested in any way involve frustrating the intention of Parliament since the statutory powers under which the public authority holds the land will prevail if it is shown that there is a current use of the land in exercise of those powers, or that it is reasonably foreseeable that such use will occur (se para 77 above). Accordingly, I would hold that the appeal in Lancashire should be allowed in part and that in Surrey the appeal should also be allowed on the basis that the matter remitted to the registration authority for a determination of the application in accordance with this judgment. LORD WILSON: (dissenting) I would have dismissed both appeals. Although I hold each of my three colleagues in the majority in the highest esteem, I am driven to suggest that today they make a substantial inroad into the ostensible reach of a statutory provision with inadequate justification. It is agreed that, in their capacity as education authorities, local authorities, such as the appellant in the Lancashire case, can hold land only for specified statutory purposes referable to education; that health authorities, such as the appellant in the Surrey case, can hold land only for specified statutory purposes referable to health; and that, for example, in their capacity as housing authorities, local authorities can hold land only for specified statutory purposes referable to housing. If public authorities which hold land for specified statutory purposes are to be immune from any registration of it as a green which would be theoretically incompatible with their purposes, the reach of section 15 of the Commons Act 2006 Act is substantially reduced. One would expect that, had such been its intention, Parliament would have so provided within the section. In the absence of any such provision, whence does justification for it come? It comes, according to todays ruling, from the decision of this court in the Newhaven case, cited in para 1 above, from which the court would in any event be able to depart if necessary. In my view interpretation of that decision by todays majority is controversial. The claim in para 11 above that their interpretation represents no more than consolidation of the law is unfortunately not one to which I can subscribe. The decision in the Newhaven case wrought an exception to the availability of registration under section 15. It is always dangerous to interpret an exception too widely lest it becomes in effect the rule and the rule becomes in effect the exception. In the Newhaven case statutes had cast upon the harbour authority, as the owner/operator of the port, specific duties in relation to that particular harbour; and the operational land of that harbour included that particular beach. An Act of 1847 obliged the authority to maintain and support that harbour. An Act of 1878 obliged it to keep that harbour open to all for the shipping and unshipping of goods and the embarking and landing of passengers. Incidental to these obligations were statutory powers, including one in an instrument of 1991 to dredge the foreshore of that harbour. Were it to exercise its power to dredge the area of the foreshore to the east of the breakwater, the authority would destroy the beach. It is therefore no surprise to read within the joint judgment of Lord Neuberger and Lord Hodge emphasis on the statutory duties cast upon the authority in relation to that particular harbour; no surprise that, in the opening paragraph they described the relevant point of principle as the interrelationship of the statutory law relating to village greens and other duties imposed by statute (emphasis supplied); and no surprise that, at the outset of the crucial paragraph (namely para 93, set out in para 48 above), in which they set out their reason for allowing the appeal on the relevant point, they stated: The question of incompatibility is one of statutory construction. What did Lord Neuberger and Lord Hodge mean by statutory construction? They meant conflict between two statutory regimes. They explained in the same paragraph that, where such conflict existed, some assistance may be obtained from the rule that a general provision does not derogate from a special one , which is set out in Bennion, Statutory Interpretation, 6th ed (2013), p 281: Where the literal meaning of a general enactment covers a situation for which specific provision is made by another enactment contained in an earlier Act, it is presumed that the situation was intended to continue to be dealt with by the specific provision rather than the later general one. In the next paragraph they proceeded to explain that the specific duties conferred by statutes on the authority in relation to that harbour were incompatible with the general provision in the 2006 Act which, on the face of it, permitted registration of the beach as a green and that therefore the general provision had to give way. By contrast, statutory provisions which confer power to acquire and hold land, not there identified, for educational and health purposes, such as are in play in the present appeals, cannot be said to be incompatible with the general provision in the 2006 Act which, on the face of it, permits registration of the respective parcels of land as greens. No reason for the disapplication of section 15 of the 2006 Act is advanced other than the alleged effect of the decision in the Newhaven case. It is in the light of the above circumstances that I would have dismissed the appeals. Let me, however, suppose that my understanding of the decision in the Newhaven case is flawed; and that, had I better understood it, its reasoning would extend to the facts in these appeals. Even in those circumstances the majority falls, so I venture to suggest, into error. In The King v The Inhabitants of Leake (1833) 5 B and Ad 469 the issue was whether villagers in the fenlands were obliged to repair a road. If it had been dedicated as a public highway, they were obliged to do so. The land on which the road had been constructed was owned by commissioners who had bought it pursuant to statutory powers to drain specified fens and to keep them drained. They had constructed drains on it and, with the excavated earth, had built a wide bank which the villagers had used as a highway for more than 20 years. In the Court of Kings Bench the villagers contended that any dedication by the commissioners of the road as a public highway would have been inconsistent with their powers. On behalf of the majority Parke J, later Lord Wensleydale, made clear that the contention should be addressed by means of a practical inquiry on the ground. He said at p 480: The question then is reduced to this, whether, upon the finding of the jury in this case, the public use of the bank as a road would interfere with the exercise of these powers? The answer was no. The Leake case demonstrates that for almost 200 years the law of England and Wales in relation to the capacity of a public authority to dedicate its land as a public highway, or indeed as a public footpath, has been to assess its alleged incompatibility with the statutory purposes for which the land is held on a practical, rather than a theoretical, basis. Such is made clear in the Opinions of the appellate committee of the House of Lords in British Transport Commission v Westmorland County Council [1958] AC 126, cited in para 71 above. A railway company was authorised by statute to buy land in Kendal for the purposes of operating a railway and to build bridges across it where necessary. On one of its bridges it built a footpath, which the public had used for more than 20 years. The question was whether, in the light of the limited statutory purposes for which it could hold land, the company could have dedicated the footpath as a public highway. Applying the Leake case, the appellate committee held that the answer was to be found by determining whether the use of the footpath by the public was incompatible with the statutory purposes; that incompatibility was a question of fact (p 143); that the test was pragmatic (p 152); that the question was not whether it was conceivable but whether it was reasonably foreseeable that the public use of the footpath would interfere with the companys use of its land in the exercise of its powers for the statutory purposes (p 144); that the burden lay on the company to establish that it was reasonably foreseeable (p 166); and that, by reference to the case stated by the local justices, the company failed to discharge that burden. In para 78 of their judgment in the Newhaven case Lord Neuberger and Lord Hodge explained the decision in the Westmorland case. In paras 77 and 91 they stressed that, like other decisions which they examined and which related to the acquisition of prescriptive rights under English and Scots law, the decision applied only by analogy to the statutory registration of a green on land owned pursuant to statutory purposes. Nevertheless, in a case in which the objection to registration as a green is cast as incompatibility with statutory purposes, there is in my view every reason to assess incompatibility in accordance with the approach adopted in the Leake case and indorsed in the Westmorland case. I am convinced that in the Newhaven case such was also the view of Lord Neuberger and Lord Hodge, and indeed of Lady Hale and Lord Sumption who agreed with them. I refer to four passages in the joint judgment. First, from para 91: It is significant in our view that historically in both English law and Scots law, albeit for different reasons, the passage of time would not give rise to prescriptive acquisition against a public authority, which had acquired land for specified statutory purposes and continued to carry out those purposes, where the user founded on would be incompatible with those purposes. (Emphasis supplied) Second, from the crucial para 93: Where Parliament has conferred on a statutory undertaker powers to acquire land compulsorily and to hold and use that land for defined statutory purposes, the 2006 Act does not enable the public to acquire by user rights which are incompatible with the continuing use of the land for those statutory purposes. (Emphasis supplied) Third, the whole of para 96: In this case, which concerns a working harbour, it is not necessary for the parties to lead evidence as to [the authoritys] plans for the future of the Harbour in order to ascertain whether there is an incompatibility between the registration of the Beach as a town or village green and the use of the Harbour for the statutory purposes to which we have referred. Such registration would clearly impede the use of the adjoining quay to moor vessels. It would prevent the Harbour authority from dredging the Harbour in a way which affected the enjoyment of the Beach. It might also restrict [the authoritys] ability to alter the existing breakwater. All this is apparent without the leading of further evidence. And fourth, from para 101: The ownership of land by a public body which has statutory powers that it can apply in future to develop land, is not of itself sufficient to create a statutory incompatibility. By contrast, in the present case the statutory harbour authority throughout the period of public user of the Beach held the Harbour land for the statutory harbour purposes and as part of a working harbour. (Emphasis supplied) It thus seems clear from the Newhaven case that registration of the beach as a green was there precluded as incompatible with the existing use of the land as a working harbour; and that, in the absence of existing use of the land, the public authority needs to adduce evidence. What evidence? Evidence which makes it reasonably foreseeable that public use of the land as a green would in practice interfere with a proposed exercise of the authoritys powers in relation to the land for the statutory purposes. It follows that I respectfully disagree with the suggestion in paras 65 and 66 of the judgment of Lord Carnwath and Lord Sales that incompatibility with statutory purposes should be assessed as a theoretical exercise rather than by means of a practical inquiry into interference with the authoritys existing or proposed future use of the land. Adopting what I believe to be the correct, practical, approach to the assessment of incompatibility in relation to the present appeals, I agree with the Court of Appeal that neither the education authority nor the health authority has established that public use of its land as a registered green would be likely to be incompatible with its use of it pursuant to its statutory powers. In the Lancashire case the Inspector conducted the requisite practical assessment, which led her to reject the alleged incompatibility; and, like the Court of Appeal, Ouseley J in the Administrative Court found no fault with her reasoning. I discern no ground upon which this court might have concluded otherwise. In the Surrey case the Inspector, while recommending refusal of the application for a different reason later shown to be invalid, also rejected the alleged incompatibility on apparently practical grounds; and the error of law which Gilbart J in the Administrative Court perceived him to have made in assessing it practically rather than as a matter of statutory construction was in my view correctly held by the Court of Appeal to have been no error at all. It was with complete passivity that, for no less than 20 years, these two public authorities contemplated the recreational use of their land on the part of the public. Their simple erection at some stage during that period of signs permitting (or for that matter prohibiting) public use would have prevented such use of the land being as of right: Winterburn v Bennett [2016] EWCA Civ 482, [2017] 1 WLR 646. In such circumstances it is hardly surprising that they both failed to establish its practical incompatibility with their own proposed use of it.
UK-Abs
The issue in the two appeals relates to the circumstances in which statutory incompatibility will defeat an application by a member of the public to register land as a town or village green (a green) under the Commons Act 2006 (the Act) where the land is held by a public authority for statutory purposes. At issue in the first appeal is land, divided into five areas, adjacent to Moorside Primary School in Lancaster and owned by Lancashire County Council (LCC). A local resident applied to register the land as a green based on 20 years qualifying use. LCC objected on the basis that the land was acquired and remains appropriated for education purposes under LCCs statutory powers as education authority. An inspector appointed by the Secretary of State determined that four of the five areas should be registered. She was not satisfied that the land was in fact acquired and held for education purposes and, even if it had been, there was no good statutory incompatibility defence available to LCC. The inspectors determination was upheld by Ouseley J in the High Court on LCCs application for judicial review. The second appeal concerns a site at Leach Grove Wood in Leatherhead owned by NHS Property Services Ltd (the NHS). An application was made to register the site as a green, relying on use over a period of 20 years. An inspector recommended refusal of registration, but the registration authority, Surrey County Council (SCC), did not accept this and registered the land. On the NHSs application for judicial review in the High Court, Gilbart J distinguished the judgment of Ouseley J and quashed the registration on the basis that SCC had failed properly to consider statutory incompatibility. The appeals were heard together by the Court of Appeal, which upheld the decision to register in both cases. LCC and the NHS appealed to the Supreme Court. By a majority, the Supreme Court allows the appeals in both cases. Lord Carnwath and Lord Sales give the majority judgment, with which Lady Black agrees. Lady Arden gives a partly dissenting judgment and Lord Wilson gives a dissenting judgment. The inspectors finding in the Lancaster case that the land was not acquired and held pursuant to statutory education purposes was inconsistent with the evidence and irrational [33] [34]. Therefore the central issue in both the cases under appeal is the interpretation and application of the statutory incompatibility ground of decision identified in the majority judgment in the Supreme Court in R (Newhaven Port & Properties Ltd) v East Sussex County Council [2015] UKSC 7 (Newhaven) [43]. The majoritys opinion is that Newhaven authoritatively interpreted the Act to mean that where land is acquired and held for defined statutory purposes by a public authority, the Act does not enable the public to acquire rights over that land by registering it as a green where such registration would be incompatible with those statutory purposes [48]. Here there is an incompatibility between the statutory purposes for which the land is held and use of that land as a green and therefore the Act is not applicable [55]. The test set out in Newhaven is not whether the land has been allocated by statute for particular purposes, but rather whether it has been acquired by the public authority pursuant to its statutory powers and is held for the purposes of those powers, where those purposes are incompatible with registration of the land as a green [56]. The reference to acquisition by both voluntary sale and compulsory purchase is significant, since acquisition by voluntary sale will typically involve the exercise of general statutory powers rather than specific statutory provisions framed by reference to the land itself [57]. This construction of the Act is unsurprising; there is no indication that the general provisions in the Act regarding registration as a green were intended to have the effect of preventing use of land held by a public authority for specific public purposes defined in statute [61]. This general point can be made with particular force in relation to land held pursuant to the exercise of statutory compulsory purchase powers, since such powers are created for use in circumstances where there is an especially strong public interest that land should be used for particular purposes, such as is capable of justifying compelling a land owner to sell their land against their wishes [63]. Applying the Act as interpreted in Newhaven, LCC and the NHS can show that there is statutory incompatibility in each case. In the Lancaster case, the rights claimed pursuant to the registration of the land as a green are incompatible with the use of the relevant areas for education purposes, including for example use of them as playing fields or for constructing new school buildings. LCC does not need to show they are currently being used for such purposes, only that they are held for such statutory purposes [65]. Similar points apply in the Surrey case: the issue of incompatibility has to be decided by reference to the statutory purposes for which the land is held, not by reference to how the land happens to be used at a particular point in time [66]. Lady Arden disagrees with the reasoning of the majority. She would have allowed the appeals save that she would have dismissed the appeal in relation to two of the areas of the Lancashire site and remitted the matter to the registration authority in the Surrey appeal [122]. In her view, the fact that a public authority holds land for statutory purposes that are incompatible with the use of the land as a green is not of itself sufficient to make the land incapable of being registered. It must be shown that the land is in fact being, or that it is reasonably foreseeable that it will be, used pursuant to those powers in a manner inconsistent with the publics rights on registration as a green [77]. Lord Wilson dissents from the majority and would have dismissed both appeals [123]. The Acts reach is substantially reduced if land held by public authorities for specified statutory purposes is to be immune from registration as a green that could theoretically be incompatible with those purposes [126]. Newhaven was concerned with statutes that conferred specific duties in relation to particular land. Those specific duties were incompatible with the general provision in the Act which therefore had to give way [131]. In contrast, the present cases involve statutory provisions that confer general powers to acquire and hold unspecified land for education and health purposes and these cannot be said to be incompatible with the provision in the Act [132].
This appeal concerns what is sometimes called a fully qualified covenant in a lease of real property. Leases commonly contain a series of covenants by the tenant not to do things, typically relating to assignment, sub-letting and the use of the demised premises. By what is called a qualified covenant, the tenant promises not to do something without the landlords consent. By a fully qualified covenant, the tenant promises not to do something without the landlords consent, not to be unreasonably withheld. In the present case, the tenant promised not to apply for any planning permission without the consent of the landlord, not to be unreasonably withheld. The tenant wished to apply for planning permission for a change of use of part of the demised premises, from business to residential use, but the landlord refused consent on the ground that this would substantially increase the risk that the tenant could compulsorily acquire the freehold reversion under the Leasehold Reform Act 1967. The tenant claimed that the landlord was unreasonably withholding consent. Both the judge and the Court of Appeal agreed. This was in their view because, although the premises were in mixed use at the time of its grant, the lease permitted the tenant to use the whole of the premises for residential purposes. Since this inevitably exposed the landlord to the risk of a compulsory purchase of the freehold (enfranchisement), to refuse permission to the tenant to seek planning permission for a change of use of part of the premises to residential use was to seek to obtain an uncovenanted advantage falling outside the purpose of the fully qualified covenant against seeking planning permission. The landlord appeals to this court, upon the basis that protection against an increased risk of enfranchisement is a well-recognised and legitimate reason for refusing consent under a fully qualified covenant, within the general purposes of restrictive covenants in leases, namely the protection of the value of the reversion and, a fortiori, its very existence. The Facts The leasehold property in question is a terraced building at 51 Brewer Street London W1, being part of the appellants Soho estate which includes numbers 39- 61 (odd numbers) Brewer Street. No 51 is constructed over six floors including a basement. The basement and ground floor are, in area, much greater than any of the upper floors. By a lease dated 4 April 1986 (the Lease) the whole of No 51 was let by Standard Wharf (No 2) to Burgess & Galer Ltd for a 100 year term from 25 December 1985, for a premium of 200,000 and a peppercorn rent. The respondent has been the tenant under the Lease since 1998. The appellant is now the successor in title to the reversion under the Lease, as freeholder of No 51. The whole of No 51 has since October 1998 been sublet, initially to Cusdens (Victoria) Ltd and, following an assignment, since 2008 to Romanys Ltd, under two successive sub- leases, the second of which will expire in September 2023. The Lease contains the following relevant tenants covenants. Clause 3(11) contained a general user covenant in the following terms: Not to use the Demised Premises otherwise than for one or more of the following purposes (a) retail shop (b) offices (c) residential purposes (d) storage (e) studio PROVIDED however that nothing herein contained shall imply or be deemed to be a warranty that the Demised Premises may in accordance with all Town Planning Laws and Regulations now or from time to time in force be used for the purpose above mentioned. By clause 3(15) the Lease contained further specific user covenants prohibiting, for example, noxious noisy or offensive trades, illegal or immoral acts, use as a sex shop, use for an auction, for holding of public meetings or entertainments or use as a betting shop, public house, restaurant, off-license or wine bar. By clause 3(19) the tenant covenanted as follows: To perform and observe all the provisions and requirements of all statutes and regulations relating to Town and Country Planning and not to apply for any planning permission without the prior written consent of the Landlord such consent not to be unreasonably withheld This is the fully qualified covenant in issue on this appeal. The Lease permitted assignment of the whole (but not part) of the premises and a sub-letting of the whole or part of the premises otherwise than during the last seven years of the term, in relation to which there was a fully qualified covenant. At the time of the grant of the Lease in 1986, the ground floor and basement of No 51 were in retail use. The first and second floors were used for storage and as a staff area in connection with the retail use on the lower floors. The top two floors were in occasional residential use. At all material times the permitted use of No 51 in planning terms has been as follows: for the ground floor and basement it is retail; for the first and second floors it is office/ancillary; for the top two floors it is residential. Between 2013 and 2015 Romanys carried out, and the respondent paid for, building works on the four upper floors of No 51 by which each floor was converted into a self-contained flat. Although this was carried out with knowledge of the landlord, it reserved its rights to refuse an application for permission to apply for a change of use under clause 3(19) of the Lease, in respect of the first and second floors. Following the completion of those works, the top two floors of No 51 have been let to residential tenants but, pending the obtaining of planning permission for consent to a change of use, the first and second floors remain vacant. At the time of the grant of the Lease in 1986, the freeholder faced no immediate risk of enfranchisement because the 1967 Act imposed a residence qualification on a tenant which could not be satisfied by a limited company. That qualification was however removed by the Commonhold and Leasehold Reform Act 2002. Nonetheless the proportion of No 51 in residential use did not, for as long as it was confined to the top two floors, amount to a sufficient proportion of the whole building to give rise to a real risk of enfranchisement, because the building could not, in that state of occupation, be described as a house reasonably so called within the meaning of section 2(1) of the 1967 Act. It is common ground that it was for that reason that, having served a notice of claim to acquire the freehold under the 1967 Act in October 2012, the respondent abandoned it in January 2013. But the judge (Judge Collender QC) found, and it is not now in dispute, that if (as he thought likely) the respondent were to obtain planning permission for a change of the use of the first and second floor to residential, this would, in his words, substantially enhance the respondents prospects of obtaining enfranchisement. On 17 April 2015 the respondent applied under clause 3(19) of the Lease for permission from the appellants predecessor in title (Tuesday One) to apply for planning permission to change the use of the first and second floors of No 51 to residential, on the basis that residential use of those two floors was permitted by clause 3(11). In its reply refusing consent dated 30 April 2015, Tuesday One identified the increased risk of a successful claim to enfranchise under the 1967 Act as its reason for refusal. Without admitting that an enfranchisement claim would then necessarily succeed, the refusal letter continued: The effect of a successful claim to enfranchise would not merely damage the reversion; it would deprive our client of its reversion in the Premises entirely. Furthermore, it would deprive our client of control for estate management purposes of the block containing the Premises, which would have an adverse impact on the value of our clients investment in the block. It is common ground on the pleadings in the litigation which ensued that one purpose of the respondents contemplated planning application was indeed to improve its prospects of a successful claim for enfranchisement. Tuesday Ones refusal of consent under clause 3(19) was the casus belli for this litigation. The respondent was successful, both at trial and in the Court of Appeal, in its contention that consent to its intended planning application had been unreasonably withheld. The respondents success turned upon a perception by both the courts below (although for slightly different reasons) about what was and was not, as a matter of construction of the Lease, the purpose of clause 3(19). In his careful and comprehensive judgment Judge Collender put it this way: I accept that the purpose of the covenant at clause 3(19) of the lease is to protect the lessor from the possible effect of an application for planning permission, because as the owner of the land, it could be subject to enforcement action if there were a breach of a planning obligation. I accept the argument that it is not to enable the lessor to restrict or limit the permitted use under clause 3(11). In my judgment, the lessors refusal of consent under clause 3(19) is unreasonable because thereby they are seeking to achieve a collateral purpose, ie the imposition of a restriction on use that was not negotiated and is not included within clause 3(11). Giving the leading judgment in the Court of Appeal ([2018] Ch 603) Sir Terence Etherton MR agreed generally with the judges reasoning. In his view, the key reason why clause 3(19) could not be construed as having been intended to permit the landlord to refuse to consent to an application for planning permission for a use authorised by clause 3(11) which increased the risk of enfranchisement was because any third party, other than the tenant, could apply for the same planning permission, which the landlord would be powerless to oppose, and which would give rise to the same increased risk of enfranchisement. At para 49 he put it this way: If Rotrust were correct in its argument, Hautford would be precluded from applying for planning permission to enable Hautford to use the first and second floors for residential purposes for the 70 or so years remaining of the original 100- year term so long as Rotrust was the landlord or any assignee of the freehold held the same views as Rotrust. Hautford would be precluded from doing so, even though any third party would be free at any time to make such an application and, if made and successful, Hautford could take advantage of the planning permission. Indeed, that would have been the position from the first day of the 100-year term. It seems inconceivable that this was the intention of the original parties to the lease. Both the courts below regarded the appellants additional estate management reason for refusing consent as insufficient to render that refusal reasonable. The judge held that the effect of the loss of one freehold within the terrace upon enfranchisement could largely be remedied by the imposition of freehold covenants under section 10(4) of the 1967 Act, and the Court of Appeal upheld that analysis. In this court it was sensibly conceded by the appellant that, regardless whether section 10 afforded a complete remedy for the loss of this one freehold within the terrace in estate management terms, this could not on its own be a sufficient ground for a reasonable refusal of consent. The Law The substantial body of case law which assists the court in determining whether a particular refusal of consent under a fully qualified covenant is unreasonable is not, subject only to one matter, significantly in issue on this appeal. Rather, the outcome turns on whether the courts below were correct in their identification of the limited purpose behind clause 3(19) of this particular Lease. It is therefore appropriate to set out the relevant principles relatively briefly. The only contentious question of principle is whether the cases (and there are several) which suggest that a landlord may reasonably refuse consent under a fully qualified covenant to the doing of something by the tenant which increases the risk of enfranchisement are limited to covenants in leases granted before the passing of the 1967 Act. Both the courts below considered that this was so: see para 63 of the judges judgment and para 53 of the judgment of the Master of the Rolls. The summary of the relevant principles which best combines completeness with conciseness is to be found in the judgment of Balcombe LJ in International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513, at 519H- 521E. Although the seven principles there set out are directed to the reasonableness of a refusal of consent to an assignment, the substance of them is equally applicable to refusal of consent to the making of a planning application. It is unnecessary to set them out here because, in Ashworth Frazer Ltd v Gloucester City Council [2001] 1 WLR 2180 they were, without being disapproved, helpfully condensed by the House of Lords into three overriding principles. At paras 3 to 5 (on pp 2182-2183) Lord Bingham of Cornhill said as follows: The first (Balcombe LJs second principle) is that a landlord is not entitled to refuse his consent to an assignment on grounds which have nothing whatever to do with the relationship of landlord and tenant in regard to the subject matter of the lease Thirdly: The landlords obligation is to show that his conduct was reasonable, not that it was right or justifiable. As Danckwerts LJ held in Pimms Ltd v Tallow Chandlers Co [1964] 2 QB 547, 564: it is not necessary for the landlords to prove that the conclusions which led them to refuse consent were justified, if they were conclusions which might be reached by a reasonable man in the circumstances .... Subject always to the first principle outlined above, I would respectfully endorse the observation of Viscount Dunedin in Viscount Tredegar v Harwood [1929] AC 72, 78 that one should read reasonableness in the general sense. There are few expressions more routinely used by British lawyers than reasonable and the expression should be given a broad, common sense meaning in this context as in others. At para 67, (on p 2201), Lord Rodger of Earlsferry said this: The test of reasonableness is to be found in many areas of the law and the concept has been found useful precisely because it prevents the law becoming unduly rigid. In effect, it allows the law to respond appropriately to different situations as they arise. This has to be remembered when a court is considering whether a landlord has unreasonably withheld consent to the assignment of a lease. He continued by endorsing the passage from Tredegar v Harwood to which Lord Bingham had earlier referred. Both Lord Bingham and Lord Rodger placed particular emphasis upon the following dicta of Lord Denning MR in Bickel v Duke of Westminster [1977] QB 517, at 524: The words of the contract are perfectly clear English words: such licence shall not be unreasonably withheld. When those words come to be applied in any particular case, I do not think the court can, or should, determine by strict rules the grounds on which a landlord may, or may not, reasonably refuse his consent. He is not limited by the contract to any particular grounds. Nor should the courts limit him. Not even under the guise of construing the words. (Emphasis added) The Ashworth Frazer case is, again, about refusal of consent to an assignment. Nonetheless, the general statements of principle which it contains are equally applicable to a refusal of consent to an application for planning permission, and need no further refinement or elucidation as general principles. The Bickel case was one of those in which it was held reasonable for a landlord to refuse consent to the doing of something by the tenant which would cause or increase a risk of enfranchisement. Another, referred to by the Court of Appeal, is Norfolk Capital Group Ltd v Kitway Ltd [1977] QB 506. In both cases the relevant lease was granted before the passing of the 1967 Act, and the judgments were handed down by differently constituted Courts of Appeal within ten days of each other in mid-1976. Taking the (slightly earlier) Kitway case first, the issue was whether the landlord could reasonably refuse consent to an assignment by a limited company (which could not enfranchise) to a private individual (who could after five years residence). All three members of the court gave judgments, and it is impossible to discern in any of them a process of reasoning along the lines that it was only because the lease was granted prior to the coming into force of the 1967 Act that it was reasonable for a landlord to have regard to the risk of enfranchisement in refusing consent. On the contrary, all three members of the court appeared to have regarded such a reason for refusal as eminently reasonable, subject only to authorities in Rent Act cases about normal and abnormal assignments which, in the event, they held not to be applicable. At p 511 Megaw LJ said: If one were asked, without having been taken into any legal authorities relating to the matter, whether or not, in the circumstances which I have outlined, it was unreasonable for the landlords to refuse their consent when the consequences of giving that consent and of the assignment being made were likely to be that they would be deprived of their freehold interest in the property in five years time, I find it very difficult to think that anyone would find it possible to say that the landlords refusal was unreasonable. At p 515 Brown LJ said: If there were no authorities, I think, like Megaw LJ, that there could be no doubt that the landlords refusal here was entirely reasonable. Geoffrey Lane LJ added, at p 516: Now, what are the facts here? Mr Barnes concedes that the value of the landlords reversion is less if there is a possibility of any of the mews houses being enfranchised. There is clearly such a possibility, and accordingly the value of the landlords reversion is less. That being so, it would be a strange landlord indeed who gave his consent to the proposed assignments. The refusal of the landlords in the present circumstances was eminently reasonable. In the Bickel case the tenants, a friendly society not in occupation, requested consent to assign the lease to their sub-tenant, who was. This gave rise to the likelihood that, five years later, the assignee would be entitled to enfranchise. In a later part of the passage approved by Lord Bingham and Lord Rodger in the Ashworth Frazer case (quoted above), Lord Denning continued, at [1977] QB 517, 524D: The landlord has to exercise his judgment in all sorts of circumstances. It is impossible for him, or for the court, to envisage them all. When this lease was granted in 1947 no one could have foreseen that 20 years later Parliament would give a tenant a right to buy up the freehold. Seeing that the circumstances are infinitely various, it is impossible to formulate strict rules as to how a landlord should exercise his power of refusal. This passage from Lord Dennings judgment is not to be read as meaning that it was only because the lease was granted prior to the coming into force of the 1967 Act that the landlord could reasonably refuse consent to an assignment, on the grounds of an increased risk of enfranchisement. On the contrary, Lord Denning was simply saying that the landlord could do so in spite of the fact that such a risk could not have been within the contemplation of the parties at the time of the grant of the lease, so that it could not have been a purpose for which the covenant against assignment had originally been sought and given. He used the risk of enfranchisement as an example of the infinitely variable circumstances in which the landlord has a choice to consent or refuse consent, illustrative of the need to address the reasonableness of a refusal by reference to the facts as they are at the date of the tenants request. It was a warning against addressing the reasonableness of a refusal by reference to an over-refined construction of the lease as at the time of its grant, something which Lord Denning called the guise of construing the words. The thinking that a fully qualified covenant may not entitle a landlord to refuse consent because of an increased risk of enfranchisement where the covenant is contained in a lease granted after the passing of the 1967 Act may be based upon the notion that, if the lease itself gives rise to such a risk, then the landlord (who must be taken to be cognisant of the 1967 Act) must be assumed to have undertaken that risk by granting the lease, so that to seek to fend off that risk by the refusal of consent would be to obtain a collateral or uncovenanted advantage. The lease in the present case was granted after the passing of the 1967 Act, but to a limited company tenant which could not (then) enfranchise. But, as the judge observed, there was no sufficient restriction upon an assignment to a private individual, and that would increase the risk. Furthermore, the permission to the tenant under clause 3(11) to use the whole of the premises for residential purposes might be thought to invite it. It is over-simplistic, and contrary to the principles as laid down in the Ashworth Frazer case, to approach this question in any rigid or doctrinaire way, still less solely by reference to original purposes of the covenant in clause 3(19) which may have been within the contemplation of the parties when the lease was granted. It will in every case be a question of fact and degree measured as at the date upon which the relevant consent is sought by the tenant. There will no doubt be some leases granted after the passing of the 1967 Act which render the risk of enfranchisement so great and so obvious that the risk is not materially increased by the tenant doing that for which he seeks the landlords consent. There will be other cases where the alteration in the risk attributable to the giving of consent is substantial. Likewise there will be cases where the landlords reversion is of only nominal value (such as the reversion on a 999 year lease) and others where, notwithstanding reforms to the enfranchisement legislation, the landlord nonetheless reasonably anticipates a real diminution in the value of his reversion occasioned by the increase in the risk of enfranchisement, which a statutory right to compensation will not sufficiently eradicate. In the present case, it is not in dispute either that the risk of enfranchisement would be substantially increased by the grant of the proposed planning permission, or that the appellants reversionary interest is of real value which would be adversely affected by enfranchisement, notwithstanding a statutory right to compensation. Analysis This appeal does not turn upon any refined analysis of the general principles relating to the reasonableness or otherwise of the refusal of consent under a fully qualified covenant. Indeed, the reasoning in the Ashworth Frazer case is antipathetic to the carrying out of any such process of refinement. Nor is there any real dispute about the relevant facts, applicable as at the date when the respondent requested consent to apply for planning permission. The real issue is whether the courts below were correct in construing the Lease in such a way as to exclude resisting an increased risk of enfranchisement as a legitimate purpose of the right to refuse consent under clause 3(19). In my opinion none of those three strands of reasoning supports the conclusion reached by the courts below. All of them seek to address the question whether the landlords consent was unreasonably withheld by reference to an over- refined attempt to identify a limited original purpose behind clause 3(19), contrary to Lord Dennings dictum in the Bickel case, approved in the Ashworth Frazer case, that it is wrong in principle to address the question under the guise of construing the words. Mr Philip Rainey QC for the appellant submitted that nothing in clause 3 and in particular clause 3(11) of the Lease could be treated as a grant because they were all parts of a comprehensive series of interlocking covenants restrictive of use. That may be formally correct, but it misses the substance of Miss Scotts point. Nonetheless, looking at the question as a matter of substance, it cannot be said that the Lease, read as a whole, conferred an unqualified right on the tenant to use the whole, or any particular part, of No 51 for residential purposes. Clause 3(11) must be read with clause 3(19), which required the tenant to perform and observe all the provisions and requirements of the planning legislation. Read together, the effect of those two clauses was to permit the tenant to use for residential purposes only such parts of No 51 as were from time to time permitted by the planning regime to be used for residential purposes. This might be either because of an established use when the Lease was granted, or because the tenant obtained, with the landlords consent, permission for residential use, or because such permission was obtained by a third party or, by some change in the legislation, residential use became lawful without the need for planning permission. At the time of the grant of the Lease, the tenant could not without breach of covenant use the first and second floors for residential purposes. At the time when it sought consent to apply for planning permission for that purpose, residential use of those two floors was still prohibited by the planning legislation, and therefore by clause 3(19). As to the judges reasoning, it may well be that one purpose of clause 3(19) was to protect the landlord from liability for compliance with conditions upon which a planning permission requested by the tenant might be granted. But the identification of that specific purpose by no means excludes other purposes for the existence of clause 3(19), or for the use of the landlords right (not unreasonably) to refuse consent. Nothing in the language of clause 3(19) supports the judges identification of a single purpose for its existence within the Lease, and it is simply a non sequitur to say that, because one specific purpose can be identified, no other purpose is permissible. On the contrary the correct approach is to construe clause 3(19) so as to discover what, upon its express terms, it permits the landlord to do and then to decide the question of unreasonableness by asking whether the landlords refusal serves a purpose sufficiently connected with the landlord and tenant relationship, as at the time when consent is requested, in accordance with the first of Lord Binghams three principles in the Ashworth Frazer case, set out above. Turning finally to the Court of Appeals reasoning, it is undoubtedly true that the combination of clause 3(11) and the ability of a third party to seek planning permission for the residential use of the first and second floors of No 51 together created a vulnerability of the freehold to enfranchisement which would not have existed if clause 3(11) had itself contained provision requiring the tenant to seek the landlords consent for an increased level of residential use within the building. But the fact that the Lease by its terms rendered the freehold vulnerable to enfranchisement does not mean that a clause like 3(19), which provided a measure of protection against that risk, should be treated as incapable of being used reasonably for that purpose. The fact is that, by the time when the respondent sought consent under clause 3(19), no third party had applied for planning permission for a change of the use of the first and second floors to residential and, so far as this court is aware, no such third party application has been made to date. The result is that, looking at the matter as a question of fact as at the time when the respondent sought consent, the landlords ability to refuse that consent continued to afford a real measure of protection against enfranchisement of the freehold. It follows that the courts below treated the question whether consent had been unreasonably refused as effectively determined by an erroneous construction of the Lease, contrary to Lord Dennings guidance in the Bickel case. They therefore made an error of law which requires this court to consider the matter afresh, upon the same undisputed facts. By April 2015 (when consent was sought) it remained unlawful in planning terms for the first and second floors of No 51 to be used for residential purposes. There was, as at that date, no real risk of enfranchisement. On the judges findings, planning permission, if requested, was likely to be granted, and the consequence would significantly increase the risk of enfranchisement which would, in turn, have a real rather than purely theoretical adverse consequence in terms of the value of the freehold reversion to the appellant. No third party had applied, or was threatening to apply, for similar planning permission for change of use. Applying Lord Binghams first principle in the Ashworth Frazer case, it cannot possibly be said that seeking to avoid a significant increase in the risk of enfranchisement, with consequential damage to the reversion, was something extraneous to or dissociated with the landlord and tenant relationship created by the Lease. On the contrary, damage to the reversion is the quintessential type of consideration rendering reasonable the refusal of consent, as is illustrated in particular by the dicta (quoted above) in the Kitway case. Applying the second principle, a down to earth factual analysis of the economic consequences to the landlord of giving or refusing the requested consent in the present case plainly suggests that a refusal is reasonable. Applying the third principle, the appellant did not need to show that a refusal was right or justifiable, but merely that it was reasonable. In my opinion it clearly was. For those reasons I would allow this appeal. I have come to the conclusion that this appeal should be dismissed effectively for the reasons given by the Court of Appeal and the judge. The first step is to examine the scope of the power of the lessor to refuse its consent to a planning application and this can only be done by interpreting clause 3(19) in the context of the lease in the usual way. The most relevant circumstances to take into account are the other provisions of the lease, including the lessees unrestricted right to use the whole of the premises if he wishes to do so for residential purposes. I do not agree that this sub-clause must be read subject to the lessee first obtaining the lessors consent to a planning application for a change of use (where that is required) or that, as Lord Briggs has concluded, the right to use the premises for residential purposes was limited to those parts for which planning consent had already been obtained. That would involve writing words into the user clause as opposed to treating the lessors power reasonably to refuse its consent in clause 3(19) as impliedly limited to other aspects of a planning application. The lessor would have been ill-advised to rely on his power to withhold his consent to a planning application as a means of preventing the lessee from improving his chances of obtaining leasehold enfranchisement because a third party, such as a developer, could obtain that consent free from the restrictions in the lease. It is not a point which is ultimately in the lessors favour that at the date of the lease the lessee could not apply for leasehold enfranchisement though he could have done if he had been an individual. It was only possible for a company to apply as a result of a subsequent amendment. The lessee was, however, from the date of the lease free under clause 3(13) to assign the whole of the premises to an individual who would have been free to apply for leasehold enfranchisement when he met the conditions as from the date of the lease. The lessor must be taken to have been aware of this. The key point in Lord Briggs judgment is that the lessor was entitled to protect the value of his reversion against a substantial increase in the chances of the lessee achieving leasehold enfranchisement and thus destroying the lessors interest in the reversion. I have no doubt that the lessor can seek to protect his own interests when exercising power to refuse consent in this way, but only when that is within the purposes for which the lease permits him to use the power to refuse consent. On my interpretation of the lease, the power to refuse consent to a planning application was not granted to enable the landlord to cut down the user clause. Lord Briggs considers that in Bickel v Duke of Westminster [1977] QB 517, 524 (which was approved by the House of Lords in Ashworth Frazer) Lord Denning MR held that the landlord could reasonably refuse consent to an assignment on the grounds that it gave rise to an increased risk of enfranchisement in spite of the fact that such a risk could not have been within the contemplation of the parties at the time of the grant of the lease. I do not agree that that is the way to read Lord Denning MRs judgment. In my judgment, it is clear that Lord Denning MR attached considerable weight to the fact that the parties had not known about the possibility of enfranchisement when they entered into the lease. Enfranchisement was something of a windfall for the tenant. Lord Denning MR held, at pp 524-525: I have studied all the previous cases and find little guidance in any of them to solve our present problems. The reason is simply because it is a new situation, consequent on the Leasehold Reform Act 1967, which was never envisaged before. I would test it by considering first the position of the landlords - the Grosvenor Estate. They hold a large estate which they desire to keep in their hands so as to develop it in the best possible way. This would be much impeded if one house after another is bought up by sitting tenants. Further, if they are compelled to sell under the Leasehold Reform Act, they will suffer much financial loss, because the price is much less than the value of the house. Test it next by considering the position of the tenants - the Foresters. They hold the premises as an investment and want to sell it. It matters not to them whether they sell to the landlord or to sub-tenants, so long as they receive a fair price for it. The landlords say they are willing to negotiate a fair price for it. They will give the Foresters a sum equivalent to that offered by the sub-tenants. Test it next by considering the position of the sub-tenant herself. When she took her sub-lease, she had no possible claim to enfranchisement. It was at a high rent, outside the Act of 1967. She is quite well protected by the Rent Acts so far as her own occupation is concerned. She will not be evicted at the end of her term. The only result on her of a refusal will be that she will not be able to buy up the freehold for a very low figure. Lord Denning MRs insight was that it was not appropriate to decide the unreasonableness of consent to assignment, as Orr and Waller LJJ did, by reference to whether the circumstances of the proposed assignment were abnormal. They based their conclusion on the availability of enfranchisement following assignment, when that was not available at the date of the lease. Lord Denning MR considered that the court should make an assessment of all the relevant considerations to determine whether the consent was unreasonably refused. In Ashworth Frazer v Gloucester City Council [2001] 1 WLR 2180 at p 2183, Lord Bingham held that Lord Denning MRs approach was the correct one. The other members of the House of Lords agreed with Lord Bingham or, in the case of Lord Rodger of Earlsferry, that Lord Denning MR was correct to hold that the question whether the refusal of consent was reasonable was one of the circumstances of the case, and not of law (see para 74 of Lord Rodgers speech). Here the parties cannot have intended that the lessor should be able to protect itself against the increased risk of leasehold enfranchisement, resulting from an increased use of the premises for residential purposes, by using the power to refuse consent to a planning application when the lessee could assign to an individual who, even at the date of the lease, would have the right to apply for enfranchisement, and when any necessary planning permission for a change of user could be obtained by the prospective assignee without any involvement of the lessee. This would be so even if the circumstances at the date of the application were that the risk stood to be substantially increased and the lessor might lose his right to the reversion completely. In those particular circumstances, I consider that the judge and the Court of Appeal were entitled to conclude, and right to conclude, that it would be unreasonable for the lessor to use clause 3(19) for such purpose. Like Lady Arden, I would have dismissed this appeal. Clause 3(11) of the Lease is crucial. I would therefore dismiss the appeal essentially for the reasons given by the Court of Appeal and the judge. In the letter dated 17 April 2015 by which, through its solicitors, the leaseholder sought the freeholders consent under clause 3(19), it suggested that clause 3(11) was crucial. So did the trial judge and the Court of Appeal. The subclause bears recital again. It is a covenant by the leaseholder (11) Not to use the Demised Premises otherwise than for one or more of the following purposes (a) retail shop (b) offices (c) residential purposes (d) storage (e) studio PROVIDED however that nothing herein contained shall imply or be deemed to be a warranty that the Demised Premises may in accordance with all Town Planning Laws and Regulations now or from time to time in force be used for the purpose above mentioned. Clause 3(11) is not a common form, or boilerplate, subclause. It is a bespoke subclause of singular generosity to the leaseholder. One result of it is that the Lease goes further than to omit to prohibit the use of any part of the premises for residential use. Its effect is specifically to permit residential use of every part of them. Indeed the permission is unqualified by any requirement to secure the freeholders prior consent to the proposed use. The proviso which excludes any warranty on the part of the freeholder about accordance with planning laws in no way detracts from the width of its permission. The trial judge was right to note another subclause which, albeit of some triviality, addresses the prospect of residential use of the premises, not limited to the third and fourth floors. It is part of clause 3(15)(c), by which the leaseholder covenanted not to permit animals of any kind to be kept [on the demised premises] except that (1) domestic animals may be kept with the consent of the Lessor and (2) this provision regarding animals shall not apply to the existing residential sub-tenants of the upper floors of the premises. The generosity of clause 3(11) to the leaseholder was no doubt a feature of the Lease which was reflected in the premium paid to the freeholder by the initial leaseholder for it and in the premiums paid for the later assignments of the lease and of the freehold reversion respectively. In Soho, unlike in many parts of England and Wales, a change in the use of premises from office use or use ancillary to retail to residential use represents unlawful development unless it has been the subject of planning permission. Unlike clause 3(11), clause 3(19) is a boilerplate clause. The leaseholders usual covenant not to apply for any planning permission without the prior written consent of the Landlord such consent not to be unreasonably withheld generates this litigation. I agree with Lord Briggs that the meaning of the leaseholders covenant in clause 3(19) is clear and generates no issue of construction. I also acknowledge that, within their overarching inquiry into the reasonableness of the freeholders withholding of consent, the judges in the lower courts found it helpful to consider the purpose of the covenant. For my part, I find that perspective less helpful than they did. I prefer to go straight to that one word: unreasonably. Were it reasonable for the freeholder not to consent to an application by the leaseholder to apply for permission to make residential use of the first and second floors, the provisions of clause 3(11) would be deprived of substantial effect. Instead of the unqualified permission for residential use there given, the permission, in so far as it relates to the first and second floors, would become a fully qualified permission. I agree with Sir Terence Etherton MR, at para 47, that, to that extent, any permissible withholding of consent in such circumstances would in effect rewrite clause 3(11). Like the courts below, I cannot accept that an express grant of permission for residential use can - reasonably - be overridden by the freeholders deployment of an entirely unfocussed provision in relation to applications for planning permission. However legitimate its concern about the prospect of enfranchisement, the freeholder cannot - reasonably - withhold its consent if the effect of doing so is to negate the permission for residential use which it granted and for which it received valuable consideration. Our duty is to appraise the trial judges determination that the leaseholder had established that the freeholder was unreasonably withholding its consent to the application. I happen to agree with the judges determination. But, more importantly, I see no significant flaw in the manner in which he approached it. The Court of Appeal was in my view right to conclude that his determination ought to be upheld. In my respectful view the contrary conclusion of the majority falls foul of the second overriding principle articulated by Lord Bingham in the Ashworth Frazer case, set out in para 22 of the judgment of Lord Briggs.
UK-Abs
The Appellant is the landlord of a six storey terraced building at 51 Brewer Street, Soho, London W1. The Respondent is the current tenant under a lease granted in 1986. Its sub tenant, Romanys Ltd, runs an ironmongers shop from the basement and ground floor. Under clause 3(11) of the lease, the tenant may use any part of the building for (among other things) retail, offices or residential purposes, although the landlord gives no warranty that this usage will comply with planning rules. Clause 3(19) of the lease says the tenant cannot apply for planning permission without the landlords consent. It also says this consent must not be unreasonably withheld. This is known as a fully qualified covenant. Between 2013 and 2015, the sub tenant converted the first, second, third and fourth floors into self contained flats. The first and second floors were previously used as storage and office space, and the existing planning permission did not allow residential use. The former landlord (the Appellants predecessor in title) reserved its position on a planning application until the works were completed. At that point, the tenant sought the former landlords consent to apply for planning permission to use those two floors residentially. The former landlord believed a change of use would damage its own financial interests. The majority of the building would become residential which, in turn, would give the tenant the chance to compulsorily acquire the freehold under the Leasehold Reform Act 1967 (a process called enfranchisement.) An increased risk of enfranchisement would devalue the landlords property. So the landlord refused consent to make a planning application for increased residential use. The tenant said this was unreasonable and challenged the landlords decision in the County Court. HHJ Collender agreed with the tenant, as did the Court of Appeal (Sir Terence Etherton MR, McCombe LJ and Lindblom LJ.) The landlord now appeals to the Supreme Court. The key question is whether the trial judge was right to find the landlord acted unreasonably in withholding consent. The Supreme Court allows the appeal by a majority of three to two. Lord Briggs gives the main judgment with which Lord Carnwath and Lord Hodge agree. Lady Arden and Lord Wilson each give a dissenting judgment. The circumstances in which a landlord may be asked to give consent under a fully qualified covenant are infinitely variable. In every case, the reasonableness of the landlords decision will be a question of fact and degree. This must be assessed by reference to the facts at the date of the tenants request, not what the parties contemplated when the lease was granted [27] [32]. The real issue in this case is whether the courts below were correct in construing the lease in such a way as to prevent the landlord from having regard to an increased risk of enfranchisement from residential use. Three reasons have been advanced in support of that conclusion [33] [34]. The first reason (adopted by the tenants counsel before the Supreme Court) is that refusal of consent under clause 3(19) is inconsistent with the landlords grant of rights under clause 3(11). The majority rejects this argument, holding that the two clauses must be read together. Under clause 3(19) the tenant must act consistently with planning legislation; so clause 3(11) only allows residential use of the building to the extent that it is permitted by the planning regime [34]; [36]. The second reason (adopted by HHJ Collender) is that clause 3(19) serves a limited purpose of protecting the landlord from liability which might arise under new planning conditions. But there is nothing to suggest that there is only one purpose for the existence of clause 3(19). The right approach is to decide whether the landlords refusal serves a purpose which is sufficiently connected with the landlord and tenant relationship: [37]. The third reason (adopted by the Court of Appeal) is that it makes no sense to allow the landlord to refuse planning permission to avoid the risk of enfranchisement, because a third party could apply for the same planning permission free of any such restraint and with the same adverse consequences to the landlord [18]; [34]. It is true that the landlord was vulnerable to enfranchisement if a third party sought planning permission. But, as a matter of fact, no third party did apply for planning permission. At the time of the tenants request, the landlords ability to refuse consent under clause 3(19) gave the landlord a real measure of protection against enfranchisement [38]. So the Court of Appeal made an error of law which requires the Supreme Court to consider the question of reasonableness for itself [39]. The Court considers that, on the undisputed facts, the landlord was acting reasonably in protecting the value of its property [40] [42]. Dissenting judgments of Lady Arden and Lord Wilson Lady Arden and Lord Wilson both rely on clause 3(11) which suggests the tenant may use the building for residential purposes. In their judgment, this cannot be cut down by the landlords power to refuse consent to a planning application [44]; [47]; [55] [60]. If so, this effectively rewrites clause 3(11) [61] [62]. Lady Arden reads the authorities as establishing that the court should make an assessment of all the circumstances to determine whether the consent was unreasonably refused. Here, the parties cannot have intended that the landlord should be able to protect itself against the risk of increased enfranchisement by refusing consent to a planning application for increased residential use [48] [50]. Lord Wilson emphasises that reasonableness is fact sensitive and considers that the Supreme Court has no reason to depart from the trial judges determination [63].
It is axiomatic that a judge or an arbitrator must be impartial; he or she must not be biased in favour of or against any party in a litigation or reference. A judge or arbitrator, who is not in fact subject to any bias, must also not give the appearance of bias: justice must be seen to be done. This appeal is not concerned with any deliberate wrongdoing or actual bias but with the circumstances in which an arbitrator in an international arbitration may appear to be biased. It raises important questions about the requirement that there be no apparent bias and the obligation of arbitrators in international arbitrations to make disclosure. The appeal concerns an arbitration under a Bermuda Form liability policy which arose out of the damage caused by the explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico in 2010 when a well was being plugged in the context of a temporary abandonment. That disaster gave rise to several arbitrations between insured parties and insurers. The principal issues which are raised in this appeal are: (i) whether and to what extent an arbitrator may accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without thereby giving rise to an appearance of bias, and (ii) whether and to what extent the arbitrator may do so without disclosure. I will therefore address first, the duty of impartiality in the context of arbitration, secondly, whether an arbitrator is under a legal duty to disclose particular matters, thirdly, how far the obligation to respect the privacy and confidentiality of an arbitration constrains his or her ability to make disclosure, and fourthly, whether a failure to disclose such matters demonstrates a lack of impartiality. I then address the times at which (a) the duty of disclosure and (b) the possibility of bias fall to be assessed. The appellants (Halliburton) entered into a Bermuda Form liability policy (the Policy) with ACE Bermuda Insurance Ltd, which is now called Chubb Bermuda Insurance Ltd (Chubb) in 1992 and the Policy was renewed annually. Chubb and the three arbitrators involved in the arbitration which I discuss below are the defendants in this action to remove one of the arbitrators. But Chubb alone defended the proceedings and appears as the respondent in this appeal. Because the appeal raises questions of law of general importance in the field of arbitration this court allowed and received written and oral representations from the International Court of Arbitration of the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA) and written submissions from the Chartered Institute of Arbitrators (CIArb), the London Maritime Arbitrators Association (LMAA) and the Grain and Feed Trade Association (GAFTA). The court is very grateful to the interveners for their contribution to the clarification of the wider issues raised by this appeal. At first instance, the names of the parties to, and the arbitrators in, the arbitrations referred to in these proceedings were anonymised. In the judgment handed down by the Court of Appeal, the names of the parties to the Halliburton/Chubb arbitration were revealed and only the names of the arbitrators were anonymised. During the hearing of this appeal, this court questioned the need for and appropriateness of such anonymity once the names of the parties to the arbitration had been disclosed and gave the parties to these proceedings, including the arbitrators, an opportunity to make submissions on the issue. Arbitration in the United Kingdom is as a norm a private form of dispute resolution and both the arbitration and the arbitral award are not generally a matter of public record. In England and Wales, the rules of procedure (CPR rule 62.10) empower the court to order that a claim under the Arbitration Act 1996 (the 1996 Act) or otherwise affecting arbitration proceedings or an arbitration agreement be heard in public or in private but create a norm that such claims are heard in private. The obligations of confidentiality which are usually imposed in arbitration agreements are designed to protect the privacy of the parties to the arbitration and the evidence led in arbitral hearings. But nobody has suggested any basis in the public interest for preserving the anonymity of the arbitrators themselves in a challenge of this nature. I am satisfied that the principle of open justice, which this court discussed in Dring (on behalf of the Asbestos Victims Support Group) v Cape Intermediate Holdings Ltd [2019] UKSC 38; [2020] AC 629, paras 41 43, points towards disclosure. This court has emphasised the importance of avoiding incremental exceptions to the principle of open justice: Khuja v Times Newspapers Ltd [2017] UKSC 49; [2019] AC 161, paras 12 14 per Lord Sumption; In re S (A Child) (Identification: Restrictions on Publication) [2004] UKHL 47; [2005] 1 AC 593, para 29 per Lord Steyn, endorsing the warning of Lord Woolf MR in R v Legal Aid Board, Ex p Kaim Todner [1999] QB 966, 977. The arbitrators in the Halliburton/Chubb arbitration were defendants in the action but understandably took no part in the proceedings. The arbitrator, whose decisions are challenged in these proceedings, Mr Kenneth Rokison QC has a long established reputation for integrity and impartiality. But the protection of that reputation is not a sufficient ground for anonymity, particularly when the courts below have founded on that reputation in their reasoning. In any event, the challenge in this case involves no assertion of actual bias but relies entirely on an assertion of an objective appearance of bias. I am satisfied that there are no good grounds for maintaining the anonymity of the arbitrators in this appeal. Factual background BP Exploration and Production Inc (BP) was the lessee of the Deepwater Horizon drilling rig. Transocean Holdings LLC (Transocean) owned the rig and had contracted with BP to provide crew and drilling teams. Halliburton provided cementing and well monitoring services to BP in relation to the temporary abandonment and the plugging of the well. The blow out of the well caused extensive damage and loss of life. It resulted in numerous legal claims by the US Government and corporate and individual claimants against BP, Halliburton and Transocean. The US Government claimed civil penalties under federal statutes and the private claims for damages were pursued through a Plaintiffs Steering Committee (PSC). After a trial to determine liability, the Federal Court for the Eastern District of Louisiana in a judgment handed down on 4 September 2014 (the Federal Judgment) apportioned blame between the defendants as follows: BP 67%, Transocean 30%, and Halliburton 3%. Before the Federal Judgment was handed down, Halliburton settled the PSC claims against it by paying approximately US$1.1 billion. Following that judgment, Transocean settled the PSC claims for about US$212m and paid civil penalties to the US Government of about US$1 billion. Halliburton claimed against Chubb under the Policy but Chubb refused to pay Halliburtons claim, contending among other things that Halliburtons settlement was not a reasonable settlement and that Chubb had acted reasonably in not consenting to the settlement. Transocean made similar claims against its liability insurers, including Chubb. Chubb contested Transoceans claim against it on substantially the same grounds. Both Transocean and Halliburton had purchased liability insurance from Chubb on the Bermuda Form. The Bermuda Form policy was created in the 1980s to provide high excess commercial general liability insurance to companies operating in the United States after the market for such insurance collapsed in that country. Bermuda Form policies usually contain a clause providing for disputes to be resolved by arbitration. Bermuda Form arbitrations are ad hoc arbitrations which are not subject to the rules of an arbitral institution. Transocean and Halliburton had arranged liability insurance in layers and both had obtained cover for the top layer from Chubb. It appears that the material policy terms were the same. The Policy was governed by the law of New York. The Policy contained a standard arbitration clause which provided for arbitration in London by a tribunal of three arbitrators, one appointed by each party and the third by the two arbitrators so chosen. If the party appointed arbitrators could not agree on the appointment of the third arbitrator, the High Court in London was to make the appointment. The arbitrators were to deliver the award within 90 days of the conclusion of the hearing. There was no right of appeal from the award. Halliburton invoked the arbitration clause of the Policy and nominated Professor William W Park, Professor of Law at Boston University, USA, who is a very experienced arbitrator, as its party appointed arbitrator on 27 January 2015. Chubb nominated Mr John D Cole, an accomplished US insurance executive, counsel and arbitrator as its party appointed arbitrator. The nominated arbitrators were not able to agree on the appointment of the third arbitrator as chairman. As a result, after a contested hearing in the High Court in which each side put forward several candidates, on 12 June 2015 Flaux J appointed Mr Rokison, who was one of the arbitrators whom Chubb had proposed to the court, as the third arbitrator. Halliburtons main objection to Chubbs candidates, including Mr Rokison, was that they were English lawyers and the Policy was governed by the law of New York but it also objected to the appointment of Mr Rokison as chair of the tribunal because insurers had a practice of repeatedly appointing retired judges or QCs known to them, such as Mr Rokison, as party appointed arbitrators. Nonetheless, Halliburton did not appeal against that order. I refer to this Halliburton/Chubb reference to arbitration as reference 1. Before he expressed his willingness to be appointed, Mr Rokison disclosed to Halliburton and the court that he had previously acted as an arbitrator in several arbitrations in which Chubb was a party, including as a party appointed arbitrator nominated by Chubb, and that he was currently appointed as arbitrator in two pending references in which Chubb was involved. The High Court did not treat these appointments as an impediment to his appointment in reference 1. Halliburton served its statement of claim in reference 1 on 18 September 2015. Chubb served its statement of defence on 11 December 2015. In December 2015 Mr Rokison accepted appointment as an arbitrator by Chubb in relation to an excess liability claim by Transocean arising out of the same incident (reference 2). The appointment was made on behalf of Chubb by Clyde & Co, who were also Chubbs solicitors in reference 1. Within Chubb, the same manager, Mr Trimarchi, was responsible for monitoring the claims made by both Halliburton and Transocean and took the decision to refuse the claims in each case. Before accepting appointment by Chubb in reference 2, Mr Rokison disclosed to Transocean his appointment in reference 1 and in the other Chubb arbitrations which he had disclosed to Halliburton. Transocean did not object. But in an omission which is central to the disclosure issue in this appeal, Mr Rokison did not disclose to Halliburton his proposed appointment by Chubb in reference 2. In August 2016 Mr Rokison accepted appointment in another arbitration arising out of the Deepwater Horizon incident as a substitute arbitrator on the joint nomination of the parties in a claim made by Transocean against a different insurer on the same layer of insurance as the claim in reference 2. I refer to this as reference 3. Nobody disclosed this proposed appointment to Halliburton. This further omission also is a ground of the non disclosure claim in this appeal but the submissions on this appeal have focused more on the non disclosure of the appointment in reference 2. In references 2 and 3 there was a preliminary issue which was potentially dispositive of the claims if the tribunal decided in favour of the insurers. The issue was whether the fines and penalties which Transocean had paid to the US Government should be taken into account in the exhaustion of both the underlying layers of insurance and Transoceans self insured retention. This issue involved the construction of the relevant insurance policy on undisputed facts. The preliminary issue was heard separately in each of those references during November 2016. On 10 November 2016 Halliburton discovered Mr Rokisons appointment in references 2 and 3. Mr Thomas Birsic, an attorney at K & L Gates, Halliburtons US lawyers, wrote to Mr Rokison on 29 November 2016 to raise its concerns. He referred to the International Bar Association Guidelines on Conflicts of Interest in International Arbitration (the IBA Guidelines), which, he stated, imposed on an arbitrator a continuing duty of disclosure of potential conflicts of interest in accordance with the Orange List in those guidelines, and asked for confirmation of the fact of the two later appointments and an explanation of the failure to make prior disclosure of those appointments. Mr Rokison responded by email on 5 December 2016. He explained how he had come to be appointed in the later references. He explained, and both parties have accepted his explanation as truthful, that he had not disclosed those appointments to Halliburton, because it had not occurred to him at the dates of those appointments that he was under any obligation to do so under the IBA Guidelines. He stated that he appreciated, with the benefit of hindsight, that it would have been prudent for him to have informed Halliburton through its lawyers and apologised for not having done so. He explained that while the three references all arose out of the Deepwater Horizon incident, the roles which Halliburton and Transocean had played had been very different. His involvement in the two Transocean arbitrations had been confined to two two day hearings on the construction of the policy in which the only evidence had been about the circumstances in which the parties entered into the relevant insurance contracts. He stated his commitment to remain independent and impartial and acknowledged the importance of both parties in an arbitration sharing confidence that their dispute would be determined fairly on the evidence and the law without bias. He concluded: I do not believe that any damage has been done but, if your clients remain concerned, I would be prepared to consider tendering my resignation from my appointment in the two Transocean cases if the results of the determination of the preliminary issues of construction, which are likely to be issued shortly, do not effectively bring them to an end. Halliburtons lawyer responded by repeating his concerns about Mr Rokisons impartiality and calling for him to resign. But Chubb would not agree to his resignation which, in its assessment, would cause the proposed hearing of evidence in the arbitration to be postponed and thereby cause wasted costs and delay. Mr Rokison responded in an email of 15 December 2016 in which he stated that he sought to take into account his duty to both parties. He repeated his view that he had not breached the IBA Guidelines by a failure to disclose the later appointments but referred to his earlier statement that with hindsight he accepted that it would have been prudent to have made disclosure to avoid any sense of lack of transparency on his part. He repeated that in references 2 and 3 he had not learned anything about the facts of the incident which was not public knowledge. But, recognising that it was fundamentally important that both parties should have confidence in the impartiality of the arbitral tribunal and in particular its chairman, he stated that, if he could decide the matter in accordance with his own self interest, he would resign. Nonetheless, he owed duties to both parties to complete the task and would be in breach of his duties if he resigned in the face of strong opposition from one party. He therefore proposed that the parties should concentrate on trying to agree upon a mutually acceptable replacement chairman who would be available before the hearing in the arbitration (which was scheduled to start towards the end of January 2017). If they could so agree, he would gladly resign. If they could not, he would have to continue and leave it to the court to decide whether he should be removed. Halliburton responded by issuing a Claim Form in the High Court on 21 December 2016 seeking an order under section 24(1)(a) of the 1996 Act that Mr Rokison be removed as an arbitrator. Halliburton then raised further questions about the overlap between the references, to which Mr Rokison responded by email on 4 January 2017, stating that he was not aware that there were any common issues. Halliburtons lawyers in an email of 5 January 2017 asked Mr Rokison whether he had seen any document in which Chubb or any other respondent in references 2 or 3 had set out similar defences to those pleaded in reference 1. Mr Rokison did not reply to that enquiry. But on 10 January 2017 Chubb released to Halliburton the pleadings in reference 2 which revealed the substantial similarity in its defences which I mentioned in para 10 above, which were challenges to the reasonableness of the settlement which Transocean had negotiated. In its pleaded defence in reference 2, Chubb had also advanced, as an additional defence, the issue of construction of the policy which was the subject matter of the preliminary issue determination. Mr Justice Popplewell heard Halliburtons application in the High Court on 12 January 2017, in which Halliburton sought to have Mr Rokison replaced by Sir Stephen Tomlinson who had just retired from the Court of Appeal, and delivered a judgment, which I discuss below, on 3 February 2017, dismissing the application. The hearing in reference 1, which included the adducing of evidence and the making of legal submissions, took place between 27 January and 6 February 2017. On 1 March 2017 the tribunals in references 2 and 3 issued awards on the preliminary issues of policy construction, deciding them in favour of Chubb and the other insurer. The tribunals held that because the fines did not count towards the exhaustion of Transoceans self insured retention, Transocean could not claim an indemnity under the relevant layer of insurance. The awards brought both references to an end, without either tribunal having to consider questions as to the reasonableness of Transoceans settlement. On 5 December 2017 the tribunal in reference 1 issued its Final Partial Award on the merits, deciding in Chubbs favour. The award was signed by all three arbitrators, although Professor Park, the arbitrator whom Halliburton had appointed, qualified his signature of the award in Separate Observations. Professor Park stated that he had signed the award to confirm his participation but that he was unable to join in the award as a result of his profound disquiet about the arbitrations fairness. He explained that: arbitrators who decide cases cannot ignore the basic fairness of proceedings in which they participate. One side secured appointment of its chosen candidate to chair this case, over protest from the other side. Without any disclosure, the side that secured the appointment then named the same individual as its party selected arbitrator in another dispute arising from the same events. The lack of disclosure, which causes special concern in the present fact pattern, cannot be squared with the parties shared ex ante expectations about impartiality and even handedness. The other arbitrators, Mr Rokison and Mr Cole, responded to the separate observations, stating that they did not regard them as being part of the tribunals award so as to render it a majority award. This was because those observations did not contain any opinion dissenting from any part of the award, which contained findings of fact, statements of applicable law, the process of reasoning and the final conclusions drawn from that reasoning. It appears from Chubbs written case and Mr Birsics second witness statement that Halliburton appointed Professor Park as its party appointed arbitrator in three references against different insurers in insurance claims arising out of the Deepwater Horizon disaster, without formal disclosure. But K & L Gates suggest, in Mr Birsics second witness statement, that their proposal, which they made when they requested the arbitration and nominated Professor Park, that the arbitrations be consolidated revealed the multiple nominations. Mr Birsic also suggests that the fact that Professor Park was a party appointed arbitrator rather than a chair or umpire is a significant distinction from Mr Rokisons position. I will return to the question whether that distinction is legally relevant in English law in my discussion below. Halliburtons pleaded case In its claim Halliburton sought the removal of Mr Rokison as arbitrator in reference 1 and the appointment of another arbitrator to chair the tribunal in his place. The grounds for the claim were that circumstances existed that gave rise to justifiable doubts as to his impartiality and in particular (i) his acceptance of the appointments by Clyde & Co in references 2 and 3 and his failure to notify Halliburton or give it the opportunity to object and (ii) his offer to resign from the tribunal in reference 1 but Chubbs refusal to permit him to do so. The judgments at first instance and in the Court of Appeal In his judgment of 3 February 2017 ([2017] EWHC 137 (Comm); [2017] 1 WLR 2280) Popplewell J addressed the three elements of Mr Rokisons conduct which were said to give rise to the appearance of bias. The first was his acceptance of the appointments in the Transocean arbitrations in references 2 and 3. The judge rejected the contention that the arbitrator would derive a secret benefit in the form of remuneration which he would receive from the arbitrations. In English law, arbitrators were under a duty to act independently and impartially and owed no allegiance to the party which appointed them. This principle was enshrined in section 33 of the 1996 Act. He also rejected the contention that the overlap between the references was a concern because the arbitrator would learn information in the Transocean references which was relevant to the issues in reference 1 and that information would be available to Chubb but not to Halliburton. He observed that it was a regular feature of international arbitration that the same underlying subject matter gives rise to more than one claim and more than one arbitration without identity of parties. It was common for arbitrators with the relevant expertise to sit in different arbitrations arising out of the same factual circumstances or subject matter. It was desirable that arbitrators be able to do so for three reasons. First, arbitration was a consensual process allowing parties to appoint their chosen arbitrators in accordance with the procedures set out in their contract. Secondly, the parties to an arbitration often wished their tribunal to have particular knowledge and expertise in the law and practices of the businesses and market in which the parties operated. Thirdly, the 1996 Act sought speedy finality, which was served when the tribunal was already familiar with the background to and uncontroversial aspects of the subject matter of the dispute. The judge considered that as a general rule the fact that an arbitrator may be involved in an arbitration between party A and party B, whose subject matter was identical to that in an arbitration between party B and party C did not preclude him or her from sitting on both tribunals. This was because an arbitrator in English law was required to decide the case by reference to the material available to the parties to the particular reference: section 33 of the 1996 Act. He concluded his consideration of element 1 in these terms (para 29): The informed and fair minded observer would not therefore regard [Mr Rokison] as unable to act impartially in the reference between [Halliburton] and [Chubb] merely by virtue of the fact that he might be an arbitrator in other references arising out of the incident, and might hear different evidence or argument advanced in another such reference. The objective and fair minded assessment would be that his experience and reputation for integrity would fully enable him to act in accordance with the usual practice of London arbitrators in fulfilling his duties under section 33 by approaching the evidence and argument in the [Halliburton] reference with an open mind; and in deciding the case, in conjunction with the other members of the tribunal, in accordance with such material, with which [Halliburton] will have a full and fair opportunity to engage. Popplewell J also rejected a submission that the chairman of a tribunal had an enhanced duty to maintain demonstrable impartiality as the ultimate guarantor of fairness and impartiality. This submission, he opined, misunderstood the English law of arbitration which required all arbitrators, including party appointed arbitrators, to maintain the same high standards of impartiality. The judge did not think that there was a risk of the tribunal in reference 1 having to address issues which arose in references 2 and 3 if the preliminary issues in the latter references were decided in the insurers favour. If the tribunals determinations of the preliminary issues in those references went against the insurers, there was very little risk of overlap because (i) the issue of the reasonableness of Halliburtons settlement was legally and factually distinct from that of Transoceans settlement as the two companies had played different roles on the rig, were alleged to have committed different breaches of duty and had reached different settlements and (ii) Mr Rokison had offered to resign from the Transocean references if the preliminary issue were resolved against the insurers. On element 2, which was the alleged failure to disclose the appointments to Halliburton, the judge held that, because of his conclusion on element 1 that the circumstances did not give rise to any justifiable concerns about the arbitrators impartiality, there was nothing which had to be disclosed. Even if the disclosure ought to have been made, the failure did not give rise to a real possibility of apparent bias against Halliburton because Mr Rokisons explanation in correspondence, which was not challenged, was that it did not occur to him that he was under a duty to do so. Even if that honest belief were mistaken, it did not raise a real possibility of apparent bias. The judge also rejected element 3, which was Mr Rokisons response to Halliburtons challenge to his impartiality. Popplewell J discussed and rejected each of the complaints about that response, commenting that Mr Rokison had dealt with the challenge, which the judge said had included a grossly offensive suggestion, in a courteous, temperate and fair way which demonstrated his even handedness. Halliburton sought and obtained permission to appeal from Popplewell J and renewed its challenge on appeal to the Court of Appeal in a hearing on 7 February 2018. The Court of Appeal (Sir Geoffrey Vos C, Simon and Hamblen LJJ) dismissed the appeal in a judgment dated 19 April 2018 ([2018] EWCA Civ 817; [2018] 1 WLR 3361). In the Court of Appeal Halliburton did not challenge Popplewell Js summary of the relevant legal principles in para 16 of his judgment but suggested, and the court accepted, that, in assessing whether there was a real possibility that the tribunal was biased, regard should be had to the risk of unconscious bias. The question for the Court of Appeal was the application of those principles to the facts of the case. The first issue which the Court of Appeal addressed was the same issue as issue 1 in this appeal, namely whether and to what extent an arbitrator may accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without thereby giving rise to the appearance of bias. The court recognised that the existence of appointments in such related arbitrations could cause the party which was not involved in the related arbitrations to be concerned and could be a good reason for a judge to decline to appoint a person as an arbitrator in the exercise of powers under section 18 of the 1996 Act in the face of an objection by that party. But the court held that the appointment of a common arbitrator did not justify the inference of apparent bias; something more of substance was required. Applying those conclusions to the facts of the case the Court of Appeal held that the degree of overlap between reference 1 and references 2 and 3 was in fact very limited. The latter references were decided on the preliminary issue. As a result, the question of the reasonableness of the settlement by Transocean and the reasonableness of the insurers withholding of consent to that settlement did not arise. In any event, the circumstances were different: Halliburton settled before the Federal Judgment and Transocean after that judgment had allocated responsibility for the incident between the three parties. The fact that an arbitrator obtained a financial benefit from appointment to an arbitral tribunal was not disqualifying; otherwise objection could be taken to every party appointed arbitrator. The second issue which the Court of Appeal addressed was to identify the circumstances in which an arbitrator should make disclosure of matters which may give rise to justifiable doubts as to his or her impartiality. The court, citing extensive case law in support, stated (para 56): Under the common law, judges should disclose facts or circumstances which would or might provide the basis for a reasonable apprehension of lack of impartiality. When a judge was aware of a matter which could arguably be said to give rise to a real possibility of bias and disclosed that matter, such disclosure enabled parties to consider the disclosure and decide whether there was no legitimate problem or to make submissions to the judge or to address the potential problem by waiver. The judge in turn could decide in the light of those submissions whether to withdraw from the case. The court stated that the test for apparent bias applied equally to arbitral tribunals and the practical advantages of early disclosure were just as important. The court held that the question whether there should be disclosure was to be decided prospectively, as it depended on the prevailing circumstances at that time when the disclosure should have been made. When deciding whether circumstances existed that would or might lead to the conclusion that there was a real possibility of bias, with the result that those circumstances needed to be disclosed, a court should not have regard to matters known only at a later stage. A failure to make disclosure when it should have been made was itself a factor which should be taken into account when considering whether there was a real possibility that the arbitrator was biased. But, the court held, non disclosure of a matter which should have been disclosed but did not on examination give rise to justifiable doubts as to the arbitrators impartiality could not in and of itself justify an inference of apparent bias; something more was required. Applying those conclusions to the facts of the case, the Court of Appeal recognised that in the context of international commercial arbitration it was good practice to make disclosure where a party had such concerns. That practice combined with the other factors, such as the degree of overlap between the references and the nature of other connections, might have been argued to combine to give a basis for a reasonable apprehension of lack of impartiality. On that basis, the court disagreed with the judge and held that Mr Rokison ought as a matter of law to have made disclosure to Halliburton at the time of his appointments in references 2 and 3. Nonetheless, the court agreed with the judges overall conclusion that the fair minded and informed observer, having considered the facts, would not conclude that there was a real possibility that Mr Rokison was biased. In reaching that conclusion the court took account of the following factors: (i) the non disclosed circumstance did not of itself justify an inference of apparent bias, (ii) the failure to disclose was accidental and not deliberate, (iii) there was only a limited degree of overlap between the references, (iv) mere oversight in such circumstances would not give rise to justifiable doubts as to impartiality, and (v) there was no substance in Halliburtons criticism of Mr Rokisons conduct after it challenged the non disclosure. The Court of Appeal therefore dismissed the appeal. Halliburtons case and the interventions Halliburton renews its challenges before this court and founds on concerns expressed by LCIA, ICC and CIArb that the Court of Appeals judgment is out of step with internationally accepted standards and practices. Halliburton in its written case confirms that it does not suggest that Mr Rokison was guilty of any deliberate wrongdoing or actual bias. Its case is one of apparent unconscious bias and it founds on five points: (i) he accepted the benefit of a paid appointment on Chubbs nomination when he was sitting on an arbitral tribunal in reference 1; (ii) in so doing, he gave Chubb the unfair advantage of being a common party to two related arbitrations with a joint arbitrator while Halliburton was ignorant of the proceedings in reference 2 and thus unaware whether and to what extent he would be influenced in reference 1 by the arguments and evidence in reference 2; (iii) Chubb would be able to communicate with him in reference 2, for example by its submissions and the evidence it led, on matters which might be relevant to reference 1 and would know of his responses to those communications while Halliburton would not even know that they had occurred; (iv) he failed to disclose his appointment to Halliburton and thereby prevented it from forming its own view as to whether it might lead to unfairness and from either making submissions to the tribunal in reference 1 or otherwise proposing or taking practical steps to mitigate the unfairness; and (v) he did not pay proper regard to Halliburtons interest in the fairness of the procedure. Under point (v) Halliburton also suggests that Mr Rokison had regard only to what he and Chubb both wanted, which was his appointment to sit as arbitrator in reference 2. In my view, the evidence before Popplewell J, which I have summarised above, clearly negatives that gloss but that negation does not wholly remove the force of point (v). Halliburton submits that English law does not require a party to an arbitration to have its disputes resolved by someone who has acted in this manner and argues that the fair minded and informed observer would see such conduct as giving rise to justifiable doubts as to the arbitrators impartiality. LCIA expresses concern that the tests set by the Court of Appeal were not sufficiently strict compared with international norms. The common law test of bias applies, but in applying it the court must take account of the context of the arbitration and the differences between arbitration and litigation. Depending on the facts of a particular arbitration, the circumstances described in the first issue in para 2 above (ie appointments in multiple references concerning the same or overlapping subject matter with only one common party) can give rise to the appearance of bias. It will all depend on the facts. A failure to disclose can give rise to that appearance even if the fact or circumstance which should have been disclosed would not of itself give rise to apparent bias. The arbitrator in considering what needs to be disclosed is under a duty to make reasonable enquiries whether there are circumstances which may give rise to doubts as to his or her impartiality. ICC also questions the approach of the Court of Appeal and submits that the fact of multiple overlapping appointments with only one or some common parties concerning the same or overlapping subject matter can, depending on the circumstances, give rise to reasonable doubts as to the arbitrators impartiality. On the second issue (disclosure) ICC opines that in English law a failure to disclose multiple appointments by a common party in overlapping references can of itself give rise to justifiable doubts as to the arbitrators impartiality. CIArb also submits (a) that a failure by an arbitrator to disclose any facts and circumstances which might give rise to justifiable doubts as to that arbitrators impartiality may in and of itself give rise to justifiable doubts as to his or her impartiality, and (b) that the acceptance by an arbitrator of multiple appointments in related references without full disclosure to all parties may, without more, give rise to justifiable doubts as to impartiality. CIArb also, unusually, expresses its views on the application of the tests to the facts of this case. The other interveners are GAFTA, which is concerned with agricultural commodities arbitration and which trains and certifies arbitrators who must have extensive practical experience in the relevant trades, and LMAA, which is an association of arbitrators concerned with shipping and trade arbitration and which produces arbitration terms and procedures widely used for maritime arbitration in London. GAFTA explains that disputes often arise in chain or string supply contracts and that arbitrations in such contracts, which often involve common issues of law or fact, are regularly referred to the same arbitrator or arbitrators. GAFTAs Rules and Code of Conduct for Qualified Arbitrators & Qualified Mediators and General Code of Conduct Applicable to All Members do not require its arbitrators to disclose multiple appointments in relation to the same event or issue, which are an intrinsic and necessary part of GAFTA arbitrations. GAFTA also provides with its submission a report from the Management Committee of ARIAS (UK), the Insurance and Reinsurance Arbitration Society, describing practice in treaty reinsurance arbitrations, which are conducted by a limited pool of specialist arbitrators and often involve multiple disputes about the same subject matter. ARIAS (UK) opines that practitioners in its field are well aware of the possibility of overlapping appointments and have not expected such appointments to be disclosed. LMAA similarly explains that multiple appointments are relatively common under their procedures because they frequently arise out of the same incident. Speed and simplicity are necessary because of the tight limitation periods in maritime claims. There is a relatively small pool of specialist arbitrators whom parties use repeatedly. LMAA terms give arbitral tribunals the power to order concurrent hearings where two or more arbitrations raise common issues of fact or law without requiring the consent of the parties. Disclosure of multiple appointments should be required only when it is arguable that the matters to be disclosed give rise to the appearance of bias. LMAA points out that the IBA Guidelines recognise that in certain types of arbitration no disclosure of multiple appointments is required if parties are familiar with such custom and practice (see para 133 below). GAFTA and LMAA submit that in their fields of activity the mere fact of appointment in arbitrations with overlapping subject matter but without identity of parties does not give rise to any appearance of bias and is a feature of arbitrations which parties in their fields of operation accept. They submit that the court should respect such party autonomy and that there is no need to impose an obligation of disclosure in their fields of operation. Chubb defends the judgments of the courts below. But Chubb also argues that the Court of Appeal was wrong to conclude that Mr Rokison was under a legal duty to disclose his appointments in references 2 and 3 because it submits that an arbitrator is only obliged to disclose circumstances which the fair minded and informed observer would regard as giving rise to a real possibility of bias. The disclosure of circumstances which might give rise to the possibility of bias was good practice but was not an obligation in law. A failure to disclose in accordance with good practice will be a factor to which the fair minded and informed observer will have regard in determining whether there is justifiable doubt as to an arbitrators impartiality. Discussion The 1996 Act is based on the principle of party autonomy and aims to limit the role of the courts to the protection of the public interest. Section 1 of the 1996 Act provides that the provisions of Part I (sections 1 84): are founded on the following principles, and shall be construed accordingly (a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense; (b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; (c) in matters governed by this Part the court should not intervene except as provided by this Part. The 1996 Act is not a complete code of the law of arbitration but allows the judges to develop the common law in areas which the Act does not address. Against that background, it is necessary to consider, first, the duty of impartiality in the context of arbitration before addressing, secondly, whether an arbitrator is under a legal duty to disclose particular matters, thirdly, how far the obligation to respect the privacy and confidentiality of an arbitration constrains his or her ability to make disclosure, and fourthly, whether a failure to disclose such matters demonstrates a lack of impartiality. I also address the times at which (a) the duty of disclosure and (b) the possibility of bias fall to be assessed. (i) The duty of impartiality Impartiality has always been a cardinal duty of a judge and an arbitrator. Thus, the first of the principles set out in section 1 of the 1996 Act is that disputes should be resolved fairly by an impartial tribunal. The duty is now enshrined within section 33 of the 1996 Act, which provides: (1) The tribunal shall (a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and (b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined. (2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it. Principle (c) in section 1 of the 1996 Act (para 47 above) seeks to limit the intervention of the court in arbitral proceedings. One such power of intervention arises in section 24(1) of the 1996 Act which provides (so far as relevant): A party to arbitral proceedings may (upon notice to the other parties, to the arbitrator concerned and to any other arbitrator) apply to the court to remove an arbitrator on any of the following grounds: that circumstances exist that give rise to (a) justifiable doubts as to his impartiality; that he has refused or failed (d) (i) properly to conduct the proceedings, and that substantial injustice has been or will be caused to the applicant. I will return to consider section 24(1)(a) later in this judgment but note at this stage (i) that by the use of the present tense of the verb exist the court is directed to the circumstances as they exist at the time at which it hears the application for removal of the arbitrator and (ii) that, in contrast with section 24(1)(d), the applicant does not have to show that substantial injustice has been or will be caused to it. A party to arbitral proceedings is also empowered by section 68 of the 1996 Act to challenge an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award and such serious irregularity includes a failure by the tribunal to comply with section 33 of the Act. In this appeal the court is concerned with an allegation of apparent bias. We are not concerned with any disqualifying interest in the outcome of the arbitration nor are we required to make windows into mens souls in search of an animus against a party or any other actual bias, whether conscious or unconscious. No such allegation is made against Mr Rokison. We are concerned only with how things appear objectively. There is no disagreement as to the relevant test. As Lord Hope of Craighead stated in Porter v Magill [2001] UKHL 67; [2002] 2 AC 357, para 103: The question is whether the fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased. The courts have given further guidance on the nature of this judicial construct, the fair minded and informed observer (to whom in this judgment I also refer as the objective observer). Thus, in Helow v Secretary of State for the Home Department [2008] UKHL 62; [2008] 1 WLR 2416, Lord Hope (paras 1 3) explained that the epithet fair minded means that the observer does not reach a judgment on any point before acquiring a full understanding of both sides of the argument. The conclusions which the observer reaches must be justified objectively and the real possibility test ensures the exercise of a detached judgment. He continued: Then there is the attribute that the observer is informed. It makes the point that, before she takes a balanced approach to any information she is given, she will take the trouble to inform herself on all matters that are relevant. She is the sort of person who takes the trouble to read the text of an article as well as the headlines. She is able to put whatever she has read or seen into its overall social, political or geographic context. She is fair minded, so she will appreciate that the context forms an important part of the material which she must consider before passing judgment. (Emphasis added) I have added the emphasis in this citation because the context in which the test falls to be applied in this appeal is of particular importance. Finally, in my consideration of the characteristics of the objective observer, I adopt Kirby Js neat phrase in Johnson v Johnson (2000) 201 CLR 488, para 53, which members of the House of Lords approved in Helow (above, Lord Hope para 2, Lord Mance para 39) that the fair minded and informed observer is neither complacent nor unduly sensitive or suspicious. This objective test of the appearance of bias is similar to the test of justifiable doubts which is adopted in the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration 1985 (as amended in 2006) article 12(2) (the UNCITRAL Model Law), the IBA Guidelines (General Standard 2(c)) and article 10.1 of the LCIA Arbitration Rules (2014). It is not necessary to determine whether the tests as to the nature of the doubts in the UNCITRAL Model Law, the IBA Guidelines and the LCIA Rules are precisely the same as those of English law. The important point is that the test in English law, involving the fair minded and informed observer, requires objectivity and detachment in relation to the appearance of bias. The objective test of the fair minded and informed observer applies equally to judges and all arbitrators. There is no difference between the test in section 24(1)(a) of the 1996 Act, which speaks of the existence of circumstances that give rise to justifiable doubts as to [the arbitrators] impartiality and the common law test above. But in applying the test to arbitrators it is important to bear in mind the differences in nature and circumstances between judicial determination of disputes and arbitral determination of disputes. First, judges resolve civil disputes in courts which are, as a general rule, open to the public; by contrast arbitration is a consensual form of dispute resolution which is generally conducted in private and of which there is very limited public oversight. A person who is not a party to an arbitration may know nothing about the arbitration and may have no ready means of discovering its existence, the evidence adduced and the legal arguments advanced at it, or the award made. Arbitrators and the parties to an arbitration are generally under a duty of privacy and confidentiality which militates against such discovery, in the absence of disclosure. That puts a premium on frank disclosure. Russell (1880) 14 Ch D 471, 474, Sir George Jessel MR said of arbitration: As a rule, persons enter into these contracts with the express view of keeping their quarrels from the public eyes, and of avoiding that discussion in public, which must be a painful one, and which might be an injury even to the successful party to the litigation, and most surely would be to the unsuccessful. In English law arbitration is, as a general rule, a private process. In Russell v It is because arbitrations are private that arbitrators have no power to order concurrent hearings without the consent of the parties: Oxford Shipping Co Ltd v Nippon Yusen Kaisha: The Eastern Saga [1984] 2 Lloyds Rep 373; [1984] 3 All ER 835. The 1996 Act says nothing about privacy or confidentiality. But that was a deliberate omission. In its report on the Arbitration Bill (February 1996), paras 10 17, the Departmental Advisory Committee on Arbitration Law (the DAC) recorded that users of commercial arbitration in England place much importance on privacy and confidentiality as essential features of English arbitrations but, recognising that there was uncertainty as to the breadth and existence of certain exceptions to those principles, recommended that there be no statutory formulation of those principles but that the courts should be left to develop the law on a pragmatic case by case basis. I will consider the principles of privacy and confidentiality further when I discuss the duty of disclosure in paras 70 116 below. Secondly, unlike a judge who decides issues of fact and law at first instance and from whose decisions the parties usually have a right of appeal, an arbitrator is not subject to appeals on issues of fact and often not on issues of law. By contrast with a first instance judge, there are very limited powers of review of the decision of an arbitral tribunal. Thirdly, a judge is the holder of a public office, is funded by general taxation and has a high degree of security of tenure of office and therefore of remuneration. An arbitrator is nominated to act by one or both of the parties to the arbitration either directly or by submitting names to the appointing body, whether an institution or the court, for appointment. The arbitrator is remunerated by the parties to the arbitration in accordance with the terms set out in the reference, and often is ultimately funded by the losing party. He or she is appointed only for the particular reference and, if arbitral work is a significant part of the arbitrators professional practice, he or she has a financial interest in obtaining further appointments as arbitrator. Nomination as an arbitrator gives the arbitrator a financial benefit. There are many practitioners whose livelihood depends to a significant degree on acting as arbitrators. This may give an arbitrator an interest in avoiding action which would alienate the parties to an arbitration, for example by assertive case management against the wishes of the legal teams who are presenting their clients cases. It also may give those legal teams an incentive to be more assertive of their sides interests in the conduct of the arbitration than might be the case in a commercial court. Fourthly, people who are appointed as arbitrators include lawyers and also other professionals and experts in a wide range of business activities, and trades. Some, like the arbitrators in this case, may have very extensive experience of arbitration practice while others may have very limited involvement in and experience of arbitration. Moreover, arbitrators in international arbitration come from many jurisdictions and legal traditions and may have divergent views on what constitutes ethically acceptable conduct. Fifthly, it follows from the private nature of most arbitrations that where there are multiple references concerning the same or overlapping subject matter in which the same arbitrator is a member of the tribunal, the party which is not common to the various arbitrations has no means of informing itself of the evidence led before and legal submissions made to the tribunal (including the common arbitrator) or of that arbitrators response to that evidence and those submissions in the arbitrations in which it is not a party. It is not unusual in commercial litigation for an interested party to instruct its lawyer to sit in on a court case involving other parties which may have a bearing on its interests in a separate action. Such an expedient is generally not available in arbitration. Sixthly, in the field of international arbitration there are differing understandings of the role and obligations of the party appointed arbitrator. There has been a lively debate as to the justification for party appointed arbitrators and their role. See, for example, the concerns about partisanship expressed by Professor Jan Paulsson, Moral Hazard in International Dispute Resolution (2010) 25 ICSID Review, Foreign Investment Law Journal, p 339 and Professor Albert Jan van den Berg, Dissenting Opinions by Party Appointed Arbitrators in Investment Arbitration in Looking to the Future: Essays on International Law in Honor of W Michael Reisman, ed Mahnoush Arsanjani et al (Brill Academic 2010) and the defence of party appointed arbitrators by Judge Charles N Brower and Charles B Rosenberg, The Death of the Two Headed Nightingale: Why the Paulsson van den Berg Presumption that Party Appointed Arbitrators are Untrustworthy is Wrongheaded, (2013) Arbitration International, Vol 29 No 1, pp 7 44. Other experienced commentators have suggested that, without compromising his or her independence and impartiality, the party appointed arbitrators role involves a sensitivity to the appointing partys legal, cultural and commercial background and its position in the arbitration (Born, International Commercial Arbitration, 2nd ed (2014), p 1808) and making sure that the arbitral tribunal properly understands the case of the appointing party (Redfern and Hunter, Law and Practice of International Arbitration, 6th ed (2015), para 4.30). In his written case, Lord Grabiner, who appears on behalf of Halliburton, goes further and refers to the selection of an arbitrator by a party as forum shopping. He quotes from an article by Professor Martin Hunter, Ethics of the International Arbitrator, ASA Bulletin, Kluwer Law International 1986, Vol 4 Issue 4, pp 173 196, at p 189, in which the author draws a distinction between impartiality and neutrality and states: Indeed, when I am representing a client in an arbitration, what I am really looking for in a party nominated arbitrator is someone with the maximum predisposition towards my client, but with the minimum appearance of bias. In arbitrations where the parties have, or one party has, an expectation that the party nominated arbitrator will be pre disposed towards it, it is perceived that the person chairing the tribunal, whether appointed by the party nominated arbitrators jointly or by an appointing institution or the court, has a particular role in making sure that the tribunal acts fairly and impartially. Notwithstanding this perception of the reality in some quarters, a party appointed arbitrator in English law is expected to come up to precisely the same high standards of fairness and impartiality as the person chairing the tribunal. Popplewell J correctly summarised the position in English law, and I would venture to say also in Scots law, when he stated in his judgment (para 19): [T]he duty to act independently and impartially involves arbitrators owing no allegiance to the party appointing them. Once appointed they are entirely independent of their appointing party and bound to conduct and decide the case fairly and impartially. They are not in any sense a representative of the appointing party or in some way responsible for protecting or promoting that partys interests. As Popplewell J went on to state, the duty on all arbitrators to act fairly and impartially is enshrined in section 33 of the 1996 Act. Lord Grabiner submits that London is the premier seat for international arbitration. He points to a survey of international arbitration which Queen Mary University of London carried out in 2018 which reveals that the main reasons why parties in international arbitration choose to arbitrate in England are the reputation of London and that the English legal system guarantees neutrality and impartiality. It is therefore important that English law upholds rules which support the integrity of international arbitration. In applying the test of the fair minded and informed observer it would be wrong to have regard to the characteristics of the parties to the arbitration, including the fact that one or more were foreign parties, as Popplewell J stated in para 16(6) of his judgment, referring to the judgment of Flaux J in A v B [2011] EWHC 2345 (Comm); [2011] 2 Lloyds Rep 591, paras 23 24; see also ASM Shipping Ltd of India v TTMI Ltd of England [2005] EWHC 2238 (Comm); [2006] 1 Lloyds Rep 375, para 39(2) per Morison J. The requirement in English law that all arbitrators, whether party appointed or independently appointed, comply with the same high standards of impartiality, appears to be increasingly widely accepted as the legal norm internationally: see the article by the Chief Justice of Singapore, Sundaresh Menon, Adjudicator, advocate or something in between? Coming to terms with the role of the party appointed arbitrator, Arbitration 2017, 83(2), pp 185 202. But this does not negate the fact that in some quarters there are understandings of the arbitral process which appear not to accept that requirement. Further, some legal systems take a different view and accept the proposition that a party appointed arbitrator has a special role in relation to his or her appointing party. For example, in Certain Underwriting Members of Lloyds of London v Florida (2018) 892 F 3d 501; 2018 US App Lexis 15377 the United States Court of Appeals for the Second Circuit addressed a case in which a party sought to vacate an arbitral award on the ground of evident partiality because of a failure by a party appointed arbitrator on a tri partite panel to disclose close business relationships with directors and employees of the party appointing him. The court drew a distinction between party appointed arbitrators on the one hand and neutral arbitrators on the other. It held that in the case of a party appointed arbitrator, an undisclosed relationship with the appointing party constituted evident partiality only if the relationship violated the contractual requirement of disinterestedness or prejudicially affected the award. The court recognised that in insurance and reinsurance arbitrations the parties sought arbitral panels with expertise and that it was common to have repeat players who had connections with the industry. This understanding applied in relation to both party appointed arbitrators and neutral arbitrators or umpires. Beyond that, recognising that party appointed arbitrators were expected to espouse the view or perspective of the appointing party and serve as de facto advocates, it considered that party appointment involved various degrees of partiality in contrast with the neutral arbitrator. It is clear from the judgment (p 509) that several circuits draw this distinction between party appointed and neutral arbitrators. Closer to home, in this case Mr Birsic sought in his second witness statement to the High Court to distinguish Mr Rokisons obligations as the neutral chair of the tribunal and those of Professor Park as a party appointed arbitrator (para 27 above). When such ideas are in play the parties in reality put a particularly heavy responsibility on the arbitrator who is not a party appointee and who chairs the tribunal. The courts in applying the test of the fair minded and informed observer would credit that objective observer with the knowledge both that some, maybe many, parties and some, maybe many, arbitrators in international arbitrations have that understanding and that there is a debate within the arbitration community as to the precise role of the party appointed arbitrator and the compatibility of that role with the requirement of impartiality. To do so is not to measure apparent bias by reference to the subjective understanding of the parties to a particular arbitration and thereby to abandon the objective assessment which the fair minded and informed observer entails. Nor is it an acceptance that there is any difference in English law as to the obligation of impartiality owed by different types of arbitrator, for there is none. It is to recognise the context in which the objective observers judgement as to apparent bias is being made. The objective observer takes account of how some parties and their appointees conduct themselves in such arbitrations and of the debate within the arbitration community as to the role of the party appointed arbitrator when considering whether mixing and matching (as counsel put it) the roles as party appointee in one reference and chairman of an arbitral tribunal in a related reference would pose a risk to the arbitrators impartiality in either case. The fair minded and informed observer would also be aware that in international arbitration the parties to an arbitration and their legal advisers may often have only limited knowledge of the reputation and experience of a professional who is appointed by an institution or by the court to chair their arbitration. While many parties and their advisers who are engaged in high value international arbitrations devote considerable resources to researching the background of people who might be suitable for selection as party appointed arbitrators or as nominees for third party appointment, there is no basis for assuming that that practice is universal. The professional reputation and experience of an individual arbitrator is a relevant consideration for the objective observer when assessing whether there is apparent bias as an established reputation for integrity and wide experience in arbitration may make any doubts harder to justify. But the weight which the fair minded and informed observer should give to that consideration will depend upon the circumstances of the arbitration and whether, objectively and as a generality, one could expect people who enter into references of that nature to be informed about the experience and past performance of arbitrators. In the context of many international arbitrations, it is likely to be a factor of only limited weight. The weight of that consideration may also be reduced if the circumstances give rise to a material risk of unconscious bias on the part of a person of the utmost integrity: Almazeedi v Penner [2018] UKPC 3, para 1 per Lord Mance. On other hand, the objective observer is alive to the possibility of opportunistic or tactical challenges. Parties engage in arbitration to win. Their legal advisers present their cases to the best of their ability, and this pursuit can include making tactical objections or challenges in the hope of having their dispute determined by a tribunal which might, without any question of bias, be more predisposed towards their view or simply to delay an arbitral determination. The courts are alive to similar tactical objections in litigation. In Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451, the Court of Appeal (Lord Bingham of Cornhill CJ, Lord Woolf MR and Sir Richard Scott V C) addressed the circumstances in which judicial office holders may be required to disqualify themselves from hearing a case. The court stated (para 25) that it would be dangerous and futile to attempt to define or list the factors which may or may not give rise to what we now describe as a real possibility of bias; [e]verything will depend on the facts, which may include the nature of the issue to be decided. The court stated (para 21): If objection is then made, it will be the duty of the judge to consider the objection and exercise his judgment upon it. He would be as wrong to yield to a tenuous or frivolous objection as he would to ignore an objection of substance. The court went on (para 22) to cite with approval dicta of Mason J in the High Court of Australia in In re JRL, Ex p CJL (1986) 161 CLR 342, 352: Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour. An arbitrator when deciding to accept a reference is not under the same obligation as a judge to hear a case but, having taken up the reference, the arbitrator may reasonably feel under an obligation to carry out the remit unless there are substantial grounds for self disqualification. Similarly, a court, when asked to remove an arbitrator, needs to be astute to see whether the ground of real possibility of bias is made out. Summarising the position so far, the English courts in addressing an allegation of apparent bias in an English seated arbitration will (i) apply the objective test of the fair minded and informed observer and (ii) have regard to the particular characteristics of international arbitration which I have discussed in paras 56 to 68. Those characteristics highlight the importance of proper disclosure as a means of maintaining the integrity of international arbitration, a topic to which I now turn. (ii) Disclosure a) The role of disclosure An arbitrator, like a judge, must always be alive to the possibility of apparent bias and of actual but unconscious bias. The possibility of unconscious bias on the part of a decision maker is known, but its occurrence in a particular case is not. The allegation, which is advanced in this case, of apparent unconscious bias is difficult to establish and to refute. One way in which an arbitrator can avoid the appearance of bias is by disclosing matters which could arguably be said to give rise to a real possibility of bias. Such disclosure allows the parties to consider the disclosed circumstances, obtain necessary advice, and decide whether there is a problem with the involvement of the arbitrator in the reference and, if so, whether to object or otherwise to act to mitigate or remove the problem: see Almazeedi (above) para 34; Davidson v Scottish Ministers (No 2) [2004] UKHL 34; 2005 1 SC (HL) 7. In the latter case, Lord Hope of Craighead stated (para 54): [T]he best safeguard against a challenge after the event, when the decision is known to be adverse to the litigant, lies in the opportunity of making a disclosure before the hearing starts. That is the proper time for testing the tribunals impartiality. Fairness requires that the quality of impartiality is there from the beginning, and a proper disclosure at the beginning is in itself a badge of impartiality. That statement mutatis mutandis applies to the arbitrator as much as to the judge. In Davidson (above, para 19) Lord Bingham of Cornhill spoke with approval of the practice of judges to disclose a previous activity or association which would or might provide a basis for a reasonable apprehension of lack of impartiality (emphasis added). When, on being asked to accept an appointment, an arbitrator knows of a matter which ought to be disclosed to the parties to the reference, prompt disclosure to those parties of that matter provides the safeguard as the quality of impartiality is shown to have been there from the beginning. But the obligation of impartiality continues throughout the reference and the emergence during the currency of the reference of matters which ought to be disclosed means that an arbitrators prompt disclosure of those matters can enable him or her to maintain what Lord Hope calls the badge of impartiality. The various arbitral codes to which we were referred address the need for proper disclosure in arbitrations. The IBA Guidelines 2014 set out good arbitral practice which is recognised internationally, and Popplewell J in setting out his uncontested principles in para 16 of his judgment in this case correctly stated that they can assist the court in identifying what is an unacceptable conflict of interest and what matters may require disclosure: para 16(7). But the IBA Guidelines do not of themselves give rise to legal obligations or override national law or the arbitral rules chosen by the parties: IBA Guidelines, Introduction para 6. By contrast, the submission to arbitration under arbitral rules can give rise to legal obligations. An agreement to submit to arbitration under the ICC Arbitration Rules 2017 is deemed to be a submission to those rules (article 6) and similar provision is made in the preamble to the LCIA Rules 2014 to give contractual effect to the relevant rules. Under those codes the arbitrator is required to make disclosure of facts and circumstances that may in the eyes of the parties give rise to doubts about the arbitrators independence and impartiality. Thus, in the IBA Guidelines, General Standard 3, the duty of disclosure is triggered by the existence of facts and circumstances that may, in the eyes of the parties, give rise to doubts as to the arbitrators impartiality or independence (emphasis added). It is clear from the explanation of General Standard 3 that under the IBA Guidelines the duty of disclosure arises out of the parties interest in being fully informed and a disclosure does not imply the existence of a conflict of interest. Article 11 of the ICC Arbitration Rules and article 5.4 of the LCIA Rules, relating to disclosure, have a similar focus on the perceptions of the parties to an arbitration. This subjective approach to the duty of disclosure in the IBA Guidelines and the rules of the arbitral institutions addresses the perception of the parties to an arbitration who are people or entities involved in a stressful and often expensive dispute. English law, by contrast, adopts an objective test by looking to the judgement of the fair minded and informed observer. The codes also use different expressions in describing the nature of the doubts. The IBA Guidelines (General Standard 3) speak simply of doubts while the ICC Rules (article 11) speak of reasonable doubts and the LCIA Rules (article 5.4) speak of justifiable doubts. But I do not think that there is a material difference between those formulations, as I do not construe the IBA Guidelines or the institutions rules as requiring disclosure when the only doubts to which the circumstances might give rise would be unreasonable or unjustified. It is also clear that an arbitrator may fail to make disclosure for entirely honourable reasons, such as forgetfulness, oversight, or a failure properly to recognise how matters would appear to the objective observer. But as Lord Bingham of Cornhill stated in Davidson (above, para 19), [h]owever understandable the reasons for it, the fact of non disclosure in a case which calls for it must inevitably colour the thinking of the observer. b) Whether there is a legal duty of disclosure? A question, on which Popplewell J and the Court of Appeal reached contradictory conclusions and which is material to this appeal, is whether disclosure is a legal duty in English law or merely good arbitral practice unless the parties submit their dispute to arbitration under arbitral rules which impose a legal obligation. The Court of Appeal held (para 71): the present position under English law to be that disclosure should be given of facts and circumstances known to the arbitrator which, in the language of section 24 of the Act, would or might give rise to justifiable doubts as to his impartiality. The court continued: Under English law this means facts or circumstances which would or might lead the fair minded and informed observer, having considered the facts, to conclude that there was a real possibility that the arbitrator was biased. (Emphasis added) The Court of Appeal held that this is a legal duty. In so holding, the Court of Appeal has developed the English law of arbitration. The question arises whether it was correct to do so. In my view the Court of Appeal was correct so to hold. An arbitrator is under the statutory duties, in section 33 of the 1996 Act, to act fairly and impartially in conducting arbitral proceedings, in decisions on matters of procedure and evidence and in the exercise of all powers conferred on him or her (para 49 above). Those statutory duties give rise to an implied term in the contract between the arbitrator and the parties that the arbitrator will so act. The arbitrator would not comply with that term if the arbitrator at and from the date of his or her appointment had such knowledge of undisclosed circumstances as would, unless the parties waived the obligation, render him or her liable to be removed under section 24 of the 1996 Act. Moving away from the circumstances of this appeal, if one supposes that an arbitrator has a close financial relationship with a party to the arbitration in which he or she is or is to be appointed, there can be little doubt that such a relationship could readily give rise to justifiable doubts as to the arbitrators impartiality. Indeed, if the arbitrator had a financial interest in the dispute he or she would be disqualified and the award would be voidable: Dimes v Proprietors of Grand Junction Canal (1852) 3 HL Cas 759; 10 ER 301. But absent disclosure, the other party to the arbitration would be unaware of that disqualifying interest. In such circumstances it would in my view be incumbent on the arbitrator to disclose the relationship in order to comply with his statutory duty of fairness under section 33 of the 1996 Act. The duty of fairness is engaged because it is necessary that the other party to the arbitration be aware of the arbitrators financial connection with the first party and so be able to form a judgment as to his or her suitability as an arbitrator. Unless there is disclosure, the parties may often be unaware of matters which could give rise to justifiable doubts about an arbitrators impartiality and entitle them to a remedy from the court under section 24 of the 1996 Act. Those remedies are necessary in the public interest. A legal obligation to disclose such matters is encompassed within the statutory obligation of fairness. It is also an essential corollary of the statutory obligation of impartiality: an arbitrator who knowingly fails to act in a way which fairness requires to the potential detriment of a party is guilty of partiality. Unless the parties have expressly or implicitly waived their right to disclosure, such disclosure is not just a question of best practice but is a matter of legal obligation. While the statutory duty on the arbitrator to act fairly and impartially arises on his or her appointment, there is a necessity for pre appointment disclosure if the arbitration system is to operate smoothly and the making of such disclosure is recognised as good practice. If an arbitrator waited until after appointment to make disclosure, the arbitrator might have to resign after appointment when a party objects to his or her appointment following disclosure. Unsurprisingly, there is an established practice of pre appointment disclosure by prospective arbitrators. It is striking that ICC, LCIA and CIArb, which have no financial interest in the outcome of this litigation but have an interest in the integrity and reputation of English seated arbitration, argue in favour of the recognition of such a legal duty. The existence of a legal duty promotes transparency in arbitration and is consistent with best practice as seen in the IBA Guidelines and in the requirements of institutional arbitrations such as those of ICC and LCIA. In summary, I would hold that there is a legal duty of disclosure in English law which is encompassed within the statutory duties of an arbitrator under section 33 of the 1996 Act and which underpins the integrity of English seated arbitrations. The relationship between disclosure and the duty of privacy and c) confidentiality In this appeal, which concerns the allegation that an arbitrator should have disclosed the existence of a related arbitration involving a common party, it is necessary to consider the obligation in English law on an arbitrator to uphold the privacy and confidentiality of an arbitration which has an English seat and the boundaries of that obligation. English seated arbitrations are both private and confidential, if the law governing the confidentiality of the arbitration is English law. The obligations on the parties to uphold the privacy and confidentiality of an arbitration have been characterised as implied obligations arising out of the nature of arbitration itself: Dolling Baker v Merrett [1990] 1 WLR 1205 (CA), 1213 per Parker LJ; Ali Shipping Corpn v Shipyard Trogir [1999] 1 WLR 314, 326 per Potter LJ. In the latter case Potter LJ stated, the parties have indicated their presumed intention simply by entering into a contract to which the court attributes particular characteristics. This analysis coincides with the view expressed by Sir Patrick Neill QC in his lecture, Confidentiality in Arbitration which he delivered in 1995, which is published in (1996) 12 Arb Int 287 318, and which the DAC cited with approval in their Report on the Arbitration Bill (para 12). In that lecture he described the privacy and confidentiality of arbitration proceedings as a fundamental characteristic of the agreement to arbitrate (p 316). In Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co [2004] EWCA Civ 314; [2005] QB 207, Mance LJ stated (para 2): Among features long assumed to be implicit in parties choice to arbitrate in England are privacy and confidentiality. Mance LJ went on to state (para 30) that the changes to the CPR in 1997 and 2002: rest clearly on the philosophy of party autonomy in modern arbitration law, combined with the assumption that parties value English arbitration for its privacy and confidentiality. Party autonomy requires the court so far as possible to respect the parties choice of arbitration. Their choice of private arbitration constitutes an election for an alternative system of dispute resolution to that provided by the public courts. The same philosophy limits court intervention to the minimum necessary in the public interest, which must include the public interest in ensuring not that arbitrators necessarily decide cases in a way which a court would regard as correct, but that they at least decide them in a fundamentally fair way: see section 1 of the 1996 Act. In his illuminating judgment in Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184; [2008] Bus LR 1361 Lawrence Collins LJ (para 84) described the fundamental characteristics of privacy and confidentiality in an agreement to arbitrate under English law as being really a rule of substantive law masquerading as an implied term. Arbitrators also must respect the private nature of the proceedings in which they are engaged: The Eastern Saga (para 57 above). They are bound to uphold the privacy and confidentiality of the arbitration, whether as a result of contract or in performance of an equitable duty because they have acquired the information in circumstances importing an obligation of confidence. The common law does not limit the obligation of privacy and confidentiality to information, such as a trade secret, which is inherently confidential but extends it to notes of evidence and other documents disclosed or generated in arbitration because of the implied agreement that such documents can only be used for the purpose of the arbitration. Further, privacy may be violated by the publication or dissemination of documents deployed in the arbitration or information relating to the conduct of the arbitration. See Emmott v Michael Wilson & Partners Ltd (above) Lawrence Collins LJ (paras 79 83), Thomas LJ (para 129(i) (iv)). What are the boundaries of the arbitrators obligation of privacy and confidentiality which would allow for or prevent disclosure? While there is broad agreement that the obligation is not absolute, its boundaries are unclear. The law in this area is developing. It is sufficient to quote Lawrence Collins LJs summary in Emmott (above) para 107 of the principal cases in which disclosure is permissible: In my judgment the content of the obligation may depend on the context in which it arises and on the nature of the information or documents at issue. The limits of that obligation are still in the process of development on a case by case basis. On the authorities as they now stand, the principal cases in which disclosure will be permissible are these: the first is where there is consent, express or implied; second where there is an order or leave of the court (but that does not mean that the court has a general discretion to lift the obligation of confidentiality); third, where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party; fourth, where the interests of justice require disclosure, and also (perhaps) where the public interest requires disclosure. As I have stated (para 57 above), the DAC did not support legislative definition but left the task of developing the rules relating to the privacy and confidentiality of arbitrations, including the boundaries of and exceptions to those obligations, to the judiciary. Parliament enacted the 1996 Act against that background. In this appeal the court is not concerned with identifying an exception to the duty of privacy and confidentiality but seeks to discover the extent to which the parties have implicitly consented to disclosure. After the hearing of this appeal, it became clear that the court needed further assistance from the parties and interveners concerning arbitral practices in making disclosure. In particular, the court sought guidance on practice in relation to the disclosure of facts concerning a related arbitration or arbitrations without obtaining the express permission of the parties to the arbitration about which information was being disclosed, and what were the practical consequences of the recognition of a legal duty of disclosure in those circumstances. Both parties and each of the interveners prepared careful written submissions for which the court is very grateful. It is clear from the parties and interveners initial cases and from their further submissions that there is a variety of arbitral practices in relation to the disclosure of multiple appointments in different contexts. In this context I use the expression multiple appointments to cover the acceptance of appointments in multiple references concerning the same or overlapping subject matter with only one common party as described in issue 1 in para 2 above. What is appropriate for arbitration in which the parties have submitted to institutional rules, such as those of ICC and LCIA, differs from the practice in GAFTA and LMAA arbitrations. There are practices in maritime, sports and commodities arbitrations, as the IBA Guidelines recognise (para 133 below), in which engagement in multiple overlapping arbitrations does not need to be disclosed because it is not generally perceived as calling into question an arbitrators impartiality or giving rise to unfairness. Where the information which must be disclosed is subject to an arbitrators duty of privacy and confidentiality, disclosure can be made only if the parties to whom the obligations are owed give their consent. In such a circumstance, if a person seeking appointment as an arbitrator in a later arbitration does not obtain the consent of the parties to a prior related arbitration to make a necessary disclosure about it, or the parties to the later arbitration do not consent to the arbitrators disclosure of confidential matters relating to that prospective appointment to the parties to the earlier arbitration, the arbitrator will have to decline the second appointment. Such consent may be express or may be inferred from the arbitration agreement itself in the context of the custom and practice in the relevant field. Regard must be had to the relevant custom and practice to ascertain whether consent can be inferred. For example, in an Admiralty case concerning a Lloyds Open Forum (LOF) arbitration, Peter Gross QC (sitting as a deputy High Court judge) agreed with the parties that the implied term of confidentiality in LOF arbitration agreements is qualified by the custom and practice of awards being made available to LOF arbitrators and counsel in other LOF cases, with a view to promoting uniformity and consistency within the LOF system of arbitration: The Hamtun (owners) v The St John (owners) [1999] 1 All ER (Comm) 587, 611. By agreeing to arbitrate in accordance with the terms and practice of a particular arbitral institution the arbitrating parties implicitly consent to the qualification or limitation of the obligations of privacy and confidentiality. In arbitrations which are governed by institutional rules which require disclosure to the institution or the parties of matters which may include information about other arbitrations (such as the ICC Arbitration Rules, article 11(2), the LCIA Rules, article 5.4, and the ICSID Arbitration Rules, rule 6(2)), the incorporation of such rules into an arbitration (arbitration 1) provides a basis for the inference that the parties to that arbitration consent to disclosure of such information about that arbitration to the parties to a prospective arbitration (arbitration 2) under such rules. Similarly, one can readily infer from the submission of the parties in arbitration 2 to such rules that they have consented to such disclosure to the parties to arbitration 1. As GAFTA and LMAA have shown, it is an accepted feature of their arbitrations that arbitrators will act in multiple arbitrations, often arising out of the same events. Parties which refer their disputes to their arbitrations are taken to accede to this practice and to accept that such involvement by their arbitrators does not call into question their fairness or impartiality. In the absence of a requirement of disclosure of such multiple arbitrations, the question of the relationship between such disclosure and the duty of privacy and confidentiality does not arise. As I have said, there is evidence of similar practice in re insurance arbitrations: para 43 above. Where parties submit to an ad hoc arbitration, practice as to privacy, confidentiality and disclosure may differ. Such arbitrations may include those in which the parties maintain the confidentiality of the existence of the arbitration itself by prohibiting any disclosure whatsoever. In such a case, the consent of both parties to the arbitration would be required to enable an arbitrator to disclose its existence to the parties to another arbitration. Whether an arbitrator can make disclosure of an existing or prospective arbitration without first obtaining the express consent of all parties to the arbitration about which disclosure requires to be made will depend on the relevant arbitration agreement and the custom and practice in the relevant field. In this appeal the court is concerned with a Bermuda Form arbitration which is a specialist form of arbitration (para 11 above). It is not disputed that it is common practice for parties, and in particular insurance companies, to appoint arbitrators who have experience in interpreting the Bermuda Form policy on repeated occasions, including in arbitrations relating to the same occurrence. There are sound reasons for doing so because the Bermuda Form contains some unique provisions and there is an interest in obtaining consistency of interpretation of the policy in the absence of published reports of the awards which the arbitrators have made. As Popplewell J stated (in para 23 of his judgment) parties often wish their arbitral tribunal to have particular knowledge and expertise in the law and practices of the relevant business or market. It is not uncommon for arbitrators in Bermuda Form arbitrations to disclose their involvement in prior or current arbitrations involving a common party without disclosing the identity of the other party or details concerning the arbitration, as the circumstances of this case demonstrate. But in this appeal the parties disagree as to the practice of disclosure in Bermuda Form arbitrations. Halliburton asserts that there is both a practice and a legal requirement to disclose the minimum information necessary to achieve proper disclosure while Chubb says that there is no established practice of disclosure in Bermuda Form arbitrations. I will address that question in para 137 below after I have considered the content of the duty of disclosure. It is sufficient at this stage to state that I am satisfied that in English law such multiple appointments must be disclosed in the absence of contrary agreement. The question which is relevant at this stage is: does the arbitrator need to obtain the express consent of the parties to the arbitration about which disclosure is to be made before making such disclosure? The parties agree that the disclosures which, in accordance with common practice in England, Mr Rokison made to the court in reference 1 and to Transocean in reference 2 did not breach his obligation of confidentiality to the parties to the references which were disclosed. Other nominees for appointment by the court in reference 1 made similar disclosures without seeking consent. Mr Rokisons disclosure, which Clyde & Co passed on to Transocean on 23 December 2015, stated: I have acted as party appointed arbitrator and chairman in many Bermuda Form arbitrations, a number of which, not surprisingly, have involved [Chubb], who have appointed me as their nominated arbitrator on various occasions. I have also previously acted as chairman in two other arbitrations, in which [Chubb] was a party. Currently I have only three pending cases involving [Chubb]. In one, I am their appointee; in the second, I have been appointed as sole arbitrator by agreement between the parties; and, in the third, I have been appointed as third arbitrator by order of the London Commercial Court. The last of these also happens to involve what I understand is a different aspect of the Deepwater Horizon incident. I do not consider that the above matters affect my independence or impartiality, which I have always been at pains to maintain, but I nonetheless consider that these are matters which ought to be disclosed at this stage, rather than risking possible disruption of the arbitral proceedings after they have got under way. It is not disputed that the duty of privacy and confidentiality is not absolute, that the parties to an arbitration can determine as a matter of contract the extent to which they wish matters to be treated as confidential, or that there is a common practice for arbitrators in English seated arbitrations to make such high level disclosure of their involvement in other relevant arbitrations without obtaining the express consent of the parties to the arbitrations about which disclosure is being made. Halliburtons position is that the arbitrators duty of confidentiality does not prevent the disclosure of the names of the parties to the disclosed arbitration. Chubbs position is that the arbitrators duty of confidentiality covers the identity of the parties but that the information which Mr Rokison disclosed to Transocean, which did not include the identity of the parties other than Chubb itself, which was the common party who proposed his appointment, or the issues in the disclosed arbitrations, was confidential to Chubb alone and the disclosure was made on Chubbs behalf. The needed consent can therefore be inferred. There also appears to be broad agreement between ICC, LCIA and CIArb that as a general rule, in the context of a proposed appointment by a common party, an arbitrator can disclose the existence of a current or past arbitration involving a common party and the identity of the common party (but not the identity of the other party or parties) without obtaining the express consent of the parties to that arbitration, unless the parties to that arbitration have agreed to prohibit such disclosure. The arbitrator may similarly disclose the proposal for his or her engagement in a proposed arbitration and the identity of the common party who is seeking to make the appointment or nomination. The widespread arbitral practice in English seated arbitrations, which those institutions describe, supports the view that an arbitrator can do so on a confidential basis without breaching his or her obligation of privacy and confidentiality. This current practice of arbitrators in English seated arbitrations vouches two things. First, as a general rule the duty of privacy and confidentiality is not understood to prohibit all forms of disclosure of the existence of a related arbitration in the absence of express consent. Secondly, the duty of disclosure does not give an arbitrator carte blanche to disclose whatever is necessary to persuade a party that there is no justification for doubts about his or her impartiality. There will be many matters which cannot be disclosed without the express consent of the parties to that arbitration. As I discuss further in para 146 below, the information that can be disclosed in this context without having to obtain the express consent of the parties to the disclosed arbitration is limited. In many cases such a limited disclosure may satisfy the recipient, as Transoceans response to Mr Rokisons disclosures shows. If an arbitrator needs to disclose more detail about another arbitration in order to comply with the duty of disclosure, the arbitrator or proposed arbitrator must obtain the consent of the parties to the arbitration or proposed arbitration about which he or she is making a disclosure. It is clear from the responses to the courts further questions that participants in arbitration understand that the information which is disclosed can be used by its recipients only for the purpose of judging the impartiality and suitability of the arbitrator making the disclosure. The legal basis for this expectation or practice is that there is an equitable duty on the recipient to confine the use of the information to the purpose for which it was disclosed because (a) the information about the related arbitration is of a confidential nature and (b) it is imparted in circumstances importing an obligation of confidence: Coco v A N Clark (Engineers) Ltd [1969] RPC 41, 47 per Megarry J. The first of these criteria is met because of the general rule that English seated arbitrations are private matters. The second is met because the recipients of the disclosure know that the information which is the subject of the disclosure has been given to the arbitrator in the context of a confidential relationship between the arbitrator and the parties to the arbitration or prospective arbitration whose existence is being disclosed. In my view, the law can and should recognise the realities of accepted commercial and arbitral practice as a guide both in the formulation of legal rules and in the interpretation of the parties contracts when the practice operates in the public interest. In this case it should do so. In the 18th century, Lord Mansfield as Chief Justice of the Kings Bench used honest commercial practices and informal rulings on the lex mercatoria to shape the common law in relation to commercial matters. More recently, Lord Goff of Chieveley in an extra judicial writing (Commercial Contracts and the Commercial Court [1984] LMCLQ 382, 391) described the role of a judge to assist honest businesspeople in these terms: We are there to give effect to their transactions, not to frustrate them: we are there to oil the wheels of commerce, not to put a spanner in the works, or even grit in the oil. There is a public interest in upholding the integrity of arbitration as a system of alternative dispute resolution by ensuring that there is proper disclosure of an arbitrators involvement in related arbitrations in a field of arbitration in which repeated appointments occur but in which there is no common understanding that disclosure is not required. There is also a strong public interest in giving greater certainty as to the legal standing of established arbitral practice and the relationship between the duty of disclosure and an arbitrators duty to respect the privacy and confidentiality of an arbitration. In short, this court should hold that in Bermuda Form arbitrations an arbitrator may, in the absence of agreement to the contrary by the parties to the relevant arbitration, make disclosure of the existence of that arbitration and the identity of the common party in accordance with the practice which I have described without obtaining the express consent of the relevant parties. The consent of the common party can be inferred from its action in seeking to nominate or to appoint the arbitrator. The consent of the other party is not required for such limited disclosure. In legal analysis, the contract or contracts under which the arbitrator has been appointed in an existing or past arbitration is to be interpreted in the light of the custom and practice in the relevant field of arbitration and the party or parties to whom the relevant duty of confidence is owed are taken to have consented to such disclosure on a confidential basis. The common law obligation of confidence owed by a candidate for appointment to a prospective arbitration is to be understood in the same way. It appears from the submissions of ICC, LCIA and CIArb that the practice in English seated arbitrations of making a confidential disclosure of involvement in an arbitration involving a common party without obtaining the express consent of the parties to that arbitration is, unsurprisingly, not confined to Bermuda Form arbitrations. Nonetheless, how far this ruling on consent, which relates to Bermuda Form arbitrations, can be applied by analogy to other arbitrations will depend on their particular characteristics and circumstances and custom and practice in their field. d) The risk of further challenges? For completeness, I also address the suggestion by Chubb that the recognition of a legal duty of disclosure will tend to increase the number of challenges to appointment and to awards and possibly give rise to personal claims against arbitrators. Halliburton, ICC, LCIA and CIArb do not agree and none of the respondents to the courts questions are able to assist the court with empirical evidence on the matter. There is some empirical evidence that, in the years immediately after the IBA Guidelines were adopted in 2004, there was an increase in challenges to arbitrators as a result of disclosures. But three points may be made. First, this increase was not a consequence of making disclosure a legal duty but may have been the result of more extensive disclosure which followed the formulation of good practice. Secondly, that statement of good practice exists and is influential internationally whether or not a jurisdiction has a legal duty of disclosure. Thirdly, the challenges have rarely succeeded. Further, research carried out within the court in relation to jurisdictions which impose a legal duty of disclosure found very little evidence of personal claims against arbitrators. I respectfully question whether there is a basis in English law for a claim for damages relating to disclosure or non disclosure, in the absence of bad faith, where the legal duty is a component of the statutory duties of fairness and impartiality which do not support such claims. In any event, section 29 of the 1996 Act will protect arbitrators against personal claims for non disclosure in most circumstances so long as the arbitrator has not acted in bad faith. The LCIA Arbitration Rules (article 31) and the ICC Arbitration Rules (article 41) contain exclusion provisions and parties, arbitrators and institutions, who have not already done so, can adapt their contracts or rules to confer a wider immunity against personal claims in the light of this ruling. e) What is the content of the duty? I also agree with the Court of Appeals formulation of the duty of disclosure (para 74 above) subject to one qualification, which concerns the words known to the arbitrator. An arbitrator can disclose only what he or she knows and is, as a generality, not required to search for facts or circumstances to disclose. But I do not rule out the possibility of circumstances occurring in which an arbitrator would be under a duty to make reasonable enquiries in order to comply with the duty of disclosure. For example, if a would be arbitrator had a business relationship with a person (A), which, because of a financial interest, would have prevented him from being an arbitrator in a reference in which A was a party, he or she, if offered an appointment in an arbitration in which B was a party, might be under an obligation to make enquiry if he or she had grounds to think that B might a business partner of A. Mr Kimmins, on behalf of LCIA, referred the court to the IBA Guidelines, Part I, General Standard 7(d), and submitted that an arbitrator is under a duty to make reasonable enquiries as to whether there are facts or circumstances which might lead the fair minded and informed observer to conclude that there was a real possibility of bias. It is not necessary in the context of this appeal to express a concluded view on whether this statement of good practice is also an accurate statement of English law, but I do not rule out that it might be. What is meant by the Court of Appeals formulation of the duty, and in particular the words would or might? Counsel hardly touched on this issue. It is not central to the dispute but it must be addressed. It appears to me that if some matter would give rise to justifiable doubts as to an arbitrators impartiality, the disclosure of that matter would not as a general rule remove the difficulty. The correct course for the arbitrator would usually be not to take up or, if the matter arose later, to withdraw from the reference. On the other hand, to require disclosure of some matter which was trivial and could not materially support a conclusion that there was a real possibility of bias, would be to risk causing the parties unnecessary concerns about an arbitrators impartiality and also to encourage vexatious challenges by a party to the arbitrators position. As Lord Mance stated in Helow (above, para 58): [T]o take two opposite extremes, disclosure could not avoid an objection to a judge who in the light of the matter disclosed clearly ought not to hear the case; and non disclosure could not be relevant, if a fair minded and informed observer would not have thought that there was anything even to consider disclosing. An obligation to disclose a matter which might give rise to justifiable doubts arises only where the matter might reasonably give rise to such doubts. There will be matters between the two extremes of which Lord Mance spoke. There will be matters which, if left unexplained, would give rise to justifiable doubts as to an arbitrators impartiality. They must be disclosed and neutralised by explanation. Similarly, there will be matters, which are more than trivial, which an arbitrator ought to recognise could by themselves or in combination with other circumstances (including a failure to disclose those matters) give rise to such justifiable doubts, if later discovered. Commentators have sought to express the requirement in different ways. Redfern and Hunter (above, paras 4.79 4.80) suggest that the arbitrator should disclose all of the facts that could reasonably be considered to be grounds for disqualification and also that there should be immediate disclosure if new circumstances arise that might give cause for any doubt as to the arbitrators impartiality. Merkin and Flannery on the Arbitration Act 1996, 6th ed (2019), pp 286 287, advise that an arbitrator should disclose any fact or circumstance which in his or her mind would or might (once disclosed) give rise to justifiable doubts as to his or her impartiality. The authors draw on the case of Almazeedi (above) and suggest that the purpose of disclosure may often go beyond legitimate concerns about independence and impartiality which would (subject to waiver) require the arbitrator to recuse himself or herself because such disclosure enables the parties to address whether there is a problem and if so how to tackle it. They advise disclosure in cases where the arbitrator might not be sure whether the truth, if disclosed, would give rise to justifiable doubts, but would (or ought to) know that the truth might do so. D Sutton et al, Russell on Arbitration, 24th ed (2015), para 4 131 state that an arbitrator should disclose a prior interest that might raise doubts about his impartiality but go on to suggest that the only legal obligation is to disclose matters which would amount to bias. Like the Court of Appeal, I am not persuaded that the legal obligation is limited as the authors of Russell suggest in their second statement. It has been suggested that the breach of a legal obligation to disclose a matter which might, but on examination after the event did not, give rise to a real possibility of bias would be a legal wrong for which there was no legal sanction. I do not agree for two reasons. First, in a case in which the matter is close to the margin, in the sense that one would readily conclude that there is apparent bias in the absence of further explanation, the non disclosure itself could justify the removal of the arbitrator on the basis of justifiable doubts as to his or her impartiality: paras 117 118 below. Secondly, in cases where the matter is serious but the non disclosure of that matter, on later examination, does not support the conclusion that there is apparent bias, the arbitrator might, depending on the circumstances, face an order to meet some or all of the costs of the unsuccessful challenger or to bear the costs of his or her own defence. The existence of such a duty provides support to the fairness and impartiality of arbitral proceedings under English law by allowing non disclosure to carry greater weight in the basket of factors to be assessed under section 24(1)(a) of the 1996 Act than a mere deviation from best practice. The development of the common law to impose such a duty is consistent with developments in other jurisdictions. In Scotland, there was no express authority but legal commentators on arbitration had long suggested that an arbiter is subject to a duty to disclose to the parties any factor of which he is aware which might provide a basis for a challenge: F Davidson, Arbitration, 1st ed (2000), para 6.20 and the commentaries which he there cites. More recently, the Scottish Parliament has enacted a mandatory rule in the Arbitration (Scotland) Act 2010, which draws on the UNCITRAL Model Law. This rule (Schedule 1, rule 8) imposes a duty on an arbitrator or anyone asked to become an arbitrator to disclose any conflicts of interest. It provides that the individual must without delay make disclosure of: any circumstances known to the individual (or which become known to the individual before the arbitration ends) which might reasonably be considered relevant when considering whether the individual is impartial and independent. Professor Davidson in the second edition of his book (in 2012) (paras 7.29 7.30) observes that this is an objective test and suggests that the factors listed in the Red and Orange Lists of the IBA Guidelines will usually provide useful guidance. Several jurisdictions have adopted the UNCITRAL Model Law which provides in article 12(1): When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties (Emphasis added) The word likely in the UNCITRAL Model Law must be interpreted in the context of the Model Law itself, which appears to suggest that the obligation to disclose arises if the circumstances could reasonably give rise to justifiable doubts. This is because the wording of article 12(1) is in contrast with article 12(2) which provides that an arbitrator may be challenged if circumstances exist that give rise to justifiable doubts (emphasis added). Provisions to substantially the same effect have been adopted in jurisdictions which have adopted the UNCITRAL Model Law, including Germany (section 1036 of Book 10 of the Zivilprozessordnung), Canada (article 12 of Schedule 1 to the Canadian Commercial Arbitration Act, RSC 1985), Belgium (article 1686(1) of the Belgian Judicial Code), Sweden (sections 8 and 9 of the Swedish Arbitration Act 1999) and Austria (section 588 of the Austrian Arbitration Act 2006). In Switzerland, although the rule is not part of a statutory regime, the Swiss Chambers Arbitration Institution has adopted the UNCITRAL Model Laws approach in article 9(2) of its Swiss Rules of International Arbitration. It is consistent with these international comparators for English common law in relation to the obligation of disclosure of an arbitrator to develop as the Court of Appeal has found. f) Summary on disclosure In summary, the arbitrators legal obligation of disclosure imposes an objective test. This differs from the rules of many arbitral institutions which look to the perceptions of the parties to the particular arbitration and ask whether they might have justifiable doubts as to the arbitrators impartiality. The legal obligation can arise when the matters to be disclosed fall short of matters which would cause the informed observer to conclude that there was a real possibility of a lack of impartiality. It is sufficient that the matters are such that they are relevant and material to such an assessment of the arbitrators impartiality and could reasonably lead to such an adverse conclusion. Whether and to what extent an arbitrator may disclose the existence of a related arbitration without obtaining the express consent of the parties to that arbitration depends upon whether the information to be disclosed is within the arbitrators obligation of privacy and confidentiality and, if it is, whether the consent of the relevant party or parties can be inferred from their contract having regard to the customs and practices of arbitration in their field. (iii) Whether a failure to make disclosure can demonstrate a lack of impartiality Is disclosure relevant to apparent bias? Mr Michael Crane QC on behalf of Chubb correctly makes the point that the inequality of knowledge, which Halliburton lists as one of the principal concerns arising from multiple references concerning overlapping subject matter with only one common party, raises a question of the fairness of the arbitral proceedings, which can be dealt with under section 24(1)(d)(i) of the 1996 Act if there is proof of substantial injustice. That is so; but a failure of that arbitrator to disclose the other references could give rise to justifiable doubts as to his or her impartiality. I agree with the dicta of Cockerill J in PAO Tatneft v Ukraine [2019] EWHC 3740 (Ch), para 57 that: the obligation of disclosure extends to matters which may not ultimately prove to be sufficient to establish justifiable doubts as to the arbitrators impartiality. However, a failure of disclosure may then be a factor in the latter exercise. Where an arbitrator has accepted an appointment in such multiple references in circumstances which might reasonably give rise to justifiable doubts as to his or her impartiality, or is aware of other matters which might reasonably give rise to those doubts, a failure in his or her duty to disclose those matters to the party who is not the common party to the references deprives that party of the opportunity to address and perhaps resolve the matters which should have been disclosed. The failure to disclose may demonstrate a lack of regard to the interests of the non common party and may in certain circumstances amount to apparent bias. (iv) The time of the assessment of the need for disclosure The Court of Appeal (para 70) held that, as disclosure was required of circumstances that might lead to a conclusion of apparent bias, the question of what is to be disclosed is to be considered prospectively. A court when later assessing whether there should have been disclosure must have regard to the circumstances prevailing at the time when the arbitrator acquired the requisite knowledge of those circumstances and disregard matters of which the arbitrator could not have known at that time. I agree with that conclusion. A determination as to whether an arbitrator has failed to perform a duty to disclose can only be made by reference to the circumstances at the time the duty arose and during the period in which the duty subsisted. The question whether there should have been disclosure should not be answered retrospectively by reference to matters known to the fair minded and informed observer only at a later date. The duty of disclosure is a continuing duty and circumstances may change before there is disclosure. Those circumstances may aggravate an existing failure to disclose a matter or, while not expunging such a failure, may render any continuing failure a less potent factor in an assessment of justifiable doubts as to impartiality. For example a scenario might be that (i) an arbitrator accepts an appointment in a reference between A and B; (ii) the arbitrator accepts an appointment in an overlapping reference to which A is not a party but B is, without disclosing the appointment to A in circumstances in which the arbitrator should have disclosed it; (iii) the arbitrator makes an interim determination in the first reference which causes A to question his or her impartiality; (iv) the second reference then does not proceed. The failures to disclose at stages (ii) and (iii) would not be negated by the termination of the second reference, but in assessing the significance of the continuing failures to disclose after stage (iv) to the question of justifiable doubts, the court would have regard to the fact that the second arbitration did not proceed. (v) The time of assessment of the possibility of bias What is the time by reference to which the court must assess the question of the possibility of bias? This question is, in my view, of central importance to the outcome of this appeal. As we have seen, section 24(1)(a) empowers the court to remove an arbitrator on the ground that circumstances exist that give rise to justifiable doubts as to his impartiality. The use of the present tense (exist) directs the court to assess the circumstances as they exist at the date of the hearing of the application to remove the arbitrator by asking whether the fair minded and informed observer, having considered the facts then available to him or her, would conclude that there is a possibility that the arbitrator is biased. There is support for this view in the case law concerning the application of the test in other circumstances. In R v Gough [1993] AC 646, Lord Goff of Chieveley stated (p 670E) that the court had to ascertain the relevant circumstances from the available evidence, knowledge of which would not necessarily be available to an observer in court at the relevant time. In AT & T Corpn v Saudi Cable Co [2000] 2 Lloyds Rep 127, the Court of Appeal (Lord Woolf MR, Potter and May LJJ) dealt with an application for the removal of an arbitrator as chairman of an ICC Tribunal on the ground of apparent bias. Lord Woolf in para 42 of his judgment described the courts task in this way: The court considers on all the material which is placed before it whether there is any real danger of unconscious bias on the part of the decision maker. This is the case irrespective of whether it is a judge or an arbitrator who is the subject of the allegation of bias. (Emphasis added) Lord Woolfs formulation of the test pre dated the refinement of Lord Goffs formulation by Lord Hope in Porter v Magill but that refinement is not material to the point for which I cite this passage. In R (Condron) v National Assembly for Wales [2006] EWCA Civ 1573; [2007] LGR 87 the Court of Appeal (Ward, Wall and Richards LJJ) addressed a challenge to a decision to allow a planning application taken by the Planning Decision Committee of the Assembly on the basis of apparent bias arising from a remark made by a member of the committee to an objector on the day before the decision. After the decision, the objectors to the application complained to the Commissioner for Standards who produced a report several months later which stated that he found no evidence of bias in the members consideration of the application. The judge disregarded evidence of the Commissioners assessment of what had occurred at the meeting of the committee, because it would not have been available to the objectors or the hypothetical observer at the time of the decision. Richards LJ, with whom the other Lord Justices agreed, disagreed with the judges approach and stated (para 50): The court must look at all the circumstances as they appear from the material before it, not just at the facts known to the objectors or available to the hypothetical observer at the time of the decision. At para 63 of AT & T Corpn Potter LJ in his concurring judgment described the courts task as embodying the standards of the informed observer viewing the matter at the relevant time, which is of course the time when the matter comes before the court. In the present appeal the Court of Appeal was correct in para 95 of its judgment to apply the test for apparent bias by asking whether at the time of the hearing to remove the circumstances would have led the fair minded and informed observer to conclude that there was in fact a real possibility of bias. I turn then to the two principal issues in this appeal. (vi) The issues Issue 1 a) The first issue is whether and to what extent an arbitrator may accept appointments in multiple references concerning the same or overlapping subject matter with only one common party without thereby giving rise to an appearance of bias. Arbitration involves the conferral of jurisdiction by contract, through the consensus of the parties to the reference. As it is a contract based jurisdiction, the degree of the independence of the arbitrators from the parties and the extent of their prior knowledge of the circumstances of an event giving rise to the arbitration or the market in which the arbitrating parties operate may, subject to the requirements of the 1996 Act, be determined by the agreement of the parties, express or implied. The 1996 Act contains no provision which directly addresses the arbitrators independence and prior knowledge, but it imposes the centrally important obligations of fairness and impartiality. Therefore, an arbitrator would be in breach of the requirements of the 1996 Act if his or her lack of independence compromised the duties of fairness and impartiality. In the absence of a statutory provision which directly addresses the question of overlapping appointments, the fair minded and informed observer will have regard to the terms of the contract or contracts giving rise to the arbitration and the factual matrix in addressing the issue. In considering the factual matrix, the objective observer will take account both of the differing perceptions of the role of the party appointed arbitrator and the fact that in certain subject matter fields of arbitration there are different expectations as to the degree of independence of an arbitrator and as to the benefits to be gained by having an arbitrator who is involved in multiple related arbitrations. The objective observer will appreciate that there are differences between, on the one hand, arbitrations, in which there is an established expectation that a person before accepting an offer of appointment in a reference will disclose earlier relevant appointments to the parties and is expected similarly to disclose subsequent appointments occurring in the course of a reference, and, on the other hand, arbitrations in which, as a result of relevant custom and practice in an industry, those expectations would not normally arise. The objective observer will consider whether in the circumstances of the arbitration in question it would be reasonable to expect the arbitrator not to have the knowledge or connection with the common party which the multiple references would give him or her. It is clear that interrelated arbitrations meeting the description of issue 1 are rarer in some circumstances than in others. Mr Constantine Partasides QC, who appears on behalf of ICC, represents to the court that such interrelated arbitrations are not common in ICC arbitrations and therefore such circumstances may more readily give rise to an appearance of bias. GAFTA and LMAA explain that multiple appointments are common in their fields of operation: see paras 43 and 44 above. There is also evidence from ARIAS (UK) of such practice in reinsurance arbitrations: para 43 above. It appears that it is not uncommon for a number of arbitrations involving claims against different insurers arising out of the same incident to commence at around the same time and for the same arbitrator to be appointed in respect of several or all of those arbitrations: see for example, Jacobs, Masters and Stanley, Liability Insurance in International Arbitration. The Bermuda Form, 2nd ed (2011), para 14.32. It is of note that both Halliburton and Chubb made such appointments in relation to the Deepwater Horizon disaster. It does not appear that this practice is inherently problematic so long as the arbitrator can approach each individual arbitration objectively and with an open mind; it depends on the facts of the individual case: see, in analogous judicial proceedings, Locabail (UK) Ltd (above), para 25 (p 480G H); Stubbs v The Queen [2018] UKPC 30; [2019] AC 868, para 16. Mr Crane also cited many arbitral appeals in which courts or arbitral bodies have rejected challenges to an arbitrators impartiality based on his or her participation in prior or contemporaneous related arbitrations. Different practices in differing fields are recognised in the IBA Guidelines. As the LMAA points out, the IBA Guidelines describe the Orange List as a non exhaustive list of specific situations that, depending on the facts of a given case, may, in the eyes of the parties, give rise to doubts as to the arbitrators impartiality or independence (emphasis added). The IBA Guidelines impose a higher test for the duty to decline an appointment than for the duty of disclosure. The former requires the existence of justifiable doubts (General Standard 2; para 54 above) and the latter merely the possibility of such doubts (General Standard 3; para 72 above). The Court of Appeal in para 53 of its judgment agreed with the judge that the mere fact that an arbitrator accepts appointments in multiple references concerning the same or overlapping subject matter with only one common party does not of itself give rise to an appearance of bias. The court referred to the judgment of Dyson LJ in AMEC Capital Projects Ltd v Whitefriars City Estates Ltd [2004] EWCA Civ 1418; [2005] 1 All ER 723, paras 20 and 21, in support of the view that something more, which was something of substance, was required. I do not interpret the Court of Appeal as saying that the acceptance of multiple appointments can never be sufficient of itself to give rise to the appearance of bias. But if that is what the court meant, I would respectfully disagree, especially because the inequality of knowledge between the common party and the other party or parties has the potential to confer an unfair advantage of which an arbitrator ought to be aware. It must depend on the circumstances of the particular arbitration, including the custom and practice in arbitrations in the relevant field, which should be examined closely. I therefore agree with the submission of LCIA that where an arbitrator accepts appointments in multiple references concerning the same or overlapping subject matter with only one common party, this may, depending on the relevant custom and practice, give rise to an appearance of bias. b) Issue 2 The second issue is whether and to what extent an arbitrator may accept the multiple references described in the first issue without making disclosure to the party who is not the common party. In English law it is not necessary that the facts or circumstances which are to be disclosed would cause the fair minded and informed observer to conclude that there was a real possibility that the arbitrator was biased. It is sufficient that they might reasonably cause the objective observer to reach that conclusion: see paras 108 and 118 above. It follows that the obligation to disclose can arise in circumstances in which the objective observer, informed of the facts at the date when the decision whether to disclose is or should have been made (the disclosure date), might reasonably conclude that there was a real possibility of bias, even if at a later date, with the benefit of information which was not available at the disclosure date, the objective observer would conclude that there was not such a real possibility. The failure of the arbitrator to disclose such facts and circumstances is itself a factor to which the fair minded and informed observer would have regard in reaching a conclusion as to whether there was a real possibility of bias. Whether there needs to be such a disclosure depends on the distinctive customs and practices of the arbitration in question. The Orange List in the IBA Guidelines includes the circumstance of an arbitrator having been appointed as arbitrator on two or more occasions within the past three years by one of the parties or its affiliate (para 3.1.3 of Part II (Practical Application of the General Standards)). However, footnote 5 to para 3.1.3 states: It may be the practice in certain types of arbitration, such as maritime, sports or commodities arbitration, to draw arbitrators from a smaller or specialised pool of individuals. If in such fields it is the custom and practice for parties to frequently appoint the same arbitrator in different cases, no disclosure of this fact is required, where all parties in the arbitration should be familiar with such custom and practice. Para 3.1.5 of that Part also lists as a circumstance which might require disclosure: The arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving one of the parties, or an affiliate of one of the parties. There will be cases where the custom and practice of the type of arbitration have created expectations which would negative the need for disclosure. There may also be cases where the failure to disclose would carry little or no weight as in Helow v Secretary of State for the Home Department (above), para 58 per Lord Mance. But an arbitrator cannot be wholly equated with a judge: see paras 56 68 above. There will therefore be circumstances in which an arbitrator is under a duty to make disclosure when a judge would not. There may be many circumstances in which the combination of multiple references as described in the first issue and a failure by the arbitrator to disclose such references to the party who is not a common party would give rise to the appearance of bias. That would require the arbitrator to extricate himself or herself from one or more of the relevant arbitrations or to face removal by the court. There may also be circumstances in which because of the custom and practice of specialist arbitrators in specific fields, such as maritime, sports and commodities and maybe others, such multiple appointments are a part of the process which is known to and accepted by the participants. In such circumstances no duty of disclosure would arise. But rather than having disputes about the existence or absence of such a duty by proof of a general custom and practice in a particular field of arbitration, there may be merit in putting the matter beyond doubt by express statement in the rules or guidance of the relevant institutions. And, in line with the principle of party autonomy, the parties to an arbitration can contract to limit the arbitrators obligation of disclosure. The answer to the second issue therefore is that, unless the parties to the arbitration otherwise agree, arbitrators have a legal duty to make disclosure of facts and circumstances which would or might reasonably give rise to the appearance of bias. The fact that an arbitrator has accepted appointments in multiple references concerning the same or overlapping subject matter with only one common party is a matter which may have to be disclosed, depending upon the customs and practice in the relevant field. In cases in which disclosure is called for, the acceptance of those appointments and the failure by the arbitrator to disclose the appointments taken in combination might well give rise to the appearance of bias. (vii) Must there be disclosure of multiple appointments in the context of Bermuda Form arbitrations? In my view under English law multiple appointments (as described in the first issue (para 2)) must be disclosed in the context of Bermuda Form arbitrations in the absence of an agreement to the contrary between the parties to whom disclosure would otherwise be made. Unlike in GAFTA and LMAA arbitrations, it has not been shown that there is an established custom or practice in Bermuda Form arbitrations by which parties have accepted that an arbitrator may take on such multiple appointments without disclosure. This is unsurprising as the claimant in such an arbitration may often not be a repeat player while an insurance company is much more likely to be. The need for disclosure can be illustrated by the circumstances of this case which I discuss more fully in the next section. In summary, on appointment as arbitrator in reference 1, Mr Rokison became subject to the statutory duties in section 33 of the 1996 Act, to act fairly and impartially in conducting arbitral proceedings, in decisions on matters of procedure and evidence and in the exercise of all powers conferred on him (para 49 above). Those duties were owed to both Halliburton and Chubb. One of Halliburtons complaints (para 41 above) is that relevant information and the opportunity for communication with the common arbitrator were available to Chubb in reference 2 which were not available to Halliburton. Being unaware of the appointment in reference 2, Halliburton was not able to assess whether and to what extent this involved unfairness and how to respond to that appointment. The appointment in reference 2 had the potential to give rise to unfairness, which Halliburton had no opportunity to address. The failure to give a party to an arbitration that opportunity, Halliburton argues, might amount to apparent bias. I agree. (viii) Application to the facts Before accepting his appointment by the High Court, Mr Rokison disclosed his prior involvement in arbitrations involving Chubb, including those in which he was appointed by Chubb. The High Court appointed him to reference 1 against the wishes of Halliburton but as one of the nominees of Chubb. The courts decision to appoint Mr Rokison, which was not challenged, means that Halliburtons wish to have another person to be the chair of the arbitral tribunal is of little if any relevance to the objective assessment of Halliburtons claim of appearance of bias. When Mr Rokison was offered the appointments by Chubb as party appointed arbitrator on references 2 and 3, he disclosed his appointment in reference 1 to the parties to those arbitrations. Transocean did not object. The appointment in reference 2 was made approximately six months after Flaux J appointed him as the third arbitrator in reference 1 and the appointment in reference 3 was over one year after that court appointment. Other things being equal, the objective observer at the time of each of the later appointments would expect that the substantive hearing in reference 1 would precede those in references 2 and 3. Each of the references arose out of the Deepwater Horizon disaster and concerned the liability of an insurer to indemnify a party involved in the disaster which had settled claims. It is not clear that at the date of his acceptance of appointment in reference 2 in December 2015, Mr Rokison would have known of the degree of overlap which might arise between reference 1 and reference 2. Most of the background circumstances of the disaster would be uncontroversial but it is not clear whether the different circumstances of the two settlements, including the fact that one pre dated and the other post dated the Federal Judgment, would have been apparent. Even if such information was then available, there is no suggestion that, at the date of appointment in reference 2, the preliminary issue which undermined Transoceans claims for indemnity had been identified as a feature that distinguished reference 2 from reference 1. The possibility that the common party to two overlapping references might obtain an advantage over its opponent in one or the other arbitration by having access to information about the common arbitrators responses to the evidence led or the arguments advanced in the arbitration which was the first to be heard can readily be seen as a cause of concern to the other party in the arbitration in which the evidence and legal submissions are heard later. That is why, in an application under section 18 of the 1996 Act, Leggatt J declined to appoint as the third arbitrator in two related arbitrations a person who had been appointed the third arbitrator in a prior overlapping arbitration, holding that there would be a legitimate concern that he would be influenced by arguments and evidence in the earlier arbitration: Guidant LLC v Swiss, In re International SE [2016] EWHC 1201 (Comm); [2016] 1 CLC 767. In the present case, the existence of possibly overlapping arbitrations with only one common party would not necessarily cause the fair minded and informed arbitrator to conclude that there was a real possibility of bias, when assessed at the date when the appointment to reference 2 was made. But if Halliburton had been aware of the appointment in reference 2, it might have had concerns about the fairness of its arbitration because of the inequality of knowledge and opportunities to communicate with the arbitrator set out in para 41 above. Such circumstances might reasonably cause the objective observer considering the matter at that time to conclude that there was a real possibility of bias. The circumstances were both relevant and material to that assessment. I recorded in para 27 above the fact that Halliburton had not formally disclosed their appointment of Professor Park in three arbitrations arising out of the Deepwater Horizon incident and the suggestion that the fact that Professor Park was a party appointed arbitrator rather than a chair or umpire is a significant distinction from Mr Rokisons position. As I have said, that is not a distinction which English law would recognise as a basis for a party appointee avoiding the obligation of disclosure. The disagreement among people involved in international arbitration as to the role of the party appointed arbitrator is a circumstance which points to the disclosure of such multiple nominations; it does not provide a ground for non disclosure. I am persuaded that Mr Rokison was under a legal duty to disclose his appointment in reference 2 to Halliburton because at the time of that appointment the existence of potentially overlapping arbitrations with only one common party was a circumstance which might reasonably give rise to the real possibility of bias. In my view the disclosure in such circumstances ought to have included (i) the identity of the common party who was seeking the appointment of the arbitrator in the second reference (ii) whether the proposed appointment in the second reference by the common party was to be a party appointment or a nomination for appointment by a court or a third party, and (iii) a statement of the fact that the second reference arose out of the same incident. The disclosure of this information would impinge upon the privacy of the second reference to the extent that the identity of the common party and the prospect of its involvement in a related arbitration were disclosed, but an arbitrators duty of privacy and confidentiality would not prevent such disclosure because one can infer consent for such limited disclosure: see paras 78 98 above. A high level statement as to whether similar issues were likely to arise, such as Mr Rokison gave to Transocean when he made a proper disclosure of his prior involvement in arbitrations involving Chubb including in an arbitration concerning the Deepwater Horizon incident (para 98 above), would also involve no breach of the arbitrators duty of privacy and confidentiality. If further information had to be imparted to achieve proper disclosure or to satisfy Halliburton that the appointment in reference 2 was not a problem, Mr Rokison would have had to obtain the express consent of both parties to the second reference to that disclosure. Mr Rokisons failure to disclose his appointment in reference 2, which was a potentially overlapping arbitration with only one common party, was a breach of his legal duty of disclosure. Without the further information which I discuss below, I am of the view that the fair minded and informed observer, if he or she had considered the question at or around the date of his acceptance of appointment in reference 2, may well have concluded that there was a real possibility of bias. But it is not necessary to express a concluded view on this as that is not the correct time to ask the question. By the date of the hearing for removal in January 2017 Mr Rokison had given an explanation of his failure to disclose the appointments in references 2 and 3. Halliburtons lawyers accepted that his explanation of oversight was genuine and they did not challenge his statement that he believed that there was not a material overlap between the references. Chubb also points out that reference 2 followed about six months behind reference 1 and suggests it is more likely that Transocean rather than Halliburton would have cause for concern about one arbitration being a dress rehearsal for the later arbitration. Having regard to the circumstances known to the court at the date of the hearing at first instance, I am not persuaded that the fair minded and informed observer would infer from the oversight that there was a real possibility of unconscious bias on Mr Rokisons part. First, there appears to have been a lack of clarity in English case law as to whether there was a legal duty of disclosure and whether disclosure was needed; that can be seen from the judgment at first instance of the able and experienced commercial judge. Secondly, the time sequence of the three references may explain why Mr Rokison saw the need to disclose reference 1 to Transocean but did not identify the need to tell Halliburton about reference 2. Thirdly, his measured response to Halliburtons robust challenge disclosed that it was likely that references 2 and 3 would be resolved by the preliminary issue and that there would not be any overlap in evidence or legal submissions between them and reference 1. As the arbitral tribunal had held hearings on the preliminary issues in November 2016, Mr Rokison would have been aware of its likely decision when he corresponded with K & L Gates in December 2016 and January 2017 (paras 19 22 above). Indeed, the awards handed down on 1 March 2017 revealed that his discreet prediction was correct. If that had not been the outcome of the preliminary issues, he had also offered to consider resigning from his appointments in references 2 and 3. As a result of Mr Rokisons response, there was no likelihood of Chubb gaining any advantage by reason of the overlapping references. Fourthly, there is no question of Mr Rokison having received any secret financial benefit in this case; if that objection were valid it would mean that every party appointed arbitrator receives a disqualifying benefit. In this regard I agree with the Court of Appeal in para 82 of its judgment and with Popplewell J in para 20 of his judgment. Fifthly, I am satisfied that there is no basis for inferring unconscious bias in the form of subconscious ill will in response to the robustness of the challenge which K & L Gates mounted on behalf of Halliburton. As Popplewell J stated (in para 56 of his judgment), he responded in a courteous, temperate and fair way and there is no evidence that he bore any animus towards Halliburton as a result. Therefore, for reasons which differ in part from the courts below, I am satisfied that Popplewell J and the Court of Appeal were correct to hold that the fair minded and informed observer, looking at the facts and circumstances which would be known to him or her at the date of the hearing in January 2017, would not conclude that there was a real possibility of bias or, in the words of section 24(1)(a) of the 1996 Act, that circumstances existed that gave rise to justifiable doubts about Mr Rokisons impartiality. The appeal therefore fails. Summary of the law The obligation of impartiality is a core principle of arbitration law and in English law the duty of impartiality applies equally to party appointed arbitrators and arbitrators appointed by the agreement of party appointed arbitrators, by an arbitral institution, or by the court. (paras 49 and 63) The assessment of the fair minded and informed observer of whether there is a real possibility of bias is an objective assessment which has regard to the realities of international arbitration which I have discussed in paras 56 68 above and the customs and practices of the relevant field of arbitration. There may be circumstances in which the acceptance of appointments in multiple references concerning the same or overlapping subject matter with only one common party might reasonably cause the objective observer to conclude that there is a real possibility of bias. Whether the objective observer would reach that conclusion will depend on the facts of the particular case and especially upon the custom and practice in the relevant field of arbitration. (paras 127 131) Where, as in the context of a Bermuda Form arbitration, such circumstances might reasonably give rise to a conclusion by the objective observer that there was a real possibility of bias, the arbitrator is under a legal duty to disclose such appointments, unless the parties to the arbitration have agreed otherwise. (paras 76 81, 132 136) That legal duty of disclosure, which is a component of the arbitrators statutory duty to act fairly and impartially, does not override the arbitrators duty of privacy and confidentiality in English law; but, absent a contract restricting or prohibiting disclosure or binding rules which have different effect, the disclosure of information of the nature described at para 146 above may be made without obtaining the express consent of the parties to the relevant arbitration where the needed consent is inferred. Such consent may be inferred from the arbitration agreement itself in the context of the practice in the relevant field. (paras 76 81, 88 104, 146) A failure of an arbitrator to make disclosure in the circumstances described in para 153 above is a factor for the fair minded and informed observer to take into account in assessing whether there is a real possibility of bias. (paras 117 118) The fair minded and informed observer in assessing whether an arbitrator has failed in a duty to make disclosure must have regard to the facts and circumstances as at and from the date when the duty arose. (paras 119 120) The fair minded and informed observer assesses whether there is a real possibility that an arbitrator is biased by reference to the facts and circumstances known at the date of the hearing to remove the arbitrator. (paras 121 123) Conclusion I would dismiss the appeal. LADY ARDEN: The parties and the interveners have provided such a considerable body of submissions and material, containing a wealth of learning, that it is hardly possible for a single judgment, or even more than one, to capture all the points that could be made. I agree with the judgment of Lord Hodge but there are a few further points I wish to make which seem to me to reinforce the overall conclusions which this court has reached, or in paras 164, 171, 185 and 188 below to qualify them. Disclosure: secondary obligation arising from the primary impartiality duty In my consideration of the issues I have found it useful to dissect the particular characteristics of the duty of disclosure. It is not an unconditional duty, or a duty in the usual sense of the word, but a part of a bigger picture. The duty is not the primary duty. The primary duty is to act fairly and impartially as arbitrator (section 33 of the Arbitration Act 1996 (the 1996 Act), set out in para 49 above). An arbitrator who acts with actual or apparent bias does not act impartially. As hereafter explained, to remove any doubt about apparent bias, an arbitrator may wish to disclose matters to the parties. It is from that consequence of the impartiality duty that a duty of disclosure can be said to arise, but it is not an independent, self contained duty. The Court of Appeal described the duty as a legal duty and Lord Hodge has made it clear that it is a legal duty because it is implied (if not express) into the contract between all the parties to an arbitration when an arbitrator is appointed. There is scope for debate as to whether it is a duty at all in the strict sense. The duty only arises if the arbitrator wants to take a further appointment in a different arbitration. The question whether there is then a duty in the strict sense or not is analogous to the debate in the law of fiduciaries as to whether a fiduciary is subject to a duty not to have a conflict of interest or merely under a disability so that the transaction into which he or she enters while he or she has a conflict of interest is liable to be set aside and he or she becomes accountable for any profit which he thereby makes. Lord Hodge and I, as fellow Law Commissioners, drew attention to this debate in the context of company directors (Company Directors: Regulating Conflicts of Interest and Formulating a Statement of Duties (1998) (Law Commission Consultation Paper No 153; Scottish Law Commission Paper No 105, para 11.13)). But Sir Robert Megarry V C in Tito v Waddell [1977] Ch 106, 248 and others regarded this problem as essentially one of classification and indeed the Law Commissions went on to recommend that Parliament should enact a statement of duties. Parliament enacted a statement which includes a duty to avoid conflicts of interest and a duty to disclose interests of which a director is aware in proposed contracts in sections 175 and 177 of the Companies Act 2006. So, I too am content to refer to it as a duty to disclose (with the special characteristics already mentioned). As regards the duty to disclose, it is of some interest that section 177(5) of the Companies Act 2006 provides that a director should be treated as being aware of matters of which he ought reasonably to be aware. While I agree with Lord Hodge (para 107 above) that this court should leave open the question of what enquiries an arbitrator should make about conflict of interests, the formulation in this subsection seems to me to be unexceptionable in principle, and it may be helpful guidance to arbitrators. I would add that the conclusion that as a matter of the law of England and Wales an arbitrator is to be treated as aware of a conflict of interest of which he is not actually aware would on the face of it take English and Wales beyond Scots law, which appears to require actual awareness (see para 112 above). That may confirm the wisdom of Parliament when it enacted the 1996 Act in leaving issues such as these to judicial development of the law rather than codifying them in legislation. By leaving them to judicial development, the common law of England and Wales can keep pace with change. It can take account of developing standards and expectations in international commercial arbitration in particular. The debate to which I have referred may account for any reticence in English arbitration law to referring to a duty to disclose but I have no doubt that the law of England and Wales is rigorous in its approach to arbitrator bias and conflicts of interest. Ensuring impartiality is a key principle of our arbitration law. Indeed, as there is force in the view expressed by Professor McKendrick and others that the courts must be especially mindful of the these issues in relation to arbitration where the proceedings take place in private and subject to strict obligations of confidentiality (Ewan McKendrick, chapter 4: Arbitrations, Multiple References and Apparent Bias: A Case Study of Halliburton Co v Chubb Bermuda Insurance Ltd (2018), in Axel Calissendorff and Patrik Schldstrom (eds), Stockholm Arbitration Yearbook 2019, Stockholm Arbitration Yearbook Series, Volume 1 (Kluwer Law International; Kluwer Law International (2019), pp 55 68, see further Paul Stanley QC, Haliburton v Chubb, 9 May 2018 at pp 4 6 and see Julia Dias QC Resignation in the Face of Confidentiality? (2020) TDM 2). I would urge caution in relation to the conclusion of the Court of Appeal (judgment para 77) that the mere acceptance of a multiple appointment in the sense described above did not give rise to an objective appearance of apparent bias. The Court of Appeal considered that, although there was a risk that an arbitrator might acquire inside information in the new arbitration, something more, which had to be something of substance, was required to establish apparent bias. In their judgment, an arbitrator could be trusted to decide a case solely on the evidence or other material before him in the reference in question (judgment, paras 51, 86). In my judgment, unless the arbitration is one in which there is an accepted practice of dispensing with any need to obtain parties consent to further appointments, an arbitrator should proceed on the basis that a proposal to take on a further appointment involving a common party and overlapping subject matter (in that it arises out of the same event) is likely to require disclosure of a potential conflict of interest. The fact that an arbitrator is to be trusted to decide the case on the evidence is not a complete answer to the objections based on inequality of arms and material asymmetry of information that have been raised by Halliburton (see paras 41 and 142 above). Moreover, as Paul Stanley QC points out at p 18 of the article already cited, this trust may not translate easily for the many parties to arbitrations who are familiar with different legal systems. The fact that section 24 of the 1996 Act (set out in para 50 above) requires the question of removal to be assessed at the date of the hearing (by when the materiality of the non disclosure may have changed) is to be attributed to the legislatures desire to hold the balance between the parties and to ensure that removal with all its consequences occurs only where the non disclosure has been material. It is understandable that the legislator would not wish section 24 to give rise to satellite litigation to upset awards that had been duly made. The balance struck in section 24 may also help to mitigate the risk of any shortage of experienced arbitrators of the parties choice due to difficulties in disclosing proposed appointments, but in fact there is no evidence that there is such a shortage. The balancing exercise is to be performed with commercial realities in mind, including the fact that parties who use arbitration must expect arbitrators to take further appointments to acquire the experience needed. On the other hand, those further appointments must be consistent with the arbitrators obligations in current arbitrations. Like Lord Hodge, I also attach considerable importance to the principles set out in section 1 of the 1996 Act (set out at para 47 above). It is unusual for Parliament to set out principles in this way. They are expressed to be foundational principles (The provisions of this Part of the Act are founded on the following principles ). (The provisions of the 1996 Act other than Part I contain a limited number of provisions, for example for the protection of consumers and enforcement, to which it would be inappropriate to apply the section 1 principles.) The section 1 principles must, therefore, guide the development of arbitration law. The second and third principles reinforce party autonomy in arbitration, which is an important, though naturally not unlimited, principle. Disclosure: rooted in both the contract of appointment and section 33 I agree with Lord Hodge in basing the duty of disclosure in both the contract of appointment and section 33 of the 1996 Act. In my judgment, while section 33 must inform the terms of appointment of the arbitrator, this duty is also an implied term of his appointment (if indeed it is not express). An arbitrator on accepting appointment comes under a duty to all the parties to the arbitration to observe this duty throughout his or her appointment. In addition, in my judgment, in the possibly unlikely circumstance that he or she has not been asked for some express assurance prior to being appointed, it is to be implied into the appointment of an arbitrator that the arbitrator has no conflict of duty at the date of his appointment which either prevents him from acting at all, or renders him liable to be removed, in the latter case unless the parties have agreed to waive this conflict. Waiver requires properly informed consent, and thus disclosure of the conflict of interest. The contract of appointment gives rise to a contract with all the parties to the arbitration. By rooting the duty in both section 33 and the contract of appointment, there is a clear legal basis for Lord Hodges conclusion, with which I also agree, that the parties can agree to waive any objection to a conflict of interest. In theory at least they can also lay down the scope for the arbitrator to accept further arbitrations and the procedure which is to apply if he or she wishes to do so. The contract based approach also overcomes the problem, which the parties drew to our attention, that section 33 in terms applies only to the tribunal and not a proposing arbitrator. The term will thus apply to a person who accepts appointment in respect of interests that he or she acquired before appointment as well as to those he or she acquires later. I need not address the case of a person who is offered an appointment but does not subsequently take it up for whatever reason because the issues in this appeal are not concerned with that situation. There is a concern that the duty of disclosure carries no sanction if an application is made to the court about a non disclosure by the arbitrator and fails (see para 111 above). I think this misses the point. It would still be a breach of the terms of appointment with such consequences, if any, as the law of contract prescribes. In addition, a person may commit a breach of contract but incur no liability as a result, and the situation postulated falls into that category. Disclosure: not available with incompatible conflicts of interest I emphasise a point which Lord Hodge makes (see para 108 above) that disclosure is only an option if the conflict of interest is not one which would prevent the arbitrator from discharging his or her duty of impartiality in the current arbitration and therefore from acting altogether. Clearly, having accepted the first arbitration, he or she cannot then go on to accept a further arbitration in these circumstances. We are concerned with a situation in which he or she wishes to accept a further appointment but, as a matter of good practice and caution, wishes to place the possibility before the parties in case they considered that it created a conflict of interest which they were not prepared to waive (Lord Hodge makes a similar point at para 79 above). By parties, I mean the parties to the current arbitration and the parties to the proposed arbitration. Disclosure where more than one form of arbitration involved As a corollary, I would point out that the arbitrations that give rise to the potential conflict may be of different kinds. The current arbitration may be a Bermuda Form arbitration, but the second may be an ad hoc arbitration of a different kind. Differing from Lord Hodge, I find it difficult, therefore, to limit what is said in this case to Bermuda Form arbitrations (see, for example, para 104 above), as opposed to other ad hoc arbitrations or arbitrations held under institutional rules which make no relevant provision. Arbitrations under institutional rules, such as the rules of the LCIA, may involve their own rules as to disclosure of interests making it unnecessary to consider the position under the general law, and so for convenience and without underestimating their important role in international commercial arbitration I leave them on one side at this point. Disclosure of multiple appointments Like Lord Hodge I am considering only conflicts of interest which arise because an arbitrator is proposed to be appointed to a further arbitration in which one of the parties in the current arbitration is also a party and which arises out of the same event with the likelihood that the issues will be the same or similar (see, for example, para 61 above). Such an appointment is likely to give rise to a potential inequality of arms and material asymmetry of information. In principle the parties to both the current and proposed arbitration should be given a chance to object to the arbitrator accepting the new appointment. And if there is more than one current arbitration in which the conflict arises, there must if there is to be disclosure be disclosure to the parties in those arbitrations too. Confidentiality an important implied term There is an implied term as to confidentiality in an arbitration agreement which binds an arbitrator: see Ali Shipping Corpn v Shipyard Trogir [1999] 1 WLR 314 and cf Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184; [2008] Bus LR 1361, cited by Lord Hodge in para 83 above. Confidentiality is of great importance to the parties since it enables them to resolve their dispute without the glare of potentially commercially damaging publicity, which makes arbitration an attractive process of dispute resolution to commercial parties (see paras 57 and 83 above). The parties may even bolster the obligations to keep information confidential in the terms of the orders which they ask the arbitrators to make and in the arbitration agreement itself. Institutional rules applying to the arbitration may also make further provision as to the responsibilities of the parties and arbitrators in arbitrations governed by such rules. The Departmental Advisory Committees report (see para 57 above) emphasised the importance of confidentiality, and, to bring matters up to date, it is also emphasised in the submissions before us. Thus, for instance, the LMAA states: The LMAA believes that users of ad hoc maritime arbitration particularly value confidentiality. Any new general rule of English law requiring disclosure of confidential information against parties wishes runs a serious risk of undermining the attractiveness of London as the preeminent seat for maritime arbitration. (para 22) The implied term as to confidentiality is independent of the implied term that the arbitrator should comply with his impartiality duty. It is truly a self standing term so much so that the parties submissions at the hearing of this appeal did not include submissions as to the effect of disclosure on confidentiality obligations. Those submissions only came later when the parties and interveners helpfully provided further written submissions at the courts request. Not all information about an arbitration is confidential. Some information may, for instance, already be in the public domain. The principle of confidentiality was not codified in the 1996 Act (see para 85 above). This was because it was too difficult to reach a statutory formulation in the light of the myriad exceptions and the qualifications that would have to follow: see Department of Economics, Policy and Development of the City of Moscow v Bankers Trust Co [2004] EWCA Civ 314; [2005] QB 207, para 3. In those circumstances, the Departmental Advisory Committee concluded that the courts should continue to be left to work out the implications on a pragmatic case by case basis. The Court of Appeal considered that the disclosure which the arbitrator had to make had to be: regarded as being an exception to that duty, a duty which is recognised not to be absolute. (para 91) It is not clear whether the Court of Appeal were referring here to an existing exception or were creating a new exception. The current exceptions to confidentiality are most conveniently set out in the judgment of Lawrence Collins LJ, as he then was, with whom Carnwath and Thomas LJJ (as they then were) agreed in the Michael Wilson & Partners Ltd case. Lord Hodge sets out the relevant passage at para 85 of his judgment and so I need not set it out again. I am only concerned with the question of confidentiality of the high level disclosure described by Lord Hodge at para 146 above. That disclosure does not in my judgment fall within any of the existing exceptions to confidentiality listed by Lawrence Collins LJ. The disclosure of information arises to a material extent from the voluntary decision of the arbitrator to pursue a further appointment (see para 160 above), and, as a result of that, I do not consider that such disclosure can fall within the protection of legitimate interests. The LCIA suggests in parenthesis that the exceptions available to an arbitrating party extend by logical extension to the arbitrator but that would appear to be on the basis of the legitimate interests exception. There is no consent, no court order, and there is no public interest mandating disclosure because disclosure is driven by the arbitrators wish to take the further appointment. Moreover, neither the Court of Appeal nor the judge found that there was any custom as to what might be disclosed by an arbitrator or proposing arbitrator without the parties consent (as to what must be proved to show a custom, see generally Baker v Black Sea & Baltic General Insurance Co Ltd [1998] 1 WLR 974). So far as a practice which falls short of a custom is concerned, this would necessarily have to be incorporated into the terms on which the arbitrator agrees to act expressly or by implication. I, therefore, leave aside GAFTA and LMAA arbitrations as in those arbitrations there is said to be an accepted practice under which arbitrators may accept multiple appointments without the consent of the parties to existing arbitrations. Further, where the information is disclosed by a party on his behalf, then in the usual case that party may be taken to have consented to the disclosure of the information and to waive any confidentiality obligation owed to itself. That party cannot waive confidentiality obligations owed to the other parties. So, in my judgment, there is in general no need, as the Court of Appeal considered, to search for, or create, an exception to confidentiality for the information in the numbered list in para 146 above. The basic reason is that the other parties, who have not been asked to consent to the disclosure, have not been named. This conclusion is supported by commentaries cited by the parties (see, for example, Derains & Schwartz, A Guide to the ICC Rules of Arbitration, 2nd ed (2005), pp 135 136 n70 (Derains/Schwartz) It is generally possible, however, for arbitrators to disclose relationships relating to other arbitration proceedings in such a manner as to avoid infringing any obligations of confidentiality that may be owed to the parties in respect of the same.) Jeffrey Waincymer, Part II: The Process of an Arbitration, chapter 5: Selection, Challenge and Change of Arbitrators in Procedure and Evidence in International Arbitration at 313 (In most such cases a careful description of the nature of the previous event without identification of the parties ought to be enough to meet both obligations [disclosure and confidentiality] concurrently.). Mauro Rubino Sammartano, chapter 11 The Arbitrator in International Arbitration Law and Practice 3rd ed (2014), p 508 (citing in support Prodim, Court of Appeal, Reims, January 31, 2012, Lettre dinfo, Versailles, July 2012). In the first sentence of the preceding paragraph, I use the words in general. My reason is that there may be exceptional cases where the other parties (that is the parties other than the proposing appointor) can be identified even without being named, and in those circumstances their consent will be required to the making even of the high level disclosure. But it is not suggested that this qualification is relevant in this case. As to the high level disclosure, para 146 addresses the matters that might be included in disclosure to the parties to the first arbitration about a proposed appointment in a further arbitration without breaching confidentiality obligations owed to the parties in the second arbitration. It may be adapted for the converse situation. Paragraph 146 does not state that disclosure of the matters itemised in that paragraph will necessarily of itself be enough to discharge the duty of disclosure, only that such matters may be included without breaching a confidentiality obligation, or as I would say, as I have explained, may in general be included without breaching such obligation. On this basis, therefore, there is no question of the other parties confidentiality being eroded by the decision on this appeal. As Lord Hodge explains, if more information is required (or, I would add, at least if it is reasonably required), it cannot be disclosed without the relevant parties consent. If consent is not forthcoming, the arbitrator will have to decline the proposed appointment (see, for example, Derains/Schwartz at the passage cited). As Lord Hodge holds, the extent of the required disclosure will depend on the facts (see para 129 above, citing the IBA Guidelines). The parties to whom the high level disclosure is made may well ask for further information to enable them to assess whether they should agree to the arbitrator taking the further appointment. Julia Dias QC gives some assistance in her article cited above on the range of disclosure by explaining what she considers would be needed: whether there is in fact a real possibility of bias depends on matters such as the identity of the parties to the two arbitrations, the nature of the subject matter, the degree of overlap between the issues and the type of evidence adduced. The problem is that none of this can be explored without disclosing in the first arbitration matters relating to the second arbitration which in principle should be confidential to that arbitration. Indeed, it is impossible to see how the confidentiality of the second arbitration would not be compromised by the need to investigate whether there is an overlap between the two references in relation to subject matter, issues etc. (p 12) Conclusion In conclusion, with and subject to these further points I agree with the judgment of Lord Hodge.
UK-Abs
This appeal concerns the circumstances in which an arbitrator in an international arbitration may appear to be biased. It raises important questions about the duty of impartiality and obligation of arbitrators to make disclosure. The appeal relates to an arbitration under a liability insurance policy which arose out of damage caused by an explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico. BP Exploration and Production Inc. (BP) was the lessee of the Deepwater Horizon rig. Transocean Holdings LLC (Transocean) owned the rig and provided crew and drilling teams to BP. The appellant, Halliburton Company (Halliburton) provided cementing and well monitoring services to BP. Halliburton had entered into a Bermuda Form liability policy with the respondent, Chubb Bermuda Insurance Ltd (Chubb"). Transocean was also insured with Chubb by a Bermuda Form policy. The Deepwater Horizon disaster resulted in numerous claims against BP, Transocean and Halliburton. Following a trial in the US in which judgment was given apportioning blame between the parties, Halliburton settled the claims against it. Halliburton then sought to claim against Chubb under the liability policy. Chubb refused to pay contending that Halliburtons settlement was not a reasonable settlement. Transocean made a similar claim against Chubb and Chubb likewise contested Transoceans claim. The Bermuda Form policies provided for disputes to be resolved by arbitration. Halliburton commenced arbitration. Halliburton and Chubb each selected one arbitrator but were unable to agree on the appointment of a third arbitrator as chairman. As a result, after a contested hearing in the High Court, Mr Rokison, proposed by Chubb to the court, was appointed. Subsequently and without Halliburtons knowledge, Mr Rokison accepted appointment as an arbitrator in two separate references also arising from the Deepwater Horizon incident. The first appointment was made by Chubb and related to Transoceans claim against Chubb. The second was a joint nomination by the parties involved in a claim by Transocean against another insurer. On discovering Mr Rokisons appointment in the later references, Halliburton applied to the court under section 24 of the Arbitration Act 1996 to remove Mr Rokison as an arbitrator. That application was refused. On appeal, the Court of Appeal found that, while Mr Rokison ought to have disclosed his proposed appointment in the subsequent references, an objective observer would not in the circumstances conclude there was a real possibility Mr Rokison was biased. The appeal was therefore dismissed. Halliburton renews its challenge before the Supreme Court. The Supreme Court unanimously dismisses the appeal. It holds, for reasons which differ in part from courts below, that as at the date of the hearing to remove Mr Rokison, the fair minded and informed observer would not conclude that circumstances existed that gave rise to justifiable doubts about Mr Rokisons impartiality. Lord Hodge gives the leading judgment with whom Lord Reed, Lady Black and Lord Lloyd Jones agree. Lady Arden gives a concurring judgment. The law The duty of impartiality is a core principle of arbitration law [49]. In English law, the duty applies equally to party appointed arbitrators and independently appointed arbitrators [63]. In considering an allegation of apparent bias against an arbitrator, the test is whether the fair minded and informed observer would conclude there is a real possibility of bias [52, 55]. The courts will apply that objective test, having regard to the particular characteristics of international arbitration, including the private nature of most arbitrations [56 68]. The duty of disclosure is not simply good arbitral practice but is a legal duty in English law. It is a component of the arbitrators statutory obligations of fairness and impartiality [78]. The legal duty of disclosure does not, however, override the arbitrators duty of privacy and confidentiality in English law. Where information which needs to be disclosed is subject to a duty of confidentiality, disclosure can only be made if the parties owed confidentiality obligations give their consent. Such consent may be express but may also be inferred from the arbitration agreement itself in the context of the custom and practice in the relevant field of arbitration [88 104]. The arbitrators duty of disclosure is to disclose matters which might reasonably give rise to justifiable doubts as to his or her impartiality [107 116]. A failure to disclose relevant matters is a factor for the fair minded and informed observer to take into account in assessing whether there is a real possibility of bias[117 118]. In assessing whether an arbitrator has failed in a duty to make disclosure, the fair minded and informed observer will have regard to the facts and circumstances as at and from the time the duty arose [119 120]. In contrast, in assessing whether there is a real possibility that an arbitrator is biased, the fair minded and informed observer will have regard to the facts and circumstances known at the time of the hearing to remove the arbitrator [121 123]. The issues in this appeal There may be circumstances where the acceptance of multiple appointments involving a common party and the same or overlapping subject matter gives rise to an appearance of bias. Whether it does so will depend on the facts of the case and, in particular, the customs and practice in the relevant field of arbitration [127 131]. Where, as in the context of a Bermuda Form arbitration, the circumstances might reasonably give rise to a conclusion that there was a real possibility of bias, the arbitrator is under a legal duty to disclose such appointments unless the parties to arbitration have agreed otherwise [132 136]. Applying those conclusions to the facts, Mr Rokison was under a legal duty to disclose his appointment in the subsequent reference involving Chubb and Transocean. At the time of his appointment, the existence of potentially overlapping arbitrations with only one common party, Chubb, might reasonably have given rise to a real possibility of bias [145]. In failing to make that disclosure Mr Rokison breached his duty of disclosure [147]. However, having regard to the circumstances known at the date of the hearing at first instance, it could not be said that the fair minded and informed observer would infer from Mr Rokisons failure to make disclosure that there was a real possibility of bias. At the time, it had not been clear that there was a legal duty of disclosure. Secondly, the Transocean arbitrations had commenced several months after the Halliburton arbitration. Thirdly, Mr Rokisons measured response to Halliburtons challenge explained that it was likely the subsequent references would be resolved by a preliminary issue (as they in fact were) and that, if they were not, he would consider resigning from the Transocean arbitrations. There was therefore no likelihood of Chubb gaining any advantage by reason of overlapping references. Fourthly, there was no question of his having received any secret financial benefit, and, fifthly, there was no basis for inferring any unconscious ill will on his part. As a result, Halliburtons appeal fails [149 150]. Lady Ardens concurring judgment Lady Arden agrees with Lord Hodges judgment but makes a few further points to reinforce or, in some instances, qualify the conclusions reached. The duty of disclosure is a secondary obligation arising from the arbitrators primary duty to act fairly and impartially [160]. Unless the arbitration is one where there is an accepted practice of dispensing with the need to obtain parties consent to further appointments, the arbitrator should proceed on the basis that a proposed further appointment involving a common party and overlapping subject matter is likely to require disclosure of a possible conflict of interest [164]. The duty of disclosure is rooted in the duty of impartiality but is also an implied (if not express) term of the arbitrators appointment [167]. The parties can therefore agree to waive any objection to a conflict of interest, but disclosure is only an option if the conflict is one which would not prevent the arbitrator from acting impartially [168, 170]. Confidentiality is an important and free standing implied term [173 175]. But, in general, high level disclosure about a proposed appointment in a further arbitration can be made without any breach of confidentiality by naming only the common party (who may be taken to have consented to disclosure) but not the other parties to the arbitration [183 187].
On or about 1 April 2010 the appellant and her husband (Mr and Mrs X, anonymity orders having been made in respect of the appellant by the Court of Appeal and the Supreme Court) entered into a contract with the respondent tour operator (Kuoni) under which Kuoni agreed to provide a package holiday in Sri Lanka which included return flights from the United Kingdom and 15 nights all inclusive accommodation at the Club Bentota hotel (the hotel) between 8 and 23 July 2010. The contract provided in relevant part: Your contract is with Kuoni Travel Ltd. We will arrange to provide you with the various services which form part of the holiday you book with us. (Booking Conditions, clause 2.2) we will accept responsibility if due to fault on our part, or that of our agents or suppliers, any part of your holiday arrangements booked before your departure from the UK is not as described in the brochure, or not of a reasonable standard, or if you or any member of your party is killed or injured as a result of an activity forming part of those holiday arrangements. We do not accept responsibility if and to the extent that any failure of your holiday arrangements, or death or injury is not caused by any fault of ours, or our agents or suppliers; is caused by you; or is due to unforeseen circumstances which, even with all due care, we or our agents or suppliers could not have anticipated or avoided. (Booking Conditions, clause 5.10(b)) In the early hours of 17 July 2010, the appellant was making her way through the grounds of the hotel to the reception. She came upon a hotel employee, N, who was employed by the hotel as an electrician and (on the facts found by the judge) known to her as such. N was on duty and wearing the uniform of a member of the maintenance staff. N offered to show her a shortcut to reception, an offer which she accepted. N lured her into the engineering room where he raped and assaulted her. In these proceedings Mrs X claims damages against Kuoni by reason of the rape and the assault. The claim is brought for breach of contract and/or under the Package Travel, Package Holidays and Package Tours Regulations 1992 (the 1992 Regulations) which implement in the United Kingdom Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (the Directive). Relevant legislation Article 5 of the Directive provided in relevant part: Article 5 1. Member states shall take the necessary steps to ensure that the organizer and/or retailer party to the contract is liable to the consumer for the proper performance of the obligations arising from the contract, irrespective of whether such obligations are to be performed by that organizer and/or retailer or by other suppliers of services without prejudice to the right of the organizer and/or retailer to pursue those other suppliers of services. 2. With regard to the damage resulting for the consumer from the failure to perform or the improper performance of the contract, member states shall take the necessary steps to ensure that the organizer and/or retailer is/are liable unless such failure to perform or improper performance is attributable neither to any fault of theirs nor to that of another supplier of services, because: the contract are attributable to the consumer, such failures are attributable to a third party unconnected with the provision of the services contracted for, and are unforeseeable or unavoidable, such failures are due to a case of force majeure such as that defined in article 4(6), second subparagraph (ii), or to an event which the organizer and/or retailer or the failures which occur in the performance of the supplier of services, even with all due care, could not foresee or forestall. In the matter of damage other than personal injury resulting from the non performance or improper performance of the services involved in the package, the member states may allow compensation to be limited under the contract. Such limitation shall not be unreasonable. 3. Without prejudice to the fourth subparagraph of paragraph 2, there may be no exclusion by means of a contractual clause from the provisions of paragraphs 1 and 2. Regulation 15 of the 1992 Regulations provides in relevant part: (1) The other party to the contract is liable to the consumer for the proper performance of the obligations under the contract, irrespective of whether such obligations are to be performed by that other party or by other suppliers of services but this shall not affect any remedy or right of action which that other party may have against those other suppliers of services. (2) The other party to the contract is liable to the consumer for any damage caused to him by the failure to perform the contract or the improper performance of the contract unless the failure or the improper performance is due neither to any fault of that other party nor to that of another supplier of services, because (a) the contract are attributable to the consumer; (b) such failures are attributable to a third party unconnected with the provision of the services contracted for, and are unforeseeable or unavoidable; or (c) the failures which occur in the performance of such failures are due to (i) unusual and unforeseeable circumstances beyond the control of the party by whom the exception is pleaded, the consequences of which could not have been avoided even if all due care had been exercised; or (ii) an event which the other party to the contract or the supplier of services, even with all due care, could not foresee or forestall. (5) Without prejudice to paragraph (3) and paragraph (4) above, liability under paragraphs (1) and (2) above cannot be excluded by any contractual term. Pursuant to section 13 of the Supply of Goods and Services Act 1982, Kuoni was required to carry out the services promised under the contract with reasonable care and skill. The proceedings At trial, Mrs Xs case was essentially that the rape and assault amounted to the improper performance of a contractual obligation. (Before the Supreme Court, although a claim for breach of the 1992 Regulations was maintained, counsel for Mrs X emphasised that the claim was essentially a claim for breach of contract.) On her behalf, it was accepted that there was no basis for suggesting that N should have been identified as a risk. Furthermore, it was no part of her case that there was systemic or organisational negligence on the part of Kuoni or the hotel (such as failure to supervise N or carelessness in selecting N as an employee) causative of the attack. The assault was caused by N alone. In its defence, Kuoni admitted that it was responsible to the claimant for the proper performance of obligations under the holiday contract whether or not such obligations were to be performed by the defendant or another supplier of services and that the said obligations would be performed with reasonable skill and care. However, Kuoni denied that the rape and assault by N constituted a breach of any obligations owed by Kuoni to Mrs X under the contract or the 1992 Regulations. In particular it denied that they constituted improper performance of any obligation under the contract. Furthermore, Kuoni relied, by way of defence, on the clause 5.10(b) of the Booking Conditions and regulation 15(2)(c)(ii) of the 1992 Regulations. At first instance, Judge McKenna, sitting as a judge of the High Court, concluded (at paras 44 to 48) that holiday arrangements in clause 5.10(b) did not include a member of the maintenance staff conducting a guest to reception. He further held, obiter, that Kuoni would in any event have been able to rely on the statutory defence under regulation 15(2)(c)(ii) because the assault was an event which could not have been foreseen or forestalled (by inference by the hotel) even with all due care. Although it was not necessary to decide the point, he held that the hotel would not have been vicariously liable for the rape and assault as a matter of Sri Lankan law, which it was agreed was the same as English law for these purposes. The Court of Appeal (Sir Terence Etherton MR, Longmore and Asplin LJJ) dismissed the appeal by a majority (Longmore LJ dissenting). In a joint judgment the Master of the Rolls and Asplin LJ held that on their proper interpretation, the words holiday arrangements in clause 5.10(b) did not include a member of the hotels maintenance team, known to be such to the hotel guest, conducting the guest to the hotels reception. This was no part of the functions for which the employee was employed (para 34). The 1992 Regulations were not designed to facilitate a claim against a tour operator for wrongful conduct by an employee of a supplier where that conduct was not part of the role in which he was employed and where the supplier would not have been vicariously liable under either the consumers domestic law or the foreign law applicable to the supplier (para 37). The majority further held, obiter, that Kuoni was not liable under either the express terms of clause 5.10(b) or regulation 15 since N was not a supplier within the meaning of those provisions. The judge had properly held that the hotel and not N was the supplier of any services performed by N. The booking conditions referred to our agents or suppliers, which denoted a need for a direct contractual or promissory relationship between Kuoni and whoever was to be regarded as a supplier. Furthermore, this reading was supported by regulation 15. Nothing in regulation 15 suggested some other meaning of the word supplier in clause 5.10(b) or the expression supplier of services in regulation 15 itself. The express reservation in regulation 15(1) of any remedy or right of action which [the package holiday operator] may have against [the] suppliers of services was consistent with a direct relationship between the operator and the supplier and may be indicative of an assumption that there would be such a relationship. In a situation where one contracting party assumes primary and personal liability for the provision of services by agents or suppliers to a reasonable standard to the other contracting party, the natural meaning of supplier is the person who assumes a direct contractual or promissory obligation to provide such services and not an employee of such a person (at paras 39 to 41). There were no discernible policy reasons for imposing liability on a tour operator when neither it nor the hotel were at fault and the express exclusion of liability under regulation 15(2)(c)(ii) pointed clearly to the contrary. Furthermore, in such circumstances it was not realistic to suppose that the tour operator could protect itself via an indemnity from the employee or the hotel or by way of insurance (at paras 43 to 47). The majority considered it unnecessary to decide the question of vicarious liability on the part of the hotel for Ns conduct because even if the hotel were vicariously liable Kuoni could nevertheless rely on the statutory defence incorporated into its booking conditions (at para 51). Longmore LJ (dissenting) concluded as follows: (1) He was not sure that Kuoni was correct in denying that there was a contractual obligation on the hotel or its staff to guide guests to reception but he was sure that if a member of the hotel staff offered to guide a guest to reception, as the judge had found, that was a service for which Kuoni accepted responsibility for it being done to a reasonable standard (at para 11). (2) He rejected Kuonis submission, founded on the judges finding that N had lured Mrs X to the engineering room, that N was not providing a service at all. Mrs X thought that N was providing a service and had every reason to suppose that he was. Furthermore, Ns actual motive was irrelevant (at para 12). (3) There was no express term of the contract that any electrician employed by the hotel would also provide Mrs X with general assistance such as showing her to reception. However, in order that the holiday arrangements at a four star hotel, which Kuoni had contracted to provide, should be provided to a reasonable standard, hotel staff must be helpful to guests when asked for assistance and all the more when offering assistance. On no view did N assist Mrs X in a reasonable way when he guided her to the engineering room (at para 13). I would therefore conclude that the holiday arrangements for Mrs X were not of a reasonable standard and constituted improper performance within regulation 15(2). Kuoni must, subject to any available defences, take responsibility for that. So far, the identity of the supplier of the services is not critical. The Hotel supplies the service of assisting its guests and performs that service by means of its employees. But the question whether N was also supplying the service is critical when it comes to a consideration of the defences. If, as the judge held, it was the Hotel and only the Hotel which was the supplier, Kuoni has a good defence since the improper performance was due neither to Kuoni nor the Hotel because, on the findings of the judge, the failure of proper performance was due to an event which neither Kuoni nor the Hotel, even with all due care, could foresee or forestall. The Hotel did not fail to take up references for N and had no reason to suppose, from past history or any other reason, that he would rape one of the guests. If, however, N was a supplier of the service of assisting, rather than or as well as, the Hotel, then he (as that supplier) could foresee or forestall his own criminal activity. (at para 14) (4) The use of the word our in Kuonis booking conditions could not be decisive to indicate whether the supplier was N or the hotel (at para 15). (5) The arguments as to who was the supplier were finely balanced and were to be decided on principle (at para 20). In the law of England and Wales, the governing principle is that a person who undertakes contractual liability retains liability for his side of the bargain even if he performs it through others (at para 21). (6) The whole point of the Directive and the 1992 Regulations was to give the holiday maker whose holiday had been ruined a remedy against his contractual opposite. It should be left to the tour operator to sort out the consequences of the ruined holiday with those with whom it had itself contracted who could then sort things out further down the line whether with their own employees or their independent contractor (at para 22). (7) There was no justification for concluding that the concept of supplier should stop with the hotel in the case of an independent contractor or an employee. The concept of supply may be no more than a question of degree (at para 24). However, there could be no doubt that some employees should be regarded as suppliers. The captain of a cruise ship, for example, supplies the important service of navigating the ship without exposing it to danger; the fact that he is the employee of the shipping line makes little difference to the holiday makers on board and the travel operators should not be able to deny responsibility, even if the shipping line had taken reasonable steps to procure the services of an experienced captain. (at para 23) (8) Although vicarious liability on the part of the hotel was not decisive, he was far from certain that the hotel would not be vicariously liable under English law for a rape carried out by an employee in uniform and represented to the world as a reliable employee (at para 25). The issues before the Supreme Court On further appeal to the Supreme Court there were two main issues. (1) Did the rape and assault of Mrs X constitute improper performance of the obligations of Kuoni under the contract? (2) If so, is any liability of Kuoni in respect of Ns conduct excluded by clause 5.10(b) of the contract and/or regulation 15(2)(c) of the 1992 Regulations? This request for a preliminary ruling on a point of EU law relates specifically to the second issue. The submissions of the parties before the Supreme Court The Supreme Court granted permission to ABTA Ltd (ABTA) (a trade association representing British travel agents) to intervene in the appeal. The parties agree that clause 5.10(b) was intended to replicate the terms of regulation 15(2)(c) which, in turn, was intended to implement article 5 of the Directive. It is further agreed that liability under regulation 15 cannot be excluded by any contractual term (regulation 15(5)). The defence in contract is coextensive with the statutory defence. The principal submissions made on behalf of Mrs X in relation to the second main issue are as follows: (1) Kuoni cannot rely on the contractual exclusion clause because it seeks to exclude Kuonis liability for personal injury resulting from negligence which is prohibited by sections 1(1)(a), 1(3) and 2 of the Unfair Contract Terms Act 1977. Furthermore, to the extent that the claim is one for breach of contract Kuoni cannot rely upon the terms of the defence under regulation 15(2)(c)(ii) which is a defence to a claim under the Regulations. This is purely a matter of domestic law. (2) The approach of the majority in the Court of Appeal to this issue is unduly restrictive. (a) If the supplier can only be someone in a contractual or promissory relationship with the tour operator, even a hotel providing accommodation may not qualify as a supplier of services under regulation 15 as there can be no certainty that the tour operator will contract directly with the hotel. (b) Furthermore, a tour operator would be able to avoid liability where there was ordinary operational negligence by an employee of a hotel (let alone a sub contractor). (3) The defence under regulation 15(2) only arises in circumstances where there has been a failure to perform the contract or the improper performance of the contract. The defence itself applies where such failure or improper performance is due neither to the fault of the tour operator nor to that of another supplier of services for the reasons set out in sub paragraphs (a) to (c). Where the improper performance of the contract is fault based, there is no room for a no fault defence. (4) Applying a restrictive approach to the interpretation of regulation 15(2)(c)(ii) and reasoning by analogy from regulation 15(2)(c)(i) and the decision of the Court of Justice of the European Union in Anthony McNicholl Ltd v Minister for Agriculture (Case C 296/86) [1988] ECR 1491, it must be foreseeable that a supplier, whether contractor or sub contractor or further removed down the chain of contracts, will act unlawfully in the provision of the service that the tour operator has contracted to provide. (5) There is no requirement under regulation 15 to read supplier of services so as to limit its ambit to those in a contractual or promissory relationship with the tour operator. On the contrary, it should be given its natural and full meaning so that it can cover any third party provided that that party is supplying holiday services. If N is recognised as having been a relevant supplier, on no view can the defence be engaged because N was himself at fault and did not exercise all due care within the terms of regulation 15(2)(c)(ii). (6) If the hotel and not N was the relevant supplier, the issue of the fault of the hotel has to be considered from the perspective of the services that the hotel has been committed by the tour operator to provide. The issue is not whether the hotel, as a company, is directly (as opposed to vicariously) at fault. The issue is whether the hotel as a supplier of services is at fault. If there was fault in the provision of the relevant service, then the hotel is at fault for the purposes of regulation 15(2). If N is not a supplier because N is part of the hotels staff and the hotel is the relevant supplier, the services supplied by the hotel must include those provided by N. The principal submissions made on behalf of Kuoni in relation to the second main issue are as follows: (1) Kuoni joins issue with Mrs X on her submissions on the Unfair Contract Terms Act. In particular, Kuoni relies on section 29 which provides that nothing in the Act prevents reliance upon any contractual provision which (a) is authorised or required by the express terms or necessary implication of an enactment or (b) being made with a view to compliance with an international agreement to which the United Kingdom is a party, does not operate more restrictively than is contemplated by the agreement. (2) On a proper construction of both the contract and the 1992 Regulations the supplier is the hotel. In this regard Kuoni concedes that there is no need to read our suppliers in the contract or other suppliers of services in the regulation so as to limit their ambit to those in a direct contractual or promissory relationship with the tour operator. The intention of the Directive, as supported by the travaux preparatoires, is that suppliers of services should include suppliers who are in a chain of contractual authority descending from the tour operator, which might include sub contractors. (3) The word fault in regulation 15(2) and article 5(2) is defined by the three subparagraphs which follow it. If, and only if, none of the three subparagraphs applies can there be fault. Fault has no other meaning within the context of this provision and no independent meaning. If the supplier of services is the hotel, Ns crime should not be (4) There is no fault attributable to Kuoni or the hotel in the sense that neither Kuoni nor the hotel could have foreseen or forestalled the criminal acts of N. (5) attributable to it, still less to Kuoni. (6) N is not a supplier of services. On the contrary he was at all material times carrying on a criminal enterprise. Those acts are not attributable to the real supplier of services, his employer. (7) The construction for which Mrs X contends runs contrary to the intention of the Directive in that, if N is a supplier: (a) A tour operator will never be able to avail itself of the defence under regulation 15(2)(c)(ii) in circumstances where neither the tour operator nor the supplier (here the hotel) were negligent or at fault in any way. (b) A tour operator is most unlikely to be able to recover an indemnity from a supplier hotel in respect of the criminal act of that supplier hotels employee which was not attributable to any negligence or fault on the part of the supplier hotel. For these reasons, Kuoni, referring to Tesco Supermarkets Ltd v Nattrass [1972] AC 153 and Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, invites the Supreme Court to formulate a special rule of attribution to enable a tour operator to avail itself of the defence in a case such as this. The principal submissions made on behalf of ABTA in relation to the second main issue are as follows: (1) An employee of a hotel is not to be regarded as another supplier of services for the purposes of regulation 15(2). While an employee is someone through whom the hotel acts and whose acts are therefore those of the hotel, it is the hotel that supplies and which has been contracted to supply the services under the contract. On a natural reading supplier connotes a person or entity responsible for the supply, not an employee of such a person or entity. In this regard ABTA draws attention to the term prestataire de services in the French text of the Directive which, it submits, envisages the commercial supply of services or merchandise. (2) Notwithstanding the view of the majority of the Court of Appeal, it may be that another supplier of services in regulation 15(2) includes other contractors in the contractual chain of supply. (3) If N is not another supplier of services and the hotel was not at fault (either directly or vicariously) for Ns actions, the defence under regulation 15(2)(c)(ii) should succeed. Mrs X errs in equating fault in the provision of the service as a result of Ns conduct with fault on the part of the hotel. The hotel would only be at fault if vicariously liable for Ns conduct. Furthermore, the improper performance was not due to any fault on the part of the tour operator or hotel because it was due to an event which neither could have foreseen or forestalled even with all due care. The defence under regulation 15(2)(c)(ii) applies generally and is not limited to situations where there is no fault. It applies where the relevant supplier would not itself be liable for fault either directly through its own acts or omissions or vicariously liable for its employees. To uphold the case for Mrs X on this point would lead to the startling result that a tour operator can be liable despite the fact that its supplier would not be liable for the actions of its employee. (4) ABTA accepts that if this submission is correct the majority in the Court of Appeal erred in considering it unnecessary to decide the issue of vicarious liability. However, it denies that the need to consider vicarious liability would introduce further complexity and expense in national proceedings. Not every case would require evidence of foreign law on the issue of vicarious liability. Expert evidence on foreign law and standards is, in any event, commonplace in package holiday claims. (5) ABTAs proposed construction of the defence in regulation 15(2)(c)(ii) furthers internal market considerations. (6) Alternatively, ABTA submits that regulation 15(2)(c)(ii) affords a defence where, as here, the acts of the employee, although performed within the scope of apparent authority, are criminal acts. Conclusion For the purposes of this reference, the Court of Justice of the European Union is asked to assume that guidance by a member of the hotels staff of Mrs X to the reception was a service within the holiday arrangements which Kuoni had contracted to provide and that the rape and assault constituted improper performance of the contract. In order to determine this appeal, the Supreme Court refers the following (1) Where there has been a failure to perform or an improper performance of the obligations arising under the contract of an organizer or retailer with a consumer to provide a package holiday to which Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours applies, and that failure to perform or improper performance is the result of the actions of an employee of a hotel company which is a provider of services to which that contract relates: is there scope for the application of the defence set out in the (a) second part of the third alinea to article 5(2); and, if so, (b) by which criteria is the national court to assess whether that defence applies? (2) Where an organizer or retailer enters into a contract with a consumer to provide a package holiday to which Council Directive 90/314/EEC applies, and where a hotel company provides services to which that contract relates, is an employee of that hotel company himself to be considered a supplier of services for the purposes of the defence under article 5(2), third alinea of the Directive? questions to the Court of Justice of the European Union:
UK-Abs
On or about 1 April 2010 the appellant and her husband (Mr and Mrs X) entered into a contract with the respondent tour operator (Kuoni) under which Kuoni agreed to provide a package holiday in Sri Lanka. In the early hours of 17 July 2010, the appellant was making her way through the grounds of the hotel to the reception. She came upon a hotel employee, N, who was employed by the hotel as an electrician and (on the facts found by the judge) known to her as such. N was on duty and wearing the uniform of a member of the maintenance staff. N offered to show her a shortcut to reception, an offer which she accepted. N lured her into the engineering room where he raped and assaulted her. In these proceedings Mrs X claims damages against Kuoni by reason of the rape and the assault. The claim is brought for breach of contract and/or under the Package Travel, Package Holidays and Package Tours Regulations 1992 (the 1992 Regulations) which implement in the United Kingdom Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (the Directive). In the High Court, HHJ McKenna concluded that the contractual undertaking that holiday arrangements would be of a reasonable standard did not include a member of the maintenance team conducting a guest to reception. He further held that Kuoni would in any event have been able to rely on the statutory defence under regulation 15(2)(c)(ii) because the assault was an event which could not have been foreseen or forestalled (by inference by the hotel) even with all due care. The Court of Appeal (Sir Terence Etherton MR, Longmore and Asplin LJJ) dismissed the appeal by a majority (Longmore LJ dissenting). In a joint judgment, the majority held that the holiday arrangements did not include N conducting Mrs X to reception. The majority further held that Kuoni was not liable under either the express terms of clause 5.10(b) or regulation 15 since N was not a supplier within the meaning of those provisions. On appeal to the Supreme Court there were two main issues: (1) Did the rape and assault of Mrs X constitute improper performance of the obligations of Kuoni under the contract? (2) If so, is any liability of Kuoni in respect of Ns conduct excluded by clause 5.10(b) of the contract and/or regulation 15(2)(c) of the 1992 Regulations? The Supreme Court unanimously decides to refer two questions to the Court of Justice of the European Union. The terms of the reference are set out by Lord Lloyd Jones. For the purposes of this reference, the Court of Justice of the European Union is asked to assume that guidance by a member of the hotels staff of Mrs X to the reception was a service within the holiday arrangements which Kuoni had contracted to provide and that the rape and assault constituted improper performance of the contract [22]. In order to determine this appeal, specifically in relation to the second issue identified above, the Supreme Court refers the following questions to the Court of Justice of the European Union [23]: (1) Where there has been a failure to perform or an improper performance of the obligations arising under the contract of an organizer or retailer with a consumer to provide a package holiday to which the Directive applies, and that failure to perform or improper performance is the result of the actions of an employee of a hotel company which is a provider of services to which that contract relates: (a) is there scope for the application of the defence set out in the second part of the third alinea to article 5(2); and, if so, (b) by which criteria is the national court to assess whether that defence applies? (2) Where an organizer or retailer enters into a contract with a consumer to provide a package holiday to which the Directive applies, and where a hotel company provides services to which that contract relates, is an employee of that hotel company himself to be considered a supplier of services for the purposes of the defence under article 5(2), third alinea of the Directive?
From 1922 successive items of legislation authorised the detention without trial of persons in Northern Ireland, a regime commonly known as internment. Internment was last introduced in that province on 9 August 1971. On that date and for some time following it, a large number of persons were detained. The way in which internment operated then was that initially an interim custody order (ICO) was made where the Secretary of State considered that an individual was involved in terrorism. On foot of the ICO that person was taken into custody. The person detained had to be released within 28 days unless the Chief Constable referred the matter to a commissioner. The detention continued while the commissioner considered the matter. If satisfied that the person was involved in terrorism, the commissioner would make a detention order. If not so satisfied, the release of the person detained would be ordered. An ICO was made in respect of the appellant on 21 July 1973. The order was signed by a Minister of State in the Northern Ireland Office. The matter was referred to a commissioner by an Assistant Chief Constable on 10 August 1973 and the commissioner decided that the appellant should continue to be detained. The appellant tried to escape from the place where he was detained on 24 December 1973. He was convicted of the offence of attempting to escape from lawful custody on 20 March 1975 and sentenced to 18 months imprisonment. He tried to escape again on 27 July 1974 and was convicted of a like offence on 18 April 1975 when a sentence of three years was passed, to be served consecutively to that imposed a month earlier. The issue At stake on this appeal is the validity of the ICO made on 21 July 1973. Although an ICO could be signed by a Secretary of State, a Minister of State or an Under Secretary of State, the relevant legislation provided that the statutory power to make the ICO arose where it appears to the Secretary of State that a person was suspected of being involved in terrorism. There is no evidence that the Secretary of State personally considered whether the appellant was involved in terrorism. On the assumption (which is common to the parties to the appeal) that he did not, the question arises whether the ICO was validly made. The reason that this matter has come to light so many years after the appellants convictions is that under the 30 year rule an opinion of JBE Hutton QC (later Lord Hutton of Bresagh) was uncovered. The 30 year rule is the informal name given to laws in the United Kingdom and other countries which provide that certain government documents will be released publicly 30 years after they were created. Mr Hutton was the legal adviser to the Attorney General when he gave his opinion. It was dated 4 July 1974 and responded to a request for directions in relation to a proposed prosecution of the appellant and three others involved in the attempted escape on 24 December 1973. Mr Hutton concluded that a court would probably hold that it would be a condition precedent to the making of an ICO that the Secretary of State should have considered the matter personally. The proceedings The appellant became aware of Mr Huttons opinion in October 2009. He had not appealed his convictions before then. Some time after learning of the opinion, he applied for an extension of time in which to appeal his convictions. That application was granted by Gillen LJ on 20 April 2017. The appellants appeal was heard by the Northern Ireland Court of Appeal (Morgan LCJ, Sir Ronald Weatherup and Sir Reginald Weir) on 16 January 2018. On 14 February 2018, the Court of Appeal unanimously dismissed the appeal, the judgment of the court being delivered by Sir Ronald Weatherup: [2018] NICA 8. An application for permission to appeal to this court was dismissed by the Court of Appeal on 16 April 2018 but the court certified the following question as one constituting a point of law of public general importance: Whether the making of an interim custody Order under article 4 of the Detention of Terrorists (Northern Ireland) Order 1972 [SI 1972/1632 (NI 15)] required the personal consideration by the Secretary of State of the case of the person subject to the order or whether the Carltona principle operated to permit the making of such an Order by a Minister of State. The reference to the Carltona principle here relates to the decision of the Court of Appeal in Carltona Ltd v Comrs of Works [1943] 2 All ER 560. In that case it had been argued that an order for the requisition of a factory under the Defence (General) Regulations 1939, which was to be made by the Commissioners of Works, should have been made by a commissioner personally. The First Commissioner of Works was the Minister of Works and Planning and the decision was made by the Assistant Secretary in that Ministry on behalf of the Commissioners of Works. The Court of Appeal rejected the argument, Lord Greene MR observing, at p 563: In the administration of government in this country the functions which are given to ministers (and constitutionally properly given to ministers because they are constitutionally responsible) are functions so multifarious that no minister could ever personally attend to them. To take the example of the present case no doubt there have been thousands of requisitions in this country by individual ministers. It cannot be supposed that this regulation meant that, in each case, the minister in person should direct his mind to the matter. The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department. Public business could not be carried on if that were not the case. Sir Ronald Weatherup considered that the Carltona principle had been amplified and reinforced in cases which were decided after Mr Hutton had given his opinion. That opinion had been strongly influenced by the consideration that deprivation of liberty was a matter of the utmost gravity and that scrupulous compliance with the precise enjoinder in article 4 of the 1972 Order was required. Sir Ronald noted that subsequent case law suggested that the seriousness of the subject matter was not to be regarded as determinative. It was a factor relevant to whether Parliament had intended to disapply the Carltona principle but was not decisive of that issue. The court relied for that conclusion on In re Golden Chemicals Products Ltd [1976] Ch 300 and R v Secretary of State for the Home Department, Ex p Oladehinde [1991] 1 AC 254. In the Golden case, what was in issue was the provision in the Companies Act 1967 which stated that, if it appeared to the Secretary of State that it was expedient in the public interest that a corporate body should be wound up, he could present a petition for its winding up. That power had been exercised by the Inspector of Companies in the Department of Trade acting for the Secretary of State. It was held that there was no obligation on the Secretary of State to exercise the power personally. It had been argued that the exercise of the power involved a serious invasion of the freedom or property rights of the subject and that it should be exercised only by the Secretary of State in whom it had been invested. Brightman J accepted that the power given to the Secretary of State was of a most formidable nature which may cause serious damage to the reputation or financial stability of the company (p 310). But he rejected the notion that a true distinction required to be drawn as a matter of law between powers which the minister must exercise personally and those which can be exercised by an officer of his department, if that distinction was based on the seriousness of the subject matter. It is important to recognise that Brightman Js judgment was based on his rejection of the claim that a distinction should be drawn as a matter of law between those cases in which the exercise of the power would have serious and grave consequences for those affected by it and cases where such consequences were not expected. Sir Ronald Weatherup said this about Brightman Js judgment at para 30: This court is satisfied that the seriousness of the subject matter is a consideration in determining whether a power must be exercised by the Minister personally, although as Brightman J found, it is not a determining consideration. (Emphasis added) It appears to me that Brightman J did not find that the seriousness of the subject matter was a consideration to which regard must be had in deciding whether a power must be exercised by a Minister personally. To the contrary, he held that that was not a consideration which was relevant at all in deciding whether the power should be exercised by the Minister or by an officer in his department. This, I believe, is clear from the following passage at p 310 of Brightman Js judgment: If there is a true distinction which must be drawn as a matter of law between powers which the Minister must exercise personally and those which can be exercised by an officer of his department, I might well come to the view that the power given by section 35 is so potentially damaging that it falls into the former category, however burdensome that may be to a Secretary of State personally. But is such a distinction to be drawn? I find no warrant for it in the authorities. In fact, the reverse. The accuracy of the breath test equipment with which R v Skinner [1968] 2 QB 700 was concerned was of vital importance to every motorist as indeed the judgment of the Court of Appeal recognised If a motorist fails the breath test he is arrested. So if the equipment over registers, an innocent subject is placed under arrest; if it under registers, a potentially lethal motorist is let loose on the highway. Yet the Court of Appeal decided that although such a vitally important matter might well have occupied the Ministers personal attention there is in principle no obligation upon the Minister to give it his personal attention: p 709. As Mr Chadwick pointed out, there are important cases in which the Minister will exercise a statutory discretion personally, not because it is a legal necessity but because it is a political necessity. Now, as it happens, I consider that the Court of Appeal in this case was right to hold that the seriousness of the consequences is a consideration to be taken into account in deciding whether a power must be exercised by the Minister personally and, to the extent that he suggested otherwise, Brightman J was wrong. I shall return to that debate later in this judgment. But, for reasons that will appear, there are other considerations beyond this issue which are of greater significance in the resolution of this appeal. The next case referred to by Sir Ronald Weatherup was Oladehinde. In that case the Home Secretary authorised certain officials in the immigration department of the Home Office to act on his behalf to decide whether to issue a notice of intention to deport persons under the Immigration Act 1971. It was argued that the structure of the Immigration Act, which differentiates between the powers of immigration officers permanently concerned with entry control and subsequent policing of illegal immigrants and the powers of the Secretary of State in relation to deportation, carried the clear statutory implication that the powers of the Secretary of State were not to be exercised by immigration officers. That argument was rejected. At p 303, Lord Griffiths said: It is well recognised that when a statute places a duty on a minister it may generally be exercised by a member of his department for whom he accepts responsibility: this is the Carltona principle. Parliament can of course limit the ministers power to devolve or delegate the decision and require him to exercise it in person. Three instances in the Immigration Act where the power to delegate was limited were identified. In each case the conferring of the power on the Secretary of State was accompanied by words such as not [to be exercised] by a person acting under his authority. The absence of such a formula in relation to the issue of a notice of intention to deport was considered to be conclusive. Not only was there no express limitation but the presence of express exclusion of delegation in other sections was a clear indication that the implication of such an exclusion in relation to the issue of an intention to deport was inapt. It is clear that the decision in Oladehinde did not address the question whether the exercise of the power had serious consequences for those affected by it. What mattered was the interpretation of the statute. By contrast, in Doody v Secretary of State for the Home Department [1993] QB 157, the issue of the seriousness of the consequences was certainly in play. In that case section 61(1) of the Criminal Justice Act 1967 conferred power on the Secretary of State to release a life prisoner. In effect, this empowered the Home Secretary to fix a tariff period which had to be served before release could be considered. In at least some instances in the Doody case the tariff had been fixed by a minister of state or a Parliamentary under secretary of state. It was argued that the tariff period had to be decided upon by the Secretary of State personally. That argument was rejected by Staughton LJ (whose judgment on this point was subsequently endorsed by the Appellate Committee of the House of Lords [1994] 1 AC 531). At p 196, after discussing the substantial number of mandatory life sentence cases that required to be considered each year, Staughton LJ said this: Every such case demands serious consideration and the burden of considering them all must be substantial. I can see nothing irrational in the Secretary of State devolving the task upon junior ministers. They too are appointed by the Crown to hold office in the department, they have the same advice and assistance from departmental officials as the Secretary of State would have, and they too are answerable to Parliament. Sir Ronald Weatherup quoted this passage at para 34 of his judgment without comment. It appears to me that two observations about the passage may be made. First, it was firmly established in evidence that a considerable burden would fall on the Secretary of State if he was required to consider every tariff case. (In 1990 no fewer than 274 mandatory life sentence cases were considered.) Secondly, as Staughton LJ stated (at 196B), there was no express or implied requirement in the 1967 Act that a decision fixing the tariff period, or for that matter a decision to release a prisoner on licence, must be taken by the Secretary of State personally. On that account, it was not irrational for him to devolve the task to junior ministers. Neither consideration obtains in the present case. On the first point (a possibly excessive burden on the Secretary of State), there was no evidence that at the time of the making of the ICO, it would have been unduly onerous for the Secretary of State, then the Rt Hon William Whitelaw MP, personally to consider each application for an ICO. Indeed, the Rt Hon Merlyn Rees MP (who was Secretary of State in the Labour government which came to power in March 1974) considered all ICOs personally. Sir Ronald Weatherup suggested that this practice was born out of caution based on legal advice para 19 of his judgment. That may be so but the fact that Mr Rees was able to carry out this task himself from March 1974 onwards is a clear indication that it should not have been impossibly difficult for Mr Whitelaw to do the same in July 1973, some eight months earlier. On the second question (whether there was an express or implied requirement in the legislation that the Secretary of State must personally consider if an order should be made) the position under the 1972 Order is quite different from that of the 1967 Act. I will discuss that difference when I come to consider the relevant legislative provisions. There is a further point to be made about Doody. An argument had been made that, in the days of capital punishment, it was the practice for the Home Secretary personally to decide whether to recommend a reprieve and it was pointed out that political memoirs had recorded how seriously that responsibility was regarded. It was suggested that the fixing of a tariff period for life prisoners was likewise of great importance to the individuals affected. That submission was accepted by Staughton LJ but he considered that Parliament must have been well aware of the great burden that would be imposed on senior ministers if they were required to review each case personally see p 196C D. The significance of this is the implicit acknowledgment, contrary to the view of Brightman J in Golden, that the seriousness of the consequences is a consideration to be taken into account. It seems to me, however, that this, in the estimation of Staughton LJ, was as a contribution to the insight that it would provide as to Parliaments intention, rather than ranking as an autonomous factor. After dealing with Doody, Sir Ronald went on to consider a number of authorities from Northern Ireland. The first of these was R v Harper [1990] NI 28. In that case the appellant had been convicted of a number of serious offences, largely as a result of admissions made by him during interviews by the police. Among the grounds of appeal was a claim that extension of the appellants detention had wrongly been authorised by a Parliamentary under secretary of state where the relevant statutory provision (section 12(4) of the Prevention of Terrorism (Temporary Provisions) Act 1984) provided that a person arrested under section 12(1) should not be detained for more than 48 hours but that the Secretary of State may, in a particular case, extend that period. The document extending the period in the appellants case had not been signed by the Secretary of State. The argument was rejected by the Court of Appeal on the basis that there was no reason to conclude that this was a power that could not be devolved to a junior minister. The Court of Appeal in Harper relied on Brightman Js judgment in Golden. For the reasons given earlier, I do not believe that to have been correct, but this does not bear on the decision in Harper. In that case there was nothing in the legislation which gave rise to the possibility of implying any restriction on the power of the Secretary of State to devolve the function of signing the extension order to the under secretary. And there was certainly no express restriction. The decision in Harper therefore involved the straightforward application of the Carltona principle. I consider that it does not assist in the resolution of the present appeal, where, as I shall discuss below, there are substantial reasons for implying a restriction on the power of the Secretary of State to devolve the making of ICOs to a junior minister. Sir Ronald Weatherup also referred to the decision of the Court of Appeal in Northern Ireland in the case of McCaffertys Application [2009] NICA 59. That case involved a prisoner who had been released on licence while serving a sentence for possession of an explosive substance. His licence was revoked, and he was arrested a month after his release. The revocation of the licence was authorised by the minister of state for security in the Northern Ireland Office. He purported to act under section 1(3) of the Northern Ireland (Remission of Sentences) Act 1995 which provided that the Secretary of State could revoke a persons licence if it appeared to him that that individuals continued liberty would present a risk to the safety of others or that he was likely to commit further offences. The prisoner applied for a writ of habeas corpus. Among other arguments presented on his behalf was the claim that his detention was unlawful because it had not been authorised by the Secretary of State but by a junior minister. This argument was rejected. Coghlin LJ, delivering the judgment of the court, observed at para 17: In general, it is to be implied that the intention of Parliament is to permit the Carltona principle to apply rather than to require a personal decision by the named decision maker. For the purpose of deciding whether the power is to be implied factors to be considered include the framework of the relevant legislation and, in particular, whether any specific contrary indications appear in the language, and the importance of the subject matter. a decision taken with regard to the liberty of the subject may attract the Carltona principle. In our view there is nothing in either the framework or the language of the 1995 Act that indicates a contrary Parliamentary intention. It is unnecessary for the purposes of the present appeal to reach a firm conclusion on the question whether it is now established that there is a presumption that Parliament should be taken to have intended that the Carltona principle should apply. It is true that in Oladehinde Lord Griffiths said that a statutory duty placed on a minister may generally be exercised by a member of his department, but I believe that he was not there proposing that there was a legal presumption to that effect. I am not persuaded that the authorities, apart from McCafferty and the decision of the Court of Appeal in the present case, have espoused that position. It is, of course, the case that Parliament legislates against the background that the Carltona principle is well established. And it is also relevant that Parliament has shown itself on occasions willing to register the displacement of the principle in explicit terms. These considerations must influence the judgment as to whether, properly construed, a particular item of legislation is in keeping with the principle or not. But that does not amount, in my opinion, to the creation of a presumption in law that the principle must be taken to apply unless it has been removed by express statutory language. My provisional view is that the matter should be approached as a matter of textual analysis, unencumbered by the application of a presumption, but with the enjoinder of Lord Griffiths well in mind. In this way, whether the Carltona principle should be considered to arise in a particular case depends on an open ended examination of the factors identified by Coghlin LJ in McCafferty, namely, the framework of the legislation, the language of pertinent provisions in the legislation and the importance of the subject matter, in other words, the gravity of the consequences flowing from the exercise of the power, rather than the application of a presumption. But, as I have said, it is not necessary in this case to reach a final view on whether there is such a presumption, not least because, if there is indeed a presumption, the statutory language in this instance is unmistakably clear, and has the effect of displacing it. Coghlin LJ decided that there was nothing in the framework of the legislation or the statutory language that expressly contraindicated the application of the Carltona principle in the McCafferty case. With that conclusion I have no quarrel. But, again, this does not provide an answer in the present case because of what I consider to be the significant difference between the wording of the 1972 Order and the 1995 Act. Unlike the 1972 Order, the 1995 Act does not stipulate one role for the Secretary of State alone and a quite separate role that can be discharged by the Secretary of State or junior ministers. (I shall discuss this further below.) I am of the view, therefore, that, as in Harper, the McCafferty decision does not assist in resolving the central issue in this appeal. The relevant legislation Article 4(1) of the 1972 Order provides: Where it appears to the Secretary of State that a person is suspected of having been concerned in the commission or attempted commission of any act of terrorism or in the direction, organisation or training of persons for the purpose of terrorism the Secretary of State may make an order (hereafter in this Order referred to as an interim custody order) for the temporary detention of that person. The language in this paragraph is clear and precise. Its apparent effect is unambiguous. It is the Secretary of State who must consider whether the person concerned is suspected of being involved in terrorism etc. Absent the possible invocation of the Carltona principle, there could be no doubt that resort to the power to make an ICO was reserved to the Secretary of State alone. Article 4(2) provides: An interim custody order of the Secretary of State shall be signed by a Secretary of State, Minister of State or Under Secretary of State. Considered together, paragraphs 1 and 2 of article 4 have two noteworthy features. First there is the distinct segregation of roles. In paragraph 1 the making of the Order is provided for; in paragraph 2, the quite separate function of signing the ICO is set out. If it had been intended that the Carltona principle should apply, there is no obvious reason that these roles should be given discrete treatment. It would have been a simple matter to provide in paragraph 1 that the Secretary of State may make [and sign] an ICO. The question therefore arises, why was provision made for the different roles in two separate paragraphs of the article. The answer appears to me to be self evident: it was intended that the two functions called for quite distinct treatment. The second noteworthy feature of article 4(2), when read together with 4(1), is that the ICO to be signed is that of the Secretary of State. Why would this stipulation be required if an ICO could be made by a minister of state? Why not simply state that, An interim custody order shall be signed by a Secretary of State, Minister of State or Under Secretary of State? The use of the words, of the Secretary of State surely denotes that the ICO is one which is personal to him or her, not a generic order which could be made by any one of the persons named in paragraph 2. If a minister of state made the ICO and then signed it, could he be said to sign the order of the Secretary of State? Surely not. Pepper v Hart The rule in Pepper v Hart [1993] AC 593 can be succinctly stated. As Lord Browne Wilkinson said (at p 640), reference to Parliamentary materials is permitted where (a) legislation is ambiguous or obscure, or leads to an absurdity; (b) the material relied upon consists of one or more statements by a Minister or other promoter of the Bill together if necessary with such other Parliamentary material as is necessary to understand such statements and their effect; (c) the statements relied upon are clear. In this case, the Court of Appeal considered that the conditions prerequisite on the invocation of the rule were not satisfied, Sir Ronald Weatherup pithily saying at para 22 of his judgment that the language of the 1972 Order was not ambiguous or obscure nor did its literal meaning lead to absurdity and that, in any event, the statements made in Parliament on which the appellant sought to rely were contradictory. I agree, although I suspect for rather different reasons from those of the Court of Appeal, that the language of the enactment is neither ambiguous nor obscure. Although Sir Ronald did not expressly say so, it seems likely that the Court of Appeal considered that the language of the 1972 Order clearly indicated that the intention of Parliament was that the Carltona principle should be in play in relation to article 4(1) of the 1972 Order. I, on the other hand, for the reasons that I have given, am firmly of the view that, properly construed, article 4(1) unmistakably points to the conclusion that the power that was invested in the Secretary of State by that provision was one which should be exercised by him or her personally. But, in any case, I fully agree that the statements made in Parliament about whether the power in article 4(1) was invested in the Secretary of State alone or whether recourse could be had to that power by a junior minister do not partake of the quality of certainty required to meet the third criterion of the Pepper v Hart test. On that account, I consider that the Parliamentary statements are not admissible. Discussion The Court of Appeal approached the central issue in this case on the basis that there was a presumption that the Carltona principle would apply to article 4(1) of the 1972 Order. In para 25 above, I have questioned whether such a presumption exists. Even if it does, I am satisfied that it is clearly displaced by the proper interpretation of article 4(1) and (2), read together. The segregation of the two functions (the making and the signing of ICOs) cannot have been other than deliberate. When one allies this to the consideration that the power invested in the Secretary of State by article 4(1) was a momentous one, the answer is, I believe, clear. The provision did nothing less than give the Secretary of State the task of deciding whether an individual should remain at liberty or be kept in custody, quite possibly for an indefinite period. In agreement with Staughton LJs view in Doody (see para 21 above), I consider that this provides an insight into Parliaments intention and that the intention was that such a crucial decision should be made by the Secretary of State. This was, after all, a power to detain without trial and potentially for a limitless period. This contrasts with Doody where, at least, the prisoner whose tariff period was to be determined had been convicted after due process. A further factor that militates towards the conclusion that it was intended that the Secretary of State should personally decide on the fate of a person whose detention was sought was that there was no reason to apprehend (at the time of the enactment of the 1972 Order) that this would place an impossible burden on the Secretary of State. Indeed, the subsequent experience with Mr Merlyn Rees scotches any notion that this should be so. This again presents a stark contrast with Doody. For these reasons, I have concluded that it was Parliaments intention that the power under article 4(1) of the 1972 Order should be exercised by the Secretary of State personally. Conclusion The making of the ICO in respect of the appellant was invalid. It follows that he was not detained lawfully. It further follows that he was wrongfully convicted of the offences of attempting to escape from lawful custody and his convictions for those offences must be quashed.
UK-Abs
From 1922 successive items of legislation authorised the detention without trial of persons in Northern Ireland, a regime commonly known as internment. The way in which internment operated then was that initially an interim custody order (ICO) was made, under article 4 of the Detention of Terrorists (Northern Ireland) Order 1972 (the 1972 Order), where the Secretary of State considered that an individual was involved in terrorism. On foot of the ICO that person was taken into custody. The person detained had to be released within 28 days unless the Chief Constable referred the matter to the Commissioner, who had the power to make a detention order if satisfied that the person was involved in terrorism. If not so satisfied, the release of the person detained would be ordered. An ICO was made in respect of the appellant on 21 July 1973. He was detained on foot of that ICO, attempted to escape from detention twice and was twice convicted of attempting to escape from lawful custody on 20 March 1975 and 18 April 1975. Following the disclosure of an opinion of JBE Hutton QC dated 4 July 1974, published in line with the 30 years rule, and which suggested that it was a condition precedent to the making of an ICO that the Secretary of State should have considered the matter personally, the appellant challenged the validity of the ICO dated July 1973. He argued that the ICO was invalid because the Secretary of State did not personally consider whether the appellant was involved in terrorism, and consequently argues that his following detention and convictions were also unlawful. The Court of Appeal in Northern Ireland dismissed his appeal. The appellant appeals to this court against the Court of Appeals judgment. The Supreme Court unanimously allows the appeal. It holds that the power under article 4 of the 1972 Order should be exercised by the Secretary of State personally, and, therefore, that the making of the ICO in respect of the appellant was invalid, and that his consequent detention and convictions were unlawful. Lord Kerr gives the judgment with which the other members of the court agree. The question for the court was whether the making of an ICO under article 4 of the 1972 Order required personal consideration by the Secretary of State of the case of the person subject to the order or whether the Carltona principle operated to permit the making of such an Order by a Minister of State [8]. The Carltona principle relates to the decision of the Court of Appeal in Carltona Ltd v Comrs of Works [1943] 2 All ER 560, which accepted as a principle of law that the duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department [9]. Lord Kerr considered the case law relied upon by the Court of Appeal to determine whether Parliament in the present case had intended to disapply the Carltona principle in the present case at [10 27]. He disagreed with the Court of Appeals understanding of the judgment of Brightman J in In re Golden Chemicals Products Ltd [1976] Ch 300, finding that Brightman J held that the seriousness of the subject matter was not a consideration which was relevant at all in deciding whether the power should be exercised by the Minister or by an officer in his department. He considered that the Court of Appeal in this case was right to hold that the seriousness of the consequences is a consideration to be taken into account and, to the extent he suggested otherwise, Brightman J was wrong [13 14]. Next, Lord Kerr considered Oladehinde v Secretary of State for the Home Department [1991] 1 AC 254. There, the Court concluded that the statutory wording relating to the power under challenge was not, unlike complementary provisions in the relevant Act, expressly limited by way of words such as not [to be exercised] by a person acting under his authority. The absence of such express limitation of the power in question was a clear indication that Carltona there was not disapplied in that case [15 16]. Oladehinde did not consider whether the seriousness of the consequences was a relevant consideration [17]. Lord Kerr then considered Doody v Secretary of State for the Home Department [1992] 3 WLR 956. There, Carltona was held not to have been disapplied because (1) it was established in evidence that a considerable burden would fall on the Secretary of State if he was to exercise the power personally and (2) there was no express or implied requirement in the Act in question that the Secretary of State exercise the power personally [18 19]. Neither consideration obtained on the facts of this case; Doody was therefore distinguishable [19 20]. However, Lord Kerr observed that in Doody there had been implicit acknowledgement that the seriousness of the consequences is a consideration to be taken into account [21]. Lord Kerr did not consider that R v Harper [1990] NI 28 assisted in the resolution of the present appeal [23]. He then analysed McCaffertys Application [2009] NICA 59, where it was suggested that there is a presumption in law that Parliament intends Carltona to apply generally. Lord Kerr did not consider it necessary to determine whether such presumption indeed exists, given that he considered the statutory language on the facts unmistakably clear. However, he expressed an obiter view that there is no such presumption at law, and that cases should instead proceed on a textual analysis of the framework of the legislation in question, the language of pertinent provisions in the legislation and the importance of the subject matter, rather than the application of a presumption [25 26]. Lord Kerr then turned to the relevant legislation. He observed that paragraphs 1 and 2 of article 4 have two noteworthy features. First, there is the distinct segregation of roles. In paragraph 1 the making of the Order is provided for; in paragraph 2, the quite separate function of signing the ICO is set out. He concluded that, if it had been intended that the Carltona principle should apply, there is no obvious reason that these roles should be given discrete treatment [31]. The second noteworthy feature of article 4(2), when read with 4(1), is that the ICO to be signed is that of the Secretary of State. The use of the words, of the Secretary of State indicates that the ICO is one which is personal to him or her, not a generic order which could be made by any one of the persons named in paragraph 2 [32]. Lord Kerr thus reached the following overall conclusions. First, even if a presumption exists that Parliament intends Carltona to apply, it is clearly displaced on the facts by the proper interpretation of article 4(1) and 4(2) read together [37]. Second, the consideration that the power invested in the Secretary of State by article 4(1) a power to detain without trial and potentially for a limitless period was a momentous one provides insight into Parliaments intention and that the intention was that such a crucial decision should be made by the Secretary of State personally [38]. Third, there was no evidence that this would place an impossible burden on the Secretary of State [39]. In conclusion, Parliaments intention was that the power under article 4(1) of the 1972 Order should be exercised by the Secretary of State personally. The making of the ICO in respect of the appellant was invalid. It follows that he was not detained lawfully and was wrongfully convicted of the offences of attempting to escape from lawful custody. His convictions for those offences must be quashed [40 41].
This case concerns the jurisdiction of a court in England to make a maintenance order in favour of a party to a marriage (here, the wife) pursuant to section 27 of the Matrimonial Causes Act 1973 (as amended section 27) in circumstances in which for most of the marriage the parties lived in Scotland and where the relevant divorce proceedings (those issued by the husband) were conducted in Scotland. After marriage in England in 1994, the parties lived together in Scotland between 1995 and 2012, when they separated. The wife returned to England in 2012 and has lived in England since then. On 13 January 2015 she issued her application under section 27 in England for an order requiring the husband to make maintenance payments. Under section 27, an order can be made for periodic payments or payment of a lump sum directed to satisfying an obligation in the nature of provision of maintenance. The wife issued a divorce petition in England in July 2013, which included a prayer for financial orders. The husband issued a writ for divorce in Scotland in October 2014. The writ sought relief only in the form of an order to dissolve the marriage and included no prayer for orders in relation to financial matters. The effect of the relevant statutory provision (paragraph 8 of Schedule 1 to the Domicile and Matrimonial Proceedings Act 1973) was that the application for divorce had to be assigned to the court in Scotland, since the parties had last lived together there. The wife accepted this and on 13 January 2015 she consented to an order dismissing her petition in England, which order was made on 16 January 2015. The husbands writ for divorce could then proceed in Scotland. Relief in the form of an order for maintenance under section 27 is not tied to the grant of a decree of divorce and such an order can be sought in separate proceedings. Therefore, subject to questions of jurisdiction, the wife was free to issue her application under section 27 in England, as she did on the same day on which she consented to the dismissal of her petition for divorce. By her application, she seeks an order for payment of periodical payments and a lump sum. She has also applied for interim periodical payments under section 27(5). Issuing proceedings for maintenance in England was both more convenient for her, since she lives in England, and offered the prospect of more generous maintenance provision than would be available to her if she sought orders in Scotland. The husband applied for an order to stay or dismiss the wifes application under section 27 on the basis that the court in England either did not have or should not exercise jurisdiction to hear the application, alternatively on the basis that her application should be rejected on the merits. These matters were considered at a hearing before Parker J in the High Court. She rejected the husbands challenge to the jurisdiction of the English court and made an order for, among other things, interim periodical payments of maintenance by the husband: [2016] EWHC 668 (Fam); [2017] 1 FLR 1083. The husband appealed to the Court of Appeal. The Court of Appeal (King, David Richards and Moylan LJJ) dismissed the appeal: [2018] EWCA Civ 1120; [2019] Fam 138. King LJ gave the sole substantive judgment, with which the other members of the court agreed. The husband now appeals to this court, with permission granted by this court, in relation to the jurisdictional issues. These are concerned with the interpretation and effect of Schedule 6 to the Civil Jurisdiction and Judgments (Maintenance) Regulations 2011 (SI 2011/1484) (Schedule 6 and the 2011 Regulations, respectively) and the interpretation and effect of Council Regulation (EC) No 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations (the Maintenance Regulation). The 2011 Regulations were promulgated by the Secretary of State for Justice pursuant to section 2(2) of the European Communities Act 1972 (the ECA 1972), and on the appeal to this court the husband has been given permission to raise a new point as to whether Schedule 6 to those Regulations, or any part of it, is ultra vires the Secretary of States powers under section 2(2). The final determination of the wifes application for financial orders under section 27 was adjourned pending the appeal to the Court of Appeal and then adjourned again pending the appeal to this court. The order by Parker J for payment of interim periodical payments has not been stayed, but the husband has failed to comply with it. presented by Mr Horton, counsel for the appellant): Four issues arise on the appeal, as follows (in the order in which they were (1) On the proper interpretation of section 27(2), does an English court have jurisdiction to make any order for maintenance in a case with no international dimension at all? (2) If the answer to (1) is yes, does the English court have a discretion which has survived the promulgation of Schedule 6, to stay maintenance proceedings before it on the general ground of forum non conveniens (and if so, should it exercise that discretion so as to give priority to the Scottish courts to deal with financial issues between the parties)? (3) If the answer to (2) is no, was the purported removal by Schedule 6 of a general discretion to stay proceedings on the ground of forum non conveniens ultra vires the Secretary of States powers in section 2(2) of the ECA 1972? and (4) If the answer to (3) is no, with the result that the jurisdictional position is governed by the express terms of the Maintenance Regulation, as adopted into domestic law by Schedule 6, is the husbands divorce proceeding in Scotland a related action for the purposes of article 13 of the Maintenance Regulation (as so adopted) and, pursuant to that provision, should the English court decline jurisdiction in respect of the wifes claim for a maintenance order under section 27? Legislative background The national legislation governing jurisdiction in cross border cases is primarily contained in the Civil Jurisdiction and Judgments Act 1982 (the CJJA 1982). That Act gave effect in domestic law to the Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 1968 (the Brussels Convention). The Brussels Convention was amended on the association of Denmark, Ireland and the United Kingdom in 1978. It was replaced as the principal instrument governing jurisdiction in cross border cases between member states of the European Union by Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the Brussels Regulation or, as it is sometimes called, the Judgments Regulation), which in large part replicated the provisions of the Brussels Convention. The CJJA 1982 was amended to refer to and give effect in domestic law to the Brussels Regulation. The Brussels Regulation has been replaced by Regulation (EU) No 1215/2012 (the Brussels Recast Regulation). The Brussels Convention did not apply to issues of the status of natural persons, including marriage, nor to rights in property arising out of a matrimonial relationship (article 1(1)), but it did apply in respect of claims for maintenance. The Convention set out a general principle that a person should be sued in his state of domicile (article 2), but this was subject to certain special rules of jurisdiction. One such rule was that in matters relating to maintenance, the person owing an obligation to pay maintenance (the maintenance debtor) could be sued by the person to whom that obligation was owed (the maintenance creditor) in the courts for the place where the maintenance creditor was domiciled or habitually resident (article 5(2)). This was specifically designed to make it easier for a maintenance creditor to enforce his or her rights, by giving them the right to choose where to sue the maintenance debtor. The rationale for this was explained by Mr Jenard in his report on the Brussels Convention (OJ 1979 C59, pp 24 25, excluding footnotes): The Convention is in a sense an extension of the Hague Convention of 15 April 1958 concerning the recognition and enforcement of decisions relating to maintenance obligations in respect of children, since it ensures the recognition and enforcement of judgments granting maintenance to creditors other than children, and also of the New York Convention of 20 June 1956 on the recovery abroad of maintenance. The Committee decided that jurisdiction should be conferred on the forum of the creditor, for the same reasons as the draftsmen of the Hague Convention. For one thing, a convention which did not recognize the forum of the maintenance creditor would be of only limited value, since the creditor would be obliged to bring the claim before the court having jurisdiction over the defendant. If the Convention did not confer jurisdiction on the forum of the maintenance creditor, it would apply only in those situations where the defendant against whom an order had been made subsequently changed residence, or where the defendant possessed property in a country other than that in which the order was made. Moreover the court for the place of domicile of the maintenance creditor is in the best position to know whether the creditor is in need and to determine the extent of such need. However, in order to align the Convention with the Hague Convention, article 5(2) also confers jurisdiction on the courts for the place of habitual residence of the maintenance creditor. This alternative is justified in relation to maintenance obligations since it enables in particular a wife deserted by her husband to sue him for payment of maintenance in the courts for the place where she herself is habitually resident, rather than the place of her legal domicile. Article 5(2) of the Brussels Convention was amended in 1978 so as to expand this special rule of jurisdiction, so that in matters relating to maintenance the maintenance debtor could be sued in the courts for the place where the maintenance creditor is domiciled or habitually resident or, if the matter is ancillary to proceedings concerning the status of a person, in the court which, according to its own law, has jurisdiction to entertain those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties. The object of this provision remained the protection of the maintenance creditor, who was regarded as the weaker party: see the judgments of the European Court of Justice (the ECJ) in Farrell v Long (Case C 295/95) EU:C:1997:168, [1997] QB 842, para 19, and Freistaat Bayern v Blijdenstein (Case C 433/01) EU:C:2004:21, [2004] All ER (EC) 591, paras 29 and 30. The Brussels Convention set out rules governing cases of lis pendens and related actions at articles 21 and 22, respectively, in terms closely similar to what later became articles 27 and 28 of the Brussels Regulation, articles 12 and 13 of the Maintenance Regulation and articles 29 and 30 of the Brussels Recast Regulation. The effect of articles 12 and 13 of the Maintenance Regulation is discussed below. Section 16(1) of the CJJA 1982 stated that the provisions in Schedule 4 to the Act (which contained a modified version of Title II of the Brussels Convention) should have effect for determining, in each part of the United Kingdom, whether the courts of that part had jurisdiction in proceedings where the subject matter of the proceedings was within the scope of the Brussels Convention as determined by article 1 (therefore, maintenance proceedings were covered) and the defendant was domiciled in the United Kingdom. As Lord Wilson explains, the Brussels Convention had nothing to say about determination of jurisdiction of courts in different parts of a single state and the CJJA 1982 did not adopt articles 21 and 22 of the Brussels Convention as part of the scheme for allocation of jurisdiction as between different jurisdictions in the United Kingdom (ie in an intra state case with a cross jurisdiction dimension). The position in such cases remained governed by ordinary domestic discretionary rules, according to the principles relating to the forum non conveniens doctrine. Section 49 of the CJJA 1982 provided: Nothing in this Act shall prevent any court in the United Kingdom from staying, sisting, striking out or dismissing any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the [Brussels Convention]. The Brussels Regulation followed the structure of the Brussels Convention. Like the Convention, the Regulation did not apply to issues of status of natural persons, nor to rights in property arising out of a matrimonial relationship (article 1.2(a)). Like the Convention, the Regulation included provisions governing jurisdiction in respect of claims for maintenance payments. Article 2 repeated the general rule that a defendant should be sued in the courts of his domicile. Article 5(2) of the Brussels Convention (as amended) was repeated. The object remained, as before, that the maintenance creditor, who is regarded as the weaker party, should have options regarding where to sue, so that he or she could proceed in the place most convenient or advantageous for him or her. As with the Brussels Convention before it, the Brussels Regulation did not harmonise the law of maintenance. The substantive law to be applied was therefore a matter for the national law of the forum in which the maintenance claim was brought. This meant that by giving the maintenance creditor a choice regarding the forum in which to bring their claim, the maintenance creditor was also afforded a choice regarding the substantive law to be applied. The CJJA 1982 was amended so as to refer to the Brussels Regulation in relevant provisions. As explained below, the domestic doctrine of forum non conveniens is excluded by the Brussels Regulation, as it was by the Brussels Convention before it. However, as the Brussels Regulation was (unlike the Convention) directly applicable in the United Kingdom as a matter of EU law, it was not necessary for section 49 of the CJJA 1982 to be amended to refer to it in order for the Regulation to have effect to govern the allocation of jurisdiction in inter state cases. As regards the effect of the Brussels Regulation, it is not the CJJA 1982 which prevents a court in the United Kingdom from staying proceedings before it on the ground of forum non conveniens, but the directly applicable Regulation itself. The final clause of section 49 now refers to inconsistency with the Brussels Convention (as this still has application in a small number of cases), or, as the case may be, the Lugano Convention or the 2005 Hague Convention. The reason for these references is that, since these instruments only have the status of treaties, they do not have direct effect in domestic law and so have to be given effect by a legislative provision in order to achieve the intended result that they, too, should exclude the operation of the forum non conveniens doctrine. Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition of and enforcement of judgments in matrimonial matters and matters of parental responsibility (the Matrimonial Regulation, or the Brussels II Revised Regulation as it is often called) excluded maintenance obligations from its scope. In due course, maintenance obligations were covered by their own jurisdictional regime as set out in the Maintenance Regulation. Accordingly, EU legislation has continued the original scheme of the Brussels Convention, by treating maintenance obligations and questions of marital status, including divorce, as separate matters for the purposes of jurisdiction. Recital (9) to the Maintenance Regulation states that a maintenance creditor should be able to obtain easily, in a member state, a decision which will automatically be enforceable in another member state. Recital (11) makes it clear that the Maintenance Regulation covers all maintenance obligations arising from, among other things, marriage. Recitals (21) and (25) make it clear that the Maintenance Regulation is not concerned with questions affecting the existence of family relationships, such as marriage. Recitals (15) and (45) (in material part) are as follows: (15) In order to preserve the interests of maintenance creditors and to promote the proper administration of justice within the European Union, the rules on jurisdiction as they result from [the Brussels Regulation] should be adapted. The circumstance that the defendant is habitually resident in a third State should no longer entail the non application of Community rules on jurisdiction, and there should no longer be any referral to national law. This Regulation should therefore determine the cases in which a court in a member state may exercise subsidiary jurisdiction. (45) Since the objectives of this Regulation, namely the introduction of a series of measures to ensure the effective recovery of maintenance claims in cross border situations and thus to facilitate the free movement of persons within the European Union, cannot be sufficiently achieved by the member states and can therefore, by reason of the scale and effects of this Regulation, be better achieved at Community level, the Community may adopt measures Article 3 of the Maintenance Regulation provides: In matters relating to maintenance obligations in member states, jurisdiction shall lie with: the court for the place where the defendant is the court for the place where the creditor is (a) habitually resident, or (b) habitually resident, or (c) the court which, according to its own law, has jurisdiction to entertain proceedings concerning the Articles 12 and 13 of the Maintenance Regulation provide as follows: status of a person if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties, or (d) the court which, according to its own law, has jurisdiction to entertain proceedings concerning parental responsibility if the matter relating to maintenance is ancillary to those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties. Article 12 Lis pendens 1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court. Article 13 Related actions 1. Where related actions are pending in the courts of different member states, any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. For the purposes of this article, actions are deemed to be 3. related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. As is made clear by recital (15), the Maintenance Regulation is intended to preserve and enhance the rights of maintenance creditors as they had been set out previously in the Brussels Convention and the Brussels Regulation. Therefore, article 3 of the Maintenance Regulation is concerned with defining the set of jurisdictions where the maintenance creditor has the right to bring her claim. This is in line with the fundamental object of the Maintenance Regulation to protect the interests of the maintenance creditor as the weaker party and is also indicated by the text of the article itself. The contrast between sub paragraphs (a) and (b) is between the place of habitual residence of the creditor (a term defined in article 2(10) to mean any individual to whom maintenance is owed or is alleged to be owed) and the place of habitual residence of the defendant (which is not a defined term; in context, it means the person against whom a claim is asserted that he owes maintenance). This language reflects the fact that the jurisdiction provisions in relation to maintenance claims have been removed from the Brussels Regulation (where the special rule of jurisdiction set out in article 5(2) was in addition to the general right under article 2 to sue a defendant in the state of his domicile) and placed in a separate Regulation dedicated to maintenance claims. The text of article 3 does not use the word debtor, which is a term defined in article 2(11) of the Maintenance Regulation to mean any individual who owes or who is alleged to owe maintenance. Thus article 3 does not create a right for a maintenance debtor to pick a jurisdiction from those set out in that provision and commence proceedings seeking declaratory relief regarding the extent of any maintenance obligation he might have. Although, as an EU Regulation, the Maintenance Regulation is directly applicable in domestic law as regards inter state cases, it required some degree of implementation in national law as at the date it came into effect in 2011 in relation to matters such as the designation of relevant central authorities and relevant courts for particular applications. Such implementation and other associated legal changes were effected by the 2011 Regulations. First, jurisdiction in relation to maintenance claims was removed from the CJJA 1982 by the amendments to that Act effected by regulation 6 of and Schedule 4 to the 2011 Regulations. Therefore, section 49 of the CJJA 1982 has no application in relation to maintenance claims. Secondly, regulation 3 of the 2011 Regulations gives effect to Schedule 1 to the 2011 Regulations which contains provisions relating to the enforcement of maintenance decisions pursuant to the Maintenance Regulation to the extent that national law is required to specify certain matters for the purposes of the Maintenance Regulation. Thirdly, regulation 8 of and Schedule 6 to the 2011 Regulations provide the relevant rules for the allocation of jurisdiction for intra state cases within the United Kingdom in relation to maintenance. Schedule 6 to the 2011 Regulations includes the following provisions, so far as material: 1. The provisions of this Schedule have effect for determining, as between the parts of the United Kingdom, whether the courts of a particular part of the United Kingdom, or any particular court in that part, have or has jurisdiction in proceedings where the subject matter of the proceedings is within the scope of the Maintenance Regulation as determined by article 1 of that Regulation. In this Schedule, a reference to an article by number 2. alone is a reference to the article so numbered in the Maintenance Regulation. 3. The provisions of Chapter II of the Maintenance Regulation apply to the determination of jurisdiction in the circumstances mentioned in paragraph 1, subject to the modifications specified in the following provisions of this Schedule. 4. Article 3 applies as if (a) the references in article 3(a) and (b) to the court for the place where the defendant or the creditor is habitually resident were references to the court for the part of the United Kingdom in which the defendant, or the creditor, as the case may be, is habitually resident; (b) the references to a persons nationality were references to a persons domicile. 12. Article 12 applies as if after different member states there were inserted or different parts of the United Kingdom. 13. Article 13 applies as if after different member states there were inserted or different parts of the United Kingdom. As part of the suite of legislative amendments made by the 2011 Regulations to give effect to the Maintenance Regulation to govern allocation of jurisdiction relating to maintenance between member states and in parallel with the promulgation of the jurisdiction code in Schedule 6 governing allocation of jurisdiction relating to maintenance between jurisdictions within the United Kingdom, section 27 was amended (by paragraph 6 of Schedule 7 to the 2011 Regulations) by the insertion of a new subsection (2). This provides: The court may not entertain an application under this section unless it has jurisdiction to do so by virtue of the Maintenance Regulation and Schedule 6 to [the 2011 Regulations]. Analysis Although Lord Wilson says that the resolution of the question of jurisdiction in this case is absurdly complicated, in my respectful opinion it is not. Schedule 6 was intended to introduce for intra state cases the same clear and certain jurisdictional rules which have been adopted for inter state cases in the Maintenance Regulation, and it has achieved that result. This means that on proper analysis the resolution of the question of jurisdiction is straightforward, as it is intended to be. (1) Does an English court have jurisdiction under section 27(2) to make any order for maintenance in a case with no international dimension at all? The submission of Mr Horton for the appellant on this issue is that section 27(2) can only apply if a case falls to be governed both by the Maintenance Regulation and by Schedule 6, so that it only applies in inter state cases. On this issue I agree with Lord Wilson that Mr Hortons submission must be rejected. Section 27(2) is intended to cover two classes of case: (i) inter state proceedings, in relation to which jurisdiction is governed by the Maintenance Regulation, and (ii) intra state proceedings, in relation to which jurisdiction is governed by Schedule 6. In this context, it might perhaps be said that the use of the word and is infelicitous; but the meaning is abundantly clear. There is no scope for the Maintenance Regulation and Schedule 6 both to apply, because they deal with different types of case. Therefore, Mr Hortons proposed construction of section 27(2) would deprive it of any practical effect. Rather, the drafter has used the formula referring to the Maintenance Regulation and Schedule 6 to indicate that the jurisdiction of an English court to make an order under section 27 is to be determined by application of the Maintenance Regulation and Schedule 6 taken together, in the sense that together they cover the whole possible field of inter state cases and intra state cases. This interpretation is also borne out by the elaborate provisions in Schedule 6 which provide for the provisions of the Maintenance Regulation to apply with appropriate modifications to give them equivalent effect in intra state cases. The intended effect of those provisions, as modified, would be defeated in a significant class of maintenance proceedings if section 27(2) were given the construction for which Mr Horton contends. There is no rational basis for thinking that they were to be deprived of effect in this way. (2) Does the English court have a discretion which has survived the promulgation of Schedule 6, to stay maintenance proceedings before it on the general ground of forum non conveniens? Appeal was right so to hold. The jurisdictional scheme of the Maintenance Regulation is modelled on the similar schemes in the Brussels Convention and the Brussels Regulation (and is in line with the scheme of what is now the Brussels Recast Regulation). The basic scheme of all these jurisdiction governing instruments is to provide clear guidance where proceedings may or must be brought. The Grand Chamber of the ECJ authoritatively ruled in Owusu v Jackson (Case C 281/02) [2005] QB 801, a case concerning the interpretation of the Brussels Convention, that the scheme of this form of EU legislation is inconsistent with courts in a Member State retaining any discretionary power to stay proceedings on the grounds of forum non conveniens. The case concerned an accident which occurred in Jamaica, but involving a defendant who was domiciled in England. As the ECJ pointed out, a national court cannot retain a power to refuse to accept jurisdiction on forum non conveniens grounds, since to do so would allow it to defeat the mandatory provision in article 2 of the Brussels Convention which required that a defendant be sued in the courts of his state of domicile. The relevant part of the judgment is at paras 37 46, as follows: In my judgment, the answer to this question is clearly no. The Court of 37. It must be observed, first, that article 2 of the Brussels Convention is mandatory in nature and that, according to its terms, there can be no derogation from the principle it lays down except in the cases expressly provided for by the Convention: see, as regards the compulsory system of jurisdiction set up by the Convention, Erich Gasser GmbH v MISAT Srl (Case C 116/02) [2005] 1 QB 1, 35, para 72, and Turner v Grovit (Case C 159/02) [2005] 1 AC 101, 113, para 24. It is common ground that no exception on the basis of the forum non conveniens doctrine was provided for by the authors of the Convention, although the question was discussed when the Convention of 9 October 1978 on the Accession of Denmark, Ireland and the United Kingdom was drawn up, as is apparent from the report on that Convention by Professor Schlosser, OJ 1979 C59, p 71, at pp 97 98, paras 77 and 78. 38. Respect for the principle of legal certainty, which is one of the objectives of the Brussels Convention (see, inter alia, GIE Groupe Concorde v Master of the vessel Suhadiwarno Panjan (Case C 440/97) [1999] ECR I 6307, 6350, para 23, and Besix SA v Wasserreinigungsbau Alfred Kretzschmar GmbH & Co KG (Wabag) (Case C 256/00) [2003] 1 WLR 1113, 1130, para 24), would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine. 39. According to its Preamble, the Brussels Convention is intended to strengthen in the Community the legal protection of persons established therein, by laying down common rules on jurisdiction to guarantee certainty as to the allocation of jurisdiction among the various national courts before which proceedings in a particular case may be brought: Besix, para 25. 40. The court has thus held that the principle of legal certainty requires, in particular, that the jurisdictional rules which derogate from the general rule laid down in article 2 should be interpreted in such a way as to enable a normally well informed defendant reasonably to foresee before which courts, other than those of the state in which he is domiciled, he may be sued: the GIE Groupe Concorde case [1999] ECR I 6307, 6350 6351, para 24, and the Besix case [2003] 1 WLR 1113, 1130, para 26. 41. Application of the forum non conveniens doctrine, which allows the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention, in particular that of article 2, and consequently to undermine the principle of legal certainty, which is the basis of the Convention. 42. The legal protection of persons established in the Community would also be undermined. First, a defendant, who is generally better placed to conduct his defence before the courts of his domicile, would not be able, in circumstances such as those of the main proceedings, reasonably to foresee before which other court he could be sued. Second, where a plea is raised on the basis that a foreign court is a more appropriate forum to try the action, it is for the claimant to establish that he will not be able to obtain justice before that foreign court or, if the court seised decides to allow the plea, that the foreign court has in fact no jurisdiction to try the action or that the claimant does not, in practice, have access to effective justice before that court, irrespective of the cost entailed by the bringing of a fresh action before a court of another state and the prolongation of the procedural time limits. 43. Moreover, allowing forum non conveniens in the context of the Brussels Convention would be likely to affect the uniform application of the rules of jurisdiction contained therein in so far as that doctrine is recognised only in a limited number of contracting states, whereas the objective of the Brussels Convention is precisely to lay down common rules to the exclusion of derogating national rules. 44. The defendants in the main proceedings emphasise the negative consequences which would result in practice from the obligation the English courts would then be under to try this case, inter alia as regards the expense of the proceedings, the possibility of recovering their costs in England if the claimants action is dismissed, the logistical difficulties resulting from the geographical distance, the need to assess the merits of the case according to Jamaican standards, the enforceability in Jamaica of a default judgment and the impossibility of enforcing cross claims against the other defendants. 45. In that regard, genuine as those difficulties may be, suffice it to observe that such considerations, which are precisely those which may be taken into account when forum non conveniens is considered, are not such as to call into question the mandatory nature of the fundamental rule of jurisdiction contained in article 2 of the Brussels Convention, for the reasons set out above. 46. In the light of all the foregoing considerations, the answer to the first question must be that the Brussels Convention precludes a court of a contracting state from declining the jurisdiction conferred on it by article 2 of that Convention on the ground that a court of a non contracting state would be a more appropriate forum for the trial of the action, even if the jurisdiction of no other contracting state is in issue or the proceedings have no connecting factors to any other contracting state. In this respect there is no material difference between the Brussels Convention, as interpreted in Owusu, and the Maintenance Regulation. Article 3 of the Maintenance Regulation establishes a mandatory rule regarding jurisdiction ( jurisdiction shall lie with ) of the same force as that in article 2 of the Brussels Convention. Like the Brussels Convention, the Maintenance Regulation is intended to lay down clear and predictable common rules of jurisdiction and the principle of legal certainty applies with equal force. In the context of the Maintenance Regulation, the objective of protection of the rights of the maintenance creditor has special force, as appears from the derivation of the Regulation from the special rule of jurisdiction in the Brussels Convention (as explained in the Jenard report), via the Brussels Regulation and as explained in recitals (9), (15) and (45) to the Maintenance Regulation. The object of the mandatory rule of jurisdiction in article 3 of the Maintenance Regulation is to afford special protection for a maintenance creditor by giving him or her the right to choose the jurisdiction most beneficial for them out of the range of options specified in that article. This has been confirmed by the caselaw of the Court of Justice of the European Union (the CJEU) on the Maintenance Regulation, most recently in R v P (Case C 468/18) ECLI:EU:C:2019:666; [2020] 4 WLR 8. That case concerned a wife and husband who were both Romanian nationals, who lived in the United Kingdom and had a child there before separating. The husband returned to Romania; the wife and child remained in the United Kingdom. The wife issued proceedings in Romania seeking the dissolution of the marriage, an order that the child should reside with her and that she should have sole parental responsibility and an order that the husband pay maintenance for the child. The husband contested the jurisdiction of the Romanian court. The court held that it had jurisdiction under the Matrimonial Regulation to hear the divorce petition, but that by virtue of that Regulation it had no jurisdiction in relation to the issues of residence and parental responsibility, as the child was habitually resident in the United Kingdom and it was the courts there which had jurisdiction in relation to those matters. The court was unsure whether it had jurisdiction under article 3 of the Maintenance Regulation in respect of the claim for maintenance, on the basis that the husband was habitually resident in Romania, or whether jurisdiction for such a claim lay with the courts of the United Kingdom; accordingly, it referred that question to the CJEU. The CJEU ruled that article 3 of the Maintenance Regulation established a right for the maintenance creditor to choose the jurisdiction in which to sue the maintenance debtor, out of the range of options set out in that article, so that the Romanian court had jurisdiction in respect of the maintenance claim brought by the wife. At paras 28 31 of its judgment, the CJEU said: 28. By its three questions, which must be examined together, the referring court asks, in essence, whether article 3(a) and (d) and article 5 of [the Maintenance Regulation] must be interpreted as meaning that where there are three joined claims before a court of a member state concerning, respectively, the divorce of the parents of a minor child, parental responsibility in respect of that child and the maintenance obligation with regard to that child, the court ruling on the divorce, which has declared that it has no jurisdiction to rule on the claim concerning parental responsibility, nevertheless has jurisdiction to rule on the claim concerning the maintenance obligation with regard to that child since it is also the court for the place where the defendant is habitually resident and the court before which the defendant has entered an appearance, or if solely the court with jurisdiction to hear the claim concerning parental responsibility in respect of the child may rule on the claim concerning the maintenance obligation with regard to that child. 29. It is apparent from the wording of article 3 of [the Maintenance Regulation], entitled General provisions, that that article lays down general criteria for attributing jurisdiction for the purposes of the courts of the member states ruling on maintenance obligations. Those criteria are alternative, as is attested to by the use of the co ordinating conjunction or after each of them: see A v B [(Case C 184/14) EU:C:2015:479], para 34). 30. In this connection, since the objective of [the Maintenance Regulation], as is apparent from recital (15) thereof, consists in preserving the interest of the maintenance creditor, who is regarded as the weaker party in an action relating to maintenance obligations, article 3 of that regulation offers that party, when he acts as the applicant, the possibility of bringing his claim under bases of jurisdiction other than that provided for in article 3(a) of that regulation: see Freistaat Bayern v Blijdenstein (Case C 433/01) EU:C:2004:21; [2004] ECR I 981; [2004] All ER (EC) 591, para 29 and Sanders v Verhaegen (Joined Cases C 400/13 and C 408/13) EU:C:2014:2461; [2015] 2 FLR 1229, paras 27 28). 31. The maintenance creditor can thus bring his application either before the court for the place where the defendant is habitually resident, in accordance with point (a) of article 3, or before the court for the place where the creditor is habitually resident, in accordance with point (b) of that article, or further, in accordance with points (c) and (d) of that article, if the maintenance application is ancillary to a main action, relating to the status of a person, such as a divorce petition (under point (c)), or to an action concerning parental responsibility (under point (d)), before the court with jurisdiction to entertain either the former or the latter proceedings respectively. The CJEU held that the fact that the Romanian court had declared that it had no jurisdiction to rule on an action in relation to the exercise of parental responsibility for a child made no difference to the availability of jurisdiction under the Maintenance Regulation, which set out mandatory rules of jurisdiction for maintenance claims. This was so even though the courts in the United Kingdom might be better placed to assess the claim for maintenance for the child. The maintenance creditor had a right to choose the jurisdiction for her claim from the list of options in article 3. The CJEU said this at paras 41 51: 41. That finding is supported by the scheme and the objectives of [the Maintenance Regulation]. 42. So far as the scheme of [the Maintenance Regulation] is concerned, that regulation sets out, in Chapter II thereof, entitled Jurisdiction, all of the applicable rules to designate the court having jurisdiction with respect to maintenance obligations. Recital (15) of that regulation stipulates in that regard that there should no longer be any referral to the rules on jurisdiction in national law, since the rules resulting from that regulation must be considered to be exhaustive. 43. Thus, if a court seised of an application concerning maintenance obligations with regard to a child does not have jurisdiction to entertain proceedings in relation to an action concerning the parental responsibility for that child, it is first of all necessary to ascertain whether that court has jurisdiction to entertain proceedings on another basis under that regulation: orders of 16 January 2018, PM v AH (Case C 604/17) EU:C:2018:10, para 33, and of 10 April 2018, CV v DU (Case C 85/18PPU) EU:C:2018:220; [2018] IL Pr 21, para 55. It must also be noted that [the Maintenance Regulation] 44. does not provide for the option, for a court with jurisdiction under one of the provisions of that regulation before which an application has legitimately been brought, to decline jurisdiction with regard to that application in favour of a court which, in its view, would be better placed to hear the case, as article 15 of Regulation No 2201/2003 permits in the matter of parental responsibility. 45. Such an interpretation also corresponds to the objective of [the Maintenance Regulation] recalled in para 30 above. As Advocate General Szpunar observed in his opinion EU:C:2019:649, points 59 and 61, that regulation provides for alternative and non hierarchised criteria for jurisdiction which give priority to the applicants choice. 46. The importance of that choice given the aim of protecting the maintenance creditor reflects the Hague Protocol of 23 November 2007 on the law applicable to maintenance obligations, approved on behalf of the European Community by Council Decision 2009/941/EC of 30 November 2009 (OJ 2009 L331, p 17), the Court having observed that that protocol has close links with [the Maintenance Regulation]: KP v LO (Case C 83/17) EU:C:2018:408, para 49. The court has thus ruled that that protocol enables the maintenance creditor, de facto, to choose the law applicable to his application concerning maintenance obligations by providing that the law of the forum, rather than the law of the State of the habitual residence of the creditor, may be applied as a matter of priority when the creditor introduces his application before the competent authority of the State where the debtor has his habitual residence: see Mlk v Mlk (Case C 214/17) EU:C:2018:744; [2019] IL Pr 2, paras 31 and 32. 47. An interpretation of Regulation No 4/2009 according to which only the court with jurisdiction in respect of parental responsibility has jurisdiction to rule on an application concerning maintenance obligations is liable to limit that option for the maintenance creditor applicant to choose not only the court with jurisdiction, but also, as a result, the law applicable to his application. 48. In a situation such as that at issue in the main proceedings, the initial choice of the parent representing the minor maintenance creditor child to regroup all his heads of claim before the same court is rendered inadmissible by the plea raised by the defendant alleging lack of jurisdiction of that court and a decision of that court declaring that it has no jurisdiction, under article 12 of Regulation No 2201/2003, in respect of the head of claim in relation to parental responsibility. 49. In the light of the risk of having to bring his applications concerning maintenance obligations and concerning parental responsibility before two separate courts, that parent may wish, in the childs best interests, to withdraw his initial application concerning maintenance obligations brought before the court ruling on the divorce petition so that the court with jurisdiction in matters of parental responsibility also has jurisdiction to rule on that application concerning maintenance obligations. 50. Nevertheless, that parent may also wish, in the childs best interests, to retain his initial application concerning maintenance obligations with respect to the child before the court ruling on the divorce petition, where that court is also the court of the place in which the defendant has his habitual residence. 51. Many reasons, like those mentioned by Advocate General Szpunar in his opinion EU:C:2019:649, points 65 to 71, may be behind such a choice by the maintenance creditor, in particular the possibility of ensuring that the law of the forum is applied, that being Romanian law in the present case, the ability to express himself in his native language, the possibility of lower costs in the proceedings, the knowledge by the court seised of the defendants ability to pay and exemption from the requirement to seek leave to enforce decisions. The importance of the object of the Maintenance Regulation of protecting the interests of the maintenance creditor was also emphasised by the CJEU in its judgment in Sanders v Verhaegan; Huber v Huber (Joined Cases C 400/13 and C 408/13) EU:C:2014: 2461; [2015] 2 FLR 1229. The issue in that case was whether Germanys system of providing centralised courts with jurisdiction for cases involving maintenance claims against debtors resident outside the country was compatible with article 3(b) of the Maintenance Regulation. The centralised courts were at a greater distance from where the maintenance creditors in these cases lived than their local courts. Article 3(b) sets out a right for the maintenance creditor to sue in the court for the place where she is habitually resident, not the courts of the member state where she is habitually resident. The CJEU held that article 3(b) would be incompatible with the German system, unless it could be shown that it sufficiently protected the interests of maintenance creditors while assisting in the effective recovery of their claims a matter which the referring courts were required to verify. At paras 23 25 of the judgment the CJEU said: 23. A preliminary point to note is that, as the Advocate General has observed at point 33 of his opinion, insofar as the provisions of the Maintenance Regulation relating to the rules on jurisdiction replaced those in [the Brussels Regulation], the courts case law concerning the provisions on jurisdiction in matters relating to maintenance obligations in the [Brussels Convention] and in [the Brussels Regulation], which follows on from the Brussels Convention, remains relevant for the purposes of analysing the corresponding provisions of the Maintenance Regulation. 24. It should also be recalled that it is settled case law that the provisions relating to the rules on jurisdiction must be interpreted independently, by reference, first, to the objectives and scheme of the regulation under consideration and, secondly, to the general principles which stem from the corpus of the national legal systems (see, by analogy, judgments in CartierParfums Lunettes SAS and Axa Corporate Solutions Assurances SA v Ziegler France SA and Others (Case C 1/13) EU:C:2014:109, [2014] 1 LPR 25, at para 32 and the case law cited, and flyLAL Lithuanian Airlines AS, in Liquidation v Starptantiska lidosta Riga VAS and Another Company (Case C 302/13) EU:C:2014:2319, [2014] All ER (D) 324 (Oct), at para 24 and the case law cited). 25. Against that background, article 3(b) of the Maintenance Regulation must be interpreted in the light of its aims, wording and the scheme of which it forms part. At paras 26 27 the CJEU referred to recitals (9), (15) and (45) to the Maintenance Regulation. At paras 28 30 and 32 the CJEU continued as follows: 28. As regards the rules on jurisdiction in cross border disputes concerning maintenance obligations, the court has stated, in the context of article 5(2) of the Brussels Convention, that the derogation relating to the rules on jurisdiction in matters relating to maintenance obligations is intended to offer special protection to the maintenance creditor, who is regarded as the weaker party in such proceedings (see, to that effect, judgments in Farrell v Long (Case C 295/95) EU:C:1997:168, [1997] All ER (EC) 449, at para 19, and Freistaat Bayern v Blijdenstein (Case C 433/01) EU:C:2004:21, [2004] All ER (EC) 591, at paras 29 and 30). The rules on jurisdiction provided for in the Maintenance Regulation, like the rule set out in article 5(2) of the Brussels Convention, are intended to ensure proximity between the creditor and the competent court, as indeed the Advocate General has observed at point 49 of his Opinion. 29. It should also be pointed out that the objective of the proper administration of justice must be seen not only from the point of view of optimising the organisation of courts, but also, as the Advocate General has observed at point 69 of his Opinion, from that of the interests of the litigant, whether claimant or defendant, who must be able to benefit, inter alia, from easier access to justice and predictable rules on jurisdiction. 30. Article 3(b) of the Maintenance Regulation specifies the criterion for identifying the court which has jurisdiction to rule on cross border disputes concerning maintenance obligations, namely, the place where the creditor is habitually resident. That provision, which determines both international and territorial jurisdiction, seeks to unify the rules of conflict of jurisdiction (see, to that effect, judgment in Color Drack GmbH v Lexx International Vertriebs GmbH (Case C 386/05) EU:C:2007:262, [2007] ECR 1 3699, [2010] 1 WLR 1909, at para 30). 32. In this connection, it should be stated that, although the rules of conflict of jurisdiction have been harmonised by the determination of common connecting factors, the identification of the competent court remains a matter for the member states (see, to that effect, judgments in Mulox IBC v Geels (Case C 125/92) EU:C:1993:306, [1993] ECR 1 4075, at para 25, and GIE Groupe Concorde and Others v Master of the Vessel Suhadiwarno Panjan and Others (Case C 440/97) EU:C:1999:456, [2000] All ER (EC) 865, at para 31), provided that the national legislation does not undermine the objectives of the Maintenance Regulation or render it ineffective (see, inter alia, to that effect, judgment in Zuid Chemie BV v Phillipos Mineralenfabriek NV/SA (Case C 189/08) EU:C:2009:475, [2010] 2 All ER (Comm) 265, at para 30, and, by analogy, judgment in Health Service Executive v SC and AC (Case C 92/12PPU) EU:C:2012:255, [2012] 2 FLR 1040, at para 79). For intra state maintenance claims within the United Kingdom, Schedule 6 to the 2011 Regulations applies the provisions of the Maintenance Regulation with relevant modifications (to take account of the fact that the Schedule is concerned to set out the jurisdiction of courts in different parts of the United Kingdom rather than courts in different member states): see, in particular, paragraphs 1, 3 and 4 of Schedule 6, set out above. The scheme of the Maintenance Regulation is replicated in domestic law for the purposes of intra state cases. The mandatory rule regarding jurisdiction in article 3 of the Maintenance Regulation is repeated in the intra state context, adapted only so far as necessary to take account of that context: paragraph 4 of Schedule 6. The effect of this transposition of the Maintenance Regulation into domestic law is that, for the same reasons as have been explained by the ECJ in Owusu and by the CJEU in R v P, a maintenance creditor has the right to choose from the menu of options in article 3 (as adapted by paragraph 4 of Schedule 6) the jurisdiction in which to bring her maintenance claim and the doctrine of forum non conveniens is excluded. In saying this, I should also make it clear that I agree with what Lady Black says at para 73 of her judgment about case management powers. Mr Horton submitted that section 49 of the CJJA 1982 preserves the jurisdiction of the English Court to stay proceedings on forum non conveniens grounds. I cannot accept this submission. As explained above, Schedule 6 is part of a legislative regime which has been established outside and separate from the CJJA 1982. Therefore section 49 has no application. Put another way, it is not anything in the CJJA 1982 which purports to prevent the English court in this case from staying the proceedings before it on forum non conveniens grounds; it is the separate legislative regime in Schedule 6, as promulgated by the 2011 Regulations, which does that. The position in relation to section 49 is basically the same as for the operation of the Brussels Regulation (see para 16 above) and other current EU Regulations governing jurisdiction, such as the Brussels Recast Regulation and the Maintenance Regulation itself: where a legal instrument separate from the CJJA 1982 governs jurisdiction and excludes the operation of the forum non conveniens doctrine, section 49 has nothing to say about that. In my view, it is clear that Schedule 6 is intended to be a comprehensive code to govern questions of jurisdiction in relation to maintenance claims with a cross jurisdictional dimension within the United Kingdom, just as the Maintenance Regulation provides such a code in relation to such claims with an inter state cross jurisdictional dimension. As with the statutory code at issue in R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54; [2011] 2 AC 15, there is no basis for reading down or modifying the plain terms of Schedule 6 by reference to fundamental human rights or the principle of legality: see para 31 per Sir John Dyson JSC. There is no scope whatever for the operation of a forum non conveniens discretion in the context of the legislative scheme in Schedule 6. (3) Was the purported removal by Schedule 6 of a general discretion to stay proceedings on the ground of forum non conveniens ultra vires the Secretary of States powers in section 2(2) of the ECA 1972? Section 2(1) and (2) of the ECA 1972 provide in relevant part as follows: (1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the [EU] Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly (2) Subject to Schedule 2 to this Act, at any time after its passing Her Majesty may by Order in Council, and any designated Minister or department may by order, rules, regulations or scheme, make provision (a) for the purpose of implementing any EU obligation of the United Kingdom, or enabling any such obligation to be implemented, or of enabling any rights enjoyed or to be enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised; or (b) for the purpose of dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time, of subsection (1) above; In my view, the answer to the question posed above is no. The Secretary of State submits that the making of the 2011 Regulations, including in particular Schedule 6 thereto, was authorised by section 2(2)(b) of the ECA 1972. This submission is clearly correct for the reasons given by Lord Wilson at paras 141 145. Section 2(2)(b) confers a wide power to make subordinate legislation for the purpose of dealing with matters (i) arising out of or (ii) related to the obligations of the United Kingdom under the Maintenance Regulation, or for dealing with matters (iii) arising out of the operation of section 2(1) of the ECA 1972 (relevant here, because the Maintenance Regulation creates rights and obligations under the EU Treaties which are recognised and available in law in the United Kingdom without further enactment) or (iv) related to such operation. In my view, the promulgation of Schedule 6 was authorised under each of limbs (i) to (iv) of section 2(2)(b). The purpose and effect of Schedule 6 is to ensure that there is one coherent, certain and predictable set of rules which apply to all maintenance claims with a cross jurisdictional dimension, whether the crossing of jurisdictions occurs on an inter state basis or on an intra state basis. To have one set of rules which applies in both types of case makes obvious sense in a world where people are highly mobile, and liable to move between jurisdictions internationally and within the United Kingdom. It enables everyone to know clearly where they stand and what their rights are, without having to worry about (and obtain expensive legal advice regarding) possible differences in the position which might apply if the applicable intra state jurisdictional rules are different from the applicable inter state rules. Further, by reason of the different grounds of jurisdiction allowed for in article 3 of the Maintenance Regulation it is readily possible to envisage a case where, say, maintenance proceedings are commenced in each of Spain, England and Scotland. Schedule 6 ensures that there is a single set of clear and coherent rules which the domestic courts can apply in order to resolve the jurisdictional issues which would arise in such a situation. (4) Is the husbands divorce proceeding in Scotland a related action for the purposes of article 13 of the Maintenance Regulation (as applied by Schedule 6) and, pursuant to that provision, should the English court decline jurisdiction in respect of the wifes maintenance claim under section 27? As stated by the CJEU in its judgment in the Sanders/Huber case at paras 23 25 (see para 33 above), the proper interpretation of the Maintenance Regulation requires consideration of its specific objects and adjustment of the more general rules applicable under the Brussels Convention in the light of those objects. In my judgment, the husbands divorce proceeding in Scotland is not a related action within article 13 of the Maintenance Regulation. Therefore, neither article 13(1) nor article 13(2) has any application in this case to permit the English court to decline jurisdiction in relation to the wifes maintenance claim based on section 27. As regards the claim under section 27, the wife is the maintenance creditor. As explained above, the Maintenance Regulation and Schedule 6 give her the right to choose in which jurisdiction, within those listed in article 3 (as adapted by paragraph 4 of Schedule 6), she wishes to bring her maintenance claim. She has an unfettered choice in that regard, and is entitled to choose to bring her claim in an English court on grounds of its convenience for her or because she believes that the law it will apply is more advantageous for her. It is a fundamental object of the Maintenance Regulation to confer that right on a maintenance creditor, and the scheme of that Regulation is replicated for intra state cases by Schedule 6. Articles 12 and 13 of the Maintenance Regulation (including as they are replicated for intra state cases by Schedule 6) have to be interpreted in the light of this object. Article 3 of the Maintenance Regulation is concerned with defining the set of jurisdictions in which the maintenance creditor has the right to bring her claim. This is in line with the fundamental object of the Maintenance Regulation to protect the interests of the maintenance creditor as the weaker party and is also indicated by the text of the article itself, read in the light of the legislative history: see para 21 above. Article 12 is directed to dealing with the position which could arise if a maintenance creditor brought maintenance proceedings in more than one court. The phrase the same cause of action in article 12(1) has to be read in the light of the objects of the Maintenance Regulation referred to in the case law cited above. Since article 3 allows a choice of jurisdiction and the substantive law to be applied in relation to a maintenance claim differs as between member states, I consider that the phrase refers to the nature of the claims being brought, ie as claims for maintenance of a specific person, rather than to the precise cause of action in law. It is possible that, by cross maintenance claims, each of a husband and wife might seek to claim that the other owes maintenance. Then, each of them would be the maintenance creditor in respect of his or her claim and would be entitled to exercise the choice of jurisdiction allowed for by article 3. In the context of the Maintenance Regulation, a core object of article 13 is to deal with this situation. In article 13, read in the context of the Maintenance Regulation, I consider that the word actions refers primarily to maintenance claims of the kind to which the special regime in the Regulation applies. If the position were otherwise, and the word actions meant legal proceedings of any kind whatever, that would undermine the fundamental object of the Maintenance Regulation that a maintenance creditor has the right to choose in which jurisdiction to claim maintenance. On such a reading, there would be a substantial risk that this object of the Maintenance Regulation would be undermined by the commencement of proceedings by the maintenance debtor according to the jurisdictional provisions of instruments other than the Maintenance Regulation, laid down in pursuance of entirely different jurisdictional policies than that reflected in the Maintenance Regulation. By contrast, by reading actions as referring primarily to maintenance claims, such claims will be brought in exercise of the rights conferred by the Maintenance Regulation and hence in accordance with its objects and policy. Since it is the case that the Maintenance Regulation may have the effect of authorising more than one person to bring a maintenance claim, it needs to make provision for how a potential jurisdictional clash arising within the objects of the Regulation should be resolved. Any extension of the concept of related action beyond this in the context of the Maintenance Regulation has to be tested against the objects and policy of that Regulation, and accordingly will be narrowly confined to cases in which the risk of conflicting judgments is very clearly made out (an example would be if an obligation to provide maintenance were conditional on a marriage relationship actually continuing, and a court in another member state had been asked to dissolve the marriage, thereby bringing the relationship on which the obligation depends to an end: cf Hoffman v Krieg (Case C 145/86) EU:C:1988:61, [1988] ECR 645, a decision on article 27(3) of the Brussels Convention, which was concerned with irreconcilable judgments). The risk should be direct, real and present, not a speculative possibility. By contrast with the situations in para 44 above, there is no relevant connection in the present case between the wifes maintenance claim under section 27 and proceedings concerned with determining marriage status, which is the subject of the Scottish proceedings brought by the husband. That these are distinct subject matters is underlined by their separation for jurisdictional purposes under the successive EU jurisdictional regimes. Article 3(c) of the Maintenance Regulation does not establish that proceedings concerning the marital status of a person must be regarded as related proceedings for the purposes of article 13. It merely adds a jurisdictional option which the maintenance creditor is entitled to choose, if she wants to. To give it wider significance than that would undermine the fundamental object of the Maintenance Regulation to protect the interests of the maintenance creditor by giving her the choice of where to litigate her claim for maintenance, since it would enable the opposing spouse, who is the maintenance debtor, to choose where to sue in relation to the question of marital status and then to argue, by reference to article 13, that the maintenance creditors maintenance claim must be brought in the same place. In my opinion, interpreting article 13 of the Maintenance Regulation in light of the objects of that Regulation is an entirely conventional approach to interpretation of an EU legislative instrument. Contrary to the view of Lord Wilson, I do not regard this as being in any way at odds with the interpretation given to article 22 of the Brussels Convention by the House of Lords in a different context in Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32. As Lord Saville of Newdigate said in that case ([1999] 1 AC 32, 41F), the interpretation had to be arrived at bearing in mind the objective of the article, and the objective of article 13 of the Maintenance Regulation has to be assessed in light of the fundamental object of the Regulation itself. I should mention that in Moore v Moore [2007] EWCA Civ 361; [2007] 2 FLR 339, it seems (albeit it is not entirely clear) that the Court of Appeal may have assumed but without deciding and with no critical examination of the issue that a maintenance debtor might be able to bring a claim in a jurisdiction of his choice which included an adjustment of family property rights to take account of the maintenance requirements of his wife and that this might be a related action for the purposes of what is now article 13 of the Maintenance Regulation (previously article 28 of the Brussels Regulation). If they really meant to say this, I respectfully doubt that it is correct. It would mean that the maintenance debtor rather than the maintenance creditor could in practice choose the jurisdiction for the maintenance claim, which would have been directly contrary to the fundamental object of article 5(2) of the Brussels Regulation (and the fundamental object of what is now the Maintenance Regulation: see para 21 above). Whatever might have been the view of the Court of Appeal in relation to this point, it does not assist the husband in this appeal. His proceeding in Scotland does not involve any claim for distribution of family property, let alone distribution of family property with allowance to take account of the wifes maintenance needs. In other respects, the decision in Moore v Moore supports the wifes case on this appeal that the husbands divorce proceeding in Scotland is not a related action for the purposes of article 13. So far as relevant for present purposes, the case concerned an English husband and wife who had relocated to Spain. Their relationship broke down and the wife returned to England. The husband filed a petition for divorce in Spain. On 24 April 2006 he made an application in Spain in the context of the divorce procedure for a judgment regarding financial aspects arising from the divorce. In conjunction with this, he made a financial offer to the wife to divide up the familys capital assets in a way which he maintained would allow her to meet her reasonable needs and maintain her standard of living. On 24 May 2006, the wife commenced a maintenance claim in England. The husband objected to the jurisdiction of the English court, arguing that it should stay its proceedings in accordance with articles 27 or 28 of the Brussels Regulation (now articles 12 and 13 of the Maintenance Regulation). The wife, on the other hand, argued that her claim was the only claim relating to maintenance and therefore that articles 27 and 28 were not engaged and the English court had no power to stay her claim. At first instance, McFarlane J decided that the husbands application was not a claim for maintenance: its essential object was to seek a division of the familys capital assets and it was not a claim by the wife for maintenance; so article 5(2) of the Brussels Regulation was not engaged by the Spanish proceedings (see [2007] EWCA Civ 361; [2007] 2 FLR 339, paras 30 31). The Court of Appeal held that the essential object of the husbands application was to achieve sharing of the family property on his terms rather than an order based on financial needs, and consequently that it was not a matter relating to maintenance for the purposes of article 5(2), and therefore there would be no basis for the application of articles 27 or 28 of the Brussels Regulation (paras 94 95). According to the Court of Appeal in Moore v Moore, the husbands petition for divorce and his application for financial relief in the divorce proceedings was not a related action in respect of the wifes claim for maintenance. I consider that this conclusion was correct. It reflects the different nature of the claims and the different jurisdictional regimes which govern issues of marital status and division of family property, on the one hand, and issues of maintenance on the other. A fortiori in the present case, where the only application the husband has made in the Scottish court is for a decree of divorce, the Scottish proceedings do not constitute a related action in respect of the wifes claim for maintenance in the English court. In the present case, as in Moore v Moore, there has only ever been one maintenance claim, ie claim in a matter relating to maintenance obligations (in the language used in article 3 of the Maintenance Regulation). It is the section 27 claim brought by the wife in the English court in reliance on article 3(b) (as adapted by paragraph 4 of Schedule 6), on the grounds that she is habitually resident in England. Article 3 (as so adapted) provides that jurisdiction shall lie with that court. The English court is the court first seised of the maintenance claim, so if there were any question of the Scottish court considering a maintenance claim by the wife it would be obliged to refuse jurisdiction under article 12 of the Maintenance Regulation (as adapted by paragraph 12 of Schedule 6). As explained in R v P, if the wife wished to proceed with her maintenance claim in Scotland rather than in England, it would be open to her to withdraw her claim in England and issue a claim in Scotland. Even if, contrary to my view above, a maintenance debtor might in principle be able to bring a claim of his own which in some sense comprehends a maintenance claim by the maintenance creditor against him and then argue that, as regards a maintenance claim brought by the maintenance creditor herself, either his claim involved the same cause of action between the same parties for the purposes of article 12 or was a related action for the purposes of article 13 of the Maintenance Regulation, that would not assist the husband on this appeal. The interpretation of the definition of related action in article 13(3) has to reflect the policy and objects of the Regulation. The definition in article 13(3) must be strictly applied, since if the husband sought to maintain such an argument he would be seeking to rely on article 13 to derogate from the fundamental object of the Maintenance Regulation (as replicated in Schedule 6 for intra state cases) to provide a right for the wife, as maintenance creditor, to choose where to bring her maintenance claim; and he would be seeking to do so by reference to an action brought by himself which relates to marital status or the division of matrimonial property rather than maintenance. The special jurisdictional regime for maintenance claims is not lightly to be regarded as supplanted by the operation of a distinct jurisdictional regime designed for different types of case. Still more clearly, on application of this approach to article 13(3), the divorce proceeding brought by the husband in the present case is not related to the wifes maintenance claim, within the meaning of article 13(3). The subject matters of the two sets of proceedings are not connected at all. The husband seeks a divorce, to end the marital status. The wife claims maintenance. It is only her claim which falls within the scope of the Maintenance Regulation. Similarly, as regards the possibility suggested by Hoffman v Krieg that in some circumstances a proceeding to dissolve a marriage might be regarded as related for the purposes of article 13, that does not assist the husband in this case. The wifes claim is not predicated on the result of the proceeding in Scotland, so there is no requirement that the two proceedings be heard and determined together to avoid the risk of irreconcilable judgments. An award of maintenance to the wife is in no way incapable of being reconciled with an order for divorce issued by the Scottish court. With respect to Lord Wilson, I consider that the decision of Moor J in N v N (Stay of Maintenance Proceedings) [2012] EWHC 4282 (Fam); [2014] 1 FLR 1399 was wrong and that the Court of Appeal in the present case was right to overrule it. In N v N the husband issued divorce proceedings in Sweden. The wife, who was habitually resident in England, then brought a maintenance claim in England under section 27. She could have brought a maintenance claim in the course of the divorce proceedings in Sweden, but preferred to claim in England. Moor J held that the divorce proceedings and the maintenance claim were related actions for the purposes of article 13 of the Maintenance Regulation, on the basis of very summary and flawed reasoning (para 25): The application here arises out of the marriage. There would be no jurisdiction to make an order if the parties were not married. The proceedings in Sweden relate to the dissolution of that very same marriage. They are undoubtedly related. Indeed, if article 13 of the Maintenance Regulation only applied to applications in each jurisdiction for maintenance, there would be no need for the article at all. The position would be covered by article 12. The two applications would be the same cause of action and would be automatically stayed without the need for the discretion given by article 13. In so far as this reasoning does not simply rest on assertion, in my opinion it is wrong. Article 13 clearly does have a role in circumstances which Moor J had overlooked: see paras 43 44 above. On the basis that the divorce proceeding in Sweden and the maintenance claim in England were, in his view, related actions, Moor J held that the wifes maintenance claim in England should not proceed. His decision was, in my view, directly contrary to the intended effect of the Maintenance Regulation, which was to give the wife (as maintenance creditor) the right to choose the jurisdiction in which to bring her maintenance claim which was most convenient and advantageous for her. She was entitled to claim maintenance under section 27 whether or not the court in Sweden dissolved the marriage for the future, so it was not a case where there was a direct risk of irreconcilable judgments such as would justify application of article 13 by way of qualification of or departure from the fundamental object and policy of the Maintenance Regulation. I find the reasons Moor J gave for his decision in para 28 revealing, as underlining the error which he made in his approach to the interpretation of the Maintenance Regulation. He took himself to be following the spirit of the jurisdictional rules in the Matrimonial Regulation (para 28(a) (c) and (g)); but the jurisdictional regime in that Regulation is very different from the jurisdictional regime in the Maintenance Regulation, which was the relevant regime to be applied. Absent a clearly established risk of directly irreconcilable judgments (of the kind illustrated by Hoffman v Krieg), jurisdiction established under the Matrimonial Regulation in respect of a divorce procedure brought by a maintenance debtor should not be allowed to undermine the right of a maintenance creditor under the Maintenance Regulation to choose the jurisdiction for her maintenance claim. The judge relied on the fact that the husbands finances were based in Sweden (para 28(d)); but that ignores the importance under the Maintenance Regulation of the position of the wife (the maintenance creditor) and the identification of her needs in the place of her habitual residence, as explained in the Jenard report (para 10 above). The judge said, [t]here is no prejudice to the wife as she can make her application in Sweden I am quite satisfied that the only reason she has not done so to date is tactical (para 28(e)). However, there was prejudice to the wife, because by his ruling the judge deprived her of her rights under the Maintenance Regulation and her ability to rely upon section 27 as a matter of substantive law. He clearly thought that the wife had engaged in illegitimate forum shopping; but the Maintenance Regulation laid down a right for her to choose the forum in which to sue. She was entitled to do so by reference to tactical reasons. In the context of the Maintenance Regulation, there was nothing illegitimate in her deciding to bring her maintenance claim in England. At para 28(f) the judge said that it was undoubtedly expedient to hear and determine the issues between these parties together in the same jurisdiction; but the EU jurisdictional regimes expressly contemplate that different claims arising out of the marriage of the parties might well have to be determined in different jurisdictions. The judge also speculated in para 28(f) that the husband might be able to apply for a maintenance order against himself in Sweden; but it would be contrary to the Maintenance Regulation to allow him, as the maintenance debtor, by such a stratagem to determine the jurisdiction in which his wifes maintenance claim should be heard. Conclusion For the reasons given above, I would dismiss this appeal. LADY BLACK: I am grateful to Lord Sales and to Lord Wilson for their thorough description of the legal provisions with which we are concerned, and of the history of those provisions. I need not go over this material again and can proceed directly to deal with the issues that require determination. For the most part, in what follows, I will refer to the various legal instruments using the same shorthand as Lord Sales. Lord Sales identifies four issues as arising in the appeal, which he lists at para 7, whereas Lord Wilson identifies five. The additional issue is whether the Maintenance Regulation (Council Regulation (EC) No 4/2009) (the Maintenance Regulation) itself regulates the allocation of jurisdiction to hear maintenance applications as between the various parts of the UK. Lord Wilson deals with this as his first issue, and I take it first below. The remaining four issues are: i) Can an application for financial provision be made under section 27 of the MCA in a purely domestic case, or, given the terms of section 27(2) as amended, is section 27 now only concerned with cases where another jurisdiction outside the UK is also involved? (Lord Sales Issue (1); Lord Wilsons Second Point) ii) Can a UK court stay maintenance proceedings which are before it, in favour of proceedings in another part of the UK, on the basis that it is a less appropriate forum than the court in the other part of the UK? (Lord Sales Issue (2); Lord Wilsons Fifth Point) iii) If Schedule 6 to the 2011 Regulations (Civil Jurisdiction and Judgments (Maintenance) Regulations 2011) should be construed as preventing a stay of maintenance proceedings in one part of the UK in favour of proceedings in another part of it on a forum non conveniens basis, was it within the powers of the Secretary of State under section 2(2) of the 1972 Act to make regulations to that effect? (the third issue/point for both Lord Sales and Lord Wilson) iv) Are the Scottish proceedings and the English proceedings in this case related actions within article 13 of the Maintenance Regulation as applied by Schedule 6 to the 2011 Regulations, and if so, should the English court stay/dismiss its proceedings on that basis? (the fourth issue/point for both Lord Sales and Lord Wilson) Does the Maintenance Regulation determine intra UK jurisdiction? At paras 128 134 of his judgment, Lord Wilson rejects the Secretary of States argument that the Maintenance Regulation itself determines questions of jurisdiction as between the various parts of the UK. I infer that Lord Sales is of the same view (see his para 22 where he refers to the implementation of the Maintenance Regulation by the 2011 Regulations). I too would reject this argument, for the reasons Lord Wilson gives. Is section 27 confined to cases with an international element? Turning to Lord Sales Issue 1 (Lord Wilsons Point 2), both Lord Sales (para 26) and Lord Wilson (paras 135 140) would reject the husbands argument that section 27 relief is no longer available in purely domestic cases. I share their view that the argument is wrong. Lord Sales considers that the use of the word and, in the section 27(2) provision that the court may not entertain an application under this section unless it has jurisdiction to do so by virtue of the Maintenance Regulation and Schedule 6, might be said to be infelicitous. For the reasons given by Lord Wilson, I do not think that it is in fact inappropriate. Even though there is no need to have recourse to the Maintenance Regulation where there is no competing jurisdiction outside the UK, both parties naturally having gravitated to the courts of the member state entrusted with jurisdiction by Chapter II of the Maintenance Regulation, the Maintenance Regulation is still the foundation for the jurisdiction of the UK courts. In such circumstances, a court might be said to have jurisdiction by virtue of both the Maintenance Regulation and Schedule 6, even in a purely domestic case. In the alternative, should it be wrong to view things this way, I would agree with Lord Sales interpretation of section 27(2), namely that the drafter referred to the Maintenance Regulation and Schedule 6 in order to encompass the whole field of inter state and intra state cases. Either way, the condition in section 27(2) can be satisfied in a purely domestic case. Forum non conveniens discretion? I now turn to Lord Sales Issue 2 (Lord Wilsons Point 5), namely the question of whether there is a discretion to stay on the forum non conveniens basis. Lord Sales deals with the issue at paras 27 to 36. He concludes that there is no scope for the operation of a forum non conveniens discretion in the context of the legislative scheme in Schedule 6. I share Lord Sales view, and I will attempt to explain, as shortly as I can, why that is. Lord Wilson reaches the same conclusion, but does so, as he explains in para 173, on a contingent basis, dependent on the reach of article 13. Although my conclusion is not contingent, I have still found myself much assisted by Lord Wilsons discussion of the arguments for and against the continuing availability of a discretion, as also by Lord Sales analysis of the position. My starting point is that ever since the Brussels Convention, it has been clear that there is no room for a forum non conveniens discretion in cases which are not purely domestic. That appears from Owusu v Jackson (Case C 281/02) [2005] QB 801, from which Lord Sales quotes extensively at para 28. It can be seen from the passages quoted that the decision to reject the doctrine was influenced significantly by the view that it would undermine the uniformity, and predictability, of the rules of jurisdiction, and thus legal certainty. The position was unchanged when the Brussels Convention was replaced with the Brussels Regulation (Council Regulation (EC) No 44/2001). And when the Maintenance Regulation came in, dealing separately with maintenance for the first time, the same approach applied, see R v P (Case C 468/18) [2020] 4 WLR 8, with which Lord Sales deals at paras 30 32. In this context, emphasis was placed on the objective of the Maintenance Regulation, which the CJEU said consists in preserving the interest of the maintenance creditor, who is regarded as the weaker party in an action relating to maintenance obligations (para 30 of the CJEU judgment), and on the importance of the right that the maintenance creditor has to choose from the range of courts featured in article 3. The Maintenance Regulation must be considered exhaustive, said the CJEU (para 42 ibid), and it does not permit a court which has jurisdiction under one of the provisions of the Maintenance Regulation to decline jurisdiction on the basis that another court would be better placed to hear the case (para 44 ibid). Schedule 6 to the 2011 Regulations, in seeking to regulate allocation of jurisdiction within the UK, kept the Maintenance Regulation centre stage. It will be recalled that Schedule 6 provides: 3. The provisions of Chapter II of the Maintenance Regulation apply to the determination of jurisdiction in the circumstances mentioned in paragraph 1, subject to the modifications specified in the following provisions of this Schedule. The circumstances mentioned in paragraph 1 are that there is (i) a jurisdiction clash between parts of the UK, and (ii) the subject matter of the proceedings is within the scope of the Maintenance Regulation. The modifications specified were, of course, set out in the rest of Schedule 6, many of them concerned with replacing references to member state with references to part of the United Kingdom, although there were changes of other types too. As to these other changes, it is relevant for present purposes to note particularly that they included the disapplication of article 9 (which sets out when a court is deemed seised). In contrast, articles 12 and 13 (lis pendens and related actions) were not disapplied. Having chosen to regulate the domestic allocation of jurisdiction by adopting (to a large extent) a model which, operating in its natural habitat, did not permit recourse to the forum non conveniens doctrine, did the drafters of the provisions nonetheless intend to leave the doctrine in place? As Lord Wilson observes at para 168, until the advent of the 2011 Regulations, UK courts could have recourse to the doctrine in maintenance proceedings when determining jurisdiction issues between the courts of different parts of the UK. But the pre 2011 law was significantly different. First, the version of the European regulation that was applied by Schedule 4 of the CJJA 1982 did not include the articles dealing with lis pendens and related actions. Secondly, the effect of section 49 of the CJJA 1982 (the saving for powers to stay, sist, strike out or dismiss proceedings) was clear. It provided that [n]othing in this Act was to prevent a court in the UK staying proceedings. Schedule 4 regulated allocation of jurisdiction around the UK, and Schedule 4 was plainly something in this Act. It followed that nothing in Schedule 4 could prevent a stay on the basis of forum non conveniens, as indeed the Court of Appeal held in the Cook and McNeil cases (see Lord Wilson para 130). If I put to one side for a moment the question of whether section 49 has a continuing role to play in relation to maintenance jurisdiction, it seems to me that Schedule 6 to the 2011 Regulations imports into domestic law a scheme which excludes stays on the basis of forum non conveniens. The principal jurisdiction provisions closely follow those of the Maintenance Regulation which firmly shut out the doctrine. And it can safely be assumed that those who drafted the 2011 Regulations shared, with the creators of the Maintenance Regulation, the objective of protecting the interests of the maintenance creditor, which objective was served by him or her having the choice of the available jurisdictions, a choice which could not be overridden by the selected court declining to entertain the proceedings. Furthermore, there is the inclusion in Schedule 6 (for the first time) of the lis pendens and related actions articles (articles 12 and 13). I cannot persuade myself that articles 12 and 13 and a forum non conveniens discretion can sensibly co exist. The first point to make is that the discretion to stay on forum non conveniens grounds is not confined within the conditions set out in articles 12 and 13, as Lord Wilson points out at para 166. If it continues to be available, it would be quite sufficient to enable the court to take action in the circumstances regulated by the articles. The articles are not therefore required as facilitative provisions. It might be suggested, however, that rather than intending to provide the court with power to stay proceedings or to decline jurisdiction, the purpose of the articles was to confine the courts discretion, in certain cases, by stipulating the conditions for its exercise. I do not find that a convincing explanation for the inclusion of the articles, however. My view can be tested by reference to article 13 (related actions). By article 13(1), any court other than the court first seised may stay its proceedings. It does not have to do so; it is given a discretion, with no restriction on how it is to be exercised. So far, therefore, the article adds nothing to the forum non conveniens discretion. But, it may be said, article 13(1) does limit the discretion to any court other than the court first seised, whereas there is no such limitation with forum non conveniens which would permit even the court first seised to stay its proceedings if the circumstances justified it. True, but what purpose is served by article 13 limiting stays to courts other than the court first seised, if it can be circumvented by the first seised court, exercising a forum non conveniens discretion instead of acting under article 13? Subject always to section 49, to which I will come shortly, it seems to me that what was intended was that the Schedule 6 scheme would follow the Maintenance Regulation model, relying exclusively on articles 12 and 13 to deal with cases where concurrent proceedings existed, ousting reliance on the forum non conveniens doctrine, and thus aligning the intra UK position in this respect with the inter state position, and protecting the interests of the maintenance creditor. Alignment was indeed what the Explanatory Memorandum to the 2011 Regulations said, at para 7.3, was intended: Schedule 6, however, embodies a policy decision to align the rules of jurisdiction between the different parts of the UK on the provisions of the Maintenance Regulation However, I reach my view without placing weight on the Memorandum, particularly given that, as Lord Wilson says at para 171, para 7.3 goes on to make the erroneous observation that when the Brussels Regulation (No 44/2001) came in, the law for domestic maintenance cases between UK jurisdictions was aligned with the requirements of the EU legislation. This was inaccurate because the articles of the Brussels Regulation (No 44/2001) which dealt with lis pendens and related actions were not adopted, and forum non conveniens intervention remained possible in domestic cases until the 2011 Regulations. The final question then, is whether section 49 operates to preserve the forum non conveniens discretion, as Mr Horton submits that it does. Like Lord Sales, and for the reasons he sets out in para 35, I cannot accept this submission. It follows that, in my view, as Lord Sales says at para 36, there is no scope for the operation of a forum non conveniens discretion in the context of the legislative scheme in Schedule 6. I should make plain that in ruling out the exercise of a forum non conveniens discretion in this context, I do not intend to suggest that normal case management powers are unavailable to the court. A stay/dismissal on the ground of forum non conveniens is the practical incarnation of a decision that another forum is the appropriate forum. It is a specialised order and must be distinguished from, for example, an order adjourning a case for a period in order that the court should be better able to decide it. To take an example unrelated to this case, if one court were to be determining issues between spouses as to residence of their children, the court determining the parties financial issues might wish to await the first courts determination on residence, because it would potentially affect the needs and resources of the spouses. The same might apply if one court were determining maintenance and another determining property issues. Was the removal of the forum non conveniens discretion ultra vires? The third issue/point logically falls next for determination ie whether the removal of the forum non conveniens discretion was ultra vires the Secretary of States powers in section 2(2) of the ECA 1972. Both Lord Wilson and Lord Sales would hold that it was not. I agree with them for the reasons that they give. Were the proceedings related actions within article 13? That leaves the question of whether the proceedings in this case fall within article 13 on the basis that they are related actions, and if so whether there should be a stay. For convenience, I will again set out article 13, in the amended form applicable to intra UK cases: 1. Where related actions are pending in the courts of different member states or different parts of the United Kingdom, any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. For the purposes of this article, actions are deemed to be 3. related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Lord Wilson and Lord Sales differ on the application of article 13 to the present case. Lord Wilson would hold that there are related actions pending in England and Scotland, so that the English court, not being the court first seised, has power under article 13 to stay, and indeed to decline to entertain, the wifes application under section 27. Lord Sales considers article 13 inapplicable, and, given his conclusion that there is no power to stay proceedings on a forum non conveniens basis, this means that the English court proceedings would continue. Lord Wilson reasons that, in contrast to article 12, article 13 applies to proceedings which do not involve the same cause of action. Although he considers that article 13(3) was probably intended to provide an exclusive definition of which actions are deemed to be related, he considers that too literal an interpretation of it would exclude situations to which article 13(2) appears to extend. He considers that the definition of related actions in article 13(3) must be driving at the situation where it is expedient to hear and determine together the issues raised in the two actions, and possible to do so because the actions can be consolidated in the court first seised and heard together there. So, he concludes, in light of the pending Scottish proceedings, the English court has power to stay/decline jurisdiction and the husbands application to this end should be remitted to a judge of the Family Division to determine whether it should be exercised. Lord Sales reasoning revolves around the wifes status as maintenance creditor. It has, in essence, the following steps: therefore Schedule 6 has to be interpreted in the light of the objective i) it was a fundamental object of the Maintenance Regulation to give the maintenance creditor the right to choose the jurisdiction in which to bring her claim; ii) Schedule 6 to the 2011 Regulations replicates the Maintenance Regulation scheme; iii) of giving the maintenance creditor the right to choose her jurisdiction; iv) interpreting article 13 in that light, it should be narrowly confined so that actions refers primarily to maintenance claims of the kind to which the Maintenance Regulation regime applies; v) any extension of the concept of related action beyond this needs to be confined to cases in which the risk of conflicting judgments is very clearly made out; it is not made out here because there is no relevant connection between vi) the wifes section 27 maintenance claim in England and the proceedings concerning marital status in Scotland; vii) be undermined. I have found the interpretation of article 13 extremely difficult. The natural response of a family lawyer might be to say that obviously one court should resolve all the financial issues that arise upon the ending of a marriage. Indeed, an initial response might be to go further and say that one court should resolve all the issues, of whatever sort, arising upon the ending of a marriage. Further thought would remind the family lawyer that that sort of consolidation is by no means universal, however. Two examples will demonstrate the point. First, jurisdiction in relation to parental responsibility issues is often dictated by the habitual residence of the child if it were otherwise, the protection of the maintenance creditor would (see domestic law and the Brussels II Revised Regulation (Council Regulation (EC) No 2201/2003)). Secondly, financial relief can be available in the courts of England and Wales, following the granting of an overseas divorce, under the Matrimonial and Family Proceedings Act 1984, including in situations where there has already been an order elsewhere for a payment, or transfer of property, to be made in favour of the applicant or a child of the family. Nevertheless, the idea of two courts within the United Kingdom both making orders which will regulate the finances of the parties to a marriage following divorce is not very palatable. And yet that is what the position might be if, as the Court of Appeal decided in a very clearly reasoned judgment, article 13 does not permit the court to intervene. The husbands argument is that the Court of Appeal erred in its construction of article 13 for one of two alternative reasons. First, there was no need to construe the 2011 Regulations strictly in accordance with EU law, and the Court of Appeal should have construed the domestic incarnation of article 13 so as to allow for a stay in the present circumstances. But secondly, if it was right to construe the 2011 Regulations in accordance with EU law, it was wrong to proceed upon the basis that, as it is put in the husbands written case, actions could only be related if they both had maintenance as their cause of action. The Court of Appeal was wrong, in the husbands submission, to be guided towards this view by Moore v Moore [2007] 2 FLR 339 (see para 48 of Lord Sales judgment and para 157 of Lord Wilsons judgment). Amongst other things, the judgments in Moore did not consider the lis pendens and related actions articles separately. If both actions had to have maintenance as their cause of action, article 13 would have a very limited scope indeed. On the contrary, in the husbands submission, proceedings for divorce and proceedings for maintenance, arising out of the same marriage, can be sufficiently closely connected to be related. If his appeal is not allowed, the husband says, the law will serve to encourage forum shopping, by maintenance creditors within the UK, in favour of England and Wales. The wife argues that the Court of Appeals analysis is unimpeachable. She submits that Moore v Moore is a complete answer to the husbands case, and there is an even stronger argument against the application of article 13 in the present case than there was in the Moore case, because in Moore there were ancillary financial proceedings in Spain, whereas in the present case there are merely divorce proceedings with no financial aspects in Scotland. As for the husbands proposal that there should be a more permissive interpretation of article 13 for domestic proceedings, the wifes submission is that there is no warrant for that, given the importation of articles 12 and 13 from the Maintenance Regulation into domestic law. And in any event, no matter how broad the interpretation, article 13 could not encompass the two sets of proceedings in this case. I have already explained that in my view, the 2011 Regulations were intended to follow the scheme of the Maintenance Regulation, and that those who drafted the 2011 Regulations shared the objective of protecting the maintenance creditor by conferring on him or her a choice from whatever jurisdictions were available on the facts of a particular case. The provisions of article 13 must, I think, be interpreted in light of that choice and the protection it is intended to confer. If article 13 is interpreted as widely as the husband submits it should be, the protection of the maintenance creditor would be diluted. The facts of the present case demonstrate that the maintenance creditors habitual residence will not necessarily be in the part of the United Kingdom which has jurisdiction over the divorce suit. If the wife has to pursue her maintenance claim in Scotland, alongside the divorce there, she will have been deprived of the possibility of litigating in her place of habitual residence. I can see the attraction of Lord Wilsons approach of looking to see whether it is expedient to hear and determine the issues raised in the two actions together. However, even giving heed to the helpful observations of Lord Saville of Newdigate in Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32, 41, to the effect that a broad common sense approach should be taken to whether actions are related (see Lord Wilsons judgment at para 155), I cannot reconcile Lord Wilsons rather wide interpretation with the wording of article 13 or the objective of the Maintenance Regulation or of the 2011 Regulations. In explaining why I say this, and what my interpretation of article 13 would be, I would start by noting that article 12 and article 13 must be dealing with different situations, otherwise there would be no point in having both of them. If the two sets of proceedings in question were maintenance claims by the wife against the husband, one could expect the situation to fall within article 12 (same cause of action, same parties), so article 13 must be intended to extend further than that. In contrast to article 12, it does not require that the proceedings involve the same cause of action between the same parties. It is focused instead on related actions. The ambit of this category is to be ascertained from article 13(3), which, like Lord Wilson, I think is intended to be a complete definition. Related actions are, accordingly, actions which are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Articles 13(1) and 13(2) concern only related actions which come within this definition, article 13(1) referring to the situation [w]here related actions are pending and article 13(2) referring back to this in its opening words [w]here these actions are pending . It is plain from article 13(3) that the actions have to be closely connected. But that is insufficient to define a related action for the purposes of the article. Actions could be said to be closely connected if they were both brought by the same litigant, but if one action was against a retailer in respect of a defective domestic appliance and the other was a petition for divorce, no one would suggest that they were related actions for article 13 purposes. The reference to avoiding the risk of irreconcilable judgments is vital, therefore, in fixing the boundaries of the category. We are asked to draw from Moore v Moore the principle that to be related, both actions must relate to maintenance. It will be recalled that in Moore, they did not, because, whether or not the wifes application in England, under Part III of the Matrimonial and Family Proceedings Act 1984, involved maintenance, the husbands application in Spain did not, being concerned with a division of matrimonial property. The Court of Appeal in the present case relied on Moore as providing the answer (see paras 89 to 92 of King LJs judgment), concluding that separate applications, one concerning status alone (Scotland) and the other for maintenance (England), could not be related, when in the Moore case the Court of Appeal held that a general application for financial relief and a discrete application for maintenance were not. The husband argues that no reliance should be placed on Moore v Moore because the Court of Appeal in that case did not, in fact, address the issues that arise in relation to article 13, not having given any specific attention to its precursor, article 28 of the Brussels Regulation (No 44/2001). For my part, I do not consider that there is much to be gained from arguing over the detail of Moore v Moore, although it is important to have regard to the fact that the court there, on stronger facts than those of the present case, found no basis to stay the English proceedings. The decision is also useful in pointing up the firm distinction made in what is there called the Brussels regime (for present purposes, the Brussels Convention of 1968, the Brussels Regulation, Brussels II (Council Regulation (EC) 1347/2000), and in due course Brussels II Revised, and the Maintenance Regulation) between maintenance on the one hand, and rights in property arising out of a matrimonial relationship on the other. As Lord Sales says at paras 17 and 46 of his judgment, maintenance obligations and questions of marital status are also treated as separate matters for jurisdiction purposes. Similarly, I would not linger too much over the case of N v N (Stay of Maintenance Proceedings) [2014] 1 FLR 1399 (see para 54 of Lord Sales judgment and para 156 of Lord Wilsons judgment), which is relied upon by the husband, who commends the analysis of Moor J, but which the Court of Appeal in the present case concluded was wrongly decided (para 87 of King LJs judgment). In my view, what is important is to go back to the wording of article 13 and to interpret it in the light of the objectives of the regulatory scheme which the 2011 Regulations have adopted to cater for intra UK cases. So what sort of proceedings are likely to be closely connected in a way which would give rise to a risk of irreconcilable judgments within the meaning of article 13(3)? I do not intend to offer a definitive answer to this question all that is required is to determine whether the two sets of proceedings in this case were related actions, and further mapping out of the territory of article 13 ought to wait until it is required to cater for other facts. But examples of the sorts of situations that might fall within article 13(3) can still be helpful in ascertaining its meaning. Two such useful examples can be found in the husbands written case. They are: (1) where a spouse is being pursued for maintenance by his or her first and second spouse at the same time, and (2) where there are child maintenance proceedings in one court, and spousal maintenance proceedings in another (assuming of course that these are considered to be two separate causes of action). Lord Sales suggests the situation where there are cross applications for maintenance, by the wife against the husband in one part of the UK and by the husband against the wife in another (see para 44 of his judgment). He gives a further example at para 45, inspired by the case of Hoffman v Krieg (Case 145/86) [1988] ECR 645. Another possibility might be where one spouse (say, the wife) applies for maintenance from the other spouse in one part of the UK and, in another part, the husband applies for an order against himself (see Dart v Dart [1996] 2 FLR 286, 292). Again, this would depend on whether or not the two actions were, in fact, classed as proceedings involving the same cause of action and therefore within article 12 rather than article 13. It is also worth noting that, in this last example, there would need to be consideration of the point made by Lord Sales, at para 46 of his judgment, about the potential problems of a maintenance debtor choosing the jurisdiction for a maintenance claim. But, in all of these examples, it is possible to foresee that, depending on the precise facts, there could be a risk of the two courts giving irreconcilable judgments. Furthermore, looking particularly at article 13(2), as Lord Wilson does, it is possible to contemplate that, in any of these examples, the first instance court first seised might have jurisdiction over both actions, and be permitted to consolidate them. The present case is, in my view, materially different from these examples. As I see it, the Court of Appeal was right to decide that here, where one action deals with status and the other with maintenance, there can be no risk of irreconcilable judgments. It was not deflected from its conclusion by the fact that an application could be made for financial relief in the Scottish proceedings. What mattered, it considered (and I agree) was that the Scottish Court was not actually seised of the question of maintenance. Moreover, as Lord Sales says at para 53, even the Hoffman v Krieg inspired possibility that in some circumstances a proceeding to dissolve a marriage might be regarded as related for article 13 purposes does not assist the husband here. A judgment in the wifes maintenance claim would not be irreconcilable with a divorce decree in Scotland, as provision made under section 27 can survive divorce (see section 28 MCA). Concentrating therefore on the wording of article 13, and reminding myself of the special objective of protecting the maintenance creditor, and of the roots that the article has in the European tradition of a firm separation of maintenance and property issues, I agree with the Court of Appeal, and with Lord Sales, that the English and the Scottish proceedings are not related actions. The frustration that a UK family lawyer might feel, when contemplating the potential fragmentation of the proceedings required to resolve the financial affairs of the husband and wife upon the ending of their marriage, is understandable. It is, however, in my view, a consequence of the system that has been adopted by the 2011 Regulations, promoting maintenance as a separate claim, and prioritising the needs of the maintenance creditor. I should add that I am grateful to Lord Wilson for his searching postscript, which has caused me to revisit my own view of the issues in the case, and to subject it to further careful scrutiny. In the end, however, this process has not caused me to alter my analysis, even though I entirely understand how frustrating the result might be for those who become involved, in whatever capacity, in litigation within the United Kingdom concerning family finance. LORD WILSON: (dissenting) (with whom Lady Hale agrees) A husband, habitually resident in Scotland, lodges a writ for divorce in Scotland. His wife, now habitually resident in England, is constrained by the law to concede that the divorce should proceed in Scotland; so she consents to the dismissal of the petition for divorce which she has issued in England. She wishes to make financial claims against the husband. But, instead of then making them within the Scottish proceedings for divorce, she issues an application in England in which she alleges that he has failed to provide reasonable maintenance for her and so should be ordered to make periodical payments to her and to pay her a lump sum. The issue is whether the English court has power to stay the application made to it by the wife and thereby in effect to require her to make her financial claims against him within the Scottish proceedings for divorce. It is common ground, and a subject of current political debate, that financial awards to a spouse following both separation and divorce are more generous in England and Wales than in Scotland. This fact explains the genesis of the issue but plays no part in its resolution. One would expect resolution of the issue to be straightforward. In fact it proves to be absurdly complicated. The husband is aged 57 and the wife is aged 61. They married in England in 1994. From 1995 until their separation in 2012 they lived in Dumbarton, which lies north west of Glasgow. There was a child of the marriage, now adult. Upon separation, the wife came to live south of the border, now in London, and she has become habitually resident in England. The habitual residence of the husband continues to be in Scotland. In 2013 the wife issued a petition for divorce in England. In 2014 the husband lodged a writ for divorce in Scotland. Since they had last resided together in Scotland and had by then been habitually resident there for at least a year, the English court was obliged to stay the wifes petition: section 5(6) of, and paragraph 8(1) of Schedule 1 to, the Domicile and Matrimonial Proceedings Act 1973 (the DMPA). In January 2015, after it had been stayed, her petition was by consent dismissed. But thereupon the wife issued an application in England under section 27 of the Matrimonial Causes Act 1973 (the MCA). Such applications are rare. The ground of the wifes application under section 27 of the MCA was that the husband had failed to provide reasonable maintenance for her. Upon that ground she sought orders that he should make periodical payments to her under subsection (6)(a) and should pay her a lump sum under subsection (6)(c). Under section 27 a court in England (and of course Wales) has no power analogous to its power when granting a divorce to order a transfer of, or other adjustment of, property in favour of an applicant or to make a pension sharing order. An applicant under section 27 has to be a party to a subsisting marriage. The marriage between these parties subsists even now because no decree of divorce has yet been granted to the husband pursuant to his writ in Scotland. An order for periodical payments under subsection (6)(a) cannot extend beyond the joint lives of the parties: section 28(1)(a). It can extend beyond the parties later divorce. In that event, however, it would also end on the payees remarriage: section 28(2). By contrast the inevitable future grant of a decree of divorce in Scotland will not enable the wife to apply in England for financial relief following overseas divorce under Part III of the Matrimonial and Family Proceedings Act 1984 (the 1984 Act): for, by section 27 of it, Scotland is not an overseas country. The husband, acting in person, defended the wifes application under section 27 of the MCA, which was determined by Parker J on 8 July 2016, [2016] EWHC 668 (Fam), [2017] 1 FLR 1083. The husbands first contention was that the wife had not been habitually resident in England on the date of issue of her application, with the result that the court would have lacked jurisdiction to entertain it. Parker J rejected the husbands first contention, about which nothing further need be said. His second contention was that, even if the court had jurisdiction to entertain it, it should stay the wifes application in the light of the writ for divorce in Scotland, the lodging of which had preceded it. The arguments presented to Parker J in this regard bore little relation to those which have since developed. At all events Parker J refused to stay the application and proceeded to make an interim order for the husband to make periodical payments to the wife. She also made an order for payments by the husband in respect of the cost of legal services to be obtained by the wife; and whether the judge had jurisdiction to do so is irrelevant to this appeal. The husband, still acting in person, applied to the Court of Appeal for permission to appeal against the orders made by Parker J. His application was refused on paper. Then, however, the Bar Pro Bono Unit assigned to him the services of Mr Horton and Mr Laing. At an oral renewal of the application, they secured permission for him to appeal to the Court of Appeal. They have continued to represent him, free of charge, in his substantive appeals to the Court of Appeal and now before this court. The amount of work which they have done for him is phenomenal; and its high quality will become evident as this judgment proceeds. By a judgment delivered by King LJ on 17 May 2018, with which David Richards and Moylan LJJ agreed, the Court of Appeal dismissed the husbands appeal: [2018] EWCA Civ 1120, [2019] Fam 138. Its dismissal of the two, alternative, grounds for a stay of the wifes application, pressed upon it on behalf of the husband, is better explained when, later in this judgment, those grounds are examined. Its reasons for dismissal of the husbands subsidiary objections to the orders for interim periodical payments and for payments in respect of the cost of legal services are irrelevant to this further appeal. Rival Jurisdictions in Respect of Maintenance For reasons which will become clear, analysis of the law in relation to the stay or dismissal of a claim for maintenance in England in favour of the jurisdiction of Scotland or Northern Ireland must be accompanied by an analysis of EU law in relation to such an issue as between member states. The two analyses must go hand in hand; and they must be both historical and chronological in order for them to illumine the evolution of these laws up to the present day. History The history begins with the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters signed at Brussels on 27 September 1968 (the 1968 Convention). The fourth paragraph of its preamble made clear that it governed international jurisdiction, in other words as between one contracting state and another. It did not purport to provide for the allocation of jurisdiction between such different legal parts of a contracting state as might exist. Indeed in due course the European Court of Justice (the ECJ) expressly recognised that it did not thus provide: Kleinwort Benson Ltd v Glasgow City Council (Case C 346/93) [1996] QB 57. The civil matters within the scope of the convention included claims for spousal maintenance. The basic jurisdictional provision, set out in article 2, was that a person domiciled in a contracting state should be sued there. But article 5(2) made special provision in matters relating to maintenance; for the maintenance creditor, in other words the applicant for maintenance, could instead sue in the place where she or he was domiciled or habitually resident. As the Advocate General of the ECJ explained in Farrell v Long (Case C 295/95) [1997] QB 842, paras 69 to 71, there were two main reasons for the grant of this option: first, the applicant for maintenance was likely to be the more impecunious of the parties and might be unable to afford to go abroad to sue in the state of the respondents domicil; and, second, the court of the place of the applicants domicil or habitual residence was better placed to assess her or his needs. By articles 21 and 22, under the heading Lis pendens related actions, the convention provided for the determination of issues of rivalry between contracting states in relation to the exercise of the jurisdiction for which it provided; but, since the substance of these articles was later replicated in a second, and even more relevantly a third, community instrument, there is no need further to consider them at this stage. Schedule 1 to the DMPA governed and continues to govern the staying of matrimonial proceedings in England in favour of the jurisdictions of Scotland and Northern Ireland. Indeed, as noticed in para 96 above, it operated so as to require a stay of this wifes English petition for divorce. But, by paragraph 2 of Schedule 1, matrimonial proceedings are so defined as not to include an application for maintenance made outside proceedings for divorce or for relief analogous to divorce. On 1 January 1973 the UK became a member of what later came to be called the European Union; and it ratified the 1968 Convention. On 1 January 1987 most of the Civil Jurisdiction and Judgments Act 1982 (the 1982 Act) came into force. By section 2(1), it gave the force of law in all three legal parts of the UK to the 1968 Convention, in other words so as to regulate jurisdiction as between any of those parts on the one hand and another contracting state on the other. But, by section 16, entitled Allocation within UK of jurisdiction in certain civil proceedings, it also extended provisions in the 1968 Convention, albeit in a modified form, so as to regulate jurisdiction to entertain civil proceedings within the scope of the convention as between one part of the UK and another part of it. Paragraph 1 of Schedule 4, to which section 16 gave effect, imported, albeit with modification, the basic provision that a person domiciled in one part of the UK should be sued in the courts of that part. But, again with modification, it also imported the special provision in the convention under which an applicant for maintenance could instead sue in the place where she or he was domiciled or habitually resident. In that way the indulgence given to the applicant for maintenance in the convention was carried into the domestic law of the UK. But the provisions in articles 21 and 22 of the convention entitled Lis Pendens related actions were not imported into Schedule 4. So, unless other provision were to be made in the 1982 Act, there would be nothing to determine issues of jurisdictional rivalry between the three parts of the UK in relation to civil proceedings within the scope of the convention. In England the High Court has an inherent power to stay proceedings before it. The power, being inherent at common law, has not been conferred by statute. But its existence has long been recognised in statute: see section 24(5) of the Supreme Court of Judicature Act 1873 (36 & 37 Vict c 66), and now section 49(3) of the Senior Courts Act 1981. The power has also been extended to the county court: see section 76 of the County Courts Act 1984. It was this inherent power to stay proceedings which was specifically recognised in the 1982 Act as applicable to proceedings brought in England pursuant to Schedule 4. For section 49 provides: Nothing in this Act shall prevent any court in the United Kingdom from staying, sisting, striking out or dismissing any proceedings before it, on the ground of forum non conveniens or otherwise, where to do so is not inconsistent with the 1968 Convention Inasmuch as the 1968 Convention did not extend to the subject matter of Schedule 4, namely the allocation of jurisdiction as between the three parts of the UK, a stay of proceedings brought pursuant to the schedule would not be inconsistent with the 1968 Convention. In their General Note to Schedule 4 in Current Law Statutes Annotated 1982, its authors explain the omission from the schedule of articles 21 and 22 of the convention. They refer to section 49 and assert that it enables the courts of the different parts of the UK, in relation to jurisdiction as between themselves, to adopt a more sophisticated approach of assuming or yielding jurisdiction according to the court which is considered most suitable for disposing of the case than is provided for in the [articles], which [adopt] the rule that the court first seised shall have jurisdiction. The English stay and the Scottish sist to which section 49 of the 1982 Act referred, and still refers, were on the ground of forum non conveniens or otherwise. It is possible that, in referring to forum non conveniens, the drafter of the 1982 Act regarded it as the ground only of a Scottish sist; and that the word otherwise was intended to cover the ground of an English stay. For it was only in 1986, four years after the Acts passage into law, that the principle of forum non conveniens was squarely adopted as part of English law: Spiliada Maritime Corpn v Cansulex Ltd (The Spiliada) [1987] AC 460. In Chapter 3 of Forum (Non) Conveniens in England (2019), Ardavan Arzandeh charts the slow movement of the principle across the border. In summary the principle had been established in Scotland by 1873: Macadam v (a) Macadam (1873) 11 M 860; (b) the ground for a stay of proceedings in England was narrower, namely whether they were vexatious and oppressive: McHenry v Lewis (1882) 22 Ch D 397; (c) the narrowness of the English ground, which persisted for 90 years, betrayed a degree of arrogance that proceedings in England were intrinsically better than proceedings elsewhere, exemplified by comments by Lord Denning MR in the Court of Appeal in The Atlantic Star [1973] QB 364, 381 382; (d) on further appeal in that case, [1974] AC 436, the House of Lords, while not expressly adopting the Scottish principle, moved closer to it by enlarging the considerations relevant to a stay; and (e) in the Spiliada case, cited above, the House of Lords, in squarely adopting the Scottish principle as part of English common law, defined the basis of it to be to permit a stay where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably for the interests of all the parties and the ends of justice: Lord Goff of Chieveley, at p 476. It is surely better to use English language when attempting to explain English law. In the Spiliada case Lord Goff observed at pp 474 475 that appropriate was a better translation of the Latin word conveniens than convenient. The Latin word forum, however, has also become an English word. So, in what follows, I will refer to the principle as being that of the less appropriate forum. The history continues with Council Regulation (EC) No 44/2001, 22 December 2000, on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the Judgments Regulation or the Brussels Regulation). The regulation came into force on 1 March 2002 (article 76) and it superseded the 1968 Convention (article 68). It covered much of the ground which the 1968 Convention had covered; and, like that convention, it contained nothing to indicate any purported regulation of jurisdiction as between the different legal parts of a member state. Its main purpose, explained in its sixth recital, was to make provisions which, unlike those in the convention, would be binding and directly applicable. Since it was a regulation, such was its effect. Like the convention, it applied to jurisdiction in matters relating to maintenance; and, by article 5(2), it continued the specific provision for an applicant for maintenance to have the option to proceed in the courts for the place where she or he was domiciled or habitually resident rather than in the courts of the member state in which the respondent was domiciled. By articles 27 and 28, in the section entitled Lis pendens related actions, the regulation repeated articles 21 and 22 of the convention subject only to some verbal re arrangement. Albeit out of chronological order, it is appropriate to note here that, with effect from 10 January 2015, the Judgments Regulation was recast by Regulation (EU) No 1215/2012, 12 December 2012, (the Recast Judgments Regulation). It will be necessary to refer to one article of this in para 152 below. The supersession of the 1968 Convention by the Judgments Regulation required substantial amendment to the 1982 Act. This was achieved by the Civil Jurisdiction and Judgments Order 2001 (SI 2001/3929). But, as in the case of their predecessors in the convention, there was no attempt to import the rules in articles 27 and 28 of the Judgments Regulation into the substituted rules in Schedule 4 for the allocation of jurisdiction within the UK. Issues of jurisdictional rivalry within the UK remained solely governed by section 49 of the 1982 Act, which was not amended. Next in time came Council Regulation (EC) No 2201/2003, dated 27 November 2003 (the Brussels II Revised Regulation or the Matrimonial Regulation), which, in expanding the rules of an earlier regulation, applied to the allocation of jurisdiction as between member states not only in matters of divorce or analogous to divorce but also in most matters relating to children. By paragraph 3(e) of article 1, however, matters of maintenance were excluded from the regulation. As was explained in its eleventh recital, they were to continue to be covered by the Judgments Regulation. Now at last we reach the two pieces of legislation which lie at the heart of the appeal. The first is Council Regulation (EC) No 4/2009, 18 December 2008, on Jurisdiction, Applicable Law, Recognition and Enforcement of Decisions and Cooperation in matters relating to Maintenance Obligations (the Maintenance Regulation). The second is the Civil Jurisdiction and Judgments (Maintenance) Regulations 2011 (SI 2011/1484) (the 2011 Regulations), made by the Secretary of State for Justice pursuant to section 2(2) of the European Communities Act 1972 (the 1972 Act) and extending to all parts of the UK. Both pieces of legislation came into force on 18 June 2011. The effect of the Maintenance Regulation was to remove from the Judgments Regulation the EUs rules in respect both of the rights of its members to determine maintenance applications and of their reciprocal obligations to recognise and enforce maintenance orders: article 68(1). It is a bespoke regulation which addresses only maintenance obligations; and in relation to them it widened, and no doubt improved, the rules in the Judgments Regulation. In its first recital to the Maintenance Regulation the EU Council referred to its intention to adopt measures relating to judicial cooperation in civil matters having cross border implications. In its fourth recital it recorded an invitation made to it in 1999 to establish common procedural rules to simplify and accelerate the settlement of cross border disputes concerning maintenance applications. In its ninth and tenth recitals it stated as follows: (9) A maintenance creditor should be able to obtain easily, in a member state, a decision which will be automatically enforceable in another member state without further formalities. (10) In order to achieve this goal, it is advisable to create a Community instrument in matters relating to maintenance obligations bringing together provisions on jurisdiction, conflict of laws, recognition and enforceability, enforcement, legal aid and cooperation between Central Authorities. Article 3 of the regulation, in Chapter II entitled Jurisdiction, defines the general jurisdiction of a member state to determine a maintenance application in terms different from those of the Judgments Regulation. But, as before, the applicant for maintenance is given an initial choice. For jurisdiction is conferred on the court for the place where (a) the respondent or (b) the applicant is habitually resident; or, if the maintenance application is ancillary to divorce proceedings, it is conferred, (c), on the court which has jurisdiction to hear them. The significance of this third basis of jurisdiction will already be apparent: it is that the regulation expressly recognises that a claim for maintenance can appropriately be made in the divorce court. A fourth basis, (d), is irrelevant. It will be seen that in the present case the Scottish court would have jurisdiction on the first and third bases and that the English court has jurisdiction on the second basis. The Maintenance Regulation did not change the rules which required or permitted the court of a member state to stay proceedings in respect of which jurisdiction had been conferred on it in favour of the court of another member state. For articles 27 and 28 of the Judgments Regulation were repeated, word for word, in articles 12 and 13 of the Maintenance Regulation. Article 12, entitled Lis pendens, provides: 1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different member states, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court. Article 13, entitled Related actions, is of central importance to the resolution of this appeal. It is better set out in para 147 below, where it must begin to receive close attention. Articles 12 and 13 of the Maintenance Regulation both refer to the seisin of the court, as had articles 27 and 28 of the Judgments Regulation and indeed articles 21 and 22 of the 1968 Convention. The 15th recital of the Judgments Regulation had declared that there should be a clear mechanism for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending [and for] the purposes of this Regulation that time should be defined autonomously. The autonomous concept of seisin had therefore been defined in article 30 of the Judgments Regulation; and the definition was repeated, in effect word for word, in article 9 of the Maintenance Regulation in order to enable articles 12 and 13 to be similarly interpreted throughout the member states. It is unnecessary to set it out. The principal purpose of the 2011 Regulations was to facilitate the application of the Maintenance Regulation within the UK. Since the latter was to come into force on 18 June 2011, it was necessary for the 2011 Regulations also to come into force on that date. Unfortunately the Ministry of Justice left it late to make the regulations, which, under paragraph 2(2) of Schedule 2 to the 1972 Act, were subject to the negative resolution procedure. They were both made and laid before Parliament on 13 June 2011 and so came into force only four clear days later. In addition to the Explanatory Note appended to the regulations, an Explanatory Memorandum was also laid before Parliament for the attention of its Joint Committee on Statutory Instruments. In the memorandum the Ministry expressed regret for the breach of the convention which requires instruments subject to the negative resolution procedure to be laid before Parliament at least 21 days before they come into force. It is unclear whether the committee had any opportunity during those four days to consider the regulations. Annexed to the Explanatory Memorandum was a Transposition Note, in which, at para 5, the Ministry of Justice stated: These regulations do not go beyond what is necessary to facilitate the application of the Maintenance Regulation in the United Kingdom, with one minor exception. This minor exception was the product of a decision that, just as the EU was removing its rules in respect of maintenance issues from the Judgments Regulation and was placing them into a regulation of their own, so too the UK should remove its rules for the allocation of maintenance proceedings within the different parts of the UK from the 1982 Act and should place them separately, namely within Schedule 6 to these regulations. Their removal from the 1982 Act was effected by paragraph 11 of Schedule 4 to the regulations. But the rules were not just to be placed separately: they were to be changed, at least to some extent. In its Explanatory Memorandum the Ministry stated, at para 3.3: The Departments view was that the policy decision to align the jurisdiction scheme for intra UK cases on the jurisdictional rules of the EU Maintenance Regulation was the right approach as this replicated what was done in 2002 when the [Judgments Regulation] was implemented Unfortunately, as will be explained in para 171 below, it was not correct to say that the provisions of the 1982 Act had been aligned with the Judgments Regulation in 2002. In para 7.3 of the memorandum the Ministry proceeded to explain that the rules in Schedule 6 would determine which court [within the different parts of the UK] will have power to deal with applications within the scope of the Maintenance Regulation. How much consultation had the Ministry conducted in relation to the proposed content of Schedule 6 to the 2011 Regulations? The answer is given in para 8.1 of the Explanatory Memorandum: there had been a limited specialist technical consultation which had extended to the entire contents of the proposed regulations and which had lasted for only three weeks. The absence of any proper consultation in relation to Schedule 6 and of any sensible opportunity for parliamentary scrutiny of it may help to explain why it is in part an unsatisfactory piece of legislation. Paragraph 1 of Schedule 6 to the 2011 Regulations, to which regulation 8 gave effect, provides: The provisions of this Schedule have effect for determining, as between the parts of the United Kingdom, whether the courts of a particular part of the United Kingdom have jurisdiction in proceedings where the subject matter of the proceedings is within the scope of the Maintenance Regulation as determined by article 1 of that Regulation. Although the reference is to whether the courts have jurisdiction, it seems clear that the provisions of the schedule are also intended to govern, at least to some extent, whether they should exercise such jurisdiction as they have. Paragraph 3 of Schedule 6 provides: The provisions of Chapter II of the Maintenance Regulation apply to the determination of jurisdiction in the circumstances mentioned in paragraph 1, subject to the modifications specified in the following provisions of this Schedule. Paragraph 12 and, being of central importance to the resolution of this appeal, paragraph 13 of Schedule 6 provide: 12. Article 12 applies as if after different member states there were inserted or different parts of the United Kingdom. 13. Article 13 applies as if after different member states there were inserted or different parts of the United Kingdom. The reader of para 117 above will recall that articles 12 and 13 of the Maintenance Regulation fall to be construed by reference to the autonomous concept of seisin, which is defined in its article 9. Paragraphs 12 and 13 of Schedule 6 to the 2011 Regulations make no change to the reference to seisin in articles 12 and 13 of the regulation. Why then does paragraph 10 of the Schedule provide that article 9 does not apply? Sir James Eadie, on behalf of the Secretary of State, confesses to having no clear answer; and he concedes that the absence of a definition of seisin for the purposes of construing articles 12 and 13, as modified for the purposes of Schedule 6, is unsatisfactory. UK courts, so it seems, are expected to seek to interpret the concept by provisions of their own laws. It is important to realise that it was only part of the Maintenance Regulation which was imported, as modified, into Schedule 6 to the 2011 Regulations. The importation relates only to the rules in Chapter II of the Maintenance Regulation entitled Jurisdiction. There was no attempt to import the rule entitled Applicable Law in Chapter III of the regulation nor the rules entitled Recognition, Enforceability and Enforcement of Decisions in Chapter IV of it. Under Chapter III the applicable law falls to be determined by reference to the Hague Protocol dated 23 November 2007, the effect of which, for those states which have ratified it (not including the UK), is that, subject to exceptions, maintenance obligations are governed by the law of the state of habitual residence of the applicant for maintenance. Within the UK, however, the court of such part as has jurisdiction under Schedule 6 will determine the application for maintenance by reference to its own law. Equally, the recognition and enforcement in one part of the UK of a maintenance order made in another part of it (including an order made in England under section 27 of the MCA) are governed by the provisions for registration and enforcement in sections 16 to 18 of the Maintenance Orders Act 1950. A footnote to this section requires the reader, however briefly, to step back from Schedule 6 to the 2011 Regulations and into the text of the regulations themselves. Regulation 10 obliged the Secretary of State to review the operation of the regulations in England and Wales and to publish his conclusions in a report. He was obliged to do so by 18 June 2016. Now, almost four years later, no such report has been published. Sir James has no instructions with which to explain the reason for this breach of the law indeed of the Secretary of States own law. The breach is irrelevant to the disposal of this appeal. But it does not follow that we should overlook it. We should direct the Secretary of State within 28 days to submit proposals for his belated compliance with Regulation 10. Five Points Does, then, the English court have power in one way or another to stay the wifes application? Five points are raised. In my view the first three and the fifth should be rejected; but the fourth should be upheld. First Point The first point arises out of the third. By the latter, the husband asserts that within Schedule 6 to the 2011 Regulations the Secretary of State included a provision which he had no power to include. It is this third point, not raised in the Court of Appeal, which has precipitated the intervention of the Secretary of State in this further appeal. By his intervention the Secretary of State introduces a startling point which logic requires the court to consider first. It is at least arguable, so he contends, that the Maintenance Regulation has effect (and, being a regulation, has direct effect) in allocating jurisdiction to hear maintenance applications not only between member states but also between the different legal parts of a member state such as the UK. The argument would mean, of course, that in creating Schedule 6 to the 2011 Regulations in order that, as modified, the Maintenance Regulation should apply to the allocation of jurisdiction within the UK (see paras 121 and 122 above), the Secretary of State made legislation of wholesale redundancy; and that, in stating in the Explanatory Memorandum that he had made a policy decision to align the provisions of the Maintenance Regulation with those for the allocation of jurisdiction within the UK (see para 119 above), he substantially, albeit no doubt unintentionally, misspoke. It is clear that the provisions of the 1968 Convention had not extended to the allocation of jurisdiction between one part of a contracting state and another: see para 102 above. It is equally clear that the Judgments Regulation had not so extended: Cook v Virgin Media Ltd and McNeil v Tesco plc [2015] EWCA Civ 1287, [2016] 1 WLR 1672, paras 18 to 26. How, then, and indeed why, might that substantial extension have been introduced when maintenance applications were removed from the Judgments Regulation and placed within an instrument bespoke to themselves, namely the Maintenance Regulation? In answer the Secretary of State raises two arguments. The first argument is to refer to two EU regulations to which, as it happens, the UK is not subject and which address not the jurisdiction of member states to determine actions for the enforcement of contractual and non contractual obligations respectively but the law which they are required to apply when they do so: Regulation (EC) No 593/2008, 17 June 2008 (Rome I) and Regulation (EC) No 864/2007, 11 July 2007 (Rome II). Article 22(2) of the former and article 25(2) of the latter provide that member states which comprise different legal parts are not obliged to apply the regulations to conflicts solely between the laws of those parts. The absence of analogous provision in the Maintenance Regulation is said to be significant. Might it, however, have been at least marginally more significant if there had been analogous provision in the Judgments Regulation which had been omitted from the Maintenance Regulation? The second, and main, argument depends largely upon the fact that in article 3, in which it makes general provision for the allocation of jurisdiction, the Maintenance Regulation partly overrides the legal arrangements within a member state by referring to the courts for the place where each party is habitually resident rather than generally to the courts of a member state: see para 115 above. In its article 5, however, the Judgments Regulation had also allocated jurisdiction to the courts for a place within a state rather than to the courts of the state itself. In Color Drack GmbH v Lexx International Vertriebs GmbH (Case C 386/05) [2010] 1 WLR 1909, the ECJ addressed the provision in article 5(1)(b) of the Judgments Regulation which permitted a claimant under a contract for the sale of goods to sue in the place where the goods were delivered. It explained in para 23 that the court of that place was presumed to have a close link to the contract and in para 30 that, by referring to the place, the provision determined local as well as international jurisdiction, in other words without reference to the domestic rules of the member states. In Sanders v Verhaegen; Huber v Huber (Joined Cases C 400/13 and C 408/13), [2015] 2 FLR 1229, the renamed Court of Justice of the European Union (the CJEU) applied the analysis in the Color Drack case to the allocation of jurisdiction in article 3(b) of the Maintenance Regulation to the court for the place where the creditor is habitually resident. It observed in para 28 that the objective behind the allocation was to ensure proximity between the applicant for maintenance, regarded as the weaker party, and the competent court; and in para 37 that to that extent article 3 restricted the freedom of a member state to determine its competent court. By their references to place, the drafters of the Judgments Regulation and of the Maintenance Regulation reflected a need, in the interests of effective access to justice, to allocate jurisdiction not just to the courts of a state but to the courts for places within a state. The references apply to all member states irrespective of whether they comprise more than one legal part. With respect to the Secretary of State, the references to place in the Maintenance Regulation cannot in my view be construed as a different invasion of member state autonomy. For they do not invade the right of a state which comprises more than one part to resolve for itself an issue as to which of its parts should exercise jurisdiction to determine a maintenance application assigned by the regulation to each of those parts as places. I confess that the Secretary of States second argument deserves greater respect than I had originally afforded to it. But, when one stands back, it fails to stand up. In its first recital to the Maintenance Regulation the EU Council referred to the objective, linked to the free movement of people, of judicial cooperation in civil matters having cross border implications and in its ninth recital it identified the objective that orders for maintenance made in one member state should automatically be enforceable in another member state: see para 115 above. Indeed articles 12 and 13 of the regulation are crucial. In the light of the four different, yet equally valid, bases of jurisdiction identified in article 3, it was essential that, when more than one of them was invoked, the regulations should determine which of them should prevail. Such is the function of articles 12 and 13. Yet each is expressly limited to proceedings brought in different member states. The conclusion has to be that, in conferring jurisdiction on the different parts of the UK as places, the Maintenance Regulation, like the Judgments Regulation, did not identify which of them should prevail in the event of rivalry; and that, irrespective of whether it entirely succeeded in filling that gap, Schedule 6 to the 2011 Regulations is not redundant. Second Point The second point, raised by the husband but not in the courts below, arises out of the substitution of a fresh subsection (2) of section 27 of the MCA, which was effected by regulation 9 of, and paragraph 6(2) of Schedule 7 to, the 2011 Regulations. The subsection addresses the jurisdiction of a court in England to entertain an application for financial provision under subsection (1). Prior to 18 June 2011 subsection (2) provided that the jurisdiction could be founded upon the domicil or (broadly speaking) the residence of one or other of the parties in England. But the fresh subsection provides: The court may not entertain an application under this section unless it has jurisdiction to do so by virtue of the Maintenance Regulation and Schedule 6 to the [2011 Regulations]. By reference to the fresh subsection, Mr Horton submits that the English court no longer has jurisdiction to entertain an application for financial provision under section 27 in what he calls a purely domestic case, by which he means a case in which all parties live in the UK. The submission is astonishing because, if valid, it would deprive the section of almost all its effect. Mr Hortons premise is that the court will not have jurisdiction under the Maintenance Regulation unless there is a cross border issue; and therefore that, although Schedule 6 applies within the UK, a purely domestic case cannot fall within the Maintenance Regulation as well as within Schedule 6, as required by the word and in the fresh subsection. Mr Scott QC on behalf of the wife helpfully explains why this argument needs careful unpacking. It is correct that in its recitals the Maintenance Regulation makes clear that its objective is to address cross border issues so as to ensure the effective recovery throughout the EU of maintenance duly awarded in one of its member states. But it in no way follows that a member state is unconstrained by the regulation when a cross border issue is not, or not yet, visible to it in relation to a maintenance application. An effective system for the orderly determination of maintenance applications and for the effective recovery of sums thereby awarded requires rules which determine the jurisdiction of the courts of member states in relation to all maintenance applications made to them. Thus the opening words of article 3 of the regulation are unqualified: In matters relating to maintenance obligations in member states, jurisdiction shall lie with ; and the article then proceeds to identify the four bases of jurisdiction. The fresh subsection (2) of section 27 is therefore correct to recognise that any application under the section for financial provision has to comply with the jurisdictional requirements of the Maintenance Regulation. Indeed, were there to be a rival application for maintenance in a court of another member state which also complied with those requirements, it would again be the provisions of that regulation, namely in articles 12 and 13, which the English court, as well as the other court, would apply with a view to ending the rivalry. But the fresh subsection is also correct to require compliance with Schedule 6 to the 2011 Regulations: for, were there to be a rival application for maintenance in a court in Scotland or Northern Ireland which also complied with those requirements, it would be the provisions of that schedule, supplemented, according to Mr Horton, by the less appropriate forum principle (this being the fifth point below), which, like the rival court, the English court would apply with a view to ending the rivalry. There is nothing wrong with the fresh subsection of section 27. It does not yield absurd results. The premise of Mr Hortons submission is incorrect. The subsection does not exclude what he calls a purely domestic case. Third Point Logically this point follows the fifth point below; but it is convenient to address it now. The husbands argument, not raised in the courts below, is that, if, which he denies, the purported effect of Schedule 6 to the 2011 Regulations is to disapply the less appropriate forum principle from potential deployment in staying maintenance proceedings in one part of the UK in favour of proceedings in another part of it, it is an effect which it was beyond the powers of the Secretary of State, in making those regulations, to achieve. The construction of section 2(2) of the 1972 Act, pursuant to which the Secretary of State made the regulations, also requires consideration of section 2(1) of it. Section 2(1) provides: All such rights obligations and restrictions from time to time created under the [EU] Treaties as in accordance with the Treaties are without further enactment to be given legal effect in the United Kingdom shall be recognised and available in law It is by virtue of this subsection that the Maintenance Regulation is recognised as law in the UK. Had it been a directive rather than a regulation, it would, by contrast, have imposed an obligation which the UK was required to implement by specific legislation. Section 2(2) enables the making of regulations which make provision: (a) for the purpose of implementing any EU obligation of the United Kingdom ; or (b) for the purpose of dealing with matters arising out of or related to any such obligation or the operation from time to time of subsection (1) above; The operation of subsection (1) was such as to recognise the Maintenance Regulation as UK law. It is therefore my view that, in the application of subsection (2)(b) to the present case, the matters to which it refers must arise out of, or be related to, the operation of subsection (1) rather than out of, or to, any such obligation as might have fallen to be implemented under subsection (2)(a). The question then becomes whether the 2011 Regulations were made for the purpose of dealing with matters arising out of, or related to, the operation of subsection (1) in recognising the Maintenance Regulation as UK law. Insofar as they facilitated the way in which that regulation was to be applied in the UK, the 2011 Regulations undoubtedly dealt with matters arising out of the operation in this respect of subsection (1). But, by regulation 8 and Schedule 6, and as the Secretary of State has always acknowledged, they went further than that. So the narrower question is whether any purported disapplication in Schedule 6 of the less appropriate forum principle was for the purpose of dealing with matters related to the operation of subsection (1) in recognising the Maintenance Regulation as UK law. The court has been referred to a number of authorities on the width of the phrase related to in section 2(2)(b) of the 1972 Act. There seems to be a tendency for one judge to offer an explanation of its extent and for the next judge to discard the explanation as an unwarranted gloss. Perhaps it is better to allow the phrase to speak for itself; but never to forget that the required relationship is to the particular terms of the EU instrument which either already has been, or is being, given the force of law in the UK. The most helpful commentaries upon the meaning of the phrase seem to be those of Waller LJ in Oakley Inc v Animal Ltd (Secretary of State for Trade and Industry intervening) [2005] EWCA Civ 1191, [2006] Ch 337, para 39, and of Lord Mance in United States of America v Nolan [2015] UKSC 63, [2016] AC 463, para 61. But there is no need to lengthen this judgment by reciting those paragraphs. For it is already clear that the husbands argument faces insuperable obstacles. The first stems from his making of a realistic, indeed an inevitable, concession. It is that in principle the provisions in Schedule 6 for the purpose of resolving jurisdictional issues between the different parts of the UK were related to the arrival of the Maintenance Regulation into UK law by operation of section 2(1) of the 1972 Act. The Judgments Regulation had, by its reference to place, held out the prospect that different parts of the UK would have equal jurisdiction to hear maintenance applications. But its provisions for the resolution of jurisdictional rivalry between member states in relation to maintenance applications had not extended to such rivalry as might arise between different parts of a member state. In section 49 of the 1982 Act the UK had therefore identified the law which would resolve such rivalry. The effect of the Maintenance Regulation was to remove maintenance applications from the scope of the Judgments Regulation; and so it required at least some adjustment to UK law in that regard. The decision was to make the adjustment in Schedule 6. But, once the concession is made that the Secretary of State had power under section 2(2)(b) of the 1972 Act to resolve issues of jurisdictional rivalry between different parts of the UK in relation to maintenance applications, how can it be said that his suggested inclusion in Schedule 6 of one particular provision in that regard was beyond his power? His power to provide for the resolution of issues of rivalry must have included power to disapply the less appropriate forum principle and to assign the resolution of such issues entirely to other provisions. The real question, which is the fifth point, is whether that power was exercised. So this third point falls to be rejected at an early stage; and there is no need to wrestle with the problems which would have confronted it at a later stage. These are problems arising out of the fact that in Schedule 6 there is on any view no express disapplication of the less appropriate forum principle. The disapplication perceived by the Court of Appeal was, so that court held, implied in Schedule 6. The husbands argument was therefore that any implied provision to that effect was beyond the Secretary of States powers. But, if the result of discerning an implied provision in regulations were to be that it would be beyond the powers of their maker, that would be a strong argument for not discerning it. Would it indeed be a contradiction in terms to speak of a provision implied in a set of rules being beyond the rule makers powers? And another knotty question would the court have to proceed to identify the express provisions in the regulations from which the impugned provision was implied and to rule them to be beyond their makers powers in giving rise to the implication? Fourth Point The husband contends that paragraph 13 of Schedule 6 to the 2011 Regulations applies to the present case. Subject to making an insertion into it, paragraph 13, set out in para 123 above, applies article 13 of the Maintenance Regulation to the resolution of jurisdictional rivalry between the courts of England and Scotland in a case such as the present. Subject to the insertion, which will be set out in square brackets, article 13, entitled Related actions, provides as follows: 1. Where related actions are pending in the courts of different member states [or different parts of the United Kingdom], any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. 3. For the purposes of this article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Since Schedule 6 does not relate to rivalry between the courts of different member states, it is not obvious why the words inserted into article 13 were presented as an alternative to the words different member states rather than as a substitution for them. But nothing turns on it. The husband contends that, as is agreed, the Scottish court must be taken to be the court first that his proceedings for divorce in Scotland and the wifes application (a) for maintenance in England are related actions within the meaning of article 13 of the Maintenance Regulation; (b) seised; (c) that within the divorce proceedings the Scottish court has jurisdiction to hear any application for maintenance which the wife might there bring so long as she were to do so prior to the grant of a decree; and (d) that accordingly the English court has power under article 13 of the Maintenance Regulation, as applied by paragraph 13 of Schedule 6 to the 2011 Regulations, to stay and indeed to dismiss the wifes application for maintenance. Article 13 of the Maintenance Regulation must be construed in its context, adjacent to article 12, set out in para 116 above. The articles have the same shape. In each of them paragraph 1 provides for a court to stay proceedings, in other words to make a temporary order. In each of them paragraph 2 provides for the court in specified additional circumstances to proceed to decline jurisdiction, in other words to proceed to make a permanent order. What, then, is the difference between them? Article 12, which addresses a Lis pendens, governs proceedings involving the same cause of action and imposes a duty on a court other than that first seised to stay its proceedings and in the specified additional circumstances to proceed to decline jurisdiction. But article 13, which addresses Related actions, confers only a power on a court other than that first seised to stay its proceedings and in the specified additional circumstances to proceed to decline jurisdiction. It follows that article 13 applies to proceedings which do not involve the same cause of action. Article 13(3) of the Maintenance Regulation defines the circumstances in which actions are deemed to be related. It is probably intended to provide an exclusive definition of such circumstances. These are that the actions are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments. But actions in different member states, as also in different parts of a member state, cannot be heard and determined together. Paragraph (3) must mean that it is expedient to hear and determine together the issues raised in the two actions. Article 13(2) of the Maintenance Regulation is in principle significant. For, in specifying the additional circumstances in which the court has power to proceed to decline jurisdiction, the paragraph necessarily identifies circumstances which can exist in related actions. But what are those circumstances? In Owens Bank Ltd v Bracco (Case C 129/92) [1994] QB 509, the Advocate General Lenz of the ECJ observed at para 66 that the provision in the 1968 Convention in terms identical to those in article 13(2) was not wholly easy to comprehend. Article 13(2) requires that the related actions should both be pending at first instance. Why? We have the benefit of an interesting insight in relation to this question. Article 13(2) is in identical terms to the provision in the Judgments Regulation which had preceded it, namely article 28(2). But in 2012 the Judgments Regulation was recast; and, when article 28(2) was recast as article 30(2), an opportunity was taken to make a small but significant amendment to it. The words [w]here these actions are pending at first instance were recast as [w]here the action in the court first seised is pending at first instance. Although in the present case the English action, having been to date the subject only of interim orders, happens to remain pending at first instance, as indeed does the Scottish action, the drafters of the Recast Judgments Regulation clearly regarded it as important for the purposes of this provision only that the action in the court first seised should remain pending at first instance. Why? The answer is surely that, once the action has been determined at first instance, the opportunity to add to its subject matter will have been lost. This construction is confirmed by the further requirement of article 13(2), namely that the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. It seems clear that article 13(2) demands an affirmative answer to the following question: would the court first seised have jurisdiction also to determine the cause of action raised before the other court and if so would its procedural rules permit that cause of action to be consolidated with the cause of action already raised before it and thus permit both to be determined in the same proceedings? To this Mr Scott QC has only one answer. But it deserves respect. Have regard, he says, to the definition of related actions in article 13(3): actions are related only if there is a risk of irreconcilable judgments resulting from separate proceedings. He argues that there would be no risk of irreconcilable judgments if the maintenance proceedings in England and the divorce proceedings in Scotland were each to continue. The difficulty is that the reference to irreconcilable judgments in article 13(3) does not fit with the clear meaning of article 13(2) in identifying circumstances which can exist in related actions. No doubt that is what the Advocate General in the Owens Bank case had in mind when making the comment quoted in para 151 above. What, then, is to be done? In Sarrio SA v Kuwait Investment Authority [1999] 1 AC 32 the two actions brought by the claimant against the defendant each stemmed indirectly from the claimants sale of part of its business to a third party. But the causes of action were entirely distinct. In its action in Spain the claimant alleged that the defendant was obliged to purchase from it shares which it had been required to receive as part consideration for the sale. In its action in England, by contrast, it claimed damages for negligent misrepresentations on the part of the defendant which had induced it to enter into the sale. The House of Lords held that the English court should decline jurisdiction on the basis that the action before it and the action in Spain were related for the purpose of article 22 of the 1968 Convention. [T]he debate, said Lord Saville of Newdigate at p 38H when making the only substantive speech, has concentrated on whether there is a risk of irreconcilable judgments resulting from the two sets of proceedings. The appellate committee reversed the decision of the Court of Appeal, which had held that judgments were irreconcilable only if issues of fact or law essential to the respective decisions were common to both. This, so Lord Saville observed at p 40, gave too limited a meaning to the word irreconcilable. The matters in the two courts, he added, did not need to be virtually identical for the actions to be related; it sufficed that the connection between them was close enough to make it expedient for them to be determined together in order to avoid the risk in question. He summarised the basis of the decision of the House at p 41, [T]here should be a broad commonsense approach to the question whether the actions in question are related, bearing in mind the objective of the article, applying the simple wide test set out in article 22 and refraining from an over sophisticated analysis of the matter. Also of relevance to the present issue is the decision of Moor J in N v N (Stay of Maintenance Proceedings) [2012] EWHC 4282 (Fam), [2014] 1 FLR 1399. The facts bear a striking resemblance to those of the present case. The Swedish husband and the Dutch wife had lived in Sweden. Upon separation she came to live in England. The husband issued divorce proceedings in Sweden. Later the wife issued divorce proceedings in England but they were stayed pursuant to the Brussels II Revised Regulation. The wife thereupon issued an application for financial provision in England under section 27 of the MCA. The husband asked Moor J to decline jurisdiction to entertain her application pursuant to article 13(2) of the Maintenance Regulation. Moor J considered the article in context. In para 18 he recited article 12. In para 19 he observed that, since the wife had chosen not to apply for maintenance in the Swedish divorce proceedings, it could not be said that there were proceedings involving the same cause of action in both states, with the result that article 12 was not engaged. In para 20, however, he proceeded to recite article 13. He then considered the wifes submission that, because of the absence of an application for maintenance in Sweden, the actions in the two states were not related. Although not spelt out in terms, her submission must have been that there was no risk of irreconcilable judgments. But Moor J held in para 25: [I]f article 13 of the Maintenance Regulation only applied to applications in each jurisdiction for maintenance, there would be no need for the article at all. The position would be covered by article 12. The two applications would be the same cause of action and would be automatically stayed without the need for the discretion given by article 13. Having at para 28 given seven reasons for exercising the discretion conferred by article 13, the judge then, at para 29, considered whether to stay the wifes application under para (1) or to decline jurisdiction under para (2). He elected to decline jurisdiction. In the present case the Court of Appeal held in para 87 that Moor J had wrongly decided the N case; in para 86 that, had the earlier decision of the Court of Appeal in Moore v Moore [2007] EWCA Civ 361, [2007] 2 FLR 339, been cited to him, he would probably have decided that the wifes English application had to proceed; and in para 89 that the effect of the decision in the Moore case was that the husbands reliance on article 13 in the present case was misplaced. Although this court would not be bound by it in any event, the decision in the Moore case clearly requires examination. In the Moore case the judgment of the court was delivered by Thorpe LJ. The facts were that the parties were British; that they had gone to live in Spain; that the wife had resumed habitual residence in England; that the husbands petition for divorce in Spain had preceded the wifes petition for divorce in England, with the result that the latter had been stayed; that an order for divorce had been pronounced in Spain; that the husband had then applied in Spain for what the Court of Appeal no doubt correctly understood to be an order defining the parties respective property rights; that, despite an initial reversal, his application in Spain probably remained pending; that later, in England, the wife had sought leave to apply for financial relief following overseas divorce under Part III of the 1984 Act; that the wife had secured leave; that the issue before the Court of Appeal was whether a judge had rightly refused the husbands application to set the leave aside; and that part of the husbands case was that the judge should have stayed the wifes application under what were then articles 27 and 28 of the Judgments Regulation. It is not disrespectful to the Court of Appeal to say that in places its judgment in the Moore case is not entirely easy to follow. One of the complications was that, while at that time the Judgments Regulation governed applications for maintenance (article 5(2)), rights in property arising out of a matrimonial relationship have never been within its scope (article 1(2)(a)). It seems, however, to have been agreed that, at least in part, the wifes application under Part III was indeed for maintenance; and that, since she had resumed habitual residence in England, the English court had jurisdiction under article 5(2) to entertain an application on her part for maintenance. So, in this part of the husbands case, the only questions were surely whether, in the light of his application in Spain, the wifes application either should be stayed under article 27(1) or could be stayed under article 28(1). Instead the court seems to have concentrated on whether the Spanish court itself had jurisdiction under article 5(2) to entertain the husbands application. Its overall conclusion on this part of the husbands case was as follows: 95. Consequently we are satisfied that [the husbands] application was not a matter relating to maintenance for the purpose of article 5.2, and therefore that there would be no basis for the application of articles 27 or 28 of [the Judgments Regulation] even if those proceedings were still pending. Thus, in the light of its reasoning, the Court of Appeal in the Moore case never recognised a need to address either article 27 or article 28 of the Judgments Regulation. Had it addressed article 27, it would, in the light of its analysis of the husbands application, undoubtedly have held that the two sets of proceedings did not involve the same cause of action and thus that there was no requirement for the wifes application to be stayed. But how would it have addressed article 28? There can be no answer to this question. In four places the court referred compendiously to articles 27 and 28. It set out article 27. It did not set out article 28. Nor did it refer to the terms or effect of article 28. Nor did it even note that article 28 provided a ground for stay distinct from, and additional to, the ground in article 27. With respect, I cannot agree with the Court of Appeal in the present case that in its judgment in the Moore case that court based any part of its decision upon what was then article 28 of the Judgments Regulation and is now article 13 of the Maintenance Regulation; cannot agree that the answer to the husbands reliance on article 13 in the present case is therefore to be found in that judgment; and cannot agree that the decision of Moor J in the N case to decline jurisdiction under article 13(2) was therefore wrong. On the contrary, in my view his decision was right. On any view article 13 of the Maintenance Regulation is poorly drafted; and, when in domestic law its effect was extended by the 2011 Regulations, the opportunity was not taken to clarify it for the purposes at any rate of the extension. Called upon to construe it, the court is presented with a conundrum. Should it give effect to the clear meaning of article 13(2) at the expense of attributing a normal meaning to the reference in article 13(3) of the phrase irreconcilable judgments? Or should it attribute a normal meaning to the phrase and deprive article 13(2) of effect? In my view we should follow the decision of our predecessors in the Sarrio case and adopt a broad, common sense, approach to resolution of the conundrum. Our more important function is to give effect to article 13(2). That is the dog. The reference to irreconcilable judgments is no more than the tail. In the light of the pendency of the Scottish proceedings the English court therefore has power under paragraph 13 of Schedule 6 to the 2011 Regulations to stay, and indeed to decline jurisdiction to entertain, the wifes application under section 27. The husbands appeal should in my view be allowed and, in the absence of Parker J who has retired, his application should be remitted to another judge of the Family Division for determination whether the power should be exercised. Fifth Point The husband contends that the common law principle of the less appropriate forum remains available for application by a UK court when determining an issue of jurisdictional rivalry between it and another UK court in relation to an application for maintenance. In the light of my conclusion above in relation to the fourth point, this fifth point may not need to be decided. For there is no reason to consider that in the present case the discretion under article 13(2) of the Maintenance Regulation, as applied by the 2011 Regulations, would be exercised differently from any discretion which might arise under the common law principle. Nevertheless the court has received extensive submissions on the fifth point. I offer a review of the most significant of them in the paragraphs which follow. Were it to apply to jurisdictional rivalry between UK courts in relation to maintenance, the common law principle would extend to some situations beyond those covered by articles 12 and 13 of the Maintenance Regulation, as applied by the 2011 Regulations. In particular it could precipitate a stay both of proceedings in the court first seised and also of proceedings even in the absence of any proceedings yet issued in the court considered to be the more appropriate forum. Even when the law of a member state, such as the UK, adheres to the less appropriate forum principle, it cannot apply it to its determinations under the Maintenance Regulation. For articles 12 and 13 represent an exclusive code for the resolution of jurisdictional rivalry between the courts of different member states in relation to maintenance. The decision of the Grand Chamber of the ECJ in Owusu v Jackson (Case C 281/02) [2005] QB 801, made this clear even in relation to the expanded situation in that case, in which the potential choice of forum was between that of a member state (the UK) and that of a non member state (Jamaica) which might have been more appropriate. Nothing turns on the fact that the decision was made by reference to the terms of the 1968 Convention which was then operative, rather than those of the Judgments Regulation or now of the Maintenance Regulation. The ECJ held in para 41 that the objective of legal certainty which formed the basis of the convention might be undermined by the less appropriate forum principle; in para 43 that in any event there were only a few contracting states which recognised the principle; and in para 46 that it could not be applied so as to displace jurisdiction conferred by the convention. Indeed recently, in R v P (Case C 468/18) ECLI:EU:C:2019:666, [2020] 4 WLR 8 the CJEU confirmed in para 44 that, if conferred with jurisdiction under the Maintenance Regulation, a member state could not decline to exercise it by reference to any principle of the less appropriate forum. To decline to do so would, observed the court in para 45, undermine the priority given by the regulation to the choice of forum made by the applicant for maintenance. By contrast, however, it is clear that, at any rate until 18 June 2011, when the 2011 Regulations came into force, UK courts did have power to apply the less appropriate forum principle when determining issues of jurisdictional rivalry between the courts of the different parts of the UK in relation to maintenance applications. Schedule 4 to the 1982 Act had in a modified form applied within those different parts the provisions of the 1968 Convention for the allocation of jurisdiction to hear civil proceedings. But Schedule 4 had not replicated the articles in the convention entitled Lis pendens related actions; and section 49 of the 1982 Act had expressly provided that the power of UK courts to stay proceedings by reference to the less appropriate forum principle was unaffected by the Act, including therefore by Schedule 4. When in 2002 the Judgments Regulation superseded the 1968 Convention, there was no change in this respect. For, similarly, the articles in the Judgments Regulation entitled Lis pendens related actions were not replicated in the substituted version of Schedule 4; and section 49 continued in force. Indeed, while maintenance applications were removed from the scope of the 1982 Act on 18 June 2011 and were therefore no longer governed by section 49, it has continued to govern the resolution of issues of jurisdictional rivalry between UK courts in relation to other civil proceedings. In the Cook and McNeil cases, cited in para 130 above, the claimants, who lived in Scotland, each brought actions in England for damages for personal injuries sustained in Scotland against companies based in England. The Court of Appeal held that the district judge had been entitled to stay their actions on the ground that Scotland was the more appropriate forum. Lord Dyson, Master of the Rolls, observed in para 30 that the rules in Schedule 4 were not a mirror of those in the Judgments Regulation and in para 33 that section 49 of the 1982 Act provided a complete answer to the claimants contentions. The wife does not dispute that, in determining an issue of jurisdictional rivalry with a court in another part of the UK in relation to all proceedings other than for maintenance, a UK court has power to stay proceedings before it by reference to the less appropriate forum principle. So the question becomes: have the 2011 Regulations rendered the power no longer available in relation to maintenance proceedings? The fact that there is no inclusion of the power in the regulations does not answer the question. The power does not need to be conferred: it already exists in the common law of all parts of the UK. As the wording of section 49 of the 1982 Act recognises in confirming that the Act does not prevent exercise of the power, the question is not whether the 2011 Regulations include the power but whether they exclude it; and, more particularly, whether, in the absence of any express exclusion of it, they exclude it by necessary implication. In R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54, [2011] 2 AC 15, the issue concerned the Secretary of States right to recover overpayments of social security benefits. He claimed that he had a right to recover them at common law and that statutory provisions for recovery had not displaced it. This court held that no such right of recovery existed at common law but that if, alternatively, it had existed, the statutory provisions had displaced it by necessary implication. Sir John Dyson JSC, as he was during the first months of his service in this court, said in para 34: The question is whether, looked at as a whole, a common law remedy would be incompatible with the statutory scheme and therefore could not have been intended [to] coexist with it. A question whether something could have been intended is often illumined by inquiry into what was intended. But not in this case. Neither in the consultation paper which preceded the making of the 2011 Regulations nor in the Explanatory Memorandum which accompanied them when laid before Parliament was there reference to the power to stay by reference to the less appropriate forum principle which had hitherto existed in relation to jurisdictional rivalry within the UK. In that regard the amended provisions of the 1982 Act had not aligned the jurisdictional rules for the allocation of maintenance applications within the UK with those in the Judgments Regulation; and the memorandum was wrong to state otherwise. It is impossible to avoid the conclusion that, in their hasty production of the 2011 Regulations, its drafters overlooked the applicability up to that point of the common law power to stay. A substantial change made in Schedule 6 to the 2011 Regulations was to import into the rules for allocation of jurisdiction in relation to maintenance applications within the UK the two articles in the Maintenance Regulation entitled Lis pendens and Related actions. So the question becomes more focussed: is the common law power to stay incompatible with their importation? Under the Maintenance Regulation the two articles represent an exhaustive code for the determination of issues of jurisdictional rivalry between member states. Should they therefore be regarded as an exhaustive code under the 2011 Regulations? Would it be a necessary consequence of their importation that a UK court which regards itself as the less appropriate forum should be disabled from staying a maintenance application in favour of another UK court otherwise than in accordance with their terms? On balance, in answer to Sir John Dysons question, I am reluctantly driven to the conclusion that the less appropriate forum principle is incompatible with, and so cannot be deemed to have been intended to co exist with, articles 12 and 13 which, once imported, have covered much, albeit not all, of the same ground. I stress, however, that I regard my conclusion as correct only if article 13 requires to be construed with reasonable width as suggested above. Were I, by contrast, to have felt obliged to give it so narrow a construction as not to extend to most of the more likely cases of jurisdictional rivalry within the UK, it would have been clear to me that the articles were not incompatible with the common law principle and that their importation had not excluded it. Postscript I drafted almost all of the above before the judgments of Lord Sales and Lady Black became available to me. In the light of their judgments, and of Lord Kerrs agreement with that of Lord Sales, my judgment becomes a dissenting judgment and is rightly placed last. In this postscript I raise six questions which reflect my concerns about the courts decision today in relation to article 13. My respect for each of my three colleagues applies to all that follows. The framing of my concerns as no more than questions reflects my respect for them; and there will be no need to reiterate it. First question: was it optimum for Lord Sales and Lady Black to consider whether the less appropriate forum principle continues to apply prior to considering whether article 13 applies to the present case? In paras 67 and 68 of her judgment Lady Black concludes that the importation of articles 12 and 13 into Schedule 6 to the 2011 Regulations cannot co exist with the survival of the common law principle. But that conclusion depends on the meaning of the articles. I reach that same conclusion but only in the light of my understanding of the meaning of them, in particular of article 13. If, however, as the majority later proceeds to hold, the articles require the narrowest possible construction, the strength of Lady Blacks conclusion falls away. Second question: how credible are the examples given by the majority of the circumstances in which, on its construction, article 13 applies? In para 44 above Lord Sales states that a core object of the article is to address a situation in which by cross maintenance claims, each of a husband and wife might seek to claim that the other owes maintenance. In para 89 above, Lady Black joins Lord Sales in presenting this situation as exemplifying the reach of the article. Her background, like mine, is in family law, and, in the light of her experience, she clearly considers that the situation which he identifies is realistic. In my experience, by contrast, it is entirely unrealistic. I cannot recall having encountered a situation in which each spouse claims maintenance from the other; but, even if a cross claim is conceivable, probably as an ill considered tactic, what is for me inconceivable is that it would be made in a different jurisdiction. Not even in the Moore case was the husband claiming maintenance from the wife. Some lawyers, although clearly not all, would regard it as preposterous that article 13 should be construed by reference to that perception of its core object. In para 89 above Lady Black mines a few other examples, all very rare, of situations which might fall within the majoritys construction of the article, although, she adds, some of them might instead fall within her construction of article 12. Even if one adds her examples to the situation identified by Lord Sales, the second question remains: how credible is their analysis of the circumstances in which article 13 applies? Third question: was it correct for the majoritys analysis of article 13 to be dominated by an understanding that, at every stage, priority must be given to the choice of jurisdiction made by the maintenance creditor (for convenience, the wife)? In 16 paragraphs of his judgment Lord Sales refers, as does Lady Black in seven paragraphs of her judgment, to the objective behind the successive European instruments of giving priority to the choice made by the wife. In para 67 of her judgment Lady Black summarises their conclusion that the objective could not be overridden by the selected court declining to entertain the proceedings. It is clear that, since 1968, the objective to which they refer has been reflected in the wider choice of jurisdiction given to the wife for the issue of her claim. But should it follow and is there authority to suggest that, when a rival action is already pending in another state, resolution of the rivalry pursuant to what are now articles 12 and 13 is in effect foreclosed by reference to that objective? Might it have been forgotten that article 13 confers only a power and that, if for whatever reason the wifes choice deserves continuing priority at that stage, the power to stay or dismiss her action will not be exercised? Indeed is not the law relating to the resolution of rivalry between the three UK jurisdictions clearer still? When in 1987 the provisions of the 1968 Convention, including the wider provisions for the issue of maintenance claims, were extended so as to operate within those jurisdictions, Parliament confirmed that the resolution of rivalry between them was to be governed by an objective not of giving priority to the wifes choice but of identifying the less appropriate forum pursuant to the common law principle. When in 2011 its resolution came instead to be governed by articles 12 and 13, was not the legislative intention that the articles would broadly cover the ground which the common law principle had governed? Why would the legislator have intended to emasculate the jurisdiction to stay by reference to a different objective, namely of giving continuing priority to the wifes choice? Can any such intention be collected from anything then said or done? Fourth question: did the majority afford sufficient significance to article 3(c) of the Maintenance Regulation brought within the UK by paragraph 4 of Schedule 6 to the 2011 Regulations? As part of the priority given to the wifes choice of jurisdiction for the issue of her claim, article 3(c) confers jurisdiction upon the court which, according to its own law, has jurisdiction to entertain proceedings concerning the status of a person if the matter relating to maintenance is ancillary to those proceedings The article thus expressly contemplates that a maintenance claim can be ancillary to divorce proceedings and that, if so, it is appropriate for it to be determined in the divorce court. So the fourth question becomes refined: if a claim for maintenance can be ancillary to divorce proceedings and appropriately issued in that court for the purpose of article 3(c), how can it be other than related to divorce proceedings for the purpose of article 13? Is it convincing for Lord Sales to respond in para 46 above that to reason from article 3(c) to article 13 would be to defeat the priority given to the wife, particularly in circumstances in which article 3(c) itself reflects that priority? Fifth question: did the majority sufficiently address the significance of the decision of the House of Lords in the Sarrio case, analysed by me at para 155 above? In para 83 above Lady Black notes only that Lord Saville there observed that an inquiry into whether actions are related should be approached with broad common sense. But, for present purposes, the real significance of the case lies in the application of broad common sense on the part of the House of Lords to the inquiry before it. For its unanimous decision was that the claimants English action for damages in tort was related to its Spanish action for payment due under a contract within the meaning of what is now article 13 and should be dismissed under what is now paragraph 2 of it. So the question, also prompted by the treatment given by Lord Sales to the decision in para 47 above, is whether further recourse to the mantra of giving priority to the wife justifies the attribution to the word related of a meaning in the context of maintenance claims entirely different from its meaning in the context of other civil claims. Sixth and final question: did the majority check its construction of article 13 in the light of its adverse consequences? When lawyers conclude that the construction of an instrument is clear, they will not shrink from their conclusion by reference to its adverse consequences. If, however, their provisional conclusion has adverse consequences, they will check it before making it their concluded view. There will be two adverse consequences of todays decision, one expressly noticed only by Lord Sales, and the other only by Lady Black. The first will be the untrammelled licence given to a wife to go forum shopping, in other words to put her husband at an initial disadvantage unrelated to the merits of her case. Having observed that in the N case the judge considered that the wife had engaged in illegitimate forum shopping, Lord Sales comments in para 56 above that she had been entitled to choose the forum for her claim by reference to tactical reasons and that, under the Maintenance Regulation, there had been nothing illegitimate in her doing so. The second will be the inability of a court in one part of the UK to decline to determine a wifes maintenance claim even when a court in another part alone has power to determine a claim by one spouse or the other for transfer of property or for some other adjustment (such as would, for example, disentangle them from joint ownership of property) or for a pension sharing order. As Lady Black says in para 79 above, the prospect is not very palatable. So the final question can be refined: did the adverse consequences of todays decision oblige the majority to undertake a rigorous examination of its provisional conclusion about the meaning of article 13 and, if so and in the light of all the questions posed above, can its provisional conclusion have received rigorous examination?
UK-Abs
This appeal brought by the husband concerns the jurisdiction of an English court to make a maintenance order in favour of the wife under section 27 of the Matrimonial Causes Act 1973 (as amended) (section 27) when the parties had mostly lived in Scotland and the divorce proceedings were conducted there. The parties married in England in 1994 and lived together in Scotland between 1995 and 2012, when they separated and the wife returned to England. She issued a divorce petition in England in July 2013 and the husband issued a writ for divorce in Scotland in October 2014. As the parties had last lived together in Scotland, the application for divorce was assigned to the Scottish court. On 13 January 2015 the wife consented to an order dismissing her petition in England and she issued an application under section 27 in England for maintenance payments. The husband applied to stay or dismiss this application on the basis that the English court did not have or should not exercise jurisdiction to hear the application. The English High Court rejected the husbands challenge and ordered maintenance to be paid by the husband. The husband unsuccessfully appealed against the decision to the Court of Appeal. The husband now appeals to this Court in relation to the jurisdictional issues. The issues relate to Council Regulation (EC) No 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations (the Maintenance Regulation) and Schedule 6 to the Civil Jurisdiction and Judgments (Maintenance) Regulations 2011 (Schedule 6 and the 2011 Regulations, respectively), promulgated by the Secretary of State for Justice pursuant to section 2(2) of the European Communities Act 1972 (the ECA 1972). By a majority, the Supreme Court dismisses the appeal. Lord Sales gives the lead judgment, with which Lord Kerr agrees. Lady Black gives a concurring judgment. Lord Wilson gives a dissenting judgment, with which Lady Hale agrees. In the lead judgment, Lord Sales sets out the four issues that arise on the appeal: (1) whether under section 27 an English court has jurisdiction to make any order for maintenance in a case with no international dimension; (2) if so, whether Schedule 6 allows for an English court to retain its previous discretion to stay maintenance proceedings before it on the ground of forum non conveniens (ie the courts discretion to make an assessment as to which jurisdiction is the most appropriate); (3) if not, whether the purported removal of that discretion was outside the scope of the Secretary of States powers in section 2(2) of the ECA 1972; and (4) if not, whether the husbands divorce proceeding in Scotland is a related action for the purposes of article 13 of the Maintenance Regulation and the corresponding provision in Schedule 6 and, accordingly, whether the English court should decline jurisdiction in respect of the wifes claim for a maintenance order under section 27 [7]. Lord Sales considers that the European Union (EU) legislation governing jurisdiction in cross border cases treats maintenance obligations and questions of marital status, including divorce, as separate matters for the purposes of jurisdiction [8] [24]. Maintenance obligations are covered by their own inter state jurisdiction regime set out in the Maintenance Regulation [17]. Schedule 6 applies the provisions of the Maintenance Regulation to the allocation of jurisdiction for intra state cases within the United Kingdom relating to maintenance [22] [23]. On the first issue, the husband submits that section 27 can only apply if a case falls to be governed by both the Maintenance Regulation and by Schedule 6, which would have the effect of it only applying in inter state cases. Lord Sales considers (and Lord Wilson agrees) that section 27 does not require that both the Maintenance Regulation and Schedule 6 apply. Section 27 refers to both the Maintenance Regulation and Schedule 6 only in the sense that together they cover the whole possible field of inter state cases and intra state cases [26], [135] [140]. On the second issue, Lord Sales follows EU case law to hold that the scheme of the EU legislation is inconsistent with the courts of a Member State retaining any discretionary power to stay proceedings on forum non conveniens grounds [28]. This is particularly applicable to the Maintenance Regulation, which aims to afford special protection to a maintenance creditor by giving him or her the right to choose jurisdiction [29]. Schedule 6 replicates the scheme of the Maintenance Regulation in domestic law for intra state cases, and accordingly has the effect of removing any discretion based on the domestic forum non conveniens doctrine [34]. On the third issue, Lord Sales considers (and Lord Wilson agrees) that the making of the 2011 Regulations is within the wide power conferred on the Secretary of State by section 2(2) of the ECA 1972 to make subordinate legislation [38], [141] [145]. On the fourth issue, in Lord Saless judgment the husbands divorce proceeding in Scotland is not a related action within article 13 of the Maintenance Regulation, so that article (and the corresponding provision in Schedule 6) does not permit the English court to decline jurisdiction [40]. The Maintenance Regulation must be considered in light of its fundamental object of conferring the right to choose jurisdiction on a maintenance creditor [41]. The word actions in article 13 refers primarily to maintenance claims to which the special regime in the Regulation applies. Holding it to mean any legal proceedings would undermine the object of the Regulation [45]. There is no relevant connection between the wifes section 27 maintenance claim in England and the Scottish proceedings concerned with determining marriage status [46]. In her concurring judgment, Lady Black agrees with Lord Saless conclusion on article 13, despite the fact that it leads to the potential fragmentation of the proceedings required to resolve financial affairs upon divorce. Based on the wording of article 13, with the object of protecting the maintenance creditor in mind, she considers that the English and the Scottish proceedings are not related actions [91]. In his dissenting judgment, Lord Wilson views the English and Scottish proceedings as related actions for the purpose of article 13, giving the English court the power to stay or decline the wifes maintenance application. He would adopt a broad, common sense approach to the interpretation of the article [162]. As a result, Lord Wilson would have allowed the husbands appeal [163].
This appeal is about equitable relief from forfeiture. Specifically, the question is whether the court has jurisdiction to grant such relief from the loss (to use a neutral word) of rights to make specified use of neighbouring land granted in a perpetual licence, where that loss of use is occasioned by the exercise of a right of termination for breach of an obligation to pay a sum due under the licence. In the present case the sum due was 50, whereas the annual value of the rights which would be lost upon termination is agreed to be in excess of 300,000. Relief from forfeiture is one of those equitable remedies which plays a valuable role in preventing the unconscionable abuse of strict legal rights for purposes other than those for which they were conferred. But it needs to be constrained with principled boundaries, so that the admirable certainty of English law in the fields of business and property is not undermined by an uncontrolled intervention of equity in any situation regarded by a judge as unconscionable. As will appear, the delineation of these principled boundaries has undergone significant development by the appellate courts during the last 45 years, but mainly in relation to relief from the forfeiture of rights in relation to chattels and other forms of personalty. This case has provided the courts with the opportunity to re examine those boundaries in relation to the forfeiture of rights in relation to land and in particular to consider the extent to which, if at all, those recent developments in relation to relief from forfeiture of rights over personalty have consequences for the boundaries of that jurisdiction in relation to rights over land. It has always been a condition for equitable relief from forfeiture that the forfeiture provision in question should have been conferred by way of security for the enforcement of some lesser primary obligation such as, but not limited to, the payment of money. It is common ground, at least in this court, that this requirement is satisfied on the facts of the case. The issues on this appeal relate to the second main condition going to jurisdiction to relieve from forfeiture which may loosely be described as turning upon the nature of the subject matter of the forfeiture, that is the rights which will be lost if the forfeiture is not relieved. The appellants say that, in relation to rights over land, nothing less than a proprietary interest will be sufficient to engage the jurisdiction to grant relief. The respondents say that the authorities establish that possessory rights, falling short of a proprietary interest in the land, are sufficient. But they invite this court to go one step further and declare that any right to use property (whether real or personal) sufficiently engages the jurisdiction to grant equitable relief from its forfeiture, if the first condition, described above, is satisfied. The trial judge, HHJ Behrens QC decided that the rights conferred by the licence in this case were, if not strictly possessory, sufficiently analogous to possessory rights to engage the jurisdiction, and he granted relief. The Court of Appeal decided that this went too far, but that the relevant rights were in any event possessory, so that they engaged the jurisdiction. Although the question whether, assuming jurisdiction, the court ought to have granted relief in its discretion was contested both before the judge and the Court of Appeal, it is only the threshold question of jurisdiction which remains live in this court. The Facts The appellant Manchester Ship Canal Co Ltd (MSCC) is the owner of the Manchester Ship Canal (the Canal) and adjacent riparian land, in particular on the south west side of it, in the vicinity of Ellesmere Port. To the south west of MSCCs riparian land there was a substantial block of land, formerly in mainly military use, including an airfield, which was acquired in July 1961 by the respondent Vauxhall Motors Ltd (formerly General Motors UK Ltd) (Vauxhall) for the purpose of being developed as a substantial vehicle manufacturing plant, now generally well known as Vauxhalls Ellesmere Port factory. Recognising that the construction of large buildings and hard surfaces on the newly acquired site would reduce its capacity for the absorption of surface water, Vauxhall sought to make arrangements with MSCC sufficient to enable it to discharge surface water and treated industrial effluent from the planned manufacturing complex into the Canal. For this purpose, Vauxhall acquired from MSCC a small rectangular part of MSCCs riparian land between the factory site and the Canal, for the construction of a water collection and effluent treatment plant, by a land exchange dated 12 October 1962. But this still left a small strip of riparian land owned by MSCC between the treatment plant and the Canal, across which Vauxhall needed to acquire a right to discharge surface water and treated effluent from the treatment plant into the Canal. Vauxhall acquired these rights by means of a licence (the Licence) made on the same date as the land exchange. Subject to the provision for early termination referred to below, the rights were granted in perpetuity, in exchange for payment of the rent or annual sum of 50 per annum and the performance of certain covenants and conditions undertaken by Vauxhall. The rights granted were set out in three parts, within clause 1 of the Licence. The first was a right to discharge surface water and suitably treated trade effluent from Vauxhalls treatment plant into the Canal, across a specified part of MSCCs land identified on plans annexed to the Licence. The second was a right to construct, maintain, alter and renew under and upon the same parts of MSCCs land pipes and other works (called the Spillway) sufficient to effect and control the discharge of surface water and treated effluent into the Canal, subject to plans and specifications to be approved by MSCCs Engineer. The third was a right of access to the Spillway along specified parts of MSCCs land for the purpose of exercising the infrastructure rights, along a specified route or other route as prescribed by the Engineer. Clause 2 of the Licence provided for payment of the annual rent of 50 as already described. Clause 3 contained covenants by Vauxhall relating, among other things, to the construction and maintenance of the Spillway, providing for it to be rerouted in the event (which did not occur) that MSCC wished to construct a wharf at the point of its discharge into the Canal. Clause 3(k) required Vauxhall to remove the Spillway and reinstate the locus in quo upon determination of the Licence. Clause 3(l) prohibited the assignment, transfer, underletting or other alienation of the benefit of the Licence by Vauxhall other than to a connected company. Clause 3(m) limited the use of the Spillway to the discharge of surface water and treated trade effluent from Vauxhalls factory site. Clause 3 also contained miscellaneous indemnities and an obligation on Vauxhall to pay for any dredging of the Canal necessitated by the construction and use of the Spillway. Clause 4 of the Licence reserved rights to MSCC to construct and use over, under, along or across the Spillway pipes, railway lines, cables, roads, tramways, bridges, subways and wharves, but not so as materially to interfere with the discharge through the Spillway of surface water and treated trade effluent without providing Vauxhall alternative means of effecting and controlling discharge. Clause 5 provided as follows: If the said yearly rent or sum or any part thereof shall at any time be in arrear for the space of 21 days after the same shall have accrued due (whether legally demanded or not) or if and whenever Vauxhalls shall make default in the performance and observance of any of the covenants conditions and provisions herein contained and on their part to be performed and observed the Canal Company may (but without prejudice to any right of action available to them by way of injunction or otherwise) by notice in writing require Vauxhalls to pay the rent in arrear within 28 days or (as the case may be) to pay reasonable compensation for the said default and remedy the same (if capable of being remedied) within a reasonable time and if Vauxhalls shall fail to comply with such notice the Canal Company may thereupon by notice in writing determine this Licence forthwith and in such event this Licence and every clause matter and thing herein contained shall forthwith absolutely cease and determine but without prejudice to any claim by either party against the other in respect of any antecedent breach of any covenant condition or provision herein contained. The Spillway was duly constructed by Vauxhall following the grant of the Licence. The infrastructure erected on MSCCs land consists of an underground pipe of about approximately 2,100mm diameter feeding into a partly underground hexagonal distribution centre, before splitting into two 1,675mm underground pipes leading to an outfall on the bank of the Canal. Following construction, the Spillway was brought into use for discharge of surface water and treated effluent, and has performed that function ever since. By a deed of variation dated 25 July 1997 the Licence was varied in the following material respects. First, clause 3(1), restricting assignment and alienation, was deleted and replaced by a provision for the avoidance of doubt whereby MSCC acknowledged that the rights granted to Vauxhall by the Licence were to be exercisable in perpetuity by all or any of Vauxhall, its successors in title, the owners, tenants and occupiers from time to time of any part of Vauxhalls factory site. Secondly, by clause 4, Vauxhall granted MSCC a right to connect into Vauxhalls treatment plant a pipe discharging surface water from neighbouring land of MSCC, for the duration of the Licence. In the meantime Vauxhall transferred part of its factory site to the Urban Regeneration Agency, upon terms that the land transferred would continue to have the benefit of the drainage system constituted by the Spillway and confirmed by the Licence. The Licence was terminated in the following circumstances. Vauxhall failed to pay its annual rent of 50 due on 12 October 2013. MSCC served notice pursuant to clause 5 of the Licence on 6 February 2014. Vauxhall continued in its failure to pay the 50 due and, on 10 March 2014, MSCC served notice to terminate the Licence under clause 5. After inconclusive negotiations for a new licence at market rates, Vauxhall claimed relief from forfeiture, initially by correspondence and then by these proceedings which were issued on 6 March 2015. As already noted the judge granted relief from forfeiture and the Court of Appeal affirmed his decision, albeit on slightly narrower grounds. The Law Equitable relief from forfeiture is a remedy of ancient origin. Prior to the conveyancing and property legislation consolidated in 1925, its main spheres of activity lay in relation to leases and mortgages of land, but those are now statutory. For present purposes, it is unnecessary to trace its antecedents back before 1972, when the rationale for and main principles regulating the remedy were restated in this well known passage in the speech of Lord Wilberforce in Shiloh Spinners Ltd v Harding [1973] AC 691, at 723 724: it remains true today that equity expects men to carry out their bargains and will not let them buy their way out by uncovenanted payment. But it is consistent with these principles that we should reaffirm the right of courts of equity in appropriate and limited cases to relieve against forfeiture for breach of covenant or condition where the primary object of the bargain is to secure a stated result which can effectively be attained when the matter comes before the court, and where the forfeiture provision is added by way of security for the production of that result. The word appropriate involves consideration of the conduct of the applicant for relief, in particular whether his default was wilful, of the gravity of the breaches, and of the disparity between the value of the property of which forfeiture is claimed as compared with the damage caused by the breach. That passage contains a trenchant restatement of the central rationale and condition for the exercise of the remedy, namely that the primary object of the bargain should be the securing of a stated result, for which the forfeiture provision is added by way of security. Lord Wilberforce did not however state any second condition for the exercise of the jurisdiction to grant relief, relating to the nature of the rights liable to be forfeited. Earlier, at p 722 he said: There cannot be any doubt that from the earliest times courts of equity have asserted the right to relieve against the forfeiture of property. The jurisdiction has not been confined to any particular type of case. The commonest instances concerned mortgages, giving rise to the equity of redemption, and leases, which commonly contained re entry clauses; but other instances are found in relation to copy holds, or where the forfeiture was in the nature of a penalty. Although the principle is well established, there has undoubtedly been some fluctuation of authority as to the self limitation to be imposed or accepted on this power. The property liable to forfeiture in that case was a lease but, since the right of re entry was reserved by an assignee of the lease rather than by the lessor upon its grant, the statutory regime for relief from forfeiture did not apply. Nonetheless, since the proprietary interest in land constituted by a lease had always been fairly and squarely within the types of property liable to forfeiture within the reach of equitys remedy of relief, the issue as to the nature of the property to which the remedy might extend simply did not arise. That question did arise for decision in Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 AC 694. The rights in issue consisted of the charterers rights under a time charter of a ship, which entitled the owners to withdraw the vessel from the service of the charterers if specified monthly payments due in advance were not made on time. Having failed to make timely payment and received a telex from the owners withdrawing the vessel, the charterers claimed that withdrawal amounted to a forfeiture and sought equitable relief, including an injunction restraining the owners from withdrawing the vessel from service. Affirming the Court of Appeal, the House of Lords held that the court had no jurisdiction to grant relief in such a case. Giving the leading judgment, Lord Diplock identified two reasons for that conclusion, in relation to time charters. The first was that a time charter conferred upon the charterer no interest in or right to possession of the vessel. He said, at pp 700 701: A time charter, unless it is a charter by demise, with which your Lordships are not here concerned, transfers to the charterer no interest in or right to possession of the vessel; it is a contract for services to be rendered to the charterer by the shipowner through the use of the vessel by the shipowners own servants, the master and the crew, acting in accordance with such directions as to the cargoes to be loaded and the voyages to be undertaken as by the terms of the charterparty the charterer is entitled to give to them. Being a contract for services it is thus the very prototype of a contract of which before the fusion of law and equity a court would never grant specific performance: Clarke v Price (1819) 2 Wils 157; Lumley v Wagner (1852) 1 De G M & G 604. To grant an injunction restraining the shipowner from exercising his right of withdrawal of the vessel from the service of the charterer, though negative in form, is pregnant with an affirmative order to the shipowner to perform the contract; juristically it is indistinguishable from a decree for specific performance of a contract to render services; and in respect of that category of contracts, even in the event of breach, this is a remedy that English courts have always disclaimed any jurisdiction to grant. This is, in my view, sufficient reason in itself to compel rejection of the suggestion that the equitable principle of relief from forfeiture is juristically capable of extension so as to grant to the court a discretion to prevent a shipowner from exercising his strict contractual rights under a withdrawal clause in a time charter which is not a charter by demise. At p 702, referring to the dicta of Lord Wilberforce in the Shiloh Spinners case, he said: That this mainly historical statement was never meant to apply generally to contracts not involving any transfer of proprietary or possessory rights, but providing for a right to determine the contract in default of punctual payment of a sum of money payable under it, is clear enough from Lord Wilberforces speech in The Laconia [1977] AC 850. Speaking of a time charter he said, at p 870: It must be obvious that this is a very different type of creature from a lease of land. Lord Diplocks second reason was that, in any event, the provision that the owner could withdraw the vessel upon failure by the charterer to make payment in advance was not a mere security, since timely payment was needed to fund the wages and victualling of the master and crew together with the insurance and maintenance of the vessel sufficient to enable her to perform the contracted services. For present purposes, the key phrases which stand out from Lord Diplocks speech are, no interest in or right to possession of the vessel, on p 700 and proprietary or possessory rights on p 702. He used the concepts of proprietary and possessory rights as a sine qua non in relation to the rights liable to be forfeited, in the absence of which equity could not intervene. The sharp distinction in his mind between a time charter, which did not confer those rights, and a charter by demise, which did, may be illuminated by the following explanation from Evans LJ in Bridge Oil Ltd v Owners and/or demise charterers of the ship The Guiseppe di Vittorio [1998] 1 Lloyds Rep 136, at 156: What then is a demise charter? Its hallmarks, as it seems to me, are that the legal owner gives the charterer sufficient of the rights of possession and control which enable the transaction to be regarded as a letting a lease, or demise, in real property terms of the ship. Closely allied to this is the fact that the charterer becomes the employer of the master and crew. The condition for jurisdiction to grant equitable relief from forfeiture, that the rights subject to forfeiture should be proprietary or possessory in nature first enunciated, in a negative sense, in The Scaptrade, have been followed in a series of later cases, mainly about chattels and other forms of personal property, rather than rights in relation to land. Sport International Bussum BV v Inter Footwear Ltd [1984] 1 WLR 776 was a case about an exclusive right to purchase sports shoes and resell them in specified territories contained in an agreement settling litigation which included a provision for termination upon (inter alia) the buyers failure to provide a security guarantee on time. Giving the judgment of the Court of Appeal, after a review of the Shiloh Spinners case and The Scaptrade, Oliver LJ said, at p 787B that: historically, the availability of equitable relief from forfeiture has been confined to cases where the subject matter of the forfeiture is an interest in land. At p 788C he continued: The fact remains that the jurisdiction never was, and never has been up to now, extended to ordinary commercial contracts unconnected with interests in land and, though it may be that there is no logical reason why, by analogy with contracts creating interests in land, the jurisdiction should not be extended to contracts creating interests in other property, corporeal or incorporeal, there is, at the same time, no compelling reason of policy that we can see why it should be. And the fact is that the defendant in this case is seeking an extension by analogy, and an extension not based on any pressing consideration of legal policy but simply on an appeal to sympathy for what is considered to be a hardship arising from strict adherence to a bargain which is concluded with its eyes open. In the House of Lords, Lord Templeman noted at p 794 that Lord Diplock had, in The Scaptrade, confined the power to relieve from forfeiture to contracts concerning the transfer of proprietary or possessory rights. He continued: I do not believe that the present is a suitable case in which to define the boundaries of the equitable doctrine of relief against forfeiture. It is sufficient that the appellants cannot bring themselves within the recognised boundaries and cannot establish an arguable case for the intervention of equity. The recognised boundaries do not include mere contractual licences and I can see no reason for the intervention of equity. Your Lordships are concerned with an unusual contract bringing hostile litigation to an end and including a number of provisions which cannot be dissected so as to attribute different degrees of importance to different rights and obligations. Ms Katharine Holland QC for MSCC drew attention, correctly, to the fact that Oliver LJ referred only to proprietary, rather than possessory, rights as sufficient to attract equitable relief from forfeiture. This was part of his description of the history of the remedy. It was not endorsed by the House of Lords, although other parts of Oliver LJs analysis were. Nor has it stood the test of time, as appears below. BICC plc v Burndy Corpn [1985] Ch 232 was about the forfeiture of patent rights conferred under a commercial agreement. Dillon LJ (with whom Kerr and Ackner LJJ agreed) said this, at p 252: There is no clear authority, but for my part I find it difficult to see why the jurisdiction of equity to grant relief against forfeiture should only be available where what is liable to forfeiture is an interest in land and not an interest in personal property. Relief is only available where what is in question is forfeiture of proprietary or possessory rights, but I see no reason in principle for drawing a distinction as to the type of property in which the rights subsist. The fact that the right to forfeiture arises under a commercial agreement is highly relevant to the question whether relief against forfeiture should be granted, but I do not see that it can preclude the existence of the jurisdiction to grant relief, if forfeiture of proprietary or possessory rights, as opposed to merely contractual rights, is in question. Ms Holland QC drew the courts attention to Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514, a vendor and purchaser case in which the purchaser was ten minutes late in tendering the purchase price under a contract which made time for completion of the essence. Giving the judgment of the Privy Council on an appeal from Hong Kong, Lord Hoffmann rejected a claim for relief from forfeiture, concluding at p 523 as follows: In his dissenting judgment, Godfrey JA said that the case cries out for the intervention of equity. Their Lordships think that, on the contrary, it shows the need for a firm restatement of the principle that in cases of rescission of an ordinary contract of sale of land for failure to comply with an essential condition as to time, equity will not intervene. This decision is not of significant assistance for present purposes. It was a case in which a contract for the purchase of legal title to land was found to have been repudiated by the failure by the purchaser to comply with a time of the essence provision. Thus the property the subject matter of the contract never became subject to the vendors obligation to convey. While it may be said that the purchaser had a species of equitable interest pending completion, the facts were far removed from cases such as the present, where the rights subject to forfeiture are perpetual in nature and have already been conferred and enjoyed for many years prior to the event giving rise to termination. Most of the cases about relief from the forfeiture of possessory (rather than proprietary) rights concern personalty. Nonetheless, some slight indication that possessory rights in relation to land may also qualify for relief from forfeiture is to be found in the judgment of Nourse LJ in Bland v Ingrams Estates Ltd [2001] Ch 767. The plaintiff had a charging order (creating an equitable charge) over a lease of land. The landlord forfeited the lease and the lessees did not apply for relief. On application for relief from forfeiture under the courts inherent jurisdiction, the Court of Appeal held that, in an area so heavily regulated by statute, equity ought not to intervene. Nonetheless the plaintiff was able to stand in the shoes of the lessees so as to assert their statutory right to relief, as if he was a beneficiary under a trust. In reviewing the inherent equitable jurisdiction Nourse LJ said this, at p 780 (para 31): A jurisdiction does not become discretionary just because it is both inherent and equitable. The authorities show that the cases in which the inherent jurisdiction to grant relief against forfeiture for non payment of rent has been exercised have been restricted to those in which the person claiming relief is entitled to possession of the land or at any rate, which is not necessarily the same thing, has a legal estate or equitable interest in it. Now that so much of the jurisdiction has been overtaken by statute, any legitimate basis for its extension has disappeared. Admittedly and notoriously, there are gaps and anomalies in the statutory framework. But it is not for the courts to fill the gaps and cure the anomalies in purported reliance on a jurisdiction which has never existed. Nourse LJ appears to have regarded a right to possession of land as having qualified, historically, for equitable relief from forfeiture. Nonetheless it is slender authority for the resolution of the present issue. It deserves mention only because all of the other relevant cases are about rights in relation to chattels or other personalty, rather than land. On Demand Information plc v Michael Gerson (Finance) plc [2003] 1 AC 368 was about forfeiture of rights in relation to video and editing equipment granted under finance leases. The leases provided a three year period for use by the lessee at a substantial rent, provision for yearly extensions for modest payments and provision that, upon termination (if they had performed their obligations) the lessees could sell the equipment and retain 95% of the proceeds. For present purposes the relevant issue was whether the equitable jurisdiction was restricted to cases of forfeiture of proprietary rights. At p 379 (para 29) Lord Millett said this: The Court of Appeal (Pill and Robert Walker LJJ, Sir Murray Stuart Smith dissenting) [2001] 1 WLR 155 dismissed the lessees appeal. The court unanimously upheld the deputy judges ruling that the criteria for the exercise of the equitable jurisdiction were present at the date of the application. They rejected the lessors objection that the leases were purely contractual in nature, and that the jurisdiction to grant relief from forfeiture was restricted to cases where the forfeiture of proprietary rights strictly so called was in question. As Robert Walker LJ put it, contractual rights which entitle the hirer to indefinite possession of chattels so long as the hire payments are duly made, and which qualify and limit the owners general property in the chattels, cannot aptly be described as purely contractual rights. For my own part, I regard this conclusion as in accordance with principle; any other would restrict the exercise of a beneficent jurisdiction without any rational justification. This is the first occasion upon which a perception that possessory rights of an indefinite duration could qualify for equitable relief from forfeiture was enunciated. Although not apparent from The Scaptrade, the relevance of the indefinite duration of the possessory right was reinforced by Hamblen J in Celestial Aviation Trading 71 Ltd v Paramount Airways Private Ltd [2011] 1 All ER (Comm) 259, a case about rights of limited duration under operating leases of aircraft. By contrast with the typical finance lease considered in the On Demand case, the operating leases for eight years conferred no rights upon the lessee to extend or to acquire the aircraft on termination. The aircraft had a substantial expected operational life after termination so that the interest of the lessor was not merely financial or economic. Hamblen J held that there was no jurisdiction to grant relief from the forfeiture of an operating lease of this kind. At para 57 he said: In summary, whilst I accept that the ASLAs transfer possessory rights to Paramount, for the relief jurisdiction to apply to contracts transferring a bare possessory right for only a proportion of the economic life of the chattel would represent a major extension of existing authority. He also concluded that the forfeiture provision was not merely by way of security, and that there were strong policy reasons why relief should not be available for operating leases of this type. Finally, the extent of the equitable jurisdiction was thoroughly reviewed by the Privy Council in ukurova Finance International Ltd v Alpha Telecom Turkey Ltd (Nos 3 5) [2016] AC 923, a case about a contractual power to appropriate shares, charged by way of equitable mortgage to secure repayment of a loan. For present purposes the importance of the decision lies in the Boards treatment of the submission that equitable relief from forfeiture was limited, in the context of mortgages, to mortgages of real property rather than personalty. After citing the passage from the judgment of Dillon LJ in the BICC case (quoted above) the Board continued, at para 94: That reasoning, with which the Board agrees, supports the conclusion that relief from forfeiture is available in principle where what is in question is forfeiture of proprietary or possessory rights, as opposed to merely contractual rights, regardless of the type of property concerned. Analysis The issues as to the extent of the jurisdiction to grant equitable relief from forfeiture have, if anything, widened since the hearing in the Court of Appeal. At that stage it appears to have been common ground that the jurisdiction did extend to relief against the forfeiture of possessory rights in relation to land. MSCC did not submit that the jurisdiction was limited to proprietary rights (as it does before this court) and Vauxhall did not submit that the jurisdiction extended to any rights to use property, regardless whether they were strictly possessory, as it now does before this court. Rather the issue was whether the rights granted by the Licence were truly possessory in the relevant sense. There were also issues about whether the termination right in clause 5 was by way of security, and issues about discretion, but they have fallen by the wayside. It is convenient to begin by addressing MSCCs main submission that the jurisdiction to grant equitable relief from the forfeiture of rights relating to the land is limited to rights which, on settled principles, amount to a proprietary interest, so that merely possessory rights, and therefore all rights conferred by licences, are insufficient. Ms Holland advanced a series of interconnected arguments about why this should be so. Her main point was that there had always existed a fundamental, well settled and clearly understood distinction between proprietary interests in land and other rights relating to land, encapsulated in the distinction between a lease, which did confer a proprietary interest and a licence, which did not. Thus the boundary between a lease and a licence has traditionally been assumed also to be a boundary for the jurisdiction from relief from forfeiture, as is apparent from para 4.1.69 of Gray and Grays Elements of Land Law, 5th ed (2008): Only a tenant and not licensee may ask for relief against forfeiture. Any other boundary for the intervention of equity into contractual arrangements conferring rights over land, and in particular which admitted possessory rights in addition to proprietary interests, would be causative of damaging uncertainty in an area of the law in which certainty commands a premium. Secondly, she submitted that although the concept of a possessory right appeared to have become entrenched in defining the boundary of equitable relief from the forfeiture of rights in relation to chattels and other personalty, this should not be transplanted so as to move the boundary line in connection with rights over land. This was first because the concept of possession as used in the authorities about chattels was different from the concept of possession in relation to land, and more akin to a form of ownership. Thirdly, because possession in the context of land had no single clear or settled meaning, its use for the identification of the boundary of equitys intervention would be a recipe for confusion and uncertainty. These are formidable submissions. It is undoubtedly true that certainty is, or should be, an important element of land law. As Fox LJ said in Ashburn Anstalt v Arnold [1989] Ch 1, at p 26: In matters relating to the title to land, certainty is of prime importance. But certainty is equally important in the law of commerce, and one of the reasons why English commercial law is chosen around the world by commercial counterparties to govern their contracts, even when neither they nor the subject matter have any connection with England. The authorities summarised above, beginning with The Scaptrade, demonstrate that English commercial law has accommodated the concept of possessory rights in relation to personalty as sufficiently defining the boundary of equitys intervention by way of relief from forfeiture, over a wide range of different types of subject matter, including ships and (potentially) aircraft, trademarks and patents, video equipment and shares. If the concept of possessory rights as part of the relevant boundary causes no damaging uncertainty in those widely varied commercial contexts, there is no immediately obvious reason why it should do so in relation to rights over land. The Court of Appeal had no difficulty in identifying a sufficiently certain concept behind the phrase possessory rights in relation to land. Basing himself on JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419, Lewison LJ said, at para 59: There are two elements to the concept of possession: (1) a sufficient degree of physical custody and control (factual possession); (2) an intention to exercise such custody and control on ones own behalf and for ones own benefit (intention to possess). What amounts to a sufficient degree of physical custody and control will depend on the nature of the relevant subject matter and the manner in which that subject matter is commonly enjoyed. The existence of the intention to possess is to be objectively ascertained and will usually be deduced from the acts carried out by the putative possessor While that concept is drawn from a case about adverse possession, it is a practical and workable concept which, although necessarily fact based, involves no inherent uncertainty. I do not accept Ms Hollands submission that the use of the concept of possessory rights in relation to chattels and other personalty in the decided cases equates to something more akin to ownership, and therefore a proprietary interest, in relation to land. As is apparent from the citation from The Scaptrade and Guiseppe di Vittorio cases, the essence of a demise charter which sets it apart from a pure time charter is that it gives the charterer not ownership of the vessel, but possession and control of it. I consider that the frequent use in the decided cases of the words proprietary or possessory as alternatives in relation to rights over personalty clearly points to a recognition that a purely possessory right is something falling short of ownership, or of a proprietary interest. There are to be weighed against MSCCs submission powerful reasons why, now that it is settled that equitable relief may apply to forfeiture of possessory rights in relation to a wide range of chattels and other personalty, it should also do so in relation to possessory rights over land. First, the original proving ground for equitable relief from forfeiture consisted of rights in relation to land, originally, but not only, leases and mortgages. It would be strange indeed if equitys reach was wider in relation to rights over chattels and other forms of personalty than over rights in relation to land. Secondly, as was noted by Robert Walker LJ and Lord Millett in the On Demand case, and by Dillon LJ in BICC plc v Burndy Corpn, there is simply no logic or reason in principle for drawing a distinction as to the type of property in which the rights subsist, when considering the extent of equitys jurisdiction to relieve from forfeiture. If therefore it is the nature of the right rather than the identity of the property over which it may be exercised that matters, then there must be every good reason to apply a jurisdiction applicable to possessory rights as much to rights over land as to rights over other forms of property. I would acknowledge that a recognition that equity may relieve against the forfeiture of possessory rights over real property, falling short of a proprietary interest, means that the simple assumption of the editors of Gray and Gray that relief may never be granted from the forfeiture of a licence calls for re examination. There will be many licences which only grant rights falling short of possession, for which that simple proposition will still hold good. As will appear, the Licence granted in the present case was a very unusual one, both because it granted an element of virtually exclusive possession, coupled with a high degree of control over the locus in quo, and because it was granted in perpetuity. It by no means follows from a conclusion that the rights conferred by this Licence are within equitys jurisdiction to relieve from forfeiture, that licences in relation to land will fall generally within that same boundary. Finally in relation to this issue, while it is essential for the certainty of the law that the scope for equitable intervention on grounds of unconscionability should be delimited by reference to reasonably clear boundaries, they should be identified by reference to a principled understanding of the nature and purpose of the relevant equity, rather than be merely arbitrary. The careful examination and development of the reasons why that boundary should accommodate relief from the forfeiture of possessory rights in the authorities cited above seems to me to be clearly in accordance with that principled approach. By contrast, the slavish adoption of a rule that nothing other than a proprietary interest will do, in relation to land, does nothing of the kind. This may be illustrated in this case by the fact that the Licence granted rights over MSCCs land very similar to, and indeed more extensive than, rights in the nature of an easement. It is common ground that an easement creates an interest in land, so that its forfeiture may be relieved against. There is no principled reason why the perpetual rights granted by the Licence should not do. It is necessary next to address Vauxhalls submission that a better boundary than one which merely accommodated possessory rights would be one which extended the equitable jurisdiction in relation to all forms of right to use property, provided only that the right of termination is intended to secure the payment of money for the performance of other obligations. I would reject this submission as well. It was heavily based upon an over literal reading of Lord Wilberforces speech in Shiloh Spinners Ltd v Harding which, as noted above, did not include as a condition of the existence of the jurisdiction any requirement as to the nature or quality of the rights liable to forfeiture. But he had no reason to do so, since the rights liable to forfeiture in that case amounted to a proprietary interest in land, and the question whether the jurisdiction might extend to any right to the use of property never arose for argument, let alone decision. To expand the ambit of the equitable jurisdiction in that way, leaving all control upon its use as a matter of discretion, would offend against the well recognised need to ensure that equity does not undermine the certainty of the law. Furthermore it would set at nought the careful development of the principled limitation of the jurisdiction to the forfeiture of proprietary or possessory rights, worked out over many years in a succession of broadly coherent authorities. I would however wish to sound one note of caution against the slavish application of the whole of that jurisprudence to land. The requirement, developed in the On Demand and Celestial cases that the possessory right should be one which is indefinite, rather than time limited to a period shorter than the full economic life of the chattel or other species of personal property, may have unintended consequences in relation to land. Chattels by their nature are of limited economic life, and most intellectual property rights, and patents in particular, have their own inherent time limitations. By contrast, land is a form of perpetual property, and I can well conceive of forms of possessory rights in relation to land which are not perpetual, but which might nonetheless qualify for equitable relief from forfeiture. The point need not be decided in this case since, most unusually, this Licence was indeed granted in perpetuity. It is to be noted that the acknowledgment in The Scaptrade that equity might relieve from the forfeiture of a demise charter (which is typically for much less than the economic life of the ship) suggests that even in relation to chattels a rule that the possessory right should be indefinite may go too far. It remains to consider whether the Court of Appeal was right to conclude that the rights granted by the Licence fell within that possessory class to which the jurisdiction to grant relief from forfeiture extends. It is common ground that they conferred no proprietary interest in favour of Vauxhall over MSCCs adjacent land. Ms Holland submitted that the rights also fell short of granting the requisite degree of possession and control over MSCCs land, lying between Vauxhalls treatment works and the Canal itself, to be regarded as possessory in the relevant sense. She emphasised, with force, that this question depended upon the nature of the rights granted, rather than merely upon the extent to which, following the grant of the Licence, Vauxhall rather than MSCC occupied or controlled the Spillway for the purpose of its construction, maintenance and operation. Her main point was that the essence of the right granted by the Licence was that of discharge of surface water and treated effluent, and that the rights to construct, maintain and operate the Spillway were strictly ancillary. The mere right of discharge did not involve possession, let alone exclusive possession, and in any event the terms of the Licence reserved to MSCC a substantial degree of control, over both the construction and maintenance of the Spillway, including a right to have the infrastructure enlarged or rerouted in stated circumstances. Finally, even if the court were to find that Vauxhall had possessory rights in relation to the infrastructure constituting the Spillway, Ms Holland submitted that there was no forfeiture of that right, because Vauxhall was both entitled and indeed obliged to remove and recover the infrastructure on termination of the Licence. These submissions were advanced with equal force before the Court of Appeal, where they constituted the central part of MSCCs case. Giving the leading judgment, Lewison LJ dealt with them with conspicuous care and detail before concluding that the Licence did indeed confer the requisite possessory rights. I have already concluded that the Court of Appeal applied the correct legal test to this question. Beyond that the issue turned on the application of that test to detailed facts, from which this court would be slow to depart from the Court of Appeal unless it was clearly wrong. It is sufficient for the disposal of this last issue for me to say that nothing in Ms Hollands submissions on this point came near to persuading me that Lewison LJs analysis was wrong. On the contrary, if it were necessary to conduct that analysis afresh, I would find it difficult to improve upon his, in particular at paras 66 69 of the judgment. Nonetheless out of respect for Ms Hollands careful submissions, I will provide the following summary of my own reasoning. The starting point is that, as is common ground, the infrastructure works carried out entirely by Vauxhall for the purpose of creating the Spillway became, upon their completion, part of MSCCs land, because they were fixtures. The question therefore is whether Vauxhall had the requisite degree of possession and control of the Spillway itself. In my view it clearly did. The infrastructure consisted largely of underground pipes and chambers which were, in practice, only or at least mainly accessible from Vauxhalls treatment plant. The practical reality was that the Spillway formed an integral part of the infrastructure for the transmission of surface water and treated effluent from Vauxhalls factory site, the remainder of which, including further retaining structures, pipes and a substantial ravine all lay on Vauxhalls land. Although MSCC had certain default rights to intervene if Vauxhall failed adequately to maintain and operate the Spillway, and a right to re route it if it caused difficulties at its point of discharge into the Canal, none of these significantly impacted upon the reality that Vauxhall would be the dominant player in the maintenance and operation of the Spillway once constructed. Of course, the whole of the construction itself was Vauxhalls undertaking. Using the chartering analogy derived from The Scaptrade, far from MSCC providing a service to Vauxhall for the discharge of its surface water and treated effluent, Vauxhall built, operated and maintained that infrastructure, and had exclusive perpetual use of it, subject only to MSCCs right of termination for breach of covenant in clause 5. It is in that context nothing to the point that, by later transactions, Vauxhall permitted MSCC to discharge water from its own land into Vauxhalls treatment works for onward transmission along the Spillway into the Canal. That additional flow became Vauxhalls discharge once it left the treatment works, and in no way detracted from Vauxhall having exclusive use of the Spillway. Finally, there is nothing in Ms Hollands point that, upon termination, Vauxhall was obliged to remove and recover the infrastructure which constituted the Spillway, so that there was no forfeiture. All Vauxhall would recover by the performance of that expensive obligation would be a collection of useless debris. The notion that nothing was thereby forfeited has no foundation in reality. Conclusion For those reasons, I would dismiss this appeal. LADY ARDEN: Issues covered by this judgment I agree with Lord Briggs that relief from forfeiture can be given where the rights in land are possessory only, which was a new point taken in this Court, and that the conclusion of the Court of Appeal that the rights were possessory is unassailable. This judgment considers whether to hold that there is jurisdiction to grant relief from forfeiture in the case of a licence of land where the rights are possessory only introduces an unacceptable element of uncertainty into the law. As to the question of certainty in the law, the present case is relatively unusual because it involves relief from forfeiture in relation to a licence over land, and not a lease where the lessee will have a proprietary interest in the land. However, this licence was not a lease by reason only that it operates in perpetuity and not for a certain time as required at common law. Where in any case relief from forfeiture is given, the party seeking forfeiture will not be able to use the property in the way in which he expected to do in the event of breach, and this may reduce the value and marketability of his asset. The operation of the agreement according to its express terms will be rendered uncertain if the licensee can apply for relief. Thus, it might be said that by allowing relief from forfeiture in respect of rights acquired under a mere licence, which moreover applies a test of possession for that purpose which depends on the successful party establishing a particular state of fact (involving no doubt the consideration of the totality of the relevant facts), the court has produced a situation in which an unacceptable element of certainty has been introduced. In my judgment, this is an important issue with which the court must grapple. It can only be resolved by looking at the loss of certainty resulting from this decision in the wider context of the operation of the doctrine. Standpoint for analysing the relief from forfeiture and the role of equity The doctrine of relief from forfeiture is an equitable doctrine. I would approach it from the standpoint of equity rather than through the prism of property law. Equity is a body of principles which alleviates the strict application of rules of law in appropriate cases. In this case, the relevant rule of law is that the court will enforce the terms of the parties agreement because there is no reason in law why it should not be enforced. Equity serves to finesse rules of law in deserving cases. It thus makes the system of law in England and Wales one which is more likely to produce a fair result than would be possible if equity did not exist. This must surely be one of the reasons why the law of England and Wales is held in high regard in the world. Some uncertainty is inevitable Some element of uncertainty in the application of the doctrine of relief from forfeiture is inevitable. Equity in general operates by principles rather than by rules. That means that relief from forfeiture is not an automatic consequence if particular conditions are fulfilled but instead is given in appropriate cases. It is not a foregone conclusion that once the conditions for relief are shown relief will necessarily be granted and that inevitably means an element of uncertainty about its availability. Another element of inherent uncertainty arises from the fact that the doctrine of relief from forfeiture is a general doctrine and will apply to new circumstances, such as where the court has to deal with a particular form of property, or (as here) interest in or in relation to property, for the first time. The most obvious new circumstances are the creation of new forms of property or interest in property, such as shares in a registered company or aircraft. Thinking ahead, it may be applied in the future to forms of property which only exist in the cybersphere, or to rights which are treated as to all intents and purposes as rights to property (see eg M Solinas Bitcoiners in Wonderland: Lessons from the Cheshire Cat (2019) LMCLQ 433). I note that the view that the law of forfeiture may yet expand in this general area is supported by Professor Ben McFarlane in Snells Equity, 33rd ed (2015), para 13 023, cited by Lewison LJ in his judgment in this case ([2018] EWCA Civ 1100; [2019] Ch 331, paras 50 51). It inevitably follows that there will be respects in which the equitable doctrine of relief from forfeiture will be unfenced. So, while I agree with Lord Briggs that there is a need for there to be certainty in this area of the law, especially in the commercial field, I would go further and conclude that certainty for the purposes of a general doctrine of equity differs from that which results from a hard edged rule of law. As Sir Richard Arden MR explained in Eaton v Lyon (1798) 3 Ves 689, 693, 30 ER 1223: At Law a covenant must be strictly and literally performed: in Equity it must be really and substantially performed according to the true intent and meaning of the parties, so far as circumstances will admit. Types of rights or types of cases? Lord Briggs points out that a mere contractual licence alone would not be enough to give rise to relief from forfeiture. There would typically be an exclusive licence (above, para 46). I agree that it is likely to be necessary to establish possessory rights, but I would go further and hold that the law recognises that there are cases in which equitable relief will not be given even if there is an interest in property of a proprietary or possessory kind. But before I reach that stage, I must retrace my steps and travel over a little of the history of relief from forfeiture. As Lord Briggs explains, equitable relief from forfeiture is a remedy of ancient origin. It is inevitably difficult, given the long history of equity, to say that the doctrine was ever finally constituted in a particular form. Rather it kept evolving as the social and economic life of the nation changed: the law of equity developed and keeps on developing. Questions such as this case raises as to whether particular forms of property interest are or are not within the reach of the doctrine would have no meaning in a society which did not discover the utility of them until later in its history. As time went on, the doctrine applied to both real and personal property and to intangible as well as tangible property, as need arose. I would prefer to express no view on the wider definition of an interest in property involved in the respondents alternative argument since it does not need to be decided on this appeal and has not been fully argued. There is a degree of uncertainty in the concept of possessory rights in relation to land, and it may be that an extension to rights to use property may not involve any significant further degree of uncertainty. The fundamental principle giving rise to relief from forfeiture What then is the principle on which equity acts when it grants relief from forfeiture? The fundamental principle was, as Lord Briggs has said, that equity intervenes to restrain forfeiture where (1) the right had been conferred to secure the performance of some other covenant and (2) although the covenantor had breached his covenant, he was now in a position to perform it and to pay any compensation that might be appropriate: see Peachy v Duke of Somerset (1721) Prec Ch 568; 24 ER 255. These are the preconditions to relief from forfeiture in the sense that they must be present, but they are not necessarily sufficient of themselves to justify the intervention of equity, even putting on one side the exercise of the judges discretion. In the striking phrase of Dr P G Turner in his valuable case note on the decision of the Court of Appeal in this case (entitled What delimits equitable relief from forfeiture?): Equity will only relieve where the security purpose stands ahead of any other. ((2019) 78(2) CLJ 276, 279) Moreover, this was a statement of general principle, not limited to any particular sort of property. Forfeiture and penalties Forfeiture and penalties are often coupled together, and forfeiture and penalties often operated within the same legal and factual space. In Sloman v Walter (1784) 1 Bro Ch C 418, the parties were partners in a coffee house. The plaintiff conducted the business of the coffee house but he agreed with the defendant that the defendant should have the use of a particular room in the coffee house when he required it. This promise was secured by a bond for 500. On one occasion he asked to use it and was refused. The defendant then sued to enforce the bond. Lord Thurlow LC held: the only question was, whether this was to be considered as a penalty, or as assessed damages. The rule, that where a penalty is inserted merely to secure the enjoyment of a collateral object, the enjoyment of the object is considered as the principal intent of the deed, and the penalty only as accessional, and, therefore, only to secure the damage really incurred, is too strongly established in equity to be shaken. This case is to be considered in that light There is no reason to think that the kindred doctrine of forfeiture was restricted to covenants to secure the payment of money any more than penalties. Fluctuations in the doctrine of relief from forfeiture Sometimes the law has developed, and then retraced its steps. Thus, in several cases, the courts decided in favour of granting relief to a tenant who had committed a breach of covenant which did not involve the payment of money, such as cutting timber when he should not have done so. The courts were prepared to grant relief against these breaches just as they did against the payment of rent. But then Lord Eldon LC in Hill v Barclay (1811) 18 Ves Jun 56, 64; 34 ER 238 firmly held that the breach had to be of a covenant to pay money. He held that: The distinction has been taken, that relief may be had against the breach of a covenant to pay money at a given day; but, not, where any thing else is to be done. In all these cases the law having ascertained the contract, and the rights of the contracting parties, a Court of Equity ought not to interfere. This meant that Parliament had in due course to provide by statute for relief against forfeiture for lessees of land, including those who were in breach of a covenant other than a covenant to pay rent, where the lessor was seeking to exercise a right of re entry or forfeiture: see now section 146 of the Law of Property Act 1925. The legislature intervened in relation to leases but its intervention did not mean that relief from forfeiture was not capable of being invoked in cases not covered by legislation, as Lord Wilberforce (with whom the other members of the House agreed) explained in Shiloh Spinners Ltd v Harding [1973] AC 691 at 725. There was an inconclusive discussion at the hearing of this appeal as to whether parties could contract out of forfeiture relief under the general law. In this connection, I note that section 146(12) expressly rules this out in relation to relief under that section. Issue is whether the circumstances satisfy the doctrine not the type of interest Where the conditions described by Lord Briggs (above, para 17) were fulfilled, and assuming that the complainant had some relevant form of entitlement to property which would be affected by the forfeiture, the doctrine of forfeiture applied unless there was some good reason why it should not do so, such as where relief from forfeiture was inconsistent with some statutory right, or the case fell within a class of case where relief was not given. Equity did not, therefore, ask whether the forfeiture would be of a particular type of interest in property. Nor, as far as I can see from the case law, did equity, in the case of tangible movable property, draw arbitrary distinctions between movable and immovable property such as whether the period for which the applicant had any right in the property was for the whole or substantially the whole of its economic life: there can be no doubt that in theory a lease of land in respect of which forfeiture might be given may be for a short period, say a month. No relief from forfeiture for termination under ordinary and lawful commercial bargain So, as it seems to me, the primary question that has to be resolved in relation to the doctrine of relief from forfeiture outside leases of land and mortgages is not what relationships to property it covers but whether the circumstances in which it is sought to be invoked are those in which equity would grant relief. There is no exhaustive list of those cases, but one of them is where the bargain giving rise to the forfeiture is an ordinary and lawful commercial bargain inconsistent with equity granting such relief from forfeiture (unless of course the right involved a penalty). Lord Briggs has already given an example of this namely The Scaptrade. On my approach this does not critically turn on the difference between charters by demise and time charters. The commercial bargain in that case required the time charterer to make his payments timeously and it was well understood between commercial people that the ship would be withdrawn if that did not happen because the shipowner needed the payments to be made timeously in order to provide a fully equipped ship. An earlier case in this field is Sparks v The Company of Proprietors of Liverpool Water works (1807) 13 Ves Jun 428; 33 ER 354, which concerns intangible property, namely the rights conferred by a share. In this case, the plaintiff was a shareholder in a statutory company formed to supply water to Liverpool. The company had issued shares, which were partly paid. Under its articles, calls could be made by notice which was to be a maximum of 21 days. The plaintiff was absent from his address and did not receive notice of the call in question. As he had failed to pay the call, the company could and did exercise an express power in its constitution to forfeit his shares, which was undoubtedly given to secure members obligation to pay calls. The plaintiff brought proceedings claiming that his failure to pay the call had been accidental due to his absence from his home. Sir William Grant MR refused to give relief from forfeiture. He held that if relief from forfeiture was given in such a situation, the company could not carry on its business. He held, at p 434: It is essential, that the money should be paid, and that they should know, what is their situation. Interest is not an adequate compensation, even among individuals; much less in these undertakings. If the company could not forfeit the shares, it would not know whether it could cause the shares to be transferred to anyone else and make calls on them, and it would not have the capital the call was supposed to raise. Sparks v Liverpool Waterworks may also be compared with Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514, which Lord Briggs summarises at para 29 of his judgment. Lord Hoffmann summed up the point in that case in the final sentence of the advice of the Privy Council by saying that the case showed: the need for a firm restatement of the principle that in cases of rescission of an ordinary contract of sale of land for failure to comply with an essential condition as to time, equity will not intervene. I would put Celestial Aviation Trading 71 Ltd v Paramount Airways Private Ltd [2011] 1 All ER (Comm) 259 (discussed by Lord Briggs at paras 33 and 51 above) into this category. Hamblen J there held that the grant of relief from forfeiture of a lease of a chattel which would have significant economic life after the expiry of the lease was outside existing authorities dealing with chattels. He did not consider whether to extend authority because he went on to hold that there was no jurisdiction to grant relief anyway because the termination provision sought to be relieved was not for the purposes of security for non payment of rent and because time for payment was of the essence of the agreement and the owner of the aircraft, which in that case had a residual economic life, had a considerable interest in the timeous performance of obligations and because the grant of relief would cause considerable uncertainty generally (see judgment of Hamblen J at paras 72 to 80). Hamblen J distinguished the earlier case of On Demand Information plc v Michael Gerson (Finance) plc [2003] 1 AC 368 (discussed by Lord Briggs at para 32 above) on the basis that the lessee would retain the goods indefinitely. The point in the On Demand case was that the lessees had sold without giving the requisite notice and in those circumstances they were required to pay to the hirer some 95% of the proceeds of sale which they had obtained for the hired goods on a sale for which they had been unable to complete the approval processes required under the contract. That was clearly a situation in which equity had to intervene. Approach is consistent with Shiloh Spinners The approach explained above is consistent with the law as authoritatively laid down in the Shiloh Spinners case [1973] AC 691 by Lord Wilberforce, with whom the other members of the House agreed. The particular facts are not important. In a magisterial analysis, Lord Wilberforce saw the doctrine as a principle of general application. He held, at p 722: There cannot be any doubt that from the earliest times courts of equity have asserted the right to relieve against the forfeiture of property. The jurisdiction has not been confined to any particular type of case. The commonest instances concerned mortgages, giving rise to the equity of redemption, and leases, which commonly contained re entry clauses; but other instances are found in relation to copy holds, or where the forfeiture was in the nature of a penalty. Although the principle is well established, there has undoubtedly been some fluctuation of authority as to the self limitation to be imposed or accepted on this power. Lord Wilberforces speech went on to describe the debates that had taken place in the early 19th century on different issues. These differences of view as to when equity should or should not grant relief show that the doctrine of relief from forfeiture was not based on some generalised concept of unconscionability but on a detailed and, as Lord Briggs describes it, principled distinction between the different situations which might bring it into contention: Yet even this head of relief has not been uncontested: Lord Eldon LC in his well known judgment in Hill v Barclay (1811) 18 Ves Jun 56 expressed his suspicion of it as a valid principle, pointing out, in an argument which surely has much force, that there may be cases where to oblige acceptance of a stipulated sum of money even with interest, at a date when receipt had lost its usefulness, might represent an unjust variation of what had been contracted for: see also Reynolds v Pitt (1812) 19 Ves Jun 140. Secondly, there were the heads of fraud, accident, mistake or surprise, always a ground for equitys intervention, the inclusion of which entailed the exclusion of mere inadvertence and a fortiori of wilful defaults. Outside of these there remained a debatable area in which were included obligations in leases such as to repair and analogous obligations concerning the condition of property, and covenants to insure or not to assign. As to covenants to repair and cases of waste, cases can be quoted before the 19th century in which relief was granted: see Webber v Smith (1689) 2 Vern 103 and Nash v Earl of Derby (1705) 2 Vern 537. There were hostile pronouncements. In Wadman v Calcroft (1804) 10 Ves Jun 67 both Sir William Grant MR and Lord Eldon LC are found stating it to be clear that relief cannot be given against the breach of other covenants ie than covenants to pay rent. It was soon after that the critical divide or supposed divide occurred, between the liberal view of Lord Erskine LC in Sanders v Pope (1806) 12 Ves Jun 282 and the strict view of Lord Eldon LC in Hill v Barclay. The latter case came to be followed as the true canon; the former was poorly regarded in Lincolns Inn, but it is important to observe where the difference lay. This was not, as I understand it, in any disagreement as to the field in which relief might be granted, for both cases seem to have accepted that, in principle, relief from forfeiture might be granted when the covenant was to lay out a sum of money on property: but rather on whether equity would relieve against a wilful breach. Lord Wilberforce continued, at pp 723 724: [N]o decision in the present case involves the establishment or recognition directly or by implication of any general power that is to say, apart from the special heads of fraud, accident, mistake or surprise in courts exercising equitable jurisdiction to relieve against mens bargains. Lord Eldon LCs firm denial of any such power in Hill v Barclay does not call for any revision or review in this case. Equally there is no need to qualify Kay LJs proposition in Barrow v Isaacs & Son [[1891] 1 QB 417]. I would fully endorse this: it remains true today that equity expects men to carry out their bargains and will not let them buy their way out by uncovenanted payment. But it is consistent with these principles that we should reaffirm the right of courts of equity in appropriate and limited cases to relieve against forfeiture for breach of covenant or condition where the primary object of the bargain is to secure a stated result which can effectively be attained when the matter comes before the court, and where the forfeiture provision is added by way of security for the production of that result. The word appropriate involves consideration of the conduct of the applicant for relief, in particular whether his default was wilful, of the gravity of the breaches, and of the disparity between the value of the property of which forfeiture is claimed as compared with the damage caused by the breach. (Emphasis added) So, significantly, equity did not mend or relieve against peoples bargains, and there were categories of cases in which equity did not grant relief, not just individual cases where the discretion was exercised against the grant of relief. As I have explained, those appropriate and limited cases do not include cases such as The Scaptrade [1983] 2 AC 694, Union Eagle and Sparks where (outside leases of land and mortgages) it was inconsistent with the terms of the parties bargain that there should be any relief from strict performance of the contract if the other party chose to enforce his rights (always provided that those terms were not unlawful, or for example unenforceable as penalties). This is a basic principle of equity for several reasons, and a key element of equitys role in economically significant cases. No unacceptable loss of certainty I have raised the question whether there is an unacceptable loss of certainty involved in applying the doctrine of relief from forfeiture where rights were the subject of a licence. I answer that concern as follows. This case does not alter the underlying approach of equity to claims for relief from forfeiture. Even where the preconditions for forfeiture have been met, relief will not be given if the case falls within one of the categories of case in which equity does not intervene. The inappropriateness of relief from forfeiture is most likely in inconsistent with ordinary and lawful commercial bargain cases, in which the approach of the courts is clear. It is, furthermore, not every type of licence which will be productive of rights in respect of property, as in this case. Further, in this case, the licence was prevented from being a lease only because it was perpetual and if it had been a lease there is no doubt that there would have been jurisdiction to grant relief from forfeiture. Moreover, the extension of the law in this case is a logical development conducive of a coherent legal principle on the basis that the gap between relief in relation to realty and relief in relation to personalty should, as Lord Briggs has explained, be closed so far as possible. In summary, the application of the doctrine to a right arising under a licence is a small step, and it is, as I see it, unlikely to be the case that this development of the law will turn out to involve any significant loss of certainty in what the principle of relief from forfeiture stands for. The circumstances of the present case Passing to the present case, the right given by clause 5 of the licence, which appears to be an adaptation of the right of re entry in a lease, was intended to be a security for the payment of an annual sum of 50. Like Lord Briggs, I consider that the judgment of Lewison LJ contained a most careful analysis of the question whether the licence conferred a possessory right and that there is no basis on which this court should interfere with that conclusion. There is no appeal in this case against the exercise by HHJ Behrens of his discretion to grant relief from forfeiture. Accordingly, on this appeal we have not been concerned with the additional range of factors which the court considers when exercising its discretion to grant relief from forfeiture. This is a large subject and it should not be thought that, since these judgments do not deal with it, it is not also an area of law in which there is a body of authority. I would therefore also dismiss this appeal.
UK-Abs
Vauxhall Motors Ltd has a large manufacturing plant at Ellesmere Port in Cheshire on the banks of the Manchester Ship Canal. When the plant was built in the early 1960s, Vauxhall entered into a contract (the Licence) with the Manchester Ship Canal Company (MSCC) allowing Vauxhall to construct a system of pipes and chambers across MSCCs land (the Spillway) and to drain surface water and treated industrial effluent into the Canal. Vauxhall agreed to pay 50 per year to MSCC in exchange for these rights. Clause 5 of the Licence allowed MSCC to terminate the Licence if (among other things) Vauxhall did not pay its annual rent within 28 days of a demand. Vauxhall duly built the Spillway and has used it for drainage from its Ellesmere Port factory ever since. Its right to use the Spillway is worth several hundreds of thousands of pounds per year. In early 2014, by administrative oversight, Vauxhall failed to pay its rent within 28 days of a demand. On 10 March 2014, MSCC served notice terminating the Licence under clause 5. This meant that Vauxhall faced having to negotiate a new licence at a cost of hundreds of thousands per year for its failure to pay 50. Vauxhall asked the High Court to grant equitable relief from forfeiture. This doctrine allows the court to relieve parties from terms which forfeit their rights in order to secure some lesser primary obligation if they operate harshly. In this case, MSCCs right to terminate under clause 5 was a forfeiture clause which secured Vauxhalls obligation to make an annual payment of 50. HHJ Behrens QC granted relief from forfeiture, effectively reinstating the Licence on condition that Vauxhall paid its arrears and certain other costs. The Court of Appeal upheld his decision. MSCCs appeal to the Supreme Court concerns whether the court had jurisdiction to grant relief on the facts of this case. MSCC argues that in relation to land the courts can only relieve parties from the forfeiture of proprietary rights which would exclude Vauxhalls contractual rights under the Licence. Vauxhall argues the doctrine is broad enough to protect any right to use land. The Supreme Court unanimously dismisses the appeal. Lord Briggs gives the main judgment with which Lord Carnwath, Lady Black and Lord Kitchin agree. Lady Arden gives a concurring judgment. The Court rejects MSCCs argument that, in the context of land, equitable relief is only available for forfeiture of property rights, as opposed to a right to possession under a contract. In the context of personal property (property which is not land), the decided cases suggest that equitable relief is available for forfeiture of proprietary or possessory rights [24]; [28]; [32] [34]. On a proper analysis, possessory rights means something falling short of ownership, or of a proprietary interest [43]. Now that it is settled that equitable relief may apply to forfeiture of possessory rights in the context of personal property, there are powerful reasons why it should also do so in the context of land. First, the doctrine of relief from forfeiture historically developed in the context of land [44]. Secondly, there is no logical or principled reason for distinguishing between rights over land and rights over other forms of property [45]; [76]. Thirdly, MSCCs distinction would lead to arbitrary results. The courts should identify the scope for equitable intervention by taking a principled approach and consider the nature and purpose of its power to grant relief [47]. The concept of possessory rights does not lead to significant uncertainty in the law. It is frequently used in the context of commercial law and there is no immediately obvious reason why it should not be used in relation to rights over land [41] [42]. Therefore, the Court concludes that the courts may relieve against the forfeiture of possessory rights over land. However, the majority rejects Vauxhalls wider argument that relief from forfeiture should extend to all rights to use land [50]. Lady Arden expresses no view on this point because it was not fully argued and is not essential to the appeal [69]. On the facts, this Licence did grant possessory rights to Vauxhall. As the Court of Appeal explained, Vauxhall gained virtually exclusive possession of the Spillway and a high degree of control over it in perpetuity. As a result, Vauxhall was entitled to ask the court for relief from forfeiture of those rights [46]; [48]; [56] [57]; [89] [90]. In her concurring judgment, Lady Arden sets out the underlying principles in detail [60] [91]. On her approach, the key question is not what category of rights are at stake, but whether the circumstances in which relief from forfeiture is sought to be invoked are those in which equity would grant relief [76] [77]. She holds that the extension of relief from forfeiture to possessory rights does not create an unacceptable loss of certainty [88].
This appeal challenges the making of a non party costs order under section 51 of the Senior Courts Act 1981 against the product liability insurer of one of the defendants in litigation being managed under a Group Litigation Order (GLO). Although the particular circumstances which led to the making of the non party costs order may fairly be described as unusual or even rare, they give rise to important questions about the principles upon which the exercise of the courts broad jurisdiction to make such orders should depend, where the non party is a liability insurer, both funding and largely directing the conduct of its insured defendants defence in the relevant litigation. The search for principle is particularly acute where, as here, some but not all the claims in the group litigation fall within the confines of the cover provided by the insurance. In Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, 975 Lord Goff of Chieveley said that it was for the rule making authority making rules of court and for the appellate courts to establish principles upon which the broad discretionary power to make costs orders against non parties should be exercised. As will appear, a series of authorities have sought to lay down some principles regulating the exercise of this discretion against non party insurers. This appeal provides an opportunity to review that developing jurisprudence. The Facts The group litigation which has generated this appeal concerns the supply of defective silicone implants for use in breast surgery, manufactured by the French company Poly Implant Prothse (PIP). One of the defendants, Transform Medical Group (CS) Ltd (Transform) operated medical clinics which supplied and fitted implants manufactured by PIP to customers in England. The appellant Travelers Insurance Co Ltd (Travelers) provided product liability insurance to Transform which covered liability for bodily injury (or property damage) occurring during the period of insurance, which ran from 31 March 2007 to 30 March 2011. Many of those implants ruptured, causing bodily injury (as defined), principally in the form of leakage of their contents. Of the 1,000 or so women claimants joining in the group litigation, some 623 of their claims were brought against Transform, which was one of a number of similar clinics joined as defendants in the litigation. Of the 623 claiming against Transform, some 197 were later identified as having suffered bodily injury from defective PIP implants during the period covered by Travelers insurance. Of the 426 remaining claimants against Transform, all of whose claims fell outside the cover provided by Travelers insurance, some 194 (labelled in the proceedings the worried well) had not yet suffered bodily injury from a rupture of their implants, but were exposed to a risk that they would do in the future. The remainder had suffered bodily injury from a rupture of their implants outside the period covered by Travelers insurance. Collectively, the 426 claimants within those two classes have been labelled the uninsured claimants. They are the respondents to this appeal. Product liability cover was provided by Travelers to Transform under standard form policies which, broadly speaking, required Travelers to indemnify Transform in respect of the costs (and costs liability) incurred or arising in proceedings where the claims made fell within the cover provided and, in relation to such claims, conferred upon Travelers the right to control the conduct thereof on behalf of Transform. Further, Transform was prohibited from making admissions or offers to settle in relation to claims falling within the cover provided by the policies, without Travelers consent. Transform was required to give Travelers all information and assistance which it might require in connection with any such claim. The 1,000 claimants pursued their claims arising out of allegedly defective PIP implants pursuant to a GLO made on 17 April 2012 by Wyn Williams J. The litigation was case managed by Thirlwall J (later LJ) at all material times after October 2012. As is reflected in para 5 of the GLO, it was appreciated from the outset that the claims were likely to give rise to common or related issues of fact and law. Paragraph 12 of the GLO made provision for sharing of common costs (that is all costs other than those which are purely personal to each claimant), on the basis of dividing common costs by the number of claimants pursuing their claims, and for each partys liability for, and entitlement to recover, costs to be several and not joint. By case management orders made in 2013 Thirlwall J identified two common issues for early determination and selected four test claims to be fast tracked for the purposes of their early determination ahead of the remainder, which were all stayed. In order to preserve the anonymity of the claimants I shall refer to them as claims A to D. Transform was the defendant clinic in all four of them. Claims A and B were made by two of the 197 claimants against Transform whose claims fell within the cover provided by the Travelers policies (insured claimants). Claims C and D were by uninsured claimants. Claim C asserted bodily injury falling outside the period of insurance. Claim D was by a worried well claimant. The selection of the test cases was not made by reference to any understanding on the part of the court, or the claimants, about the extent and terms of Transforms product liability insurance from Travelers. It was, therefore, mere happenstance that two of the test claims were insured, and two uninsured. Furthermore, the costs liability and entitlement arising from the litigation of the common issues in the four test claims was itself shared among all 1,000 claimants and, in particular, all 623 claimants against Transform, on a several only basis pursuant to the GLO. Transform had obtained the PIP breast implants supplied to its customers from a company called Cloverleaf Products Ltd (Cloverleaf), against which Transform made a Part 20 claim for an indemnity for any liability of its own to the claimants. Cloverleaf was itself insured by Amlin Corporate Solutions Ltd (Amlin) which provided cover to Cloverleaf in respect of the period 2004 to 2007, for which Transform was itself uninsured. The claimants legal team had from an early stage in the litigation been understandably concerned to discover, if they could, the nature and extent of Transforms insurance cover, all the more so when in about mid 2013 they became aware that Transform might be in financial difficulties. Inconclusive discussions took place between the claimants legal team, the solicitors jointly retained by Transform and Travelers to conduct Transforms defence, and between Transform, Travelers and those solicitors, about what if any disclosure might voluntarily be made. Eventually the claimants made an application against Transform for disclosure of information about its insurance position in July 2013, which was heard by Thirlwall J in late September and dismissed (subject to one exception) in her reserved judgment on 22 November 2013: [2013] EWHC 3643 (QB). The exception was that she directed Transform to inform her, confidentially, as to whether it had the resources to fund its own defence up until trial. In the event however, the relevant limitations upon Transforms cover from Travelers, namely the temporal limits and the exclusion of worried well claims, were voluntarily disclosed to the claimants by June 2014. It was by then apparent that, without insurance, Transform would be unlikely to have the resources to pay compensation or costs to successful uninsured claimants. The judge was later to find that, had the claimants solicitors known from the outset about those limits on Transforms insurance cover, the uninsured claimants would not have commenced or at least continued their claims as registered members of the claimants group under the GLO. But by June 2014 they had on a several only basis participated in the cost of the prosecution of the common issues in the four test cases, upon which considerable outlay had been expended, including on the obtaining of vital expert evidence probative of the deficiencies in the quality of the PIP implants. They had done so on the basis of no win no fee contingency fee agreements, backed by after the event (ATE) insurance so that, although to that extent protected in their own pockets, the substantial recoveries (including success fees and ATE premium) which might be expected to be made after a successful claim against an insured defendant were threatened with being frustrated if the uninsured claimants only recourse lay against the financially distressed Transform (which, incidentally, went into insolvent administration a year later). It might be asked therefore why, after the disclosure of the limitations on Transforms insurance cover was made in June 2014, the uninsured claimants against Transform continued as members of the GLO, or the group as a whole continued to pursue the uninsured test claims C and D. The answer, as was expressly confirmed by Mr Hugh Preston QC on behalf of the respondents in response to an inquiry from the court during the hearing of this appeal, was that an important (although not sole) reason why they did so was in the hope of obtaining a non party costs order against Travelers in due course, if successful in their claims against Transform. Travelers was in the meantime funding the whole of Transforms defence costs, consisting mainly of the costs of defending all four sample claims in relation to the common issues, notwithstanding that claims C and D were uninsured. This is because, in relation to issues common to insured and uninsured claims, it is settled law that insurers may not seek to apportion their contractual liability to pay defence costs: see New Zealand Forest Products Ltd v New Zealand Insurance Co Ltd [1997] 1 WLR 1237 (PC) approved by this court in International Energy Group Ltd v Zurich Assurance plc UK Branch [2016] AC 509, paras 36 38. That much is common ground. In July 2014 Transform sought and obtained Travelers consent to the making of a drop hands offer to the worried well claimants. It does not appear that such an offer was made and, when Transform sought consent to do so again in January 2015, consent was not given. The judge also found (but it is not clear precisely when this occurred) that Transform sought consent from Travelers to make an admission of liability to the uninsured claimants, and that consent for this was not forthcoming either. Meanwhile, an attempt to settle the litigation against Transform by mediation was attempted but without success in August 2014, mainly because Cloverleaf and Amlin declined to participate. In September 2014 the trial of the sample claims listed for October 2014 was adjourned, so as to enable a coverage dispute to be resolved between Transform and Travelers. That was settled in April 2015 and a settlement of all the insured claims against Transform resolved at a mediation in June 2015 in which Cloverleaf and Amlin did participate. Transform was by then in administration and, being fully insured in relation to those claims, the administrators took no active part in the mediation. Final agreement was reached in August 2015, including sample cases A and B, leaving only the uninsured claims outstanding. At that point Travelers obligation to fund defence costs ceased. The remaining uninsured sample claims C and D were eventually determined in May 2016, by an award of summary judgment. By then, all the other uninsured claimants against Transform had obtained default judgment, in March 2016. The section 51 Applications Notice that a section 51 application would be made against Travelers was communicated to Travelers before the uninsured claimants obtained summary judgment against Transform, as described above. It was heard by Thirlwall LJ in October 2016 and determined in an admirably concise reserved judgment handed down on 24 February 2017: [2017] EWHC 287 (QB). The judge reminded herself of the leading general authorities on non party costs orders, to which reference will be made below. She referred only to one first instance case about non party cost orders against insurers, namely Citibank NA v Excess Insurance Co Ltd [1999] 1 Lloyds Rep IR 122, although she noted that it had been followed in later cases. But she distinguished that line of authority on the basis that, uniquely in the case before her, the insurers had participated in the defence of wholly uninsured claims. She therefore directed herself by reference to the general principles relating to non party costs orders namely: (1) whether the case was exceptional and (2) whether the making of an order would accord with fairness and justice. Her decision to make a non party costs order against Travelers was, in summary, motivated by the following analysis. First, she took the view that the uninsured claims were entirely separate and distinct from the insured claims, so that Travelers had no business involving itself in the uninsured claims at all, either directly or through jointly retained solicitors. Secondly, she was powerfully influenced by her conclusion (which is not open to challenge in this court, having been affirmed by the Court of Appeal) that if early disclosure of the limitations on Travelers insurance had been made, the uninsured claimants would not have pursued their claims, so that the costs which they then incurred on a several only basis under the terms of the GLO for which they had no effective recourse, outside section 51, against anyone, would not have been incurred at all. She concluded that the decision not to make early disclosure had been, at least, influenced by a perception on the part of the jointly retained solicitors that non disclosure would serve Travelers rather than Transforms interests, and that the conflict in that regard had been overlooked. Thirdly, the judge was clearly much affected by her perception that there was an asymmetry or lack of reciprocity in costs risk as between the uninsured claimants and Travelers. If the uninsured claims were successfully defended (at Travelers expense) then Travelers would have a full costs recovery against, inter alia, the uninsured claimants for their several shares of that liability. By contrast, if the uninsured claimants were successful against Transform, they would have no recourse at all against Travelers for their costs and, because of Transforms financial plight, no effective recourse against Transform either. Looking at it from Travelers perspective, the presence of the uninsured claimants within the GLO reduced their costs exposure of failure on the common issues by reference to the number of the uninsured claimants against Transform expressed as a fraction of all the claimants against Transform, whereas Travelers would suffer no corresponding reduction in their costs recovery if successful. By contrast, if only insured claimants had proceeded against Transform, Travelers costs risk would have been for the whole of the common costs, and there would have been reciprocity. Finally, the judge regarded Travelers participation in questions about whether to make offers of settlement or admissions to the uninsured claimants as further factors strongly supportive of a conclusion that Travelers had participated in the uninsured claims to an extent sufficient to incur a non party costs liability. The Court of Appeal (Patten and Lewison LJJ) reached the same conclusion as the judge, but for slightly different reasons: [2018] EWCA Civ 1099. They thought that the judge went too far in her conclusion that the uninsured claims had nothing whatsoever to do with the insured claims, because the same common issues arose in both, and Travelers were obliged under the policies (and the general law) to fund the defence of Transforms position in relation to those common issues in all four test cases. They were, if anything, even more powerfully affected by the asymmetry or lack of reciprocity as between the uninsured claimants and Travelers in relation to costs risk. Having described that lack of reciprocity as leading to the fortuitous result that Travelers escaped liability for approximately 68% of the costs of the common issues Lewison LJ continued, at para 12: My instinctive reaction is that this result accords neither with reason nor justice given the probably unique circumstances of this case. He noted that the editors of Colinvaux and Merkin on Insurance Contract Law reached a similar conclusion, namely that reciprocity was appropriate (see para 17). The Court of Appeal broadly upheld the judges factual analysis of the circumstances in which disclosure of Transforms insurance cover was delayed, and its consequences, and (not without hesitation) her conclusion that Travelers should bear responsibility for what she had regarded as the flawed advice given by the jointly retained solicitors, mindless of the underlying conflict of interest between Travelers, which stood to gain from the addition of uninsured claimants, and Transform, which stood to lose from it. But it is clear that the Court of Appeal regarded the reciprocity point as decisive, both because it made the present case exceptional and because it pointed the way to a non party costs order against Travelers as achieving a just result: see para 45, and its reference back to para 32. In conclusion, after an analysis of the cases (referred to below) about non party costs orders against insurers, the Court of Appeal concluded, at para 46, that the judge had been entirely correct to treat the question as depending upon the twin issues of exceptionality and justice, rather than upon any particular principles applicable to non party costs orders against insurers. The Law Section 51 of the Senior Courts Act 1981 (previously known as the Supreme Court Act) provides as follows: (1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in (a) (b) (ba) (c) the civil division of the Court of Appeal; the High Court; the family court; and the county court, shall be in the discretion of the court. (2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings including, in particular, prescribing scales of costs to be paid to legal or other representatives or for securing that the amount awarded to a party in respect of the costs to be paid by him to such representatives is not limited to what would have been payable by him to them if he had not been awarded costs. (3) The court shall have full power to determine by whom and to what extent the costs are to be paid This formulation amends the original language of section 51(1), which was as follows: Subject to the provisions of this or any other Act and to rules of court, the costs of and incidental to all proceedings in the civil division of the Court of Appeal and in the High Court, including the administration of estates and trusts, shall be in the discretion of the court, and the court shall have full power to determine by whom and to what extent the costs are to be paid. It is not suggested that the change of language affects the issues arising in this appeal in any way. It was not initially appreciated that the jurisdiction to determine by whom costs are to be paid (first conferred in those words by section 5 of the Supreme Court of Judicature Act 1890) enabled the court to make costs orders against non parties at all. That was the issue decided in the affirmative by the Aidan Shipping case in 1986, reversing long standing authority consisting of decisions of the Court of Appeal to the contrary in 1901 and 1958. Lord Goffs recognition in that case that it was for the Rules Committee to regulate the exercise of this broad jurisdiction if it thought fit has not been reflected in any rules or practice directions relevant to this appeal. Rather the task of formulating principles for the discretionary exercise of this jurisdiction has fallen to the courts. It is evident (from p 981B in the Aidan Shipping case), and obviously right, that it is a pre requisite for the making of a costs order against a non party that the person sought to be made liable has some relevant connection with the proceedings in question. But the passage of time, and the endless development of novel ways of funding the ever increasing cost of civil litigation, has shown that non parties may become connected with proceedings in a wide variety of ways, usually providing funding and/or exercising some degree of control or providing assistance. They range from the pure funder who contributes to a litigation fund out of sympathy or charity, with no financial or other interest in the outcome, through the company shareholder who funds the companys litigation to preserve the value of his shareholding, or the director who controls the conduct of the litigation pursuant to a fiduciary duty to the company, to the speculator who buys into a piece of litigation with a view to making a profit from a share in the damages recovered. Liability insurers occupy a particular, well populated, space on that broad spectrum. It is therefore not surprising that the appellate courts have struggled to identify principles applicable across the board to the exercise of the jurisdiction to make a costs order against a non party, save at the very highest level of generality, although some attempt has been made, for example by Lord Brown of Eaton under Heywood giving the opinion of the Judicial Committee of the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807, paras 25 29, approved as an authoritative statement of English law by the Court of Appeal in Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 17, para 62. But neither was a case about insurers, and the conduct of the non party relied upon in the Dymocks case for the making against it of a costs order consisted in the main of self interested funding rather than, as here, conduct of the relevant litigation. An earlier attempt to lay down general principles had been made by the Court of Appeal in Symphony Group Plc v Hodgson [1994] QB 179, but that was not an insurance case either. The ratio of that case was that a section 51 non party costs application should not be used as a substitute for the pursuit of a related cause of action against the non party in ordinary proceedings. Beyond that, the particular statements of principle there enunciated have no relevance to this appeal. It is not the purpose of this judgment comprehensively to reassess those generally applicable principles. It may be (and I am reluctantly prepared to assume but without deciding) that they really are limited, as the Court of Appeal thought in the present case, to the twin considerations of exceptionality and justice. The same general conclusion is to be found in the Deutsche Bank case. That said, I share all Lord Reeds concerns as to the lack of content, principle or precision in the concept of exceptionality as a useful test. Rather, this is an occasion to consider, in more granular detail, the principles which ought to apply to that distinct part of the broad spectrum of non parties occupied by liability insurers. While doing so it will be appropriate to make some brief observations about the impact of those general principles in the liability insurance context, and in particular about the role played by the presence or absence of a causative link between the conduct of the non party relied upon and the costs which the applicants incurred which they seek to recover against the non party under section 51. Liability insurance serves an obvious public interest. It protects those incurring liability from financial ruin. More importantly, it serves to minimise the risk that persons injured by the insured will go uncompensated as a result of the insureds lack of means. Unlike ATE insurance it is not primarily aimed at making a profit by assisting in the funding of litigation but, where liability becomes the subject of litigation, the insurance typically contains provision under which the insurer is obliged to fund the insureds defence and, as an inevitable concomitant, entitled to exercise substantial (although not always complete) control over the conduct of its insureds defence. The liability insurer is therefore typically an involuntary rather than voluntary funder of litigation, and the control which the insurer habitually exercises over the conduct of its insureds defence arises from a pre existing contractual entitlement, rather than from a freely made decision to intermeddle. Where a liability for which the insurance policy provides cover becomes the subject of litigation, there are long settled principles of insurance law which, in addition to the contractual terms of the policy itself, serve to regulate the proper participation of the insurer in the funding and, in particular, conduct and control of the insureds case. They long pre date the recognition of the non party costs jurisdiction. They were summarised by Sir Wilfred Greene MR in Groom v Crocker [1939] 1 KB 194, 203, as follows: The right given to the insurers is to have control of proceedings in which they and the assured have a common interest the assured because he is the defendant and the insurers because they are contractually bound to indemnify him. Each is interested in seeing that any judgment to be recovered against the assured shall be for as small a sum as possible. It is the assured upon whom the burden of the judgment will fall if the insurers are insolvent. The effect of the provisions in question is, I think, to give to the insurers the right to decide upon the proper tactics to pursue in the conduct of the action, provided that they do so in what they bona fide consider to be the common interest of themselves and their assured. But the insurers are in my opinion clearly not entitled to allow their judgment as to the best tactics to pursue to be influenced by the desire to obtain for themselves some advantage altogether outside the litigation in question with which the assured has no concern. The combination of the clear public interest in the provision of liability insurance and the fact that, within the above confines of contractual propriety, an insurer commits itself to the funding and control of its insureds litigation long before the dispute in question is even known about, provides a firm basis for concluding that (in the absence of engagement by the Rules Committee) the appellate courts ought to be as clear and detailed as they properly can in setting out the principles applicable to the incurring of non party costs liability by insurers. It would be unsatisfactory if the insurers exposure to that liability, ex hypothesi lying outside the confines of the policy, were to depend purely upon the uncontrolled perception of a particular judge about the general justice of the matter, controlled only by a requirement to show exceptionality, in the general sense that the case in which the question has arisen is unusual, measured against the general run of civil litigation. Cases in which any question of the non party liability of the liability insurer under section 51 arises may be said, almost by definition, to be unusual. This is because, in the vanilla case of a single claim within the scope of the cover provided by the policy, the insurer will be contractually liable to the insured to indemnify it in respect of its costs liability to the successful claimant, who will make a full costs recovery by that indirect route, if necessary (where the insured is insolvent) with the assistance provided by the Third Parties (Rights against Insurers) Act 2010, replacing the earlier Act of the same name in 1930 (the 1930 Act). To treat every case as exceptional where, for any reason, the claimant lacks that indirect means of costs recovery exposes the liability insurer to the unpredictable outcome of the judges perception of justice in every case where a section 51 application is likely to need to be made. The court should therefore be disposed to identify within the requirement for exceptionality something much more focussed than that the facts of the particular case are unusual. Prior to the present case, the reported decisions about non party costs applications against liability insurers do disclose a sustained attempt to provide some measure of guiding principle for the exercise of this wide jurisdiction. In TGA Chapman Ltd v Christopher [1998] 1 WLR 12 the section 51 application was made because the cover was limited under the defendants liability policy and insufficient to pay all the damages, let alone any part of the costs, and the defendant was not worth powder and shot. Nonetheless the claim fell squarely within the cover provided by the policy. It was, in the argot of the present case, an insured claim, and could have been pursued (subject to the limit of cover) directly against the insurer under the 1930 Act if the insurer had not put the defendant in funds (up to the policy limit) with which to settle it. Drawing upon general principles about the section 51 jurisdiction Phillips LJ identified two separate bases upon which a liability insurer might become exposed to non party costs liability. The first basis (by no means limited to insurers) may be labelled intermeddling. Repeating dicta of his own in Murphy v Young & Cos Brewery Plc [1997] 1 WLR 1591, 1601, he said at p 16: In Giles v Thompson [1994] 1 AC 142, 164 Lord Mustill suggested that the current test of maintenance should ask the question whether: there is wanton and officious intermeddling with the disputes of others in which the meddler has no interest whatever, and where the assistance he renders to one or the other party is without justification or excuse. Where such a test is satisfied, I would expect the court to be receptive to an application under section 51 that the meddler pay any costs attributable to his intermeddling. The second, which may be labelled the real defendant test, arose from the combination of the insurers interest in the outcome of the proceedings, its contractual obligation to indemnify the defendant for its costs liability and its exercise of control over the conduct of the defence. In a case where there was no limit of cover which excluded such a contractual obligation in relation to costs he regarded a section 51 order as a convenient time and cost saving short cut to recovery against the insurer of an insolvent defendant under the 1930 Act. He regarded a case where a limit of cover excluded the insurers contractual liability for costs, as it did in that case, as a more complex example of the second type, calling for a more nuanced approach. The claimant company relied upon five features of the case which justified a section 51 order, namely that: (1) the insurers determined that the claim would be fought; (2) the insurers funded the defence of the claim; (3) the insurers had the conduct of the litigation; (4) the insurers fought the claim exclusively to defend their own interests; (5) the defence failed in its entirety. The Court of Appeal agreed. Much the most important consideration, for both purposes, was that the claim had been funded and defended by the insurers purely in their own interests, regardless of the interests of the assured defendant, who had been entirely without means from start to finish, and who would have been content to settle the case at the outset rather than contest it. The insurers were regarded as the real defendants in all but name. In passing Phillips LJ rejected the submission that exceptionality was to be measured by comparison with other insurance cases rather than the generality of cases, and the argument that an insurer who stayed within the bounds of his rights and obligations under the policy should never be exposed to liability beyond the limit of cover by means of a section 51 application. In Citibank NA v Excess Insurance Co Ltd [1999] Lloyds Rep IR 122, the section 51 application was prompted by the reporting of the Chapman case, and decided by Thomas J (as he then was) specifically upon the basis that the continued defence of the quantum of the claim after judgment on liability had been conducted by the insurers solely in their own interests, after the insureds interest in protecting its reputation had been terminated by the adverse judgment on liability. It was another case in which the claim fell within the cover, but the policy limit left the insureds costs liability uninsured. Thomas J said, at p 131: The decision in Chapman has laid down clear principles that a court can apply. If the circumstances are such that the application for a costs order falls within those principles, then it should follow that there should be a costs order under section 51; if they do not, they should not. To my mind, the principles have been formulated in such a way that the cases that fall within them will be exceptional across the spectrum of litigation and thus the primary approach of the court should be to consider whether the principles set out have been satisfied. The principles to which Thomas J was particularly referring are those features of the Chapman case numbered (1), (3) and (4) in the above summary: namely that the insurers decided that the claim should be fought, conducted the defence, and did so motivated entirely by their own interests. They have since come to be known (and were referred to in submissions during this appeal) as the Chapman principles. Cormack v Excess Insurance Co Ltd [2002] Lloyds Rep IR 398 was another case in which a limit of cover triggered the section 51 application. It turned on the proper application of the fourth Chapman principle. The insurers had conducted the litigation for the defendant under a professional indemnity policy, without objection from the defendant, and the outcome was an award of damages and costs which left part of the costs outside the limit of cover. The judge decided that the insurers had not conducted the litigation solely in their own interests, and that the defendant had, throughout, an interest in defending its reputation. Further the insurers conduct of the case had not been the cause of the claimant incurring costs in excess of the limit of cover. He therefore refused the application, for both those reasons. Dismissing the appeal, the Court of Appeal endorsed the judges analysis that the question whether a limit of cover case of this type was exceptional for the purposes of section 51 was likely to depend critically upon the extent of the insurers self motivation in its conduct of the defence, although this was not to be regarded as an invariable rule. Giving the leading judgment, Auld LJ treated the passage in Groom v Crocker (cited above) as setting the bench mark. Insurers who strayed beyond an appropriate balance, as identified by Groom v Crocker, in allowing their interests to predominate over those of the insured might be found to have acted exceptionally, so as to attract the section 51 jurisdiction to make a non party costs order against them. He said that it followed from the Chapman case that this is what could turn an insurer for all practical purposes into the real defendant. In passing the Court of Appeal warned against treating non disclosure of cover as exceptional, because there was no duty to do so, and disclosure might damage the insurers legitimate interests. Finally the Court of Appeal firmly endorsed the need for the applicant to demonstrate that the relevant conduct of the insurer (or some part of it) caused the claimant to incur the costs sought to be recovered from the insurer under section 51. Auld LJ said that the causation question went to the satisfaction (or otherwise) of the exceptionality requirement. Palmer v Palmer [2008] Lloyds Rep IR 535 was essentially an application of the fourth Chapman principle, as interpreted in the Cormack case. The judge had concluded that the insurers conduct of an unsuccessful defence was sufficiently self motivated to make it the real defendant in all but name, and the Court of Appeal dismissed the appeal. It adds nothing beyond repetition to the development of the relevant principles. Nor does Legg v Sterte Garage Ltd [2016] Lloyds Rep IR 390. It was not a limit of cover case, because the policy required the insurers to indemnify the insured defendants costs liability without monetary limit. Further the claimants were entitled to pursue their costs claim in full against the insurers under the 1930 Act. The section 51 issues arose from the fact that the claimants put their nuisance and Rylands v Fletcher pollution claim on two alternative grounds, single escape of fuel and (by a later amendment) long term leakage, when the relevant policy only provided cover against the former. The insurers abandoned the defence when they (mistakenly) thought that the covered basis of claim had been abandoned, but the claimants then secured default judgment on the basis of both. The judge held, and the Court of Appeal agreed, that the insurers had defended the claims solely or predominantly in their own interests, because they were concerned not to defend the insured from all liability, but only from liability for the head of claim covered by the policy, and the insured had no commercial or reputational reason to defend the claim. The Legg case was therefore a conventional application of the fourth Chapman principle, as interpreted in the Cormack case. In the present case the judge appears to have been persuaded that the Chapman principles, which she identified by reference to the Citibank case, were of limited assistance, because the problem facing her was conceptually different from a limit of cover case about an otherwise insured claim. Her approach was rather to examine whether Travelers became involved in the litigation of the uninsured claims which, in her view, had nothing to do with the insured claims or, therefore, with Travelers, who therefore had no business to become involved in them at all. Although she did not say so in terms, she clearly regarded the question whether Travelers should be liable for the uninsured claimants costs as turning upon whether Travelers intermeddled in those claims. She therefore concentrated her analysis of what she called the exceptionality question upon the conduct of the insurers. She was properly alert to the question of causation, and therefore took the trouble to examine whether the non disclosure of the relevant limits of the cover was a cause of the incurring of costs by the uninsured claimants, concluding that it was. For its part the Court of Appeal conducted a review of the Chapman line of cases, concluding that they did not seek to lay down rigid rules, before concluding that exceptionality was established by the unusual nature of the circumstances, in particular the asymmetry or lack of reciprocity between Travelers and the uninsured claimants, rather than by any departure on the part of the insurers from the normal boundaries of conduct summarised in Groom v Crocker, and treated as a useful bench mark in the Cormack case. Analysis The Chapman principles The main thrust of Travelers case is that the decisions of the courts below, for different reasons, wrongly departed from the Chapman principles, thereby exposing insurers to unexpected and unforeseeable liability for costs as a non party in excess of their obligations under the relevant policies, where their own conduct did not depart from the acceptable norm in a way that could properly be described as exceptional, and that the supposed asymmetry or lack of reciprocity as to costs risk between them and the uninsured claimants was neither exceptional in the relevant sense, nor a good reason why an order under section 51 was a just solution. More specifically they say that the reliance of the courts below upon the non disclosure of the policy cover was contrary to principle, and that the other respects in which the judge found that Travelers had overstepped the proper boundaries had no causative consequences in either causing or increasing the uninsured claimants expenditure of costs. Travelers also sought to mount a detailed attack on the judges findings of fact, although they were confirmed by the Court of Appeal. This court would not have considered it appropriate to entertain this part of the appeal (although it was not actively pursued in oral submissions) but, for reasons which will appear, it has been unnecessary to do so in any event. For their part the uninsured claimants say that the judge was right to treat the insured and uninsured claims as completely separate, that the judge was therefore correct to regard any significant involvement by Travelers in the conduct of the defence of the uninsured claims as conduct stepping across the boundary into the exceptional, and that the lack of reciprocity was, on its own, sufficient to justify an order under section 51. In my view the courts in the Chapman line of cases were right to seek to identify clear and reasonably detailed principles, by way of guidelines rather than rigid rules, sufficient to enable liability insurers to know in advance what kind of conduct would, and what would not, be likely to attract non party liability for the costs of successful claimants against their insured defendants, in excess of any relevant policy limits. It may be that Thomas J went a little too far towards elevating the Chapman principles into rigid conditions rather than guidelines, turning what was designed to be a good servant into a poor master. But the underlying perception that a loose requirement for exceptionality was an insufficient protection from exposure to a particular judges after the event perception of the just result was correct, essentially for the public policy reasons identified in para 32 above. I also consider that the two bases under which an insurer might become liable to a non party costs order identified in the Chapman case, namely by intermeddling or becoming the real defendant, do represent a principled approach to the engagement of this jurisdiction against liability insurers, which is much preferable to the quest for factors which may satisfy an elusive concept of exceptionality. Where the claim itself falls within the scope of the insurance, whether or not subject to limits of cover, the real defendant test will usually be the appropriate one to apply. Furthermore the underlying purpose of the Chapman principles, namely to identify in a limit of cover situation the cases where an insurer has become the real defendant in all but name is also correct. As Lord Reed demonstrates, this has been the animating principle behind the jurisdiction of the Scottish courts to make costs orders against non parties for far longer than the parallel jurisdiction has been recognised in England and Wales, at least following the Judicature Acts. The Chapman line of cases make it clear that this is what the principles which they enunciate are designed to reveal. But I am not satisfied that the Chapman principles really assist in relation to a case, such as the present, where the costs sought to be recovered against the insurer arise in the successful conduct against the insured defendant of a claim which lies outside the scope of the cover provided by the insurer: ie an uninsured claim. In such a case it is the intermeddling principle which falls to be applied. This is a principle derived from the English law about maintenance and champerty, as Phillips LJ acknowledged in the Chapman case, and which has no equivalent in Scotland, as Lord Reed explains. Its starting assumption is that non parties usually, although not invariably, have no legitimate interest in becoming involved in the litigation of others. It does not render involvement of any kind objectionable, but only involvement which is (in old fashioned language) wanton and officious, for which the non party cannot demonstrate some justification or excuse. This basis for the costs liability of the non party does not necessarily depend upon showing that it has taken control of the litigation, or done anything approaching becoming the real defendant in it. Nor is there any fixed benchmark which will establish whether involvement has become a form of intermeddling. In every case the nature and extent of the non partys involvement will have to be measured against the alleged justification or excuse for it. In sharp contrast with the real defendant test, the question whether the non party has become involved under a framework of contractual obligation is likely to be of primary relevance. It may even be decisive against liability, especially where the relevant contract is of a type which is recognised and supported by public policy, such as liability insurance. If the non party has not gone beyond the confines of those contractual obligations and attendant rights in framing its involvement, as explained in Groom v Crocker, liability as an intermeddler may be very hard to establish. The key feature of the present case is that every one of the successful claims for which the claimants seek a non party costs order is wholly uninsured. The uninsured claimants can have had no real expectation, if successful, of being paid their costs by the insurers, unless those costs were incurred as a result of some unjustified intervention in their claims by the insurers. This is sufficient on its own to take them out of the proper ambit of the Chapman principles, and to make it necessary to ask whether Travelers involvement in the defence of the uninsured claims amounted to intermeddling. The question is not whether Travelers became the real defendant in each of them, but whether its level of involvement in them was justified and, even if not, whether it caused the incurring by the claimants of the relevant costs. The present case is of course further complicated by the facts that the uninsured claims against Transform were brought in a group action alongside a smaller number of insured claims by different claimants against Transform, together with further claims (whether insured or uninsured) by yet further claimants against other defendants, all raising similar issues to be tried by reference to test cases, with the claimants contributing to, and liable for, costs on a several only basis. It is out of these additional facts (coupled with Transforms insolvency) that the asymmetry or lack of reciprocity in costs risk arose. Asymmetry Lack of Reciprocity This factor, which so deeply affected the courts below, may be summarised by saying that it describes a situation where one side faces having to pay the other sides costs if it loses, but the other side faces no such risk if it loses. Put the other way round, one side gets its costs if it wins, but not the other side if it wins. While it may be said that there is usually symmetry or reciprocity as to costs risk in ordinary civil litigation between solvent opponents, there are numerous situations where this is not so. The opponent may be legally aided. The claimant may have the benefit of Qualified One way Costs Shifting (QOCS). Sometimes the court makes special orders limiting the costs exposure of one side only, for example under the Aarhus Convention. As in the present case, one side may be uninsured and be or become insolvent. In the latter situation there is theoretical reciprocal liability between the parties, but asymmetry in practicable recovery, and therefore risk. The risk of asymmetry when claiming against a defendant of unknown means is aggravated by any uncertainty whether the defendant is adequately insured, and the law does not generally, and did not in this case, enable the claimants against Transform to obtain disclosure of the terms of its insurance cover. Whether that should be the law is not the subject of this appeal. In the present case every one of the claimants against Transform began their claims without knowing whether they were covered by insurance, and continued them in face of increasingly depressing evidence about Transforms impending insolvency. They all took the risk of asymmetric costs exposure and, for a majority of them, namely the respondents, that risk came to pass, as was revealed when Transform voluntarily disclosed the limits of its insurance cover in June 2014, followed by Transform going into insolvent administration in 2015. By contrast the lucky minority made a satisfactory costs recovery, funded by Travelers, when their cases were settled after mediation in August 2015. In my view the reliance placed by the courts below on asymmetry or lack of reciprocity as a factor tending to justify a section 51 order against Travelers was misplaced. My reasons follow. First, leaving aside the incurring of costs by the uninsured claimants, the asymmetry in risk was not itself in any sense the result of any aspect of the intervention in, or conduct of, the defence of the uninsured claims by Travelers. It arose from the combination of the facts that Transform was insolvent, had insurance for only some of the claims, excluding those of the respondents, and that the claimants liability for and therefore entitlement to costs was several only, and extended to the prosecution of the common issues in the test cases. They chose, no doubt for good reason, to undertake that several only costs burden regardless whether their claims were insured, taking the risk that they would not recover their outlay if they were not, even if successful. One consequence of the several only costs liability of each of the claimants is that the costs position of each of the claimants needs to be looked at separately. This is so notwithstanding the fact that, behind the scenes, the claimants may have used common solicitors, CFAs and ATE insurance in a way which greatly modified both their personal costs exposure, and the entitlement of the common solicitors to make a satisfactory costs recovery. Looked at separately, each claimant had either an insured or an uninsured claim against a common insolvent defendant, with all the consequences in terms of reciprocity which that entailed. Non disclosure of Cover The only sense in which anything done or not done by Travelers may be said to have contributed to that asymmetric outcome for the uninsured claimants was that the solicitors jointly instructed by Travelers and Transform played an advisory role in Transforms decision not to disclose the limits of its insurance cover earlier, when the uninsured claimants might have abandoned their claims, and successfully to resist an order for disclosure in 2013. That advice was given in good faith without a perception by the solicitors that there might be (as the judge held that there was in fact) a conflict between the interests of Transform and Travelers in whether to make that disclosure. Still less was the advice motivated in fact by a desire to dilute Travelers costs risk in the defence of the common issues. It was not in any recognisable sense an inappropriate intervention by Travelers in the defence of the uninsured claims, as distinct from the insured claims. The advice was given in relation to the claims against Transform as a whole and was plainly part of the conduct of the defence to the insured claims which Travelers was entitled to control (in the Groom v Crocker sense) just as much as it was part of the conduct of the defence of the uninsured claims. Of course Transform, Travelers and their jointly instructed solicitors knew that the Worried Well claimants claims were not insured, nor were claimants claims falling outside the insurance policy periods, but disclosure could not practicably have been made to the uninsured claimants alone, since all the claimants were represented by common solicitors. Both the judge and (but with less assurance) the Court of Appeal regarded it as right for Travelers to have to take responsibility for that advice. Whether or not that is so, it was advice which fairly reflected Travelers rights as insurer, as was in due course confirmed by the judge, and noted as something not properly contributory to the making of a section 51 order in the Cormack case. It was not conduct which amounted to unjustified intermeddling in the uninsured claims for the purposes of section 51. Causation I have noted above how firmly the Court of Appeal in the Cormack case endorsed the requirement for an applicant under section 51 to demonstrate a causative link between the incurring of the costs sought to be recovered from the non party and some part of the conduct of the non party alleged to attract the section 51 jurisdiction. That requirement is in my view rightly imposed. Auld LJ regarded it as part of the exceptionality requirement. It could equally be seen as going to the justice, or otherwise, of making the order. If the costs would still have been incurred if the non party had not conducted itself in the relevant manner, why should it be just to visit the non party with liability for them? The causation requirement was not the subject of challenge on this appeal. It does not appear to have featured in the other Chapman cases, but their facts suggest that the relevant costs ordered to be paid would not have been incurred, but for the exceptional conduct relied upon. In cases such as the present, where it is the intermeddling test rather than the real defendant test which falls to be applied, the formulation of that test by Phillips LJ in the passage in the Chapman case quoted above clearly incorporates a need to demonstrate causation, since it is the costs attributable to the intermeddling that the meddler is ordered to pay. The judge found that there was a causative link between the non disclosure of the limits of the cover and the incurring of costs by the uninsured claimants. But for the reasons already given the non disclosure was not itself conduct by Travelers in relation to the uninsured claims which falls within the necessary requirement for unjustified intermeddling. It remains to consider whether the other aspects of Travelers conduct in relation to the uninsured claims amounted to unjustified intermeddling and, if so, whether it had any causative consequence in relation to the incurring of costs by the uninsured claimants. The relationship between the insured and uninsured claims The starting point is that the Court of Appeal was right to depart from the judges view that the uninsured claims were totally separate from the insured claims, so that they were no business of Travelers at all. On the contrary, all the claims, insured and uninsured, were being pursued together within a single group action, by common solicitors. All the claims raised common issues which were ordered to be tried together by way of sample test claims. Although there were several defendant clinics, all the test cases were against Transform and, as already noted, it was mere happenstance that two of them (A and B) were insured and two (C and D) uninsured. At the time of the selection of the test claims, the limits of Travelers cover had not been disclosed. Transform were contractually entitled as against Travelers to have the defence of the common issues funded, regardless whether they arose in insured or uninsured claims. Thus Travelers participation in the litigation of the common issues in claims C and D was not unjustified intermeddling in litigation in which Travelers had no legitimate business, but the involuntary engagement which arose from their status as insurers under the policies. Mr Hugh Preston QC for the respondents acknowledged this, up to a point, but submitted that this legitimate role of Travelers in the uninsured claims did not extend to funding the whole of their defence (a point not relied on by the judge) still less to decision making about admissions or offers of settlement (two matters upon which she did rely). While those distinctions may be discernable conceptually, I consider that they are likely to break down in the real world of hostile group litigation, all the more so when, as here, the main issues in the litigation are common to the insured and uninsured claims alike. For example the offer of a drop hands settlement to uninsured claimants might well be taken as a sign of weakness in relation to the merits of the common issues, and therefore a sign of weakness in relation also to the insured claims. Settlement and Admissions Leaving aside non disclosure of the limits of cover, the two aspects of participation by Travelers in the uninsured claims which the judge regarded as crossing the line were involvement in decision making about whether Transform should make a drop hands offer to all the uninsured claimants, or make certain admissions in relation to their claims, in a context where Transform believed, rightly or wrongly, that Travelers consent was required for both, pursuant to the terms of the policies. As noted above, Travelers consented to the making of a drop hands offer to the uninsured claimants in July 2014, but the offer was not then made. Travelers withheld consent in early 2015, and its participation in the decision whether an admission of liability should be made to the uninsured claimants appears also to have occurred some time in 2015, but before the final settlement by agreement of the insured claims, ie at a time when the common liability issues were still live. By 2015 the uninsured claimants knew who they were and had resolved to continue with their claims, notwithstanding the impending insolvency of Transform, in part for the specific purpose of recovering costs already incurred by means of a section 51 application against Travelers. Against that background it is striking that there is no analysis by the judge of the question whether Travelers conduct in relation to settlement or admissions in relation to the uninsured claims had any causative consequence in terms of the expenditure of costs sought to be recovered under section 51. This is in sharp contrast with her careful analysis of causation in relation to the non disclosure of the limits of cover. It cannot be said that (as perhaps in some of the Chapman line of cases), causation was too obvious to need to be mentioned. The Court of Appeal did not appear to place reliance upon this aspect of Travelers conduct, and conducted no causation analysis of its own. It therefore falls to this court to do so, if satisfied that the relevant conduct in relation to the uninsured claims amounts to unjustified intermeddling. That question also needs to be addressed afresh, because of the judges erroneous view that the uninsured claims were entirely separate from the insured claims, such that Travelers had no business being involved in them at all. Had it been necessary to do so I would have concluded that the judge was wrong to regard Travelers involvement in settlement and admissions in relation to the uninsured claims (while the closely related insured claims were still live) as a sufficient crossing of the line to attract a section 51 order, either alone or in combination with any other matters. Contrary to the judges view there were no other relevant matters, because she was (for reasons already given) wrong about non disclosure of the limits of cover. The court should be slow to second guess jointly instructed solicitors where they allow the insurer a role in decision making about claims raising common issues, notwithstanding that some of them, even as here a majority, are uninsured. Although the judge was far better placed as the manager of this litigation than this court to identify the relevant boundaries, her analysis was undermined by her over rigid separation of the insured and uninsured claims into separate camps. I am however content to rest my decision on the absence of any relevant causative link. By 2015 the uninsured claimants were pursuing their claims to a judgment with costs, in part so that they could seek to recover substantial expenditure already incurred by mid 2014 (while ignorant that they were uninsured) by means of a costs order against Travelers under section 51, as Mr Preston acknowledged during the hearing of this appeal. I cannot see how the offer of an admission of liability, still less a drop hands offer (ie with each side paying their own costs) would have dissuaded the uninsured claimants from continuing to incur the cost of obtaining (in the event) default judgment, and summary judgment in relation to test claims C and D, once the insured claims had been settled and Travelers had withdrawn further funding. I would add that there is to my mind at least some element of disingenuity in the respondents stoutly maintaining that, at the relevant time, the uninsured claims had nothing to do with Travelers when they were by then being pursued by the uninsured claimants for the purpose of obtaining a costs order against Travelers in due course. But that reflection was not advanced in the submissions of the appellant, and my decision is in no sense based upon it. Conclusions It may be convenient to draw together the threads of this rather long analysis into some concluding propositions. First, the underlying question, whether the non party has either become the real defendant in relation to an insured claim, or intermeddled in an uninsured claim, is fundamental to the exercise of the section 51 jurisdiction, in insurance cases. It is the conduct of the non party which matters, rather than the mere rarity of the case. Secondly, the Chapman principles are useful guidelines for establishing whether the liability insurer has become the real defendant in all but name, in a case where some part of the claim (including the claim for costs) is or may lie outside the limits of cover, so that the insured has at least a prima facie joint interest with the insurer in the outcome of the litigation. Thirdly , the Chapman principles are not likely to be of assistance where the question is (as here) whether the liability insurers crossed the line in becoming involved in the funding and conduct of the defence of wholly uninsured claims, as opposed to claims where there is limited cover. In such cases the insurer may cross the line by conduct falling well short of total control, and without becoming the real defendant, if the insurer intermeddles in the uninsured claim in a manner which it cannot justify. But, fourthly, where there is a connection between uninsured claims and claims for which the insurer has provided cover, it may well be that the legitimate interests of the insurer will justify some involvement by the insurer in decision making and even funding of the defence of the uninsured claims without exposing the insurer to liability to pay the successful claimants costs. This is just such a case because of the very close connection between insured and uninsured claims, raising common issues to be tried together in test cases in group litigation, and the limited nature of Travelers involvement in the uninsured claims. Fifthly, causation remains an important element in what an applicant under section 51 has to prove, namely a causative link between the particular conduct of the non party relied upon and the incurring by the claimant of the costs sought to be recovered under section 51. If all those costs would have been incurred in any event, it is unlikely that a section 51 order ought to be made. Sixthly, the non disclosure of limits of cover by the defendant at the request of the insurer is unlikely to amount to relevant conduct, for as long as the law continues to make that non disclosure legitimate. Seventhly, asymmetry or lack of reciprocity in costs risk, as between the uninsured claimant and the defendants insurer, is unlikely on its own to be a reason for the making of a non party costs order against the insurer where, as here, the asymmetry arises because a claimant sues an uninsured and insolvent defendant and incurs several only costs liability in group litigation. Applied to this case, those conclusions mean that this appeal should be allowed. This is because, of the three elements of the conduct of Travelers which the judge regarded as crossing the line, the first (non disclosure) was not unjustified intermeddling, although it did cause those costs to be incurred, while the second and third (decision making about offers and admissions), even if amounting to unjustified intermeddling, which I doubt, plainly had no relevant causative consequences. The Court of Appeals alternative route to the judges conclusion, based essentially upon the asymmetry point, was in my view wrong for the reasons already given. LORD REED: I am respectfully in general agreement with the judgment of Lord Briggs, and wish only to make some additional observations directed towards three points. The first is that Lord Briggss conclusion that an award of costs against a non party may be justified where that person is a meddler in the proceedings, or is in substance a party to those proceedings, has historical antecedents in the practice of the English courts. The second is that the real party approach has also been adopted in other comparable jurisdictions. The third is that exceptionality is not in my opinion a necessary pre condition of an award of costs against a non party. Historical antecedents It may be worth explaining at the outset the historical background to the decision of the House of Lords in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, where the scope of the discretion conferred by section 51 of the Senior Courts Act 1981, as it is now known, was held to be sufficiently wide to allow costs to be awarded against persons who were not party to the proceedings before the court. Traditionally, costs were dealt with differently at common law and in equity, although it was possible in both types of proceedings for an award to be made against a person who was not a party to the proceedings, as I shall explain. With the fusion of the administration of law and equity under the Judicature Acts, section 16 of the Supreme Court of Judicature Act 1875 provided for rules of court, contained in the First Schedule to that Act, to regulate proceedings in the High Court and the Court of Appeal. Those rules of court contained, in Order LV, a single general provision regulating the award of costs. The rules scheduled to the 1875 Act were repealed by the Statute Law Revision Act 1883, and new rules, referred to as the Rules of the Supreme Court 1883, were made pursuant to section 19 of the Supreme Court of Judicature Act 1881. Order 65, rule 1 of those rules provided that, subject to the provisions of, among other things, the Judicature Acts and the rules of court, the costs of and incident to all proceedings in the Supreme Court, including the administration of estates and trusts, were within the discretion of the court or judge. In In re Mills Estate; Ex p Comrs of Works and Public Buildings (1886) 34 Ch D 24 it was held by the Court of Appeal that the effect of the Judicature Acts and of Order 65 was not such as to confer any new jurisdiction to award costs, but was merely to regulate the mode in which costs were to be dealt with in cases where the court already had such jurisdiction. Parliament sought to overcome this restrictive interpretation by enacting section 5 of the Supreme Court of Judicature Act 1890, which was the statutory predecessor of section 51(1) of the Senior Courts Act 1981. The language of section 5 of the 1890 Act was, however, itself restrictively interpreted by the Court of Appeal, notably in Forbes Smith v Forbes Smith (1901) P 258 and John Fairfax & Sons Pty Ltd v E C de Witt & Co (Australia) Pty Ltd [1958] 1 QB 323, until the ground breaking decision in Aiden Shipping. Prior to the Judicature Acts, as I have mentioned, costs were dealt with differently at common law and in equity. The general position in common law proceedings was summarised by Blackburn J in Mobbs v Vandenbrande (1864) 33 LJ QB 177,180: In ordinary cases, where there has been no abuse of its process, the court has no jurisdiction to order a person not a party on the record to pay costs. (Emphasis added) In this context, it appears that the concept of an abuse of process was not narrowly confined. That can be seen, for example, in the judgment of Lord Abinger CB in Hayward v Giffard (1838) 4 M and W 194. In that case, the Court of Exchequer refused to make an order for costs against a non party to the action although he was interested in the outcome of the suit. His Lordship said at p 196: If we were at liberty to consult equity and justice, we should probably make this rule absolute. But the authority of the courts at Westminster is derived from the Queens writ, directing them to take cognisance of the suits mentioned in the writs respectively, and thus bringing the parties before them. This being so, they have no power to order any particular individual to come before them at their pleasure. In the present case, if it could have been shewn that Spencer had committed any contempt of Court, or been guilty, in respect of this suit, of anything in the nature of barratry or maintenance, it would have been another matter; but we cannot make any order against an individual who is not party to any suit before us, nor has been guilty of any contempt, but merely because he has an interest in the event of the suit. (Emphasis added) It appears from Lord Abingers reference to anything in the nature of barratry and maintenance that the court could have made an award of costs against a non party who instigated the prosecution of groundless litigation or who intermeddled in proceedings contrary to the laws of maintenance and champerty. There are also a number of examples of awards of costs against non parties which were based on the conclusion that the non party was the real plaintiff or defendant. For example, in Doe dem Masters v Gray (1830) 10 B and C 615, an order for costs was made in an action of ejectment against a parish council which had put a pauper into possession of the premises in question. Lord Tenterden CJ said at p 616: In ejectment we can make the real party to the suit pay the costs. Actions of ejectment could be regarded at that time as being in a special position by reason of the fictitious form of the proceedings, as Lord Abinger explained in Hayward v Giffard at p 197. However, the real party approach continued to be adopted in relation to actions of ejectment even after the fictitious form of action had been abolished by the Common Law Procedure Act 1852. For example, in Hutchinson v Greenwood (1854) 4 El and Bl 324 Lord Campbell CJ stated at p 326 that the court had jurisdiction to order the persons, who really conducted the defence in an action of ejectment, to pay the costs, though they were not parties on the record. Lord Campbell explained this on the basis that the real party had engaged in an abuse of process, stating (ibid): The principle is that the individuals who order an appearance to be entered in ejectment, in the names of those not really defending the suit, abuse our process, and that, as they substantially are the suitors, we have jurisdiction to make them pay the costs. The real party approach was not confined to actions of ejectment. For example, in Hearsey v Pechell (1839) 5 Bing (NC) 466, an action of trespass, the question arose whether the action should be stayed until a non party provided security for costs. Tindal CJ said at pp 468 469: The real question is, whether this is the action of the plaintiff, or substantially the action of Mr Wood [the non party]. If it were an action which the plaintiff would not have brought but for the instigation and countenance of Wood, the case would fall within the principle of Tenant v Brown (1826) 5 B and C 208, and another case in the Court of Kings Bench, where a master was compelled to pay costs for his servant, whom he had put forward as a defendant instead of himself. An example of an award of costs against the real party, in a different type of case from ejectment, is In re Jones (1870) LR 6 Ch 497, which decided, in the words of the headnote, that where a solicitor engages to indemnify the plaintiff in a suit against the costs of the suit, and has the control of the suit, he will be ordered to pay to the defendants their costs of the suit when dismissed. Lord Hatherley LC stated at p 499 that the general principles of the court were perfectly well established upon the point: The view of the court is, that when a solicitor takes upon himself the conduct of a suit by saying that he will indemnify his client against all costs where the plaintiff is a mere puppet, and the real party suing is the solicitor the court will hold the solicitor liable for all the expenses to which he has put the other parties by his conduct. It was said by Sir Montague Smith in the Indian case of Coondoo v Mookerjee (1876) App Cas 186, 212 that the award of costs in In re Jones was based on the courts disciplinary jurisdiction over solicitors, but the next case to be cited suggests that that may be too narrow a view. It is in any event noteworthy that the Lord Chancellors dictum expressly mentions the need for a causal connection between the conduct of the non party and the incurring of the costs for which he was held liable. Another illustration is R v Greene (1843) 4 QB 646, which concerned relator proceedings brought by an indigent plaintiff who had been procured to bring them by an attorney. The reasoning does not however appear to turn upon the fact that the case concerned an attorney. Lord Denman CJ stated at pp 649 650: Nothing, however, is more certain than that this court has in several instances granted costs against persons who have made affidavits without being strictly parties, especially against attorneys, who are considered as being before the court, and, as its officers, bring cases to its notice We take the true rule to be that the court may adjudge from all circumstances who is the party, and give costs against any party, or against an attorney, if the affidavit of the person sought to be charged, or any affidavit produced by an attorney, shews good ground for imposing them upon them respectively. A similar approach can also be seen in cases concerning next friends, such as Palmer v Walesby (1868) LR 3 Ch App 732. In proceedings in equity, the award of costs was discretionary, and was said to be based on conscience and arbitrium boni viri: Andrews v Barnes (1888) 39 Ch D 133, 138. There are numerous cases concerned with the enforcement of awards made against non parties, such as Attorney General v Skinners Co, Ex p Watkins (1837) Coop Pr Cas 1 and Sangar v Gardiner (1838) Coop Pr Cas 262. It is unnecessary for present purposes to reach any definite conclusions as to the circumstances in which, prior to the Judicature Acts, the courts might have made an order for costs against a non party. It can however be seen from the examples cited that such awards were by no means unknown, even if the circumstances in which they were made were special in one respect or another. The position was in my respectful opinion aptly summarised by Mason CJ and Deane J, giving the majority judgment of the High Court of Australia in Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, 190: Having regard to the variety and the nature of the circumstances in which an order for costs was made against a person who was not a party according to the record, we cannot accept that there was before the Judicature Acts a general rule that there was no jurisdiction to order costs against a non party in the strict sense. It is plain enough that the courts from time to time awarded costs against a person who, not being a party on the record, was considered to be the real party. It may be that these cases are capable of being explained on various grounds, including the ground that the non party ordered to pay costs was guilty of abuse of process, taking a very broad view of what constitutes an abuse of process, but to say that does not deny that there was jurisdiction to make an order for costs against a non party even if the jurisdiction was exercised in limited circumstances only. Other jurisdictions (1) Scotland By 1986, when Aiden Shipping was decided and the earlier decisions of the Court of Appeal were overruled, the general understanding that costs could not be awarded against non parties was long established in England and Wales. In Scotland, on the other hand, where the courts have always possessed an inherent jurisdiction to award expenses (in English terminology, costs), the power to make awards against non parties, without the necessity of establishing conduct which would merit condemnation as an abuse of process, has been recognised and exercised continuously since at least the 18th century (see, for example, Leigh v Rose (1792) Mor 4645), and the principles governing its proper exercise have been considered in a substantial number of cases of different kinds. The power to award expenses can be exercised under Scots law against a person who, although not a party to an action, has the true interest in its subject matter and the control and direction of the case. Such a person is known in civilian terminology as the verus dominus litis (the real master of the litigation), or more briefly as the dominus litis. Put briefly and in broad terms, the court is prepared to look beyond the person who is formally a party to the action, and to exercise its power to award expenses on the basis that another person is the real party in all but form: the person, that is to say, who is in reality conducting the suit and interested in its outcome. by Lord Rutherford in Mathieson v Thomson (1853) 16 D 19, 23: In more precise language, the classic description of a dominus litis was given There may be some difficulty in defining exactly what is a dominus litis; but I confess that I very much agree with what has been laid down by your Lordship [Lord President McNeill, later Lord Colonsay], and with the definition quoted from the civil law by Lord Ivory, that he is a party who has an interest in the subject matter of the suit, and, through that interest, a proper control over the proceedings in the action. Now it will not make a person liable in the expenses of an action that he instigated the suit, or told a man that he had a good cause of action, and that he would be a fool if he did not prosecute it, or though he promoted it by more substantial assistance. It will not make him liable in the expenses of the suit that, while he does both of these things, he shall have some ultimate consequent benefit in the issue of that suit. But when you go a step further, and find a party with a direct interest in the subject matter of the litigation, and, through that interest, master of the litigation itself, having the control and direction of the suit, with power to retard it, or push it on, or put an end to it altogether, then you have a proper character of dominus litis; and, though another name may be substituted, the party behind is answerable for the expenses. As appears from that passage, the alleged dominus litis must, in the first place, have the control and direction of the suit, with power to retard it, or push it on, or put an end to it altogether. Lord President Dunedin observed in McCuaig v McCuaig 1909 SC 355, 357 that The true test of whether a party is or is not dominus litis is probably whether he has or has not the power to compromise the action. Control and direction of the proceedings are not in themselves sufficient. The alleged dominus litis must also have an interest in the subject matter of the action. As Lord Rutherford explained in the passage cited from his opinion in Mathieson, it is not sufficient that the non party have some ultimate consequent benefit; rather, he must have a direct interest in the subject matter of the litigation. The interest must, as Lord President Dunedin stated in McCuaig v McCuaig at p 357, be: the true interest in the cause, and by true interest I mean the entire interest, using that term not in the absolute sense, but as denoting the whole interest for all practical purposes. The alleged dominus litis must also, of course, have caused the expense for which he is sought to be made liable. As Lord President Robertson stated in Kerr v Employers Liability Assurance Co Ltd (1902) 2 F 17, 22: The next point is this, what is the ground upon which a dominus litis is made liable in expenses? As I take it, it is simply the ground upon which everybody is made liable in expenses, and it is stated thus by Lord Jeffrey in Irvine v Kilpatrick (1847) 10 D 367 If any party is put to expense in vindicating his rights he is entitled to recover it from the person by whom it was created, that is to say, by whom the expense was created. To the same effect is the opinion of Lord Hunter in Main v Rankin & Sons 1929 SC 40, 43: The principle upon which liability attaches to a dominus litis is the simple one that he is responsible for the expenses which have been caused to the other party in the litigation. It was established long ago that the requirements of a dominus litis might be satisfied by a liability insurer conducting the defence of proceedings in accordance with a policy of insurance. The leading authority on the point is Kerr v Employers Liability Assurance Co Ltd, in which an injured workman who had obtained an award of damages and expenses against his employer sought, after the employer became insolvent, to obtain an award of expenses against the insurer. It was accepted that, under the policy, the insurers had complete control of the conduct of the defence, that they had exercised such control, and that they also had the entire interest in the subject matter of the action. The court found the insurer liable for the expenses of the action on the basis that it was the dominus litis. Lord President Robertson stated at pp 21 22: Now, if anybody other than the person whose name is printed as party in the record can be the dominus litis, I think this assurance company was. To begin with, to the person whose name was used it was immaterial whether the result of the action was success or failure; he was completely covered by his policy of assurance, and accordingly the assurance company very naturally stipulated in their contract that they, and not he, should have the control of the action, and should, of course, incur all liabilities resulting from that position. There are valuable illustrations, in the cases, of the relations which might constitute a man a dominus litis, but I do not cite any of them, for this reason, that I think that not one of them is clearer than, or, indeed, so clear as, the present case, of an assurance company who begin by stipulating that the insured shall give his name to them in order that they may conduct the action, and where, from that point onwards, he has nothing whatever to do with the conduct of the case. Therefore, that the assurance company was the dominus litis in this matter seems to me to be beyond all doubt. Lord Adam reached the same conclusion at p 22 by reference to the opinion of Lord Rutherfurd in Mathieson v Thomson: That the assurance company had an interest in the subject matter of this suit is beyond doubt. They were ultimately liable to the employers for the damages, and a greater interest in this suit they could not have. And, having that direct interest in the suit, they had entire control of it. It is not disputed that the defenders claimed and obtained, as the insuring company, the absolute conduct and control of the suit. Therefore it appears to me that if ever there was a case where a party fell within the definition of Lord Rutherfurd it is this assurance company. Several other cases of a similar kind can be found in the law reports. Claims of that nature have however seldom, if ever, been necessary since the enactment of the Third Parties (Rights against Insurers) Act 1930, now replaced by the Third Parties (Rights against Insurers) Act 2010. I have not found in the reports any example of a Scottish case where the insurer was sought to be made liable beyond its contractual limit of cover or, as in the present case, was sought to be made liable for the expenses of an uninsured claim. In such a case, it would remain necessary to establish that the insurer had control of the conduct of the defence and had the real interest in its success or failure: requirements which might not readily be satisfied. Finally, in relation to Scotland, it is relevant to note that there is no equivalent of the English law of maintenance and champerty. The discussion of intermeddling in the English cases, as the basis of an award of costs, has no equivalent in the Scottish case law. (2) Other common law jurisdictions It is also relevant to note the approach adopted in some other common law jurisdictions in the aftermath of the decision in Aiden Shipping. The position in Australia, in relation to jurisdictions conferring a discretionary power to award costs, analogous to that existing in England and Wales, was considered by the High Court of Australia in Knight v FP Special Assets Ltd. The court held that costs should be awarded against a non party in a general category of case described by Mason CJ and Deane J at pp 192 193: That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non party has played an active part in the conduct of the litigation and where the non party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non party if the interests of justice require that it be made. Later Australian decisions have identified a number of other situations in which an award of costs against a non party may be appropriate, as for example in Kebaro Pty Ltd v Saunders [2003] FCAFC 5. The position in New Zealand was considered by the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Associated Industrial Finance Pty Ltd, Third Party) [2004] UKPC 39; [2004] 1 WLR 2807, and was held to be similar to that in England and Australia. Exceptionality In Symphony Group Plc v Hodgson [1994] QB 179, the Court of Appeal sought to respond to Lord Goffs observation in Aiden Shipping, at p 975, that section 51 of the 1981 Act left it to the appellate courts to establish principles upon which the discretionary power conferred by that provision might be exercised. Balcombe LJ, with whom Staughton and Waite LJJ agreed, listed at pp 192 193 a number of considerations to be taken into account. The first, and the only one which need be considered for present purposes, was the following: An order for the payment of costs by a non party will always be exceptional: see per Lord Goff in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, 980F. This dictum has been treated in some later cases as imposing a requirement of exceptionality before an award of costs can be made against a non party. Such a requirement or pre condition would not, however, reflect the true import of the dictum on which Balcombe LJs observation was based. What Lord Goff said was this: In the vast majority of cases, it would no doubt be unjust to make an award of costs against a person who is not a party to the relevant proceedings. But, as the facts of the present case show, that is not always so. Lord Goff was not suggesting that exceptionality was a pre condition. He was merely observing that cases in which it is just to make a non party costs order form only a small proportion of the total. It is obvious that, as a general rule, orders for costs are made only against a party to the proceedings. That is because, in general, persons who are not parties do not have a sufficient connection with the proceedings to provide a proper basis for them to be held liable for the costs of the litigation. There are, however, circumstances in which considerations of justice may, in accordance with general principles, justify such an award against a non party. Such cases might be described as exceptional in the sense that their outcome involves a departure from the general rule that orders for costs are made against a party to the proceedings, but not in the sense that their determination depends on the identification of some unique or extraordinary feature. Indeed, exceptionality can scarcely be in itself an intelligible criterion for the making of a non party costs order. A case may be exceptional in respects which have no bearing on the appropriateness of a non party costs order. The case of Donoghue v Stevenson [1932] AC 562, for example, was exceptional in that it concerned a snail. It was also exceptional in that it raised a point of law of the greatest importance. Neither of those factors would have rendered it a suitable case for an award of costs against a non party, if such a question had arisen. In order for such an award to be appropriate, there would have to be some factor present which justified the making of the award. What is necessary, therefore, is to identify the relevant factor or factors. In TGA Chapman Ltd v Christopher [1998] 1 WLR 12, Phillips LJ, in a judgment with which Waller and Mummery LJJ agreed, sought to reformulate the relevant principles, refining his earlier analysis in Murphy v Young & Cos Brewery [1997] 1 WLR 1591. As Lord Briggs has explained, he identified two separate bases on which a non party costs order might be made against a liability insurer: first, that he had intermeddled in the proceedings, or secondly, that he had the control and direction of the proceedings, and the true interest in them, so as to render him the real defendant. He listed at p 20 five factors which were held to make an award of costs against the liability insurer appropriate: (1) the insurers determined that the claim would be fought; (2) the insurers funded the defence of the claim; (3) the insurers had the conduct of the litigation; (4) the insurers fought the claim exclusively to defend their own interests; (5) the defence failed in its entirety. Those factors, which were also present in the Scottish case of Kerr discussed at paras 100 101 above, established control of the proceedings, the real interest in the subject matter of the proceedings, and causation of the plaintiffs costs. Phillips LJs observation at p 21 that in reality, it is the insurers rather than Mr Christopher who are the defendants also expresses in English the idea conveyed in Latin by the expression verus dominus litis. Phillips LJ also clarified the issue of exceptionality. Having listed the features of the case which made it appropriate to make a non party costs order, he added at p 20: In the context of the insurance industry, the features to which I have just referred may not be extraordinary. But that is not the test. The test is whether they are extraordinary in the context of the entire range of litigation that comes to the courts. The later English decisions concerned with liability insurers are mostly consistent with the approach adopted in Chapman, as Lord Briggs has explained. In addition to the cases cited by Lord Briggs, I would mention in addition the case of Globe Equities Ltd v Globe Legal Services Ltd [1999] BLR 232, where Morritt LJ, in a judgment with which Butler Sloss and Sedley LJJ agreed, observed that the supposed requirement of exceptionality was based on what had been said by Lord Goff in Aiden Shipping, and should not be elevated into a precondition to the exercise of the power conferred by section 51. Echoing Phillips LJ in Chapman, he commented, at para 21, that the exceptional case is one to be recognised by comparison with the ordinary run of cases where the party is pursuing or defending the claim for his own benefit through solicitors acting as such. That was also the approach of Lord Brown of Eaton under Heywood, giving the advice of the Judicial Committee of the Privy Council in Dymocks Franchise Systems (NSW) Pty Ltd v Todd (Associated Industrial Finance Pty Ltd, Third Party). In a dictum subsequently repeated by the Court of Appeal in Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23; [2016] 4 WLR 17, para 62, he stated at para 25: Although costs orders against non parties are to be regarded as exceptional, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. So understood, exceptionality is in reality of little if any significance, since no judge would contemplate making a non party costs order in the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. LORD SUMPTION: The common law has an instinctive reluctance to make orders in private law litigation which affect non parties, but also a long standing aversion to the unjustified interference by non parties in other peoples litigation. The first of these instincts is founded on elementary principles of justice. Non parties may well have a more or less direct commercial interest in the outcome but do not thereby assume the risks associated with contested litigation. Nor are they bound by rules of practice in the way that parties are. At the same time, there are cases where a person who is not on the record may nevertheless be the real party. He may, for example, be an equitable assignee or, arguably, a subrogated insurer, or have some other interest entitling him to litigate in the name of another. The second instinct depends for its practical application on what constitutes interference and what is unjustified, large questions which vary with changing attitudes to litigation. Historically, it arose from the concern of the law with the implications of contested litigation for public order, but is now founded mainly on a purely procedural concern for the fair and efficient conduct of court proceedings. In the context of costs orders against non parties, the first instinct is reflected in Lords Briggss real defendant test, and the second in what he has called the intermeddling test. I agree with this taxonomy, and more broadly with Lord Briggss analysis of the principles and their application to this case. We are concerned on this appeal with the position of a liability insurer exercising a contractual right to direct the conduct of the defence on behalf of his assured. The relationship between a liability insurer and his assured has a number of specific features which are not necessarily common to other cases in which costs orders are sought against non parties. In the first place, although the insurer is potentially liable to meet a third partys claim against his assured, that liability is owed only to his insured and not directly to the third party, subject to special statutory regimes such as that applicable to insolvent assureds under the Third Parties (Rights against Insurers) Act 2010. In this respect English law differs from many civil law systems which allow direct actions against insurers as a matter of course. Secondly, the insurer is not even liable to his assured during the litigation, since his liability arises only once the assureds liability has been ascertained by judgment, award, admission or agreement. Thirdly, the insurers contractual right to direct the conduct of the litigation, which is an almost invariable incident of liability policies, is a form of compulsory agency. It is a right to direct it in his assureds interest, and not his own, even though their interests will usually coincide. The solicitor whom he appoints is the assureds solicitor, who owes all the usual professional duties to the assured and is entitled to look to the assured for his fees, notwithstanding that his instructions come from the insurer. These features, and particularly the last, mean that the insurer cannot be regarded as the real defendant. He is simply in a position where (i) by virtue of his contractual obligations to the assured, he is liable to suffer a detriment if the assured loses; and (ii) by virtue of his contractual right against his assured, he is entitled to direct the conduct of litigation in his assureds interest. Both are common to other relationships which non parties may have with a defendant without necessarily being at risk in costs, for example his solicitor or other litigation agent in case (i), or a liquidator bringing a claim in the companys name in case (ii). Neither factor is any concern of the claimant, whose concern is only with the defendant. The claimant may hope or even expect the defendant to be insured. But he has no legally recognised right to proceed on that basis and must accept the risk, commonplace in litigation, that he is not. That leaves unjustifiable intermeddling as the only basis on which a liability insurer might be at risk of having a costs order made against him. Cases in which a costs order may be made against a liability insurer on this basis are likely to be rare. What may make a non partys involvement in litigation an unjustified intermeddling is the absence of any interest in the litigation recognised by the law. That need not necessarily be a legal interest. But a liability insurer has an obvious legal interest in the performance of his contractual duties under the policy and the exercise of his contractual rights. Of course, that interest is limited to the defence of insured claims and different considerations may arise if he steps outside that role. But, as the present case illustrates, where insured and uninsured claims are at issue in the same litigation, the proper defence of insured claims may involve steps which directly or indirectly affect uninsured claims. This is an area in which a person conducting or directing the conduct of litigation is entitled to a large margin of judgment and hindsight is not usually an adequate tool for assessing how he exercises it. If he acts in good faith in the interest of the assured qua the defendant to insured claims, he should not incur liability in costs. As at present advised, I would expect this to be equally true of the case where the potential liability of the assured is subject to a limit of cover which is exceeded, but that is not an issue which needs to be examined on this appeal because it does not arise on the facts. I too would allow this appeal.
UK-Abs
This appeal is about who should pay the legal costs of 426 claimants who successfully sued a medical group for the supply of defective silicone breast implants. It allows the Supreme Court to review the principles concerning third party costs orders. 623 claims were brought against Transform Medical Group (CS) Ltd (Transform), a medical clinic which had supplied implants manufactured by Poly Implant Prothse (PIP). Transform had insurance cover with Travelers Insurance Co Ltd (Travelers) in relation to claims brought against it. Travelers funded the whole of Transforms defence. It did not disclose until a relatively late stage that a substantial number of claimants were uninsured. The insurance policy only covered the claims of 197 claimants who suffered from a rupture of their implants between 31 March 2007 and 30 March 2011. Transform was uninsured in respect of the claims of the remaining 426 claimants. The uninsured claimants are the Respondents to this appeal. Transform entered insolvent administration half way through the litigation. The insured claims were settled by an agreement made in August 2015 and Travelers paid an agreed proportion of the damages and costs attributable to those insured claims. This left the insured claimants in a much better position than the uninsured claimants who had obtained a judgment but recovered no damages or costs from Transform at all. The 426 uninsured claimants applied to the court for an order that Travelers pay their costs. Lady Justice Thirlwall, sitting in the High Court, held that Travelers should be ordered to pay them. The Court of Appeal (Lord Justice Lewison and Lord Justice Patten) reached the same conclusion for slightly different reasons. Travelers appealed to the Supreme Court. The Supreme Court unanimously allows Travelers appeal. Lord Briggs gives the main judgment, with which Lady Black and Lord Kitchin agree. Lord Reed and Lord Sumption each give a concurring judgment. The court has a general power to order non parties to pay costs under section 51 of the Senior Courts Act 1981 [25] [26]. In the context of liability insurance, it is important for the courts to apply clear and reasonably detailed principles so that liability insurers can understand their position. It is not enough for the courts to ask whether the case is exceptional because this would not provide adequate certainty [33]; [51]. Broadly speaking, the authorities reveal two approaches to deciding whether a third party should pay costs: (1) whether the third party took control of the litigation and became the real defendant; and (2) whether the third party engaged in unjustified intermeddling. The real defendant test, as explained by the Court of Appeal in TGA Chapman Ltd v Christopher [1998] 1 WLR 12, provides useful guidelines for cases where insurance exists but some part of the claim (including the claim for costs) lies outside the limits of cover [48] [53]. However, it is inappropriate in cases like this where the claims are wholly uninsured [54]. In such cases, the appropriate question is whether the insurer engaged in unjustified intermeddling in litigation to which it was not a party. If the insurer has acted within a framework of contractual obligation, it may be very hard to establish that it has intermeddled [55] [56]; [78]. It will usually be necessary to establish a causative link between the insurers involvement and the claimants incurring of costs [65] [67]; [80]. In this case, all the claims were pursued within a single group action by common solicitors. They involved common issues which were being tried together in four test claims (which, as it turned out, comprised two insured and two uninsured claims) [68]; [79]. Travelers had a legitimate interest in Transforms defence of the insured claims and, consequently, in Transforms defence of the test cases and common issues. Travelers involvement was the natural result of its status as an insurer and did not amount to unjustified intermeddling [69]. The courts below relied on a number of specific instances of Travelers conduct. However, none of them crossed the line into unjustified intermeddling: (1) Non disclosure of the limits of cover. Travelers and Transforms solicitors advised Transform not to disclose the limits of its insurance cover. However, as the law stands, parties are not legally obliged to disclose the details of their insurance [59]. The advice about non disclosure fairly reflected Travelers rights relating to the insured claims [63] [64]; [81]. (2) Offers and admissions. Travelers was involved in Transforms decisions not to make offers of settlement or admissions to the uninsured claimants [70] [71]. If necessary, the court would conclude this involvement was justified but in any event, it did not cause the claimants to incur costs. By 2015 the uninsured claimants were determined to pursue their claims to a judgment with costs, and an offer to settle without paying their costs would have made no difference [73] [74]. (3) Asymmetry of risk. The Court of Appeal was concerned by the fact that the uninsured claimants faced failing to recover their costs if they won, whereas Transform could have recovered its costs if they had failed [58]. However, this asymmetry was not the product of Travelers intervention. It resulted from the fact that Transform was insolvent and largely uninsured, and the claimants liability for costs was several only (i.e. each claimant was independently liable for a small proportion of the overall costs) [61] [62]; [82]. Therefore, the courts below were wrong to order Travelers to pay the uninsured claimants costs [83]. Concurring judgments of Lord Reed and Lord Sumption Lord Reed reviews the historical position in England, Australia and New Zealand relating to third party costs orders [85] [93]; [106] [112] and compares this to Scotland, where the courts may order expenses against a third party who has acted as the real master of the litigation, and where there is no equivalent concept to intermeddling [94] [103]. Lord Reed adds that the suggestion that a costs order must be exceptional has little, if any, significance [106] [112]. Lord Sumption discusses the intermeddling and real defendant approaches. He suggests that cases in which an insurer has engaged in intermeddling are likely to be rare, and an insurer who acts in good faith in relation to insured claims should not incur liability in costs [113] [116].
This appeal concerns the type of investments which those who administer the local government pension scheme are permitted to make or to continue to hold. More particularly, it concerns the breadth of the ethical investments which they are permitted to make or to continue to hold. By an ethical investment, I mean an investment made not, or not entirely, for commercial reasons but in the belief that social, environmental, political or moral considerations make it, or also make it, appropriate. Parliament has conferred on the respondent, the Secretary of State for Housing, Communities and Local Government (the Secretary of State), the power to issue guidance in relation to some of the functions of the administrators of the scheme, in accordance with which they are required to act. The issue arises out of two passages in the guidance which he has issued to them in relation to their making or continuing to hold ethical investments. By the second passage, which, as I will show, covers the ground covered by the first and indeed goes further, the Secretary of State provides that they [s]hould not pursue policies that are contrary to UK foreign policy or UK defence policy. The claim is that the issue of that guidance was unlawful. It was lawful only if it fell within the power conferred by Parliament on the Secretary of State. The issue therefore requires the court to analyse the scope of the power. Pursuant to the decision of the House of Lords in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997, the court must analyse the power by construing the words by which it was conferred on him in their context. From the words in their context Parliaments purpose in conferring the power can be identified; and the purpose will illumine its scope. The Proceedings The claim for judicial review of the two passages in the guidance was launched by, and in this appeal continues to be pursued by, two claimants. The first is Palestine Solidarity Campaign Ltd. This company is dedicated to campaigning both in support of the rights of the Palestinian people, in particular by challenging Israels occupation of the disputed territories, and in opposition to racism in all its forms, including antisemitism as well as islamophobia. The second is Ms Jacqueline Lewis, who is not only a member of the companys executive committee but also an employee of a local authority and a member of its pension scheme. The claim raised issues in relation to the guidance other than the issue identified above; they were determined, adversely to the claimants, in the lower courts and can now be ignored. On 22 June 2017 Sir Ross Cranston, sitting as a judge of the Administrative Court of the High Court of England and Wales, upheld the claim by reference to the issue identified above and declared the two passages in the guidance under challenge to be unlawful: [2017] EWHC 1502 (Admin), [2017] 1 WLR 4611. But on 6 June 2018 the Court of Appeal, by a judgment delivered by Sir Stephen Richards with which Davis and Hickinbottom LJJ agreed, upheld the Secretary of States appeal; set aside the declaration made by Sir Ross; and dismissed the claim: [2018] EWCA Civ 1284, [2019] 1 WLR 376. It is worthwhile to record that, in support of the application of the claimants for permission to appeal to our court, submissions were filed by the Religious Society of Friends in Britain, known as the Quakers, and by the organisation known as Campaign Against Arms Trade. The Local Government Pension Scheme The existing local government pension scheme (the scheme) is a statutory occupational pension scheme established by regulations made under section 7 of the Superannuation Act 1972 (the 1972 Act) and having effect as if made under the Public Service Pensions Act 2013 (the 2013 Act). Pursuant to the scheme, authorities in England and Wales, which can conveniently (albeit not entirely accurately) be taken to be local authorities, administer some 89 distinct funds, which are kept separate from other local authority resources. In its capacity as an employer, a local authority makes contributions into the pension fund referable to its employees, as do its employees themselves. The scheme provides statutorily defined pension benefits for about 5m past and present employees, referable in particular to their age, their pensionable earnings and their years of service. Therefore their benefits do not vary in accordance with the changing value of the fund in relation to them. A local authority is required to set contributions at a level appropriate to ensure its funds solvency; and, were the fund to prove insufficient to meet its obligations to pay pensions to its employees, a local authority might be required to make increased contributions into it. The scheme is thus structurally different from other public sector pension schemes under which payment is unfunded, in other words made not out of ring fenced funds but out of the overall resources of central government. If we consider first the 2013 Act and then the regulations relevant to this appeal which were made under it, we will be able to drill down into the guidance issued pursuant to them which is under challenge. The 2013 Act, which came mainly into force on 1 April 2014, provides by section 1(1) that regulations may establish schemes for the payment of pensions and other benefits to persons specified in subsection (2), which at (c) identifies local government workers for England, Wales and Scotland. By section 2(1) and paragraph (3)(a) of Schedule 2, these so called scheme regulations may, insofar as they relate to local government workers in England and Wales, be made by the Secretary of State as the so called responsible authority. It follows that this appeal does not relate to such regulations as establish the scheme referable to local government workers in Scotland, nor for that matter to those in Northern Ireland, in relation to whom nothing akin to the guidance under challenge seems to apply. Section 3 of the 2013 Act provides as follows: (1) Scheme regulations may, subject to this Act, make such provision in relation to a scheme under section 1 as the responsible authority considers appropriate. (2) That includes in particular (a) provision as to any of the matters specified in Schedule 3; (b) consequential, supplementary, incidental or transitional provision in relation to the scheme Section 3(2)(a) therefore sends us to the matters specified in Schedule 3, in which there is reference in paragraph 1 to eligibility and admission to membership; in paragraph 2 to the benefits which must or may be paid under the scheme; in paragraph 3 to the persons to whom benefits under the scheme are payable; in paragraph 9 to contributions; in paragraph 11 to funds; and in paragraph 12 to the following: The administration and management of the scheme, including the giving of guidance or directions by the (a) responsible authority to the scheme manager On 1 April 2014, when the 2013 Act came mainly into force, the regulations also came into force which established the existing scheme and which, as already explained, had effect as if made under that Act. They were entitled the Local Government Pension Scheme Regulations 2013 (SI 2013/2356). They made provision for the functioning of the scheme in numerous respects. Prior to 1 November 2016, however, the management and investment of funds within the scheme continued to be subject to regulations which had been made in 2009. It was only on that day that the latter were replaced by the regulations relevant to this appeal, namely the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 (SI 2016/946) (the 2016 Regulations), which were duly made pursuant to sections 1 and 3 of, and to Schedule 3 to, the 2013 Act, as set out above. The guidance partly under challenge, to which I will later turn, took effect on that same day, 1 November 2016. I refer to the guidance at this stage only in order to quote from part 1 of it an interesting passage as follows, which illumines one of the aims of the 2016 Regulations themselves: One of the main aims of the [2016] regulations is to transfer investment decisions and their consideration more fully to administering authorities within a new prudential framework. Administering authorities will therefore be responsible for setting their policy on asset allocation, risk and diversity, amongst other things. In relaxing the regulatory framework for scheme investments, administering authorities will be expected to make their investment decisions within a prudential framework with less central prescription. Regulation 7 of the 2016 Regulations, entitled Investment strategy statement, provides: (1) An authority must, after taking proper advice, formulate an investment strategy which must be in accordance with guidance issued from time to time by the Secretary of State. (2) The authoritys investment strategy must include a requirement to invest fund money in a wide the authoritys assessment of the suitability of (a) variety of investments; (b) particular investments and types of investments; (c) the authoritys approach to risk, including the ways in which risks are to be assessed and managed; (d) the authoritys approach to pooling investments, including the use of collective investment vehicles and shared services; the authoritys policy on how social, (e) environmental and corporate governance considerations are taken into account in the selection, non selection, retention and realisation of investments; and (f) the authoritys policy on the exercise of the rights (including voting rights) attaching to investments. By this stage, therefore, we have noticed, at para 7 above, that the 2013 Act enables the making of regulations which provide for the administration and management of schemes, including for the issue of guidance in that regard; and, at para 9 above, that the 2016 Regulations, clearly falling within that enabling power, require an administering authority within the local government scheme to formulate an investment strategy which accords with what they describe as guidance but which is in fact mandatory. The guidance The guidance, entitled Local Government Pension Scheme: Guidance on Preparing and Maintaining an Investment Strategy Statement, was issued by the Secretary of State on 15 September 2016. It was issued pursuant to regulation 7(1) of the 2016 Regulations, and it was thus to take effect when the regulations did so, namely on 1 November 2016. The express focus of the guidance was the formulation, publication and maintenance by administering authorities of their investment strategy statement. On 30 June 2014, some two years prior to the issue of the guidance, the Law Commission of England and Wales had, following consultation, published a report entitled Fiduciary Duties of Investment Intermediaries (2014) (Law Com No 350). The government had generally accepted the Commissions recommendations; and, as will become clear, the report, which in places specifically addressed the local government scheme, clearly influenced the drafting of part of the guidance. It is therefore worthwhile to keep in mind the following statements in the report: (a) at para 4.3(3), that the local government scheme was not technically a trust but that at a practical level the duties of those managing its assets were similar to those of trustees; (b) at para 4.79, that in practice administering authorities under the scheme considered themselves to be quasi trustees, acting in the best interests of their members, and that, insofar as they might consider whether to take account of wider or non financial factors in relation to investment, the rules applicable to pension fund trustees should also apply to them; and (c) at para 6.34, in relation to investment decisions by trustees, that In general, non financial factors may only be taken into account if two tests are met: trustees should have good reason to think that (1) scheme members would share the concern; and (2) significant financial detriment to the fund. the decision should not involve a risk of The Secretary of States guidance individually addresses each of the six topics which regulation 7(2) of the 2016 Regulations requires to be included in an authoritys investment strategy. The appeal concerns its address of the fifth topic, set out at (e) of para (2), which for convenience I set out again: the authoritys policy on how social, environmental and corporate governance considerations are taken into account in the selection, non selection, retention and realisation of investments; The reference to corporate governance considerations appears to relate to assessing investment in a company by reference to the quality or otherwise of the manner in which it is governed and operated, including no doubt its treatment of its workforce. The guidance in relation to the fifth topic comprises text, which is followed by a Summary of requirements. It is convenient to divide the relevant part of the text into three sections. This is the first section of the relevant part of the text: Although administering authorities are not subject to trust law, those responsible for making investment decisions must comply with general legal principles governing the administration of scheme investments [S]chemes should consider any factors that are financially material to the performance of including social, environmental and corporate governance factors, and over the long term, dependent on the time horizon over which their liabilities arise. investments, This is the second section of the relevant part of the text: However, the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government. This part of the guidance, which I present in bold, is the first of the two passages in it under challenge. It begins by stating that the Government has made clear that . At the hearing of the appeal we asked where and in what circumstances the government had made [it] clear. In answer we were referred to a Procurement Policy Note, Information Note 01/16, issued by the Crown Commercial Service on 17 February 2016. It is entitled Ensuring compliance with wider international obligations when letting public contracts. It suffices to set out para 1: This [Note] sets out contracting authorities international obligations when letting public contracts. It makes clear that boycotts in public procurement are inappropriate, outside where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government. The subject matter of the note is therefore the entry by public authorities into contracts and, as its title indicates and its text proceeds to explain, the policy there identified has been substantially informed by international obligations. It has no relevance to investment decisions made by trustees or by those in an analogous position. This is the third section of the relevant part of the text: Although schemes should make the pursuit of a financial return their predominant concern, they may also take purely non financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision. It will be seen that this part of the guidance is an adoption, almost word for word, of the two tests identified by the Law Commission for investment by reference to non financial considerations in para 6.34 of its report. This is the Summary of requirements: In formulating and maintaining their policy on social, environmental and corporate governance factors, an administering authority: Must take proper advice Should explain the extent to which the views of interested parties will be taken into account when making an investment decision based on non financial factors Must explain the extent to which non financial factors will be taken into account in the selection, retention and realisation of investments Should not pursue policies that are contrary to UK foreign policy or UK defence policy Should explain their approach investments. to social As indicated in para 1 above, the fourth bullet point, which I present in bold, is the second of the two passages in the guidance under challenge. It is clear that the two passages in the guidance under challenge had been the subject of careful consideration by the Secretary of State. In November 2015 he had issued a consultation paper in relation to his proposal to replace the regulations made in 2009 with what became the 2016 Regulations; and in para 3.8 of the paper he had advertised his intention to issue guidance under the proposed regulations which would in particular relate to the extent to which administering authorities should take non financial considerations into account in making investment decisions. He had there spelt out the proposed guidance in almost the same terms as those ultimately adopted. In September 2016 he had published a paper by way of response to the consultation, in which, under Part C, he had written: The majority of respondents also expressed concern about the way in which the policy on compliance with UK foreign policy is to be taken forward in the guidance to be published under draft regulation 7(1). However, the Government remains committed to the policy set out in Novembers consultation paper that administering authorities should not pursue investment policies against foreign nations and UK defence industries, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government. The Legal Principles The Padfield case, cited in para 1 above, arose out of the statutory requirement in England and Wales that producers of milk should sell it only to the Milk Marketing Board. Producers in the south east of England complained to the minister about the price paid to them by the board. Statute provided that, if the Minister so directs, a committee had to consider their complaint. The minister declined to direct the committee to do so. The House of Lords upheld the claim of the producers that he had acted unlawfully in declining to give the direction. Of the four judges in the majority, one (Lord Hodson) applied long recognised principles of judicial review. But Lord Reid, supported by Lord Pearce at p 1053 and Lord Upjohn at p 1060, reached his decision by reference to a different principle which he explained as follows at p 1030: Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act [which] must be determined by construing the Act as a whole [I]f the Minister so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court. In R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349 the House of Lords applied the principle identified in the Padfield case, albeit in reaching a conclusion that the Secretary of States order was not unlawful. His order, under challenge by a landlord, capped otherwise justifiable increases in the rent which had been registered as payable under regulated tenancies. The order was made pursuant to a power conferred in wide terms by section 31 of the Landlord and Tenant Act 1985. The landlord argued that Parliaments object in granting the power was that it should be used only in order to counter inflation but the appellate committee held that it had wider objects which extended to the purpose behind the capping order. Lord Bingham of Cornhill said at p 381: no statute confers an unfettered discretion on any minister. Such a discretion must be exercised so as to promote and not to defeat or frustrate the object of the legislation in question The object is to ascertain the statutory purpose or object which the draftsman had in mind when conferring on ministers the powers set out in section 31. Lord Nicholls of Birkenhead said at p 396: The present appeal raises a point of statutory interpretation: what is the ambit of the power conferred on the minister by section 31(1) ? No statutory power is of unlimited scope Powers are conferred by Parliament for a purpose, and they may be lawfully exercised only in furtherance of that purpose The purpose for which a power is conferred, and hence its ambit, may be stated expressly in the statute. Or it may be implicit. Then the purpose has to be inferred from the language used, read in its statutory context and having regard to any aid to interpretation which assists in the particular case. In either event the exercise is one of statutory interpretation. In R (Ben Hoare Bell Solicitors) v Lord Chancellor [2015] EWHC 523 (Admin), [2015] 1 WLR 4175, the Divisional Court of the Queens Bench Division upheld a challenge by solicitors to the lawfulness of a regulation which withheld remuneration under the Civil Legal Aid scheme for work done on behalf of applicants for judicial review unless their applications eventually met with a specified result. The court chose to divide the challenge into two sections. It rejected the first, which it entitled Strict ultra vires, and upheld the second, which it entitled The Padfield / statutory purpose ground. With respect, it is not obvious that such was a helpful division of an inquiry into whether the impugned provision exceeded the scope of the statutory power under which it was claimed to have been made. For those who continue to insist on Latin, an inquiry by reference to the principle in the Padfield case is an inquiry into whether the provision is ultra vires: De Smiths Judicial Review, 8th ed (2018), para 5 018. The Application of the Principles So we must start with the terms of the 2013 Act. Section 3(1) provides that the scheme regulations permitted by section 1(1) may make such provision as the Secretary of State considers appropriate. But the power cannot be as broad as that. No statutory discretion is unfettered. When we read further into section 3, we at once find a helpful signpost. For subsection (2)(a) states that the permitted provision includes, in particular, provision as to any of the matters specified in Schedule 3. It is only a signpost because the words in particular mean that the matters specified in Schedule 3 are not the only matters which can be the subject of provision in the regulations. But it valuably identifies the matters which, in particular, Parliament had in mind. And, when we turn to Schedule 3, we find the relevant matter, in relation to which the Secretary of State can not only make regulations but also give guidance, described as the administration and management of the scheme. Next we turn to the terms of the 2016 Regulations. The content of any unchallenged regulations can be a guide to the interpretation of their enabling Act even when they are not made contemporaneously with the Act: Hales v Bolton Leathers Ltd [1951] AC 531, at 541, 544, 548 and 553. In this case the 2016 Regulations are, in themselves, unchallenged. By regulation 7, clearly made pursuant to the power to provide for the administration and management of the scheme, the Secretary of State mandates the formulation of an investment strategy, to include, at (e), the authoritys policy on how non financial considerations are taken into account in relation to its investments. Finally we address some of the unchallenged parts of the guidance. Its subject matter, as identified in its title, is Preparing and Maintaining an Investment Strategy Statement. And in its text it adopts the two tests commended by the Law Commission for the taking into account of non financial considerations: does the proposed step involve significant risk of financial detriment to the scheme and is there good reason to think that members would support taking it? From these three instruments we therefore collect the following words: (a) (b) administration; management; (c) (d) (e) (f) (g) policy; how considerations are taken into account; preparing; maintaining; and strategy. Yes, all these words must be considered in their context. But in my view, when so considered, they all point in the same direction: that the policy of the Act, recognised in the case of the scheme by the regulations and indeed by most of the guidance, is to identify procedures and indeed the strategy which administrators of schemes should adopt in the discharge of their functions. In the two passages under challenge, however, the Secretary of State has insinuated into the guidance something entirely different. It is an attempt to enforce the governments foreign and defence policies; and it purports to provide that, even when the tests commended by the Law Commission for reaching a potential investment decision by reference to non financial considerations have both been met, an administrator is prohibited from taking the decision if it runs counter to such policies. Presumably it follows that, when the policy changes, the prohibition changes. How does the Secretary of State seek to justify the prohibition? In a witness statement one of his senior officers states as follows: UK foreign and defence policy are matters which are properly reserved for the UK government and do not fall within the competence of local government. It was therefore right to put safeguards in place to ensure that decisions made by the UK government on foreign and defence policy in the interests of the UK as a whole would not be undermined by local boycotts on purely non pension grounds. The implied suggestion that the investment decisions in issue were a function of local government was adopted and developed by Sir Stephen Richards in para 20 of his judgment in the Court of Appeal, as follows: The public service pension schemes to be established under the 2013 Act include central as well as local government schemes. It must be possible to have regard to the wider public interest when formulating the investment strategy for central government schemes; and it would be very surprising if it could not also be taken into account in the giving of guidance to local government authorities, themselves part of the machinery of the state, in relation to the formulation of the investment strategy for schemes administered by them. As it happens, central government pension schemes are unfunded so the concept of an investment strategy does not apply to them. But of greater significance is Sir Stephens description of scheme administrators as part of the machinery of the state. It is a description which Mr Milford, on behalf of the Secretary of State, commends to us as apt to the present context. Indeed he goes further. Pension contributions to the [scheme], he writes, are ultimately funded by the taxpayer. Its public money, so he said to us at the hearing. In my view there has been a misconception on the part of the Secretary of State which probably emboldened him to exceed his powers in issuing guidance which included the two passages under challenge. The misconception relates both to the functions of scheme administrators in relation to investment decisions and, linked to their functions, to the identity of those to whom the funds should properly be regarded as belonging. As the Law Commission observed, administrators of local government schemes have duties which, at a practical level, are similar to those of trustees and they consider themselves to be quasi trustees who should act in the best interests of their members. The view, superficial at best, that the administrators are part of the machinery of the state, and are discharging conventional local government functions, fails to recognise that crucial dimension of their role. And it is equally misleading to claim that pension contributions to the scheme are ultimately funded by the taxpayer. As Sir Nicolas Browne Wilkinson VC said in Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589, 597: Pension benefits are part of the consideration which an employee receives in return for the rendering of his services. In many cases membership of the pension scheme is a requirement of employment. In contributory schemes the employee is himself bound to pay his or her contributions. Beneficiaries of the scheme, the members, far from being volunteers have given valuable consideration. The company employer is not conferring a bounty. The contributions of the employees into the scheme are deducted from their income. The contributions of the employers are made in consideration of the work done by their employees and so represent another element of their overall remuneration. The fund represents their money. With respect to Mr Milford, it is not public money. Irrespective of whether the misconception to which I have referred played a part in leading the Secretary of State to include in the guidance the two passages under challenge, I conclude that his inclusion of them went beyond his powers. HOW does not include WHAT. Power to direct HOW administrators should approach the making of investment decisions by reference to non financial considerations does not include power to direct (in this case for entirely extraneous reasons) WHAT investments they should not make. The Result LORD CARNWATH: In agreement with Lord Wilson I also would allow the appeal. I agree generally with his reasoning. However. since the court is split, and we are differing from the Court of Appeal, it may be helpful therefore for me to express my reasons in my own words. The issue is as to the legality of two parts of the guidance: I would allow the appeal and restore the order made by Sir Ross. the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government In formulating and maintaining their policy on social, environmental and corporate governance factors, an administering authority: Should not pursue policies that are contrary to UK foreign policy or UK defence policy Lady Arden and Lord Sales (para 52) criticise Lord Wilson for overstating the effect of the second paragraph: 52. Lord Wilson considers that the statement in the summary of requirements goes further than the statement in the body of the guidance that they should not pursue policies that are contrary to UK foreign policy or UK defence policy. However, the Secretary of State considers that the summary went no further than the body of the guidance. The appellants have not challenged that, and we proceed on that basis. The critical passage is therefore the statement in the body of the document. Even if that were a fair categorisation of the appellants position, I am unable to accept that approach. The guidance is a public document with significance far beyond the parties to this litigation. It must be considered in its own terms. We cannot be constrained by the way in which these particular claimants may have chosen to present their case. In any event, it is part of the appellants complaint that the guidance in this respect is intrinsically unclear in Mr Lannings words (witness statement for the first appellants). I share their difficulty. Even if one directs attention only to the first paragraph, it is far from evident what exactly is its scope. It begins by referring to an earlier, unidentified policy statement (the Government has made clear ). As Lord Wilson explains (para 16), this appears from the evidence to be a reference to a Procurement Policy Note issued in 2016, relating to boycotts in international trade. Like Lord Wilson I find it difficult to see the relevance of this to public sector pensions, which are governed by an entirely different statutory scheme. In what follows the objection in terms is limited to boycotts, divestment and sanctions against foreign nations and UK defence industries. Lady Arden and Lord Sales say there is no issue about the meaning of these concepts. That may be true as between the present parties, but again the meaning should be clear from the document itself. From the governments evidence (in the statement of Mr Megainey, quoted at length by Lady Arden and Lord Sales paras 53ff) it appears that the words were not intended to be read in the abstract, but reflected concerns about the possible impact of the Boycott, Divestment and Sanctions movement. Those terms are in turn explained by Mr Lanning, in a passage again quoted by Lady Arden and Lord Sales (para 51), as describing particular types of campaign conducted by his organisation and others, directed principally against the State of Israel and Israeli companies and their investors. If the reference to these specific concepts is intended to mean no more than that administering authorities should not actively participate in political campaigns of that kind, the advice is unremarkable and clearly right. What however is not clear, even from that paragraph, is whether it would also to apply, for example, to an independent decision by an authority on ethical grounds, supported by its members but not directly linked to any campaign, not to invest in defence companies. I doubt if that would be naturally described as boycott, disinvestment or sanction. But it might more readily be said to involve the pursuit of policies contrary to UK defence policy, contrary to the second paragraph. As I understand Mr Megaineys evidence, the guidance was intended to be read in the wider sense. He distinguishes (paras 22 23 in passages quoted by Lady Arden and Lord Sales) other investment policies which (authorities) may legitimately adopt. He refers for example to investment in companies making products harmful to health (eg tobacco, sugar and alcohol), or harmful to the environment (eg water or air pollution caused by oil or gas companies). He notes that administering authorities have responsibilities for public health and the environment in their areas, and distinguishes such policies from those carrying general risks to UK trade, security or communities, which are said to be matters properly reserved for the UK government. Thus the objection appears to be directed to investment policy generally, whether or not fairly described as boycott, disinvestment or sanctions. The difficulty with that line of reasoning, to my mind, is that there is nothing in the Act or the regulations which limits relevant social factors under regulation 7(1)(e) to matters for which the authority otherwise has statutory responsibility. The judge (Sir Ross Cranston) also understood the guidance in the wider sense. He expressed his objection as follows: But the flaw in the Secretary of States approach is that the guidance has singled out certain types of non financial factors, concerned with foreign/defence and the other matters to which reference has been made, and stated that administering authorities cannot base investment decisions upon them. In doing this I cannot see how the Secretary of State has acted for a pensions purpose. Under the guidance, these factors cannot be taken into account even if there is no significant risk of causing financial detriment to the scheme and there is no good reason to think that scheme members would object. Yet the same decision would be permissible if the non financial factors taken into account concerned other matters, for example, public health, the environment, or treatment of the workforce. In my judgment the Secretary of State has not justified the distinction drawn between these and other non financial cases by reference to a pensions purpose (para 32) Although I am doubtful of the value of his reference to pensions purposes (a term of somewhat uncertain scope), I agree with his identification of the logical flaw in the guidance. I agree with Lady Arden and Lord Sales (para 86) that the scope of the guidance (under Schedule 3, paragraph 12 and regulation 7(1)) cannot be necessarily confined to purely procedural or operational matters, but I do not understand that to be the intended effect of Lord Wilsons words. In particular there is no reason why the guidance should not extend to guidance on the formulation of the investment strategy, including the social and other matters appropriate to be taken into account under regulation 7(e). However, I cannot agree that this opens the door, as they seem to suggest, to the delineation of the functions of central government in relation to the fund, if by that they imply the broadening of the role of central government to include the imposition of its own policy preferences. In my view it is unhelpful to observe, as they do (paras 78, 87), that such a pension scheme is liable to be identified with the British state or that the administering authority is part of the machinery of the state. The fact that the authority may for certain purposes be seen as a state agency tells one nothing about the legal powers and constraints under which it operates. Nor does it give the Secretary of State any decision making role beyond that express or implicit in the relevant statutory framework. Any guidance must respect the primary responsibility of the statutory authorities as quasi trustees of the fund, as Lord Wilson puts it (para 12, echoing the words of the Law Commission). That the primary responsibility rests with the authorities is emphasised by the guidance itself. As it says in the Foreword: One of the main aims of the new investment regulations is to transfer investment decisions and their consideration more fully to administering authorities within new prudential framework The Secretary of States power of intervention does not interfere with the duty of elected members under general public law principles to make investment decisions in the best long term interest of scheme beneficiaries and taxpayers. Responsibility for investment decisions thus rests with the administering authorities. The same must be true of policy choices made under regulation 7(e). As Lord Wilson says (para 17) the guidance in that respect follows the approach of the Law Commissions report (Law Com No 350). That report in turn may be seen as having settled a long running debate as to the extent to which pension trustees could take account of non financial factors, dating back to cases such as Cowan v Scargill [1985] Ch 270 (see for example Lord Nicholls Trustees and their Broader Community: where Duty. Morality and Ethics Converge (1996) Australian Law Journal Vol 70, p 206). There appears now to be general acceptance that the criteria proposed by the Law Commission are lawful and appropriate. I agree. Thus administering authorities may take non financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision. These are judgements to be made by the administering authority, not the Secretary of State. The attempt of the Secretary of State to impose policy choices was objectionable, not so much because they were not pensions purposes (in the judges words see above), but because they were choices to be made by the authorities, not by central government. appellants: In this respect I agree with the submissions of Mr Giffin QC for the What the Secretary of State sought to do in the guidance was to promote the governments own wider political approach, by insisting that, in two particular contexts related to foreign affairs and to defence, administering authorities could not refrain from making particular investments on non financial grounds, regardless of the views held by the scheme members. The analogy drawn by the Court of Appeal between the basis upon which the administering authority may properly act, and the purpose for which the Secretary of State may properly issue guidance, was therefore founded upon a misconception of the administering authoritys position in law. Whilst the Secretary of State was entitled to give guidance to authorities about how to formulate investment policies consistently with their wider fiduciary duties, he was not entitled to use the guidance giving power, conferred by the Investment Regulations, to make authorities give effect to the Secretary of States own policies in preference to those which they themselves thought it right to adopt in fulfilment of their fiduciary duties. For these reasons I also would allow the appeal and restore the order of the judge. LADY ARDEN AND LORD SALES: (dissenting) Padfield v Minister for Agriculture, Fisheries and Food [1968] AC 997 (Padfield) was a ground breaking decision of the House of Lords in which the exercise of a power by a minister for improper purposes was set aside. The House held that an unfettered statutory power could only be exercised to promote the policy and objects of the Act. We will call that holding the Padfield principle. The only issue on this appeal is whether it is outside the broad discretion given to the Secretary of State under the Public Service Pensions Act 2013 (the 2013 Act) to give guidance which prohibits the use of pension policies to pursue boycotts and similar activities against foreign nations against whom the UK has not imposed sanctions or taken similar steps. It is said that this exercise of the power contravenes the Padfield principle, in effect that this too was the exercise of a power for improper purposes rather than for the purposes of promoting the policy and objects of the Act. We shall explain the powers, the guidance and the Padfield principle in more detail below. In summary, we conclude that the objects of the 2013 Act are not simply to set up public service pension schemes such as the Local Government Pension Scheme (LGPS) but also to ensure that the public interest is reflected in the arrangements for the management of those schemes. The 2013 Act was part of a package of measures to reform public service pensions which were intended to take due account of both the public interest and that of the beneficiaries of the pension funds. The powers to give guidance can, therefore, within appropriate limits, extend to matters which reflect the role of the Secretary of State or central government in relation to the funds, which is the essence of the challenged guidance. The wide discretion The 2013 Act was framework legislation setting out broad powers to enable the transition to new public service pension schemes to be achieved. The powers to make regulations under sections 1(1) and 3(1) were both broad. The regulations with which this appeal is concerned were made under both those powers. Although the powers are broad, they are not limitless. The powers in respect of the pension schemes are in circumstances such as those arising in this case at least subject to an obligation to ensure that the administering authorities of the schemes remain able to perform their primary duties in relation to the schemes, to promote the financial well being of scheme members. There may be other limitations. In this judgment, we focus on section 3(1). The power to make regulations conferred by section 3(1) is to make provision as to certain matters and those matters are not limited to the provision of the matters listed in Schedule 3. However, paragraph 12 of Schedule 3 lists as one of those matters as to which regulations may make provision the administration or management of the scheme. The scheme in this case is the LGPS. The management of a scheme includes the delineation of the roles of those who have a relationship to the scheme. Pursuant to his statutory powers under sections 1(1) and 3(1) of the 2013 Act, the Secretary of State made the Local Government Pension Scheme Regulations 2013 (SI 2013/2356). These contained regulation 7, which Lord Wilson sets out in para 9 above. This regulation empowered the Secretary of State to give guidance about the formulation of the administering authoritys investment strategy statement. The guidance in issue The guidance in issue is contained in a document dated September 2016 issued by the Department for Communities and Local Government (DCLG) entitled Local Government Pension Scheme Guidance on Preparing and Maintaining an Investment Strategy Statement (the guidance). As the title to the document states, the general purpose of the guidance is to assist administering authorities in formulating and maintaining their investment strategy statement. The relevant parts of the guidance are marked in bold in the following passage: The law is generally clear that schemes should consider any factors that are financially material to the performance of their investments, including social, environmental and corporate governance factors, and over the long term, dependent on the time horizon over which their liabilities arise. However, the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government. Although schemes should make the pursuit of a financial return their predominant concern, they may also take purely non financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision. [] Summary of requirements In formulating and maintaining their policy on social, environmental and corporate governance factors, an administering authority: Must explain the extent to which non financial factors will be taken into account in the selection, retention and realisation of investments Should not pursue policies that are contrary to UK foreign policy or UK defence policy By way of brief explanation, boycotts involve withdrawing support for Israel, and Israeli and international companies, that are involved in the violation of Palestinian human rights. Divestment campaigns urge banks, local councils, churches, pension funds and universities to withdraw investments from all Israeli companies and from international companies complicit in violations of Palestinian rights actions by organisations that have funds under their control, by which they dispose of or do not acquire holdings in certain types of investment. Sanctions campaigns pressure governments to fulfil their legal obligation to hold Israel to account, including There is no issue about the meaning of the concepts used in the guidance so we will set out the meanings given to them by the appellants in the context of the issues with which they are concerned: by ending military trade and through free trade agreements. (First witness statement of Hugh Lanning, para 30) Lord Wilson considers that the statement in the summary of requirements goes further than the statement in the body of the guidance that they should not pursue policies that are contrary to UK foreign policy or UK defence policy. However, the Secretary of State considers that the summary went no further than the body of the guidance. The appellants have not challenged that, and we proceed on that basis. The critical passage is therefore the statement in the body of the document. Mr Chris Megainey, an official of the DCLG, deals with the provenance of the guidance in his evidence on this application. He explains how the guidance, which had not previously been necessary, had come to be issued: 12. It was clear to us that the new guidance on the new Investment Strategy Statement which replaced the [Statement of Investment Principles] under the 2016 Regulations would also need to cover what would be appropriate non financial factors to take into account and the extent to which non financial factors should or should not be taken into account. It was also clear that the power to give such guidance was provided by the 2013 Pensions Act (Schedule 3, paragraph 12) and that such guidance was consistent with the overall purpose of the Pensions Act. 13. However, there were factors which led us to consider whether the content and the status of the guidance on the 2016 Regulations should be strengthened in relation to local boycotts. Firstly, there were concerns about the possible impact of the Boycott, Divestment and Sanctions movement which sought to give practical force to criticism of the policies of certain foreign nations and exports of certain types of arms to certain countries. The Governments fear was that this might undermine UK foreign policy and legitimate UK trade which was in accordance with international law, if adopted by a part of the UK state, in the form of administering authorities. There were also concerns about whether such campaigns might be perceived as legitimising anti Semitic or racist attitudes and attacks. I am aware from subsequent discussions with colleagues that although anti Israel and pro Palestinian campaigning in itself is not anti Semitic, there is a pattern of anti Semitic behaviour in connection with campaigns promoting a boycott of Israel. For example, protests outside an Israeli owned shop in central Manchester in summer 2014 led to some Jewish people using the shop being racially abused by protestors, including shoppers being called Child killer, comments such as You Jews are scum and the whole world hates you, and Nazi salutes being made at Jewish shoppers using the Israeli owned store. On social media, hashtags such as #BDS, #BoycottIsrael and #FreePalestine are regularly used by people posting anti Semitic tweets and comments. Secondly, a Procurement Policy Note had been issued by the Cabinet Office in February 2016 restating the existing policy on procurement, that authorities should comply with international law and that boycotts are inappropriate, except where sanctions, embargoes and restrictions have been put in place by the UK Government. To my knowledge the question of whether investment boycotts could legitimately be put in place had not previously arisen in relation to the LGPS. The overriding duty of authorities to maximise investment returns and act in the interests of scheme members and taxpayers was clear, as was the risk of legal challenge if authorities did not comply with that duty. However, the existing guidance did not specifically address the question of investment boycotts. 14. Given the serious nature of the concerns and the potential impacts across the UK set out above, we concluded that statutory guidance including a specific requirement to reflect UK foreign policy was justified and would fall within the powers in the 2013 Pensions Act. The protection of beneficiaries and taxpayers from the possibility that investment decisions might be taken by authorities purely on the basis of non pensions considerations is in my view a pensions purpose. Mr Megainey then explained that there was a public consultation on the statutory guidance which attracted over 23,000 responses, including responses from supporters of charities in the field of famine relief, education, development and similar fields drawing attention to the problems that a ban on boycotts would have on the selection of investments based on non financial considerations. After careful consideration the guidance was issued limited to boycotts which would undermine UK foreign and defence policy and which constitutionally were outside the competence of local government. Mr Megainey confirmed that the pursuit of boycotts against foreign states was considered to be beyond the competence of local authorities, and that the circumstances with which the guidance was concerned would arise rarely: 22. However, we were clear that UK foreign and defence policy are matters which are properly reserved for the UK government and do not fall within the competence of local government. It was therefore right to put safeguards in place to ensure that decisions made by the UK government on foreign and defence policy in the interests of the UK as a whole would not be undermined by local boycotts on purely non pension grounds. We expected these circumstances to arise very rarely but it seemed right to take these steps in view of the nature and scale of the potential risks. The Secretary of State thus took the view that boycotts were not a matter for the administering authority but for central government. There is no challenge to the rationality of his decision. The decision was clearly one of policy as to what was in the public interest. Mr Giffin submits in reply that the guidance is a recipe for politicisation of pension schemes. We do not agree: if anything the purpose is to preclude their politicisation in limited respects. Mr Giffin further submits that the Secretary of State is seeking to cut back on the legitimate choices of the administering authority: but this is within the statutory power as we read it. Nor do we agree that it is any part of the guidance to tell those who invest what investments to make (cf para 31 of the judgment of Lord Wilson). The guidance deals only with the situation where those who invest funds have no active duty to promote the best interests of the members of the pension fund in financial terms because the considerations are non financial and there is no material financial consequence attached to the decision. If it were otherwise, the guidance could be said to invite administering authorities or scheme managers to breach the primary duties to safeguard the financial well being of scheme members which the guidance accepts that they have. The passage in the guidance quoted in para 53 above is concerned to regulate the extent to which scheme managers may make decisions based on factors which are not financial, in circumstances which, as explained in the next paragraph of the guidance can only arise where the financial interests of scheme members are not materially affected. In doing so, it recognises that framing investment decisions by reference to such factors may serve to communicate or express views of a political, social or ideological character. In our view, it is clear that the state (representing the interest of the general public) and scheme members may both have an interest in how this expressive function is exercised. The LGPS is liable to be identified with the British state. This is because of the impression produced by the combined effect of the nature of the persons who are members of the scheme, its designation as a public sector scheme, the identity of the scheme managers (which include county councils and London boroughs, which are part of the machinery of the state), the funding which the state provides for the scheme, and the degree of state regulation to which it is subject pursuant to the 2013 Act. The precise niceties of how investment decisions are taken are not likely to be recognised or understood. So, for instance, if the managers of funds within the LGPS decided to boycott Israel, that could readily be portrayed as the British state (in the guise of one of its major public sector pension funds) deciding to boycott Israel. Moreover, such a perception could well fuel difficult and sensitive tensions in society, as Mr Megainey explains. For the proper discharge of the governments role in the conduct of international affairs and in promoting harmonious relationships in society, it is important that it should be able to exercise control over the generation of perceptions about the attitude of the British state. Any suggestion that these are not appropriate concerns for government would be unsustainable. No suggestion is made that the position taken in para 22 of Mr Megaineys witness statement was wrong in law, unreasonable or constitutionally incorrect. As explained, the only question on this appeal is whether the 2013 Act enables the Secretary of State to give the guidance in issue. Mr Megainey makes the important point that the part of the guidance in issue related only to the use in limited circumstances of non financial considerations to make investment decisions: 23. The relevant section in the guidance was therefore carefully drafted in the light of the arguments in consultation responses and made in Parliament. It set out the very restricted range of investment policies which could go beyond the competence of an administering authority and potentially undermine policies of the UK government. But it left a very wide range of discretion for authorities on other investment policies which they may legitimately adopt and which are consistent with their wider responsibilities. One example might be local policies against investment in companies responsible for particular products which may be harmful to health (eg tobacco, sugar and alcohol) or which have operations or activities which cause environmental harm (eg water or air pollution caused by oil or gas companies). Administering authorities have responsibilities for public health and the environment in their areas. The guidance makes clear that they may legitimately take into account the potential for harm by refusing to invest in tobacco manufacturers, fossil fuel companies or high sugar products: such policies do not carry general risks to UK trade, security or communities. Mr Megainey made the further important point that the guidance in issue did not interfere with the performance by the administering authority of their legal duties with respect to investment: 24. The guidance did not therefore affect the ability of authorities to comply with their duty to act in the best interests of beneficiaries, nor did it prevent them from taking ethical considerations into account when making investment decisions except in a very narrow range of circumstances. It is common ground that regulation 7(2)(e) of the Regulations (set out in para 54 above) is within the regulation making power in section 3(1) of the 2013 Act. Regulation 7(2)(e) contemplates that guidance issued by the Secretary of State may cover the administering authoritys policy on how social, environmental and corporate governance considerations (ie matters which include non financial factors) are taken into account in the selection, non selection, retention and realisation of investments. That is to say, the Regulations and the 2013 Act envisage that guidance may be issued as regards how non financial factors may (or may not) be taken into account as substantive considerations when the administering authority makes investment decisions. We can see nothing in the wording or context of section 3(1) of the 2013 Act to indicate that its coverage in respect of the giving of guidance in relation to non financial factors to be taken into account, or not, when making investment decisions is limited as the appellant contends. On the contrary, we consider that both the wording and the context of that provision indicate that it is not so limited. As Sir Stephen Richards put it in his judgment in the Court of Appeal (with which Davis and Hickinbottom LJJ agreed), [s]ince the Secretary of State is empowered to give guidance as to an authoritys investment strategy, it seems to be equally plainly within the scope of the legislation for the guidance to cover the extent to which such non financial considerations may be taken into account by an authority (para 20). We agree. The Padfield principle This is an important principle of statutory construction, which for present purposes is encapsulated in the following passage from the speech of Lord Reid in Padfield [1968] AC 997, 1030: Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole and construction is always a matter of law for the court. In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the Act or for any other reason, so, uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court. So it is necessary first to construe the Act. We would make a number of observations. First, it is not the practice of Parliament to insert purpose clauses into legislation, and indeed the policies or objects of particular legislation may be quite complex. They may be deduced from the context, including the constitutional position. The relevant constitutional background which sets the context in which the 2013 Act falls to be construed includes the constitutional responsibility of central government for the conduct of the UKs international affairs, for promoting the countrys economy and for seeking to preserve internal good order and harmonious relations between different parts of society. In R v Secretary of State for the Environment, Transport and the Regions, Ex p Spath Holme Ltd [2001] 2 AC 349 (Spath Holme), the House of Lords gave important guidance regarding the operation of the Padfield principle. Lord Bingham, referring to observations by Lord Simon of Glaisdale and Lord Diplock in Maunsell v Olins [1975] AC 373, 393, emphasised at [2001] 2 AC 349, 385E G and 391A B that a statute may well have more than one statutory objective. As Lord Simon (speaking for himself and Lord Diplock) said in Maunsell v Olins, in the passage relied on by Lord Bingham: For a court of construction to constrain statutory language which has a primary natural meaning appropriate in its context so as to give it an artificial meaning which is appropriate only to remedy the mischief which is conceived to have occasioned the statutory provision is to proceed unsupported by principle, inconsonant with authority and oblivious of the actual practice of parliamentary draftsmen. Once a mischief has been drawn to the attention of the draftsman he will consider whether any concomitant mischiefs should be dealt with as a necessary corollary. The Bill leading to the 2013 Act laid down a common framework for pension provision within the public service so that the framework could be adapted to each sector as circumstances required. So, it was clear that the detail had to be filled in by secondary legislation and it is not surprising to find that the powers to make secondary legislation were given in broad terms. One of the purposes of the legislation, as one might expect, was to establish sound governance arrangements for the new schemes. The second point is that it is not good enough if the minister misconstrues the legislation in good faith. This is because the courts are the authoritative organ for the interpretation of a statutory power. We do not have any equivalent of the Chevron doctrine in the United States (Chevron v Natural Resources Defence Council (1984) 467 US 837), where it was held that where a statute directed to a government agency was ambiguous, the court will follow any permissible reading adopted by the agency. Thirdly, as Lord Nicholls explained in Spath Holme, at [2001] 2 AC 349, 396D G, the Padfield principle depends upon the proper interpretation of the relevant statutory provision; and an appropriate starting point is that language is to be taken to bear its ordinary meaning in the general context of the statute (p 397B). [T]he overriding aim of the court must always be to give effect to the intention of Parliament as expressed in the words used: Spath Holme [2001] 2 AC 349, 388D, per Lord Bingham. Here, the language of section 3(1), according to its ordinary meaning, especially when it is read in context and alongside section 3(2) of and Schedule 3 to the 2013 Act, is apt to confer a very wide discretion upon the Secretary of State (as the responsible authority) to promulgate regulations which make such provision in relation to a [public service pension scheme] as the Secretary of State considers appropriate. We do not think that the limitation for which the appellant contends can be read into section 3(1). Again, we agree with Sir Stephen Richards, who said (para 21), I find it helpful to put the question in terms of whether the legislation permits wider considerations of public interest to be taken into account when formulating guidance to administering authorities as to their investment strategy; and given the framework nature of the statute and the broad discretion it gives to the Secretary of State as to the making of regulations and the giving of guidance, I can see no reason why it should not be so read. The policy and objects of the 2013 Act The Preamble to the 2013 Act makes it clear that the 2013 Act is not only about pensions. It reads: An Act to make provision for public service pension schemes; and for connected purposes. This is a very wide formulation. A purpose may be connected with another even if it does not directly or otherwise promote that other provided that it has a relationship with that other. It is enough that it is reasonably or logically associated with it. The reason for having such a wide formulation is to be found in the circumstances leading to the 2013 Act. We take these circumstances from the final report of the Independent Public Sector Pensions Commission issued on 10 March 2011 under the chairmanship of Lord Hutton of Furness (the Hutton Report). This forms part of the context of the 2013 Act admissible on its interpretation since it explains why the legislation was needed and what changes were introduced. What follows is not a comprehensive summary. The Hutton Report found that the then current pensions structure for the public sector needed structural reform, for example because the cost was unfairly borne by employees, employers and the taxpayer. There was an unfunded past service deficit on the LGPS which fell on the employer, and ultimately in the case of local government employees, the taxpayer. Lord Huttons first set of recommendations were directed to ensuring the sustainability of public service pensions. The measures which he recommended included an employers cap, that is, a limit on the amount of contributions which employers would be obliged to make. Such a cap was introduced by the 2013 Act. There was praise for some aspects of local authority pension scheme management (see para 6.62), in particular for the adoption by individual funds within the LGPS of express, transparent investment strategies. However, the Hutton Report also recommended improvements in governance of pension schemes, including the management of investments. It concluded there were valid reasons for differences in the governance arrangements between public service and private pension schemes, but the former could learn from the latter. At the time of his report, some functions were carried out by government departments. On governance, the Hutton Report stated: Clear guidance will be required for members of pension boards on their role and duties. They would fulfil similar duties to trustees, acting in accordance with scheme rules, impartially and prudently, balancing the interests of scheme beneficiaries and of taxpayers. There will be a need for effective committee structures to facilitate sound decision making and strong oversight of scheme administrators and fund managers. (para 6.16) The government accepted the Hutton Report, subject to consultation. What this brief summary makes clear is that the 2013 Act was not simply about matters internal to pension schemes: it also concerned the relationship of ministers to pension schemes and the interests of the taxpayer. There was no suggestion that we have found that the powers of ministers should be limited to protecting the interests of members of pension schemes. The systems for governance would have to be put in place by government. The changes made by the 2013 Act were very significant indeed. In his speech introducing the second reading of the Bill which became the 2013 Act, the Chief Secretary to the Treasury (Danny Alexander MP), the minster responsible for promoting the Bill, stated: Lord Huttons fourth key test related to governance and transparency. The reformed schemes should be widely understood, both by scheme members and by taxpayers. People understand what is in their pay packet each month, and it should be just as easy to understand how their pension works. Under the Bill, the schemes will have robust and transparent management arrangements. Clause 5 [which became section 5] provides for each scheme to have a pension board which will work to ensure that the scheme is administered effectively and efficiently. There will be local pension boards in the case of the locally administered police, fire and local authority schemes. The boards will consist of member representatives, employer representatives and officials. They will operate in a similar way to boards of trustees, holding scheme administrators to account and providing scheme members and the public with more information about the pensions. The board members will be identified publicly, and their duties will be made clear to scheme members. I welcome the greater transparency that the Bill will bring to this area of public pension administration. (Hansard, vol 552, col 63 4, 29 October 2012) Unusually for public service pension schemes, the pension funds within the LGPS are funded. Their aggregate value as at 31 December 2020 was some 287 billion, which makes them very substantial investors indeed. There are some other funded public service pension schemes. The relevant provisions of the 2013 Act apply to both funded and unfunded schemes. In the case of funded schemes like the LGPS, the funding for them has been provided by the state in the past (by funding the employers contributions from taxation and also funding the salaries of relevant employees from taxation, out of which employee contributions have been made) and continues to be provided and underwritten by the state into the future (subject to the employers cap). This is one reason why such public pension schemes are liable to be identified with the British state (para 58 above). It is also a further reason why the government and taxpayer have a legitimate interest in regulating how public sector pension schemes manage the money which is provided to them. In our judgment, having regard to the scope and context of the 2013 Act, in particular as indicated by its preamble and the Hutton Report, the policy and objects of the 2013 Act include not simply setting up the new pension schemes but also the working out of the role of central government in relation to the newly created schemes and in ensuring that the right balance is struck between the public interest and the interests of fund members. The 2013 Act is about introducing a new structure whereby these interests can be brought into account and held in balance. Accordingly, we consider that the part of the guidance in issue was promulgated for reasons falling within the policy and objects of the 2013 Act. At first instance Sir Ross Cranston held the relevant guidance could not be for a pensions purpose because ex hypothesi the decision would have no adverse financial impact on the scheme. He held that the purpose is a desire to advance UK foreign and defence policy, without mentioning its significance in the pension context. However, as Mr Julian Milford for the Secretary of State submits, the court has to read the guidance as a whole and in its proper context. The relevant part of the guidance applies when the administering authority is making an investment decision. It regulates the extent to which they may act other than on the basis of ordinary financial factors. They may only take non financial factors into account if that can be done without any material financial detriment for scheme members. In order to be Padfield compliant, the relevant part of the guidance does not have to promote or affect the LGPS financially. The policy of the 2013 Act was also to establish suitable governance more generally for the deregulated LGPS. The public interest is implicated in decisions which might be made by scheme managers and hence is an appropriate matter to be covered in the guidance relating to such governance. Therefore, if the minister considered that it was in the public interest to restrict the investment decisions that the managers could take consistently with their duties to the scheme members, then in our view this fell within the policy and objects of the 2013 Act. Paragraph 12 of Schedule 3 to the 2013 Act (set out at para 52 above) is in general terms. It does not limit the scope of regulations to the management and administration of pension funds forming part of the LGPS or other public sector pension schemes. The power can be used for any purpose the minister thinks appropriate subject to the Padfield principle. We have already explained that there are some limits on the broad discretion to make regulations to be deduced from the policy and objects of the 2013 Act. The minister cannot require the administering authority, the scheme managers or the board appointed pursuant to section 5 to transgress the primary legal duties upon them to safeguard the financial interests of scheme members. But the relevant part of the guidance has not sought to do this. There was some confusion at the hearing as to whether the guidance in issue would force the administering authority to invest in any particular stock. However, that is not a fair reading of the guidance. The relevant part of it is simply guidance that the administering authority should refrain from making an investment decision for the particular purposes there stated. Moreover, it does not, for example, say that the administering authority could not decide that the LGPS should divest itself of an investment with the incidental purpose of relinquishing all investments in an industry to which the administering authority or the scheme members had ethical objections; but they could not do so for the sole or principal purpose of pursuing boycotts, divestment or sanctions against foreign nations which the UK government had not subjected to sanction, nor against the UK defence industry. This reading of the relevant passage in the guidance is precisely in line with the evidence which the government has filed and with Information Note 01/16, which Lord Wilson considers of no relevance. That Note explains that There are wider national and international consequences from imposing such local level boycotts. They can damage integration and social cohesion within the United Kingdom, hinder Britains export trade, and harm foreign relations to the detriment of economic and international security. The Secretary of State referred to this Note in the consultation document in November 2015 leading to the 2016 Regulations and in the governments response to the consultation in September 2016. It follows that we do not accept that the distinction made by Lord Wilson in para 31 of his judgment between how an administering authority should approach investment decisions and what investments they should not make applies in this situation. The guidance in issue does not purport to tell administering authorities what investments they must hold. One of the points made against the conclusion to which we have come is that government policy on relations with particular foreign nations may change. That is of course so, but it does not follow that the part of the guidance in issue falls outside the purpose and objects of the 2013 Act. The proper characterisation of the guidance is that it reflects and articulates the legitimate role of central government in relation to public sector pensions. Lord Wilson considers that the guidance must be about procedures. That is in our judgment an inappropriately one dimensional view of what management in relation to a scheme created under the 2013 Act involves. Guidance cannot in our judgment realistically be limited to operational controls but must be capable of extending more widely so as to include the objectives of pension provision, including the delineation of the functions of central government in relation to the fund. A public service pension scheme may, by reason of its particular status as a public service scheme funded in substance by the public, entirely properly be made subject to restrictions which are different from those of private sector pensions. For example, as explained by Mr Milford, the public sector equality duty may well apply in relation to public service schemes. Sir Stephen Richards was surely correct to say in his judgment in the Court of Appeal that the administering authority is part of the machinery of the state. On the other hand, we agree entirely that the pensions provided by the LGPS are earned. As Sir Nicholas Browne Wilkinson VC held in Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589, 597: Beneficiaries of the scheme, the members, far from being volunteers, have given valuable consideration. However, the benefits for scheme members are guaranteed by statute and so are underwritten by the state. If, for example, there is a significant change in life expectancy, and a deficiency emerges as regards employees or former employees of a local authority, that deficiency must be made good by the relevant local authority. That burden may therefore end up with local council taxpayers or possibly central government through the grant system. This is an aspect of the public interest in the LGPS. The fact is that there is both a public interest and private interests of scheme members which co exist in relation to the LGPS. Both aspects are recognised by the statute and receive due respect according to the terms of the guidance. Moreover, the guidance which the Secretary of State may give must, as a matter of ordinary language as employed in paragraph 12 of Schedule 3, be capable of covering any action of the administering authority in issue in this case, as regards the taking into account of non financial considerations. We do not accept that the power could only be to explain the approach to investment and not in relation to the substantive power to invest in the circumstances with which we are concerned. There is no obvious or straightforward distinction between these matters, which both fall within the concepts of administration and management of a scheme. This point is reinforced by the terms of paragraph 11 of Schedule 3, which refers to the administration, management and winding up of any pension funds within a scheme, where the terms administration and management clearly cover both procedural and substantive aspects of fund administration and management. We therefore consider that the Court of Appeal were correct to say that the judge read the legislation too narrowly. We would dismiss this appeal.
UK-Abs
This appeal concerns the breadth of the ethical investments that the authorities which administer the local government pension scheme (the scheme) are permitted to make. An ethical investment can be defined as one made not, or not entirely, for commercial reasons but in the belief that social, environmental, political or moral considerations make it, or also make it, appropriate. The scheme is an occupational pension scheme under which authoritiesin most cases local authoritiesin England and Wales administer funds separate from their other resources. An authority makes contributions into its fund for its employees, who also make contributions themselves. The scheme provides defined pension benefits for past and present employees. The Public Service Pensions Act 2013 (the 2013 Act) empowers the respondent Secretary of State to make regulations providing for the issue of guidance to authorities on the schemes administration and management (section 3 and para 12 of Schedule 3). The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 (the 2016 Regulations), made pursuant to these provisions, require an authority to formulate an investment strategy. This must be in accordance with the guidance and must include the authoritys policy on how social, environmental and corporate governance considerations are taken into account in its investment decisions (reg. 7). The appellants brought a claim for judicial review alleging that two passages in the guidance issued in 2016 by the Secretary of State pursuant to that regulation were unlawful. The first passage states that the Government has made clear that using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government. The second passage states that authorities [s]hould not pursue policies that are contrary to UK foreign policy or UK defence policy. In the High Court the claim was upheld, and the two passages ruled unlawful, on the basis that the issue of them by the Secretary of State exceeded his powers. The Court of Appeal upheld the Secretary of States appeal. The appellants now appeal to the Supreme Court. By a majority, the Supreme Court allows the appeal and restores the High Courts order. Lord Wilson gives the main judgment, with which Lady Hale agrees. Lord Carnwath gives a concurring judgment. Lady Arden and Lord Sales give a joint dissenting judgment. Lord Wilson states that, to determine whether the issue of the guidance under challenge was lawful, the court must analyse the scope of the power conferred by Parliament on the Secretary of State. Pursuant to the decision of the House of Lords in Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 (Padfield), it must do so by construing the words by which the power was conferred on him in their context. From the words in their context Parliaments purpose in conferring the power can be identified, and the purpose can be used to shed light on the powers scope [1, 20 22]. Lord Wilson observes that Schedule 3 to the 2013 Act identifies the matters which, in particular, Parliament had in mind when conferring the power, one of which was the administration and management of the scheme [23]. The 2016 Regulations, which can be used to interpret the Act, require the investment strategy to include the authoritys policy on how non financial considerations are taken into account (reg. 7) [24]. The guidance adopts two uncontroversial tests for the taking into account of such considerations: does the proposed step involve significant risk of financial detriment to the scheme and is there good reason to think that members would support taking it? These three legal instruments use words (including administration, management, how considerations are taken into account, and strategy) which, considered in their context, all point in the same direction: that the Acts policy is to identify procedures, and the strategy, which administrators should adopt in the discharge of their functions [25 26]. But in the passages under challenge, the Secretary of State has insinuated into the guidance something entirely different: an attempt to enforce the governments foreign and defence policies by providing that, even when the two tests above have been met, an administrator is prohibited from taking an investment decision if it runs counter to such policies [27]. Lord Wilson suggests that the Secretary of State was probably emboldened to exceed his powers by the misconception that the scheme administrators were part of the machinery of the state and discharge conventional local government functions. This fails to recognise that they have duties which, at a practical level, are similar to those of trustees, and they consider themselves quasi trustees who should act in their members best interests. The Secretary of States claim that contributions to the scheme are ultimately funded by the taxpayer is equally misleading: for the fund represents the contributing employees money, not public money [28 30]. In any event, the Secretary of States inclusion of the two passages in the guidance exceeded his powers. Power to direct how administrators should approach the making of investment decisions by reference to non financial considerations does not include power to direct what investments they should not make [31]. Lord Carnwath notes that, while the scope of the guidance is unclear, it appears to have been intended to preclude authorities who are making investment decisions both from engaging in political campaigns and from taking into account considerations in policy areas reserved for the UK government [36 40]. But the 2013 Act and the 2016 Regulations required any guidance to respect the primary responsibility of the authorities as quasi trustees of the fund [41 42]. The Secretary of State was not entitled, therefore, to make authorities give effect to his own policies in preference to those which they themselves thought it right to adopt in fulfilment of their fiduciary duties [43 44]. Lady Arden and Lord Sales consider that the purposes of the 2013 Act, which implemented the Hutton report, extend to reflecting the public interest and instituting good governance in the reformed public sector pension schemes [47, 69 80]. Guidance as to their management could include establishing the role of the Secretary of State in relation to investment [49]. Following consultation, the guidance related only to decisions based on non financial considerations which are taken to pursue boycotts and disinvestment campaigns against foreign nations [50 55, 82 5]. The Secretary of State had serious concerns that these might undermine foreign policy or trade and might lead to racist behaviour. These were matters for government [53 56]. The schemes were liable to be identified with the British state [58, 87 8]. The power to give guidance is not limited to procedural matters [62, 86, 89]. The leading authorities on the Padfield principle support the approach taken [63 68].
The right to physical liberty was highly prized and protected by the common law long before the United Kingdom became party to the European Convention on Human Rights (ECHR). A person who was unlawfully imprisoned could, and can, secure his release through the writ of habeas corpus. He could, and can, also secure damages for the tort of false imprisonment. This case is about the meaning of imprisonment at common law and whether it should, or should not, now be aligned with the concept of deprivation of liberty in article 5 of the ECHR. The story so far This is a claim for damages for false imprisonment brought in judicial review proceedings challenging the legality of a curfew imposed upon the claimant, purportedly under paragraph 2(5) of Schedule 3 to the Immigration Act 1971 (the 1971 Act). That reads: A person to whom this sub paragraph applies shall be subject to such restrictions as to residence, as to his employment or occupation and as to reporting to the police or an immigration officer as may from time to time be notified to him in writing by the Secretary of State. There is a dispute about the claimants identity. He claims to be a Liberian national named Ibrahima Jalloh. The Secretary of State asserts that he is a Guinean national named Thierno Ibrahima Diallo. This dispute is irrelevant to the issues before this Court. The claimant was granted asylum under his claimed name on 29 August 2003. However, following his conviction of various offences in 2006, the Secretary of State made a deportation order against him on 21 July 2008. This was still extant when the events with which we are concerned began. (It was revoked on 22 September 2015 and a new order made on 20 December 2016.) On 15 April 2013, the claimant was convicted and sentenced for a further offence and on 16 April 2013, when the custodial part of his sentence expired (because of time already spent in custody on remand), he was detained by the Secretary of State under powers conferred by the 1971 Act. On 29 October 2013, the claimant was given bail by a judge of the First tier Tribunal. The bail conditions included requirements as to residence and electronic monitoring but not a curfew. On 30 October, as required in the grant of bail, the claimant reported to an immigration officer. The bail granted by the tribunal thereupon came to an end. The claimant was then issued with a document headed NOTICE OF RESTRICTION. This stated that he was liable to be detained under the Immigration Act 1971 but that he would not be detained. Instead, he would have restrictions imposed upon him under paragraph 2(5) of Schedule 3 to the 1971 Act. The restrictions included a requirement to report to an immigration officer every Monday, Wednesday and Friday, to live at a specified address and YOU ARE TO ELECTRONICALLY BY MEANS OF BE MONITORED TAGGING/TRACKING. He was to be at his address in Sunderland between specified hours on a specified date for induction into the monitoring system. Following induction, he must be present at the address shown above between the hours of 23.00 hours to 07.00 am every day, and every day thereafter between the hours of 23.00 hours to 07.00 am. This imposed a curfew of eight hours every day. The notice continued: You should note that [i]f without reasonable excuse you fail to comply with any of these restrictions you will be liable on conviction to a fine not exceeding the maximum on level 5 of the standard scale (currently 5,000) or imprisonment for up to six months or both. The monitoring equipment was installed on 3 February 2014 and the claimant was fitted with an electronic tag. The claimant was issued with a further Notice of Restriction on 8 March 2014 to the same effect as the first. The curfew was in place from 3 February until 14 July 2016, a total of 891 days. The claimant did not always comply with it. On 37 occasions he was away from home without permission for the whole of the curfew period, 29 of those because he was attending care proceedings in Coventry relating to his daughter and step daughter. On 108 occasions he was away from home without permission for part of the curfew period, 57 of those for more than an hour. Some of those were connected with Ramadan and some with returning from Coventry. But the claimant did, broadly, seek to comply with the curfew and curtailed his social activities to a limited extent. The curfew was lifted by order of Collins J in these judicial review proceedings, which were brought by the claimant following the judgment of the Court of Appeal in the case of R (Gedi) v Secretary of State for the Home Department [2016] EWCA Civ 409; [2016] 4 WLR 93. The court there held that paragraph 2(5) of Schedule 3 to the 1971 Act (see para 2 above) did not empower the Secretary of State to impose a curfew by way of a restriction under that paragraph. The Secretary of State has, understandably, not sought to challenge that holding. However, she did seek to impose the same curfew again on the claimant, but this time under paragraph 22 of Schedule 2 to the 1971 Act. On 14 July 2016, Collins J ordered that that curfew be lifted, which it was. On 14 February 2017, at a preliminary hearing, Lewis J held that the curfew constituted imprisonment for the purpose of the tort of false imprisonment, following the decision of Edis J at first instance in the case of R (Gedi) v Secretary of State for the Home Department [2015] EWHC 2786 (Admin) (the Court of Appeal did not deal with this point in Gedi but left it open): [2017] EWHC 330 (Admin). After a three day trial, on 9 November 2017, Lewis J awarded the claimant 4,000 damages for false imprisonment: [2017] EWHC 2821 (Admin). On appeal, the Court of Appeal held that the curfew did indeed amount to imprisonment and so dismissed the Secretary of States appeal on liability; it also dismissed the claimants cross appeal on the measure of damages: [2018] EWCA Civ 1260; [2019] 1 WLR 394. The Secretary of State now appeals to this Court, arguing, first, that the curfew did not amount to imprisonment at common law, and second, that if it did, it did not amount to a deprivation of liberty under article 5 of the ECHR and the common law concept of imprisonment should now be aligned with that concept. The first issue: Imprisonment at Common Law Mr Robin Tam QC, for the Secretary of State, argues that the curfew did not amount to imprisonment at common law. He makes five propositions. His first proposition is that imprisonment requires constraint on a persons freedom of movement, usually by physical or human barriers, such as locked doors or guards. Voluntary compliance with a request or instruction is not enough. An illustration is the Irish case of Phillips v Great Northern Railway Co (1903) 4 NIJR 154. There was an argument between the claimant, who was travelling with two daughters and a dog, and the ticket collector, who wrongly thought that she was defrauding the company. As the claimant was stepping into the cab ordered by one of her daughters, the ticket collector told her not to move. He fetched the station master, but after some further argument, she got into the cab and it drove off. Lord OBrien LCJ held that there was no evidence of total restraint of the person. Voluntary compliance is not enough, even if the request is backed up with a warrant which could be executed by force. He cites Arrowsmith v Le Mesurier (1806) 2 Bos & P (NR) 211, 127 ER 605, where Sir James Mansfield CJ held that there was no imprisonment when a constable simply showed the claimant a magistrates warrant for his arrest and the claimant went voluntarily with the constable to see the magistrate: the warrant was treated as a summons rather than an arrest. Berry v Adamson (1827) 6 B & C 528, 108 ER 546, was a fortiori: the officer merely sent his man with a message to the claimant that there was a writ and that he should fix a time for giving bail. On the other side of the line was Grainger v Hill (1838) 4 Bing (NC) 212, 132 ER 769. Tindal CJ held that it was enough for the sheriffs officer to tell the claimant, while he was lying ill in bed, that there was a writ of capias against him and unless he surrendered his ships register or found bail, he would be taken away or a man would be left with him: this was a sufficient restraint of his person to amount to an arrest. His second proposition is that, if the constraint is not by physical barriers, it has to be of a nature that is intended to keep the person in the same place and there have to be the means of doing so. He cites Grainger v Hill as an illustration of this form of imprisonment; also Warner v Riddiford (1858) 4 CB (NS) 180, 140 ER 1052, where it was held that the claimant was imprisoned when he was refused permission by police officers, acting on behalf of his employers, to leave the room and go upstairs in his own house; and Meering v Graham White Aviation Co Ltd (1920) 122 LTR 44, where the claimant was suspected of being involved in thefts of material from the company. A warrant was obtained to search the place where the claimant was staying. The claimant was not there when the search took place, but the companys own security officers waited until he returned and took him to the companys offices where they waited for the police officers who eventually arrested him. It was held that he was imprisoned by the companys officers while they were waiting. From the moment that the claimant had come under the influence of the companys officers, there was evidence to support the jurys conclusion that he was no longer a free man. Atkin LJ emphasised, at p 53, that it is perfectly possible for a person to be imprisoned in law without his knowing the fact and appreciating that he is imprisoned: if a man could be imprisoned in a locked room without knowing that the door was locked, he could also be imprisoned by being in a room with guards who would prevent his leaving, even if he did not know this. His third proposition is that the constraint must be total or complete, restricting the person to a particular place. The leading case is Bird v Jones (1845) 7 QB 742. Part of Hammersmith Bridge, which was usually used as a footpath, was enclosed and seats were erected for people to watch a boat race on the Thames, for which they were charged a fee. The claimant wanted to walk along the footpath in the usual way but was forcibly prevented by policemen from doing so. He could always have left the enclosure, and crossed the bridge along the roadway, but he could not leave in the way that he wanted to do. The majority held that this was not imprisonment because it was only a partial obstruction. Bird v Jones was approved by the Judicial Committee of the Privy Council in Syed Mahamad Yusuf Ud Din v Secretary of State for India (1903) 30 Ind App 154, where it was held that a prisoner who was out on bail was not imprisoned while on bail: nothing short of actual detention and complete loss of freedom would do. Robinson v Balmain New Ferry Co Ltd [1910] AC 295 was another Privy Council case. There were entry and exit turnstiles to the ferry wharf on each side of the water to be crossed. The claimant paid his penny to enter the wharf on one side, intending to take the ferry to the other side, but then changed his mind and was not allowed to leave without paying the exit penny. This was not imprisonment as there was an exit route and he had agreed to the terms. His fourth proposition is that a person is not imprisoned if he is able to leave that place by another route, even if that is not the way he wants to go and even if it involves trespassing. The earliest case cited was Wright v Wilson (1699) 1 Ld Raym 739, 91 ER 1394, where Holt CJ ruled that it was not false imprisonment to lock one of two doors out of a room, when the claimant could have got out through the other door, although this would involve trespassing through another persons room. His fifth proposition is that it is not enough that the act of leaving would trigger an adverse response, such as prosecution or arrest. This is illustrated by cases such as Arrowsmith v Le Mesurier and Phillips v Great Northern Railway Co, but also by the decision of the House of Lords in R v Bournewood Community and Mental Health NHS Trust, Ex p L [1999] 1 AC 458. L was a severely mentally disabled man who became agitated at his day centre and an emergency psychiatric team was called. He was sedated and taken to hospital. The psychiatrist decided to admit him as an informal patient, rather than compulsorily, because by that time he was compliant and showing no desire to leave. He was placed in an unlocked ward, but his foster parents were not allowed to visit in case he showed signs of wanting to leave with them. If he had wanted to leave, he would have been compulsorily detained under the Mental Health Act 1983. The House of Lords held, by a majority, that he had not been detained while an informal patient. Lord Steyn and Lord Nolan disagreed. Lord Steyn, at p 495, described the suggestion that he was free to leave as a fairy tale. The fact that he did not know that he was imprisoned was irrelevant, as Meering showed. Applying these propositions, Mr Tam argues that the claimant was not locked into his home; there were no guards to prevent his leaving; there was no other way in which he was physically prevented from leaving home; indeed, he was able to break the curfew on numerous occasions the constraint was not total or complete; there might be adverse consequences if he did so either prosecution for an offence or being detained once more under the 1971 Act but these would not result in his being kept in the place where he was instructed to remain. The situation is not comparable to being detained in an open prison or psychiatric hospital, to which one can be returned by force if one goes absent without leave. Against this, Ms Dinah Rose QC, for the claimant, derives the following propositions from those same authorities. First, imprisonment is the imposition of restraint upon a persons liberty so that he is compelled at the will of a third person to stay within a defined boundary. Second, the restraint must be complete, in the sense that he is required to stay within a defined area. There is no imprisonment if movement is blocked in one direction but he remains free to depart in a different direction. Third, it is imprisonment no matter how short the period a few seconds is sufficient. Fourth, the restraint must be immediate and not conditional. Fifth, complete restraint does not mean that there must be physical barriers such as locks or guards to prevent him leaving. Nor does it mean that it must be physically impossible to leave. He is imprisoned if he is made to stay by intimidation or threats, fear of the consequences, or submission to apparent legal authority. Sixth, it is also imprisonment if he is made to stay by the threat of imprisonment if he leaves, including the threat of arrest or prosecution. Seventh, the threat does not have to be a threat to return him to the same place of confinement. Eighth, it is also imprisonment if he is only able to leave the defined area by an unreasonable means or route, for example, by jumping out of a first floor window or risking prosecution by doing so. An obvious illustration of the reasonableness principle is the true story told by Eric Williams in his 1949 novel, The Wooden Horse. Prisoners of war escaped from their prison camp by concealing their tunnelling under a wooden vaulting horse: their will was never overborne because they always intended to escape and it did prove physically possible for them to do so but they clearly were imprisoned while they were in the camp. Another illustration is the decision of the Court of Appeal of Victoria in McFadzean v Construction, Forestry, Mining and Energy Union [2007] VSCA 289; [2007] 20 VR 250. The Union set a picket round a camp set up by anti logging protesters to prevent the protesters getting out. The protesters could have asked the police to escort them out, but that did not mean that they were not imprisoned until they did so. But the protesters could also have escaped at any time along a track through the bush: this was a reasonable means of egress and so they had not been imprisoned. The most problematic case from the claimants point of view is the Bournewood decision in the House of Lords. But, argues Ms Rose, it has no bearing because if a person is not actually confined at the moment, the fact that he might be confined if he tries to leave does not make it imprisonment. This is different from being actually confined by fear of the consequences if one leaves. In any event, she points out that the case might well be decided differently today. The Court of Appeal were unanimous in holding that the patient was imprisoned. The House of Lords decided otherwise by a narrow majority and it is not easy to grasp their rationale. And the European Court of Human Rights held that he had been deprived of his liberty: HL v United Kingdom (2004) 40 EHRR 32. So far as is known, this is the only example of a deprivation of liberty which did not amount to imprisonment at common law: generally speaking, one may well be imprisoned without being deprived of ones liberty, but the other way round is harder to envisage. Discussion on the first issue As it is put in Street on Torts, 15th ed (2018), by Christian Witting, p 259, False imprisonment involves an act of the defendant which directly and intentionally (or possibly negligently) causes the confinement of the claimant within an area delimited by the defendant. The essence of imprisonment is being made to stay in a particular place by another person. The methods which might be used to keep a person there are many and various. They could be physical barriers, such as locks and bars. They could be physical people, such as guards who would physically prevent the person leaving if he tried to do so. They could also be threats, whether of force or of legal process. A good example is R v Rumble [2003] EWCA Crim 770; (2003) 167 JP 205. The defendant in a magistrates court who had surrendered to his bail was in custody even though there was no dock, no usher, nor security staff and thus nothing to prevent his escaping (as indeed he did). The point is that the person is obliged to stay where he is ordered to stay whether he wants to do so or not. In this case there is no doubt that the defendant defined the place where the claimant was to stay between the hours of 11.00 pm and 7.00 am. There was no suggestion that he could go somewhere else during those hours without the defendants permission. This is not a case like Bird v Jones where the claimant could cross the bridge by another route or Robinson v Balmain New Ferry Co Ltd where he had agreed to go onto the wharf on terms that he could only get out if he paid a penny. The fact that the claimant did from time to time ignore his curfew for reasons that seemed good to him makes no difference to his situation while he was obeying it. Like the prisoner who goes absent from his open prison, or the tunneller who gets out of the prison camp, he is not imprisoned while he is away. But he is imprisoned while he is where the defendant wants him to be. There is, of course, a crucial difference between voluntary compliance with an instruction and enforced compliance with that instruction. The Court of Appeal held that this was a case of enforced not voluntary compliance and I agree. It is not to be compared with those cases in which the claimant went voluntarily with the sheriffs officer. There can be no doubt that the claimants compliance was enforced. He was wearing an electronic tag which meant that leaving his address would be detected. The monitoring company would then telephone him to find out where he was. He was warned in the clearest possible terms that breaking the curfew could lead to a 5,000 fine or imprisonment for up to six months or both. He was well aware that it could also lead to his being detained again under the 1971 Act. All of this was backed up by the full authority of the State, which was claiming to have the power to do this. The idea that the claimant was a free agent, able to come and go as he pleased, is completely unreal. For what it is worth, in the case of Secretary of State for the Home Department v JJ [2007] UKHL 45; [2008] AC 385, it was taken for granted that a curfew enforced by electronic tagging, clocking in and clocking out, and arrest or imprisonment for breach was a classic detention or confinement (para 59). The only question was whether it was also a deprivation of liberty within the meaning of article 5 of the ECHR, which leads on to the second issue. The second issue: Deprivation of Liberty Mr Tam makes an alternative argument in this Court which was not open to him in the courts below. This is that the concept of imprisonment for the purpose of the tort of false imprisonment should now be aligned with the concept of deprivation of liberty within the meaning of article 5 of the ECHR. The classic definition of this concept is taken from Guzzardi v Italy (1980) 3 EHRR 333, para 92: In order to determine whether someone has been deprived of his liberty within the meaning of article 5, the starting point must be his concrete situation and account must be taken of a whole range of criteria such as the type, duration, effects and manner of implementation of the measure in question. The ECHR distinguishes between the deprivation and restriction of liberty and the court emphasised that this was a matter of degree rather than nature or substance (para 93). This multi factorial approach is very different from the approach of the common law to imprisonment. In Austin v Comr of Police of the Metropolis [2007] EWCA Civ 989; [2008] QB 660, the Court of Appeal held that kettling the claimants for several hours at Oxford Circus was indeed imprisonment at common law, but that it was justified by the common law principle of necessity; however, it was not a deprivation of liberty within the meaning of article 5, a conclusion with which both the House of Lords and the European Court of Human Rights agreed: [2009] UKHL 5; [2009] 1 AC 564, and Austin v United Kingdom (2012) 55 EHRR 14. The trial judges observation that there could be imprisonment at common law without there being a deprivation of liberty under article 5 and vice versa was cited by the Court of Appeal with apparent approval (para 87). That observation was repeated by the Court of Appeal in Walker v Comr of Police of the Metropolis [2014] EWCA Civ 897; [2015] 1 WLR 312, where it was held to be false imprisonment for a police officer to stand in the front doorway of a house so as to prevent the claimant from leaving, even for a very short time, but it was not a deprivation of liberty within the meaning of article 5. By contrast, when the Bournewood case reached the European Court of Human Rights, that court held that the patient had been deprived of his liberty within the meaning of article 5: HL v United Kingdom. This is thought to be the only case going the other way. Imprisonment for the purpose of the tort of false imprisonment can take place for a very short period of time, whereas a number of factors are relevant to whether there has been a deprivation of liberty. On the other hand, imprisonment may be justified at common law in circumstances which are not covered by the list of possibly permissible deprivations of liberty in article 5(1) of the ECHR. Mr Tam argues that the time has now come to align the two concepts: specifically to align the concept of imprisonment with the concept of deprivation of liberty. He says this because, in Secretary of State for the Home Department v JJ [2007] UKHL 45; [2008] AC 385, while the House of Lords held, by a majority, that a 16 hour curfew was a deprivation of liberty, Lord Brown of Eaton under Heywood expressed the view that an eight hour curfew, such as this, would not be such a deprivation. It is, of course, the case that the common law is capable of being developed to meet the changing needs of society. In Lord Toulsons famous words in Kennedy v Charity Commission [2014] UKSC 20; [2015] AC 435, para 133, it was not the purpose of the Human Rights Act that the common law should become an ossuary. Sometimes those developments will bring it closer to the ECHR and sometimes they will not. But what Mr Tam is asking this Court to do is not to develop the law but to make it take a retrograde step: to restrict the classic understanding of imprisonment at common law to the very different and much more nuanced concept of deprivation of liberty under the ECHR. The Strasbourg court has adopted this approach because of the need to draw a distinction between the deprivation and the restriction of physical liberty. There is no need for the common law to draw such a distinction and every reason for the common law to continue to protect those whom is has protected for centuries against unlawful imprisonment, whether by the State or private persons. The Court of Appeal in Austin and in Walker were right to say that there could be imprisonment at common law without there being a deprivation of liberty under article 5. Whether they were also right to add and vice versa may be open to doubt in the light of the Bournewood saga, but it is not necessary for us to express an opinion on the matter. Conclusion I would dismiss this appeal.
UK-Abs
This appeal is about the law on damages for false imprisonment. It requires the Supreme Court to consider the meaning of imprisonment at common law and whether this should be aligned with the concept of deprivation of liberty under the European Convention on Human Rights (ECHR). The claimant (who claims to be a Liberian national named Ibrahima Jalloh, although his identity is disputed by the Home Office) was released from immigration detention on bail in October 2013. On the following day, he reported to an immigration officer. He was given a document headed NOTICE OF RESTRICTION purporting to impose restrictions on him under paragraph 2(5) of Schedule 3 to the Immigration Act 1971. The restrictions included a requirement to report to an immigration officer every Monday, Wednesday and Friday, to live at a specified address in Sunderland, to submit to electronic tagging and to stay at home each night between the hours of 11.00 pm and 7.00 am. The notice warned him that he would be liable to imprisonment or a fine if he failed to comply with the curfew without reasonable excuse. Electronic monitoring equipment was installed and the curfew was in place from 3 February 2014 until 14 July 2016, a total of 891 days. On the whole, the claimant sought to comply with the curfew although he did break it on a number of occasions, leaving the house (among other things) for religious observance and to attend family court proceedings in Coventry. It transpired in 2016 that the Secretary of State had no legal power to impose restrictions by way of curfew in this way: R (Gedi) v Secretary of State for the Home Department [2016] EWCA Civ 409. In consequence of that decision, the High Court ordered the claimants curfew to be lifted. The Secretary of State now accepts the curfew was unlawful from the start. The claimant sought damages for false imprisonment, arguing he had been confined to his house without any legal basis for long periods of time. Mr Justice Lewis accepted that argument and awarded him 4,000 in damages. The Court of Appeal upheld his decision. On appeal to the Supreme Court, the Home Secretary argues that (1) the curfew (although unlawful) did not qualify as imprisonment at common law; and (2) if it did, the common law concept of imprisonment should be modified and aligned with the more demanding concept of deprivation of liberty under article 5 of the ECHR. The Supreme Court unanimously dismisses the Secretary of States appeal. Lady Hale gives the only judgment with which Lord Kerr, Lord Carnwath, Lord Briggs and Lord Sales agree. Imprisonment The essence of imprisonment is being made to stay in a particular place by another person. The methods which might be used to keep a person there are many and various. They include physical barriers, guards or threats of force or of legal process [24]. In this case there is no doubt that the Secretary of State defined the place where the claimant was to stay between the hours of 11.00 pm and 7.00 am. There was no suggestion that he could go somewhere else during those hours without the Secretary of States permission [25]. Although the claimant broke his curfew from time to time, this made no difference to his situation while he was obeying it. Like a prisoner who goes absent from an open prison, or a tunneller who successfully escapes from a prison camp, the claimant was not imprisoned while he was away, but he was imprisoned as long as he stayed at home [26]. Although it was physically possible for the claimant to leave, his compliance was enforced and not voluntary. He was wearing an electronic tag which meant that leaving his address would be detected. The monitoring company would then telephone him to find out where he was. He was warned in the clearest possible terms that breaking the curfew could lead to a 5,000 fine or imprisonment for up to six months or both. He was well aware that it could also lead to his being detained again under the 1971 Act. All of this was backed up by the full authority of the State, which was claiming to have the power to do this [27]. This is a case of classic detention or confinement [28]. Deprivation of liberty The ECHR distinguishes between deprivation and mere restriction of physical liberty. Whether there has been a deprivation of liberty depends on a number of factors including the type, duration and effects of the confinement [29] [30]. In Secretary of State for the Home Department v JJ [2007] UKHL 45, Lord Brown expressed the view that an eight hour curfew would not amount to a deprivation of liberty for these purposes [32]. Consequently, the Secretary of State argued the curfew in this case would not amount to a deprivation of liberty, and suggested the time had come to align the domestic law of false imprisonment with the concept of deprivation of liberty under the ECHR. The Supreme Court unanimously declines to do so. Although the common law may develop to meet the changing needs of society, this proposal would not develop the law but make it take a retrograde step. It would restrict the classic understanding of imprisonment at common law to the very different and much more nuanced concept of deprivation of liberty under the ECHR. This approach derives from the need to distinguish under the ECHR between the deprivation and the restriction of physical liberty. There is no need for the common law to draw such a distinction and every reason for the common law to continue to protect those whom is has protected for centuries against unlawful imprisonment, whether by the state or private persons [33]. Accordingly, it is possible for there to be imprisonment at common law without a deprivation of liberty under article 5. It is not necessary to decide whether the converse is true [34].
The Childrens Investment Fund Foundation (UK) (CIFF) is a charitable company with more than $4bn in assets helping children in developing countries. It was founded by Sir Christopher Hohn (Sir Christopher) and Ms Jamie Cooper (Ms Cooper) in 2002, but it became difficult to manage when their marriage broke down. To resolve those difficulties, Sir Christopher and Ms Cooper agreed that in exchange for a grant (the Grant) of $360m, to be paid over five years, to Big Win Philanthropy (BWP), a charity founded by Ms Cooper, she would resign as a member and trustee of CIFF. CIFF, Sir Christopher and Ms Cooper entered into a grant agreement (the Grant Agreement) for this purpose on 25 July 2015. The main legal issues in the case stem from the special combination of three factors. First, the relevant arrangements came about with a view to resolving the governance issues resulting from the breakdown in the relationship between Sir Christopher and Ms Cooper, not for a reason derived from the activities of the charity. Second, CIFF is both a charity and a company limited by guarantee (not having a share capital) formed and registered on 8 February 2002 under the Companies Act 1985. I will call such companies guarantee companies. As a guarantee company, CIFF has a two tier governance structure, namely members and directors, the latter being called trustees, and the Companies Act 2006 (the 2006 Act) applies to it. Dr Lehtimki, the first respondent and a central figure in this appeal, is a member of CIFF, as are Sir Christopher and Ms Cooper. They were the original subscribers to the memorandum of association. CIFF has no other members. Third, the recipient of the Grant under the arrangements is a new charity established and already endowed by a $40m payment made by TCI Fund Management Ltd pursuant to a Deed of Covenant made by Sir Christopher on 25 July 2015. In very brief outline, Sir Geoffrey Vos, the Chancellor of the High Court [2018] Ch 371 decided on CIFFs application for directions that the Grant was in the best interests of the charity and directed the sole unconflicted member of CIFF, Dr Lehtimki, the first respondent to this appeal, to vote in favour of a resolution of the members of CIFF to approve it pursuant to section 217 of the 2006 Act (see para 10 below). Dr Lehtimki, however, prefers to be free to exercise his own judgment on how to vote as a member. He appealed to the Court of Appeal to set aside this part of the Chancellors order. The Court of Appeal (Gloster VP, David Richards and Newey LJJ) [2019] Ch 139 acceded to his appeal on this issue, and Ms Cooper now appeals to this Court. The other respondents to this appeal are Sir Christopher, CIFF and HM Attorney General. Dr Lehtimki and Sir Christopher argue that the appeal should be dismissed and the decision of the Court of Appeal upheld on additional grounds. This is because while Dr Lehtimki and Sir Christopher agree that the Court of Appeal was right to conclude that it did not have the power to direct Dr Lehtimki to vote in favour of the Grant they do not want the Supreme Court to uphold every aspect of the Court of Appeals decision. In particular, they contend that the Court of Appeal was wrong to conclude that the members of CIFF owe fiduciary duties. CIFF and HM Attorney General have made submissions for the assistance of the Court, and CIFF also advances positive criticisms of the conclusion of both courts below that a member of a charitable company is a fiduciary. (This is the subject of Issue 1, below). The Attorney General must be joined to proceedings of this nature and represents the Crown in its role as parens patriae or protector of charities, an important and very long established role. In the words of Lord Eldon LC: It is the duty of the King, as parens patriae, to protect property devoted to charitable uses; and that duty is executed by the officer who represents the Crown for all forensic purposes. On this foundation rests the right of the Attorney General in such cases to obtain by information the interposition of a court of equity (Attorney General v Brown (1818) 1 Swans 265, 291; 36 ER 384, 394 395) Because of the joinder of the Attorney General, the Charity Commission for England and Wales (the Charity Commission) has properly played no part in this appeal. Requirements for making the Grant The making of the Grant is governed by several matters: the terms of the Grant Agreement, the provisions of the Companies Act 2006, the provisions of the Charities Act 2011 (the 2011 Act) and the general law applying to charities, trustees and directors and members of companies. The Grant Agreement is conditional on either the Charity Commission having approved or made no objection to this payment or the approval of the court. Both Sir Christopher and Ms Cooper agreed separately to donate $40m to BWP. Ms Coopers agreement in this regard was conditional on the making of the Grant. Prior to the Grant Agreement, Sir Christopher and Ms Cooper signed a letter of intent dated 14 April 2015 in which they stated that they would not vote on the proposed Grant on account of their conflict of interest. Sir Christopher also agreed: to support the application before the Board of CIFF, and in the boards application for approval to the Charity Commission or any tribunal or court that may have jurisdiction. For the avoidance of doubt such support shall not require any active steps to be taken by Sir Chris beyond confirming the same in writing in the form of Appendix 1 when required to do so. By a Deed of Resignation dated 9 July 2015, Ms Cooper agreed to resign as a member and trustee of CIFF. That resignation will be effective when the court approves or refuses to approve the Grant. The implementation of the Grant Agreement necessitates the passing of a resolution of CIFF in general meeting under section 217 of the 2006 Act because the payment of the Grant constitutes a payment for loss of office to a person connected with a director for the purposes of section 215 of the 2006 Act. The relevant provisions of sections 215 and 217 of the 2006 Act provide: A company may not make a payment for loss of office to a director of the company unless the payment has been approved by a resolution of the members of the company. (section 217) A payment for loss of office means a payment made to a director or past director of a company (c) as consideration for or in connection with his retirement from his office as director of the company (section 215) For the purposes of sections 217 to 221 (payments requiring members approval) (a) payment to a person connected with a director is treated as payment to the director. (section 215(3)) Moreover, under section 201 of the 2011 Act, the Grant requires the consent of the Charity Commission. Section 201 provides that: (1) In the case of a charitable company, each of the following is ineffective without the prior written consent of the Commission (a) any approval given by the members of the company under any provision of Chapter 4 of Part 10 of the Companies Act 2006 (transactions with directors requiring approval by members) listed in subsection (2), (2) The provisions of the 2006 Act are (f) office); section 217 (payments to directors for loss of The means by which the Grant is made must also comply with CIFFs own constitution, which consists of its memorandum and articles of association. The memorandum of association of CIFF contains various prohibitions on trustees receiving benefits from CIFF. In particular, clause 5.2 provides that a trustee must not receive any payment of money or other material benefit, directly or indirectly, from CIFF except in certain circumstances which do not apply in this case or with the prior written approval of the Charity Commission. The articles of association of CIFF provide for the appointment of trustees who perform the functions of both directors of the company and charity trustees. The trustees are authorised by the articles of CIFF to manage its operations (see article 6.8 of CIFFs articles of association). Some matters, however, require a resolution of the company in general meeting, including the approval of payments to directors for loss of office under section 217 of the 2006 Act. The members cannot interfere with the decisions of the trustees unless they amend the articles to enable them to do so (see John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113, 134 approving a passage in Buckley on the Companies Acts (1930) 11th ed, p 723). Only Dr Lehtimki will vote at the meeting of CIFF on the section 217 resolution Because the making of the Grant involves a conflict of interest on the part of both Sir Christopher and Ms Cooper, it is proposed that only one member, Dr Lehtimki, will vote on any resolution required to carry the Grant into effect. The court has not been concerned with any issue about how this meeting is to be summoned, assuming that Dr Lehtimki is not able to approve a written resolution. The decisions of the Chancellor and the Court of Appeal CIFF applied to the Charity Commission for approval of the overall transaction. The Charity Commission did not give its approval but instead made an order under section 115 of the 2011 Act authorising the bringing of proceedings to obtain the courts approval of the Grant and directions regarding the resolution under section 217 of the 2006 Act. (a) Judgment of the Chancellor Grant approved: The Chancellor of the Chancery Division of the High Court, Sir Geoffrey Vos, held that the trustees had surrendered their discretion whether to make the Grant to the court. The Chancellor, at para 64, cited a passage from an unreported judgment of Robert Walker J in In re Egerton Trust Retirement Benefit Scheme, cited by Hart J in Public Trustee v Cooper [2001] WTLR 901 in which Robert Walker J analysed the nature of various applications by trustees to the court, including the surrender of discretion by trustees. He made the important point that this was conceptually different from seeking the courts approval for a transaction since the court would be exercising its own discretion. The Chancellor found that that was the nature of the application which CIFF was making. On the basis of the evidence presented to him, the Chancellor held that, in the exceptional circumstances of the case, the court would exercise its discretion in favour of approving the Grant. The Chancellor held, at para 128, that in the unique circumstances of this extremely unusual case, the Grant was in the best interests of CIFF. In approving the Grant, the principal reasons given by the Chancellor were that the parties should not be allowed to renege on the deal they had made in good faith, that Ms Cooper would be contributing a further $40m to her new charity and that approving the Grant would bring finality and avoid further legal costs. The Chancellor referred to the considerable talents of Ms Cooper. The Chancellor expressly stated that, while he had come to a clear conclusion that he should approve the Grant, he was not saying that no reasonable trustee or fiduciary could disagree with [his] view that the Grant was in the best interests of CIFF or that anyone who disagreed with [his] view would automatically be acting in bad faith (Judgment, para 135). Section 217 resolution: The Chancellor held that the Grant would constitute a payment in connection with Ms Coopers resignation as a director and that BWP is a person connected with Ms Cooper within sections 252(2)(b) and 254(2)(b) of the 2006 Act. There was no applicable exception from these provisions. Therefore the 2006 Act requires CIFF to disclose the Grant to members and obtain their approval by resolution. This is now common ground, and I will refer to the required resolution as the section 217 resolution. As the Chancellor put it, section 217 of the 2006 Act applies as much to charitable companies as it does to ordinary trading companies. Reasons for making a direction that Dr Lehtimki should vote in favour of the section 217 resolution: Dr Lehtimki was not one of the original parties to these proceedings but the Chancellor ordered him to be joined after the hearing started and he had an opportunity to make submissions to the court. Dr Lehtimki filed a witness statement on 17 May 2017 in which he explained his difficulties and concerns about voting to approve the Grant. These may be taken from his conclusions and I have set out these conclusions below at para 106, when I come to apply the law to the facts of this case. The Chancellor wanted to ensure that the courts decision was not overridden by an unaccountable membership (Judgment, para 38). The Chancellor noted that the position of Dr Lehtimki, a Harvard and Stanford trained economist, was one of studied neutrality and that it was perhaps more likely than not that he would vote against any section 217 resolution but the Chancellor stated that he would not take any suspicion on that point into account as Dr Lehtimki had not been cross examined (para 121). Dr Lehtimki did not consider that he was bound to vote in favour of the section 217 resolution (para 132). The Chancellor further held (at para 46) that: Generally a member of a commercial trading company may vote his shares at a general meeting in accordance with his own interests or wishes. Even a vote to amend the articles of association may be cast in accordance with the members own view of what is in the best interests of the company, and the court will only determine that the votes of a member have not been cast in such a case for the benefit of the relevant company if no reasonable person could consider that it was for its benefit. See Pender v Lushington (1877) 6 Ch D 70, 75 76, North West Transportation Co Ltd v Beatty (1887) 12 App Cas 589, 593, Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656, and In re Charterhouse Capital Ltd; Arbuthnott v Bonnyman [2015] 2 BCLC 627, para 90. However, in the judgment of the Chancellor, Dr Lehtimki was a fiduciary in that his power as a member of CIFF to vote on the section 217 resolution was vested in him for the benefit of CIFF and not vested in him personally. The Chancellor distinguished the rule that the members were not obliged to vote other than in their own interest (citing, at para 141, Northern Counties Securities Ltd v Jackson & Steeple Ltd [1974] 1 WLR 1133) as not decided in the context of charitable companies. In his judgment, members of a charitable company were bound into the regime in the 2011 Act, under which the assets of a charitable company could only be used for charitable purposes (para 144). He further held that the members could not use assets for non charitable purposes. Accepting, at para 145, the submissions made on behalf of the Attorney General and Ms Cooper that the members did not stand outside the charity, the Chancellor held that the members of CIFF were an integral part of the administration of the charity. Accordingly, in his judgment, a member was bound to exercise his right to vote in the best interests of the charity of which he was a member. The Chancellor concluded that he should give the direction to Dr Lehtimki because it was inappropriate to defer to the situation in which the courts decision could be undermined, there was a risk of extremely expensive litigation, charity generally would suffer and finality could only be achieved by the courts exercising its discretion to make a direction against the member. The member was a fiduciary and would not be acting in the best interests of the charity if he came to a different conclusion from that of the court. He did not have a free vote in this case, because he was bound by the fiduciary duties described above and was subject to the courts inherent jurisdiction over the administration of charities. In addition, the Attorney General and the Charity Commission considered that such a direction could be made. (b) Judgment of the Court of Appeal The Court of Appeal agreed with the Chancellor with respect to the question whether the members of CIFF were fiduciaries but went on to hold that the Chancellor should not have made the direction against Dr Lehtimki. On the question whether a member was a fiduciary, the Court of Appeal distinguished the decision in Bolton v Madden (1873) LR 9 QB 55. It further held that a member was part of the internal workings of the charity and his powers were exercisable for the benefit of the charity. It accepted, however, that the position might be different in relation to companies with a large membership, which it called mass membership charities: 46. It does not necessarily follow that members of charities such as the National Trust also have fiduciary obligations. Since we are not dealing with such an organisation, we do not need to decide whether their members are in the same position as CIFFs. There may possibly, moreover, be scope for argument as to whether it is less reasonable to expect those belonging to mass membership charities to act exclusively in the charities interests. That said, it is far from clear that it should be legitimate for members of, say, the National Trust to vote to obtain benefits for themselves from an entity with exclusively charitable objects. The Court of Appeal held that the members of a charitable company have no proprietary rights. As to the content of their fiduciary duty, the Court of Appeal held (at para 48) that it was unnecessary: to rule on the precise scope of the fiduciary duties owed by members of CIFF. It is sufficient to say that a member of CIFF owes, in our view, a duty corresponding to that specifically imposed on members of CIOs by section 220 of the Charities Act 2011. In other words, the member must exercise the powers that he has in that capacity in the way that he decides, in good faith, would be most likely to further the purposes of CIFF. It should be stressed that this duty is subjective: in other words, that what matters is the members state of mind (compare eg Regentcrest plc v Cohen [2001] 2 BCLC 80, para 120, dealing with company directors). A charitable incorporated organisation or CIO is a form of charity incorporated under the 2011 Act (which repealed provisions of the Charities Act 2006 introducing the CIO). The suggestion of a new legal form for charities was first made by the Company Law Review Steering Group, set up by the Department of Trade and Industry, of which I was a member (Modern Company Law for a Competitive Economy (2001), Final Report, para 4.63 et seq). A CIO has a separate legal personality from the individual trustees, and limited liability. Like a charitable company, a CIO has two tiers of governance: (1) the trustees and (2) the members. On incorporation, the CIO is registered only with the Charity Commission so it is not subject to dual regulation under the 2006 Act. Section 220 of the 2011 Act, to which the Court of Appeal referred in the citation in the preceding paragraph, provides: Each member of a CIO must exercise the powers that the member has in that capacity in the way that the member decides, in good faith, would be most likely to further the purposes of the CIO. However, the Court of Appeal allowed the appeal on the basis of the non intervention principle (described in para 36 below). The Court of Appeal concluded that the court could not direct a fiduciary to substitute its view for that of his own unless there was a breach of duty. Additionally, the Court of Appeal considered that their conclusion was reinforced by the fact that, in enacting section 217 of the 2006 Act and section 201 of the 2011 Act, Parliament had specifically and expressly entrusted the responsibility of approving payments such as the Grant to the members of the charitable company, subject only to the prior written consent of the Charity Commission. The Chancellors order would prevent Dr Lehtimki from exercising his choice as to whether to approve the transaction in accordance with section 217 and stop him from playing a part which in the circumstances Parliament had assigned him. There was no significant evidence of breach of duty and the Court of Appeal noted that the Chancellor had expressly accepted that he was not saying that no reasonable trustee could disagree with his decision that the Grant should be approved (Judgment, para 135). It was therefore reasonably open to Dr Lehtimki to disagree. Issues on this appeal On this appeal, there is no challenge to the Chancellors finding that CIFFs trustees had surrendered to the court their discretion on the question whether to make the Grant or to his conclusion that the Grant was in the best interests of the charity. Dr Lehtimki has not surrendered his discretion as a member of CIFF as to how to vote on the section 217 resolution. The overarching question on this appeal is whether the Chancellor could in law make the direction. Leaving to one side the concurring judgment of Lord Briggs, with whom Lord Wilson and Lord Kitchin agree, to which I respond at paras 174 to 199 below, this question involves resolving three issues. First, is Dr Lehtimki in his capacity as a member of CIFF a fiduciary in relation to the objects of the charity? A person has to be a fiduciary for the courts jurisdiction over fiduciaries to be engaged. This is a threshold question. Both the Chancellor and the Court of Appeal decided this issue in favour of the appellant, but Dr Lehtimki contends that it should have been decided in his favour. I have added the words in relation to the objects of the charity because, as Frankfurter J held in Securities & Exchange Commission v Chenery Corpn (1943) 318 US 80, 85 86: to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? Second, if Dr Lehtimki is a fiduciary, have circumstances arisen with respect to the section 217 resolution in which the court can exercise its jurisdiction over fiduciaries in relation to Dr Lehtimki? The jurisdiction to intervene in relation to the discretionary actions of trustees is in general governed by the principle, known as the non intervention principle, that (in the absence of evidence of breach of duty) the court does not intervene in the exercise by a fiduciary of a discretion. The Court of Appeal decided this issue against the appellant, but Lord Pannick QC contends that it was wrong in law to do so. The parties to this appeal have presented their arguments on the non intervention principle on the basis that it applies where the fiduciary owes duties to a charitys charitable purposes as well as where a fiduciary acts with respect to a private trust, but in my judgment the application of the principle in the two cases may not be co terminous. A major reason for a distinction between the courts jurisdiction over fiduciaries who owe duties to the purposes of a charity and its jurisdiction over those who owe duties to the beneficiaries under a private settlement is in relation to schemes, which are not available for private trusts. However, this may not be the only distinction because the fact that the trust is charitable is clearly part of the circumstances, and the court must have regard to all the circumstances when considering whether to intervene in relation to a trustees exercise of a discretionary power. The order which the Chancellor made against Dr Lehtimki was a direction that he should vote in a particular way on the section 217 resolution. Lord Pannick, for the appellant, submits that the court could also grant the relief sought in this case against Dr Lehtimki under its separate jurisdiction to make a scheme for a charity. However, the direction sought against Dr Lehtimki does not fall within the meaning of scheme since it neither relates to the purposes of CIFF nor affects the management and administration of the charity. Lord Pannick points out that in Chinachem Charitable Foundation Ltd v The Secretary for Justice [2015] HKCFA 35, para 41, Lord Walker of Gestingthorpe NPJ (formerly a Justice of this Court and sitting in the Court of Final Appeal of Hong Kong) referred to a scheme as a written instrument approved by the court to regulate, in whole or in part, the future management and administration of the trust, but it is important not to take this observation out of context. I do not consider that Lord Walkers observation is intended to remove the distinction to be drawn between on the one hand schemes, which may operate in the way Lord Walker described or concern the charitys purposes, and on the other hand directions which may be given in the operation of a charity by the Charity Commission or the court. Third, does section 217 of the 2006 Act allow the court to direct a member how to exercise his discretion when Parliament has provided for members to approve the resolution, subject to the prior written consent of the Charity Commission? The Chancellor decided this issue in favour of the appellant, but the Court of Appeal disagreed with him. The appellant appeals against the Court of Appeals ruling on this issue. Discussion Summary of conclusions In my judgment, the three issues should be decided in the appellants favour. I have summarised my reasons at the end of this judgment. I will now consider each of the three issues in turn. Issue 1: Is Dr Lehtimki qua member of CIFF a fiduciary? (1) What the term fiduciary means and why it matters in this context The question whether a person is a fiduciary is important because of the duties which follow. But in this case the additional significance of the question whether Dr Lehtimki is a fiduciary in his capacity as a member of CIFF is that the court will, subject to Issues 2 and 3 below, be able to direct him as to how to vote on the section 217 resolution. Equity imposed stringent duties on persons who were appointed trustees of trusts: Lord Eldon is said to have held that these duties were imposed with relentless jealousy in order to ensure that trustees fulfilled their duties, and that trustees had to be watched with infinite and the most guarded jealousy (see Ex p Lacey (1802) 6 Ves Jnr 625, 626; 31 ER 1228 and note 2 to the report). The words infinite and relentless aptly indicate the capacity of equity to develop to meet new challenges. Over the years these duties were also imposed on directors, agents, solicitors and others. The term fiduciary is used to cover all persons subject to these duties, including trustees, and it is therefore a wider term than that of trustee. There has been considerable debate as to how to define a fiduciary, but it is generally accepted today that the key principle is that a fiduciary acts for and only for another. He owes essentially the duty of single minded loyalty to his beneficiary, meaning that he cannot exercise any power so as to benefit himself. In Bristol and West Building Society v Mothew [1998] Ch 1, 18 Millett LJ described the duties of a fiduciary as follows: A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary. So the distinguishing obligation of a fiduciary is that he must act only for the benefit of another in matters covered by his fiduciary duty. That means that he cannot at the same time act for himself. If a person is a fiduciary then, as part of his core responsibility, he must not put himself into a position where his interest and that of the beneficiary conflict (the no conflict principle) and he must not make a profit out of his trust (the no profit principle). The fiduciary is likely to owe other fiduciary duties as well, such as the duty to act in the best interests of the person to whom the duty is owed. Section 178(2) of the 2006 Act expressly makes this a fiduciary duty in the case of company directors. It is not necessary to consider whether these duties are fiduciary duties in all cases. It is not enough that a person has agreed to perform certain duties by agreement. As the Privy Council held in In re Goldcorp Exchange Ltd [1995] 1 AC 74, 98 The essence of a fiduciary relationship is that it creates obligations of a different character from those deriving from the contract itself. The Court of Appeal adopted the following test put forward by Finn J, sitting in the Federal Court of Australia, in Grimaldi v Chameleon Mining NL (No 2) (2012) 287 ALR 22, para 177: a person will be in a fiduciary relationship with another when and in so far as that person has undertaken to perform such a function for, or has assumed such a responsibility to, another as would thereby reasonably entitle that other to expect that he or she will act in that others interest to the exclusion of his or her own or a third partys interest This formulation introduces the additional concept of reasonable expectation of abnegation of self interest. Reasonable expectation may not be appropriate in every case, but it is, with that qualification, consistent with the duty of single minded loyalty. There was a suggestion in this case that a member would not expect to find that he was a fiduciary. However, there was no evidence about that, and Mr Robert Pearce QC, for Her Majestys Attorney General, pointed to a publication of the Charity Commission available since 2004 and entitled RS7 Membership Charities. This makes it clear that the Charity Commission takes the view that members of a charitable company have an obligation to use their rights and exercise their vote in the best interests of the charity of which they are a member (p 18), and that the rights that exist in relation to the administration of a charitable institution are fiduciary (p 33). (There are similarities here with the duty imposed on members of a CIO by section 220 and indeed RS7 Membership Charities contemplates that members of a CIO would be placed under that duty.) Leading works on charities, such as Tudor on Charities, 10th ed (2015), paras 6 051 and 17 005 and Picarda, The Law and Practice Relating to Charities, 4th ed (2010), p 287 considered it doubtful or an open question whether members were fiduciaries. This view derives support from a number of decisions where that was assumed to be the case: see, for example, Bolton v Madden LR 9 QB 55, 57 where the Court of Queens Bench (now the High Court) on appeal from the Lord Mayors Court held that they could find no legal principle to justify us in holding that the subscriber to a charity may not give his votes as he pleases. However, it seems to me that when it comes to finding whether there is a reasonable expectation in the public at large, the Charity Commissions published guidance must have more weight than even much respected legal commentaries. For the reasons given below at para 104, I do not consider that Bolton v Madden is necessarily inconsistent with members of a charitable company owing a fiduciary duty. I should add here that Tudor in the passage first cited, at footnote 485 criticises a learned article by Professor J Warburton Charity Members; duties and responsibilities [2006] Conv 300 for overlooking the fact that any fiduciary duty owed by a member of a charitable company is owed to the company itself. The Court of Appeal in this case also expressed that view. As will hereafter become clear, I take the view that any fiduciary duty is owed not to the company (viz CIFF in this case) but to the charitable purposes or objects of the charity. The Attorney General or a duly qualified individual can bring charity proceedings to enforce this duty: see section 115 of the 2011 Act. (That section imposes limits on the bringing of proceedings: see section 115(2), which requires an order of the court or of the Charity Commission, and the case law on section 115). My conclusion is consistent with section 172(2) of the 2006 Act which provides that directors of companies set up for altruistic purposes owe their fiduciary duty to promote the purposes of the company: Where or to the extent that the purposes of the company consist of or include purposes other than the benefit of its members, subsection (1) has effect as if the reference to promoting the success of the company for the benefit of its members were to achieving those purposes. A person can be a fiduciary in relation to another party with whom he has a contractual relationship in respect of some only of his contractual obligations: see, for example, F & C Alternative Investments (Holdings) Ltd v Barthelemy (No 2) [2012] Ch 613, especially at paras 212 216 and 223 per Sales J (as he then was). This is only one of the situations in which a fiduciary duty may arise. It is important to examine the very specific context in which it is said that a fiduciary duty arises. This point was made by Sales J: The touchstone is to ask what obligations of a fiduciary character may reasonably be expected to apply in the particular context, where the contract between the parties will usually provide the major part of the contextual framework in which that question arises. (para 223) (Emphasis added) (2) Companies as charities (a) Backdrop It will seem extraordinary to many people that, despite the fact that there have been charitable companies for many years and that there are now some 33,000 guarantee companies which are registered charities, the issue whether a member is a fiduciary has never before been decided. There is also little scholarship or textbook commentary on this issue. However, there are other signposts to guide the courts: first, the liberal interpretation taken to charities by the courts, second, the recognition of charitable companies by Parliament, and, third, the decision of Slade J (as he then was) in Liverpool and District Hospital for the Diseases of the Heart v Attorney General [1981] Ch 193 (the Liverpool and District case). I consider each signpost in turn. (b) Liberal approach taken to charities by the courts The first signpost is to be found in the case law and it is the general approach of the courts, which is to uphold charitable gifts wherever possible. As Lord Macnaghten, with whom Lord Watson and Lord Morris agreed, held in Income Tax Special Purposes Comrs v Pemsel [1891] AC 531 at 580 581: The Court of Chancery has always regarded with peculiar favour those trusts of a public nature which, according to the doctrine of the court derived from the piety of early times, are considered to be charitable. Charitable uses or trusts form a distinct head of equity. Their distinctive position is made the more conspicuous by the circumstance that owing to their nature they are not obnoxious to the rule against perpetuities, while a gift in perpetuity not being a charity is void. Examples of the approach of the court can be seen in marshalling, where the deceaseds debts were in some cases required to be paid out of the residue of the deceaseds estate rather than at the expense of some charitable gift made by the will (see generally, Gareth Jones History of the Law of Charity 1532 to 1827 Cambridge University Press (1969) pp 96 97, read with pp 156 157), and, most importantly, in the way in which gifts which failed, because, for example, the purpose was against public policy, were nonetheless applied by the court cy prs to charitable purposes provided that a general charitable intention was shown. The latter point is described by Lord Simonds at National Anti Vivisection Society v Inland Revenue Comrs [1948] AC 31, 64: Nowhere perhaps did the favour shown by the law to charities exhibit itself more clearly than in the development of the doctrine of general charitable intention, under which the court, finding in a bequest (often, as I humbly think, on a flimsy pretext) a general charitable intention, disregarded the fact that the named object was against the policy of the law . So, too, in Gaudiya Mission v Brahmachary [1998] Ch 341, 350, Mummery LJ observed that [u]nder English law charity has always received special treatment. The Liverpool and District case considered below (paras 67 73) provides a further example of the courts adopting an approach designed to uphold an intention to make a charitable gift rather allow the gift to fail on a technicality. (c) The recognition of charitable companies by Parliament An important signpost to the correct way to approach the law as it applies to charitable companies is the recognition of charitable companies in statute law and the conclusions to be drawn from this statutory scheme. The legislature has modelled charitable companies on the normal registered UK company. Thus, in section 353(1) of the 2011 Act, unless the context otherwise requires, the word company means a company registered under [the 2006 Act] in England and Wales or Scotland. Section 193 of the 2011 Act then provides that: In this Act charitable company means a charity which is a company. It is a short step from this to see that the provisions of the 2006 Act, for example as to alterations of the memorandum and articles of association and financial statements, then apply to a charitable company as they do to other registered companies. In some cases, however, the 2011 Act makes further or different provision. These provisions are engrafted on to the model established by the companies legislation so that charitable companies may be subject to two levels of regulation. A notable example of this is section 198 of the 2011 Act, which places restrictions on the amendments which a charitable company may effectively make to its memorandum and articles of association: 198. Alteration of objects by companies and Commissions consent (1) Any regulated alteration by a charitable company requires the prior written consent of the (a) Commission, and (b) obtained. is ineffective if such consent has not been (2) The following are regulated alterations an amendment of the companys articles of (a) association adding, removing or altering a statement of the companys objects, (b) any alteration of any provision of its articles of association directing the application of property of the company on its dissolution, and (c) any alteration of any provision of its articles of association where the alteration would provide authorisation for any benefit to be obtained by directors or members of the company or persons connected with them There is nothing surprising in this section, or indeed in section 30(2) of the Charities Act 1960, now section 197 of the 2011 Act. Section 30(2) for the first time prevented a charitable company from altering its objects and then treating the assets as part of its general assets in response to the Report of the Committee on the Law and Practice relating to Charitable Trusts (the Nathan Committee), Cmd 8710 (1952), para 573, cited by Mr Pearce. A company still has the powers conferred by the Companies Acts to alter its memorandum and articles of association even though it is also a charitable company. The 2011 Act remedies the consequences for charitable companies. The ruling of Slade J in the Liverpool and District case that a company is not a trustee in the strict sense of the charitable assets but has a beneficial interest in them is entirely consistent with the approach taken in section 30(2). Section 201 of the 2011 Act, which is set out in para 11 of this judgment, follows the pattern I have identified since it provides for the stapling of a requirement for the Charity Commissions prior written consent on to the consents already required by the 2006 Act. In turn the 2006 Act (as amended) contains a handful of references to the 2011 Act, but it does not define the term charitable company, though the expression companies that are charities is used (see for example section 42 of the 2006 Act). Neither the 2006 Act nor the 2011 Act further analyses the effect of the incorporation of a charity. One can speculate as to how this dual system of legislative regulation came about. It must have occurred to charity trustees (assuming the charity was not incorporated by Royal Charter or a statutory corporation) that it would be useful if charities could be incorporated under a general Act of Parliament by about 1870 because in 1872 Parliament passed the Charitable Trustees Incorporation Act 1872 (the 1872 Act) providing that trustees could apply to the Charity Commissioners to be incorporated. This secured the perpetual succession of the trustees, which meant there was no need to convey property or transfer securities to new persons every time there was a change of trustees. This system continues to exist (see now section 251 of the 2011 Act). Some charities avoided the problems resulting from the lack of perpetual succession by vesting land and securities in the Official Custodian, but where this was not sufficient, a form of incorporation was needed. The form of incorporation originally provided by the 1872 Act and now by section 251 of the 2011 Act is not generally satisfactory since it does not provide that the incorporated body would have limited liability or provide any rules for its internal management or dissolution, and an early edition of Tudor on Charities stated in the footnotes that [t]he powers of the Act are in practice never used. It is quite possible that what happened was that the need for incorporation was satisfied by charities being incorporated through companies registered under the Companies Acts and that they sought to register names dispensing with the word limited. That gave the Board of Trade as it then was the power to impose conditions (which applied to other types of company as well) that the memorandum of association should state that the property and funds of the company should be used only for promoting the objects of the charity and do not belong to the members of the charity and no portion would be distributed to members with minor exceptions for reasonable and proper remuneration for services provided, interest up to 5% on loans and proper rent. To dispense with the word limited, the memorandum also had to state that the persons fulfilling the role of directors should be accountable for the companys property which came into their hands and for their own acts and omissions as if the company had not been incorporated. This wording may have been based on section 5 of the 1872 Act which provided that despite incorporation all the trustees should be chargeable for such property as shall come into their hands, and shall be answerable and accountable for their own acts, receipts, neglects, and defaults, and for the due administration of the charity and its property, in the same manner and to the same extent as if no such incorporation had been effected (see Palmers Company Precedents, 17th ed (1956), vol 1, p 290). This provision assumed that on incorporation the charity continued, but now encased in corporate form. It also provided for all corporators who were trustees to be liable to the charity as they were before without making any distinction between directors and members. The net result of this analysis for present purposes is that the legislature has by the 2011 Act simply stapled on to the 2006 Act the restrictions which it wished to impose on charitable companies. Those companies do not have a founding statute of their own but are subject to a mosaic of statutory provisions. Another key point is that Parliament clearly considered that a company with exclusively charitable objects should itself in law be a charity for the purposes of the 2011 Act. On the basis that the legal framework is a mosaic, the next important issue is whether the courts will apply their liberal attitude to charities under the general law to making the mosaic work in places where there are evident difficulties not foreseen by the legislature. This brings me to the important Liverpool and District case. (d) The Liverpool and District case and wider points to be drawn from The issue of the relationship of charity law to company law came to a head in the Liverpool and District case. A charitable company had been formed to provide a hospital and promote research into diseases of the heart and other ailments. Its memorandum of association, but not its articles, provided that on winding up its assets should not be distributed amongst its members but transferred to an institution having similar objects. On the formation of the National Health Service, the hospital which it ran was transferred to the National Health Service. The company continued to do research until it discontinued its activities and was wound up on the petition of the Attorney General. At that point it was realised that, under section 302 of the Companies Act 1948 (now to be found in section 107 of the Insolvency Act 1986), surplus assets had to be distributed to the members of the company unless the articles otherwise provided. So the liquidator issued a summons in the liquidation for directions as to whether this statutory provision displaced the provisions of the companys memorandum of association. One of the arguments was that the assets of the charity did not belong to the company. The matter came before Slade J who considered the law in great depth. Slade J concluded that the companys relationship to its assets was analogous to that of a trustee. It was not a trustee in the strict sense. It retained a beneficial interest in its assets and so they fell to be applied in accordance with the Companies Acts. However, the members had agreed to the memorandum of association and therefore this took effect and was binding on them. Even though there was no similar provision, as there is in CIFFs articles of association dealing with the distribution of surplus assets on winding up, the articles were subordinate to the memorandum and the provisions of the memorandum took effect. Finally, the court had jurisdiction now to order that assets be applied cy prs. This arose not only where there was a strict trust but also in relation to the assets of a charitable company where under the terms of its constitution there was a legally binding obligation to apply its assets for exclusively charitable purposes. Slade J accordingly directed that the companys assets should be applied cy prs. In reaching his decision, Slade J relied on the judgment of Buckley LJ in two important cases which it is convenient to mention here. The first was Construction Industry Training Board v Attorney General [1973] Ch 173, where the principal issue was whether a body set up by statute and subject to the control of a minister of the Crown was a charity within the meaning of section 45(1) of the Charities Act 1960, for which purpose it had to be subject to the control of the High Court in the exercise of the courts jurisdiction with respect to charities. The case highlights that the High Court has two relevant bases of jurisdiction that can be invoked in the case of charities: its jurisdiction over trusts generally and its jurisdiction over charities. However, the reference to the control of the High Court did not refer to the courts power over statutory bodies generally to control actions outside their powers. The majority (Buckley LJ and Plowman J, Russell LJ dissenting) held that sufficient control was vested in the High Court despite the fact that the minister had complete control over the running of the board. That issue does not arise in this case, but it led to an illuminating description of the courts extensive jurisdiction over charities in the judgment of Buckley LJ: It is a function of the Crown as parens patriae to ensure the due administration of established charities and the proper application of funds devoted to charitable purposes. This it normally does through the instrumentality of the courts, but this is not the only way in which the Crown can regulate charities or the application of charitable funds. Where a charity has been incorporated by Royal Charter, the Crown may amend its constitution or vary its permitted objects by granting a supplemental charter. Where funds are given for charitable purposes in circumstances in which no express or implied trust is created, the Crown can regulate the application of those funds by means of a scheme under the sign manual. Where the Crown invokes the assistance of the courts for such purposes, the jurisdiction which is invoked is, I think, a branch of the courts jurisdiction in relation to trusts. In such cases the relief granted often takes the form of an order approving a scheme for the administration of the charity which has been laid before the court, but this is not the only way in which the court can exercise jurisdiction in respect of a charity or over charity trustees. The approval of a scheme of this nature is, so far as I am aware, a form of relief peculiar to charities, but it does not constitute relief of a kind given in the exercise of a jurisdiction confined to giving relief of that sort. The court could, for instance, restrain trustees from applying charitable funds in breach of trust by means of an injunction. In the case of a charity incorporated by statute this might, as was suggested in the present case, be explained as an application of the doctrine of ultra vires, but I do not think that this would be a satisfactory explanation, for a similar order upon unincorporated trustees could not be so explained. Or, by way of further example, the court could order charity trustees to make good trust funds which they had misapplied, or could order them to account, or could remove or appoint trustees, or could exercise any other kind of jurisdiction available in the execution of trusts other than charitable trusts. In every such case the court would be acting upon the basis that the property affected is not in the beneficial ownership of the persons or body in whom its legal ownership is vested but is devoted to charitable purposes, that is to say, is held upon charitable trusts. Any relief of this kind is, in my judgment, appropriately described as relief granted in the exercise of the courts jurisdiction with respect to charities, and, where the relief is such as to bind the body of trustees as a whole, this would, in my opinion, constitute control of the charity by the court in the exercise of its jurisdiction with respect to charities. I consequently feel unable to accept the suggestion put forward on behalf of the Attorney General that the reference in section 45 of the Act of 1960 to the courts jurisdiction with respect to charities is in some way confined to its jurisdiction to approve charitable schemes. (pp 186 187) Lord Walker commended this passage and the passage in the judgment of Slade J dealing with the question whether a charitable company was a trustee of the assets of the charity in Chinachem in the Court of Final Appeal of Hong Kong at para 45. A further factor which weighed with Buckley LJ was that the minister had no powers of enforcement: the minister would have to invoke the assistance of the courts. The court could make a scheme even if the charity was not a trust in the strict sense. Slade J relied on the later judgment of Buckley LJ in Von Ernst & Cie SA v Inland Revenue Comrs [1980] 1 WLR 468, 479 480 in which he had specifically observed that the assets of a corporate charity were held on charitable trusts: We were referred to certain authorities which give support to the view that a company incorporated for exclusively charitable purposes is in the position of a trustee of its funds or at least in an analogous position. The authorities were In re French Protestant Hospital [1951] Ch 567; Soldiers, Sailors and Airmens Families Association v Attorney General [1968] 1 WLR 313; Construction Industry Training Board v Attorney General [1973] Ch 173 and In re Fingers Will Trusts [1972] Ch 286. In the first two of these cases it seems to me that it was assumed, rather than decided, that a corporate charity was in the position of a trustee of its funds. In the third, the question was what was meant by the words in the exercise of the courts jurisdiction with respect to charities in section 45(1) of the Charities Act 1960. In the course of my judgment in that case I certainly did express the view that the court would exercise its jurisdiction over corporate charities on the basis that their assets were held on charitable trusts and it appears to me that Plowman J, as I understand his very short judgment, agreed with me in that respect. In re Fingers Will Trusts turned on a question of whether or not a bequest to a charitable corporation, which ceased to exist in the testatrixs lifetime, demonstrated a general charitable intention capable of permitting a cy prs application. I do not think that it is a decision which is of assistance for present purposes. That passage provided a strong footing for the decision of Slade J. The Liverpool and District case evidences two points which are wider than the point just described. It is a yet further example of the determination of the courts to give effect to the charitable objects and not to allow technical matters, such as the reference to the companys articles in section 302, to prevent the gift to charity taking effect. It would be a break with a long standing tradition if this court was to depart from that approach. It also demonstrates another point, this time new as there had been little or no litigation about charitable companies registered under the Companies Acts in this regard before, namely the courts determination to make the statutory framework cohesive where this could be achieved. No party to these proceedings has challenged the authority of this important case. This decision was cited with approval by Lord Walker in Chinachem. It recognised that registered companies could be charities, and that meant that the new charitable vehicle had to meet both the charitable and corporate model. The members would be affected by the fact that the company was charitable because the practice was and is that the memoranda of association of charitable companies should provide that the assets should only be applied towards its charitable objects and other restrictions. The memorandum and articles of the company bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions (see section 33(1) of the 2006 Act, which is derived from the Companies Act 1862, sections 11 and 16). So, members could not assert rights in disregard of their contractual obligations to the charity. The next matter to be considered is the objections, principally those of CIFF, to members of charitable companies being fiduciaries as both the Chancellor and the Court of Appeal have held. The analysis conducted so far on this issue will shape my response to these submissions. (3) Were the courts below in error in holding that the members of a charitable company are fiduciaries? While Lord Pannick seeks to uphold the decisions of the Court of Appeal and the Chancellor that Dr Lehtimki is a fiduciary, Mr William Henderson, for CIFF, impressed on us the difficulties which CIFF sees in members of charitable companies being fiduciaries. The practical difficulties he mentioned included: (i) Whether there ought to be declarations of interest before meetings of members; (ii) Whether a member with a conflict of interest can vote (which was particularly emphasised by Dr Lehtimki on the grounds of the difficulties that this would cause where a member was a member of more than one charity in the same field); (iii) Whether a member has a duty to attend and vote at meetings; (iv) Whether a member can appoint a general proxy as permitted by section 324(1) of the 2006 Act; (v) Whether a member can receive a benefit from the company; (vi) Whether a member can fetter his discretion by making a voting agreement; (vii) Whether a member would have to investigate a matter before he could vote on it; (viii) What information a member could require from the company; (ix) Whether a member is entitled to be indemnified for the cost of attending a meeting of the company or for the cost of taking legal advice; (x) Whether a member would be liable to compensate the company if he exercised his right to vote in breach of duty. Mr Henderson also raises several objections of principle to members being fiduciaries which I will address in the course of expressing my reasons for concluding that the Court of Appeal and the Chancellor were correct on this issue. Mr Pearce submits that the members of CIFF have a range of powers. The property of the company is solely applicable to charitable purposes, so a member undertakes functions to promote charitable purposes to the exclusion of any benefit to himself. The members of CIFF fall squarely within the test of who is a fiduciary set out in Grimaldi. The obligations of the members are to serve the purposes of the charity. It is unnecessary to go further than to say that if a member exercises his powers he must do so in a way that he decides in good faith would be most likely to promote the purposes of the charity. (4) My conclusions on the question whether a member is a fiduciary The question who is a fiduciary has been considered above and I need not repeat those points again. The court has to determine whether there is a fiduciary relationship between the charitable objects of CIFF and Dr Lehtimki in his capacity qua member of CIFF. In my view that question falls to be answered in the affirmative, and what applies to Dr Lehtimki and CIFF will apply to all other members of charitable guarantee companies which, like CIFF, contain restrictions which in general prevent members receiving profits from the company. Moreover, such restrictions are generally contained in the memorandum and articles of association of charitable companies. The important point in my judgment is that the law allows the duties of a fiduciary to be fashioned to a certain extent by the arrangements between the parties. In the case of a member of a charitable company this means that the duties of a member can be fiduciary even if the memorandum and articles of association impose restrictions which mean that he cannot discharge all the obligations which a fiduciary would have under the general law. The decision in Liverpool and District was an important decision because it set the direction of travel. Slade J gave precedence to the fact that a member had agreed to become a member of a charity. The general principle is that, as a result of the agreement which is made when a person becomes a member of a company, the rights of a member against the company and his liabilities to it stem from the memorandum and articles and the obligations imposed by the Companies Acts and the general law. Thus, the fiduciary duties which a member owes are tailored by the memorandum and articles. There is therefore no difficulty in a member delegating the right to vote to a general proxy if that is what the 2006 Act and the articles allow. Fiduciary duties take effect subject to the restrictions imposed by the nature of the corporate form which constitutes the charity. Trust law allows the fiduciary duties to be diminished by an appropriate means and to an appropriate extent. As to means, the members can resolve to amend the memorandum and articles of association within the powers conferred by the 2006 Act and subject to compliance with restrictions imposed by the 2011 Act. As to the extent to which a persons fiduciary duties may be reduced before he ceases to be a fiduciary, the principle is that there is no difficulty with this so long as the duties of a fiduciary nature are not reduced below the irreducible core of obligations identified by Millett LJ in Armitage v Nurse [1998] Ch 241, 253 254: there is an irreducible core of obligations owed by the trustees to the beneficiaries and enforceable by them which is fundamental to the concept of a trust. If the beneficiaries have no rights enforceable against the trustees there are no trusts The duty of the trustees to perform the trusts honestly and in good faith for the benefit of the beneficiaries is the minimum necessary to give substance to the trusts, but in my opinion it is sufficient. In Citibank NA v QVT Financial LP [2007] EWCA Civ 11; [2007] 4 All ER 736, the controlling noteholder of a series of notes issued by a company and secured by a trust deed argued that its extensive powers, while its notes remained outstanding, to direct the trustee of the trust deed how to exercise its discretion (for example, as to when to take enforcement action) diminished the role of the trustee below the irreducible core which a valid trust must have. The Court of Appeal (Sir Anthony Clarke MR, Arden and Dyson LJJ) rejected that argument by reference to various other powers which the trust deed vested in the trustee and the trustees obligation to act in good faith. So, there must be some fiduciary duty which the court can enforce but it need not extend to the full range of fiduciary duties which a fiduciary might owe. I need not express a view on the further question whether, if the duties were reduced below the irreducible minimum, the court could in any circumstances declare that reduction to be ineffective. The beneficiaries of a trust can, by giving their fully informed consent, agree to authorise or permit their fiduciary to act notwithstanding a conflict of interest or to receive certain profits: see, for example, Ex p Lacey 6 Ves Jnr 625. In the present case, the memorandum of association as registered on incorporation contains exceptions from the no conflict and no profit principles. There is no reason why the memorandum of association should not validly authorise the trustees or members to be interested in the transactions within those exceptions or to retain the profits there mentioned. The exceptions include for example reasonable and proper remuneration for goods or services supplied to CIFF: see clause 5 of CIFFs memorandum of association. The further significance of the provisions of the memorandum is that it is clear that the original corporators of CIFF took the view that the no conflict and no profit principles applied to members as well as trustees. The subscribers and other members also agree in the memorandum of association that the assets of the company should be applied for the objects of the charity. The memorandum of association is open to public inspection at the Companies Registry (sections 9 and 1085 of the 2006 Act) and it is also available for inspection at the Charity Commission (section 38(4) of the 2011 Act). The provisions of the memorandum of association are a further indication that members should be treated as fiduciaries. It represents the understanding of CIFF and all its members that the members are fiduciaries and they have agreed to represent that position to the entire world. So, it would require a good reason not to conclude that members are fiduciaries. A member may therefore still be a fiduciary in his capacity as a member even if the companys articles of association mean that he will not be able to obtain information relevant to the exercise of his fiduciary powers. Moreover, under charity law, there is no objection to a member receiving an incidental benefit provided that this is authorised by the memorandum and articles of association. That releases him from the no profit principle. It does not, however, without more release him from any obligation of disclosure or entitle him to vote on any resolution allowing him a benefit, even one authorised by the memorandum or articles of association. The point is rightly made that members of companies are not normally fiduciaries in relation to any of their powers. On the contrary, in the case of non charitable companies having a share capital, the share is a right of property which the member can in general vote as he pleases even if it is in his own personal interests rather those of the company. There are, however, limitations on how a member may use his voting rights. For the purposes of this judgment, it is not necessary to go further on this than Briggs J (as he then was) did in Assnagon Asset Management SA v Irish Bank Resolution Corpn Ltd (Formerly Anglo Irish Bank Corpn Ltd) [2012] EWHC 2090 (Ch); [2013] Bus LR 266, para 44: 44. The basis for the application of that principle in relation to powers conferred on majorities to bind minorities is traditionally described as arising from general principles of law and equity, and by way of implication. In Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656, 671 Lindley MR said this, in relation to a power conferred on the majority of shareholders to alter the articles of association: Wide, however, as the language of section 50 is, the power conferred by it must, like all other powers, be exercised subject to those general principles of law and equity which are applicable to all powers conferred on majorities and enabling them to bind minorities. It must be exercised, not only in the manner required by law, but also bona fide for the benefit of the company as a whole, and it must not be exceeded. These conditions are always implied, and are seldom, if ever, expressed. In the same case Vaughan Williams LJ said, at p 676: I also take it to be clear that the alteration must be made in good faith; and I take it that an alteration in the articles which involved oppression of one shareholder would not be made in good faith. The principle is no different in relation to companies which do not have a share capital. However, where the company is also a charity, a member may, in my judgment, in some circumstances be a fiduciary in relation to the rights attached to membership, including the right to vote. To answer the questions posed by Frankfurter J in Securities & Exchange Commission v Chenery Corpn 318 US 80, 85, in my judgment a member of CIFF owes a fiduciary duty to the charitable purposes, and that duty is one of single minded loyalty. What does that involve in the present context? In my judgment, it requires that he considers whether the resolution should be passed and that he do so only by considering the best interests of the objects of the charity. That is because the resolution involves a disposition of assets that would otherwise be available for application by CIFF towards those objects. There is no basis for saying that a member was intended to have any separate interest in this transaction. On Dr Lehtimkis case he neither provided those assets nor has any legitimate competing interest in the application of those assets. That does not mean to say that he would be bound to approach every members resolution of CIFF with only the charitable beneficiaries in mind. There may be some resolutions where a member may be able to take other interests into account as well. It is useful to test the matter by reference to reasonable expectation, as did the Court of Appeal in this case and has been done in other cases, such as Arklow Investments Ltd v Maclean [2000] 1 WLR 594, 598 (PC). The duty as I have found it to be exactly matches what Dr Lehtimki for instance considers is required of him. More importantly it is also surely what both a potential beneficiary and member of the public would expect him to do. Moreover, and this harks back to my earlier discussion of the liberal approach taken towards charities by the courts, to hold that a member is a fiduciary is consistent with the special and beneficent treatment which the law gives to charities. That is no doubt because of their potential to benefit society and the public at large in a very major way. This is an appropriate consideration in this case because a charity must be established for public benefit. Sir Richard Scott V C held in Stanway v Attorney General, 5 April 2000, unreported: Charities operate within a framework of public law, not private law. The Crown is parens patriae of the charity and the judges of the courts represent the Crown in supervising what the charity is doing and in giving directions The Attorney Generals function is to make representations to the court as to where lies the public interest as he sees it. (transcript, p 4) I consider that, because CIFF is a guarantee company, Dr Lehtimki is not entitled to any further information than that to which members of a company registered under the Companies Acts are entitled by virtue of those Acts or the general law. That would include, for example, particulars of the proposed transaction: see section 217(3) read with section 215(3) of the 2006 Act. I consider that those limits mean that he cannot compel access to further information (though he could of course still ask the directors voluntarily to provide additional information). That is a limit on his role as a fiduciary, but that limit is not inconsistent with his position as a fiduciary because it is imposed by the structure which has been adopted for the administration of the charity. It is essentially a contract and statute based model of fiduciary duty. The structure comprises both the statutory provisions in the Companies Acts and the agreement of the members and CIFF which is deemed to occur when the members agree to become members of it: see section 33(1) of the 2006 Act (set out in para 73 above). The 2011 Act (in addition to the general law) provides additional restrictions, but they are mainly from outside the structure. Mr Henderson submits that it is unnecessary for a member of a charitable company to be a fiduciary. He submits that the interests of the charity are already well protected by the 2011 Act against the risk of members acting contrary to the charitys best interests (see for example sections 197 to 202 of the 2011 Act) and there are constraints on which members can exercise their voting rights. Mr Guy Morpuss QC, for Dr Lehtimki, further cites a learned article by Professor Worthington in which she expresses the view that the law should only consider a person to be a fiduciary if the obligations imposed by contract or tort, or the duty to act for proper purposes, would be insufficient for the task (Fiduciaries: when is self denial obligatory? Professor S Worthington, (1999) 58 CLJ 1999 500, 506). But I do not consider that it is necessary to go that far. If Dr Lehtimki is a fiduciary, then a well known set of rules and remedies come into play. It will be easier for the court to exercise its inherent jurisdiction over charities, and the law of charities will be more internally coherent. On Mr Hendersons submission, which was not supported by any particular evidence, for this court to hold that a member was a fiduciary is likely to disincentivise a person from becoming a member when it is often desirable to give those who support a particular charity a stake in its affairs. I accept that this is an important point, but RS7 Membership Charities has anticipated the point so that there was guidance from an official source already available. Also, approximately 65% (or 3,203 in number) of new charities registered with the Charity Commission in 2018 were CIOs, which suggests that section 220 of the 2011 Act is not seen as a disincentive by those charities. As an alternative to his submission that a company member does not owe a fiduciary duty, Mr Henderson submits that a member of a charitable company should owe the same duties as a member of a CIO by virtue of section 220 of the 2011 Act (set out in para 30 above). But this has a dual disadvantage: firstly, it would subject a member to this duty in all circumstances, and, secondly, it leaves open the full scope of a company members duties since section 220 does not state that this is an exhaustive statement of the duties of a member of a CIO. (Nor yet does that section make it clear whether this is a fiduciary duty or not: contrast section 178(2) of the 2006 Act applying to directors.) It is not suggested that Dr Lehtimki has any conflict of interest in voting on the resolution. But suppose that he was going to be a trustee or member of BWP. This is not an interest which the memorandum or articles of CIFF has pre authorised. The Companies Acts do not provide for the disclosure of this kind of interest by him as a member of CIFF. Moreover, there is neither any organ of the company which has the express function of receiving any disclosure of details of a conflict of interest nor any means of obtaining fully informed consent. But, certainly, he would not be able to vote as a member on any resolution concerning the benefit. This problem does not require to be resolved in the present case. I do not, however, consider that it is correct to say, as Mr Henderson argues, that this problem undermines the initial conclusion. The solution may be that, if Dr Lehtimki could be said to thereby potentially obtain a benefit, the articles should be amended to permit a member to have this interest. The prior written consent of the Charity Commission is required only if Dr Lehtimki would obtain a benefit: section 198(2)(c) of the 2011 Act. It may also be the Charity Commission could issue guidance under section 15(2) of the 2011 Act on conflicts of interest in order to reduce practical difficulties. It may similarly be possible for the problem to be solved by a scheme or by way of sanction under section 105 of the 2011 Act. Section 198(2)(c) reflects the decision of Danckwerts J in In re French Protestant Hospital [1951] Ch 567, and reinforces the conclusion that members of a charitable company who receive benefits from it are within the no conflict and no profit principles. In that case, the governor and directors of a charity set up by Royal Charter sought to exercise a power conferred on them by the charter to amend the byelaws to enable the directors professional firms to be remunerated for their services to the charity. Danckwerts J held that, even though they were not trustees, the governor and directors had the same duty as the corporation to apply the assets in furtherance of the charitable objects because in reality they controlled the corporation. They could not therefore authorise a benefit for themselves. They had to act in a fiduciary manner on behalf of the charitable trusts (p 571). Therefore, in that case, the governor and directors could only proceed by way of scheme. Mr Henderson also relied on In re Girls Public Day School Trust Ltd [1951] Ch 400, but that case can have no bearing on the point under consideration because the companys purposes were not exclusively charitable. The company was therefore not a charity and so the question whether a member owes a fiduciary duty did not arise in the same way as it does in the case of a company which is exclusively charitable. In that case, the company had a share capital and had issued preference shares which had valuable rights on a winding up and sufficient votes to compel a winding up. The company was formed for charitable purposes but, because of the rights of the preference shareholders, those purposes were not exclusively charitable. Thus, the company failed in its bid to establish that it was a charity. On this approach, the fiduciary duty of a member of a charitable company should in my judgment be more narrowly drawn than it was drawn by the Court of Appeal which held that a member of a charitable company would in all circumstances owe a duty to act in the way that would be most likely to further the purposes of that company. The Court of Appeal stressed that the duty was subjective: I agree that it is for the member to reach a conclusion on that matter in good faith provided that he does not do so improperly or unreasonably, the court will not seek to intervene or to hold him liable if his view turns out to have been wrong in fact (see generally Tempest v Lord Camoys (1882) 21 Ch D 571, where the court declined to order one trustee to act in accordance with the proposals of the other). The Court of Appeal understandably based their formulation of the duty on members of a charitable company on that adopted by statute for CIOs, but a CIO is not a vehicle incorporated under the Companies Acts and therefore there may be good reason for the difference in the duty of members which I have identified. Suppose, for example, that a charity runs a lending library but for those prepared to pay an annual subscription it also provides access to a small separate area for which the library has no use, but in which there has been installed a machine that dispenses coffee at cost. This is at no cost to the charity since the member pays an annual subscription to cover this cost. Suppose that the charity proposes a resolution at the annual meeting of the charity to reduce the opening hours of the separate area. It is difficult to see why a member should owe a duty of single minded loyalty to the charitable objects on a matter on which only the members qua private individuals have an interest. Mr Pearce takes the different example of a separate arrangement between members and a charity: if one becomes a friend of the Royal Opera House, one pays them money and in return one gets priority booking. That is a completely different arrangement from anything to do with having a constitutional role in the affairs of the charity. The precise circumstances in which the member of a charitable company has fiduciary duties in relation to the charitable purposes and the content of those duties will have to be worked out when they arise. The point of principle is the point made by P D Finn in Fiduciary Obligations (1977), para 4 that [a] fiduciary for one obligation is not ipso facto a fiduciary for all. While charities must be for public benefit, minor incidental benefits may be permitted. Parliament has enacted the gift aid scheme for tax relief on donations, and that relief is available if minor gifts are made unless certain limits are exceeded. So, Parliament has recognised that charities do sometimes, and without losing their charitable status, give members minor benefits in exchange for donations. Those charities may well be charitable companies, because that vehicle, together with the CIO is often a preferred option for a charity that wishes to encourage a wide range of persons to become members. In Bolton v Madden LR 9 QB 55, the subscribers obtained the right to vote in exchange for their subscription. Mr Morpuss submits that members of CIFF had to use their section 217 power for a proper purpose but were not fiduciaries. That would mean that they did not owe a duty of single minded loyalty even though their powers could, as in this case, result in a substantial grant out of the assets held on charitable trusts. In my judgment the duty to exercise powers for a proper purpose does not adequately recognise the scope of members powers and it would not be consistent with the obligations of members of a CIO. I should add that there is no evidence before us that the duties imposed on members of a CIO is causing any difficulty in finding members of CIOs or that it creates an unsatisfactory level of uncertainty. Mr Jonathan Crow QC, for Sir Christopher, submits that it would be astonishing if members could not vote on their own appointments as directors or trustees, but with respect it seems to me wholly reasonable to say that a person must not vote for himself. The distinction which I have drawn between the duties which a member may owe which involve a duty of single minded loyalty and those which do not may help explain the briefly reported case of Bolton v Madden, referred to at para 49 above. That concerned two subscribers to an incorporated charity (and assuming that the incorporated charity was a registered company they would be members: see now section 16(2) of the 2006 Act). The issue was the lawfulness of an agreement to vote in favour of each others choice of charitable object. There is no suggestion that the parties to the agreement intended to select objects which did not qualify as charitable objects which were manifestly not appropriate for selection. When it comes to nominating charitable objects, the courts do not interfere with the choice made by the party entitled to nominate unless it is corrupt or outside the terms of the power or the person chosen is manifestly unfit. One example of this is Attorney General v Dean and Canons of Christ Church (1822) Jac 474, 486 where Sir Thomas Plumer MR held that he did not know how any restriction on [the] power [of the Dean and Canons conferred by the testator to manage a school in Portsmouth and choose persons to be educated there] [could] be introduced. So long as that remains the law for charities generally it is difficult to see how members having a right of nomination as in Bolton v Madden could be held to a higher standard. But that is clearly a different situation from exercising a power which amounts to an effective veto on the disposition of charitable assets since that veto is a (negative) right of control comparable to the issue of payment in connection with a directors loss of office to the right of control in In re French Protestant Hospital. Mass membership charitable companies The above principles apply to charitable companies large or small. On this basis, the number of members which a guarantee company happens to have is not the deciding factor, and the Court of Appeal fell into error in suggesting that there might be some different outcome as regards members of mass membership charities. Since there is no comprehensive or statutory definition of such charities, the qualification made by the Court of Appeal introduced an element of uncertainty. It was suggested that we should not say more about these cases until they arose, and I agree that it is not appropriate for the court to go further at this stage in this context. Application of the principles to the facts of this case In his witness statement dated 17 May 2017, Dr Lehtimki summarised his difficulties and concerns over voting on the section 217 resolution: Conclusion as to the Grant 34. The analyses that I have carried out above make me think that it is very difficult on the currently available evidence to decide whether the Grant is in the best interests of CIFFs beneficiaries. On the one hand there is a clear benefit in resolving the historic governance problems and achieving finality. On the other hand transferring $360m to BWP comes at a cost. How big a cost is unknown, particularly given the lack of available information in relation to BWP and its very limited track record. It may be large, and that is my biggest concern. I would very much like CIFF to be able to draw a 35. line under its difficulties, and move forward, with no further risk of litigation. However, I remain concerned about the cost of achieving that end. It is for that reason that I consider this a difficult decision. If I am in the future able to vote on this issue, the points set out above are the ones that are likely to influence my decision. I will of course give careful consideration to any further information that becomes available, as well as to the conclusions of the court and the Charity Commissioners. These are telling passages. Dr Lehtimki has rightly identified the charitable purposes and recognised the need to exercise his right to vote in their interests. As I see it, he implicitly recognises what is in law a fiduciary duty. He does not indicate that there is any practical difficulty in recognising or performing the obligations attached to his right to vote. Those are important obligations and, given their fiduciary nature, there is an onus on the court to consider carefully how they are enforced. It is of the essence of a fiduciary obligation that it should be capable of effective enforcement by the court. Issue 2: Have circumstances arisen with respect to the section 217 resolution in which the Court can exercise its jurisdiction over fiduciaries in relation to Dr Lehtimki? The competing positions of the parties This issue now falls to be considered on the basis that Dr Lehtimki owes fiduciary duties in relation to the way in which he votes on the section 217 resolution. The Chancellor considered the Grant to be in the best interests of the charity, but he accepted that a person could reasonably come to a different view. He made a direction against Dr Lehtimki for the reasons explained above. Those reasons are not open to challenge in this case. The Court of Appeal did not consider that Dr Lehtimkis stance represented a breach of any duty by him and I proceed on the basis that that is the case. That makes this issue particularly difficult because in the case of private trusts the court rarely intervenes in the exercise of discretionary judgment. In this section I only give a very brief summary of the submissions and it is more convenient to deal with other important points made by counsel as I set out my conclusions. The law of charities is described by Buckley LJ in the Construction Industry Training Board case [1973] Ch 173 as a branch of the law of trusts (see the passage set out above at para 69), but, as Buckley LJ indicates, the law of charities has a number of different features which are unique to it and do not apply to charitable trusts, the best known of which is its jurisdiction to make a scheme for the application of the property of the charity cy prs. Lord Pannick submits that the Construction Industry Training Board case shows that the powers of the court were very broad and that the court would be slow to substitute its own decision. There is a long established jurisdiction to deal with alienations of property interests. The views of the Attorney General are material. The powers of the court are not confined to a scheme. Lord Pannick relies on In re J W Laing Trust [1984] Ch 143 as demonstrating that the court may intervene in a charity when it is expedient in the interests of the charity to do so. Likewise, in In re Royal Societys Charitable Trusts [1956] Ch 87, Vaisey J made a scheme consolidating the investments of several special funds of which the society was a trustee in order to improve its management of these funds in a case where there was no suggestion of a breach of duty. Lord Pannick submits that Letterstedt v Broers (1884) 9 App Cas 371 (see para 124 below) is an example of the courts broad jurisdiction since the court made it clear that the court could remove old trustees and substitute new ones where such a remedy was required. The main principle should be that the jurisdiction should be exercised for the welfare of the beneficiaries and the trust estate. He submits that this is a general principle. Accordingly, the court has power to decide whether a specific transaction is in the interests of the charity by reason of the inherent jurisdiction and surrender, and it can give directions to the members. Mr Morpuss carried the burden of the case against the appellant for the first and fourth respondents on this issue. He submits that the court could not intervene in the decision of a fiduciary unless there was an actual or threatened breach of duty or the fiduciary had surrendered his discretion. The members had not surrendered their discretion to the court. Moreover, there was no question of any threatened or actual breach of duty. All the court could do in exercise of its special charitable jurisdiction was to direct a scheme, which it did not do. In any event there was no basis for directing a scheme because there had been no failure of machinery nor was an administrative scheme appropriate as that would involve changing the constitution of the charity. The present case does not fall within any exception to the non intervention principle. Expediency was not enough: this was highlighted in Chapman v Chapman [1954] AC 429 where the House of Lords held that the court had no inherent jurisdiction to sanction a rearrangement of a private trust merely to gain a tax advantage. Mr Morpuss essentially submits that there is no case cited which goes beyond the jurisdiction of the court as described by Russell LJ in the Construction Industry Training Board case, to cure defects in the machinery of the trust or to supervise and direct the administration of a charitable trust or the application of its assets. In In re J W Laing no order was made directing the trustee to perform any particular act. It was an administrative scheme case because the beneficiaries could not properly make use of the considerable funds of the trust if they were all distributed within the period of ten years as directed by the settlor. As counsel (later Buckley LJ) argued in Royal Societys Charitable Trusts, the court exercises over trusts an equitable jurisdiction. Mr Morpuss accepts that the court can intervene in exceptional circumstances, and he submits that on the facts, the circumstances in Letterstedt were exceptional. There had been a very serious over charge by trustees. Mr Crow relies on Attorney General v Bishop of Worcester (1851) 9 Hare 328; 68 ER 530 and In re Steeds Will Trusts [1959] Ch 354. It is not a question of what is expedient. Further authorities included Attorney General v Harrow School (1754) 2 Ves Sen 551; 28 ER 351, Attorney General v Haberdashers Company (1791) 1 Ves Jun 295, 30 ER 351, Attorney General v Governors of Foundling Hospital (1793) 4 Bro Ch 165; 29 ER 833; 2 Ves Jnr 43, and Attorney General v Governors & Co of Sherborne Grammar School (1854) 18 Beav 256; 52 ER 101. He referred to two texts: Chitty, Prerogatives of the Crown (1820), Storeys Equity Jurisprudence (1839). As Slade J recognised in Liverpool and District Hospital case, the jurisdiction of the court with respect to charities could be ousted by statute. The applications in the property alienation cases were to approve matters which the trustees wanted to do. Mr Pearce submits that there are particular cases where the non intervention principle does not apply. Examples of such cases are where it is necessary or expedient for the court to interfere in the affairs of a charity (see for example J W Laing). But the courts have not exhaustively defined the circumstances. My conclusion on this issue This issue is about whether the court has jurisdiction, that is, as part of its supervisory jurisdiction over charities, to intervene to direct Dr Lehtimki to exercise his fiduciary discretion in a particular way. For the reasons given in paras 121 to 173 below, I consider that the court can take jurisdiction through an exception to the non intervention principle. Indeed, all the members of this Court agree that, if an exception to the non intervention principle is needed, it can be found. Lord Briggs, however, joined by Lord Wilson and Lord Kitchin on this issue, holds in his concurring judgment that the same result can be reached more simply by holding that the position adopted by Dr Lehtimki would constitute a threatened breach of fiduciary duty on his part (the breach of duty route). In the Chancellors judgment, that position was one of studied neutrality (para 121), and posed too great a risk for the court to allow the final decision to be taken by Dr Lehtimki without guidance from the court (para 153). With respect to my colleagues, I consider that the court cannot take jurisdiction over Dr Lehtimki by that route: for my reasons, see paras 174 to 199 below. Accordingly, in this section of my judgment, I confine my attention to the non intervention principle, which I consider to be the correct principle to apply. The respondents arguments on this issue are formidable. There is no doubt in my judgment that there is a well established non intervention principle which means that the role of the court is to ensure that the trustees of a charity exercise their discretion properly and that the court does not interfere in the trustees exercise of a discretionary power unless they act improperly or unreasonably. The leading authority on the non intervention principle is now Pitt v Holt [2013] UKSC 26; [2013] 2 AC 108 where Lord Walker (with whom all the other members of this Court agreed) held that a breach of duty was necessary before the court could intervene with respect to matters that fell to trustees to do or decide: Lord Walker also made some important observations on a well known saying of Lord Truro LC, which encapsulates the principle: 73. In my view Lightman J was right to hold that for the rule to apply the inadequate deliberation on the part of the trustees must be sufficiently serious as to amount to a breach of fiduciary duty. Breach of duty is essential (in the full sense of that word) because it is only a breach of duty on the part of the trustees that entitles the court to intervene (apart from the special case of powers of maintenance of minor beneficiaries, where the court was in the past more interventionist: see para 64 above). It is not enough to show that the trustees deliberations have fallen short of the highest possible standards, or that the court would, on a surrender of discretion by the trustees, have acted in a different way. Apart from exceptional circumstances (such as an impasse reached by honest and reasonable trustees) only breach of fiduciary duty judicial intervention. justifies 88. Finally, on this part of the case, there is the submission that the trustees duty to take account of relevant considerations is to be interpreted as a duty to act on advice only if it is correct in effect, a duty to come to the right conclusion in every case. I have left this submission until the end because it is to my mind truly a last ditch argument. It involves taking the principle of strict liability for ultra vires acts (paras 81 84 above) out of context and applying it in a different area, so as to require trustees to show infallibility of judgment. Such a requirement is quite unrealistic. It would tip the balance much too far in making beneficiaries a special favoured class, at the expense of both legal certainty and fairness. It is contrary to the well known saying of Lord Truro LC in In re Beloved Wilkess Charity (1851) 3 Mac & G 440, 448: that in such cases as I have mentioned it is to the discretion of the trustees that the execution of the trust is confided, that discretion being exercised with an entire absence of indirect motive, with honesty of intention, and with a fair consideration of the subject. The duty of supervision on the part of this court will thus be confined to the question of the honesty, integrity, and fairness with which the deliberation has been conducted, and will not be extended to the accuracy of the conclusion arrived at, except in particular cases. The trustees duty does not extend to being right (the accuracy of the conclusion arrived at) on every occasion. The particular cases that Lord Truro LC had in mind may have included cases concerned with the maintenance of minor beneficiaries. They may also have included cases (such as Kerr v British Leyland (Staff) Trustees Ltd [2001] WTLR 1071) in which the trustees have to make a particular factual judgment, rather than exercise a wide discretion. It is to be noted that Lord Truro LC leaves room for exceptional cases in his final words. Lord Pannick cited several examples of this and further examples were cited by Mr Pearce, including examples from the judgment of Lord Walker: for example, paras 64, 74 and 75. In those circumstances I do not read Lord Walker as excluding the possibility of intervention in cases other than breach of duty (or scheme) if the circumstances attain a sufficient level of exceptionality and seriousness. In my judgment, these exceptional cases have special resonance in the law of charities, and it is unnecessary for me to cite all the examples we were given. Before leaving Lord Truro LC, I note that his formulation does not contain any equivalent of the manifestly unfit test used in relation to nominations. There is on his formulation no test of perversity, at most a requirement for fairness and fair consideration of the matter. In this connection, Lord Pannick places particular reliance on another well known case, Letterstedt v Broers 9 App Cas 371, where the Judicial Committee of the Privy Council removed the existing trustees of a trust in the course of litigation against them by the beneficiaries even though no allegation of misconduct on the part of the trustees had yet been established. This was clearly seen as a very delicate matter and the Board invoked the broad general principle that the duty of the court was to execute trusts, being guided principally by the welfare of the beneficiaries. The Board considered that it was probably not possible to lay down any more definite rule than that. The Board considered on the complex facts of that case that the continuance of the trustees would prevent the trust from being properly executed. The useful point which I derive from this case is the reminder that it is the duty of the court to see that a trust is executed. I start from the basis, which is not challenged, that it has been decided that it is in the best interests of the charity to make the Grant, and that seen from that perspective if Dr Lehtimki were to vote against the section 217 resolution, the achievement of what is the best interests of the charity would be impeded. Lord Pannick also relies on In re Ashton Charity (1856) 22 Beav 288, 52 ER 1119, and property alienation cases. In In re Ashton Charity, Sir John Romilly MR held, at p 289, that: upon an information, the Court of Chancery has a general jurisdiction, as incident to the administration of a charity estate, to alien charity property, where it clearly sees it is for its benefit and advantage. These cases concern the courts power to authorise the alienation of interests in property held on charitable trusts and this topic is a very specific exercise of the role of the court acting under the delegated power to act as parens patriae. However, it also reflects the broad principle that the courts duty is to see that charitable trusts are performed. The J W Laing [1984] Ch 143 case is instructive. In that case, Peter Gibson J considered an application by the trustees of a charity for a scheme enabling the trustees for the time being to be discharged from an obligation to distribute capital within ten years of the settlors death. Deciding that section 13 of the Charities Act 1960 was inapplicable, he approved the scheme in exercise of the inherent jurisdiction of the court. In doing so he noted that the court (at p 153E F): can, and should, take into account all the circumstances of the charity, including how the charity has been distributing its money, in considering whether it is expedient to regulate the administration of the charity by removing the requirement as to distribution within ten years of the settlors death. Another important example is Hampden v Earl of Buckinghamshire [1893] 2 Ch 531 (cited by Mr Morpuss) which as Mr Pearce explains shows the flexibility of the courts response to applications for its intervention. In that case, the Court of Appeal intervened to prevent a trustee about to act in a manner which was within his powers but detrimental to other beneficiaries applying the following principle: But, to preserve the estates for those intended by the settlor to enjoy them, still an honest trustee may fail to see that he is acting unjustly towards those whose interests he is bound to consider and to protect; and, if he is so acting, and the court can see it although he cannot, it is in my opinion the duty of the court to interfere. (at p 544 per Lindley LJ) P D Finn in Fiduciary Obligations (1977), at para 86, provides an interesting analysis of this case as one in which the court recognised that, even where a trustee acts in good faith in the manner in which he considers to be the best interests of his beneficiaries, his actions may be reviewed by the court by reference to their consequences. Mr Morpuss submits that either this case was wrongly decided or the Court of Appeal did consider that there had been a breach of trust because the trustee failed to consider all the relevant matters. In my judgment, it is clear from the passage cited that Lindley LJ was proceeding on the basis that there was no breach of trust, and that the Court of Appeal took the view that it should intervene because of the unjust consequences to the other beneficiaries. This case is consistent therefore with the presence of an exceptional jurisdiction which goes beyond breach of duty. There is little authority to support intervention by the court in circumstances such as the present, but as I see it that is because in the reported cases charities do not often have two governing organs with differing views: here the board of the company, ie the trustees, and the company in general meeting, ie the members. The trustees have surrendered their discretion to the court and the court has made a decision that a particular transaction which the board supports is in the best interests of the charity and should be put into effect. The second organ wishes to make its own decision independently of the board. It only has a right to vote on one element of the transaction by virtue of section 217 of the 2006 Act. Under the terms of the second organs agreement with CIFF the necessary power is otherwise vested in the first organ. It would be reasonable for a member of a commercial company to treat his voting power as a veto on the transaction and to use it as a bargaining counter, but CIFF is not a commercial company but a charitable company and Dr Lehtimki is a fiduciary and bound to act in this matter for the single minded purpose of promoting the charitable objects. The nearest case to the present may be that of Attorney General v Governors of Christs Hospital [1896] 1 Ch 879, which the respondents rely on, but which properly understood is against them. In that case, the court was asked to give a direction, but it required the consent of a second person by the terms of the Royal Charter constituting the charity. It is quite clear that the objection which Chitty J saw to the making of the order was the fact that the governors were given power to administer the charity (following a compromise of earlier disputes) by the Royal Charter of Edward VI for he held at p 888: I hold that it is beyond the jurisdiction of the court to sanction the Attorney Generals scheme in the face of the opposition of the existing governing body. Their title is founded on Royal Charter, and is established by Act of Parliament. To whatever lengths the court may have gone, it has never assumed legislative authority; it has never by a stroke of the pen at one and the same time revoked a Royal Charter and repealed an Act of Parliament. It has never ousted from its rights of administering the charitable trusts such a body as the present governors against their will, and that, too, in a case where no breach of trust is charged. There is no authority in the books for any such proposition. There is no suggestion that Chitty J would not have made the order in that case but for the Royal Charter which prevented an order from being made without the consent of the governors. Although the court had no jurisdiction in the Christs Hospital case, it is significant that the jurisdiction of the court was not ousted where the charity obtained a charter subsequent to its founding (Attorney General v Dedham School (1857) 23 Beav 350; 53 ER 138) or if the charity established by a charter had been translated from land to money following the compulsory acquisition of its property (Clephane v Lord Provost of Edinburgh (1869) LR 1 Sc 417). In the cases where the court is not precluded by statute, the court can, if on the application of the trustees it has decided that a particular transaction is in the best interests of the charity, make a consequential direction against not simply the applicants but also any other organ of the charity, which would clearly include the members in the case of a charity. As the Chancellor put it in this case, the members of CIFF do not stand outside the charity; they are part of the administration of the charity, and they cannot lay claim to any private interest (para 145). So, the court as entitled to make a direction against the organ which made the application as it is against any other organ whose consent is required, though that other organ would have of course first to be given an opportunity to be heard, as Dr Lehtimki was in this case. In this case, the trustees had surrendered their discretion with respect to the Grant, but Dr Lehtimki did not surrender his. There is a distinction between a surrender of discretion and an application to the court for approval of a transaction without such surrender. In the former case, it has been held that the court starts with a clean sheet and has an unfettered discretion to decide what it considers should be done in the best interests of the trust: per Lightman J in Royal Society for the Prevention of Cruelty to Animals v Attorney General [2002] 1 WLR 448, para 31. Coupled with the surrender of discretion by the trustees in this case is the further fact that the governance disputes had brought the work of the charity close to a halt and that situation has been resolved by an agreement between the trustees and CIFF which will effectively divide the endowment into shares and allow the parties to go their separate ways but both employing their considerable skills in pursuit of charitable purposes albeit through different charities in the future. In addition, as I have shown above, the courts have always leaned in favour of giving special treatment to charities. The court has a well established jurisdiction to intervene where the charity can no longer be carried on as the founder envisaged, perhaps because the endowment has increased so substantially over the years that it is excessive for achieving the founders original purposes, and it is satisfied that the charitable purposes can be beneficially carried out in some different way (see now sections 62 and 67 of the 2011 Act). (This is recorded by Chitty J in the course of his judgment in the Christs Hospital case, although there was no failure of the charitable objects in that case, and see for example Andrews v McGuffog (1886) 11 App Cas 313.) The fundamental point appearing from all these cases is that although the court must proceed with considerable caution, the categories of exceptional circumstances referred to by Lord Truro LC are not closed. In the particular circumstances of this case, I consider that the Chancellor was entitled to conclude that this was one of the cases in which the court can exceptionally intervene irrespective of any breach of duty, alleged or found, by any fiduciary. That is because an impasse is threatened in the performance of the trust if Dr Lehtimki is unable to reach the same conclusion as the Chancellor has done. If he does that, the Grant cannot be made even though the arrangements which have led to the proposal for that Grant provided the means for settling an existential threat to the operation of the charity caused by deeply felt dissension between its two founders. As Lord Wilson pointed out at the hearing, there is power in article 1.5 of the articles of association of CIFF for the trustees to remove members but the process is cumbersome and may not lead to a clear result. It only applies when the continued membership of the member is harmful to the charity and provision is made for the member to make written representations. So, I do not consider that it provides an adequate alternative to the Chancellors order. That means that I must next consider a point which Mr Morpuss raises about an important provision of the 2011 Act, which seems to follow on from the non intervention principle. Section 20(2) applies to the Charity Commission. Section 20 (as amended by sections 6(3) and 7(3) of the Charities (Protection and Social Investment) Act 2016) provides: 20. Incidental powers (1) The Commission may do anything which is calculated to facilitate, or is conducive or incidental to, the performance of any of its functions or general duties. (2) But nothing in this Act authorises the Commission (a) to exercise functions corresponding to those of a charity trustee in relation to a charity, or (b) otherwise to be directly involved in the administration of a charity. (3) Subsection (2) does not affect the operation of section 84, 84A, 84B or 85 (power of Commission to direct specified action to be taken or to direct application of charity property). Mr Morpuss contends that the Chancellors direction, if made by the Charity Commission, would fall within section 20(2). He goes on to submit that the court cannot have any wider jurisdiction than the Charity Commission in this regard and so the court cannot make an order compelling a member to vote in a particular way. I do not consider that the first part of this proposition is sound. A member is not a charity trustee as defined in the 2011 Act. Section 177 of the 2011 Act states that, unless the context otherwise requires (which has not been suggested), the expression charity trustees means the persons having the general control and management of the administration of the charity. The members of CIFF do not have general control of the activities of CIFF for the reasons discussed in para 14 above, and so subsection (2)(a) is not engaged by the Chancellors direction. In the light of my other conclusions, I need not consider the question whether the direction to Dr Lehtimki that he is to vote on the section 217 resolution in favour of it requires the performance of an act within the administration of a charity. I reject the submission that the same restrictions as are imposed on the Charity Commission by section 20(2) apply to the courts inherent jurisdiction. What Mr Morpuss contends is that the court cannot have any wider jurisdiction than the Charity Commission in this regard and so the court cannot make an order compelling a member to vote in a particular way. In my judgment, the courts inherent jurisdiction is not tailored to that of the Charity Commission. The jurisdiction of the court with respect to charities is of ancient origin and there is no provision in the 2011 Act which attempts to codify it. It would, as Lord Pannick points out, require an express provision to remove or reduce the scope of the courts inherent jurisdiction: see In re S (an infant) [1965] 1 WLR 483. There is no such express provision in either the 2011 Act or the 2006 Act which modifies the inherent jurisdiction engaged in this case. The final point is whether the court can exercise this jurisdiction by giving a direction and without making a scheme. It is said by the first and fourth respondents that to give the relief sought the court is restricted to making a scheme. Both Mr Morpuss and Mr Crow make the point that Ms Cooper has been unable to find a previous case in which the court, in reliance on its jurisdiction over trusts, has ordered a fiduciary to cast his vote at a company meeting as the Chancellor did in this case. As the circumstances of every case are likely to be unique it is not at all surprising that the appellant has not been able to rise to this particular challenge. The facts and circumstances of this case are most unusual. Moreover, ubi jus ibi remedium is one of the maxims of equity and certainly examples can be found where the courts have made directions as consequential relief in charity cases: see, for example, Attorney General v Black (1805) 11 Ves Jr 191; 32 ER 1061, where Lord Eldon, having decided that the election of a master of a free school had not been carried out in accordance with the terms of the trusts, continued the appointment of acting master until proper elections could be held, which was obviously a necessary and expedient intervention by the court. But there are more modern authorities on this point. Mr Pearce disagrees with the submission of Mr Morpuss. He submits that the jurisdiction of the court in respect of charities enables the court, when it is necessary or expedient in the interests of the charity, to direct the holder of a fiduciary power exercisable in respect of the charitys property as to how to exercise that power. He also submits, but in my judgment the wording is not beyond argument, that the Chancellor found it necessary that the court should intervene because he held: the only remaining voting member of CIFF must be directed to approve it, otherwise the essential interests of charity which the court is there to protect would be put at risk. (para 155) In my judgment, the starting point on this issue is that the court has the jurisdiction which it would normally exercise in respect of trusts and in addition the special jurisdiction which the court has in respect of charities. The latter is far wider than the former. It is ancient in origin and is the way in which the prerogative of the Crown as parens patriae is exercised in the case of charities. Buckley LJ in the Construction Industry Training Board case considered that the court could exercise its jurisdiction in relation to charities without a scheme (see the passage cited at para 69 above). I reject Mr Crows submission that this is limited to the discussion of breach of duty later in the same paragraph. Buckley LJs holding is in general terms. Moreover, the matters in the relevant sentence of that passage from Buckley LJs judgment are expressly stated to be only by way of example in any event. The correct principle is that articulated by Lord Wilberforce in the context of private trusts in In re Badens Deed Trusts (No 1) [1971] AC 424, 457: the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlors or testators intentions. It may do so by appointing new trustees, or by authorising or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis for distribution appear by itself directing the trustees so to distribute. The books give many instances where this has been done . In the present case, there cannot be any doubt but that the trustees were entitled to seek the directions of the court as to whether CIFF should make the Grant, and the court, once it had decided that the making of the Grant was in the charitys best interests, was entitled and bound to consider how those interests may be carried into effect. The matter simply did not require a scheme it only required directions. Lord Wilberforces examples relate to private trusts, but many examples can be found in relation to charities. One of the first reported cases of a direction is Attorney General v Haberdashers Company 1 Ves Jun 295, cited by Mr Crow, where Lord Thurlow LC made a direction for the respondent trustee to distribute certain funds. There was no allegation of any misconduct by the trustee. Later examples include In re Randall (1888) 38 Ch D 213, where a limited gift to charity had come to an end (citing Walsh v Secretary of State for India (1863) 10 HL Cas 367, concerning the destination following the Indian mutiny of a trust fund established by Lord Clive of India for the East India Companys militia). In the context of charities, the court is not in a case such as this seeking to execute the trust in the manner best calculated to give effect to the settlors or testators intentions (see per Lord Wilberforce above) but in the manner most likely to advance the charitable purposes for public benefit. No party, other than Sir Christopher, suggested that there was any doubt about whether there could be a scheme in relation to CIFF even though the Law Commission of England and Wales in its report on Technical Issues in Charity Law (2017) (Law Com No 375) records a doubt about this, though it saw no reason to exclude charitable companies and other corporate charities from the scheme making power of the court and the Charity Commission: see para 4.22. A charitable company is only in a position analogous to that of a trustee, but it is now well established that the courts jurisdiction with respect to charities extends to institutions which are not trusts in the strict, technical sense of the word (see the comments of Slade J in the Liverpool and District case [1981] Ch 193, 214; see also the Construction Industry Training Board case [1973] Ch 173). (It is to be noted that the scheme in the Liverpool and District case would not have involved any change to the companys constitution as the company was in liquidation and its assets were held on the statutory trusts for distribution). That is sufficient for the purposes of this case. Accordingly, in my judgment, while the court may commonly make a scheme, particularly where the application of assets cy prs is required, in an appropriate case it may also give effect to the charitable purposes by giving a direction. There would seem to have been little point in a scheme in this case, and there is no evidence that the Charity Commission thought that there should be a scheme. Issue 3: Does section 217 of the Companies Act 2006 allow the Court to direct a member to exercise his discretion in a particular way when Parliament has provided for members to pass the resolution? The range of the arguments on this issue Lord Pannick submits that, although the court should be slow to exercise its power to intervene, section 217 of the 2006 Act does not prevent the court from exercising its inherent jurisdiction to direct the member as to how exercise his discretion under section 217. As for the first and fourth respondents, Mr Crow took the burden of their arguments on this issue. He submits that Dr Lehtimki would be using different skill sets from those of the court and implied there was therefore a good reason why Dr Lehtimki should be able to exercise his vote independently. Mr Crow made the forensic point that no one had produced any case in which the court had directed a member how to vote when there was no evidence that he had acted in breach of duty. The court had power to put in place machinery for the charity, but not to manage its activities. The prohibition on the Charity Commission from managing a charity in section 20 of the 2011 Act (discussed above) reflected the policy of the courts. Mr Crow submits that, in the absence of a breach of duty, the court does not usurp the judgmental discretion of the decision maker. By analogy with public law (and charities operated within the realm of public law see Stanway above, para 91), the court should defer to the decision of the decision maker chosen by Parliament. An inherent jurisdiction is not an unlimited jurisdiction. The court intervenes to approve matters which the fiduciaries wished to do: see, for example, In re Ashton Charity. In any event, policy supports the non intervention principle because (1) members are better informed than the court, (2) it is important not to discourage donors who were potential members, (3) there is likely to be an increase in charity litigation if there is more intervention, (4) the court should by analogy with public law defer to the decision of the decision maker chosen by Parliament. Therefore, the court could not override the members powers under section 217. Mr Pearce submits that the direction given by the Chancellor to Dr Lehtimki was a proper exercise of that discretion. Mr Pearce submits that the power of the court extends to giving directions (see per Lord Wilberforce in Baden (No 1) [1971] AC 424) even though Fox LJ in Kerr v British Leyland (Staff) Trustees Ltd [2001] WTLR 1071 thought that the trustee could not be directed. My conclusions on the third issue I have concluded that the court could intervene where this is necessary or expedient to see that the charitable trusts are performed and can do so by way of a direction as opposed to a scheme. I deal here only with the issue that turns on section 217. There are a number of principles in play here: (1) The courts inherent jurisdiction with respect to charities and the principle that Parliament must make it clear if it is restricting the jurisdiction of the court. (2) The principle that the regulation of charities takes place in the field of public law and that in public law the court does not substitute its decision for that of the decision maker selected by Parliament, which in the case of section 217 is the members of CIFF. (3) The principle that to be valid steps taken by registered companies in pursuance of statutory powers must follow those provisions of the Companies Acts applicable to them. In default the action taken without following the provisions of the 2006 Act will be of no effect. Lord Pannick relies on the first and third principles, while Mr Morpuss and Mr Crow rely on the second. Starting with the position of the non charitable company, the purpose of section 217 is not to veto transactions in which a director or her connected person has an interest but to ensure that there is adequate disclosure and approval by the company in general meeting. This is apparent from the drafting of the section. The original prohibition, as originally enacted, applied only to directors but the Law Commission of England and Wales and the Law Commission of Scotland recommended that it should be extended to payments to connected persons in their report, Company Directors: Regulating Conflicts of Interest and Formulating a Statement of Duties (1999) (Law Com No 261; Scot Law Com No 173, paras 7.31 to 7.37). The Government decided to propose the necessary changes in the 2006 Act on the basis of the Law Commissions report. Moreover, the legislature has not sought to interfere with or restrict the special voting rights a company may confer on any member, and so the articles could provide that only one member should effectively be able to vote on a resolution. The House of Lords considered in Bushell v Faith [1970] AC 1099 that the mandatory rule in section 184 of the Companies Act 1948 (now section 168 of the 2006 Act), whose purpose was to prevent companies from making removal of a director subject to an extraordinary resolution, did not prevent special voting rights being attached to a particular share on any ordinary resolution for the removal of a director. In that case, the House of Lords by a majority held that the article attaching special voting rights was valid despite the provisions of section 184(1), since Parliament was only seeking to make an ordinary resolution sufficient to remove a director and had not sought to fetter a companys right to issue a share with such rights or restrictions as it thought fit. Lord Donovan held at pp 1110 1111: When, therefore, it is said that a decision in favour of the respondent in this case would defeat the purpose of the section and make a mockery of it, it is being assumed that Parliament intended to cover every possible case and block up every loophole. I see no warrant for any such assumption. A very large part of the relevant field is in fact covered and covered effectively. And there may be good reasons why Parliament should leave some companies with freedom of maneuver in this particular matter. There are many small companies which are conducted in practice as though they were little more than partnerships, particularly family companies running a family business; and it is, unfortunately, sometimes necessary to provide some safeguard against family quarrels having their repercussions in the boardroom. I am not, of course, saying that this is such a case: I merely seek to repel the argument that unless the section is construed in the way the appellant wants, it has become inept and frustrated. So, the protection given by Parliament is subject to being rendered less effective by the company exercising other powers, such as the right to attach special rights to shares. There cannot therefore be any policy objection from the perspective of company law why the law of charities should not enable a court to direct a member how to vote on a section 217 resolution. Furthermore, there are other provisions in the 2006 Act which confer broad powers on the court to make directions: see, for example, section 994 of the 2006 Act (relief against unfair prejudice). While the court could not dispense with the requirement for a resolution as described in section 217 this power could be used in an appropriate case to require a member to vote in favour of a resolution. In the case of a charitable company, the member is a fiduciary for certain purposes which would include the making of a grant, like the Grant in this case. The question how he votes is usually an exercise of his discretion in which the court cannot interfere (see generally Issue 2, above). However, if the directors (here the trustees) have surrendered their discretion to the court, then the court will exercise their power to agree to a transaction which involves a payment in connection with a trustees loss of office. The court is called upon to approve the exercise of that discretion. The Chancellor did so unconditionally (save as to the Charity Commissions approval), and in particular his decision was not dependent on Dr Lehtimki taking the same view and agreeing to pass the section 217 resolution. In those circumstances the field for the operation of public law in this case is exhausted. The section 217 resolution becomes a matter of the internal management of the company. So, in my judgment, it is open to the court to make an order which compels the member entitled to vote on the section 217 resolution to vote in a particular way. This outcome is consistent with the role of a member in a registered company where the power to manage the companys activities is delegated to the board unless and to the extent that the 2006 Act or the companys constitution provide otherwise. Section 217 of the 2006 Act only gives members the right to vote on the Grant because it is also a payment in connection with loss of office: a member would normally have no say on the making of grants by a grant making charitable company and in any event has no role in initiating or negotiating the proposal. There is no interference with the statutory scheme in the 2006 Act because there still must be a resolution for the purposes of section 217. In the same way, a resolution has to be passed even where a member is effectively disenfranchised because another member has weighted voting rights. That is so even though, unless the member is a fiduciary who is not authorised to vote on a resolution, he is the director who, or whose connected person, will benefit under the resolution. Likewise, there is no interference with the statutory scheme in the 2011 Act. The court does not dispense with the separate requirement in section 201 of that Act for the prior written consent of the Charity Commission. If the conclusion of the Court of Appeal were right, it would mean that if, in this case, Dr Lehtimki had come to the view that, despite the conclusion of the Chancellor, the Grant was not in the interests of the charity, the court would have no power in an appropriate case to give a direction to Dr Lehtimki to vote in favour of the section 217 resolution or to see that the charitable purposes were performed. Mr Morpuss submits that section 201 recognises that the Charity Commission cannot by a scheme under the 2011 Act short circuit the requirement for a resolution of the members of a charitable company. The Law Commission of England and Wales likewise noted that there was uncertainty on this point in relation to a companys power to alter its constitution (which requires a special resolution) in its recent report, Technical Issues in Charity Law (2017) (Law Com No 375), which is currently awaiting government response. The 2011 Act and the 2006 Act are both primary legislation and thus my provisional view (as this point has not been fully argued) is that, under the law currently in force and in the absence of an order by a court having power to make the necessary change itself, a charitable company must follow the procedures in the 2006 Act if it proposes to alter its constitution or take any other step for which a procedure is prescribed by the 2006 Act, and that Mr Morpuss submission about section 201 would appear to be correct. The frustration felt by Dr Lehtimki at not being called upon to exercise his own, highly skilled judgment is understandable, but the Chancellor was in a position to consider the merits of the Grant very carefully in the light of the evidence filed. Of course, the law applies in the same way whether a fiduciary has Dr Lehtimkis knowledge and skills or not. The court finds itself in the position that it is totally uncertain as to what the final conclusions of Dr Lehtimkis deliberations might be, and he has not sought an opportunity to come to a view before the court makes any order. As CIFF was seeking the directions of the court, it must, in the absence of some evidence to the contrary (and there is none), be assumed that all relevant information known to it was placed before the court. Moreover, as a member, Dr Lehtimki is subject to the terms of the articles which entrust the management of CIFF to the trustees and they have resolved to surrender their discretion to the court. The court must look at all the circumstances and the full context of the potential exercise of discretion. In that regard, the question is not only what Parliament intended in enacting section 217 of the 2006 Act but also what the settlors intended in establishing a charity which gave members only a subsidiary role. Looking for the intention of the settlors as expressed in the structure which they established, it seems to me unlikely that they intended in a case such as the present that members should prevent the charitable purposes from being performed and their beneficiaries safeguarded as a result of reaching a different view from the court, exercising the discretion of the trustees, on the question of the Grant. WOULD THE COURT HAVE JURISDICTION TO DIRECT DR LEHTIMKI TO VOTE IN FAVOUR OF THE SECTION 217 RESOLUTION ON THE BREACH OF FIDUCIARY DUTY ROUTE? Lord Briggs concurring judgment on the breach of duty route I have had the benefit of reading Lord Briggs judgment. Lord Briggs conclusion on Issue 2 is that reliance on an exception to the non intervention principle is unnecessary and that the court can simply direct Dr Lehtimki to vote in favour of the section 217 resolution because the court has determined, on exercise of the trustees discretion surrendered to it, that it is in the best interests of the charity for the Grant to be made. Lord Wilson and Lord Kitchin agree with Lord Briggs. I respectfully disagree. In the judgment of Lord Briggs, the determination by the court that the Grant should be approved on the trustees surrender of their discretion to the court binds Dr Lehtimki as a member of CIFF because he has been joined as a party to the proceedings (para 208). Although the ordinary duty of a fiduciary is to exercise the powers that he has in that capacity in the way that he decides, in good faith, would be most likely to further the purposes of CIFF, that power has to give way (para 218), and, once the court has given its approval, there can be no reasonable basis for a fiduciary acting contrary to that decision (para 232). The duty of the fiduciary is then to use his powers so as to give effect to the courts decision (para 218). In Lord Briggs judgment, there is no longer any legitimate debate on the question that the court has decided (para 218). Lord Briggs considers that the members only option if he cannot vote for the section 217 resolution is to resign (para 218). Moreover, while Parliament has imposed constraints on the trustees exercise of their powers in section 217 of the 2006 Act and section 201 of the 2011 Act, those constraints do not serve the same purpose where the court makes that decision in place of the trustees (paras 209 and 210), and so the members can be directed how to vote by the court. Dr Lehtimki ceases to be entitled under section 217 to overrule the trustee directors (para 221). In contrast, my conclusion is that a direction should be made by way of an exception to the non intervention principle based on the exceptional circumstances of this case. The views of the Chancellor and of the Court of Appeal Lord Briggs founds his conclusion on the judgment of the Chancellor. As I have explained above, the Chancellor accepted that another fiduciary acting reasonably could reach a different conclusion from his own (para 135: I am not saying that no reasonable trustee or fiduciary could disagree with my view . ) but then went on to hold that, once the court has made its decision, the member no longer had a free vote and would be acting in breach of duty if he acted contrary to the courts decision. Thus, he held: Here, both the Commission and the trustees of CIFF have decided that their discretion to approve the Grant should be exercised by the court. That discretion has now been exercised. The discretion so exercised binds the charity and the charitable company, CIFF. Its management is only divided between trustees and members for specific purposes. Here the trustees of CIFF bound CIFF in relinquishing their discretion to the court, and the court order will bind CIFF in deciding that the Grant should be made. That means that, whilst the members must pass a resolution under section 217 to approve the Grant, it is not in this case open to any member of CIFF to vote against that resolution, once the court and the Commission have approved the Grant. The member does not have a free vote in this case because he is bound by the fiduciary duties I have described and is subject to the courts inherent jurisdiction over the administration of charities. When the court has decided what is expressly in the best interests of a charity, a member would not be acting in the best interests of that charity if he gainsaid that decision. (para 154) The Court of Appeal disagreed with the Chancellor. Moreover, their view, with which I agree, was that there was no basis for any suggestion that when Dr Lehtimki makes his decision he will not do so in the proper performance of his fiduciary duties (para 69). Submissions on the breach of duty route The only party to this appeal to advocate the breach of duty route before this Court was Ms Cooper, and then only fleetingly. Mr Morpuss brief rejection of this route was to my mind convincing. The approval given by the court in this case is only on the surrender by the trustees (with the Charity Commissions approval) of their discretion. On Mr Morpuss submission, the court did not have jurisdiction as against the member simply because it had jurisdiction as against the trustees. He went on to describe that proposition as bootstrapping. Basis of jurisdiction must logically precede the conclusion of breach of duty I emphasise that word jurisdiction, which means, as already explained, the courts supervisory jurisdiction over charities. The Chancellor had no jurisdiction to make an order against Dr Lehtimki unless he was threatening to act in breach of his duty. But Dr Lehtimki was not threatening to act in breach of this duty. The Court of Appeal so found. The fiduciarys duty is subjective, namely to do that which he considers to be in the best interests of the objects of the charity. The importance of a subjective duty is that it is the fiduciary, and not the court, which decides which option to take. The question, properly formulated, for a member is not as stated in para 222 of Lord Briggs judgment: is the Grant in the best interests of CIFF?, but: do I in good faith consider that the transaction is in the best interests of CIFF (or, more accurately, the charitable objects)? The order of the Chancellor to approve the Grant was an exercise of the discretion which had been surrendered to him by the trustees. The Chancellor made Dr Lehtimki a party to the proceedings but that does not alter the nature of the application or enlarge the courts jurisdiction (cf para 227 of Lord Briggs judgment). Dr Lehtimki chose not to surrender his discretion to the court and the trustees had no power to surrender his discretion for him. On that the position in this court remains the same as it was before the Chancellor. When the court exercises a discretion surrendered to it, it acts in the place of the trustees and the surrender confers no power on the court which the trustees themselves did not have: see Lewin on Trusts, 20th ed (2020), para 39 099. So the jurisdiction has to be found in some other way. Lord Briggs explains that when the Grant is approved Dr Lehtimkis duty is transformed from one under which he is bound to act in what he considers to be the best interests of the charity to one under which he has no discretion but to vote to approve the Grant. The Chancellor made a mandatory order against him to that effect. But the order approving the Grant could not alter his powers in that way. If the required transformation can be achieved at all, despite the fact that Dr Lehtimki was intending to exercise his powers in a proper manner, it could not be done by an order exercising the trustees discretion: see Lewin on Trusts, above. It could only be done by making a separate substantive order to that effect against Dr Lehtimki changing his subjective duty into one to vote to give effect to the courts decision. Furthermore, the point is not one of form. Jurisdiction must be established in substance before the direction is given, it is not enough for the court to found jurisdiction on a breach of duty which does not arise unless the court has jurisdiction to make the order. To do otherwise is, with respect, circular. Therefore, as I analyse it, the breach of duty route cannot be followed because there is no jurisdiction. The court must first establish jurisdiction by finding, if it properly can, an exception to the non intervention principle. That may explain why counsel made detailed submissions on this principle to almost the complete exclusion of the breach of duty route. The courts approval may be frustrated by the action of non fiduciaries The exceptions to the non intervention principle only enable the court to make orders against fiduciaries. It does not enable the court to bind any non fiduciary such as a donor, benefactor or founder of a charity who has reserved the right to give consent to any transaction, save to the extent that they are themselves fiduciaries. If their consent is required, but is withheld, the effect is likely to be that the transaction which the court approved on the trustees application cannot be implemented. So too with the Charity Commission. The Chancellor made it clear that the Charity Commission, which is not a party to these proceedings and has not made submissions, should be free to decide whether to give its approval: 150. In these circumstances, therefore, it is relatively clear that the Commission has deferred to the court in relation to the decision as to whether the making of the Grant is expedient in the best interests of CIFF and should, therefore, be sanctioned, but has decided to wait and see what the court decides before giving its prior approval to a section 217 resolution. When it took these decisions, however, the Commission did not know what the court now knows as to the legal position of the members of CIFF (as now determined) and as to Dr Lehtimkis position as described to the court. None the less, I take the view that the Commissions approach should be respected, and that it should be given its statutory opportunity in the light of this judgment to consider whether to approve the making of a members resolution under section 217 of the Companies Act. The Chancellors direction against Dr Lehtimki was expressly made conditional on the Charity Commission giving its consent under section 201 of the 2011 Act (as well as under the constitution of CIFF), and there has been no appeal against that part of the Chancellors decision. In my judgment, the Charity Commission as a public body cannot be bound to reach its decision on what is expedient in the interests of the charity by virtue of the decision which the court has made on the trustees application. The Charity Commission must make its own decision on the materials available to it though no doubt it would take into account the courts decision. However unlikely, it is open to it to come to a different conclusion, and if it does, the Grant will not proceed. Avoiding a blanket approach to breach of duty The breach of duty route involves a blanket approach: all other fiduciaries for the charity in question must vote to give effect to the transaction which the court has approved. Once it is appreciated that the Charity Commission and the holder of any non fiduciary power to give consent is not bound by the order made on the trustees surrender of their discretion to the court, a more nuanced view of the position can be taken and the conclusion reached that there is no absolute need for a member of a charitable company to have his discretion taken away from him. Even if he is bound to act reasonably, there can, as is demonstrated by the judgment of the Chancellor in this case, be a reasonable difference of judgment on the exercise of a discretion. The importance of the subjective test for breach of fiduciary duty The subjective nature of the fiduciarys duty is very important to the operation of charity law. The court does not interfere in a dispute as to how a charity is to be administered: see paras 120 122 above. The non intervention principle reflects the judicial policy of not interfering with the acts or decisions of trustees in the absence of evidence of a breach of duty. As explained, any departure from the non intervention principle calls for caution. Furthermore, Lord Briggs approach is out of line with the benevolent approach which the law adopts in relation to charitable trusts (see paras 53 to 55 above) and also in relation to charitable trustees. Thus, for example (and remembering that I have not concluded that there is any threatened or actual breach of duty by Dr Lehtimki: see further para 195 below), the law looks benevolently on charity trustees even where there is evidence of actual or potential breach of duty: see, for example, the judgment of Lord Eldon in Attorney General v Exeter Corpn (1826) 2 Russ 45, 54 (approved by the House of Lords in in Andrews v McGuffog 11 App Cas 313, 324) as follows: With respect to the general principle on which the court deals with trustees of a charity, though it holds a strict hand over them, when there is wilful misapplication, it will not press severely upon them, where it sees nothing but mistake. It often happens, from the nature of the instruments creating the trust, that there is great difficulty in determining how the funds of a charity ought to be administered. If the administration of the funds, though mistaken, has been honest, and unconnected with any corrupt purpose, the court, while it directs for the future, refuses to visit with punishment what has been done in time past. To act on any other principle would be to deter all prudent persons from becoming trustees of charities. There are practical reasons for the courts benevolent approach, and the reasons are equally valid in support of the subjective nature of the fiduciarys duty. Lord Eldon explains that the reason for the courts benevolence is to encourage people to become trustees of charities. Another reason would also be that it may give donors to charities confidence that their generous, and in this case, massive, donations for public benefit will be managed and applied as the officers and, in the case of a membership charity like CIFF, its members think fit in accordance with the law and the constitution of the charity, and not by the court. The court may not have the same detailed experience and knowledge of the charity as the officers and members have. The Court of Appeal expressed similar views to those in this paragraph in para 63 of its judgment when agreeing with a submission by Mr Robert Ham QC, then appearing for Sir Christopher. Importance of my more nuanced approach in membership charities Another important reason for the courts restraint in the case of membership charities is that people become members so that they can have a say in how the charity is run. The function of the membership charity is inherently participatory for those who desire to do more than give and also want to play a part in the direction of the charity. The effect of the breach of duty route is that once the court has decided on the trustees application that a particular step is in the best interests of a charity, its members will have no further say. As already indicated, this is contrary to the ethos of a membership charity. The court may not be aware of their reasons on a particular proposal of the charity trustees, especially if the members are drawn from a wide section of the public. Society draws enormous strength and benefit from charities of this kind, and that factor should in my judgment incline the court to hold that jurisdiction can only be founded in this case if there is an applicable exception to the non intervention principle. That principle should in my judgment prevail over any disagreement with or disapproval of Dr Lehtimkis conduct in this matter. The trustees surrendered their own discretion to the court, not that of Dr Lehtimki. The Chancellor was therefore not exercising any corporate power conferred on the members or any other person. In my judgment the court should be very circumspect in overriding protections written into the articles or conferred on members by the Companies Acts. Appropriate restraint is reflected in the non intervention principle. Deadlocked trustees are not an analogous situation Lord Briggs seeks to draw an analogy with cases where the court makes directions to resolve disputes among a deadlocked body of trustees but in my respectful view that analogy misses the point. In those cases, the court has only a single body of fiduciaries before it. In this case, there are two: (i) the trustees and (ii) the members of CIFF. As a matter of corporate law, the trustees do not control the members powers (see para 14 above). In any event, the cases on deadlock form an exception to the non intervention principle (see per Lord Walker in Pitt v Holt [2013] 2 AC 108, para 73, cited at para 121 above). A material change of circumstances would undermine the basis on which the direction has been made Lord Briggs accepts that there could be a change of circumstances and the possibility that the order of the court (para 230 below) would have to be reviewed but he does not explore the consequences of that acceptance. An important consequence is that it may turn out that in the event there is no breach of duty by the time the member comes to vote. A change of circumstances could occur at any time before the date on which Dr Lehtimki has to vote on the section 217 resolution, which is the material time for assessing the existence of a breach of his duty. Once it is accepted that his decision is one to be taken at the date of the vote (which may not take place for some time), it cannot be concluded that a fiduciary, who has assured the court that he will act bona fide in the best interests of the objects of the charity, is currently threatening to act in breach of his subjective duty at the date of the courts determination on the trustees application or that there is no basis on which if there were no order he could not reasonably form the view that it was not in the best interests of the charity to vote in favour of the section 217 resolution (cf per Lord Briggs at para 232 below). So to conclude would be to prejudge the issue. On conventional principles, there is no threatened breach of duty at the present time, and a quia timet injunction would not lie on the basis of the subjective duty. Conclusions on the breach of duty route The breach of duty route assumes that which must first be proved and diverts attention away from the source of the courts jurisdiction to make a direction against a member. Unless there is an applicable exception to the non intervention principle, there is no jurisdiction. And it seems to me wrong for a court, in an understandable desire to ensure the effectiveness of its order, to characterise any dissension from it as automatically a breach of duty. Rather, it should satisfy itself that it is justified in concluding that there is an appropriate exception to the non intervention principle. That is the principled way to ensure that a member cannot exercise a veto on the courts approval of the Grant. Moreover, the conclusion that there is a threatened breach of duty can only be reached, as Lord Briggs accepts, by making what I see as a significant inroad into the subjective duty. Lord Briggs response is that the test has to be objective in these circumstances. But the effect of that approach is to make a fundamental change in the members duty. It also involves taking away the members discretion: in the words of the Chancellors judgment, at para 154, the member does not have a free vote in this case, and so he is no longer free to exercise his voting rights as he thinks fit in the proper performance of his duties. The making of a direction against Dr Lehtimki on the basis that it would be a breach of duty for him to act other than as the court has decided in relation to the trustees may have consequences which stretch beyond the very exceptional nature of this particular case. In my judgment, the broader consequence in membership charities is to tip the balance of power in favour of the trustees and/or the court, and against the membership. The members who take a different view from the court will be compelled to return to the court to justify their approach. The onus should not be on them to do so. The core facts of this case are not necessarily very unusual: it is not infrequent to find disagreements between the trustees and members of substantial and well known membership charities. Accordingly, in my judgment, to hold that members are automatically bound by the courts decision in relation to the trustees is the wrong turn for charity law to take. Respectfully, I consider that the non intervention principle has to be observed even in this case. The court can only make a direction against Dr Lehtimki if it is satisfied that there is an applicable exception to that principle. I am so satisfied for the reasons that I have given. SUMMARY OF MY OVERALL CONCLUSIONS On the first issue, I consider that a member of a charitable company owes fiduciary duties to the charitable purposes in relation to the passing of a resolution such as the 217 resolution, which, if passed, will make possible a disposition of assets which would otherwise have been applicable for those purposes. The fiduciary duties are tailored to fit within the corporate vehicle, and thus Dr Lehtimki has no greater right to demand information from the trustees (the directors) than the terms of the companys constitution or the general law relating to companies allows a member. I also consider that the duties are narrower than those formulated by the Court of Appeal so that they do not apply in every instance where a member has power to act. Those circumstances must be worked out as and when they arise. On the second issue, I conclude that the fundamental principle is the non intervention principle under which the court does not seek to substitute its judgment for that of a fiduciary. Any departure from this principle must be approached with considerable caution by the court. Litigation which simply seeks to draw the court into matters which can be dealt with by the trustees under their powers is not to be encouraged, but litigants must in any event overcome the hurdles to bringing charity proceedings to which I have referred in para 50. However, in my judgment, the present case is a rare exception to that principle. The trustees of CIFF have surrendered their discretion to the court and the courts priority is to see that fiduciaries for the charity perform their duties in the way most likely to achieve its continued existence notwithstanding what has been held to be in effect an existential threat to the proper governance of the charity. I also consider that the court has jurisdiction to give a direction to Dr Lehtimki to vote in favour of the section 217 resolution, and that there does not have to be a scheme. On the third issue, I conclude that, CIFFs trustees having surrendered their discretion to the court, and the court having reached the unchallenged conclusion that it is in the best interests of the charity for the Grant to be made, the court can give a direction to a fiduciary as to the manner in which he votes on the section 217 resolution and that the 2006 Act does not by implication prevent the court from making such an order. I therefore conclude that the Court of Appeal was in error in not making the direction. However, differing here from Lord Briggs, I would reject the breach of duty route, that is, the view that the court can found its jurisdiction to make this order against a member on the basis that for a member to threaten to vote other than in favour of the section 217 resolution would be a breach of duty by the member simply because the court has reached the conclusion that the Grant should be approved on the trustees application (paras 174 to 199 above). I would allow the appeal to the extent explained in this judgment. LORD BRIGGS: (with whom Lord Wilson and Lord Kitchin agree) I agree that this appeal should be allowed, and with the summary of the reasons for doing so given by Lady Arden in paras 200 202 (but not 203) of her judgment. I add a few words of my own first because there is in my view a simple although unusual reason why it was right for the Chancellor to direct Dr Lehtimki how to cast his vote under section 217 which depends upon no deep consideration of the law of trusts and charities of the type which both the parties and my Lady have considered it necessary to undertake. CIFF is a charitable company, falling under the courts special jurisdiction in relation to charities. Like a charitable trust CIFF is only a charity because its objects (ie its purposes) as laid down by its constitution are exclusively charitable. The furtherance of those purposes is entrusted primarily to its trustees. Although their functions are in most respects indistinguishable from those of company directors, like other charitable trustees they have the power to surrender to the court the exercise of their fiduciary discretion about a particular matter, a surrender which the court may or may not accept. If (as here) the court accepts that surrender, it will exercise that discretion in accordance with what it considers will best further the charitable purposes of the company, after hearing evidence and submissions from interested parties and from HM Attorney General representing the Crown as parens patriae. If the surrender of the trustees discretion relates to the approval or disapproval of a particular proposed transaction the court will have to come to a decision whether the companys entry into that transaction is, or is not, in furtherance of those charitable purposes. If the court concludes that it is, then it will follow that those purposes will not best be furthered by that transaction not going ahead. The courts decision on this question may be (and was in this case) a very difficult one, about which reasonable minds, activated by nothing less than the loyal performance of a fiduciary duty, may well differ. But once the courts decision about the merits of the transaction is made then, subject to any appeal (or perhaps a significant change in circumstances before it is implemented), that difficult question has been finally resolved. It ceases to be a question for debate. It is binding on all those interested parties joined to the relevant proceedings, and the duty of the charitys fiduciaries (whether or not joined as parties) is to use their powers to the end that it is implemented, both generally and in accordance with any directions which the court may give for that purpose. It would in my view be a plain breach of fiduciary duty for a relevant fiduciary of the charity to do otherwise, a fortiori to exercise a fiduciary power so as in effect to veto the very transaction which the court has decided should proceed in furtherance of the charitys purposes. Where a proposed transaction by a company involves a payment to one or more of its directors for loss of office, then section 217 of the Companies Act 2006 requires that the payment element of the transaction be approved by a members resolution. Section 201 of the Charities Act 2011 requires that, in addition, the payment element be approved by the Charity Commission where the relevant company is a charity. Section 217 recognises the need for an ordinary companys main stakeholders to have a veto over the ability of its directors to make payments to themselves or to one of their number from the companys funds. Section 201 recognises that the Commission, as the representative of the public for this purpose, should have the same ultimate control over such payments out of the funds of a charity. Both these sections recognise the obvious risk that directors may be swayed by inappropriate motives in deciding upon such payments, even when the intended recipients abstain entirely from the decision making process. Such constraints have no equivalent purpose where the decision that the charity should enter into a transaction involving payment to a director or trustee for loss of office is not merely approved, but actually decided on, by the court, after a surrender of the requisite discretion, and after those with contrary views are given a proper opportunity to make submissions and furnish evidence. The court will not be affected by fellow feeling of the type which might affect the directors or trustees. If the court gets the decision wrong, there is an appellate process in place to put it right. It is common ground that the Charity Commission may defer to the court under section 201 in such a case. It would be most unlikely if (as in the present case) the Charity Commission had authorised proceedings designed to enable the court rather than the trustees to make the decision that it would then decline to consent to a transaction which the court had approved, as being in furtherance of the purposes of the charity. But the same goes, or ought to go, for the members of a charitable company under section 217 if, as here, they are pure fiduciaries with no proprietary or other separate stake of their own in the companys assets. That is not to say that a section 217 resolution becomes unnecessary, but only that the members, if fiduciaries, can be directed by the court to approve it, if they are minded to do otherwise. Nor would approval by the Charity Commission become unnecessary, but in the absence of something having gone badly wrong with the court proceedings, it is hard to conceive why it would be withheld. Applied to the facts of the present case, the analysis is as follows. The management of CIFF was gravely threatened by the most unfortunate falling out between its generous and dedicated founders, Sir Christopher and Ms Cooper. What became the Grant (as Lady Arden describes) was thrashed out as a way of dealing with that threat in a way which would effect a form of demerger of CIFFs funds and activities into two charities, CIFF and Big Win Philanthropy (BWP), each with the same (though differently worded) objects as CIFF, the latter to be managed by Ms Cooper who would withdraw from CIFF, with its funds augmented by further substantial donations from both Sir Christopher and Ms Cooper. CIFF was under the control of five trustees, including Sir Christopher and Ms Cooper. The latter two were, along with Dr Lehtimki, the only members of CIFF. For perfectly understandable reasons the trustees considered it appropriate to surrender to the court their discretion whether to commit CIFF to the making of the Grant, and the Charity Commission deferred to the court by authorising the proceedings. But the Grant included what was, strictly, a payment for loss of office within section 217, and therefore required the approval of the members of CIFF. Again for understandable reasons, Sir Christopher and Ms Cooper declined to participate in voting as members. So the question whether to vote in favour of the making of the Grant fell upon the shoulders of Dr Lehtimki. The court heard submissions from all interested parties including CIFF itself, HM Attorney General and Dr Lehtimki, who was joined as a party and lodged evidence. The Charity Commission understandably took no active part itself. The Chancellor decided that the making of the Grant was in the best interests of CIFF; ie that its charitable purposes would be better advanced by the making of the Grant than by its not being made. He found that a difficult decision, about which relevant fiduciaries, including in particular Dr Lehtimki, could reasonably differ without thereby being in breach of duty. But there has been no challenge to that decision. When informed that Dr Lehtimki did not consider himself compelled by the courts decision as to the best interests of CIFF to approve the making of the Grant under section 217, he directed him to do so. Speaking of Dr Lehtimki he said, at para 154: The member does not have a free vote in this case because he is bound by the fiduciary duties I have described and is subject to the courts inherent jurisdiction over the administration of charities. When the court has decided what is expressly in the best interests of a charity, a member would not be acting in the best interests of that charity if he gainsaid that decision. I agree. I must say something very briefly about the two principal grounds on which that direction has been challenged, successfully, in the Court of Appeal. The first is the submission that Dr Lehtimki is not, as a member of CIFF, a fiduciary at all, although it may be conceded that he was bound by the proper purpose rule, that is to exercise his section 217 power for the purpose for which it was given. On this issue I agree with the Chancellor, the Court of Appeal and with Lady Arden that Dr Lehtimki is a fiduciary, in particular in relation to the exercise of his power as a member of CIFF to approve or disapprove the making of the Grant. There may be slight differences in emphasis and detail in their reasoning, particularly in relation to the question whether the members of mass membership charities like the National Trust are fiduciaries and, if not, why not. Like Lady Arden I would prefer to leave these issues to a case where they might affect the outcome. In the case of CIFF, its constitution confers no particular benefits on its members which would bring that question into play. The second, and main, ground is what is loosely described as the non intervention principle, namely that the court will not generally interfere with the performance by fiduciaries of their duties unless they are acting, or threatening to act, in breach of duty, or have surrendered their discretion, and that the courts special jurisdiction over charities gives rise to no exception. It was the main ground upon which the Court of Appeal overturned the Chancellors direction to Dr Lehtimki as to how he should vote upon the necessary section 217 resolution. Lady Arden deals with this ground on the assumption that Dr Lehtimkis stance involved neither a breach nor a threatened breach of his fiduciary duty. On that basis she concludes that the non intervention principle, important though it undoubtedly is, cannot be without exception, either in the law of trusts or a fortiori in relation to charities and that this case is, on its very unusual facts, just such an exception. In particular she concludes, and I agree, that the courts jurisdiction to intervene in the affairs of charities extends beyond its trusts jurisdiction more widely than just in relation to schemes. If it were necessary to proceed upon the basis that Dr Lehtimki was neither committing nor threatening a breach of his fiduciary duty by declining to vote on the section 217 resolution in accordance with the courts decision that the making of the Grant furthered the charitable purposes of CIFF, then I would agree both with Lady Ardens conclusion and with her analysis. But I am unable to accept the premise. I shall assume in Dr Lehtimkis favour that, as the Chancellor said, a conclusion by him that the making of the Grant was not in the best interests of CIFF, and a vote against it under section 217, would not in the absence of the courts decision on the point have involved any breach of fiduciary duty on his part. Thus if for example the trustees had resolved that the Grant should be made (on their perception that to do so would be in the furtherance of CIFFs charitable objects) without seeking the assistance of the court it would have been perfectly consistent with his fiduciary duty as a member to consider the matter afresh and, if he concluded otherwise, to prevent the making of the Grant by voting against it as the only unconflicted member. It is plainly within the intent of section 217 (which Parliament clearly intended should apply with full force to charitable companies) that the members may overrule the trustee directors in the event of a bona fide disagreement of that kind, where (as here) the transaction in question includes a relevant payment for loss of office. But once the court has ruled upon the underlying common question whether the proposed transaction is in the best interests of the charity, in properly constituted proceedings in which both the company and the members are joined as parties, the position fundamentally changes. It may well be that particular fiduciary organs of the charity bona fide opposed and argued against the decision which the court reached and remained unconvinced by the courts reasoning. But there comes a point where the ordinary subjective duty of the fiduciary (as the Court of Appeal put it at para 48) to exercise the powers that he has in that capacity in the way that he decides, in good faith, would be most likely to further the purposes of CIFF has to give way, where the court has reached a different view from his own and made a final decision to that effect. This is because the concept that the fiduciary is entitled to form his own subjective judgment about a matter affecting (in this case) the company assumes that there are different conclusions about the matter which may reasonably be reached. But when the very question in issue has been finally decided by the court in proceedings in which the fiduciary has been joined as a party and been heard, then there is no longer any legitimate debate. The duty of the fiduciary is then to use his powers so as to give effect to the courts decision about the companys best interests, however much he may disagree with it. If he finds that he cannot in conscience do so, then he should resign. There is a useful parallel in the situation which arises where trustees who have to act unanimously in deciding whether or how to exercise a fiduciary power find themselves deadlocked and, exceptionally, the court needs to resolve that deadlock in order to enable the trust to be duly administered. The court may be called upon to do so by one or more of the trustees, without a surrender of discretion by all of them, or indeed on the application of any interested party, such as a beneficiary. The opposing sides among the trustees may each have perfectly reasonable and bona fide views about whether the exercise, or non exercise, of the relevant power would best serve the interests of the beneficiaries. Where in such a case the court chooses to decide whether or how the power should be exercised, in the best interests of the beneficiaries, then it becomes the duty of all the trustees to act in accordance with the courts decision, regardless whether they agree with the courts view about the merits of the matter. If necessary the court may direct them to do so. For a useful summary of English and Commonwealth authorities on this aspect of the courts jurisdiction in the administration of trusts, see Garnham v PC [2012] JRC 050. It is suggested in this case that the above analysis is inapplicable because all that the court was doing was standing in the shoes of the trustees in making for them their decision on the merits of the Grant, whereas Dr Lehtimki as a member is a different organ of the company, unaffected by that decision, entitled to reach and act upon his own view of the merits and thereby to overrule the trustees. It is said that his joinder as a party, otherwise than at his request, does not detract from that entitlement. I respectfully disagree, for the following reasons. First, the court was not merely resolving some internal disagreement among the trustees. It was at the trustees unanimous request making the decision about the merits of the Grant for the company itself, exercising for that purpose its inherent jurisdiction in relation to the administration of the company as a charity, with the consent of the Charity Commission. CIFF was, in recognition of that, joined as a party, for the purpose of being bound by the outcome. As the organ charged with the overall direction and management of CIFF the trustees were beyond question the appropriate body within CIFF to put that question before the court on CIFFs behalf. While it is true that this is not a case of deadlock (because the members are, in respect of proposed payments for loss of office, entitled under section 217 to overrule the trustee directors), the court became seized of the issue as to the merits of the Grant by a legitimate alternative route. Secondly, the underlying question whether the making of the Grant was in furtherance of CIFFs charitable purposes was the determinative question for both the trustees and for the members, although they were different fiduciary organs of the company. This is not a case (as it would usually be in the case of an ordinary commercial company with non fiduciary members) where the two organs might legitimately have a different agenda from each other. There is no sense in which it could be said that Dr Lehtimki as a member might legitimately bring different objectives into his decision making, from those actuating the trustees. For both of them, the decisive question was the same: would the making of the Grant further the charitable purposes of CIFF? If it would, then they both had a duty to see that it happened. Thirdly the court was astute to make CIFFs members, and Dr Lehtimki in particular, parties to the proceedings, both to obtain their assistance in the making of a difficult decision, in the form of evidence and submissions, and to bind them into the outcome. It is in my view nothing to the point that Parliament has by section 217 given the members of a company their own decisive say in relation to the making of payments for loss of office to directors, and confirmed it in relation to charitable companies in which the members will usually be fiduciaries. The members decisive role is given to them as a control upon what would otherwise be the uncontrolled discretionary power of the directors (here the trustees). It was no part of Parliaments purpose to give fiduciary members of a charitable company the like control over the courts exercise of power over the company under its jurisdiction in relation to charities. That does not mean that section 217 was thereby disapplied, or for that matter the requirement for the approval of the transaction by the Charity Commission under section 201 of the 2011 Act, as the Chancellor recognised by the terms of his order. Lady Arden was kind enough to read a draft of my judgment, which ended at para 224 above. She has, in paras 174 and following of her judgment set out at length why she disagrees with the breach of duty route. I must explain why I have not been persuaded by her analysis. I mean no disrespect by doing so briefly. First however, I acknowledge the awkwardness of a point which asserts a threatened breach of duty when this was not in the forefront of the arguments which the court heard. But this is a really important point: can a fiduciary whose duty is to further the purposes of a charity stand aloof from a final decision of the court, made for the charity, on that very point, in proceedings in which he had been both joined and heard, so as to exercise a veto over what the court has decided would best further those purposes, or would it be a breach of duty to do so? I have not been persuaded by Lady Ardens reasons for not affirming the judges conclusion that such conduct would be a breach. Lady Arden says (at paras 178 and 181) that she prefers the submission of Mr Morpuss that the court had no jurisdiction over Dr Lehtimki as a member merely because it had accepted a surrender of the trustees discretion. I agree. But having joined Dr Lehtimki, the courts jurisdiction to require him to vote in favour of the Grant arose because his threat not to do so was a threatened breach of duty. Lady Arden acknowledges, at para 178, that the breach of duty point was, albeit briefly, taken on Ms Coopers behalf in her Grounds of Appeal. The Court asked Lord Pannick during his opening of the appeal whether he adhered to the argument that Dr Lehtimki would be in breach of duty if he voted against the Grant after its approval by the Chancellor and he said, again briefly, that he did. So the point remained to be decided, even though little was thereafter said about it during the hearing. More to the point, as I have sought to explain, the breach of duty point was precisely the basis upon which the Chancellor decided to direct Dr Lehtimki to vote in favour of the Grant. True it is that the Court of Appeal disagreed with the Chancellors reasoning, but that is why there is an appeal to this court. It must be open to this court on a second appeal to conclude that the first instance judge was right in his analysis, save perhaps where all parties to the appeal are for good (rather than tactical) reasons united in the view that he was wrong. There was no such unanimity in the present case. I am unable to agree with Lady Ardens next point (at paras 184 186), which is that if (as the Chancellor recognised) the Charity Commission retained its power to approve or disapprove the transaction under section 201 of the 2011 Act, then there could be no valid distinction with Dr Lehtimkis power as a member under section 217. First, the Charity Commission is not a fiduciary subject to the courts general jurisdiction in relation to breach of duty. It is a separate public body with its own statutory jurisdiction. Secondly the Charity Commission was not joined as a party to the proceedings, or heard on the merits of the Grant. The relationship between the court and the Charity Commission is quite different from that between the court and a fiduciary who is also a party to the proceedings, and its detail is beyond the scope of the issues in this appeal. Leaving aside change of circumstances, it seems very unlikely that the Charity Commission would prohibit the making of the Grant by a refusal under section 201, where the court had already finally decided that it would further the purposes of CIFF, and directed Dr Lehtimki to vote in favour of it under section 217. Lady Arden makes a number of points which may be loosely characterised as suggesting that the breach of duty route would have ramifications adverse to the willingness of members of the public to become engaged in the affairs of charity by becoming donors or members of charitable companies. Thus she says that the decision that Dr Lehtimki was threatening a breach of duty would undermine the subjective basis of fiduciary liability, that it would be contrary to the benevolent treatment of charity trustees by the court, that donors would react adversely to the court preferring its own views to those of members and trustees, and that it would discourage membership by shifting the balance of power from the membership to management and the court. I accept that the principled basis upon which the Chancellor decided to direct Dr Lehtimki to vote (with which I agree) does involve some limited departure from a purely subjective assessment of the question whether a fiduciary has committed, or is threatening to commit, a breach of duty. But the test for breach of fiduciary duty has never been purely subjective. The fiduciarys belief has to be both bona fide and reasonable, if he or she is to act upon it without risking breach of duty. In Cowan v Scargill [1985] Ch 270, 289, Sir Robert Megarry V C said this, of the trustees duty in relation to investment: This requirement is not discharged merely by showing that the trustee has acted in good faith and with sincerity. Honesty and sincerity are not the same as prudence and reasonableness. Where the court has finally decided what is in the charitys best interests there can be no reasonable basis for a fiduciary acting contrary to that decision and, here, actually vetoing the transaction which the court has decided best furthers the purposes of the charity. Nor can such conduct, in the face of a final decision of the court after hearing full argument, be equated with the type of bona fide mistake referred to by Lord Eldon LC in Attorney General v Exeter Corpn 2 Russ 45. He contemplated that the court would readily give directions as to future conduct by the trustee, but be merciful in relation to punishment for the past. No one is suggesting that Dr Lehtimki should be punished. Nor should anyone be discouraged from becoming a fiduciary for a charity (as a trustee or a member) by the prospect that, in unusually difficult cases like the present, the court may give such directions, in the expectation that they will be complied with. The fact that the court is there to lend its assistance when the fiduciaries are divided, or cannot make up their minds, should be an encouragement to those uncertain whether to undertake what may occasionally be a challenging role. I fully agree with Lady Arden that membership of corporate charities should be encouraged, and that members should also be encouraged to play their constitutional part in decision making about the charity. But there will, very occasionally, be decisions of great difficulty, sometimes of great controversy, with which the court is there to assist, in its general supervisory role over charity. That this is just such a case is the foundation of Lady Ardens judgment as much as it is of mine. I do not think that this very unusual case will tend to shift the balance of power away from members towards management and the court. In the present case Dr Lehtimki was, by his joinder, encouraged to put his own view of the merits of the Grant before the court, although it was the trustees who placed the matter before the court. In fact the originators of the proposal to make the Grant, Sir Christopher and Ms Cooper, were both members as well as trustees. I would therefore allow the appeal, and restore the Order made by the Chancellor, essentially for the reasons which he gave. LORD REED: With some reluctance, as I found the judgment of the Court of Appeal more persuasive than have your Ladyship and your Lordships, but in deference to the unanimity of the other members of the court as to the outcome of this appeal, and bearing in mind that the facts of this case seem unlikely ever to be replicated, I concur in the order proposed.
UK-Abs
In 2002, Sir Christopher Hohn and Ms Jamie Cooper, who were then married, set up The Childrens Investment Fund Foundation (UK) (CIFF), a charitable company limited by guarantee, helping children in developing countries. CIFF has a board of trustees (directors), and members. Governance issues emerged when their marriage broke down. The parties agreed that Ms Cooper should resign as a member and trustee of CIFF, and that CIFF should make a grant (the Grant) of $360 million to Big Win Philanthropy (BWP), a new charity founded by Ms Cooper. Under the Companies Act 2006, section 217 and the Charities Act 2011, section 201, payments by a company in connection with the loss of office of a director (here Ms Cooper) must be approved by the members of the company and the Charity Commission. The Charity Commission authorised the trustees of CIFF to obtain the approval of the court. So, the trustees started proceedings in the name of CIFF and surrendered their discretion on the transaction to the court. As to s.217, the members of CIFF were Sir Christopher, Ms Cooper and Dr Lehtimki. Only Dr Lehtimki as the sole non conflicted member, would vote on the resolution (the resolution) to approve the Grant. Dr Lehtimki (a party to the trustees proceedings) did not surrender his discretion or make his voting intentions clear. The Chancellor of the High Court (Sir Geoffrey Vos) determined that he should exercise the trustees discretion by approving the Grant, which he held was in CIFFs best interests. He accepted that a reasonable fiduciary could disagree with this conclusion. As to the resolution, Dr Lehtimki did not consider that he was bound to vote in favour, although throughout the proceedings it has been unclear what his actual voting intentions are. The Chancellor held that, as a member of CIFF, Dr Lehtimki was also a fiduciary and that, once the court had approved the Grant, he would be in breach of his fiduciary duty if he voted against the resolution. He ordered Dr Lehtimki to vote in favour of the resolution. The Court of Appeal (Gloster VP, Richards and Newey LJJ) agreed that Dr Lehtimki was a fiduciary but held that he had not threatened to act contrary to his fiduciary duty, since he had stated that he intended to act in what he considered would promote CIFFs charitable purposes. The Court of Appeal discharged the order against Dr Lehtimki. Ms Cooper appeals to the Supreme Court and seeks an order requiring Dr Lehtimki to vote in favour of the resolution. Dr Lehtimki and Sir Christopher contend that: (1) no such order can be made as a member is not a fiduciary; (2) that, if he was, there is a principle of trust and charity law that the court does not generally intervene in the exercise of a fiduciarys discretion unless he is acting improperly or unreasonably (the non intervention principle); and, (3) that Companies Act, s 217 precluded the court from giving Dr Lehtimki the direction to vote. The Supreme Court, Lord Reed (dubitante) concurring in the order, allows that appeal and makes an order requiring Dr Lehtimki to vote in favour of the resolution for the following reasons: Issue 1: Dr Lehtimki is a fiduciary when acting as a member of CIFF Lady Arden gives the sole judgment on this issue. The distinguishing characteristic of a fiduciary is that he owes a single minded duty of loyalty in matters covered by his duty [44]. A member of a charitable company in principle owes this duty. A charitable company itself is analogous to a charitable trustee, in the sense that it holds its assets subject to a binding obligation to apply them for charitable purposes only. The practical objections to members being fiduciaries (with duties to make their own investigations before voting and so on) are met by the fact that trust law allows such duties to be shaped by contract and in this case the members duties are shaped by the companys constitution, as well as relevant legislation. So, the duty is essentially a contract and statute based model [92]. The holding that a member is a fiduciary does not mean that there may not be matters on which a member can vote which only concern him personally and not the charity [101]. Issue 2: The Court can direct Dr Lehtimki to vote in favour of the resolution Lord Briggs, with whom Lord Wilson and Lord Kitchin agree, considers that once a court has decided whether a transaction is in the charitys best interests, that question is finally resolved. The Chancellor was right that the member no longer has a free vote. The charitys fiduciaries (whether or not parties) were obliged to use their powers to ensure that the courts decision was implemented. It would be a plain breach of duty for a fiduciary not to follow that decision [207 208]. If the decision was wrong, it could be appealed [210]. The concept that a fiduciary is entitled to form his own subjective judgment about a matter assumes that there are different conclusions about the matter which might reasonably be reached. This is no longer the case where a court has decided the issue [218]. If there was no such breach of duty, Lord Briggs agrees with Lady Arden that this case constitutes an exceptional case in which the non intervention principle does not apply [217]. Lady Arden holds that this care is a rare exception to the non intervention principle because of the existential threat to CIFF caused by the deeply felt dissension between the two founders [137]. She rejects the majoritys analysis. The order approving the Grant did not give jurisdiction to make an order directing Dr Lehtimki to vote on the beach of duty basis [180]. Moreover, a members duty is subjective: Dr Lehtimki did not threaten to breach that duty. There are strong reasons of policy for the subjective approach to fiduciary duties and for the non intervention principle, such as the policy of encouraging persons to act as fiduciaries [187]. The majoritys analysis also means that members are automatically in breach of duty if they fail to implement a transaction approved by the court at the trustees request, and this was contrary to the ethos of a membership charity, in which members who desire to do more than give may play a part in the direction of the charity. In addition, when the vote is taken, circumstances may have changed [194]. Issue 3: Companies Act 2006, s 217 does not prevent the court from directing a member to vote Lady Arden gives the sole judgment on this issue. Charities operate within a public law framework, where the court does not in general substitute its own judgment for that of the decisionmaker. However, section 217s purpose is to ensure adequate disclosure to, and approval by, the companys members [159], and the right to vote can be restricted by the companys constitution or by orders made under the 2006 Act. In these circumstances, where the matter is internal to the charitable company, the court can in an appropriate case direct one of its members how to vote [165].
This case is concerned with the right of a trader (in this case, Zipvit) to deduct input VAT due or paid by it on supplies of services to it by a supplier (in this case, Royal Mail), so far as those supplies are used for the traders own supplies of goods or services to an ultimate consumer. The issue arises in a specific set of circumstances. The general terms and conditions governing the supply contract between the supplier and the trader provided that the trader should pay the commercial price for the supply plus such amount of VAT (if any) as was chargeable in respect of the supply. As determined by a subsequent judgment of the Court of Justice, the supply should in fact have been treated as standard rated for VAT, so that the trader should have been charged VAT assessed at the relevant percentage of the commercial price for the supply. However, at the time of the supply both the supplier and the trader, acting in good faith and on the basis of a common mistake, understood that the supply was exempt from VAT, so the trader was only charged and only paid a sum equal to the commercial price for the supply. The invoices relating to the supplies in question denoted the supplies as exempt and hence indicated that no VAT was due in respect of them. The tax authorities (Her Majestys Revenue and Customs Commissioners, HMRC) made the same mistake in good faith. HMRC had inadvertently contributed to the mistake by the parties, by issuing tax guidance containing statements to the same effect. The effect of the mistake has been that the trader has only paid the amounts equivalent to the commercial price for each supply and there is now no prospect that it can be made to pay, or will pay, the additional amount equivalent to the VAT element of the total price (ie the commercial price plus the VAT due in respect of it) which ought to have been charged and paid in respect of such supplies. Likewise, the supplier has not accounted to HMRC for any VAT due or paid in respect of such supplies, and there is no prospect that it can now be made to account, or will account, to HMRC for such VAT. Notwithstanding this, the trader now maintains that under article 168(a) of the Principal VAT Directive (2006/112/EC the Directive) it is entitled as against HMRC to make a claim to deduct as input VAT the VAT due in respect of the supplies in question or a VAT element deemed by law to be included in the price charged by the supplier for each supply (and hence deemed by law to be VAT in fact paid in respect of such supply when the trader paid what the parties believed to be the commercial price of the supply). Against this, HMRC contend that in the circumstances of this case, on the proper interpretation of the Directive: (1) there is no VAT due or paid in respect of the supplies in question, so no claim can be made to recover input tax in relation to them, and/or (2) the invoices relating to the supplies in question did not show that VAT was due in respect of the supplies, and since the trader at no stage held invoices which showed that VAT was due and its amount, in compliance with article 226(9) and (10) of the Directive, for this reason also the trader is not entitled to recover input tax in relation to the supplies. The trader responds on point (1) that VAT must be treated as having been paid as part of the price (or as due) and on point (2) that all relevant facts are now known and it can prove by other means the amount of the VAT due or paid on each supply. The sums claimed by Zipvit as input VAT on the relevant supplies amount to 415,746 plus interest. The present proceedings are a test case in respect of supplies of services by Royal Mail where the same mistake was made. The court has been provided with estimates of between about 500m and 1 billion as the total value of the claims against HMRC. The factual background Royal Mail is the public postal service in the United Kingdom. Article 132(1)(a) of the Directive (and equivalent provisions which preceded it) provides that member states shall exempt the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental thereto. In implementing this provision, Parliament and HMRC interpreted it as covering all postal services supplied by Royal Mail. The implementing national legislation, the Value Added Tax Act 1994 (VATA), contained a provision to this effect (Schedule 9, Group 3, paragraph 1) and HMRC issued guidance notes to the same effect. Zipvit carries on the business of supplying vitamins and minerals by mail order and used the services of Royal Mail. During the period 1 January 2006 to 31 March 2010, Royal Mail supplied Zipvit with a number of business postal services under contracts which had been individually negotiated with Zipvit. The present proceedings concern supplies of one such service, Royal Mails multimedia service (the services). The contract under which Royal Mail supplied the services incorporated Royal Mails relevant general terms of business which provided that all postage charges specified as payable by the customer (ie Zipvit) were exclusive of VAT, that the customer shall pay any VAT due on Postage and other charges at the appropriate rate, and that VAT shall be calculated and paid on [the commercial price of the services]. Accordingly, insofar as VAT was due in respect of the supply of the services, the total price payable by Zipvit for such supply under the contract was the commercial price plus the VAT element. However, on the basis of the domestic legislation and guidance and the common mistaken view that the services were exempt from VAT, the invoices issued by Royal Mail to Zipvit in relation to the services were marked E for exempt, showed no sum attributable to VAT to be due, and charged Zipvit only the commercial price of the services. Zipvit duly paid to Royal Mail the sums set out in the invoices. Zipvit did not at the time of the supplies make any claim to recover input VAT in respect of them. Since Royal Mail understood the services to be exempt, and since it had set out no charge for VAT in its invoices, it did not account to HMRC for any sum relating to VAT in respect of the supply of the services. HMRC likewise believed the services to be exempt and did not expect or require Royal Mail to account to them for any such sum. Things proceeded in this way for several years, until the judgment of the Court of Justice of 23 April 2009 in R (TNT Post UK Ltd) v Revenue and Customs Comrs (Case C 357/07) EU:C:2009:248; [2009] ECR I 3025. The Court of Justice held that the postal services exemption applied only to supplies made by the public postal services acting as such, and did not apply to supplies of services for which the terms had been individually negotiated. On the basis of this interpretation of the Directive and its predecessor by the Court of Justice, in the relevant period the services in the present proceedings should have been treated as standard rated. Royal Mail should have charged Zipvit a total price for the supply of the services equal to the commercial price plus VAT at the relevant rate, and Royal Mail should have accounted to HMRC for that VAT element. As it was, however, Zipvit was not charged and did not pay that VAT element, and Royal Mail did not account to HMRC for any sum representing VAT in respect of the services. In the light of the TNT Post judgment, Zipvit made two claims against HMRC for deduction of input VAT in respect of the services by a procedure called voluntary disclosure: (i) on 15 September 2009 in the amount of 382,599 plus In the meantime, HMRC was making inquiries with Royal Mail to establish interest, in respect of input tax paid from the quarter ended 31 March 2006 (due after 1 April 2006) to the quarter ended 30 June 2009, and (ii) on 8 April 2010 in the amount of 33,147, relating to the periods to December 2009 and to March 2010. These claims were calculated on the basis that the prices actually paid for the supplies must be treated as having included a VAT element. precisely which of its services were affected by the TNT Post judgment. HMRC rejected Zipvits claims by letter dated 12 May 2010. This was on the basis that Zipvit had been contractually obliged to pay VAT in relation to the commercial price for the services, but it had not been charged VAT in the relevant invoices and had not paid that VAT element. After review, HMRC upheld that decision by letter dated 2 July 2010. At this time, the national limitation period of six years under section 5 of the Limitation Act 1980 for a contract claim by Royal Mail to claim the balance of the total price due to it in respect of the supply of the services (ie a sum equal to the amount of the VAT due in respect of such supply, calculated by reference to the commercial price of the services) had not expired. But issuing claims against all Royal Mails relevant customers affected by the TNT Post judgment, including Zipvit, would have been costly and administratively burdensome for Royal Mail and it had no commercial interest in doing this, and so did not pursue such claims. At this time, HMRC were within the time limits set out in section 73(6) and section 77(1) of VATA to issue assessments against Royal Mail for VAT in respect of at least some of the supplies of the services. However, HMRC considered that they should not issue such assessments because national law in the form of VATA had provided at the relevant time that the supply of the services was exempt and, moreover, Royal Mail had not in fact received from Zipvit the VAT due in respect of the supplies. Furthermore, HMRC considered that they had created an enforceable legitimate expectation on the part of Royal Mail that it was not required to collect and account for VAT in respect of the services, so that Royal Mail would have a good defence to any attempt to issue assessments against it to account for VAT in respect of the services. Zipvit appealed against HMRCs review decision to the First tier Tribunal (Tax Chamber). The hearing of the appeal took place on 14 and 15 May 2014. By this time, the limitation period for a contract claim by Royal Mail against Zipvit for the payment of the balance of the total price due for the supply of the services had expired in relation to the greater part of the supplies which had been made. HMRC were also largely if not entirely out of time to issue an assessment against Royal Mail, as noted in para 140 of the First tier Tribunals judgment. The First tier Tribunal held that the services were standard rated as a matter of EU law, as the judgment in TNT Post indicated, and that the postal service exemption in national law could and should be interpreted in the same way, so that the services were properly to be regarded as standard rated as a matter of national law. This is now common ground. The First tier Tribunal dismissed Zipvits appeal, in a judgment dated 3 July 2014. It held that HMRC had no enforceable tax claim against Royal Mail because Royal Mail had not in its VAT returns declared any VAT in respect of its supply of the services, had made no voluntary disclosure of underpaid VAT, had not issued any invoice showing the VAT as due, and HMRC had not assessed Royal Mail as liable to pay any VAT: para 137. In those circumstances there was no VAT due or paid by Royal Mail in respect of the supply of the services, for the purposes of article 168(a) of the Directive: paras 138 146. The question whether HMRC would have been prevented by principles of public law, including the principle of legitimate expectation, from issuing an assessment against Royal Mail was left to one side, as unnecessary for determination: paras 147 148. In any event, since Zipvit did not hold valid tax invoices in respect of the supply of the services, showing a charge to VAT, it had no right to claim deduction of such VAT as input tax: paras 149 153. Although HMRC have a discretion under national law to accept alternative evidence of payment of VAT in place of a tax invoice (under regulation 29(2) of the Value Added Tax Regulations 1995 (SI 1995/2518) regulation 29(2)), which they had omitted to consider in their decisions, the First tier Tribunal found that on due consideration whether to accept alternative evidence, HMRC would inevitably and rightly have decided in the exercise of their discretion not to accept Zipvits claim for a deduction of input VAT in respect of the services: paras 192 198. The important point in that regard was that repayment of notional input VAT to Zipvit in respect of the services would constitute an unmerited windfall for Zipvit: paras 189 and 195 198. Zipvit had in fact paid only the commercial price for the services, exclusive of any element of VAT, so repayment to it of a notional element of VAT in respect of the supply of those services would mean that in economic terms it would have received the services for considerably less than their true commercial value, and there was no good reason why HMRC should in their discretion dedicate large sums of public money to achieve such an unmeritorious benefit for Zipvit. Zipvit appealed. The Upper Tribunal (Tax Chamber) dismissed the appeal. Its reasoning on the due or paid issue (article 168(a) of the Directive) differed from that of the First tier Tribunal which was later disapproved by the Court of Appeal and is not now supported by HMRC. It is now common ground that due or paid means due or paid by the trader to the supplier. The Upper Tribunal upheld the First tier Tribunals decision on the invoice issue and on the question of the exercise of discretion under regulation 29(2). Zipvit appealed to the Court of Appeal. It was only in the Court of Appeal that the underlying factual position regarding the obligations of Zipvit under its contract with Royal Mail was finally fully investigated and the findings of fact in that respect set out above were made. These are now common ground. The Court of Appeal dismissed Zipvits appeal. After an extensive review of the case law of the Court of Justice in relation to the due or paid point as it arose in the light of the factual position regarding Zipvits contractual obligations, the Court of Appeal found that the position was not acte clair: [2018] 1 WLR 5729, para 86. However, the Court of Appeal reached the same conclusion as the Tribunals below on the invoice issue: paras 91 119. After reviewing the case law of the Court of Justice, the Court of Appeal held that it was a necessary precondition for Zipvit to be able to exercise any right of deduction of input VAT in respect of the services that it should be able to produce VAT invoices which showed that VAT had been charged in respect of the supplies of the services, in compliance with article 226(9) and (10) of the Directive, or supplementary evidence showing payment of the relevant tax by Royal Mail to HMRC, which Zipvit could not do: paras 113 115. The Court of Appeal agreed with the Tribunals below on the question of the exercise of discretion by HMRC under regulation 29(2): paras 116 117. If HMRC treated Zipvit as having paid input VAT in respect of the services, Zipvit would receive an unmerited windfall (uncovenanted bonus), by obtaining in effect a reduction in the commercial price it had had to pay for the services, paid for out of public funds, even though that VAT had not been paid into the public purse: para 116. The Court of Appeal considered the position regarding the invoice issue to be acte clair, so that no reference was required to the Court of Justice: para 119. The appeal to the Supreme Court Zipvit has now appealed to this court. Zipvit contends that it should succeed on both the due or paid issue and the invoice issue, including so far as necessary on the question of the exercise of discretion by HMRC under regulation 29(2). After full argument, the court has decided that neither the due or paid issue nor the invoice issue can be regarded as acte clair, and that a reference should be made to the Court of Justice to ask the questions set out at the end of this judgment. In brief outline, the parties submissions on the appeal are as follows. (1) The due or paid issue Article 168(a) of the Directive provides that a trader who is a taxable person has an entitlement to deduct from VAT which he is liable to pay the VAT due or paid in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person. Zipvit contends that in the circumstances of this case, on each occasion when (although contractually liable for VAT in addition) it only paid the commercial price charged to it in Royal Mails invoice it (Zipvit) must be treated as having paid an element of VAT to be regarded as embedded in the sum paid. The sum charged by Royal Mail and paid by Zipvit should be treated as a total price comprising a (lesser) taxable amount and the VAT at standard rate on that taxable amount. Thus, if Royal Mail charged Zipvit 120 in an invoice for the services, that being the commercial price for the services, and Zipvit only paid that amount, then even though the invoice purported to say that the services were exempt from VAT, the taxable amount (within the meaning of articles 73 and 78 of the Directive) should (after the elapse of six months under article 90 and section 26A of VATA) be treated as having been only 100 and the additional 20 (assuming a 20% rate of VAT) should be treated as VAT, which Zipvit is now entitled to claim as input VAT relating to supplies made by it to its customers. This embedded VAT element of each payment constitutes VAT which has been paid, in the requisite sense, and thus falls within article 168(a). In support of this submission, Zipvit relies in particular on articles 73, 78 and 90 of the Directive (reflected in national law in sections 19(2) and 26A of VATA) and the judgment in Tulic v Agenia Naional de Administrare Fiscal (Joined Cases C 249/12 and C 250/12) EU:C:2013:722; [2013] BVC 547. Alternatively, even if the embedded element of VAT on which Zipvit relies is not to be regarded as having been paid for the purposes of article 168(a), VAT should be regarded as being due for the purposes of that provision, so that Zipvit is entitled to claim to deduct it as input VAT on that basis. To the extent that HMRC say that they cannot compel Royal Mail to account to them for VAT in respect of its supply of the services to Zipvit, that is HMRCs own fault (either because of their actions in creating any legitimate expectation or other defence on which Royal Mail could rely against enforcement action taken by HMRC it not being admitted that there is any such defence or by reason of allowing time to elapse so that they are now out of time to take enforcement action), and is not in any event a matter which can prevent Zipvit from relying on its entitlement under article 168(a) to deduct input VAT due or paid. Against these submissions, HMRC contend that in the circumstances of this case there is nothing in the Directive which requires or justifies the retrospective re writing of the commercial arrangements between Royal Mail and Zipvit, according to which the invoices from Royal Mail referred only to the commercial price to be paid by Zipvit for the services and Zipvit remained contractually obliged to pay Royal Mail an additional sum in respect of VAT at the standard rate in respect of that commercial price (as became clear only after the TNT Post judgment). As events transpired, Royal Mail did not issue further invoices to demand payment of that VAT; it could not be compelled to issue such further invoices (and is now out of time to do so, under the national law of limitation in relation to contract claims); it has not accounted to HMRC for any VAT in respect of the services (whether embedded VAT on a lower notional commercial price as referred to by Zipvit or VAT chargeable on the true commercial price); and HMRC could not take action to compel Royal Mail to account for any VAT in respect of the supply of the services (either for reasons of public law, including respect for the legitimate expectations of Royal Mail, or by reason of limitation). HMRC say that to allow Zipvit to claim an element of VAT notionally embedded in the payments it made to Royal Mail would be to re write history in an entirely theoretical manner divorced from reality, which is not required by any provision of the Directive. As the Tribunals and the Court of Appeal rightly found, it would mean that Zipvit gained an unmerited financial windfall at the expense of the taxpayer (and which would give it an advantage against its commercial competitors), which cannot be justified under the Directive. It would also produce a result which would violate the principle of neutrality which is fundamental to the Directive, in that the input VAT which Zipvit claims to deduct has never been paid into the public purse and Royal Mail would not have acted as collecting agent for the tax authorities in the manner required to give effect to that principle (relying in that regard, in particular, on the judgments in Elida Gibbs Ltd v Customs and Excise Comrs (Case C 317/94) [1997] QB 499, para 22, and in Minister Finansw v MDDP (Case C 319/12) [2014] STC 699, paras 41 43). HMRC submit that the present case is to be distinguished from the circumstances under consideration in Tulic. At para 37 of the judgment in that case, the Court of Justice expressly said that it was not dealing with the type of contractual arrangement which has been found to exist in this case. In a case where the contract between the supplier (Royal Mail) and the trader (Zipvit) obliges the trader to pay the commercial price for the services supplied plus a supplement covering the VAT due in respect of that commercial price, the case law indicates that on the proper interpretation of article 168(a) of the Directive VAT can only be regarded as having been paid when the VAT due in respect of the commercial price is actually paid, which it has not been here. The case law also indicates that VAT can only be regarded as being due when there is an enforceable claim to collect it from Zipvit and to ensure that it is passed on to the tax authorities, which there is not here. HMRC rely, in particular, on Vleclair SA v Ministre du budget, des comptes publics et de la rforme de lEtat (Case C 414/10) [2012] STC 1281; Volkswagen AG v Financn riaditelstvo Slovenskej republiky (Case C 533/16) EU:C:2017:823; [2018] BVC 15; and Biosafe Indstria de Reciclagens SA v Flexipiso Pavimentos SA (Case C 8/17) EU:C:2017:927; [2018] BVC 17. HMRC say that the case law does not suggest that the conduct of the tax authority is a relevant consideration in the application of the Directive in a case of this kind. Usually, in the absence of a declaration by the supplier or the presentation of tax invoices which comply with article 226(9) and (10), the tax authority will not know what supplies have been made and whether it is in a position to issue a tax assessment against the supplier. Further and in any event, there is nothing in the conduct of HMRC which could justify disregarding the principles of EU law referred to in this jurisprudence. As in the Volkswagen and Biosafe Indstria cases, the situation under review has arisen as a result of a simple mistake made in good faith by all of Zipvit, Royal Mail and HMRC. HMRC also rely on the principle that asymmetrical reliance on the Directive is not permitted, whereby a trader both takes advantage of an exemption in national law (which is not in fact authorised by the Directive) in relation to supplies and seeks to deduct input VAT in relation to those supplies. In that regard, HMRC refer in particular to the MDDP case. They contend that in substance Zipvit is seeking both to take advantage of the fact that national law mistakenly treated the supply of the services in this case as exempt and to rely on the Directive in support of its claim to deduct input VAT in relation to such supply, in breach of that principle. Zipvit denies this. (2) The invoice issue Zipvit submits that the case law of the Court of Justice indicates that there is an important difference between the substantive requirements to be satisfied for a claim for input tax (including those in article 168(a)) and the formal requirements which apply in relation to such a claim (including those in relation to the production of a VAT invoice in accordance with article 226). The approach is strict in relation to the substantive requirements, but departure from the formal requirements is permissible if alternative satisfactory evidence of the VAT which was paid or is due can be produced by the trader. Zipvit relies in particular on the judgments in Barlis 06 Investimentos Imobilirios e Tursticos SA v Autoridade Tributria e Aduaneira (Case C 516/14) [2016] BVC 43, SC Paper Consult SRL v Direcia Regional a Finanelor Publice Cluj Napoca (Case C 101/16) EU:C:2017:775; [2017] BVC 52 and Vdan v Agenia Naional de Administrare Fiscal (Case C 664/16) EU:C:2018:933. In this case, Zipvit contends that it has produced alternative satisfactory evidence of the VAT which was paid (in the form of the payment of embedded VAT which Zipvit contends was included in the price paid by it to Royal Mail) or which was due, since with the benefit of the judgment in the TNT Post case this can readily be worked out from the invoices which Royal Mail in fact sent to Zipvit together with an understanding of the contractual arrangements for the provision of the services to which the invoices related. HMRC could not, in the exercise of their discretion under regulation 29(2), refuse to accept the alternative evidence produced by Zipvit in support of its claim. Zipvit contends that the judgments in the Volkswagen and Biosafe Indstria cases do not have the significance for the invoice issue which HMRC say they have. According to Zipvit, the better explanation of the reasoning in those cases is that they were concerned to ensure that a trader should not be prevented from being able to give practical effect to its right to claim deduction of input VAT in circumstances where it had been misled by receipt of an invoice which purported to show that no VAT was due in respect of a supply. Against this, HMRC submit that the regime in the Directive for collection of VAT in accordance with the principle of neutrality requires particular importance to be attached to the requirements in article 226(9) and (10) regarding production of an invoice which shows that VAT is due in respect of a supply and in what amount. Under the VAT regime, several parties need to know these matters in order for the regime to function effectively; and the tax authorities need to be presented with invoices which deal properly with these requirements so that they can monitor the position and ensure that the supplier has properly accounted to them for the VAT charged. Therefore, according to HMRC, a valid claim for deduction of input tax cannot be made in the absence of a VAT invoice which satisfies these particular requirements. HMRC support the reasoning of the Court of Appeal. They also rely, in particular, on the Advocate Generals opinions and the judgments in the Volkswagen and Biosafe Indstria cases, which they contend support their submission that a valid claim for deduction of input VAT in respect of the supply of the services would have to be supported by a VAT invoice from Royal Mail which complied with article 226(9) and (10) of the Directive. Zipvit had never asked Royal Mail to send invoices charging it with the VAT due in respect of the commercial price charged for the supply of the services and evidently had no intention of asking for such invoices or of paying the charge for VAT which they would contain. Since Zipvit could not produce relevant VAT invoices in support of its claim to deduct input VAT in respect of the services, that claim must fail. There is nothing in EU law which can be relied on to impugn the conclusion of the Tribunals and the Court of Appeal regarding the exercise of HMRCs discretion under regulation 29(2). Copies of the provisions of national law referred to above are annexed to this reference. The reference to the Court of Justice In these circumstances, the court refers the following questions to the Court (1) Where (i) a tax authority, the supplier and the trader who is a taxable person misinterpret European VAT legislation and treat a supply, which is taxable at the standard rate, as exempt from VAT, (ii) the contract between the supplier and the trader stated that the price for the supply was exclusive of VAT and provided that if VAT were due the trader should bear the cost of it, (iii) the supplier never claims and can no longer claim the additional VAT due from the trader, and (iv) the tax authority cannot or can no longer (through the operation of limitation) claim from the supplier the VAT which should have been paid, is the effect of the Directive that the price actually paid is the combination of a net chargeable amount plus VAT thereon so that the trader can claim to deduct input tax under article 168(a) of the Directive as VAT which was in fact paid in respect of that supply? (2) Alternatively, in those circumstances can the trader claim to deduct input tax under article 168(a) of the Directive as VAT which was due in respect of that supply? (3) Where a tax authority, the supplier and the trader who is a taxable person misinterpret European VAT legislation and treat a supply, which is taxable at the standard rate, as exempt from VAT, with the result that the trader is unable to produce to the tax authority a VAT invoice which complies with article 226(9) and (10) of the Directive in respect of the supply made to it, is the trader entitled to claim to deduct input tax under article 168(a) of the Directive? (4) In answering questions (1) to (3): (a) is it relevant to investigate whether the supplier would have a defence, whether based on legitimate expectation or otherwise, arising under national law or EU law, to any attempt by the tax authority to issue an assessment requiring it to account for a sum representing VAT in respect of the supply? (b) is it relevant that the trader knew at the same time as the tax authority and the supplier that the supply was not in fact exempt, or had the same means of knowledge as them, and could have offered to pay the VAT which was due in respect of the supply (as calculated by reference to the commercial price of the supply) so that it could be passed on to the tax authority, but omitted to do so? of Justice:
UK-Abs
The case concerns whether Zipvit, a trader selling vitamins and minerals by mail order, is entitled when accounting for VAT on its sales to make deductions of input VAT (the tax paid by the trader on goods and services purchased in connection with its business, as opposed to output VAT, which is the tax charged to the consumer by the trader on its goods or services) in respect of the price of postal services supplied to it by Royal Mail. Under Royal Mails terms and conditions, Zipvit was required to pay the commercial price for the supply plus such amount of VAT (if any) as was chargeable. At the time of supply, both Royal Mail and Zipvit understood that the supply was exempt from VAT, so Zipvit was only charged and only paid a sum equal to the commercial price for the supply. Royal Mails invoices treated the supplies as exempt. However, the Court of Justice of the European Union (the CJEU) subsequently held that such a supply of individually negotiated mail services should in fact have been treated as standard rated for VAT. If that had been appreciated at the time of the supplies, Royal Mail would have charged Zipvit VAT and would have accounted for this to HM Revenue and Customs (HMRC). The present proceedings are a test case in respect of supplies of services by Royal Mail where the same mistake was made. Zipvit now claims that under article 168(a) of the Principal VAT Directive (2006/112/EC) (the Directive) it is entitled to deduct as input VAT the VAT due in respect of these supplies or a VAT element deemed by law to be included in the price paid to Royal Mail for each supply. HMRC contend that on the proper interpretation of the Directive: (a) there was no VAT due or paid for the purposes of the Directive; and/or (b) since Zipvit at no point held invoices which showed that VAT was due and its amount, in compliance with article 226(9) and (10) of the Directive, Zipvit is not entitled to recover input tax. Zipvit made claims to HMRC for the deduction of input VAT, which were rejected by HMRC. Zipvit appealed against HMRCs decision to the First tier Tribunal (Tax Chamber), which dismissed the appeal. Zipvit appealed to the Upper Tribunal (Tax Chamber), which dismissed the appeal. The Court of Appeal dismissed Zipvits appeal from the Upper Tribunal. Zipvit now appeals to the Supreme Court. The Supreme Court unanimously decides that the legal position under the Directive is not clear. It is common ground that at this stage in the process of the UKs withdrawal from the EU, in a case involving an issue of EU law which is unclear, the Supreme Court is obliged to refer that issue to the CJEU to obtain its advice on the point. Therefore, the Supreme Court makes an order for a reference and sets out the questions for the CJEU. Lord Briggs and Lord Sales give the judgment, with which all other members of the Court agree. Zipvit appealed on two issues: first, the due or paid issue, and second, the invoice issue. The Court has decided that neither issue can be regarded as acte clair (so obvious as to leave no scope for any reasonable doubt) and that a reference should be made to the CJEU. The due or paid issue arises out of article 168(a) of the Directive, which provides that a trader who is a taxable person has an entitlement to deduct from VAT which he is liable to pay the VAT due or paidin respect of supplies to him of goods or services, carried out or to be carried out by another taxable person. Zipvit contends that the commercial price it paid Royal Mail for the supplies of postal services must be treated as having contained an element of VAT, even though the invoice purported to say that the services were exempt from VAT. Alternatively, even if this embedded element of VAT is not to be regarded as having been paid, it should be regarded as being due [26] [27]. HMRC contend that there is nothing in the Directive which requires or justifies retrospective re writing of the commercial arrangements between Royal Mail and Zipvit. Royal Mail did not issue further invoices to demand payment of VAT, cannot be compelled to issue such further invoices, and has not accounted to HMRC for any VAT in respect of the services. HMRC could not take action to compel Royal Mail to account for any VAT in respect of the supply of services. As the courts below found, if Zipvit were to succeed it would gain an unmerited financial windfall at the expense of the taxpayer [31] [32]. On the invoice issue, Zipvit submits that CJEU case law indicates that there is an important difference between the substantive requirements to be satisfied for a claim for input tax and the formal requirements that apply in relation to such a claim. The approach is strict for the substantive requirements, but departure from the formal requirements is permissible if alternative satisfactory evidence of the VAT which was paid or is due can be produced. Zipvit contends that it has produced alternative satisfactory evidence of the VAT paid, in the form of payment of the embedded VAT [36] [38]. Against this, HMRC submit that the regime in the Directive requires particular importance to be attached to the requirement of the production of an invoice showing that VAT is due and in what amount. A valid claim for the deduction of input tax cannot be made in the absence of a compliant VAT invoice [39] [40]. The Supreme Court refers four questions to the CJEU. The first asks whether, in circumstances like those of Zipvit, the effect of the Directive is that the price actually paid by the trader is to be regarded as the combination of a net chargeable amount plus VAT thereon, thus allowing the trader to claim to deduct input tax under article 168(a) of the Directive in the amount of VAT which was in fact so paid by it in respect of that supply [42(1)]. The second asks whether, in those same circumstances, the trader can claim to deduct input tax under article 168(a) as VAT which was due in respect of that supply [42(2)]. The third asks whether, where a tax authority, the supplier, and the trader misinterpret European VAT legislation and treat a taxable supply as exempt, resulting in a non compliant VAT invoice which stated that no VAT was due, the trader is entitled to claim to deduct input tax under article 168(a) [42(3)]. Finally, in answering the prior three questions, the Court asks whether it is relevant to investigate whether the supplier (Royal Mail) would have a defence to any attempt by the tax authority to issue an assessment requiring it to account for a sum representing VAT in respect of the supply, and whether it is relevant that the trader (Zipvit) knew at the same time as the tax authority and the supplier that the supply was not in fact exempt, and could have offered to pay the VAT due, but omitted to do so [42(4)].
The world community recognises human trafficking and modern slavery as twin evils requiring a world wide response. The United Kingdom is party to both the 2000 Palermo Protocol (the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children, supplementing the United Nations Convention against Transnational Organised Crime) and the 2005 Council of Europe Convention on Action against Trafficking in Human Beings (ECAT). The purposes of ECAT are to prevent and combat trafficking, to protect the human rights of victims, as well as to ensure effective investigation and prosecution, and to promote international co operation on action against trafficking (article 1). An essential part of that is the effective identification of victims (article 10). Accordingly, the United Kingdom has established the National Referral Mechanism (NRM). First responders, such as police officers or social workers, who suspect that a person may be a victim of trafficking refer the case to the Home Office, as the competent authority under the Convention, for investigation. Officials first decide whether there are reasonable grounds to believe that the person may be a victim. If there are, he or she is usually given a period of recovery and reflection during which money, practical assistance and if necessary accommodation are provided. Not less than 45 days later (and nowadays usually much longer) the Home Office will make a conclusive grounds decision as to whether the person is, on the balance of probabilities, a victim of trafficking. Trafficking may, of course, take place internally. But very often it involves moving people across international borders, in which case victims are likely to face immigration issues. This case is principally about the relationship between the decision making processes of the NRM and the decision making processes of the immigration appeals tribunals: in essence, to what extent are the immigration appeals tribunals bound to accept the decisions of the NRM as to whether a person is, or is not, a victim of trafficking? However, it also raises questions about the relevance of a finding that a person has been trafficked to the immigration decisions which come before the tribunals. Specifically, when will a decision to remove a person from the UK be contrary to section 6 of the Human Rights Act 1998 because it is incompatible with that persons rights under article 4 of the European Convention on Human Rights (ECHR)? Article 4.1 provides that No one shall be held in slavery or servitude and article 4.2 that No one shall be required to perform forced or compulsory labour. This raises the broader question of the relationship between the individuals rights under article 4 and the UKs obligations under ECAT. The history MS is a national of Pakistan. He entered the UK on a visitors visa on 22 July 2011 when he was just 16. For the four years before that he had been subject to forced labour and physical abuse by his step grandmother and her nephews in Pakistan. He was brought to the United Kingdom by his step grandmother, who deceived him into thinking that he was coming here for his education. He was not. When he got here, he was initially made to perform labour for which he received no pay; this was arranged by his step grandmother, who profited financially. For the next 15 months, he moved from job to job. The First tier Tribunal (FTT) found that he was under the control of adults, exploited as cheap and illegal labour and felt that he had no choice but to work in these establishments in order to survive. The Upper Tribunal (UT) held that he was acting under compulsion and manipulation throughout those 15 months. He was a commodity who had been bought and sold and put to forced labour for little payment (para 52). MS came to the attention of the police in September 2012. They referred him to the local authority social services department. In November, the social services department referred him to the NRM because he appeared to be a vulnerable young person and potentially a victim of trafficking for exploitation purposes. In February 2013, the NRM decided that there was no reasonable ground to believe that he was a victim of trafficking. The official concerned did not meet or interview MS. On a review of the documents, the official concluded that MS was never under the control or influence of your alleged traffickers to the UK because you were able freely to quit each job you undertook and that you were able to move and work on [sic] your own accord in the UK. This decision was later maintained on review. In April 2013, MS had issued judicial review proceedings challenging the decision. In the meantime, in September 2012, MS had claimed asylum but this claim was rejected on 1 August 2013 and on 2 August the Secretary of State decided to remove him from the UK. MS appealed against this decision to the FTT, which dismissed his appeal on 3 December 2013. Nevertheless, the FTT made various findings of fact which were favourable to MS (see above). Permission to appeal was initially refused by both the FTT and the UT, but the refusal was successfully challenged by judicial review and the UT granted permission to appeal. The UT heard the appeal in December 2015 and January 2016 and promulgated its judgment in March 2016: [2016] UKUT 226 (IAC). It set aside the FTTs decision but preserved some of its positive credibility findings which related to MS time in the UK. Instead of remitting the case, the UT decided it for itself. The removal decision was challenged on two grounds: first, that it was not in accordance with the law because it had been based upon an unlawful NRM decision; and second, that it would be incompatible with MS human rights under article 4 of the ECHR: Nationality, Immigration and Asylum Act 2002 (the 2002 Act), section 84(1)(e) and (c) respectively. The UT decided in the appellants favour on both grounds. It acknowledged that the NRM decision was not an immigration decision which could be appealed under section 82 of the 2002 Act; it could only be directly challenged in judicial review proceedings. Nevertheless, if satisfied that the NRM decision was perverse, the tribunal could make its own decision as to whether the appellant was a victim of trafficking; it could also do so if the decision was in breach of the Secretary of States guidance or on some other public law ground. If the appellant was the victim of trafficking, he was entitled to the protection of ECAT, and the decision to remove him was not in accordance with the law. It was also a breach of his rights under article 4 of the European Convention. The Secretary of State appealed to the Court of Appeal, which allowed the appeal: [2018] EWCA Civ 594; [2018] 4 WLR 63. The court held that, in accordance with AS (Afghanistan) v Secretary of State for the Home Department [2013] EWCA Civ 1469; [2014] Imm AR 513, the tribunal could only go behind the trafficking decision and re determine the factual issues if the decision was perverse or irrational or one which was not open to it (para 70). It was difficult to identify precisely what it was in the NRM decisions which was susceptible to such a challenge (para 75). The UT had in effect treated the NRM decision as an immigration decision, which it was not (para 77). The UT had also been wrongly influenced by a submission that the obligations under ECAT were positive obligations under article 4, contrary to Secretary of State for the Home Department v Hoang Anh Minh [2016] EWCA Civ 565; [2016] Imm AR 1272. Hence it had been wrong to conclude that there had been a breach of the procedural obligations under article 4. A preliminary issue This Court gave the appellant permission to appeal in February 2019. He was later able to resolve his immigration status by other means and applied to withdraw his appeal. However, the Equality and Human Rights Commission had applied to intervene in the case and wished to take over the appeal. This was resisted by the Secretary of State on the grounds that the Commission had no power to take over a case and that the Court had no power to allow it. Accordingly, a preliminary hearing was held on 2 October 2019. The Commission applied to intervene in the appeal under its power to institute or to intervene in legal proceedings, whether for judicial review or otherwise, if it appears that the proceedings are relevant to a matter in connection with which the Commission has a function (Equality Act 2006, section 30(1)). Among the Commissions functions is the protection of human rights and encouraging public authorities to act compatibly with them (section 9(1)(c) and (d)). Thus the only question was what the Court might permit the Commission, as an intervener, to do. An intervener is a party to an appeal (Rules of the Supreme Court 2009 (SI 2009/1603 (L 17)), rule 3(2)). An appeal can only be withdrawn with the written consent of all parties or the permission of the Court (rule 34(1)). The appeal was therefore extant unless and until the Court gave permission to withdraw it. The Rules do not expressly state that the Court may permit an intervener in effect to stand in the shoes of an appellant. However, they do provide that if any procedural question arises which is not dealt with in the Rules, the Court may adopt any procedure that is consistent with the overriding objective, the Constitutional Reform Act 2005 and the Rules (rule 9(7)). The overriding objective is to secure that the Court is accessible, fair and efficient (rule 2(2)). Where an important question of law, which may well have been wrongly decided by the Court of Appeal, is raised in an appeal, it is clearly open to the Court to consider that the question should be fairly decided even though one of the parties no longer wishes to pursue it. Accordingly, we allowed the Commission to intervene and to take over the main conduct of the appeal. The principal issue The Secretary of State now concedes that when determining an appeal that removal would breach rights protected by the ECHR, the tribunal is required to determine the relevant factual issues for itself on the basis of the evidence before it, albeit giving proper consideration and weight to any previous decision of the defendant authority (para 65 of the printed case). Hence it is now common ground that the tribunal is in no way bound by the decision reached under the NRM, nor does it have to look for public law reasons why that decision was flawed. This is an important matter. As the AIRE Centre and ECPAT UK point out, had the tribunal been bound by such decisions, it could have had a profoundly chilling effect upon the willingness of victims to engage with the NRM mechanism for fear that it would prejudice their prospects of a successful immigration appeal. There are several reasons why the tribunal cannot be bound by the NRM decision. First, its jurisdiction is to hear appeals against the immigration decisions of officials: 2002 Act, section 82(1). It does not have jurisdiction judicially to review the decisions of the competent authority under the NRM. An appeal is intrinsically different from a judicial review. Second, those appeals are clearly intended to involve the hearing of evidence and the making of factual findings on relevant matters in dispute. This is made clear both by the 2002 Act and the Rules. Section 85(4) provided: On an appeal under section 82(1) against a decision the tribunal may consider any matter which it thinks relevant to the substance of the decision, including a matter arising after the date of the decision. The Tribunal Procedure (First tier Tribunal) (Immigration and Asylum Chamber) Rules 2014, (SI 2014/2604 (L 31)) in rules 14 and 15, and the Tribunal Procedure (Upper Tribunal) Rules 2008, (SI 2008/2698 (L 15)) in rules 15 and 16, make detailed provision for the calling of witnesses and the production of documents. Third, that this was the role of the tribunal was made crystal clear by the House of Lords in the well known case of Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167. That case concerned individuals who did not qualify for leave to enter or remain under the Immigration Rules but claimed that to deny them leave would be incompatible with their rights under article 8 of the ECHR. Discussing the predecessor to the 2002 Act, in section 65 of the Immigration and Asylum Act 1999, Lord Bingham of Cornhill said this: These provisions, read purposively and in context, make it plain that the task of the appellate immigration authority, on an appeal on a Convention ground against a decision of the primary official decision maker refusing leave to enter or remain in this country, is to decide whether the challenged decision is unlawful as incompatible with a Convention right or compatible and so lawful. It is not a secondary, reviewing, function dependent on establishing that the primary decision maker misdirected himself or acted irrationally or was guilty of procedural impropriety. The appellate immigration authority must decide for itself whether the impugned decision is lawful and, if not, but only if not, reverse it. (para 11) The earlier decisions, of Edore v Secretary of State for the Home Department [2003] EWCA Civ 716; [2003] 1 WLR 2979 and M (Croatia) v Secretary of State for the Home Department [2004] UKIAT 24; [2004] INLR 327, were right to recognise that the judgment of the primary decision maker, on the same or substantially the same factual basis, is always relevant and may be decisive. But they do not describe the correct approach of the immigration appellate authority to its role. (para 12) In contrast to cases such as R (Daly) v Secretary of State for the Home Department [2001] UKHL 26; [2001] 2 AC 532 and R v Ministry of Defence, Ex p Smith [1996] QB 517, which were judicial reviews of departmental policy, the appellate immigration authority, deciding an appeal under section 65, is not reviewing the decision of another decision maker. It is deciding whether or not it is unlawful to refuse leave to enter or remain, and it is doing so on the basis of up to date facts. (para 13) In an article 8 case, the authority had a two part role: The first task of the appellate immigration authority is to establish the relevant facts. These may well have changed since the original decision was made. In any event, particularly where the applicant has not been interviewed, the authority will be much better placed to investigate the facts, test the evidence, assess the sincerity of the applicants evidence (para 15) The Upper Tribunal, in the case before us, made the same point: this Tribunal is better equipped than the Authority to make pertinent findings. The decisions of the Authority were the product of a paper exercise, entailing no live evidence. In contrast, we have the distinct advantage of having heard the appellants viva voce evidence and, further, we have received evidence not available to the Authority. Linked to this is the Secretary of States submission, with which we concur, that the appellants credibility is central to the disposal of this appeal. (para 46) The second task was to weigh up the competing considerations for and against granting leave, in other words, the proportionality exercise required by article 8(2) of the ECHR. After listing the public interest factors against granting leave, Lord Bingham in Huang said this: The giving of weight to factors such as these is not, in our opinion, aptly described as deference; it is performance of the ordinary judicial task of weighing up the competing considerations on each side and according appropriate weight to the judgment of a person with responsibility for a given subject matter and access to special sources of knowledge and advice. (para 16) It is thus apparent that the proper consideration and weight, which the Secretary of State says should be given to any previous decision of the authority, will depend upon the nature of the previous decision in question and its relevance to the issue before the tribunal. The decision of the competent authority under the NRM process was an essentially factual decision and, for the reasons given, both the FTT and the UT were better placed to decide whether the appellant was the victim of trafficking than was the authority. The more difficult question is the precise relevance of that factual determination to the appeal before the tribunals. The second issue: trafficking and the ECHR The Secretary of State argues that the Court of Appeal was correct to dismiss the appellants appeal because the decision to remove him from the UK entailed no possible breach of article 4 of the ECHR. The Upper Tribunal found that he would not be at risk of being re trafficked back to the UK (or elsewhere) if he returned to Pakistan. He was now older and more mature and would be able to re locate and establish himself in a manner which would distance him sufficiently from his step grandmother and her nephews (para 66). The positive obligations in article 4, it is argued, follow the same pattern as the positive obligations in articles 2 and 3. It is wrong to enlarge them by reference to the obligations in ECAT, as the appellant and the interveners seek to do. It is therefore necessary to examine the relevant obligations contained in ECAT and the Strasbourg jurisprudence relating to article 4 of the ECHR. However, it may not be necessary to import all of the obligations in ECAT into article 4 in order to find a violation of the obligations in article 4. Article 4 of ECAT defines trafficking as follows: a. Trafficking in human beings shall mean the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation. Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs; b. The consent of a victim of trafficking in human beings to the intended exploitation set forth in sub paragraph (a) of this article shall be irrelevant where any of the means set forth in sub paragraph (a) have been used; c. The recruitment, transportation, transfer, harbouring or receipt of a child for the purpose of exploitation shall be considered trafficking in human beings even if this does not involve any of the means set forth in sub paragraph (a) of this article; Child shall mean any person under 18 years of age; d. e. Victim shall mean any natural person who is subject to trafficking in human beings as defined in this article. Thus, it was sufficient for the appellant, as a child, to be identified as a victim of trafficking if he was recruited and transported for the purpose of exploitation in the form of forced labour or services. There was no need to show that this had been achieved by any of the means set out in article 4.a. ECAT imposes a large number of obligations upon state parties. The following are the most relevant to this case. Article 5 requires parties to establish or strengthen effective policies for preventing trafficking and to use a child sensitive approach to their development and implementation. Article 10 requires parties to identify victims by a procedure which takes account of the special situation of child victims and to have people trained and qualified in preventing and combating human trafficking to do this. Where there are reasonable grounds to believe that a person is the victim of trafficking, that person should not be removed from the country until the identification process is completed. Article 12 requires parties to provide necessary assistance to victims in their physical, psychological and social recovery, including subsistence, accommodation, counselling and information. Article 14 requires those found to be victims to be issued with a residence permit if this is necessary owing to their personal situation or for the purpose of co operation with the authorities in an investigation or criminal proceedings. Articles 18 to 22 require the creation of various criminal offences and article 23.1 requires that they be punishable by effective, proportionate and dissuasive sanctions. Article 40 provides that the Convention does not affect the other international instruments to which the parties are party. Nor does it affect the rights, obligations and responsibilities of states and individuals under international law, including international humanitarian law and international human rights law. This is the usual saving for the other rights and obligations arising under international law: it does not mean that those rights and obligations are to be interpreted without reference to ECAT. ECAT as such has not been incorporated into UK law. Its obligations have been implemented by a variety of measures. The NRM is designed to fulfil the obligations in articles 10, 12 and 13; immigration rules have been modified in the light of article 14; and various criminal offences are created by the Modern Slavery Act 2015. The NRM does not, however, give private law rights to individuals. There is no right of appeal against an adverse decision or against a failure to provide the expected assistance. The only remedy lies in judicial review. However, the Secretary of State has consistently accepted that the NRM should comply with ECAT. In R (Atamewan) v Secretary of State for the Home Department [2013] EWHC 2727; [2014] 1 WLR 1959, para 55, it was accepted that it would be a justiciable error of law if the NRM Guidance did not accurately reflect the requirements of ECAT and a decision based on that error would accordingly be unlawful. The same was common ground in R (PK (Ghana)) v Secretary of State for the Home Department [2018] EWCA Civ 98; [2018] 1 WLR 3955. But this is of limited help to a victim who is subject to an adverse immigration decision. It would be of much greater help if a failure to observe the requirements of ECAT were also a violation of article 4 of the ECHR. Article 4 ECHR The first case in which the European Court of Human Rights examined article 4 in this context was Siliadin v France (2006) 43 EHRR 16. A 15 year old girl from Togo was brought to France by a relative and then lent to a couple who obliged her to work for them unpaid for years without respite and against her will (para 114). The Court held that limiting article 4 to direct state action would be contrary to international instruments and render it ineffective. Accordingly, governments had positive obligations in the same way as under article 3 for example, to adopt criminal law provisions penalising slavery, servitude and forced labour and to apply them in practice (para 89). The court went on to hold that, while the applicant had not been held in slavery, she had been held in servitude and she had been required to perform forced or compulsory labour. The French criminal law at the time was defective and the perpetrators had not been convicted. Hence there was a violation of article 4. To like effect was CN v United Kingdom (2013) 56 EHRR 24 holding that the lack of any legislation in the UK penalising forced labour and servitude violated article 4 (the Modern Slavery Act 2015 followed). The breakthrough in Siliadin was recognising that article 4 imposed, not only negative, but positive obligations upon the state. The court relied principally on instruments relating to forced labour and discussion of modern slavery and made only passing reference to ECAT in its discussion. The leading case on the relationship between ECAT and article 4 is Rantsev v Cyprus and Russia (2010) 51 EHRR 1. A young Russian woman, Ms Rantseva, had been working as an artiste in a cabaret in Cyprus. She left the apartment she was sharing with other women working there, leaving a note that she wanted to go back to Russia. The manager of the cabaret informed the authorities and, when she was seen in a discotheque, he went and apprehended her and took her to a police station. The police consigned her to the manager, who collected her and took her to the apartment of a male employee. The next morning, she was found dead on the street outside the building. An inquest concluded that in an attempt to escape and in strange circumstances she had jumped into the void and was fatally injured. Her father made complaints against both Cyprus and Russia under articles 2 and 4 (and against Cyprus under other articles) complaining of the lack of sufficient investigation and protection. The court had thus to consider whether trafficking, within the meaning of the Palermo Protocol (in force at the time of these events) and ECAT (in force later), fell within the scope of article 4, despite the fact that it referred only to slavery, forced labour and servitude. The court observed: The court considers that trafficking in human beings, by its very nature and aim of exploitation, is based on the exercise of powers attaching to the right of ownership. It treats human beings as commodities to be bought and sold and put to forced labour, often for little or no payment, usually in the sex industry but also elsewhere. It implies close surveillance of the activities of victims, whose movements are often circumscribed. It involves the use of violence and threats against victims, who live and work under poor conditions. It is described by Interights and in the explanatory report accompanying the Anti Trafficking Convention as the modern form of the old worldwide slave trade. (para 281) Hence the court concluded that trafficking within the meaning of article 4(a) of ECAT fell within the scope of article 4 of the ECHR (para 282). It was not necessary to decide whether it was slavery, servitude or forced labour. The court then went on to discuss what this entailed. It repeated, as had been said in Siliadin v France, that, together with articles 2 and 3, article 4 enshrined one of the basic values of the democratic societies of the Council of Europe (para 283). The spectrum of safeguards set out in national legislation must be adequate to ensure the practical and effective protection of the rights of victims and potential victims. This required, not only the criminal law, but also the regulation of businesses used as a cover for trafficking, and immigration rules (para 284). The extent of the positive obligations arising under article 4 had to take account of the broader context of the Palermo Protocol and ECAT, which required not only punishment but prevention and protection (para 285). As with articles 2 and 3, a positive obligation to take operational measures to protect an individual would arise where the authorities were aware, or ought to have been aware, of circumstances giving rise to a credible suspicion that the individual had been or was at real and immediate risk of being trafficked or exploited within the meaning of the Palermo Protocol and article 4(a) of ECAT (para 285). Like articles 2 and 3, article 4 also entailed a procedural obligation to investigate situations of potential trafficking. This did not depend upon a complaint. The authorities must act of their own motion once the matter had come to their attention. The investigation must be independent and capable of leading to the identification and punishment of the individuals responsible (para 288). In relation to Cyprus, violations were found in the regulatory regime for artistes visas which did not afford practical and effective protection against trafficking and exploitation (para 293); in the multiple failures of the police to investigate whether Ms Rantseva had been trafficked and to protect her (para 298); and under article 2 in the failure to conduct an effective investigation into her death (para 300). In relation to Russia, there was no evidence that the Russian authorities were aware of a real and immediate risk to Ms Rantseva before she left and thus no breach of an operational duty towards her (paras 305, 306), but there was a breach of the procedural obligation to investigate alleged trafficking (para 309). Thus, the appellant is right to point to the numerous references to the Palermo Protocol and ECAT in informing the content of the states obligations under article 4. On the other hand, the Secretary of State is also right to point out that the general structure of those obligations was modelled on the general structure of the states obligations under articles 2 and 3. However, as will become apparent, it is not necessary for us to decide whether all the obligations in ECAT are incorporated into the states positive obligations under article 4 in order to decide this appeal. The next case is Chowdury v Greece (Application No 2184/15) Judgment of 30 March 2017. A large group of Bangladeshi strawberry pickers protested that their promised wages had not been paid. They worked very long hours and their living and working conditions were particularly harsh (para 94). They were overseen by armed guards, who opened fire on the protesters and injured some of them. The Greek public prosecutor accepted that the injured workers were victims of trafficking but not that the other workers were. The Assize Court acquitted the employers of trafficking. The workers complained of forced and compulsory labour contrary to article 4.2. The court held that member states are required to adopt a comprehensive approach and put in place measures, not only to punish the traffickers, but also to prevent trafficking and protect the victims (para 86). This required the trilogy of measures set out in Rantsev: a legislative and administrative framework to do this effectively (para 87); an obligation to take operational measures to protect individual victims in certain circumstances (para 88); and a procedural obligation to investigate potential trafficking situations (para 89). The facts of the case clearly demonstrated the existence of forced labour and human trafficking, consistent with the definitions in the Palermo Protocol and ECAT (para 100). Greece had complied with the obligation to put in place a legislative framework to combat trafficking (para 109). The situation in the strawberry fields had been well known to the authorities, the Ombudsman had alerted them to the situation, but there had only been a sporadic reaction; hence there was a breach of the obligation to take operational measures to prevent trafficking and protect the applicant victims (para 115). Further, there was a breach of the obligation to investigate, not only in relation to the injured workers whose treatment had resulted in the failed prosecution (para 127), but also in relation to the other workers, because the public prosecutor had failed to investigate and had disregarded the obligation in article 13 of ECAT to provide a recovery and reflection period (paras 120 122). In short, there had been a breach of the obligations to prevent, to protect, to investigate and to punish (para 128). Thus the judgment does follow the same analytical framework as the judgment in Rantsev, but it more noticeably relies upon specific provisions in ECAT to flesh out the content of those positive obligations. The last case cited to us was J v Austria (Application No 58216/12) Judgment of 17 January 2017. The applicants were Filipina women who had been recruited for domestic work in Dubai where they had been badly treated. They were brought by their employers on a holiday to Vienna but escaped after three days and were supported by the Filipino community there. Some months later, after their employers had returned to Dubai, they went to the police. The Austrian authorities decided not to prosecute because the trafficking had taken place abroad and the traffickers were foreigners. The women complained that the Austrian authorities had failed in their protective and investigative obligations under article 4. The Court repeated the positive obligations to protect victims, to conduct a comprehensive investigation and to put in place a legislative and administrative framework to prohibit and punish trafficking, as well as to take measures to protect victims, in order to ensure a comprehensive approach to the issue, as required by the Palermo Protocol and the Anti Trafficking Convention (para 106). However, it decided that the authorities had done all that could reasonably be expected to protect the women: the police had treated them as potential victims; they had been interviewed by specially trained police officers; a personal data disclosure ban was imposed so that their whereabouts were untraceable; they were supported by an NGO which was publicly funded to provide assistance to victims of human trafficking; and they were given legal representation, procedural guidance and assistance to facilitate their integration in Austria (including special residence permits) (paras 110, 111). There was no obligation on Austria to investigate their recruitment in the Philippines and alleged exploitation in the United Arab Emirates (para 114). The authorities did investigate their treatment in Austria and their conclusion that no offences had been committed there does not appear unreasonable (para 116). Nor could they be expected to try and pursue their investigations with the authorities in the United Arab Emirates (para 117). Application to this case The UT having decided that the appellant was indeed a victim of trafficking, it is necessary to decide whether his removal from the UK would amount to a breach of any of the positive obligations in article 4 of the ECHR. It could well be said that, because of the defective NRM decision, the appellant was denied the protective measures required by ECAT, including the immigration status necessary for him to co operate in the investigation and prosecution of the perpetrators. As is clear from the above cases, article 4 does require operational measures of protection where the authorities were aware, or ought to have been aware, of circumstances giving rise to a credible suspicion that an identified individual had been or was at real and immediate risk of being trafficked or exploited (Rantsev, para 286). However, it does appear that, once he had come to the attention of the police, he was effectively removed from the risk of further exploitation. Further, the UT decided that he would not be at further risk if returned to Pakistan. However, it is clear that there has not yet been an effective investigation of the breach of article 4. The police took no further action after passing him on to the social services department. It is not the task of the NRM to investigate possible criminal offences, although the competent authority may notify the police if it considers that offences have been committed: Secretary of State for the Home Department v Hoang Anh Minh [2016] EWCA Civ 565; [2016] Imm AR 1272. The authorities are under a positive obligation to rectify that failure. And it is clear that an effective investigation cannot take place if the appellant is removed to Pakistan: the UT rightly held that it is inconceivable that an effective police investigation and any ensuing prosecution could be conducted without the full assistance and co operation of the appellant. Realistically this will not be feasible if he is removed to Pakistan (para 64). Accordingly, the appeal should be allowed and the decision of the UT restored on this ground. In accordance with the law In the light of that decision, it is unnecessary for us to consider whether the UT was also correct to hold that, because it followed on from a flawed NRM decision, the removal decision was not in accordance with the law. As from 20 October 2014, that ground of appeal is no longer contained in section 84 of the 2002 Act, following amendments made by the Immigration Act 2014, section 15. It will therefore be of limited relevance in future. It remains a ground of appeal that the removal of the appellant from the United Kingdom would be unlawful under section 6 of the Human Rights Act 1998. As the Upper Tribunal pointed out, appellants will still be able to appeal on this ground if the decision breaches the requirements of article 4.
UK-Abs
The Appellant, MS, is a Pakistani national who entered the UK in 2011 at the age of 16 on a visitors visa. During the four preceding years, while still in Pakistan, he had been subjected to forced labour and physical abuse by relatives. One of them, his step grandmother, brought him to the UK by deceiving him into thinking this was for the purpose of his education. On arrival, he was forced to work for no pay, as arranged by his step grandmother for her own financial gain. He then moved from job to job for the next 15 months, under the control and compulsion of adults, as both the First tier Tribunal (FTT) and the Upper Tribunal (UT) later found. In September 2012, the Appellant came to the attention of the police, who referred him to a local authority social services department. They in turn referred him to the National Referral Mechanism (NRM), due to concerns as to his vulnerability and the possibility that he had been trafficked. However, in February 2013, the NRM decided, without meeting or interviewing the Appellant, that there was no reason to believe he was a victim of trafficking. The NRM considered that he was never under the control or influence of traffickers while in the UK and changed jobs freely. The Appellant sought judicial review of this decision in April 2013. In September 2012, the Appellant had also claimed asylum, but that application was rejected in August 2013. The Secretary of State therefore decided to remove the Appellant from the UK. The Appellant appealed this decision on asylum and human rights grounds to the FTT, who found as above that he had been under compulsion and control. The FTT nonetheless dismissed his appeal. The UT granted permission to appeal and re made the decision in view of errors of law by the FTT, finding in favour of the Appellant. In addressing the NRMs decision, the UT observed that that could only be challenged by judicial review proceedings, not through the immigration appeals system. However, the UT also held that if an NRM decision was perverse or otherwise contrary to some public law ground, the UT could make its own decision as to whether an individual was a victim of trafficking. Otherwise, the decision to remove him would be contrary to the European Convention on Action against Trafficking in Human Beings (ECAT) and the European Convention on Human Rights (ECHR). The Respondent appealed to the Court of Appeal, which allowed the appeal for the reason that, in accordance with AS (Afghanistan) v Secretary of State for the Home Department [2013] EWCA Civ 1469; [2014] Imm AR 513, the UT could only go behind the NRMs decision and re determine the factual issues as to trafficking if the decision was perverse or irrational or one which was not open to the NRM. The UT had in effect treated the NRM decision as an immigration decision and had also been wrong to consider that the obligations under ECAT were also positive obligations under article 4 of the ECHR, which prohibits slavery, servitude and forced labour. The Appellant was granted leave to appeal to the Supreme Court. He later wished to withdraw from the proceedings, as his immigration problems had now been resolved. A preliminary issue therefore arose as to whether the Equality and Human Rights Commission (EHRC), which had applied to intervene in the proceedings, could take over the appeal. The Supreme Court unanimously allows the appeal. Lady Hale gives the only judgment, with which Lord Kerr, Lady Black, Lord Lloyd Jones and Lord Briggs agree. As to the preliminary issue, following a hearing in October 2019, the EHRC was permitted to intervene and take over the appeal. An intervener is a party to an appeal (Rules of the Supreme Court, rule 3(1)) and an appeal can only be withdrawn with the consent of all parties or the permission of the Court (rule 34(1)). The appeal therefore remained on foot until the Court permitted otherwise. The Court is permitted to adopt any procedure consistent with the overriding objective, the Constitutional Reform Act 2005 and the Rules (rule 9(7)). The overriding objective is to secure that the Court is accessible, fair and efficient (rule 2(2)). Where an important question of law that may have been decided wrongly below is raised in an appeal, it is open to the Court to permit intervention and allow the intervener to take over the conduct of the appeal [9 10]. On the principal issue, the Secretary of State conceded that, when determining an appeal as to whether a removal decision would infringe rights under the ECHR, a tribunal must determine the relevant factual issues for itself on the evidence before it, albeit giving due weight to a decision making authoritys prior determination. It therefore became common ground that a tribunal is not bound by a decision of the NRM nor must it seek a public law ground for finding such a decision flawed [11]. This is because a tribunal has statutory jurisdiction to hear appeals from immigration decisions. The Nationality, Immigration and Asylum Act 2002 and Immigration Rules indicate that those appeals are plainly intended to involve the hearing of evidence and determination of factual issues. The House of Lords in Huang v Secretary of State for the Home Department [2007] UKHL 11; [2007] 2 AC 167 had made clear that this was a tribunals role [12 14]. The proper consideration and weight to be given to an authoritys previous decision will depend on the nature of that decision and its relevance to the issue before the tribunal. In the present case, the FTT and the UT were better placed to decide whether the Appellant was a victim of trafficking than the authority. The more difficult question was the relevance of that factual determination to the appeals [15]. This depended upon the relationship between the obligations in ECAT and the obligations in article 4 of the ECHR [17]. Article 4 of ECAT defines trafficking such that a child, recruited and transported for the purpose of exploitation through forced labour or services, may be considered a victim of trafficking [18]. ECAT also imposes other obligations on states, to prevent trafficking and to identify and protect its victims [19]. In Siliadin v France (2006) 43 EHRR 6, the European Court of Human Rights held that states have positive obligations under article 4 of the ECHR to adopt and apply criminal law provisions against slavery, servitude, and forced labour. In Rantsev v Cyprus and Russia (2010) 51 EHRR 1, it held that trafficking within the meaning of article 4 of ECAT fell within the scope of article 4 of the ECHR. The state had a positive obligation to prevent, to investigate, to protect and to punish [23 26]. This was confirmed in Chowdury v Greece (Application No 2184/15) and in J v Austria (Application No 58216/13) [32 33]. The investigative duty arises whether or not there has been a complaint and must be capable of leading to the identification and punishment of the individuals responsible [25]. In the present case, the UT decided that the Appellant was indeed a victim of trafficking. Once brought to the attention of police, the Appellant was removed from the risk of further exploitation, while the UT held that he would not be at risk of re trafficking if returned to Pakistan. However, there had not yet been an effective investigation into the breach of article 4, as the police took no action after referring him to social services. Such an investigation is required and cannot take place if the Appellant is removed to Pakistan. The appeal is therefore allowed and the UTs decision on this ground restored [34 36].
This appeal raises a question concerning the role of this court in relation to the principles governing the award of costs in lower courts. The facts The material facts can be shortly stated. The appellant, Mr Gourlay, is a life prisoner. The respondent is the Parole Board. In 2014 the Board met to consider whether it would be appropriate to direct the appellants release. If it did not direct his release, it was required to consider whether to recommend his transfer to open conditions. On 10 March 2014 the Board issued its decision. It did not direct his release or recommend his transfer to open conditions. The appellant then brought proceedings for judicial review of the decision. In the claim form, both aspects of the decision were challenged. The Board did not take part in the proceedings. In its acknowledgment of service, it ticked the box stating that the defendant is a court or tribunal and does not intend to make a submission. At the hearing, counsel for the appellant confined his challenge to the decision not to recommend a transfer to open conditions. The challenge was successful, and that aspect of the decision was quashed: [2014] EWHC 4763 (Admin). The treatment of costs at first instance The appellant then applied for an order finding the Board liable for his costs. His submissions in support of that application reflected the established practice, described in R (Davies) v Birmingham Deputy Coroner [2004] EWCA Civ 207; [2004] 1 WLR 2739, of not making an award of costs against a court or tribunal which adopted a neutral stance in proceedings in which its decision was challenged, in the absence of exceptional circumstances, such as flagrantly improper behaviour. In Davies, Brooke LJ, with whom Longmore LJ and Sir Martin Nourse agreed, identified four issues as arising for consideration, at para 3: (1) What is the established practice of the courts when considering whether to make an order for costs against an inferior court or tribunal which takes no part in the proceedings, except, in the case of justices, to exercise their statutory right to file an affidavit with the court in response to the application? (2) What is the established practice of the courts when Brooke LJ set out his conclusions on those issues at para 47: considering whether to make an order for costs against, or in favour of, an inferior court or tribunal which resists an application actively by way of argument in the proceedings in such a way that it makes itself an active party to the litigation? (3) Did the courts adopt an alternative established practice in those cases in which the inferior court or tribunal appeared in the proceedings in order to assist the court neutrally on questions of jurisdiction and procedure and such like but did not make itself an active party to the litigation? (4) Whatever the answers to the first three questions, are there any contemporary considerations, including the coming into force of the Civil Procedure Rules 1998, which should tend to make the courts exercise their discretion as to costs in these cases in a different way from the way in which it was regularly exercised in the past? (l) The established practice of the courts was to make no order for costs against an inferior court or tribunal which did not appear before it except when there was a flagrant instance of improper behaviour or when the inferior court or tribunal unreasonably declined or neglected to sign a consent order disposing of the proceedings. (2) The established practice of the courts was to treat an inferior court or tribunal which resisted an application actively by way of argument in such a way that it made itself an active party to the litigation, as if it was such a party, so that in the normal course of things costs would follow the event. (3) If, however, an inferior court or tribunal appeared in the proceedings in order to assist the court neutrally on questions of jurisdiction, procedure, specialist case law and such like, the established practice of the courts was to treat it as a neutral party, so that it would not make an order for costs in its favour or an order for costs against it whatever the outcome of the application. (4) There are, however, a number of important considerations which might tend to make the courts exercise their discretion in a different way today in cases in category (3) above, so that a successful applicant . who has to finance his own litigation without external funding, may be fairly compensated out of a source of public funds and not be put to irrecoverable expense in asserting his rights after a coroner (or other inferior tribunal) has gone wrong in law, and there is no other very obvious candidate available to pay his costs. Against that background, the appellant argued in the present proceedings first, that the Board was not a court or tribunal falling within the scope of the practice described in Davies, and secondly, that there were in any event exceptional circumstances, arising from the Boards behaviour in relation to the proceedings. His submissions were recorded by the judge, King J, in a reasoned order dated 2 February 2015: 4. The claimants submission is that the defendant is not to be treated as a court or tribunal. Its legislative history is set out showing its development into an independent executive Non Departmental Public Body (NDPB) and body corporate. In that capacity it is said unlike a court or tribunal, this defendant does have the discretion to compromise a claim, it can actively contest a case or concede a case, and hence taking a neutral stance should not entitle the defendant to avoid an order for costs in circumstances where (as here) the claim against it has been successful and its Decision under challenge has been quashed. It is said that it had always been open to the defendant to concede this claim and to convene a fresh panel to re consider the claimants case The claimant prisoner would have been entitled to a new Review in any event which could have been brought forward. The defendants decision not to concede but to take a neutral stance led to an unnecessary hearing before this court. 5. The claimant relies on the Court of Appeal judgments in Bahta [R (Bahta) v Secretary of State for the Home Department] [2011] EWCA Civ 895, that even against government departments the normal provisions as to costs contained in the CPR apply, including the general rule starting point(rule 44.3(2)) that a successful claimant is entitled to his costs and the importance of complying with Pre action Protocols (an aspect of conduct identified in rule 44.3(5)). The point is made in this context that here the defendant did not respond to the letter before the claim. 6. There are, says the claimant, no circumstances apparent in these proceedings which should lead the court when exercising its discretion as to costs, to depart from the usual position in judicial review proceedings that the unsuccessful defendant public body whose decision has been under challenge will normally be ordered to pay costs to the successful claimant. The fact that the claimant is publicly funded is not a good reason to decline an award of costs which would otherwise be appropriate (again see Bahta). In any event as a fallback position the claimant submits that even if the defendant is to be treated differently, there are exceptional circumstances here to justify an order of costs, in that the defendant did not respond to the letter before claim, was late in filing its AOS [acknowledgment of service], and that which is described as a failure to compromise the claim (as invited by the claimants letter of 29 September 2014) is only to be interpreted as a defended claim and puts the defendant in an adversarial role. 7. The judge rejected those submissions. He stated that the first and critical issue was whether, for the purpose of the exercise of the courts discretion as to costs, the Board was to be treated as a court or tribunal, or at least a judicial decision making body, when making the decision under challenge. There was no doubt that it was acting in a judicial capacity when making its decision whether or not to direct a prisoners release. The second, consequent, decision was whether to recommend a transfer to open conditions: a recommendation which was not binding on the Secretary of State. It was that aspect which had been challenged. Although a theoretical distinction might be drawn between these two matters, the judge concluded: [I]n reality in the process before the defendant when the prisoner appears on a Review the question as to transfer is so bound up with the question of the prospects of the ultimate release of the prisoner, that I consider it artificial to characterise the defendant as acting in a judicial capacity one moment and then not the next. On any view in my judgment the defendant is acting in at least a quasi judicial capacity throughout. Approaching the application for costs on that basis, and following the practice described in Davies, the judge concluded that he should make no order as to costs: On the facts I have set out above this is not a case in which the defendant made itself an active party to the litigation and actively resisted the claim. The defendants failure to respond to the letter before the claim is to be regretted but that omission in itself cannot be interpreted as making the defendant an active party. In my view it was clear from the date the AOS was lodged that the defendant was not actively resisting the claim. I do not consider there was anything improper in the defendant taking a neutral stance and I cannot accept that by taking such a stance the defendant was adopting an adversarial role. I am not persuaded that the fact that the defendant could have agreed to convene a fresh panel to hold a further Review changes this analysis. Nor do I consider that there are any circumstances here of improper or unreasonable behaviour which should lead me to make an order for costs against a body such as the defendant notwithstanding it has not actively resisted the claim, despite the emphasis put by the claimant on the failure to respond to the letter before claim and the failure to compromise the claim when invited to do so. The judgment of the Court of Appeal The appellant appealed against that decision to the Court of Appeal: [2017] EWCA Civ 1003; [2017] 1 WLR 4107. Senior counsel was instructed and presented a more elaborate argument than King J had heard. The appeal was, however, presented on a limited basis. The court noted, at para 33 of the judgment delivered by Hickinbottom LJ, with whom Gloster and David Richards LJJ agreed: The sole ground relied upon by Mr Southey [senior counsel for the appellant] is that the principles set out in Davies as applicable to courts and tribunals do not apply to the Board. Hickinbottom LJ also noted at para 44: Mr Southey in my view, properly conceded that this court is bound by Davies. Although it seemed to me that at times he came painfully close to doing so, he unconditionally accepted that he could not argue before this court that Davies was not still good law. The only ground upon which he relied was that the principles and practice set out in that case, and expressly applied by King J below, simply do not apply to the Board when it performs its function of making recommendations to the Secretary of State in respect of the transfer of a prisoner to open conditions. In support of that proposition, counsel for the appellant made a number of submissions, which can be summarised as follows: (1) The Board did not fulfil the criteria of a court or tribunal for the purposes of Davies, because the relationship of the executive and the Board was closer than it should be. In that regard, counsel relied upon a direction which the Secretary of State had given to the Board as to how it should approach its decision making in relation to transfers to open conditions. (2) The Board could not properly maintain a neutral stance in response to a challenge to its decisions, since it could review its decisions or concede a challenge. Its failure to do so was tantamount to contesting the challenge. (3) Davies should now be read in the light of R (M) v Croydon London Borough Council [2012] EWCA Civ 595; [2012] 1 WLR 2607, which signalled a new approach to costs in public law cases. That new approach was designed to encourage the compromise and settlement of claims against public bodies. (It should be explained that M was a more recent case following and elaborating upon the reasoning in the earlier case of R (Bahta) v Secretary of State for the Home Department [2011] EWCA Civ 895; [2011] 5 Costs LR 857, which had been cited to the judge.) (4) It would be helpful for the Board to be a party to a challenge to one of its decisions. The historic concern over the possibility of the decision maker having to pay costs out of his own pocket had been alleviated in the case of the Board, which had been constituted as a body corporate. (5) Davies proceeded on the basis that it was irrelevant whether a claimant judicially reviewing a court or tribunal was legally aided, with the consequence that the fees paid to his legal representatives were below the rates paid for privately funded work. However, following In re appeals by Governing Body of JFS [2009] UKSC 1; [2009] 1 WLR 2353, that was or might be a relevant factor. Lord Hope of Craighead said in that case at para 25 that [i]t is, of course, true that legally aided litigants should not be treated differently from those who are not. But the consequences for solicitors who do publicly funded work is a factor which must be taken into account. A court should be very slow to impose an order that each side must be liable for its own costs in a high costs case where either or both sides are publicly funded . (6) The scope of Davies should therefore be restricted, and it should not be applied where the Board was a defendant to a judicial review. (7) Even if Davies applied to the Board when deciding questions of release, it should not apply when the Board was considering whether to recommend a transfer to open conditions. Those submissions were carefully considered by Hickinbottom LJ, and each of them was rejected, for reasons which, taking each point in turn, can be summarised as follows: (1) There was no doubt as to the independence and impartiality of the Board. The direction merely confirmed the self evident need for the Board, when considering a transfer to open conditions, to balance the benefits to the prisoner against the risks to the public. (2) A party did not contest a claim simply because he did not concede it. A tribunals power to review any decision it made did not detract from the judicial nature of the reviewable decision; nor did it mean that Davies was not applicable when such a decision was judicially reviewed. (3) The argument that M modified Davies had been considered, and rejected, in the case of R (Gudanaviciene) v First tier Tribunal (Immigration and Asylum Chamber) [2017] EWCA Civ 352; [2017] 1 WLR 4095. In that case Longmore LJ, with whom David Richards and Moylan LJJ agreed, held that M did not constitute a new approach at all, but merely decided that to make no order for costs in a public law claim might not be appropriate where, as a result of some settlement or compromise, there had been some degree of success. It was only in that limited situation that M broke new ground. However, that had no relevance to the different question of whether a party that was wholly successful should obtain an order for costs against the other party. Hickinbottom LJ also cited para 36 of Longmore LJs judgment, where it was said: It would be a serious step to say that in any undefended appeal or judicial review, the tribunal would be at risk as to costs and any such conclusion cannot be implied into the decision of M. If such a step is to be taken, it cannot be by a court of coordinate jurisdiction with the court which decided Davies. Hickinbottom LJ observed at para 57 that Gudanaviciene was binding upon the court, and that he would in any event adopt Longmore LJs analysis and conclusions: M did not materially affect the approach of the courts to costs orders in public law cases involving a court or tribunal, ie the principles and application of Davies; and, in particular, the encouragement given by M to the early settlement of public law cases by the threat of costs sanctions has no application to judicial review claims against courts or tribunals. (4) The principle that, unless it had acted improperly or had actively participated in the challenge, a court or tribunal was not required to pay the costs of rectifying one of its orders whether by way of judicial review or appeal was therefore well settled. It was a principle supported by many strands of public policy, and it had been well established since Davies. It could not be undermined in the case of a particular court or tribunal simply because one of the historic concerns that it sought to address was absent, for example where, as in the present case, the relevant judicial decision maker had an indemnity against costs. Nor was it undermined by the fact that the active intervention of the court or tribunal in the proceedings might be of assistance. As Brooke LJ indicated in Davies, it was open to a court or tribunal to make a neutral submission without incurring a costs order. The Administrative Court could also ask for the assistance from the tribunal. The fact that specialist courts or tribunals might assist in this way was no reason for overriding the principle in Davies. (5) Lord Hopes comments in JFS were made in an entirely different context, in which they were consistent with the proposition that legally aided litigants should not be treated differently from those who are not. He was not dealing with a retrospective application for costs, or with an application made against a court or tribunal. Nor were the present proceedings a high costs case. Following Davies, the source of funding was immaterial to the principle that, where a court or tribunal had not acted improperly and had taken no active part in the claim, the appropriate course was to make no order for costs. In respect of decisions concerning the release of prisoners, the Board (6) was clearly acting as a court or tribunal for the purposes of Davies. The principles of Davies thus applied to challenges to such decisions. (7) Although the recommendation of the Board in relation to transfer was only advisory, a similar approach to the costs of challenging decisions of the Board was appropriate. Whether dealing with decisions concerning release or decisions concerning transfer, the Board performed a similar function, in that it had to obtain relevant material from the National Offender Management Service and the offender himself, and evaluate that material in making an assessment of the risk posed by the offender, and of whether that risk was at an appropriate level for him to progress by way of transfer to a category D prison or release on licence, as the case might be. In respect of release, it had to reach its own objective judicial decision, in order to comply with the requirements of article 5(4) of the European Convention on Human Rights. In respect of transfer, it reached its decision in the same way, and to the same procedural standards. It had to use the same procedures for practical reasons: it was often the case that a panel was considering both transfer and release at the same time. However, it was also required to adopt the same procedural standards, not as a result of article 5(4), but by the common law. Therefore, in considering transfer decisions, the Board both in practice acted, and in principle was required to act, as if it were a court or tribunal. Hickinbottom LJ added that it was likely to be open to the prisoner to make the Secretary of State a party to any challenge to a decision in relation to transfer, so that in appropriate cases the prisoner would be able to obtain a costs order against the Secretary of State. The appeal to this court The issues arising on this appeal were agreed by the parties to be, first, whether Davies continues to represent the approach that should be adopted to costs orders against courts or tribunals, and secondly, if Davies continues to apply, whether the Board should be treated as a court or tribunal for that purpose. In relation to the first of those issues, counsel for the appellant submitted that Davies is wrong: a submission which, it was said, was not available to him below. In support of his submission, counsel argued that the rationale for the practice described in Davies had not been explained or justified. To the extent that reasons were given, many if not all of them had fallen away. In that regard, counsel referred to a number of changes which were said to have occurred since Davies was decided: in particular, the decline of legal aid, a diminution (in real terms) in legal aid payment rates, an increased reliance on conditional fees, and the introduction of the general rule that costs follow success, in CPR rule 44.2(2). Davies was argued to be incompatible with CPR rule 44.2(2), since it created an exception to that general rule. The Board must be viewed as the unsuccessful party even if it played no active part in the proceedings, since its decision had been quashed. If the Board did not concede a challenge, then in substance it opposed it. In relation to the second issue, counsel submitted, as in the courts below, that the Board should not be treated as a court or tribunal, at least when deciding whether to recommend a transfer to open conditions. In support of that submission, counsel referred to a number of factors, placing particular emphasis on the fact that the Boards recommendation was not binding on the Secretary of State, and on the fact that the Board had published a litigation strategy, which noted that in any form of litigation, it could decide to concede the case. In response, counsel for the Board submitted that the Court of Appeal was correct to hold that Davies was good law, and that the approach which it laid down applied to the Board. That approach, it was argued, accorded with the settled and long established approach of the High Court and the Court of Appeal, and ensured the continuing impartiality of judicial decision making bodies where their decisions were challenged by way of judicial review. Any decision which swept away their long established ability to maintain neutrality in proceedings challenging their decisions would have a very significant impact on the way in which litigation was conducted. An approach which declined to award costs against a neutral party was compatible with CPR rule 44.2(2). Such a party was not unsuccessful, and in any event rule 44.2(2) provided that the court may make a different order. At an early stage in the hearing of the appeal, the court raised with the parties the question whether the issues which were said to arise on the appeal (para 13 above) raised any question of law, as distinct from questions of practice in relation to the award of costs, which it might be appropriate for this court to leave to the courts below. The parties were invited to file written submissions on the question after the hearing. In the post hearing submissions filed on behalf of the appellant, counsel submitted that the Court of Appeal regarded itself as bound by its decision in Davies, as was apparent from para 36 of Gudanaviciene (para 11(3) above) and para 57 of Hickinbottom LJs judgment in the present case (ibid), and from its acceptance in the present case of the appellants concession that Davies was binding upon it (para 9 above). That understanding was also apparent from the judgment of Hickinbottom LJ, with which Davis and Ryder LJJ agreed, in R (Faqiri) v Upper Tribunal (Immigration and Asylum Chamber) [2019] EWCA Civ 151; [2019] 1 WLR 4497, para 24, where Gudanaviciene was said to have confirmed that Davies was still good law, and binding on this court. It followed that only the Supreme Court could decide whether Davies was good law. If, however, the question was one of practice, then it followed that the Court of Appeal had been mistaken in regarding itself as bound by the decision in Davies. This court should therefore find in favour of the appellant, on the ground that the courts below were mistaken in regarding Davies as imposing a strict rule, when their discretion was in reality much broader. The submissions on behalf of the respondent identified the relevant question of law as being whether King J had exercised his discretion correctly, or whether his approach was erroneous in law. In response to the submission of the appellant summarised at para 19 above, counsel observed that, given that counsel for the appellant had conceded before the Court of Appeal that it was bound by Davies, the implication of his argument was that the Court of Appeal should, of its own motion, have decided the appeal on a basis for which the appellant was not contending. Discussion Section 51(1) of the Senior Courts Act 1981 provides, so far as material: (1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in (a) (b) the civil division of the Court of Appeal; the High Court; shall be in the discretion of the court. (2) Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings (3) The court shall have full power to determine by whom and to what extent the costs are to be paid. Section 51 is concerned with the jurisdiction of the court to make orders as to costs. That jurisdiction is expressed to be subject to rules of court. It is therefore open to the rule making authority (now the Civil Procedure Rule Committee established under section 2 of the Civil Procedure Act 1997) to make rules which control the exercise of the courts jurisdiction under section 51(1). It is also open to appellate courts to provide guidance to lower courts as to how their discretion should be exercised. As Lord Goff of Chieveley remarked in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, 975, section 51(1) is consistent with a policy under which jurisdiction to exercise the relevant discretionary power is expressed in wide terms, thus ensuring that the court has, so far as possible, freedom of action, leaving it to the rule making authority to control the exercise of discretion (if it thinks it right to do so) by the making of rules of court, and to the appellate courts to establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. The rules of court relating to the courts discretion as to costs set out a number of general principles. Some are contained in CPR rule 44.2. Under paragraph (1), the court has discretion as to whether costs are payable by one party to another, the amount of those costs, and when they are to be paid. Under paragraph (2), if the court decides to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. Certain exceptions to the general rule are set out in paragraph (3), but do not apply in the present case. Under paragraph (4), in deciding what order (if any) to make about costs, the court is to have regard to all the circumstances, including the conduct of the parties. Other principles are set out in other rules, notably CPR rule 44.3, and apply to circumstances falling within the scope of those rules. The rules of court do not, however, set out a comprehensive code. It is also important, as Lord Goff indicated, that the appellate courts establish principles upon which the discretionary power may, within the framework of the statute and the applicable rules of court, be exercised. This court, like the House of Lords before it, proceeds on the basis that responsibility for developing those principles falls principally upon the Court of Appeal. In proceeding on that basis, the court recognises that such principles are generally matters of practice, rather than matters of law, and follows its general approach to matters of practice. In modern times, that approach was articulated by Lord Hope in Girvan v Inverness Farmers Dairy 1998 SC (HL) 1, an appeal from the Inner House of the Court of Session concerned with the level of damages for personal injuries which had been awarded by a jury. In the course of his speech, with which the other members of the Appellate Committee agreed, Lord Hope considered a submission that a change in practice should be introduced in the Court of Session, so that juries would be given guidance by the judge as to the appropriate level of damages. He observed at p 21: In the first place it would, I believe, be inappropriate for your Lordships to recommend changes in the practice which is followed by the Court of Session in the conduct of jury trials in its own court. The Court of Session is, in a very real sense, the master of its own procedure. It has been said several times in the Inner House, on motions for leave to appeal in interlocutory matters, that it is not appropriate to refer matters of practice for decision by the House of Lords The basis for this view is that the Court of Session is far better placed than your Lordships can ever be to assess what changes in procedure or practice can appropriately be made and, if they were to be made, what would be their consequences. Lord Hope went on to explain that the Court of Session had a statutory power to make rules of court regulating its procedure, and that the Court of Session Rules Council, established under the same legislation, had the function of considering what changes ought to be made from time to time. Both branches of the legal profession were represented on the Rules Council, so that it provided an appropriate forum for consultation when changes to the rules were being proposed. In those circumstances, Lord Hope concluded: The Court of Session is thus well equipped to keep its own rules under regular review, and it has the ability to change or modify those rules with the minimum of delay by act of sederunt or practice note or by a decision of the court which can be reviewed, if necessary, by a larger court. By way of contrast, a decision by your Lordships on a matter of practice would lack the process of consultation which is needed to ensure general acceptability. It would also lack flexibility, as a decision of this House would be binding on the Court of Session and it would be very difficult to reverse except by legislation. The proper approach for this House to take therefore is to leave it to the Court of Session to decide what changes, if any, should be made to its own rules. That case was concerned with a different question from the one which arises in the present appeal. The emphasis on rules of court, in particular, distinguishes it from a case concerned with the principles upon which a discretionary power should be exercised, as set out in the judgments of appellate courts. Nevertheless, Lord Hopes remarks about the role of the House of Lords in relation to matters of practice, and about the greater ability of the Court of Session to assess what changes can appropriately be made, and to modify practice flexibly and without delay by means of judicial decisions, are of wider scope. They are relevant, mutatis mutandis, to the relationship between this court and the Court of Appeal of England and Wales, and the Court of Appeal of Northern Ireland, and have been cited in a number of different contexts in more recent decisions of the House of Lords and of this court. The case of Callery v Gray (Nos 1 and 2) [2002] UKHL 28; [2002] 1 WLR 2000, is more directly in point, as it concerned appeals against an order for costs. Questions arose, where the claimant had entered into a conditional fee agreement with his solicitors, as to whether the success fee, and an after the event insurance premium, were recoverable from the defendant as part of an award of costs; whether the amount of the success fee was reasonable; and whether the insurance premium was reasonable. The House of Lords decided not to intervene in the Court of Appeals determination of those questions. Lord Bingham of Cornhill, with whom Lord Nicholls of Birkenhead and Lord Hope agreed, stated at para 8: [T]he responsibility for monitoring and controlling the developing practice in a field such as this lies with the Court of Appeal and not the House, which should ordinarily be slow to intervene. The House cannot respond to changes in practice with the speed and sensitivity of the Court of Appeal, before which a number of cases are likely over time to come. Although this is a final and not an interlocutory appeal, there is in my view some analogy between appeals on matters of practice and interlocutory appeals, of which Lord Diplock in Birkett v James [1978] AC 297, 317 observed that only very exceptionally are appeals upon such matters allowed to come before the House. Lord Hoffmann added at para 17: My Lords, the Court of Appeal is traditionally and rightly responsible for supervising the administration of civil procedure. This is an area in which your Lordships have in the past seldom intervened and, it must be said, the few exceptions to this policy of self restraint have usually tended to confirm the wisdom of the general practice. Lord Hope, with whom Lord Nicholls also agreed, referred to his earlier observations in Girvan v Inverness Farmers Dairy, and said at para 56 that, for similar reasons to those which he gave in that case, responsibility for dealing with these issues lies pre eminently with the Court of Appeal and not with this House. Mention should also be made of the case of Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] UKSC 64; [2014] 1 WLR 4495, which concerned an order striking out a defence as a result of the defendants non compliance with a case management decision. Lord Neuberger of Abbotsbury stated at para 39, in a judgment with which Lord Sumption, Lord Hughes and Lord Hodge agreed: [I]ssues such as those raised by this appeal are primarily for the Court of Appeal to resolve. It would, of course, be wrong in principle for this court to refuse to entertain an appeal against a decision simply because it involved case management and the application of the CPR. However, when it comes to case management and application of the CPR, just as the Court of Appeal is generally reluctant to interfere with trial judges decisions so should the Supreme Court be very diffident about interfering with the guidance given or principles laid down by the Court of Appeal. Similar remarks have been made in other decisions of this court concerned with analogous matters. For example, in the case of BPP Holdings Ltd v Revenue and Customs Comrs [2017] UKSC 55; [2017] 1 WLR 2945, which concerned guidance given by the Court of Appeal and the Upper Tribunal (UT) to the First tier Tribunal (F tT), Lord Neuberger, with whom the other members of the court agreed, stated at para 26: It is not for this Court to interfere with the guidance given by the UT and the Court of Appeal as to the proper approach to be adopted by the F tT in relation to the lifting or imposing of sanctions for failure to comply with time limits (save in the very unlikely event of such guidance being wrong in law). The position is different where an appeal on costs raises a question of law. Appeals to the House of Lords, or in more recent times to this court, which are purely on costs have long been discouraged, as a general rule, and will rarely meet the courts central criterion for the grant of permission to appeal, namely that the appeal must raise an arguable point of law of general public importance: Practice Direction 3.3.3. Nevertheless, where permission to appeal has been granted, the court will intervene if an error of law is established. The Aiden Shipping case is itself an example. Three more recent examples can be given. First, in R (Hunt) v North Somerset Council [2015] UKSC 51; [2015] 1 WLR 3575, the appellant successfully challenged the legality of a decision taken by the respondent council, but the Court of Appeal declined to grant a quashing order because of the practical problems which that would cause, given the time which had elapsed before the appeal came on for hearing. Declaratory relief was not sought. In those circumstances, the Court of Appeal dealt with costs on the basis that the council was the successful party to the appeal. Its order was set aside by this court, Lord Toulson stating at para 15: The discretion of a court in a matter of costs is wide and it is highly unusual for this court to entertain an appeal on an issue of costs alone. But the Court of Appeal said that it reached its decision as a matter of principle, treating the respondent as the successful party. In adopting that approach, I consider that the court fell into error. Secondly, in Cartier International AG v British Telecommunications plc [2018] UKSC 28; [2018] 1 WLR 3259 the question arose whether the costs to internet service providers (ISPs) of implementing website blocking orders should be borne by the ISPs or by the persons who had obtained the orders in order to protect their intellectual property rights. The courts below had considered that the costs should in principle be borne by the ISPs, first for reasons of commercial equity, and secondly on the view that that was required by EU directives. This court intervened, on the basis that the ordinary rule in equity, in situations where a person was ordered to prevent the use of his facilities by a third party to commit or facilitate a wrong, was that the applicant bore the costs of compliance by an innocent intermediary, and the EU directives contained no contrary requirement. A third example of intervention is the case of XYZ v Travelers Insurance Co Ltd [2019] UKSC 48; [2019] 1 WLR 6075, where this court reversed the decisions of the courts below in relation to the award of a non party costs order against a liability insurer. Earlier decisions of the Court of Appeal had laid down the applicable general principles, which in the context in question implied that the relevant question was whether the insurer had become the real defendant in relation to an insured claim, or had intermeddled in an uninsured claim, thereby causing additional costs to be incurred. The judge had erred in the exercise of her discretion by basing her order on conduct by the insurer, some of which could not reasonably be regarded as intermeddling, and the remainder of which had not in any event resulted in the incurring of additional costs. The Court of Appeal had also erred, by relying on an irrelevant consideration. In summary, therefore, this court will ordinarily be slow to intervene in matters of practice, including guidance given by the Court of Appeal as to the practice to be followed by lower courts in relation to the award of costs. The court recognises that responsibility for monitoring and controlling developments in practice generally lies with the Court of Appeal, which hears a far larger number of cases. This court is generally less well placed to assess what changes in practice can appropriately be made. It cannot respond to developments with the speed, sensitivity and flexibility of the Court of Appeal. Nevertheless, it can intervene where there has been an error of law, and has done so where a question of law arose which was of general public importance. Bearing in mind, however, the discretionary nature of decisions on costs, and the rarity of their raising any question of law of general public importance, appeals solely on costs are not ordinarily appropriate. The counterpart of this restraint on the part of the Supreme Court is that the Court of Appeal must fulfil its primary responsibility for monitoring and controlling developments in practice, including developments in relation to costs. It cannot do so, however, unless it is able to keep its decisions laying down principles of practice as to how lower courts should exercise their discretion in relation to costs, such as Davies, under review. That entails that its decisions on such matters cannot be treated as binding precedents, in the sense in which that expression is generally understood: that is to say, precedents which the Court of Appeal is required to follow in accordance with the principles laid down in authorities such as Young v Bristol Aeroplane Co Ltd [1944] KB 718 and Davis v Johnson [1979] AC 264. Were the position otherwise, the Court of Appeal would be severely restricted in its ability to introduce changes in practice, since any departure from its previous decisions could only be brought about by appeals to this court. However, the appellants submission that such decisions are treated by the Court of Appeal as binding precedents, in the same sense as decisions on questions of law, appears to be a misleading over simplification of the position. In the first place, the principles of practice laid down by the Court of Appeal to guide judges in the exercise of their discretion as to the award of costs are not strictly binding even upon those judges, in the way in which a decision of the Court of Appeal on a point of law is binding upon them. There is always a residual discretion as to costs. Since the discretion is to be judicially exercised (Pepys v London Transport Executive [1975] 1 WLR 234, 237), the application of the principles laid down by appellate courts must be tempered by an ability to respond flexibly to unusual situations, and to reach a just result in the individual case. As was said long ago in relation to the discretion to order a jury trial, the Court cannot be bound by a previous decision, to exercise its discretion in a particular way, because that would be in effect putting an end to the discretion (Jenkins v Bushby [1891] 1 Ch 484, 495 per Kay LJ). Brooke LJs judgment in Davies itself recognised that there was scope for judges to exercise their discretion: see para 47(4), cited at para 4 above. Secondly, since a decision such as Davies establishes principles which should generally be applied as a matter of practice, as Brooke LJ repeatedly made clear (see, for example, para 47, cited at para 4 above), rather than deciding a question of law, it falls outside the scope of the rules of precedent laid down in authorities such as Young v Bristol Aeroplane Co Ltd, which are concerned with the effect of a decision on a question of law (p 729). It also falls outside the scope of the rationale of those rules, namely to promote legal certainty. It is therefore appropriate for a decision on a matter of practice to be reviewed where sufficient reason, such as a material change of circumstances, is put forward. Indeed, the fourth of the issues which Brooke LJ identified in para 3 of his judgment in Davies (cited at para 3 above) was whether there were any contemporary considerations which should tend to make the courts exercise their discretion as to costs in these cases in a different way from the way in which it was regularly exercised in the past: a question to which he gave an affirmative answer in para 47. Previous decisions on matters of practice are not, therefore, binding in the ordinary sense of that term. At the same time, Brooke LJ observed at para 4 of his judgment in Davies that some of the issues in that case had recently been considered by the Court of Appeal in another case, R (Touche) v Inner London North Coroner [2001] EWCA Civ 383; [2001] QB 1206. He added (ibid): Needless to say, the latter judgment is binding on us unless we were satisfied that the court in Touches case overlooked relevant case law of a material nature or that its decision could be treated as not binding on us on other grounds. That approach, indicating that the court would only review its recent decision on the same issue of practice if persuaded that the previous case had been decided per incuriam, or that there was some other sufficient reason to do so, makes evident sense, if the Court of Appeal is to avoid repeated arguments about the principles to be adopted in costs cases, potentially divergent decisions, and the attendant risk of inconsistency and incoherence. Accordingly, although a previous decision of the Court of Appeal on a question of practice is not binding upon it in the sense in which its precedents on questions of law are binding, it is appropriate that such a decision should only be reviewed where there is sufficient reason to do so: as, for example, where there has been a material change of circumstances, or where the previous case was decided per incuriam. Following that approach, the Court of Appeal can ensure a consistent approach, and prevent the repeated re arguing of the same points without justification, while also avoiding a situation in which its previous decisions become a potential barrier to the development of practice. Placed in that context, the dictum of Longmore LJ in Gudanaviciene at para 36 (cited at para 11(3) above) takes on a different complexion. The central issue in that case was whether the approach to costs in cases of judicial review which had been adopted in the M case, and the observations of Lord Hope in the JFS case, required the guidance given in Davies to be revisited. The Court of Appeal did not close its mind to those arguments, on the basis that Davies was a binding precedent, but examined the issues fully. As has been explained, Longmore LJ concluded that M did not represent a new approach, as had been argued, but reflected the approach generally adopted to challenges to the decisions of public bodies. That approach did not impinge upon the distinct approach taken to cases involving courts and tribunals which adopted a neutral stance towards challenges, exemplified by Davies. The case of Gudanaviciene itself was a case of the latter kind. In addition, the observations in the JFS case had been made in very different circumstances and were not in point. It was in those circumstances, where the arguments in favour of a new approach had been considered and rejected by the Court of Appeal, that Longmore LJ observed at para 36 that, if such an approach were to be adopted, that step would have to be taken by this court. Similarly, in the present case, Hickinbottom LJ carefully examined the arguments which were advanced in support of a modification of the approach adopted in Davies. Since the arguments were in substance the same as those which had recently been rejected by the Court of Appeal in Gudanaviciene, and no good reason had been put forward for reviewing the decision in that case, Hickinbottom LJ was correct to conclude that that decision should be followed. His description of it as binding was perhaps open to misinterpretation, but did not in reality involve any error of law: he plainly did not treat Gudanaviciene as a binding precedent in the Bristol Aeroplane sense. The same is true of his description of the decision in Davies as binding, and of his similar remark in Faqiri, cited at para 18 above. The present case The central question raised in an appeal on costs is generally whether the decision awarding costs was vitiated by a failure to exercise the statutory discretion rationally and in accordance with established principles. In this case, the relevant decision was taken by King J. The submissions before him took as their starting point the established practice described in Davies, and argued that the Board should not be treated as a court or tribunal for that purpose since (in particular) it could concede a challenge to one of its decisions; that it should be treated in the same way as the generality of public bodies, and as such should normally be liable for the costs of successful challenges to its decisions; and that there were in any event circumstances justifying an exception to the usual practice, since its conduct, in failing to respond to the appellants letter before action in accordance with the relevant protocol, and in filing its acknowledgment of service after the due date, should be penalised by an award of costs. The judges reasons for declining to make such an award took full account of the appellants submissions, and reflected the established practice. In particular, he identified the point of central importance as being that the Board had taken the decision under challenge while acting in a judicial or quasi judicial capacity, and had not made itself an active party to the litigation. His conclusion that the Board consequently fell within the scope of the practice described in Davies did not involve any error of law. The question whether the Board should be treated as a court or tribunal for that purpose is itself a question of practice: it is not determined abstractly or on the basis of definitions used for other purposes, such as the meaning given to the expression court or tribunal in the European Convention on Human Rights. Nor was there any error of law involved in the judges conclusion that the Boards failure to respond to the letter before action was regrettable, but did not amount to improper or unreasonable behaviour which would justify an award of costs against it. In short, there is nothing in the judges reasoning which was erroneous in law, or with which this court would consider it appropriate to interfere as a matter of practice. Given that conclusion, it is difficult to see any basis upon which this court could properly allow this appeal. The same arguments were presented to the Court of Appeal in a more fully elaborated form, together with an argument concerning the significance of the appellants being in receipt of legal aid. The appellants contention that the Court of Appeal erred in law by regarding itself as bound, as a matter of precedent, to follow its decision in Davies, has already been considered and rejected. Although the court might have proceeded on the basis that no adequate grounds had been advanced for it to review its recent decision in Gudanaviciene, in which the same arguments had been considered and rejected, it considered the appellants submissions fully, and gave detailed reasons for rejecting them on their merits. In doing so, it committed no error of law. In particular, there is nothing in CPR rule 44.2 which is inconsistent with the approach which was described in Davies and followed in the present case. A body which takes a decision in a judicial or quasi judicial capacity, and then declines to defend it when it is challenged in court proceedings, choosing instead to maintain its impartiality and to let the reasons which it gave for its decision speak for themselves, acts in accordance with principles of judicial independence and impartiality which have long been recognised both in English law and at an international level: see, for example, the United Nations Commentary on the Bangalore Principles of Judicial Conduct, paras 72 and 74. A judicial or quasi judicial body which acts in that way cannot be what the framers of the CPR rule had in mind when they referred to an unsuccessful party. Furthermore, CPR rule 44.2 was in force at the time of the decision in Davies, although differently numbered. As Brooke LJ observed in Davies at para 45(1), the rule provides unequivocally that the general rule is that the unsuccessful party will be ordered to pay the costs of a successful party, but this does not throw any light on the position of a neutral party. The only additional observation that need be made in relation to the law is that the fact that a party is in receipt of legal aid cannot affect the principles on which the discretion to award costs is normally exercised. That is because section 30(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (re enacting a provision previously contained in section 22(4) of the Access to Justice Act 1999) provides: Except as expressly provided by regulations, any rights conferred by or under this Part on an individual for whom services are provided under this Part for the purposes of proceedings do not affect the rights or liabilities of other parties to the (a) proceedings, or (b) or tribunal is normally exercised. the principles on which the discretion of a court Furthermore, as a matter of principle, this court would respectfully agree with Lord Neuberger MRs statement in the M case, at para 46, that the basis upon which the successful partys lawyers are funded, whether privately in the traditional way, under a no win no fee basis, by the Community Legal Service, by a law centre, or on a pro bono arrangement, will rarely if ever make any difference to that partys right to recover costs. The dictum of Lord Hope in the JFS case which was cited in para 10(5) is clearly consistent with that approach in so far as he said that legally aided litigants should not be treated differently from those who are not. It may, however, appear at first sight to conflict with it in so far as he said that the consequences for solicitors who do publicly funded work is a factor which must be taken into account. However, as Hickinbottom LJ explained at para 60 of his judgment in the present case, there is no inconsistency when the dictum is placed in its context. In the relevant passage of his judgment, Lord Hope was considering, obiter, whether it would have been appropriate to make a protective costs order under which each party would be liable for its own costs whatever the outcome of the appeal, in the event that such an order had been sought. The result of making such an order would have been to disapply the principles which normally govern an award of costs, so as to prejudice the legally aided claimants lawyers by making it impossible for them to recover remuneration at the rates which would have applied if the claimant had been privately funded. The point made by Lord Hope, in explaining why such an order would not have been made, was therefore consistent with his endorsement of the principle that legally aided litigants should not be treated differently. In so far as the decision whether to award costs against the Board turns on matters of practice, it would not be appropriate for this court, for the reasons explained earlier, to impose on the Court of Appeal its own assessment of the merits of the parties arguments. Conclusion For all these reasons, I would dismiss this appeal.
UK-Abs
This appeal raises a question concerning the role of the Supreme Court in relation to the principles governing the award of costs in lower courts. The Appellant, Mr Gourlay, is a prisoner serving a life sentence, the minimum term of which has expired. In 2014, the Parole Board decided not to direct his release on licence and not to recommend his transfer to open prison conditions. Mr Gourlay challenged those decisions on a claim for judicial review. The Parole Board did not take part in the proceedings. The High Court decided that the Parole Boards decision not to recommend Mr Gourlay for transfer to open conditions was unlawful. Upon his success, Mr Gourlay applied for an order requiring the Parole Board to pay the costs he incurred in bringing his claim for judicial review. The High Court decided not to make such an order, following the practice described in R (Davies) v Birmingham Deputy Coroner [2004] 1 WLR 2755 (Davies): that, if a court or tribunal adopts a neutral stance in proceedings in which its decision is challenged, it will not be liable for the costs of the claim, unless there are exceptional circumstances. The Court of Appeal upheld the High Courts decision not to make an award of costs. Mr Gourlay appealed to the Supreme Court. He argued that the approach described in Davies is no longer correct, that it was wrongly treated by the Court of Appeal as a binding precedent, and that it does not apply to the Parole Board in any event. The Supreme Court unanimously dismisses the appeal. Lord Reed gives the sole judgment, with which the other Justices agree. Section 51 of the Senior Courts Act 1981 provides that the High Court and the Court of Appeal have discretion as to the award of costs, subject to the rules of court [21] [22]. The rules of court include the general rule that, if the court decides to make an order about costs, the unsuccessful party will be ordered to pay the costs of the successful party [23]. The rules of court do not, however, set out a comprehensive code [24]. It is also important that the appellate courts establish principles upon which the courts discretion as to the award of costs may, within the framework of the Senior Courts Act 1981 and the rules of court, be exercised [24]. Responsibility for the development of those principles falls principally upon the Court of Appeal [24]. Generally, such principles are matters of practice, rather than matters of law [24]. The Supreme Court will ordinarily be slow to intervene in matters of practice, including guidance given by the Court of Appeal as to the practice to be followed by lower courts in relation to the award of costs [36]. This is because the Supreme Court is generally less well placed to assess what changes in practice can appropriately be made [36]. The Supreme Court can intervene where there has been an error of law, but, bearing in mind the discretionary nature of decisions on costs, and the rarity of their raising any question of law of general public importance, appeals solely on costs are not ordinarily appropriate [36]. The counterpart of this restraint on the part of the Supreme Court is that the Court of Appeal must fulfil its primary responsibility for monitoring and controlling developments in practice [37]. In order to fulfil that responsibility, decisions on matters of practice should not be treated as binding precedents [37]. Otherwise, any departure from a previous decision could only be brought about by an appeal to the Supreme Court [37], and the Court of Appeal would be unable to respond flexibly to unusual situations, and reach a just result in each individual case [38]. Instead, it is appropriate for decisions of the Court of Appeal on matters of practice to be open to review by the Court of Appeal itself [39]. To avoid repeated arguments, potentially divergent decisions, and the attendant risk of inconsistency and incoherence, such decisions should be reviewed only where there is sufficient reason to do so: for example, where there has been a material change of circumstances [40]. In the present case, the High Court took full account of the arguments made on behalf of Mr Gourlay, and reached a decision which reflected established practice [44]. The question of whether the Parole Board falls within the scope of the practice described in Davies is itself a matter of practice: it is not determined abstractly or on the basis of definitions used for other purposes, such as the meaning given to the expression court or tribunal in the European Convention on Human Rights [44]. There is nothing in the Judges reasoning which was erroneous in law, or with which the Supreme Court would consider it appropriate to interfere as a matter of practice [44]. The Court of Appeal also did not commit any error of law [45]. In particular, its approach was not inconsistent with the rules of court [46]. The choice of a judicial or quasi judicial body to take a neutral position in court proceedings accords with principles of judicial independence and impartiality, and this cannot be what the framers of the rules of court had in mind when they referred to an unsuccessful party [46]. In addition, the Court of Appeal correctly recognised that the fact that a party is in receipt of legal aid cannot affect the principles on which the discretion to award costs is normally exercised [47] [48]. It also did not incorrectly treat itself as bound, as a matter of precedent, to follow the decision in Davies [42], [45]. The Court of Appeal could have proceeded on the basis that there was no good reason to review its recent decisions on this issue [42], [45]. Nonetheless, the Court considered Mr Gourlays submissions in full and gave detailed reasons for rejecting them on their merits [42], [45]. Insofar as the decision whether to award costs against the Parole Board turns on matters of practice, it would not be appropriate for the Supreme Court to impose on the Court of Appeal its own assessment of the merits of the parties arguments [49]. Mr Gourlays appeal must therefore be dismissed [50].
Allegations that a bribe was paid to procure a contract are by no means unknown in international business disputes heard by the Commercial Court in London. Allegations that evidence was procured by torture are thankfully rare. In this case allegations of both bribery and torture were made. A claim under a guarantee of a contract to charter a vessel was met with a defence that the contract was procured by bribery, with the consequence that the guarantee was therefore unenforceable. The allegation of bribery was founded on evidence of confessions made by the individuals who had allegedly paid and received the bribe. The claimant in turn alleged that the confessions were obtained by torture and for that reason were inadmissible as evidence in legal proceedings. The relevant events all took place in the Peoples Republic of China (the PRC) and the judge was faced with a difficult task of having to assess the truth of the allegations on the basis of limited evidence. In particular, no one with first hand knowledge of the alleged bribery or torture gave evidence and the documentation available at the trial was substantially incomplete. The judge concluded that torture could not be ruled out as a reason for the confessions and that in any case the allegations of bribery had not been proved. He therefore found that the contract was enforceable and awarded damages to the claimant. The Court of Appeal allowed an appeal from that decision and remitted the case for redetermination. They did so on the grounds that the judge failed to ask and answer the correct legal question as to what weight should be accorded to the confession evidence and, in those circumstances, fell into legal error in failing to take all the appropriate matters into account and failing to exclude irrelevant matters in considering whether the alleged bribe was paid. Those irrelevant matters included, in the Court of Appeals view, the judges finding that torture could not be ruled out as a reason for the confessions. The Court of Appeal decided that, as a matter of law, if an allegation that a statement was made as a result of torture has not been proved on the balance of probabilities, a court when estimating the weight to be given to the statement as hearsay evidence in civil proceedings must entirely disregard the possibility that the statement was obtained by torture, even if on the evidence given at trial the court considers this to be a serious possibility which it cannot rule out. In this judgment we explain our reasons for concluding that the Court of Appeal was wrong to interfere with the factual findings made by the trial judge in this case and was also wrong in its approach to the question whether evidence had been obtained by torture. On the latter question we explain why, as matter of principle and authority, the judges finding that torture could not be ruled out as a reason for confessions of bribery was a factor that he was entitled to take into consideration in deciding whether the confessions were reliable evidence that bribery had in fact occurred. Factual background The contract in dispute is a charterparty concluded on 6 August 2008 between the appellant, Shagang Shipping Company Ltd (Shagang), as disponent owner and Grand China Shipping Company Ltd (Grand China) as charterer. Under the charterparty Grand China agreed to charter from Shagang a capesize bulk carrier, then under construction, for a period of 82 to 86 months to run from when the vessel was delivered in 2010. A few months earlier, Shagang had itself chartered the vessel from head owners, Dong A Tanker Corporation, on similar terms save for the rate of hire. Grand China was a new company. Its ultimate parent company was the respondent, HNA Group Company Ltd (HNA), which guaranteed the performance of Grand Chinas obligations under the charterparty. The guarantee, also dated 6 August 2008, is governed by English law and provides that any dispute arising from it is subject to the exclusive jurisdiction of the English courts. Shagang, Grand China and HNA are all companies based in the PRC. Shagang, which is now in liquidation, is based in Hong Kong, as is Grand China (also now in liquidation). HNA is based in Haikou, which is the capital of Hainan province. In August 2008 the relevant chartering market was at its height. It was an active market in which owners (including disponent owners like Shagang) held the dominant bargaining position. The rates of hire for the vessel agreed in the charterparty were in line with the market. The vessel, named Dong A Astrea, was delivered to Grand China in April 2010. By that time market rates were very considerably lower than in August 2008, the financial crisis in the autumn of 2008 having changed things dramatically. From September 2010 onwards, Grand China defaulted in making payments of hire under the charterparty. Shagang commenced arbitration proceedings against Grand China and obtained a series of interim final awards for unpaid hire. Some payments were made by Grand China but it remained in arrears, and on 17 January 2012 Shagang In the meantime, on 13 September 2012 Shagang commenced the present terminated the charterparty on the basis of Grand Chinas default in paying hire and consequent repudiatory breach of the charterparty. The claim for unpaid hire was settled in May 2012 but Shagang pursued its claim in arbitration for damages for the loss caused by Grand Chinas repudiatory breach of the charterparty. On 1 November 2012 the arbitral tribunal issued a partial final award for damages in a sum of US$58,375,709. On 8 April 2013 Grand China was wound up in Hong Kong. action in the Commercial Court against HNA under its guarantee. The PSB investigation and allegations of bribery HNA filed its defence to Shagangs claim on 4 November 2013, initially without making any allegation of bribery. On 23 June 2014, however, HNA amended its defence to allege that the charterparty had been procured by the payment of bribes by or on behalf of Shagang to senior employees of Grand China. In support of this allegation, HNA relied on confessions made during an investigation undertaken by the Chinese Public Security Bureau (the PSB). At the time when the charterparty was concluded in August 2008, Mr Jia Hongxiang (Mr Jia H) was a general manager within HNA and the chief executive officer of Grand China. On 11 November 2013, Mr Jia H was detained by the Haikou PSB on suspicion of embezzlement. On 29 November 2013, Mr Jia Hs son, Mr Jia Tingsheng (Mr Jia T), was detained on bribery charges. Mr Jia T was not employed directly by either Grand China or HNA but was employed by an associate company, GCS Development Company. Mr Jia T knew from college Mr Xu Wenzhong (Mr Xu) who in August 2008 had been employed by Shagang. Both men lived in Shanghai. On 22 January 2014, Mr Xu was detained by officers of the Haikou PSB on the charge of bribing a non public servant. He was flown to Haikou (over a thousand miles away), where he was questioned by PSB officers from the Meilan district branch overnight and during 23 January 2014. According to the PSBs interrogation record, Mr Xu gave an account of being asked by the general manager of Shagang, Mr Shen Wenfu (Mr Shen), to use his relationship with Mr Jia T to cause Mr Jia Ts father, Mr Jia H, to charter the vessel from Shagang as soon as possible. Mr Xu is recorded as saying that Mr Shen gave him RMB 100,000 (equivalent to around US$16,000 at that time) in cash, which Mr Xu delivered to Mr Jia T at Mr Jia Ts home in a single instalment. The interrogation record states that Mr Xu was willing to confess his crime for leniency. Also on 23 January 2014, Mr Jia T was questioned by the same PSB officers who had interrogated Mr Xu. The only interrogation record disclosed is described as the 4th. It records Mr Jia T as saying that Mr Xu gave him RMB 150,000 in the hope that Mr Jia Ts father would communicate with HNA to arrange the guarantee as quickly as possible. The money was said to have been handed over by Mr Xu in cash in the cafeteria of a hotel near Mr Jia Ts home. When Mr Jia T told his father about this payment, Mr Jia H said that he could only communicate with HNA according to the companys normal rules and told Mr Jia T to send the money back. Mr Jia T did not do so and, shortly after the charterparty was concluded, met Mr Xu again at a restaurant near Mr Xus house where he received another RMB 150,000. He did not tell his father about this payment. The interrogation record states that Mr Jia T was asked whether his confession had been extorted by torture or deceit, to which he replied no. A confession note dated 24 January 2014 in Mr Xus name gives a similar account to that given in Mr Jia Ts 4th interrogation record. It describes Mr Xu paying Mr Jia T a sum of RMB 300,000 in two instalments, one before and one after the signing of the charterparty. Another interrogation record dated 4 March 2014 refers to Mr Xu being asked why he had initially stated that he had bribed Mr Jia T with RMB 100,000, when he was now saying that the amount was RMB 300,000. He answered that in his initial confession he had lied and deliberately given a lower amount because he was trying to escape punishment. However: Being educated by the police officers, I realised the mistakes I made. Now, I am willing to truthfully confess, for leniency. Mr Xu was also asked why he and Mr Shen would want to bribe HNA if, as he had told the PSB, the pricing of the charterparty was reasonable in any event. Mr Xu is recorded as answering that it would otherwise have been difficult to charter the vessel quickly. Mr Shen was also detained on bribery charges and on 16 February 2014 was questioned by the PSB. According to the PSBs interrogation record, Mr Shen said that he had given Mr Xu RMB 300,000 in two instalments to pay Mr Jia T. The money was said to have been provided at Mr Xus request to make sure that HNA would provide a guarantee of Grand Chinas performance of the charterparty. The same account is contained in an undated confession note. On 17 February 2014, the PSB sent a letter to HNA summarising the confessions made by the individuals accused of bribery. This letter was sent in response to a request made by HNA on 10 February 2014 for information about the criminal investigation to enable HNA to explain and prove the facts in the English court proceedings. Allegations of torture and Mr Xus guilty plea On 1 May 2014 Mr Zhang Jie (Mr Zhang), who had by then replaced Mr Shen as the general manager of Shagang, made a formal complaint to the Peoples Procuratorate (the entity that has supervisory responsibility for the PSB) of Haikou. The complaint alleged that the confessions of Mr Xu and Mr Shen had been procured by torture and that HNA had wrongly used the PSB to manufacture false charges with a view to interfering in an economic dispute. Mr Zhang requested the Procuratorate urgently to investigate these allegations. On 23 June 2014, the Procuratorate made a report on the outcome of its investigation into this complaint. The report stated that the Procuratorate had visited the [PSB], interviewed the concerned suspects, [and] retrieved from the detention centre relevant materials. It concluded that the allegations made in the complaint were not supported by the facts. (Copies of the complaint and report were not available at the trial and were admitted as new evidence in the Court of Appeal.) On 23 July 2014 Mr Xu (who in the meantime had been under a form of house arrest at a hotel in Hainan province) was arrested for bribery of a non public servant and transferred to a detention centre in Haikou. On 21 August 2014 he was visited and interviewed at the detention centre by Mr Guo, a lawyer retained by his wife. Mr Guos interview notes record that Mr Xu maintained that he was innocent and gave the following account of his interrogations: I was brought to Hainan on 23 January this year [2014], Initially there werent any charges. I was taken to the basement of the [PSB]. It was around 11pm and I was definitely there for over 48 hours. I came out on the afternoon of the 26 [January]. The least serious methods used against me were fists and truncheons. I was stripped of my clothes and cold air was blown on me. They covered my mouth with their hands after water was poured into me. I was also burnt with a cigarette butt. At first I said that there had been no such thing [bribery], but then they tortured me and I couldnt take it any longer. On the morning of 24 [January], I said I had paid out 100,000 yuan. I made this up. On the afternoon of 24 [January] they tortured me again and poured water into me. I couldnt bear it any more. They told me it had been 300,000 and it had been paid in two batches 150,000 each time. In the end, I had no other way out but to say what I was told to say . I definitely never did it. At that time, the market was dominated by shipowners and we didnt have to ask any favours of [Grand China]. They had to ask help from us. Their company was a new company and we were an established company. Despite what Mr Xu had told Mr Guo in this interview, on 22 August 2014 Mr Guo made an application for bail on behalf of Mr Xu on the basis that Mr Xu had given a true account in his confessions and had repented. Bail was refused. On 15 September 2014, in a further interview, Mr Xu gave Mr Guo a detailed account of all his interrogations by the PSB and of the visit by the Procuratorate in June. As well as describing how he had allegedly been tortured by the PSB, Mr Xu said that, before he was interrogated again on 24 January 2014, he had heard Mr Jia T screaming from another room. He also said that he was later told that Mr Shen had confessed and was taken to see Mr Shen. He said that Mr Shens whole face was red and it was obvious that he had had water poured into him. On 14 November 2014 Shagang amended its reply in the Commercial Court proceedings to plead an allegation that the confessions of bribery relied upon by HNA in its defence had been obtained by torture, with the consequence that they were inadmissible as evidence in the proceedings. In response, on 3 December 2014, HNA wrote to the Haikou PSB accusing Mr Xu, his wife, Mr Zhang, Mr Guo and two solicitors acting for Shagang in the Commercial Court proceedings of crimes involving interference with the PSBs investigation and fabricating evidence. HNA asked the PSB to handle the case legally and punish the criminals severely so as to realise the fairness and justice of our society and maintain judicial authority. On 17 and 19 December 2014, Mr Xu was visited by two lawyers from Mr Guos firm. According to their notes of these meetings, Mr Xu said that he had been interrogated again on two consecutive days at the end of November. At first he had not admitted to bribery but he was told that, if he admitted the offence, the sentence would be two years at most; otherwise he would be imprisoned for much longer. Mr Xu was recorded as telling the lawyers that he had already been detained for almost a year and that, in order to get out as soon as possible, he had decided to repeat the fabricated account of events he had previously given to the PSB officers. He said that he had then given a video recorded interview in which he repeated that account. The case against Mr Xu came before the Meilan District Peoples Court of Haikou City in Hainan province on 22 September 2015. Before the hearing Mr Xu instructed Mr Guo that he wanted to admit the allegations against him in order to be released sooner. In his submissions Mr Guo relied on Mr Xu having made a voluntary confession in asking the court for leniency. Mr Xu was sentenced on 16 November 2015 to a term of imprisonment of one year and eight months. With credit given for the time he had already spent in detention, this led to his release the following month. No prosecution was brought against Mr Shen or Mr Jia H. In late 2015 Mr Guo met Mr Jia Hs lawyer, who gave him a copy of an unsigned document said to have come from Mr Jia Ts wife. The document is entitled Report on torture suffered by [Mr Jia T] during the period detained in Hainan. This report contains a detailed account written in the first person of three interrogations of Mr Jia T, in each of which torture was allegedly used: the first, lasting 46 hours, from 29 November to 1 December 2013; the second, lasting 24 hours, on 19 and 20 December 2013; and the third, lasting 42 hours, on 23 and 24 January 2014. The torture alleged to have occurred during the last of these interrogations, in which the confession recorded in the 4th interrogation record was made, included: sleep deprivation; putting a cover over Mr Jia Ts head so that it was difficult to breathe and then pouring wasabi oil on his head near his mouth and nose as he lay on his back so that he was forced to inhale it; and covering his face with a sweater soaked in iced water until he could hardly breathe, then loosening the sweater as water was poured into his nose (a procedure said to have been continued over a period of around four hours). The report also contains the following passage, which occurs at the point in the narrative in the early hours of 24 January 2014 after the alleged torture had ended and just before the confession that Mr Jia T had given was written down: [The PSB team leader] came in and said: Actually, you do not know to what stage this situation has developed. Shagang recently wound up Grand China, and took over USD20m, now they are preparing to wind up our HNA. We are undoubtedly not interested in you people as individuals, our HNA Group just wants to solve a problem. So really it is no big deal, you need not worry, just co operate and write down a confession, and strive to return home for Chinese New Year. After you go home do not ever recant your confession or you know what the consequence will be. The trial The trial of Shagangs claim against HNA in the Commercial Court took place over ten days between 26 January and 9 February 2016 before Robin Knowles J. By the time of the trial it was agreed that, unless HNA succeeded in its defence that the charterparty was procured by bribery, Shagang was entitled to judgment on its claim under the guarantee in a sum of US$68,641,712. Only three witnesses gave oral evidence at the trial. They were Mr Guo and Mr Zhang for Shagang and the general manager of HNAs audit and legal affairs department, Mr Wu. None of the witnesses had first hand knowledge of the alleged bribery or torture, although (as mentioned) Mr Guo had interviewed Mr Xu and represented him in the criminal proceedings against him. Each party also relied at the trial on expert evidence of Chinese criminal law and procedure and of experience of confession evidence in China. Neither party sought to cross examine the others experts but each party provided (at the judges request) a list of key propositions to be derived from this evidence. The expert evidence showed that, in a high proportion of criminal cases in the PRC (as many as 95% according to Shagangs expert), the suspect confesses, and also that it is the almost invariable practice of the PSB to interrogate suspects and obtain their confessions on multiple occasions. It is normal for suspects to plead guilty and innocent verdicts are very rare. Torture is illegal in the PRC and legislative reforms of criminal procedure were introduced in 2012 with the aim of giving greater protections to suspects and seeking to eradicate a perceived problem of the use of torture to coerce confessions. However, there have continued to be reported instances of torture being used. The experts were also agreed that it is by no means unknown for local PSBs to interfere in commercial disputes in favour of locally powerful economic interests, although over the years the Chinese authorities have issued various promulgations seeking to clamp down on this practice. The judgment of the trial judge In his judgment given on 16 May 2016, the judge noted that there was little first hand oral evidence available at the trial. None of Mr Xu, Mr Jia T, Mr Jia H or Mr Shen was available to give evidence. Nor was there any evidence from any officer of the PSB. The judge declined to draw any adverse inference against Shagang from the absence of Mr Xu, Mr Xus wife (who had made a witness statement) and Mr Shen. He noted that Shagang was now in liquidation and found that Shagang could not realistically be expected to procure their presence at trial. With regard to the witnesses who gave oral evidence, the judge commented unfavourably on the evidence of Mr Wu, finding that he chose to attempt to avoid giving straightforward answers. In relation to Mr Guo, the judge said that, whilst he was able to accept substantial parts of his evidence, there were other parts that he found unconvincing. He observed that it was to Mr Guos credit that he was prepared to attend the trial and said that there was nothing in the suggestion that he was looking to help Shagang. The judge also said that he did not doubt the essential accuracy of the notes made by Mr Guo of his interviews with Mr Xu. The judge found that the expert evidence relating to Chinese criminal law and procedure, and experience in China of confession evidence, was valuable context or background evidence. The documentation available was found by the judge to be substantially incomplete. He rejected the suggestion that Shagang had deliberately withheld or deleted documents. The judge said that the evidence available was limited in many respects when compared with the evidence that would be desirable for conclusions on the issues in this case, observing at para 85 that: many of the documents require caution before reliance can be put on what they appear to say. The evidence of those few factual witnesses the court has seen has its shortcomings. Accounts of the same key people (Mr Xu in particular) are used both to support and to deny the case of bribery, and both to support and to deny the case of torture. Accounts are altogether missing from other key people. The judge summarised the evidence under the following headings: Commercial Context (paras 18 22); Approval of the Charterparty within Grand China and HNA (paras 23 24); Confession by Mr Xu (paras 25 44); Confession by Mr Jia T (paras 45 50); Confession by Mr Shen (paras 51 55); Mr Jia H (paras 56 57); the Sun bribe (paras 58 62); and Confession evidence and torture (paras 63 82). (The Sun bribe was a separate allegation of bribery made by HNA against a broker, which HNA accepted did not give it a defence and which the judge found was not relevant to Shagangs claim.) The judge then proceeded straight to his conclusions. Under the heading Conclusions on bribery he found at para 87 that: On the limited evidence at this trial, and after careful consideration, on the balance of probabilities I find that there was no bribe by Mr Xu. At paras 88 93 he set out his principal reasons for reaching that conclusion. Because criticisms made of the judges reasoning are at the centre of this appeal, we quote these paragraphs in full: 88. I fully acknowledge that the Meilan District Peoples Court of Haikou City found Mr Xu guilty of bribery and sentenced him. On the material put before that Court I can entirely follow its finding. However, material has been put before this Court that was not put before the Meilan District Peoples Court. In particular, the Meilan District Peoples Court had evidence of Mr Xu (and others) admitting the alleged bribery, but did not have the evidence of his (and their) also denying the alleged bribery. 89. When Mr Xu, Mr Jia T and Mr Shen each first referred to a bribe they did so without a lawyer or representative present. Although it appears Mr Guo was not his first lawyer, when Mr Xu had access to Mr Guo as his lawyer Mr Xu denied that there was a bribe. 90. There is no evidence that any account of the officers of PSB who were present at any interrogation has been tested with them in China. I appreciate the practical difficulties, but there has been no opportunity to test an account from them at this trial. 91. The reason given for the alleged bribing concluding the charterparty quickly rather than the pricing of the charterparty is unconvincing, in my judgment. Even if there was a desire for a quick conclusion I am unpersuaded, on the evidence, that bribes were introduced to achieve that end. On the documents, Mr Xu at one point suggested it as a reason for bribing. The same appears to be the case for Mr Shen. But both have also denied any such bribe. Further, the state of the market was not such as to provide an objective reason for a quick conclusion being so important, or being other than achievable in ordinary course in any event. The relevant chartering market was active and an owners market. As for the facts that the charter period would commence in 2010 and be of some length, it is hard to accept these would have made a difference: Shagang itself had recently agreed a charterparty for the Vessel of identical commencement and duration to the Charterparty. 92. Even when Mr Jia T gave an account consistent with receiving a bribe, that account supported the fact that Mr Jia Hs response was to insist on normal procedures. I do not overlook HNAs point that a requirement for board approval was lifted and the charterparty was not submitted for a required legal and financial review, but in the result the charterparty was approved by, among others, a main board director of HNA, and by the Chairman of HNA. I do not overlook Mr Wus own evidence that he did not become aware of the charterparty until 2011, but in the next several years following the agreement of the charterparty in 2008 I do not see anyone at HNA bringing out the point that the charterparty was agreed too quickly so as to cause suspicion of bribery. 93. Further, I have seen no records to show withdrawal of funds used for the alleged bribe or expenditure of funds by Mr Jia T. At para 94 the judge observed that the reasons I have given would alone cause me to reach the conclusion that there was no bribe. He then addressed various contrary arguments advanced by HNA as follows: I am not led to a different conclusion by the fact that Mr Xu pleaded guilty at trial, when I consider that plea in context. Further my conclusion is not disturbed by Mr Xus admission of accepting a watch as a bribe in connection with an unrelated matter. 95. I have considered carefully a challenge by HNA to the reliability of Mr Xus apparent accounts by reference to the dates and times, and sequence of events, in January 2014, including by comparison with the Jia T report. I do not find these points affect the substance of the matter, and I would have been surprised not to find some possible discrepancies in the circumstances that obtained. 96. HNA argues that an unequivocal confession is sufficient to convict an accused even on the criminal standard of proof. But the question in the present case is not whether a confession by an accused may lead to a conviction of that accused. In these proceedings HNA relies on the alleged confessions against Shagang and not against the individuals said to have made them. [Counsel for HNA] refers to R v Tippet (1823) Russ & Ry 509 and R v Sykes (1913) 8 Cr App 233 at 236 but those were cases where confessions were relied upon against the individuals said to have made them. 97. HNA argues that, in the absence of torture, there is no credible reason why Mr Xu, Mr Jia T and Mr Shen should falsely confess to crimes which they did not commit. However, the possibility of a large difference between the sentence that might follow an admission and the sentence that might follow a conviction was referenced expressly by Mr Xu in his exchanges with Mr Guo, and on his account reflected what had been indicated to him by officers of the PSB. 98. HNA argues that the prospect of a lighter sentence cannot be a reason for a false confession. I do not accept that argument. In the following section the judge set out his conclusions on torture: 101. But what of the allegations of torture? I have considered the evidence available at this trial for and against the allegations of torture, and the limitations of that evidence, including the absence emphasised by HNA of medical evidence. Having done so, I find that torture cannot be ruled out as a reason for the confessions. 102. The fact that I cannot rule out torture further reduces the confidence that I can put in the confessions, although it will be apparent from my conclusions on bribery (above) that I already have insufficient confidence in the confessions to allow a finding of bribery. 103. HNA distinguishes the confessions from later admissions (including in bail applications) and pleas of guilty, at which later points torture is not alleged to have been practised. But in the present case the matters are interconnected. Once the confessions had been made, a departure from them, in the form of a denial or a not guilty plea, would likely require reference back to the torture allegations. 104. In the present case, in the circumstances of my conclusion that there was no bribe, it is not necessary to express a definitive conclusion on whether there was torture. I have said that I cannot rule it out; the evidence available does not equip me well to reach a firmer conclusion. 105. That I should so confine my view at this trial is also in the interests of leaving proper room for investigation in China by the appropriate authorities, to include questioning of the officers who were on duty. I have not set out in this judgment the full extent and nature of the torture alleged to have occurred, but if the allegations were all true it would be hard to imagine a more comprehensive breach of the duties and responsibilities of the officers. In the light of his conclusions, the judge found that HNA was liable to pay damages to Shagang and judgment was entered in the agreed principal sum of US$ 68,597,049.59. The judge refused permission to appeal to the Court of Appeal, as did Davis LJ when he considered HNAs application for permission on the papers. Permission to appeal was granted by Longmore LJ, however, following an oral hearing. On the appeal HNA contended that the judges conclusion on bribery was unsustainable and that, having accepted that the confession evidence was admissible, the judge should have held that the charterparty was procured by bribery. The Court of Appeals judgment For reasons given in a joint judgment dated 23 July 2018 [2018] EWCA Civ 1732, the Court of Appeal (Sir Geoffrey Vos, Chancellor of the High Court, Newey LJ and Dame Elizabeth Gloster DBE) allowed the appeal. The Court of Appeal recognised that it was concerned with an appeal on questions of fact but observed that there was no appeal against the findings of primary fact made by the judge. The challenge made was to the manner in which the judge reasoned and his conclusion, drawn from his unchallenged findings of primary fact, that there was no bribe (para 53). In these circumstances, it was common ground that the proper approach to the appeal was that set out in Clarke LJs judgment in Assicurazioni Generali SpA v Arab Insurance Group (Practice Note) [2002] EWCA Civ 1642; [2003] 1 WLR 577, as approved by the House of Lords in Datec Electronics Holdings Ltd v United Parcels Service Ltd [2007] UKHL 23; [2007] 1 WLR 1325, and that the relevant questions were whether the judge made an error of law in reaching his ultimate conclusion and/or whether it was a conclusion that no reasonable judge could have reached (para 53). The Court of Appeals answer to those questions was that the judges decision was unsustainable for reasons summarised in para 79 as follows: The judge did not follow the logical steps necessary to reach a proper evaluation of the admissible evidence. He failed to ask and answer the correct legal question as to what weight should be accorded to the admissions evidence. The judge ought to have said why he was unable to place any reliance on the admissions, if that was his view. The judge also fell into legal error in failing to take all the appropriate matters into account in deciding the crucial bribery issue. As we have also said, the judge failed to exclude irrelevant matters (including his lingering doubt as to whether the admissions were procured by torture) in considering whether the alleged bribe was paid. The Court of Appeal decided that the case should be sent back for reconsideration of the issue of the weight to be attached to the admissions and of the issue of bribery in the light of this judgment, and on the basis that the issue of torture has already been decided (para 88). It directed that these issues be determined by a different Commercial Court judge. This appeal As encapsulated in para 79 of its judgment (quoted above), the Court of Appeal made four main criticisms of the judges reasoning: The judge failed to follow the logical steps necessary to reach a proper i) evaluation of the admissible evidence. ii) The judge failed to ask and answer the correct legal question as to what weight should be accorded to the confession evidence. iii) The judge fell into legal error in failing to take all the appropriate matters into account in deciding the bribery issue. iv) The judge fell into legal error in failing to exclude irrelevant matters, including what the Court of Appeal described as his lingering doubt as to whether the confessions were procured by torture, in considering whether the alleged bribe was paid. The central issue on this further appeal is whether these criticisms were justified and, to the extent that they were, whether they warranted overturning the judges decision and remitting the case for a fresh determination. If the Court of Appeal was right to remit the case, a further question arises as to whether the basis on which it did so was appropriate. Although not all aspects of these issues were covered by Shagangs original grounds of appeal, they are fully covered by the statement of issues agreed between the parties and by the parties written cases. To answer an objection raised by HNA that some of the arguments advanced by Shagang fall outside the scope of the original grounds, Shagang has applied for permission to amend its grounds of appeal to add a ground, in similar terms to the first agreed issue, that there was no basis in law for the Court of Appeal to interfere with the judges conclusions in light of the facts found by the judge (which are not in themselves challenged by either party). We would grant this application, as the amendment ensures that all the important points in dispute are properly before the court and causes no prejudice to HNA. It is convenient to consider each of the four key criticisms of the judges reasoning made by the Court of Appeal in turn. (i) Alleged failure to address issues in the logical order The Court of Appeal considered that the judge approached the issues in the wrong order and that he ought to have decided the issue of torture first. As stated at para 63: In our view, the judge ought to have decided the issue of torture first. It was the sole basis on which the admissibility of the admissions was resisted. All the other arguments went only to the weight that should be accorded to them. Thus, the judges first task was to decide on the facts whether or not torture had taken place in order to extract each of the three main admissions (leaving aside Mr Jia H) relied upon by HNA. Once he had done that exercise, the judge should have stated his conclusion that, since torture had not been proved, the admissions were admissible as evidence of their contents. In the view of the Court of Appeal, having decided that the confession evidence was admissible, the judge should next have determined the weight to be given to that hearsay evidence, having regard in particular to the considerations set out in section 4(2) of the Civil Evidence Act 1995. Only then should the judge have moved on to decide whether there had been bribery. The Court of Appeal summarised at para 65 the approach which it said should have been taken: In our judgment, therefore, the proper approach in a case of this kind is to decide first whether torture is proved. If it is not proved, as in this case, the statements are admitted as hearsay evidence. The next step is to decide the weight that can be attached to that evidence in all the circumstances, including those in section 4 of the 1995 Act. Only then could the court properly move on to an evaluation of all the evidence, including the hearsay statements of admission, in order to decide the primary factual issue in the case, which was whether the alleged bribery occurred. We can quite see that the second and third stages of the process might be undertaken together, but it must be clear that both have actually been considered. We fully accept that, where there is an issue as to whether important hearsay evidence is admissible, it is a logical approach to decide that issue first before going on, if the evidence is held to be admissible, to consider its weight and its evidential impact on the substantive issues to be determined. We do not, however, accept that such an approach is mandatory, either generally or in this particular case. How and in what order questions concerning the admissibility and weight of evidence are dealt with is very much a matter for the trial judge. There is no one size fits all approach. The judge will consider how best to deal with such matters in the light of the issues, the evidence and the arguments in the case as a whole. There will usually, if not invariably, be more than one legitimate approach which can be taken. In many cases, for example, issues of admissibility can be dealt with efficiently by admitting the evidence de bene esse. This means taking the evidence into account on the assumption, without deciding, that the evidence is admissible. Unless the evidence turns out to be critical to the decision to be reached, the issue of admissibility may never need to be determined. This is often a convenient approach to adopt, as resolving issues of admissibility can be complex and time consuming. Mr Brown for HNA realistically accepts that it would have been a permissible approach in this case. To make his reasoning clear the judge ought to have stated at the start of his conclusions on bribery that this was what he was doing. Nevertheless, when his conclusions are read as a whole, it is apparent that this is in fact the approach which the judge took. The judge was clearly aware that the issue of torture was a sensitive one and that any findings that he made about whether torture had occurred might have ramifications beyond the confines of the case, as he indicated at para 105 of his judgment. In these circumstances, it is understandable that he should have preferred not to determine that issue unless it was necessary to do so. This explains why he proceeded, as he manifestly did, by treating the confession evidence as admissible before coming to the issue of torture. If, as was the case, he reached the conclusion that notwithstanding the confession evidence there was no bribery, then the question whether that evidence was inadmissible because obtained by torture did not have to be decided. This also explains why the judge did not find in terms whether there was or was not torture, but instead left the matter open. Thus, he stated in para 101 that: I find that torture cannot be ruled out as a reason for the confessions. Similarly, in para 104 he stated that: it is not necessary to express a definitive conclusion on whether there was torture. I have said that I cannot rule it out. At para 105 he gave reasons why he considered that he should so confine my view. The Court of Appeal considered that, since the judge treated the confessions as admissible, he must have held that torture had not been proved on the balance of probabilities. We disagree. In our judgment, it is clear that the judge deliberately refrained from deciding that question. He considered that he did not need to decide it because he was in any event satisfied that there was no bribery. It is common for judges not to make findings on particular issues where to do so is unnecessary for the disposal of the case. As Davis LJ stated in refusing permission to appeal on the papers, in circumstances where the judge had decided that there was no bribery notwithstanding the confession evidence: there was no further requirement for the judge to make an express finding of whether or not there was also torture. He clearly had doubts on the matter; but he in terms stated that it was not necessary to reach a conclusion. We also note that the judges approach was consistent with the way in which Shagang put its case at trial. Its primary case was that, even taking the confession evidence at face value, it did not support HNAs pleaded case since it did not demonstrate the requisite inducement. Its secondary case was that such evidence was internally inconsistent, made no sense in the commercial context, and provided no or no sufficient basis for a finding of bribery. Its tertiary case was that if, contrary to both these arguments, the evidence did support a prima facie case of bribery, then it should be ruled inadmissible as having been procured by torture. In all the circumstances we do not consider the Court of Appeals criticism that the judge made an error by not deciding the issue of torture first to be justified. The approach taken was both legitimate and consistent with the way the case was put before him. We deal under the next heading with the Court of Appeals further criticism that the judge ought to have decided the weight to be given to the confession evidence before moving on to decide the primary factual issue of whether the alleged bribery occurred. (ii) Alleged failure to assess the weight of the confession evidence The Court of Appeal considered that the judge did not adequately address the weight to be given to the confession evidence, stating at para 77 that: he did not really address the point at all. He seems to have omitted that step in the argument. Once he found that the admissions had not been obtained by torture, if he was going to reject them as unreliable, he needed in our judgment to say why he was doing so. The nine factors relied upon by the judge in his conclusions on bribery may be summarised as follows: the confessions had been made without a lawyer present (para 89); the PSB officers present at the interrogations had not given any the fact of the confessions and the guilty plea of Mr Xu (para 88); the fact that all three individuals accused of bribery had retracted their i) ii) admissions and asserted their innocence privately (para 88); iii) iv) account which could be tested (para 90); v) the reason for the bribe given in the confessions, namely the need to conclude the charterparty speedily, was unconvincing, and the bribe made no sense commercially (para 91); vi) there was no evidence that the alleged bribe was ever received by Mr Jia H and the account of Mr Jia T in his confession on which HNA relied was that Mr Jia H had told him to return the bribe and abide by normal procedures (para 92); vii) and the chairman of HNA (para 92); viii) there was no evidence of withdrawal of funds used to pay the bribe or expenditure of those funds by Mr Jia T (para 93); and ix) confessions (paras 97 98). It is correct that the judge did not address the question of what weight should be given to the confession evidence as a separate step in his reasoning before going on to decide whether the alleged bribery had occurred. He did not refer to section 4 of the 1995 Act or to any of the considerations there set out. It is also fair to say that the charterparty was approved by an unconnected HNA board director the prospect of leniency was a credible reason for making false the judge stated his conclusions in what may be described as thumbnail terms without any detailed discussion of the evidence underlying them. It would have been much more satisfactory if he had dealt in more detail with the content of the confessions, the circumstances in which the confessions were made and other factors bearing directly on their reliability, such as the evidence that each of the individuals had told others their confessions were false, before bringing into consideration other factors bearing on the likelihood or otherwise that the confessions were truthful, such as the lack of any plausible commercial reason for paying a bribe. We do not accept, however, that the judge failed to address the question of what weight should be given to the confession evidence or to say why he rejected it as unreliable. The confession evidence was the first matter to which he referred in the reasons given for his conclusion that no bribe was paid. Furthermore, the judges second, third and fourth factors listed above all directly relate to the reliability and weight of that evidence. The third factor is of obvious importance. The right in most circumstances to consult a lawyer before police questioning is well recognised in this jurisdiction and under the European Convention on Human Rights. It is an important safeguard and incriminating evidence obtained without affording that opportunity will generally be inadmissible see section 58 of the Police and Criminal Evidence Act 1984 (PACE); Cadder v HM Advocate (HM Advocate General for Scotland intervening) [2010] UKSC 43; [2010] 1 WLR 2601. The judge was also entitled to attach weight to the fact that none of the PSB officers present at the interrogations had given any account which could be tested (his fourth factor). The Court of Appeal considered that this factor could only have been relevant to the question of whether the confessions were obtained by torture, and not to the question whether the confessions were otherwise reliable evidence of bribery. We disagree. It seems to us that there were many questions that it would have been relevant to ask the PSB officers had there been an opportunity to do so and the fact that such questions were unanswered was relevant, not only to the allegation of torture, but more generally to the reliability of the confession evidence and the weight that should be accorded to it. One obvious area of enquiry is what caused officers of the Haikou PSB to detain Mr Jia T and Mr Xu on bribery charges in the first place and whether they had any information to suggest that a bribe had been paid before Mr Jia T and Mr Xu made their confessions. There was no evidence at the trial that they did. Mr Wu in his testimony accepted that HNA had no evidence that Shagang had bribed anyone in relation to the charterparty when the PSB began its investigation. Nor did HNA ever acquire any such evidence apart from the confessions. None of the interrogation records and other documents relating to the PSB investigation and to the subsequent criminal proceedings against Mr Xu refers to any reason for suspecting Mr Jia T, Mr Xu or Mr Shen of bribery apart from their confessions, or records any question confronting any of them with any reason for suspicion. According to the first interrogation record of Mr Xu, for example, his initial confession came about in the following way. Having been asked about his personal details and background and told that he was under suspicion of bribery, Mr Xu was asked: Question: Do you have any criminal action, please explain? Answer: Yes, I have criminal action of bribery. Question: Please describe in detail your behaviour of bribery. Answer: Sure. In June 2008 [The confession then follows] While there are no doubt cases where individuals confess to crimes including crimes of dishonesty entirely of their own initiative, when there is no evidence to implicate them, such an occurrence raises questions about how the individual had come to be suspected of a criminal action of bribery, whether the interrogation records are complete and whether the suspect was offered any inducement or given any motive to confess. Quite apart from its relevance to the allegation of torture, the judge was entitled to regard the inability to test any account from any officer of the PSB of how the confessions had come about as tending to reduce the reliance he could reasonably place on the confession evidence. It is also important to bear in mind that the question whether the confession evidence was reliable and the question whether bribery had taken place were not merely inter related but, in the circumstances of this case, were simply different ways of framing the same issue. It was not disputed that Mr Xu, Mr Jia T and Mr Shen had made the confessions attributed to them in the interrogation records and that Mr Xu had pleaded guilty to an offence of bribing a non public servant. The issue was whether or not, when they made the confessions, these individuals were telling the truth. Furthermore, the confessions were the only evidence to support the allegation of bribery made by HNA. There was no evidence apart from the confession evidence to suggest that a bribe had been paid. In addressing the issue of bribery, the judge was therefore necessarily engaged in estimating the weight to be given to the confession evidence. It was the only matter to be put into the evidential scale on behalf of HNA. As part of the exercise of evaluating the weight to be given to the confession evidence, it was appropriate for the judge to consider the plausibility of the alleged bribe. The more implausible it was that a bribe had been paid, the less likely the confessions were to be true and therefore the less weight he should give to that evidence. A number of the factors identified by the judge went to the implausibility of any bribe and/or the alleged bribe having been paid, in particular his fifth to eighth factors. In summary, the explanation given for the bribe was unconvincing; bribery made no sense in the commercial context; the charterparty went through normal approval procedures; no one complained about the fixture for a considerable period of time and there were no documents to support the allegation, despite the fact that there had been a criminal investigation. The fact that the confession evidence may have been induced by the prospect of a lenient sentence was also relevant to the weight which it was appropriate to give that evidence the judges ninth factor. As already noted, there was evidence that all three individuals had offers of leniency made to them and of both Mr Xu and Mr Jia T saying: I am willing to truthfully confess, for leniency. In the interrogation record dated 4 March 2014 Mr Xu was recorded as stating: Being educated by the police officers, I fully realised my crimes. I am willing to truthfully confess my problems, for leniency. And I would like to give my appreciation to the Public Security Bureau for its lawful acts and protection of my rights. There was also the striking evidence of Mr Xu deciding, for reasons of leniency, to adhere to his original confession even after he had told his lawyer that it was false. As the judge found at para 38: Mr Xu explained a decision to adhere to his earlier account accepting guilt because it would lead to a much reduced sentence than if he contested the allegations and was found guilty. This evidence fell to be considered against the background evidence that in the region of 95% of criminal cases in China involve a confession, that it is normal for suspects to plead guilty and that Chinese courts very rarely hand down innocent verdicts. The attractions of leniency are clear if allegations are believed to be highly likely to lead to conviction in any event and to much greater punishment if they are denied. Whilst the Court of Appeal recognised that leniency could certainly have been a relevant factor, it pointed out that the judge had not found that the prospect of leniency was in fact a reason for false confessions having been made. It was not, however, necessary for the judge so to find. That it may have been a reason is sufficient for it to be relevant to an assessment of weight. The Court of Appeal also found it difficult to see why someone might make up something which was untrue in order to obtain a more lenient sentence. False confessions are, however, a known problem for criminal justice systems, and are a reason why in this jurisdiction there are important safeguards governing the admission of confession evidence see section 76 of the Police and Criminal Evidence Act 1984 (PACE). Indeed, as Davis LJ observed when refusing permission to appeal, under English law an indication of leniency such as those given in the present case would render the alleged confessions vulnerable under section 76 of PACE 1984 even as against the accused. It is a fortiori with regard to a third party (Shagang). For all these reasons, it is in our judgment clear that the judge did address the question of the weight to be given to the confession evidence. He also answered that question. In circumstances where that evidence was the only evidence of bribery, in finding that there was no bribery the judge was necessarily finding that the confession evidence was of little or no weight, as confirmed by his statement in para 102 that it will be apparent from my conclusions on bribery (above) that I already have insufficient confidence in the confessions to allow a finding of bribery. Moreover, it cannot be said that such a conclusion was unreasonable or unsustainable. There were ample grounds to support it. (iii) Alleged failure to take all appropriate matters into account The principal matters which HNA contended, and the Court of Appeal appears to have considered, that the judge failed to take into account are the details of the confessions made, including such matters as the content of each confession made by each individual, their timing, surrounding circumstances and how they tallied with one another. It is said, in particular, that the judge should have addressed each confession made by each of the three individuals rather than simply dealing with the matter compendiously. We agree that it would have been much more satisfactory for the judge to have addressed the confession evidence in greater detail. It is, however, apparent that those of his factors which went to the circumstances of the confessions (retraction, no lawyer present, no PBS evidence and offers of leniency) applied to all three individuals. His conclusions also have to be read together with the earlier part of his judgment, at paras 25 55, where he dealt in some detail with the confessions made by each individual. In assessing the reliability of the confession evidence, the judge can fairly be taken to have had this detail well in mind. Further, he addressed some issues relating to how the confession evidence tallied together at para 95. He also referred to the importance of the initial confessions, and the difficulty of formally resiling from them once they had been made, at para 103. This is not therefore a case in which it can be said that the judge failed to have any regard to material evidence. He clearly did consider the confession evidence of all three individuals. The real complaint is as to the degree of depth in which he did so and that he did not do so in a sufficiently systematic way. Such a shortcoming, whilst regrettable, does not involve an error of law or otherwise justify intervention by an appellate court. (iv) Whether the possibility of torture was irrelevant As mentioned, when he came to consider the allegations of torture, the judge found that torture cannot be ruled out as a reason for the confessions. He said that this further reduces the confidence that I can put in the confessions (para 102). The possibility that the confessions may have been obtained by torture therefore provided an additional ground for his conclusion that the confession evidence could not be relied on. The most striking criticism of the judges reasoning made by the Court of Appeal is that, in considering whether the alleged bribe was paid, the judge failed to exclude his lingering doubt as to whether the confessions were procured by torture. The Court of Appeal described the possibility of torture as an irrelevant matter (para 79) and considered that the judge ought not to have allowed his doubts about whether torture had occurred to infect his findings on the central issue in the case (para 69). The judge was clearly very troubled by the evidence of torture and, although he did not find it necessary to express a definitive conclusion on the question, his emphasis on his finding that he could not rule out torture as a reason for the confessions made it clear that he considered there to be at least a serious possibility that torture had been used. It is a general principle of the law of evidence that, in assessing what weight (if any) to give to evidence, a court should have regard to any matters from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence. In the case of hearsay evidence in civil proceedings this principle is embodied in section 4 of the Civil Evidence Act 1995. Circumstances specifically listed in section 4(2) to which regard may be had include whether any person involved had any motive to conceal or misrepresent matters. It is difficult to think of a motive which would more seriously undermine the reliability of a confession than a desire to escape intense physical pain and suffering caused by torture. The Court of Appeal nevertheless held that to take account of such a possible motive is an error of law and contrary to the established rules of evidence in civil proceedings. In re B The argument made by HNA which persuaded the Court of Appeal to reach this conclusion was founded on passages in the judgments in In re B (Children) (Care Proceedings: Standard of Proof) (CAFCASS intervening) [2008] UKHL 35; [2009] AC 11, a decision of the House of Lords. Lord Hoffmann said (at para 2): If a legal rule requires a fact to be proved (a fact in issue), a judge or jury must decide whether or not it happened. There is no room for a finding that it might have happened. The law operates a binary system in which the only values are zero and one. The fact either happened or it did not. If the tribunal is left in doubt, the doubt is resolved by a rule that one party or the other carries the burden of proof. If the party who bears the burden of proof fails to discharge it, a value of zero is returned and the fact is treated as not having happened. If he does discharge it, a value of one is returned and the fact is treated as having happened. To similar effect, Baroness Hale observed (at para 32): In our legal system, if a judge finds it more likely than not that something did take place, then it is treated as having taken place. If he finds it more likely than not that it did not take place, then it is treated as not having taken place. He is not allowed to sit on the fence. He has to find for one side or the other. HNA argued and the Court of Appeal accepted that, applying this binary principle, the fact that the judge in the present case did not find that on the balance of probabilities the confessions had been obtained by torture was, in law, a finding that there was no torture (para 60). Hence, in estimating the weight to be attached to the confession evidence, the judge was bound entirely to disregard the possibility that the admissions had been obtained by torture and, to the extent that he took this possibility into account, he made an error of law. As already discussed, the judge expressly said that he had not reached any definitive conclusion on whether there was torture. He did not have to find for one side or the other on that question because he had already concluded that, notwithstanding the confession evidence, no bribe was paid. It was therefore unnecessary for him to decide one way or the other whether torture had occurred and he did not do so. The absence of a finding on that question is not the same as a finding that torture had not been proved on the balance of probabilities. Even if the binary principle operated in this context, therefore, the judge could not be treated as having, in law, made a finding that there was no torture. Nor, as the transcript makes clear, was it common ground that he had done so, as the Court of Appeal appears to have erroneously assumed (see para 3 of its judgment). This is a short answer to HNAs argument. Even if, however, the judge had reached a definite conclusion that the use of torture had not been proved on the balance of probabilities, there would have been no inconsistency between that conclusion and the judges finding that torture was a real possibility which affected the reliance that should be placed on the confessions. It is of course true that, as Lord Hoffmann observed in In re B, if a legal rule requires a fact to be proved, the law operates a binary system. So where it is necessary to prove a fact for the purpose of a rule governing the admissibility of evidence, there are only two possibilities: either the evidence is admissible or it is not, which depends on whether the fact has been proved or not. There is no room for a finding that the fact might have happened. But not all legal rules do require relevant facts to be proved in this binary way. In particular, the rule governing the assessment of the weight to be given to hearsay evidence in civil proceedings does not. It requires the court to have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence: see section 4(1) of the Civil Evidence Act 1995. Such circumstances are not limited to facts which have been proved to the civil standard of proof. HNAs argument depends on an assertion that, if failure to prove a fact to the requisite standard of proof requires a value of zero to be returned for the purpose of a particular legal rule, then that fact must be treated as not having happened for the purpose of other legal rules as well. But there is no logical reason why that should be so. Nor is there anything in In re B (or any other authority cited in these proceedings) which lends that notion any support. What was decided in In re B was that section 31(2)(a) of the Children Act 1989 requires any facts used as the basis of a prediction that a child is likely to suffer significant harm to be proved on the balance of probabilities, and that the assessment of the childs welfare required in care proceedings once the threshold in section 31(2) has been crossed must be conducted on the same factual basis as the determination of whether that threshold has been crossed. Hence, if a particular fact (in that case an allegation of sexual abuse) has not been proved, it must be treated as not having happened for the purposes of both section 31(2) and the assessment of the childs welfare. That is a decision about the meaning and effect of particular provisions of the Children Act. It does not establish any general principle that failure to prove that a fact happened for the purpose of a particular legal rule has the legal consequence that the fact must be treated as not having happened for all other purposes in the litigation. In particular, it provides no support for the proposition that failure to prove that a fact happened for the purpose of determining whether evidence is admissible has the legal consequence that the fact must be treated as not having happened for the purpose of assessing the weight to be given to the evidence, if it is admissible. Facts in issue Some confusion seems to have arisen in the arguments in this case from the use by Lord Hoffmann in the passage quoted above of the expression fact[s] in issue. This phrase commonly and in our view most usefully refers to those facts which as a matter of law it is necessary to prove in order to establish a claim or a defence: see eg Phipson on Evidence, 19th ed (2018), para 7 02; Cross and Tapper on Evidence, 13th ed (2018), p 30. That is how we shall use the expression in this judgment. Thus, for example, in the present case the facts that the charterparty and the guarantee were entered into and that Grand China failed to pay hire in accordance with the terms of the charterparty were all facts in issue which Shagang had to prove in order to establish its claim (until those facts were formally admitted by HNA). The fact that a bribe was paid by an employee of Shagang to an individual connected with HNA was also, and remained throughout the trial, a fact in issue which it was necessary for HNA to prove in order to establish a defence that the charterparty (and therefore its guarantee) was unenforceable by reason of bribery. Indeed, this was the key fact in issue in the case. On the other hand, the fact that torture was used to procure the confessions of Mr Xu, Mr Jia T and Mr Shen was not a fact in issue as we are using the term. There was no claim for relief made by Shagang for which it was legally necessary, in order for the claim to succeed, to prove that torture had been used by the PSB. It was therefore unnecessary for the judge to make any finding as to whether on the balance of probabilities torture had taken place in order to decide the facts in issue in the case. The requirement to discharge the legal burden of proof, which operates in a binary way, applies to facts in issue at a trial, but it does not apply to facts which make a fact in issue more or less probable. Lord Hoffmann was alert to this point in In re B as, immediately after the passage quoted above, he contrasted facts in issue with facts which merely form part of the material from which a fact in issue may be inferred, which need not each be proved to have happened (para 3). So, for example, in the present case (as already discussed) it was not necessary to prove that the prospect of leniency in fact caused the confessions to be made. That it may have done is sufficient to make it relevant to take into account in deciding whether a bribe had been paid. Judges need to take account, as best they can, of uncertainties and degrees of probability and improbability in estimating what weight to give to evidence in reaching their conclusions on whether facts in issue have been proved. It would be a mistake to treat assessments of relevance and weight as operating in a binary, all or nothing way. Preliminary facts In the present case the allegations of torture were relevant in two different ways. One was in assessing the likelihood or otherwise that the confessions were reliable and hence whether it was proved as a fact that a bribe had been paid. The other was in order to determine whether the confession evidence was admissible. Whilst the core purpose for which evidence is admissible in legal proceedings is that of proving or disproving facts in issue at a trial, it is also often necessary for a court to decide factual questions for the purpose of applying procedural and evidential rules. Facts which must be proved for such purposes have been called preliminary facts: see R Pattenden, The proof rules of pre verdict judicial fact finding in criminal trials by jury (2009) 125 LQR 79. The distinction between finding preliminary facts and finding facts in issue is embodied in criminal proceedings by the division of responsibilities between judge and jury. Although in civil proceedings both functions may be performed by the same person, the distinction is conceptually no less important. Examples of preliminary facts which may need to be determined in civil proceedings are: the fact that a communication between a lawyer and client was made in confidence for the purpose of giving or receiving legal advice (in order to decide whether the communication is protected by legal professional privilege); the fact that a person is capable of understanding the nature of an oath and of giving rational testimony (in order to decide whether the person is competent to testify as a witness); and facts which it is necessary to determine for the purpose of deciding whether evidence is admissible. In criminal proceedings where there is a division of function between judge and jury a factual finding made by the judge for a preliminary purpose such as determining whether evidence is admissible is not binding on (nor even generally known to) the jury when it is performing its task of deciding facts in issue in proceedings. So if, for example, the defence alleges that a confession was obtained by an improper threat and the judge finds that the prosecution (on whom the burden of proof lies) has proved beyond reasonable doubt that the confession was not so obtained, evidence of the confession will be admissible; but the jury at the trial will be free to make its own assessment of the facts and to reach a different conclusion on whether the alleged threat was or might have been made. In civil proceedings, at least in cases where both functions are performed by the same decision maker in the course of a single hearing, it seems to us that unlike at a jury trial there is a requirement of consistency in performing these functions. A judge could not rationally reach one factual conclusion for the preliminary purpose of deciding whether evidence is admissible and then, on the same evidence, reach a different factual conclusion for the purpose of deciding a fact in issue in proceedings. That would be illogical. But there is no inconsistency in finding that a factual allegation may well be true but has not been established on the balance of probabilities. Nor is there any reason why the fact that such a finding results in the admission of evidence (by reason of the burden and standard of proof governing its admissibility) should require the finding to be ignored when assessing the weight to be given to the evidence in deciding a fact in issue in proceedings. That would also be illogical. Evidence obtained by torture In the modern law of evidence relevance is the paramount consideration. The general test of whether evidence is admissible is whether it is relevant (or of more than minimal relevance) to the determination of any fact in issue in the proceedings. In the days when facts in civil as well as criminal cases were found by juries and there was fear that more weight would be given to certain kinds of evidence than they deserved, rules were developed to exclude reliance on evidence notwithstanding its relevance. The rule against hearsay is a classic example. The tendency of the law has been and continues to be towards the abolition of such rules. Thus, the rule excluding hearsay evidence has been abolished in civil proceedings. The modern approach is that judges (and, increasingly, juries) can be trusted to evaluate evidence in a rational manner, and that the ability of tribunals to find the true facts will be hindered and not helped if they are prevented from taking relevant evidence into account by exclusionary rules. There are now very few categories of relevant evidence which are inadmissible in civil proceedings, but one such category is evidence obtained by torture. Article 15 of the United Nations Convention Against Torture 1984 imposes an international obligation on state parties to ensure that any statement which is established to have been made as a result of torture shall not be invoked as evidence in any proceedings, except against a person accused of torture as evidence that the statement was made. In A v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221 a seven member appellate committee of the House of Lords unanimously held that it is also a rule of the common law that evidence obtained by torture is inadmissible in judicial proceedings. A minority (of three members of the committee) would have held that it was sufficient to render evidence inadmissible that there was a real risk that it was obtained by torture. However, it was decided by the majority that the test for this purpose is proof on a balance of probabilities. It is accordingly settled law, and common ground in this case, that if it is proved on a balance of probabilities that a confession (or other statement) on which a party wishes to rely in legal proceedings was made as a result of torture, evidence of the statement is not admissible and must be excluded from consideration altogether when deciding the facts in issue. The total exclusion of evidence shown to have been obtained by torture is not justified on grounds of relevance alone. As the judgments in In re A (No 2) make clear, the exclusion is founded also on reasons of public policy and morality. In the words of Lord Hope at para 112: The use of such evidence is excluded not on grounds of its unreliability if that was the only objection to it, it would go to its weight, not to its admissibility but on grounds of its barbarism, its illegality and its inhumanity. The law will not lend its support to the use of torture for any purpose whatever. It does not follow, and there is no rule, that if it is not proved on a balance of probabilities that a statement was made as a result of torture, evidence that torture was used is not admissible and must be ignored when deciding the facts in issue. There is no legal or logical reason for treating such evidence as inadmissible and good reason to treat it as admissible given its obvious relevance. We go further. A rule that required a court, in assessing the reliability of a confession, to disregard entirely evidence which discloses a serious possibility that the confession was made as a result of torture would not only be irrational; it would also be inconsistent with the moral principles which underpin the exclusionary rule. As Mr Jaffey QC observed in his helpful submissions on behalf of Liberty as an intervenor on this appeal, even when there are reasonable grounds for suspecting that torture has been practised, its use is often inherently difficult to prove because it tends to happen in secret, where there are no safeguards such as the recording of interviews or the presence of a legal representative, and often involves techniques which leave no lasting marks. A rule which excluded evidence that a confession has been obtained by torture unless this has been proved on a balance of probabilities would be calculated positively to encourage the practice of torture to obtain evidence for use in legal proceedings, provided that it is done in a way which is deniable. It would also put evidence that may have been obtained by torture in a uniquely advantageous position, since as counsel for HNA rightly accepted no such rule applies to a possibility that a confession was obtained by ill treatment less severe than torture or by other forms of oppression or inducement. Granting a special dispensation for evidence that may have been obtained by torture would turn the law in this area upside down. In In re A (No 2) the majority of the House of Lords who did not accept that a real risk that evidence was obtained by torture was sufficient to justify its exclusion nevertheless made it clear that such a risk would need to be taken into account in evaluating the evidence. Thus, Lord Hope said (at para 118): So SIAC should not admit the evidence if it concludes on a balance of probabilities that it was obtained by torture. In other words, if SIAC is left in doubt as to whether the evidence was obtained in this way, it should admit it. But it must bear its doubt in mind when it is evaluating the evidence. (Emphasis added) The other judges in the majority agreed with this observation: see paras 141 142 and 145 (Lord Rodger), para 158 (Lord Carswell) and para 173 (Lord Brown). There has been much argument devoted in this case to whether, as HNA contended and the Court of Appeal thought, the relevant passages in the judgments in In re A (No 2) were confined to the context of proceedings in the Special Immigration Appeals Commission (SIAC). We accept that there were conclusions reached in In re A (No 2), including conclusions about the applicable burden and standard of proof, which were specific to that context. However, the observations that, when evaluating evidence which although admissible may have been obtained by torture, a tribunal should bear that possibility in mind are not related to any special feature of SIAC and are no more, in our view, than a reminder of the approach which should rationally be adopted in evaluating such evidence. Conclusion on evidence of torture We conclude that the Court of Appeal was wrong to hold that, if the use of torture has not been proved on the balance of probabilities, a serious possibility that a statement was obtained by torture must be ignored by a court in estimating the weight to be given to the statement. Such an approach is contrary to principle. The true position is that, where there are reasonable grounds for suspecting that a statement was obtained by torture, this is a matter which a judge can and should take into account, along with all other relevant circumstances, in assessing the reliability of the statement as evidence of the facts stated. It follows that in the present case the judge was entitled to rely, as he did, on his finding that torture could not be ruled out as providing further support for the conclusion he had already reached that there was no bribe paid by Mr Xu. Evidence admitted on appeal The Court of Appeal allowed an application by HNA to adduce new evidence in the form of a complaint made by Mr Zhang to the Peoples Procuratorate of Haikou City and the report of the Procuratorate in June 2014 into the outcome of its investigation into this complaint (referred to at paras 20 and 21 above), together with a report of a medical examination of Mr Xu on his arrival at a detention centre on 23 July 2014 (which did not record any injury). The Court of Appeal did not find that this new evidence was a reason to overturn the judges decision. Having reviewed this evidence ourselves, we can see that it would have been relevant to consider it in deciding whether torture had been proved on the balance of probabilities. However, as discussed, the judge did not decide that question. We think it inconceivable that, if this evidence had been available at the trial, it might have affected the judges conclusion that torture could not be ruled out. The most material new document was the investigation report. The report is, however, written in very general terms and adds little or nothing of substance to the record of the interrogation of Mr Xu on 6 June 2014 carried out for the purpose of that investigation and Mr Xus own account of the same occasion given to Mr Guo on 15 September 2014, both of which were in evidence at the trial. The fact that further evidence was admitted in the Court of Appeal therefore makes no difference to our conclusions. The causation issue In the Court of Appeal Shagang argued that, even if the judges finding that no bribe had been paid could not be sustained, his decision should be upheld on the ground that there was no sufficient causal connection between the alleged bribe and Grand Chinas entry into the charterparty. The Court of Appeal rejected that argument. On this appeal it was common ground that, if it became necessary to decide that issue, it would have to be determined at a further trial. As it is unnecessary to remit the case for any further hearing, the issue does not arise. Had it arisen, it was common ground that the observations at paras 84 85 of the judgment of the Court of Appeal had not decided the question. Overall conclusion The judgment which has given rise to an appeal and second appeal in this case is short, running to 16 pages. As Males LJ observed in Simetra Global Assets Ltd v Ikon Finance Ltd [2019] EWCA Civ 1413; [2019] 4 WLR 112 at para 46: succinctness is as desirable in a judgment as it is in counsels submissions, but short judgments must be careful judgments. In this case it is right to observe that the judges reasoning is not merely succinct but sparse. The judgment contains no sustained analysis of the main evidence and arguments. In particular, the judge did not spell out the fact that he was admitting the confession evidence de bene esse, did not in his essential reasoning discuss the confession evidence in any detail and did not directly address the reliance placed by HNA on the fact that three individuals had separately confessed. It is important to make it plain to the losing party that its case has been fully considered and to leave no doubt about the reasons which have led to its rejection. In this case the judge approached this task in too cursory a manner. This can only encourage appeals. The question on an appeal, however, is whether the decision was wrong. For the reasons we have given, none of the key criticisms which led the Court of Appeal to decide that the judges decision is unsustainable and ought to be set aside has been made out. In the final analysis the judge did identify reasons for reaching the conclusion that bribery had not been established and those reasons are sufficient to support that conclusion. It has not been shown that the judge made an error of law or that he reached a conclusion in his evaluation of the facts which no reasonable judge could have reached. Furthermore, the approach adopted by the Court of Appeal to reliance on evidence that statements were made as a result of torture was itself erroneous. The judge was entitled to rely on his finding that torture could not be ruled out as a reason for the confessions as providing additional support for his conclusion that no bribe had been paid. The appeal must therefore be allowed and the judgment in favour of Shagang restored.
UK-Abs
This appeal arises out of a claim by the appellant under a guarantee of a contract, to charter a vessel which was met with a defence from the respondent that the contract was procured by bribery and that the guarantee was therefore unenforceable. The bribery allegation was based on evidence of confessions that the appellant alleged were obtained by torture and therefore inadmissible. A contract for the charter of a ship was agreed in August 2008 between the appellant, a Hong Kong company now in liquidation, and the respondents subsidiary, a Hong Kong company also now in liquidation. A guarantee was agreed between the respondent, a Chinese company, and the appellant by which the respondent guaranteed its subsidiarys performance under the contract. The guarantee is governed by English law and confers jurisdiction on the English courts. The vessel was delivered in April 2010, but from September 2010 the subsidiary defaulted on its payments. The appellant brought arbitration proceedings and ultimately terminated the contract for the subsidiarys repudiatory breach. The appellant pursued its claim in arbitration for damages for the subsidiarys breach, achieving a partial final award in November 2012. In September 2012, the appellant commenced proceedings against the respondent under the guarantee in the Commercial Court. In its amended defence, the respondent alleged that the contract had been procured by bribes paid by or on behalf of the appellant to senior employees of the subsidiary. The respondent relied on confessions made by three individuals during an investigation undertaken by the Chinese Public Security Bureau. In an amended reply the appellant alleged that those confessions had been obtained by torture and consequently were inadmissible as evidence in the proceedings. At trial, Knowles J gave judgment in favour of the appellant, finding that there was no bribery and that he could not rule out torture. On appeal, the Court of Appeal held that the judges decision was unsustainable and sent the case back for reconsideration by a different judge. The appellant appealed to the Supreme Court seeking restoration of the judges judgment. The Supreme Court unanimously allows the appeal and restores the judgment in favour of the appellant. Lord Hamblen and Lord Leggatt give the judgment, with which all members of the Court agree. The issue on the appeal is whether the Court of Appeals criticisms were justified and warranted remitting the case for fresh determination. The four main criticisms were that the judge: (i) failed to follow the logical steps necessary to reach a proper evaluation of the admissible evidence; (ii) failed to ask and answer the correct legal question as to what weight should be accorded to the confession evidence; (iii) fell into legal error in failing to take all the appropriate matters into account in deciding the bribery issue; and (iv) fell into legal error in failing to exclude irrelevant matters, including what the Court of Appeal described as his lingering doubt as to whether the confessions were procured by torture, in considering whether the alleged bribe was paid [51] [52]. On the first criticism, the judge had considered the bribery issue before the torture allegations [41] [44]. The Court of Appeal took the view that the judge should have decided the torture allegations first and, having concluded the confession evidence was admissible, proceeded to determine the weight to be given to that evidence, then subsequently have considered whether bribery had taken place [55] [56]. The Supreme Court accepts that the Court of Appeals approach is logical, but it is not mandatory. The manner and order of the consideration of admissibility and weight of evidence are matters for the trial judge and there will usually be more than one legitimate approach [57] [58]. The judge took the confession evidence into account on the assumption, without deciding, that the evidence was admissible. That was a permissible approach [59]. Having done so, the judge considered it unnecessary to make a finding on the torture issues because he was in any event satisfied there was no bribery. The approach taken was both legitimate and consistent with the way the case was put before him [62], [65]. On the second criticism, the Court of Appeal considered that the judge had not adequately addressed the weight to be given to the confession evidence [66]. Though not separately set out, the Supreme Court considers that the judge did address the weight of the evidence in the factors relied upon in his conclusion on bribery. In circumstances where that evidence was the only evidence of bribery, in finding that there was no bribery the judge was necessarily finding that the confession evidence was of little or no weight. It cannot be said that his conclusion on bribery was unreasonable or unsustainable and there were ample grounds to support it [67] [84]. On the third criticism, the Court of Appeal considered that the judge failed to take into account the details of the confessions made and should have addressed each confession made by each individual rather than dealing with them compendiously [85]. Though the Supreme Court agrees that it would have been more satisfactory for the judge to have addressed the confession evidence in greater detail, it is clear that he did consider the confession evidence of all three individuals. The failure to consider it systematically is not an error of law [85] [87]. On the fourth criticism, the Court of Appeal considered that, as the judge did not find the allegation of torture proved on a balance of probabilities, he should have disregarded it entirely [93]. However, the judge did not need to and did not reach any conclusion that torture had or had not been proved [94]. Even if the judge had reached a definite conclusion that torture had not been proved on a balance of probabilities, there would have been no inconsistency between such a conclusion and the finding that torture was a real possibility that affected the reliance that should be placed on the confessions [95]. The facts that the court can take into account in assessing the weight to be given to hearsay evidence in civil proceedings are not limited to facts proved to the civil standard of proof [96]. While it is settled law that evidence proved on a balance of probabilities to have been obtained by torture is inadmissible, there is no rule that if an allegation that torture was used is not proved to that standard a possibility that evidence was obtained by torture must be ignored when deciding the facts in issue [106] [108].
On 11 December 2013 an International Centre for Settlement of Investment Disputes (ICSID) tribunal made a final investment arbitration award (the Award) in favour of the Respondents to this appeal (the Claimants) against the appellant (Romania). The Award related to investments made by the Claimants in food production in Romania prior to Romanias accession to the European Union on 1 January 2007. The present appeal is the latest chapter in the Claimants extensive attempts in a number of different jurisdictions to enforce their award against Romania and the attempts of the European Commission (the Commission) to prevent enforcement on the ground that it would infringe EU law prohibiting unlawful State aid. More specifically, this appeal arises out of Romanias application in the Commercial Court to set aside the registration of the Award or to stay enforcement pending the determination of the proceedings in the EU courts, and out of the Claimants application in response for security in the amount of the Award. Factual and procedural background The First and Second Claimants are brothers born in Romania who became Swedish nationals in 1995 and 1992 respectively, having renounced their Romanian nationality. The Third to Fifth Claimants are Romanian companies incorporated by the First and Second Claimants. In 1993 Romania entered into an association agreement with the European Community and the then 15 member states of that Community, which entered into force in 1995 (the Europe Agreement). The Europe Agreement included a provision on State aid and required Romania eventually to introduce State aid rules similar to the EC rules on State aid. The Europe Agreement further encouraged Romania to establish and improve a legal framework which favours and protects investment and to conclude agreements for the promotion and protection of investment. In 1997 to 1998 the Commission was of the view that Romania did not yet meet the criteria for EU membership and recommended, inter alia, that Romania pursue rapid privatisation, secure foreign direct investment and engage in regional development. In 1999, in the context of attempting to develop its regional policy, Romania adopted an investment incentive scheme in the form of Emergency Government Ordinance No 24/1998 (EGO 24). With effect from 1 April 1999 the tei Nucet region of Romania was designated as a disfavoured region for a ten year period. The designation was later extended to include Drgneti. On 30 June 1999 Romania adopted Law No 143/1999 incorporating State aid rules into domestic law and designating the Romanian Competition Council as the competent authority for authorising the grant of State aid. On 15 May 2000 the Romanian Competition Council issued Decision No 244/2000 declaring that certain facilities provided under EGO 24 distorted competition because they constituted incompatible State aid within the meaning of Law No 143/1999 and therefore had to be eliminated unless modified. On 16 June 2000 Romania passed Emergency Government Ordinance No 75/2000 which, with effect from 1 July 2000 modified but did not eliminate EGO 24. The Claimants do not accept that the Romanian Competition Council had authority to require the revocation of the schemes or that its decision followed from EU State aid rules. During the early 2000s, the Claimants, in reliance on the EGO 24 incentives (which required investments to be maintained for twice the period of the benefits received) invested in a large, highly integrated food production operation in that region as part of a ten year business plan. In 2002 Romania and Sweden negotiated the Sweden Romania Bilateral Investment Treaty on the Promotion and Reciprocal Protection of Investments (the BIT). The BIT entered into force on 1 April 2003. It provided for reciprocal protection of investments and included provision for investor State dispute resolution under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). Romania had ratified the ICSID Convention in 1975 and the United Kingdom had done so in 1966. During the formal accession negotiations between Romania and the EU from 2000 to 2004, the EU informed Romania that various Romanian government schemes, including the EGO 24 scheme, were not in line with the State aid rules of the acquis communautaire. The EU urged Romania to bring its schemes into alignment without delay. The EU in 2001 also invited Romania to identify existing schemes that Romania considered were compatible with the acquis and to provide information on the benefits of schemes to disfavoured regions. In a 2003 paper the EU proposed that Romania close existing schemes to new entrants. On 31 August 2004 Romania passed a Government Ordinance repealing all but one of the tax incentives provided in EGO 24 subject to certain transitional periods agreed with the EU with effect from 22 February 2005. The government report accompanying these measures indicated that the repeal was effected in order to meet the criteria in the Community rules on State aid and also facilitate completion of accession negotiations. On 28 July 2005 the Claimants filed a request for arbitration with ICSID under the terms of the BIT, claiming that the repeal of the EGO 24 incentives was a breach of the BIT. Romania contended that it was forced to revoke the incentives in order to comply with EU requirements and allow lawful accession by Romania to the EU. The Commission participated in the arbitration as amicus. Both Romania and the Commission submitted that any payment of compensation arising out of any award in the arbitration would constitute illegal State aid under EU law and render the award unenforceable in the EU. On 1 January 2007 Romania acceded to the EU. On 24 September 2008 the ICSID Tribunal dismissed Romanias objections on jurisdiction and admissibility and concluded that it had jurisdiction over the claims asserted by the Claimants. On 11 December 2013 the ICSID Tribunal issued the Award. It held that Romania had breached the terms of the BIT by failing to ensure fair and equitable treatment, respect the Claimants legitimate expectations and act transparently. Compensation of RON 376,433,229 was awarded (approximately 70m at the time) plus interest to the date of the award of RON 424,159,150 (approximately 80m at the time) plus compound interest until satisfaction of the Award. The Tribunal declined to address in the Award the effect of the EU State aid rules on its enforceability. On 9 April 2014 Romania applied to annul the Award under the procedure set out in the ICSID Convention and to suspend its enforcement pending a decision on that application. Following Romania purportedly implementing the Award in part by setting off tax debts owed by the Third Claimant (which set off was later annulled by the Romanian courts), on 26 May 2014 the Commission issued an injunction under article 11(1) of Regulation 659/1999 (the injunction decision) ordering Romania to suspend any action which might lead to the execution or implementation of the Award until the Commission had taken a final decision on the compatibility of that State aid with the EU internal market, on the ground that the execution of the Award appeared to the Commission to constitute unlawful State aid contrary to article 107(1) of the Treaty on the Functioning of the EU (TFEU). On 7 August 2014 the ICSID ad hoc Committee agreed to a continuation of the stay of enforcement of the Award, provided that Romania filed an assurance that it would pay the Award in full and subject to no conditions whatsoever if the annulment application was dismissed. Romania did not give this assurance and the stay was revoked in September 2014. On 1 October 2014 the Commission took a decision formally opening the State aid investigation (the initiating decision). On 30 March 2015 the Commission adopted Final Decision 2015/1470 (the Commission Decision) which was addressed to Romania. It decided that the payment of the Award by Romania constituted State aid within article 107(1) TFEU and was incompatible with the internal market. It prohibited Romania from making any payment of such State aid to the Claimants and demanded that Romania recover any payments already made under the Award. It further provided that the Claimants and five other entities directly or indirectly owned by the First and Second Claimants were jointly liable to repay any sums received by any one of them as part payment of the Award. Proceedings seeking annulment of the Commission Decision were commenced before the General Court of the European Union (GCEU) by the Third to Fifth Claimants on 6 November 2015, by the First Claimant on 28 November 2015 and by the Second Claimant on 30 November 2015. The Claimants did not apply for interim relief before the GCEU. On 26 February 2016, having heard arguments from the parties to the arbitration and from the Commission as amicus, the ICSID ad hoc Committee delivered a decision rejecting Romanias application to annul the Award. On 18 June 2019 the GCEU annulled the Commission Decision on the ground that the Commission had purported retroactively to apply its powers under article 108 TFEU and Regulation No 659/1999 to events predating Romanias accession to the EU: European Food SA and Others v European Commission (Cases T 624/15, T 694/15 and T 704/15) EU:T:2019:423. The GCEU did not rule upon certain other grounds of appeal presented by the Claimants because, in the light of its decision, they did not arise. On 31 July 2019 the Commission adopted a decision to appeal against the decision of the GCEU. That decision was communicated to this court and the parties on 13 August 2019. On 27 August 2019 the Commission lodged its appeal to the Court of Justice of the European Union (CJEU). The appeal is limited to the pleas of law addressed by the GCEU in its judgment of 18 June 2019. Should it succeed on its appeal, the Commission has invited the CJEU to remit the remaining pleas to the GCEU for further consideration. There are ongoing enforcement proceedings by the Claimants in the United States, France, Belgium, Luxembourg and Sweden. On 12 March 2019 the Brussels Court of Appeal referred three questions to the CJEU concerning the enforcement of the Award and the principle of sincere co operation in EU law. On 7 September 2018 the Commission responded to a request for an opinion from Romania stating, inter alia, that it continued to view the payment into court of security by Romania as breaching the Commission Decision, the position it maintained throughout the High Court and Court of Appeal proceedings. On 7 December 2018 the Commission adopted a decision empowering it to refer Romania to the CJEU for infringement proceedings for failure to recover sums said to have been paid by Romania to the Claimants under the Award. The proceedings in this jurisdiction On 2 October 2014 the First Claimant applied without notice for registration of the Award in the Commercial Court, pursuant to the Arbitration (International Investment Disputes) Act 1966 (the 1966 Act). Registration was effected on 17 October 2014. On 28 July 2015 Romania filed an application to the Commercial Court to vary or set aside the registration order. By a counter application the Claimants sought an order for security to be made in the event that a stay of enforcement was ordered. In a judgment dated 20 January 2017 [2017] EWHC 31 (Comm); [2017] Bus LR 1147 Blair J dismissed Romanias application to set aside registration, but granted Romanias application to stay enforcement of the Award pending determination of the proceedings in the GCEU. (1) The Claimants had advanced a case on the basis that the Award was res judicata. The judge held that he could not determine whether the Award could be enforced on this basis, because this was in issue in the pending proceedings before the GCEU and accordingly there was a real risk of inconsistent decisions if the domestic court were to decide as a matter of EU law that the Award could be enforced. (2) The judge held that the Commission Decision did not prevent registration of the Award and accordingly he refused Romanias application to set aside registration. However, he held that the domestic court could not enforce the judgment consequent on registration of the Award in circumstances in which the Commission had prohibited Romania from making any payment under the Award to the Claimants. In his view this did not create a conflict with the international obligations of the United Kingdom under the ICSID Convention, because a purely domestic judgment would be subject to the same limitation. (3) The judge held that the domestic court could not rule on whether article 351 TFEU applies in the present case because it was being considered by the GCEU and so there was a real risk of conflicting decisions if the domestic court were now to rule on the issue. (4) The judge held that there was no conflict between the European Communities Act 1972 and the 1966 Act and accordingly he rejected a submission on behalf of the Claimants that the court should give priority on this ground to the 1966 Act. (5) The judge held that he could not rule on the Claimants arguments that EU law did not preclude enforcement because the issue had been raised before the GCEU and there was a real risk of conflict. (6) The judge rejected arguments by Romania that the Award had already been paid in full. (7) The judge held that the domestic court cannot rule on the validity of the BIT between Sweden and Romania, although he accepted the submission of behalf of the Claimants that the validity of that treaty was not relevant to the issues to be decided. Following a further hearing in May 2017, Blair J handed down a second judgment on 15 June 2017 [2017] EWHC 1430 (Comm) in which he refused the Claimants application for security. He considered that, as payment under the Award was prohibited under the Commission Decision, if the court were to proceed to enforce the award against the assets of Romania it would be acting in direct contradiction of the Decision. Accordingly, it was not possible to order security as a condition of the stay. The judge also rejected a submission on behalf of the Claimants that the consequences of non compliance with an order for security need not be set out in the order which could instead provide that the parties could come back to court to consider what the consequences should be. He considered that the balance at that time was against ordering security but he did not rule it out definitively for the future. The Claimants appealed both orders to the Court of Appeal. On 27 July 2018 the Court of Appeal (Arden, Hamblen and Leggatt LJJ) [2018] EWCA Civ 1801; [2019] Bus LR 1394 dismissed the appeal against the order for a stay but allowed the appeal against the security order and ordered that security should be provided in the sum of 150m. In dismissing the Claimants appeal against the grant of a stay: (1) The Court of Appeal did not agree with Blair J that the issue ought not to be decided because of a risk of conflict with the GCEU. However, it considered that to permit enforcement on the basis that the Award was res judicata would frustrate the effective application of EU State aid law. (2) Arden and Leggatt LJJ held that Blair J had erred in holding that the effect of the 1966 Act, in implementing the ICSID Convention in domestic law, is to give an award upon registration the same status within English law as any other judgment. Hamblen LJ dissented on this issue and considered that Blair J had correctly held that there was no conflict between the international obligations of the United Kingdom under the ICSID Convention (and the 1966 Act which gives effect to those obligations) and under EU law. (3) Arden and Leggatt LJJ held that a stay was within the powers of the domestic court because it was consistent with the purposes of the ICSID Convention and it was appropriate to exercise the discretion to order a stay on the facts of the case. (4) Leggatt and Hamblen LJJ held that, if there was a conflict between the international obligations of the United Kingdom under the ICSID Convention as reflected in the 1966 Act and the courts duties under EU law, the judge had correctly concluded that there ought to be a stay because the applicability of article 351 TFEU was an issue before the GCEU and there was a clear risk of conflicting decisions. The Court of Appeal held that there was power to order security. It considered that the judge was correct in holding that the duty of sincere co operation precluded the provision of security as a condition of the stay. However, the Court of Appeal held that EU law did not preclude an order for security which did not provide as a consequence of any failure to provide security that the stay would be lifted. It considered that there was no material risk of conflict which would preclude such an order. Accordingly, it ordered Romania to provide security in the sum of 150m. It suspended enforcement of the Court of Appeal security order, however, to allow Romania time to lodge an application for permission to appeal to the Supreme Court. On 31 October 2018 the Supreme Court granted Romania permission to appeal limited to Grounds 1, 3 and 4 as set out in the notice of appeal. The Supreme Court also ordered that the stay of the security order made by the Court of Appeal be continued until determination of the appeal or further order. The same order granted the Commission permission to intervene in the appeal, as it had in the High Court and the Court of Appeal. On 11 April 2019 the Supreme Court granted the Claimants permission to cross appeal in relation to the order for a stay on Grounds 1 and 2 in the notice of cross appeal and reserved to the hearing the question of permission to cross appeal on Grounds 3 and 4 in that notice. The grounds of appeal are set out at paras 37 to 39 below. The appeal was listed for hearing over three days commencing on 18 June 2019. On the morning of that day the GCEU handed down its judgment annulling the Commission Decision. As the Court of Appeals order of a stay had lapsed with the GCEU giving its judgment, and as security had been ordered as a term of the stay, by its order of 18 June 2019, the Supreme Court adjourned the hearing to a further hearing listed for 7 9 October 2019 and gave directions for other steps to be taken with a view to establishing or clarifying the basis on which it would have jurisdiction to hear the appeals. Following the Commissions confirmation that it intended to appeal against the decision of the GCEU to the CJEU, Romania issued an application for the stay of enforcement of the Award, which had lapsed with the GCEUs judgment, to be imposed or extended pending determination of the appeal to the CJEU. The Claimants also issued applications against Romania for security in respect of any stay. These applications were heard by Phillips J on 9 September 2019. On 10 September 2019 Phillips J [2019] EWHC 2401 (Comm) ordered that enforcement of the Award be stayed pending the final determination of the CJEU appeal proceedings. He also ordered that Romania provide security in the amount of 150m by 17 October 2019. Following judgment, the parties applied for certificates for a leapfrog appeal to the Supreme Court under the Administration of Justice Act 1969, which the judge granted. Grounds of appeal Romania appeals against the order for security on the following grounds. Ground 1: The Court of Appeal erred in its approach to assessing whether there was a risk of conflict. Ground 3: The security ordered and whether it is to be used to pay the Award is to be subject to the jurisdiction of the Commercial Court, which, from the date on which the United Kingdom withdraws from the EU, will not be bound to observe EU law. While the United Kingdom remains a member state of the EU, it is contrary to EU law for the Court of Appeal as an emanation of the State to create a situation whereby the authority of the EU institutions could be wholly circumvented. Ground 4: By ordering Romania to provide security, the Court of Appeal has erred in going further than the process of enforcement which it itself considered to be premature. The Claimants cross appeal against the grant of a stay on the following original grounds. Original Ground 1: Under the ICSID Convention and the 1966 Act there is no power to order a stay of the Award. Original Ground 2: The stay is incompatible with the ICSID Convention in any event and serves no useful purpose. Original Ground 3: The European Communities Act 1972 does not require the United Kingdom to breach its pre accession obligations under the ICSID Convention as implemented by the 1966 Act. Original Ground 4: Article 351 TFEU applies with the result that the obligations of the United Kingdom under the pre accession ICSID Convention are not subject to the over riding effect of EU law. In addition, the Claimants, with the permission of the Supreme Court, rely on a new ground of appeal: New Ground: The effect of the GCEUs judgment annulling the Commission Decision is that the duty of sincere co operation can no longer require courts in this jurisdiction to stay enforcement of the award. It is convenient to consider the Claimants appeal (by way of the cross appeal) in respect of the stay first. The Stay Appeal The new ground Article 4(3) of the Treaty on European Union (TEU) provides: Pursuant to the principle of sincere cooperation, the Union and the member states shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties. The member states shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union. The member states shall facilitate the achievement of the Unions tasks and refrain from any measure which could jeopardise the attainment of the Unions objectives. The duty of sincere co operation contained in article 4(3) TEU was described, in its application to State aid law, in the following terms by the Court of Justice in Deutsche Lufthansa AG v Flughafen Frankfurt Hahn GmbH (Ryanair Ltd intervening) (Case C 284/12) [2014] 2 CMLR 20, para 41: It is also important to note that the application of the European Union rules on State aid is based on an obligation of sincere co operation between the national courts, on the one hand, and the Commission and the courts of the European Union, on the other, in the context of which each acts on the basis of the role assigned to it by the Treaty. In the context of that co operation, national courts must take all the necessary measures, whether general or specific, to ensure fulfilment of the obligations under European Union law and refrain from those which may jeopardise the attainment of the objectives of the Treaty, as follows from article 4(3) TEU. Therefore, national courts must, in particular, refrain from taking decisions which conflict with a decision of the Commission . In imposing and upholding the stay in the present case, Blair J and the Court of Appeal both referred to this passage and acted on the premise that the Commission Decision was valid in accordance with the principle stated in Masterfoods v HB Ice Cream (Case C 344/98) [2001] All ER (EC) 130, para 53 that: Acts of the Community institutions are in principle presumed to be lawful until such time as they are annulled or withdrawn. In the changed circumstances brought about by the decision of the GCEU annulling the Commission Decision, however, the Claimants now advance, with the permission of this court, their new ground of appeal. The courts below proceeded on the basis that the duty of sincere co operation in EU law required a stay of enforcement because there was a valid Commission decision which imposed a direct prohibition on Romania from paying the Award. The Claimants now submit that as the Commission Decision has been annulled and the Commission has not sought interim measures staying the effect of the judgment, there is no EU law duty on courts in this jurisdiction to stay enforcement of the Award. They submit that the presumption of validity no longer applies in respect of the Commission Decision and that, on the contrary, the applicable and binding act of the EU institutions is now the judgment annulling the Commission Decision. In their submission the authoritative determination of the EU institutions, binding on the UK courts, is that the Commission had no competence to find that the Award was State aid or to apply EU law to the Award at all and that, accordingly, the basis for the stay has fallen away entirely. They further point to article 278 TFEU which states: Actions brought before the Court of Justice of the European Union shall not have suspensory effect. The Court may, however, if it considers that circumstances so require, order that application of the contested act be suspended. In the present case, no application has been made to suspend the application of the judgment of the GCEU. Similarly, article 279 TFEU provides that the CJEU may, in any cases before it, prescribe any necessary interim measures. No such measures have been sought or ordered. Accordingly, the Claimants submit that the reasoning in and the annulment ordered pursuant to the GCEUs judgment have full legal effect. In response, the Commission and Romania submit that the effects of the GCEUs judgment are limited to annulling the Commission Decision, and that this does not extend to: (1) the injunction decision of 26 May 2014 prohibiting Romania from implementing the award pending further investigation by the Commission; or (2) the initiating decision of 1 October 2014 by which the Commission formally opened the State aid investigation. They contend that neither is the subject of any successful or pending legal challenge and that, accordingly, the consequence of the relief granted by the GCEU is that the Commissions State aid investigation into Romanias implementation of the Award is reopened. The effect of this, they say, is that even if the Commission does not succeed in its appeal to the CJEU, it will be open to the Commission to re take a State aid decision provided it can do so by addressing and avoiding the legal difficulties identified in the GCEUs judgment. In the meantime, the injunction decision continues to have effect. They maintain that the duty of sincere co operation requires courts in this jurisdiction to refrain from taking decisions that would conflict with these decisions. In addition, they point to the pending appeal by the Commission to the CJEU and the possibility that the Commission Decision may yet be vindicated as creating a further risk of conflict which engages the duty of sincere co operation. Before considering these submissions, it is appropriate to consider what precisely was decided in the judgment of the GCEU. In the view of the GCEU, the ICSID Tribunal in the Award had confined itself to determining the exact damage suffered by the Claimants on the basis of the repeal of EGO 24 and calculated the amount of damages corresponding to a right to compensation which arose at the time of the infringements committed by Romania in 2005 (para 74). The right to receive the compensation awarded arose prior to Romanias accession to the EU on 1 January 2007. The Award was simply the recognition of that right and payments made in 2014 merely represented the enforcement of that right which arose in 2005 (para 78). EU law was not applicable in Romania before its accession and it was only from Romanias accession that the Commission acquired the competence enabling it to review Romanias actions pursuant to article 108 TFEU (para 79). As the EGO 24 incentives were repealed in 2005, the Commission was by no means competent to assess their alleged unlawfulness in the light of EU law, at least with regard to the period predating accession (para 86). The GCEU noted that, as the compensation awarded was calculated from the repeal of EGO 24 on 22 February 2005 until its scheduled expiry on 1 April 2009, that period covered 27 months during which Romania was a member of the EU (para 89). The amounts awarded as compensation for the pre accession period could not constitute State aid in EU law and the Commission had exercised its powers retroactively in relation to a situation predating Romanias accession to the European Union, at least with regard to those amounts (para 90). With regard to the award of compensation in respect of the post accession period, even assuming that the payment of compensation relating to that period could be classified as incompatible aid, given that the Commission did not draw a distinction between the periods of compensation for the damage suffered by the applicants before or after accession, the Commission has, in any event, exceeded its powers in the area of State aid review. (para 91) The GCEU then addressed the classification by the Commission of the Award as an advantage and a State aid within the meaning of article 107 TFEU and concluded as follows: 107. the Commission is not competent and EU law is not applicable to the EGO scheme, to its revocation or to the compensation for that revocation, because the arbitral award, which found that there was a right to compensation in 2013, did not have the effect of triggering the applicability of EU law and the Commissions competence to the earlier EGO tax incentives and, accordingly, to the compensation at issue which resulted therefrom. 108. Therefore, as the compensation at issue covered, at least in part, a period predating accession (from 22 February 2005 to 1 January 2007) and as the Commission did not draw a distinction, among the amounts to be recovered, between those falling within the period predating accession and those falling within the period subsequent to accession, the decision by which it classified the entirety of the compensation as aid is necessarily unlawful. 109. It follows that the contested decision is unlawful in so far as it classified as an advantage and aid within the meaning of article 107 TFEU the award, by the arbitral tribunal, of compensation intended to compensate for the damage resulting from the withdrawal of the tax incentives, at least in respect of the period predating the entry into force of EU law in Romania. In summary, the GCEU held that the Commission had exceeded its competence to the extent that it had applied its State aid powers retroactively to events predating Romanias accession and the Commission Decision was unlawful to the extent that it classified as an advantage or aid compensation relating to the period prior to Romanias accession to the EU. As the Commission had not distinguished between the pre and post accession periods, the Commission Decision as a whole was annulled. Initiating decision and injunction decision Romania and the Commission submit that the effect of that relief is that the position prior to the Commission Decision is restored. They submit that the injunction decision and the initiating decision commencing the formal investigation into State aid arising from the Award are distinct from the annulled Commission Decision and are unchallenged. (The Claimants did, in fact, challenge the injunction decision before the GCEU but they later withdrew that action: Micula v European Commission (Case T 646/14) EU:T:2016:135. The initiating decision has never been challenged.) The result, Romania and the Commission therefore submit, is that the Commissions investigation into Romanias implementation of the Award is reopened and that both the injunction decision and the initiating decision are restored. The Commission submits that the reopening of the investigation means that the investigation must be closed, either by a successful appeal to the CJEU reinstating the Commission Decision, or by the Commission adopting a new final decision. The Commission also points to the fact that the initiating decision recalls Romanias obligations under the standstill provision in article 108(3) TFEU which provides that the member state concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision. The case law of the Court of Justice establishes that annulment of an EU measure does not necessarily affect the preparatory acts (R v Ministry of Agriculture, Fisheries and Food, Ex p Fedesa (Case C 331/88) [1990] ECR I 4023, para 34; Kingdom of Spain v Commission of the European Communities (Case C 415/96) [1998] ECR I 7008, para 32). In certain circumstances, therefore, it may be possible to resume the procedure for replacing a measure at the point at which the illegality occurred. In the present case, Romania and the Commission, relying on ArcelorMittal Tubular Products Ostrava v Commission (Case T 364/16) EU:T:2018:696, para 64, maintain that the prior acts adopted in the context of the investigation, the injunction decision and the initiating decision, are separate acts unaffected by the judgment of the GCEU and must therefore be presumed to be lawful. On that basis they rely on Deutsche Lufthansa AG (Case C 284/12) which establishes that where the Commission has initiated a formal investigation procedure under article 108(2) TFEU with regard to a State measure which has not been notified and is being implemented, a national court is required, pursuant to the duty of sincere co operation, to adopt all the necessary measures with a view to drawing the appropriate conclusions from an infringement of the obligation to suspend the implementation of that measure. (See also European Commission v Hansestadt Lbeck (Case C 524/14 P) EU:C:2016:971, paras 29, 30 where this was endorsed by the Grand Chamber of the Court of Justice.) Moreover, Deutsche Lufthansa also establishes that where a national court, in these circumstances, entertains doubts as to whether the measure at issue constitutes State aid within article 107(1) TFEU, or as to the validity of interpretation of the decision to initiate the formal examination procedure, the appropriate course is for it to seek clarification from the Commission or to refer a question to the Court of Justice for a preliminary ruling. In response the Claimants submit that the injunction decision and the initiating decision are tainted by the same illegality as the Commission Decision which has been annulled by the GCEU. Relying on Asteris AE v Commission of the European Communities (Joined Cases 97/86, 193/86, 99/86 and 215/86) [1988] ECR 2181, paras 27 29, they submit that the Commission is under an obligation by virtue of article 266 TFEU to comply not only with the operative part of the judgment but also with its reasoning. In Asteris the Greek government had secured the annulment of a regulation fixing aid for the production of tomato concentrates for the 1983/84 marketing year. While that case had been pending before the Court of Justice the Commission had made the same error in relation to regulations adopted in relation to subsequent marketing years. The Court of Justice held that the Commission was bound to have regard not only to the operative part of the judgment but also to the grounds which led to the judgment and constitute its essential basis, in so far as they are necessary to determine the exact meaning of what is stated in the operative part (para 27) and concluded: However, by virtue of the retroactive effect of judgments by which measures are annulled, the finding of illegality takes effect from the date on which the annulled measure entered into force. It follows that in the present case the institution concerned is also under an obligation to eliminate from the regulations already adopted when the annulling judgment was delivered and governing marketing years after 1983/84 any provisions with the same effect as the provision held to be illegal. (para 30) On behalf of the Claimants, Ms Demetriou QC submits that the injunction decision and the initiating decision are vitiated by the same legal errors which resulted in the annulment of the Commission Decision and that it is, therefore, not open to the Commission to rely on the preceding decisions as giving rise to a duty of sincere co operation on the part of national courts. In determining the effect of the annulment of an EU measure on a preparatory measure, it is necessary, in each case, to identify the precise provision held to be illegal and the specific reasons which underlie the finding of illegality and which the institution concerned must take into account when replacing the annulled measure (Asteris, para 27; Kingdom of Spain v Commission of the European Communities, para 31). As stated above, the Commission Decision was flawed because the Commission exceeded its competence by applying its State aid powers retroactively to events predating Romanias accession and because the Commission Decision classified as an advantage or aid compensation relating to the period prior to Romanias accession to the EU. The failure to distinguish between pre and post accession periods led to the annulment of the whole Commission Decision. These errors also characterise the injunction decision and the initiating decision. The initiating decision (C (2014) 6848), while expressly stating in the preamble, para (57) that the obligation not to put into effect any aid measure only applies to aid measures put into effect after the entry into force of the Romanian Treaty of Accession on 1 January 2007, continues: (58) The Commission considers that executing the Award would amount to new aid in the sense of article 1(c) of Regulation (CE) No 659/1999 of 22 March 1999, as the decision to execute the Award would take place after the entry into force of the Treaty for Romania. (59) It does not matter that the revocation of the EGO 24 facilities occurred before the entry into force of the Treaty for Romania or that the amount granted or to be granted would correspond, at least partially, to the operating expenses incurred by the claimants before the entry into force of the Treaty for Romania. For the purposes of State aid law it does not matter at which time these expenses were incurred; rather, the decisive point in time is the moment at which the State decides to relieve the undertaking of the economic burden that those expenses constitute. Similarly, at para (34) the Commission states that implementation of the Award would grant to the Claimants an amount corresponding to the advantages foreseen under the abolished EGO 24 scheme from the moment it was repealed (22 February 2005) until the scheduled expiry (1 April 2009) and that this constitutes an economic advantage within article 107(1) TFEU. In the same way the preamble to the injunction decision states at para 23 that by implementing the award Romania is reinstating the EGO incentives and will grant to the Claimants the advantages foreseen under the abolished EGO 24 from its repeal until its scheduled expiry. These preliminary decisions are, therefore, subject to the same flaws as the Commission Decision. Nevertheless, we are not persuaded that these errors in the preparatory decisions prevent the Commission from relying on the initiating decision as giving rise to a duty of sincere co operation on the part of national courts. The judgment of the GCEU leaves in existence an extant Commission investigation into State aid. In the absence of a final decision of the Commission closing the formal investigation procedure, the effects of that initiating decision subsist (European Commission v Hansestadt Lbeck (Case C 524/14 P), para 31). This necessarily imposes a duty of sincere co operation on the part of the United Kingdom. Whereas in Asteris the reasoning of the Court of Justice totally undermined the legality of the regulations in respect of subsequent years, it may well be open to the Commission to reconfigure the investigation in the present case so as to avoid the errors which resulted in the annulment of the Decision. Thus, for example, it may be open to the Commission to reframe its investigation so that it is limited to the post accession period. Similarly, we note that the reasoning of the GCEU judgment does not address the Commissions case, founded on the terms of Romanias accession agreement (L 157/203, 21.6.2005; Annex V, section 2, para 5) which exceptionally permits the Commission to object to any aid measure granted in the pre accession period from 1 September 2004 and to initiate a formal investigation procedure in relation to it and which empowers the Commission to decide thereafter that Romania shall take all necessary measures to recover the aid from the beneficiary. It may be open to the Commission to reconfigure its investigation on this basis. In any event, courts in this jurisdiction cannot be confident that the judgment of the GCEU rules out such possibilities. For these reasons, we consider that the subsisting initiating decision continues to engage the duty of sincere co operation owed by national courts, notwithstanding the failure of the Commission to apply to suspend the effect of the GCEU decision or to seek an interim order from the CJEU. With regard to the injunction decision, the Claimants object that on its construction it cannot have any application in the present circumstances. The operative part of the decision provides that Romania shall immediately suspend any action which may lead to the execution or implementation of the Award until the Commission has taken a final decision on the compatibility of that State aid with the internal market. The Claimants submit that this created only an interim prohibition until the Commission took a final decision, that that final decision was taken on 31 March 2015 and that at that point this injunction ceased to apply. Whether the injunction may have revived as a result of the annulment of the Commission Decision, as suggested by the Commission, was a point not fully argued before us. In any event, it is not necessary to reach a concluded view on this point in the light of the conclusions to which we have come on the parties other submissions. The pending appeal The decision of the GCEU is currently under appeal to the CJEU. Romania and the Commission submit that, as a result, the duty of sincere co operation continues to apply. They observe that it has not been suggested that the Commissions appeal has no realistic prospect of success and they point to a risk of conflict between the EU courts and courts in this jurisdiction if the GCEU judgment does not stand and the Commission Decision is vindicated. In Masterfoods (Case C 344/98) the Irish High Court had granted HB a permanent injunction restraining Masterfoods from inducing retailers to store Masterfoods products in freezers belonging to HB, in breach of an exclusivity clause, thereby rejecting Masterfoods case that the clause and HBs conduct infringed EC competition rules. In parallel proceedings before the Commission, the Commission ruled that the exclusivity provision infringed article 85(1) of the Treaty establishing the European Community (EC) and that HBs inducement to retailers in Ireland to enter into freezer cabinet agreements subject to a condition of exclusivity infringed article 86 EC. The Irish Supreme Court made a preliminary reference to the Court of Justice in which it asked whether the obligation of sincere co operation required the Supreme Court to stay the proceedings pending the disposal of the appeal to the Court of First Instance against the decision of the Commission and any subsequent appeal to the Court of Justice. The Court of Justice expressed the duty on a national court in such circumstances in the following terms: When the outcome of the dispute before the national court depends on the validity of the Commission decision, it follows from the obligation of sincere co operation that the national court should, in order to avoid reaching a decision that runs counter to that of the Commission, stay its proceedings pending final judgment in the action for annulment by the Community Courts, unless it considers that, in the circumstances of the case, a reference to the Court of Justice for a preliminary ruling on the validity of the Commission decision is warranted. (para 57) On behalf of the Claimants, Ms Demetriou seeks to distinguish Masterfoods on two grounds. First, she points to the fact that the decision by the Commission in that case was valid and subsisting whereas the Commission Decision with which we are concerned has been annulled. Secondly, she submits that in Masterfoods the national court was seized with precisely the same issue of law as had been decided by the Commission in its decision, namely the application of the same competition provisions to the same agreements, and that accordingly the Court of Justice was concerned to avoid a direct conflict which would have infringed the principle of legal certainty. By contrast, she submits, there is no such risk in the present case. In these proceedings the court is not asked to determine whether the award or any part of it constitutes State aid, so there is no risk of conflicting judgments on that point or on EU law more generally. In the absence of a stay of the national proceedings, the award could be enforced which might result in Romania paying compensation to the Claimants. Should the Court of Justice allow the Commissions appeal, she submits, that would oblige Romania to recover the payments of compensation which would not be a conflict but, at most, a possible practical inconvenience. Moreover, that possibility would be remote because if the Commission were to succeed on appeal before the Court of Justice it would be necessary for the matter to be remitted to the GCEU to resolve the other grounds for annulment not yet ruled on by that court. The first suggested ground of distinction may be dealt with very briefly. The judgment of the Court of Justice in Masterfoods makes clear that the duty of sincere co operation (and therefore the obligation to stay national proceedings) continues pending final judgment in the action for annulment by the Community Courts (paras 57, 59). We are also unable to accept the second suggested ground of distinction. The duty of sincere co operation is intended to preserve the effectiveness of actions taken by EU bodies with relevant competence. While it is true that the present state of legal proceedings before the EU courts and in this jurisdiction does not present the stark direct conflict apparent in Masterfoods, we are concerned with potentially contradictory decisions on the same subject matter between the same parties (cf Crehan v Inntrepreneur Pub Co [2007] 1 AC 333, per Lord Bingham of Cornhill, at para 11). Ms Demetriou minimises unduly the risk of conflict which the duty of sincere co operation is intended to avoid. It is only where there is scarcely any risk of a conflict between decisions of domestic and EU institutions that national authorities should proceed (Delimitis v Henninger Brau AG (Case C 234/89) at para 50; Emerald Supplies Ltd v British Airways plc (Nos 1 & 2) (CA) [2016] Bus LR 145, para 70). Moreover, it appears by analogy with Kernkraftwerke Lippe Ems GmbH v Hauptzollamt Osnabruck (Case C 5/14) EU:C:2015:354 at para 33, that national institutions should defer even if the impediment to the full effectiveness of EU law is only temporary. Subject to the other grounds of appeal considered below, it is not possible to conclude that there is scarcely any risk of conflict. On the contrary, the risk of the consequences to which Ms Demetriou points would amount to a substantial impediment to the operation of EU law. Accordingly, the existence of a pending appeal to the Court of Justice with a real prospect of success is, in itself, sufficient to trigger the duty of cooperation and, subject to the further grounds of appeal considered below, requires the grant of a stay so as not to undermine the effect of the Commission Decision, should it be upheld. For these reasons, we would dismiss this ground of appeal. Cross Appeal Original Ground 1: Under the ICSID Convention and the 1966 Act there is no power to stay Cross Appeal Original Ground 2: The stay is incompatible with the ICSID Convention in any event and serves no useful purpose Grounds 1 and 2 may conveniently be considered together. There are currently 154 State parties to the ICSID Convention. Both the United Kingdom and Romania are Contracting States. The United Kingdom became a party in 1966, prior to its accession to the EEC in 1973. Romania became a party in 1975, prior to its accession to the EU in 2007. The EU is not a party to the ICSID Convention. Section 6 of Chapter IV of the ICSID Convention provides for the recognition and enforcement of awards. Article 53 provides in relevant part: (1) The award shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in this Convention. Each party shall abide by and comply with the terms of the award except to the extent that enforcement shall have been stayed pursuant to the relevant provisions of this Convention. Article 54 provides in relevant part: Article 53 Article 54 (1) Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. (2) A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary General. Each Contracting State shall notify the Secretary General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation. (3) Execution of the award shall be governed by the laws concerning the execution of judgments in force in the State in whose territories such execution is sought. Article 55 provides that nothing in article 54 shall be construed as derogating from the law in force in any Contracting State relating to immunity of that State or of any foreign State from execution. Article 53(1) prohibits any appeal or any other remedy except those provided for in this Convention. The exception is a reference to the provisions in section 5 of Chapter IV of the Convention. Article 50 provides for any dispute between the parties as to the meaning or scope of an award to be decided by a Tribunal. Article 51 provides for revision of an award by a Tribunal on the ground of the discovery of some fact which decisively affects the award. Article 52 provides for the annulment of an award by an ad hoc Committee on the grounds that the Tribunal was not properly constituted, that it has manifestly exceeded its powers, that there was corruption on the part of a member of the Tribunal, that there has been a serious departure from a fundamental rule of procedure, or that the award has failed to state the reasons on which it is based. In each case the Tribunal or Committee concerned may stay enforcement of the award pending its decision. The Arbitration (International Investment Disputes) Act 1966 implements the ICSID Convention in the domestic law of the United Kingdom. Section 1(2) provides that a person seeking recognition or enforcement of an ICSID award shall be entitled to have the award registered in the High Court. Section 2 provides: 2. Effect of registration. (1) Subject to the provisions of this Act, an award registered under section 1 above shall, as respects the pecuniary obligations which it imposes, be of the same force and effect for the purposes of execution as if it had been a judgment of the High Court given when the award was rendered pursuant to the Convention and entered on the date of registration under this Act, and, so far as relates to such pecuniary obligations (a) proceedings may be taken on the award, (b) the sum for which the award is registered shall carry interest, (c) over the execution of the award, the High Court shall have the same control as if the award had been such a judgment of the High Court. (2) Rules of court under section 84 of the Senior Courts Act 1981 may contain provisions requiring the court on proof of the prescribed matters to stay execution of any award registered under this Act so as to take account of cases where enforcement of the award has been stayed (whether provisionally or otherwise) pursuant to the Convention, and may provide for the provisional stay of execution of the award where an application is made pursuant to the Convention which, if granted, might result in a stay of enforcement of the award. A rule of court, CPR 62.21(5), provides with regard to registration under the 1966 Act: Where, on granting permission to register an award or an application made by the judgment debtor after an award has been registered, the court considers (a) that the enforcement of the award has been stayed (whether provisionally or otherwise) under the Convention; or (b) that an application has been made under the Convention which, if granted, might result in a stay of the enforcement of the award, the court may stay the enforcement of the award for such time as it considers appropriate. At first instance, Blair J dismissed the application by Romania to set aside the order of Burton J registering the award. In Blair Js view, registration of the award would not place Romania in breach of the Commission Decision. However, he stayed enforcement of the award pending the resolution of the annulment proceedings in the GCEU on the basis that under the ICSID Convention and under section 2 of the 1966 Act an arbitral award was to be equated for the purposes of enforcement with a judgment of the High Court. As the High Court would not enforce a domestic judgment which conflicted with a decision of the Commission, it could not enforce the Award pending the outcome of the annulment proceedings. Accordingly, article 351 TFEU (set out at para 90, below) did not apply because there was no conflict between the obligations of the United Kingdom under the ICSID Convention and the EU Treaties. The Court of Appeal unanimously dismissed the appeal against the order for a stay. The majority (Arden and Leggatt LJJ) held that while section 2(1) of the 1966 Act did not have the effect of making an ICSID award registered under section 1 equivalent for all purposes to an ordinary domestic judgment, the domestic court could grant a stay of execution if in the circumstances of the case it was just to do so, provided the stay was temporary and consistent with the purposes of the ICSID Convention. Hamblen LJ (dissenting on this point) held that the ICSID Convention and the 1966 Act conferred on a registered award the same status as a final domestic judgment. Since such a judgment would not be enforced where inconsistent with EU law, there was no inconsistency with the ICSID Convention or the 1966 Act in not enforcing an award where inconsistent with EU law. On behalf of the Claimants it is submitted that Blair J and the Court of Appeal were in error in granting a stay because the ICSID Convention and the 1966 Act do not permit a stay in such circumstances. Distinguishing between enforcement and execution, they submit that a stay of enforcement may only be granted pursuant to articles 50 52 of the ICSID Convention. Article 54 imposes a duty on national courts to enforce awards and does not permit a national court to refuse enforcement where it would refuse to enforce a domestic judgment. They accept that the national court has control over the execution of an award, including power to grant a temporary stay; however, this is strictly for procedural (not substantive) reasons and only where no inconsistency arises with the duties to recognise and enforce the award. They submit that the stay granted in these proceedings was not a stay of execution but a stay of enforcement pending the determination of the GCEU proceedings, which the Court had no power to order. The provisions of the 1966 Act must be interpreted in the context of the ICSID Convention and it should be presumed that Parliament, in enacting that legislation, intended that it should conform with the United Kingdoms treaty obligations. It is a notable feature of the scheme of the ICSID Convention that once the authenticity of an award is established, a domestic court before which recognition is sought may not re examine the award on its merits. Similarly, a domestic court may not refuse to enforce an authenticated ICSID award on grounds of national or international public policy. In this respect, the ICSID Convention differs significantly from the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. The position is stated in this way by Professor Schreuer in his commentary on article 54(1): The system of review under the Convention is self contained and does not permit any external review. This principle also extends to the stage of recognition and enforcement of ICSID awards. A domestic court or authority before which recognition and enforcement is sought is restricted to ascertaining the awards authenticity. It may not re examine the ICSID tribunals jurisdiction. It may not re examine the award on the merits. Nor may it examine the fairness and propriety of the proceedings before the ICSID tribunal. This is in contrast to non ICSID awards, including Additional Facility awards, which may be reviewed under domestic law and applicable treaties. In particular, the New York Convention gives a detailed list of grounds on which recognition and enforcement may be refused (Christoph H Schreuer, The ICSID Convention: A Commentary, 2nd ed (2009), p 1139, para 81) The Conventions drafting history shows that domestic authorities charged with recognition and enforcement have no discretion to review the award once its authenticity has been established. Not even the ordre public (public policy) of the forum may furnish a ground for refusal. The finality of awards would also exclude any examination of their compliance with international public policy or international law in general. The observance of international law is the task of the arbitral tribunal in application of article 42 of the Convention subject to a possible control by an ad hoc committee Nor would there be any room for the application of the Act of State doctrine in connection with the recognition and enforcement of an ICSID award (Schreuer, pp 1140 1141, para 85) Contracting States may not refuse recognition or enforcement of an award on grounds covered by the challenge provisions in the Convention itself (articles 50 52). Nor may they do so on grounds based on any general doctrine of ordre public, since in the drafting process the decision was taken not to follow the model of the New York Convention. However, although it is recognised that this is the general position under the Convention, it is arguable that article 54(1), by framing the relevant obligation as to enforcement as an obligation to treat an award under the Convention as if it were a final judgment of a local court, allows certain other defences to enforcement which are available in local law in relation to such a final judgment to be raised. The principle that arbitration awards under the ICSID Convention should be enforceable in the courts of all Contracting States and with the same status as a final judgment of the local courts in those States, as eventually set out in article 54(1), was a feature from an early stage in the drafting of the Convention. Mr Aron Broches, General Counsel of the World Bank at the time who chaired the regional consultative meetings (the Regional Consultative Meetings) that occurred as part of the Conventions drafting, explained to delegates that by virtue of this formula Contracting States would be entitled to apply their local law of sovereign or state immunity with regard to the enforcement of awards, and thereby avoid or minimise possible embarrassment at having to enforce awards against other friendly Contracting States. Accordingly, it was made clear that article 54(1) had the substantive effect of introducing to some degree a principle of equivalence between a Convention award and a local final judgment as regards the possibility of applying defences in respect of enforcement. See ICSID, History of the ICSID Convention (Washington DC, 1968) vol II 1: Doc 22 (20 September 1963) Memorandum of the discussion by the Executive Directors, September 10, 1963, Discussion of the First Preliminary Draft Convention, p 177); Doc 25, (30 April 1964) Summary Record of Proceedings, Addis Ababa Consultative Meetings of Legal Experts, December 16 20, 1963, p 242; Doc 31 (20 July 1964) Summary Record of Proceedings, Bangkok Consultative Meetings of Legal Experts, April 27 May 1, 1964, p 520. In his report on the Regional Consultative Meetings, Mr Broches referred to certain comments that had dealt with the effect of what was then draft section 15 (which became article 54(1)) on existing law with respect to sovereign immunity. Mr Broches explained that the drafters had no intention to change that law. By providing that the award could be enforced as if it were a final judgment of a local court, section 15 implicitly imported the limitation on enforcement which in most countries existed with respect to enforcement of court decisions against Sovereigns. However, this point might be made explicit in order to allay the fears expressed by several delegations (History, vol II 1: Doc 33 (9 July 1964) Chairmans Report on the Regional Consultative Meetings of Legal Experts, p 575; and see Doc 27 (12 June 1964) Summary Record of Proceedings, Santiago Consultative Meetings of Legal Experts, February 3 7, 1964, pp 342 et seq, where Mr Broches again indicated that this was the intended effect of what became article 54(1), but that it could be made completely clear to allay concerns). Accordingly, the provision which eventually became article 55 was included in what was designated as the First Draft of the Convention and was retained in the final version of the Convention (History, vol I, 254; vol II 1, Doc 43 (11 September 1964) Draft Convention: Working Paper for the Legal Committee, p 636). The official Report of the Executive Directors on the Convention confirmed that this provision was introduced for the avoidance of doubt (as its text indicates): see ICSID, Report of the Executive Directors of the International Bank for Reconstruction and Development on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington DC, 1965), para 43; Mr Broches made the same point in his Memorandum to the Executive Directors (History, vol II 2, Doc 128 (19 January 1965) Memorandum from the General Counsel and Draft Report of the Executive Directors to accompany the Convention, paras 43 44). The law of State immunity varies from State to State, and the Convention made no attempt to harmonise it. As Professor Schreuer points out in his commentary on article 54, persons seeking to enforce arbitration awards made pursuant to the Convention will tend to choose to do so in those jurisdictions which have the least generous rules of State immunity for the protection of the assets of other Contracting States (Schreuer, p 1124, para 27). The fact that the specific qualification of the obligation to enforce an award like a final court judgment relating to state immunity was expressly dealt with in article 55 for the avoidance of doubt indicates that article 54(1) was itself understood to have the effect of allowing the possibility of certain other defences to enforcement if national law recognised them in respect of final judgments of local courts. The travaux prparatoires also indicate that it was accepted that further defences available in national law in relation to enforcement of court judgments could be available in exceptional circumstances by virtue of the formulation of the obligation in article 54(1). Mr Broches pointed out that the First Draft went further than the Secretariat draft since treating awards in the same way as court judgments implied that exceptional grounds only could be invoked to prevent recognition and enforcement (Aron Broches, Awards Rendered Pursuant to the ICSID Convention: Binding Force, Finality, Recognition, Enforcement, Execution, (1987) ICSID Rev 287, 312). But he also resisted a proposal by the Austrian representative to delete the words (in what became article 54(1)) requiring an award to be enforced as if it were a final judgment [of a local court], so as to make the obligation in that provision an unqualified one, since the Austrian representative noted that there were several possibilities for annuling [sic] judgments even after they had been declared final (History, vol II 2, Doc 120 (11 January 1965) Summary Proceedings of the Legal Committee meeting, December 11, morning, p 901). Mr Broches stated that in his opinion by making an award the equivalent of a final judgment one had reached the maximum obtainable (that is to say, in practical terms, given the issues raised in the drafting meetings) (Broches, p 314). So, for example, there was discussion of the possibility in English law of applying to have a final judgment of a national court set aside on the grounds that it was obtained by fraud, and Mr Broches confirmed that this would also be applicable in relation to a Convention award: see History, vol II 2, Doc 113 (11 January 1965) Summary Proceedings of the Legal Committee meeting, December 10, afternoon, p 889 (If a final judgment against a sovereign State could not be executed, then an award could not be executed either; and in the same way, if a final judgment was open to some extraordinary remedy in the case of fraud or similar occurrence, that would be true for the award as well.). Later, Mr Broches resisted a suggestion that what is now article 55 should be expanded so as also to cover the cases where there were laws which, although not related to immunities, might limit the execution of the award against the State, on the grounds that he thought this was unnecessary because full recognition had been given to the laws of the State in article [54] and [article 55] dealt with one specific problem on which certain delegations had expressed concern (History, vol II 2, Doc 120, p 905). In his commentary on article 54, Professor Schreuer observes that at the stage of recognition and enforcement of awards [t]he otherwise self contained nature of the Convention does not apply (p 1120, para 10). At, pp 1142 1143, para 91 he says (omitting references): The fact that article 54(1) assimilates ICSID awards to final judgments of domestic courts implies that enforcement may be resisted in countries where national rules provide for an exceptional refusal to enforce a final judgment. Though this possibility was already acknowledged during the drafting of the Convention, it has not yet been relied upon in practice in order to defy recognition and enforcement of ICSID awards. Instead, past attempts to resist enforcement of awards have relied upon immunity from execution. Article 54(3) of the Convention is concerned with execution of awards. Its effect is that the available processes of execution will be those in the law of the State where enforcement is sought. It does not require that State to make available any other processes of execution. This provision does not limit the obligation on Contracting States to enforce awards. Once again, the matter is explained by Professor Schreuer in his commentary: having regard to all the authentic language versions of the Convention, no distinction is to be drawn between enforcement and execution (p 1134, para 64). He observes in his commentary on article 54(3): The drafting history and the context of article 54(3) make it clear that the laws of the enforcing State that govern execution of an ICSID award are of a procedural nature only. Article 54(3) does not detract from the obligation of every State party to the Convention to enforce awards. In particular, the laws of the enforcing State may not serve as a standard for the review of awards. Article 54(3) does not affect the finality and non reviewability of awards (p 1149, para 112) Articles 50(2), 51(4) and 52(5) make specific provision for staying enforcement of an award in certain specific situations, none of which applies here. Section 2(2) of the 1966 Act and CPR 62.21(5) make corresponding provision in domestic law for the grant of a stay in such situations. These stays pursuant to the Convention are available only in the context of interpretation, revision and annulment of awards addressed by those articles. In the present case, Romania has already exercised and exhausted its right under article 52 of ICSID to seek annulment of the Award. The ICSID ad hoc Committee upheld the Award on 26 February 2016. However, in light of the wording of articles 54(1) and 55 and the travaux prparatoires reviewed above, it is arguable that there is scope for some additional defences against enforcement, in certain exceptional or extraordinary circumstances which are not defined, if national law recognises them in respect of final judgments of national courts and they do not directly overlap with those grounds of challenge to an award which are specifically allocated to Convention organs under articles 50 to 52 of the Convention. Mr Broches proposed at the drafting meeting on 11 December 1964 referred to above that representatives should consciously accept something that was of necessity not precise, which each country in good faith would seek to translate into appropriate local law. He thought that it was necessary to leave some freedom to the Contracting States to interpret in good faith the principal concept laid down in the Convention (ie the obligation in article 54(1)) (History, vol II 2, Doc 120, 903). In the Court of Appeal Hamblen LJ accepted Romanias submission that the relevant obligation of the United Kingdom under article 54(1) was one of equivalence. He considered that, while there will be different national rules and procedures relating to enforcement, provided the same rules and procedures are applied to registered awards as to final court judgments in the State concerned article 54 will be complied with. In his view, the effect of section 2(1) of the 1966 Act was to make an ICSID award registered under section 1 of the Act equivalent for all purposes to a judgment of the High Court given in ordinary domestic proceedings. As a result, in his view, if the present award had been a final decision of the English court there could be little doubt that the English court would stay enforcement because payment was prohibited by a subsequent Commission decision. On that basis, he considered that enforcement of the Award had to be stayed. The courts have general powers under the CPR to order a stay where that would be appropriate outside the specific situations dealt with in CPR 62.21: see in particular CPR 3.1(2)(f), CPR 40.8A and CPR 83.7(4). Hamblen LJs view on the general question whether article 54(1) operates on the basis of a principle of equivalence gains some support from the points set out above and the travaux prparatoires referred to. But as appears below, even if he is right on that point, consideration of the effect of article 351 TFEU means that it does not follow that Romania succeeds in showing that the enforcement of the Commission Award should be refused under the ICSID Convention and the 1966 Act. On the other hand, it might be said that this reading of the obligation of each Contracting State under article 54(1) to enforce the pecuniary obligations imposed by an ICSID award as if it were a final judgment of a court in that State fails to take proper account of the scheme of the ICSID Convention as described above. It is arguable that there is countervailing force in the view of Arden and Leggatt LJJ in the Court of Appeal that it would be inconsistent with that scheme for a national court to refuse to enforce an award on the ground that, if it had been an ordinary domestic judgment, giving effect to it would be contrary to a provision of national law and that the only circumstances in which the validity or enforceability of an ICSID award can be challenged are those set out in the ICSID Convention itself. It is arguable that the words as if it were a final judgment of a court in that State in article 54(1) should not be read as referring to the circumstances in which an award is enforceable in the State concerned or as importing national standards as a requirement of enforceability. Rather it is arguable that, as Leggatt LJ put it (at para 258), albeit without consideration of the travaux prparatoires, the purpose of equating an award with a final judgment of a court in the state where enforcement is sought is to give legal force to an award for the purpose of executing it and to provide machinery for that purpose. If that is right, then section 2(1) of the 1966 Act, which implements article 54(1), would not entitle courts in this jurisdiction to refuse to enforce an award on grounds that would justify staying enforcement of a domestic judgment. On this view, article 54(1) simply provides a legal basis for execution. If anything, this might be said to emerge even more clearly from section 2(1) which provides that an award shall be of the same force and effect for the purposes of execution (emphasis added) as a domestic judgment (although clearly that provision should be read so as to conform with article 54(1), to which it is intended to give effect). Nevertheless, despite the view they took about the effect of article 54(1), Arden and Leggatt LJJ came to the conclusion that it was open to the court to grant a stay. In their view article 54(3) gave the national court control over the process of execution which includes its manner and timing and that was reflected in section 2(1)(c) of the 1966 Act. Rules of court, CPR 40.8A and CPR 83.7(4), confer wide discretionary powers to stay the execution of a final judgment. Accordingly, it was open to courts in this jurisdiction to grant a stay of execution if in the particular circumstances of the case it was just to do so, provided that the stay was temporary and consistent with the purposes of the ICSID Convention (Arden LJ at paras 122 126; Leggatt LJ at paras 260 262). Both emphasised, however, that this power could not extend to declining to enforce an award because of a substantive objection to it or staying enforcement of an award permanently or indefinitely (at paras 125, 262). The difference between Hamblen LJ on the one hand and Arden and Leggatt LJJ on the other regarding the proper interpretation of article 54(1) of the ICSID Convention is something which ultimately could only be authoritatively resolved by the International Court of Justice. There are valid arguments on both sides. It is perhaps not altogether surprising that there is some doubt about the true meaning and effect of article 54, given that the work on drafting that provision was carried out under great time pressure and is described by Broches as being characterized by great fluidity, sometimes bordering on confusion (Schreuer, p 1135, para 66). However, the important point for present purposes is that whichever view is correct, it does not assist Romania in this case. We first address the position which arises on the interpretation of article 54(1) preferred by Arden and Leggatt LJJ. We agree with them that courts in this jurisdiction have the power to stay execution of an ICSID award in the limited circumstances which they describe. However, we consider that in granting a stay of execution of the Award in the present case pending the determination of the annulment proceedings in the GCEU (or further order in the meantime) they exceeded the proper limits of that power. The grant of a stay in these circumstances was not consistent with the ICSID Convention, on their interpretation of it, under which the United Kingdom and its courts had a duty to recognise and enforce the Award. This was not a limited stay of execution on procedural grounds, but a prohibition on enforcement of the Award on substantive grounds until the GCEU had ruled on the apparent conflict between the ICSID Convention and the EU Treaties. Effect was given to the Commission Decision until such time as the GCEU might pronounce upon it. The logic of the position adopted by Arden and Leggatt LJJ was that if the GCEU upheld the Commission Decision, the stay would continue indefinitely (and the same would be true if the CJEU allows the Commissions appeal against the decision of the GCEU). But the grounds of objection raised by the Commission, even if upheld before the EU courts, were not valid grounds of objection to the Award or its enforcement under the ICSID Convention, as interpreted by Arden and Leggatt LJJ. The principle laid down in article 53(1) that awards are binding on the parties and are not subject to any appeal or other remedy except those provided under the Convention and reflected in article 54 (on their interpretation of it) was disregarded. In substance, the Court of Appeal made use of powers to stay execution granted by domestic law in order to thwart enforcement of an award which had become enforceable under the ICSID Convention. On the other hand, if article 54(1) incorporates the principle of equivalence, in line with Hamblen LJs interpretation, it remains the case that Romanias submission in answer to the Claimants cross appeal cannot succeed. This is because article 351 TFEU has the effect that any obligation on the UK courts to give effect to a decision such as the Commission Decision pursuant to the duty of sincere co operation which might arise under the Treaties in other circumstances does not arise in this case. The discussion below of Original Ground 4 of the cross appeal, explains that the United Kingdom owes relevant obligations to non EU member states under the ICSID Convention, a treaty to which the United Kingdom was party before it became a member state. By virtue of article 351 TFEU this means that the obligations on the United Kingdom arising from the ICSID Convention are not affected by the provisions of the Treaties. Leaving aside the Treaties, in the circumstances of the present case the English courts are obliged under article 54(1) of the ICSID Convention to give effect to the Award in favour of the Claimants and this is not a case in which any of the exceptional possible types of defence to enforcement contemplated by Mr Broches and Professor Schreuer arise. Leaving the Treaties out of the analysis, if the Award were a final judgment of an English court it would be enforced without question. Similarly, on Hamblen LJs interpretation of article 54(1) involving the principle of equivalence, it must follow that the Award would be enforced in the same way. Article 351 TFEU means that this obligation cannot be affected by anything in the Treaties, which are the foundation for the legal effect of Commission rulings and for the obligation of sincere co operation on which Romania seeks to rely. Romanias attempt to pray in aid the obligation of sincere co operation is an attempt to pull itself up by its own bootstraps. It cannot make out the necessary foundation for its argument, since it cannot show that the obligation of sincere co operation has any application at all. Finally, in this regard, we should refer to the submission on behalf of Romania that to the extent that there is any uncertainty as to the meaning of the relevant provisions of the ICSID Convention and the 1966 Act, this court is bound by EU law to interpret them so far as possible in accordance with EU law in order to comply with the EU principle of effectiveness (seeking to gain support from van Munster v Rijksdienst voor Pensioenen (Case C 165/91) [1994] ECR I 4686, para 34; Budjovick Budvar nrodn podnik v Rudolf Ammersin GmbH (Case C 216/01) [2003] ECR I 13657, paras 168 169). This is another bootstraps argument on behalf of Romania. The first step in the analysis should be to ask whether the United Kingdom has relevant obligations arising from the ICSID Convention which, by operation of article 351 TFEU, preclude the application of the Treaties. As explained below in relation to Cross Appeal Original Ground 3 (paras 101 108), on a proper interpretation of the ICSID Convention, the United Kingdom clearly does have such obligations. Therefore, the Treaties do not have any relevant effect and this court is not bound by EU law to interpret the Convention in the manner for which Romania contends. In any event, the proper interpretation of the Convention is given by principles of international law applicable to all Contracting States and it cannot be affected by EU law. Cross Appeal Original Ground 3: The European Communities Act 1972 does not require the United Kingdom to breach its pre accession obligations under the ICSID Convention, as implemented by the 1966 Act On behalf of the First Claimant, Viorel Micula, Mr Patrick Green QC advances this ground of appeal, which the other Claimants adopt, on the basis that a conflict might be said to arise between the United Kingdoms obligations under the ICSID Convention and EU law. Mr Green submits that the UK Parliament, in enacting section 2(1) of the European Communities Act 1972, could not have intended to empower the EU to put the United Kingdom in breach of pre accession international obligations, with only EU institutions as arbiters of the lawfulness of doing so. He says this is so for two reasons. First, it undermines the scheme of the Convention and the express terms and purpose of the 1966 Act. Secondly, at the time Parliament enacted the 1972 Act there was before it a treaty which provided, in what has become article 351 TFEU, that it would not affect the pre accession international obligations of member states. The effect of the 1972 Act was to confer defined competences within limited fields and the limitations included the preservation of prior international obligations falling within what is now article 351 TFEU. In this regard he relies on the decision of the Court of Appeal in Shindler v Chancellor of the Duchy of Lancaster [2016] EWCA Civ 469; [2017] QB 226, in particular the observations of Elias LJ at paras 58 59, and the observations of Lord Mance in Pham v Secretary of State for the Home Department [2015] UKSC 19; [2015] 1 WLR 1591, para 82. The constitutional principles which underlie this submission are clearly correct. Under the UK constitution Parliament is sovereign and EU law has effect within the United Kingdom only to the extent that it has been given such effect by section 2(1) of the European Communities Act 1972 (R (Buckinghamshire County Council) v Secretary of State for Transport (HS2) [2014] UKSC 3; [2014] 1 WLR 324, para 79; Pham v Secretary of State for the Home Department [2015] 1 WLR 1591, paras 80, 90; R (Miller) v Secretary of State for Exiting the European Union [2017] UKSC 5; [2018] AC 61, paras 60, 61). It is for the UK courts to decide on the scope and effect of section 2(1) and, as Lord Reed observed in HS2 at para 79, if there is a conflict between a constitutional principle and EU law, that conflict has to be resolved by our courts as an issue arising under the constitutional law of the United Kingdom. However, by contrast with HS2, which concerned article 9 of the Bill of Rights, the present case concerns obligations arising under the ICSID Convention which are given effect by the 1966 Act, which is not a statute of fundamental constitutional importance. In these circumstances, there is no sound basis for concluding that the effect of section 2(1) of the European Communities Act 1972 was impliedly excluded so far as the 1966 Act is concerned. In any event, successive treaties which have been given effect in the domestic law of the United Kingdom by section 2(1) of the 1972 Act have included a provision equivalent to the current article 351 TFEU. As a result, the 1972 Act has already made provision for the effect of accession on pre accession treaties and, accordingly, this ground of appeal collapses into Original Ground 4 to which we now turn. Cross Appeal Original Ground 4: Article 351 TFEU (formerly article 307 EC) Article 351 TFEU provides: The rights and obligations arising from agreements concluded before 1 January 1958 or, for acceding States, before the date of their accession, between one or more member states on the one hand, and one or more third countries on the other, shall not be affected by the provisions of the Treaties. To the extent that such agreements are not compatible with the Treaties, the member state or States concerned shall take all appropriate steps to eliminate the incompatibilities established. member states shall, where necessary, assist each other to this end and shall, where appropriate, adopt a common attitude. In applying the agreements referred to in the first paragraph, member states shall take into account the fact that the advantages accorded under the Treaties by each member state form an integral part of the establishment of the Union and are thereby inseparably linked with the creation of common institutions, the conferring of powers upon them and the granting of the same advantages by all the other member states. At first instance Blair J held that article 351 TFEU did not apply because there was no conflict between the obligations of the United Kingdom under the ICSID Convention and the EU Treaties. In the Court of Appeal the majority (Hamblen and Leggatt LJJ) considered that the issue of whether there was a conflict between the United Kingdoms duties under EU law and under the ICSID Convention depended on the proper application of article 351 TFEU. That issue had been before the GCEU in the annulment proceedings, although not in precisely the same way, and Blair J had been entitled to stay the proceedings on the basis that without a stay, there would be a clear risk of conflicting decisions with the EU courts. There had been no appeal against his finding on that point. Leggatt LJ considered that while the point could be taken by the court of its own motion, it was inappropriate to do so. Arden LJ (dissenting on this point) considered that the interpretation of article 351 TFEU was a point which should be taken by the court of its own motion. It was for the UK courts to decide whether article 351 TFEU applied to the ICSID Convention. In view of her conclusion that a stay could be ordered consistently with the ICSID Convention, there was no need to reach a final decision on the article 351 TFEU point. However, she considered that there was little overlap between that issue and the proceedings in the GCEU. Before the Supreme Court, the parties have addressed this ground of cross appeal on the basis that it arises only if Blair J and the Court of Appeal erred in concluding that to stay the enforcement or execution of the award pending the annulment proceedings is consistent with the ICSID Convention. We agree that the matter should be approached on this basis. In those circumstances, Romania and the Commission submit that the EU duty of sincere co operation nevertheless requires the imposition of a stay, while the Claimants submit that the United Kingdoms obligations to recognise and enforce awards under the ICSID Convention are pre accession treaty obligations within article 351 TFEU and are therefore unaffected by EU obligations. Preliminary issue: permission to appeal A preliminary issue which arises under this ground of cross appeal is whether the Claimants should be given permission to appeal on this ground, the question of permission having been reserved to the full hearing. At first instance, the Claimants argued that article 351 TFEU applied with the result that the obligations of the United Kingdom arising from the pre accession ICSID Convention were not subject to the over riding effect of EU law. Blair J did not express any conclusion as to the United Kingdoms separate international law obligations under the ICSID Convention, but considered that article 351 TFEU was one of the grounds on which the Claimants asked the GCEU to annul the Commission Decision and that, even though those issues were not necessarily the same as those which arose in these proceedings, there was a risk of conflicting decisions if the court were to decide the effect of article 351 TFEU while the GCEU proceedings were pending (Blair J, Judgment of 20 January 2017 [2017] EWHC 31 (Comm); [2017] Bus LR 1147, para 152). In the Court of Appeal, Leggatt LJ (at para 265) and Hamblen LJ (at paras 160 164) agreed with that conclusion. The grounds of appeal of the Claimants before the Court of Appeal did not raise objection to the judges rejection of their arguments on article 351 TFEU. However, although the position is not entirely clear, it seems that they did seek to rely on article 351 TFEU in the course of argument without amending their grounds of appeal (see Arden LJ at para 172, cf Leggatt LJ at para 265). Romania now objects to the Supreme Court considering the submissions of the Claimants on article 351 TFEU, on the ground that the point was not appealed from Blair J to the Court of Appeal. We would grant permission to appeal on this ground. First, we agree with the observation of Arden LJ in the Court of Appeal (at para 173) that courts in this jurisdiction should normally, so far as the law allows, exercise their powers so as to ensure compliance with the international obligations of the United Kingdom. The article 351 TFEU issue as now presented to this court is concerned with seeking to identify what are the relevant international obligations of the United Kingdom and, in the event of a conflict, which obligations are to prevail. Furthermore, we are persuaded that this issue goes to the heart of the present dispute and that the parties cannot by their conduct withdraw it from the courts consideration. Secondly, the ground is a pure point of law and we are satisfied that Romania and the Commission have had ample time to enable them to meet the case which is now put against them. Article 351 TFEU Article 351 TFEU is an express provision of EU law regulating priority where there are potentially conflicting obligations. It is general in scope and applies to any international agreement, irrespective of subject matter, which is capable of affecting the application of the EU Treaties (Criminal proceedings against Levy (Case C 158/91) [1993] ECR I 4287, para 11). It applies to agreements concluded by the United Kingdom before its accession on 1 January 1973 (Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland (Open Skies) (Case C 466/98) [2003] 1 CMLR 6, para 25). Article 351 TFEU is intended to establish, in accordance with principles of international law, that the application of the EU Treaties does not affect the duty of a member state to respect the rights of non member states under a prior agreement and to perform its obligations thereunder (Commission of the European Economic Community v Government of the Italian Republic, In re Italian Customs Duties on Radio Valves (Case C 10/61) [1962] ECR 1; Attorney General v Burgoa (Case C 812/79) [1980] ECR 2787, para 8; Levy (Case C 158/91), para 11; R v Secretary of State for the Home Department, Ex p Evans Medical Ltd (Case C 324/93) EU:C:1995:84; [1995] All ER (EC) 481, para 27). It also implies a duty on the part of the EU institutions not to impede the performance of the obligations of the member states which stem from a prior agreement (Attorney General v Burgoa (Case C 812/79), para 9). The rule in article 351 TFEU is concerned with conflicting obligations. Accordingly, where an international agreement merely permits but does not require a member state to act in a manner contrary to EU law, the member state must refrain from such conduct (Evans Medical (Case C 324/93), para 32). Moreover, article 351 TFEU does not apply to the obligations of a member state under a pre accession agreement where the rights of non member states are not involved. If the only obligations in play are those owed to other member states, the matter is regarded as an intra EU matter and EU law prevails over obligations under pre accession agreements (Commission v Italy, In re Italian Customs Duties on Radio Valves (Case C 10/61) [1962] ECR 1, 10; Radio Telefis Eireann v Commission of the European Communities (RTE) (Joined Cases C 241/91 P and C 242/91 P) [1995] All ER (EC) 416, para 84). Determining the scope of obligations under pre accession agreements In order to determine whether a rule of EU law may be deprived of effect by a pre accession international agreement, it is necessary to consider whether that agreement imposes on the member state concerned obligations the performance of which may still be required by non member states which are parties to it (Levy (Case C 158/91), para 13; Evans Medical (Case C 324/93), para 28). In Levy the Court of Justice considered a submission that an International Labour Organization Convention, ratified by France prior to the entry into force of the Treaty of Rome, was inconsistent with a Council Directive. The Court of Justice held: [I]n proceedings for a preliminary ruling, it is not for this Court but for the national court to determine which obligations are imposed by an earlier international agreement on the member state concerned and to ascertain their ambit so as to be able to determine the extent to which they constitute an obstacle to the application of the directive. (para 21) [See also Office national de lemploi v Minne (Case C 13/93) [1994] ECR I 371, para 18.] Similarly, in Evans Medical (Case C 324/93) the Court of Justice held (paras 29 30) that it was not for that court but for the national court to determine which obligations were imposed by the Single Convention on Narcotic Drugs, a treaty concluded by the United Kingdom before its accession, and to ascertain their ambit so as to be able to determine the extent to which they thwarted the application of Community law. The authorities cited by Romania on this point cast no doubt on the principle stated in Levy and Evans Medical. In Budjovick Budvar nrodn podnik v Rudolf Ammersin GmbH (Case C 216/01) [2003] ECR I 13657, the obligation owed under the prior bilateral treaty was common ground (para 147). In T Port GmbH & Co v Hauptzollamt Hamburg Jonas (Joined Cases C 364/95 and C 365/95) [1998] ECR I 1023 the Court of Justice merely held that what is now article 351 TFEU did not apply in a case involving imports from a third country which was not at the relevant time a party to a prior international agreement concluded by member states (paras 61 65). Both Levy and Evans Medical were concerned with proceedings for a preliminary ruling. As Advocate General Lenz explained in Evans Medical (at EU:C:1994:357, para 39), what is now article 267 TFEU empowers the Court of Justice to give preliminary rulings on EU law. It does not confer any power to interpret agreements in international law which member states concluded with non member states before the entry into force of the Treaties or prior to their own accession. Accordingly, it would not be possible for the Supreme Court to make a preliminary reference to the CJEU on this issue in the present case. While it may well be open to the Court of Justice to rule on the extent of a member states prior treaty obligations in other circumstances for example in infringement proceedings (see Evans Medical per Advocate General Lenz at para 44; European Commission v Slovak Republic (Case C 264/09) [2011] ECR I 8065, paras 32 40) or in direct actions (RTE (Joined Cases C 241/91 P and C 242/91 P)), Levy and Evans Medical make clear that this is not a question of EU law and that there can be no objection to the courts of a member state deciding the issue. Furthermore, as this is a matter of the interpretation of the prior agreement in international law, EU courts are no better placed to determine the scope of obligations under a pre accession agreement than the courts of the member state concerned or, indeed, a court or tribunal which has jurisdiction to rule on its meaning under the prior agreement itself. On behalf of Romania, Mr ODonoghue QC submits that in applying article 351 TFEU it is necessary to distinguish between two questions. The first is whether there is a relevant prior international obligation in play at all. The second is whether, even if as a matter of international or domestic law the obligation is in some sense owed to all parties to the prior agreement, the effect of that is that the case does not only involve intra Community relations for the purposes of article 351 TFEU. His formulation of the second limb, however, mis states the effect of the authorities. While it is correct that in order for article 351 TFEU to apply relevant obligations under the prior treaty must be owed to a non member state, that does not impose an additional requirement that the particular dispute before the court must relate to extra EU activities or transactions. The decisions of the Court of Justice demonstrate that the opposite is the case. Thus, Levy was concerned only with conduct within France. Similarly, Evans Medical concerned activities entirely within the EU the importation of drugs from the Netherlands to the United Kingdom but article 351 TFEU was nevertheless engaged. In both cases what mattered was that the relevant obligations under the prior treaties were owed to non member states. Thus, notwithstanding the fact that the United Kingdom, Sweden and Romania were at the material times all member states, if the relevant obligations under the ICSID Convention are owed to ICSID contracting States which are non member states, article 351 TFEU will be engaged. Does article 351 TFEU apply to the United Kingdoms relevant obligations under the ICSID Convention? It is not difficult to see that all States which are parties to the ICSID Convention have an interest in the effective operation of the Convention scheme for the enforcement of arbitral awards. However, article 351 TFEU is concerned with conflicting obligations and, accordingly, it is only if a relevant obligation under ICSID is owed by the United Kingdom to a non member state that the Claimants can succeed on this ground. We also accept the submission on behalf of Romania that we are not here concerned with the general question whether the United Kingdom owes obligations under the ICSID Convention to non member states, but with the question whether the specific obligation of the United Kingdom under the ICSID Convention to enforce this award is owed by the United Kingdom to non member states. Romanias case is that the only legal obligation of the United Kingdom which is in play is the obligation owed under the ICSID Convention to Sweden, which is an EU member state. It submits that Sweden is the only State with a direct interest in the enforcement of the award. The Claimants, on the other hand, identify as the relevant obligations of the United Kingdom articles 54 and 69 of the ICSID Convention. Article 54(1) provides that each contracting State shall recognise an award rendered pursuant to the Convention as binding and shall enforce the pecuniary obligations imposed by that award as if it were a final judgment of a court in that State. Article 69 provides that each Contracting State shall take such legislative or other measures as may be necessary for making the provisions of the ICSID Convention effective in its territories. The Claimants submit that these obligations are owed to all other parties to the ICSID Convention. Mr ODonoghue on behalf of Romania submits that if the Claimants are correct in their submission, this would apply equally to every significant obligation in every multilateral treaty with the result that every multilateral treaty involving some parties which are not EU member states would fall within article 351 TFEU. He submits that this clearly is not correct and points to decisions of the Court of Justice relating to other multilateral conventions where, he says, article 351 TFEU did not apply: Commission v Italy, In re Italian Customs Duties on Radio Valves (Case C 10/61); Ministere Public v Deserbais (Case C 286/86) [1988] ECR 4907; RTE (Joined Cases C 241/91 P and C 242/91 P). Thus, for example, he submits that in RTE (Joined Cases C 241/91 P and C 242/91 P), a direct action, the CJEU found that the rights of non member states under the Berne Convention were not involved, since the case involving the United Kingdom and Ireland only concerned the rights of EU member states, notwithstanding that the Berne Convention was a multilateral treaty involving multiple non member states. He relies in particular on para 84 of the judgment where the Court of Justice observed: It is, however, settled case law that the provisions of an agreement concluded prior to entry into force of the Treaty or prior to a member states accession cannot be relied on in intra Community relations if, as in the present case, the rights of non member countries are not involved (Emphasis added) We note, however, that since its decision in RTE, the Court of Justice has had occasion to consider the Berne Convention in Luksan v van der Let (Case C 277/10) EU:C:2012:65; [2013] ECDR 5, where it stated (para 58) that the Berne Convention displayed the characteristics of an international agreement for the purposes of article 351 TFEU, although it concluded (para 62) that article 351 TFEU was not engaged in that case because the relevant provision of the Convention allowed but did not require a member state to adopt a measure which appears to be contrary to EU law. There is, however, a shorter and more fundamental answer to this submission of Romania: it is founded on a non sequitur. In order to determine whether article 351 TFEU applies in any particular case it will be necessary to construe the prior agreement in question in order to ascertain whether any relevant obligations arising from it are owed to non member states. The authorities on which Romania relies can cast no light on the question whether obligations under articles 54 and 69 of the ICSID Convention are owed to all Contracting States. It is clear that the specific duties in articles 54 and 69 of the ICSID Convention are owed to all other Contracting States. The Convention scheme is one of mutual trust and confidence which depends on the participation and compliance of every Contracting State. The importance within this scheme of the effective recognition and enforcement of awards is apparent from the preamble which emphasises the requirement that any arbitral award be complied with. The structure of the ICSID Convention supports this interpretation. The Convention establishes the International Centre for Settlement of Investment Disputes to provide facilities for conciliation and arbitration of investment disputes between Contracting States and nationals of Contracting States (article 1). The Convention provides that in relation to such disputes any Contracting State or any national of a Contracting State can apply to a tribunal appointed pursuant to Chapter IV of the Convention. However, article 64 provides a separate route for resolution of disputes between Contracting States by permitting an aggrieved State to refer the matter to the International Court of Justice. This is required to provide a remedial mechanism in cases of infringement of direct obligations owed to other States. The obligations of Contracting States in articles 53, 54 and 69 are expressed in unqualified terms, without limit as to the persons to whom they are owed. Article 64 is expressed in entirely general terms which are apt to include disputes regarding the obligations set out in those articles. These features of the Convention regime provide a strong indication that a Contracting State which has obligations under the Convention in relation to an award owes those obligations to all other States party to the Convention as well as to any party to the award. Article 27(1) confirms that the obligation on a Contracting State against whom an arbitration award is made to comply with the award is not just owed to the other parties to the dispute, since it recognises that any Contracting State whose national is involved in the dispute may bring an international claim against the other Contracting State if it fails to comply with the award rendered. Professor Schreuer in his commentary on article 53 confirms that the obligation of compliance under article 53 is in fact owed to every other Contracting Party: p 1100, para 13 and p 1109, para 46. The same is true of the obligation under article 54, as Professor Schreuer confirms in his commentary on that provision at p 1125, para 28, (non compliance with article 54 would carry the usual consequences of state responsibility ). The Claimants identify four features of the scheme, which demonstrate that its purpose requires that the relevant obligations must be owed, not only to the State of nationality of the party seeking to enforce the award, but to all Contracting States. First, a key purpose of the Convention is to encourage investment by providing investors with reassurance that a monetary award can be enforced in the territories of all Contracting States. The failure of any Contracting State to enforce an award in accordance with article 54 would undermine the Convention scheme on which investors and Contracting States all rely. This points to a network of mutual enforcement obligations. Secondly, were a Contracting State, when implementing its Convention obligations into domestic law, to qualify them by providing that no award was to be recognised or enforced if illegal under domestic law or contrary to its public policy, that would represent a plain breach of duty owed to all other Contracting States of which they would all be entitled to complain, even before such legislation came to be applied in any particular case. Thirdly, if a Contracting State were to fail to enforce an award in accordance with the ICSID scheme the beneficiaries of the award would be compelled to seek enforcement elsewhere and the burden of enforcement would fall on other States involving expenditure of resources within their legal systems. Fourthly, in such situations attempts to enforce in an alternative forum might result in the party against which enforcement is sought reducing or withdrawing its commercial assets in that alternative forum to the detriment of the State concerned. The travaux prparatoires of the ICSID Convention also support the view that obligations to comply with the Convention scheme are owed to all Contracting States. Thus, at the Fifth Session held on 18 December 1963, responding to a suggestion by the representative of Dahomey that, by analogy with article 94 of the UN Charter, the Security Council be given power to enforce awards, the Chairman stated that he did not believe that any State which had acceded to the Convention would fail to fulfil its provisions but added: If it did, other Contracting States might take such action as might be appropriate. (History, vol II I, Doc 25 (30 April 1964) Summary Record of Proceedings, Addis Ababa Consultative Meetings of Legal Experts, December 16 20, 1963, p 273) Similarly, in the Sixth Session held on 20 February 1964 the Chairman acknowledged that a Contracting States duty to comply with an award was owed to all other Contracting States. Apart from legal sanctions based on the revival of the right of diplomatic protection of the investors State there would be even more serious indirect sanctions because a State which did not comply would fail to meet its obligations not only to the investor but also to the community of Contracting States which would presumably include capital exporting countries from which the losing State could expect assistance. (History, vol II I, Doc 29 (1 June 1964) Summary Record of Proceedings, Geneva Consultative Meetings of Legal Experts, February, 17 22, 1964, p 425) Although these statements were made in the context of compliance with awards, as opposed to recognition and enforcement, they are powerful indications that obligations under the ICSID Convention are owed by all Contracting States to the community of Contracting States. Accordingly, neither the Convention nor its travaux prparatoires provide any warrant for restricting the duties owed by a Contracting State under articles 54 and 69 so that they are owed only to the State of nationality of an award beneficiary. Does the article 351 TFEU issue give rise to a risk of conflict which requires the imposition of a stay pending the outcome of the proceedings before the EU courts? Romania and the Commission submit that this court is precluded from deciding the issue of the extent of the obligations of the United Kingdom and to whom those obligations are owed because there would be a risk of a conflict between such a ruling and a future ruling by an EU court in the present dispute. It is said that the duty of sincere co operation requires courts in this jurisdiction to impose a stay pending the resolution of the issue by the EU courts. Neither the EU courts nor domestic courts have competence to give an authoritative decision, binding as between States, as to the existence and extent of obligations under a prior multilateral convention. The convention itself will usually make provision for the resolution of disputes. In the case of the ICSID Convention that function is reserved to the International Court of Justice by article 64. However, both the EU courts (for example, in infringement proceedings or direct actions) and domestic courts (in national proceedings) have competence to consider and rule upon the effect of a multilateral treaty, insofar as it may bear upon the outcome of the proceedings before them. In the present case, the duty of sincere co operation does not require courts in this jurisdiction to decline to decide this issue pending its resolution by the EU courts, or otherwise to defer to the EU courts on this issue, for the following reasons. First, the case law of the Court of Justice makes clear that, as a matter of EU law, questions as to the existence and extent of obligations under prior treaties, in the context of article 351 TFEU, are not reserved to the EU courts. In Levy and Evans Medical the Court of Justice has accepted the appropriateness of national courts ruling on such issues. Such questions are not governed by EU law and the Court of Justice is in no better position than a national court to answer them. This is addressed at paras 98 99 above. Secondly, although the Claimants have raised an article 351 TFEU issue in the proceedings before the EU courts, it is not the same issue as that with which this court is seized. In the proceedings to annul the Commission Decision, the Claimants advanced eight pleas of law, one of which was that the Commission Decision was in breach of article 351 TFEU, because that provision affords primacy to Romanias pre existing international obligations under the BIT and the ICSID Convention. The GCEU did not rule on that plea and, accordingly, it is not the subject of the appeal to the CJEU by the Commission. Although the pleadings before the GCEU made references to article 54 of the ICSID Convention in conjunction with article 53, the essential article 351 TFEU issue raised by the Claimants in the annulment proceedings concerned Romanias obligation to abide by and comply with the award under article 53 of the ICSID Convention. By contrast, the issue with which we are concerned in these proceedings is the United Kingdoms obligations to implement the ICSID Convention and to recognise and enforce the award under articles 54 and 69 of the ICSID Convention. The extent of the United Kingdoms obligations under those articles has not been raised before the EU courts. There is, therefore, no congruence of the issues before the domestic courts and the EU courts. Thirdly, the prospect of an EU court addressing the applicability of article 351 TFEU to pre accession obligations under the ICSID Convention in the context of the present dispute is remote. Although the Claimants raised in the annulment proceedings the issue of Romanias obligations under the ICSID Convention, the GCEU did not rule on this issue. The pending appeal to the CJEU is limited to those grounds on which the GCEU decided the application. Accordingly, if the Commission fails on the appeal, the article 351 TFEU issue will not be addressed in those proceedings. If the Commission succeeds on the appeal, however, the matter will have to be remitted to the GCEU for consideration of the other pleas advanced by the Claimants and the article 351 TFEU issue, so far as concerns the obligations of Romania, may then be considered by the GCEU or on a further appeal by the CJEU. The preliminary reference to the CJEU made by the Belgian court does not raise any issue in relation to article 351 TFEU. Belgium was an original signatory of the Treaty of Rome and the entry into force of that treaty pre dated Belgiums ratification of the ICSID Convention. It is conceivable that if the United Kingdom courts were to conclude that no stay of enforcement is required, because article 351 TFEU secures pre accession obligations owed to non member states under articles 54 and 69 of the ICSID Convention, and if the United Kingdom were to enforce the award on that basis, the Commission might thereafter bring infringement proceedings against the United Kingdom in which that issue would be squarely raised. It is important to point out, however, that the Commission has given no indication that it is contemplating any such proceedings and the possibility is entirely speculative. There is no good answer to the Claimants submission that relevant duties are owed by the United Kingdom under articles 54 and 69 of the ICSID Convention to non member states, so it seems unlikely that the Commission could bring infringement proceedings on this basis. It would have no realistic prospect of success in disputing the existence of such obligations. Moreover, were it to seek to do so, the principle of comity and the two way application of the principle of sincere co operation would be likely to lead the Court of Justice to leave the interpretation of the Convention, to which the EU is not a party, to the domestic courts of the United Kingdom as a Contracting State. (In this regard see the observation of the Court of Justice in Commission v Slovak Republic (Case C 264/09), para 40.) In any event, it would not be appropriate for this court to stay enforcement in deference to the EU courts on this issue, which is not one of EU law, simply because of the speculative possibility of infringement proceedings in the future. (See, generally, Patmalneice v Secretary of State for Work and Pensions [2011] 1 WLR 783.) The possibility that the EU courts may consider this issue at some stage in the future is both contingent and remote. We cannot accept that in such circumstances the duty of sincere co operation requires the imposition of a stay on the enforcement of the award. Conclusion on the cross appeal For these reasons the duty of sincere co operation is not applicable in this case and there is no impediment to the lifting of the stay, which is an unlawful measure in international law and unjustified and unlawful in domestic law. We would therefore allow the cross appeal of the Claimants and lift the stay on enforcement of the award. The appeal In the light of our conclusion in relation to the cross appeal, it is no longer necessary to consider the appeal in relation to the provision of security. We would discharge the order for security.
UK-Abs
The appeals arise out of the attempted enforcement of an investment arbitration award (the Award) in favour of the Respondents to this appeal (the Claimants) against the Appellant (Romania) in relation to investments made by the Claimants in food production in Romania before the country acceded to the European Union (EU). With effect from 1 April 1999, Romania adopted an investment incentive scheme for certain regions (EGO 24). On 30 June 1999, Romania incorporated EU State aid rules into domestic law, as a result of which EGO 24 was modified. During the early 2000s, the Claimants invested in a large, highly integrated food production operation in the relevant region in reliance on EGO 24. In 2002, Romania and Sweden entered into a bilateral investment treaty (the BIT) providing reciprocal protection of investments and investor State arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). During the accession negotiations between Romania and the EU before its accession on 1 January 2007, the EU informed Romania that certain schemes, including EGO 24, were contrary to EU State aid rules. As a result, Romania repealed all but one of the incentives under EGO 24. On 28 July 2005, the Claimants filed a request for ICSID arbitration under the BIT based on this repeal. On 11 December 2013, the tribunal issued the Award, deciding that Romania had breached the BIT and awarding compensation of approximately 70m plus interest. Romania unsuccessfully applied to annul the Award. Romania purported to implement the Award by setting off tax debts owed by one of the Claimants. This precipitated the European Commission issuing an injunction on 26 May 2014 ordering Romania to suspend any action that might lead to execution of the Award until the Commission had taken a final decision on its compatibility with State aid rules (the injunction decision). On 1 October 2014, the Commission formally opened a State aid investigation (the initiating decision). On 30 March 2015, the Commission adopted a final decision (the Commission Decision) concluding that the payment of the Award by Romania constituted unlawful State aid. The Claimants sought annulment of the Commission Decision before the General Court of the European Union (the GCEU) in 2015. On 18 June 2019, the GCEU annulled the Commission Decision on the ground that the Commission had purported to apply its powers retroactively to events pre dating Romanias accession to the EU. The Commission applied to appeal this decision. The English proceedings were started in 2014 by the Claimants applying for registration of the Award under the Arbitration (International Investment Disputes) Act 1966 (the 1966 Act), which was granted. In 2015, Romania applied for a stay of enforcement and the Claimants sought an order for security. In 2017, the High Court granted Romanias application to stay enforcement pending the GCEU proceedings and refused the Claimants application for security. The Claimants appealed these orders. In 2018, the Court of Appeal continued the stay but ordered that Romania provide security. Romania appealed the order for security and the Claimants cross appealed the grant of a stay. The hearing before the Supreme Court was listed to start on 18 June 2019, but that morning the GCEU handed down its judgment, causing the hearing to be adjourned until October 2019. The Supreme Court unanimously allows the Claimants cross appeal and lifts the stay. In light of this, it is no longer necessary to consider Romanias appeal in relation to security, so that order is discharged. Lord Lloyd Jones and Lord Sales give the judgment, with which all members of the Court agree. The Court considers the Claimants cross appeal first [40]. The Claimants appeal the stay on five grounds: (1) the effect of the GCEUs judgment is that the duty of sincere co operation no longer requires the English courts to stay enforcement; (2) there is no power to order a stay under the ICSID Convention and the 1966 Act; (3) the stay is incompatible with the ICSID Convention; (4) the European Communities Act 1972 does not require the United Kingdom to breach pre accession obligations under the ICSID Convention; and (5) Article 351 of the Treaty on the Functioning of the EU (TFEU) applies, with the result that the obligations of the United Kingdom under the pre accession ICSID Convention are not subject to the overriding effect of EU law [38] [39]. First, the Claimants submit that the GCEU decision annulling the Commission Decision changes the circumstances, meaning there is no EU law duty on the English courts to stay enforcement [43]. Romania, and the Commission intervening, submit that the GCEU judgment annuls only the Commission Decision and not the injunction or initiating decisions [44]. The Court considers that the GCEU judgment leaves in existence an extant Commission investigation into State aid. Without a final Commission decision closing the formal investigation procedure, the effects of the initiating decision subsist, imposing a duty of sincere co operation on the English courts [51]. Second, in relation to the Claimants second and third grounds, the Court examines the ICSID Convention and the 1966 Act [60] [63]. The Court emphasises that the scheme of the ICSID Convention does not permit a domestic court before which recognition is sought to re examine an award on its merits, once its authenticity is established [68]. In light of the wording of articles 54(1) and the preparatory materials, it is arguable that there is scope for certain exceptional defences against enforcement if national law recognises them in respect of final domestic judgments [78]. Though the proper interpretation of article 54(1) of the ICSID Convention is something which could only be authoritatively resolved by the International Court of Justice, it does not affect the outcome of the present case [83]. The Court agrees with the majority in the Court of Appeal that English courts have the power to stay execution of an ICSID award in the limited circumstances they describe, but in the present circumstances the granting of a stay exceeds the proper limits of that power and is not consistent with the ICSID Convention [84]. Finally, the Claimants fourth and fifth grounds collapse into one another and thus fall to be considered together [89]. Article 351 TFEU is intended to establish that the application of the EU treaties does not affect the duty of a member state to respect the rights of non member states under a prior agreement and to perform its obligations thereunder [97]. In the Courts view, the specific duties in articles 54 and 69 of the ICSID Convention are owed to all other Contracting States, including non member states [107] [108]. The duty of sincere co operation does not require courts in this jurisdiction to decline to decide the issue pending its resolution by the EU courts; EU case law makes it clear that questions regarding prior treaties under article 351 are not reserved to the EU courts. The article 351 issue here the extent of the United Kingdoms obligations under the ICSID Convention is not the same issue that is before the EU courts [112] [113]. The possibility that the EU courts may consider the issue at some future stage is contingent and remote. In such circumstances the duty of sincere co operation does not require the imposition of a stay of enforcement of the Award [117]. The Court therefore allows the Claimants cross appeal and lifts the stay. In light of this conclusion, it is no longer necessary to consider Romanias appeal in relation to security [118] [119].
This appeal concerns the supposed principle that reflective loss cannot be recovered. Before describing the factual background, or entering into the details of the legal issues, it may be helpful to begin by considering some basic principles of our law. Introduction It is not uncommon for two persons, A and B, to suffer loss as a result of the conduct of a third person, C. If that conduct was in breach of an obligation owed by C to A, then A will in principle have a cause of action against C. If the conduct was also in breach of an obligation owed by C to B, then B will also have a cause of action against C. A and B are both at liberty to sue C whenever they please, subject to rules as to limitation and prescription, and C is normally liable to compensate them both for the loss which they have suffered. If A obtains and enforces a pecuniary award against C, and some time later B also seeks a similar award but C is unable to pay it, then in principle that is Bs misfortune. However, where C is insolvent at the time when the first claim is made against him, the law of insolvency protects the position of both A and B by imposing a regime for the distribution of Cs assets among his creditors which ensures that they are treated equally, after the claims of secured or preferred creditors have been met. The position can become more complicated where A and B have concurrent claims in respect of losses which are inter related in such a way that a payment by C to one of them will have the practical effect of remedying the loss suffered by the other. The general position in situations of that kind was described by Brandon J in The Halcyon Skies [1977] QB 14, 32: There is no reason, as a matter of law, why two different persons should not have concurrent rights of recovery, based on different causes of action, in respect of what is in substance the same debt. The court will not allow double recovery or, in a case of insolvency, double proof against the insolvent estate: The Liverpool (No 2) [1963] P 64. Subject to this, however, either of the two persons is entitled to enforce his right independently of the other. The principle that double recovery should be avoided does not prevent a claimant from bringing proceedings for the recovery of his loss. But the court will have to consider how to avoid double recovery in situations where the issue is properly before it. Procedurally, that may occur in a number of ways. For example, both claimants may bring proceedings concurrently, or the wrongdoer may raise the issue by way of defence to proceedings brought by one claimant, and join the other potential claimant as a defendant, or the court may itself direct the claimant to notify the other potential claimant so that he has an opportunity to intervene (as explained in In re Gerald Cooper Chemicals Ltd [1978] Ch 262, 268 269). The principle that double recovery should be avoided does not deflect the law from compensating both claimants, but affects the remedial route by which the law achieves that objective. There are a number of ways in which the law can avoid double recovery, or double proof in insolvency, where concurrent rights of recovery might otherwise have that result. In some circumstances, priority is given to the cause of action held by one person, and the claim of the other person is excluded so far as may be necessary to avoid double recovery. The rationale in such cases is that, by directly achieving its remedial objective in respect of the person who is permitted to bring the prior claim, the law indirectly achieves that objective in respect of the person whose claim is excluded. That was the approach adopted, for example, in the decision cited by Brandon J, The Liverpool (No 2) [1963] P 64. In that case, a port authority sought to prove against an insolvent fund, established to meet the liabilities of the owners of one vessel, the Liverpool, for the cost of clearing the wreck of another, the Ousel, which had been damaged in a collision for which the Liverpool was responsible. The authority also made a statutory claim for the same cost against the owners of the Ousel, and they in turn sought to prove for that amount against the fund. The Court of Appeal held that the claim of the authority against the fund should be given priority over that of the owners of the Ousel, since the authority was actually out of pocket, while the claim of the owners of the Ousel against the fund should be disallowed. It also observed that it would be consonant with justice and good sense that, in the event that the authority sought to recover also from the owners of the Ousel (for any balance remaining after it had received a dividend out of the fund), it would have to give credit for the amount that it had already recovered. In that way, the owners of the Ousel benefited from the authoritys recovery from the fund to the same extent as they would have done if their claim against the fund had been allowed. A similar approach, in the context of concurrent claims arising out of the breach of a construction contract, can be seen in Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518, 595. There are also circumstances in which the law finds other means of avoiding double recovery, such as subrogation (as discussed, for example, in Gould v Vaggelas [1984] HCA 68; (1984) 157 CLR 215), or the imposition on one claimant of an obligation to account to the other out of the damages which the former has received (as, for example, in OSullivan v Williams [1992] 3 All ER 385). The most suitable approach to adopt in a particular case will depend upon its circumstances. This appeal is concerned with a particular type of situation in which two persons, A and B, suffer loss as a result of the conduct of a third person, C. The situation in question is one in which A is a company, B is a creditor of that company, and Bs loss is consequential upon the loss suffered by A, because Cs conduct has rendered A insolvent and unable to pay its debt to B. The fact that a claim lies at the instance of a company rather than a natural person, or some other kind of legal entity, does not in itself affect the claimants entitlement to be compensated for wrongs done to it. Nor does it usually affect the rights of other persons, legal or natural, with concurrent claims. There is, however, one highly specific exception to that general rule. It was decided in the case of Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 that a shareholder cannot bring a claim in respect of a diminution in the value of his shareholding, or a reduction in the distributions which he receives by virtue of his shareholding, which is merely the result of a loss suffered by the company in consequence of a wrong done to it by the defendant, even if the defendants conduct also involved the commission of a wrong against the shareholder, and even if no proceedings have been brought by the company. As appears from that summary, the decision in Prudential established a rule of company law, applying specifically to companies and their shareholders in the particular circumstances described, and having no wider ambit. The rule in Prudential, as I shall refer to it, is distinct from the general principle of the law of damages that double recovery should be avoided. In particular, one consequence of the rule is that, where it applies, the shareholders claim against the wrongdoer is excluded even if the company does not pursue its own right of action, and there is accordingly no risk of double recovery. That aspect of the rule is understandable on the basis of the reasoning in Prudential, since its rationale is that, where it applies, the shareholder does not suffer a loss which is recognised in law as having an existence distinct from the companys loss. On that basis, a claim by the shareholder is barred by the principle of company law known as the rule in Foss v Harbottle (1843) 2 Hare 461: a rule which (put shortly) states that the only person who can seek relief for an injury done to a company, where the company has a cause of action, is the company itself. Putting matters broadly at this stage, in Johnson v Gore Wood & Co [2002] 2 AC 1 the House of Lords purported to follow Prudential, but the reasoning of some members of the Appellate Committee was not clearly confined to circumstances of the kind with which Prudential was concerned. In particular, the reasoning of Lord Millett, which proved particularly influential in subsequent cases, advanced a number of other justifications for the exclusion of the shareholders claim whenever the company had a concurrent claim available to it, of wider scope than the approach adopted in Prudential. The decision in Johnson has been interpreted in later cases as establishing a principle, generally referred to as the reflective loss principle, whose legal basis and scope are controversial. This supposed principle has been applied to claims brought by a claimant in the capacity of a creditor of a company, where he also held shares in it, and the company had a concurrent claim. In the present case, the Court of Appeal held that the principle applied to a claim brought by an ordinary creditor of a company (who was not a shareholder), where the company had a concurrent claim. In the present appeal, the court is invited to clarify, and if necessary depart from, the approach adopted in Johnson, and to overrule some later authorities. It is also necessary for the court to examine the rationale and effect of the decision in Prudential, in order to consider the reasoning in Johnson and the later cases. The present appeal The appeal is brought against an order of the Court of Appeal (Lewison, Lindblom and Flaux LJJ), allowing an appeal against an order made by Knowles J in the Commercial Court. In summary, an application was made to Knowles J to set aside an order giving permission for service of proceedings on the respondent, Mr Sevilleja, out of the jurisdiction. One of the arguments advanced by Mr Sevilleja in support of his application was that the appellant, Marex, did not have a good arguable case against him because the losses which Marex was seeking to recover were reflective of loss suffered by two companies which had concurrent claims against him, and were therefore not open to Marex to claim. The judge held that Marex had a good arguable case that its claim was not precluded by the reflective loss principle, and therefore dismissed Mr Sevillejas application: [2017] EWHC 918 (Comm); [2017] 4 WLR 105. On appeal, the Court of Appeal accepted that the reflective loss principle applied to about 90% of Marexs claim: [2018] EWCA Civ 1468; [2019] QB 173. The effect of the Court of Appeals decision is that although Marexs permission to serve out was not set aside, it can pursue its claim only as regards the 10% of its alleged losses which were conceded not to be reflective. The facts It is common ground that, for the purposes of the present proceedings, the facts must be taken to be as alleged by Marex in its particulars of claim and supporting documents. On that basis, the material facts which, it should be made clear, are disputed by Mr Sevilleja can be summarised as follows. Mr Sevilleja was the owner and controller of two companies incorporated in the British Virgin Islands (the BVI), Creative Finance Ltd and Cosmorex Ltd (the Companies), which he used as vehicles for trading in foreign exchange. Marex brought proceedings against the Companies in the Commercial Court for amounts due to it under contracts which it had entered into with them. Following a trial before Field J in April 2013, Marex obtained judgment against the Companies for more than US$5.5m. It was also awarded costs which were later agreed at 1.65m. Field J provided the parties with a confidential draft of his judgment on 19 July 2013, the judgment being handed down and orders for payment made on 25 July 2013. Over a few days starting on or shortly after 19 July 2013, Mr Sevilleja procured that more than US$9.5m was transferred offshore from the Companies London accounts and placed under his personal control. By the end of August 2013, the Companies disclosed assets of US$4,329.48. The object of the transfers was to ensure that Marex did not receive payment of the amounts owed by the Companies. In procuring the transfers, Mr Sevilleja acted in breach of duties owed to the Companies. The Companies were placed into insolvent voluntary liquidation in the BVI by Mr Sevilleja in December 2013, with alleged debts exceeding US$30m owed to Mr Sevilleja and persons and entities associated with him or controlled by him. Marex was the only non insider creditor. According to Marex, the liquidator has been paid a retainer, and has been indemnified against his fees and expenses, by an entity controlled by Mr Sevilleja or associated with him. The liquidation process has effectively been on hold. The liquidator has not taken any steps to investigate the Companies missing funds or to investigate the claims submitted to him, including claims submitted by Marex. Nor has he issued any proceedings against Mr Sevilleja. Marex refers in its pleadings to proceedings in the United States, where the court, after hearing evidence, refused to recognise the BVI liquidation as a main proceeding under Chapter 15 of the US Bankruptcy Code. It described the liquidation as a device to thwart enforcement of a $5m judgment against the [Companies] that Marex won in the courts of England and the most blatant effort to hinder, delay and defraud a creditor this Court has ever seen: In re Creative Finance Ltd (In Liquidation) et al, (2016) 543 BR 498, p 502 (United States Bankruptcy Court for the Southern District of New York). It also found that [f]rom beginning to end, Sevillejas tactics were a paradigmatic example of bad faith, and the Liquidators actions and inaction facilitated them (p 503). Mr Sevilleja was found to be guilty of attempting (unfortunately, successfully) to control a BVI liquidator, who was supposed to act as an independent fiduciary, by the purse strings [and] depriving the Liquidator of the resources he needed to properly do his job (p 513). In the present claim against Mr Sevilleja, Marex seeks damages in tort for (1) inducing or procuring the violation of its rights under the judgment and order of Field J dated 25 July 2013, and (2) intentionally causing it to suffer loss by unlawful means. The amounts claimed are (1) the amount of the judgment debt, interest and costs awarded by Field J, less an amount recovered in US proceedings concerning the bankruptcy of a company which was indebted to the Companies, and (2) costs incurred by Marex in the US proceedings and in other attempts to obtain payment of the judgment debt. Mr Sevilleja concedes that those costs fall outside the scope of the reflective loss principle. The issues in the appeal are agreed by the parties to be the following: 1. Whether the No Reflective Loss Rule applies in the case of claims by company creditors, where their claims are in respect of loss suffered as unsecured creditors, and not solely to claims by shareholders. 2. Whether there is any and if so what scope for the court to permit proceedings claiming for losses which are prima facie within the No Reflective Loss Rule, where there would otherwise be injustice to the claimant through inability to recover, or practical difficulty in recovering, genuine losses intentionally inflicted on the claimant by the defendant in breach of duty both to the claimant and to a company with which the claimant has a connection, and where the losses are felt by the claimant through the claimant's connection with the company. Prudential Assurance v Newman Industries (No 2) Although incorporated companies have long existed, it was only towards the end of the 19th century that the independent legal personality of the company was conclusively established by the decision of the House of Lords in Salomon v A Salomon & Co Ltd [1897] AC 22. During the 20th century, the implications of corporate personality for rights of property, and for the nature of a shareholders interest, were addressed by the courts in a series of cases, including Macaura v Northern Assurance Co Ltd [1925] AC 619 and Short v Treasury Comrs [1948] 1 KB 116, affirmed [1948] AC 534. In more recent times, the courts have had to consider the position where a shareholder seeks to recover damages in respect of a diminution in the value of his shareholding or in the distributions received from the company, resulting from a loss suffered by the company in respect of which the company has its own cause of action. The issue appears to have arisen for the first time in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2). The case concerned a situation where the directors of a company were alleged to have made a fraudulent misrepresentation in a circular distributed to its shareholders, so as to induce them to approve the purchase of assets at an overvalue from another company in which the directors were interested. Prudential, which was a minority shareholder in the company, brought a personal and a derivative action against the directors, claiming that they had committed the tort of conspiracy against the company and its members. In relation to the personal claim, the Court of Appeal (Cumming Bruce, Templeman and Brightman LJJ) concluded that, where a company and its shareholders had suffered wrongs which resulted in a loss to the company and a fall in the value of its shares, a shareholder could not bring a personal action against the wrongdoer. The court devoted most of its judgment to the derivative action, and dealt with the personal action relatively briefly. It approached the issue on the basis that the directors had acted in breach of their obligations to the shareholders (p 222), and that the loss suffered by the company had brought about a fall in the value of its shares. It recorded at p 222 that no facts were relied upon in support of the personal claim which were not relied upon in support of the derivative claim. It also expressed the opinion, at pp 223 224, that the plaintiffs were never concerned to recover in the personal action, and were only interested in it as a means of circumventing the rule in Foss v Harbottle, which stood directly in the way of a derivative action. Nevertheless, it dealt with the personal action on the basis of general principles rather than on its particular facts; and the courts decision was treated by the House of Lords in Johnson as establishing principles of general application, which Lord Bingham of Cornhill set out at pp 35 36 (see para 41 below). The court disallowed Prudentials claim on the ground that it had not suffered any personal loss. It stated at pp 222 223: But what he [the shareholder] cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a loss is merely a reflection of the loss suffered by the company. As that passage makes clear, the decision was concerned only with a diminution in the value of shares or in distributions, suffered by a shareholder merely because the company had itself suffered actionable damage. It was not concerned with other losses suffered by a shareholder, or with situations where the company had not suffered any actionable loss. The court explained its reasoning as follows, at p 223: The shareholder does not suffer any personal loss. His only loss is through the company, in the diminution in the value of the net assets of the company . The plaintiffs shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. That reasoning requires elaboration. It is unrealistic to assert as a matter of fact that the shareholder does not suffer any personal loss: ex hypothesi, there has been a fall in the value of his shares. It is not immediately obvious what it means to say that his only loss is through the company. It is, however, possible to explain the courts decision, particularly in the light of later passages in the judgment. As I understand its reasoning, what the court meant, put shortly, was that where a company suffers actionable loss, and that loss results in a fall in the value of its shares (or in its distributions), the fall in share value (or in distributions) is not a loss which the law recognises as being separate and distinct from the loss sustained by the company. It is for that reason that it does not give rise to an independent claim to damages on the part of the shareholders. The court provided at p 223 an illustration of its approach: Suppose that the sole asset of a company is a cash box containing 100,000. The company has an issued share capital of 100 shares, of which 99 are held by the plaintiff. The plaintiff holds the key of the cash box. The defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key. The defendant then robs the company of all its money. The effect of the fraud and the subsequent robbery, assuming that the defendant successfully flees with his plunder, is (i) to denude the company of all its assets; and (ii) to reduce the sale value of the plaintiffs shares from a figure approaching 100,000 to nil. There are two wrongs, the deceit practised on the plaintiff and the robbery of the company. But the deceit on the plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company The plaintiff obviously cannot recover personally some 100,000 damages in addition to the 100,000 damages recoverable by the company. (Emphasis added) The court also made it clear that the companys failure to recover its loss would not open the door to recovery by the shareholder, asking rhetorically how the failure of the company to pursue its claim could entitle the shareholder to recover the loss for himself. The cash box example has been criticised for its artificiality. Certainly, by envisaging a company whose only asset was cash, the court greatly simplified a situation which, in real life, is likely to be more complex. But the point being made has a rationale in real life as well as in the simplified example. The starting point is the nature of a share, and the attributes which render it valuable. A share is not a proportionate part of a companys assets: Short v Treasury Comrs. Nor does it confer on the shareholder any legal or equitable interest in the companys assets: Macaura v Northern Assurance Co Ltd. As the court stated in Prudential, a share is a right of participation in the company on the terms of the articles of association. The articles normally confer on a shareholder a number of rights, including a right to vote on resolutions at general meetings, a right to participate in the distributions which the company makes out of its profits, and a right to share in its surplus assets in the event of its winding up. Where a company suffers a loss, that loss may affect its current distributions or the amount retained and invested in order to pay for future distributions (or, if the company is wound up, the surplus, if any, available for distribution among the shareholders). Since the value of a companys shares is commonly calculated on the basis of anticipated future distributions, it is possible that a loss may result in a fall in the value of the shares. That is, however, far from being an inevitable consequence: companies vary greatly, and the value of their shares can fluctuate upwards or downwards in response to a wide variety of factors. In the case of a small private company, there is likely to be a close correlation between losses suffered by the company and the value of its shares. In the case of a large public company whose shares are traded on a stock market, on the other hand, a loss may have little or no impact on its share value. If there is an impact on share value, it will reflect what Lord Millett described in Johnson [2002] 2 AC 1, 62 as market sentiment, and will not necessarily be equivalent to the companys loss. If the companys loss does not affect the value of its shares, then there is no claim (or at least no sustainable claim) available to a shareholder, and in principle the problem addressed in Prudential does not arise. A problem only arises where, as in Prudential, a shareholder claims that the companys loss has had a knock on effect on the value of his shares. Considering, then, the situation where a company suffers actionable loss as the result of wrongdoing, the company then acquires a right of action. If the companys loss results (or is claimed to result) in a fall in the value of its shares, then, but for the rule in Prudential, the shareholder would simultaneously acquire a concurrent right of action. The purpose of an award of damages to the company is to restore it to the position in which it would have been if the wrongdoing had not occurred. In circumstances where an award which restores the companys position to what it would have been if the wrongdoing had not occurred would also restore the value of the shares, the only remedy which the law would require to provide, in order to achieve its remedial objectives of compensating both the company and its shareholders, would be an award of damages to the company. For the shareholders to have a personal right of action, in addition to the companys right of action, would in those circumstances exceed what was necessary for the law to achieve those objectives, and would give rise to a problem of double recovery. Most of the cases in which the rule in Prudential has been applied (but not Prudential itself) have concerned small private companies, where those circumstances are likely to have existed. As I have explained, however, there are also circumstances where there may not be a close correlation between the companys loss and any fall in share value. The avoidance of double recovery cannot, therefore, be sufficient in itself to justify the rule in Prudential. That conclusion is also supported by another point. What if the company fails to pursue a right of action which, in the opinion of a shareholder, ought to be pursued, or compromises its claim for an amount which, in the opinion of a shareholder, is less than its full value? If that opinion is shared by a majority of the shareholders, then the companys articles will normally enable them to direct the companys course of action by passing a suitable resolution at a general meeting. Even if the shareholder finds himself in a minority, he has a variety of remedies available to him, including the bringing of a derivative action on the companys behalf, equitable relief from unfairly prejudicial conduct, or a winding up on the just and equitable ground, if (put shortly) those in control of the company are abusing their powers. But what if the companys powers of management are not being abused, and a majority of shareholders approve of the companys decision not to pursue the claim, or its decision to enter into a settlement? Should the minority shareholder not then be able to pursue a personal action? In Prudential, the court answered that question in the negative, stating at p 224 that the rule in Foss v Harbottle would be subverted if the shareholder could pursue a personal action. The rule, as stated in Edwards v Halliwell [1950] 2 All ER 1064 and restated in Prudential at pp 210 211, has two aspects. The first is that the proper plaintiff in an action in respect of a wrong alleged to be done to a corporation is, prima facie, the corporation. As was explained in Prudential at p 210, one of the consequences of that aspect of the rule is that a shareholder cannot, as a general rule, bring an action against a wrongdoer to recover damages or secure other relief for an injury done to the company. The second aspect of the rule is that [w]here the alleged wrong is a transaction which might be made binding on the corporation and on all its members by a simple majority of the members, no individual member of the corporation is allowed to maintain an action in respect of that matter because, if the majority confirms the transaction, cadit quaestio [the question falls]; or, if the majority challenges the transaction, there is no valid reason why the company should not sue. This second aspect of the rule reflects the fact that the management of a companys affairs is entrusted to the decision making organs established by its articles of association, subject to the exceptional remedies mentioned in para 34 above. When a shareholder invests in a company, he therefore entrusts the company ultimately, a majority of the members voting in a general meeting with the right to decide how his investment is to be protected. As the court stated in Prudential at p 224: When the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and that he can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meeting. Accordingly, in a situation where a shareholder claims that his shares have fallen in value as a result of a loss suffered by the company, and the company has a right of action in respect of that loss, the shareholder can exercise such rights of control over its decision making as have been granted to him by the articles of association. These normally provide for the ultimate control of the companys affairs by a majority of the shareholders voting at a general meeting. A minority shareholder has other remedies available to him if the companys management is acting improperly, including a derivative action and an application for relief against unfairly prejudicial conduct. As the court observed in Prudential, to allow the shareholder in addition to pursue a personal action would subvert the rule in Foss v Harbottle. This is not merely a theoretical concern. Examples of the use of personal actions, post Johnson, to circumvent the rule in Foss v Harbottle are discussed in paras 52 53 below. The existence of concurrent claims could also result in the shareholders preventing the companys management from dealing with its claim in the way they considered appropriate in the best interests of the company, thereby undermining the rule in Foss v Harbottle. That could occur, for example, where the companys management wanted to compromise the companys claim but were prevented from doing so by the shareholders refusal to enter into a settlement with the wrongdoer. One can envisage other situations where the existence of concurrent claims could result in the shareholders acting contrary to the companys interests, for example where the wrongdoers assets were inadequate to satisfy both claims. But the effect of the rule in Foss v Harbottle, as the court said in Prudential at p 224, is that [the shareholder] accepts the fact that the value of his investment follows the fortunes of the company. It is for that reason that the rule in Prudential has been said to recognise the unity of economic interests which bind a shareholder and his company: Townsing v Jenton Overseas Investment Pte Ltd [2007] SGCA 13; [2008] 1 LRC 231, para 77. In addition to arguments based on Foss v Harbottle, there are also pragmatic advantages in a clear rule that only the company can pursue a right of action in circumstances falling within the ambit of the decision in Prudential. As Lord Hutton commented in Johnson at p 55, the rule in Prudential has the advantage of establishing a clear principle, rather than leaving the protection of creditors and other shareholders of the company to be given by a judge in the complexities of a trial. Those complexities should not be underestimated. Even without the complications arising from the existence of concurrent claims, it would not be straightforward to establish the extent, if any, to which a fall in the value of a companys shares was attributable to a loss that it had suffered as a consequence of the defendants wrongdoing. But the existence of a concurrent claim by the company would add another dimension to the difficulties. It would be necessary, for example, to take account of the fact that the wrongdoing had resulted in the companys acquiring an asset, namely its right of action against the defendant, which might have offset any detrimental effect of the wrongdoing on the value of his shares. It would also be necessary to consider the question of double recovery, and how it should be addressed both procedurally and substantively. Those issues might have to be addressed in the context of a proliferation of claims, possibly in different proceedings, at different times, and in different jurisdictions. They would also arise in a context where there might well be conflicts of interest between the shareholder and the companys directors, its liquidator, other shareholders, and creditors. In summary, therefore, Prudential decided that a diminution in the value of a shareholding or in distributions to shareholders, which is merely the result of a loss suffered by the company in consequence of a wrong done to it by the defendant, is not in the eyes of the law damage which is separate and distinct from the damage suffered by the company, and is therefore not recoverable. Where there is no recoverable loss, it follows that the shareholder cannot bring a claim, whether or not the companys cause of action is pursued. The decision had no application to losses suffered by a shareholder which were distinct from the companys loss or to situations where the company had no cause of action. Johnson v Gore Wood & Co The decision in Prudential was considered by the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1. The case concerned alleged negligence on the part of solicitors acting for a private company, which caused it to suffer losses. The company brought proceedings against the solicitors, which were settled during the sixth week of the trial for a very substantial proportion of the sum claimed, as Lord Bingham explained at p 18. Mr Johnson, who owned virtually all the shares in the company and was its managing director, then brought proceedings against the solicitors in which he alleged that they had also acted in breach of a duty owed to him personally, and that he had suffered personal losses. The claim was struck out as an abuse of process. Mr Johnson appealed against the striking out of his claim, and the defendants cross appealed to have certain heads of loss struck out on the ground that Mr Johnson was seeking to recover for damage which had been suffered by the company. It is only the latter aspect of the case which needs to be considered. Lord Bingham stated at pp 35 36 that the authorities supported the following statement of principle: (1) Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholders shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the companys assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss. So much is clear from Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, particularly at pp 222 223, Heron International [Heron International Ltd v Lord Grade [1983] BCLC 244], particularly at pp 261 262, George Fischer [George Fischer (Great Britain) Ltd v Multi Construction Ltd [1995] 1 BCLC 260], particularly at pp 266 and 270 271, Gerber [Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443] and Stein v Blake [[1998] 1 All ER 724], particularly at pp 726 729. (2) Where a company suffers loss but has no cause of action to sue to recover that loss, the shareholder in the company may sue in respect of it (if the shareholder has a cause of action to do so), even though the loss is a diminution in the value of the shareholding. This is supported by Lee v Sheard [1956] 1 QB 192, 195 196, George Fischer and Gerber. (3) Where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other. I take this to be the effect of Lee v Sheard, at pp 195 196, Heron International, particularly at p 262, R P Howard [RP Howard Ltd v Woodman Matthews & Co [1983] BCLC 117], particularly at p 123, Gerber and Stein v Blake, particularly at p 726. I do not think the observations of Leggatt LJ in Barings [Barings plc v Coopers & Lybrand [1997] 1 BCLC 427] at p 435B and of the Court of Appeal of New Zealand in Christensen v Scott [1996] 1 NZLR 273 at p 280, lines 25 35, can be reconciled with this statement of principle. In Lord Binghams proposition (1), the first sentence is a statement of the rule in Foss v Harbottle. The second sentence encapsulates the reasoning in Prudential, and explains why, in the circumstances described, a shareholder who is suing in that capacity and no other cannot bring a claim consistently with the rule in Foss v Harbottle. The third sentence should not be understood as limiting the rule in Prudential to cases where there is an exact correlation between the companys loss and the fall in share value. As was explained at paras 32 38 above, it is possible to envisage cases where there is not a precise correlation, and where recovery by the company might not therefore fully replenish the value of its shares, but where the rule in Prudential would nevertheless apply. Lord Binghams proposition (2), stating that a shareholder can sue for reflective loss where the company has no cause of action, on the authority of Lee v Sheard, George Fischer (Great Britain) Ltd v Multi Construction Ltd and Gerber Garment Technology Inc v Lectra Systems Ltd, merits closer consideration. In Lee v Sheard the plaintiff was a company director and shareholder who earned his living by working for the company and being remunerated by distributions out of its profits. He suffered injuries in a road accident for which the defendant was responsible. He was unable to work while he recovered from his injuries, and as a result there was a fall in the companys profits, which led to a reduction in the distributions paid to him. He recovered damages for his loss of earnings. The company had no cause of action against the negligent driver. This was not, therefore, a case concerned with concurrent claims. The plaintiffs loss of earnings took the form of a reduction in distributions, but it was not merely a reflection of the loss suffered by the company, in the phrase used in Prudential (para 26 above). He, not the company, had been injured in the road accident. He, not the company, was entitled to recover damages for his loss. In George Fischer (Great Britain) Ltd v Multi Construction Ltd, the defendant entered into a contract with the plaintiff company (the shareholder) to install equipment at the premises of one of its subsidiaries (the company). When the equipment proved defective, causing the company to suffer a loss of profits, the shareholder was held to be entitled to damages for breach of contract in respect of the loss which it had suffered as a result of the companys reduced profits. That was another case where the wrong was committed against the shareholder, not the company. Since the company had no cause of action, there was no reason why the shareholder should not recover its loss by means of an award of damages, in accordance with ordinary principles. Similar observations apply to Gerber Garment Technology Inc v Lectra Systems Ltd. The plaintiff company was the owner of a patent which was infringed, causing it to suffer a loss of income. As the commercial exploitation of the patent was carried on by its subsidiary, the plaintiffs loss of income took the form of a reduction in the distributions it received from its subsidiary. But it was the plaintiff, not its subsidiary, whose patent was infringed, and which suffered a loss of income to which its ownership of the patent entitled it. Lord Binghams proposition (3), stating (put shortly) that a shareholder can sue to recover a loss which is separate and distinct from that suffered by the company, reflects the fact that the shareholders loss, where it does not consist merely of a fall in the value of his shareholding, or in the distributions which he receives by virtue of his shareholding, does not fall within the ambit of the rule in Prudential. This proposition also makes it clear that the rule renders certain heads of loss irrecoverable, rather than barring a cause of action as such. Lord Bingham went on to explain how courts should apply the relevant principles: On the one hand the court must respect the principle of company autonomy, ensure that the companys creditors are not prejudiced by the action of individual shareholders and ensure that a party does not recover compensation for a loss which another party has suffered. On the other, the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation. (p 36) The aims identified in the first sentence respecting the principle of company autonomy, ensuring that the companys creditors are not prejudiced by the action of individual shareholders, and ensuring that a party does not recover compensation for a loss which another party has suffered are all objectives or consequences of the rule in Foss v Harbottle, and are consistent with the decision in Prudential. The second sentence reflects the fact that deciding whether a loss falls within the scope of the rule may call for the exercise of judgement. Before turning to Lord Binghams treatment of the losses claimed, it is necessary to consider Lord Milletts speech, which lies at the origin of the expansion of the supposed reflective loss principle in the subsequent case law. Lord Millett began by discussing the relationship between the companys assets and the value of its shares. A share, he said at p 62, represents a proportionate part of the companys net assets, and if these are depleted the diminution in its assets will be reflected in the diminution in the value of the shares. But a share is not a proportionate part of the companys net assets: see Macaura. The idea that a diminution in the value of a companys net assets will be reflected in the value of the shares is therefore not an axiomatic truth, as was noted in para 32 above. The rule in Prudential is not premised on any necessary relationship between a companys assets and the value of its shares (or its distributions). Approaching the matter on the basis which he had described, Lord Millett observed at p 62 that the problem which arose, where the company suffered loss caused by the breach of a duty owed to it, and a shareholder claimed to have suffered a consequent diminution in the value of his shareholding or in distributions, caused by the breach of a duty owed to it by the same wrongdoer, was the risk of double recovery, on the one hand, or a risk to the companys creditors through the depletion of its assets, on the other: If the shareholder is allowed to recover in respect of such loss, then either there will be double recovery at the expense of the defendant or the shareholder will recover at the expense of the company and its creditors and other shareholders. Neither course can be permitted Justice to the defendant requires the exclusion of one claim or the other; protection of the interests of the companys creditors requires that it is the company which is allowed to recover to the exclusion of the shareholder. As explained at para 33 above, the principle that double recovery should be avoided is not in itself a satisfactory explanation of the rule in Prudential. As was explained at paras 34 37 above, the unique position in which a shareholder stands in relation to his company, reflected in the rule in Foss v Harbottle, is a critical part of the explanation. In addition, as was explained at para 38 above, there are pragmatic advantages in adopting a clear rule. However, by treating the avoidance of double recovery a principle of wider application as sufficient to justify the decision in Prudential, Lord Millett paved the way for the expansion of the supposed reflective loss principle beyond the narrow ambit of the rule in Prudential. One problem with reasoning based on the avoidance of double recovery is that the principle is one of the law of damages. It does not deny the existence of the shareholders loss, as the rule in Prudential does, where the loss falls within its ambit, but on the contrary is premised on the recognition of that loss. Applying an approach based on the avoidance of double recovery, it is therefore possible for a shareholder to bring a personal action based on a loss which would fall within the ambit of the decision in Prudential, and to obtain a remedy which that decision would have barred to him, provided the relief that he seeks is not an award of damages in his own favour. This device has been exploited in a number of cases subsequent to Johnson, in ways which circumvent the rule in Foss v Harbottle: a rule which is not confined to actions for damages but also applies to other remedies, as explained at para 35 above. For example, in Peak Hotels and Resorts Ltd v Tarek Investments Ltd [2015] EWHC 3048 (Ch), the judge considered it arguable that the reflective loss principle, as explained by Lord Millett in Johnson, did not bar proceedings by a shareholder, who complained of a fall in the value of his shares resulting from loss suffered by the company in respect of which the company had its own cause of action, where the relief that he sought was not damages but a mandatory injunction requiring the defendant to restore property to the company. A similar view was taken in Latin American Investments Ltd v Maroil Trading Inc [2017] EWHC 1254 (Comm), where the shareholder complained of a fall in the value of its shares resulting from a breach of obligations owed to the company, which also involved a breach of contractual obligations owed to itself. It responded to the argument that its claim was for reflective loss by seeking an order for the payment of the contractual damages not to itself but to the company. A further example is Xie Zhikun v Xio GP Ltd, Cayman Islands Court of Appeal, unreported, 14 November 2018. Summarising complex facts, in that case the shareholder applied for a quia timet injunction to prevent the breach of fiduciary duties owed both to the company and to himself, which would cause the company to suffer loss, and would consequently affect the value of his interest in it. Sir Bernard Rix JA observed at para 66 that he did not see how, other than perhaps in terms of pure formalism the present case differs from a derivative action. Those cases demonstrate how right the Court of Appeal was in Prudential in considering that the rule established in that case, based on the absence of separate and distinct loss, was necessary in order to avoid the circumvention of the rule in Foss v Harbottle. The exception to that rule is the derivative action. Whether a shareholder can bring such an action depends on whether the relevant conditions are satisfied. The most obvious difficulty with the avoidance of double recovery, as an explanation of the judgment in Prudential, is perhaps its unrealistic assumption that there is a universal and necessary relationship between changes in a companys net assets and changes in its share value. Another serious problem is its inability to explain why the shareholder cannot be permitted to pursue a claim against a wrongdoer where the company has declined to pursue its claim or has settled it at an undervalue, and the risk of double recovery is therefore eliminated in whole or in part. In addressing this point, Lord Millett relied on a number of arguments, none of which, with respect, appears to me to be persuasive. The first was based on causation. Lord Millett stated at p 66 that, if the company chooses not to exercise its remedy, the loss to the shareholder is caused by the companys decision not to pursue its remedy and not by the defendants wrongdoing. The same reasoning, he added, applies if the company settles for less than it might have done. The logic of the argument is that it is impossible for the shareholder to suffer a loss caused by the wrongdoer, since his actions result in the companys loss being balanced by a right of action of equivalent value, so that its net assets are unaffected. It is only if the company fails to enforce its right of action that the shareholder can suffer a loss, and his loss will in that event be caused by the company. That reasoning might be contrasted with the logic of the argument based on the avoidance of double recovery, namely that the companys loss results in the shareholders suffering an equivalent loss, because their shares represent the companys net assets. As Lord Hutton observed in Johnson at p 54, causation does not provide a satisfactory explanation. One difficulty is that the failure of the company to sue the wrongdoer, or its decision to settle with him for less than the full value of its claim, may be the result of its impecuniosity, caused by the defendants wrongdoing. In those circumstances, the companys failure to recover its loss can hardly be regarded as interposing a novus actus interveniens between the defendants wrongdoing and the shareholders loss. Furthermore, in an economic tort case, where the shareholders claim is based on an allegation that the wrongdoer committed the wrongdoing with the intention of causing the shareholder to suffer loss, it is bizarre to say that the loss which the defendant intended to cause, and which ensued from his wrongdoing, was nevertheless not caused by what he did. In addition to the causation argument, Lord Millett put forward at p 66 two other reasons, which he described as policy considerations, for excluding the shareholders claim where the company had settled its claim. The first was that the personal interests of the directors might otherwise conflict with their fiduciary duty to the company. Presumably Lord Millett was envisaging a situation where the directors were also shareholders, and might be tempted to settle the companys claim at an undervalue, or fail to pursue it altogether, in order to recover the balance of the loss for their personal benefit. This reasoning does not, however, explain why shareholders are generally prevented from pursuing a claim for a fall in share value which is consequential on the companys loss, when the company has its own cause of action: the principle is not confined to shareholders who are also directors. Nor is it apparent why, having prohibited directors from acting in breach of their fiduciary duties, the law should also impose a disability on shareholders (who normally owe the company no such duties) as an additional, indirect, and indiscriminate safeguard. The second policy consideration was that it would be difficult for a liquidator to settle claims against wrongdoers for the benefit of the companys creditors, if the wrongdoers remained exposed to further claims brought by the shareholders: the conduct of the companys claims would effectively be taken out of the liquidators hands. This point is addressed by the rule in Prudential, consistently with the underlying rule in Foss v Harbottle, as was explained in para 37 above. The most serious difficulty with the approach favoured by Lord Millett is that the possibility of double recovery can arise where concurrent claims exist at the instance of companies and of persons who have suffered loss otherwise than as shareholders. As will be explained, Lord Milletts approach has been interpreted in subsequent cases as extending to such persons the same categorical exclusion of claims as he applied to shareholders. That is not the position on the approach adopted in Prudential: the loss suffered by a creditor, for example, when he cannot recover a debt owed to him by a company because of losses which it has incurred, stands in a different relationship to the companys loss from the loss sustained by a shareholder whose shares have fallen in value, and raises different issues. This is discussed at paras 62 63 and 84 85 below. Lord Millett went on to express the opinion that the concept of reflective loss extended beyond the diminution of the value of shares and the loss of dividends, stating at p 66 (omitting the citation): [I]t extends to all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds. All transactions or putative transactions between the company and its shareholders must be disregarded. Payment to the one diminishes the assets of the other. In economic terms, the shareholder has two pockets, and cannot hold the defendant liable for his inability to transfer money from one pocket to the other. (Emphasis added) It appears from the passage cited in para 62 below that those observations may have been intended to apply only to payments receivable by shareholders in that capacity, in which case they correctly recognise that distributions can take other forms besides the payment of dividends. However, the words that I have italicised repeat a point made earlier on p 66, when Lord Millett said: The test is not whether the company could have made a claim in respect of the loss in question; the question is whether, treating the company and the shareholder as one for this purpose, the shareholders loss is franked by that of the company. (Emphasis added) These passages appear to suggest that the separate legal personalities of the company and its shareholder are to be disregarded in this context. That would provide a simple explanation of why the company and its shareholders cannot have concurrent claims, but would also introduce an important exception to the fundamental principle in Salomon v A Salomon & Co Ltd, with potentially significant ramifications. That issue was not discussed. Millett continued at p 67: In words which have had a particular influence on later developments, Lord The same applies to other payments which the company would have made if it had had the necessary funds even if the plaintiff would have received them qua employee and not qua shareholder and even if he would have had a legal claim to be paid. His loss is still an indirect and reflective loss which is included in the companys claim. This is not altogether easy to follow. Lord Milletts reasoning in the preceding passage, cited (first) in para 61 above, is not transferable to persons whose claims are not brought as shareholders, but, for example, as employees or creditors of the company. As Lord Millett had indicated, a company may be regarded in economic terms as the alter ego of its shareholders. It cannot be regarded as the alter ego of its creditors or employees, or of shareholders whose claims are brought in the capacity of creditors or employees. If Lord Millett meant that all claims against a wrongdoer in respect of amounts which the company would have paid to the claimant if it had had the necessary funds must be excluded where the company also has a cause of action, then I would respectfully regard the dictum as going further than was necessary for the decision of the appeal, and as being mistaken. For example, one might envisage a situation in which a creditor of a company has entered into a contract with the wrongdoer, the performance of which would have preserved the companys solvency, and the wrongdoer then breaches the contract and also his duties to the company, rendering it insolvent and unable to pay the debt it owes to the creditor. If the creditor sues the wrongdoer for breach of contract, he is entitled to damages. The fact that the company also has a cause of action is no reason why the creditor should be deprived of the benefit of his contract. In the event that any issue of double recovery arises, it will need to be addressed; but that possibility is no reason for barring the creditors claim, regardless of whether any such issue arises in the particular case. Where the creditors claim against the wrongdoer is based on tort, it is equally important that he should not be deprived of the protection afforded by the law of tort, merely because the debt in question is owed to him by a company rather than a natural person. Turning to the remaining speeches in Johnson, Lord Goff of Chieveley agreed with Lord Milletts analysis. Lord Cooke of Thorndon accepted the correctness of the decision in Prudential, and agreed that the English authorities cited by Lord Bingham supported the three propositions which he had stated. He also concurred in the order proposed by Lord Bingham. On the other hand, some of his observations (at pp 45 and 47) suggest that he regarded the avoidance of double recovery and of prejudice to creditors as the critical considerations. Lord Hutton also emphasised those considerations (at p 54). He considered that the Prudential principle should be upheld, although he was critical of the reasoning in that case in so far as it denied that the shareholder had suffered a personal loss. The decision on the facts of Johnson is also important. The House of Lords concluded that two of the heads of loss should be struck out. The first of these was a claim for the fall in the value of Mr Johnsons shareholding in the company. Its being struck out followed from Lord Binghams proposition (1). The second was a claim for loss in respect of the value of a pension policy set up by the company for Mr Johnsons benefit. Since the striking out of this head of loss has featured prominently in the subsequent case law, it is necessary to consider the matter in some detail. Mr Johnson claimed that he had suffered loss as a result of the companys failure to make payments into the policy which it would have made out of its profits if it had not suffered the losses caused by the defendants. It was not suggested in any of the speeches, or in the judgment of the court below ([1999] BCC 474), that the company was under any obligation to Mr Johnson to pay the pension contributions. That aspect of his claim was not, therefore, brought as a creditor of the company. It appears, instead, that the pension contributions were a form of distribution of the companys profits to its 99% shareholder: an alternative to the payment of dividends or bonuses. Lord Bingham dealt with this aspect of the case extremely briefly: an indication that he did not regard it as raising any issue which he had not already addressed in his discussion of shareholders claims. He stated at p 36: [T]his claim relates to payments which the company would have made into a pension fund for Mr Johnson: I think it plain that this claim is merely a reflection of the companys loss and I would strike it out. The other members of the House agreed. There is no indication in the speeches, other than possibly in the passage in Lord Milletts speech cited at para 62 above, that the Appellate Committee intended, in its treatment of this element of Mr Johnsons claim, to suggest that the principle which excluded a shareholders claim for a diminution in the value of his shares or in the distributions which he received should also apply to claims brought otherwise than in the capacity of a shareholder. Lord Bingham clearly intended that the principle which he had explained should be confined to claims brought in that capacity: see the second sentence of his proposition (1), cited in para 41 above. His conclusion that this head of loss should be struck out was consistent with the application of that proposition. In summary, Johnson gives authoritative support to the decision in Prudential that a shareholder is normally unable to sue for the recovery of a diminution in the value of his shareholding or in the distributions he receives as a shareholder, which flows from loss suffered by the company, for the recovery of which it has a cause of action, even if it has declined or failed to make good that loss. Lord Binghams speech is consistent with the reasoning in Prudential. On the other hand, the reasoning in the other speeches, especially that of Lord Millett, departs from the reasoning in Prudential and should not be followed. Later cases Johnson has been followed by a multitude of cases in which litigants, usually relying on the speech of Lord Millett, have sought either to establish exceptions to the general principles laid down by Lord Bingham, or to establish that the rule against the recovery of reflective loss extends more widely than Johnson had determined. One of the issues which remained controversial was whether, notwithstanding Lord Binghams analysis, there were circumstances in which a shareholder could recover for loss which flowed from the companys loss where the company had a cause of action but failed to pursue it. In Giles v Rhind [2003] Ch 618 the Court of Appeal decided that such circumstances existed. The claimant was a former company director who was also a shareholder in the company. He brought proceedings against a defendant who had conducted a business in competition with that of the company, in breach of contractual obligations owed to both the claimant and the company. The companys action for damages had been discontinued due to its inability to find security for costs, as a result of impecuniosity caused by the defendants wrongdoing. The terms on which the action was discontinued precluded the company from bringing any further proceedings in relation to its claim. The claimant sought to recover for a variety of losses, including the loss of the value of his shares. The Court of Appeal allowed the claim to proceed to trial. It considered that it would be unjust to allow a wrongdoer to defeat a claim by shareholders on the basis that the claim was trumped by a right of action held by the company which his own wrongful conduct had prevented the company from pursuing. It concluded that the reflective loss principle, in so far as it was relevant, did not apply in those circumstances. One can sympathise with the Court of Appeals sense of the unattractiveness of the defendants position, but the fact that a wrongdoer has unmeritoriously avoided his liability in damages to A is not a reason for requiring him to pay damages to B. The basis of the decisions in Prudential and Johnson is that a shareholder, whose shares have fallen in value as the consequence of loss suffered by the company for the recovery of which it has a cause of action, has not suffered a recoverable loss. That conclusion does not depend on whether the company is financially able to bring proceedings or not. If the shareholder has not suffered a recoverable loss, he has no claim for damages, regardless of whether, or why, the company may have failed to pursue its own cause of action. The same criticism applies to the later decision in Perry v Day [2004] EWHC 3372 (Ch); [2005] 2 BCLC 405, where the court followed Giles v Rhind in a situation where the wrongdoer had abused his powers as a director of the company so as to prevent it from bringing a claim under which it could have recovered its loss. The solution which company law provides, in a situation of that kind, is the derivative action. Gardner v Parker A question left in doubt by Lord Milletts speech in Johnson was how widely the bar on the recovery of reflective loss applied. That issue came before the Court of Appeal in Gardner v Parker [2004] EWCA Civ 781; [2004] 2 BCLC 554. The claim was brought by the assignee of rights of action held by a company (the shareholder) which was both a shareholder and a creditor of a second company (the company), against a defendant who was a director of both the shareholder and the company. He was alleged to have sold the companys principal assets at an undervalue to another entity in which he had an interest, rendering the company insolvent, and preventing the shareholder from recovering the debt which the company owed it. In so acting, the defendant had acted in breach of fiduciary duties owed separately to the shareholder and to the company as a director of both of them. The shareholder then sought to recover in respect of the fall in the value of its shareholding, and also in respect of the loss arising from its inability to obtain repayment of the debt. Proceedings brought by another of the companys creditors against the purchaser of the companys assets had been resolved by a settlement, to which the company, acting by receivers appointed by that creditor over its property, and the defendant, were both party. Under the settlement, a payment was made to that creditor, and the defendant was released from all claims which the company might have against him (other than claims vested solely in its liquidators; but the company was not in liquidation). The Court of Appeal considered three questions. The first was whether the reflective loss principle applied where the wrongdoing took the form of a breach of fiduciary duty rather than the breach of a duty arising under the common law. The court held that it did, following its earlier decision in Shaker v Al Bedrawi [2003] Ch 350. That aspect of the decision is not challenged in the present appeal. The second question was whether the exception established in Giles v Rhind ought to be extended to a situation in which the company had disabled itself, under a settlement with the wrongdoer, from bringing proceedings against him for the recovery of its loss. The court held that it should not. As I have explained, I would hold that no such exception exists. The third question was whether the reflective loss principle applied to a claim arising from a creditors inability to recover a debt owed to it by a company in which the creditor was a shareholder. The court held that it did, relying on the treatment of the claim for loss of pension in Johnsons case, and applying Lord Milletts dictum, cited at para 62 above. Neuberger LJ stated at para 70: It is clear from those observations, and indeed from that aspect of the decision, in Johnsons case that the rule against reflective loss is not limited to claims brought by a shareholder in his capacity as such; it would also apply to him in his capacity as an employee of the company with a right (or even an expectation) of receiving contributions to his pension fund. On that basis, there is no logical reason why it should not apply to a shareholder in his capacity as a creditor of the company expecting repayment of his debt. The claim brought as a creditor was therefore dismissed. Taking this reasoning to its logical conclusion, Neuberger LJ added (ibid) that the same reasoning should apply even where the employee or creditor was not also a shareholder. As was explained in paras 65 66 above, on the facts of Johnson the claim in respect of lost pension contributions was a claim for a loss of distributions, brought by Mr Johnson in the capacity of a shareholder. It therefore fell within the scope of the reasoning in Prudential, and Lord Binghams proposition (1). The claim brought by the creditor shareholder in Gardner v Parker did not fall within the scope of that reasoning, or Lord Binghams proposition. It should not have been barred as reflective loss. The court might have had to consider the avoidance of double recovery, applying the general principles discussed in paras 2 7 above, if that issue had been raised; but it was not. The cases since Gardner v Parker have followed the approach adopted in that case. The supposed reflective loss principle has been treated as being based primarily on the avoidance of double recovery and the protection of a companys unsecured creditors, and as being applicable in all situations where there are concurrent claims and one of the claimants is a company. So understood, the reflective loss principle, as Sir Bernard Rix JA observed in Xie Zhikun at para 95, seems to be extending its scope wider and wider. Sir Bernard added at para 96 that a number of distinguished judges have commented on the uncertainties and difficulties of the reflective loss doctrine. Professor Andrew Tettenborn has rightly warned that [t]oday it promises to distort large areas of the ordinary law of obligations: Creditors and Reflective Loss: A Bar Too Far? (2019) 135 Law Quarterly Review 182. The decision of the Court of Appeal in the present case, applying the approach laid down by Lord Millett in Johnson and by the Court of Appeal in Gardner v Parker, confirms that threat. It is the first case in this jurisdiction in which the reflective loss principle has been applied to a claimant which is purely a creditor of a company. The extension of the principle to such cases has the potential to have a significant impact on the law and on commercial life. The possibility of the further extension of the principle to creditors of natural persons, which the Court of Appeal considered, indicates the extent to which it has become difficult to confine. As the scope of the principle has expanded, so have the volume of litigation and the level of uncertainty. Other jurisdictions Almost 40 years have passed since Prudential was decided. The decisions in that case and in Johnson have been followed throughout much of the common law world, albeit sometimes on the basis of different reasoning. Without attempting an exhaustive survey, they have, for example, been followed in Australia (see, for example, Chen v Karandonis [2002] NSWCA 412 and Hodges v Waters (No 7) (2015) 232 FCR 97); in the Cayman Islands (see Xie Zhikun v Xio GP Ltd, Cayman Islands Court of Appeal, unreported, 14 November 2018, and Primeo Fund v Bank of Bermuda (Cayman) Ltd, Court of Appeal of the Cayman Islands, 13 June 2019); in Hong Kong (see, for example, Waddington Ltd v Thomas [2008] HKCU 1381; [2009] 2 BCLC 82, where Lord Milletts approach in Johnson was followed, in a judgment delivered by Lord Millett NPJ, and Giles v Rhind was doubted and not followed); in Ireland (see, for example, Alico Life International Ltd v Thema International Fund plc [2016] IEHC 363, where the court followed the reasoning in Prudential, and of Lord Bingham in Johnson, and rejected the reasoning in Christensen v Scott [1996] 1 NZLR 273); in Jersey (Freeman v Ansbacher Trustees (Jersey) Ltd [2009] JRC 003; JLR 1, where the principle was treated, consistently with the reasoning in Prudential, as an aspect of the rule in Foss v Harbottle); and in Singapore (see, for example, Townsing v Jenton Overseas Investment Pte Ltd [2007] SGCA 13; [2008] 1 LRC 231, where the principle was explained as an aspect of the rule in Foss v Harbottle, and the reasoning in Christensen was rejected). Summary Summarising the discussion to this point, it is necessary to distinguish between (1) cases where claims are brought by a shareholder in respect of loss which he has suffered in that capacity, in the form of a diminution in share value or in distributions, which is the consequence of loss sustained by the company, in respect of which the company has a cause of action against the same wrongdoer, and (2) cases where claims are brought, whether by a shareholder or by anyone else, in respect of loss which does not fall within that description, but where the company has a right of action in respect of substantially the same loss. In cases of the first kind, the shareholder cannot bring proceedings in respect of the companys loss, since he has no legal or equitable interest in the companys assets: Macaura and Short v Treasury Comrs. It is only the company which has a cause of action in respect of its loss: Foss v Harbottle. However, depending on the circumstances, it is possible that the companys loss may result (or, at least, may be claimed to result) in a fall in the value of its shares. Its shareholders may therefore claim to have suffered a loss as a consequence of the companys loss. Depending on the circumstances, the companys recovery of its loss may have the effect of restoring the value of the shares. In such circumstances, the only remedy which the law requires to provide, in order to achieve its remedial objectives of compensating both the company and its shareholders, is an award of damages to the company. There may, however, be circumstances where the companys right of action is not sufficient to ensure that the value of the shares is fully replenished. One example is where the markets valuation of the shares is not a simple reflection of the companys net assets, as discussed at para 32 above. Another is where the company fails to pursue a right of action which, in the opinion of a shareholder, ought to have been pursued, or compromises its claim for an amount which, in the opinion of a shareholder, is less than its full value. But the effect of the rule in Foss v Harbottle is that the shareholder has entrusted the management of the companys right of action to its decision making organs, including, ultimately, the majority of members voting in general meeting. If such a decision is taken otherwise than in the proper exercise of the relevant powers, then the law provides the shareholder with a number of remedies, including a derivative action, and equitable relief from unfairly prejudicial conduct. As explained at paras 34 37 above, the companys control over its own cause of action would be compromised, and the rule in Foss v Harbottle could be circumvented, if the shareholder could bring a personal action for a fall in share value consequent on the companys loss, where the company had a concurrent right of action in respect of its loss. The same arguments apply to distributions which a shareholder might have received from the company if it had not sustained the loss (such as the pension contributions in Johnson). The critical point is that the shareholder has not suffered a loss which is regarded by the law as being separate and distinct from the companys loss, and therefore has no claim to recover it. As a shareholder (and unlike a creditor or an employee), he does, however, have a variety of other rights which may be relevant in a context of this kind, including the right to bring a derivative claim to enforce the companys rights if the relevant conditions are met, and the right to seek relief in respect of unfairly prejudicial conduct of the companys affairs. The position is different in cases of the second kind. One can take as an example cases where claims are brought in respect of loss suffered in the capacity of a creditor of the company. The arguments which arise in the case of a shareholder have no application. There is no analogous relationship between a creditor and the company. There is no correlation between the value of the companys assets or profits and the value of the creditors debt, analogous to the relationship on which a shareholder bases his claim for a fall in share value. The inverted commas around the word value, when applied to a debt, reflect the fact that it is a different kind of entity from a share. Where a company suffers a loss, it is possible that its shareholders may also suffer a consequential loss in respect of the value of their shares, but its creditors will not suffer any loss so long as the company remains solvent. Even where a loss causes the company to become insolvent, or occurs while it is insolvent, its shareholders and its creditors are not affected in the same way, either temporally or causally. In an insolvency, the shareholders will recover only a pro rata share of the companys surplus assets, if any. The value of their shares will reflect the value of that interest. The extent to which the companys loss may affect a creditors recovery of his debt, on the other hand, will depend not only on the companys assets but also on the value of any security possessed by the creditor, on the rules governing the priority of debts, and on the manner in which the liquidation is conducted (for example, whether proceedings are brought by the liquidator against persons from whom funds might be ingathered, and whether such proceedings are successful). Most importantly, even where the companys loss results in the creditor also suffering a loss, he does not suffer the loss in the capacity of a shareholder, and his pursuit of a claim in respect of that loss cannot therefore give rise to any conflict with the rule in Foss v Harbottle. The potential concern that arises in relation to claims brought by creditors is not, therefore, the rule in Foss v Harbottle. On the other hand, the principle that double recovery should be avoided may be relevant, although it is not necessarily engaged merely because the company and the creditor have concurrent claims against the same defendant. In International Leisure Ltd v First National Trustee Co UK Ltd [2013] Ch 346, for example, the principle was not engaged where the company and a secured creditor had concurrent claims against an administrative receiver whom the creditor had appointed, since the company could only claim in respect of any loss remaining after the secured creditor had been paid in full. Where the risk of double recovery arises, how it should be avoided will depend on the circumstances. It should be borne in mind that the avoidance of double recovery does not entail that the companys claim must be given priority. Nor, contrary to the view expressed in a number of authorities, including the decision of the Court of Appeal in the present case, does the pari passu principle entail that the companys claim must be given priority. That principle requires that, in a winding up, a companys assets must be distributed rateably among its ordinary creditors. The proceeds of its recovery from a wrongdoer will form part of its assets available for distribution (subject to the claims of secured and preferred creditors). But the pari passu principle does not give the company, or its liquidator, a preferential claim on the assets of the wrongdoer, over the claim of any other person with rights against the wrongdoer, even if that claimant is also a creditor of the company. In other words, the pari passu principle may restrict a creditor of an insolvent company to the receipt of a dividend on the amount which the company owes him, but it does not prevent him from enforcing his own right to recover damages from a third party, or confer on the companys right against the third party an automatic priority. In the event that the third party cannot satisfy all the claims made against him, the position will be regulated by the law of (his) insolvency. It is also necessary to consider whether double recovery may properly be avoided by other means than the prioritising of one claim over the other, such as those mentioned in paras 5 7 above. The judgments of Gibbs CJ and Brennan J in Gould v Vaggelas [1984] HCA 68; (1984) 157 CLR 215, at pp 229 and 258 259 respectively, raise the possibility that subrogation, in particular, may provide a solution to issues of double recovery arising in connection with creditors claims. That question has not, however, been discussed in the present proceedings, and I express no view upon it. I would therefore reaffirm the approach adopted in Prudential and by Lord Bingham in Johnson, and depart from the reasoning in the other speeches in that case, and in later authorities, so far as it is inconsistent with the foregoing. It follows that Giles v Rhind, Perry v Day and Gardner v Parker were wrongly decided. The rule in Prudential is limited to claims by shareholders that, as a result of actionable loss suffered by their company, the value of their shares, or of the distributions they receive as shareholders, has been diminished. Other claims, whether by shareholders or anyone else, should be dealt with in the ordinary way. The present case In the light of the foregoing discussion, the present case can be addressed relatively briefly. As explained earlier, Marex obtained judgment against the Companies for US$5.5m. Following the circulation of the judgment in draft, Mr Sevilleja is alleged to have stripped the Companies of their assets, rendering them insolvent. That action is alleged to have involved the commission of economic torts against Marex, as well as a breach of fiduciary duties owed by Mr Sevilleja to the Companies. Three issues arose before the Court of Appeal. The first was whether the reflective loss principle applied to creditors as well as shareholders. Knowles J had held that it did not. No authority, he said, compelled him to apply the principle to cases of knowingly procuring a third party to act in violation of a creditors rights, or intentionally causing loss to a creditor by unlawful means directed against a debtor company. The Court of Appeal disagreed. In a careful judgment, Flaux LJ accepted that the rationale of the decision in Prudential was that a personal action by a shareholder would subvert the rule in Foss v Harbottle, and that if the rule against reflective loss had rested there, it would only apply to claims by shareholders. However, he correctly noted that the scope of the rule had been expanded in Gardner v Parker, following the approach of Lord Millett in Johnson. The second issue was whether the Giles v Rhind exception applied. The Court of Appeal held that it did not: it was a narrow exception which applied only where the companys claim was barred by law as a result of the defendants wrongdoing, rather than merely prevented on the facts. The third issue was whether the reflective loss doctrine applied to intentional torts. The court held that it did. It also granted Marex permission to appeal, in order, as Lewison LJ explained at para 71, to enable this court to consider the coherence of the law in the current state of the authorities. The appeal concerns only the first and second issues. For the reasons I have explained, the rule in Prudential has no application to the present case, since it does not concern a shareholder. That disposes of the first issue. It also disposes of the second, since no question arises of a possible exception. In any event, as I have explained, there is no Giles v Rhind exception. It follows that Marex should be permitted to pursue the entirety of its claim. The court has not been addressed on the issue of double recovery, in so far as it might arise in relation to Marexs claim. That issue may or may not arise on the facts of the case, bearing in mind that no claim has yet been brought against Mr Sevilleja on behalf of the Companies, and that Marex maintains that the other debts supposedly owed by the Companies are not genuine, and that the liquidation is merely part of Mr Sevillejas scheme to defeat its claim. If the issue of double recovery does arise, the court will need to consider it in the light of the discussion at paras 2 7 and 86 88 above. Conclusion For the foregoing reasons, I would allow the appeal. LORD HODGE: (agreeing with Lord Reed) I agree for the reasons given by Lord Reed that this appeal should be allowed. There is no disagreement within the court that the expansion of the so called principle that reflective loss cannot be recovered has had unwelcome and unjustifiable effects on the law and that, if the facts alleged by Marex are established in this case, the exclusion of the bulk of its claim would result in a great injustice. But because there is a division of view as to whether a shareholder can recover damages for the diminution in value of its shareholding in a company or for the loss of distributions which the company would have paid to it in circumstances where a wrong has been done both to the company and to the shareholder, I wish to add a few comments about the central role of company law in the Court of Appeals judgment in the Prudential case which is the fons et origo of the principle. In my view the problems and uncertainties which have emerged in the law have arisen because the principle of reflective loss has broken from its moorings in company law. In the Prudential case the Court of Appeals discussion of Prudentials personal claim comprised merely three pages of a long judgment, which was principally concerned with its derivative claim, and that discussion should be read in the context of the judgment as a whole. The discussion of the personal claim followed a longer discussion of Prudentials derivative action which Newman opposed as being contrary to the interests of the company (p 211). In its discussion of the rule in Foss v Harbottle the Court of Appeal (p 210F G) referred to the classic definition of the rule in the judgment of Jenkins LJ in Edwards v Halliwell [1950] 2 All ER 1064, which I quote in part: (1) The proper plaintiff in an action in respect of a wrong alleged to be done to a corporation is, prima facie, the corporation. (2) Where the alleged wrong is a transaction which might be made binding on the corporation and on all its members by a simple majority of the members, no individual member of the corporation is allowed to maintain an action in respect of that matter because, if the majority confirms the transaction, cadit quaestio; or, if the majority challenges the transaction, there is no valid reason why the company should not sue The Court went on to state that the rule did not operate where the alleged wrong was ultra vires the company or if the transaction could be sanctioned only by a special majority of the members of the company and that there was an exception to the rule if those in control of the company committed a fraud on a minority of shareholders. When the Court of Appeal turned to consider Prudentials personal action it held that the directors in advising the shareholders to support the resolution approving the impugned transaction owed the shareholders a duty to give advice in good faith and not fraudulently. It continued: It is also correct that if directors convene a meeting on the basis of a fraudulent circular, a shareholder will have a right of action to recover any loss which he has been personally caused in consequence of the fraudulent circular; this might include the expense of attending the meeting. (p 222G H) The Court of Appeal in so stating clearly recognised that the allegedly fraudulent circular, on which Prudential founded its personal claim, could give rise to a right of action in damages by the shareholder. That was the context in which the Court made the centrally important statement, which Lord Reed quotes at para 26 above but which bears repeating: But what he [the shareholder] cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a loss is merely a reflection of the loss suffered by the company. (pp 222 223) This exclusion, as Lord Reed has stated, relates only to the diminution in value of shares or in distributions which the shareholder suffers in his capacity as a shareholder as a result of the company having itself suffered actionable damage. When a shareholder pursues a personal claim against a wrongdoer in another capacity, such as guarantor or creditor of the company, the exclusion has no application. The Courts reasoning on p 223, which Lord Reed has quoted at paras 27 and 29 above, has been criticised because the stark assertion, that the shareholder does not suffer any personal loss by the diminution in the value of its shares or of the distributions which it received, cannot be taken at face value clearly the shareholder suffers economic loss and because the example of a non trading company whose only asset was a cash box containing 100,000 is an oversimplification. But the reasoning is nonetheless clear where the Court asserts (a) that the deceit on the shareholder causes the shareholder no loss which is separate and distinct from the loss to the company (p 223), (b) that when the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and that he can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meeting (p 224), and (c) that [a] personal action would subvert the rule in Foss v Harbottle, a rule which operates fairly by preserving the rights of the majority (p 224). I agree with Lord Reed (para 28 above) that what the Court was saying is that where a company suffers a loss as a result of wrongdoing and that loss is reflected to some extent in a fall in the value of its shares or in its distributions, the fall in the share value or in the distributions is not a loss which the law recognises as being separate and distinct from the loss sustained by the company. That is the full extent of the principle of reflective loss which the Prudential case established. It was not articulated as a general principle to be applied in other contexts; it is a rule of company law arising from the nature of the shareholders investment and participation in a limited company and excludes a shareholders claim made in its capacity as shareholder. As this Court has been invited to review the principle of reflective loss it is appropriate to ask whether this rule as formulated by Lord Reed in para 28 above from his analysis of the Prudential case is supported by principle. In my view, the Court of Appeals articulation of the rule in the Prudential case was a principled development of company law which should be maintained. Investment in or conducting a business through the medium of a limited company brings advantages to the shareholder, principally in the form of limited liability, which is a consequence of the separate personality of the company: Salomon v A Salomon & Co Ltd [1897] AC 22. As the Court of Appeal stated in Prudential (p 224), [t]he company is liable for its contracts and torts; the shareholder has no such liability. The company owns its assets and the shareholders have no legal or equitable interest in and are not part owners of those assets: Macaura v Northern Assurance Co Ltd [1925] AC 619, 626 per Lord Buckmaster, 630 per Lord Sumner and 633 per Lord Wrenbury; Short v Treasury Comrs [1948] 1 KB 116, 122 per Evershed MR. A shareholding in a company confers a right of participation in the affairs of the company in accordance with the terms of the companys articles of association, often in the form of voting on resolutions at general meetings, and it entitles the shareholder to ensure that other shareholders comply with the rules imposed on them by the articles of association: Companies Act 2006 (the 2006 Act) section 33(1). A shareholder in an unfair prejudice application under section 994 of the 2006 Act can also invoke equity to protect it from unfairness by restraining the exercise by another shareholder of its legal rights which are contrary to the understandings reached or promises made: In re A Company (No 00709 of 1992) (ONeill v Phillips) [1999] 1 WLR 1092. It is a significant principle of company law that, in the absence of agreement to the contrary such as that expressed in the terms of a share issue, shares confer the same rights and impose the same liabilities: see for example section 284 of the 2006 Act and Birch v Cropper (1889) 14 App Cas 525, 543 per Lord MacNaghten. A shareholding will usually entitle its holder to participate in the success of the companys enterprise by receiving distributions from the company out of its profits and to receive a return of its capital and a proportionate share of any surplus assets of the company on its winding up: Macaura (above) 626 627 per Lord Buckmaster; Birch v Cropper (above) 543. A share confers rights in a company as well as rights against a company. The shareholders as a body have certain characteristics of proprietorship of the company to the extent that they exercise ultimate control over the direction of a company through their votes in general meetings and have a claim to its surplus assets on a winding up. But as the Short v Treasury Comrs case has shown, they are not part owners of the undertaking. Investment in a limited liability company through a shareholding often involves the separation of management of the company from the ownership of its shares. This facilitates the transfer of the members interests as, absent contractual restrictions, shares in a public company can be bought and sold without requiring the consent of others. Investment in a company by means of a shareholding can also bring disadvantages. A minority shareholder is liable to be outvoted by other shareholders, who form a majority in a vote at a general meeting of the company, in decisions concerning the company. The shareholder in a large company normally leaves it to the Board to make decisions about the business of the company, including whether to sue a wrongdoer for a wrong done to the company. A minority shareholder would have to obtain the support of the holders of sufficient numbers of shares to create a majority in order to force the directors to adopt a policy towards the companys business which the Board did not support. Further, unless the shareholder can sell its shareholding to a third party, there are restrictions on the ways in which it can realise its investment in the company in order to protect the interests of the companys creditors. In particular, the shareholders entitlement to receive money from the company on its winding up is postponed to the claims of the creditors of the company: Insolvency Act 1986, sections 107 and 143(1). The characteristics of a shareholding as a means of participation in a companys enterprise which are most directly relevant in the context of this appeal are the default rule of equality among shareholders and the postponement of the shareholders entitlements on a winding up to the claims of the companys creditors. Against this background, the laws refusal to recognise the diminution in value of a shareholding or the reduction or loss of a distribution, which is the consequence of the company suffering loss as a result of wrongdoing against it, as being separate and distinct from the companys loss is a principled development of company law. It excludes the possibility of double recovery. It avoids a scramble between shareholders to establish their private claims against a wrongdoer in case the wrongdoer does not have sufficient accessible assets to meet those claims. It thereby upholds the default position of equality among shareholders in their participation in the companys enterprise: each shareholders investment follows the fortunes of the company. It maintains the rights of the majority of the shareholders, as the Court of Appeal stated in Prudential at p 224. And it preserves the interests of the companys creditors by maintaining the priority of their claims over those of the shareholders in the event of a winding up. It may well be, as Lord Sales reasons, that the law can achieve some protection of those interests by other means such as case management and equitable subrogation. But the creation of a bright line legal rule, as the Court of Appeal did in the Prudential case, is principled. That judgment has stood for almost 39 years; it was upheld by the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1; and it has been adopted in other common law countries. We should not depart from it now. LORD SALES: (with whom Lady Hale and Lord Kitchin agree) Introduction The facts in this case are relatively simple. The legal issues are more complex. By its claim form in these proceedings Marex claims damages against Mr Sevilleja for inducing or procuring violation of Marexs rights under the judgment of 25 July 2013 (based on the principle first recognised in Lumley v Gye (1853) 2 E & B 216: I will refer to this as the Lumley v Gye claim) and for intentionally causing loss to Marex by unlawful means (based on the principle recognised in OBG Ltd v Allan [2007] UKHL 21; [2008] AC 1 (OBG): I will refer to this as the OBG claim), by dissipating the assets of the Companies. The judge found that, subject to the issue of reflected loss, these claims are arguable and suitable for service out of the jurisdiction. There has been no appeal to challenge this aspect of the judges conclusions. This appeal is concerned with a distinct argument for Mr Sevilleja, that the loss suffered by Marex reflected the loss suffered by the Companies as a result of his alleged unlawful actions and that reflective loss of this kind is irrecoverable. The result, says Mr Sevilleja, is that Marex is unable to contend that it has any completed cause of action in tort (save in respect of certain costs incurred by Marex in trying to obtain payment of the judgment debt). He contends that there is a principle established by the decision of the Court of Appeal in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 (Prudential) and the decision of the House of Lords in Johnson v Gore Wood & Co [2002] 2 AC 1 (Johnson) which precludes recovery of reflective loss of this kind (the reflective loss principle). The judge did not accept this argument. Mr Sevilleja appealed to the Court of Appeal to challenge this part of the judges reasoning. Marex filed a respondents notice by which it submitted that if, contrary to its primary case, the reflective loss principle is applicable, its claims against Mr Sevilleja fell within the exception to that principle established by the decision in Giles v Rhind [2002] EWCA Civ 1428; [2003] Ch 618. In that case the Court of Appeal held that there is an exception to the reflective loss principle in certain circumstances where the action of the defendant who has unlawfully abstracted funds from a company makes it impossible for a claim to be pursued by the company itself. The Court of Appeal allowed Mr Sevillejas appeal and rejected Marexs submission based on Giles v Rhind. Marex now appeals to this court with permission granted by the Court of Appeal with the object of providing this court with the opportunity to review the scope of the reflective loss principle and the exception to it identified in Giles v Rhind. In view of the significance of the case, this court granted permission to the All Party Parliamentary Group on Fair Business Banking (the APP Group) to intervene by oral and written submissions in support of Marexs appeal. The first part of the appeal is concerned with the question whether the reflective loss principle applies to preclude recovery where the claimant is an unsecured creditor of the relevant company, but is not a shareholder in that company, where each of the creditor and the company has its own cause of action against a third party defendant in respect of the same wrongful conduct by him. However, in order to answer that question it is necessary to examine what justification there is for the reflective loss principle in a shareholder case as well. It is therefore necessary to examine whether the reasoning in Prudential, a shareholder case, can be sustained as a matter of principle. It is only if one subjects to critical examination the rationale for the reflective loss principle as stated in Prudential that one can see whether that rationale extends to cover a creditor case. This court has been convened as an enlarged panel with the object of examining the rationale for the reflective loss principle and the coherence of the law in this area. The APP Group placed material before us which argued that the law had made a wrong turn in the Prudential case. I have come to the same conclusion as Lord Reed and the majority that Marexs appeal should be allowed. But my reasoning differs from theirs. It may be helpful if I give a brief outline of where the differences lie. Lord Reed says that the reflective loss principle is justified in a shareholder case but that the rationale for it does not extend to cover a creditor case. On his account, the reflective loss principle laid down in Prudential is a rule of law: the court deems that the loss suffered by a shareholder in relation to diminution in the value of shares or loss of dividends simply is to be regarded as irrecoverable in a case where the company has a parallel claim against the third party defendant (paras 9, 28 39 and 52). Lord Hodge likewise says that the Court of Appeal in Prudential laid down a rule of law (paras 99, 100 and 108) that loss suffered by a shareholder is regarded as irrecoverable. Since it is a rule of law that the shareholder is deemed not to have suffered a loss different from that suffered by the company, it is not a matter of evidence whether he has or has not in fact suffered such a loss. It follows that, apart from this deeming effect, the reflective loss principle is not concerned with the issue of double recoverability against the third party defendant. By contrast, in my opinion the Court of Appeal in Prudential did not lay down a rule of law that a shareholder with a claim against a third party defendant in parallel with, and reflective of, a claim by the company against the same defendant simply had to be deemed to suffer no different loss of his own which he could recover, whatever the true position on the facts. It did not purport to do so. Rather, the court set out reasoning why it thought the shareholder in such a case in fact suffered no loss. But as I explain below, that reasoning cannot be supported. There clearly are some cases where the shareholder does suffer a loss which is different from the loss suffered by the company. In the face of this difficulty with the reasoning in Prudential, I do not think it is appropriate to re characterise the courts decision as one laying down a new rule which simply deems that loss suffered by the shareholder to be irrecoverable as a matter of law. If a shareholder has a valid cause of action against the third party defendant in respect of different loss which he has in fact suffered, it is not open to a court to rule it out as a matter of judicial fiat. This means that, in common with many other courts and judges, I consider that the issue of double recovery is of importance in relation to shareholder claims as well as in relation to creditor claims. That was clearly the view of four of the law lords in Johnson, who said so in terms: see Lord Reeds discussion above of the speech of Lord Millett (with whom Lord Goff of Chieveley agreed) and [2002] 2 AC 1, 45D E and 47E per Lord Cooke of Thorndon and 54H 55D per Lord Hutton. I do not read Lord Binghams speech as discounting the relevance of this factor in a shareholder case. The idea of reflective loss was employed by the Court of Appeal in Prudential as a way of addressing a number of points which the court grouped together. Some aspects of the idea are valid, but some are not. It is necessary to analyse with care what exactly is in issue when any specific proposition of law is advanced and is said to be justified on the basis of a principle relating to reflective loss. The reflective loss principle and other principles In the case note cited by Lord Reed at para 77, Professor Tettenborn has likened the reflective loss principle to some ghastly legal Japanese knotweed whose tentacles have spread alarmingly and which threatens to distort large areas of the ordinary law of obligations: 135 LQR 182, 183. The Court of Appeal in this case loyally sought to identify and follow through the rationale of the reflective loss principle first identified and relied upon in the Prudential case, but in my opinion its decision shows how the reasoning in that case leads to an unprincipled and unattractive terminus. In granting permission to appeal to this court, the Court of Appeal has invited us to consider the conceptual basis and extent of the reflective loss principle. That requires consideration of principles of law which long predate 1981, when the judgment in Prudential was handed down. In another article placed before the court, Alan Steinfeld QC contends that [t]he law took a seriously wrong turn when in Prudential the court elevated what was a relatively simple everyday problem concerned with an assessment of damages into a principle of causation; he urges that this court should now think it over and wonder why it was ever thought to be necessary or just to have this rule at all: (2016) 22 Trusts & Trustees 277, at 285. Before turning to examine the authorities, it is relevant to have in mind some very basic points. A company is a legal person distinct from its shareholders, which has its own assets which are distinct from theirs. A share in a company is an item of property owned by the shareholder, which is distinct from the assets owned by the company. Typically, or at least very often, a share in a company has a market value which reflects the markets estimation of the future business prospects of the company, not what its net asset position happens to be at any given point in time. There is no simple correspondence between the value of a 1% shareholding and 1% of the net assets of the company. This is true both in respect of a company whose shares are publicly traded and in respect of a small private company. In that regard, I respectfully disagree with the observation by Lord Millett in Johnson [2002] 2 AC 1, at 62A B, where he said that a share represents a proportionate part of the companys net assets, and if these are depleted the diminution in its assets will be reflected in the diminution in the value of the shares and stated that in the case of a small private company whose net assets are diminished the correspondence with the diminution in the value of the shares is exact. The shares in both public and private companies are marketable and their value reflects the view of the relevant market about the future prospects of the company; it is just that in the former case it might be easier to identify the market value. I expand on this below. A company which is wronged acquires its own cause of action in respect of that wrong. That cause of action is a chose in action which is the property of the company. What the company does with it is a matter for decision by the relevant organs of the company; a shareholder has no right to seek to vindicate the companys cause of action: Foss v Harbottle (1843) 2 Hare 461 and Prudential [1982] Ch 204, 224. That is subject to an exception if the wrongdoer has control of the relevant decision making organs of the company, in which case a court may authorise a shareholder to bring a derivative action on behalf of the company. Litigation is an expensive enterprise, especially if lost, and can have negative consequences on trading relationships and business reputation. It is not to be embarked upon lightly and, subject to the exception to the rule, whether a company should take on the risks of litigation is a matter to be decided by the relevant decision making organs of the company. A person may act in ways such that several people acquire causes of action against him. Sometimes, the same actions by that person may give rise to causes of action vested in different people, such as when he owes different people duties of care in respect of the same activity a type of case discussed in Barings plc v Coopers & Lybrand [1997] 1 BCLC 427 (Barings) and in Johnson or where he breaches a duty owed to one person with the intention of harming another, in circumstances where the other person acquires his own right of action pursuant to the principle in the OBG case. The law lays down no general principle to govern the order in which people who have causes of action against the wrongdoer should sue to vindicate their rights against him. Each may seek to sue and execute any judgment he obtains without regard to the impact that may have on the rights of others. That is, of course, subject to any obligation a claimant may have assumed in relation to those others. But a shareholder in a company does not, by becoming a shareholder, assume any obligation to anyone else (whether the company itself, other shareholders in the company or creditors of the company) to the effect that he will stay his hand as regards vindication of his personal rights of action against a defendant in order to safeguard theirs. For example, if a shareholder in a company is run over by a driver employed by the company acting in the course of his employment, the shareholder is entitled to sue to obtain damages from the company even though by doing so he might diminish the ability of the company to pay a dividend to shareholders or to meet its obligations to its creditors. Similarly, if a shareholder and a company each have their own cause of action against a third party defendant, the shareholder is entitled to seek to sue and obtain recovery from that defendant in the usual way, even though by doing so he may reduce the capacity of the defendant to satisfy the companys claim and hence might diminish the ability of the company to pay a dividend or pay its creditors. The shareholder does not violate the pari passu principle by proceeding in this way, because the vindication of his own cause of action is not subject to that principle at the stage at which he brings his claim. If the third party defendant is insolvent, then during the insolvency process the shareholders claim and those of everyone else against the defendant will be subject to that principle and any other insolvency rules which are applicable. The insolvency rules constitute a regime for securing fair outcomes as between competing claimants, if there is a risk that the defendant will not be able to meet the claims of all. There is, therefore, no obvious need to create an a priori solution such as that which the reflective loss principle attempts to provide by means of a crude bright line rule to exclude a shareholders claim. As explained below, if the company and a shareholder have overlapping claims against a third party defendant, there is scope at trial (if an action is brought) or in the insolvency process for the relationship between those claims to be worked out in a practical way which secures overall justice for all those parties. Arising from the concept of the company as a society or societas of its members and from the history of company law in the law of partnership, it is recognised that shareholders may be subject to certain obligations owed to their fellow shareholders other than those expressly stated in the articles of association: see In re A Company (No 00709 of 1992) (ONeill v Phillips) [1999] 1 WLR 1092, 1098 1099 (Lord Hoffmann). These obligations are concerned with the way in which the companys affairs are managed when the shareholders act together, requiring that they use their powers as set out in the articles of association for proper purposes and in good faith for the benefit of the company as a whole: see eg Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656, 671, per Lindley MR; Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286, CA. Such obligations do not extend to limiting the ability of a shareholder to take action to vindicate any cause of action he may himself have sounding in damages against a third party defendant. A general obligation of good faith of this kind does not require that the shareholder should regard himself as deprived of his property in the form of such a cause of action. A defendant may owe obligations in contract or tort to the shareholder owner of a company where breach of those obligations results in loss to the shareholder which is suffered in the form of a reduction in the value of its shares in the company or a diminution of dividends which it receives. There is no inherent conceptual difficulty about recovery of damages in respect of loss suffered in that way: see Lee v Sheard [1956] 1 QB 192, George Fischer (Great Britain) Ltd v Multi Construction Ltd [1995] 1 BCLC 260 and Gerber Garment Technology Inc v Lectra Systems Ltd [1997] RPC 443 (Gerber). In such cases, the usual rules of contract or tort apply: the claimant shareholder is to be put in the same position as if the contract had been complied with or the tort had not been committed. A defendant may owe obligations to the shareholder owner of a company which are similar to those owed to the company itself. This was the situation addressed in Barings, in which it was alleged that auditors had undertaken a duty owed to the parent shareholder company to audit its subsidiary with reasonable care and also a duty owed to the subsidiary to similar effect. I discuss this case below. The Court of Appeal declined to rule out the parents claim on the basis of the reflective loss principle. If the auditors failed to exercise reasonable care, that would constitute a breach of the duty owed to the parent and at the same time a breach of the duty owed to the subsidiary. Each of them would have a cause of action. The subsidiary could sue for losses which it suffered as a result (these might include, for example, loss of its property flowing from a failure by the auditors to detect defalcations or unauthorised loss making trading). The parent could sue for the different losses which it suffered as a result (these might include a reduction in the value of the shares it owned or a loss of dividends from the subsidiary). It is difficult to see why the fact that the subsidiary has its own claim for a different loss should preclude the parent from being able to vindicate its own right of action in respect of the loss which it has suffered. In this latter type of case there is no difference from the position described in para 128 above, save that in assessing the loss actually suffered by the parent one would have to bring into account the fact that by reason of the auditors lack of care the subsidiary would also have acquired its own cause of action against them. That would be an asset of the subsidiary to be set against its losses. Depending on the facts, it might be that the existence or vindication of that cause of action would prevent the parent from suffering any loss itself; but that would turn on the evidence in the case and could not simply be assumed. Suppose that the subsidiary in this scenario waived its claim, or settled it for only a fraction of its value, or came to lose it by limitation arising through the lapse of time. That would in no way remove the parents cause of action, assuming the parent had sued within the limitation period. The auditors undertook a separate duty of care owed to the parent to safeguard the parent against losses which it would suffer if the duty was not satisfied and it might indeed have suffered loss. Subject to any argument about novus actus interveniens, the abandonment by the subsidiary of its claim, or its compromise or loss of that claim, would just affect the extent of the loss which the parent might be able to show it had suffered. In discussing the authorities, it is relevant to call attention to what I regard as unhelpfully slippery and imprecise language which has been used in them. Judges have talked about loss suffered by a shareholder in his personal capacity which reflects the loss suffered by a company. This is a rather deceptive word. Where the company suffers loss and this affects the value of shares in it, there is obviously some relationship between the loss suffered by the company and the loss suffered by a shareholder, so that in a loose sense it might be said that the latter loss reflects the former. But the loss suffered by the shareholder is not the same as the loss suffered by the company. There is no necessary, direct correlation between the two. The loss suffered by the shareholder does not reflect the loss suffered by the company, in the stricter sense of there being a one to one correspondence between them. These different senses of the word reflects have been conflated. A similar point may be made about references in the cases to whether the loss suffered by the shareholder is separate and distinct from the loss suffered by the company. In a loose sense of that phrase, it is not; but in a strict sense, it may be. The reflective loss principle was first identified and relied upon in the judgment of the Court of Appeal in Prudential in 1981. It is striking that this occurred so late in the development of the law, despite the existence of joint stock companies for a very long time and the passage of more than 80 years after the decision of the House of Lords clarifying the position of companies in Salomon v A Salomon & Co Ltd [1897] AC 22. The relevant facts in Prudential can be summarised as follows. The claimant, Prudential, held 3.2% of the issued ordinary shares in Newman Industries (Newman), a company whose shares were quoted on the stock exchange. Mr Bartlett was the chairman and chief executive of Newman and Mr Laughton was a non executive director and its vice chairman. They were also associated with another company, TPG. Prudentials case was that Mr Bartlett and Mr Laughton conspired to make fraudulent statements to the board and shareholders of Newman by means of which they induced Newman, acting by its board and by its shareholders voting in general meeting (which was required to approve the transaction), to purchase assets of TPG at a price higher than their true value; and that by reason of that overpayment the value of Newmans shares was reduced. In fact, however, the market value of shares in Newman had increased after the transaction (as pointed out by Mr Richard Scott QC, counsel for Mr Bartlett and Mr Laughton at first instance: [1981] Ch 257, 265E) and Prudential had not pleaded particulars of its loss and did not adduce any evidence to show that the market value of shares in Newman had been in any way detrimentally affected by the alleged overpayment (as Mr Scott QC energetically emphasised in his submissions at first instance: [1981] Ch 257, 265E F, 271G, 273A, 273D F and 285D). Prudential adduced no expert evidence in relation to the impact, if any, of the overpayment on the market value of shares in Newman and no evidence in relation to market expectations regarding the performance of Newman and whether such expectations were in any way affected by the overpayment. Prudential brought a claim against Mr Bartlett and Mr Laughton in its own capacity as shareholder for damages for the diminution in value of its shares (and also claiming to represent other shareholders with similar claims), and also sought to bring a derivative action against them in the name of Newman in respect of the loss which it suffered in the form of the overpayment for the assets of TPG. Since proof of loss was a necessary element of Prudentials cause of action based on conspiracy, Mr Scotts submission was that Prudential had failed to establish that it had any cause of action of its own against Mr Bartlett and Mr Laughton. Mr Caplan QC, counsel for Prudential, made it clear that Prudentials main objective was to pursue a derivative claim on behalf of Newman and indicated that if that claim succeeded Prudential would not be seeking any damages in respect of its own alleged cause of action in conspiracy: [1981] Ch 257, 278H 279C; noted by Vinelott J at p 328C. Prudentials position on this serves to underline that in respect of its own cause of action it entirely relied on the loss suffered by the company, rather than seeking to prove any different loss suffered by itself. Vinelott J found at trial that Prudentials case was made out on the facts and held that Prudential was entitled to sue in its own right for loss which it maintained it had suffered in respect of the diminution in value of its shares in Newman and was also entitled to bring a derivative action on behalf of Newman, under the exception to the rule in Foss v Harbottle: [1981] Ch 257. As regards Prudentials own cause of action (and the representative claim it made on behalf of other shareholders), the judge was prepared to assume that the overpayment to TPG to acquire the relevant assets had caused a reduction in the value of shares in Newman, despite the absence of evidence about whether the overpayment had had any effect on their value: [1981] Ch 257, 302E 303D. He directed an inquiry as to the amount of the damages. Mr Bartlett and Mr Laughton appealed. By the time of the hearing in the Court of Appeal, Mr Scott had ceased to act for them and they appeared as litigants in person. The Court of Appeal upheld certain of the judges findings of fact to the effect that Mr Bartlett and Mr Laughton had made fraudulent statements which induced Newman to buy the assets of TPG at an overvalue (though this was only in the sum of 45,000 rather than 445,000 as had been found by the judge). However, the court held that Prudential had no cause of action in its own right, because it was seeking to recover damages in respect of the loss in value of its shares in Newman on the basis that Newman had suffered damage, which claim fell foul of the reflective loss principle. The court also held that the judge ought to have held a trial of a preliminary issue of whether this was an appropriate case for a derivative action in the name of Newman; however, as the full trial of that claim had taken place and Newman had indicated that it would take the benefit of an order in its favour, in the particular circumstances of the case it was not necessary to determine whether Prudential had been entitled to bring a derivative action. Both aspects of the courts judgment are significant for the present discussion. Again, Prudentials main objective was to succeed on the derivative claim, rather than on its own cause of action (referred to as its personal claim). The court was scathing about Prudentials pleadings, which it described as vague and obscure and confused ([1982] Ch 204, 225 226), and the whole presentation of its case. As a prelude to the relevant part of the courts reasoning on reflective loss, it noted ([1982] Ch 204, 222D): Counsel for the plaintiffs [Mr Caplan QC] agreed before us that no facts are relied upon in support of the personal claim which are not relied upon in support of the derivative claim. Thus, at this stage, Mr Caplan was not seeking to argue in relation to Prudentials personal claim that any finding could be made that Prudential had suffered any loss in the value of its shares in Newman different from the part of Newmans own loss which was proportionate to Prudentials shareholding in Newman. This position no doubt reflected the points made by Mr Scott at first instance, that Newman had not given particulars of any different or distinct loss of its own and had not adduced any evidence about such loss at trial. The Court of Appeal was not prepared to make the assumption which Vinelott J had made regarding different loss suffered by Prudential, in the absence of a properly pleaded case and evidence in support. By reason of Mr Caplans position at the hearing in the Court of Appeal, there was no need for the court to deal with the point which had been debated at first instance. In view of the importance of the judgment in Prudential as the foundation for the reflective loss principle and the adoption of the reasoning in it in Johnson, it is necessary to set out the courts reasoning at some length ([1982] Ch 204, 222E 224D): Vinelott J upheld the plaintiffs personal claim He began with the proposition, which accorded with his findings, that Newman had been induced by fraud to approve an agreement under which Newman paid more (he thought about 445,000 more) than the value of the assets acquired and thus 445,000 more than it needed to pay; therefore Newmans indebtedness to its bankers immediately after the transaction (about 5m) was 445,000 more than it would have been but for the fraud; therefore the fraud caused a reduction in net profits, which must have affected the quoted price of Newman shares; therefore, the plaintiffs suffered some damage in consequence of the conspiracy and that was sufficient to complete the cause of action, the quantum of damages being left to an inquiry. In our judgment the personal claim is misconceived. It is of course correct, as the judge found and Mr Bartlett did not dispute, that he and Mr Laughton, in advising the shareholders to support the resolution approving the agreement, owed the shareholders a duty to give such advice in good faith and not fraudulently. It is also correct that if directors convene a meeting on the basis of a fraudulent circular, a shareholder will have a right of action to recover any loss which he has been personally caused in consequence of the fraudulent circular; this might include the expense of attending the meeting. But what he cannot do is to recover damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a loss is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss. His only loss is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3% shareholding. The plaintiffs shares are merely a right of participation in the company on the terms of the articles of association. The shares themselves, his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company. A simple illustration will prove the logic of this approach. Suppose that the sole asset of a company is a cash box containing 100,000. The company has an issued share capital of 100 shares, of which 99 are held by the plaintiff. The plaintiff holds the key of the cash box. The defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key. The defendant then robs the company of all its money. The effect of the fraud and the subsequent robbery, assuming that the defendant successfully flees with his plunder, is (i) to denude the company of all its assets; and (ii) to reduce the sale value of the plaintiff's shares from a figure approaching 100,000 to nil. There are two wrongs, the deceit practised on the plaintiff and the robbery of the company. But the deceit on the plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company. The deceit was merely a step in the robbery. The plaintiff obviously cannot recover personally some 100,000 damages in addition to the 100,000 damages recoverable by the company. Counsel for the plaintiffs sought to answer this objection by agreeing that there cannot be double recovery from the defendants, but suggesting that the personal action will lie if the companys remedy is for some reason not pursued. But how can the failure of the company to pursue its remedy against the robber entitle the shareholder to recover for himself? What happens if the robbery takes place in year 1, the shareholder sues in year 2, and the company makes up its mind in year 3 to pursue its remedy? Is the shareholders action stayed, if still on foot? Supposing judgment has already been recovered by the shareholder and satisfied, what then? A personal action could have the most unexpected consequences. If a company with assets of 500m and an issued share capital of 50m were defrauded of 500,000 the effect on dividends and share prices would not be discernible. If a company with assets of 10m were defrauded, there would be no effect on share prices until the fraud was discovered; if it were first reported that the company had been defrauded of 500,000 and subsequently reported that the company had discovered oil in property acquired by the company as part of the fraud and later still reported that the initial loss to the company could not have exceeded 50,000, the effect on share prices would be bewildering and the effect on dividends would either be negligible or beneficial. The plaintiffs in this action were never concerned to recover in the personal action. The plaintiffs were only interested in the personal action as a means of circumventing the rule in Foss v Harbottle. The plaintiffs succeeded. A personal action would subvert the rule in Foss v Harbottle and that rule is not merely a tiresome procedural obstacle placed in the path of a shareholder by a legalistic judiciary. The rule is the consequence of the fact that a corporation is a separate legal entity. Other consequences are limited liability and limited rights. The company is liable for its contracts and torts; the shareholder has no such liability. The company acquires causes of action for breaches of contract and for torts which damage the company. No cause of action vests in the shareholder. When the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company and that he can only exercise his influence over the fortunes of the company by the exercise of his voting rights in general meeting. The law confers on him the right to ensure that the company observes the limitations of its memorandum of association and the right to ensure that other shareholders observe the rule, imposed upon them by the articles of association. If it is right that the law has conferred or should in certain restricted circumstances confer further rights on a shareholder the scope and consequences of such further rights require careful consideration. In this case it is neither necessary nor desirable to draw any general conclusions. This reasoning of the Court of Appeal was a new departure in the case. At first instance it appears to have been common ground that (a) the loss suffered by a shareholder could not simply be equated with a proportionate part of the loss suffered by the company and (b) in order for the shareholder to have his own cause of action in tort (where damage was the gist of the action), it was necessary to show that there had been a diminution in the value of his shares by reason of the wrongdoing: for Mr Scotts argument on behalf of the defendants, see the references above; for Mr Caplans argument for Prudential, see [1981] Ch 257, 265B and 278F H; and for the judges ruling that Prudential had made out its claim that there had been a diminution in the value of its shareholding, which was not equivalent to a proportionate part of the loss suffered by the company, see [1981] Ch 257, 302E 303D. Further, by setting out reasoning which seemed to cover every case involving loss by a shareholder and loss by a company which are related, including those where they are not the same, the court went further than it needed to do and further than was justified on the case as presented to it: see para 137 above. As noted above, the rule in Foss v Harbottle is to the effect that where a company has a cause of action, it is for the relevant organs of the company to decide whether to sue upon it. In the present case, on the facts as alleged by Marex, the Companies have their own causes of action against Mr Sevilleja in respect of misappropriation of their money by him. Marex has no right to sue in relation to those causes of action; nor would recovery by Marex in relation to its cause of action affect the ability of the Companies to recover the full extent of their losses in relation to their causes of action. There is no great difficulty in answering the questions posed by the Court of Appeal in Prudential when this distinction is borne in mind. Since the Companies are now in liquidation the relevant organ of the Companies is the liquidator, who is an officer subject to the control of the courts in the BVI. It is for him to decide whether to prosecute such claims as the Companies may have against Mr Sevilleja, taking into account the resources available for that. I see no reason to question the good faith of the present liquidator, who is an insolvency practitioner from a reputable firm. This is not a case in which the relevant organ of a company is under the control of the wrongdoer against whom the company has a cause of action, so there is no question of the exception to the rule in Foss v Harbottle being applicable. In the Court of Appeal, Flaux LJ said, there is no evidence that there is anything preventing a claim against Mr Sevilleja by the present or another liquidator or preventing Marex from taking an assignment of the Companies claim (para 60). However, Marex does not seek to sue Mr Sevilleja to vindicate the Companies causes of action against Mr Sevilleja, but to vindicate what it maintains are its own causes of action against him comprising the Lumley v Gye claim and the OBG claim. The Court of Appeal in Prudential regarded the personal claim by Prudential in respect of the diminution in the value of its shares in Newman as misconceived and an illegitimate attempt to circumvent the rule in Foss v Harbottle. The cause of action relied upon was conspiracy, and no facts were relied on in support of the personal claim that were not relied on in support of the derivative claim. Further, as appears from the passage above, the courts view was that Prudential was never concerned to recover in the personal action, but was only interested in it as a means of circumventing the rule in Foss v Harbottle ([1982] Ch 204, 223H 224A). There was, therefore, no real focus on the independent nature of the causes of action which Prudential might have had in its personal capacity. In the final part of the passage quoted above, I respectfully consider that the court conflated the rationale for the rule in Foss v Harbottle with the rationale for the reflective loss principle, and assumed as correct what was actually in question (namely, whether a personal action would in fact subvert the rule in Foss v Harbottle); while at the same time the court left open the possibility that the law might confer further rights on a shareholder. Thus, the court did not address the possibility that a shareholder might have a personal cause of action based on intentional infliction of harm by unlawful means as illustrated by the OBG case, which would depend upon the shareholder establishing additional facts which would not be relevant to the companys own cause of action (ie that there was deliberate action by the wrongdoer, unlawful as against an intermediate party the company but aimed at inflicting harm on the shareholder). Be that as it may, earlier in the passage quoted the court offered reasons of a general nature to justify the introduction of the reflective loss principle. I have already noted that the court went further in its reasoning than it needed to do, on the case as presented to it by Prudential. There is no report of any argument which led it to do this. Since Mr Caplan for Prudential had made the concession referred to above and Mr Bartlett and Mr Laughton were representing themselves, it must be doubted that the court had the benefit of rigorous argument on this issue. With respect, I do not consider that the courts reasoning is sustainable. Again, it conflates something which is undoubtedly correct (a shareholder cannot recover damages merely because the company in which he is interested has suffered damage: of course not, because the mere fact that the company suffers damage does not create a cause of action for the shareholder), with something which is highly questionable (a shareholder cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a loss is merely a reflection of the loss suffered by the company. The shareholder does not suffer any personal loss). In fact, however, the third party defendants actions may include elements which, in combination with his unlawful action vis vis the company, give rise to a cause of action vested in the shareholder. That may be so if the defendant has acted with the intention of using his unlawful actions vis vis the company to harm the shareholder, so as to give rise to a cause of action vested personally in the shareholder for the tort of intentional infliction of harm by unlawful means as discussed in the OBG case (see also JT Stratford & Son v Lindley [1965] AC 269, noted by Lord Hoffmann at para 48 in the OBG case, regarding the ability of a claimant to rely on breaches or threatened breaches by a defendant of contractual duties owed by the defendant to a third party as the relevant unlawful means for the purposes of this tort, if the defendant acted with the requisite intention of harming the claimant). Furthermore, the shareholder may well have suffered loss as a result of the commission of that tort (particularly in the form of a reduction in the market value of his shares or a reduction in dividend payments) which is different from, and does not have a simple one to one correspondence with, the loss suffered by the company itself. The reasoning in relation to the cash box example is in my view flawed. Companies come in many varieties and there are several methodologies for valuing their shares, which may be more or less appropriate in a particular case depending on the context. The cash box example assumes a company which is not trading and has no liabilities, where the market value of the shares is equivalent to the value of the assets in the cash box. I will return to this example below, but for the purposes of analysis it should be emphasised that this is an unusual scenario. In the case of a trading company, especially one whose shares are quoted and freely traded on a public exchange, common valuation methodologies for shares include application of price/earnings ratios and discounted cashflow models. What is important for the calculation of value under these methodologies is the future income or profits of the company, not its current net asset position (see Charles Mitchell, Shareholders Claims for Reflective Loss (2004) 120 LQR 457, 475 478). A company may be predicted to have strong prospects of future income or future profits which may support a high valuation of its shares; and that may be so even though its net asset value is relatively low. Often, the predicted future income or profits of a trading company will reflect a judgment about its capacity to enter into new contracts in the future, which are not yet reflected in its balance sheet. When a person buys a share in a trading company in the market, he pays both for a capital asset (the share itself, which he can sell the next day if he chooses) and for the right to participate in the future commercial performance of the company. In this sense, the Court of Appeal in Prudential was right to say that [w]hen the shareholder acquires a share he accepts the fact that the value of his investment follows the fortunes of the company; but in my view it was wrong to conflate this with the erroneous idea implicit in the cash box example that the shareholders interest and the value of his shares is confined to a right to participate in the assets of the company as they happen to stand at any given point of time. It is only on this basis that the court could say in relation to that example that two wrongs were committed (one against the shareholder and one against the company), yet the wrong against the shareholder plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company. The court states this proposition as if it is a logical conclusion applicable in all cases, whereas the question whether the shareholder suffers a different loss of his own is a matter of fact. In the more typical case, the position may well be that the shareholder suffers a different loss with reference to the value of his shares in the company whose assets have been stolen. (Even if the company has a claim against the defendant wrongdoer for loss of profits as well as loss of assets, the recoverable profits which might be awarded as compensation by a court are not necessarily the same as the markets estimation of future profits which supports the market value of a share in that company: see in that regard the comments by Waller LJ in Giles v Rhind, para 28). This point has been made in the scholarly literature and later cases in particular Christensen v Scott [1996] 1 NZLR 273 (NZCA), at 280 per Thomas J, delivering the judgment of the court, and Gerber [1997] RPC 443, 475 and 479 (per Hobhouse LJ) and 482 483 (per Hutchinson LJ) as reviewed in Mitchell (2004) 120 LQR 457. Mitchell rightly criticises the explanation in Prudential as (p 459): an indefensibly narrow view of the value inherent in shares. No one would dispute that shares are valuable because they are contractual rights of participation in a company, but it does not follow from this they have no other value and if one accepts that shares are also valuable as property which generates income and can be sold to others, then one must conclude that a shareholder suffers a personal loss when the value of his shares or the amount of dividends he receives goes down. (Joyce Lee Suet Lin, Barring Recovery for Diminution in Value of Shares on the Reflective Loss Principle [2007] CLJ 537, 539 552, also points out that the value of the shares in a company may well be different from the net assets of the company.) In my view, the Court of Appeal in Prudential was right to say that Prudential had no good cause of action in respect of the diminution in value of its shares in Newman; but this was for a different, and narrower, reason than the one it gave. As explained above, at the hearing in the Court of Appeal Prudentials only argument was that it was entitled to say that it sustained damage in relation to the value of its shares equivalent to that part of the loss suffered by Newman which was proportionate to its shareholding in Newman. It did not attempt to establish that there had in fact been a fall in the market value of its shareholding and had adduced no evidence to that effect. On the case as presented by Prudential, the Court of Appeal was right to hold that Prudential had failed to show that it had suffered any loss which was different from the loss suffered by Newman. The distinction drawn by the court between Prudentials personal claim and the claim a shareholder might have to recover loss he has personally been caused when acting on his own behalf in consequence of a fraudulent circular, such as the expense of attending the meeting, is a valid one. By contrast, by reason of the way in which it presented its personal claim, Prudential had failed to show that it had suffered any loss in respect of the value of its shareholding and so could not establish that it had any cause of action. Its attempt to say that it had suffered loss equivalent to a proportionate share of Newmans loss was rightly dismissed by the Court of Appeal. That loss, on which Prudential sought to rely for the purposes of its personal claim, was not loss in respect of which it had any cause of action. The only person with a cause of action in relation to that loss was the company, Newman. What, then, is to happen in a case where the actions of a third party defendant constitute two wrongs (one as against the company and one as against the shareholder) with different loss in each case, so that the company and the shareholder each have their own distinct fully established cause of action against him? In principle, as mentioned above, if a person has a cause of action against another he is entitled to bring proceedings to vindicate his rights. He may proceed as quickly as he chooses and with a view to maximising his prospects of securing recovery from the defendant. If he is a shareholder with a personal cause of action, nothing in the articles of association constitutes a promise by him that he will not act to vindicate his own personal rights against a defendant against whom the company also has its own cause of action; and there is no other obligation to that effect arising out of his membership of the company. It is sometimes said that in a case where a wrong is done to the company which has an impact on the value of its shares, in circumstances capable of giving rise to independent causes of action for the company and for a shareholder, the shareholders claim fails for reasons of causation. It is suggested that the cause of the loss suffered by the shareholder in the form of diminution in the value of his shares or loss of dividend payments which would otherwise have been made to him is not the wrong committed by the defendant wrongdoer, but the decision of the company not to sue to recover in respect of the loss it has suffered: Gerber [1997] RPC 443, 471 per Hobhouse LJ; Johnson [2002] 2 AC 1, 66 per Lord Millett; Giles v Rhind, para 78 per Chadwick LJ. In my view, this reasoning cannot be sustained. As explained above, the loss suffered by the shareholder is not the same as the loss suffered by the company, and it does not follow that eventual recovery by the company will have the effect of eliminating the loss suffered by the shareholder. As Charles Mitchell points out in his article, (2004) 120 LQR 457, 469 470, the causation argument begs the important question. It presupposes that the shareholder will suffer a reflective loss when the company decides not to pursue its remedy, because the shareholder cannot recover this loss for himself. The argument does not show why the shareholder should be disabled from claiming in the first place. The absence of any necessary correspondence between the loss to a shareholder and the loss to the company which follows from a wrong done to the company which also forms part of a parallel wrong done to the shareholder can be demonstrated in various ways. Knowledge in the market that the company had been made a victim of the wrong might have the effect of undermining market confidence in its management, thereby reducing the market value of shares in it even if the company made a full recovery of what it had lost. Further, in other cases, the timing of recovery by the company may be important. If a wrong done to the company were instantaneously and automatically corrected, a shareholder might suffer no diminution in the value of his shares as a result of that wrong. But that is not the real world. The law has to address the real world, not an imaginary one (see eg Gould v Vaggelas (1984) 157 CLR 215, 225 per Gibbs CJ; 232 per Murphy J; 242 and 244 246 per Wilson J). In reality, a shareholder may be able to prove that, but for the defendants wrongful actions which gave rise to independent causes of action vested in the company and in the shareholder respectively, he would have been paid a dividend or his shares would have had a higher value which he could have realised in the market. It does not follow that if the company sues to vindicate its rights and is successful years later in obtaining a judgment against the third party defendant and in obtaining execution of that judgment that it would, in the changed circumstances then prevailing, choose then to make the same dividend payment it would have made previously but for the defendants wrongdoing. Nor does it follow that the value of the shares held will automatically be restored to what it would have been previously but for the defendants wrongdoing. The companys prospects, as judged by the market, may be radically different at the later point in time. Or the shareholder may already have sold the shares at a price discounted for uncertainty regarding possible recovery by the company. In many cases the companys recovery of its loss will not have the effect of restoring the value of the shares. Since the companys recovery may not put the shareholder back in the position he would have been in but for the defendants wrongdoing, it cannot be said that it is the decision of the company whether to sue or not which has a determinative causative effect in relation to whether the shareholder suffers loss as a result of such wrongdoing. Further and in any event, whether the company decides to sue, compromise or waive its rights in respect of the cause of action with which it is vested as a result of the defendants wrongdoing is res inter alios acta so far as concerns the entitlement of the shareholder to sue in relation to the separate cause of action vested in him as a result of that wrongdoing. The company does not control what the shareholder may do in relation to vindicating his own cause of action. He is entitled to sue in relation to his own cause of action if he thinks he can prove he has suffered a loss. If the company makes recovery in respect of its loss, that may have an effect on the extent of the loss suffered by the shareholder, but may well not eliminate it. If the company decides to settle its claim for less than its whole value or decides not to sue, that does not affect the entitlement of the shareholder to sue on his own cause of action in respect of the loss suffered by him as a result of the defendants wrongdoing. As Peter Watts observes in his case note on Johnson in (2001) 117 LQR 388, at p 391: It is difficult to see that the firm [Gore Wood, the defendant firm of solicitors which had advised both the company and the shareholder] could be relieved from its obligation to the shareholder by laying the blame for the shareholders not being indemnified on the companys having settled its claim, an outcome achieved only with the firms concurrence. In particular, in relation to a claim based on OBG, where the defendant has acted with the intention of harming the shareholder claimant and has succeeded, it would be contrary to justice to hold that the claimant cannot sue the defendant in relation to his cause of action just because the company has decided not to pursue its own cause of action. In fact, if the company foregoes recovery in respect of the wrong done to it, the effect may be to make it easier for the shareholder to establish the extent of his loss and to meet another objection to his claim, to which I now turn. As a matter of basic justice, the defendant ought not to be liable twice for the same loss, once to a shareholder with a personal claim and again to the company. But in the situation under review the wrongs and also the losses suffered by the claimant shareholder and the company respectively are different. The claimant and the company each have distinct causes of action of their own. The company can recover for its losses, eg depletion of its assets stolen by the defendant and consequential loss of profits. The claimant can recover for diminution in the value of his shares, which is a function of how the market values them, and for loss of dividends he might have received but for the wrong in relation to himself. These losses may have some relationship to the losses suffered by the company, but are not the same as those losses. The loss suffered by the company as a result of theft of its assets may represent a substantial loss of the working capital it needs to generate future profits; and if so, that may have an effect on the value which the market places on shares in the company (but, contrary to what is said to be demonstrated by the cash box example, the loss will be different from that suffered by the shareholder and there is unlikely to be direct correspondence between what the company has lost and the reduction in the value of the shareholders shares). On the other hand, the loss suffered by the company might be insignificant in terms of any effect on its ability to generate profits in future, in which case the impact on share value might be practically nothing. If, after the wrongdoing of the defendant, the company is still trading and the claimant shareholder has not sold his shares, he retains shares of some worth in the market which reflects, among other things, the value of the companys own claims against the defendant. In my view, the claimant would then be entitled to claim damages in respect of the reduced market value of his shares due to the wrong against him committed by the defendant (by the means of or in parallel with his commission of a wrong against the company), ie their market value absent the wrong done to the company (and to the shareholder) less their actual current market value, reflecting among other things the companys claims against the defendant. Accordingly, it can be said that in such a case due allowance in respect of the companys claims against the defendant is reflected in what is recoverable by the claimant. It does not, then, seem to me to be unjust to allow both the claimant and the company to pursue their separate claims for their different losses against the defendant. In the cash box example given in Prudential, in the case of an inert, non trading company, the market would presumably value each share as equivalent to a proportionate part of the assets of the company, namely the cash in the cash box. The result would be that the loss suffered by the claimant personally would be directly reduced pound for pound by the companys own claim against the defendant, so there would be no question of the defendant being liable twice over for the same loss (if for some reason the company does not sue, the claimants loss will not have been reduced and he would be able to pursue his own cause of action: see paras 131 and 154 above). In more typical situations, the relationship between the companys loss and the claimants loss will not be direct like this, but due allowance for the companys potential to make recovery for its losses (albeit possibly discounted to a degree to allow for the hazards of litigation) will still be reflected in the calculation of the claimants loss. One could also envisage a situation in which, after the defendants wrongdoing, a claimant shareholder decided to sell his shares in the company, and in consequence of that wrongdoing received a lesser price than he otherwise would have done. In that case the claimant could recover for the crystallised loss he has suffered by way of the diminution in the shares value due to the wrong committed by the defendant. Lord Millett appears to have contemplated that this might be so, since in explaining Stein v Blake [1998] 1 All ER 724 in Johnson he emphasised that the shareholder had not disposed of his shares in the company: [2002] 2 AC 1, 64B. In Heron International Ltd v Lord Grade [1983] BCLC 244 the Court of Appeal would have been prepared to distinguish Prudential and allow shareholders to sue for damages in a situation where breaches of fiduciary duty by a companys directors caused a diminution in the value of its assets resulting in a reduction in the value of its shares as sold by the shareholders in the market, albeit on the facts this had not occurred and would not occur: see p 262a h; and see Lin [2007] CLJ 537, 554. In this situation, what the claimant has received for his shares by selling them in the market will have reflected the markets view of the value of the companys claims against the defendant (alongside its other assets and its general trading prospects). The companys claims against the defendant will have been brought into account for the credit of the defendant in this way, to the extent that they are material to valuing the claimants loss, and it would not be unjust to allow the claimant to recover the full amount of his crystallised loss. It should not make any difference to the position whether the claimant has sold his shares or has decided to retain them. (In Johnson the House of Lords held that the claimant shareholder was entitled to claim in respect of his loss of a 12.5% shareholding in the company, transferred to a lender as security for a loan which, by reason of his lack of funds attributable to the defendants wrongdoing, he was unable to redeem: [2002] 2 AC 1, 37A: presumably the value of what the claimant had lost would reflect the value which the relevant market would place upon the company as a company having amongst its assets its own cause of action against the defendant.) Moreover, if there remains a concern about the risk of the defendant being liable twice over by virtue of the relationship between the companys loss and the loss suffered by the claimant shareholder, that has to be balanced against a concern that if one excludes the liability of the defendant to the claimant, then the claimant may well be undercompensated in respect of a real and different loss which he has suffered as a result of the defendants wrong against him. The claimant would have to prove on the balance of probabilities that he has indeed suffered a loss which is different from the loss suffered by the company. If he can do so, then given the choice between ensuring that the claimant is fully compensated for the wrong done to him and eliminating any risk that the defendant might have to pay excessive compensation, I consider that the choice should be in favour of giving priority to protecting the interests of the innocent claimant rather than to giving priority to protecting the interests of the wrongdoing defendant. Compare Wattss case note on Johnson in (2001) 117 LQR 388, at 390: referring to a case where a defendant has given the same promise of performance to the company and the shareholder, he says If, as a fact, a promisor has undertaken obligations which might contemplate its having a double liability upon default, it is not plain that the law should be unduly concerned; and Lin [2007] CLJ 537, 556, makes the same point. In the context of a claim based on OBG (and also, in the context of a claim by a creditor of the company, as discussed below, based on Lumley v Gye) the wrongdoer has likewise engaged in deliberate conduct which engages the right of the claimant shareholder to sue him alongside any right of action the company might have. In some cases, the relationship between the loss suffered by the company and the loss suffered by the claimant shareholder may be more direct. Perhaps the cash stolen in the cash box example was being earmarked by the company for payment of a dividend to shareholders, and in stealing it the defendant had the requisite intention to harm the claimant shareholder (as required for an OBG type claim by him) by depriving him of his share of the dividend. Two points may be made about this. First, it would still be the case that the claimant has a distinct cause of action against the defendant in respect of losses suffered personally by him, assessed by reference to what would have happened if the defendant had committed no wrong. The claimants case would be that if the cash had remained in the cash box, the company would in fact have chosen to distribute it by way of payment of a dividend. The fact that the company, when actually faced with the loss of the cash, might decide not to pursue its own cause of action against the defendant does not undermine that case; and if the company so decides, any concern regarding double liability of the defendant is thereby removed. Even if the company decided to pursue its own claim as well, that would not necessarily undermine the claimants case either. If and when the company makes recovery for its loss, circumstances will be different and it may be that the company will not at that stage decide to use the money so recovered to make any dividend payment. So the claimant will again have suffered a real loss which would not be eliminated by the award of a remedy to the company. Secondly, the court can take steps to manage the coincidence of claims by the claimant and by the company by procedural means. For instance, it could, if it were thought necessary, direct the claimant to give the company notice of the claim he is bringing against the defendant so that the company can choose to join in the proceedings and bring its own claim if it wants to. The court could then work through the interaction of the two claims, in so far as there is found to be any concrete and relevant relationship between them, in a pragmatic way with full information as the proceedings progress. For example, if it became clear that the company would recover in the proceedings the money stolen from the cash box and would use it to make a belated dividend payment, as it had intended to do previously, the claimants own loss might be reduced to the value to be ascribed to being deprived of the money for a period of time, rather than altogether. Alternatively, if the money recovered by the company was going to be retained by it, the claimant would have to give credit for any increase in the market value of his shares attributable to the fact that the companys assets will have been swelled to that extent. This is an aspect of working out the application of the principle of compensation in the light of what is known by the time of the judicial decision: cf Golden Strait Corpn v Nippon Yusen Kubishika Kaisa (The Golden Victory) [2007] UKHL 12; [2007] 2 AC 353; Gould v Vaggelas (1984) 157 CLR 215, in particular at 254 255 per Brennan J. Courts considering the issue prior to the decision in Johnson considered that procedural ways of managing the coincidence of claims would generally be possible (even if not available in every case) and appropriate: Christensen v Scott [1996] 1 NZLR 273, 281; Barings [1997] 1 BCLC 427, 435; see also Mitchell (2004) 120 LQR 457, 465; and Lin [2007] CLJ 537, 554 555. Similarly, at first instance in Prudential, Vinelott J (who, unlike the Court of Appeal, was confronted with the argument that there would be situations in which a shareholder had a cause of action and suffered a loss different from that suffered by the company) proposed as a procedural solution that the company might be joined as a defendant in such cases: [1981] Ch 257, 328B E. If the company is joined as a party and does not advance its own claim at trial, it may be estopped from doing so in later proceedings. On the other hand, if the company does wish to pursue its claim, it may be beneficial in case management terms to allow the companys claim to be tried first or at the same time as the shareholders claim, since then the extent of the companys recovery can be brought into account when valuing the loss suffered by the shareholder claimant. A procedural approach allows for nuanced adjustment of the vindication of parallel claims in the light of all relevant evidence about the circumstances regarding the interests of the company and the shareholder. The court can ensure that there is no double recovery and that the shareholder by his action does not deprive the company of sums properly due to it. The decision of the High Court of Australia in Gould v Vaggelas, discussed below, provides an example of how a court can work through the practical implications where a company and its shareholders both have claims against the same defendant and where the liquidator of the company fails to take steps to vindicate its claim against the defendant. Similarly, in In re Gerald Cooper Chemicals Ltd [1978] Ch 262, Templeman J envisaged that a procedural solution would be appropriate for managing the coincidence of claims in respect of carrying on the business of a company with intent to defraud creditors, in contravention of section 332 of the Companies Act 1948 (see now sections 213 and 214 of the Insolvency Act 1986), available both to the liquidator of the company and to a supplier/creditor dealing with it, as against persons involved in carrying on its business: pp 268 269. To avoid the defendants being placed in double jeopardy for the loss, the liquidator was to be informed of a claim brought by the supplier/creditor to allow the liquidator the option of bringing a claim himself. In reviewing the statutory insolvency regime and making recommendations, the Cork Committee emphasised the desirability of flexibility for courts with regard to beneficiaries in relation to awards in respect of what are now sections 213 and 214 of the 1986 Act, in view of the diversity of situations which can arise: Insolvency Law and Practice, Report of the Review Committee (1982) (Cmnd 8558), para 1797. A focus on procedural solutions also emerges in the decision of the Court of Appeal of Singapore in Townsing v Jenton Overseas Investment Pte Ltd [2007] SGCA 13; [2008] 1 LRC 231. This concerned a misapplication of funds of a company by its director in breach of his fiduciary duty owed to the company and also in breach of duty which he owed directly to the shareholder owner of that company. The shareholder sued the director for loss which it had suffered as a result of the wrong done to it, claiming that the loss was equivalent to the amount of the funds of the company which had been misapplied. Thus in its action, much as happened in the Prudential case in the Court of Appeal, the shareholder simply equated the loss it suffered with the loss suffered by the company and made no attempt to identify a different loss: para 29. The courts judgment has to be read with this in mind. In these circumstances the court decided that the reflective loss principle accepted in Johnson should apply in Singapore, in preference to the position set out in Christensen v Scott: paras 77 79. This was on the basis that (in light of the way in which the shareholder presented its claim and following Lord Millett in Johnson at [2002] AC 1, 66 67) there was a unity of the economic interests of a shareholder and his company; that the no reflective loss rule is a variant of the proper plaintiff rule in Foss v Harbottle; and that it protects against the risk of double recovery and prejudice to the creditors and shareholders of the company. In my opinion, for reasons set out above, the unity of interests point and the proper plaintiff point do not support the reflective loss principle, insofar as it is sought to be applied in relation to a different loss suffered by a shareholder in relation to which he has his own cause of action. As to protection against the risk of double recovery and prejudice to shareholders and creditors, the court recognised that these points could be met by procedural means, such as by the shareholder obtaining an undertaking from the liquidator of the company that it would not sue on the wrong done to it: paras 85 86. At para 85 the court also noted with approval that in Christensen the court was prepared to deal with the problem of double recovery in several ways, such as staying one proceeding or staying execution against one or other of the parties. Since the appellant director had not pleaded the reflective loss principle as a defence to a claim by the shareholder, he had deprived the shareholder of procedural opportunities of this kind by which it might have met such a defence and he was not permitted to introduce the plea for the first time on the appeal. The reflective loss principle was not treated as a rule of law which had the effect of stipulating that the shareholder could not be regarded as suffering any loss at all. Are there any reasons of public policy why the shareholders cause of action should be eliminated altogether in order to ensure priority for the companys claim? Lord Reed says (para 38), with reference to the speech of Lord Hutton in Johnson, that there are pragmatic advantages which justify having a rule of law that a shareholder cannot sue to recover his own loss. However, as I set out below, none of the other law lords in Johnson agreed with Lord Hutton. In my view, there are no sound reasons why the shareholders personal cause of action should be eliminated in this way. The cause of action is personal, so there is no reason why it should be subjected to the collective decision making procedures which apply when the company decides what to do in relation to any cause of action it may have. The shareholders cause of action falls outside the rule in Foss v Harbottle. To say he is to be denied being able to vindicate his own cause of action by reason of his position as shareholder in the company seems to me to erode the principle of the separate legal personality of the company established in the Salomon case without good justification. There is no question of the shareholder being entitled to recover damages due to the company in respect of the companys own cause of action and in that way reducing the assets of the company which are available for paying its creditors or distributing to its shareholders. It is, however, possible that if the claimant shareholder sues to vindicate his personal cause of action and succeeds in making recovery from the defendant wrongdoer, that may so diminish the defendants fund of assets that when the company sues to vindicate its cause of action against him, it is unable to make full recovery in respect of its claim. That may mean that the companys shareholders and creditors lose out. But in my view, this is not a reason to prevent the claimant shareholder from recovering in respect of his cause of action. As observed above, he owes no duty to the company, its creditors or the other shareholders to hold off from seeking to vindicate his own rights. The risk that those other persons might suffer if he acts to vindicate his rights is simply a risk inherent in the general situation where a defendant has liabilities owed to different persons. The shareholder is exposed to the same risk in reverse, if the company obtains judgment and execution before the shareholder vindicates his rights. Moreover, these types of risk can be managed by procedural means and also fall to be addressed by the law of insolvency, so there is no sound basis for recognition of a principle of reflective loss on these grounds. There is also no good reason of public policy why a shareholders personal right of action should be deprived of effect in order to protect the wrongdoing defendant: see para 159 above. It is true that adoption of the rule of law identified by Lord Reed and Lord Hodge would eliminate the need for debate about the interaction of the companys cause of action and the shareholders cause of action, and in that way would reduce complexity. Bright line rules have that effect. But the rule only achieves this by deeming that the shareholder has suffered no loss, when in fact he has, and deeming that the shareholder does not have a cause of action, when according to ordinary common law principles he should have. In my respectful opinion, the rule would therefore produce simplicity at the cost of working serious injustice in relation to a shareholder who (apart from the rule) has a good cause of action and has suffered loss which is real and is different from any loss suffered by the company. Common law courts are used to working through complex situations in nuanced and pragmatic ways, to achieve practical justice. In my opinion, the fact that the interaction between the companys cause of action in respect of its loss and the shareholders cause of action in respect of his own loss gives rise to complexity is more a reason for not adopting a crude bright line rule which will inevitably produce injustice, and requiring instead that the position be fully explored case by case in the light of all the facts, with the benefit of expert evidence in relation to valuation of shares and with due sensitivity to the procedural options which are available. In Christensen v Scott the New Zealand Court of Appeal, sitting as a five judge court, declined to apply the reflective loss principle. The defendants were chartered accountants and solicitors who acted for the claimants personally in advising them on channelling their assets into a company taking a lease of farmland. The defendants came to act for the company as well. The claimants alleged that negligence on the part of the defendants meant that the consent of the landlords mortgagees was not obtained, nor was a caveat registered against the title. Consequently the land was lost and the company failed. The companys claim against the defendants was settled by the liquidator for a sum alleged by the plaintiffs to be totally inadequate. The Court of Appeal held that the personal claims of the claimants should not be struck out before trial. Thomas J, giving the judgment of the court, said at pp 280 281: We do not need to enter upon a close examination of the [Prudential] decision. It has attracted not insignificant and, at times, critical comment. See eg LCB Gower, Gowers Principles of Modern Company Law, 5th ed (1992), pp 647 653; LS Sealy, Problems of Standing, Pleading and Proof in Corporate Litigation (ed BG Pettit), p 1, esp pp 6 10; and MJ Sterling, The Theory and Policy of Shareholder Actions in Tort (1987) 50 MLR 468, esp pp 470 474. It may be accepted that the Court of Appeal was correct, however, in concluding that a member has no right to sue directly in respect of a breach of duty owed to the company or in respect of a tort committed against the company. Such claims can only be brought by the company itself or by a member in a derivative action under an exception to the rule in Foss v Harbottle (1843) 2 Hare 461. But this is not necessarily to exclude a claim brought by a party, who may also be a member, to whom a separate duty is owed and who suffers a personal loss as a result of a breach of that duty. Where such a party, irrespective that he or she is a member, has personal rights and these rights are invaded, the rule in Foss v Harbottle is irrelevant. Nor would the claim necessarily have the calamitous consequences predicted by counsel in respect of the concept of corporate personality and limited liability. The loss arises not from a breach of the duty owed to the company but from a breach of duty owed to the individuals. The individual is simply suing to vindicate his own right or redress a wrong done to him or her giving rise to a personal loss. We consider, therefore, that it is certainly arguable that, where there is an independent duty owed to the plaintiff and a breach of that duty occurs, the resulting loss may be recovered by the plaintiff. The fact that the loss may also be suffered by the company does not mean that it is not also a personal loss to the individual. Indeed, the diminution in the value of Mr and Mrs Christensens shares in the company is by definition a personal loss and not a corporate loss. The loss suffered by the company is the loss of the lease and the profit which would have been obtained from harvesting the potato crop. That loss is reflected in the diminution in the value of Mr and Mrs Christensens shares. They can no longer realise their shares at the value they enjoyed prior to the alleged default of their accountants and solicitors. (For a discussion of the policy issues which arise in considering these questions, see Sterling, at pp 474 491.) In circumstances of this kind the possibility that the company and the member may seek to hold the same party liable for the same loss may pose a difficulty. Double recovery, of course, cannot be permitted. The problem does not arise in this case, however, as the company has chosen to settle its claim. Peat Marwick and McCaw Lewis accepted a compromise in the knowledge that Mr and Mrs Christensens claim was outstanding. It may well be, as was acknowledged by Mr Pidgeon in the course of argument, that an allowance will need to be made for the amount already paid to the liquidator in settlement of the companys claim. It is to be acknowledged, however, that the problem of double recovery may well arise in other cases. No doubt, such a possibility is most likely with smaller private companies where the interrelationship between the company, the directors and the shareholders may give rise to independent duties on the part of the professional advisers involved. But the situation where one defendant owes a duty to two persons who suffer a common loss is not unknown in the law, and it will need to be examined in this context. It may be found that there is no necessary reason why the companys loss should take precedence over the loss of the individuals who are owed a separate duty of care. To meet the problem of double recovery in such circumstances it will be necessary to evolve principles to determine which party or parties will be able to seek or obtain recovery. A stay of one proceeding may be required. Judgment, with a stay of execution against one or other of the parties, may be in order. An obligation to account in whole or in part may be appropriate. The interest of creditors who may benefit if one party recovers and not the other may require consideration. As the problem of double recovery does not arise in this case, however, it is preferable to leave an examination of these issues to a case where that problem is squarely in point. Essentially, Mr and Mrs Christensen are alleging that as a result of Peat Marwick and McCaw Lewiss breach of duty owed to them personally they suffered a personal loss, that is, a reduction in the value of their assets. Their assets in this case had been channelled into their company. Thus, it is arguable that the diminution in the value of their shareholding is the measure of that loss. It may well be that when the evidence is heard it will be apparent that Mr and Mrs Christensens claim is inflated, but that is a matter for the trial. We are not prepared to hold at this stage that they do not have an arguable case to recover damages for the breach of an acknowledged duty. It will be clear from what I have said about Prudential that I consider that there is considerable force in this reasoning. The law as stated in Christensen v Scott was in substance affirmed by Leggatt LJ in Barings [1997] 1 BCLC 427, 435. That case was concerned with negligence of auditors in relation to the audit of a subsidiary company, in relation to which they were alleged to owe a similar duty of care to both that company and its ultimate parent company. The Court of Appeal held that the parent companys claim against the auditors was an arguable claim fit for service out of the jurisdiction and that the Prudential case provided no answer to it. I find the decision of the High Court of Australia in Gould v Vaggelas helpful in relation to the issues which arise on this appeal. That case concerned the purchase by a company of a holiday resort business as a result of fraudulent representations by the vendors regarding its trading history and prospects made to the claimant shareholders/controllers of the company. Induced by those fraudulent representations, the claimant shareholders entered into transactions which had the practical effect that they lent the company $733,212.12 to enable it to pay part of the purchase price to the vendors; they also mortgaged certain properties of theirs to the vendors and provided the vendors with personal guarantees in respect of outstanding parts of the purchase price which were to be paid by the company over a period of time after completion. Later, as the business faltered, the claimant shareholders lent the company further sums to enable it to continue trading. It was found by the trial judge and by a majority in the High Court that the claimant shareholders acted reasonably and without knowledge of the fraud when providing this further lending to support the business. The business eventually failed, the mortgaged properties were lost and the claimant shareholders incurred a substantial liability under their personal guarantees. The company did not repay them the sums they had lent it. The claimant shareholders came to realise that they had been deceived. In their own right they sued the vendors in deceit, claiming as damages the original sum lent to the company for the purchase, the further sums lent by them to support its continued trading, the value of the securities lost by reason of the failure of the company to repay the bank lending and the amount they had to pay under the guarantees they had given. The liquidator of the company, which had its own right of action against the defendants in deceit for being induced to purchase the business, for want of resources originally chose not to commence proceedings against the defendants and only issued a claim against them after the decision at first instance on the claimant shareholders claim. The trial judge awarded the claimant shareholders the damages claimed by them. His decision was overturned by the Full Court on appeal as regards the damages claimed, but on further appeal to the High Court his decision was upheld by a majority. The losses suffered by the claimant shareholders in providing the company with funds to acquire the business and to keep it trading were recoverable even though the company had its own claim against the vendors in respect of the price it paid (using the funds provided by the shareholders) and the sums it spent (using funds provided by the shareholders) to keep the business going. The approach of the majority in the Full Court to identify the claimant shareholders with the company was disapproved: see pp 240 241, 256 257 and 264. The shareholders had suffered personal losses in respect of which they were entitled to damages from the vendors notwithstanding that the company had its own parallel claim against the vendors. Although the Prudential case was referred to, only Dawson J in a minority opinion and without any critical examination of the reasoning in the case thought that the claimant shareholders claim should be excluded by reason of the reflective loss principle: pp 269 270. On the other hand, Gibbs CJ (p 220), Murphy J (pp 231 232), Wilson J (pp 245 246) and Brennan J (p 253) all treated Prudential as distinguishable, because the claimant shareholders sued in their personal capacity for losses suffered by them by spending their own resources in reliance on the fraudulent representations made to them, and not on behalf of the company in respect of its loss. This is in line with my own view regarding the Prudential decision: para 148 above. Although on the facts the company was funded by debt rather than equity (other than to a negligible extent), according to the reasoning by the majority I do not think that it would have made any difference to the right of recovery of the claimant shareholders if they had been induced to fund the companys purchase and continued trading by subscribing for shares in it rather than lending it money. That is the view taken in Spencer Bower and Handley, Actionable Misrepresentation, 5th ed (2014), para 12.26: it is pointed out that issues of double recovery can be addressed by treating the defendant as subrogated to the shareholders rights to the extent that the defendant satisfies a judgment which they obtain against him, in a manner similar to the solution proposed in the case of a creditor in Gould v Vaggelas itself (see below). The majority recognised that in principle the claimant shareholders had to bring into account as a credit the value of their rights against the company as shareholders and creditors, but on the facts the companys only value and only means of repaying them depended on its vindicating its own claim against the vendors, which in view of the conduct of the liquidator and as events had transpired had to be treated as nil. See pp 226 229 per Gibbs CJ (focusing on the rights of the claimant shareholders as creditors of the company); p 232 per Murphy J (referring both to the value of the shareholders shares and of their rights as creditors of the company); p 246 per Wilson J (focusing on their rights as creditors, but to be assessed at an earlier point in time when he considered they became aware of the fraud); pp 254 258 per Brennan J (focusing on their rights as creditors). Johnson v Gore Wood However, the leading English authority is now the decision of the House of Lords in Johnson. The case is primarily concerned with other issues, of abuse of process and estoppel by convention. It appears that there was only comparatively limited argument about the reflective loss principle and it seems that it was not suggested that Prudential was wrongly decided by reference to that principle, only that it was distinguishable. A difficulty with the case is that the law lords produced separate speeches in which the reasoning on the subject of reflective loss is materially different. Although on various other issues which arose in the case (including on the question of abuse of process, on which the case is the leading authority) agreement was expressed with the reasoning of Lord Bingham, no member of the appellate committee expressed agreement with his reasoning in relation to the issue of reflective loss. Lord Bingham and Lord Millett, in their separate speeches, accepted the approach and reasoning in Prudential without question. However, there was in fact no agreement between them on the reasoning applicable in relation to the reflective loss issue, nor any majority for any particular analysis. Therefore, I do not think that the case can be regarded as authority for the special rule of law identified by Lord Reed and Lord Hodge. It is necessary to examine the relevant reasoning in the separate speeches on its merits in each case to determine what weight it should be given. The one point on which at least four of the law lords were agreed (and Lord Bingham as well, as I read his speech) was that the issues of double recoverability and prejudice to creditors were relevant factors driving the application of the reflective loss principle: see para 119 above. For present purposes the facts can be summarised as follows. The claimant, Mr Johnson, was a businessman who conducted certain of his business affairs through a company, W Ltd, in which he held all but two of the shares. On behalf of W Ltd he instructed the defendant firm of solicitors, GW, in connection with the purchase of land for development. W Ltd had an option to purchase the land, and GW were instructed to serve a notice exercising the option. Service of the notice was followed by a dispute as to its validity and consequent legal proceedings which resulted in an order for specific performance against the vendor. The need for legal proceedings meant there was a long delay before completion of the conveyance and the property market collapsed in the interim, with the result that W Ltd suffered a loss of profit on its development project; W Ltd also suffered the loss of legal expenses from having to litigate in a lengthy trial against the vendor, who was legally aided. W Ltd claimed against GW that they had breached a duty of care owed to W Ltd to ensure that the notice to exercise the option was served in such a way as to avoid argument regarding its validity. Mr Johnson also alleged in correspondence that GW owed him personally a duty of care to like effect and intimated that he would in due course claim to recover damages. W Ltd commenced proceedings, but for particular reasons Mr Johnson held off bringing his own claim at the same time. GW settled W Ltds claim. After that, Mr Johnson commenced his personal claim against them. GW applied to strike out his claim on grounds of abuse of process and in reliance on the reflective loss principle. The House of Lords held that Mr Johnson had committed no abuse of process. By application of the reflective loss principle it struck out certain heads of damages claimed by Mr Johnson, but allowed his claim to proceed in relation to other heads of claim. Lord Bingham addressed the reflective loss principle at [2002] 2 AC 1, 35 37. After the passage quoted by Lord Reed at para 41 above, Lord Bingham continued: These principles do not resolve the crucial decision which a court must make on a strike out application, whether on the facts pleaded a shareholders claim is sustainable in principle, nor the decision which the trial court must make, whether on the facts proved the shareholders claim should be upheld. On the one hand the court must respect the principle of company autonomy, ensure that the companys creditors are not prejudiced by the action of individual shareholders and ensure that a party does not recover compensation for a loss which another party has suffered. On the other, the court must be astute to ensure that the party who has in fact suffered loss is not arbitrarily denied fair compensation. The problem can be resolved only by close scrutiny of the pleadings at the strike out stage and all the proven facts at the trial stage: the object is to ascertain whether the loss claimed appears to be or is one which would be made good if the company had enforced its full rights against the party responsible, and whether (to use the language of [Prudential] [1982] Ch 204, 223) the loss claimed is merely a reflection of the loss suffered by the company. In some cases the answer will be clear, as where the shareholder claims the loss of dividend or a diminution in the value of a shareholding attributable solely to depletion of the companys assets, or a loss unrelated to the business of the company. In other cases, inevitably, a finer judgment will be called for. At the strike out stage any reasonable doubt must be resolved in favour of the claimant. I turn to consider the heads of claim now pleaded by Mr Johnson. (1) Collector Piece Video Ltd and Adfocus Ltd. The claim is for sums which Mr Johnson, acting on GWs advice, invested in these companies and lost. This claim is unobjectionable in principle, as Mr Steinfeld came close to accepting. (2) Cost of personal borrowings: loan capital and interest. The claim is for sums which Mr Johnson claims he was obliged to borrow at punitive rates of interest to fund his personal outgoings and those of his businesses. Both the ingredients and the quantum of this claim will call for close examination, among other things to be sure that it is not a disguised claim for loss of dividend, but it cannot at this stage be struck out as bad on its face. The same is true of Mr Johnsons claims for bank interest and charges and mortgage charges and interest (which will raise obvious questions of remoteness). (3) Diminution in value of Mr Johnsons pension and majority shareholding in WWH. In part this claim relates to payments which the company would have made into a pension fund for Mr Johnson: I think it plain that this claim is merely a reflection of the companys loss and I would strike it out. In part the claim relates to enhancement of the value of Mr Johnsons pension if the payments had been duly made. I do not regard this part of the claim as objectionable in principle. An alternative claim, based on the supposition that the company would not have made the pension payments, that its assets would thereby have been increased and that the value of Mr Johnsons shareholding would thereby have been enhanced, is also a reflection of the companys loss and I would strike it out. (4) Loss of 12.5% of Mr Johnsons shareholding in WWH. Mr Johnson claims that he transferred these shares to a lender as security for a loan and that because of his lack of funds, caused by GWs breach of duty, he was unable to buy them back. This claim is not in my view objectionable in principle. (5) Additional tax liability. If proved, this is a personal loss and I would not strike it out. With respect to Lord Bingham, he takes the reasoning of the Court of Appeal in Prudential to be correct without subjecting it to critical examination. The authorities the effect of which he summarises essentially did the same, save for Christensen v Scott and Barings. In my view, following as they do the reasoning in Prudential, Lord Binghams propositions inaccurately equate the loss suffered by a company and the loss in the value of its shares (or from non payment of a dividend) suffered by a shareholder. Lord Goff agreed with the analysis of Lord Millett on this part of the case. In my view, the reasoning of Lord Millett again assumes, without questioning it, that the reasoning in Prudential is correct and he inaccurately equates the loss suffered by a company and the loss suffered by the shareholder. Lord Milletts discussion of the reflective loss principle begins by noting that a companys cause of action is its property for it to decide what to do with, that shares in a company are the property of the shareholder, and if he suffers loss as a result of an actionable wrong done to him, then prima facie he alone can sue and the company cannot ([2002] 2 AC 1, 61 62). He goes on at p 62: On the other hand, although a share is an identifiable piece of property which belongs to the shareholder and has an ascertainable value, it also represents a proportionate part of the companys net assets, and if these are depleted the diminution in its assets will be reflected in the diminution in the value of the shares. The correspondence may not be exact, especially in the case of a company whose shares are publicly traded, since their value depends on market sentiment. But in the case of a small private company like this company, the correspondence is exact. Lord Milletts comment regarding a company whose shares are publicly traded recognises that, contrary to the suggestion in Prudential, there is no necessary correspondence between the value of shares in the hands of a shareholder and the value of the companys assets. However, he did not subject the reasoning in Prudential to critical examination in the light of this. His comment regarding the correspondence between the value of shares in a small private company and its net assets reflects the reasoning in the Prudential case. This is made clear a little further on, when Lord Millett sets out the passage in that judgment dealing with the cash box example: [2002] 2 AC 1, 62 63. This is fundamental to Lord Milletts whole approach in his speech. As stated above, however, I do not consider that this reasoning can be supported. When it is appreciated that a shareholder has his own cause of action in respect of a loss which is not identical with the loss suffered by the company, as a matter of principle it is not possible to treat the shareholders cause of action as something eliminated by virtue of the fact that the company has its own cause of action in respect of loss which it suffers. Lord Millett points out that the problem of corresponding loss which he postulated causes no difficulty if the company has a cause of action in respect of that loss, but the shareholder does not; or if the shareholder has a cause of action in respect of it, but the company does not ([2002] 2 AC 1, 62B D). He continues [2002] 2 AC 1, 62D F: The position is, however, different where the company suffers loss caused by the breach of a duty owed both to the company and to the shareholder. In such a case the shareholders loss, in so far as this is measured by the diminution in value of his shareholding or the loss of dividends, merely reflects the loss suffered by the company in respect of which the company has its own cause of action. If the shareholder is allowed to recover in respect of such loss, then either there will be double recovery at the expense of the defendant or the shareholder will recover at the expense of the company and its creditors and other shareholders. Neither course can be permitted. This is a matter of principle; there is no discretion involved. Justice to the defendant requires the exclusion of one claim or the other; protection of the interests of the companys creditors requires that it is the company which is allowed to recover to the exclusion of the shareholder. This reasoning is predicated on the loss suffered by the company and the loss suffered by the shareholder being identical, as is also made clear by his citation of the cash box example in Prudential as the principal authority in support of his statement of principle ([2002] 2 AC 1, 62G 63D). In my respectful opinion, that is a false premise. The same false premise is evident again in Lord Milletts treatment of his own previous judgment in Stein v Blake. The case concerned the misappropriation of assets belonging to certain companies (the old companies) by a director, where the claimant shareholder alleged that the director also owed a duty to him personally and that he had suffered loss. The Court of Appeal affirmed the decision that the claim should be struck out. Lord Millett explained ([2002] 2 AC 1, 64A D): The problem [for the plaintiff] was that the only conduct relied upon as constituting a breach of that duty was the misappropriation of assets belonging to the old companies, so that the only loss suffered by the plaintiff consisted of the diminution in the value of his shareholding which reflected the depletion of the assets of the old companies. The old companies had their own cause of action to recover their loss, and the plaintiffs own loss would be fully remedied by the restitution to the companies of the value of the misappropriated assets. It was not alleged that the plaintiff had been induced or compelled to dispose of his shares in the companies; he still had them. If he were allowed to recover for the diminution in their value, and the companies for the depletion of their assets, there would be double recovery. Moreover, if the action were allowed to proceed and the plaintiff were to recover for the lost value of his shares, the defendants ability to meet any judgment which the old companies or their liquidators might obtain against him would be impaired to the prejudice of their creditors. The plaintiff would have obtained by a judgment of the court the very same extraction of value from the old companies at the expense of their creditors as the defendant was alleged to have obtained by fraud. The court assumed that if the old companies recovered in respect of their loss, the claimants loss would be fully remedied. But that would only be so if the loss was identical. Since the losses were not identical, double recovery would not necessarily follow from allowing the claimant to bring his personal claim. Also, as I have sought to explain, he would have to give credit for the effect on the value of his shares due to the old companies having their own causes of action against the defendant. There was no principled reason why the claimant should not be entitled to seek to vindicate his own cause of action against the defendant. That would not prevent the old companies from obtaining recovery in respect of their cause of action and their loss. In my opinion, the same false premise underlies Lord Milletts criticism of the decisions in Barings and in Christensen v Scott. In respect of the latter, he said that he could not accept the reasoning of Thomas J ([2002] 2 AC 1, 66B C): It is of course correct that the diminution in the value of the plaintiffs shares was by definition a personal loss and not the companys loss, but that is not the point. The point is that it merely reflected the diminution of the companys assets. The test is not whether the company could have made a claim in respect of the loss in question; the question is whether, treating the company and the shareholder as one for this purpose, the shareholders loss is franked by that of the company. If so, such reflected loss is recoverable by the company and not by the shareholders. However, with respect, I consider that the error is Lord Milletts. The claimants personal loss did not merely reflect the companys loss; it was not identical with that loss, and the company could not make a claim in respect of the loss which the claimants had suffered. There is no good reason to treat the company and the shareholder as one for the purpose of working out who could sue for the losses in question, since there is not a single loss. Similarly, for the reasons given above, I do not think that Lord Milletts further reliance on the causation point ([2002] 2 AC 1, 66D E) can be supported. Lord Millett continued at [2002] 2 AC 1, 66F G: But there is more to it than causation. The disallowance of the shareholders claim in respect of reflective loss is driven by policy considerations. In my opinion, these preclude the shareholder from going behind the settlement of the companys claim. If he were allowed to do so then, if the companys action were brought by its directors, they would be placed in a position where their interest conflicted with their duty; while if it were brought by the liquidator, it would make it difficult for him to settle the action and would effectively take the conduct of the litigation out of his hands. I do not consider that these policy considerations can justify the reflective loss principle. Again, the underlying point is that the company and the shareholder each have their own cause of action and that the loss suffered by the company and the loss suffered by the shareholder are not one and the same. If the company settles its claim, the shareholder will have to give appropriate credit for that to the extent that it has reduced his loss (which might or might not be significant, depending on the facts of the case). In bringing his claim he would not go behind nor undo the settlement of the companys claim. If the shareholder is also a director of the company, that could give rise to a conflict of interest and duty in deciding how the company should prosecute its claim; but as pointed out by Mitchell (2004) 120 LQR 457, 470, there will be cases which do not involve shareholders who are directors. In any event, company law has procedures for coping with similar conflicts of interest and duty on the part of directors and this point does not amount to a good reason to eliminate the shareholders properly constituted cause of action. If a director has been run over by an employee of the company or has a contract claim against it, one would not say that he was prevented from suing the company because he would thereby be placed in a position where his interests and those of the company would conflict. If exposed to the possibility of claims by a shareholder and a company, a defendant would still have an interest to settle with the liquidator of the company in order to cap his liability to the company and there is no good reason why the liquidator, by his conduct of the companys claim, should be able to defeat a viable cause of action vested in the shareholder. In my view, the same flawed premise underlies the following two paragraphs in Lord Milletts speech, which have particular relevance in the context of the present appeal concerning the application of the reflective loss principle to claims brought by a creditor of a company ([2002] 2 AC 1, 66G 67C): Reflective loss extends beyond the diminution of the value of the shares; it extends to the loss of dividends (specifically mentioned in [Prudential]) and all other payments which the shareholder might have obtained from the company if it had not been deprived of its funds. All transactions or putative transactions between the company and its shareholders must be disregarded. Payment to the one diminishes the assets of the other. In economic terms, the shareholder has two pockets, and cannot hold the defendant liable for his inability to transfer money from one pocket to the other. In principle, the company and the shareholder cannot together recover more than the shareholder would have recovered if he had carried on business in his own name instead of through the medium of a company. On the other hand, he is entitled (subject to the rules on remoteness of damage) to recover in respect of a loss which he has sustained by reason of his inability to have recourse to the companys funds and which the company would not have sustained itself. The same applies to other payments which the company would have made if it had had the necessary funds even if the plaintiff would have received them qua employee and not qua shareholder and even if he would have had a legal claim to be paid. His loss is still an indirect and reflective loss which is included in the companys claim. The plaintiffs primary claim lies against the company, and the existence of the liability does not increase the total recoverable by the company, for this already includes the amount necessary to enable the company to meet it. The analogy with a shareholder with two pockets does not give appropriate recognition to the separate legal personality of a company, as emphasised in the Salomon case. The analogy assumes, incorrectly, that the loss suffered by the company is identical with the loss suffered by the shareholder. Starting from that assumption, Lord Millett would extend the reflective loss principle to prevent recovery from a wrongdoing defendant by a creditor of the company who suffers the loss of being unable to recover what he is owed by the company as a result of the wrong done at the same time by the defendant to him and the company. His speech therefore provides support for Mr Sevillejas case on this appeal. I will discuss the position of creditors after finishing this discussion of Johnson. Lord Cooke stated that he had difficulty with the part of Lord Binghams speech dealing with the recoverability of damages by Mr Johnson on his personal claim against GW. Although he was at pains not to criticise the decision in Prudential ([2002] 2 AC 1, 43A and 45F), he observed that the cash box illustration was not helpful in the Johnson case because it does not envisage any loss except of the companys 100,000 ([2002] 2 AC 1, 42G 43B). In other words, the illustration proceeds on the basis that the companys loss and the shareholders loss are identical, as was also true of the analysis in Stein v Blake. Lord Cooke agreed that the English authorities cited by Lord Bingham supported the three propositions stated by him. Nonetheless, Lord Cooke was not willing to dismiss the statement of the law by Thomas J in Christensen v Scott and pointed out that Leggatt LJ in Barings and Hobhouse LJ in Gerber (at [1997] RPC 443, 475) had regarded it as in line with English legal principles. Lord Cooke observed that the court in Christensen v Scott had been guarded in its approach and he stated that if a client is suing his own solicitor, it would appear that only the problems of double recovery or prejudice to the companys creditors would justify denying or limiting the right to recover personal damages which, on ordinary principles of foreseeability, would otherwise arise ([2002] 2 AC 1, 45D E; also 47E and 48B). Despite his reservations about Lord Binghams reasoning, however, Lord Cooke was prepared to agree the order proposed by him, as were the other members of the appellate committee ([2002] 2 AC 1, 48B E). Lord Hutton also agreed with the order proposed by Lord Bingham, but his analysis was different from the others. Lord Hutton noted that the basis on which Prudential had been distinguished by Hobhouse LJ in Gerber (on the footing that the shareholder claimants in Prudential did not have an individual cause of action) was invalid, since the Court of Appeal considered that they did have such a cause of action (however, see para 148 above); contrary to the view of Hobhouse LJ in Gerber, Lord Hutton stated (correctly, in my view) that the ruling against the shareholder claimants in Prudential could not be explained on the ground of causation; and he agreed (again correctly, in my view) with the court in Christensen v Scott that the shareholders could be regarded as suffering a personal loss caused by breach of duty of the defendant, different from the loss of the company, and considered that the reasoning in Prudential on this point was open to criticism ([2002] 2 AC 1, 54). However, he stated that there is a need to ensure that there is no double recovery and that creditors and the other shareholders of the company are protected: [2002] 2 AC 1, 54H 55D. On that basis, faced with the conflict between Prudential and Christensen v Scott, Lord Hutton preferred to endorse the approach in Prudential despite the flaws in its reasoning, since it provided a bright line rule to debar a shareholder from bringing a claim without the need for the complexities of a trial to examine the extent of overlap between the loss of the claimant shareholder and the loss of the company. A bright line rule of this character would ensure that there would be no double recovery and that the creditors and other shareholders would be protected; it would also avoid the possibility of conflicts of interest between directors and some shareholders or between liquidator and some shareholders: [2002] 2 AC 1, 55C G. I disagree with this last step in the reasoning of Lord Hutton. None of the other law lords endorsed this. The problem, as I see it, is that the factors mentioned by Lord Hutton do not justify depriving a claimant shareholder who has suffered a loss different from the loss suffered by the company of what Lord Hutton accepted would otherwise be a perfectly valid cause of action in his own right. I also agree with Mitchells criticism of Lord Huttons bright line approach, that it proves too much, in that it would prevent recovery by a shareholder even if there is no policy reason to support this, eg in a case where the company itself never had a cause of action against the defendant: (2004) 120 LQR 457, 460. It is a very strong thing for a bright line rule to be introduced in the common law as a matter of policy to preclude what are otherwise, according to ordinary common law principles, valid causes of action; especially on the basis of the very summary explanation given by Lord Hutton. Whilst, as noted above, it would allow for simple and speedy resolution of disputes, the price to be paid for that is too high. The effect of Lord Huttons bright line rule would be disproportionate and arbitrary. So long as there is any degree of overlap between the companys loss and the shareholders loss, however small the degree of overlap and however large the shareholders loss might be, it seems that the shareholders claim must fail in limine. And this is so even though, as explained above, the claimant shareholders loss would be calculated after due allowance for the effect of rights of action which the company would have against the wrongdoing defendant and even though the law has other techniques available to deal with issues of conflict of interest which might arise. It is also a rule which, in my view, gives undue priority to the interests of other shareholders and creditors of the company in circumstances where the claimant shareholder is not subject to any obligation to subordinate his interest in vindicating his personal rights to their interests. Insolvency law is a regime which already makes appropriate provision to cater for the possibility that the defendant does not have sufficient assets to meet all claims against him, and there is no good policy basis for recognition of the reflective loss principle at common law to supplement that regime. Further, there will be cases where there is in fact no difficulty in the defendant being able to meet all claims. In summary, in my respectful opinion the reasoning in Johnson, in so far as it endorses the reflective loss principle as a principle debarring shareholders from recovery of personal loss which is different from the loss suffered by the company, ought not to be followed. The reasoning of Lords Bingham, Goff and Millett purports to be based on the logic in the Prudential case, which on critical examination is not sustainable. The reasoning of Lord Hutton relies on a policy based bright line exclusionary rule which is not justified. The reasoning of Lord Cooke is suspended uneasily between the majority and Lord Hutton. Lord Cooke endorsed the decision in Prudential (and in my opinion was right to do so as to the result: para 148 above), albeit he was unwilling to disclaim the judgment in Christensen v Scott (even though the reasoning in the two cases cannot be reconciled, a fact which he was not prepared to acknowledge); and to the extent that, like Lord Hutton, he emphasised that there should not be double recovery and that the companys other shareholders and creditors should be protected, in my view he gave insufficient attention to the ways in which the law already allows for the risk of double recovery to be taken into account and did not explain why the interests of the companys other shareholders and creditors should take priority over the interests of the claimant shareholder suing to vindicate a personal cause of action. Lord Reed points out (para 78) that the decisions in Prudential and Johnson have been followed in other common law jurisdictions. However, whilst there is some variation in the reasoning which is deployed, the courts in those jurisdictions have not given Prudential and Johnson the same interpretation as Lord Reed gives them. To a substantial degree they have regarded them as being concerned with the issues of double recovery and protection of the interests of creditors and other shareholders of the company, which I have addressed above: see eg the discussion at para 164 above of the judgment of the Court of Appeal of Singapore in Townsing v Jenton Overseas Investment Pte Ltd. This is not surprising, given that in Johnson Lords Millett, Goff, Cooke and Hutton all identified these as the important issues by reference to which the reflective loss principle fell to be justified, and Lord Bingham (as I read his speech) did not dispute this. Flaux LJ in his judgment in the Court of Appeal in the present case at para 32 distilled a four fold justification for the reflective loss principle, principally derived from the speech of Lord Millett in Johnson: (i) the need to avoid double recovery by the claimant shareholder and the company from the defendant; (ii) causation, in the sense that if the company chooses not to claim against the wrongdoer, the loss to the claimant is caused by the companys decision not by the defendants wrongdoing ([2002] 2 AC 1, 66; also per Chadwick LJ in Giles v Rhind, para 78); (iii) the public policy of avoiding conflicts of interest, particularly that if the claimant had a separate right to claim it would discourage the company from making settlements; and (iv) the need to preserve company autonomy and avoid prejudice to minority shareholders and other creditors. In my opinion, none of these considerations in fact provides a viable justification for the reflective loss principle. Points (i) and (ii) reflect Lord Milletts incorrect view that the loss suffered by the company is the same as the loss suffered by the shareholder (to the extent of his shareholding), and ignore the ways in which the law takes account of the need to avoid double recovery by other means. Point (iii) also reflects Lord Milletts view regarding the identity of the loss suffered by the company and the loss suffered by the shareholder, and ignores the availability of other mechanisms to deal with conflicts of interest on the part of directors and the interest that a defendant would have in settling with a company which makes a claim in parallel with a personal claim made by a shareholder. Point (iv) again reflects Lord Milletts view regarding identity of loss; it ignores the fact that company autonomy (safeguarded by the rule in Foss v Harbottle) remains in place as regards any cause of action vested in the company; and it gives undue weight to protection of other shareholders and other creditors. The reflective loss principle and claims by creditors of the company The discussion above indicates that the reflective loss principle as stated in Prudential is a flimsy foundation on which to build outwards into other areas of the law, and particularly when it is sought to be deployed in answer to Marexs claim in the present case. Marex was not a shareholder in the Companies, but their creditor. In my view this means that there is even less reason for saying that its interest in obtaining recovery directly from Mr Sevilleja should be eliminated by virtue of the fact that the Companies also have claims against him. A creditor of a company has not chosen to be in a position where he is required to follow the fortunes of the company in the same way as a shareholder. Subject to the company having sufficient assets, whether the creditor gets paid or not does not depend on the decision of the directors, as payment of a dividend to a shareholder does: when armed with a court judgment the creditor can execute it against the assets of the company. Moreover, there is a clear mechanism available to meet the problem of possible double recovery against the defendant in respect of the loss suffered by Marex and the loss suffered by the Companies. To the extent that Marex sues Mr Sevilleja and obtains recovery from him for the judgment sum, Mr Sevilleja can be subrogated to Marexs rights against the Companies or allowed a right of reimbursement in respect of them. If Marexs debtor had been an individual and Mr Sevilleja had stolen all his assets with a view to preventing him paying the debt due to Marex, it would be possible for Marex to bring an OBG claim against him, in line with the part of the judgment of Robin Knowles J which is not under appeal. Also, in line with that part of the judges judgment, Marex would arguably have been able to bring a Lumley v Gye claim against him. By his tortious actions, Mr Sevilleja would have made himself, in a practical sense, jointly and severally liable with the individual debtor in respect of the amount of the unpaid debt and Marex could sue either or both of them. Marex would not be required to sue the individual debtor to make him bankrupt and then seek to procure his trustee in bankruptcy to pursue Mr Sevilleja in the hope that a recovery would eventually lead to it receiving a dividend in the bankruptcy (after deduction of the trustees fees). Mr Sevillejas torts in respect of Marex would create a direct nexus between them of such force that Marexs rights against him would not have to be postponed behind any proof in the individual debtors bankruptcy in this way. To the extent that the individual debtor or Mr Sevilleja paid the money due, Marex would have to give credit in pursuing the other. To the extent that Mr Sevilleja paid Marex a sum representing money owed by the individual debtor (which he would have had to pay Marex had Mr Sevilleja not stolen all his assets), the justice of the case would require that the individual debtor should give credit for that when suing Mr Sevilleja in relation to the theft. In my view, this outcome could readily be achieved in a case involving an individual debtor. The question which arises, therefore, is whether the fact that Marexs debtor is a company rather than an individual should make any difference. In my view, there is no good reason why it should. Mr Sevillejas position would be protected if Marex assigned its rights against the Companies to him, to the extent any payment he made to Marex was in respect of the debts owed. Alternatively, if by making payment in respect of the Companies debts to Marex Mr Sevilleja was able to discharge them, he would have a right of reimbursement against the Companies, as they are the primary obligee in respect of the debt obligations: Moule v Garrett (1872) LR 7 Ex 101; Duncan Fox & Co v North & South Wales Bank (1880) 6 App Cas 1, 10 per Lord Selborne LC; Goff & Jones, The Law of Unjust Enrichment, 9th ed (2016), paras 19 19 to 19 21. If Mr Sevilleja seeks to compromise Marexs claim, he could make it a term of their agreement that he takes an assignment of Marexs rights as creditor. Absent such agreement, a court ruling on Marexs claim against him could impose as a condition for the grant of relief that Marex should assign its rights to him to an appropriate extent or that it should acknowledge his payment as discharging the debt to that extent, thereby bringing into effect a right of reimbursement in favour of Mr Sevilleja pursuant to Moule v Garrett. Even if these mechanisms were not pursued and payment by Mr Sevilleja did not discharge the debts of the Companies, in my view Mr Sevilleja would have a right to be subrogated to an appropriate extent to the rights of Marex as against the Companies. In my opinion, this would in fact be the simplest and most appropriate solution. Subrogation is a flexible equitable remedy which would be available in this case for basic reasons of equity and natural justice similar to those which underlie the rule in Moule v Garrett, in order to ensure that neither the Companies (if Marex did not sue them on the debts) nor Marex (if it did sue them on the debts) would receive a windfall enrichment by virtue of the payment by Mr Sevilleja of the judgment sum or part thereof: see Banque Financire de la Cit v Parc (Battersea) Ltd [1999] 1 AC 221 and Swynson Ltd v Lowick Rose LLP (formerly Hurst Morrison Thomson LLP) [2017] UKSC 32; [2018] AC 313, paras 18 19 per Lord Sumption; and C Mitchell and S Watterson, Subrogation Law and Practice (2007), paras 1.01 to 1.03, 1.07 and 1.08. Again, the decision of the High Court in Gould v Vaggelas provides a helpful illustration. The case was concerned with a situation in which a company owed money to creditors (who happened to be shareholders, but who sued the defendants relying on their capacity as creditors of the company), which the company had been prevented from repaying by reason of losses suffered as a result of a deceit practised on it by the defendants. As Brennan J put it at p 253: The [claimants] loss is the loss suffered by a creditor of the company which, apart from its cause of action in deceit, is worthless. The position was in my view analogous to that in the present case. The High Court held that the claimants were entitled to sue the defendants to vindicate their personal rights in respect of the loss suffered by them as a result of the failure of the company to repay the loans. The justices who directly considered the question of what would happen if the defendants paid the claimants the equivalent of the money owed to them by the company while claims against the defendants by the company remained on foot were clear that the justice of the case would require that the claimants could not take the benefit of sums which the company might later be able to repay: see p 246 per Wilson J and pp 258 259 per Brennan J. Gibbs CJ at p 229 referred to the possibility of there being a right of subrogation for the defendants should the company later be able to pay back the loans. The most considered discussion was that by Brennan J, who observed that since satisfaction of the claimants judgment against the defendant would not discharge the company from liability for the companys debt, a right of reimbursement under the principle in Moule v Garrett would not arise; but said that the defendant would be subrogated to the claimants rights against the company in respect of the loans (p 259). Save that, as indicated above, I think there would be ways in which the principle in Moule v Garrett might be brought into operation, I agree with Brennan Js analysis. Turning to address the four considerations identified by Flaux LJ at para 32 of his judgment, this time in the context of liability in respect of a claim by a creditor of a company, I do not consider that they justify excluding Marexs claim against Mr Sevilleja, even if (contrary to my view above) they might have force in respect of a claimant shareholders claim. Point (i) (the need to avoid double recovery) is satisfied by recognising that Mr Sevilleja will have a right to be subrogated to Marexs right of action against the Companies, to the extent that he makes a payment referable to the debts they owe Marex. Point (ii) (absence of causation, because the claimants rights depend on the companys decision) has no force, because Marexs right to seek payment from the Companies had already accrued and was not dependent on a choice to be made by the Companies. Mr Sevillejas wrongdoing clearly caused loss to Marex because it prevented Marex from being able to execute a judgment in respect of the judgment sum against the Companies assets. Point (iii) (avoidance of conflicts of interest and discouraging settlements by the company) similarly has no force. The Companies were obliged to pay Marex to satisfy its accrued rights against them, so it was out of the hands of their directors and not a matter of discretion whether they should do so or not. If the liquidator of the Companies seeks a compromise of their claims against Mr Sevilleja, it is open to Mr Sevilleja to bargain for protection against double liability if Marex is also successful in obtaining payment from him. Point (iv) (preservation of company autonomy and avoidance of prejudice to minority shareholders and other creditors) also cannot justify dismissing Marexs claim. The Companies have no autonomy to exercise as regards the debt claim against them, and have no right or power of control in respect of Marexs own property in the form of its rights of action against Mr Sevilleja. If the Companies had been insolvent at the time of Mr Sevillejas wrongdoing so that, but for his actions, Marex would only have received, say, 50% of the value of what was due to it, its claim for damages against Mr Sevilleja would be limited to that amount. It is not apparent that minority shareholders or other creditors of the Companies would suffer unacceptable detriment from allowing Marex to proceed directly against Mr Sevilleja. In any event, as explained above, there is no rule which governs the order in which people can seek to vindicate their rights against others; and even less than in the case of a shareholder can it be said that an ordinary creditor of a company has undertaken not to seek to enforce his rights against the wrongdoing defendant in order to safeguard the interests of the shareholders and other creditors of that company. There is an additional consideration in respect of point (iv) which arises on the facts of this case which I should mention, albeit I prefer to state the reasons why Marexs appeal should succeed in more general terms. It appears that Mr Sevilleja is very wealthy and both for that reason and because there is no indication that the liquidator proposes to pursue the Companies claims against him, it does not seem that there is any real risk that the creditors of the Companies will in fact find themselves less well off if Marexs claim against him is allowed to proceed than they would otherwise have been. There is support from Lord Milletts speech in Johnson (at [2002] 2 AC 1, 66G 67C, quoted above) for Mr Sevillejas submission that the reflective loss principle precludes a claim against him by Marex, as a creditor of the Companies, in respect of loss suffered by Marex as a result of the non payment by the Companies of the judgment sum. Lord Bingham also arguably provides implicit support for Mr Sevillejas submission, in that he struck out Mr Johnsons claim under head (3) for payments which the company would have made into a pension fund for his benefit. It seems that these would have been discretionary, non contractual payments for Mr Johnsons benefit as part of his remuneration, not payments by way of dividend. Lord Bingham did not suggest that it would make a difference if these payments constituted remuneration to which Mr Johnson was contractually entitled. There is also support for Mr Sevillejas submission in the judgment of Neuberger LJ in Gardner v Parker [2004] EWCA Civ 781; [2004] 2 BCLC 554, with which Mance LJ and Bodey J agreed. The case concerned the claim of a company (BDC), as assigned to the claimant in the proceedings, against its sole director, Mr Parker. BDCs principal assets were a 9% shareholding in another company, S Ltd (of which Mr Parker was also the sole director and in which he held 91% of the shares), and a debt of 799,000 owed to BDC by S Ltd. The claimant alleged that, in breach of the fiduciary duties he owed to BDC and S Ltd, Mr Parker procured the sale by S Ltd of its principal asset at an undervalue to another company in which Mr Parker had an interest; that his purpose in doing so was to extract from S Ltd its most valuable asset to the detriment of BDC or to damage BDC; and that as a consequence of the sale S Ltd became insolvent. It was pleaded that, as a consequence, the value of BDCs 9% shareholding in S Ltd was reduced to nil and the value of the loan due from S Ltd was also reduced to nil. Neuberger LJ held that the losses claimed by BDC in its capacity as creditor of S Ltd were caught by the reflective loss principle, as were BDCs claims in its capacity as shareholder in S Ltd, with the result that it could not claim in respect of them: paras 35 and 67 75. Neuberger LJ relied on the speeches of Lord Bingham and, in particular, Lord Millett in Johnson. Proceeding on the basis of the reasoning in those speeches, Neuberger LJ observed that there was no logical reason why the reflective loss principle should not apply to a shareholder in his capacity as a creditor of the company and added that it is hard to see why the [reflective loss principle] should not apply to a claim brought by a creditor (or indeed, an employee) of the company concerned, even if he is not a shareholder (para 70). According to Neuberger LJ, the creditor would not be without remedies; he can put the company into liquidation (if that has not already happened) and can either fund a claim by the liquidator against the defendant or, as Mr Gardner did in relation to BDC, he can take an assignment of the companys claim (para 74). Neuberger LJ observed that the arguments for the claimant were more consistent with the approach in Christensen v Scott, but that decision had been disapproved in Johnson. Accordingly, in his view, although the claimants arguments were not without force, although not without difficulties either, they could only be accepted at the highest level if it was thought appropriate to reconsider the reflective loss principle (para 75). The Court of Appeal in the present case followed these authorities in respect of Marexs claims, based as they are on its being a creditor of the Companies. In this court, it is open to us to re examine them from the point of view of principle, rather than to treat them as binding authority. In my judgment, the foundation in the reasoning of Lord Bingham and Lord Millett regarding the reflective loss principle in respect of shareholder claimants is not sustainable. I would not follow Johnson in so far as it endorsed the reflective loss principle identified in Prudential in relation to claims by shareholder claimants. But even if the principle is to be preserved in relation to such claimants, the questionable nature of the justification for it means that it is appropriate for this court to stand back and ask afresh whether it can be justified as a principle to exclude otherwise valid claims made by a person who is a creditor of the company. We are not trapped by Prudential and the speeches of Lord Bingham and Lord Millett in Johnson in the way in which the Court of Appeal in Gardner v Parker felt that it was bound by their reasoning. For the reasons given above, I would hold that the reflective loss principle, if it exists, does not apply in the present case. The exception in Giles v Rhind In view of my conclusion that the reflective loss principle does not apply in this case, the question regarding the ambit of the exception to that principle which was identified in Giles v Rhind does not arise. However, it is worth pointing out that the exception was identified in an effort to achieve practical justice against the backdrop of an assumption that the reflective loss principle stated in Prudential was valid. If Prudential is held to lay down a bright line rule of law deeming reflective loss not to be a loss, whatever the true position on the facts, and that bright line rule is endorsed, cases such as Giles v Rhind, exemplifying the dissonance between the rule and practical justice on the facts, will continue to arise. This will put pressure on the acceptability of the rule itself. Conclusion For the reasons set out above, I would allow Marexs appeal and permit it to proceed with its OBG claim and Lumley v Gye claim directly against Mr Sevilleja.
UK-Abs
The respondent, Mr Sevilleja, owned and controlled two companies (the Companies) incorporated in the British Virgin Islands (BVI). The appellant, Marex Financial Ltd (Marex), brought proceedings against the Companies for sums due under contract. After a trial in the Commercial Court before Field J, Marex obtained judgment for over US$5.5 million, plus costs of1.65 million. On 19 July 2013, Field J gave the parties a confidential draft of his judgment, due to be handed down six days later. From 19 July 2013, Mr Sevilleja allegedly procured the offshore transfer of over US$9.5 million from the Companies London accounts into his personal control. By the end of August 2013, the Companies assets were just US$4,329.48, such that Marex could not receive payment of its judgment debt and costs. In December 2013, Mr Sevilleja placed the Companies into liquidation in the BVI, their alleged debts exceeding US$30 million. Marex is the only creditor not connected to Mr Sevilleja. According to Marex, the liquidation process is effectively on hold, with the liquidator failing to investigate claims submitted to him, to locate Marexs missing funds, or to issue proceedings against Mr Sevilleja. In the present proceedings, Marex seeks damages from Mr Sevilleja in tort for (1) inducing or procuring the violation of its rights under Field Js judgment and orders, and (2) intentionally causing it to suffer loss by unlawful means. The sums claimed are (1) the judgment debt, interest and costs awarded by Field J, less an amount Marex recovered in US proceedings, and (2) costs incurred by Marex in its attempts to obtain payment. Mr Sevilleja contends that Marexs claim in respect of (1) is barred by the reflective loss principle. That contention was upheld by the Court of Appeal. The Supreme Court unanimously allows the appeal. The leading judgment is given by Lord Reed, with whom Lady Black and Lord Lloyd Jones agree. Lord Hodge gives a separate judgment agreeing with the reasoning of Lord Reed. Lord Sales delivers a separate judgment, with which Lady Hale and Lord Kitchin agree, allowing the appeal on a wider basis. After explaining relevant general principles of law [2 13], and the background to the appeal [14 22], Lord Reed examines the decisions which are said to have established the reflective loss principle, namely Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 [23 39] and Johnson v Gore Wood & Co [2002] 2 AC 1 [40 67]. He concludes that Prudential laid down a rule of company law: a diminution in the value of a shareholding or in distributions to shareholders, which is merely the result of a loss suffered by the company in consequence of a wrong done to it by the defendant, is not in the eyes of the law damage which is separate and distinct from the damage suffered by the company, and is therefore not recoverable. The rule is based on the rule in Foss v Harbottle (1843) 2 Hare 461, which would be subverted if the shareholder could pursue a personal action in those circumstances [35 39]. That understanding of the rule is consistent with the speech of Lord Bingham in Johnson. Lord Milletts speech, however, treated the reflective loss principle as a wider principle of the law of damages, based on the avoidance of double recovery [61 63]. Lord Reed then reviews subsequent cases in which the reflective loss principle as explained by Lord Millett has developed, including Giles v Rhind [2002] EWCA Civ 1428, Perry v Day [2004] EWHC 3372 (Ch), and Gardner v Parker [2004] EWCA Civ 781 [68 77]. This examination makes clear the need to distinguish (1) cases where claims are brought by a shareholder in respect of loss which he has suffered in that capacity, in the form of a diminution in share value or in distributions, which is the consequence of loss sustained by the company, in respect of which the company has a cause of action against the same wrongdoer, and (2) cases where claims are brought, whether by a shareholder or by anyone else, in respect of loss which does not fall within that description, but where the company has a right of action in respect of substantially the same loss [80]. The first kind of case is barred by the rule in Prudential, regardless of whether the company recovers its loss in full [80 83]. In the second kind of case, recovery is permissible in principle, although it may be necessary to avoid double recovery [84 88]. In light of this, Lord Reed holds that the reasoning in Johnson (other than that of Lord Bingham) should be departed from, and that Giles, Perry and Gardner were wrongly decided [89]. The rule in Prudential does not apply to Marex, which is a creditor of the Companies, not a shareholder [92]. Lord Hodge agrees with Lord Reeds reasons, noting that the panel was in agreement that the reflective loss principle has been expanded too greatly and would cause injustice if applied to Marexs situation [95]. Lord Hodge also points out the central role of company law in the Court of Appeals judgment in Prudential, and how the reflective loss principles departure from those foundations has given rise to problems and uncertainties in the law [95 108]. The bright line rule has a principled basis in company law and ought not to be departed from now [109]. Lord Sales concludes that Marexs appeal should be allowed, but for reasons differing from those of the majority [116]. The majority see the reflective loss principle, per Prudential, to be a rule of law deeming a shareholders loss by reduction in value of their shares or dividends to be irrecoverable where the company has a parallel claim. However, in Lord Saless view, Prudential did not lay down a rule that would exclude a shareholders recovery where, factually, the loss was different from that of the company. The court in Prudential set out reasoning why it thought a shareholder in such a case had suffered no separate loss, but this is not sustainable [117 118]. The governing principle is indeed avoidance of double recovery, as was the view of the Law Lords in Johnson (contra Lord Reed) [119]. Lord Sales criticises the authorities use of the word reflective as being unhelpful. Although there is necessarily a relationship between a companys loss and the reduction in share values that it causes, the loss suffered by the shareholder is not the same as the loss suffered by the company and there is no one to one correspondence between the two [132]. The Court of Appeal in Prudential conflated the rationale for the rule in Foss v Harbottle with that for the reflective loss principle and assumed that a personal action would subvert the rule. That is not the case [142]. A shareholder ought not to be prevented from pursuing a valid personal cause of action; double recovery can be prevented by other means [149 155]. Lord Sales therefore questions the justification for the reflective loss principle and whether it should still be recognised [194]. Even if the principle is accepted, it should not be extended to cover a case involving loss suffered by a creditor of the company. There are better ways to avoid double recovery in such a situation, such as by according the wrongdoer a right of subrogation to the extent he pays the creditor sums in respect of the debt owed by the company [198 205].
As Lord Hewart CJ famously declared, in R v Sussex Magistrates, Ex p McCarthy [1924] 1 KB 256, 259, it is not merely of some importance but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done. That was in the context of an appearance of bias, but the principle is of broader application. With only a few exceptions, our courts sit in public, not only that justice be done but that justice may be seen to be done. But whereas in the olden days civil proceedings were dominated by the spoken word oral evidence and oral argument, followed by an oral judgment, which anyone in the court room could hear, these days civil proceedings generate a great deal of written material statements of case, witness statements, and the documents exhibited to them, documents disclosed by each party, skeleton arguments and written submissions, leading eventually to a written judgment. It is standard practice to collect all the written material which is likely to be relevant in a hearing into a bundle which may range from a single ring binder to many, many volumes of lever arch files. Increasingly, these bundles may be digitised and presented electronically, either instead of or as well as in hard copy. This case is about how much of the written material placed before the court in a civil action should be accessible to people who are not parties to the proceedings and how it should be made accessible to them. It is, in short, about the extent and operation of the principle of open justice. As Toulson LJ said, in R (Guardian News and Media Ltd) v City of Westminster Magistrates Court (Article 19 intervening) [2012] EWCA Civ 420; [2013] QB 618 (Guardian News and Media), at para 1: Open justice. The words express a principle at the heart of our system of justice and vital to the rule of law. The rule of law is a fine concept but fine words butter no parsnips. How is the rule of law itself to be policed? It is an age old question. Quis custodiet ipsos custodes who will guard the guards themselves? In a democracy, where power depends on the consent of the people governed, the answer must lie in the transparency of the legal process. Open justice lets in the light and allows the public to scrutinise the workings of the law, for better or for worse. The history of the case The circumstances in which this important issue comes before the court are unusual, to say the least. Cape Intermediate Holdings Ltd (Cape) is a company that was involved in the manufacture and supply of asbestos. In January and February 2017, it was the defendant in a six week trial in the Queens Bench Division before Picken J. The trial involved two sets of proceedings, known as the PL claims and the CDL claim, but only the PL claims are relevant to this appeal. In essence, these were claims brought against Cape by insurers who had written employers liability policies for employers. The employers had paid damages to former employees who had contracted mesothelioma in the course of their employment. The employers, through their insurers, then claimed a contribution from Cape on the basis that the employees had been exposed at work to asbestos from products manufactured by Cape. It was alleged that Cape had been negligent in the production of asbestos insulation boards; that it knew of the risks of asbestos and had failed to take steps to make those risks clear; indeed, that it obscured, understated and unfairly qualified the information that it had, thus providing false and misleading reassurance to employers and others. Cape denied all this and alleged that the employers were solely responsible to their employees, that it did publish relevant warnings and advice, and that any knowledge which it had of the risks should also have been known to the employers. Voluminous documentation was produced for the trial. Each set of proceedings had its own hard copy core bundle, known as Bundle C, which contained the core documents obtained on disclosure and some documents obtained from public sources. The PL core bundle amounted to over 5,000 pages in around 17 lever arch files. In addition, there was a joint Bundle D, only available on an electronic platform, which contained all the disclosed documents in each set of proceedings. If it was needed to refer to a document in Bundle D which was not in Bundle C, it could immediately be viewed on screen, and would then be included in hard copy in Bundle C. The intention was that Bundle C would contain all the documents referred to for the purpose of the trial, whether in the parties written and oral opening and closing submissions, or in submissions or evidence during the trial. After the trial had ended, but before judgment was delivered, the PL claims were settled by a consent order dated 14 March 2017 and sealed on 17 March 2017. The CDL claim was also settled a month later, before judgment. The Asbestos Victims Support Groups Forum UK (the Forum) is an unincorporated association providing help and support to people who suffer from asbestos related diseases and their families. It is also involved in lobbying and promoting asbestos knowledge and safety. It was not a party to either set of proceedings. On 6 April 2017, after the settlement of the PL claims, it applied without notice, under the Civil Procedure Rules, CPR rule 5.4C, which deals with third party access to the records of the court, with a view to preserving and obtaining copies of all the documents used at or disclosed for the trial, including the trial bundles, as well as the trial transcripts. This was because the Forum believed that the documents would contain valuable information about such things as the knowledge of the asbestos industry of the dangers of asbestos, the research which the industry and industry related bodies had carried out, and the influence which they had had on the Factory Inspectorate and the Health and Safety Executive in setting standards. In the Forums view, the documents might assist both claimants and defendants and also the court in understanding the issues in asbestos related disease claims. No particular case was identified but it was said that they would assist in current cases. That same day, the Master made an ex parte order designed to ensure that all the documents which were still at court stayed at court and that any which had been removed were returned to the court. She later ordered that a hard drive containing an electronic copy of Bundle D be produced and lodged at court. After a three day hearing of the application in October, she gave judgment in December, holding that she had jurisdiction, either under CPR rule 5.4C(2) or at common law, to order that a non party be given access to all the material sought. She ordered that Mr Dring (now acting for and on behalf of the Forum) should be provided with the hard copy trial bundle, including the disclosure documents in Bundle C, all witness statements, expert reports, transcripts and written submissions. She did not order that Bundle D be provided but ordered that it be retained at court. Cape appealed, inter alia, on the grounds that: (1) the Master did not have jurisdiction, either under CPR rule 5.4C or at common law, to make an order of such a broad scope; (2) to the extent that the court did have jurisdiction to grant access, she had applied the wrong test to the exercise of her discretion; and (3) in any event, she should have held that the Forum failed to meet the requisite test. The appeal was transferred to the Court of Appeal because of the importance of the issues raised. In July 2018, that court allowed Capes appeal and set aside the Masters order: [2018] EWCA Civ 1795; [2019] 1 WLR 479. It held that the records of the court for the purpose of the discretion to allow access under CPR rule 5.4C(2) were much more limited than she had held. They would not normally include trial bundles, trial witness statements, trial expert reports, trial skeleton arguments or written submissions; or trial transcripts. Nevertheless, the court had an inherent jurisdiction to permit a non party to obtain (i) witness statements of witnesses, including experts, whose statements or reports stood as evidence in chief at trial and which would have been available for inspection during the trial, under CPR rule 32.13; (ii) documents in relation to which confidentiality had been lost under CPR rule 31.22 and which were read out in open court, or the judge was invited to read in court or outside court, or which it was clear or stated that the judge had read; (iii) skeleton arguments or written submissions read by the court, provided that there is an effective public hearing at which these were deployed; and (iv) any specific documents which it was necessary for a non party to inspect in order to meet the principle of open justice. But there was no inherent jurisdiction to permit non parties to obtain trial bundles or documents referred to in skeleton arguments or written submissions, or in witness statements or experts reports, or in open court, simply on the basis that they had been referred to in the hearing. When exercising its discretion under CPR rule 5.4C(2) or the inherent jurisdiction, the court had to balance the non partys reasons for seeking disclosure against the partys reasons for wanting to preserve confidentiality. The court would be likely to lean in favour of granting access if the principle of open justice is engaged and the applicant has a legitimate interest in inspecting the documents. If the principle of open justice is not engaged, then the court would be unlikely to grant access unless there were strong grounds for thinking it necessary in the interests of justice to do so (paras 127 and 129). Accordingly, the court ordered, in summary: (i) that the court should provide the Forum with copies of all statements of case, including requests for further information and answers, apart from those listed in Appendix 1 to the order, so far as they were on the court file and for a fee, pursuant to the right of access granted by CPR rule 5.4C(1); (ii) that Cape should provide the Forum with copies of the witness statements, expert reports and written submissions listed in Appendix 2 to the order; and (iii) that the application be listed before Picken J (or failing him some other High Court Judge) to decide whether any other document sought by the Forum fell within (ii) or (iv) in para 9 above and if so whether Cape should be ordered to provide copies. Copying would be at the Forums expense. Cape was permitted to retrieve from the court all the documents and bundles which were not on the court file and the hard drive containing a copy of Bundle D. In making this order, the Court of Appeal proceeded on the basis that clean copies of the documents in question were available. Cape now appeals to this court. It argues, first, that the Court of Appeal should have limited itself to order (i) in para 11 above; second, that the Court of Appeal was wrong to equate the courts inherent jurisdiction to allow access to documents with the principle of open justice; the treatment of court documents is largely governed by the Civil Procedure Rules and the scope of any inherent jurisdiction is very limited; insofar as it goes any further than expressly permitted by the Rules, it extends only to ordering provision to a non party of copies of (a) skeleton arguments relied on in court and (b) written submissions made by the parties in the course of a trial (as held by the Court of Appeal in GIO Personal Investment Services Ltd v Liverpool and London Steamship Protection and Indemnity Association Ltd (FAI General Insurance Co Ltd intervening) [1999] 1 WLR 984 (FAI)); and third, that the Court of Appeal was wrong to conclude that the Forum did have a relevant legitimate interest in obtaining access to the documents; the public interest in open justice was different from the public interest in the content of the documents involved. The Forum cross appeals on the ground that the Court of Appeal was wrong to limit the scope of CPR rule 5.4C in the way that it did. Any document filed at court should be treated as part of the courts records for that purpose. The default position should be to grant access to documents placed before a judge and referred to by a party at trial unless there was a good reason not to do so. It should not be limited by what the judge has chosen to read. The Media Lawyers Association has intervened in the appeal to this court. It stresses that the way in which most members of the public are able to scrutinise court proceedings is through media reporting. The media are the eyes and ears of the public. For this, media access to court documents is essential. The need often arises after the proceedings have ended and judgment has been given because that is when it is known that scrutiny is required. The media cannot be present at every hearing. It cites, among many other apposite quotations, the famous words of Jeremy Bentham, cited by Lord Shaw of Dunfermline in the House of Lords in Scott v Scott [1913] AC 417, the leading case on open justice, at p 477, Publicity is the very soul of justice. It is the keenest spur to exertion and the surest of all guards against improbity. It keeps the judge himself while trying under trial. The issues There are three issues in this important case: (1) What is the scope of CPR rule 5.4C(2)? Does it give the court power to order access to all documents which have been filed, lodged or held at court, as the Master ruled? Or is it more limited, as the Court of Appeal ruled? (2) Is access to court documents governed solely by the Civil Procedure Rules, save in exceptional circumstances, as the appellant argues? Or does the court have an inherent power to order access outside the Rules? (3) exercised? If there is such a power, how far does it extend and how should it be Civil Procedure Rules, rule 5.4C Rule 5.4C is headed Supply of documents to a non party from court records. For our purposes, the following provisions are relevant: (1) The general rule is that a person who is not a party to proceedings may obtain from the court records a copy of (a) a statement of case, but not any documents filed with or attached to the statement of case, or intended by the party whose statement it is to be served with it; (b) a judgment or order given or made in public (whether made at a hearing or without a hearing), (2) A non party may, if the court gives permission, obtain from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person. By rule 2.3(1), statement of case (a) means a claim form, particulars of claim where these are not included in a claim form, defence, Part 20 claim, or reply to defence, and (b) includes any further information in relation to them voluntarily or by court order There are thus certain documents to which a non party has a right of access (subject to the various caveats set out in the rule which need not concern us) and what looks at first sight like a very broad power to allow a non party to obtain copies of any other document filed by a party, or communication between the court and a party or other person. Hence the Forum argues that the test is filing. CPR rule 2.3 provides that filing in relation to a document means delivering it by post or otherwise to the court office. So, it is argued, any document which has been delivered to the court office has been filed and the court may give permission for a non party to obtain a copy. There are two problems with this argument. First, the fact that filing is to be achieved in a particular way does not mean that every document which reaches court in that same way has been filed: the famous fallacy of the undistributed middle. The second is that the copy is to be obtained from the records of the court. The Civil Procedure Rules do not define the records of the court. They do not even provide what the records of the court are to contain. Nor, so far as we are aware, does any other legislation. The Public Records Act 1958 is not much help. It only tells us which records are public records and what is to be done with them. The person responsible for public records must make arrangements to select those which ought to be permanently preserved and for their transfer to the Public Record Office no later than 20 years after their creation (section 3). The Lord Chancellor is the person responsible for many court records, including those of the High Court and Court of Appeal (section 8). Section 10 and Schedule 1 define what is meant by a public record. Paragraph 4 of Schedule 1 includes the records of or held in the Senior Courts (ie the High Court and Court of Appeal) in the list of records of courts and tribunals which are public records. We have been shown a document prepared by Her Majestys Courts and Tribunals Service and the Ministry of Justice, headed Record Retention and Disposition Schedule. This lists how long various categories of files and other records are to be kept. Queens Bench Division files, for example, are to be destroyed after seven years. Trial bundles are to be destroyed if not collected by the parties at the end of the hearing or on a date agreed with the court. This is of no help in telling us what the court files should contain. We have been shown various historical sources which indicate what the records of certain courts may from time to time have contained, but it is clear that practice has varied. Some indication of what the court records may currently contain is given by Practice Direction 5A, para 4.2A of which lists the documents which a party may obtain from the records of the court unless the court orders otherwise. These include a claim form or other statement of case together with any documents filed with or attached to or intended by the claimant to be served with such claim form; an acknowledgement of service together with any documents filed with or attached to or intended by the party acknowledging service to be served with such acknowledgement of service; an application notice, with two exceptions, and any written evidence filed in relation to an application, with the same two exceptions; a judgment or order made in public (whether made at a hearing or without a hearing); and a list of documents. It does not include witness statements for trial, experts reports for trial, transcripts of hearings, or trial bundles. The essence of a record is that it is something which is kept. It is a permanent or long term record of what has happened. The institution or person whose record it is will decide which materials need to be kept for the purposes of that institution or person. Practice may vary over time depending on the needs of the institution. What the court system may have found it necessary or desirable to keep in the olden days may be different from what it now finds it necessary or desirable to keep. Thus one would expect that the court record of any civil case would include, at the very least, the claim form and the judgments or orders which resulted from that claim. One would not expect that it would contain all the evidence which had been put before the court. The court itself would have no need for that, although the parties might. Such expectations are confirmed by the list in Practice Direction 5A. The records of the court must therefore refer to those documents and records which the court itself keeps for its own purposes. It cannot refer to every single document generated in connection with a case and filed, lodged or kept for the time being at court. It cannot depend upon how much of the material lodged at court happens still to be there when the request is made. However, current practice in relation to what is kept in the records of the court cannot determine the scope of the courts power to order access to case materials in particular cases. The purposes for which court records are kept are completely different from the purposes for which non parties may properly be given access to court documents. The principle of open justice is completely distinct from the practical requirements of running a justice system. What is required for each may change over time, but the reasons why records are kept and the reasons why access may be granted are completely different from one another. Other court rules There are other court rules which are relevant to the access to documents which may be granted to non parties. CPR, rule 39.2 lays down the general rule that court hearings are to be in public. Rule 39.9 provides that in any hearing the proceedings will be recorded. Any party or other person may require a transcript (for which there will be a fee). If the hearing was in private, a non party can get a transcript but only if the court so orders. A Practice Direction (Audio Recordings of Proceedings: Access) [2014] 1 WLR 632 states that there is generally no right for either a party or a non party to listen to the recording. If they have obtained a copy of the transcript, they can apply for permission to listen, but this will only be granted in exceptional circumstances, save to official law reporters. Nevertheless, the effect of rule 39.9 (which is wider than its predecessor) is that a non party can (at a fee) obtain a transcript of everything that was said in court. Rule 39.5 requires the claimant to file a trial bundle and Practice Direction 32, para 27.5, deals in detail with how these are to be prepared. Nothing is said about non parties being granted access to them. Rule 32 deals with evidence. If a witness who has made a witness statement is called to give evidence, the witness statement shall stand as his evidence in chief (rule 32.5(2)). A witness statement which stands as evidence in chief is open to inspection unless the court otherwise directs during the course of the trial (rule 32.13(1)). The considerations which might lead the court otherwise to direct are listed as the interests of justice, the public interest, the nature of expert medical evidence, the nature of confidential information, and the need to protect a child or protected person (rule 32.13(3)). Rule 32.13 recognises that the modern practice of treating a witness statement as evidence in chief (which dates back to the Report of the Review Body on Civil Justice (1988, Cm 394)) means that those observing the proceedings in court will not know the content of that evidence unless they can inspect the statement. The rule puts them back into the position they would have been in before that practice was adopted. In FAI, FAI applied to inspect and obtain: copies of documents referred to in witness statements which they had obtained under the predecessor to rule 32.13 (Rules of the Supreme Court, Order 39, rule 2A); any written opening, skeleton argument or submissions, to which reference was made by the judge, together with any documents referred to in them; and any document which the judge was specifically requested to read, which was included in any reading list, or which was read or referred to during trial. The Court of Appeal held that RSC Order 38, rule 2A, the predecessor to CPR, rule 5.4C(2), did not cover documents referred to in witness statements. The purpose of using witness statements was to encourage a cards on the table approach, to accelerate the disclosure of the parties evidence as between themselves; it was not to enable non parties to obtain access to documentation which would otherwise have been unavailable to them whether or not they had attended court. As to the inherent jurisdiction of the court, based on the principle of open justice, the same reasoning applied to documents referred to in court or read by the judge, unless they had been read out in court and thus entered the public domain. Written submissions or skeleton arguments were a different matter. The confidence of the public in the integrity of the judicial process must depend upon having an opportunity to understand the issues. Until recently this had been done in an opening speech, but if the public were deprived of that opportunity by a written opening or submissions which were not read out, it was within the inherent jurisdiction of the court to require that a copy be made available. Nevertheless, the court did observe, having referred to Lord Woolfs report, Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (July 1996) that It is of great importance that the beneficial saving in time and money which it is hoped to bring about by such new procedures should not erode the principle of open justice (p 997). Lybrand [2000] 1 WLR 2353, para 43, he said this: Indeed, Lord Woolf himself took the same view. In Barings plc v Coopers & As a matter of basic principle the starting point should be that practices adopted by the courts and parties to ensure the efficient resolution of litigation should not be allowed to adversely affect the ability of the public to know what is happening in the course of the proceedings. In this case, the Court of Appeal largely adopted the approach in FAI, while recognising that in certain respects the law had been developed. First, it was now apparent that the court had inherent jurisdiction to allow access to all parties skeleton arguments, not just the opening submissions, provided there was an effective public hearing at which they were deployed (see Law Debenture Trust Corpn (Channel Islands) Ltd v Lexington Insurance Co [2003] EWHC 2297 (Comm); (2003) NLJ 1551), and the same would apply to other advocates documents provided to the court to assist its understanding of the case, such as chronologies, dramatis personae, reading lists and written closing submissions (para 92). Second, although CPR rule 32.13 is limited to access during the trial, there was no reason why access to witness statements taken as evidence in chief should not be allowed under the inherent jurisdiction after the trial (para 95). Third, what applies to witness statements should also apply to experts reports which are treated as their evidence in chief (para 96). This did not extend to documents exhibited to witness statements or experts reports unless it was not possible to understand the statement or report without sight of a particular document (para 100). Finally, developments since FAI also meant that it was within the inherent jurisdiction to allow access to documents read or treated as read in open court (para 107). This should be limited to documents which are read out in open court; documents which the judge is invited to read in open court; documents which the judge is specifically invited to read outside court; and documents which it is clear or stated that the judge has read (para 108). These were all documents which were likely to have been read out in open court had the trial been conducted orally. Furthermore, the rule that parties may only use documents obtained on disclosure for the purpose of the proceedings in which they are disclosed does not apply to documents which have been read to or by the court, or referred to, at a hearing which has been held in public unless the court prohibits or limits their use (CPR rule 31.22). However, the mere fact that a document had been referred to in court did not mean that it would have been read out had the trial been conducted wholly orally or that sight of it is necessary in order to understand or scrutinise the proceedings (para 109). So, as in FAI, the court did not consider that the inherent jurisdiction extended to granting access simply on the basis that it has been referred to in open court (para 109). The decisions of the Court of Appeal in FAI and in this case are not the only cases in which the courts have accepted that they have an inherent jurisdiction to allow access to materials used in the course of court proceedings and that the rationale for doing so is the constitutional principle of open justice. That this is so is made even plainer by some recent cases of high authority. The principle of open justice The Court of Appeal had the unenviable task of trying to reconcile the very different approaches taken by that court in FAI and Guardian News and Media. This court has the great advantage of being able to consider the issues from the vantage point of principle rather than the detailed decisions which have been reached by the courts below. There can be no doubt at all that the court rules are not exhaustive of the circumstances in which non parties may be given access to court documents. They are a minimum and of course it is for a person seeking to persuade the court to allow access outside the rules to show a good case for doing so. However, case after case has recognised that the guiding principle is the need for justice to be done in the open and that courts at all levels have an inherent jurisdiction to allow access in accordance with that principle. Furthermore, the open justice principle is applicable throughout the United Kingdom, even though the court rules may be different. This was plainly recognised in Guardian News and Media. A District Judge had ordered two British citizens to be extradited to the USA. The Guardian newspaper applied to the District Judge to inspect and take copies of affidavits, witness statements, written arguments and correspondence, supplied to the judge for the purpose of the extradition hearings, referred to during the course of the hearings but not read out in open court. The judge held that she had no power to allow this and the Divisional Court agreed. In a comprehensive judgment, Toulson LJ, with whom both Hooper LJ and Lord Neuberger MR agreed, held that she did. The requirements of open justice applied to all tribunals exercising the judicial power of the state. The fact that magistrates courts were created by statute was neither here nor there (para 70). The decisions of the House of Lords in Scott v Scott [1913] AC 417, and of the Court of Appeal in FAI, and R v Howell [2003] EWCA Crim 486 respectively a family, civil and criminal case were illustrations of the jurisdiction of the court to decide what open justice required (para 71). Hence the principles established in Guardian News and Media cannot be confined to criminal cases. They were clearly meant to apply across the board. Nor has anyone suggested why the jurisdiction in criminal cases should be wider than that in civil. More to the point, they have since been approved by this court. So what were those principles? The purpose of open justice is not simply to deter impropriety or sloppiness by the judge hearing the case. It is wider. It is to enable the public to understand and scrutinise the justice system of which the courts are the administrators (para 79). The practice of the courts was not frozen (para 80). In FAI, for example, issues of informing the public about matters of general public interest did not arise (para 81). In earlier cases, it had been recognised, principally by Lord Scarman and Lord Simon of Glaisdale (dissenting) in Home Office v Harman [1983] 1 AC 280, 316, and by Lord Bingham in SmithKline Beecham Biologicals SA v Connaught Laboratories Inc [1999] 4 All ER 498, p 512, that the practice of receiving evidence without its being read in open court has the side effect of making the proceedings less intelligible to the press and the public. Lord Bingham had contemplated that public access to documents referred to in open court might be necessary to avoid too wide a gap between what has in theory, and what has in practice, passed into the public domain. The time had come to acknowledge that public access to documents referred to in open court was necessary (para 83). Requiring them to be read out would be to defeat the purpose of making hearings more efficient. Stating that they should be treated as if read out was merely a formal device for allowing access. It was unnecessary. Toulson LJ was unimpressed by the suggestion that there would be practical problems, given that the Criminal Procedure Rules 2011, in rule 5.8, provided, not only that there was certain (limited) information about a criminal case which the court officer was bound to supply, but also that, if the court so directs, the officer could supply other information about the case orally and allow the applicant to inspect or copy a document containing information about the case (para 84). But it was the common law, not the rule, which created the courts power; the rule simply provided a practical procedure for implementing it. Hence [i]n a case where documents have been placed before a judge and referred to in the course of proceedings the default position should be that access should be permitted on the open justice principle; and where access is sought for a proper journalistic purpose the case for allowing it will be particularly strong. In evaluating the grounds for opposing access, the court would have to carry out a fact specific proportionality exercise. Central to the courts evaluation will be the purpose of the open justice principle, the potential value of the material in advancing that purpose and, conversely, any risk of harm which access to the documents may cause to the legitimate interests of others (para 85). The principles laid down in Guardian News and Media were clearly endorsed by the majority of the Supreme Court in Kennedy v Charity Commission (Secretary of State for Justice intervening) [2014] UKSC 20; [2015] AC 455: see Lord Mance, at para 47, Lord Toulson, with whom Lord Neuberger and Lord Clarke agreed, at paras 110 to 118, Lord Sumption who agreed with both Lord Mance and Lord Toulson, at para 152. Nor did the minority cast doubt upon the decision: see Lord Wilson, para 192; Lord Carnwath, 236. The principles were also endorsed by a unanimous Supreme Court in A v British Broadcasting Corpn (Secretary of State for the Home Department intervening) [2014] UKSC 25; [2015] AC 588, a case emanating from Scotland: see Lord Reed, with whom Lady Hale, Lord Wilson, Lord Hughes and Lord Hodge agreed, at paras 23 27. That case was concerned with the exceptions to the open justice principle, in particular to the naming of a party to the proceedings, and Lord Reed expressly adopted the test laid down in Kennedy, at para 41, which was a direct citation from Guardian News and Media, at para 85: Whether a departure from the principle of open justice was justified in any particular case would depend on the facts of that case. As Lord Toulson JSC observed in Kennedy v Information Comr (Secretary of State for Justice intervening) [2015] AC 455, para 113, the court has to carry out a balancing exercise which will be fact specific. Central to the courts evaluation will be the purpose of the open justice principle, the potential value of the information in question in advancing that purpose and, conversely, any risk of harm which its disclosure may cause to the maintenance of an effective judicial process or to the legitimate interests of others. It follows that there should be no doubt about the principles. The question in any particular case should be about how they are to be applied. Discussion The constitutional principle of open justice applies to all courts and tribunals exercising the judicial power of the state. It follows that, unless inconsistent with statute or the rules of court, all courts and tribunals have an inherent jurisdiction to determine what that principle requires in terms of access to documents or other information placed before the court or tribunal in question. The extent of any access permitted by the courts rules is not determinative (save to the extent that they may contain a valid prohibition). It is not correct to talk in terms of limits to the courts jurisdiction when what is in fact in question is how that jurisdiction should be exercised in the particular case. The principal purposes of the open justice principle are two fold and there may well be others. The first is to enable public scrutiny of the way in which courts decide cases to hold the judges to account for the decisions they make and to enable the public to have confidence that they are doing their job properly. In A v British Broadcasting Corpn, Lord Reed reminded us of the comment of Lord Shaw of Dunfermline, in Scott v Scott [1913] AC 417, 475, that the two Acts of the Scottish Parliament passed in 1693 requiring that both civil and criminal cases be heard with open doors, bore testimony to a determination to secure civil liberties against the judges as well as against the Crown (para 24). But the second goes beyond the policing of individual courts and judges. It is to enable the public to understand how the justice system works and why decisions are taken. For this they have to be in a position to understand the issues and the evidence adduced in support of the parties cases. In the olden days, as has often been said, the general practice was that all the argument and the evidence was placed before the court orally. Documents would be read out. The modern practice is quite different. Much more of the argument and evidence is reduced into writing before the hearing takes place. Often, documents are not read out. It is difficult, if not impossible, in many cases, especially complicated civil cases, to know what is going on unless you have access to the written material. It was held in Guardian News and Media that the default position is that the public should be allowed access, not only to the parties written submissions and arguments, but also to the documents which have been placed before the court and referred to during the hearing. It follows that it should not be limited to those which the judge has been asked to read or has said that he has read. One object of the exercise is to enable the observer to relate what the judge has done or decided to the material which was before him. It is not impossible, though it must be rare, that the judge has forgotten or ignored some important piece of information which was before him. If access is limited to what the judge has actually read, then the less conscientious the judge, the less transparent is his or her decision. However, although the court has the power to allow access, the applicant has no right to be granted it (save to the extent that the rules grant such a right). It is for the person seeking access to explain why he seeks it and how granting him access will advance the open justice principle. In this respect it may well be that the media are better placed than others to demonstrate a good reason for seeking access. But there are others who may be able to show a legitimate interest in doing so. As was said in both Kennedy, at para 113, and A v British Broadcasting Corpn, at para 41, the court has to carry out a fact specific balancing exercise. On the one hand will be the purpose of the open justice principle and the potential value of the information in question in advancing that purpose. On the other hand will be any risk of harm which its disclosure may cause to the maintenance of an effective judicial process or to the legitimate interests of others. There may be very good reasons for denying access. The most obvious ones are national security, the protection of the interests of children or mentally disabled adults, the protection of privacy interests more generally, and the protection of trade secrets and commercial confidentiality. In civil cases, a party may be compelled to disclose documents to the other side which remain confidential unless and until they are deployed for the purpose of the proceedings. But even then there may be good reasons for preserving their confidentiality, for example, in a patent case. Also relevant must be the practicalities and the proportionality of granting the request. It is highly desirable that the application is made during the trial when the material is still readily available, the parties are before the court and the trial judge is in day to day control of the court process. The non party who seeks access will be expected to pay the reasonable costs of granting that access. People who seek access after the proceedings are over may find that it is not practicable to provide the material because the court will probably not have retained it and the parties may not have done so. Even if they have, the burdens placed on the parties in identifying and retrieving the material may be out of all proportion to benefits to the open justice principle, and the burden placed upon the trial judge in deciding what disclosure should be made may have become much harder, or more time consuming, to discharge. On the other hand, increasing digitisation of court materials may eventually make this easier. In short, non parties should not seek access unless they can show a good reason why this will advance the open justice principle, that there are no countervailing principles of the sort outlined earlier, which may be stronger after the proceedings have come to an end, and that granting the request will not be impracticable or disproportionate. It is, however, appropriate to add a comment about trial bundles. Trial bundles are now generally required. They are compilations of copies of what are likely to be the relevant materials the pleadings, the parties submissions, the witness statements and exhibits, and some of the documents disclosed. They are provided for the convenience of the parties and the court. To that end, the court, the advocates and others involved in the case may flag, mark or annotate their copies of the bundle as an aide memoire. But the bundle is not the evidence or the documents in the case. There can be no question of ordering disclosure of a marked up bundle without the consent of the person holding it. A clean copy of the bundle, if still available, may in fact be the most practicable way of affording a non party access to the material in question, but that is for the court hearing the application to decide. Application to this case Cape argues that the Court of Appeal did not have jurisdiction to make the order that it did, not that if it did have jurisdiction the order was wrong in principle. The Forum argues that the court should have made a wider order under CPR rule 5.4C(2). Both are, in our view, incorrect. The Court of Appeal not only had jurisdiction to make the order that it did, but also had jurisdiction to make a wider order if it were right so to do. On the other hand, the basis of making any wider order is the inherent jurisdiction in support of the open justice principle, not the Civil Procedure Rules, CPR rule 5.4C(2). The principles governing the exercise of that jurisdiction are those laid down in Guardian News and Media, as explained by this court in Kennedy, A v British Broadcasting Corpn and this case. In those circumstances, as the Court of Appeal took a narrower view, both of the jurisdiction and the applicable principles, it would be tempting to send the whole matter back to a High Court judge, preferably Picken J, so that he can decide it on the basis of the principles enunciated by this court. However, Cape has chosen to attack the order made by the Court of Appeal, not on its merits, but on a narrow view of the courts jurisdiction. Nor has it set up any counter vailing rights of its own. In those circumstances, there seems no realistic possibility of the judge making a more limited order than did the Court of Appeal. We therefore order that paras 4 and 7 of the Court of Appeal order (corresponding to points (i) and (ii) in para 11 above) stand. But we would replace paragraph 8 (corresponding with point (iii)) with an order that the application be listed before Picken J (or, if that is not possible, another High Court Judge) to determine whether the court should require the appellant to provide a copy of any other document placed before the judge and referred to in the course of the trial to the respondent (at the respondents expense) in accordance with the principles laid down by this court. Postscript We would urge the bodies responsible for framing the court rules in each part of the United Kingdom to give consideration to the questions of principle and practice raised by this case. About the importance and universality of the principles of open justice there can be no argument. But we are conscious that these issues were raised in unusual circumstances, after the end of the trial, but where clean copies of the documents were still available. We have heard no argument on the extent of any continuing obligation of the parties to co operate with the court in furthering the open justice principle once the proceedings are over. This and the other practical questions touched on above are more suitable for resolution through a consultative process in which all interests are represented than through the prism of an individual case.
UK-Abs
Rule 5.4C of the Civil Procedure Rules (CPR) provides that a person who is not a party to proceedings may obtain from the court records copies of a statement of case and judgment or orders made in public, and, if the court gives permission, obtain from the records of the court a copy of any other document filed by a party, or communication between the court and a party or another person. This appeal concerns the scope of Rule 5.4C, and whether the court has an inherent power to order access to documents for non parties outside this provision. Cape Intermediate Holdings Ltd (Cape), a company that was involved in the manufacture and supply of asbestos, was a defendant in a trial in the High Court to claims brought by employers insurers. Voluminous documentation was available to the court during the trial. After the trial had ended, but before judgment was delivered, the claims were settled. The Asbestos Victims Support Groups Forum UK (the Forum), which was not a party to the proceedings, applied to the court under Rule 5.4C for access to all documents used at or disclosed for the trial, including trial bundles and transcripts. The Master held that she had jurisdiction either under Rule 5.4C or at common law to grant the order sought. The Court of Appeal allowed an appeal by Cape, limiting the disclosure to the Forum to (i) statements of case held by the court pursuant to Rule 5.4C; (ii) provision by Cape of witness statements, expert reports and written submissions, and (iii) ordering that the application for further disclosure be listed before the trial judge or another High Court judge to decide whether any other documents had lost confidentiality and had been read out in court or by the judge, or where inspection by the Forum was necessary to meet the principle of open justice. Cape appealed to the Supreme Court, arguing that the disclosure should have been limited to the statements of case held on the court file; that the scope of any inherent jurisdiction of the court was very limited and could only extend to skeleton arguments or written submissions relied on in court; and that the Forum did not have a legitimate interest based on the public interest in open justice in the content of the documents it was seeking. The Forum cross appealed on the ground that the Court of Appeal had been wrong to limit the scope of Rule 5.4C in the way that it did. The Supreme Court unanimously dismisses the appeal and cross appeal. In a judgment of the court, the Supreme Court upholds orders (i) and (ii) of the Court of Appeal and replaces (iii) with an order that the application be listed before the trial judge (or another High Court judge if he is unavailable) to determine whether the court should require Cape to provide a copy of any other document placed before the judge and referred to in the course of the trial to the Forum (at the Forums expense) in accordance with the principles laid down in the judgment. Rule 5.4C refers to the records of the court. The CPR do not define this term or provide what the records of the court are to contain. The essence of a record is something which is kept. It must therefore refer to documents kept for the courts own purposes, presently at least the claim form and the judgments or orders which resulted, but not every document lodged or held for the time being at court. However current practice in record keeping cannot determine the scope of the courts power to order access to materials to non parties, which is informed by the principle of open justice, not the practical requirements of running a justice system [19 24]. The constitutional principle of open justice applies to all courts and tribunals exercising the judicial power of the state. They all have inherent jurisdiction to determine what that principle requires in terms of access to documents or other information placed before them. The extent of any access permitted by the courts rules is not determinative (except where they contain a valid prohibition) [41]. The principal purposes of the open justice principle are two fold: to hold individual courts and judges to account, and to enable the public to understand how the justice system works and why decisions are taken. Now that much more of the argument and evidence is reduced to writing before a hearing it is difficult for non parties to follow what is going on without access to the written material, including documents [42 43]. The default position is that the public should be allowed access, not only to the parties submissions and arguments, but also to the documents which have been placed before the court and referred to during the hearing, which are not limited to those the judge has been asked to or has said that he has read [44]. It does not follow, however, that an applicant has a right for access to be granted (save to the extent that the rules grant such a right). A non party seeking access must explain why he seeks it and how granting access will advance the open justice principle. The court will carry out a fact specific balancing exercise to take account of any countervailing principles, such as the need to protect national security, privacy interests or commercial confidentiality. The practicalities and proportionality of granting the request will also be relevant, especially when proceedings are over [45 47]. In the present appeal and cross appeal, both parties submissions are therefore incorrect. The Court of Appeal did have inherent jurisdiction to make the order it did, to support the open justice principle, and it could have made a wider order if it were right to do so. The basis for the order is not Rule 5.4C [49]. There seems no realistic possibility of the judge making a more limited order than the Court of Appeal, so the orders for access already made will stand, while the balance of the application be listed before the trial judge (or another High Court judge if that is not possible) to determine whether the court should require Cape to provide a copy of any other document placed before the judge and referred to in the course of the trial to the Forum, at the Forums expense, in accordance with the principles laid down in the judgment [50]. By way of postscript, the Supreme Court urges the bodies responsible for framing the court rules in each part of the United Kingdom to give consideration to and consult on the questions of principle and practice raised by this case [51].
The decision of the Supreme Court in Patel v Mirza [2016] UKSC 42; [2017] AC 467 is a significant development in the law relating to illegality at common law. It has resolved a period of considerable uncertainty during which conflicting views have been expressed in the Supreme Court as to the appropriate approach and the direction the law on the subject should take (Hounga v Allen (Anti Slavery International intervening) [2014] UKSC 47; [2014] 1 WLR 2889; Les Laboratoires Servier v Apotex Inc [2014] UKSC 55; [2015] AC 430; Bilta (UK) Ltd v Nazir (No 2) [2015] UKSC 23; [2016] AC 1). In Patel v Mirza a majority of the Supreme Court rejected the reliance principle as applied in Tinsley v Milligan [1994] 1 AC 340, whereby relief was refused to parties who had to rely on their own illegality to establish their case. In its place, the majority adopted a more flexible approach which openly addresses the underlying policy considerations involved and reaches a balanced judgment in each case, and which also permits account to be taken of the proportionality of the outcome. The present appeal raises issues as to the application of the new policy based approach outlined in Patel v Mirza in the context of a claim for negligent breach by a solicitor of his retainer, a concurrent claim in breach of contract and in tort. Factual background On or about 1 March 2000, Ms Maria Grondona (the respondent) entered into an agreement (the 2000 agreement) with Mr C L Mitchell (Mitchell), with whom she had a business relationship, relating to four properties: 73b Beulah Road; 362 High Road, Tottingham (sic); and 12 and 12A Cator Road. The 2000 agreement provided: I Maria Grondona agree to have in my name mortgage loans in the above mentioned properties with the understanding and agreement that Mr CL Mitchell of Flat 2, 2 Silverdale, London SE26 4SZ will carry out the following tasks: (1) To pay all monthly mortgages on each of the properties as and when they become due (2) Receives from the tenants in these properties the due rents (3) Carry out all repair work on the properties (4) Deals with all the financial matters on these properties (5) Decides when to sell all or any of these properties (6) Mr Mitchell to pay to me 50% of the net profit when any of the above properties are sold. This is a binding agreement enforceable by law between Mr Mitchell and myself. On 27 November 2001 the freehold of 73 Beulah Road, Thornton Heath was purchased by Ms Loretta Hedley for 82,000 with the assistance of finance from BM Samuels Finance Group plc (BM Samuels) which obtained a registered charge in its favour. There was apparently also a subsidiary restriction in favour of Moneypenny Investments Ltd and Gemforce Investments Ltd. In or about July 2002 Mitchell paid the sum of 30,000 to Ms Hedley, for the grant of a 125 year lease of part of the freehold of 73 Beulah Road, which comprised a rear ground floor flat, No 73b (the property). The commencement date for the lease was 24 June 1990. On 26 July 2002 Mitchell entered into a loan facility of 45,000 for a period of six months secured by a legal charge over the property with BM Samuels to enable him to purchase it (the BM Samuels charge). On the same date a leasehold interest in the property was registered in the name of Mitchell at the Land Registry under title number SGL 638702. The BM Samuels charge was also duly registered at the Land Registry. In October 2002 the respondent entered into a form of purchase of the leasehold interest in the property from Mitchell for the sum of 90,000 (ie three times the price paid when the leasehold had been created a few months earlier). She did so with the assistance of a mortgage advance from Birmingham Midshires in the sum of 76,475 with the intention that the advance would be secured by a charge over the property entered into by the respondent on 31 October 2002 (the Birmingham Midshires charge). The mortgage advance was procured by fraud. The respondent dishonestly misrepresented on the mortgage application form that the sale from Mitchell to the respondent was not a private sale, that the deposit moneys were from her own resources and that she was managing the property. The purpose of the fraud, as found by the trial judge, was to raise capital finance for Mitchell from a high street lender which he would not otherwise have been able to obtain, rather than to fund the purchase of the property by the respondent. Stoffel & Co, solicitors, (the appellants) acted for the respondent, for Mitchell and for the chargee, Birmingham Midshires, in connection with the transaction. On or about 31 October 2002 Mr Mitchell executed in favour of the respondent and delivered to the appellants the HM Land Registry Transfer of Whole of Registered Title(s) Form TR1 in relation to the property. On 1 November 2002 the appellants paid the sum of 76,475 received by way of mortgage advance from Birmingham Midshires to BM Samuels, as the existing chargee of the property, in order for the BM Samuels charge to be discharged. BM Samuels duly provided a Form DS1 releasing the BM Samuels charge. However, the appellants failed to register at the Land Registry the Form TR1 transferring the property from Mitchell to the respondent, the Form DS1 releasing the BM Samuels charge or the Birmingham Midshires charge granted by the respondent. The trial judge found that this failure to register was because the Form TR1 submitted by the appellants had not been impressed with stamp duty and the procedural stamp and that it was therefore returned by Croydon District Land Registry on 28 November 2002. The Land Registry wrote again to the appellants on 7 and 13 April 2003. On 14 April 2003 it wrote to the appellants to notify them that the application for registration had been cancelled. A further application for registration was rejected on 2 July 2003 due to errors on the transfer and that application was cancelled on 5 August 2003. As a result of the appellants failure to register the relevant forms, Mitchell remained the registered proprietor of the property and BM Samuels remained the registered proprietor of the BM Samuels charge. On the basis of that charge, further advances were made to Mitchell following the transactions in 2002. The legal proceedings In 2006 the respondent defaulted on payments under the Birmingham Midshires charge and Birmingham Midshires brought proceedings against her in order to obtain a money judgment. The respondent defended the claim and brought proceedings against the appellants by a CPR Part 20 claim for an indemnity and/or a contribution and/or damages for breach of duty and/or breach of contract. The appellants defended the Part 20 claim. Although by the date of trial they admitted that the failure to register the TR1 Form, the DS1 Form and the Birmingham Midshires charge constituted negligence or breach of duty, they contended that damages were not recoverable by the respondent because the purpose of putting the property into her name and obtaining a mortgage from Birmingham Midshires was illegal, in that it was a conspiracy to obtain finance for Mitchell by misrepresentation. They maintained that the purpose of instructing the appellants could only have been to further that fraud and that, accordingly, they were entitled to rely on the defence of illegality. In the alternative, the defendant raised defences relating to quantum. Birmingham Midshires amended its claim in order to claim directly against the appellants, against BM Samuels, the prior chargee, and against Mitchell. The claims brought by Birmingham Midshires against BM Samuels and against the appellants were settled. Summary judgment was obtained by Birmingham Midshires against the respondent on 29 May 2014. That judgment was for 70,000 with the balance to be subject to an account. By the time of the trial before Her Honour Judge Walden Smith in the Central London County Court, which began on 5 January 2016, it appeared that Mitchell had died, although the judge did not see any documentary evidence to that effect. On 22 April 2014 the leasehold interest in 73b Beulah Road was sold by BM Samuels for 110,000 in order to satisfy the sum owed by Mitchell under the BM Samuels charge. In a judgment dated 11 April 2016 the judge held as follows. (1) The respondent had participated with Mitchell in a mortgage fraud to deceive Birmingham Midshires into making an advance to her to purchase the property. (2) The respondent was a knowing and dishonest participant in the mortgage fraud perpetrated to obtain moneys from Birmingham Midshires for Mitchell which he could not obtain himself. (3) The following dishonest misrepresentations had been made by the respondent in the mortgage application form: that the sale from Mitchell to the respondent was not a private a) sale, when in fact it was a private sale; b) the deposit moneys were from her own resources, when in fact they came from the proceeds of a loan to the respondent from BM Samuels; that she was managing the property (and the other properties c) referred to in the mortgage application) herself, when in fact Mitchell was doing so pursuant to the terms of the 2000 agreement and the respondent had had no involvement whatsoever in the collection of rents or any other aspect of the management of the properties. (4) The effect of the 2000 agreement was that Mitchell retained complete control over the properties. Mitchell remained de facto owner of the property. The respondent was not and never was the de facto owner of the property. She had agreed to act as Mitchells nominee and the provision in the agreement that she recover 50% of the net profits from any sale was her payment for having obtained the mortgage advance. (5) The mortgage application was a sham arrangement whereby the respondent lent her good credit history to Mitchell to enable him to obtain finance behind the scenes and out of sight of the potential lender. (6) The respondent had little or no actual involvement in the alleged purchase and it was not a bona fide purchase of a proprietary interest for value. (7) The respondent did, however, undertake legal responsibility for the Birmingham Midshires mortgage which was to be charged over the property. In addressing the defence of illegality, the judge applied the reliance test as she was required to do by Tinsley v Milligan. She concluded that the illegality defence did not apply. She held that the claim against the appellants for failing to register the forms was conceptually separate from the fraud. The claim did not rely on the allegations of illegality and the reason for the conveyance was irrelevant to it. Following a further hearing on quantum, in a further judgment dated 11 May 2016 the judge awarded the respondent damages of 78,000, the value of the property as at November 2009, with interest thereon. The appellants appealed to the Court of Appeal ([2018] EWCA Civ 2031; [2018] PNLR 36). In her judgment with which Flaux LJ agreed, the Vice President Gloster LJ held that the judge had erred in law in concluding that the mortgage transaction was a sham, because as between Birmingham Midshires and the respondent the mortgage was clearly intended to take effect. The respondent had intended to borrow the money secured by way of a legal charge on her registered title and Birmingham Midshires likewise intended to lend the money secured in such a way. Gloster LJ held, further, that the judge had erred in law in holding that there was no intention to transfer the legal title in the property to the respondent because that was the very essence of the transaction between her and Mitchell, the whole purpose of the arrangement between them being, whatever the position in relation to retention of beneficial ownership, that she should be clothed with legal title so as to be able to obtain finance from Birmingham Midshires and grant a charge to secure such finance. The Court of Appeal held, on the basis of the decision of the Supreme Court in Patel v Mirza, which had been handed down since the first instance decision, that the illegality defence did not bar the respondents claim. Gloster LJ considered that, although mortgage fraud was a canker on society, barring the claim against the negligent appellants would not enhance the fight against mortgage fraud. There was a public interest in ensuring that clients who use the services of solicitors are entitled to seek civil remedies for negligence or breach of contract against their solicitors arising from a legitimate and lawful retainer between them, in circumstances where the client was not seeking to profit or gain from her mortgage fraud but merely to ensure that the chargees security was adequately protected by registration. In the view of the Court of Appeal, to deny the claim would also be disproportionate to the wrongdoing involved. It dismissed the appeal and also dismissed a cross appeal on quantum. The appellants sought permission to appeal to the Supreme Court on the following four grounds. (1) The Court of Appeal erred in overturning the finding of the judge that the sale between Mitchell and the respondent was a sham. (2) The Court of Appeal wrongly held that there was an intention to transfer legal title in the property. (3) The Court of Appeal failed to analyse adequately or at all the relevance of the transfer of legal title. (4) The Court of Appeal erred fundamentally in its application of the Patel v Mirza guidelines. On 18 March 2019 the Supreme Court (Lady Hale, Lord Hodge and Lord Briggs) gave permission to appeal, limited to Ground 4 only. The issues on appeal to the Supreme Court It was common ground between the parties to the appeal before us that, subject to the defence of illegality, the respondent had a complete cause of action against the appellants. In particular: (1) Negligence and/or breach of retainer had been conceded by the appellants; (2) The judge held that the loss sustained by the respondent was caused by the negligence and/or breach of duty of the appellants; (3) The parties agreed that loss was to be calculated by reference to the fact that the respondent did not have an unencumbered property which was available to her as the security for the moneys advanced to her by Birmingham Midshires. Had the appellants fulfilled their obligations to her, she would have had an otherwise unencumbered property in about November 2009, when the property would have been sold to meet her arrears. The value of that property was 78,000, so the loss was that sum plus interest from November 2009. On behalf of the appellants Mr Michael Pooles QC submits that the Court of Appeal erred in its analysis and application of the Patel v Mirza guidelines. He submits that the present case is a paradigm case for the refusal of relief on the grounds of illegality. The respondent utilised the services of the appellants in the context of and in order to execute a mortgage fraud which she and Mitchell were practising on Birmingham Midshires. The appellants acted innocently but incompetently in carrying out their instructions and left the respondent without registered title to a property which was only to be transferred to her for the purpose of the mortgage fraud. He submits that if the illegality defence operates to leave the loss to lie where it falls, then the respondent can complain of no injustice. The new approach to the illegality defence: Patel v Mirza It is necessary to examine in a little detail Lord Toulsons exposition in Patel v Mirza of the new approach to the illegality defence at common law. Having referred to the maxims ex turpi causa non oritur actio (no action arises from a disgraceful cause) and in pari delicto potior est conditio defendentis (where both parties are equally in the wrong the position of the defendant is the stronger), Lord Toulson observed: 99. Looking behind the maxims, there are two broad discernible policy reasons for the common law doctrine of illegality as a defence to a civil claim. One is that a person should not be allowed to profit from his own wrongdoing. The other, linked, consideration is that the law should be coherent and not self defeating, condoning illegality by giving with the left hand what it takes with the right hand. 100. Lord Goff observed in the Spycatcher case, Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 286, that the statement that a man shall not be allowed to profit from his own wrong is in very general terms, and does not of itself provide any sure guidance to the solution of a problem in any particular case. In Hall v Hebert [1993] 2 SCR 159 McLachlin J favoured giving a narrow meaning to profit but, more fundamentally, she expressed the view, at pp 175 176, that, as a rationale, the statement that a plaintiff will not be allowed to profit from his or her own wrongdoing does not fully explain why particular claims have been rejected, and that it may have the undesirable effect of tempting judges to focus on whether the plaintiff is getting something out of the wrongdoing, rather than on the question whether allowing recovery for something which was illegal would produce inconsistency and disharmony in the law, and so cause damage to the integrity of the legal system. 101. That is a valuable insight, with which I agree. I agree also with Professor Burrows observation that this expression leaves open what is meant by inconsistency (or disharmony) in a particular case, but I do not see this as a weakness. It is not a matter which can be determined mechanistically. So how is the court to determine the matter if not by some mechanistic process? In answer to that question I would say that one cannot judge whether allowing a claim which is in some way tainted by illegality would be contrary to the public interest, because it would be harmful to the integrity of the legal system, without (a) considering the underlying purpose of the prohibition which has been transgressed, (b) considering conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim, and (c) keeping in mind the possibility of overkill unless the law is applied with a due sense of proportionality. We are, after all, in the area of public policy. That trio of necessary considerations can be found in the case law. This passage makes clear that the evaluation of the factors described in para 101 is directed specifically at determining whether there might be inconsistency damaging to the integrity of the legal system. This is confirmed later in Lord Toulsons judgment where he refers (at para 109) to the need when considering the application of the common law doctrine of illegality to have regard to the policy factors involved and to the nature and circumstances of the illegal conduct in determining whether the public interest in preserving the integrity of the justice system should result in denial of the relief claimed and in the following passage at para 120: The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather by than the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate. Earlier in his judgment in Patel (at para 76) Lord Toulson had drawn support from the approach of Lord Wilson in Hounga v Allen [2014] 1 WLR 2889 at para 42 where Lord Wilson had observed that the defence of illegality rests on the foundation of public policy and continued: So it is necessary, first, to ask What is the aspect of public policy which founds the defence? and, second, to ask But is there another aspect of public policy to which the application of the defence would run counter. Lord Wilson had weighed the policy considerations in that case and concluded that in so far as any public policy existed in favour of applying the illegality defence, it should give way to the public policy to which its application would be an affront. A balancing of the policy considerations in either direction is, therefore, an important element of the decision making process. With regard to the third stage of the process, namely the assessment of proportionality, Lord Toulson observed (at para 107): In considering whether it would be disproportionate to refuse relief to which the claimant would otherwise be entitled, as a matter of public policy, various factors may be relevant. Professor Burrows list [set out at para 93 of Lord Toulsons judgment] is helpful but I would not attempt to lay down a prescriptive or definitive list because of the infinite possible variety of cases. Potentially relevant factors include the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties respective culpability. It is important to bear in mind when applying the trio of necessary considerations described by Lord Toulson in Patel that they are relevant not because it may be considered desirable that a given policy should be promoted but because of their bearing on determining whether to allow a claim would damage the integrity of the law by permitting incoherent contradictions. Equally such an evaluation of policy considerations, while necessarily structured, must not be permitted to become another mechanistic process. In the application of stages (a) and (b) of this trio a court will be concerned to identify the relevant policy considerations at a relatively high level of generality before considering their application to the situation before the court. In particular, I would not normally expect a court to admit or to address evidence on matters such as the effectiveness of the criminal law in particular situations or the likely social consequences of permitting a claim in specified circumstances. The essential question is whether to allow the claim would damage the integrity of the legal system. The answer will depend on whether it would be inconsistent with the policies to which the legal system gives effect. The court is not concerned here to evaluate the policies in play or to carry out a policy based evaluation of the relevant laws. It is simply seeking to identify the policies to which the law gives effect which are engaged by the question whether to allow the claim, to ascertain whether to allow it would be inconsistent with those policies or, where the policies compete, where the overall balance lies. In considering proportionality at stage (c), by contrast, it is likely that the court will have to give close scrutiny to the detail of the case in hand. Finally, in this regard, since the overriding consideration is the damage that might be done to the integrity of the legal system by its adopting contradictory positions, it may not be necessary in every case to complete an exhaustive examination of all stages of the trio of considerations. If, on an examination of the relevant policy considerations, the clear conclusion emerges that the defence should not be allowed, there will be no need to go on to consider proportionality, because there is no risk of disproportionate harm to the claimant by refusing relief to which he or she would otherwise be entitled. If, on the other hand, a balancing of the policy considerations suggests a denial of the claim, it will be necessary to go on to consider proportionality. (a) Would the underlying purpose of the prohibition which has been transgressed be enhanced by a denial of the claim? On behalf of the appellants, Mr Michael Pooles QC is able to point to the fact that the respondent was knowingly and dishonestly involved in a mortgage fraud to deceive Birmingham Midshires into making the advance to the respondent to purchase the property. She made dishonest misrepresentations to Birmingham Midshires that the sale was not a private sale, that the deposit moneys were from her own resources and that she was managing the property herself. The sale between Mitchell and the respondent was tainted with illegality because it was entered into with the object of deceiving an institutional lender into thinking that the respondent was both the legal and beneficial owner of the property and required mortgage finance for her own business purposes. The respondents conduct would, at that time, have constituted an offence contrary to section 15, Theft Act 1968. The background to the respondents claim against her solicitors is undoubtedly a serious fraud. Moreover, the appellants, who were not a party to and knew nothing about the illegality, were retained by the respondent in order that the mortgage fraud might be facilitated. With regard to the first of the trio of considerations identified by Lord Toulson in Patel, Mr Pooles submits that it is trite that the underlying purpose of the criminalisation and penalisation of mortgage fraud and conspiracies to defraud is to deter such fraud. He submits further that it is equally notorious that mortgage fraud prosecutions are difficult and that therefore the deterrent effect of the prohibition must be seen as limited. In these circumstances, he says, the refusal of relief to someone closely involved in mortgage fraud would enhance the deterrent effect of the prohibition. The operation of the illegality defence would prevent the respondent from recovering damages from her solicitors who were instructed for the purpose of the fraud. It would or should, he submits, deter the use of solicitors as catspaws in mortgage frauds. There clearly exists an important policy that the law should condemn mortgage frauds which are serious criminal offences. The appellants correctly identify deterrence as one underlying policy of the criminal law against fraud. I doubt, however, that permitting a civil remedy to persons in the position of the respondent would undermine that policy to any significant extent. The risk that they may be left without a remedy if their solicitor should prove negligent in registering the transaction is most unlikely to feature in their thinking. A further underlying purpose of the prohibition against mortgage fraud is correctly identified by Mr Andrew Warnock QC on behalf of the respondent as the protection of the public, and in particular mortgagees, from suffering loss. Viewed from this perspective, it is difficult to see how refusing the respondent a civil remedy against her solicitors for their negligence in failing to register the transfer would enhance that protection. Registration of the transactions could only take place after the completion of the conveyance. By the time of the negligent breach of duty the loan had already been advanced by Birmingham Midshires and received by the respondent. The required registration was not a necessary step in perpetrating the fraud and, by the time of the negligent failure to register the transfer, the fraud was complete. In these circumstances, denying a remedy to the respondent in respect of negligence in what occurred subsequently would not afford any protection to Birmingham Midshires. On the contrary, as the respondent points out, not only was the required registration of the transfer to the respondent in the interests of the respondent, but it was also in the interests of the mortgagee, Birmingham Midshires, both during the currency of the mortgage and following its discharge, that the transfer should be registered in addition to the mortgagees charge. The registration of the transfer was necessary in order that Birmingham Midshires charge could be registered. In addition, it was in Birmingham Midshires interest that the respondent should have assets with which to meet her liability if sued on her personal covenant. As matters turned out, the failure to register the transfer to the respondent meant that the property was not available to meet any part of the respondents liability on the discharge of the mortgage. When sued by Birmingham Midshires the respondent, having discovered that she had no registered title, brought Part 20 proceedings against the appellants seeking damages for the loss of her proprietary interest. Were she to recover compensation from the appellants, that could be applied to meet or reduce her liability to Birmingham Midshires on her personal covenant. While Birmingham Midshires had, in these circumstances, an independent claim for negligent breach of duty against the appellants, it can at the very least be said that the denial of such a claim by the respondent against the appellants would not enhance the protection afforded by the law to mortgagees. It was, therefore, in the interests not only of the respondent but also of Birmingham Midshires for the appellants to have complied with their duties to the respondent. I will return to the relationship of the negligent conduct to the mortgage fraud itself when considering centrality in the context of proportionality. Is there any other relevant public policy on which the denial of the claim may (b) have an impact? Important countervailing public policies in play in the present case are that conveyancing solicitors should perform their duties to their clients diligently and without negligence and that, in the event of a negligent breach of duty, those who use their services should be entitled to seek a civil remedy for the loss they have suffered. To permit solicitors to escape liability for negligence in the conduct of their clients affairs when they discover after the event that a misrepresentation was made to a mortgagee would run entirely counter to these policies. While denial of a remedy may sometimes be justified in such circumstances, this should only be on the basis that to afford a remedy would be legally incoherent. Moreover, I agree with the observation of Gloster LJ in the Court of Appeal (at para 37) that there is more likelihood that mortgage fraud would be prevented if solicitors appreciate that they should be alive to, and question, potential irregularities in any particular transaction. In this regard, descending to the facts of the present case, I am unable to accept the submission on behalf of the appellants that there were here no potential irregularities which could have put them on notice of the possibility of fraud. First, it is a striking feature of this case that the appellants acted for both Mitchell and the respondent, in addition to the mortgagee, Birmingham Midshires. Secondly, Mitchell had purchased the property in July 2002 and purported to sell it to the respondent in October 2002. Thirdly, the claimed value of the property had increased greatly over a short period of time. The purchase price on the sale to the respondent was 90,000, three times the price paid when the leasehold had been created three months earlier. (See generally, The Law Society, Practice Note on Mortgage Fraud, 13 January 2020.) A further countervailing public policy which arises here relates to the effect of the transaction on property rights. It is now established that, unless a statute provides otherwise expressly or by necessary implication, property can pass under a contract which is illegal as a contract. Where property is transferred for an illegal purpose the transferee obtains good title both in law and in equity, notwithstanding that the transaction being illegal it would not have been specifically enforced (Tinsley v Milligan per Lord Browne Wilkinson pp 369 371; Patel v Mirza per Lord Toulson at para 110). In the present case the Court of Appeal reversed the conclusions of the trial judge that the mortgage application and agreement constituted a sham and that there was no intention that the respondent would become the legal owner of the property. First, the Court of Appeal considered that the fact that, so far as the respondent and Mitchell were concerned, the mortgage application was fraudulent in that it contained misrepresentations did not as a matter of law result in its being a sham transaction as between the respondent and Birmingham Midshires, the mortgagee. She and Birmingham Midshires intended that the money should be borrowed and secured on her registered legal title to the property. Furthermore, Birmingham Midshires had no knowledge of the misrepresentations or the true intentions of the respondent and Mitchell. Accordingly, the transaction was intended to take effect between the respondent and Birmingham Midshires and was not a sham. (Cf Snook v London and West Riding Investments Ltd [1967] 2 QB 786 at 802 per Diplock LJ.) Secondly, the fact that the sale agreement between Mitchell and the respondent was tainted with illegality because it was entered into with the object of deceiving Birmingham Midshires, did not mean that Mitchell and the respondent did not intend legal title to pass to her. On the contrary, the whole purpose of the arrangement between them (whatever the position in relation to retention of beneficial ownership might be) was that legal title should vest in the respondent so that she could obtain a loan from Birmingham Midshires and grant a charge in favour of Birmingham Midshires to secure the loan. The Supreme Court refused an application by the appellants for permission to appeal on the grounds that the Court of Appeal erred in (1) overturning the judges conclusion that the sale between Mitchell and the respondent was a sham; (2) holding that there was an intention to transfer legal title in the property; and (3) failing to analyse adequately the relevance of the transfer of legal title. Permission to appeal was limited to the issue of the application of the Patel v Mirza guidelines. In my view, this reasoning of the Court of Appeal is clearly correct. The intention of Mitchell and the respondent was that the appellants should register the Form TR1 executed by Mitchell at the Land Registry. Had the appellants done so, in accordance with their retainer, legal title in the property would have passed to the respondent under section 27(1), Land Registration Act 2002. In the event, no legal title passed to the respondent but, as Mitchell had executed and delivered the Form TR1 and had done everything which he could do to effect the legal transfer, the respondent was entitled to an equitable interest in the property, namely an equitable right to be registered as proprietor of the registered legal title. (See section 24(b), Land Registration Act 2002; Mortgage Business plc v OShaughnessy [2012] 1 WLR 1521 per Etherton LJ at para 58.) The fact that the law recognises this equitable property right vested in the respondent gives rise to an important countervailing policy which requires to be brought into consideration. Once an equitable interest in the property has passed to the respondent, she should have available to her as the holder of that interest the remedies provided by law for its protection. It would, in my view, be incoherent for the law to accept on the one hand that an equitable interest in the property passed to the respondent, notwithstanding that the agreement for sale was tainted with illegality, while on the other refusing, on the basis of the same illegality, to permit proceedings against a third party in respect of their failure to protect that equitable interest by registering the Form TR1 at the Land Registry. I pause at this point in the process of addressing Lord Toulsons trio of relevant considerations. To permit the respondents claim in the particular circumstances of this case would not undermine the public policies underlying the criminalisation of mortgage fraud and could, indeed, operate in a way which would protect the interests of the victim of the fraud, ie the mortgagee. Furthermore, to deny the respondents claim would run counter to other important public policies. It would be inconsistent with the policy that the victims of solicitors negligence should be compensated for their loss. It would be a disincentive to the diligent performance by solicitors of their duties. It would also result in an incoherent contradiction given the laws acknowledgment that an equitable property right vested in the respondent. In these circumstances, it is not strictly necessary to go on to consider the third of the trio of considerations, namely whether denial of the claim would be a proportionate response to the illegality, but I shall nevertheless do so. (c) Proportionality of the response to the illegality On behalf of the respondent Mr Warnock draws attention to a series of features of the present case which the Court of Appeal (at para 39) considered represented the reality of the situation and which it accepted would make it entirely disproportionate to deny the respondents claim. First, it is submitted that, while the victim of the fraudulent misrepresentations was Birmingham Midshires and not the appellants, Birmingham Midshires has made no complaint of this against the respondent in its recovery proceedings or otherwise. In the view of the Court of Appeal, Birmingham Midshires adopted the transaction. It is, however, difficult to attach any significant weight to this consideration. Even if it was aware of the fraud at any material time, which is unclear, Birmingham Midshires had no need to complain of the fraud in order to recover its money as it could simply rely on its entitlement to arrears and its right to payment under the respondents personal covenant. To have pleaded fraud in its claim against the respondent would have been an unnecessary complication. In any event, the respondents central role in the fraud was clearly established. Secondly, it is submitted that it is surprising that the conveyancing solicitor who acted for Mitchell and the respondent did not address the issue of fraud at all in any statement of evidence, given that the appellants now maintain that his role was essential to the fraud and that his retainer was not legitimate and proper. In my view, Mr Warnock was right not to press this point. It was accepted by the respondent and the Court of Appeal that the solicitor was not aware of the fraud at the time of the transaction. Moreover, the respondents part in the fraud was established on the objective evidence at the trial. Thirdly, Mr Warnock submits that this was not a case where, money having been obtained by fraud, there was never any intention to repay it. On the contrary, payments were made under the mortgage for some years. Once again, this submission does not assist the respondent because this does not detract from the fraudulent nature of the mortgage transaction. There is, however, much more substance in Mr Warnocks fourth submission which relates to the centrality of the respondents illegal conduct. It is undoubtedly the case that it was necessary to retain a solicitor in order to maintain the dishonest pretence that the respondent was borrowing to purchase the property and in order to obtain a loan secured by a mortgage. However, this simply provides the background to the claim by the respondent against her solicitors for negligent breach of their retainer. The appellants breach of duty related to the registration of title and the way in which the respondent had procured the finance to obtain that title was irrelevant to the appellants obligation to register the title. Two features of the present case, to which reference has already been made, demonstrate the lack of centrality of the illegality to the breach of duty of which the respondent complains. First, by the time the appellants were required to register the transactions the loan had been advanced and used to discharge the pre existing BM Samuels charge. The defrauding of Birmingham Midshires had been achieved. Secondly, by that time equitable title to the property had already passed to the respondent. Although legal title could pass to her only on registration of the transfer, she was already the owner in equity because once Mitchell had executed and delivered the Form TR1 he had done everything which he could do in order to effect the transfer of legal title. These matters serve to distance the appellants negligence from the respondents fraud. Some light is cast on the issue of centrality by the decision of the Court of Appeal (Schiemann, Waller and Dyson LJJ) in Sweetman v Nathan [2003] EWCA Civ 1115; [2004] PNLR 7. For present purposes the facts may be summarised as follows. Sweetman borrowed 1.6m from Coutts Bank in order to purchase property. He subsequently induced Coutts Bank to make a second loan to him by a fraudulent misrepresentation that the full amount of the second loan was needed to discharge an existing claim against the property which Sweetman proposed to sell to an identified purchaser. In fact, only a smaller sum was required for that purpose. Sweetman instructed his solicitor, Nathan, to carry out the necessary conveyancing on the sale of the property. The purchaser proved to be a worthless shell company with the result that Sweetman could not repay either of the loans to the bank. Sweetman sued Nathan and his firm for their negligence in failing to discover this. Sweetman contended that if Nathan had not been negligent Sweetman would not have taken out the second loan because he would have known that there was no genuine purchaser. Moreover, he had been prevented from repaying the second loan with the purchase price from the resale of the land and had made payments which were irrecoverable. Nathan contended that all of the losses claimed had been caused by the deception of the bank by Sweetman, alternatively that he was a party to a deliberate deception and that the claim was barred by illegality. The Court of Appeal declined to strike out the claim on this ground. In its view the claim by Sweetman against Nathan was conceptually entirely separate from the fraud against the bank. Schiemann LJ asked (at para 60) whether Sweetman would have any prospect of successfully suing Nathan for his assumed negligence in carrying out the conveyancing. Proceeding on the assumptions that Nathan and Sweetman were jointly engaged in falsely representing to the bank that Sweetman was going to use the second loan to pay off a prior interest in the property and that there was some prospect of Sweetman showing that he had suffered substantial damage as a result of the negligence, Schiemann LJ observed: What remains is a pure question of public policy. Should the courts refuse in principle to lend Mr Sweetman their assistance in suing Nathan when they were jointly engaged on a fraud? If Mr Sweetman were suing Coutts for, say, failing to transfer the money to him, one could see a strong case for refusing him the courts aid. However he is suing his fellow fraudster. If he were suing him for writing such an incompetent letter that Coutts had grasped in time that there was a fraud going on and had therefore refused to lend the money and that therefore a profitable deal had fallen through, again one could see a strong case for refusing him the courts aid. He is however not doing this. He is suing his solicitor for negligence which is conceptually entirely separate from the fraud upon which both of them are engaged. (paras 62 63) As an authority Sweetman v Nathan has its shortcomings. It concerned an application to strike out the claim and the decision was that the claim should not be struck out as it could not be said that it had no serious prospect of success. Furthermore, it was decided on the basis of the law as it existed before Patel with its emphasis on reliance on illegality. Nevertheless, the factual situation addressed is very much in point as is the following situation posited by counsel for the defendants in that case to which Schiemann LJ referred (at paras 42 and 65). A purchaser of a house instructs a solicitor who negligently fails to discover a covenant which renders it worthless. The purchaser, in ignorance of this, obtains a mortgage by false representations as to the level of his income. Before the fraud comes to light the mortgagee is repaid. Counsel submitted that these facts would not prevent the purchaser from suing his solicitor, as the loss was properly described as flowing from the solicitors negligence and not from the purchasers fraud. Schiemann LJ found that this analogy had force. I respectfully agree and find his reasoning on this point convincing. The purchaser had suffered a genuine wrong to which the allegedly unlawful conduct was incidental. As a result of the change in the law brought about by Patel v Mirza, the question whether a claimant must rely upon illegal conduct to establish a cause of action is no longer determinative of an illegality defence. Nevertheless, the question of reliance may have a bearing on the issue of centrality. In the present case it is significant that, as the decision at first instance on the basis of Tinsley v Milligan demonstrates, the essential facts founding the claim can be established without reference to the illegality. The respondents claim for breach of duty against her solicitors is conceptually entirely separate from her fraud on the mortgagee. Profiting from ones own wrongdoing For one branch of the law to enable a person to profit from behaviour which another branch of the law treats as criminal or otherwise unlawful would tend to produce inconsistency and disharmony in the law and so cause damage to the integrity of the legal system. In the present case it is not suggested by either party that by suing the appellants the respondent is seeking to profit from her wrongdoing. The parties, as I understand them, here use profit in the narrow sense of a direct pecuniary reward for an act of wrongdoing. (See Hall v Hebert, supra, per McLachlin J at p 172.) In their application for permission to appeal the appellants expressly accepted that the respondents claim was in respect of losses suffered rather than to enforce an illegitimate gain. In May 2014 the Bank of Scotland (as successor to Birmingham Midshires) obtained summary judgment against the respondent for 70,000 with the balance subject to an account. The Bank of Scotland also settled claims against BM Samuels and the appellants, but the amount of the settlements is not known. At the trial of the present action the respondent was awarded damages of 78,000 plus interest and that award was upheld by the Court of Appeal. The sum of 78,000 represented the value of the property at November 2009. In her judgment, the trial judge noted that it was impossible to say what, beyond the 70,000, the Bank of Scotland was seeking against the respondent and noted that the amount outstanding to the Bank of Scotland included a large amount by way of legal fees. The Court of Appeal proceeded on the basis that the respondents intention in pursuing the claim was not to profit but to obtain funds to reduce or discharge her liability under the Birmingham Midshires charge. In their written cases and in their oral submissions in the present appeal, both parties proceeded on this basis. Mr Pooles, on behalf of the appellants, makes a rather different point, however. He submits that, while the claim is to reduce or avoid a loss rather than to enforce an illegitimate gain, there is no difference as to the intention and that underlying the fraud into which the respondent willingly entered was the prospect of recovering 50% of the net profits on the sale of the property. He submits that the loss results from the respondents wrongdoing and that the policy consideration that a person should not be allowed to profit from her own wrongdoing applies equally in these circumstances. No doubt, the respondents motive in entering into the illegal transaction was to make a profit. That is likely to be the motive behind most illegal agreements and the same could be said of many such claimants including Mr Patel and Miss Milligan. The motive for the wrongdoing which forms the background to this claim must, however, be distinguished from enlisting the courts assistance to make a profit from that wrongdoing. The relief sought from the court will be important here. (See Patel v Mirza per Lord Toulson at para 109.) Clearly, it would be objectionable for the court to lend its processes to recovery of an award calculated by reference to the profits which would have been obtained had the illegal scheme succeeded. This, however, is not a claim to recover a profit but a claim for compensation for property lost by the negligence of the appellants. The award of damages made by the trial judge and upheld by the Court of Appeal was the value of the property as at November 2009 with interest thereon until the date of payment. This represented the loss to the respondent arising from the fact that at the date of default she was, as a result of the appellants negligence, unable to provide Birmingham Midshires with an unencumbered registered title to the property in reduction or discharge of the loan to her. This is not a case of the court assisting a wrongdoer to profit from her own wrongdoing. There is, however, a more fundamental answer to Mr Pooles submission. The respondent can indeed be considered to have got something out of her fraudulent transaction; she has an equity of redemption in the property of uncertain value and, if her claim is permitted to succeed, she will acquire the means of meeting a substantial judgment against her. However, even if this could properly be considered profiting from ones own wrong, which in my view it cannot, while profiting from ones own wrong remains a relevant consideration it is no longer the true focus of the inquiry. As Lord Toulson explained in Patel at paras 99 101 (cited at para 22 above), adopting the reasoning of McLachlin J in Hall v Hebert supra, at pp 175 176, the notion that persons should not be permitted to profit from their own wrongdoing is unsatisfactory as a rationale of the illegality defence. It does not fully explain why particular claims have been rejected and it leads judges to focus on the question whether a claimant is getting something out of the wrongdoing, rather than on the question whether to permit recovery would produce inconsistency damaging to the integrity of the legal system. The true rationale of the illegality defence, as explained in Patel and in the judgment of McLachlin J in Hall v Hebert, is that recovery should not be permitted where to do so would result in an incoherent contradiction damaging to the integrity of the legal system. In the present case, to allow the respondents claim to proceed would not involve any such contradiction, for the reasons I have given. Conclusion For these reasons, I consider that the Court of Appeal correctly followed the policy based approach adopted by the Supreme Court in Patel v Mirza and was correct in its conclusion that a defence of illegality should not bar the present claim. I would, accordingly, dismiss the appeal.
UK-Abs
This appeal concerns the defence of illegality. The Supreme Court is asked to decide whether a firm of solicitors, Stoffel & Co, can escape liability to Ms Grondona for their negligent failure to register documents effecting a transfer of property because the transfer formed part of an illegal mortgage fraud. Ms Grondona had a business relationship with Mr Mitchell. In or about July 2002, Mr Mitchell purchased a 125 year lease of the rear ground floor flat at 73b Beulah Rd, Thornton Heath (the property). Shortly afterwards, he borrowed 45,000 from BM Samuels Finance Group Plc. The loan was secured by a legal charge over the property (the BM Samuels charge). In October 2002, Ms Grondona bought the property from Mr Mitchell, with the assistance of a mortgage advance of 76,475 from Birmingham Midshires. The plan was that the mortgage advance would be secured by a charge over the property, which Ms Grondona entered into on 31 October 2002 (the Birmingham Midshires charge). Ms Grondona procured the mortgage advance by fraud. According to the trial judge, the purpose of the fraud was to raise capital for Mr Mitchell from a high street lender, which he would not otherwise have been able to obtain. Ms Grondona and Mr Mitchell had previously entered into an agreement which confirmed that Mr Mitchell would be responsible for the mortgage payments. Stoffel & Co solicitors acted for Ms Grondona, Mr Mitchell and Birmingham Midshires in connection with the transaction. Stoffel & Co negligently failed to register at the Land Registry the form TR1 transferring the property from Mr Mitchell to Ms Grondona, the form DS1 releasing the BM Samuels charge, and the Birmingham Midshires charge. This meant that Mr Mitchell remained the registered owner of the property, which continued to be subject to the BM Samuels charge. Mr Mitchell subsequently received further advances from BM Samuels on the basis of that charge. In 2006, Ms Grondona defaulted on payments under the Birmingham Midshires charge. Birmingham Midshires brought proceedings against her. Ms Grondona, in turn, sought damages from Stoffel & Co. Stoffel & Co admitted that their failure to register the forms with the Land Registry constituted negligence or a breach of retainer. However, they argued that they were entitled to rely on the illegality defence, because Ms Grondona had only instructed them to further the illegal mortgage fraud. The trial judge held that Ms Grondonas claim was not barred by the illegality defence. The Court of Appeal dismissed Stoffel & Cos appeal. Stoffel & Co appealed to the Supreme Court. The Supreme Court unanimously dismisses Stoffel & Cos appeal, and holds that Ms Grondonas claim is not barred by the illegality defence. Lord Lloyd Jones gives the judgment, with which all members of the Court agree. The Supreme Court decision in Patel v Mirza [2016] UKSC 42 set out a new policy based approach to the illegality defence at common law. In that case, the majority held that, when a claim is tainted by illegality, the court should ask itself whether enforcing the claim would lead to inconsistency that is damaging to the integrity of the legal system. In making this assessment, the court should consider: (a) the underlying purpose of the illegality in question, and whether that purpose would be enhanced by denying the claim; (b) any other relevant public policy on which denying the claim may have an impact; and (c) whether denying the claim would be a proportionate response to the illegality [22 23]. The application of this trio of considerations should not be a mechanistic process. Accordingly, the court will identify the policy considerations at stages (a) and (b) of the trio at a relatively general level. The courts task is to establish whether enforcing a claim that is tainted with illegality would be inconsistent with the policies to which the law gives effect or, where the policies compete, to decide where the balance lies. The court is not required to evaluate the underlying policies themselves. In contrast, when considering proportionality at stage (c), it is likely that the court will need to look closely at the case before it. However, it is not necessary for the court to consider proportionality in every case. If, after it has examined the policy considerations at stages (a) and (b), the court determines that the claim should not be barred by the illegality defence, there will be no need for it to go on to consider proportionality. This is because the claim will be allowed, so there is no risk of disproportionate harm to the claimant by refusing relief to which he or she would otherwise be entitled [26]. In considering stage (a), Lord Lloyd Jones observes that Ms Grondona was engaged in mortgage fraud, which is a serious criminal offence. However, denying her claim would not enhance the underlying purpose of the prohibition on mortgage fraud. Fraudsters are unlikely to be deterred by the risk that they will be left without a civil remedy if their solicitors prove to be negligent [29]. On the other hand, allowing Ms Grondonas claim would enhance the protection that the law provides to mortgagees and other members of the public, which is a further underlying purpose of the prohibition on mortgage fraud. By the time of Stoffel & Cos negligence, it was in the interests of both Ms Grondona and Birmingham Midshires that the transfer should be registered [30 31]. Turning to stage (b), denying Ms Grondonas claim would run counter to a number of important public policies. In particular, it would be inconsistent with the policy that solicitors should perform their duties to their clients diligently and without negligence, as well as with the policy that the victims of solicitors negligence should be compensated for the loss they have suffered [32]. Denying the claim would also result in an incoherent contradiction in the law, because the law accepts that an equitable interest in the property passed to Ms Grondona, even though she was engaged in mortgage fraud [33 34]. The balancing of the policy considerations at stages (a) and (b) indicate that Ms Grondonas claim should not be barred by the illegality defence. There is, consequently, no need to consider proportionality, but Lord Lloyd Jones does so nevertheless [35]. He concludes that it would not be proportionate to deny Ms Grondonas claim because it is conceptually entirely separate from the mortgage fraud [43]. Enforcing the claim would not allow Ms Grondona to profit from her wrongdoing [44 45]. In any case, following Patel v Mirza, the courts focus should be on the need to avoid inconsistency that is damaging to the integrity of the legal system. The question of whether the claimant will profit from the illegality remains a relevant consideration, but it is no longer the true focus of the courts inquiry [46].
The United Kingdom operates a points based system (PBS) for the grant of leave to remain to non EU nationals who wish to work or study here. There are five tiers, and for the purposes of this appeal the relevant tier is Tier 2 (General) Migrant. The applicant migrant must be sponsored by an employer which is licensed to sponsor migrants. The guidance relevant to the application makes it clear that his sponsor must be licensed by the Home Office. It also states that an applicant must have a valid certificate of sponsorship (CoS) provided by his sponsor and that, if he does not have a valid CoS, the Home Office will reject his application. There is no discretion about this. The PBS has been described as prescriptive (Kaur v Secretary of State for the Home Department [2015] EWCA Civ 13, para 41 per Burnett LJ). The Secretary of State has a discretion to grant leave outside the PBS in exceptional circumstances (R (Agyarko) v Secretary of State for the Home Department [2017] 1 WLR 4546, para 4 per Lord Reed). Moreover, the Home Office has power to revoke a licence at any time. In this case, Mr Pathan made his application and was sponsored by his employer, Submania Ltd (Submania). It was his second application for Tier 2 leave. Submania held a sponsors licence and provided him with a valid CoS when he put in his application, but he contends that, unbeknown to him, while his application was outstanding, the Home Office revoked his sponsors licence before his application was determined. The Home Office did not inform Mr Pathan of this and simply rejected his application on the basis that his sponsor was no longer licensed, and so he had not fulfilled the conditions for the grant of leave. The principal issue is whether the Secretary of States failure to inform Mr Pathan of the revocation of his sponsors licence is reviewable in public law on the grounds that it amounts to procedural unfairness, that is, a breach of the rules of natural justice. These, so far as relevant, in appropriate circumstances require a person to have an opportunity to be heard on any material information which the decision maker acquires and of which he was unaware. Procedural unfairness is to be contrasted with substantive unfairness, where the challenge is to the merits of the rule under which the decision against him was or is to be challenged. The grounds on which such a challenge can succeed are generally limited to situations where the rule is irrational. Mr Pathan sought an administrative review of the Secretary of States decision to reject his application, but the decision was maintained. He then sought judicial review of that decision in the Upper Tribunal. Mr Pathan contended in the Upper Tribunal (Upper Tribunal Judge Allen) [2017] UKUT 369 (IAC) and in the Court of Appeal (Sir Andrew McFarlane P, Singh and Coulson LJJ) [2018] 4 WLR 161 that the decision of the Secretary of State to reject his application without giving him an opportunity to find another sponsor is reviewable in public law on the grounds of procedural unfairness. Both the Upper Tribunal and the Court of Appeal dismissed Mr Pathans appeal. In the Court of Appeal, Singh LJ gave a full judgment and the other members of the Court agreed (with Coulson LJ expressly agreeing with reservations of Singh LJ about the decision mentioned in the next paragraph). The Court of Appeal held that Mr Pathans appeal raised a question of substantive fairness. As substantive fairness was not a free standing ground for judicial review, Mr Pathan would have to show irrationality. He could not succeed on that ground because the rules for the PBS had been drafted for rational policy reasons. The Court of Appeal expressed doubt about the correctness of another decision of the Upper Tribunal, Patel (Revocation of Sponsor Licence Fairness) India [2011] UKUT 211 (IAC); [2011] Imm AR 5, dealing with the extension of leave to a student under Tier 4 if his colleges licence is revoked, but did not overrule that decision. In Patel, the principal holding of the Upper Tribunal was that, where the college with which a student with Tier 4 leave is enrolled has its licence revoked and the student has acted in good faith, the common law duty of fairness required that the student should generally be given a 60 day extension to find a fresh sponsorship letter to enable them to apply to vary their existing leave to include study at another college which was licenced. As a result of that decision, the practice of the Secretary of State is now to grant all students in that position an extension of 60 days unless the student has not been a bona fide student or has participated in the practices that may have contributed to the sponsors licence being withdrawn. In those cases, the students leave is limited to any existing permission to stay that he has. On this appeal, the Secretary of State does not ask this Court to overrule Patel but submits that the basis of the decision was unsound. For the reasons set out below, I consider that it was a breach of the procedural duty of fairness for the Secretary of State not to have informed Mr Pathan that his sponsors licence had been withdrawn, which meant that his application, as it stood, would be bound to fail. All the members of the Court reach this conclusion and accordingly the appeal succeeds on that issue. I go on to hold that the duty of procedural fairness meant that the Secretary of State had to give Mr Pathan an opportunity to avert that difficulty. Lord Wilson has reached the same conclusion as appears from his judgment, with which as explained below I agree. Lord Kerr and Lady Black in their joint judgment and Lord Briggs in his judgment take a different view. They consider that the grant of an extension of time is a matter of substance and falls outside the duty of procedural fairness. On that issue, the views of Lord Kerr, Lady Black and Lord Briggs as the majority prevail. Why Mr Pathans Tier 2 application failed and the proceedings Mr Pathan then initiated Mr Pathan, his wife and son are Indian nationals living in the UK. The ability of Mr Pathans family to remain in the UK is dependent on Mr Pathans success in the present appeal. Mr Pathan was granted leave to enter the UK as the dependant partner of a Tier 4 (General) Student on 7 September 2009, with leave to remain (LTR) until 31 December 2012. LTR was extended from 1 December 2010 to 30 April 2014. Subsequently, Mr Pathan was given further LTR as a Tier 2 (General) Migrant from 23 March 2013 to 15 October 2015 in order to work as a business development manager for Submania, a food outlet with some seven to ten outlets in London and the South East. Submania held a sponsors licence and provided him with a valid CoS. On 2 September 2015 Mr Pathan made an application for further LTR to enable him to continue working for Submania. The Secretary of States evidence was that Mr Pathans application was put on hold whilst officials visited Submania to investigate whether the vacancy was genuine. On 7 March 2016 (following an initial suspension giving Submania a chance to make representations which it did not take) the Secretary of State revoked Submanias sponsors licence. This invalidated the CoS provided by Mr Pathan in his application for LTR. On 7 June 2016 the Secretary of State, without previously informing Mr Pathan of the revocation, refused his application because his CoS was invalid. Mr Pathans LTR would have expired on 15 October 2015 but for his application for further leave. In those circumstances section 3C of the Immigration Act 1971 (the 1971 Act) (as substituted by section 118 of the Nationality, Immigration and Asylum Act 2002) operated to extend his expiring leave pending his further application and any administrative review or appeal of the decision on that application. I will call this leave section 3C leave. When Mr Pathan applied for administrative review of the decision rejecting his application on 14 June 2016, he sought a 60 day period to enable him to provide a fresh CoS. The Secretary of State maintained the decision to refuse his application, ruling not that no period beyond the 14 days allowed for removal was appropriate but that the 60 day period (curtailment period) would only have been appropriate if Mr Pathan had had 60 days leave remaining. As explained, his LTR had by then expired. When Mr Pathan issued judicial review proceedings, he again sought a period of 60 days to provide a further CoS. The Upper Tribunal dismissed his application, as did the Court of Appeal. Mr Pathan now seeks relief from this Court. Relevant rules and legislation The relevant Immigration Rules are those in force at July 2016. The relevant provisions of these Rules start at paragraph 245H, which states the purpose of Tier 2 (General) is to enable UK employers to recruit workers from outside the EEA [European Economic Area] to fill a particular vacancy that cannot be filled by a British or EEA worker. Paragraph 245HD states: To qualify for leave to remain as a Tier 2 (General) Migrant an applicant must meet the requirements listed below. If the applicant meets these requirements, leave to remain will be granted. If the applicant does not meet these requirements, the application will be refused. It sets out the requirements for leave to remain in this context. requirements include at paragraph (f): If applying as a Tier 2 (General) migrant, the applicant must have a minimum of 50 points under paragraphs 76 to 79D of Appendix A. Appendix A includes a requirement at paragraph 77A that, in order to obtain points for a CoS, the applicant must provide a valid CoS reference number. Paragraph 77C(f) provides that the reference number must not have been withdrawn or cancelled by the Sponsor or by the UK Border Agency since it was assigned . From February 2016, the curtailment of leave was dealt with by paragraphs 323 onwards. Leave could be curtailed if, for example, deception was used to obtain leave to remain or a variation of leave to remain (paragraph 323) or if the migrants sponsor ceases to have a sponsor licence (paragraph 323A(b)(i)). At all material times there was guidance in place for applicants. At the time of Mr Pathans application, version 04/15 of the guidance was in force and applied to applications made on or after 6 April 2015. This had been superseded by version 04/16 by the time of the decision but this does not affect paragraph 190 of 04/15, which stated: A Certificate of Sponsorship can be withdrawn or cancelled at any time by either the Home Office or your Sponsor. Where your application relies on a Certificate of Sponsorship that has been either withdrawn or cancelled, your application will be refused. As to the consequences of revocation of the sponsors licence, the version of the guidance dated 04/16 stated: 9 If we revoke your licence, we will: immediately end (curtail) the permission to stay in the UK, or worker authorisation of any migrants whom we believe were actively and knowingly involved (complicit) in the reasons for the revocation of your licence such as if the migrant agreed that you would arrange a non existent job for them so they could come to the UK shorten the length of the worker authorisation, or permission to stay in the UK of any other migrants who were not actively involved to 60 calendar days if the migrant has fewer than 60 calendar days of their leave or worker authorisation remaining, we will not shorten it 19.10 In the first case above, any migrant with leave in Tiers 2, 4 or 5 will have to leave the UK or face enforced removal. In the second case above, they will also have to leave or face enforced removal if, at the end of the 60 calendar days, they have not made an application for leave in a category for which they qualify. If they were complicit in any abuse of the immigration system, their leave will end (curtailed) with immediate effect. 19. The equivalent passages in the version dated 04/15 were in virtually identical terms. Evidence on behalf of the Secretary of State Mr Richard Jackson, a senior executive officer in the Migration Policy Unit, which is part of the Immigration and Border Policy Directorate of the Home Office, filed a witness statement on behalf of the Secretary of State. This was largely directed to explaining what curtailment period is given to Tier 2 migrants and the reasons for treating Tier 2 and Tier 4 cases differently. Mr Jackson states that an applicant for Tier 2 leave will know that his application is dependent on his sponsor having a valid licence and that he can therefore have no expectation from the Home Offices published guidance that [he] will be given 60 days if their sponsors licence is revoked. (para 18) He also states that the Home Office considered making available to Tier 2 applicants the curtailment granted in the light of Patel to Tier 4 migrants. However, the Home Office concluded that there were differences between the two cases which made it inappropriate to give Tier 2 applicants a similar 60 day period. Migrants already entitled to leave to remain at the time when a sponsors licence was withdrawn in general have the benefit of a similar 60 day period. On revocation, the sponsor would cease to be able to employ the migrants who had obtained leave to remain on the basis of a CoS issued by that sponsor and this group of migrants would be given a 60 day curtailment period, reducing their leave to 60 days (or such lesser number of days as represented their unexpired leave) unless they had been complicit in the conduct which led to the revocation of the licence. But the curtailment period was not extended to applicants essentially for the following reasons: i) The curtailment period was given to Tier 4 migrants in those circumstances to allow them time to sort out their affairs. (This could include submitting another application for leave to remain in Tier 4 or some other category). A Tier 2 applicant was in a different position. They could have no expectation that their stay would continue and could therefore be expected to have put their affairs in order in case their application was refused. ii) The applicants position was protected by his section 3C leave. Under the Immigration Rules they were entitled to stay for a further 14 days (previously 28 days) after the administrative review was completed. iii) To treat the applicant in the same way as a migrant who already has Tier 2 leave would give him an additional 60 days that he would not otherwise have had, while the migrant who already has leave has his leave curtailed to 60 days. If he had less than 60 days remaining, his leave is not curtailed but neither is it extended to allow for 60 days. iv) There was evidence of manipulation as a result of the Patel decision if extra time is given, as there had been found to be students who were exploiting the extra days (this is discussed in the judgment of the Upper Tribunal). v) An application under Tier 2 will not be successful if the sponsor has not complied with the conditions of his licence in hiring the applicant, even if the licence is not revoked. There are a variety of reasons why a Tier 2 application might fail. vi) Tier 2 is different from Tier 4 because it is concerned with filling a particular labour market gap experienced by the sponsor and leave is given to fill a particular vacancy. The migrant will not lose wages as a result of the revocation of a licence and there is no guarantee that there is a gap elsewhere which a resident worker cannot fill. The courses provided to Tier 4 students are more generic, and the higher fees which they pay assist in ensuring the availability of courses for UK students. Tier 2 migrants are expected to know if their sponsor loses or is at risk of losing its licence. Mr Jackson expressed the view that where issues relating to the applicants job is among the reasons for revocation of a licence, it is probable that the employee has been complicit in those issues. In the first of those reasons, Mr Jackson draws no distinction between a Tier 2 applicant who has not yet started his job and a Tier 2 applicant who is currently working for the sponsor and is making an application for leave to extend that existing employment. Some key arguments Mr Michael Biggs appears for Mr Pathan. His primary complaint is that the Court of Appeal was wrong to treat Mr Pathans claim as one of substantive unfairness. He does not dispute the lawfulness of the licence revocation but contends that he should have been informed of it. He argues that this case engages common law unfairness, that is (among other matters) the principle that a person should know important information that might significantly impact the decision and have the opportunity to put in more information which would enable him to satisfy the decision maker. The actions of the Secretary of State were unfair because the rejection of Mr Pathans Tier 2 application radically impacted his and his familys rights and interests. The licence revocation prevented him from continuing his employment. The decision put him at risk of criminal liability and other restrictions as an overstayer. His article 8 rights and those of his family were engaged. Notice of the licence revocation could have made a difference to the outcome of Mr Pathans LTR application. If he was aware of it, he could have varied his application to one relying upon a new CoS, or he could have made a new application. Mr Alan Payne, for the Secretary of State, submits that no case suggests that procedural fairness requires notice to be given for any reason other than giving an individual an opportunity to address the merits of the applicable criteria or proposed decision. No case says an application that is bound to fail must be given a second chance. What Mr Pathan seeks is a substantive benefit (a second chance) and so his complaint is not as to procedural fairness. The Court of Appeal were correct and their decision should be upheld. Discussion The complaint is procedural because establishing a procedural impropriety is a necessary first step The judgment of the Court of Appeal hinges on its conclusion that Mr Pathans complaint was about substantive, and not procedural, fairness. It is easy to see how this conclusion was reached. The overall objective of Mr Pathan in bringing these proceedings is to obtain a 60 day curtailment (see para 10 above). That is effectively to insert an exception into the requirement for a valid CoS, and to qualify the statements made as to the consequences which ensue on licence revocation in the Guidance. However, the preliminary and essential step in Mr Pathans argument is that as a matter of fairness the Secretary of State should have told him that she had revoked his sponsors licence. What Mr Pathan really wants to do is to have the opportunity to respond to the licence revocation by putting forward some other application for leave which would ensure that his application was not refused. Role of section 3C leave Section 3C makes it possible for him to do this because while the application is pending he can make another application for leave to remain on a different basis, and his application will be merged into his original application. Section 3C (as amended) provides: (1) This section applies if (a) a person who has limited leave to enter or remain in the United Kingdom applies to the Secretary of State for variation of the leave, (b) leave expires, and (c) variation having been decided. the leave expires without the application for the application for variation is made before the (2) The leave is extended by virtue of this section during any period when the application for variation is neither decided (a) nor withdrawn, (b) an appeal under section 82(1) of the Nationality, Asylum and Immigration Act 2002 could be brought, while the appellant is in the United Kingdom against the decision on the application for variation (ignoring any possibility of an appeal out of time with permission), [. ] (c) (ca) (cb) an administrative review of the decision on the (d) application for variation (i) (ii) could be sought, or is pending. (3) Leave extended by virtue of this section shall lapse if the applicant leaves the United Kingdom. (3A) Leave extended by virtue of this section may be cancelled if the applicant (a) has failed to comply with a condition attached to the leave, or (b) has used or uses deception in seeking leave to remain (whether successfully or not). (4) A person may not make an application for variation of his leave to enter or remain in the United Kingdom while that leave is extended by virtue of this section. (5) But subsection (4) does not prevent the variation of the application mentioned in subsection (1)(a). The Secretary of States practice on timing is not entirely clear. In the present case there was an interval of three months between the revocation of the sponsors licence and the rejection of Mr Pathans application. It may be that, where a sponsors licence has been revoked, the Secretary of State generally takes no step for three months, ie until the usual period for bringing judicial review proceedings has elapsed. But it seems unlikely that the Secretary of State could wait that long before giving notice to other migrant workers since they would be likely to hear about the revocation at work. While it may be difficult for the Secretary of State to link up completely new applications with a particular sponsor, it may well be easier to identify applicants like Mr Pathan who are already working for the sponsor and are making an application for further leave. Because section 3C of the 1971 Act applies to any application for leave, Tier 2 leave applications are always inherently capable of being varied so that the applicant can rely on a different basis for leave, whether a different sponsor or some other basis altogether. It follows that even if the policy objective of the Secretary of State is that an application for Tier 2 leave should only match a particular employer (the sponsor) and that employer alone, the Secretary of State cannot resist a variation application made during the pendency of a Tier 2 application. Moreover, the fact that the primary purpose of section 3C of the 1971 Act was to prevent the proliferation of multiple claims does not prevent the possibility of its being used for the purpose of making an application which is more likely to succeed, and I venture to suggest that it is regularly used by applicants and practitioners for that purpose. There is an element of substantive unfairness in the complaint It seems to me that there is undeniably also an element of substance in Mr Pathans challenge, but the way I see it is that it is as a consequence of his argument about procedural fairness, not vice versa. If the challenge could only be analysed as one of substantive fairness, it would be impossible to bring a challenge on the grounds of procedural fairness unless the rule under which the decision maker was acting allowed such a challenge. It is not the law that a procedural challenge can be made only if there is no challenge to a substantive provision. In Cooper v Wandsworth Board of Works (1863) 14 CB NS 180, the defendant public board took the view that a landowner had failed to notify it of his intention to build a house as he was required to do by statute, and proceeded to exercise its statutory power to demolish his house without giving the landowner any opportunity to explain. The power to demolish was for public benefit, and the statute did not require the board to give the houseowner the opportunity to make representations. Nonetheless, the owner was held to have a right to be heard in case he could give information that might have caused the board not to demolish his house but to take some other step. (The public board did not assert that it did not know who the owner was.) It was no answer that the challenge also involved a challenge to a substantive provision of the relevant statute. Byles J famously cited an example given by Fortescue J in R v Chancellor, Masters and Scholars of the University of Cambridge (1723) 2 Ld Raym 1334; 1 Stra 557 (Dr Bentleys case): The judgment of Mr Justice Fortescue, in Dr Bentleys case, is somewhat quaint, but it is very applicable, and has been the law from that time to the present. He says, The objection for want of notice can never be got over. The laws of God and man both give the party an opportunity to make his defence, if he has any. I remember to have heard it observed by a very learned man, upon such an occasion, that even God himself did not pass sentence upon Adam before he was called upon to make his defence. Adam (says God), where art thou? Hast thou not eaten of the tree whereof I commanded thee that thou shouldest not eat? And the same question was put to Eve also. (pp 194 195) In the present case, if the Secretary of State had given Mr Pathan notice that Submanias sponsors licence had been revoked, he would have been able to take steps to produce another basis for leave and applied to vary his application. By that means, he would have had the opportunity, equivalent to that of Mr Cooper in the Wandsworth case of persuading the board not to demolish his house, of persuading the Secretary of State not to reject his application. It is common ground that the rules of natural justice apply to decision makers in public law whether or not they are acting judicially. In the Wandsworth case it was argued that the board, as successors to the commissioners for sewers, who were a judicial body, also acted judicially. I need not go into that question as I give an example in para 46 below of the Secretary of State being required to observe the rules of natural justice. The line between procedure and substance Going back to Byles Js famous example of the expulsion of Adam and Eve from the Garden of Eden, that determination was undoubtedly a substantive decision, but the grant to Adam and Eve of an opportunity to provide an explanation was a procedural decision. It might be thought that the distinction between substance and procedure is hard to grasp but that is only because the same substantive decision can give rise to both a claim of procedural unfairness and a claim that a substantive decision is unfair. As stated, both claims in Byles Js example arose out of the same substantive decision of expulsion from the Garden of Eden. This confusing state of affairs also occurs in the common law. For example, in R v Secretary of State for the Home Department, Ex p Venables [1998] AC 407 the Secretary of State increased the tariff for the two young persons convicted of murder beyond that fixed in their case by the Lord Chief Justice. One of the matters which the Secretary of State took into account was the public concern expressed in the media about the nature of their crimes. The House of Lords held that the decision of the Secretary of State was unlawful because (among other matters) this was an irrelevant consideration. The House also decided that it was contrary to the rules of natural justice for the Secretary of State to take these factors into account. The decision should have been made only on the basis of relevant considerations. That case is an example of how the same act of a public body can lead to claims of both procedural unfairness and unlawfulness. Lord Steyn expressly noted the overlap between substance and procedure, which illustrates the point I made in the preceding paragraph: [. ] I have come to the conclusion that the decisions of the Home Secretary as contained in his letters of 22 July 1994, which fixed a 15 year tariff for both Venables and Thompson, were unlawful for substantive reasons as well as a breach of the principles of procedural fairness. There are two separate substantive reasons why I conclude that the Home Secretarys decisions were unlawful. First, the Home Secretary regarded a sentence of detention during Her Majestys pleasure under section 53(1) imposed on a child convicted of murder as in law equivalent to a mandatory sentence of life imprisonment imposed on an adult convicted of murder. His legal premise was wrong: the two sentences are different. A sentence of detention during Her Majestys pleasure requires the Home Secretary to decide from time to time, taking into account the punitive element, whether detention is still justified. The Home Secretary misunderstood his duty. This misdirection by itself renders his decision unlawful. Secondly, the Home Secretary misdirected himself by giving weight to public protestations about the level at which the tariff in the cases of Venables and Thompson should be fixed. In doing so the Home Secretary took into account in aggravation of the appropriate level of punishment legally irrelevant considerations. This was a material defect in the reasoning of the Home Secretary. It rendered his decisions unlawful. On the issues of alleged procedural unfairness, I have concluded that the decisions of the Home Secretary were also procedurally flawed by the credence and weight which he gave to public clamour for an increase in the level of the tariff. This point overlaps with my second substantive conclusion. It may be two sides of the same coin: either way the quality of the decision making was adversely affected in a material way. (pp 518 519) The next section of this judgment develops the question of overlap. Line between procedural and substantive unfairness need not be rigid The closely reasoned decision of the Court of Appeal in the present case drew a rigid line between procedural and substantive fairness. This distinction harks back to the well known passage in the speech of Lord Diplock in Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374. At pp 410 411, Lord Diplock held: Judicial review has I think developed to a stage today when without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds upon which administrative action is subject to control by judicial review. The first ground I would call illegality, the second irrationality and the third procedural impropriety. That is not to say that further development on a case by case basis may not in course of time add further grounds. I have in mind particularly the possible adoption in the future of the principle of proportionality which is recognised in the administrative law of several of our fellow members of the European Economic Community; but to dispose of the instant case the three already well established heads that I have mentioned will suffice. By illegality as a ground for judicial review I mean that the decision maker must understand correctly the law that regulates his decision making power and must give effect to it. Whether he has or not is par excellence a justiciable question to be decided, in the event of dispute, by those persons, the judges, by whom the judicial power of the state is exercisable. By irrationality I mean what can by now be succinctly referred to as Wednesbury unreasonableness (Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223). It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it. Whether a decision falls within this category is a question that judges by their training and experience should be well equipped to answer, or else there would be something badly wrong with our judicial system. To justify the courts exercise of this role, resort I think is today no longer needed to Viscount Radcliffes ingenious explanation in Edwards v Bairstow [1956] AC 14 of irrationality as a ground for a courts reversal of a decision by ascribing it to an inferred though unidentifiable mistake of law by the decision maker. Irrationality by now can stand upon its own feet as an accepted ground on which a decision may be attacked by judicial review. I have described the third head as procedural impropriety rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an administrative tribunal to observe procedural rules that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice. But the instant case is not concerned with the proceedings of an administrative tribunal at all. Lord Diplocks speech is not, however, to be read as excluding the possibility that there may be, as counsel argues, a subset of one of the heads (which Lord Diplock calls procedural propriety) which arises only in particular circumstances and which has different attributes from the circumstances in which other cases under that head arise. In my judgment, Mr Biggs is correct in his submission that there is a subset of procedural fairness. This subset applies where there is a rule for the conduct of applications for some benefit, and the alleged unfairness stems from the fact that that rule does not expressly provide an applicant with the right to be heard or to be informed on a point when a significant event occurs which is brought about (rightly or wrongly) by the actions of the executive and which has grave impact on the applicant, who is not otherwise aware of those actions. Lord Diplocks categorisation of grounds for judicial review is important and I do not suggest otherwise. But the real issue is the level of intensity, or sensitivity, to judicial review given the roles and responsibilities of the judiciary under the British constitution. In R (Talpada) v Secretary of State for the Home Department [2018] EWCA Civ 841, para 63, Singh LJ held that unless kept within clearly defined and predictable boundaries, the doctrine of substantive unfairness risks (even if unconsciously) inviting the court to intrude impermissibly on the province of the executive. I share his overriding concern, but it is in the nature of the common law that the boundaries cannot always be clearly defined in advance or predictable. Examples of procedural unfairness throwing light on this case One of the cases which illustrates the last point is one which was not cited, namely FP (Iran) v Secretary of State for the Home Department [2007] EWCA Civ 13. That was an early decision directed at mitigating some of the hardship brought about when the Immigration Rules are drafted with a view to understandable efficiency, and in absolute terms, without perhaps taking full account of potential procedural unfairness. In some ways the case is close to this one because it too was a case where the Immigration Rules made it impossible for an applicant to make representations to the immigration tribunal rehearing his appeal against a refusal to accept his asylum claim. The rules stipulated that, if an applicant made no representations, the hearing had to proceed in his absence and there was no procedure for reopening that decision to allow the applicant to show a good reason for his absence. The appellants legal representative had failed to give notice of his change of address so that he was not notified of the hearing at which his appeal was to be reheard. Sedley LJ considered that rules could not stand where they were productive of irremediable procedural unfairness (para 48). The Rules deprived the applicant of his right to be heard (para 49). The fact that the rules took the form they did to to eliminate manipulation of the system did not justify the breadth of their effect (para 31). The Rules in question were outside the rule making powers and the purpose for which those powers were given. My judgment was based on the question whether the rules fell within the rule making power and drew on (among other matters) Professor Lon Fullers work, The Morality of Law, revised ed (1969) which is mentioned again at para 50 below. Wall J agreed with Sedley LJ. The breach of the common law principle of unfairness led to the rules being unlawful. A point to note is that the court considered how the rule would operate across the board and not simply in the instant case before them. So too here. Mr Pathans complaint is not peculiar to him. It must apply to anyone who is ignorant of a revocation of his sponsors licence but is working for him in the expectation that he will qualify for a Tier 2 visa. The complaint in this sort of case is about a systemic failure. The particular subset of procedural fairness with which this case is involved is a material systemic failure and the applicant is already in the employment of the sponsor but completely ignorant of the circumstances which led to the revocation of the licence. In my judgment in this subset of procedural fairness, the challenge will inevitably engage the substantive rule as well as procedural unfairness. Once the applicant is through the procedural gateway, the decision has to be set aside and the question of the rationality of the rule is then demonstrably irrelevant. There are many cases which apply the principle of procedural fairness. In the recent case of R (Balajigari) v Secretary of State for the Home Department [2019] EWCA Civ 673; [2019] 1 WLR 4647, the Court of Appeal (Underhill, Hickinbottom and Singh LJJ) held that where the Secretary of State was minded to refuse indefinite leave on the basis of dishonesty, which was likely to be a serious matter, common law procedural fairness required that an indication of that suspicion should be supplied to the applicant to give him an opportunity to respond. Underhill LJ, giving the judgment of the court, stated at para 160: Specifically, we do not believe that it was fair that Mr Kawos should have been expected to give detailed and definitive answers to an accusation of dishonesty without any prior notice. The contrary view seems to us to depend on the assumption that he must have known what the Secretary of State had in mind and should therefore have come prepared to face an interview in which he would have to give a detailed explanation of the original error in order to rebut an allegation of dishonesty; but if he was in fact innocent which is the very question which the Secretary of State had to decide why should he have anticipated any such thing? Another example in the numerous authorities on procedural fairness placed before us is R v Secretary of State for the Home Department, Ex p Fayed [1998] 1 WLR 763 (Lord Woolf MR, Kennedy and Phillips LJJ). Mr Al Fayed and his brother had applied to the Secretary of State for naturalisation as a British citizen. Section 44 of the British Nationality Act 1981 stated that the Secretary of State did not have to give reasons for his decision and his decision was not reviewable in the courts. The Secretary of State made an announcement that the applications were especially difficult and sensitive. Both applications were refused. It was held that procedural fairness applied and that the Secretary of State had to give the applicant an indication of the areas that were causing him concern. Lord Woolf explained that there was a long tradition in administrative law that a person should act fairly before exercising a statutory discretion and that inconvenience to the decision maker was not a bar. This case illustrates the point that the requirements of procedural fairness are affected by issues such as the difficulty for the applicant in identifying the critical matter unless the decision maker gives him some indication as to what it is. Lord Woolf held: I appreciate there is also anxiety as to the administrative burden involved in giving notice of areas of concern. Administrative convenience cannot justify unfairness but I would emphasise that my remarks are limited to cases where an applicant would be in real difficulty in doing himself justice unless the area of concern is identified by notice. In many cases which are less complex than that of the Fayeds the issues may be obvious. If this is the position notice may well be superfluous because what the applicant needs to establish will be clear. If this is the position notice may well not be required. However, in the case of the Fayeds this is not the position because the extensive range of circumstances which could cause the Secretary of State concern mean that it is impractical for them to identify the target at which their representations should be aimed. (p 777) Values served by procedural fairness In R (Osborn) v Parole Board [2014] AC 1115, Lord Reed considered the values served by the requirements about procedural fairness. He mentioned three in particular. The first was that it satisfied a persons intuitive expectations of what a just process involved: The first was described by Lord Hoffmann (ibid) [Secretary of State for the Home Department v AF (No 3) [2010] 2 AC 269, para 72] as the avoidance of the sense of injustice which the person who is the subject of the decision will otherwise feel. I would prefer to consider first the reason for that sense of injustice, namely that justice is intuitively understood to require a procedure which pays due respect to persons whose rights are significantly affected by decisions taken in the exercise of administrative or judicial functions. (para 68) Lord Reeds second point is particularly relevant to this case. Procedural fairness promotes congruence between decision making and the law: The second value is the rule of law. Procedural requirements that decision makers should listen to persons who have something relevant to say promote congruence between the actions of decision makers and the law which should govern their actions: see eg Fuller, The Morality of Law, revised ed (1969), p 81, and Bingham, The Rule of Law (2010), ch 6. (para 71) Lord Reeds third value concerned cost. While it might appear that the cost of providing a person with an oral hearing (not in point here) increases the cost of decision making, that may not be the case if the decision reached is a fairer one: The easy assumption that it is cheaper to decide matters without having to spend time listening to what the persons affected may have to say begs a number of questions. In the context of parole, where the costs of an inaccurate risk assessment may be high (whether the consequence is the continued imprisonment of a prisoner who could safely have been released, or re offending in the community by a prisoner who could not), procedures which involve an immediate cost but contribute to better decision making are in reality less costly than they may appear. (para 72) Procedural fairness is thus an important matter. It makes the law more just and at the same time improves the standards with which decision makers are expected to comply in the 21st century. Substantive unfairness is not in itself a head of judicial review In referring as I do to unfairness, I do not in any way depart from what Lord Carnwath (with whose judgment the other members of this Court agreed) held in R (Gallaher Group Ltd) v Competition and Markets Authority [2019] AC 96, para 41 that substantive unfairness is not a self standing head of judicial review: In summary, procedural unfairness is well established and well understood. Substantive unfairness on the other hand or, in Lord Dyson MRs words whether there has been unfairness on the part of the authority having regard to all the circumstances is not a distinct legal criterion. Nor is it made so by the addition of terms such as conspicuous or abuse of power. Such language adds nothing to the ordinary principles of judicial review, notably in the present context irrationality and legitimate expectation. It is by reference to those principles that cases such as the present must be judged. Lord Sumption made a similar point at para 50 in that case. What does fairness require in this case? Procedural fairness is adaptable to the environment in which it is applied. Procedural unfairness does not entail that the decision maker must comply with a pre designed set of rules. As Lord Mustill held in a very well known passage in R v Secretary of State for the Home Department, Ex p Doody [1994] 1 AC 531, 560, what fairness requires in any particular case will depend on the circumstances and may change over time. Lord Mustill held: What does fairness require in the present case? My Lords, I think it unnecessary to refer by name or to quote from, any of the often cited authorities in which the courts have explained what is essentially an intuitive judgment. They are far too well known. From them, I derive that (1) where an Act of Parliament confers an administrative power there is a presumption that it will be exercised in a manner which is fair in all the circumstances. (2) The standards of fairness are not immutable. They may change with the passage of time, both in the general and in their application to decisions of a particular type. (3) The principles of fairness are not to be applied by rote identically in every situation. What fairness demands is dependent on the context of the decision, and this is to be taken into account in all its aspects. (4) An essential feature of the context is the statute which creates the discretion, as regards both its language and the shape of the legal and administrative system within which the decision is taken. (5) Fairness will very often require that a person who may be adversely affected by the decision will have an opportunity to make representations on his own behalf either before the decision is taken with a view to producing a favourable result; or after it is taken, with a view to procuring its modification; or both. (6) Since the person affected usually cannot make worthwhile representations without knowing what factors may weigh against his interests fairness will very often require that he is informed of the gist of the case which he has to answer. Here what procedural fairness aims to achieve is that a person who, like Mr Pathan, is applying for further leave in order to continue working for his sponsor, and had a valid CoS at the date of his application, should have notice of the communication to the sponsor of the determination of the Secretary of State that the sponsors licence is revoked. Where the Secretary of State has initiated the process for the revocation of the sponsors licence, and revocation is the cause of the invalidation of his application, it is right that the applicant should have that information in order to avert or mitigate the potential fatal blow to his application. This is because, while the applicant can be under no illusion as to the effect of revocation, he is not told in terms that the Secretary of State will take this course without his being informed. In order to give the applicant a meaningful opportunity for the applicant to take averting action if he can, the Secretary of State must give him a further period selected by her (subject of course to any successful challenge to the revocation). The Secretary of State is likely to have to allow three months for a challenge to the revocation in any event and so the reasonable period might be 60 days. Both periods could run together. By the time revocation occurs, an applicant may have no part of their leave left and so he may be relying on the extension to his leave conferred by section 3C of the 1971 Act. But such applicants would have also been expecting to obtain their leave and so it seems to me that the length of the period should be the same for these applicants as it is for those applicants who made their application for Tier 2 (General) leave and continue to have sufficient days remaining to cover the curtailment period. The decision as to the appropriate period will be a matter (subject to any judicial review) for the Secretary of State. It has been represented to us that a shorter period of 28 days would not give the applicant time to find a new sponsor if the new sponsor had to comply with the resident labour market test. Once the Secretary of State has given notice of revocation to Mr Pathan it would be up to him to find out from his original sponsor whether the sponsor proposes to, and does successfully, challenge the revocation. Fairness does not require the Secretary of State to answer questions about that or keep the applicant informed. Averting what I have described as a potential fatal blow to his application may include the applicant seeking to vary his application so that he obtains LTR under the sponsorship of another sponsor; demonstrating that he has other sponsorship to the Secretary of State is but another form of the making of representations to which Lord Mustill refers in his fifth point (point (5)) in the passage which I have set out from Doody. It is not right to say, as Mr Payne submits, that, once his sponsors licence is revoked, his application is doomed and that, because of this, procedural fairness has no role to play and so does not require any steps to be taken. The applicant has a chance (which may be only a small chance) that he may find a new basis for applying for LTR. There is no difficulty in making an application for a variation in these circumstances, as the Upper Tribunal held in Patel [2011] Imm AR 5, para 21. Lord Kerr and Lord Briggs conclude that the duty of fairness extends no further than giving Mr Pathan notice of the revocation. Respectfully, I do not share this view. As De Smith s Judicial Review, 8th ed (2019), states at paras 7 045 and 7 046: 7 045 The Court of Appeal has characterised the principle of natural justice or procedural fairness as requiring that any participant in adversarial proceedings is entitled to know the case which he has to meet and to have a reasonable opportunity to adduce evidence and make submissions in relation to that opposing case. 7 046 Individuals should not be taken unfairly by surprise. In disciplinary and analogous situations, there will often be a further reason why adequate prior notice should be given to the party to be charged to give him the opportunity of offering to resign or (for example) surrender his licence, rather than face the prospect of formal condemnation. The duty to notify also includes the duty to take into consideration any representations made in response to notification. (footnotes omitted) The first sentence of para 7 046 contrast with para 196 of the judgment of Lord Briggs in this matter. In addition, De Smith references at the end of para 7 046 R v North Yorkshire County Council, Ex p M [1989] QB 411. The local authority had failed to disclose to the childs guardian ad litem major changes in the circumstances of the child. Ewbank J held that that the authority had both to notify the guardian of these circumstances and also to listen to the guardians views. For that purpose, the guardian would have to have been given time to formulate views and submit them to the authority. The examples given in para 7 046 of enabling a defendant to disciplinary proceedings to resign or to surrender his licence are interesting examples of situations in which a person should be given the chance not simply to make further representations in the proceedings but also to take steps which are independent of them. There is no case law footnoted as supporting these examples, but the text clearly expresses the view of the learned editors. There is an obvious parallel between those examples and a case such as this where the applicant wishes to find another sponsor so that he can apply to vary his application for Tier 2 (General) leave. Since an applicant is permitted to vary his application, it is moreover foreseeable that an applicant may properly wish to take steps which are not directly related to his then current application. There is no basis therefore why his further pursuit of his application should be disregarded or treated as substantive, as Lord Briggs considers that it should, simply because the original purpose of the application had failed. The PBS will remain a prescriptive scheme, and the requirements of fairness must take that into account. Unless the applicant can produce an alternative basis for LTR, his application will fail. Under the PBS, the Secretary of State will not have to consider statements of intention by the applicant or applications for further extensions of the Secretary of States usual timeframe for dealing with his original application, which will presumably be three months from the date of communication of revocation to allow for challenges by way of judicial review. There will be other cases where fairness does not require the applicant to be informed: obvious examples are where he already knows that there are grounds for revocation and where he is complicit in them. In those circumstances, he already knows that the success of his application is in jeopardy. There is also no need for the Secretary of State to give notice to the applicant if the licence is terminated other than as the result of the Secretary of States actions (see paras 82 to 84 below). Similarly there may be cases where the applicant will be unable to obtain any remedy if the Secretary of State does not give him notice of the revocation, because, for example, it is shown that even if he had had that notice he would still have been unable to find a sponsor (see generally De Smiths Judicial Review, paras 8 065 to 8 072, which cites among other authorities Cinnamond v British Airports Authority [1980] 1 WLR 582, which is cited by Lord Briggs in his judgment in this case. We are also only concerned with a person in the sponsors employment, who is seeking LTR in order to continue working for their sponsor. The Secretary of State has accepted that existing workers are likely to have entered into commitments for which they will need time to sort out their affairs. The difference said to exist between them and migrants like Mr Pathan who, being existing employees of the sponsor, are seeking further LTR is that the latter group is said to have no expectation that their application will be successful. But this somewhat overstates the position. One of the effects of the PBS is that if a person makes an application and calculates that he has the required number of points he will in reality expect his application to succeed. Paragraph 245HD (set out above) states: If the applicant meets these requirements, leave to remain will be granted. Success in obtaining leave under the PBS, as its name suggests, involves earning sufficient points. I have already described the PBS as prescriptive: see para 1 above. By way of further background, under the PBS the Home Office has a large volume of applications each year: Mr Jackson explains that there were about 90,000 applicants in 2016 for Tier 2 leave involving some 28,000 sponsors. The policy aims are very specific: the Home Office has designed Tier 2 around the principle of sponsorship with the sponsor having a specific vacancy that cannot be filled by a resident worker and undertaking certain duties in relation to the applicant. As explained, the applicant is then awarded points for meeting conditions. As Burnett LJ put it in Kaur at [2015] EWCA Civ 13, para 41: 41. The points based system for determining whether to grant leave to enter or remain in the United Kingdom, which applies to students as well as a number of other categories of applicant, is designed to achieve predictability, administrative simplicity and certainty. It does so at the expense of discretion, that is to say it is prescriptive. The consequence is that failure to comply with all its detailed requirements will usually lead to a failure to earn the points in question and thus refusal: see eg Sullivan LJ in Alam v Secretary of State for the Home Department [2012] EWCA Civ 960 at para 44, Davis LJ in Secretary of State for the Home Department v Rodriguez [2014] EWCA Civ 2 at para 100; Sales LJ in EK (Ivory Coast) v Secretary of State for the Home Department [2014] EWCA Civ 1517 at para 28 and Briggs LJ at para 59. It was that important background which informed the decision in EK (Ivory Coast). I have considered with care the whole of the evidence of Mr Jackson. In my judgment, it is unreal to suppose that, as he states, if an applicant who seeks LTR so that he can continue working for his sponsor and puts in an application which is apparently in order when submitted, he is going to put himself in a position where he has no commitments so that he can leave if required to do so. Moreover, if he is kept in ignorance as to his sponsors shortcomings, he will not know about any revocation unless the Secretary of State informs him. There is something deeply unsatisfactory about the Secretary of State being able to take that decision which may have a profound influence on the life of the applicant, without any obligation to tell him. It is after all knowledge which is peculiarly in the Secretary of States possession. The Secretary of State has accepted an obligation to give a window of opportunity to migrant workers who become unemployed when their sponsor loses his licence. It seems to me that fairness demands that the Secretary of State accepts some similar obligation to tell the applicant, who is also an employee of a sponsor, of the revocation to give him too time to sort his affairs out. It is not really an answer to say that his leave had expired. He would have been planning his affairs on the basis that he would be granted a new Tier 2 Migrant visa. He is likely to have engaged the same sort of commitments as other migrant workers of the sponsor. Moreover, employees who have already obtained their Tier 2 leave are allowed to look for other sponsors which suggest that the stated aim of Tier 2 to match migrants to particular vacancies can, as one would expect, equally be satisfied by matching resident labour market shortages to migrants. We are not concerned with a new applicant or an applicant for a new position. It would not be reasonable to expect the Secretary of State to assume that such applicants would have commitments. Lord Kerr, Lady Black and Lord Briggs have reached a different conclusion from me on the question whether the applicant would be entitled to a period of time to amend his application or take other steps if informed that the Secretary of State had revoked his sponsors licence. In my view, the duty of procedural fairness requires the Secretary of State to give a meaningful opportunity to take steps in the light of the information supplied to him. The giving of information to him is largely pointless if this does not happen and the Secretary of State is able to reject his application the very next day as Lord Briggs holds. Likewise the appropriate period of time cannot serendipitously depend on the amount of time which happens to pass in any individual case between the notification by the Secretary of State to the applicant and the rejection of his application, as Lord Kerr and Lady Black hold. However I agree with Lord Kerr and Lady Black that the duty to give notice of a decision to someone who will be adversely affected by it cannot be defined solely by the consideration that it is pointless for that person to make representations with a view to reversing or avoiding the effect of the decision (para 131). That is to confuse the duty with the courts discretion to determine the appropriate remedy. Why the question is not one of substance Singh LJ held that the dispute is about whether the mandatory requirement for a valid CoS is lawful. So put, the question in issue is indeed one of substance but it is not the issue raised by Mr Pathan and for which he was granted leave to bring judicial review proceedings. His case is that the Secretary of State should have given him notice that his sponsors licence was revoked and time to deal with it. In my judgment, and with respect, the distinction between procedure and substance does not justify recharacterising his complaint. Lord Briggs also reaches the conclusion that the issue is one of substance by looking at the reality of the complaint. He calls it a question of substance dressed up as procedure, but I do not read that description as a suggestion that the application was clothed with the label of procedural unfairness but put forward as one of substance, like a wolf in sheeps clothing. Mr Biggs has not sought to challenge either the substantive decision made by the Secretary of State, or the rationality of the rule. Moreover, leave was given for the procedural unfairness argument to be run. As the Venables case [1998] AC 407 (see para 38 above) illustrates, where an applicant relies on procedural fairness, the court looks at the process. It is true that if a decision has been taken and procedural unfairness is found, the decision will be set aside. That may or may not show a defect in the rule. In the present case, the rule that the applicant for Tier 2 must have a valid CoS at the time when the Secretary of State makes his decision on his application, which was the substantive rule identified by Singh LJ, is unaffected by the determination of the procedural unfairness claim in Mr Pathans favour. In other words, that rule is in fact not affected by a conclusion that the process of decision making which involved an omission to give notice as in the Wandsworth case 14 CBNS 180 was unfair. A defect in the decision making process is the hallmark of a procedural dispute. A substantive decision is the decision that determines the application, ie a decision on the merits. As I see it, Mr Pathans case falls within, not beyond, the phrase used by Lord Briggs: the true boundaries of procedural fairness. Question whether rule irrational does not need to be decided Having found that the challenge was one of substantive unfairness Singh LJ went on to conclude that the Tier 2 rules, which meant that Mr Pathan had no time to seek another sponsor, were not irrational. The aim of Tier 2 was to match a migrant to a particular vacancy. The Tier 4 regime was different because the aim was to encourage foreign students to study in the UK. Tier 4 applicants were given notice that their application would fail because the Secretary of State had revoked their sponsors licence. Tier 2 applicants could always renew their application from abroad. In that way they would avoid the risk of criminal liability as an overstayer. Singh LJ considered that the applicant is in a different position from a migrant who is already working for the sponsor. Given that I have found that there was procedural unfairness to a person in Mr Pathans position, these points do not arise on this appeal. Unfairness in this case is not displaced by administrative review or the need not to impose burdens on the executive In my judgment, it is not an answer to Mr Pathans challenge to say that his leave is extended during the administrative review period and for 14 days thereafter. If he wishes to make an application to vary his application for Tier 2 leave because he has a different sponsor, he must do this before his section 3C leave expires. If he makes a variation application before his section 3C leave expires, that application is then automatically merged with his previous application. Making a variation application will hasten the end of his section 3C leave as he will be prevented from continuing with an administrative review if he makes an application for variation. If the applicants section 3C leave comes to an end and no other leave has been put in his place, the applicant becomes an illegal overstayer. Mr Biggs emphasised the hostile environment in which a migrant finds himself if he becomes an illegal overstayer. He may be expelled and prevented from returning to the UK for ten years. Mr Biggs submission to this court is essentially the same that he made in Balajigari, which Underhill LJ helpfully records as follows: 81. Secondly, Mr Biggs relied on the legal consequences for an applicant who remained in the UK without leave, which have been rendered more severe by the so called hostile environment provisions introduced by the Immigration Act 2014. It is, in the first place, a criminal offence to be in the UK without leave to remain: see section 24 of the Immigration Act 1971. As regards practical consequences, a person without leave faces severe restrictions on their right to work (see section 24B of the 1971 Act), to rent accommodation (section 22 of the 2014 Act), to have a bank account (section 40 of the 2014 Act) and to hold a driving licence (sections 97, 97A and 99 of the Road Traffic Act 1988); nor will they be entitled to free treatment from the NHS: section 175 of the National Health Service Act 2006. He submitted that those consequences are bound to have a serious impact on a migrants private life irrespective of any removal action. The Secretary of State recognises that a migrant worker needs 60 days to put his affair in order. It cannot be fair to leave an applicant for LTR who is also working for his sponsor with a shorter period of time. That period may indeed be too short as a new sponsor may have to complete a resident labour market test before issuing him with a CoS, and this may require him to advertise the post twice in order to see if there is a resident worker who would fill the vacancy. I appreciate that the Secretary of State sees the position of the applicant simply as matched to the job vacancy with the original sponsor, but the Secretary of State has also to discharge his duty of procedural fairness to the individual applicant as well. As to imposing burdens on the executive, it is well known that the PBS has been devised to enable the Secretary of State to deal efficiently with the number of cases which Britain attracts. Fairness must take full account of this, but the resultant scheme must not sacrifice fairness in order to achieve efficiency. As Sedley LJ, giving the judgment of the Court, held in R (Refugee Legal Centre) v Secretary of State for the Home Department [2004] EWCA Civ 1481; [2005] 1 WLR 2219, para 8: The choice of an acceptable system is in the first instance a matter for the executive, and in making its choice it is entitled to take into account the perceived political and other imperatives for a speedy turn round of asylum applications. But it is not entitled to sacrifice fairness on the altar of speed and convenience, much less of expediency; and whether it has done so is a question of law for the courts. Where revocation is not the result of the Secretary of States actions Singh LJ considered that Mr Pathans case was analogous to that of Talpada [2018] EWCA Civ 841, mentioned above, but in my judgment that case is distinguishable. The applicants application was for leave to remain as a Tier 2 migrant, and he received a CoS from his employer. Unfortunately, this was a CoS which had been used and so he could not meet the requirement that he should hold a valid CoS. Singh LJ held, at para 62: The reality of the complaint is that, despite what the Immigration Rules require, the respondent should have been prepared to accept something else, namely a COS number which in fact had already been used. That has nothing to do with any duty on the respondent to hear the appellant before taking her decision. In reality it is concerned with a matter of substance, namely whether the requirements in the Rules should be complied with in full or whether the respondent should be prepared to dispense with one of those requirements. In my view, it makes no difference to this analysis to say that the requirement in the Rules is itself concerned with a matter of procedure rather than, for example, whether a person should be granted leave to remain or a work permit. The important point is that this is nothing to do with procedural fairness in the sense outlined above. It is to do with whether a substantive requirement of the rules themselves needs to be complied with in making a relevant application. The officer of the sponsor company who had spoken to an official at the Home Office thought she had got permission to assign a previously used CoS. The Court of Appeal did not accept that there had been unfairness because the reason why the appellant had no valid CoS was not in the system provided by the Home Office. It was due to an error made by the officer of the sponsor company. Likewise, in EK (Ivory Coast) v Secretary of State for the Home Department [2014] EWCA Civ 1517; [2015] INLR 287, the Court of Appeal (Sales and Briggs LJJ; Floyd LJ dissenting) rejected an argument that the Secretary of State should have allowed a Tier 4 applicant further time when her college withdrew sponsorship from her by mistake. Another case where the cause of the failure of the application could not be attributed to the actions of the Secretary of State was R (Raza) v Secretary of State for the Home Department [2016] EWCA Civ 36; [2016] Imm AR 682, where the applicants sponsors licence was withdrawn but the Court of Appeal (Arden, Beatson and Christopher Clarke LJJ) rejected his claim for judicial review as he was already an overstayer when he made his application. Making an application from abroad In his judgment, Singh LJ accepted the Secretary of States argument that a person in Mr Pathans position could always return to their own country and make an application from there. But that course of action may be unreal if the migrant has financial commitments through having already worked for the sponsor. If the applicant went abroad and applied from another country, he would have to pay another fee. Procedural fairness does not of course apply any differently because of this. If the applicant is entitled to receive notification from the Secretary of State that his sponsors licence has been revoked, and if he is then able to apply for a variation of his application for leave, he will not incur that fee. Should this Court rule on the question whether the basis of the Upper Tribunals decision in Patel was unsound? As I have explained, Singh LJ said that he had considerable reservations about the decision of the Upper Tribunal (Blake J, President, and Batiste SIJ) in Patel, which concerned Tier 4 migrants, but he did not consider that the Court of Appeal in this case should overrule it because the Secretary of State had not appealed in that case and the submissions made in Raza to the effect that Patel was wrongly decided had been rejected, albeit obiter. Coulson LJ also expressed his concerns about this decision. As previously explained, this Court is not asked to overrule Patel. Singh LJs concerns arose from observations in Patel about equal treatment. What the tribunal had held in its decision under appeal in Patel to the Upper Tribunal was that the students should have leave but in error did not limit the leave to 60 days leave. One of the reasons of the Upper Tribunal for allowing the appeal was that the students in that case should be treated as other students were. Singh LJ held that as the law stands equal treatment was not as a self standing head of unfairness. However, as I read the decision, the reference to equal treatment was only one basis for the decision. Fairness in that case required 60 days to be given to all students of colleges whose licences the Secretary of State took steps to revoke. The point which the Upper Tribunal was making was that the same 60 days should be given to all Tier 4 applicants even if they did not have 60 days leave left. In the second half of para 23 and in para 24, the Upper Tribunal decided the case on the basis of fairness alone: 23. Although we accept that there is no such policy for refusal cases, fairness requires that such cases be treated in broadly the same way. The applicant must be given an equal opportunity before refusal of application to amend it in the way we have described. This was clearly not done in this case. The Home Office knew that it had suspended the college in January 2010 but no one else did. The applicant could not have known that subsequently the colleges status as an approved sponsor was revoked before his application for an extension of stay was decided. 24. It is obviously unfair for the Secretary of State to revoke the colleges status after the application has been made when it was an approved sponsor and not to inform the applicant of such revocation and not afford him an opportunity to vary the application. Moreover, the Secretary of State in that case had accepted that there was procedural unfairness to that extent. Furthermore, the reality is that the question whether equal treatment was part of the basis for the decision is academic because, as Mr Jackson explains, the Secretary of State accepts (and did accept before the decision in Patel) that as a matter of procedural fairness notice of withdrawal of the licence for their college should in general be given to applicants for Tier 4 leave, and the effect of the decision has been absorbed in the Secretary of States revised practices as regards Tier 4 applications. That was a proper and sensible decision for the Secretary of State to take. In my judgment, it is sufficient to explain Patel as I have done, and I do not consider that this Court should indicate that the basis of the decision in Patel so explained was unsound. I have not had to rely on Patel in reaching my conclusions in this judgment, which of course concerns a different tier of leave for migrants. Lord Wilsons judgment Since preparing this judgment, I have had the privilege of reading in draft the judgment of Lord Wilson, with which I completely agree. Conclusion For the reasons and to the extent summarised in para 6 above I would allow the appeal. LORD KERR AND LADY BLACK: Mr Pathan was granted leave to enter the United Kingdom as the dependant partner of a Tier 4 (general) student on 7 September 2009 with leave to remain until 31 December 2012 (later extended until 30 April 2014). Before the latter date arrived, Mr Pathan applied for and was granted leave to remain as a Tier 2 (general) migrant from 23 March 2013 until 15 October 2015. This was so that he could be employed by a company known as Submania Ltd as a business development manager. The period between March 2013 and October 2015 is known as the period of leave. Before the period of leave was due to expire in October 2015, Mr Pathan applied, on 2 September 2015, for further leave to remain in order to continue to work for Submania in the same capacity as before. The application was made on the basis that he would retain his Tier 2 status. It was made within the time allowed and it was in correct form. His wife and child were named as dependants in the application. It was supported by a certificate of sponsorship (CoS) issued by Submania. Mr Pathans application was put on hold while a Sponsor Compliance Team of the Home Office investigated Submania. As a result of their investigations, Submanias sponsor licence was suspended on 4 February 2016. The licence was subsequently revoked on 7 March 2016. This had the automatic effect of invalidating Mr Pathans CoS. Although, as seen below in para 101, his leave was automatically extended until the Secretary of State considered his individual case, he had no opportunity to take steps to deal with the impending, inevitable determination of his application. Mr Pathan was not informed of the revocation until 7 June 2016. He was therefore unaware of the impact that the decision would have on his status until three months after it had been taken. Mr Pathan applied for judicial review. The nature of the judicial challenge has been the subject of, if not dispute, at least discussion, in the Upper Tribunal (Immigration and Asylum Chamber) (the UT) and in the Court of Appeal. The UT judge who dismissed Mr Pathans judicial review claim characterised the issue in this way at [2017] UKUT 369 (IAC), para 2: Whether an immigration applicant who has applied . for leave to remain under the Tier 2 (General) Migrant Category of the Immigration Rules and has submitted a Certificate of Sponsorship from their sponsoring employer which is valid at the time the application is made is entitled to challenge the respondents decision not to provide [him] with a period of 60 days in which to secure an alternative sponsor, in circumstances where the sponsors Tier 2 Licence was revoked . On the appeal by Mr Pathan from the UT judges dismissal of his claim, it became clear that this formulation went further than the case which the appellants wished to advance. In the course of the hearing before the Court of Appeal ([2018] EWCA Civ 2103; [2018] 4 WLR 161, Sir Andrew McFarlane P, Singh and Coulson LLJ) the issue was framed thus by Singh LJ (who delivered the principal judgment with which McFarlane P and Coulson LJ agreed), at para 5: [the appellants] contend that they were entitled to notice of the fact that the sponsors licence had been revoked and a reasonable opportunity (not necessarily 60 days) to re arrange their affairs, not necessarily to find an alternative sponsor but potentially to do other things, including making an application to the Secretary of State on an alternative basis, for example on human rights grounds or to ask for the exercise of his residual discretion, or even to leave the United Kingdom voluntarily without the risks associated with being found to have been staying here after their leave to remain had expired. (para 5) (there was another appellant besides Mr Pathan who was in a broadly similar situation as he but who plays no part in the appeal to this court.) The difference in the two formulations is significant. As articulated or refined in the Court of Appeal, Mr Pathans case does not specify that he was entitled to a particular defined period between becoming aware of the revocation of the licence and the final decision on his migrant status, the new formulation being that he was entitled to a reasonable period. And the purpose of the time sought is no longer confined to obtaining an alternative sponsor. His case can be seen to have two elements. The primary case that he advances is that he should have been given notice of the revocation when that occurred. The second element is that he should have had a reasonable period thereafter to rearrange his affairs in response to that. If Mr Pathan had been given notice of the revocation of his sponsors licence, a number of options would have opened for him: (i) he could have sought to vary his leave application, other than by making a human rights or asylum claim (eg by making an application relying on a new CoS from a different employer); (ii) he could have made an application to vary the terms on which he was entitled to remain so as to rely on human rights grounds; (iii) he could have made practical plans to remove himself, his wife and his child from the United Kingdom to his native India, thereby avoiding the prospect of their becoming overstayers, with all the negative consequences which that entailed; and (iv) he could have decided to take no steps until formally notified by the Secretary of State that his leave to remain was refused. The possible advantages of early notification By section 3C of the Immigration Act 1971, when a person applies for variation of his leave to remain before that leave expires, if it then expires before a decision is taken, the leave is automatically extended to the point at which the appropriate period for appealing a refusal comes to an end. By virtue of subsection (2), the existing leave will be extended during any period when (a) the application is neither decided nor withdrawn; or (b), if the application has been decided and there is a right of appeal against that decision, an appeal could be brought; or (c), if an appeal has been brought, that appeal is pending, or (d), an administrative review of the decision could be sought or is pending. None of these options was realistically open to Mr Pathan because the first he knew of the problem with his application was when he received the Secretary of States letter of 7 June 2016 refusing it. Before this was communicated to him, Mr Pathan had no occasion to seek leave to remain other than on foot of what he believed was a valid CoS. Although his leave had been extended (by operation of section 3C) while the Secretary of State considered his application, because he was unaware of the virtually certain outcome of that consideration, Mr Pathan took no steps to deal with that inevitability. Why would he? He simply did not know what lay ahead. But what unavoidably lay ahead, while his application for leave to remain depended on a CoS which was of no value, was the end of his leave to remain, as from the conclusion of the administrative review period following refusal of his application. If he had known that this was inevitable, Mr Pathan could have applied to vary the application. Even if the variation constituted a significant departure from the original application, it is recognised as a variation for the purposes of section 3C of the 1971 Act, so long as the original application for leave had not been determined: paragraph 34BB of the Immigration Rules, section 3C(5), and JH (Zimbabwe) v Secretary of State for the Home Department [2009] EWCA Civ 78; [2009] Imm AR 3, para 40. Section 3C(5) has the effect that any new application made by the migrant during the currency of a variation application (VA1), operates as a variation of VA1. If, therefore, the new application succeeds, it is tantamount to VA1 succeeding. This can be regarded as akin to the conventional procedural fairness situation of an applicant being allowed to make further submissions with a view to improving the chances of his application succeeding. As Lord Briggs has said in para 170, in appropriate cases, the rules of natural justice may require a party to be afforded time to amend his case in a way that cures an otherwise fatal defect of which he had, without fault on his part, previously been unaware. Whether this is required is, as Lord Briggs says, heavily context specific, but the question quite obviously arises for consideration where the circumstances are as they were in the present case. A real and distinct advantage would have accrued to Mr Pathan if he had been notified of the revocation of his sponsors licence as soon as that had taken place and rejection of his Tier 2 application occurred some time later. Between those two dates, all of the options adumbrated in para 100 above and explored in paras 113 and 114 below) would have become available. Crucially for present purposes, he would have become aware of the need to vary under section 3C. By contrast, if someone in his position is notified of the revocation of his sponsors licence at the time that it is revoked and his application for a Tier 2 licence is rejected at the same time, that range of options is not available to him. Applying for administrative review is the only course. It was not suggested by the respondent that it was necessary that the revocation and the rejection of the Tier 2 application take place concurrently. Indeed, Mr Pathans case demonstrates that it was not. It was perfectly possible to inform him at the time of revocation and, as appears to be the practice, to consider his application on its merits in due time. The proper discharge of a duty to act in a procedurally fair way recognises the advantage that comes of having notice of a fundamental difficulty in the way of the original application, so that steps can be taken to allow it to be adjusted. Underpinning the duty to act fairly in this context is the notion that a person such as Mr Pathan should be afforded as much opportunity as reasonably possible to accommodate and deal with a decision which potentially has devastating consequences. One only has to envisage how Mr Pathan must have reacted to the news that his Tier 2 application had been rejected because of the revocation of Submanias licence, to understand the fundamental justice in giving him the chance to do something about it. He had every reason to believe that his application would succeed. The reason that it did not had nothing whatever to do with him. But, failure in the application represented a calamitous upheaval for him and his family. To ensure in those circumstances that he had timely notice that, for wholly unanticipated reason his application was bound to fail, so that he could seek to avoid its consequences seems to us to be a self evident aspect of the duty to act fairly. That is not to say that the Secretary of State should be fixed with a positive duty to provide Mr Pathan with that opportunity, much less that he should have allocated a specific period (not already available under the Rules/legislation) within which it might be exploited. The duty to act fairly in these circumstances involves a duty not to deprive, not an obligation to create. It appears to us that requiring of the Secretary of State that he or she should supply a period of time for someone such as Mr Pathan during which to deal with the decision would be to impose a positive duty, and, importantly, a duty that would involve an extra extension of leave beyond that expressly set out in the legislation/Rules. Such an extension is a matter of substance. In contrast, there is nothing incompatible with the legislation or the Rules in allowing the affected person to know, as soon as may be, of the circumstances which imperil their application, so that they may make use of whatever time remains to them under those provisions. This does not confer a substantive benefit. It may be properly characterised as a procedural duty to act fairly. It is not a duty to bestow. It is an obligation not to deprive. Expressed in another way, the Secretary of State did not incur an obligation to give someone such as Mr Pathan an extra period of grace beyond that provided for in the legislation and the Rules but fairness required that she/he did not take steps to frustrate or circumscribe the period during which action might have been taken if timely notice of the revocation of the licence had been given. Thus, the duty to act procedurally fairly comprehends an obligation to tell somebody such as Mr Pathan immediately about circumstances which doomed his current application so that he could avail of the full period which would then have become available to allow him to do something about it. It follows that to contrive to ensure that Mr Pathan was informed of the revocation of Submanias licence at the same time that he was told that his application to renew his Tier 2 status was refused would be procedurally unfair. These decisions are, naturally and conventionally, taken sequentially. To compress them in order to reduce the time available in which to seek to avoid their impact would obviously be procedurally unfair. That is not to say that a decision to revoke a CoS, communicated at the same time as a refusal of an application to renew a Tier 2 status will inevitably and invariably be unfair. Exigencies, as yet unforeseen, may make such a convergence of decisions and their coincident communication unavoidable. It is only where the coincidence of communication of both has been contrived in order purposely to deprive an affected person of the period between learning of the revocation of the CoS and the refusal of the application that procedural unfairness would arise. That theoretical case has nothing to do with the present appeal, however. Here, there was time between the revocation of the sponsors licence and the determination of Mr Pathans application, during which he could have sought to do something about the changed circumstances, but the Secretary of State did not provide him with information about the revocation of the CoS which would have opened that door for him. True it may be, as Lord Briggs states in para 148, that there is no evidence that the Secretary of State decided deliberately [to] keep Mr Pathan in the dark about the revocation of his sponsors licence, or subject him to some kind of ambush. But what the Secretary of State neglected to do was something that lay squarely within her power, namely, to let Mr Pathan know, as soon as the decision on revocation of the licence was made, that the entire basis of his application was undermined. It might be suggested that this too would involve the imposition of a positive duty and the correlative conferral of a substantive benefit. It does not. This is information which he would have had to be given. A decision that it should have been communicated at the time that revocation occurred involves no more than the assertion of a fair procedure. A window would have existed for Mr Pathan, therefore, if he had learned timeously of the revocation of Submanias sponsor licence and before the Secretary of States determination of his application for leave to remain. One way in which he might have used this would have been to apply for a new Tier 2 (general) migrant visa with a new CoS from a new employer. Another was to apply for a variation of leave on the basis of a human rights claim. Even if this was initially rejected, Mr Pathan could have appealed under sections 82(1)(b) and 92 of the Nationality, Immigration and Asylum Act 2002. His leave to remain in the United Kingdom would thereby be extended for: (a) the first 14 day period during which such an appeal may be brought: section 3C(2)(b) of the 1971 Act; and (b) the period during which any such appeal remained pending: section 3C(2)(c) of the 1971 Act; section104 of the 2002 Act. A further option available to Mr Pathan if he had been notified of the revocation of Submanias sponsorship licence was that he could have used the extra time which this afforded him to arrange his affairs so as to make an orderly return for himself and his family to India. The benefit of doing so would have been that he could have avoided the effect on him and his family of becoming overstayers. Acquiring the status of an overstayer carries a number of potentially serious adverse consequences. The consequences of being an overstayer There are two types of effect of becoming an overstayer: immediate and long term. If one is knowingly an overstayer, one automatically commits an offence under section 24(1)(b) of the 1971 Act and becomes liable to imprisonment for a term of up to six months or a fine. Overstaying also tips a person into the Home Offices hostile environment. Since July 2016 it has been illegal for an overstayer to be in employment. That prohibition remains in place even after an overstayer has applied for a visa extension. It persists until (and if) they are granted leave to remain. Overstayers may find it difficult to rent accommodation and may be prevented from driving. Long term consequences may be even more serious. The Home Office would not normally accept an immigration application from an overstayer unless, as was the law in force before November 2016, an overstayers application is made within 28 days of the applicants leave expiring see policy paper, statement of changes to the Immigration Rules HC194, June 2012, and paragraphs 245CD(i) and 245HD(p) of the Rules. (The period of 28 days was reduced to 14 days by Statement of Changes HC 667. This came into force on 24 November 2016.) Individuals who overstay for longer periods may be subject to a re entry ban under rule 320(7B) of the Rules, preventing them from returning to the UK for between 12 months and ten years depending on the particular circumstances. There will be no re entry ban if the person overstayed for less than 90 days and left the UK voluntarily and not at the expense of the Secretary of State. The table below summarises the various consequences: Overstay period If overstay for 28 days or less If overstayed for 90 days or less If overstayed for more than 90 days If overstayed for any period Other circumstances and left UK voluntarily not at expense of Home Office and left UK voluntarily not at expense of the Home Office and left UK voluntarily at expense of Home Office within six months of being given removal notice or within six months of exhausting appeal or administrative review process and left UK voluntarily at expense of Home Office OR was removed from the UK as a condition of a caution If overstayed for any period If removed or deported from the UK OR used deception in an application for entry clearance Consequence No effect No mandatory ban 1 year ban 2 year ban 5 year ban 10 year ban The duty of procedural fairness: the issue of pointlessness We should supplement what we have said already about the duty of procedural fairness by considering a particular question that arises in relation to it. When an administrative body is contemplating a decision which will adversely affect an individual, does the duty to act in a procedurally fair way require the body to inform the individual even though any representations that he or she might make will not affect the outcome? Or, to put it in other words, is the duty to act fairly by giving notice of an impending adverse decision dependent on the existence of the possibility of submissions by the person affected bringing about a change of mind by the decision maker? Before addressing that question, it should be pointed out that the scope of inquiry into the duty to act fairly cannot be confined, in every instance, to circumstances in which the affected person aspires to change the decision makers mind on the precise decision made. Where notice of the decision might prompt a change of direction which would achieve the aim of the person, albeit by a different route, there is an active inquiry to be had as to whether the duty is activated. There is ample authority on the issue of whether the duty to afford the opportunity to make representations arises where any such representations are bound to fail. Thus, as Lord Briggs has pointed out, in Cinnamond v British Airports Authority [1980] 1 WLR 582, 593, it was said that no one could complain of not being given an opportunity to make representations if it would have achieved nothing. A somewhat similar view was expressed in Bank Mellat v HM Treasury (No 2) [2014] AC 700, para 179 in the passage from Lord Neuberger of Abbotsburys judgment cited by Lord Briggs at para 161 below. (It is noteworthy, however, that in that passage Lord Neuberger was at pains to point out that any argument advanced in support of pointlessness should be very closely examined, as a court will be slow to hold that there is no obligation to give the opportunity, when such an obligation is not dispensed with in the relevant statute.) Pointlessness can have two dimensions. The first is that there is no possibility of bringing about a change of mind on the part of the authority on the terms of the decision that has been made. So, for instance, in the present case, Mr Pathans application, so long as it was based on a CoS issued by a company which had ceased to have authority to issue such a certificate, could not succeed in any circumstances. The second dimension is different. It involves an examination of whether, on becoming aware of the decision, there was simply nothing that the affected person could do to achieve his aim. In other words, there was no other avenue which he or she could explore to avoid the impact of the adverse decision. We are here concerned with the second dimension, and it will already be apparent that, in our view, it cannot be said that, even if notified promptly, Mr Pathan would still have been without avenues to pursue in an attempt to alter the outcome of the decision making process. We have outlined above the various options which we believe would have been open to Mr Pathan if he had been alerted earlier to the decision to cancel Submanias sponsor licence. Before turning again to those options, it is necessary to say something of the nature of the duty to act fairly in the context of bringing to the attention of an individual at the earliest time reasonably possible a decision in relation to revocation of the sponsor licence which is likely to affect him or her adversely. In Cinnamond the pointlessness argument was put starkly. Lord Neubergers exposition of it in Bank Mellat (No 2) was more muted. The argument needs to be viewed, however, in the context of other judicial pronouncements where a less stringent view of the requirements of the utility of notice can be discerned. In Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28; [2010] 2 AC 269, para 72, Lord Hoffmann noted that the purpose of the audi alteram partem rule is not merely to improve the chances of the tribunal reaching the right decision but to avoid the subjective sense of injustice which an accused may feel if he knows that the tribunal relied upon material of which he was not told. And in R (Osborn) v Parole Board [2013] UKSC 61; [2014] AC 1115, para 68, Lord Reed endorsed a normative understanding of the duty to act procedurally fairly: [J]ustice is intuitively understood to require a procedure which pays due respect to persons whose rights are significantly affected by decisions taken in the exercise of administrative or judicial functions. Respect entails that such persons ought to be able to participate in the procedure by which the decision is made, provided they have something to say which is relevant to the decision to be taken. As Jeremy Waldron has written (How Law Protects Dignity [2012] CLJ 200, 210): Applying a norm to a human individual is not like deciding what to do about a rabid animal or a dilapidated house. It involves paying attention to a point of view and respecting the personality of the entity one is dealing with. As such it embodies a crucial dignitarian idea respecting the dignity of those to whom the norms are applied as beings capable of explaining themselves. In their work Administrative Law: Text and Materials, 5th ed (2016), Elliott and Varuhas at para 10.2.5 discuss this passage from Lord Reeds judgment: Referring to the dictum from R v The Chancellor of Cambridge (1723) 1 Stra 557 set out at 10.1, concerning Gods willingness to grant Adam a hearing, Lord Reed continued (at para 69): The point is that Adam was allowed a hearing notwithstanding that God, being omniscient, did not require to hear him in order to improve the quality of His decision making. On this view, the notion of procedural fairness which would make no difference becomes a contradiction in terms, since it rests on an exclusively outcomes oriented view which overlooks the much wider role played by procedural fairness in an administrative state that seeks to build constructive relationships between individuals and public bodies by casting the former as participants in the process of governance. These statements do not, of course, relate directly to Mr Pathans case. But they serve as a useful reminder that utility is not the only yardstick by which to measure the duty to act fairly in communicating to an individual why (and more relevantly in this case when) a decision adverse to their interests has been or is to be taken. It cannot have been lost on those who were involved in the decision in this case that it would have a significant impact on Mr Pathan and his family. The duty to inform him at the earliest reasonable opportunity that this effect was due to accrue seems to us to be obvious. Not only should those concerned with the decision have been aware that Mr Pathan and his family would experience a major disruption to their lives, they must also have been alive to the likelihood that he would want to do something to mitigate the effects of the decision. This reinforces the need to inform him timeously. Of course, as Lord Briggs has said (in para 146 below), the rules provide for a very short time between notification of the decision to reject the Tier 2 application and the requirement to leave the United Kingdom. As Lord Briggs put it, the tight timetable is the consequence of the rules. But the rules are not necessarily comprehensive of the duty to act in a procedurally fair way. They do not inhibit release of information when that can be first provided. True it may be that Mr Pathan would have been taken as much by surprise if he had been notified immediately of the revocation of his sponsors licence as he was when told of it three months later but he would have had a longer period in which to do something about it if he had been told on the earlier date. At para 10.3.2 of their work, Elliott and Varuhas, referring to cases such as Al Rawi v Security Service [2011] UKSC 34; [2012] 1 AC 531 and R (B) v Westminster Magistrates Court [2014] UKSC 59; [2015] AC 1195, suggest that the courts have generally taken the view that unless primary legislation so provides (either explicitly or, as in Bank Mellat v HM Treasury (No 1) [2013] UKSC 38; [2014] AC 700, by necessarily implication), they may not adopt procedures enabling them to take account of evidence to which one of the parties is denied access. This approach they describe as the principle of open justice to which, they say, the common law has a strong commitment. This is not a case of denying Mr Pathan access to evidence relating to the cancellation of Submanias sponsorship licence, nor even to the material which led to the rejection of his Tier 2 application. But, in a telling passage (also at para 10.3.2) Elliott and Varuhas continue: The open justice principle finds its analogue in the administrative context in the duty to give notice. At its lowest, this means that individuals must know that a matter liable to affect them is going to be decided before any final decision is taken. As Lord Sumption put it in Bank Mellat v HM Treasury (No 2) [2013] UKSC 39; [2014] AC 700, at para 29: The duty to give advance notice and an opportunity to be heard to a person against whom a draconian statutory power is to be exercised is one of the oldest principles of what would now be called public law. We freely acknowledge that these observations were made with a different context in mind from that of the present case. The decision to refuse Mr Pathans application was, in a sense, preordained by the Immigration Rules. By contrast, Elliott and Varuhas were discussing circumstances where the decision was at large. The outcome depended on a weighing of evidence. One can readily see how, in such a situation, the person to be affected should be given notice of the prospect of a decision so as to be able to contribute evidence which might influence the outcome. But, if I should be given notice of the prospect of a decision which I might be able to influence by the production of evidence, should I not be given notice of that prospect when I might take steps to avoid its impact on me? Discussion We are of the view that the duty to give notice of a decision to someone who will be adversely affected by it cannot be defined solely by the consideration that it is pointless for that person to make representations with a view to reversing or avoiding the effect of the decision. The duty to give notice is an accepted element of the duty to act fairly. Three months elapsed between Submanias sponsors licence being revoked and the refusal of Mr Pathans application. It cannot be suggested that informing him promptly of the revocation of the licence when it had been cancelled would not have made a difference. The options that would have become available to Mr Pathan have been discussed at paras 100 to 105 and 113 to 114 above. To have the three months extra in which to explore those options that prompt notification would have afforded him would have made a difference. That conclusion does not rest on any estimate of his likely success in pursuing any of the chances that opened up for him. Nor does it depend on a view as to whether he would have sought to follow up on any of them. The cornerstone here is procedural fairness. What was the fair thing to do, procedurally? In our judgment, it was to tell Mr Pathan as soon as reasonably possible after the cancellation of Submanias licence that this had happened. He would then have known that his application in its current form was bound to fail. He could then have tried to get a different sponsor. Lord Briggs has pointed out (in para 151) that Mr Pathan did make a second Tier 2 application after finding a new sponsoring employer and that he made two applications based on human rights grounds all of which failed. This is true. It is also true that their failure was not due to the fact that Mr Pathan had become an overstayer. But, simply because, in the event, the applications were unsuccessful, does not mean that the withholding of the information was fair. It is not possible to know, now, what would have happened had Mr Pathan had the additional time that a timely notification would have afforded him. To take an obvious example, he might have had different opportunities to find an acceptable sponsor which would have enabled him to put in an application on that basis before his original application was determined against him in light of the withdrawal of Submanias licence. Furthermore, the fairness of withholding the information is not to be judged on an ex post facto basis. At the time when it was first possible to inform Mr Pathan of the cancellation of Submanias licence, there was no means of knowing whether he would have been able to obtain a new, acceptable sponsor. But, this is the time that the fairness of withholding the information falls to be judged. If it was not fair then, it cannot be converted to a condition of fairness because of Mr Pathans subsequent failure to put forward an employer who could have provided a CoS acceptable to the Home Office. Quite apart from these considerations, failing to tell Mr Pathan at the time that Submanias licence was cancelled meant that his acquisition of the status of overstayer was accelerated with all the adverse consequences which that entailed. To deny him the greater opportunity to avoid those consequences was in itself unfair. Again, that conclusion does not depend on any judgment as to whether he would have sought to avoid that outcome. Whether he would or not, to deprive him of the chance was unfair. We have concluded, therefore, that the failure to inform Mr Pathan promptly of the revocation of Submanias licence constituted procedural unfairness. It is not a species of the audi alteram partem rule in the classic meaning of that rubric. This was not a case of the Home Office making sure that Mr Pathan had a chance to make representations to it about the correctness of its decision to reject his application as originally formulated. Rather, it is an instance of his being deprived of the enlarged period that timeous information would have provided, during which he might have been able to vary his existing application so as to put it into a form that could succeed. There is, however, no material difference between these two situations. Furthermore, in principle, it can be just as unfair, procedurally, to restrict a persons opportunity to take steps to avoid the effect of the decision as it would be to deny him the opportunity to make representations. The objective of the person affected is the same in both scenarios. It is to avoid the adverse consequences of an unfavourable decision. We must turn then to the debate as to whether the duty to act fairly by providing the information promptly is procedural or substantive. At para 178, Lord Briggs says that time for the applicant to put his best case forward on the facts already available may be procedural, but time to change or improve the underlying facts to make them more favourable is substantive. We acknowledge the force of this argument and its initial attractiveness. But we cannot agree with it. A distinction must be drawn between the duty to act in a procedurally fair way and the use which the beneficiary of the discharge of that duty will avail of it. Leaving aside the pointlessness argument, it is generally accepted that the duty to give a person affected by an adverse decision the opportunity to make representations is procedural. If, by making the representations, the affected person secures a change of mind by the decision maker, the favourable result may be regarded as a substantive benefit. The procedural duty to act fairly by giving the opportunity to make representations exists whether or not that opportunity is availed of. Likewise, in the case of the duty to provide relevant information promptly. In both cases the agency responsible acts in contemplation that the person affected will take a particular course to avoid the impact of the decision and that it is fair that he or she should have the chance to do so. This is what underpins the duty. If the opportunity is taken and a different outcome is obtained, that can be regarded as a substantive benefit. But it does not make the duty to inform or to allow representations to be made any less of a procedural duty. It can be argued that the making of submissions on the decision to be taken is integral to the decision making process, whereas the opportunity to avoid the effect of an adverse outcome by taking a course not directly connected to that process is not. But why should this make a difference to the characterisation of the duty? Again, the notion of what is fair holds the key. If there is a duty to allow representations to be made for the purpose of bringing about a result favourable to the representor, why should it not also be fair to allow the affected person to have the chance by a different means to secure that outcome? In both cases the duty to act fairly involves allowing the opportunity to influence the result. And in both cases, in our opinion, the duty is properly to be regarded as a procedural duty. The answer to this difficult issue lies, we believe, in maintaining a strict segregation between the procedural duty to act fairly at the time when the decision is taken or is imminent and the steps which a person affected might take to achieve a different result. Once the opportunity to make submissions or the chance to take different steps has been provided, the procedural duty has been fulfilled. To deny the chance to make submissions or to fail to inform promptly involves breach of that duty. By contrast, an obligation positively to confer a particular period of grace during which to take action would, as we have explained at para 108 above, amount to the imposition of a substantive rather than a procedural duty. Essentially, the procedural duty extended to the maintaining of a fair procedure. Telling Mr Pathan at the earliest reasonable opportunity that his sponsors licence had been cancelled preserved the fairness of that procedure. Giving him an allotted time thereafter in which to take action would involve a modification of the processes laid down by the Rules and the legislation, rather than conducing to the intrinsic fairness of the stipulated procedure. As Lord Briggs says in para 186, the provisions in the Rules and the legislation which define when migrants have permission to remain, and when they become overstayers are matters of substance implementing immigration policy. Conclusion We would therefore allow the appeal on the basis that the failure promptly to inform Mr Pathan of the cancellation of Submanias licence was a breach of the respondents procedural duty. We would hold, however, that the Secretary of State was not under an obligation to allow him a particular period within which to make an alternative application. Postscript We consider that it is necessary, in a case where all members of the court have provided judgments, to identify the core of the decision of the court. Here, it consists in (1) the decision that the appeal must be allowed (as agreed by us in our joint judgment and by Lord Wilson and Lady Arden in their respective judgments, albeit that there are differences of reasoning), (2) the determination (agreed by at least four members of the court) that there was a duty on the Secretary of State to notify Mr Pathan promptly of the revocation of his sponsors licence, it being procedurally unfair not to do so, and (3) the determination (agreed by us and Lord Briggs) that there is no positive obligation on the Secretary of State to provide a period of time following notification to enable an applicant to make an alternative application or otherwise to react to the revocation of the sponsors licence. LORD BRIGGS: (dissenting) Although I broadly agree with Lord Kerrs and Lady Blacks analysis of this difficult case, I would nonetheless have dismissed this appeal. It is best therefore that I set out my reasons in full. Overview In summary, when the considerable complexity is properly analysed, Mr Pathans entirely understandable perception that he has been treated harshly does not amount to a basis for quashing the rejection of his Tier 2 application on the grounds of procedural unfairness. For the reasons given by Lord Kerr I am inclined to agree that it was procedurally unfair for the Secretary of State not promptly to inform Mr Pathan of the revocation of his sponsors licence rather than, as actually happened, to delay informing him of that important event for three months. But his real grievance is not simply that he should have been informed more quickly than he was. Rather it is that, once his application became bound to fail because of the revocation of his sponsors licence, the Secretary of State should have given him more time after notification of it than allowed by the rules to make alternative arrangements, either to extend his leave to remain by other means (including an amendment of his application) or to bring it to an orderly end, before he and his family incurred the very real disabilities of becoming overstayers. He says that time should have been given to him, as it is given under current departmental policy to Tier 4 students in a similar predicament, by extending the life of his original Tier 2 application after he had been told of the revocation of his sponsors licence, so that he could pursue those arrangements under the protection of the extended leave to remain afforded by his pending Tier 2 application. Many would agree with Mr Pathan that the time to make alternative arrangements, given by the Rules to a Tier 2 applicant who is taken completely by surprise by the rejection of his application, is very short indeed and that it would often be impracticable for him for example to find a new sponsor, or even to pack up and leave the UK, before becoming an overstayer. But that is what the Rules provide for a person in his position. No direct attack is made upon the Rules in these proceedings. But it is said that the discretionary grant of an extended period, say 60 days, after notification of the revocation and before the refusal of his original application would provide the necessary extended time to remain lawfully for him to have a fair chance to make those arrangements. But the tight timetable is the consequence of the Rules, which make no more lenient provision for a person taken by surprise by the rejection of a Tier 2 application than they do for any other unsuccessful applicant for extended leave to remain. Applicants for leave to remain under the PBS system are quite frequently taken by surprise when their application fails, but thus far (subject to two exceptions referred to below) the courts have not treated being taken by surprise as a reason for requiring the Secretary of State to find some discretionary way of giving them some means, outside the Rules, to achieve a recovery of their position, or an extension of their leave to remain, before becoming an overstayer. It was not irrational or Wednesbury unreasonable (see Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223) for the Secretary of State to decline to exercise such a discretion in this case, by giving advance notice of the impending failure of Mr Pathans application. Even if under a fairness duty to give prompt notice of the revocation of his sponsors licence, she could, for example, lawfully have notified him of the revocation on the day it happened, and rejected his Tier 2 application on the same or the following day. There is therefore no basis upon which her not giving him time can be subjected to judicial review. The fact that the Secretary of State provides just that kind of relief to Tier 4 students in a similar situation does not enable a Tier 2 migrant to complain by way of judicial review about being treated differently, because the two classes of permitted immigration are there for different political and economic reasons. Analysis It is necessary to begin by dispelling some myths which have arisen from the way in which this appeal has been presented. The Secretary of State did not deliberately keep Mr Pathan in the dark about the revocation of his sponsors licence, or subject him to some kind of ambush. Nor was the failure of his original Tier 2 application in substance brought about by something done by the Secretary of State. An employing sponsor has to be licenced, and the continuation of its licence depends upon compliance with conditions. In this case the sponsor was warned that its licence was liable to be revoked, invited to make representations why it should continue, and failed to do so. Revocation followed as a matter of course, with unfortunate but inevitable consequences for all its sponsored employees, including Mr Pathan. Although the Secretary of State necessarily played a part in that process, the real cause of the failure of Mr Pathans Tier 2 application was the conduct (or rather misconduct) of his employing sponsor. The limited involvement of the Secretary of State was insufficient, in my view, to serve as the basis for identifying a new sub category of procedural fairness, encapsulated in a requirement to give 60 days advance notice of the revocation of the sponsors licence before refusing any Tier 2 application which had been based upon it. Nor is this case in substance about whether a party to a pending matter is in fairness obliged to give the other party immediate or early notice of some fact of which it is aware which will be fatal to the application when decided at a pre arranged date in the future, like a County Court trial for which a date or a window has already been set. The Secretary of State is in principle entitled to choose the date upon which to determine a Tier 2 application, subject perhaps to the margin permitted by the dictates of good public administration, which may render unreasonable delay unlawful. In principle, the sooner a Tier 2 application is determined (once the relevant examination of the facts has been completed) the better for all concerned. When asked by the Court what would have been Mr Pathans position if the Secretary of State had immediately notified him of the revocation of his sponsors licence, and then, or on the same or the following day, refused his by then hopeless application (rather than three months after the revocation, as actually happened), Mr Biggs submitted that his case would be just the same. The immediate refusal of the Tier 2 application would be unfair, because Mr Pathan would not have a fair opportunity to make alternative arrangements, after being taken by surprise. The resolution of this appeal does not therefore depend in any way upon the mere happenstance that the application was refused three months after the revocation of the licence. Mr Pathan would have been taken just as much by surprise in either case and is in no different a predicament. Nor did Mr Pathan have some legitimate expectation, the denial of which of itself entitles him to the courts assistance by way of judicial review. He had been informed in writing that the success of his Tier 2 application depended, among other things, upon his sponsor maintaining its licenced status. His immigration status as a Tier 2 migrant depended upon him continuing to be employed by his licenced sponsor. The purpose of the written warning in paragraph 190 of the Guidance (quoted in Lady Ardens judgment) was to make it clear that the sponsors licence could be withdrawn or cancelled at any time either by the Home Office or by the sponsor, and that if this occurred it would cause the Tier 2 application to be refused. A Tier 2 migrant can check on the Government website whether his sponsor remains licenced and is encouraged by published Guidance to do so, for example before travelling to the UK to work for a sponsor. Mr Pathan has not shown that not being given prompt notice of the revocation of his sponsors licence, followed by time to respond to it before the determination of his application prevented him from taking any of the steps which he says he would have wished to take to obtain extended leave to remain. Thus in fact he could and did make a further Tier 2 application after finding a new sponsored employer. He could and did make two applications based on human rights grounds. For complicated reasons none of these applications were adversely affected by his having become an overstayer by the time when he made them. They all failed for other reasons. Rather his complaint is that he could not at the same time preserve himself and his family from becoming overstayers while he took those steps, by postponing the determination of his original Tier 2 application in the meantime. The defining feature of this appeal is that the Tier 2 applicant was taken by surprise by the failure of his application, at a time when (because of the expiry of his earlier leave to remain) the lawfulness of his continued stay in the UK depended solely upon his outstanding application, which he understandably expected to succeed, but which failed due to an event for which (on the assumed facts) he was in no way to blame, and of which he was unaware until informed about it by the Secretary of State. The defining nature of the unfair prejudice which he alleges is being unable to postpone becoming an overstayer beyond the time when that would otherwise occur in accordance with the Rules, by obtaining the discretionary grant of time between being told of the revocation of his licence and the determination of his application. For reasons which follow, that is not procedural unfairness. The Law Procedural Unfairness In respectful agreement with the Court of Appeal, and with Lady Arden, I do consider that procedural unfairness (as it is now called) is a distinct ground for judicial review, not a sub set of some general ground of unfairness, and that its boundaries need to be carefully defined if it is not to operate as a gateway through which the courts can pass judgment on the substantive merits, rather than the lawfulness, of administrative action. The parties to this appeal were therefore right to raise, as the first issue to be decided, whether not being given extra time to respond to the revocation of his sponsors licence gives rise to a case of procedural unfairness at all. In my judgment, and largely for the reasons given by Singh LJ in the Court of Appeal, it does not. I put on one side the question whether he should in any event have been given prompt notice of the revocation, and concentrate for the moment on the main question, whether he should have been given further time, after that notification, before the determination of his Tier 2 application. The reason why it is necessary to decide whether an allegation of unfairness is procedural or not is that it is only if it is, that it amounts to a distinct ground for judicial review. If it is not, then the allegation of unfairness is just an aspect of a case based upon irrationality, Wednesbury unreasonableness or denial of a legitimate expectation. In this respect Lady Arden and I are at one: see R (Gallaher Group Ltd) v Competition and Markets Authority [2019] AC 96 per Lord Carnwath at para 41, in a passage cited by Lady Arden at para 53 of her judgment. The ordinary principles of judicial review have been developed over many years to ensure that the courts confine themselves to a review of the lawfulness of administrative decision making, rather than an appeal against its substantive merits. Irrationality and Wednesbury unreasonableness are stern tests. They are by no means satisfied merely because the court thinks that it would have reached a different decision. The legitimate expectation principle has its own internal checks and balances. By contrast, where procedural unfairness is alleged, the court is the final arbiter of what is, or is not, fair. This is because a decision made by a process which is in fact procedurally unfair is for that very reason unlawful. Thus it is necessary for the court to be satisfied that an allegation of unfairness falls squarely within the true boundaries of procedural unfairness, if its dominion over the answer to the unfairness question is not to lead it into an inappropriate role as the final arbiter of an appeal on the merits of administrative action. In R (Osborn) v Parole Board [2014] AC 1115, Lord Reed said, at para 65: The first matter concerns the role of the court when considering whether a fair procedure was followed by a decision making body such as the board. In the case of the appellant Osborn, Langstaff J [2010] EWHC 580 at para 38 refused the application for judicial review on the ground that the reasons given for refusal [to hold an oral hearing] are not irrational, unlawful nor wholly unreasonable. In the case of the appellant Reilly, the Court of Appeal in Northern Ireland stated [2012] NI 38, para 42: Ultimately the question whether procedural fairness requires their deliberations to include an oral hearing must be a matter of judgment for the Parole Board. These dicta might be read as suggesting that the question whether procedural fairness requires an oral hearing is a matter of judgment for the board, reviewable by the court only on Wednesbury grounds: see Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223. That is not correct. The court must determine for itself whether a fair procedure was followed: Gillies v Secretary of State for Work and Pensions [2006] 1 WLR 781, para 6, per Lord Hope of Craighead. Its function is not merely to review the reasonableness of the decision makers judgment of what fairness required. Procedural unfairness is a modern title for a form of unlawfulness which used to be called breach of the rules of natural justice. That phrase collected together a number of traditional doctrines, the most important of which were the requirement that a decision should be unaffected by bias (nemo judex in causa sua) and the principle espoused by the Latin tag audi alteram partem or, literally translated, hear the other side. The rules of natural justice served originally to protect the integrity of decision making by courts but have been applied for more than 150 years to maintain the lawfulness of administrative decision making: see eg Cooper v Wandsworth Board of Works (1863) 14 CBNS 180. For present purposes the court is concerned only with the second of those main principles, which enshrines the healthy notion that a matter should not be decided against a party without that person being offered a fair opportunity to present their case to the decision maker. It is to be noted that all but one of the cases referred to by Lady Arden in her elucidation of the principles of procedural fairness are about the audi alteram partem principle: see Cooper v Wandsworth (concerning the right to be heard to stop a building being demolished); FP (Iran) [2007] EWCA Civ 13 (the right to be heard at a substantive asylum hearing); Balajigari [2019] 1 WLR 4647 (the right to reply to dishonesty allegations); and Fayed [1998] 1 WLR 763 (the right to be informed of proposed reasons for rejecting a nationality application in order to reply to them). The right to be heard assumes that there is some case, however weak, that the party might actually advance, and has no application to a situation where the decision is inevitable, whatever the party adversely affected by it may say. Presentation of a case need not, of course, necessarily be oral. The one case relied upon by Lady Arden in which a finding of procedural unfairness was not squarely within the audi alteram partem principle is the Venables case [1998] AC 407. But there the main ground for the quashing of the increased tariff was that the Secretary of State had acted unlawfully in making the decision itself by taking an irrelevant matter into account. That was not itself a procedural ground at all, but a separate ground for review. It was merely described as procedural as well. Here there is no attack on the lawfulness of the refusal of the original Tier 2 application. In Cinnamond v British Airports Authority [1980] 1 WLR 582, 593, Brandon LJ said: no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing. In Bank Mellat v HM Treasury (No 2) [2014] AC 700, para 179 Lord Neuberger said, speaking of the audi alteram partem rule in the administrative context: In my view, the rule is that, before a statutory power is exercised, any person who foreseeably would be significantly detrimentally affected by the exercise should be given the opportunity to make representations in advance, unless (i) the statutory provisions concerned expressly or impliedly provide otherwise or (ii) the circumstances in which the power is to be exercised would render it impossible, impractical or pointless to afford such an opportunity. I would add that any argument advanced in support of impossibility, impracticality or pointlessness should be very closely examined, as a court will be slow to hold that there is no obligation to give the opportunity, when such an obligation is not dispensed with in the relevant statute. (My emphasis) The present case is a perhaps rare example of pointlessness, although one which may well arise quite frequently under the mainly mechanical provisions of the PBS scheme. Mr Pathan had at the outset been fully heard, as contemplated by the rules, on the basis of his on line application for extended leave under Tier 2. It was common ground, and inevitable, that it depended critically upon him continuing to be employed and sponsored by a particular licenced sponsor, namely Submania Ltd. The question is whether he should have been heard further when the central plank of his application was swept away by the revocation of his sponsors licence. It was common ground before this Court that nothing he could have said could have affected the negative outcome of the original application. Audi alteram partem is usually relied upon as a means of challenging the decision made after the alleged departure from fair procedure. Here there is no such challenge. Mr Pathan accepts that, following the revocation of his sponsors licence, there could only have been one outcome to his original Tier 2 application, whatever the procedure subsequently adopted by the Secretary of State. Nor does he complain about having been unable to make representations to the Secretary of State. Rather he complains about not being given a period of time when, knowing of the revocation of the sponsors licence, he could have taken alternative steps to protect (or bring to an orderly end) his status as a lawful migrant, while protected from becoming an overstayer by the continuing pendency of his by then hopeless application. Using Brandon LJs formulation, being told of the revocation of the sponsors licence, together with being given time before the refusal of his Tier 2 application, would have availed Mr Pathan something rather than nothing, just as does the same facility when granted to students who lose their educational sponsor. But this sort of collateral advantage from the adoption of a particular procedural step is not in my view something which the audi alteram partem principle is designed to protect. On the contrary, the integrity of a decision making process is in general damaged rather than preserved by enabling a participant to buy time by the prolongation of a hopeless case. That is why, in the private law sphere, there exists a regime for the grant of summary judgment when there is no real issue needing to be tried. I do not mean by describing the advantage as collateral to imply that it is not a real advantage, or that it might not be usefully deployed, even by the Secretary of State, for the purpose of giving an applicant time to respond to an unexpected failure of his application. It is now something which the Secretary of State does routinely, as a matter of policy, to assist Tier 4 applicant students who lose their educational sponsor. Buying time in that way is a common practice. For example it was common ground between counsel that, under the rules, a disappointed applicant in Mr Pathans position could buy a minimum of an extra 14 days leave to remain, by applying for an administrative review of the refusal of his Tier 2 application, however hopeless that might be. But the question is whether it can be procedurally unfair, in the sense of being a breach of the rules of natural justice, for the Secretary of State not to grant such time, beyond that provided by the Rules, as a matter of discretion. It is plain that this inaction by the Secretary of State did not amount to a breach of the audi alteram partem rule. Mr Pathan was not seeking to be heard in support of his application, after being informed of the revocation of his licence. Further submissions would have been pointless. The integrity of the outcome was in no way affected by the refusal of his original application at a time when he was unaware of the revocation of his sponsors licence. I have searched in vain for some other aspect of the rules of natural justice which might have assisted him, and none were suggested. Rather, the case is put on the broad basis that the boundaries of procedural fairness are not fixed and that the taking, or not taking, of any step which might loosely be described as procedural falls within the purview of procedural fairness, even if it amounts to nothing more than letting the existing rules which apply to a given situation take their course, rather than interfering with them by the exercise of some residual discretion, such as delaying the determination of a pending application. The only authorities which might appear to support such a basis for judicial review are the decisions of the Upper Tribunal in Thakur (PBS decision common law fairness) Bangladesh [2011] UKUT 151 (IAC) and Patel (Revocation of Sponsor licence Fairness) India [2011] UKUT 211 (IAC); [2011] Imm AR 5. In both cases the relevant appellant was a Tier 4 student applicant whose educational sponsor lost its licence while his application was pending, and who (like Mr Pathan) only found out that this had occurred when (or shortly before) his application was refused. The decision in the Thakur case was heavily based on the well known dicta of Lord Mustill about procedural fairness in R v Secretary of State for the Home Department, Ex p Doody [1994] 1 AC 531, 560, cited by Lady Arden at para 55 of her judgment. The decision in both Thakur and Patel was that Tier 4 students in the position summarised above should be informed of the loss of their sponsors licence and (by analogy with departmental policy in a different but related factual situation) given 60 days in which to attempt to find an alternative sponsor with which to complete their education, and vary their application for leave to remain by substituting the new sponsor for the old one. It is convenient to focus on the reasoning in the Patel case, rather than on Thakur, because most of the controversy which has followed those two cases, at Court of Appeal level, has done the same. At para 22, Blake J said: Where the applicant is both innocent of any practice that led to loss of the sponsorship status and ignorant of the fact of such loss of status, it seems to us that common law fairness and the principle of treating applicants equally mean that each should have an equal opportunity to vary their application by affording them a reasonable time with which to find a substitute college on which to base their application for an extension of stay to obtain the relevant qualification. (My emphasis) It is apparent that Blake J relied in combination on what he called common law fairness and the supposed principle of equal treatment. The latter principle was not relied upon before this Court, following cogent criticism of it by Singh LJ in the Court of Appeal, and it is doubtful whether, as a separate principle, it survives the detailed analysis of it in the Gallaher case [2019] AC 96. It appears to have arisen from a misreading by Blake J of the way in which leave to remain is cut down to 60 days upon the failure of an application for Tier 4 extended leave, where (unlike in Mr Pathans case) the applicant still has leave to remain for longer than that. Shorn of equal treatment, Blake Js reliance on common law fairness is not further developed by way of legal analysis. Perhaps the best aspect of Mr Pathans argument that both his and Mr Patels cases were cases of procedural unfairness is because of the way in which the rules deal with the making of a fresh application for extended leave to remain, when an earlier application is pending. Blake J spoke in the quoted passage and elsewhere in his ruling about Mr Patel needing to be given the opportunity to vary or amend his application. Mr Pathan says that he was deprived of the same opportunity, because he was given no time in which to vary or amend his application by substituting a new sponsoring employer, before it was refused. I would readily accept that, in appropriate cases, the rules of natural justice may require a party to be afforded time to amend his case in a way that cures an otherwise fatal defect of which he had, without fault on his part, previously been unaware. Such time is frequently given to a party in civil proceedings, whose statement of case is found to disclose no cause of action, to attempt to amend it to cure that defect, before his claim is struck out. Whether the rules of natural justice do or do not impose that requirement is heavily context specific, and in the sphere of civil proceedings the position has changed significantly in recent years, following changes in the detail of the Overriding Objective governing civil procedure generally. In the immigration context there is (now) a special deeming process whereby a second application for extended leave to remain, made during the pendency of an earlier first application, is treated as if it were a deemed variation of the first application, however completely different it may be in substance. It is designed to avoid an applicant obtaining, in effect, an endless extension of leave to remain by making a series of successive applications, however ill founded on the merits, each new one just before the determination of its predecessor. It applies equally to Tier 2 and Tier 4 applications, and to applications on human rights grounds. Thus for example, a pending Tier 2 application may be deemed to be varied by a fresh Tier 2 application based on employment by a different sponsor, or even by a fresh application based on human rights grounds, and vice versa. Section 3C of the Immigration Act 1971 (as amended) provides, so far as relevant, as follows: (1) This section applies if a person who has limited leave to enter or remain (a) in the United Kingdom applies to the Secretary of State for variation of the leave, (b) leave expires, and (c) variation having been decided. the leave expires without the application for the application for variation is made before the (2) The leave is extended by virtue of this section during any period when the application for variation is neither decided (a) nor withdrawn, (d) application for variation an administrative review of the decision on the (i) (ii) could be sought, or is pending (4) A person may not make an application for variation of his leave to enter or remain in the United Kingdom while that leave is extended by virtue of this section. (5) But subsection (4) does not prevent the variation of the application mentioned in subsection (1)(a). The Immigration Rules provide, in this connection, as follows: Multiple Applications 34BB(1) An applicant may only have one outstanding application for leave to remain at a time. (2) If an application for leave to remain is submitted in circumstances where a previous application for leave to remain has not been decided, it will be treated as a variation of the previous application Variation of Applications or Claims for Leave to Remain 34E If a person wishes to vary the purpose of an application or claim for leave to remain in the United Kingdom and an application form is specified for such new purpose or paragraph A34 applies, the variation must comply with the requirements of paragraph 34A or paragraph A34 (as they apply at the date the variation is made) as if the variation were a new application or claim, or the variation will be invalid and will not be considered. 34F Any valid variation of a leave to remain application will be decided in accordance with the immigration rules in force at the date such variation is made. Paragraph 34BB was not in force at the relevant time, but it merely reflected that which the courts had already worked out: see JH (Zimbabwe) v Secretary of State for the Home Department [2009] EWCA Civ 78; [2009] Imm AR 3, paras 34 46 per Richards LJ. I will call it the deemed variation rule. The result is that, for example, a Tier 2 application which has become hopeless because the employing sponsor has had its licence revoked may nonetheless be saved by the making of what is in substance a fresh Tier 2 application on a completely new form, based upon employment by a new licenced sponsor, because (provided that the new application is made before the previous application has been determined), it will (however artificially) be deemed to be a variation or amendment of the previous application. It is a very artificial form of variation, because the rationale of the Tier 2 process is that each applicant seeks to fill a distinct gap in the labour market identified by their sponsoring employer. Thus if, for example, the original sponsor immediately informs the applicant that its licence has been revoked, and the applicant has time to find employment by a new sponsor before his application is determined, he can make a fresh application based on employment by the new sponsor and it will be deemed to be a variation of his original application. But if the applicant only discovers that his sponsors licence has been revoked from reading the Secretary of States letter refusing his application, he cannot of course save it by a new application which is deemed to be a variation of his original application. This is for two reasons. First, he has no time to complete the new application. But secondly he will not have left the employment of his original sponsor, still less found a new one. And the new employer, once found, may well (if it has not already done so) have to carry out the resident labour market test, which takes a minimum of 28 days. In the present case it must be assumed that Mr Pathan was still employed by his original sponsor when his application was refused, and he discovered that its licence had been revoked. Mr Biggs submitted that he needed time, following that discovery but before the refusal of his Tier 2 application, to take one or more of three alternative steps, in each case with a view to avoiding becoming an overstayer: first, finding employment with a new licenced sponsor and making a fresh Tier 2 application; second, seeking a right to remain on human rights grounds; third, making an orderly departure from the UK. None of these alternatives could, he submitted, realistically be achieved before Mr Pathan became an overstayer, even if he obtained a 14 day (or a little longer) window by making a hopeless application for administrative review. The question whether the failure to provide time for the taking of any of those steps can amount to procedural unfairness, rather than unfairness in any more general sense, does not necessarily admit of a uniform answer. Although the grant or refusal of an adjournment (ie time before an application is determined) is in one sense a question about procedure, it is relevant to ask, what is the giving of time for? If it is for time simply to take a procedural step, such as amending a claim or application, in a way that may affect its outcome, then a refusal may, depending on the facts and the context, amount to procedural unfairness. But if time is sought to do something more, or different, than that, then the question is likely to be about substantive rather than procedural fairness. In short, time for the applicant to put his best case forward on the facts already available may be procedural, but time to change or improve the underlying facts to make them more favourable is substantive. Time before determination to enable an applicant facing a refusal to prepare for an orderly departure from the UK (Mr Pathans third alternative) is in my view clearly substantive. It can have no effect on the outcome of his application and is not sought to give him time to take a procedural step in the process. It is just a way of getting a longer time as a lawful migrant than provided by the Rules, before becoming an overstayer. It is like an occupier of a home seeking the adjournment of a possession application to which he has no defence, in order to give him more time to move out than permitted by the courts limited jurisdiction to postpone enforcement of a possession order once made. It is, at best, substance dressed up as procedure. Time simply to raise an existing human rights ground for an extension of leave to remain, which would presumably require no longer than time to find a lawyer, make the application and pay the fee, may be procedural, so that a refusal might amount to procedural unfairness. If sought by a fresh application before the Tier 2 application was refused, it would amount to a deemed variation of the original application, and therefore be capable of affecting its outcome. Time to seek fresh employment with a new licensed sponsor, and then to make a new Tier 2 application on that basis, again by way of the deemed variation rule, is something of a hybrid. To the extent that it is designed to give Mr Pathan time to alter the available facts by finding new sponsored employment so as to qualify for Tier 2 leave to remain, I consider it to be substantive. If it had merely been to give him time to complete a fresh application based on qualifying employment which had already been begun or offered, it might have been procedural. The former might well require something like the 60 days now afforded to Tier 4 students in a similar predicament, not least because of the employers need to carry out a resident labour market test. The latter would not generally require more than a working week. Both could in fact be done within the period of grace following the refusal of his Tier 2 application, within which a fresh application could be made despite being an overstayer (then a minimum of 42 days, ie 28 days after the end of the minimum 14 days protection afforded by an administrative review). But it would expose him to becoming an overstayer while the fresh application remained pending, whereas the same application made by way of deemed variation, before the determination of his first application, would not. The fact that the Secretary of State did not give Mr Pathan any time at all by way of a breathing space between informing him of the revocation of his sponsors licence and refusing his Tier 2 application may therefore in a strictly limited and rather artificial sense be described as procedural. However, this does not mean that it was therefore procedurally unfair. It is convenient at this point to examine what actually happened following the refusal, and the then legal consequences, in order to identify the prejudice which not being given such a breathing space may have caused him. His Tier 2 application was refused on 7 June 2016. He had 14 days in which to mount an administrative review, which he did, in time. It was refused on 7 July, whereupon he became an overstayer. But the rules then in force gave him a further 28 days grace (now reduced to 14 days) in which to make a further application for leave to remain, without the fact that he was by then an overstayer being taken into account to his disadvantage. On 3 August, within the period of grace, he made an application for leave to remain based on article 8. He made a further application on 29 November, and a further Tier 2 application on 12 December, (presumably having by then found further employment with a licenced sponsor, although there is no evidence about this). They were both treated as successive variations of his 3 August application, to which the period of grace therefore applied, although it had by then expired. He made a further article 8 application on 27 May 2017, again treated as a variation of his 3 August application. That final article 8 application was refused on 11 October 2018 on grounds wholly unrelated to his being by then an overstayer. Two factors clearly emerge from this factual description. The first is that being given no breathing space between discovering that his sponsors licence had been revoked and having his original Tier 2 application refused did not in fact have any adverse effect upon Mr Pathans ability to pursue alternative ways of obtaining extended leave to remain. Secondly the combined effect of the period for administrative review and the (then) 28 day period of grace thereafter within which to make a fresh application (typically 70 days in total if the response to the application to the request for administrative review was in accordance with the 28 day departmental target) was actually ten days longer than the full 60 days now afforded to Tier 4 students in a similar predicament. Even if the Secretary of State conducted the administrative review within a single day it would still be 42 days. In the present case Mr Pathan actually secured 58 days. It was (for good reason) no part of Mr Pathans case before this Court that fairness required nothing less than a full 60 days rather than some other reasonable period. The adverse effect was only that for the period of the pendency of those alternative applications, Mr Pathan would (if he chose to remain in the UK) be an overstayer rather than a migrant with leave to remain. I do not by that description mean thereby to belittle that adverse effect. Being an overstayer has very serious consequences, although leaving is always an alternative to being an overstayer, and Mr Pathan was not an asylum seeker. But the point is that they are consequences of substance rather than procedure. The consequences of being an overstayer had no effect (procedural or otherwise) upon the outcome of his repeated applications for extended leave to remain. They all failed for other reasons. They are also consequences which flow from a statutory framework and from Rules approved by Parliament which (for example by providing for the 28 day period of grace during which being an overstayer is not to prejudice a fresh application) expressly contemplate that migrants whose first application for leave fails may have to pursue alternative applications while an overstayer (or after a return to their country of origin). Parliament has, in short, provided a tough, rigid regime for migrants who wish to pursue multiple applications for leave to remain, and the Rules treat a person taken by surprise by the refusal of an original application in exactly the same way as an applicant who is not taken by surprise. The lawfulness of those Rules (however tough in their effect) is not challenged in these proceedings. Furthermore, the only reason why the giving of time between communicating the revocation of the sponsors licence and the refusal of the Tier 2 application is capable of being viewed as procedural at all is because of the deemed variation rule. But that rule is part of a structure designed, as explained above, to hinder rather than facilitate the obtaining of extended leave to remain by the making of multiple applications. And these are relevant specific details within the context of a PBS scheme which is itself deliberately designed to be operated mechanically, in accordance with strict rules, with minimal scope for discretionary adjustment. They matter because they constitute the contextual framework within which, as Lord Mustill explains in the Doody case, an allegation of procedural unfairness has to be evaluated. I would acknowledge that procedural unfairness might arise from the imposition of hurdles which, while not absolutely preventing the taking of further procedural steps to achieve the original objective, may properly be characterised as designed to render the taking of them impracticable. But the provisions in the Immigration Act 1971 and Rules which define (with great particularity) when migrants have permission to remain, and when (if they do not depart) they become overstayers are matters of substance which implement immigration policy, not (generally at least, and not in the present case) procedural bars in the way of obtaining extended leave to remain by further applications, even if they may have the consequence (although not in this case) that further applications have to be made from abroad. Drawing together the threads of this unavoidably complicated analysis, I reach the following conclusions about the class of case where a Tier 2 migrant, whose status as lawfully present in the UK hangs on the slender thread of an outstanding application for extended leave to remain, learns of the revocation of his sponsors licence only at the same time as his application is refused: i) The migrant will have the opportunity to seek employment with a new licensed sponsor and make a new Tier 2 application within a minimum of (then) 42 days, and typically 70 days, without his having become an overstayer during that period adversely affecting its outcome. He will suffer the disadvantages of becoming an overstayer, but this is not procedurally unfair since both: a) His requirement to find a new sponsored employer is substantive rather than merely procedural, and b) His loss of the status of being entitled to remain while pursuing his fresh application is itself a matter of substance rather than procedure and does not generally render the making of his further application impracticable, although there may be cases, on different facts from those affecting Mr Pathan, where it might do so. ii) It is not therefore procedurally unfair for the Secretary of State not to volunteer to such a migrant a time between the communication of the revocation of the sponsors licence and the refusal of his Tier 2 application. iii) Nor is the absence of the conferral of such a time period otherwise judicially reviewable because: a) There is no wider principle of common law or substantive fairness, outside the rules of natural justice, which supports it, b) It is not irrational or Wednesbury unreasonable for the Secretary of State in such circumstances to allow the Act and the Rules to take their ordinary course, for the purpose of giving effect to an immigration policy approved by Parliament in circumstances where specific provision is made for what is to happen, and c) The migrant is denied no legitimate expectation, because of the written warning about the consequences of the revocation of the sponsors licence in the Guidance, and the migrants ability to check on the Governments website whether his sponsor remains licenced. It remains to check whether this outcome falls within the general thrust of the authorities which address similar apparently hard cases arising under the PBS. With the exception only of the Patel and Thakur cases they present an austere jurisprudence which gives effect to the requirements of a rigid rules based scheme, at considerable cost to individual applicants who, in circumstances demanding at least sympathy, frequently fall foul of it, and often to their surprise. While a full analysis would be beyond the scope of this dissenting judgment, the following cases will serve as sufficient examples. First, the Rules impose very strict requirements on applicants in terms of documentary evidence. Thus where a Tier 1 applicant failed to provide payslips to prove that he had employed the requisite number of workers, but had submitted amply sufficient other forms of proof of the same facts, this gave rise to no obligation on the Secretary of State to give him time to correct the error, otherwise than as very narrowly required by the Rules: see Singh v Secretary of State for the Home Department [2018] EWCA Civ 2861, following Mudiyanselage v Secretary of State for the Home Department [2018] EWCA Civ 65; [2018] 4 WLR 55. Secondly where, through no fault of his own, a Tier 4 student applicant was taken by surprise by the accidental cancellation by her college of her CAS letter due to an administrative error, the Secretary of State was under no obligation of fairness to give the student time to obtain another valid letter from the same college before deciding her application, even though (in sharp contrast with the present case) that would have made her original application good: see EK (Ivory Coast) v Secretary of State for the Home Department [2014] EWCA Civ 1517; [2015] INLR 287. In that case the Court of Appeal recognised a line of authority which justified a different outcome where the Secretary of State bore substantial responsibility for the happening of a mistake which, unless corrected, threatened to undermine an otherwise perfectly well founded PBS application: see Naved v Secretary of State for the Home Department [2012] UKUT 14 (IAC). The Court of Appeal was minded to treat the Patel and Thakur cases as falling within the same category because, in each of them, as in the present case, the Secretary of State had been instrumental, although not in any way at fault, in bringing about the revocation of the Tier 4 sponsors licence. But the Court did so under the clear caveat that the duty to give the applicant an opportunity to respond would not apply where, as here, the relevant defect was obviously irremediable (per Floyd LJ, at para 49, dissenting but not on this point). In my judgment both the Patel and Thakur cases were wrongly decided. This is because: i) The combined use of the twin supposed general principles of common law fairness and equal treatment were shaky foundations, for reasons already given. ii) Mere involvement without fault in the process of the revocation of a licence does not impose on the Secretary of State a fairness duty to go outside the Rules in affording recovery time to an applicant to find another sponsor, still less by enabling the migrant to take advantage of the deemed variation rule to achieve a result which it was not designed to facilitate. Revocation of a sponsors licence is an irremediable defect in any Tier 4 (or Tier 2) application based on a relevant relationship of education or employment with that sponsor. In both those cases (as in the present case) the relevant fault lay squarely with the sponsor, no less than in EK (Ivory Coast). iii) In any event the general unfairness which may be inherent in the applicant being taken by surprise is not procedural in nature, for the reasons already given. iv) The supposed parallel with the curtailment situation (where an existing period of leave is shortened to 60 days where a sponsor loses its licence) is not a true comparable from which a supposed principle of equal treatment could properly be applied. The fact that those two cases were wrongly decided, at least as far as laying down any general principle in a fact and context sensitive field, makes no practical difference in Tier 4 cases on the same facts, since it is now departmental policy to give disappointed applicant students 60 days to find another sponsor. But the elevation of what is in truth a non existent legal duty into an administrative policy provides no alternative means of support for the existence of an equivalent duty in Tier 2 cases. It is not in question whether the Secretary of State could, if she thought fit, now decide to give Tier 2 migrants who unexpectedly lose their licenced sponsor while their application for extended leave is pending further time in which to find another sponsor, without risking becoming overstayers. The question is whether she is obliged to do so, in the sense that any other decision would be irrational. The Court of Appeal thought not, and I agree, for the reasons given by Singh LJ at para 71. In short, the evident policy behind Tier 4 is to provide students with education, whereas the policy behind Tier 2 is to enable specific employers to find suitable employees where (after due enquiry) the local labour market is found to be deficient. Those policy differences are sufficient to prevent a different policy approach to giving time to find another sponsor being stigmatised as irrational, regardless whether others, including the Court, would disagree. Remedy I began this judgment by acknowledging the force of Lord Kerrs and Lady Blacks opinion that it was in any event procedurally unfair for the Secretary of State not to have informed Mr Pathan promptly of the revocation of his sponsors licence. The question then arises whether, if so, that of itself rendered her decision, three months later, to refuse his Tier 2 application unlawful. Mr Pathans claim is to have that decision set aside. If one assumes that (for some unexplained reason to do with internal administrative delay) she would, after giving such prompt notice of revocation, still have done nothing about determining his Tier 2 application for another three months, it is easy to see that, in the events which have happened, Mr Pathan could and probably would have done something to improve his position by making the series of applications which in fact he did make, but earlier, before his original application was determined. Critically, he would have done so by way of successive deemed amendments of his original application, and thereby have avoided becoming an overstayer in the meantime. In theory he might even have improved upon one or more of the applications which he did make, so that he might have succeeded in obtaining Tier 2 permission to remain, although no factual basis for that possibility has ever been suggested. On any view the opportunity to delay becoming an overstayer would have been a solid advantage of which he was deprived, on those assumed facts. But the reality is that, on those assumed facts, the reason why Mr Pathans position would have been improved is not because of the promptness of the notification per se, but because of the time which the Secretary of State did in fact let pass, following the revocation, before refusing his application, even though, for the reasons already given, she was under no duty to give him such a breathing space. I have deliberately described that three months gap as a mere happenstance. Mr Pathan would have obtained no such benefit if, as she was entitled to do, the Secretary of State had followed up a prompt notice of revocation with an equally prompt refusal of his application. That analysis raises the stark question: if the Secretary of State was not obliged to give Mr Pathan time between the notification of the revocation and the determination of his application, so as to avoid him being taken by surprise by the revocation, why should an unfair delay in notification in this case mean that the refusal of his application was unlawful? He had no right not to be taken by surprise, and it was the surprise, not the time lapse between revocation and notification of it, which caused him the detriment which I have described. It is I think no coincidence that, upon enquiry by the court, counsel for Mr Pathan based his appeal squarely upon a right not to be taken by surprise, ie an entitlement to a breathing space, rather than simply upon a right to prompt notification. Like Lord Kerr and Lady Black I have concluded that the case for a right to a time between notification and refusal fails, because it is a matter of substance governed by the Act and the Rules, with solid consequences for his immigration status, rather than a matter of procedure. By contrast the denial of his right to prompt notification of revocation, although procedurally unfair, had no adverse consequence of its own, save when aggregated with the Secretary of States purely voluntary (and probably unconscious) delay in dealing with Mr Pathans application for three months after the revocation. I do not consider that, where causation of detriment rests upon such a happenstance, the court should intervene by striking down the refusal of Mr Pathans Tier 2 application as unlawful. LORD WILSON: (partly dissenting) (with whom Lady Arden agrees) We should with precision identify the issue raised on this appeal. The issue is not whether Mr Pathan should have been notified of the revocation of Submanias licence. For he was notified of it. In the letter dated 7 June 2016, by which she refused his application for extension of leave to remain as of that date, the Secretary of State told him that she had cancelled the CoS reference number which he had provided; and in the letter dated 7 July 2016, by which she determined his application for administrative review, she added that she had cancelled the number because, following investigation, she had revoked his sponsors licence. The issue is whether notification to Mr Pathan of the revocation of the licence should have occurred prior to the determination of his application for extension. The issue is therefore not notification but what, for short, I will call prior notification. Like Lady Arden, I agree with that part of the judgment of Lord Kerr and Lady Black (the joint judgment) in which they explain why the Secretary of State owed to Mr Pathan a duty of what, for short, I will call prompt notification of her revocation of the licence; and, in the light of her delay of three months in notifying him, she was clearly in breach of it. So there is a majority of four members of the court in favour of that conclusion. But, with respect, I disagree with that part of the joint judgment in which they reject Mr Pathans submission that the Secretary of State also owed to him a duty of prior notification. In effect like Lady Arden, I conclude that, concomitant with the duty of prompt notification, the Secretary of State owed to Mr Pathan a duty not to determine his application for extension of leave to remain until a reasonable period had elapsed following notification to him of the revocation of the licence. Irrespective of the precise parameters of a reasonable period, it is clear that the determination of Mr Pathans application on the very day on which he was notified of the revocation falls outside it. A judgment qualifies as a dissenting judgment if it disagrees with any significant part of the actual order to be made by the majority. Lord Kerr, Lady Black and Lord Briggs understandably propose that the actual order of the court should record not only the conclusion of four of its members that the Secretary of State was in breach of her duty to Mr Pathan of prompt notification but also the conclusion of the three of them that she had no duty of prior notification. It follows that the judgments of Lady Arden and myself qualify as partly dissenting judgments. In Lloyd v McMahon [1987] AC 625 Lord Bridge of Harwich said at pp 702 703: it is well established that when a statute has conferred on any body the power to make decisions affecting individuals, the courts will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness. Lord Bridges reference to the procedure prescribed by the statute must include the procedure prescribed by a rule made pursuant to a statute. There is no doubt that his statement of principle applies to the rules relating to the points based system in the law of immigration. In SH (Pakistan) v Secretary of State for the Home Department [2016] EWCA Civ 426 Beatson LJ, in the course of addressing the public duty of fairness at common law, said at para 29: It is common ground that this may impose obligations on the Secretary of State in addition to those under the Rules concerning the points based system So in this context the duty of fairness at common law provides additions. It cannot displace a rule unless, as in the joined FP (Iran) and MP (Libya) cases cited by Lady Arden at para 43 above, the rule was made outside the powers given to the rule maker or unless it can be disapplied under the Human Rights Act 1998. Lord Kerr and Lady Black at paras 108 and 141 above and Lord Briggs at paras 146, 164 and 197 above suggest that a duty of prior notification would be inconsistent with statute or the Immigration Rules. I beg to differ. There is no such legislative provision as requires the Secretary of State to determine an application for extension within a specified period. Equally there is no such provision as requires her to determine an application for extension at the same time as she notifies the applicant of an irremediable defect in the application as then framed. There are of course numerous legislative provisions which address the consequences of the ultimate refusal of an application for extension. But Mr Pathans assertion of a duty of prior notification does not relate to the period following refusal. Nor, crucially, does it amount to an attempt to extend his leave to remain beyond the terminal point specified in section 3C(2) of the Immigration Act 1971 (the 1971 Act), namely the refusal of his application and the negative conclusion of any associated appeal or review. In his judgment in the present case Singh LJ relied heavily on observations which he had made in the Talpada case, cited by Lady Arden at para 42 above. In his application for extension Mr Talpada had furnished a Certificate of Sponsorship reference number which he had already furnished in a prior unsuccessful application. Para 77C(e) of the Immigration Rules provided that a reference number could not be re used in such circumstances. So his second application was also refused. The Court of Appeal dismissed his appeal against an order declining to grant him permission to apply for judicial review of the second refusal. The courts decision is, I suggest, readily explained on the basis that, although the requirement of a fresh reference number was procedural, it was contained in a rule and that accordingly there was no room for the duty of procedural fairness at common law to fulfil its auxiliary function. Singh LJ, however, chose to describe the requirement as substantive. Having explained in para 57 that procedural fairness was the modern term for the two hallowed principles of natural justice, he suggested in para 58 that Mr Talpadas complaint had nothing to do with procedural fairness in that sense. It is, he said, to do with whether a substantive requirement of the rules themselves needs to be complied with in making a relevant application. Every observation of Singh LJ on a matter of public law commands particular respect. But how helpful was it for him to have stamped Mr Talpadas complaint as one of substantive rather than procedural unfairness? In his judgment in the present case Singh LJ enlarged the meaning which in the Talpada case he had ascribed to the concept of substantive unfairness. He said, at para 62, that the two cases then before the court were analogous to the Talpada case and, at para 63, that the complaint in the present case is properly to be analysed as one of substantive rather than procedural unfairness. But was a complaint that notice of revocation had not been given prior to the determination of the application analogous to a complaint about a rule which prohibited re use of a reference number? And how, without departure from ordinary meaning, could Mr Pathans complaint be described as not being procedural? In paras 177 to 181 above Lord Briggs addresses in detail the conclusion of Singh LJ that Mr Pathans complaint was one of substantive unfairness and he subjects it to generally favourable analysis. Lord Briggs there draws various distinctions between substance and procedure which, I confess, I find challenging. Then at para 197 he concludes: the case for a right to a time between notification and refusal fails, because it is a matter of substance governed by the Act and the Rules, with solid consequences for his immigration status, rather than a matter of procedure. ceased to be entitled to state benefits; committed a criminal offence punishable with imprisonment; committed a criminal offence if he continued to work for Submania or I have already suggested, with respect, that the matter is not governed by statute or rule. I now suggest, with equal respect, that the matter is not one of substance. What, however, no one can dispute is that the ultimate refusal of Mr Pathans application had, in the almost understated language of Lord Briggs above, solid consequences for his immigration status. Upon the negative determination of his request for administrative review of the decision to refuse his application, Mr Pathan at once became an overstayer. The consequences were that, while he remained in the UK, he (a) (b) became liable to detention pending forcible removal; (c) worked elsewhere; (d) (e) became disqualified from occupying rented accommodation; (f) (g) became subject to the freezing of funds in his bank account; (h) became subject to revocation of his driving licence; and (i) in the various circumstances identified in para 117 of the joint judgment above, became subject to a ban on later re entry into the UK. It follows that, when on 7 July 2016 Mr Pathan became an overstayer, legal disabilities at once precluded his continued pursuit of normal life in the UK. It is in this light that a controversial part of Lord Briggs reasoning falls to be considered. In para 181 of his judgment he sets out a history of applications made by Mr Pathan to the Secretary of State between 3 August 2016 and 11 October 2018; and earlier, became subject to NHS charging provisions; in para 151, Lord Briggs states that none of the applications was adversely affected by the fact that Mr Pathan was an overstayer at the time when he made them. Lord Briggs would be the last person knowingly to pile procedural unfairness on top of procedural unfairness. It must, however, be noted that the history of later applications plays no part in these proceedings issued on 4 August 2016 now before the court. The Court of Appeal did not refer to the history. It is not included in the agreed Statement of Facts and Issues. Lord Briggs has located it in a brief footnote to the Secretary of States written Case, to which neither counsel made reference in their oral argument before the court. So the question arises: in the absence of any invitation to Mr Pathans counsel to address the later applications, is it fair for Lord Briggs to conclude that the disabilities which, as an overstayer, stunted his ability to function in so many respects played no part in his failure to pursue them successfully? In para 166 of his judgment Lord Briggs cites the decisions of the Upper Tribunal in 2011 in the Thakur case (Simon J and Latter SIJ) and in the Patel case (Blake P and Batiste SIJ); and in para 192 he concludes that they were wrongly decided. Mr Thakur and Mr Patel were students rather than employees so the revocations in their cases were of the licences of their colleges to act as sponsors under Tier 4 of the system, rather than of the licence of an employer to act as a sponsor under Tier 2. In every other respect their cases are materially identical to that of Mr Pathan: all three of them had applied for extensions prior to the expiry of their leave and prior to the revocation of the licences. The Thakur and Patel cases have been regarded as good law for more than nine years. In Alam v Secretary of State for the Home Department [2012] EWCA Civ 960 Sullivan LJ, at para 44, cited the Patel case, then recently decided, with apparent approval but distinguished it from the case before him on the basis that Mr Patel had not contributed to the reasons for the revocation of his colleges licence and was unaware of it until informed of the refusal. In the EK (Ivory Coast) case, cited by Lord Briggs (who had been a member of that court) in para 190 above, the decisions in the Thakur and Patel cases were again cited with apparent approval at para 38 and, in relation to the Thakur case, by Lord Briggs himself at para 54. But they were distinguished from the facts of Ms EKs case in which her college had, albeit accidentally, withdrawn its confirmation of her acceptance for studies and in which therefore the Secretary of State had not been instrumental in rendering her application no longer valid. Indeed, in the Raza case, cited by Lady Arden in para 84 above, Christopher Clarke LJ, who gave the only substantive judgment, at para 1 expressly identified one of the issues before the court to be whether the Patel case had been rightly decided. In conclusion, at para 38, he rejected any suggestion that it was not good law; but he held that the case was distinguishable because Mr Razas application had been made following the expiry of his leave. Indeed the standing of the decisions in the Thakur and Patel cases is, in practical terms, even stronger than that which arises from their endorsement by the Court of Appeal. For, within a year of the later decision, the Secretary of State had reflected the effect of the decisions in her Policy Guidance. It is currently reflected in para 11 of Annex 1 to Tier 4 of the Points Based System Policy Guidance for use in respect of applications made on or after 29 October 2019. Many will take the view that, if Lord Briggs now considers that the decisions in the Thakur and Patel cases are wrong, he is right to say so. But some may harbour concern about whether the doubts now cast on them by so authoritative a voice might influence the formulation of future guidance and impair the ability of students and their lawyers confidently to analyse their rights. For my part, I consider that the decisions in the Thakur and Patel cases are correct. I also consider that they help to indicate the proper resolution of the present appeal. I do not understand how the different reasons of policy which lead the UK to admit students to study at particular colleges, on the one hand, and employees to fill particular vacancies, on the other, can affect the level of unfairness which each group suffers when the Secretary of State takes action which renders their subsisting applications for extension no longer valid. There is, however, one factor which, so I acknowledge, increases the level of unfairness upon students in that situation. For they will have come to the UK in order to gain a qualification and, if required to leave prior to the expiry of their course, their work will have yielded nothing for them, whereas employees will at least have been remunerated for the work that they did. But that extra level of unfairness on students does not in my view eradicate the unfairness on employees. If a strong level of unfairness operates on A, it is not diminished when an even stronger level of unfairness is seen to operate on B. Lord Briggs concludes at para 197 above that Mr Pathans appeal should be dismissed. We other four members of the court agree that it should be allowed. But, as already explained, we do not agree about the basis on which it should be allowed. The basis favoured in the joint judgment is a breach of a duty only of prompt notification. The basis favoured by Lady Arden and myself is a breach of duties not only of prompt notification but also of prior notification. It remains for me to address that difference. To hold that the Secretary of State owes a duty to Mr Pathan to give, and therefore that he has a reciprocal right to receive, prompt notification of the revocation is, I respectfully suggest, to give nothing of value to Mr Pathan unless it is accompanied by a duty, and a reciprocal right, of prior notification. The law should not impose a duty nor confer a right if they are of no value. The reasoning in the joint judgment appears to me to be as follows: (a) It was fundamental to the duty of procedural fairness that, prior to the determination of his application, Mr Pathan should be afforded a reasonable opportunity to avoid the consequences of the revocation of his sponsors licence: paras 106 and 107 above. (b) But the Secretary of State had no positive duty to afford that opportunity to him: para 108 above. (c) For the effect of any such positive duty would be to extend Mr Pathans leave beyond that for which the rules provide and any such duty would therefore be substantive rather than procedural: paras 108 and 141 above. (d) The natural and conventional practice of the Secretary of State is to determine an application for extension after she has notified the applicant of revocation of the licence: paras 106 and 110 above. (e) Exceptionally she will determine the application at the same time as she notifies the applicant of the revocation but, were she to contrive to do so in order to deprive him of the above opportunity, she would be in breach of the duty of procedural fairness: para 110 above. In the present case prompt notification would have afforded to Mr (f) Pathan three months extra in which to explore [his] options: para 132 above. With the brevity apt to dissenting observations, I respectfully respond to each stage of the above reasoning as follows: I disagree and question whether this is consistent with (a). I do not accept that Mr Pathan seeks an extension of leave beyond the (a) There are four statements to this effect in paras 106 and 107 above and I entirely agree with them. (b) (c) provisions of section 3C(2) of the 1971 Act. (d) Mr Pathans case belie it. I am unaware of the evidence of the suggested practice. The facts of (e) I disagree with the first proposition and, in relation to the second, question whether enquiry into the Secretary of States motive for taking action is a satisfactory determinant of breach of duty. (f) paragraph. I seek to unpack the reference to three months extra in the following In referring to three months extra Lord Kerr and Lady Black clearly have in mind that revocation of the licence occurred on 7 March 2016 and that refusal of Mr Pathans application occurred on 7 June 2016. So, for convenience, they surely here adopt a hypothesis of notification on the date when the revocation actually occurred; and then they take the hypothetical date of refusal to be the date when the refusal actually occurred. This yields the three months to which they refer. But the question, already posed by Lord Briggs in paras 194 and 195 above, is whether, were the Secretary of State to have had a duty of prompt notification but not also a duty of prior notification, she would, following prompt notification, have delayed for three months before refusing Mr Pathans application. I can see no reason why she would have delayed her refusal to any extent at all. If one adopts the convenient hypothesis that the Secretary of State should have notified Mr Pathan of the revocation on 7 March 2016, then in my view, in the absence of a concomitant duty of prior notification, she would be likely to have refused his application on the same day. He would then no doubt have applied for administrative review, as he later did; it would no doubt have been determined negatively to himself, as it later was; and all this would probably have been concluded within the space of a month from the date of refusal, as it later was. So, instead of his becoming an overstayer on 7 July 2016, Mr Pathan would have become an overstayer on 7 April 2016. The limited duty recognised in the joint judgment is therefore not just valueless to Mr Pathan: it is likely to be prejudicial to him. It is a curious result of his forensic success. In my view counsel for Mr Pathan is right to submit that, in fairness, the duty of prompt notification must be accompanied by a duty of prior notification. This alone would yield to Mr Pathan a reasonable period in which, while not being an overstayer, he could seek to vary his application under section 3C(5) of the 1971 Act by identifying a fresh employer licensed, able and willing to sponsor him, or by asserting a human right not to be removed from the UK, or by seeking leave to remain outside the rules.
UK-Abs
The Appellant made an application for leave to remain as a Tier 2 (General) Migrant in the UK. At the time his application was made, it was supported by a valid certificate of sponsorship (CoS) from his employer, Submania Limited (Submania). However, the Home Office revoked Submanias sponsor licence while the application was outstanding. The Home Office did not inform the Appellant and, three months after revoking Submanias licence, rejected his application on the basis that he no longer had a valid CoS from a licensed sponsor and so he had not fulfilled the conditions for the grant of leave. The Appellant sought an administrative review of the decision to reject his application and a 60 day period to enable him to provide a fresh CoS, but the decision was maintained. The Appellant then applied for judicial review in the Upper Tribunal. The Upper Tribunal dismissed his application, and the Court of Appeal dismissed his appeal, the Court of Appeal holding that the Appellants challenge raised an issue of substantive unfairness. The Appellant appealed to the Supreme Court. The Supreme Court allows the appeal. The Court unanimously holds that the Home Secretary breached her procedural duty to act fairly by failing promptly to notify the Appellant of the revocation of his sponsors licence. The majority of the Justices (Lord Kerr, Lady Black, and Lord Briggs) hold that the Home Secretary was not under a further duty to provide a period of time following notification to enable the Appellant to react to the revocation of his sponsors licence. Lord Wilson and Lady Arden concluded that the law did impose this further duty on the Home Secretary. Lord Briggs would have dismissed the appeal despite the Home Secretarys breach of the duty promptly to notify. Issue (i): Did the Home Secretarys failure promptly to notify the Appellant of the revocation of his sponsors licence breach the duty of procedural fairness? The Court unanimously answers this question yes. Lord Kerr and Lady Black (delivering a joint judgment) consider that it is a self evident aspect of that duty for the Home Secretary to ensure that the Appellant had timely notice that, for a wholly unanticipated reason, his application was bound to fail (carrying potentially devastating consequences). They find that this duty is underpinned by the notion that a person such as the Appellant should be afforded as much opportunity as reasonably possible to accommodate and deal with such a decision [107]. Lord Kerr and Lady Black consider that this duty can be characterised as procedural rather than substantive because it is a negative duty: an obligation not to deprive the Appellant of the chance to avoid, or mitigate the effects of, the Home Secretarys adverse decision on his application [108]. The Appellant would ultimately have to be notified that his sponsors licence had been revoked, and so the duty promptly to notify does not create any novel positive obligations [112]. Nor does the fact that the procedural duty may result in the opportunity to avoid the effect of an adverse outcome affect that conclusion [137 140]. Consequently, the duty arose as a matter of procedural fairness. Lord Briggs agrees that the Home Secretarys failure to notify constituted procedural unfairness, but he does not consider that this breach justifies the Court setting aside the Home Secretarys decision. He considers that the Appellants lost opportunity to improve his position resulted from the Home Secretarys voluntary (and probably unconscious) three month delay in dealing with the application and that, because the delay was a mere happenstance and the Home Secretary was not obliged to give the Appellant any such breathing space, this breach ought not to render the decision unlawful [197]. Issue (ii): Was the Home Secretary under a duty to provide a period of time following notification to enable the Appellant to react to the revocation of his sponsors licence? The majority answer this question no. Lord Kerr and Lady Black consider that the duty to act fairly in the circumstances involves a duty not to deprive, not an obligation to create. To require the Home Secretary to grant a grace period following notification would be to impose a positive duty and an extra extension of leave beyond that set out in the legislation or Immigration Rules [108 109]. This would be a substantive duty, falling outside of the bounds of procedural fairness [108; 141]. Lord Briggs agrees that a duty to provide a grace period following notification would be a substantive duty going beyond that set out in the Immigration Rules [164; 187]. He reasons that, if time is sought to change or improve the underlying facts to make them more favourable, the issue is probably substantive [177]. A grant of time to find new sponsored employment so as to qualify for Tier 2 leave to remain is therefore substantive [180]. So too is a grant of time to prepare for an orderly departure from the UK [178]. Furthermore, the ultimate consequence of the Home Secretarys failure to grant a grace period that the Appellant became an overstayeris itself a matter of substance [183]. Lord Briggs also considers that the duty to provide a grace period would be perhaps a rare example of pointlessness [162] and that the principles that underlie procedural fairness have no application to a situation where the decision is inevitable (as was the outcome of the Appellants original application) [158; 162]. Equally, the collateral advantage of being able to take alternative steps as a lawful migrant while being protected from being an overstayer is not one which procedural fairness is designed to protect [164 165]. Consequently, the Home Secretarys failure to provide a grace period was not challengeable under that head of judicial review (nor any other) [187]. In separate judgments, Lady Arden and Lord Wilson disagree with the majority. Lady Arden holds that the duty falls under procedural fairness because establishing a procedural impropriety is a necessary first step [27 28]. The substantive element in the challenge is a consequence of the procedural fairness argument rather than vice versa [32], and this conclusion is supported both by the fact that the Home Secretarys substantive decision is unchallenged [74] and by the fact that the rule in question is unaffected by the determination of procedural unfairness [75]. Lady Arden also considers that this is not a case of pointlessness: if granted a grace period, the Appellant would have a chance (which may only be small) that he may find a new basis for applying for leave to remain [61]. Rather, it is pointless to impose a duty on the Home Secretary to notify the Appellant promptly if that duty is not accompanied by a grace period giving the Appellant a meaningful opportunity to take steps in light of that notification [72]. She also considers that the opportunity to take any such steps ought not to depend serendipitously on the amount of time that happens to pass between notification and rejection [72]. She agrees with the judgment of Lord Wilson [92]. Lord Wilson agrees with Lady Arden. He holds that the duty of fairness at common law can impose positive obligations [203 204] and that a duty to provide a grace period would not be inconsistent either with the statute or the Immigration Rules [205]. He queries how, without departure from ordinary meaning, the Appellants complaint could be described as not being procedural [208]. Furthermore, he finds that a duty of prompt notification would be to give nothing of value to the Appellant unless accompanied by a duty to provide a grace period and that the law should not impose a duty nor confer a right if they are of no value [217]. He finds that the Home Secretary would have been likely to refuse the Appellants application immediately after notification if it were only subject to a duty of prompt notification [221]. Consequently, he considers that only both dutiestaken togetherwould yield the Appellant a reasonable time within which, while not suffering the serious consequences of being an overstayer, he could seek to vary his leave to remain application or seek leave to remain outside the Immigration Rules [222]. He therefore considers that procedural fairness requires both duties to be imposed.
This appeal by the Secretary of State for the Home Department concerns five individuals, the respondents, who arrived in the United Kingdom illegally and claimed asylum. Inquiries revealed that they had travelled to the United Kingdom via at least one other member state of the European Union in which they had already claimed asylum and so the Secretary of State requested those states to take responsibility for examining the asylum claims pursuant to Parliament and Council Regulation (EU) No 604/2013 of 26 June 2013 (the Dublin III Regulation, Dublin III or the Regulation). Ultimately each such state agreed to take the relevant respondent back for that purpose. The respondents were all detained for a period of time pending their removal pursuant to paragraph 16(2) of Schedule 2 to the Immigration Act 1971. The Secretary of State had published her policy in relation to detention pending removal in Chapter 55 of her Enforcement Instructions and Guidance (23 October 2015) (the EIG). This appeal now gives rise to important questions concerning the requirements imposed on member states by the Dublin III Regulation, whether the policy in Chapter 55 of the EIG meets those requirements and, so far as it fails to do so, the consequences of that failure. The particular questions which must be decided are: i) whether the detention of each respondent was lawful given that article 28 of the Dublin III Regulation permits detention where there is a significant risk of absconding, risk of absconding being defined in article 2(n) as the existence of reasons in an individual case, based on objective criteria defined by law, to believe that the person might abscond; and, if the detention was not lawful, ii) whether damages are payable either under domestic law for false imprisonment or pursuant to what is known as the Factortame principle established in Brasserie du Pecheur SA v Federal Republic of Germany; R v Secretary of State for Transport; Ex p Factortame Ltd No 4 (Joined Cases C 46/93 and C 48/93) [1996] QB 404. The facts Ms Hoda Hemmati, the first respondent, is a national of Iran and arrived in the United Kingdom illegally by lorry. On 11 February 2015 she presented herself to the authorities and claimed asylum. A check revealed that she had already claimed asylum in Bulgaria. The United Kingdom proceeded formally to request Bulgaria under the Dublin III procedure to take responsibility for the asylum claim and on 17 April 2015 Bulgaria agreed to do so. On 8 June 2015 she was detained in order to effect her removal to Bulgaria and, according to the evidence of the Secretary of State, on the basis she posed a risk of absconding. Removal directions were set for 7 July 2015. These were cancelled when she gave notice that she had issued judicial review proceedings to challenge the decision to remove her. She contended that removal would give rise to a real risk of a violation of her rights under article 3 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (the ECHR). She was released on 17 July 2015. She was therefore detained from 8 June 2015 to 17 July 2015. Mr Fawad Khalili, the second respondent, is a national of Afghanistan. He arrived in the United Kingdom illegally by lorry. On 20 November 2014 he presented himself to the authorities and claimed asylum. He was initially released on temporary admission. On 6 January 2015 he attended a screening interview and made a formal in country claim for asylum. He was detained on the basis that his removal was imminent, that he had behaved deceptively and, according to the evidence of the Secretary of State, that he posed a risk of absconding. A check revealed that he too had already made an asylum claim in Bulgaria. The United Kingdom proceeded formally to request Bulgaria under the Dublin III procedure to take responsibility for the asylum claim and on 12 February 2015 Bulgaria agreed to do so. Removal directions were set for 23 February 2015. In the meantime, on 5 February 2015, the second respondent made submissions to the Secretary of State that his removal would breach his rights under article 3 of the ECHR and on 20 February 2015 he issued a claim for judicial review to prevent his scheduled removal. The removal directions were cancelled and on 9 March 2015 he was granted bail by the First tier Tribunal (the FTT). He claims that his detention became unlawful on 5 February 2015, the date he complained that his removal to Bulgaria would be incompatible with article 3 of the ECHR. The relevant period of his detention was therefore 5 February 2015 to 9 March 2015. Mr Jamal Abdulkadir, the third respondent, is a national of Iraq. On 18 August 2015 he arrived in the United Kingdom illegally by lorry. Upon arrival in Kent, he ran from the lorry but was apprehended and detained. The Secretary of State maintains that the evidence he produced of his identity was inadequate and that there was a risk he would abscond. A check revealed that he had made an asylum claim in Austria in July 2015. At this point he claimed asylum in the United Kingdom. The United Kingdom proceeded formally to request Austria under the Dublin III procedure to take responsibility for the asylum claim and on 15 September 2015 Austria agreed to do so. On 28 September 2015 removal directions were set but later cancelled at Austrias request. Further removal directions were set for 23 October 2015. On 22 October 2015 the third respondent issued judicial review proceedings challenging the decision to remove him on the basis that in Austria he would be exposed to a real risk of violation of his rights under article 3 of the ECHR. He made an application for bail which the FTT refused on 13 November on the basis that there was a risk he would abscond and that it was likely he would be removed in a short time. On 27 November 2015 he was given permission to apply for judicial review and on 8 December 2015, upon review of his detention, he was released. He was therefore detained from 18 August 2015 to 8 December 2015. Mr Jwytar Mohammed, the fourth respondent, is also a national of Iraq. On 8 September 2015 he arrived in the United Kingdom illegally by lorry. He ran off when the lorry doors were opened but was apprehended later that day. He claimed asylum and, according to the evidence of the Secretary of State, was detained on the basis he posed a risk of absconding. A check revealed that he had previously claimed asylum in Austria. The United Kingdom proceeded formally to request Austria under the Dublin III procedure to take responsibility for the asylum claim and on 15 September 2015 Austria agreed to do so. Removal directions were set for 12 October 2015 but on 2 October 2015 he began proceedings for judicial review claiming, among other things, that in Austria he would be exposed to a real risk of violation of his rights under article 3 of the ECHR. He was released from detention on 4 November 2015. He was therefore detained from 8 September 2015 to 4 November 2015. SS, the fifth respondent, is a national of Afghanistan. On 15 September 2015 he arrived in the United Kingdom illegally and by hiding in the back of a train. Upon arrival he claimed asylum and pretended to be a child. A check revealed he had already claimed asylum in Bulgaria, Hungary and Germany. He was detained on that same day on the basis that it was reasonably likely that he would be accepted by another member state under the Dublin III procedure. A month later a notice of detention review stated that it had been decided he should remain in detention because there was reason to believe he would not comply with any conditions of release. The United Kingdom proceeded formally to request Bulgaria, Hungary and Germany under the Dublin III procedure to take responsibility for the asylum claim and on 27 October 2015 Germany agreed to do so. Removal directions were set for 30 November 2015 but were cancelled when he began proceedings for judicial review. He was released from detention on 10 December 2015. He was therefore detained from 15 September 2015 to 10 December 2015. The proceedings The judicial review claims brought by the first and second respondents were listed for hearing together with claims brought by three other individuals. The first and second respondents challenged both the lawfulness of their removal and the lawfulness of their detention. The claims were heard by Garnham J who dealt first with their challenges to removal. He gave judgment on 18 April 2016 dismissing all of the claims ([2016] EWHC 857 (Admin)) and an appeal to the Court of Appeal was subsequently dismissed ([2017] EWCA Civ 1871). There has been no further appeal against that decision. Garnham J gave a further judgment on 15 June 2016 dealing with the claims for unlawful detention ([2016] EWHC 1394 (Admin); [2016] 1 WLR 4243). He allowed two of the claims but not those of the first and second respondents. The judicial review claims brought by the third and fourth respondents were listed for hearing together. Again, they both challenged the lawfulness of their removal and their detention. These claims were heard by Irwin J who dismissed them all for reasons given in his judgment of 28 June 2016 ([2016] EWHC 1504) (Admin)). The judicial review claim brought by the fifth respondent came on for hearing before Mr John Howell QC, sitting as a deputy High Court judge. The original grounds of claim focused on the assertion by the fifth respondent that he was a child and therefore could not be removed to Germany under the Dublin III scheme. But at the hearing he was permitted to amend his claim to introduce a further claim that he was unlawfully detained because his detention was contrary to articles 28(2) and 2(n) of the Dublin III Regulation. The deputy judge gave judgment on 26 May 2017 ([2017] EWHC 1295 (Admin); [2017] 1 WLR 3641). He found that that the fifth respondent was not a child when he was detained. However, he also found that the fifth respondent had been detained to secure his transfer to the responsible member state under the Dublin III scheme; that it had to be established that he posed a significant risk of absconding; and that his detention was unlawful because, even if he posed a significant risk of absconding, his detention was in conflict with articles 28(2) and 2(n). The Court of Appeal The first to fourth respondents in the first four claims and the Secretary of State in the fifth appealed to the Court of Appeal. The principal issues before the court concerned the meaning and effect of articles 28 and 2(n) of the Dublin III Regulation and, in particular, whether the application of the principles explained in R v Governor of Durham Prison, Ex p Hardial Singh [1984] 1 WLR 704 or the Secretary of States policy set out in Chapter 55 of the EIG satisfied the requirements of those articles; and, if not, whether damages were payable in respect of the respondents detention either under domestic law for false imprisonment or under European Union law pursuant to the Factortame principle. It is important to note that the Court of Appeal was asked to decide these issues on the agreed assumption that the only ground for detaining the respondents was that the Secretary of State wished to remove them using the Dublin III procedure. The position remains the same on this further appeal. The first and second respondents also raised as a separate issue whether their detention was unlawful because of a failure by the Secretary of State to comply with the Hardial Singh principles. The Court of Appeal, by a majority (Sir Terence Etherton MR and Peter Jackson LJ), allowed the appeals of the first to fourth respondents and dismissed the appeal of the Secretary of State in the case of the fifth respondent. Critical to the reasoning of the majority was the decision of the second chamber of the Court of Justice of the European Union (the CJEU) in Policie R, Krajsk editelstv policie steckho kraje, odbor cizineck policie v Al Chodor (Case C 528/15) [2017] 4 WLR 125. This decision post dated the decisions of Garnham J and Irwin J but predated that of Mr John Howell QC. The majority held that the touchstone applied by the CJEU in Al Chodor for assessing compliance with articles 28(2) and 2(n) of the Dublin III Regulation was whether the provisions relied upon for detention had the requisite legal basis and the safeguards of clarity, predictability, accessibility and protection against arbitrariness within a framework of certain predetermined limits. The majority also held that it was clear that neither the Hardial Singh principles nor the Secretary of States published policy in Chapter 55 of the EIG satisfied these requirements. It followed that the detention of all of the respondents was in breach of article 28(2). The majority of the Court of Appeal went on to hold that each of the respondents had established all of the necessary ingredients of the common law cause of action for wrongful imprisonment. They had all been detained and that detention was unlawful because it was effected pursuant to the policy in Chapter 55 of the EIG, and that was itself unlawful in so far as it failed to give effect to articles 28(2) and 2(n) of the Regulation. The respondents were therefore entitled to damages for false imprisonment. The Factortame principle had no relevance because the individual right of each person to liberty existed save in so far as it is legitimately cut down by law. The appeals did not concern infringement of rights which were to be found only in European Union law. Further, it was not necessary to consider the additional and discrete claims by the first and second respondents for false imprisonment based upon the alleged breach by the Secretary of State of the Hardial Singh principles. Sales LJ, dissenting, held that a policy statement such as that contained in Chapter 55 of the EIG was in principle capable of satisfying the requirements of articles 28(2) and 2(n) of the Dublin III Regulation, and that here it did satisfy those requirements. However, conscious that he was in the minority on this issue, he went on to consider whether, on the footing that he was wrong, the respondents were entitled to damages. He concluded that they were not. In his view, the claim turned on the alleged failure by the United Kingdom to adopt a particular form of law when implementing articles 28(2) and 2(n). In these circumstances the proper approach in considering whether the Secretary of State was liable for damages was to ask whether the relevant criteria for an award of damages in respect of a breach of European law had been satisfied and, in particular, whether the breach was sufficiently serious within the meaning of the decision of the CJEU in Factortame, that is to say whether the member state had manifestly and gravely disregarded the limits of its discretion. Here, any breach of articles 28(2) and 2(n) did not satisfy that sufficiently serious test. Sales LJ also addressed the separate claims by the first and second respondents for false imprisonment based upon a breach of the Hardial Singh principles. In his view there was nothing in them, and in this regard he agreed with the decision of Garnham J: the first and second respondents were detained for proper reasons; they were assessed as posing a risk of absconding and that assessment was rational and justified; and throughout the period of their detention, there remained a real prospect that they would be removed eventually. Issues of principle This further appeal therefore raises the following important issues of principle concerning the limits of the permission conferred by the Dublin III Regulation upon member states to detain an applicant for international protection in order to secure the transfer of that applicant to another member state in accordance with the transfer procedures laid down in the Regulation: i) Does the policy published by the Secretary of State in Chapter 55 of the EIG satisfy the requirements imposed by articles 28 and 2(n) of the Regulation for a measure setting out objective criteria defined by law for believing that an applicant for international protection who is subject to a transfer procedure may abscond? ii) If not, are damages payable to an applicant whose detention pursuant to article 28(2) was authorised by the Secretary of State pending such transfer: under domestic law for the tort of false imprisonment, or pursuant to European Union law under the Factortame a) b) principle? European Union law The European Union has for some time sought to establish an area of freedom, security and justice which is open to those who, forced by circumstances, legitimately seek its protection. To this end the Union has harmonised the procedures and substantive rules of refugee law and, as part of that harmonisation, established a body of law within what is known as the Common European Asylum System (the CEAS). A well functioning Dublin system is seen as essential to the CEAS in ensuring the rapid identification of the member state responsible for examining an application for international protection, and in this way guaranteeing effective access to the procedures for determining refugee status. The Dublin III Regulation replaced Council Regulation (EC) No 343/2003 of 18 February 2003 establishing the criteria and mechanisms for determining the member state responsible for examining an asylum application lodged in one of the member states by a third country national (the Dublin II Regulation). Dublin III lays down, in Chapter III, a hierarchy of criteria for identifying the member state responsible for deciding the claim. If the member state where an asylum claim has been lodged considers that another member state is responsible then it may ask the other member state to take charge of the applicant. If the other member state agrees to this request, the first member state will transfer the applicant there in accordance with the procedure laid down in the Regulation. The Dublin III Regulation permits, subject to strict safeguards, the detention of an applicant for international protection in order to ensure that the Dublin III procedure is implemented effectively. In this regard, recital 20 provides, so far as relevant: The detention of applicants should be applied in accordance with the underlying principle that a person should not be held in detention for the sole reason that he or she is seeking international protection. Detention should be for as short a period as possible and subject to the principles of necessity and proportionality. In particular, the detention of applicants must be in accordance with article 31 of the Geneva Convention. The procedures provided for under this Regulation in respect of a detained person should be applied as a matter of priority, within the shortest possible deadlines. As regards the general guarantees governing detention, as well as detention conditions, where appropriate, member states should apply the provisions of Directive 2013/33/EU also to persons detained on the basis of this Regulation. The terms of this recital are reflected in article 28 of the Regulation which authorises member states to detain applicants subject to various conditions. It provides: 1. Member states shall not hold a person in detention for the sole reason that he or she is subject to the procedure established by this Regulation. 2. When there is a significant risk of absconding, member states may detain the person concerned in order to secure transfer procedures in accordance with this Regulation, on the basis of an individual assessment and only in so far as detention is proportional and other less coercive alternative measures cannot be applied effectively. 3. Detention shall be for as short a period as possible and shall be for no longer than the time reasonably necessary to fulfil the required administrative procedures with due diligence until the transfer under this Regulation is carried out. Where a person is detained pursuant to this article, the period for submitting a take charge or take back request shall not exceed one month from the lodging of the application. The member state carrying out the procedure in accordance with this Regulation shall ask for an urgent reply in such cases. Such reply shall be given within two weeks of receipt of the request. Failure to reply within the two week period shall be tantamount to accepting the request and shall entail the obligation to take charge or take back the person, including the obligation to provide for proper arrangements for arrival. Where a person is detained pursuant to this article, the transfer of that person from the requesting member state to the member state responsible shall be carried out as soon as practically possible, and at the latest within six weeks of the implicit or explicit acceptance of the request by another member state to take charge or to take back the person concerned or of the moment when the appeal or review no longer has a suspensive effect in accordance with article 27(3). When the requesting member state fails to comply with the deadlines for submitting a take charge or take back request or where the transfer does not take place within the period of six weeks referred to in the third subparagraph, the person shall no longer be detained. Articles 21, 23, 24 and 29 shall continue to apply accordingly. 4. As regards the detention conditions and the guarantees applicable to persons detained, in order to secure the transfer procedures to the member state responsible, articles 9, 10 and 11 of Directive 2013/33/EU shall apply. Article 28(2) therefore permits, subject to the other provisions of the article, the detention of applicants in order to secure their transfer in accordance with the Regulation, but only where there is a significant risk of absconding; that risk has been identified on the basis of an individual assessment; and the detention is proportional and other less coercive measures cannot be applied effectively. Article 2(n) defines risk of absconding as: the existence of reasons in an individual case, which are based on objective criteria defined by law, to believe that an applicant or a third country national or a stateless person who is subject to a transfer procedure may abscond. I must also refer to another of the group of instruments forming the CEAS body of law: Parliament and Council Directive 2013/33/EU of 26 June 2013 (the recast Reception Directive), referred to in recital 20 of the Dublin III Regulation. The United Kingdom has not opted in to this Directive and remains governed by its predecessor, Council Directive 2003/9/EC of 27 January 2003. Nevertheless, its terms do shed some light on the meaning of the relevant terms of the Dublin III Regulation. Recital 15 of the recast Reception Directive provides: The detention of applicants should be applied in accordance with the underlying principle that a person should not be held in detention for the sole reason that he or she is seeking international protection, particularly in accordance with the international legal obligations of the member states and with article 31 of the Geneva Convention. Applicants may be detained only under very clearly defined exceptional circumstances laid down in this Directive and subject to the principle of necessity and proportionality with regard to both to [sic] the manner and the purpose of such detention. Where an applicant is held in detention he or she should have effective access to the necessary procedural guarantees, such as judicial remedy before a national judicial authority. Article 8 of the recast Reception Directive provides, so far as relevant: 1. Member states shall not hold a person in detention for the sole reason that he or she is an applicant in accordance with Directive 2013/32/EU of the European Parliament and of the Council of 26 June 2013 on common procedures for granting and withdrawing international protection. 2. When it proves necessary and on the basis of an individual assessment of each case, member states may detain an applicant, if other less coercive alternative measures cannot be applied effectively. 3. An applicant may be detained only: in accordance with article 28 of [the Dublin III (f) Regulation]. The grounds for detention shall be laid down in national law. Al Chodor The meaning of these provisions of the Dublin III Regulation was considered by the CJEU in Al Chodor on a reference from the Nejvy sprvn soud, the Supreme Administrative Court of the Czech Republic. This decision is of great importance to the issues arising on this appeal and so I must deal with it in some detail. The case concerned a family of Iraqi nationals, the Al Chodors, who were stopped by police in the Czech Republic and interviewed. They claimed to be of Kurdish origin and it emerged that they had travelled to the Czech Republic via Turkey, Greece and then Hungary, where they had claimed asylum. The Foreigners Police Section of the Czech police force decided to place the family in detention pending their transfer to Hungary under the Dublin system. They took the view, for perfectly sensible reasons, that there was a serious risk that, unless detained, the Al Chodors would abscond before their transfer. The relevant Czech legislation conferred on the police force the power to detain a foreign national who had entered the Czech Republic illegally for the period of time necessary to secure the transfer of that person in accordance with, among other measures, the Dublin III Regulation. Upon a challenge by the Al Chodors, the Czech Regional Court annulled the decision to detain on the basis that the objective criteria for assessing the risk of absconding were not defined by Czech legislation as required by article 2(n) of the Regulation. The police force then brought an appeal on a point of law before the Supreme Administrative Court, which made the reference to the CJEU. The referring court was unsure whether the relevant Czech legislation, read together with articles 28(2) and 2(n) of the Dublin III Regulation, provided a sufficient legal basis for detention given that it did not lay down any objective criteria for assessing the risk of absconding. The court was also unsure whether the recognition of such criteria in case law which confirmed a consistent administrative practice of the police could meet the requirement of criteria defined by law within the meaning of article 2(n). It was pointed out by the referring court that the various language versions of article 2(n) diverged and that while the French and German versions required a definition, laid down in legislation, of the objective criteria for the purposes of absconding, other versions required a definition of those criteria by law in the general sense. As a result, the meaning of the term defined by law did not follow clearly from the wording of the provision. The referring court therefore asked, in substance, whether articles 2(n) and 28(2) of the Dublin III Regulation require member states to establish, in a national law, objective criteria underlying the reasons for believing that an applicant for international protection who is subject to a transfer procedure may abscond, and whether the absence of those criteria in a national law leads to the inapplicability of article 28(2). The Czech and United Kingdom Governments argued that, according to the case law of the European Court of Human Rights (the ECtHR), the concept of law as referred to in the ECHR was not limited to legislation but also included other sources of law provided they possessed the qualities of precision, foreseeability and accountability. They contended that the Czech case law and relevant administrative practice possessed those qualities in this case. The Greek Government and the Commission disagreed. Advocate General Saugmandsgaard e delivered his Opinion on 10 November 2016 EU:C:2016:865; [2017] 3 CMLR 24. He considered that the concept of law as referred to in article 2(n) of Dublin III, read in context and in light of its purpose, had a meaning which was different from that of the concept of law in the ECHR; that the provisions of the ECHR established a minimum level of protection and did not exclude the possibility that European Union law might provide more extensive protection; that the European Union legislature had indeed chosen to provide more extensive protection than that arising from article 5(1) of the ECHR; and that the criteria had to be laid down in legislation (Opinion, paras 42 45). He then proceeded to explain his reasons for these views. The Advocate General began with his reasons for believing that the Dublin III Regulation and the recast Reception Directive were intended to extend the protection afforded to applicants (Opinion, paras 46 58). He pointed out that before these instruments there was only minimal regulation of applicants detention. By contrast and as stated in recital 15 of the recast Reception Directive, the European Union legislature intended that detention of such persons under the new regime should be limited to exceptional circumstances. He also explained that the freedom of member states to detain applicants was already subject to the restrictions imposed by article 5(1)(f) of the ECHR and that the compliance of a detention measure with this provision was not conditional on there being a risk of absconding or the absence of other less restrictive measures enabling the removal of the person concerned. In his view, in adopting the Dublin III Regulation and the recast Reception Directive, the legislature intended to provide more extensive protection than that arising from article 5(1)(f). His reasons were twofold: first, article 28(2) of Dublin III permitted detention only where there was a significant risk of absconding; and secondly, article 28(2) of Dublin III and article 8(2) of the recast Reception Directive provided that detention was a measure of last resort and might be taken only in the absence of less coercive alternative measures. Two objectives of the requirement that the criteria for assessing the risk of absconding must be defined by law were identified by the Advocate General (Opinion, paras 59 70). The first was to ensure that the criteria offered sufficient guarantees of legal certainty, as that concept is understood in European Union law (Opinion, para 62). The second was to ensure that the discretion enjoyed by the individual authorities responsible for applying the criteria was exercised within a framework of certain pre determined markers (Opinion, para 63). In the Advocate Generals view, the achievement of each of these objectives was dependent on the objective criteria for the assessment of the risk of an applicant absconding being defined in a legislative text. Legal certainty demanded that individuals should be able to ascertain the scope of their rights and obligations and foresee the consequences of their actions. This requirement had not been satisfied in the instant case because the Czech case law was fragmentary, and the relevant administrative practice could be altered at will and had not been publicised (Opinion, paras 72 80). As for the objective of circumscribing the discretion of the administrative and judicial authorities, the adoption of legislation, in addition to providing advantages in terms of legal certainty, offered additional assurances in terms of external control of the discretion of the administrative and judicial authorities responsible for assessing the risk of absconding and, where appropriate, ordering detention (Opinion, para 81). Interference with liberty should be limited to exceptional circumstances; the discretion of the authorities should be circumscribed in such a way as to guard applicants against arbitrary deprivations of liberty; and, from this perspective, it was important that the criteria and their application should be determined by institutionally separate authorities (Opinion, para 82). The twofold requirement inherent in article 2(n), for an individual assessment and for the assessment to be based upon pre defined, objective criteria, required the administrative and judicial authorities to take the circumstances of each case into consideration; and further, it ensured that the discretion of the individual authority was channelled by means of general, abstract criteria that have been determined in advance by a third authority (Opinion, para 83). The CJEU gave judgment on 15 March 2017 [2017] 4 WLR 125. It dealt first with a submission that the Dublin III Regulation was directly applicable in member states and did not require transposition into national law. Thus, it was argued, article 2(n) did not require national legislatures to implement the objective criteria in national law. The court rejected this submission, observing, at para 28, that article 2(n) required that objective criteria defining the existence of a risk of absconding be defined by law. Since these criteria had been established neither by Dublin III nor in any other European Union legal act, the elaboration of those criteria was a matter for national law. The CJEU turned next to the question whether law in article 2(n) included settled case law which confirmed a consistent administrative practice. It explained, at paras 30 to 32, that a textual analysis did not provide an answer and that the provision had to be interpreted by reference to the purpose and the general scheme of the rules of which it formed a part. Here, the court continued, at paras 34 and 35, it was relevant that the Regulation was intended to make improvements to the effectiveness of the Dublin system but also to the protection afforded to applicants. Indeed, the high level of protection now afforded to applicants was apparent from the terms of articles 28 and 2(n), the requirement in article 2(n) that a finding of a risk of absconding must be based upon objective criteria defined by law and applied on a case by case basis, and the fact that its predecessor, the Dublin II Regulation, did not contain any provision relating to detention. The CJEU also thought it relevant that, by authorising the detention of applicants in order to secure their effective transfer under the Dublin III regime, the Regulation was authorising a limitation on the fundamental right to liberty enshrined in article 6 of the Charter of Fundamental Rights of the European Union (the Charter), and account also had to be taken of article 5 of the ECHR as providing the minimum threshold of protection. The court reasoned that any law authorising the deprivation of liberty must therefore be sufficiently accessible, precise and foreseeable in its application to avoid all risk of arbitrariness (para 38); that there must be no element of bad faith or deception on the part of the authorities (para 39); and that the detention of applicants, constituting, as it does, a serious interference with their liberty, is subject to strict safeguards, namely the presence of a legal basis, clarity, predictability, accessibility and protection against arbitrariness (para 40). There followed an analysis by the CJEU of the safeguard of legal basis and the type of provision needed to satisfy the other safeguards of clarity, predictability, accessibility and protection against arbitrariness. Here the courts reasoning is of particular importance and so I set it out in full: 41. With regard to the first of those safeguards, it must be recalled that the limitation on the exercise of the right to liberty is based, in the present case, on article 28(2) of the Dublin III Regulation, read in conjunction with article 2(n) thereof, which is a legislative act of the European Union. The latter provision refers, in turn, to national law for the definition of the objective criteria indicating the presence of a risk of absconding. In that context, the question arises as to what type of provision addresses the other safeguards, namely those of clarity, predictability, accessibility and protection against arbitrariness. In that regard, as was noted by the Advocate General in 42. point 63 of his Opinion EU:C:2016:865, it is important that the individual discretion enjoyed by the authorities concerned pursuant to article 28(2) of the Dublin III Regulation, read in conjunction with article 2(n) thereof, in relation to the existence of a risk of absconding, should be exercised within a framework of certain predetermined limits. Accordingly, it is essential that the criteria which define the existence of such a risk, which constitute the basis for detention, are defined clearly by an act which is binding and foreseeable in its application. 43. Taking account of the purpose of the provisions concerned, and in the light of the high level of protection which follows from their context, only a provision of general application could meet the requirements of clarity, predictability, accessibility and, in particular, protection against arbitrariness. 44. The adoption of rules of general application provides the necessary guarantees in so far as such wording sets out the limits of the flexibility of those authorities in the assessment of the circumstances of each specific case in a manner that is binding and known in advance. Furthermore, as the Advocate General noted in points 81 and 82 of his Opinion EU:C:2016:865, criteria established by a binding provision are best placed for the external direction of the discretion of those authorities for the purposes of protecting applicants against arbitrary deprivations of liberty. It follows that article 2(n) and article 28(2) of the Dublin 45. III Regulation, read in conjunction, must be interpreted as requiring that the objective criteria underlying the reasons for believing that an applicant may abscond must be established in a binding provision of general application. In any event, settled case law confirming a consistent administrative practice on the part of the Foreigners Police Section, such as in the main proceedings in the present case, cannot suffice. 46. In the absence of those criteria in such a provision, as in the main proceedings in the present case, the detention must be declared unlawful, which leads to the inapplicability of article 28(2) of the Dublin III Regulation. Accordingly, the CJEU ruled as follows: Article 2(n) and article 28(2) of Parliament and Council Regulation (EU) No 604/2013 of 26 June 2013 establishing the criteria and mechanisms for determining the member state responsible for examining an application for international protection lodged in one of the member states by a third country national or a stateless person, read in conjunction, must be interpreted as requiring member states to establish, in a binding provision of general application, objective criteria underlying the reasons for believing that an applicant for international protection who is subject to a transfer procedure may abscond. The absence of such a provision leads to the inapplicability of article 28(2) of that regulation. It is striking that, although the CJEU plainly adopted aspects of the reasoning of the Advocate General, it did not in terms endorse his conclusion that the criteria for assessing the risk of absconding must be embodied in legislation. I must return to this decision in addressing the issues arising on this appeal but first I must say something about our domestic law. Domestic law Paragraph 16(2) of Schedule 2 to the Immigration Act 1971 (the 1971 Act) confers powers on immigration officers to detain an individual who is held within the immigration system pending a decision whether to give directions for his or her removal, and pending removal pursuant to any such directions. Similar powers are conferred on the Secretary of State by section 62(1) and section 62(2)(c) and (d) of the Nationality, Immigration and Asylum Act 2002. Paragraph 1(3) of Schedule 2 to the 1971 Act provides that, in exercising their functions under the 1971 Act, immigration officers must act in accordance with such instructions as may be given to them by the Secretary of State. It is rightly accepted by the Secretary of State that there are limits to these powers to detain. First, they are subject to the Hardial Singh principles. These are well known and may be summarised as follows: (i) the Secretary of State must intend to deport the person and can only use the power to detain for that purpose; (ii) the person may only be detained for a period that is reasonable in all the circumstances; (iii) if, before the expiry of the relevant period, it becomes apparent that the Secretary of State will not be able to effect deportation within a reasonable period, he should not seek to exercise the power of detention; and (iv) the Secretary of State should act with reasonable diligence and expedition to effect the removal: see R (I) v Secretary of State for the Home Department [2002] EWCA Civ 888; [2003] INLR 196; affirmed as common ground in R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245, paras 22 and 171. These principles reflect the basic public law duties to act consistently with the purpose of the legislation and reasonably in the Wednesbury sense: Associated Provincial Picture Houses Ltd v Wednesbury Corpn [1948] 1 KB 223. But, as Lord Dyson observed in Lumba at para 30, they are not exhaustive. Were it otherwise, there would be no room for a public law duty of adherence to a published policy, to which I will come in a moment. We have also been referred by counsel for the Secretary of State to the decision of this court in R (Nouazli) v Secretary of State for the Home Department [2016] UKSC 16; [2016] 1 WLR 1565. There this court accepted (at para 75) that the primary responsibility to comply with the Hardial Singh principles lies with the Secretary of State but that the courts provide supervision of their application and that challenges are brought to secure release and not just for damages after the event. The Secretary of States policy in relation to detention to effect removal was set out in Chapter 55 of the EIG. Paragraph 55.1.1 states: The power to detain must be retained in the interests of maintaining effective immigration control. However, there is a presumption in favour of immigration bail and, wherever possible, alternatives to detention are used (see 55.20 and chapter 57). Detention is most usually appropriate: to effect removal; initially to establish a person's identity or basis of claim; or where there is reason to believe that the person will fail to comply with any conditions attached to a grant of immigration bail. To be lawful, detention must not only be based on one of the statutory powers and accord with the limitations implied by domestic and Strasbourg case law but must also accord with stated policy. Paragraph 55.1.3 provides: Detention must be used sparingly, and for the shortest period necessary. Paragraph 55.1.4 addresses the implied limitations on the statutory powers to detain and provides: In order to be lawful, immigration detention must be for one of the statutory purposes for which the power is given and must accord with the limitations implied by domestic and ECHR case law. Paragraph 55.1.4.1 then sets out what are, in substance, the Hardial Singh principles: To comply with article 5 [ECHR] and domestic case law, the following should be borne in mind: a) The relevant power to detain must only be used for the specific purpose for which it is authorised. This means that a person may only be detained under immigration powers for the purpose of preventing his unauthorised entry or with a view to his removal (not necessarily deportation). Detention for other purposes, where detention is not for the purposes of preventing unauthorised entry or effecting removal of the individual concerned, is not compatible with article 5 and would be unlawful in domestic law (unless one of the other circumstances in article 5(1)(a) to (e) applies); b) The detention may only continue for a period that is reasonable in all the circumstances for the specific purpose; c) If before the expiry of the reasonable period it becomes apparent that the purpose of the power, for example, removal, cannot be effected within that reasonable period, the power to detain should not be exercised; and d) The detaining authority (be it the immigration officer or the Secretary of State), should act with reasonable diligence and expedition to effect removal (or whatever the purpose of the power in question is). Paragraph 55.3 is also concerned with decisions to detain: Decision to detain (excluding fast track and criminal casework cases) 1. There is a presumption in favour of temporary admission or temporary release there must be strong grounds for believing that a person will not comply with conditions of temporary admission or temporary release for detention to be justified. 2. All reasonable alternatives to detention must be considered before detention is authorised. 3. Each case must be considered on its individual merits, including consideration of the duty to have regard to the need to safeguard and promote the welfare of children involved. Of particular significance is paragraph 55.3.1 which provides: Factors influencing a decision to detain All relevant factors must be taken into account when considering the need for initial or continued detention, including: What is the likelihood of the person being removed and, if so, after what timescale? Is there any evidence of previous absconding? Is there any evidence of a previous failure to comply with conditions of temporary release or bail? Has the subject taken part in a determined attempt to breach the immigration laws? (For example, entry in breach of a deportation order, attempted or actual clandestine entry). Is there a previous history of complying with the requirements of immigration control? (For example, by applying for a visa or further leave). What are the persons ties with the UK? Are there close relatives (including dependants) here? Does anyone rely on the person for support? If the dependant is a child or vulnerable adult, do they depend heavily on public welfare services for their daily care needs in lieu of support from the detainee? Does the person have a settled address/employment? What are the individuals expectations about the outcome of the case? Are there factors such as an outstanding appeal, an application for judicial review or representations which might afford more incentive to keep in touch than if such factors were not present? (See also 55.14). Is there a risk of offending or harm to the public (this requires consideration of the likelihood of harm and the seriousness of the harm if the person does offend)? Does the subject have a history of torture? Does the subject have a history of physical or mental ill health? Is the subject under 18? (See also sections 55.3.2 Further guidance on deciding to detain in criminal casework cases, 55.6 detention forms, 55.7 detention procedures, 55.9 special cases and 55.10 persons considered unsuitable for detention). Once detention has been authorised, it must be kept under close review to ensure that it continues to be justified. A policy such as that embodied in Chapter 55 of the EIG is published so that an individual affected by it knows the criteria by which the executive has chosen to exercise the power conferred upon it by statute and so that the individual can make appropriate representations in relation to that exercise in relation to him. In Lumba, Lord Dyson explained its importance in these terms at para 34: The rule of law calls for a transparent statement by the executive of the circumstances in which the broad statutory criteria will be exercised. Just as arrest and surveillance powers need to be transparently identified through codes of practice and immigration powers need to be transparently identified through the immigration rules, so too the immigration detention powers need to be transparently identified through formulated policy statements. It is also submitted on behalf of the Secretary of State, and I accept, that the executive must follow this stated policy unless there are good grounds for not doing so. Further, and as Lord Dyson explained in Lumba, at para 66, a purported lawful authority to detain may be impugned either because the defendant has acted in excess of jurisdiction or because the jurisdiction has been wrongly exercised. Both species of error render an executive act ultra vires, unlawful and a nullity. There is in this context no difference between a detention which is unlawful because there was no statutory power to detain and a detention which is unlawful because the decision to detain, although authorised by the statute, was made in breach of a rule of public law. The same point emerges from the decision of this court in R (Kambadzi) v Secretary of State for the Home Department [2011] UKSC 23; [2011] 1 WLR 1299. As Lord Hope of Craighead said at para 42, the published policy in that case narrowed the power of the executive to detain by requiring that any detention be reviewed regularly, and so it was an abuse of the power for any person to be detained if that detention was not reviewed at regular intervals. Lord Hope continued, at paras 51 and 52, that the policy was designed to give practical effect to the Hardial Singh principles and to meet the requirement that, to be lawful, the measures had to be transparent and not arbitrary; that the policy contained a set of instructions with which officials were expected to comply; that the policy and the principles went hand in hand; and that the discretion to continue detention had to be exercised in accordance with the principles but also in accordance with the policy. Does Chapter 55 of the EIG satisfy articles 28(2) and 2(n)? To summarise the position under European Union law, a member state may not hold in detention a person who is subject to the Dublin III procedure unless there are reasons in that individual case, based on objective criteria defined by law and an individual assessment, to believe that person may abscond. In addition, detention must be proportional, is justified only where other less coercive alternative methods cannot be applied effectively and must be for as short a period as possible. Further and as interpreted by the CJEU in Al Chodor and consistently with the ECHR and the Charter, articles 28(2) and 2(n) of the Dublin III Regulation demand that the detention of applicants, constituting, as such detention does, a serious interference with their right to liberty, is subject to compliance with the strict safeguards of legal basis, clarity, predictability, accessibility and protection against arbitrariness (Al Chodor, para 40). The first of these safeguards requires national law to define objective criteria indicating the presence of a risk of absconding (Al Chodor, para 41). The others demand that the assessment is carried out within a framework of certain predetermined limits and that the objective criteria are defined clearly by an act which is binding and foreseeable in its application (Al Chodor, para 42) and are established in a binding provision of general application (Al Chodor, para 45). The adoption of such a provision of general application provides the necessary safeguards in so far as its wording sets out the limits of the flexibility of [the] authorities in the assessment of the circumstances of each specific case in a manner which is binding and known in advance (Al Chodor, para 44). The CJEU accordingly ruled that member states are required to establish, in a binding provision of general application, objective criteria underlying the reasons for believing that an applicant for international protection who is subject to a transfer procedure may abscond. These requirements are of great importance. As we have seen, the Dublin III Regulation was intended to improve not only the effectiveness of the Dublin system but also to confer a high level of protection upon those subject to Dublin III transfers and to impose significant limitations on the powers of member states to detain them. The Regulation was also intended to provide greater guarantees in relation to detention than its predecessor, the Dublin II Regulation. The Secretary of State accepts that, within the taxonomy of English law, Chapter 55 of the EIG cannot be described as legislation but contends that it nevertheless includes rules and that decision makers have legal obligations, imposed by settled case law, to comply with them. It is submitted that the policy contained in Chapter 55 constitutes a clear statement by the executive of the circumstances in which the statutory criteria will be exercised; that they are objective and publicly accessible; and that their meaning will, if necessary, be determined by the court. It is also argued that Chapter 55 and domestic case law are integral parts of the law that governs and limits the power to detain and that together they define how the power to detain must be exercised and set out the objective criteria which decision makers must apply when exercising that power. Consequently, the submission continues, the combination of Chapter 55 and domestic case law ensures that any decision to detain is exercised within a framework of certain predetermined limits and according to criteria established by binding provisions of general application which meet the requirements of clarity, predictability, accessibility and protection against arbitrariness explained by the CJEU in Al Chodor. These submissions are all directed to the issues set out in para 18(i) above. The majority of the Court of Appeal addressed those issues in two stages. They considered first, whether the contents of Chapter 55 of the EIG met the requirement that the criteria for the assessment of the risk of absconding must be clear, predictable and accessible, and whether they constituted a framework of certain predetermined limits; and secondly whether Chapter 55, though not legislation and even though capable of being changed at any time by the Secretary of State without being subject to parliamentary scrutiny or consultation, provided the necessary predictability and amounted to a binding provision of general application as referred to by the CJEU in Al Chodor and constituted a defining law as required by article 2(n). I propose to adopt the same course. Does Chapter 55 of the EIG constitute a framework of certain predetermined limits? As we have seen, Chapter 55 of the EIG contains the Secretary of States policy in relation to detention pending removal. However, it is not a policy which is specifically directed to the detention of persons subject to a Dublin procedure. Indeed, as the majority in the Court of Appeal observed, it contains no reference to Dublin III at all. In these circumstances it comes as no surprise that it makes no reference to the requirement that a person is not to be detained for the sole reason that he or she is subject to a Dublin procedure; nor does it say that the only permissible basis for detaining such a person is that there is a significant risk of absconding. Further, there is no direction that detention must be proportional. I accept that paragraph 55.1.1 of Chapter 55 states that, in considering the power to detain, there is a presumption in favour of immigration bail and that, where possible, alternatives to detention should be used. It also states that detention is most usually appropriate to effect removal, initially to establish a persons identity or basis of claim or where there is reason to believe that a person will fail to comply with any conditions attached to the grant of immigration bail. So too, paragraph 55.1.3 makes clear that detention must be used sparingly and for the shortest necessary period; and paragraph 55.1.4 says that detention must be for one of the statutory purposes for which the power is given and must comply with the limitations imposed by domestic and ECHR case law. But all of this amounts to no more than general guidance as to how the power to detain is to be exercised and does not constitute a set of objective criteria against which the risk of absconding is to be assessed. Nor does it set out the limits of the flexibility of the authorities in the assessment of the particular circumstances of each case in a manner which is binding and known in advance. Paragraph 55.1.4.1 of Chapter 55 sets out the Hardial Singh principles but, as the majority of the Court of Appeal explained at paras 167 to 169, by the end of the hearing before them it appeared not to be in dispute that these principles were insufficient to satisfy the requirements of articles 28(2) and 2(n). Nevertheless, the majority in the Court of Appeal went on to explain why that was in any event their view, and it is a view which I share. In short, the Hardial Singh principles require the power to detain to be exercised reasonably and for the prescribed purpose of facilitating deportation: see, for example, Lumba, para 30, per Lord Dyson. But they do not constitute objective criteria on the basis of which an assessment may be made as to the likelihood that a person who is subject to a transfer procedure may abscond. The Secretary of State places particular reliance on paragraphs 55.3 and 55.3.1 of the EIG. Paragraph 55.3 does no more than set out further general guidance to the effect that, for detention to be justified, there must be strong grounds for believing a person will not comply with conditions of temporary admission or temporary release; that all reasonable alternatives to detention have been assessed; and that each case has been considered on its merits, with due regard to the need to safeguard and promote the welfare of any children involved. The Secretary of State therefore focuses on the criteria set out in paragraph 55.3.1 and contends these are objective and publicly accessible and that their meaning will, if necessary, be determined by the court. It is also argued that they have formed the basis of detention decisions for many years and are well known and well understood by asylum seekers and the courts. So too, the argument continues, binding guidance as to the application of these criteria is set out in case law, and the courts have ensured that the decision making process is transparent. The Secretary of State accepts that this list relates not just to Dublin III cases but also to all other cases in which it may be appropriate to consider detention for immigration purposes but contends this is not incompatible with article 2(n). It is submitted that this article does not say that the objective criteria have to be set out in a separate stand alone document focused exclusively on article 28, nor that there has to be an express reference to that provision. Further, an individual who is subject to the Dublin III procedure can readily identify which of the criteria in the list are relevant to any assessment of whether he poses a risk of absconding. I do not find these submissions persuasive. Paragraph 55.3.1 sets out 11 factors which may be relevant in considering the need for initial or continued detention. It does not purport to be a list of criteria for assessing whether a person in a Dublin III procedure may abscond. Further, it is not an exhaustive list for, as its opening words make clear, all relevant factors are to be taken into account. As for the list itself, only one factor, the second, refers in terms to absconding. Some of the others might be relevant to a risk of absconding but might also be relevant to the need for detention for different purposes underpinned by different policy considerations. In the case of the last three (whether the subject is under 18, whether the subject has a history of torture and whether the subject has a history of physical or mental ill health), it is hard to see their relevance to a risk of absconding at all. In the result, persons subject to a Dublin III procedure cannot know which criteria will be used for the basis of an assessment whether they are likely to abscond and cannot identify the limits of the flexibility of the relevant authorities in carrying out their evaluation. In my judgement a provision such as this does not constitute a framework of certain predetermined limits for assessing whether a person in a Dublin III procedure is likely to abscond, does not identify the criteria which are to form the basis of the assessment and does not set out the limits of the flexibility of the authorities in a manner which is binding and known in advance. Nor is there any evidence or finding that asylum seekers were aware of the provisions of the Dublin III Regulation or the existence or significance of the Al Chodor decision and so could in some way factor these matters into their understanding of the assessment processes to which they were subjected. The Secretary of State also points to the subsequent legislative history and submits this shows how little difference formal compliance with any requirement for secondary legislation would make. On the 15 March 2017, the day the CJEU gave judgment in Al Chodor, the Secretary of State made the Transfer for Determination of an Application for International Protection (Detention) (Significant Risk of Absconding Criteria) Regulations 2017 (SI 2017/405) (the 2017 Regulations). These set out, at regulation 4, the criteria to be considered when deciding whether a person (P) poses a significant risk of absconding for the purposes of article 28(2): When determining whether P poses a significant risk of absconding for the purposes of article 28(2) of the Dublin III Regulation, the Secretary of State must consider the following criteria (a) whether P has previously absconded from another participating state prior to a decision being made by that participating state on an application for international protection made by P, or following a refusal of such an application; (b) whether P has previously withdrawn an application for international protection in another participating state and subsequently made a claim for asylum in the United Kingdom; (c) whether there are reasonable grounds to believe that P is likely to fail to comply with any conditions attached to a grant of temporary admission or release or immigration bail; (d) whether P has previously failed to comply with any conditions attached to a grant of temporary admission or release, immigration bail, or leave to enter or leave to remain in the United Kingdom granted under the Immigration Act 1971, including remaining beyond any time limited by that leave; (e) whether there are reasonable grounds to believe that P is unlikely to return voluntarily to any other participating state determined to be responsible for consideration of their application for international protection under the Dublin III Regulation; (f) whether P has previously participated in any activity with the intention of breaching or avoiding the controls relating to entry and stay set out in the Immigration Act 1971; (g) Ps ties with the United Kingdom, including any network of family or friends present; (h) when transfer from the United Kingdom is likely to take place; (i) whether P has previously used or attempted to use deception in relation to any immigration application or claim for asylum; (j) whether P is able to produce satisfactory evidence of identity, nationality or lawful basis of entry to the UK; (k) whether there are reasonable grounds to consider that P has failed to give satisfactory or reliable answers to enquiries regarding Ps immigration status. The Secretary of State contends that these criteria reflect the relevant bullet points referred to in paragraph 55.3.1 and observes that paragraph 55.3.1 could have been drafted in precisely these terms. This, so it is said, shows how technical and formal the following argument of the respondents is: promulgation of the criteria by means of a policy such as the EIG does not comply with articles 28(2) and 2(n), yet the making of secondary legislation in the same terms by the Secretary of State alone and without any Parliamentary scrutiny does comply with them. It will be appreciated that this argument is primarily directed at the second stage of the analysis as explained at para 56 above, and I address this below. But in my view the 2017 Regulations are also relevant to the first stage. The contrast between regulation 4 of the 2017 Regulations and paragraph 55.3.1 of the EIG is striking. Paragraph 55.3.1 contains a non exhaustive list of criteria, only some of which may be relevant to an assessment of the risk of an applicant absconding for the purposes of article 28(2). Regulation 4, on the other hand, says that the Secretary of State must consider the factors which are identified and the potential relevance of them all to such an assessment is plain. In summary and for the reasons I have given, I am satisfied that Chapter 55 of the EIG does not establish objective criteria for the assessment of whether an applicant for international protection who is subject to a Dublin III transfer procedure may abscond; its contents do not constitute a framework with certain predetermined limits; and it does not set out the limits of the flexibility of the relevant authorities in assessing the circumstances of each case in a manner which is binding and known in advance. It follows that Chapter 55 of the EIG cannot satisfy the requirements of articles 28(2) and 2(n) of the Dublin III Regulation and the majority of the Court of Appeal were right so to hold. Does Chapter 55 of the EIG constitute a binding provision of general application and amount to a defining law within the meaning of article 2(n)? In the light of the foregoing it is not strictly necessary to deal with this further stage of the analysis. Nevertheless, since we heard argument about it, I will address it. The Secretary of State contends that the circumstances of these appeals are very different from those of Al Chodor. It is argued that Chapter 55 of the EIG is not mere administrative practice and that in reality it is prescriptive and imposes restrictions on the executive power to detain that go beyond the Hardial Singh principles. Compliance with the provisions of Chapter 55 is enforceable by individuals before the courts and an unlawful failure to comply will result in the detention being held to be unlawful and lead to an order for the release of the person concerned or an award of compensation, or both. It is also contended that, in English law, settled case law defines the legal powers which limit the statutory power to detain and permits enforcement of the criteria which restrict the power of the executive to detain and which in other legal systems might exist only in legislation. As such, case law and Chapter 55 EIG are integral components of the law that governs and limits the power to detain and together define how the power to detain must be exercised. Therefore, Chapter 55 constitutes the kind of non legislative instrument that the CJEU contemplated would satisfy article 28(2) and 2(n). Indeed, the submission continues, if a non legislative instrument like Chapter 55 does not constitute the kind of non legislative instrument that the CJEU contemplated would satisfy articles 28(2) and 2(n) then it is difficult to imagine what the CJEU was contemplating when it departed from the Advocate Generals view. The circumstances of the Al Chodor case were plainly very different from those the subject of these appeals. It will be recalled that Czech law conferred on the police force a wide power to detain. Nevertheless, the national court had laid down in a series of judgments some criteria for assessing the risk of absconding. However, as the Advocate General explained, the presentation of these criteria was fragmentary. In addition, there was doubt as to whether that administrative practice had been publicised and it was alterable at will. There can also be no doubt that in this jurisdiction a policy statement such as Chapter 55 of the EIG has significant legal effects. I have referred to these at paras 50 51 above. In broad terms and as Laws LJ explained in R (Nadarajah) v Secretary of State for the Home Department [2005] EWCA Civ 1363, para 68, where a public authority has issued a promise or adopted a practice which represents how it proposes to act in a given area, the law requires that promise or practice to be honoured unless there is good reason not to do so. Moreover, the court is the final arbiter of what a policy means: Kambadzi, at para 36, per Lord Hope; Mandalia v Secretary of State for the Home Department [2015] UKSC 59; [2015] 1 WLR 4546, para 31, per Lord Wilson of Culworth. It is also well established that compliance with such a policy is enforceable by individuals before the courts. Moreover, the word law is used in articles 5(1)(f), 8(2), 9(2), 10(2) and 11(2) of the ECHR which require that any interference with the rights affirmed by these provisions be in accordance with a procedure prescribed by law, in accordance with the law or prescribed by law. The meaning of each of these expressions is the same and the word law within them encompasses not only legislation but also case law. As the ECtHR explained in Sunday Times v United Kingdom (1979) 2 EHRR 245, para 47, were it otherwise it would deprive a common law state which was party to the ECHR of the protection of article 10(2) and strike at the roots of that states legal system. Indeed, the applicants in that case did not argue that the expression prescribed by law required legislation in every case; they contended that legislation was required only where the common law rules were so uncertain that they did not satisfy the requirement of legal certainty. The court went on to explain, at para 49, that two of the requirements that flow from the expression prescribed by law are that a law must be accessible and sufficiently precise to enable a person adequately to foresee the consequences of his actions and so regulate his conduct. But, the court continued, the consequences need not be foreseeable with absolute certainty; that was unattainable and might carry with it excessive rigidity, preventing the law from keeping pace with changing circumstances. Similarly, R (Munjaz) v Mersey Care NHS Trust [2005] UKHL 58; [2006] 2 AC 148 concerned a policy adopted by an authority for the seclusion of detained psychiatric patients. The House of Lords held any interference with the article 8 rights of patients was justified under article 8(2). Seclusion under the policy was necessary for, among other things, the prevention of disorder, the protection of health and the protection of the rights and freedoms of others, and if properly used it would not be disproportionate. The procedure adopted by the authority did not permit arbitrary or random decision making and the rules were accessible, foreseeable and predictable. In these circumstances, it could not be said that they were not in accordance with or prescribed by law. Lord Bingham of Cornhill, with whom Lord Hope and Lord Scott of Foscote agreed, rejected a submission that the interference was not in accordance with the law because it was not prescribed by a binding general law: 34. I cannot for my part accept this. The requirement that any interference with the right guaranteed by article 8(1) be in accordance with the law is important and salutary, but it is directed to substance and not form. It is intended to ensure that any interference is not random and arbitrary but governed by clear pre existing rules, and that the circumstances and procedures adopted are predictable and foreseeable by those to whom they are applied. Nevertheless, in my view it does not follow that Chapter 55 of the EIG and domestic case law constitute law within the meaning of article 2(n) of Dublin III. That is so because a provision can only amount to a law within the meaning of article 2(n) if it has the necessary quality of certainty and that is something that Chapter 55 does not have. To ignore the need for certainty would be impermissibly to remove the word law from its context. As I have explained, the Advocate General identified the two objectives of the requirement that the criteria for assessing the risk of absconding be defined by law as being first, to ensure that those criteria offer sufficient guarantees in terms of legal certainty, that is to say that the measures adopted by member states enable the individuals concerned to ascertain the scope of their rights and obligations and to foresee the consequences of their actions; and secondly, to ensure that the discretion enjoyed by the individual authorities responsible for applying those criteria is exercised within a framework of pre determined limits. All of this reasoning is echoed in the judgment of the CJEU, in particular at paras 41 to 43. The CJEU also explained, at para 44, that the adoption of rules of general application would provide the necessary guarantees in so far as they set out the limits of the flexibility of the authorities in a manner which is binding and known in advance, and further, that the criteria are best placed for the external direction of the discretion of those authorities for the purpose of protecting applicants against arbitrary decision making. In this latter connection it referred, with apparent approval, to the observations of the Advocate General at paras 81 and 82 of his Opinion (see para 33 above). In my judgement and for the reasons I have given at paras 57 65 above, it is clear that Chapter 55 does not satisfy these requirements. It does not set out the limits of the flexibility of the relevant authorities in assessing the circumstances of each case in a manner which is binding and known in advance and so lacks the necessary qualities of certainty and predictability. Therefore, it does not constitute a law for the purposes of articles 28(2) and 2(n). A broader question is whether a statement of policy and public law adherence to it can ever amount to a binding provision of general application and so a law within the meaning of article 2(n). The Secretary of State maintains that it can for the reasons summarised at paras 67 71 above. Reliance is also placed on the 2017 Regulations. It is said that the respondents argument that promulgation of the criteria set out in the 2017 Regulations by means of a policy would not comply with articles 2(n) and 28(2) whereas the making of secondary legislation in the same terms would so comply, shows how technical and formal the objection is. The respondents have advanced powerful arguments to the contrary, however. First, it is a feature of the policy adherence principle that the decision maker is entitled for good reason to depart from the policy: see, for example, Lumba at para 54, per Lord Dyson (with whom Lord Hope, Lord Walker of Gestingthorpe and Lord Collins of Mapesbury agreed); at para 202, per Baroness Hale of Richmond; at para 245, per Lord Kerr of Tonaghmore; at para 351, per Lord Brown of Eaton Under Heywood (with whom Lord Rodger of Earlsferry agreed); and at para 312, per Lord Phillips of Worth Matravers. Hence, the respondents continue, a statement of policy cannot be a principle of general application. The respondents second argument focuses on the view expressed by the Advocate General in Al Chodor [2017] 3 CMLR 24, paras 81 and 82 of his Opinion that the discretion of the authorities should be circumscribed in such a way as would best guard applicants against arbitrary deprivations of liberty, and so the content of the criteria and their application in a particular case should be decided by institutionally separate authorities (see para 33 above). Further, in explaining why a provision of general application is required, the CJEU referred to this aspect of the Advocate Generals Opinion with apparent approval (Al Chodor [2017] 4 WLR 125, para 44). The respondents also point out that, under United Kingdom constitutional arrangements, a statement of immigration policy and the common law principle of policy adherence do not involve external direction and that, as a matter of constitutional theory, under the Carltona doctrine (Carltona Ltd v Comrs of Works [1943] 2 All ER 560), the decisions of the Secretary of States officials count as his. It follows, say the respondents, that a statement of policy cannot be a binding general law. The third argument advanced by the respondents is directed at the reliance by the Secretary of State upon the position under the ECHR that interferences with human rights must be prescribed by law, and how this requirement has been interpreted. The respondents contend that this reliance is misplaced because articles 28(2) and 2(n) require more than the conventional ECHR standards of prescription. They also say, fairly in my view, that what is needed is a high level of protection (Al Chodor [2017] 4 WLR 125, paras 34 and 43), that there are to be strict safeguards (Al Chodor, para 40), and that there are to be greater guarantees than applied under Dublin II (Al Chodor, para 35). They contend that, in giving this guidance and contrary to the position taken by the Secretary of State, the CJEU plainly had in mind the settled case law of common law systems and that such is apparent from its reference (Al Chodor, para 21) to the decision of the ECtHR in Kruslin v France (1990) 12 EHRR 547 in which that court discussed the role of case law in both civil law and common law systems. It is not necessary to resolve these rival contentions in this appeal and in my judgement the question whether a statement of policy and public law adherence to it can ever amount to a binding provision of general application and so a law within the meaning of article 2(n) should be decided in a case in which it is necessary to do so. Conclusion on issue 1 For the reasons I have given, the policy published by the Secretary of State in Chapter 55 of the EIG does not satisfy the requirements of articles 28(2) and 2(n) of the Dublin III Regulation. Are damages payable to a person whose detention pursuant to Chapter 55 of the EIG is authorised by the Secretary of State? The right to personal freedom is of fundamental importance and is reflected in the guarantees contained in articles 5(4) and 5(5) of the ECHR. A person who is unlawfully detained in this jurisdiction has (a) a right to be released; and (b) a right to damages for the tort of false imprisonment. This tort has just two ingredients: the fact of imprisonment and the absence of lawful authority to justify it: R v Deputy Governor of Parkhurst Prison, Ex p Hague [1992] 1 AC 58, 162C D per Lord Bridge of Harwich. All that a claimant has to prove in order to establish false imprisonment is that he was directly and intentionally detained by the defendant, whereupon the burden shifts to the defendant to show that there was lawful justification for doing so: Lumba, para 65, per Lord Dyson. Here the Secretary of State relies upon the discretionary power to detain which is conferred by paragraph 16(2) of Schedule 2 to the 1971 Act. But that reliance can only assist the Secretary of State so far as the power to detain was exercised in accordance with the 1971 Act. As we have seen, the power is limited in various ways. It is limited by the Hardial Singh principles such that a failure by the Secretary of State to comply with those principles will render the detention unlawful. So too, a failure by the Secretary of State to adhere to a published policy under the 1971 Act without good reason can amount to an abuse of power which will render the detention unlawful: Kambadzi, paras 41 42, per Lord Hope. The respondents primary submission, which the majority of the Court of Appeal accepted, is that the exercise by the Secretary of State of the power to detain under the 1971 Act is also constrained by any applicable obligations under European Union law by operation of section 2(1) of the European Communities Act 1972. The respondents were detained pursuant to the policy in the EIG which was unlawful in so far as it failed to give effect to articles 28(2) and 2(n) of the Dublin III Regulation. Put another way, nothing in the 1971 Act authorised an exercise of the power to detain in breach of European Union law. The detention of the respondents under the 1971 Act and pursuant to the policy in the EIG was in breach of Union law. It follows that they were detained without lawful authority and their detention amounted to false imprisonment, and they are entitled to damages. This argument is clear and, in my opinion, compelling. However, the Secretary of State argues that it is simplistic and that, were it to be accepted, it would ride roughshod over the careful balance of interests that is inherent in the principles of European Union law which govern and restrict the availability of damages as a remedy for breach by a member state of Union law, particularly where the precise effect of that law is unclear until it has been established by a decision of the CJEU. There are three limbs to the Secretary of States submissions. The first limb Francovich It is contended first, that there are only two ways in which a claimant in domestic proceedings is entitled to damages payable by a member state for a breach of European Union law: either where the law specifies the penalties to be imposed or the compensation to be provided in the event of breach, or under the principles established by the CJEU in Francovich v Italian Republic (Joined Cases C 6/90 and C 9/90) [1995] ICR 722. Here, the Secretary of State continues, the Dublin III Regulation does not provide for compensation for its breach and so the respondents only possible claim under Union law is for Francovich damages. Francovich was a case concerning the obligation upon a member state to take, within a given period, the measures necessary to implement a Directive. The court explained that it is a principle of European Union law that member states are obliged to pay compensation for harm caused to individuals by breaches of the law for which they can be held responsible, but that the conditions under which that liability gives rise to a right to compensation depend upon the nature of the breach giving rise to the claim. This issue and in particular the approach to be adopted where the legislature of the member state has a wide discretion when acting in a field governed by Union law, was explored further by the court in Factortame. The court explained that Union law confers a right to reparation where: the rule of law infringed is intended to confer rights on individuals; the breach of the obligation resting on the state is sufficiently serious; and there is a direct causal link between the breach and the damage sustained by the injured parties: Factortame, para 51. The decisive test for determining whether the breach is sufficiently serious is whether the member state manifestly and gravely disregarded the limits on its discretion: Factortame, para 55. The factors which the national court may take into consideration include the clarity and precision of the rule breached; the measure of discretion left by the rule to the national authority; whether the infringement and the damage caused was intentional or involuntary; whether any error of law was excusable or inexcusable; the fact that the position taken by a European Union institution may have contributed towards the omission; and the adoption or retention of national measures contrary to European Union law: Factortame, para 56. On any view, a breach of European Union law will be sufficiently serious if it is persisted in once it is clear that the impugned conduct constitutes an infringement: Factortame, para 57. The Secretary of State has invoked all of these principles on this appeal. It is contended that European Union law was impenetrable before the decision of the CJEU in Al Chodor and that this is highly relevant to the question whether any breach by the United Kingdom of Union law was intentional or voluntary, or excusable or inexcusable, and therefore sufficiently serious to trigger a liability for Francovich damages. The Secretary of State also points to the wide margin of discretion given to member states in giving effect to articles 28(2) and 2(n), and contends that in circumstances such as those of this appeal a manifest and grave disregard of the limits of the discretion must be established before damages are available; and that the same criteria should inform, if not govern, a claim for damages for false imprisonment under common law. There can be no dispute about the correctness of the principles of European Union law which I have summarised in para 86. I accept too that it is by reference to these principles that any claim by the respondents for damages under Union law must be judged. But it does not follow that the same principles constrain the claim by the respondents for damages for wrongful imprisonment and in my judgement and for the reasons which follow, they do not. First, the consequence of a failure by a member state to establish, in a binding provision of general application, objective criteria underlying the reasons for believing that an applicant for international protection who is subject to a Dublin III procedure may abscond, is that article 28(2) of the Regulation does not apply. This in turn means that the detention of such an applicant in such a state is unlawful and he or she must be released: see Al Chodor, paras 17 and 46. In this appeal, it has the consequence that the decision to detain the respondents lay outside the boundaries of any permissible exercise of the power to detain conferred by paragraph 16(2) of Schedule 2 to the 1971 Act. Secondly and as I have explained, the right to liberty is a fundamental human right enshrined in article 5 of the ECHR. Immigration detention is only in accordance with article 5(1)(f) in so far as it is in accordance with a procedure prescribed by law. Moreover, a person who is detained unlawfully must be released: article 5(4); and is entitled to compensation: article 5(5). These principles are also general principles of European Union law: article 6(3) of the Treaty on European Union. Thirdly, the right to compensation is provided in domestic law by the right at common law to claim damages for false imprisonment. Generally, damages for false imprisonment are awarded as compensation and so the level of damages will depend on the circumstances and degree of harm the claimant has suffered by reason of his or her wrongful detention. There is no reason to believe that the impact of loss of liberty is likely to be affected by whether lack of legal authority for the detention is the consequence of a failure to comply with European Union or domestic legislation, and in my judgement the source of the lack of legal authority does not justify treating those who have been wrongfully detained differently from one another. The second limb Lumba The second limb to the Secretary of States submissions is founded on the decision of this court in Lumba. It is argued that in Lumba this court rejected the submission that any public law error in a decision to detain would result in the subsequent detention being unlawful, regardless of any of the circumstances of that public law error, and instead adopted an approach which involved the weighing of a number of countervailing considerations, such as the nature and extent of the public law error, the absence of procedural safeguards which are normally available in cases of judicial review but are not available in a private law action for damages for false imprisonment, and the discretionary nature of judicial review remedies. We are urged to adopt the same approach in this appeal in considering the elements of the tort of false imprisonment and correct approach to the assessment of damages, if liability is established. It is submitted that such an approach echoes that of the CJEU in Factortame when formulating the necessary elements of a claim for damages for a breach of European Union law. Lumba was a case in which the Secretary of State applied an unpublished policy of detention for all foreign national prisoners on completion of their sentences of imprisonment and pending the making of deportation orders against them. This court held that the unpublished policy was unlawful because it was a blanket policy which admitted of no exceptions and was inconsistent with the Secretary of States published policy. It also held that a public law error can found a claim for damages for false imprisonment but recognised that not all public law errors will have this effect. The majority expressed themselves in slightly different ways. Lord Dyson explained, at para 68, that the error must be material to the decision to detain: the error must be one which is material in public law terms. It is not every breach of public law that is sufficient to give rise to a cause of action in false imprisonment. In the present context, the breach of public law must bear on and be relevant to the decision to detain. Lord Hope considered, at para 175: that there was here a serious abuse of power which was relevant to the circumstances of the appellants detention. Baroness Hale put it this way, at para 207: the breach of public law duty must be material to the decision to detain and not to some other aspect of the detention and it must be capable of affecting the result which is not the same as saying that the result would have been different had there been no breach. Lord Kerr stated the test in these terms, at para 251: Breach of a public law duty which has the effect of undermining the achievement of the statutory purpose will therefore, in my opinion, render the continued detention invalid. All of these formulations have at their heart a recognition that a public law error will not render detention unlawful unless that error bears upon and is relevant to the decision to detain, and so is capable of affecting the result. Similar expressions were adopted subsequently in Kambadzi at paras 41 42 (Lord Hope), para 69 (Baroness Hale) and para 88 (Lord Kerr). In my judgement, there can be no doubt that the test laid down in Lumba and Kambadzi, however expressed, is met in the circumstances of the cases before us in this appeal. There was a requirement for a binding provision of general application containing objective criteria underlying the reasons for believing that an applicant might abscond, and that requirement was not satisfied. This was fundamental to the decision to detain and it can make no difference whether the source of that requirement lay in European Union or domestic legislation. The third limb choice of law The third limb to the Secretary of States submissions adopts the reasoning in the dissenting judgment of Sales LJ in the Court of Appeal at paras 132 to 147. The essential elements of that reasoning are these: The Dublin III Regulation does not stipulate that damages are to be i) awarded for detention in breach of its terms. ii) The test laid down in Factortame for attaching liability to a state to pay damages to an individual for a breach of European Union law reflects the fact that Union legislation is frequently not clear. iii) The domestic tort of false imprisonment was framed without reference to the particular problems to which the Dublin III Regulation gives rise, and ignores the fair balance of interests which the Regulation aims to achieve. iv) In effect, a choice of law question arises when assessing whether a person within article 28 of Dublin III who has been wrongfully detained is entitled to substantial damages, and the appropriate law to govern that question is Union law. v) A person who is subject to a Dublin III procedure and who has been wrongfully detained must be released but such a person is only entitled to damages if there has been a sufficiently serious breach of article 2(n), and any other approach would be disproportionate. Put another way, article 28 excludes any application of the power to detain conferred by Schedule 2 of the 1971 Act. The detention of such a person is therefore completely covered by Union law and that person is only entitled to damages under Union law. vi) The disconnection between Union law as set out in articles 28(2) and 2(n) of the Regulation and the domestic law of false imprisonment is illustrated by the case of the third respondent who was refused bail and so was detained by order of the court, and could not claim damages for false imprisonment in respect of his detention thereafter. However, he could still claim damages for breach of Union law if the breach was sufficiently serious. vii) The Secretary of States position is also supported by the fact that damages for a breach of article 6 of the ECHR fall to be assessed by reference to ECtHR authority. These arguments overlap to a considerable extent with those I have already addressed. I of course accept that the Dublin III Regulation does not require member states to confer a right to damages on persons who have been detained in breach of its terms. So too I recognise that one of the matters informing the formulation by the CJEU of the conditions under which a member state may incur liability for damage caused to individuals by a breach of Union law is whether the state concerned manifestly and gravely disregarded the limits on its discretion, and that one of the factors which may be relevant to this issue is the clarity and precision of the rule breached: Factortame, paras 55 56. I also accept that the domestic tort of false imprisonment was framed without reference to the particular problems to which the Dublin III Regulation gives rise. These points aside, however, I cannot agree with Sales LJs analysis. The power to detain applicants for international protection who are subject to a Dublin III procedure is conferred, not by the Dublin III Regulation, but by Schedule 2 to the 1971 Act. That power to detain is constrained in various ways, three of which I have discussed: the Hardial Singh principles, the policy adherence principle and the provisions of the Dublin III Regulation. Here the Secretary of States published policy in Chapter 55 of the EIG did not comply with articles 28(2) and 2(n) of the Dublin III Regulation with the consequence that, in the case of each of the respondents, the decision to detain lay outside the scope of any legitimate exercise of the discretion conferred by Schedule 2 to the 1971 Act. In these circumstances, the two ingredients of the tort of wrongful imprisonment were undoubtedly present. As the respondents submit and I accept, the right under domestic law to claim damages for wrongful imprisonment is not dependent on the law being clear. Nor is it dependent upon the nature of the illegality, that is to say whether it is the consequence of a failure to comply with European Union legislation, as in this case, or has some other cause, as it did in Lumba. Further, there is no disconnection between a failure to comply with articles 28(2) and 2(n) of Dublin III Regulation and the tort of false imprisonment in circumstances such as those of the cases before us. Nor can the Secretary of State derive any assistance from the position of the third respondent. He was not detained pursuant to an order of the court. He was simply denied bail. A decision on a bail application is not a determination of whether or not the detention is lawful, whether at common law or for the purposes of article 5(4) of the ECHR: see, for example, Lumba at para 118. The approach adopted in this jurisdiction to claims for damages for violations of article 6 of the ECHR does not assist the Secretary of State either. Sales LJ referred to the decision of the House of Lords in R (Greenfield) v Secretary of State for the Home Department [2005] UKHL 14; [2005] 1 WLR 673. In that case Mr Greenfield, a prisoner, failed a mandatory drug test and was charged with a drugs offence under the relevant prison rules. The charge was heard by the deputy controller, a Crown servant, for whom the Secretary of State was responsible. The deputy controller refused a request by Mr Greenfield that he be legally represented. The charge was proved and Mr Greenfield was ordered to serve an extra 21 days of imprisonment. He applied for judicial review of the decision, alleging that his rights under article 6 of the ECHR had been violated. In due course the Secretary of State conceded there had been a breach of article 6 on the basis that the proceedings involved a criminal charge, that the deputy controller was not an independent tribunal and that Mr Greenfield had been denied legal representation of his own choosing. Mr Greenfield nevertheless pursued his claim for damages for the violations of article 6 which had taken place. The House of Lords held that, in deciding whether an award of damages was necessary, it was appropriate to look to the jurisprudence of the ECtHR for guidance, and in the great majority of cases in which that court had found a breach of article 6 it had treated the finding of violation as, in itself, just satisfaction under article 41, and that it would only award monetary compensation where it was satisfied that the loss or damage was caused by the violation. The important point of difference between Greenfield and the cases before us on this appeal is that, in Greenfield, the claim for damages was based entirely on the breach of article 6. There was no claim for damages for wrongful imprisonment or for any other tort and Mr Greenfield had not suffered any loss. Indeed, as Lord Bingham of Cornhill explained at paras 27 to 29, the hearing had been conducted in an exemplary manner and, while it could be accepted that Mr Greenfield thought that the authorities were biased against prisoners and that he would not receive a fair hearing, the manner of his adjudication had been the norm, he had been treated no differently from any other prisoner and there was no feature of the case which justified an award of damages. In my judgement the majority in the Court of Appeal were therefore right to hold that the respondents were wrongfully detained. The respondents are also entitled to compensation for any loss their wrongful detention has caused them. Causation and nominal damages The Secretary of State contends that the respondents should be awarded no more than nominal damages. It is said that it is inevitable that the respondents would have been detained lawfully, had the Secretary of State appreciated the unlawfulness of Chapter 55 of the EIG. That is demonstrated by the 2017 Regulations, which came into force on 15 March 2017, the day the CJEU gave judgment in Al Chodor. Further, the argument continues, these regulations meet all of the criteria set out in articles 28(2) and 2(n) of the Dublin III Regulation as interpreted by the CJEU in Al Chodor, and their application would have resulted in the same outcome: the respondents would have been detained. The Secretary of State relies in support of this contention upon the decision of this court in Lumba. One of the issues in that appeal was whether the appellants had suffered any loss as a result of their wrongful imprisonment. The majority of the court held they had not because, had the Secretary of State acted lawfully and applied her published policy on detention as opposed to her unpublished policy of blanket detention, it was inevitable that the appellants would have been detained. In other words, the detention of the appellants was at all times justifiable. The same point emerges from the decision of this court in Kambadzi. There the claimants detention pending deportation was unlawful because it had not been reviewed in accordance with the Secretary of States published policy and rule 9(1) of the Detention Centre Rules 2001 (SI 2001/238). Although it could be no defence to a claim for false imprisonment to demonstrate that, if reviews had been carried out, the claimant would still have been detained, this would be relevant to the claim for damages. Lord Hope said this at para 55: As for the question of damages, the decision on this point in Lumba was that the appellants were entitled to no more than nominal damages as their detention was at all times justifiable. But this cannot be assumed to be so in every case, and in this case the facts have still to be established. So I would not foreclose entirely the possibility that the appellant in this case is entitled to no more than a purely nominal award. Baroness Hale of Richmond summed up the position this way at para 74: False imprisonment is a trespass to the person and therefore actionable per se, without proof of loss or damage. But that does not affect the principle that the defendant is only liable to pay substantial damages for the loss and damage which his wrongful act has caused. The amount of compensation to which a person is entitled must be affected by whether he would have suffered the loss and damage had things been done as they should have been done. Similarly, Lord Kerr said this at para 89: As the majority in Lumba also held, however, causation is relevant to the question of the recoverability of damages. I consider that if it can be shown that the claimant would not have been released if a proper review had been carried out, this must have an impact on the quantum of compensation and that nominal damages only will be recoverable. These principles were subsequently applied by the Court of Appeal in Parker v Chief Constable of Essex Police [2018] EWCA Civ 2788; [2019] 1 WLR 2238, another decision on which the Secretary of State relies. Here the claimant was arrested on suspicion of murder and rape. The investigating officer was delayed by traffic so the arrest was carried out by a surveillance officer who was present at the scene but did not personally have reasonable grounds for suspecting the claimant was guilty of an offence, as required by section 24(2) of the Police and Criminal Evidence Act 1984. It was perfectly clear that, had this requirement been appreciated, it could and would have been met, either by waiting for the investigating officer to arrive or by properly briefing the officer who carried out the arrest. Accordingly, the claimant could only recover nominal damages. In my view the Secretary of State is seeking to apply these principles well beyond their proper limits. In Lumba, this court considered what would have happened had the Secretary of State applied his published policy. In Kambadzi, the question was whether the claimant would have been detained had regular reviews been carried out. In Parker, it was established that, had things been done as they should have been, the claimant could and would have been arrested lawfully. In other words, a claimant will be awarded nominal damages if it is established that the detention could have been effected lawfully under the existing legal and policy framework. Article 5(1) of the ECHR requires any deprivation of liberty to have a legal basis in domestic law, and that law must be sufficiently precise and accessible in order to avoid all risk of arbitrariness: see Dougoz v Greece (2002) 34 EHRR 61, para 55. Similarly, a person is entitled to know what the law and any policy made under it is, so he or she can make relevant representations in relation to it: see Lumba, at paras 34 36, per Lord Dyson. It can be no answer to a claim for damages for unlawful imprisonment that the detention would have been lawful had the law been different. Damages for a breach of European Union law The respondents say that they are also entitled to damages pursuant to European Union law in the light of the principles explained by the CJEU in Francovich and Factortame. It is not contended that any award of damages for such a breach would exceed those payable for false imprisonment. It is therefore not necessary to consider this alternative claim in this appeal. Consequences The respondents claims do not require remittal for any further consideration of the lawfulness of their detention. They were all detained unlawfully and are entitled to damages under domestic law for false imprisonment. I would transfer these proceedings to the County Court for the assessment of the quantum of those damages, if that quantum cannot be agreed. Overall conclusion I would dismiss this appeal.
UK-Abs
The five respondents arrived in the United Kingdom illegally and claimed asylum. They had all travelled to the United Kingdom via at least one other member state of the European Union in which they had already claimed asylum. In each case, the Secretary of State requested those states to take responsibility for examining the asylum claims pursuant to Parliament and Council Regulation (EU) No 604/2013 of 2013 (Dublin III or the Regulation). Each member state ultimately agreed to that request. Each of the respondents was detained for a period of time pending his or her removal from the United Kingdom pursuant to paragraph 16(2) of Schedule 2 to the Immigration Act 1971 (the 1971 Act). In 2015, the Secretary of State had published a policy in relation to such detention in Chapter 55 of her Enforcement Instructions and Guidance (the EIG). The respondents challenged the lawfulness of their detention by bringing claims against the Secretary of State for the Home Department. The High Court dismissed the challenges of the first to fourth respondents, but the detention of the fifth respondent was found to have been unlawful. The first to fourth respondents appealed to the Court of Appeal. In the case of the fifth respondent, the Secretary of State appealed to the Court of Appeal. By a majority, the Court of Appeal allowed the appeals of the first to fourth respondents and dismissed the Secretary of States appeal. The Secretary of State now appeals to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Kitchin gives the sole judgment, with which Lady Hale, Lord Reed, Lord Wilson and Lady Arden agree. There were two particular questions before the Supreme Court [2]. First, was the detention of each respondent lawful, given that article 28 of the Regulation permits detention where there is a significant risk of absconding? The phrase risk of absconding is defined in article 2(n) of the Regulation as the existence of reasons in an individual case, based on objective criteria defined by law, to believe that the person might abscond. Secondly, if the detention was not lawful, are damages payable either under domestic law for false (or wrongful) imprisonment, or pursuant to what is known as the Factortame principle established in Brasserie du Pecheur SA v Germany; R v Transport Secretary; Ex p Factortame Ltd No 4 (Joined Cases C 46/93 and C 48/93) [1996] QB 404? A policy such as that embodied in Chapter 55 of the EIG is published so that an individual affected by it knows the criteria by which the executive has chosen to exercise the power conferred upon it by statute. Its publication also allows the individual to make appropriate representations in relation to that exercise of power as it affects him or her [49]. The executive must follow its stated policy unless there are good grounds for not doing so [50]. Chapter 55 does not establish objective criteria for the assessment of whether an applicant for international protection who is subject to a Dublin III transfer procedure may abscond. Its contents do not constitute a framework with certain predetermined limits. Further, it does not set out the limits of the flexibility of the relevant authorities in assessing the circumstances of each case in a manner which is binding and known in advance. Therefore, the Court of Appeal was right to hold that Chapter 55 cannot satisfy the requirements of articles 28(2) and 2(n) of the Regulation [65]. Chapter 55 does not satisfy the requirements laid down by the Court of Justice of the European Union in Policie R, Krajsk editelstv policie steckho kraje, odbor cizineck policie v Al Chodor (Case C 528/15) [2017] 4 WLR 125. Because Chapter 55 does not set out the limits of the flexibility of the relevant authorities in assessing the circumstances of each case in a manner which is binding and known in advance, it lacks the necessary qualities of certainty and predictability. It therefore does not constitute a law for the purposes of articles 28(2) and 2(n) [74]. A broader question is whether a statement of policy and public law adherence to it can ever amount to a binding provision of general application and so a law within the meaning of article 2(n) [75]. That question should be decided in a case in which it is necessary to do so [79]. Any claim by the respondents for damages under European Union law must be judged by reference to the principles established in Francovich v Italy (Case C 6/90) [1993] 2 CMLR 66 and Factortame. However, those principles do not constrain the claim by the respondents for damages for wrongful imprisonment [88]. In R (Lumba) v Secretary of State for the Home Department [2011] UKSC 12; [2012] 1 AC 245, the Supreme Court considered the test for when a public law error bearing upon and relevant to a decision to detain can found a claim for damages for false imprisonment. That test is met in the cases in this appeal. There was a requirement for a binding provision of general application containing objective criteria underlying the reasons for believing that an applicant might abscond, and that requirement was not satisfied. This was fundamental to the decision to detain and it makes no difference whether the source of that requirement lay in European Union or domestic legislation [98]. Chapter 55 did not comply with articles 28(2) and 2(n) of the Regulation, with the consequence that, in the case of each of the respondents, the decision to detain lay outside the scope of any legitimate exercise of the discretion conferred by Schedule 2 to the 1971 Act. The ingredients of the tort of wrongful imprisonment were undoubtedly present. The right under domestic law to claim damages for wrongful imprisonment is not dependent on the law being clear. Nor is it dependent upon whether the illegality is the consequence of a failure to comply with European Union legislation (as in this case) or has some other cause [101]. The majority in the Court of Appeal were right to hold that the respondents were wrongfully detained. The respondents are entitled to compensation under domestic law for any loss that the wrongful detention has caused them [105, 114]. The Secretary of States submission that the respondents should only be entitled to nominal damages is rejected [106 112]. It is not necessary in this appeal to consider the respondents alternative claim for damages under European Union law, since it is not contended that any such damages would exceed those payable for false imprisonment under domestic law [113]. The County Court will assess the amount of damages, if it cannot be agreed [114].
The appellant, Ms Ecila Henderson, suffers from paranoid schizophrenia or schizoaffective disorder. On 25 August 2010 she stabbed her mother to death whilst experiencing a serious psychotic episode. She was charged with her mothers murder but, in view of the psychiatric evidence, the prosecution agreed to a plea of manslaughter by reason of diminished responsibility. That plea was accepted by the court and on 8 July 2011 Foskett J sentenced the appellant to a hospital order under section 37 of the Mental Health Act 1983 (the 1983 Act) and an unlimited restriction order under section 41 of the 1983 Act. The appellant has remained subject to detention pursuant to the 1983 Act ever since and she is not expected to be released for some significant time. The respondent, Dorset Healthcare University NHS Foundation Trust, has admitted liability in negligence in failing to return the appellant to hospital on the basis of her manifest psychotic state. The tragic killing of her mother would not have occurred had this been done. The appellant advances various heads of damages against the respondent as a result of its admitted negligence. Liability for these heads of damages is denied on the grounds that the damages claimed by the appellant are the consequence of: (i) the sentence imposed on her by the criminal court; and/or (ii) her criminal act of manslaughter, and are therefore irrecoverable by reason of the doctrine of ex turpi causa non oritur actio/illegality. Similar claims for damages to those made by the appellant were held to be irrecoverable by the House of Lords in Gray v Thames Trains Ltd [2009] UKHL 33; [2009] AC 1339 (Gray), also a case of manslaughter on the grounds of diminished responsibility. The appeal raises the question of whether Gray can be distinguished and, if not, whether it should be departed from, in particular in the light of the Supreme Court decision concerning illegality in Patel v Mirza [2016] UKSC 42; [2017] AC 467 (Patel). II The factual background This is set out in detail in the agreed statement of facts appended to the judgments below. In outline, the appellant was born on 10 August 1971. She has been diagnosed at different times as suffering from paranoid schizophrenia or schizoaffective disorder. She began experiencing problems with her mental health in 1995. From about 2003, she had various admissions to hospital, including formal admissions under the 1983 Act. Between April 2006 and June 2008, she was detained in hospital under section 3 of the 1983 Act. She was then granted leave from hospital pursuant to section 17 of the 1983 Act to enable her to live in the community. She was subsequently discharged from detention and placed on a Community Treatment Order (CTO) made under section 17A of the 1983 Act (as inserted by section 32(2) of the Mental Health Act 2007) on 14 January 2009. Her care plan stated that there should be a low threshold for recall to hospital pursuant to section 17E(1) of the 1983 Act. In August 2010 the appellant was living in supported accommodation, Queensland Lodge, pursuant to the CTO. She had resided there since November 2009. During this period, she was under the care of the Southbourne community mental health team (SCMHT), managed and operated by the respondent. On or around 13 August 2010, the appellant began to experience a relapse of her psychiatric condition. She missed various appointments and, on 23 August 2010, when visited by a housing support worker, Ms Loynes, she appeared agitated and either would not make eye contact or would stare intensely. Concerns were expressed to SCMHT who decided to wait until 25 August 2010 to carry out an assessment, when the appellants previous care co ordinator would be available. On 25 August 2010, the appellants mother arrived outside her flat, having tried to get hold of her for several days without success. She knocked on the door demanding to be let in and then went down the garden to make a phone call to Ms Loynes to express her concern about the appellants mental health and to ask if she could be let into the flat. Whilst she was in the garden the appellant approached her with a kitchen knife and stabbed her 22 times. The appellant then walked out of the garden into an alleyway and onto the street. She was seen by several people, covered in blood and carrying the knife. She was described by witnesses as walking in an odd way with a detached crazy look. When she was approached by the police, she would not put the knife down. The police used an incapacitant spray on her and she was then taken into custody at Bournemouth police station, where she was charged with the murder of her mother. On the same day, the appellant was admitted to a high security mental health unit. On 28 August 2010 she was transferred to a medium secure unit. She was detained pursuant to section 2 and subsequently section 3 of the 1983 Act. After the first court hearing the appellant was detained pursuant to sections 48/49 of the 1983 Act. Medical evidence in the criminal proceedings was obtained from two consultant forensic psychiatrists, Dr Caroline Bradley and Dr Adrian Lord. Dr Bradley was asked her opinion as to whether the grounds for the defence of insanity had been established. She expressed the view that the appellant, albeit floridly psychotic and under the influence of auditory hallucinations and delusions about her mother, nevertheless knew what she was doing was wrong in terms of the act of stabbing her mother and she knew that this was legally wrong. Dr Bradley also considered whether there was sufficient psychiatric evidence to establish the defence of diminished responsibility. Dr Bradley concluded that there was and expressed her opinion that the appellants mental state impaired her responsibility for the alleged offence. Dr Lords view in relation to whether the psychiatric evidence supported the insanity defence was that it was clear from all the evidence that the appellant knew what she was doing when she inflicted the stab wounds on her mother, and that what she was doing was morally and legally wrong. He went on to say that she was nevertheless suffering from a profound abnormality of mental functioning at the time of the killing which at the material time substantially impaired her responsibility for the commission of the act and impaired her ability to form a rational judgement and exercise self control, and so the defence of diminished responsibility was available to her. Based upon their written evidence and the evidence at trial, the prosecution agreed to a plea of manslaughter by reason of diminished responsibility. The appellants trial took place at the Crown Court at Winchester on 8 July 2011 before Foskett J who heard oral evidence from Dr Lord. His sentencing remarks, in what he described as a desperately sad and tragic case, included the following: There has been a full review of the care being given to you at the time, and it is, I think, inappropriate for me to make any comment one way or the other about that, save to say that it is plain that lessons have been learned from it, as I understand, having read the report. The one thing that is clear, from the report, is a conclusion that there was little, if any, basis for believing that your mother would be a potential victim of any violence that you might display in a psychotic episode, and that conclusion and analysis seems to have been borne out by the two expert opinions that I have read in the context of this case. When you recovered from that psychotic episode, as you did, you appreciated fully what you had done, and you were distressed beyond measure. The very detailed and comprehensive reports I have seen from Dr Bradley and Dr Lord, to whom I express my appreciation, demonstrate clearly that your ability to act rationally and with self control at the time of the incident was substantially and profoundly impaired, because of the psychotic episode to which I have referred, and to the extent that you had little, if any, true control over what you did. That means that the conviction for manslaughter by reason of diminished responsibility is obviously the appropriate verdict, and the prosecution has undoubtedly correctly accepted that is so. It is also that mental health background that informs and largely dictates how this case should be disposed of. It is quite plain that in your own interests, and in the interests of the public, if and when you are released, that the most important consideration is the successful treatment and/or management of your condition. I should say that there is no suggestion in your case that you should be seen as bearing a significant degree of responsibility for what you did. Had there been any such suggestion I would have given serious consideration to making an order under section 45(A) of the Mental Health Act 1983, however, on the material and evidence before me that issue does not arise. The joint recommendation of Dr Bradley and Dr Lord is that you should be made the subject of a hospital order under section 37 of the Act, with an unlimited restriction order under section 41 of the Act. Dr Bradley says in her report that your illness is difficult to treat and monitor and that A high degree of vigilance and scrutiny of mental state will be needed to ensure successful rehabilitation. Dr Lord says in his report that the effect of such an order would be that you would be detained in secure psychiatric services for a substantial period of time in order for such treatment and rehabilitation to be completed and to ensure the safety of the public. The restrictions imposed by section 41, he says in his report and has repeated in what he has said to me, would be invaluable in protecting the public from the risk of serious harm in the future. Given those strong and firm recommendations from two experienced psychiatrists, who examined you and your psychiatric history with very considerable care, it seems to me that this is the order that I should make, and I will make. The judge accordingly made a hospital order with restrictions pursuant to sections 37 and 41 of the 1983 Act. III The criminal law background The offence of murder is committed when a person unlawfully kills another with intent to kill or cause grievous bodily harm. Insanity is a defence to murder. As established in MNaghtens case (1843) 10 Cl & F 200, in order to establish the defence it must be proved on the balance of probabilities that at the time of the committing of the act, the party accused was labouring under such a defect of reason, from disease of the mind, as not to know the nature and quality of the act he was doing, or, if he did know it, that he did not know he was doing what was wrong per Tindal CJ at p 210. If the defence is established, a special verdict of not guilty by reason of insanity is returned. Diminished responsibility is a partial defence to murder which was introduced by section 2 of the Homicide Act 1957 and amended by section 52(1) of the Coroners and Justice Act 2009. In summary, the defence applies where: the defendant suffers from an abnormality of mental functioning (1) which; arises from a recognised medical condition; (2) (3) substantially impaired the defendants ability (a) to understand the nature of his or her conduct; and/or (b) to form a rational judgment; and/or (c) to exercise self control; and (4) deceased. caused or significantly contributed to the defendants killing of the Prior to the amendments introduced by section 52(1) of the Coroners and Justice Act 2009, the partial defence applied where an abnormality of mind substantially impaired the defendants mental responsibility for the killing. The partial defence only arises where the defendant would otherwise be convicted of murder. As Lord Hughes explained in R v Golds [2016] UKSC 61; [2016] 1 WLR 5231, para 36: By definition, before any question of diminished responsibility can arise, the homicide must have been done with murderous intent, to kill or to do grievous bodily harm, and without either provocation or self defence. If the partial defence is made out, then the defendant who would otherwise be convicted of murder will instead be convicted of manslaughter. Manslaughter by reason of diminished responsibility is a serious specified offence for the purposes of sections 224 and 225(2) (life sentences for serious offences) of the Criminal Justice Act 2003. The Sentencing Council Guideline (effective 1 November 2018) for the offence (the Guideline) directs the sentencing judge to consider whether the offenders degree of responsibility is high, medium or lower. In relation to harm the Guideline states that: For all cases of manslaughter the harm caused will inevitably be of the utmost seriousness. Recommended custodial sentence starting points and category ranges are then set out. In appropriate cases a mental health disposal under the 1983 Act may be In such cases the court should first consider whether to order custody with a hospital and limitation direction under section 45A of the 1983 Act. Such a direction should be made if a penal element is appropriate and the mental disorder can appropriately be dealt with by a section 45A direction. If such a direction is not appropriate, then the court must consider whether to make a hospital order under section 37 of the 1983 Act. Such an order may be made with or without a restriction order under section 41 of the 1983 Act. A helpful explanation of orders under section 37 and section 41 of the 1983 Act is provided by Mustill LJ in R v Birch (Beulah) (1989) 11 Cr App R (S) 202, 210 211. As Mustill LJ there states, a section 37 order means that the position of the offender is almost exactly the same as if he were a civil patient. In effect he passes out of the penal system and into the hospital regime. Neither the court nor the Secretary of State has any say in his disposal. By contrast, where a restriction order under section 41 is made the circumstances of his detention are fundamentally different: No longer is the offender regarded simply as a patient whose interests are paramount. No longer is the control of him handed over unconditionally to the hospital authorities. Instead the interests of public safety are regarded by transferring the responsibility for discharge from the responsible medical officer and the hospital to the Secretary of State and the Mental Health Review Tribunal. IV The proceedings below The appellant claimed damages under six heads of loss: (1) General damages for personal injury (a depressive disorder and post traumatic stress disorder (PTSD)) consequent on her killing of her mother. (2) General damages for her loss of liberty caused by her compulsory detention in hospital pursuant to sections 37 and 41 of the 1983 Act. (3) General damages for loss of amenity arising from the consequences to her of having killed her mother. (4) Past loss in the sum of 61,944 being the share in her mothers estate which she is unable to recover as a result of the operation of the provisions of the Forfeiture Act 1982. (5) The cost of psychotherapy (by way of future loss). (6) The cost of a care manager/support worker (by way of future loss). In view of the respondents position that the heads of loss were irrecoverable as a matter of law, on 17 February 2016 Master Cook ordered that there be a trial of a preliminary issue to determine that question. The preliminary issue was heard over two days by Jay J who decided the issue in the respondents favour: Henderson v Dorset Healthcare University NHS Foundation Trust [2016] EWHC 3275 (QB); [2017] 1 WLR 2673. Jay J held that the facts were materially identical to those in Clunis v Camden and Islington Health Authority [1998] QB 978 (Clunis) and Gray and that those decisions were binding on him. The Court of Appeal (Sir Terence Etherton MR, Ryder and Macur LJJ) dismissed the appellants appeal against the order of Jay J: Henderson v Dorset Healthcare University NHS Foundation Trust [2018] EWCA Civ 1841; [2018] 3 WLR 1651. Like Jay J, the Court of Appeal held that the facts were materially identical to those in Clunis and Gray and that those decisions were binding on it. V The issues The principal issues to be determined on the appeal are: (1) Whether Gray can be distinguished. (2) If not, whether Gray should be departed from and Clunis overruled. (3) If not, whether all heads of loss claimed are irrecoverable. On issue (2), the appellants contend that Gray should be departed from and Clunis overruled on a number of grounds, in particular: (i) The reasoning in Gray cannot stand with the approach to illegality adopted by the Supreme Court in Patel. (ii) Gray should be held not to apply where the claimant has no significant personal responsibility for the criminal act and/or there is no penal element in the sentence imposed. (iii) The application of the trio of considerations approach set out in Patel leads to a different outcome. It will be apparent that what was decided in Clunis, Gray and Patel is of central importance to the appeal. I shall consider first the House of Lords decision in Gray. Although it came after the Court of Appeal decision in Clunis, which it approved, as a decision of the House of Lords it is the case of most relevance to this court and Clunis stands or falls with it. (i) Gray The claimant, Mr Gray, was a passenger on a train involved in a major railway accident as a result of which he suffered PTSD. Whilst suffering from that disorder he killed a man. He pleaded guilty to manslaughter on the grounds of diminished responsibility and he was ordered to be detained in a hospital under sections 37 and 41 of the 1983 Act. The claimant brought an action in negligence against the defendants, a train operator and the company responsible for the rail infrastructure. The defendants admitted negligence but claimed that public policy precluded the recovery of losses incurred after the date of the manslaughter by reason of the ex turpi causa doctrine. The claim for damages included damages which were the result of the sentence imposed on him, such as general damages for his detention and loss of earnings during it (the narrow claim). It also included damages which were the result of the killing, such as general damages for feelings of guilt and remorse consequent upon the killing and an indemnity against any claims which might be brought by dependants of the deceased (the wide claim). The House of Lords held that both the narrow and the wide claims were precluded by the operation of the ex turpi causa doctrine. The leading judgments were given by Lord Hoffmann and Lord Rodger, with both of whom Lord Scott agreed. Lord Hoffmann summarised the appellant defendants argument in the following terms at para 29: Their principal argument invokes a special rule of public policy. In its wider form, it is that you cannot recover compensation for loss which you have suffered in consequence of your own criminal act. In its narrower and more specific form, it is that you cannot recover for damage which flows from loss of liberty, a fine or other punishment lawfully imposed upon you in consequence of your own unlawful act. In such a case it is the law which, as a matter of penal policy, causes the damage and it would be inconsistent for the law to require you to be compensated for that damage. Lord Hoffmann considered the narrower rule first. He held that it was well established by authority in this country and in the Commonwealth. He said that the rule was based on inconsistency. As he explained at para 37: The inconsistency is between the criminal law, which authorizes the damage suffered by the plaintiff in the form of loss of liberty because of his own personal responsibility for the crimes he committed, and the claim that the civil law should require someone else to compensate him for that loss of liberty. He rejected the submission that the narrower rule did not apply because the sentence of detention in hospital under sections 37 and 41 of the 1983 Act was not a punishment but rather detention for treatment. As he stated at para 41: it has been submitted in this case that the sentence of detention in a hospital reflected the fact that Mr Gray was not really being punished but detained for his own good to enable him to be treated for post traumatic stress disorder. But the sentence imposed by the court for a criminal offence is usually for a variety of purposes: punishment, treatment, reform, deterrence, protection of the public against the possibility of further offences. It would be impossible to make distinctions on the basis of what appeared to be its predominant purpose. In my view it must be assumed that the sentence (in this case, the restriction order) was what the criminal court regarded as appropriate to reflect the personal responsibility of the accused for the crime he had committed. As one commentator has said Tort law has enough on its plate without having to play the criminal laws conscience: see EK Banakas [1985] CLJ 195, 197. He affirmed the narrower rule and held that it barred the narrow claim. As he stated at para 50: Mr Grays claims for loss of earnings after his arrest and for general damages for his detention, conviction and damage to reputation are all claims for damage caused by the lawful sentence imposed upon him for manslaughter and therefore fall within the narrower version of the rule which I would invite your Lordships to affirm. Lord Hoffmann then considered the wider rule which he noted had the support of the reasoning of the Court of Appeal in Clunis. In that case the claimant stabbed a man to death after he had been discharged from hospital where he had been detained for treatment for a mental disorder. He pleaded guilty to manslaughter on the grounds of diminished responsibility and he was ordered to be detained in a hospital under sections 37 and 41 of the 1983 Act. He sued the local authority for damages for loss of liberty as a result of its negligence in discharging him and failing to provide adequate after care. Although the claim fell within the narrower rule, the reasoning of the court in dismissing the claim was based on the wider rule, as made clear by Beldam LJ at pp 989 990: In the present case the plaintiff has been convicted of a serious criminal offence. In such a case public policy would in our judgment preclude the court from entertaining the plaintiffs claim unless it could be said that he did not know the nature and quality of his act or that what he was doing was wrong. The offence of murder was reduced to one of manslaughter by reason of the plaintiffs mental disorder but his mental state did not justify a verdict of not guilty by reason of insanity. Consequently, though his responsibility for killing Mr Zito is diminished, he must be taken to have known what he was doing and that it was wrong. A plea of diminished responsibility accepts that the accuseds mental responsibility is substantially impaired but it does not remove liability for his criminal act The court ought not to allow itself to be made an instrument to enforce obligations alleged to arise out of the plaintiffs own criminal act and we would therefore allow the appeal on this ground. Lord Hoffmann said at para 51 that the wider rule could not be justified on the grounds of inconsistency in the same way as the narrower rule but that it was justified on the policy ground that: it is offensive to public notions of the fair distribution of resources that a claimant should be compensated (usually out of public funds) for the consequences of his own criminal conduct. He then held that the wider rule meant that, as a matter of causation, if the immediate cause of the damage was the claimants intentional criminal conduct then it was caused by it even if that conduct would not have occurred but for the defendants prior negligence. Such negligence was to be regarded as merely providing the occasion for the claimants conduct. In conclusion he stated as follows at para 55: However the test is expressed, the wider rule seems to me to cover the remaining heads of damage in this case. Mr Grays liability to compensate the dependants of the dead pedestrian was an immediate inextricable consequence of his having intentionally killed him. The same is true of his feelings of guilt and remorse. In his judgment, Lord Rodger considered various Australian and Canadian authorities, including the decision of the Supreme Court of Canada in British Columbia v Zastowny [2008] 1 SCR 27. That case concerned a claim for wage loss during time spent in prison as a result of various offences which were alleged to have been committed as a consequence of sexual assaults by a prison officer during an earlier period of incarceration. At para 68 Lord Rodger cited with approval from the unanimous judgment of the court delivered by Rothstein J: 22. Zastownys wage loss while incarcerated is occasioned by the illegal acts for which he was convicted and sentenced to serve time. In my view, therefore, the ex turpi doctrine bars Zastowny from recovering damages for time spent in prison because such an award would introduce an inconsistency in the fabric of law. This is because such an award would be, as McLachlin J described in Hall v Hebert [1993] 2 SCR 159, 178, giving with one hand what it takes away with the other. When a person receives a criminal sanction, he or she is subject to a criminal penalty as well as the civil consequences that are the natural result of the criminal sanction. The consequences of imprisonment include wage loss. 23. Preserving the integrity of the justice system by preventing inconsistency in the law is a matter of judicial policy that underlies the ex turpi doctrine. 30. In asking for damages for wage loss for time spent in prison, Zastowny is asking to be indemnified for the consequences of the commission of illegal acts for which he was found criminally responsible. Zastowny was punished for his illegal acts on the basis that he possessed sufficient mens rea to be held criminally responsible for them. He is personally responsible for his criminal acts and the consequences that flow from them. He cannot attribute them to others and evade or seek rebate of those consequences 77. In British Columbia v Zastowny [2008] 1 SCR 27, 38, para 23, Rothstein J treated the need to preserve the integrity of the justice system, by preventing inconsistency in the law, as a matter of judicial policy that underlay the ex turpi causa doctrine. In other words, in the circumstances of that case the application of the ex turpi causa doctrine helped to promote the more fundamental legal policy of preventing inconsistency in the law. That such a policy exists is beyond question. In Zastowny and the preceding cases, the need was to ensure that the civil and criminal courts were consistent in their handling of the plaintiffs criminal conduct and its consequences. But that is simply one manifestation of a desirable attribute of any developed legal system. Likewise, in the present case, when Lord Rodger emphasised the importance of preventing inconsistency in the law and thereby preserving the integrity of the legal system: considering the claim for loss of earnings, a civil court should bear in mind that it is desirable for the criminal and civil courts to be consistent in the way that they regard what the claimant did. As Samuels JA observed in State Rail Authority of New South Wales v Wiegold 25 NSWLR 500, 514, failure to do so would generate the sort of clash between civil and criminal law that is apt to bring the law into disrepute. He said that the court must proceed on the basis that the claimants conviction and sentence were appropriate, that he was responsible for what he did and that this was not altered by the fact that orders under section 37 and 41 of the 1983 Act did not involve punishment. As he stated at para 78: He held that the narrow claim should be rejected on the grounds of inconsistency: The civil courts must therefore proceed on the basis that, even though the claimants responsibility for killing Mr Boultwood was diminished by his PTSD, he nevertheless knew what he was doing when he killed him and he was responsible for what he did. Similarly, it must be assumed that the disposals adopted by the criminal courts were appropriate in all the circumstances, including the circumstance that he was suffering from PTSD. Rafferty J imposed a hospital order and a restriction order. While it is correct to say that a hospital order, even with a restriction, is not regarded as a punishment, this does not mean that the judge was treating the claimant as not being to blame for what he did. 79. By imposing the hospital order with a restriction, the judge was ensuring that, because he had committed manslaughter, the claimant would not be free to move around in the community unless and until authorised to do so by the Secretary of State. In my view, it would be inconsistent with the policy underlying the making of the orders for a civil court now to award the claimant damages for loss of earnings relating to the period when he was subject to them. In short, the civil court should cleave to the same policy 81. as the criminal court. He recognised that the wide claim was not a consequence of the sentence and so cannot be disposed of on the ground of inconsistency but said that it should be rejected on the public policy ground that the claimant should not be entitled to be indemnified for the consequences of criminal acts for which he has been found to be criminally responsible: 85. In British Columbia v Zastowny [2008] 1 SCR 27, 41 42, para 30, quoted at para 68 above, Rothstein J observed that a person is not entitled to be indemnified for the consequences of his criminal acts for which he has been found criminally responsible. He cannot attribute them to others or seek rebate of those consequences. Yet that is precisely what the claimant is trying to do, both in his claim for any sum he is found liable to pay in damages to Mr Boultwoods dependants and in his claim for his feelings of guilt and remorse. In Meah v McCreamer (No 2) [1986] 1 All ER 943 86. Woolf J rejected an attempt to recover the damages which the plaintiff had been found liable to pay to two women whom he had subjected to criminal attacks. His main reason for rejecting the claim was that the damages were too remote. But he would also have rejected it, at pp 950h 951f, on the public policy ground that the plaintiff was not entitled to be indemnified for the damages which he was liable to pay as a result of his criminal attacks. That seems to me to be an appropriate application of the ex turpi causa rule. 87. In the same way, in this case the claimant should not be entitled to an indemnity for any damages he had to pay in consequence of his having assaulted and killed Mr Boultwood. The same goes for his claim for feelings of guilt and remorse. As an alternative he considered that the claims can be treated as simply raising issues of causation and disposed of as Lord Hoffmann explains (para 87). Lord Scott agreed that the appeal should be allowed for the reasons given by Lord Hoffmann and Lord Rodger. Lord Phillips also agreed that the appeal should be allowed for the reasons given by Lord Hoffmann and Lord Rodger and at para 7 specifically agreed with Lord Hoffmanns identification of a wider and a narrower rule of public policy, applicable in this case. He said, however, that whilst Lord Hoffmanns comments at para 37 were correct in relation to the sentence imposed in Mr Grays case, they would not always be true of a hospital order imposed under section 37 of the 1983 Act. He referred to the explanation of such orders given by Mustill LJ in R v Birch at p 210, as summarised above. Lord Phillips then drew attention to the fact that under section 45A of the 1983 Act it was now possible to combine a hospital order with a penal sentence. Against that background Lord Phillips expressed the following reservations in relation to the application of the ex turpi causa doctrine: 14. The comments of both Mustill LJ and Lord Bingham recognised that a mentally disordered offender whose mental condition did not satisfy the test of insanity or render him unfit to plead might none the less have no significant responsibility for his offence. Furthermore, while a conviction for an offence punishable with imprisonment is necessary to confer jurisdiction on a judge to impose a hospital order under section 37, the offence leading to that conviction may have no relevance to the decision to make the hospital order. Thus in R v Eaton [1976] Crim LR 390 a hospital order with a restriction order unlimited as to time was made in respect of a woman with a psychopathic disorder where her offence was minor criminal damage. 15. In such an extreme case, where the sentencing judge makes it clear that the defendants offending behaviour has played no part in the decision to impose the hospital order, it is strongly arguable that the hospital order should be treated as being a consequence of the defendants mental condition and not of the defendants criminal act. In that event the public policy defence of ex turpi causa would not apply. More difficult is the situation where it is the criminal act of the defendant that demonstrates the need to detain the defendant both for his own treatment and for the protection of the public, but the judge makes it clear that he does not consider that the defendant should bear significant personal responsibility for his crime. I would reserve judgment as to whether ex turpi causa applies in either of these situations, for we did not hear full argument in relation to them. In so doing I take the same stance as Lord Rodger. The first reservation made by Lord Phillips in para 15 relates to a case where the offending behaviour plays no part in the decision to impose the hospital order. His second reservation relates to a case where the sentencing judge makes it clear that he does not consider that the defendant should bear significant personal responsibility for his crime. The reservation made by Lord Rodger at para 83 was as follows: The position might well be different if, for instance, the index offence of which a claimant was convicted were trivial, but his involvement in that offence revealed that he was suffering from a mental disorder, attributable to the defendants fault, which made it appropriate for the court to make a hospital order under section 37 of the 1983 Act. Then it might be argued that the defendants should be liable for any loss of earnings during the claimants detention under the section 37 order, just as they should be liable for any loss of earnings during his detention under a section 3 order necessitated by a condition brought about by their negligence. That point does not arise on the facts of this case, however, and it was not fully explored at the hearing. Like my noble and learned friend, Lord Phillips of Worth Matravers, I therefore reserve my opinion on it. This reservation relates to a more specific example of Lord Phillips first reservation, being a case where (i) the offence is trivial; (ii) the offenders involvement in the offence reveals that he is suffering from a mental disorder attributable to the defendants negligence and (iii) that disorder makes a hospital order appropriate. Lord Brown gave a judgment of his own which he said was in substantial agreement with those given by others, including Lord Phillips reservations at para 15. Like others, he rejected the narrow claim on the grounds of what he described at para 93 as the consistency principle: the integrity of the justice system depends upon its consistency. The law cannot at one and the same time incarcerate someone for his criminality and compensate him civilly for the financial consequences. I shall refer to this henceforth as the consistency principle. It is the underlying rationale for the application of the ex turpi causa non oritur actio doctrine in the present context. So far as relevant to the present appeal, I would make the following observations on the judgments given in Gray in so far as they relate to public policy. (1) Both the narrow claim and the wide claim failed on the grounds of public policy. (2) All judges considered that the relevant policy in connection with the narrow claim was the need to avoid inconsistency so as to maintain the integrity of the legal system the consistency principle. (3) Lord Hoffmann did not consider that this applied to the wide claim but held that a related policy did, namely that it is offensive to public notions of the fair distribution of resources that a claimant should be compensated (usually out of public funds) for the consequences of his own criminal conduct. I understand this to mean that allowing a claimant to be compensated for the consequences of his own criminal conduct risks bringing the law into disrepute and diminishing respect for it. It is an outcome of which public opinion would be likely to disapprove and would thereby undermine public confidence in the law the public confidence principle. (4) The public confidence principle is also applicable to the narrow claim. It is related to the consistency principle since one of the reasons that the public would be likely to disapprove of the outcome is the inconsistency which it involves between the criminal law and the civil law. (5) Although Lord Rodger appeared to consider that the consistency principle did not apply to the wide claim, the policy reasons he gives for rejecting the claim reflect that principle. The reason that a person cannot attribute to others acts for which he has been found criminally responsible, or seek rebate of the consequences of those acts, is that it would be inconsistent with that finding of criminal responsibility. If a person has been found criminally responsible for certain acts it would be inconsistent for the civil courts to absolve that person of such responsibility and to attribute responsibility for those same acts to someone else. (6) Whilst the consistency principle more obviously applies to the narrow claim, on analysis it applies to the wide claim as well. In relation to the narrow claim the inconsistency is with both the criminal courts finding of responsibility and the sentence it has imposed. In relation to the wide claim it is with the former only. That the consistency principle applies to both the narrow and the wide claims in Gray is supported and explained by Lord Sumption in his dissenting judgment in Patel at para 232: the inconsistency of awarding damages representing loss arising from a criminal sentence is more obvious and direct than it is when the claimant is claiming other damages causally flowing from his commission of a crime. But it seems to me, as it did to McLachlin J and those who have adopted her approach more generally, that the internal coherence of the law is also the reason why it will not give effect in a civil court to a cause of action based on acts which it would punish in a criminal court. As Lord Hughes put it in Hounga v Allen [2014] 1 WLR 2889, para 55, a dissenting judgment but not on this point, the law must act consistently; it cannot give with one hand what it takes away with another, nor condone when facing right what it condemns when facing left. (ii) Clunis The facts of Clunis and the essential reasoning of the Court of Appeal in reaching its decision have been summarised above. On the facts of the case it concerned a narrow claim and, as the courts below held, was authority binding on them in relation to such a claim. As Lord Hoffmann observed at para 35 in Gray, however, the reasoning of the court in Clunis would have applied to a wide claim the court ought not to allow itself to be made an instrument to enforce obligations alleged to arise out of the plaintiffs own criminal act: [1998] QB 978, 990. (iii) Patel In Patel a panel of nine justices sat to consider what was the proper approach to the defence of common law illegality. The background to the decision was that there had been a divergence of views between different constitutions of the court as to whether the appropriate test was the reliance based approach, applied by the House of Lords in Tinsley v Milligan [1994] 1 AC 340, or an approach based on the balancing of public policy considerations. In Hounga v Allen (Anti Slavery International intervening) [2014] UKSC 47; [2014] 1 WLR 2889 the majority of the court, Baroness Hale, Lord Kerr and Lord Wilson, had adopted a policy based approach, as set out in the judgment of Lord Wilson. In Les Laboratoires Servier v Apotex Inc [2014] UKSC 55; [2015] AC 430 the majority of the court, Lord Sumption, Lord Neuberger and Lord Clarke, had adopted the reliance based approach, with the leading judgment being given by Lord Sumption. Patel involved a claim in restitution for unjust enrichment. The claimant, Mr Patel, had paid Mr Mirza 620,000 for the purpose of investing in Royal Bank of Scotland shares using insider information which Mr Mirza expected to obtain in advance of an anticipated government announcement. In the event, no announcement was made, and so no insider information was provided and the money was not invested. Mr Mirza refused to repay the money. The agreement between them was a conspiracy to commit an offence of insider dealing contrary to section 52 of the Criminal Justice Act 1993. The issue was whether the illegality of the agreement meant that Mr Patels claim for restitution for unjust enrichment, based on the total failure of consideration under that unlawful agreement, should fail. All the justices agreed that the defence of illegality failed and that the claim succeeded. The majority, Lord Neuberger, Baroness Hale, Lord Kerr, Lord Wilson, Lord Toulson and Lord Hodge, held that the reliance based approach was wrong, and that Tinsley v Milligan should not be followed. A policy based approach should be adopted based on an assessment of relevant competing public policy considerations and proportionality factors. The minority, Lord Mance, Lord Clarke and Lord Sumption, considered that the reliance based approach should continue to be applied. The leading judgment of the majority was given by Lord Toulson. At para 99 he identified two main policy reasons for the defence of illegality: One is that a person should not be allowed to profit from his own wrongdoing. The other, linked, consideration is that the law should be coherent and not self defeating, condoning illegality by giving with the left hand what it takes with the right hand. At para 100, in reliance on the valuable insight provided by McLachlin Js judgment in Hall v Hebert [1993] 2 SCR 159, Lord Toulson stated the underlying policy question to be: whether allowing recovery for something which was illegal would produce inconsistency and disharmony in the law, and so cause damage to the integrity of the legal system. At para 101 Lord Toulson addressed how the court is to determine that question, and held that it required: (a) considering the underlying purpose of the prohibition which has been transgressed, (b) considering conversely any other relevant public policies which may be rendered ineffective or less effective by denial of the claim, and (c) keeping in mind the possibility of overkill unless the law is applied with a due sense of proportionality. He described these as a trio of necessary considerations and set out how they could be found in the case law at paras 102 106. In relation to consideration (c), proportionality, he stated as follows at para 107: 107. In considering whether it would be disproportionate to refuse relief to which the claimant would otherwise be entitled, as a matter of public policy, various factors may be relevant. Professor Burrows list is helpful but I would not attempt to lay down a prescriptive or definitive list because of the infinite possible variety of cases. Potentially relevant factors include the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties respective culpability. Lord Toulsons conclusion is set out at para 120: 120. The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather by than the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate. Baroness Hale, Lord Wilson and Lord Hodge agreed with the judgment of Lord Toulson as did Lord Kerr, who gave a judgment of his own. Lord Neuberger also gave a judgment, concluding at para 186 that: although my analysis may be slightly different from that of Lord Toulson JSC, I do not think that there is any significant difference between us in practice. I agree with his framework for arriving at an outcome Lord Sumption, with whom Lord Clarke agreed, delivered a trenchant dissenting judgment, as did Lord Mance, for reasons which he considered corresponded with those of Lord Clarke and Lord Sumption. In his judgment Lord Sumption agreed with the majority that the rationale of the illegality doctrine is the consistency principle. He considered that the reliance test was the best method of determining whether this principle applied because (i) it gives effect to the basic principle that a person may not derive a legal right from his own illegal act; (ii) it establishes a direct causal link between the illegality and the claim and (iii) it ensures that the illegality principle applies no more widely than is necessary to give effect to its purpose of preventing legal rights from being derived from illegal acts (para 239). He considered that the trio of considerations approach favoured by the majority (which he referred to as the range of factors test) would wrongly transform the policy factors which have gone into the development of the current rules, into factors influencing an essentially discretionary decision about whether those rules should be applied (para 261) and made four particular criticisms of it (para 262): (i) Whatever rationale one adopts for the illegality principle, it is manifestly designed to vindicate the public interest as against the interests and legal rights of the parties. That is why the judge is required to take the point of his own motion even if the parties have not raised it, as the deputy judge did in this case. The operation of the principle cannot therefore depend on an evaluation of the equities as between the parties or the proportionality of its impact upon the claimant. (ii) The range of factors test largely devalues the principle of consistency, by relegating it to the status of one of a number of evaluative factors, entitled to no more weight than the judge chooses to give it in the particular case. (iii) If the application of the illegality principle is to depend on the courts view of how illegal the illegality was or how much it matters, there would appear to be no principle whatever to guide the evaluation other than the judges gut instinct. (iv) The range of factors test discards any requirement for an analytical connection between the illegality and the claim, by making the nature of the connection simply one factor in a broader evaluation of individual cases and offering no guidance as to what sort of connection might be relevant. (iv) The application of Patel An important issue which arises on this appeal concerns the width of the application of Patel and how it applies in relation to existing case law. First, it should be emphasised that Patel concerned common law illegality rather than statutory illegality. Where the effects of the illegality are dealt with by statute then the statute should be applied. As Lord Toulson stated at para 109 of Patel: The courts must obviously abide by the terms of any statute. In relation to contractual illegality, this is explained by Underhill LJ in Okedina v Chikale [2019] EWCA Civ 1393; [2019] ICR 1653, para 12, drawing on the formulations set out in Burrows: A Restatement of the English Law of Contract: (1) Statutory illegality applies where a legislative provision either (a) prohibits the making of a contract so that it is unenforceable by either party or (b) provides that it, or some particular term, is unenforceable by one or other party. The underlying principle is straightforward: if the legislation itself has provided that the contract is unenforceable, in full or in the relevant respect, the court is bound to respect that provision. That being the rationale, the knowledge or culpability of the party who is prevented from recovering is irrelevant: it is a simple matter of obeying the statute. (2) Common law illegality arises where the formation, purpose or performance of the contract involves conduct that is illegal or contrary to public policy and where to deny enforcement to one or other party is an appropriate response to that conduct Secondly, Patel concerned a claim in unjust enrichment, but there can be little doubt that it was intended to provide guidance as to the proper approach to the common law illegality defence across civil law more generally. The cases it discusses include tort cases, such as Gray and Hounga v Allen, as well as a number of Commonwealth tort law authorities. The case of Hall v Hebert, on which particular reliance was placed, was a tort case. Tinsley v Milligan, which was not followed, concerned trusts and property rights. At para 99, Lord Toulson identifies the policy reasons for the doctrine of illegality as a defence to a civil claim. The approach set out in paras 101 and 120 is expressed in general and unqualified terms. Thirdly, that does not mean that Patel represents year zero and that in all future illegality cases it is Patel and only Patel that is to be considered and applied. That would be to disregard the value of precedent built up in various areas of the law to address particular factual situations giving rise to the illegality defence. Those decisions remain of precedential value unless it can be shown that they are not compatible with the approach set out in Patel in the sense that they cannot stand with the reasoning in Patel or were wrongly decided in the light of that reasoning. Lord Toulson made it clear in Patel that the principles he identified were to be found in the existing case law see, for example, paras 42, 99 and 102 106. This is well illustrated by the decision of the Court of Appeal in Okedina v Chikale. In employment law the touchstone for the availability of the defence of common law illegality to employee claims has long been recognised as being whether the employee has knowingly participated in the illegal performance of the contract, as stated in the Court of Appeal decision in Hall v Woolston Hall Leisure Ltd [2001] 1 WLR 225, paras 31 32 per Peter Gibson LJ. In Okedina v Chikale that approach had been followed by the Employment Tribunal and the Employment Appeal Tribunal. It was submitted on appeal that this was inadequate and that the matter should have been addressed by going through the Patel trio of considerations. The Court of Appeal rejected the submission that it was necessary for the tribunal on the facts of this case to carry out an elaborate analysis by reference to the particular factors enumerated. As Underhill LJ explained at para 62: In his judgment in Patel v Mirza [2017] AC 467 Lord Toulson was attempting to identify the broad principles underlying the illegality rule. His judgment does not require a reconsideration of how the rule has been applied in the previous case law except where such an application is inconsistent with those principles. In the case of a contract of employment which has been illegally performed, there is nothing in Patel v Mirza inconsistent with the well established approach in Hall v Woolston Hall Leisure Ltd [2001] ICR 99 as regards [common law illegality] cases. As Mr Reade put it, Hall is how Patel v Mirza plays out in that particular type of case. Issue (1) Whether Gray can be distinguished The argument unsuccessfully advanced by the appellant below was that Lord Phillips second reservation in Gray at para 15, concerning cases where the defendant has no significant personal responsibility, was agreed with by both Lord Brown and Lord Rodger, and therefore reflects a majority view. Reliance was placed on Lord Phillips reference to taking the same stance as Lord Rodger, and Lord Rodgers statement at para 83 that: Like my noble and learned friend, Lord Phillips of Worth Matravers, I therefore reserve my opinion on it. In oral submissions, this argument was maintained on the appeal. In agreement with the courts below, I reject it. As explained above, whilst both Lord Phillips and Lord Rodger were agreeing that a reservation should be made, they were not in agreement as to the nature of that reservation. In particular, Lord Rodgers reservation at para 83 did not relate to a case where there was no significant personal responsibility, but rather to a more specific example of Lord Phillips first reservation. There was therefore no agreement between them on Lord Phillips second reservation. As the Court of Appeal concluded at paras 74 and 75: 74. It is impossible to see that those passages can provide any support for Ms Hendersons appeal. Lord Phillips speculation on the factual scenario postulated in para 15 was not only obiter but was expressly made on the footing that it had not been explored at the hearing, and he reserved his position on it. For his part, Lord Rodger did not address at all the scenario postulated by Lord Phillips in para 15. Lord Rodgers speculation was, moreover, limited to a case where the index offence of which a claimant was convicted was trivial a case which, he accepted, had not been explored at the hearing and on which he reserved his opinion. 75. Accordingly, a majority of the appellate committee (Lords Hoffmann, Rodger and Scott) did not agree with the observations of Lord Phillips at para 15 of his speech, at the very least in so far as those observations were intended to apply to a serious crime such as manslaughter. Even if Lord Phillips second reservation does not reflect a majority view, the appellant submits that it demonstrates that Gray concerned a claimant who did have significant personal responsibility. By contrast, in the present case Foskett J found in terms that the appellant did not bear a significant degree of responsibility for what she did, which was the reason the judge gave for not considering an order under section 45A of the 1983 Act. Although there does not appear to have been any specific finding by the trial judge in Gray as to the degree of his responsibility, I am prepared to assume that he was regarded as bearing a significant degree of responsibility. The difficulty for the appellant, however, is that the degree of responsibility involved forms no part of the reasoning of the majority. The crucial consideration for the majority was the fact that the claimant had been found to be criminally responsible, not the degree of personal responsibility which that reflected. At para 41 of his judgment Lord Hoffmann rejected the argument that the narrower rule does not apply in cases where the claimants conduct had not been as blameworthy as all that. At para 51 he explained that the sentence of the court is plainly a consequence of the criminality for which the claimant was responsible. In the same paragraph, he explained the wider rule as being justified on the grounds that a claimant should not be compensated for the consequences of his own criminal conduct (emphasis added). At para 69 Lord Rodger endorsed the narrow rule, explaining that a civil court will not award damages to compensate a claimant for an injury or disadvantage which the criminal courts of the same jurisdiction have imposed on him by way of punishment for a criminal act for which he was responsible. At para 85 he endorsed the wider rule on the basis that a person is not entitled to be indemnified for the consequences of his criminal acts for which he has been found criminally responsible (emphasis added). In my judgment Gray cannot be distinguished. It involved the same offence, the same sentence and the reasoning of the majority applies regardless of the degree of personal responsibility for the offending. It is against this high hurdle that the appellants suggested reasons for VII Issue (2) Whether Gray should be departed from and Clunis overruled If Gray is to be departed from it is necessary for the appellant to show that it is an appropriate case in which to do so under the 1966 Practice Statement: Practice Statement (Judicial Precedent) [1966] 1 WLR 1234. As this court has recently emphasised, it will be very circumspect before accepting an invitation to invoke the 1966 Practice Statement Knauer v Ministry of Justice [2016] UKSC 9; [2016] AC 908, para 23. It is important not to undermine the role of precedent and the certainty which it promotes. Circumstances in which it may be appropriate to do so include where previous decisions were generally thought to be impeding the proper development of the law or to have led to results which were unjust or contrary to public policy per Lord Reid in R v National Insurance Comr, Ex p Hudson [1972] AC 944, p 966. Even then the court needs to be satisfied that a departure from precedent is the safe and appropriate way of remedying the injustice and developing the law per Lord Scarman in R v Secretary of State for the Home Department, Ex p Khawaja [1984] AC 74, p 106. departing from Gray fall to be assessed. (i) Whether the reasoning in Gray cannot stand with the approach to illegality adopted by the Supreme Court in Patel. The appellant argues that the decision in Gray is an example of the now discredited rule based approach to illegality and is contrary to the flexible policy approach endorsed in Patel. It does not allow for the court to take into account the particular circumstances of the case, such as the degree of the claimants personal responsibility. Nor does it allow for consideration of proportionality. In my judgment, the essential reasoning in Gray is consistent with the approach adopted in Patel. Gray did not involve the reliance based approach, nor did it follow or apply Tinsley v Milligan. Indeed, at para 30 of his judgment Lord Hoffmann stated that such an approach was not helpful in that case, that it had nothing to do with whether there is the rule of law for which the appellants contend and that the maxim ex turpi causa expresses a policy. The court in Gray examined whether the narrower and the wider rules were, as was contended, a special rule of public policy. As already explained, both Lord Hoffmann and Lord Rodger considered the policy reasons for the rules and concluded that they were justified as a matter of public policy. Even though Lord Hoffmann endorsed a causation approach to the application of the wider rule, that involved a causal rule based on policy considerations. As the Court of Appeal said at para 64 of its judgment, it was a combination of public policy and causation. In Patel Lord Toulson stated at para 28 that in Gray the House of Lords held that public policy precluded him from recovering damages. As he further observed at para 32: The Law Commission drew from the various judgments a readiness on the part of the judges to examine the policy reasons which justified the application of the illegality defence and to explain why those policies applied to the facts of the case. Gray was correctly seen in Patel as being an example of a decision on illegality based on policy considerations rather than reliance. It was cited with apparent approval not only by Lord Toulson at paras 28 32, but also by Lord Kerr at para 129 and Lord Neuberger at paras 153 and 155. In addition, the fundamental policy consideration relied upon in Gray was the need for consistency so as to maintain the integrity of the legal system, the very matter that was held in Patel to be the underlying policy question. It is correct to observe that Gray involved no express consideration of proportionality. In Patel that did not, however, cause any doubt to be cast on the correctness of the decision and, for reasons explained below, the factual circumstances in Gray do not give rise to any issue of proportionality. The approach adopted by the House of Lords in Gray therefore provides no reason why it should be departed from. If anything, it points to the contrary conclusion. (ii) Whether it should be held that Gray does not apply where the claimant has no significant personal responsibility for the criminal act and/or there is no penal element in the sentence imposed. As already explained, the majority decided that the narrower and wider rules applied regardless of the degree of personal responsibility. The appellant contends that they were wrong so to do and that this part of the decision should be departed from. It is submitted that this case raises on the facts the second reservation expressed by Lord Phillips because the trial judge accepted that the appellant did not bear a significant degree of personal responsibility for her crime, and that this court should accept and apply that reservation. The appellants fundamental point is that there is no inconsistency or incoherence between the civil and the criminal law in a case in which the claimant has no significant personal responsibility for a criminal act. It is pointed out that the bar for lack of criminal responsibility is a high one, being the MNaghten rule of insanity. The defence dates from 1843 and has often been criticised as being out of date and failing to reflect modern medical understanding and practice. As the Law Commission stated at para 1.2 of its July 2013 Discussion Paper, Criminal Liability: Insanity and Automatism: The existing law has long been the subject of academic criticism for being unfair, out of date and failing to reflect advances made in medicine, psychology and psychiatry. The appellant places particular emphasis on the Law Commissions conclusion that lack of responsibility should be extended not only to those who are unable to think rationally, but also to those who are unable to control their actions. As stated in the Law Commissions principal conclusions: A.5 Our principal conclusion is that people should not be held criminally responsible for their conduct if they lack the capacity to conform their behaviour to meet the demands imposed by the criminal law regulating that conduct. This lack of capacity might consist in an inability to think rationally, or in an inability to control ones actions. The reason for that lack of capacity might lie in a mental disorder, or in a physical disorder. Given what the appellant says is the unsatisfactory state of the law governing criminal responsibility, it is submitted that no incoherence would be introduced into the law if tort law was to adopt a different approach to responsibility. It is pointed out that in any event civil law approaches issues of responsibility differently, focusing more on the question of capacity. Moreover, the purposes of the criminal law (focusing on the persons wrongdoing) and tort law (the connection between the wrongdoing and the claimants injury) are different. Given the divergent functions of tort law and the criminal law, it is submitted that there is nothing incoherent or inconsistent about tort law and criminal law having different tests for responsibility. That there is no inconsistency is said to be further borne out in this case by the fact that the sentence imposed on the appellant involved no penal element. A sentence under the 1983 Act only contains a penal element if an order under section 45A is made see, for example, R v Edwards [2018] 4 WLR 64, paras 12 and 34. To decide whether a penal element to the sentence is necessary, the judge should assess the offenders degree of responsibility together with the harm caused by the offence. In this case, the judge declined to make such an order precisely because of the appellants lack of significant personal responsibility. In such circumstances, it is submitted that the denial of the tort claim by means of illegality would constitute a punishment meted out in the civil law when the criminal law had declined to punish. If anything, the need for coherence would best be served by tort law declining to do what the criminal law has refused to do. As to how it should be determined whether a claimant bears no significant personal responsibility, it is submitted that this is essentially a matter of fact for the trial judge hearing the civil claim. If, however, a test is required then it should be: did the claimant lack capacity to conform his/her behaviour to the demands imposed by the criminal law?. These are formidable arguments persuasively presented by Mr Bowen QC on behalf of the appellant and supported by some academic commentary, in particular the writings of Dr Dyson. I am, however, unable to accept that they meet the high hurdle of justifying departure from the House of Lords relatively recent decision in Gray. As explained above, the key consideration as far as the majority in Gray were concerned was that the claimant had been found to be criminally responsible for his acts. That he had been convicted of manslaughter on the grounds of diminished responsibility meant that responsibility for his criminal acts was diminished, but it was not removed. It was not an insanity case and so, as Beldam LJ pointed out in Clunis (at p 989): he must be taken to have known what he was doing and that it was wrong. In such circumstances, the majority in Gray justifiably considered that inconsistency would arise not only if he was allowed to recover damages resulting from the sentence imposed, but also if they resulted from the intentional criminal act for which he had been held responsible. To allow recovery would be to attribute responsibility for that criminal act not, as determined by the criminal law, to the criminal but to someone else, namely the tortious defendant. There is a contradiction between the laws treatment of conduct as criminal and the acceptance that such conduct should give rise to a civil right of reimbursement. The criminal under the criminal law becomes the victim under tort law. Whilst the wider rule may not involve, as the application of the narrower rule does, the law giving with one hand what it takes away with the other, it does involve, as Lord Hughes said in Hounga v Allen at para 55, the law condoning when facing right what it condemns when facing left. If, as the appellant submits, the degree of personal responsibility is a matter for the trial judge to determine in the civil claim there is a clear risk of inconsistent decisions being reached in the criminal and the civil courts, both as to the degree of responsibility involved and as to how that is to be determined. If, as is further submitted, it is appropriate for the civil court to move away from the MNaghten approach to insanity, and to develop its own approach to such issues, then the inconsistencies will be heightened. Nor does the fact that there may be no penal element to the sentence imposed by the criminal court alter matters. As Lord Rodger observed at para 78 of Gray, even if the sentence is not regarded as being a punishment, this does not mean that the judge was treating the claimant as not being to blame for what he did. A conviction for manslaughter by diminished responsibility still involves blame. The defendant would otherwise have been convicted of murder and some responsibility for the unlawful killing necessarily remains. Moreover, the fact of a criminal conviction for manslaughter is itself punitive. A further difficulty with the appellants argument is why significant personal responsibility is to be regarded as the threshold, precisely what that means and how it is to be determined. Whilst a sentencing judge will be concerned with the level of responsibility involved, he or she will not be specifically addressing the issue of significant personal responsibility. If, for example, in accordance with the Guideline an offender is found to bear medium responsibility, how does that relate to the threshold of significant personal responsibility? In any event, any findings which may be made by the trial judge in the criminal proceedings will be solely for the purpose of sentencing. It is not sufficient simply to say that this will be a matter of fact for the trial judge to determine in the civil claim. As the Law Commissions Discussion Paper illustrates, the issue of responsibility raises questions of great complexity and difficulty. This fundamental building block of the appellants case was barely addressed in the appellants written case or in the 77 page speaking note provided on the first day of the hearing, a clear abuse of the written case procedure and its required page limits. Instead, the court was provided with a five page insert to the speaking note which put forward the test of whether the claimant lacked capacity to conform their behaviour to the demands imposed by the criminal law. What the justification is for that proposed test was not really explained, nor was its meaning. Not only is it a recipe for uncertainty, but it risks being tantamount to judicial legislation. Finally, the appellant advances a related argument that the lack of significant personal responsibility means that there is insufficient turpitude to give rise to an illegality defence. This again ignores the seriousness of a criminal conviction for manslaughter. It is an indictable only offence punishable by a sentence of life imprisonment. It is a serious offence for the purposes of the provisions regarding dangerous offenders in the Criminal Justice Act 2003. The plea of guilty to manslaughter by reason of diminished responsibility means acceptance by the appellant that she possessed the mental prerequisites of criminal responsibility for murder, namely an intention to kill or to cause grievous bodily harm. In the present case, the expert psychiatrists also agreed that the appellant knew that what she was doing was morally and legally wrong when she inflicted the stab wounds on her mother. In Les Laboratoires Servier v Apotex Inc [2015] AC 430 Lord Sumption stated at para 23 that: The paradigm case of an illegal act engaging the defence is a criminal offence. As Lord Sumption explained at para 29, there may be some exceptional cases where a criminal act will not constitute turpitude. The reservation made in Gray in relation to trivial offences may be an example of such a case, as may be strict liability offences where the claimant is not privy to the facts making his act unlawful. The serious criminal offence of manslaughter by reason of diminished responsibility does not come close to falling within such an exception and clearly engages the defence. (iii) Whether the application of the trio of considerations approach set out in Patel leads to a different outcome. The trio of considerations set out by Lord Toulson at para 120 of his judgment are: any other relevant public policy on which the denial of the claim may (a) the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim (the first stage or stage (a)); (b) have an impact (the second stage or stage (b)); and (c) whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts (the third stage or stage (c)). The issues and the arguments in the present case have raised a number of questions as to the proper understanding and application of the trio of considerations. First, the appellant contends that the case should be remitted so that evidence can be adduced as to the suggested policy considerations, as to which there were various factual disputes. It is neither necessary nor desirable that consideration of the relevant policy considerations should give rise to a mini trial. They should usually be capable of being addressed as a matter of argument and at a level of generality that does not make evidence necessary, as is well illustrated by this courts decision in Hounga v Allen. Secondly, questions arise as to exactly how under the trio of considerations approach relevant policy considerations are to be weighed. It appears that this must involve a balancing between considerations arising at the first and second stages; the third stage relates to proportionality and factors specific to the case rather than general policy considerations. Stage (a) is directed at policy reasons which support denial of the claim and stage (b) is directed at policy reasons which support denial of the illegality defence. As Lord Toulson makes clear at para 101, stage (b) is meant to operate conversely to stage (a). This is consistent with the approach of Lord Wilson in Hounga v Allen from which Lord Toulson had drawn support (at para 76). Lord Wilson described the balancing exercise in the following terms at para 42: So it is necessary, first, to ask What is the aspect of public policy which founds the defence? and, second, to ask But is there another aspect of public policy to which the application of the defence would run counter? It also reflects the broad way in which Lord Kerr expressed his understanding of stage (a) at para 124: By this, I understand Lord Toulson JSC to mean the reasons that a claimants conduct should operate to bar him or her from a remedy which would otherwise be available. It follows that stage (a) should not be interpreted as being confined to the specific purpose of the prohibition transgressed. Whilst that is of great importance, other general policy considerations that impact on the consistency of the law and the integrity of the legal system also fall to be taken into account. In the present case, for example, that would encompass the public policy considerations identified in Gray, namely the consistency principle and the public confidence principle. Similarly, whilst preventing someone from profiting from his own wrong is not the rationale of the illegality defence, it is a relevant policy consideration, which is linked to the need for consistency and coherence in the law. For one branch of the law to enable a person to profit from behaviour which another branch of the law treats as being criminal or otherwise unlawful would tend to produce inconsistency and disharmony in the law, and so cause damage to the integrity of the legal system, as is recognised in Patel (at paras 99 to 101). In cases where it features, it too is a factor to be taken into account, even though it may not reflect the purpose of the prohibition transgressed. In considering the issue of consistency and coherence in the law, the closeness of the connection between the claim and the illegal act may well be of relevance. The closer that connection is, the greater and more obvious may be the inconsistency and consequent risk of harm to the integrity of the legal system. The rejection by the majority in Patel of reliance as the test of illegality did not mean that reliance was thereby rendered irrelevant to the policy based approach. It may not provide a satisfactory test of illegality, but it will often be a relevant factor. Thirdly, questions arise as to the weight it may be appropriate to give to different policy considerations. At para 99 Lord Toulson recognised the importance of the policy considerations that a person should not be allowed to profit from his own wrongdoing and that the law should be coherent. Where either or both of these considerations are engaged it would seem appropriate that they are given great weight. This was a point made by Lord Kerr in his judgment at para 143 where he stated as follows: 143. Lord Toulson JSCs solution to this question also permits readier access to investigation of the traditional justifications for the ex turpi causa maxim preservation of the integrity of the legal system and preventing profit from wrongdoing. If, on examination of the particular circumstances of the case, these can be shown to weigh heavily in the balance, it is more likely that the defence will be upheld. I would respectfully agree with that approach. Fourthly, questions arise as to whether proportionality always has to be considered and as to how it is to be addressed. In some cases, of which Hounga v Allen is an example, it may be apparent that the balancing of policy considerations comes down firmly against denial of the claim. If so, it will not be necessary to go on to the third stage and the issue of proportionality. This is consistent with Lord Toulsons statement at para 107 that these factors relate to whether it would be disproportionate to refuse relief to which the claimant would otherwise be entitled and at para 101 that they fall to be considered to avoid the possibility of overkill. In other words, they are a disproportionality check rather than a proportionality requirement. In relation to proportionality, at para 107 Lord Toulson identified four factors which were likely to be of particular relevance, namely: the seriousness of the conduct, its centrality [to the transaction], whether it was intentional and whether there was marked disparity in the parties respective culpability. Lord Toulson refrained from saying anything about the potential weight of such factors, no doubt to avoid being prescriptive. I would, however, suggest that centrality will often be a factor of particular importance. When considering the circumstances relating to the illegality, whether there is a causal link between the illegality and the claim, and the closeness of that causal connection, will often be important considerations. (a) Stage (a) The underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the As explained above, this stage involves identification of policy reasons which support denial of the claim. Considering first general policy considerations rather than the purpose of the prohibition, for the reasons explained in Gray, the consistency principle is engaged in this case. There is a need to avoid inconsistency so as to maintain the integrity of the legal system. Whilst that most obviously applies to the narrower rule, it also applies to the wider rule. As Patel makes clear, this is a central and very weighty public policy consideration. For the reasons given by Lord Hoffmann in Gray, the public confidence principle is also engaged. Again, this applies to both the narrower and the wider rule. In the present case, the gravity of the wrongdoing heightens the significance of the public confidence considerations, as does the issue of proper allocation of resources. NHS funding is an issue of significant public interest and importance and, if recovery is permitted, funds will be taken from the NHS budget to compensate the appellant for the consequences of her criminal conviction for unlawful killing. This is also a case in which there is a very close connection between the claim and the illegality, thereby highlighting and emphasising the inconsistencies in the law which would be raised were the claim to succeed. The appellants crime was the immediate and, on any view, an effective cause of all heads of loss claimed. Indeed, applying Lord Hoffmanns approach to causation in Gray, with which Lord Rodger and Lord Scott agreed, it was the sole effective cause of such loss. In relation to the underlying purpose of the prohibition transgressed, an important purpose is to deter unlawful killing thereby providing protection to the public. As far as the public is concerned there could be no more important right to be protected than the right to life. It is clearly in the public interest that everything possible is done to enhance protection of that fundamental right. There is also a public interest in the public condemnation of unlawful killing and the punishment of those who behave in that way. On behalf of the appellant it is submitted that it is absurd to suppose that a person suffering from diminished responsibility will be deterred from killing by the prospect of not being able to recover compensation for any loss suffered as a result of committing the offence. Indeed, more generally it is submitted that a person who is not deterred by a criminal sanction is unlikely to be deterred by being deprived of a right to compensation. There is force in these points, but the question should not be considered solely at the granular level of diminished responsibility manslaughter cases. Looking at the matter more broadly there may well be some deterrent effect in a clear rule that unlawful killing never pays and any such effect is important given the fundamental importance of the right to life. To have such a rule also supports the public interest in public condemnation and due punishment. (b) Stage (b) Any other relevant public policy on which the denial of the claim may have an impact The appellant suggests four countervailing public policies. The first is the policy of encouraging NHS bodies to care competently for the most vulnerable. It is said that it is recognised that imposing a duty of care can enhance standards. There is, however, no issue that a duty of care was owed. Indeed, liability for damages up to the date of the killing is admitted. It is unlikely that limiting the extent of the liability to the victim will affect the exercise of due care. In any event, there is a potential exposure in such cases to claims on behalf of victims as well as to regulatory sanctions. Focusing on the specific factual situation in the present case, there is no ready means of judging the likely consequences of removing the illegality defence from NHS bodies in claims by mental health patients who kill others. As the respondent submits, it does not seem likely that NHS staff or organisations need any encouragement to try to do their best to stop patients killing people. The second is the policy of providing compensation to victims of torts where they are not significantly responsible for their conduct. It is not clear that there is any such general policy and the example of suicide cases which is relied upon raises different considerations, not least because suicide is not a crime. The third is the policy of ensuring that public bodies pay compensation to those whom they have injured. This may be said to beg the question since it assumes that it was the respondents negligence which injured the appellant rather than her own criminal act. Even if it was, this is not one of those cases where the injury was the very thing which the respondent was engaged to prevent and it is agreed that the killing by the appellant of her mother could not have been predicted. The fourth is the policy of ensuring that defendants in criminal trials receive sentences proportionate to their offending. That is consistent with the purpose of the narrower rule which is to avoid giving back with one hand what has been taken by the other. I recognise that there is force in at least some of the policy considerations relied upon by the appellant, but I do not consider that they begin to outweigh those which support denial of the claim. In particular, as Gray makes clear, the resulting inconsistency in the law is such as to affect the integrity of the legal system. The underlying policy question identified in Patel is accordingly engaged. As stated by McLachlin J in Hall v Hebert [1993] 2 SCR 159 at 182, concern for the integrity of the legal system trumps the concern that the defendant be responsible. (c) Stage (c) Whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is for the criminal courts It is not suggested that there were factors relevant to proportionality aside from the four factors identified by Lord Toulson at para 107 of his judgment in Patel, namely: (i) the seriousness of the conduct; (ii) the centrality of the conduct to the transaction; (iii) whether the conduct was intentional; and (iv) whether there was a marked disparity in the parties respective wrongdoing. As to the seriousness of the conduct, this was a very serious offence. It involved culpable homicide committed with murderous intent. As was acknowledged on behalf of the appellant, unlawful killing is the most serious conduct imaginable. The appellant knew what she was doing and that it was legally and morally wrong. As to the centrality of the conduct to the transaction, the offending is central to all heads of loss claimed and, as held in Gray, is the effective cause of such loss. As to whether the conduct was intentional, there was intent to kill or to do grievous bodily harm. Whilst there may have been no significant personal responsibility, there was nevertheless murderous intent. As to whether there was a marked disparity in the parties respective wrongdoing, the appellant was convicted of culpable homicide. Whilst she may not bear a significant degree of responsibility for what she did, she knew what she was doing and that it was morally and legally wrong. The respondent has admitted negligence in the appellants treatment. It is not the case, however, that the respondents staff did nothing in response to the appellants mental health relapse. In all the circumstances I do not consider that denial of the claim would be disproportionate. It would be a proportionate response to the illegality, bearing in mind that punishment is for the criminal court. The same would apply to the materially similar facts of Gray, even more clearly in so far as the offending in that case involved significant personal responsibility. The fact that proportionality was not specifically addressed in Gray does not therefore undermine the approach taken or the decision reached in that case. For all these reasons, the application of the trio of considerations approach set out in Patel does not lead to a different outcome. (iv) Conclusion on issue (2) The appellant has not shown that Gray should be departed from and Clunis overruled. On the contrary, I consider that the decision in Gray should be affirmed as being Patel compliant it is how Patel plays out in that particular type of case. The clearly stated public policy based rules set out in Gray should be applied and followed in comparable cases. VIII Issue (3) Whether all heads of loss claimed are irrecoverable In the appellants written case it was accepted that all heads of loss are irrecoverable pursuant to the ratio in Gray, save for (as was common ground) any losses for pain and suffering or loss of amenity that arose prior to the killing. The claim for general damages for loss of liberty was accepted as being barred by the narrower rule, the other heads by the wider rule. In oral submissions there appeared to be some retreat from this position, although the only head of loss addressed in any detail was that relating to the Forfeiture Act. In my judgment, the appellants concession was properly made. Damages for loss of liberty (head (ii)) and loss of amenity during her detention (part of head (iii)), are barred by the narrower rule. The other heads of loss are barred by the wider rule; indeed, two of them are expressly stated to be the consequence to the appellant of the killing of her mother (heads (i) and (iii)). As to the Forfeiture Act claim, the reason that the appellant is unable to recover the full share of her mothers estate is because an order to that effect was made by the court pursuant to the provisions of the Forfeiture Act. In deciding what order to make the court has regard to the conduct of the offender and of the deceased, to such other circumstances as appear to the court to be material and to the justice of the case. It would be entirely inappropriate to subvert the operation of the specific and bespoke Forfeiture Act regime, and the court order made thereunder, by permitting the appellant to recover from the respondent what she was not permitted to recover under the Forfeiture Act. IX Conclusion For all the reasons outlined above, I consider that the appeal should be dismissed.
UK-Abs
This appeal concerns the defence of illegality. The Supreme Court is asked to decide whether the appellant, Ms Henderson, can claim damages for loss she has suffered as a result of her conviction for her mothers manslaughter from the respondent, Dorset Healthcare University NHS Foundation Trust (Dorset Healthcare). Ms Henderson suffers from paranoid schizophrenia or schizoaffective disorder. In August 2010, she was under the care of the Southbourne community mental health team, which was managed and operated by Dorset Healthcare. On or around 13 August 2010, Ms Hendersons condition began to deteriorate. On 25 August 2010, she stabbed her mother to death whilst experiencing a serious psychotic episode. Ms Henderson was convicted of manslaughter by reason of diminished responsibility. In her criminal trial, the judge said that there was no suggestion that Ms Henderson should be seen as bearing a significant degree of responsibility for what she had done. The judge sentenced Ms Henderson to a hospital order under section 37 and an unlimited restriction order under section 41 of the Mental Health Act 1983. She has remained in hospital ever since, and is not expected to be released for some time. Ms Henderson brought a negligence claim against Dorset Healthcare, seeking damages for personal injury and other loss and damage. Dorset Healthcare admitted liability for its negligent failure to return Ms Henderson to hospital when her psychiatric condition deteriorated. It accepted that, if it had done this, the tragic killing of Ms Hendersons mother would not have taken place. However, it argued that Ms Hendersons claim is barred for illegality, because the damages she claims result from: (i) the sentence imposed on her by the criminal court; and/or (ii) her own criminal act of manslaughter. Similar claims for damages to those made by Ms Henderson were held to be irrecoverable by the House of Lords in Gray v Thames Trains Ltd [2009] UKHL 33; [2009] AC 1339 (Gray). The recoverability of the damages claimed was, therefore, ordered to be tried as a preliminary issue. The High Court judge determined the preliminary issue in favour of Dorset Healthcare, and the Court of Appeal dismissed Ms Hendersons appeal. Both the High Court and the Court of Appeal held that the facts of Ms Hendersons claim are materially identical to those in Gray, which was binding upon them. Ms Henderson appealed to the Supreme Court. The appeal raises the question of whether Gray can be distinguished and, if not, whether it should be departed from, in particular in the light of the more recent Supreme Court decision concerning illegality in Patel v Mirza [2016] UKSC 42; [2017] AC 467 (Patel). The Supreme Court unanimously dismisses Ms Hendersons appeal, and holds that her claim against Dorset Healthcare is barred by the illegality defence. Lord Hamblen gives the judgment, with which all members of the Court agree. Ms Hendersons appeal raises three main issues [32]. Issue 1: Can Gray be distinguished? In Gray, the House of Lords held that Mr Grays negligence claim was barred by the defence of illegality because the damages he sought resulted from: (i) the sentence imposed on him by the criminal court; and/or (ii) his own criminal act of manslaughter [36]. The courts below held that the facts of Ms Hendersons and Mr Grays claims are materially identical, so Ms Hendersons claim is barred for illegality for the same reasons as Mr Grays [30 31]. However, Ms Henderson argues that the reasoning in Gray does not apply or can be distinguished, because Gray concerned a claimant with significant personal responsibility for his crime. In contrast, in Ms Hendersons criminal trial, the judge said that there was no suggestion that Ms Henderson should be seen as bearing a significant degree of responsibility for what she had done [82]. The Court rejects Ms Hendersons argument and finds that Gray cannot be distinguished. The crucial consideration in Gray was that the claimant had been found to be criminally responsible for his conduct, not the degree of personal responsibility which that reflected [83 86]. Lord Phillips reserved judgment in Gray on whether the illegality defence would apply to a case where the claimant did not bear significant personal responsibility for their crime, but this was not the view of the majority [79 81]. Issue 2: Should the Court depart from Gray? In Patel, the Supreme Court held that the proper approach to the illegality defence at common law was one based on a balancing of public policy considerations rather than a reliance based approach [61]. The majority held the underlying policy question to be whether allowing recovery for something which is illegal would produce inconsistency and disharmony in the law and so cause damage to the integrity of the legal system. In assessing whether the public interest would be harmed in that way, the court should consider a trio of considerations, namely: stage (a) the underlying purpose of the illegality in question, and whether that purpose would be enhanced by denying the claim; stage (b) any other relevant public policy on which denying the claim may have an impact; and stage (c) whether denying the claim would be a proportionate response to the illegality [66 68, 113]. With regard to the application of Patel, the Court confirms, first, that it concerned common law illegality rather than statutory illegality [74]; secondly, that although it concerned a claim in unjust enrichment, the Courts decision provides guidance on the proper approach to the common law illegality defence across civil law generally [76]; and thirdly that the principles identified in Patel are derived from the pre existing case law and earlier decisions on the illegality defence remain of precedential value, unless they are incompatible with the Courts reasoning in Patel [77]. Ms Henderson contends that the Court should depart from Gray on three grounds. The first ground is that the reasoning in Gray is incompatible with the approach to illegality adopted by the Supreme Court in Patel. The Court finds, however, that the essential reasoning in Gray is consistent with Patel, and so remains good law [89 96]. The second ground is that Gray should not apply where the claimant has no significant personal responsibility for the criminal act and/or there is no penal element in the sentence imposed on them by the criminal court [97 103]. The Court rejects this argument because allowing a claimant to recover damages for loss that results from: (i) the sentence imposed by the criminal court; and/or (ii) an intentional criminal act for which the claimant has been held to be criminally responsible would give rise to inconsistency that is damaging to the integrity of the legal system. The criminal under the criminal law would become the victim under the civil law [106]. Requiring the civil court to assess whether or not a civil claimant has a significant degree of personal responsibility for their crime would create a clear risk of inconsistent decisions being reached in the criminal and civil courts [108]. In any case, it is unclear why significant personal responsibility is the appropriate threshold, and how the civil courts should decide whether a claimant meets that threshold [110 111]. There may be some exceptional trivial or strict liability offences which do not engage the illegality defence. However, the serious criminal offence of manslaughter by reason of diminished responsibility is not one of those exceptions [112]. The third ground is that Ms Hendersons claim would be allowed under the trio of considerations approach in Patel [113 116]. With regard to the trio of considerations, the Court confirms first that they should usually be capable of being addressed as a matter of argument and at a level of generality that does not make evidence necessary [115]; secondly, that they involve a balancing between policy considerations arising under stages (a) and (b) and that stage (c) relates to proportionality and factors specific to the case rather than general policy considerations [116 120]; thirdly, that, where they arise, it is appropriate to give great weight to the policy considerations that a person should not be allowed to profit from his own wrongdoing and that the law should be coherent [121 122]; fourthly, that where the policy considerations come down firmly against denial of the claim it will not be necessary to consider stage (c) and proportionality [123]; and fifthly, that in relation to proportionality, centrality and the closeness of the causal link between the illegality and the claim will often be factors of particular importance [124]. In relation to stage (a), the policy reasons which support denial of Ms Hendersons claim include the consistency and public confidence principles identified in Gray [119, 125 126]. They also include: (i) the gravity of her criminal offence; (ii) the public interest in the proper allocation of NHS resources; (iii) the very close connection between her claim and her offence; and (iv) the public interest in deterring, protecting the public from and condemning unlawful killing [127 129]. Although a claimant in Ms Hendersons position may not be deterred from unlawful killing by being deprived of a civil right to compensation, there may well be a broader deterrent effect in a clear rule that unlawful killing never pays. Any such effect is important given the fundamental importance of the right to life. To have such a rule also supports the public interest in public condemnation and due punishment [130 131]. In relation to stage (b), the policy reasons relied upon for allowing Ms Hendersons negligence claim do not begin to outweigh those which support the denial of the claim. In particular, as Gray makes clear, the resulting inconsistency in the law is such as to affect the integrity of the legal system and the underlying policy question identified in Patel is accordingly engaged [137]. In relation to stage (c), the four factors relevant to proportionality identified in Patel do not show that denial of the claim would be disproportionate [138 143]. It follows that the trio of considerations approach in Patel does not lead to a different outcome in Ms Hendersons case [144]. Gray should therefore be affirmed as being Patel compliant and should be applied and followed in similar cases [145]. Issue 3: Can Ms Henderson recover damages for any of the heads of loss she has claimed? The Court answers this question no. Ms Henderson cannot claim damages for loss of liberty or for loss of amenity during her detention in hospital because these heads of loss result from the sentence imposed on her by the criminal court. The other heads of loss cannot be recovered because they result from Ms Hendersons unlawful killing of her mother [148]. It would be inappropriate for the Court to subvert the operation of the Forfeiture Act 1982, which prevents Ms Henderson from recovering her full share of her mothers estate [149].
London Clubs Management Ltd (LCM) operates casinos where games such as blackjack, punto banco and American roulette are played. The questions to which this appeal gives rise concern the correct treatment for gaming duty purposes of non negotiable gaming chips and free bet vouchers which are provided free of charge by LCM and some other casino operators to selected gamblers to encourage them to gamble in their casinos. Gaming duty is an excise duty which was introduced by the Finance Act 1997 (the FA 1997). Section 10(1) provides that the duty is charged in accordance with section 11 on any premises where dutiable gaming takes place. It is accepted that the gaming at issue in this appeal is dutiable gaming for which LCM, as the provider of the casino premises where it takes place, is liable. The amount of gaming duty payable is calculated by applying the relevant rate of gaming duty to the gross gaming yield from the casino premises during a specified accounting period. Section 11(8) provides that the gross gaming yield consists of the aggregate of gaming receipts and bankers profits for that period: the gaming receipts for that period from those premises; (a) and (b) where a provider of the premises (or a person acting on his behalf) is banker in relation to any dutiable gaming taking place on those premises in that period, the bankers profits for that period from that gaming. Gaming receipts are defined by section 11(9), which reads, so far as relevant: For the purposes of subsection (8) above the gaming receipts for an accounting period from any premises are the receipts in that period from charges made in connection with any dutiable gaming which has taken place on the premises other than (b) any charge the payment of which confers no more than an entitlement to admission to the premises. Bankers profits were, at the relevant time, 1 October 2008 to 30 September 2012, defined by section 11(10) as the amount by which the value in money or moneys worth of the stakes staked exceeded the value of the prizes provided by the banker: In subsection (8) above the reference to the bankers profits from any gaming is a reference to the amount (if any) by which the value specified in paragraph (a) below exceeds the value specified in paragraph (b) below, that is to say (a) the value, in money or moneys worth, of the stakes staked with the banker in any such gaming; and the value of the prizes provided by the banker to (b) those taking part in such gaming otherwise than on behalf of a provider of the premises. Section 11(10A), which has had effect since 1 September 2007, addresses the valuation of prizes: Subsections (2) to (6)(a) of section 20 of the Betting and Gaming Duties Act 1981 (expenditure on bingo winnings: valuation of prizes) apply, with any necessary modifications, for the purposes of gaming duty as they apply for the purposes of bingo duty. Section 20 of the Betting and Gaming Duties Act 1981 (the BGDA) says, so far as relevant: (2) Where a prize is obtained by the promoter from a person not connected with him, the cost to the promoter shall be treated as the value of the prize for the purpose of subsection (1). (3) Where a prize is a voucher which (a) may be used in place of money as whole or partial payment for benefits of a specified kind obtained from a specified person, (b) in place of which the voucher may be used, and (c) does not fall within subsection (2), specifies an amount as the sum or maximum sum the specified amount is the value of the voucher for the purpose of subsection (1). (4) Where a prize is a voucher (whether or not it falls within subsection (2)) it shall be treated as having no value for the purpose of subsection (1) if (a) it does not satisfy subsection (3)(a) and (b), or (b) its use as described in subsection (3)(a) is subject to a specified restriction, condition or limitation which may make the value of the voucher to the recipient significantly less than the amount mentioned in subsection (3)(b). The facts The relevant facts are not in dispute and are very straightforward. Normal cash chips are either purchased by gamblers for cash or won on a winning bet. They are replayable at the gaming tables until they are lost, or they may be used to buy goods or services, or they may be encashed. Non negotiable chips are provided to selected gamblers as a promotional tool. They have some of the characteristics of normal cash chips. In particular, they may be used to place bets at the gaming tables and they are replayable until they are lost. If the gambler wins, the banker pays out the winnings in cash chips and the gambler retains the non negotiable chips and may use them to place further bets. There are important differences between non negotiable chips and cash chips, however. First and as I have mentioned, they are not purchased for cash but are provided free of charge. Secondly, they cannot be used to buy goods or services, nor can they be encashed. They can be used to place bets and that is all. Thirdly, when a gambler loses a bet placed with non negotiable chips, the banker places them in the tables drop box which is a secure box under the gaming table. In contrast (with the exception of tips), cash chips are not placed in the drop box. Rather, when a gambler loses a bet placed with cash chips, the chips are placed in the chip float, a tray which rests in front of the banker and contains the casinos chips. Fourthly, non negotiable chips are physically distinguishable from cash chips. The face of each non negotiable chip is clearly marked non negotiable. Free bet vouchers are printed paper vouchers which are also provided to selected gamblers as a promotional tool. There are several different types. Free play vouchers or replayable vouchers can be used in just the same way as non negotiable chips. If the gambler loses the bet, they are placed in the drop box. If the gambler wins the bet, the winnings are paid to him in cash chips and the voucher is returned to him and may be used to place further bets. One hit vouchers can only be used to place a single bet, regardless of whether the gambler wins or loses. Once the voucher has been played, the dealer puts it in the drop box. If the gambler has won the bet, his winnings are paid in the form of cash chips. If he loses the bet, he receives nothing. Cash match vouchers operate in a similar way to one hit vouchers, except that a gambler must first place a bet with cash chips in order to use a cash match voucher of the same value. Finally, there are free gaming chips vouchers. They may be exchanged for non negotiable chips at the casinos cash desk without charge. These non negotiable chips can then be used in just the same way as other non negotiable chips. Non negotiable chips have no printed terms and conditions. Free bet vouchers, on the other hand, are subject to terms and conditions which may limit the games in which they may be played (for example, blackjack or punto banco), the bets for which they may be placed (for example, even money bets) or the time at which they may be used (for example, between particular dates). In these proceedings non negotiable chips and all free bet vouchers have been referred to collectively as Non Negs and I too will use that terminology. No one has suggested that, for tax purposes, the various kinds of Non Negs should be treated differently from one another. But I should observe that the Upper Tribunal pointed out, entirely correctly in my view, that free gaming chips vouchers should not have been included in the same category as other Non Negs because they are not used in the game itself, nor do they end up in the drop box; it is only the Non Negs into which they may be exchanged which are placed as bets. Clearly this can have no effect on the outcome of this appeal, however. LCM introduced Non Negs in 2008 and from that time it included the face value of all the Non Negs played by gamblers and retained by its casinos in their drop boxes in the calculation of its bankers profits. However, following a review of that approach, it considered that it had made an error in so doing and that, in consequence, it had over declared its payable gaming duty. In October 2012 LCM therefore wrote to the Commissioners for Her Majestys Revenue and Customs (HMRC) and requested repayment of 1,973,376.97 of gaming duty which it said had been overpaid in the period from 1 October 2008 to 30 September 2012. The request was made under section 137A of the Customs and Excise Management Act 1979. On 13 March 2013, HMRC rejected that claim. LCM appealed against that decision. The proceedings The First tier Tribunal (FTT) (Judge Sinfield) [2014] UKFTT 1060 (TC) dismissed LCMs appeal. The FTT rejected LCMs argument that Non Negs did not have any value in money or moneys worth within the meaning of section 11(10)(a) of the FA 1997 because they were provided to the gambler free of charge and so the gambler did not risk anything of value when he placed them as a bet. It accepted instead the argument advanced on behalf of HMRC that the value in money or moneys worth of the Non Negs was their monetary face value on the basis that the face value would be used to calculate the winnings in cash chips and on a losing bet the gambler would no longer have the right to bet the monetary value of the Non Negs for free. On appeal by LCM, the Upper Tribunal (Tax and Chancery Chamber) (UT) (Henderson J and Judge Roger Berner), [2016] UKUT 0259 (TCC) allowed the appeal. It held that the FTT failed to have proper regard to the requirement that the value of the stakes staked in section 11(10)(a) of the FA 1997 must be the value of those stakes in money or moneys worth. However, Non Negs did not represent any money paid or deposited with LCM, nor did they have any value in moneys worth by reason of being redeemable for cash or for goods or services. Further, there was no evidence and there were no findings of fact either that Non Negs were transferable or, if they were, as to the monetary value that they might realise upon any transfer. The UT also addressed the position of Non Negs as prizes under section 11(10)(b) of the FA 1997. It considered that this was not an issue which needed to be resolved to dispose of the appeal but it was desirable that it should express a view upon it because the system of valuation for gaming duty purposes of chips and vouchers for free bets should be regarded as a whole, taking into account the positive and negative elements of the calculation of the bankers profits. On this issue, the parties took the position that Non Negs should be treated in the same way for the purposes of section 11(10)(a) and (b). Hence LCMs case was that Non Negs were to be treated as having no value for the purposes of section 11(10)(a) and (b). HMRC, on the other hand, argued that Non Negs were to be treated as having their face value for the purposes of section 11(10)(a) and (b), with the result that only when a Non Neg was not returned to or retained by the gambler would its value contribute to bankers profits. The UT observed that it was not part of LCMs claim or its case on appeal that if Non Negs had no value for the purposes of section 11(10)(a) they could nevertheless have a value for the purposes of section 11(10)(b). Correspondingly but not surprisingly, LCM did not dispute HMRCs analysis of the position as to the value of Non Negs as prizes were HMRCs argument as to the value of Non Negs for the purposes of section 11(10)(a) to have prevailed. The UT accepted LCMs contentions on this issue. It held that Non Negs which were returned to or retained by the gambler fell within section 20(4)(a) and (b) of the BGDA and therefore must be regarded as having no value. They fell within section 20(4)(a) because they failed to satisfy section 20(3)(a) and (b). They could be used to play a game but that did not mean they were used in place of money as payment for benefits. They fell within section 20(4)(b) because their use was restricted to the same use as any other Non Neg and therefore could not have any different value in money or in moneys worth. The Court of Appeal (Flaux, Leggatt LJJ, Dame Elizabeth Gloster) [2018] EWCA Civ 2210; [2019] 1 WLR 1 dismissed HMRCs further appeal. It held that a Non Neg was not a stake staked for the purposes of section 11(10)(a) of the FA 1997; and, if a Non Neg was a stake staked, that stake had no value in money or moneys worth. Dame Elizabeth Gloster, with whom Leggatt and Flaux LJJ agreed, reasoned that the assessment of stakes staked under section 11(10), in context, involved a conventional arithmetical calculation of real world stakes received from players which, if necessary, could feature as revenue figures in a set of accounts and contribute to the casinos gross profits. It did not include artificial or notional values placed on tokens given to the gambler by the casino as a promotional exercise which intrinsically had no value and were non negotiable, or at best had an economic value to the player equivalent to their face value multiplied by the chance of winning. In no sense could the face value of a Non Neg, or even the value calculated by reference to the chance of winning, feature as a receipt in a casinos accounts or be said to contribute to its gross profits. Further, when a gambler used a Non Neg, he was not using his own money or putting his own money at risk. When a gambler lost a Non Neg and it was placed in the casinos drop box, he was not losing cash but the right to use that Non Neg to place a bet. On an objective assessment of value, a Non Neg had no value in money or moneys worth for the purposes of section 11(10)(a). HMRC also asked the Court of Appeal to consider the value of Non Negs as prizes provided on the basis that, although a finding on this issue was not necessary to dispose of the appeal, there should, so far as possible, be consistency between the value of Non Negs as stakes staked and as prizes provided. The Court of Appeal duly did so and, once again, agreed with the reasoning of the UT. The benefit which a retained Non Neg provided was no different from that referable to the original Non Neg. As no payment was required for the original Non Neg, there was no payment in money which the Non Neg could replace. Nor did staking a Non Neg in a casino game entail payment in return for a benefit. Moreover, the use of a Non Neg was restricted, since it could only be used as a stake, and its use as such had no value. The UT was therefore right to conclude that the effect of either section 20(4)(a) or (b) of the BGDA was that a Non Neg retained as a prize had no value for the purposes of section 11(10)(b) of the FA 1997. This appeal Upon this further appeal, HMRC contend that the Court of Appeal fell into error on each of the issues it decided. It is therefore necessary to consider: i) whether, in calculating bankers profits, Non Negs are stakes for the purposes of section 11(10)(a) of the FA 1997; ii) what value, in money or moneys worth (if any) Non Negs have for the purposes of section 11(10)(a); and iii) what value (if any) should be given to Non Negs for the purposes of section 11(10)(b). Issues (i) and (ii) Non Negs as stakes staked It is convenient to address these issues together, for they are closely related. HMRCs case is clear and straightforward. They contend that for the purposes of section 11(10)(a) Non Negs are stakes staked when they are played in a game and that their value in money or moneys worth is their face value because that is the value which is attached to them in the game. Non Negs are to be treated as a stake for the purposes of section 11(10)(a) because they are treated as a stake under the rules of the game in which they are played, and are to be valued by reference to their value in money as a stake under those rules. This approach is, they say, focused on the treatment of the Non Negs in the game but also reflects the commercial reality that it is only because they can be staked at their face value and confer an entitlement to cash winnings if the play is successful that they act, as intended, as incentives or rewards. HMRC recognise that one of two other approaches might be adopted. The first is that section 11(10)(a) is concerned with stakes which consist of cash or which can be encashed or converted to cash, in which case Non Negs, which cannot be encashed, have a zero value or are not stakes at all. The second is that this provision is concerned with stakes which have a real world value to the gambler, and that this is their value under the provision. HMRC continue that this value will generally not be zero because a gambler can, by using cautious strategies, convert a Non Neg into cash chips. Further, if the Non Neg is assignable, it will have a value in an arms length transaction between its holder and another gambler. HMRC accept that it is not open to them on this appeal to argue that, on this approach, the market value of the Non Negs in issue was not zero but say that, were this court to find this is the correct approach, it would be open to them to do so in other cases, and to argue that the market value is substantial. It is contended by HMRC that their preferred approach is the correct one. Section 11(10)(a) is concerned with the existence and value of the stake being placed as a stake in the casino game, and not its value in any other context, such as its value when encashed or when sold or assigned to another gambler. They continue that this is why, when ordinary cash chips are given by casinos to favoured gamblers and are used to place bets in a game, these chips count as stakes staked in the game for duty purposes. It is also why a cash incentive given to a gambler, such as a promise of a 50 cash back if 1,000 worth of ordinary cash chips are bought and staked, has no effect on the value of those cash chips as stakes staked in the calculation required by section 11(10). The promise does not affect the treatment or value of the stakes staked in the game under the rules of the game. LCM contends that HMRCs approach accords with neither the wording of the legislation nor the judicial guidance in this area. Playing a casino game with a Non Neg does not involve staking a stake with the banker. Further, if and in so far as playing with a Non Neg does involve staking a stake, the value of the stake in money or moneys worth is nil. The case advanced by LCM therefore has two elements. In support of the first, namely that a Non Neg is not a stake staked within the meaning of section 11(10)(a), it argues that it is inherent in the concept of staking a stake that a gambler is putting something of value at risk. However, a Non Neg has no value and it represents nothing of value. A gambler risks nothing when he plays a game with a Non Neg and the banker gains nothing if the player loses his bet. Much the same reasoning underpins the second limb of LCMs case. It argues that if a Non Neg is a stake then it has no value in money or moneys worth. Assessment of whether a Non Neg has a value in money or moneys worth requires a consideration of the economic substance which underpins its use as a stake in a game. As a matter of substance, the gambler is not placing anything of value at risk. The Non Neg is a token which allows him to play the game for free. I should add one further point at this stage. The parties remain in agreement that there should, so far as possible, be consistency in approach between the value of Non Negs as stakes staked under section 11(10)(a) and as prizes provided under section 11(10)(b). This is a matter to which I must return in considering issue (iii). Discussion Before addressing these rival arguments and the proper interpretation of the legislation, I must say a little about the nature of a cash chip and what it represents. This was explored by the House of Lords in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. The case concerned the misappropriation by a solicitor of money from his firms client account. The solicitor exchanged that money for cash chips which he gambled away at the respondents club. In these proceedings the firm sought to recover from the respondents the money lost by the solicitor as money had and received. One of the issues which arose was whether the respondents had given, in good faith, good consideration for the money. At that time gaming contracts were void under section 18 of the Gaming Act 1845 (the 1845 Act) but the respondents nevertheless claimed they had given good consideration for two reasons: first, each time the solicitor placed a bet at the club, he obtained in exchange the chance of winning and thus of being paid; and secondly, the chips were supplied to the solicitor in exchange for money, and this constituted a separate contract, independent of the contracts under which bets were placed at the club and it was not void under the 1845 Act. The House of Lords had no difficulty rejecting the first of these arguments. Each time the solicitor placed a bet he received nothing in return which constituted valuable consideration. The gaming contract was void and, if the solicitor won his bet, he had no right to any winnings, though he might have had a confident expectation that the club would pay. Were it otherwise, the club would soon have gone out of business. The second argument ultimately fared no better. In the course of his reasoning, Lord Goff of Chieveley said this at p 575F H: In common sense terms, those who gambled at the club were not gambling for chips: they were gambling for money. As Davies LJ said in CHT Ltd v Ward [1965] 2 QB 63, 79: People do not game in order to win chips; they game in order to win money. The chips are not money or moneys worth; they are mere counters or symbols used for the convenience of all concerned in the gaming. The convenience is manifest, especially from the point of view of the club. The club has the gamblers money up front, and large sums of cash are not floating around at the gaming tables. The chips are simply a convenient mechanism for facilitating gambling with money. The property in the chips as such remains in the club, so that there is no question of a gambler buying the chips from the club when he obtains them for cash. Lord Goff went on to explain that if gaming contracts were not void under English law there would be a contract in respect of the chips under which the club would accept the deposit of money by the gambler and provide him with chips which he could use to place bets or redeem; and separate contracts would be made when each bet was placed, at which point in time part or all of the money so deposited would be appropriated to the bet. As it was, however, each time the gambler placed a bet, the agreement between the gambler and the club was an agreement by way of gaming and so was null and void. The club, by accepting the bets, had not given valuable consideration for the money wagered by the gambler because the club was under no legal obligation to honour those bets. It follows that when a gambler plays with cash chips in a casino, he is not staking the chips but the money those cash chips represent which he has deposited with the casino. When the gambler uses the chips to make a bet in a game, the money those chips represent is appropriated to the bet the gambler is making. If the gambler loses the bet, the right to the money those chips represent passes to the casino. If, on the other hand, the gambler wins the bet, then, depending on the rules of the game, the gambler will be entitled to a prize comprising the money he has bet and a further monetary prize, the size of which will usually be related to the size of the bet the gambler has made and the odds of him winning. The gambler will be given cash chips which represent the money he has won and he can use those chips and the money they represent to place further bets or he may encash the chips. I can now turn to the legislation and would make three points at the outset. First, the assessment of the gross gaming yield from any premises requires a focus upon the activity of gaming and not the provision of other goods or services on the premises. As I have explained, section 11(8) of the FA 1997 provides that the gross gaming yield consists of the aggregate of the gaming receipts from the premises and, where the provider of the premises (or a person acting on his behalf) is banker in relation to dutiable gaming taking place on the premises, the bankers profits. Gaming receipts, as defined in section 11(9), comprise, subject to section 11(9)(b), receipts from charges made in relation to dutiable gaming such as fees to participate in a particular dutiable game. Similarly, bankers profits are those profits derived from the activity of gaming and not any wider activities or services provided at the premises at which the gaming takes place. The second point concerns the nature of bankers profits and the perspective from which they must be considered. As defined in section 11(10), bankers profits from gaming are the value in money or moneys worth of the stakes staked with the banker in any such gaming, less the value of the prizes provided by the banker to the gamblers taking part in the gaming (excluding anyone who takes part on behalf of a provider of the premises). This assessment must, so it seems to me, be carried out from the perspective of the banker for it is the bankers profits which must be brought into account in calculating the gross gaming yield from the premises. The third point concerns the nature of the valuation that must be conducted. In my view, the expression money or moneys worth in section 11(10)(a) emphasises that in determining the value of the stakes staked it is the actual and real world value of the stakes in the hands of the banker which matters. Section 11(10)(a) is concerned with stakes which are or represent money (as cash chips do) or which can be converted into money. Similarly, in working out the value of the prizes provided by the banker, it is the actual or real world cost to the banker of providing the prizes that must be brought into account, subject to the operation of section 20 of the BGDA. I would reject the submission made by HMRC that section 11(10)(a) is concerned with the role the stake plays in the game and the value it carries for that purpose. In my view, the UT was right to say that this goes too far and attaches insufficient weight to the expression money or moneys worth and the context, which requires a focus on the economic substance of the stake and the real financial contribution that stake makes to the bankers profits from gaming and in turn to the gross gaming yield from the premises. So too, the Court of Appeal was correct to say that the calculation of stakes staked involves a conventional accounting of the real world value of the stakes which have been staked in any given accounting period. Aspects of this approach to the legislation are reflected in the decision of the Court of Appeal in Aspinalls Club Ltd v Revenue and Customs Comrs [2013] EWCA Civ 1464; [2015] Ch 79. There Aspinalls Club Ltd, the operator of a well known gaming casino, offered various incentive schemes to wealthy gamblers whom it wished to encourage. These took the form of commissions or rebates provided to the gambler based on the amount of chips played or losses incurred by him over the term of the agreement. Under one of these schemes, the cash chip agreement, Aspinalls agreed to pay to the gambler a commission based on the total amount of cash chips staked during the course of the agreement providing the gambler had staked enough to meet a turnover requirement. One issue to which the appeal gave rise was whether, as Aspinalls argued, the value of the stake staked had to be determined by reference to the agreement between Aspinalls and the gambler under the cash chip agreement. Hence, Aspinalls argued, the value of the stake staked was the value of the stake less any commission due under the agreement. The Court of Appeal rejected that argument for reasons given by Moses LJ, with whom Black and Gloster LJJ agreed, at para 8: Section 11(10)(a) of the 1997 Act is clear. The value in money or moneys worth of the stakes staked is the face value of the chip. Staking a chip is the same as staking money and the value in money of the chip is its face value: see Davis LJ in CHT Ltd v Ward [1965] 2 QB 63, 79 and Lord Goff of Chieveley in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, 575, cited [2011] UKFTT 325 (TC) at para 30; [2012] STC 2124, para 35. The stake is the amount risked in connection with the game; it is the value of that stake which is put at risk in the game. The value put at risk in the game is not altered by reference to any commission the player receives under the cash chip agreement. The Court of Appeal was right to reach this conclusion. Section 11(10)(a) is concerned with the value of the stakes staked in the game, not any wider consideration such as the payment of commissions. The value of the stakes staked by a high value gambler with the benefit of the cash chip agreement was the face value of the chips used by that gambler to place the bet. That was the amount of money the gambler put at risk. The Court of Appeal went on to find, again rightly in my view, that the commissions were not prizes either. Section 11(10)(b) is concerned with the prizes provided by the banker in the game in the event the gambler wins the bet. The focus throughout is on the game itself, not the wider activities of the casino or the expenses it has incurred or its overall profitability. That brings me to Non Negs and how they are to be treated under this statutory scheme. I would acknowledge at the outset that Non Negs do have a real world value to the gambler. They confer on the gambler a right to make a bet in a game without placing any of his own money at risk, and with the bet comes the opportunity of winning. To this extent, therefore, I agree with HMRCs submissions. Non Negs operate as incentives or rewards because they have a real world value to the gamblers to whom they are provided and by whom they may be used to place bets in a game. So too I would reject LCMs submission that a gambler risks nothing when he uses a Non Neg to make a bet. He risks losing the Non Neg and with it the opportunity to win a prize by using it to make a bet. Nevertheless, Non Negs are very different from cash chips which represent money deposited by the gambler, or money which he has won or been given to encourage him to bet. Non Negs do not represent money to which the gambler is entitled and, unlike cash chips, they cannot be encashed or exchanged for goods or services. Further, when a gambler places a bet using a Non Neg, no money is appropriated to the bet. If the gambler loses, the Non Neg is placed in the drop box but no right to money passes to the casino. When the casino allows a gambler to bet with a Non Neg, it is, in a sense, allowing the gambler to bet with the casinos own money. Put another way, from the point of view of the casino, a Non Neg amounts to a free bet. As such, a Non Neg has no real world value to the casino when the gambler loses it in a bet save in so far as it may be said that a contingent liability of the casino to pay out according to the rules of the game in which it is played is eliminated. But in my view, this does not instil in the Non Neg a value, in money or moneys worth within the meaning of section 11(10)(a). Nor does it render it a stake staked within the meaning of that provision. Furthermore, a Non Neg does not make a contribution to the bankers profits within the meaning of section 11(10) or to the bankers gross gaming yield within the meaning of section 11(8). This is so whether the Non Neg is assignable or not. The assignability of the Non Neg cannot and does not affect its value to the casino. The diamond necklace This approach also yields the answer to a question which animated submissions at the hearing of this appeal. It arises from an illustration used by HMRC. Suppose, say HMRC, a gambler stakes a diamond necklace with an uncertain market value lying somewhere in the range of 15,000 to 35,000. HMRC submit that section 11(10) of the FA 1997 deals with this uncertainty by treating the value of the necklace (and so the stake) as the value that it is given in the game. So, if the casino and the gambler agree that the value of the necklace is to be treated for the purposes of the game as 10,000 then that is its value for the purposes of section 11(10) when it is placed as a stake. The casino cannot argue later that the true value of the necklace is less than 10,000, nor can HMRC argue that the true value is more than 10,000. This, HMRC continue, is the position in relation to Non Negs too. The casino and the gambler have agreed that Non Negs shall be treated as having their face value for the purposes of the game, and that is the value they must have when placed as a stake under section 11(10). This approach produces certainty. LCM agrees that, in this example, the necklace is to be treated as having a value of 10,000 for the purposes of calculating the bankers profits but says that this is consistent with its case rather than that of HMRC. Its case, it continues, focuses on the contract between the parties in order to determine whether there is a stake and, if there is a stake, what its value is. Non Negs allow a gambler to play for free. He places nothing at risk. So, a Non Neg has no value and is not a stake. I would not accept the arguments of either party in relation to this example for they both seem to me to ignore the need to assess the value in money or moneys worth of the stakes staked in calculating the bankers profits from gaming under section 11(10). The need to assess the value in money or moneys worth emphasises the need to ascertain the real objective value, that is to say, the real world value of a stake staked. If the casino and the gambler have agreed a value of 10,000 for a necklace which is staked in a game but the casino later finds that the necklace is made of paste and worthless, then it will contribute nothing to the bankers profits. Conversely, if the casino discovers that it has made a good bargain and that the necklace is worth more than 10,000, then that is the contribution it will make to the bankers profits. Of course the fact that the casino and the gambler have agreed a value of 10,000 for the necklace may be powerful evidence of its true value but it may not be determinative, and where it is not I can see no reason why HMRC, which are not party to the agreement between the casino and the gambler, should be bound by its terms. For all of these reasons, I would conclude that Non Negs are not stakes staked within the meaning of section 11(10)(a) of the FA 1997, nor do they have any value in money or moneys worth within the meaning of that provision. Issue (iii) Non Negs as prizes I agree with the UT and the Court of Appeal that any discussion of how Non Negs are to be valued in a game ought also to consider their value when returned by the casino to the gambler who has won his bet. As I have said, HMRC and LCM agree that Non Negs which are returned to the gambler in that way are prizes within the meaning of section 11(10)(b) of the FA 1997. They also agree that, so far as possible, there should be a consistency in approach as to the value of Non Negs as stakes staked under section 11(10)(a) and as prizes provided under section 11(10)(b). Hence HMRC say that they should be treated as having their face value for the purposes of section 11(10)(a) and (b) whereas LCM argues, and the UT and the Court of Appeal agreed, that they have no value. So too it formed no part of the submissions of either party that Non Negs should be treated differently for the purposes of section 11(10)(a) and (b). I would emphasise, therefore, that HMRC do not contend that, were this court to hold that Non Negs are not stakes staked or that they do not have a value, in money or moneys worth equal to their nominal face value when assessing the value of the stakes staked in a given accounting period, they nonetheless have their face value when returned to gamblers as prizes by application of section 20 BGDA. Nor, I would add, did LCM make such a submission. Nevertheless, it seems to me to be desirable that I should address, on their merits, HMRCs arguments concerning the value of Non Negs as prizes, albeit that these arguments have only been advanced as the counterpart of their case that Non Negs have their face value as stakes staked. HMRC have developed their case on this aspect of the appeal in the following way. They say that, as a matter of ordinary language, a Non Neg may be used in place of money as payment for benefits of a specified kind, namely the benefit in the course of a game of cash equivalent to the face value of the Non Neg. In the game, the Non Neg is as good as cash, and a gambler who uses the Non Neg is in the same position as a gambler who uses cash. Accordingly, section 20(3)(a) and (b) of the BGDA are satisfied and in so far as the UT and the Court of Appeal found to the contrary, they fell into error and misunderstood the statutory language and the underlying economic reality. They also say that section 20(3)(c) is satisfied, about which there has been no dispute. Turning now to paragraph (b) of section 20(4) of the BGDA, HMRC say this must be read with section 20(3)(a) and (b) and that, in referring to a specified restriction, condition or limitation which may make the value of the voucher to the recipient significantly less than the amount specified in subsection (3)(b), the paragraph must be referring to a restriction, condition or limitation on the use of the voucher beyond the fact that it can only be used as payment for benefits of a specified kind obtained from a specified person. Were it otherwise, any voucher which satisfied the requirements of section 20(3)(a) would also fall within section 20(4)(b) and that cannot have been the intention of the legislature. As for Non Negs, HMRC say that there is no restriction on their use beyond the limitation that they can be used for the purpose of playing particular games in LCMs casino. In summary, HMRC continue, Non Negs are vouchers which satisfy section 20(3)(a), (b) and (c) of the BGDA. Further, Non Negs do not satisfy section 20(4)(b). It follows that Non Negs are to be treated as having their face value as prizes for the purposes of section 11(10)(b) of the FA 1997. In my judgment Non Negs do not satisfy section 20(3)(a) of the BGDA. As I have explained, gamblers gamble with money. When a casino issues cash chips, the property in those chips remains the property of the casino. The cash chips are simply a convenient way of facilitating gambling with money. A gambler who places a bet using cash chips is not purchasing goods or services or any other benefits with the chips or with the money those chips represent. He is placing his money at risk under the terms of an agreement he makes with the casino to play a game of chance. Similarly, when a gambler uses a Non Neg to place a bet he is playing a game of chance in which the casino treats him as having put money to the value of the Non Neg at risk. If the gambler loses, the casino retains the Non Neg. If the gambler wins, the Non Neg is returned to him together with any other prize he has won. But in neither case has the gambler used the Non Neg in place of money as whole or partial payment for benefits of a specified kind obtained from the casino or banker. In these circumstances it is not necessary to express a final view on the proper interpretation and application of section 20(4)(b). Nevertheless, I would be minded to reject one aspect of the submissions of HMRC here too. In particular I would not accept that section 20(4)(b) must be referring to restrictions, conditions or limitations on the use of the vouchers concerning matters other than the kinds of benefits for which they can be used as payment or the persons from whom those benefits can be obtained. To my mind a critical feature of section 20(4)(b) is the requirement for its application that the restriction, condition or limitation may make the value of the voucher to the recipient significantly less than its face value. Some vouchers will satisfy this condition and others will not. Whether a Non Neg does so or not will depend upon the restrictions, conditions or limitations imposed by the casino on its use and the impact those restrictions, conditions or limitations have upon the value of the Non Neg to the gambler. I am confirmed in these views because, on the interpretation of section 20(3) of the BGDA which I would hold to be correct, the outcome is a coherent scheme for the treatment of Non Negs whether used by gamblers to place bets or when returned to gamblers as prizes. Were it otherwise, the legislation would have the consequence that Non Negs would not contribute to bankers profits when gamblers lost their bets but would reduce those profits when gamblers won and had their Non Negs returned to them as prizes. It would mean that if, for example, a gambler, who places as a bet a Non Neg with a face value of 100, wins three times in a row before losing, and each time he wins has his Non Neg returned to him together with any other prize, the casino can say that, simply by returning the Non Neg, it has incurred a cost of 300 in prizes and reduce its profits accordingly. That would produce an incoherent scheme which would be unduly favourable to casinos and in my view that cannot have been Parliaments intention. Conclusion For all of these reasons, I would dismiss this appeal. LADY ARDEN: Bankers profits for gaming duty purposes This appeal concerns gaming duty, which is chargeable on premises such as casinos in the United Kingdom where dutiable gaming, including casino games, takes place. The respondent at its casinos provides to selected customers Non Negs, that is, non negotiable vouchers for gaming conferring the right to place free bets in order to induce those customers to visit its casinos and engage in gaming. The vouchers can only be used for that purpose and they are non negotiable in that they cannot be exchanged for cash or used to pay for goods or services such as food and drink, but, if the customer using Non Negs wins, he receives redeemable cash chips and is given back his Non Negs. Non Negs are not subject to any restriction on transfer. They bear a face value amount which is the amount for which they can be wagered. The key question at the heart of this appeal is whether the Non Negs should be taken into account as part of the bankers profits for the purposes of section 11(8)(b) read with section 11(10) of the Finance Act 1997 (the FA 1997), which are set out in paras 3 and 5 above. Gaming duty in this case is charged on gross gaming yield from the relevant premises (section 11(8) of the FA 1997, para 3 above). Where there is a banker for gaming purposes, the gross gaming yield means both the gaming receipts and the bankers profits. These are defined in section 11(10) as follows: In subsection (8) above the reference to the bankers profits from any gaming is a reference to the amount (if any) by which the value specified in paragraph (a) below exceeds the value specified in paragraph (b) below, that is to say (a) the value, in money or moneys worth, of the stakes staked with the banker in any such gaming; and (b) the value of the prizes provided by the banker to those taking part in such gaming otherwise than on behalf of a provider of the premises. Value of stakes is value at large It is clear that Parliament in enacting this provision is requiring there to be brought into account for the purposes of gaming duty not the receipts of gaming (which are covered by section 11(8)(a)) but the value of stakes staked less the value of prizes paid. It is, therefore, not determinative that the stake might have been issued as a free bet by the casino, or that the receipt was less than its perceived value as where the customer puts down a stake in the form of an IOU but then fails to pay. The key is the value of whatever has generated the gaming activity. Value is not restricted to the amount for which the stake is bet In my judgment, the term value in section 11(10)(a) is value at large in that it is determined by open market valuation, that is what a person would pay for it in the open market, and that person could include the casino. In its primary case HMRC adopt a game based approach to valuation and submits that the value of the stakes staked is the value which the stake is given for the purposes of the relevant gaming, as opposed its value to any particular person or in the market. HMRC point out that the term banker is used in this subsection in its gaming connotation. The term value of the stakes staked is not, however defined and it seems to me that that it must bear its ordinary meaning. The expression stake staked are an unusual collocation of words, and it has not been suggested that the combined phrase is a term of article The word staked seems to mean which has been staked, meaning actual staking and constituting a form of condition subsequent to the identification of a stake. I do not think it can be read as in the amount that it has been staked. Even if it did, it could be liable to circumvention where stakes were accepted, for instance, in ounces of silver. I therefore join with the majority in rejecting HMRCs primary case. Of course, it is consistent with HMRCs case that, as the majority hold and I agree, the diamond necklace of uncertain value is to be taken to have a value equal to the amount for which the casino allows it to be staked, no more and no less. This is also consistent with my approach. As I see it, that limitation is achieved by the word staked. The only value which is relevant is that which has been wagered or staked, and the rest falls outside gaming duty. I can see that it would be easier to administer the duty (which is self assessed in the first place) if the person liable to gaming duty had to take only the face value of the voucher, but we have to interpret the words that Parliament has used. This to me is more important than the fact that the object of section 11(10) is to ascertain the bankers profits because section 11(10) does not have as its purpose the presentation of a true and fair view of a bankers profits, as would the statutory accounts of a registered company. Section 11(10) is an artificial sectoral formula which has left matters of deduction out of account and which can equally bring matters into account even if they would not fall to be included under conventional accounting principles (cf para 38, last sentence of Lord Kitchins judgment). Aspinalls (paras 39 to 41 above) shows that the formula is not based on conventional accounting principles of admitting the deduction of all costs incurred in making a particular profit. Market value is in issue on this appeal An alternative case put by HMRC is market valuation. This does not arise on the facts in this case as found by the tribunals. It arises only because the majority has adopted the approach to value of valuation from the perspective of the banker alone. This excludes market valuation. Therefore it seems to me incumbent to deal with the issue of market valuation on this appeal. If market value is the value of the stake, and a stake has a market value, that stake would, to the extent of that value, form part of the bankers profits once the stake had been staked. Contrary to the majoritys conclusion, value of a stake is not restricted to the perspective of the banker In my judgment, the majority make a critical error in interpreting value as the value from the perspective of the banker without any legislative direction to that effect (see para 37 above). This appears, in the opinion of the majority, to make irrelevant any market value: see para 44 above (The assignability of a Non Neg cannot and does not affect its value to the casino). That means that, if the banker issues a free bet and can then say, when the free bet is staked, that there is no contribution to its tangible assets, the free bet is outside the scope of gaming duty. In my judgment this is contrary to the statutory direction in section 11(10) to ascertain the value of the stakes staked because value is, as explained above, unqualified. The bankers perspective approach fails to take account of the fact that the free bet is staked and leads to gaming activity at the premises which are subject to gaming duty. A nil value is still a value. An objective value is a real world value. Profits can be bankers profits without the elements used to calculate those profits having to be valued from the perspective of the banker. Moreover, if Lord Sales is right in his interpretation of section 20 of the BGDA (dealing with the valuation of prizes), the further asymmetric and anomalous result is reached under section 11(10A) that the casino can not only exclude the free bets from bankers profits but also deduct the amount of prizes in the form of free bets from other stakes and reduce its other bankers profits accordingly. In any event, if there is a market value, it is as open to the banker as anyone else to make an offer to acquire the Non Neg. It is wrong to conclude that market value is not available to the casino. The casino could offer to acquire the Non Neg when the holder arrives at the casino, perhaps by offering him a free drink in exchange or a cash chip of a reduced amount. If the banker modelled the risk of a holder of a Non Neg winning, it would no doubt be in its interests to make such an offer at the appropriate amount to avoid a loss. When the player loses his bet, the right to stake the Non Neg is lost and the paper voucher is taken out of play. So, in my respectful judgment it is not open to the casino to say that nothing passes to it: it has extinguished the liability on the Non Neg. There cannot be read into the statute a requirement that this benefit is acquired by way of assignment or transfer. HMRCs failure to lead evidence of market value HMRC made an error of law at the start of this case which was corrected by the Tribunals. HMRC contended that the value of a Non Neg was its face value. The First tier Tribunal (Judge Greg Sinfield) rejected that method of valuation and found that the value was the chance of winning. The Upper Tribunal (UT) (Henderson J and Judge Roger Berner) corrected that by pointing out that the value had to be value in money or moneys worth, and there was no evidence to support any valuation. Therefore, HMRC failed on the facts, but non constat that it could not be shown on other evidence that objectively speaking the Non Neg had value. The UT explained the position as follows: 33. We do not regard as anything to the point that the Non Neg might provide the player with a right to play a game, or a right to have the chance to win, or a promise from the club in those respects, which Ms Wilson argued was a valuable right. The mere fact that such a right might subjectively be regarded by the holder of the Non Neg as a valuable right, in the sense that it would enable that holder to play a game without putting money at risk, is not material to an objective valuation, in money or moneys worth, of the stake staked. 34. On the other hand, the objective valuation of a stake would, in our view, have to have regard to the monetary value, if any, that could be obtained on an arms length assignment to a third party of the right to place that stake, in the same way that it would if the Non Neg was redeemable for cash or for goods and services. That would be moneys worth for the purpose of section 11(10)(a). It was not, however, HMRCs case that the stakes of the Non Negs should have any value other than the face value of the Non Negs, and there were no findings of fact either that the Non Negs were transferable or, if they were, what value might be realisable on a transfer. Furthermore as section 11(10)(a) requires the individual stake to be valued, there would have to be evidence of a value generally obtainable in a market in Non Negs or evidence that a particular Non Neg could have been, at the time it was staked, assigned for money or moneys worth. In the absence of such evidence, it is not possible to ascribe any moneys worth to the stake by reference to any assignable right. 35. It follows, in our judgment, that the FTT erred in law when it concluded, at para 27, that the value, in money or moneys worth, of a Non Neg was its monetary face value, on the basis that the face value would be used to calculate winnings in cash chips and on a losing bet the player would no longer have the right to bet that monetary value for free. In our view, the FTT failed to have proper regard to the requirement that the value in section 11(10)(a) must be a value in money or moneys worth The Court of Appeal (as referred at [2019] 1 WLR 1) agreed with this passage from the judgment of the UT (paras 36, 51 and 52). Mechanics of objective valuation Objective valuation permits the possibility that the parties will adduce evidence as to whether another person in the open market would buy the voucher and if so at what price. In the hands of an experienced player, it might be that the Non Negs could be turned into winnings, paid in cash chips, which the player could then encash. In those circumstances the Non Neg may have some value in the open market, even if small. The objective valuation of the stake permits the stake to be taken into account at an appropriate value as directed by Parliament if it has generated gaming activity, which is the trigger for the charge to gaming duty. The voucher serves the function of a gaming chip. In the normal way the customer obtains a gaming chip by placing a deposit of cash with the banker. Lord Kitchin refers to the speech of Lord Goff in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 in which this point is made. But with free bets there is no deposit of cash: although there are different types of voucher in this case as Lord Kitchin explains, this feature is a constant. In short, the Non Negs are all free bets issued by the casino itself as a promotional tool. The fact that they are not issued for cash does not in my judgment prevent it from being a stake or having an objective value for the purposes of section 11(10). Furthermore, the majority accept that the Non Neg has a real world value to the gambler and thus, I assume, a value might be realisable on the open market: see para 42 of the judgment of Lord Kitchin. Subjective ideas of value play no part in the process of valuing a stake. I therefore agree with Lord Kitchin in rejecting the argument to that effect that a diamond necklace of uncertain value offered and accepted as a stake for a specified amount is to be valued by reference to what the parties or at least the banker thought was its value. It is irrelevant if the banker or the player wrongly thought that the necklace was paste and therefore much less than it turned out to be. As I have said, it is inherently unlikely, given that Parliament would be concerned with the fair and equal allocation of tax burdens, that it was intended that the value of a stake should depend on anything other than its objective market valuation. That leaves the question of exactly what must be valued. As I have explained, one function of the word staked in the expression of the value of the stakes staked is to limit the stake to that part of, or that part of the value of whatever is staked, or what is used in the game. Why a Non Neg is a stake for the purposes of section 11(10)(a) of the FA 1997 In my judgment, a Non Neg is a stake and the Court of Appeal fell into error in holding otherwise. Dame Elizabeth Gloster, with whom Leggatt and Flaux LJJ agreed, reasoned on this issue as follows: 29. The calculation of stakes staked under section 11(10)(b), to my mind, in context, involves a conventional arithmetical calculation of real world stakes received from players, which, if necessary, could feature as actual receipt or revenue figures in a set of accounts; it does not on any natural reading include artificial or notional values placed on tokens given to the player by the casino, as part of a promotional or marketing exercise, which intrinsically have no value and are non negotiable, or at best have an economic value to the player equivalent to their face value multiplied by the chances of winning. In real terms, when the casino gives out Non Negs to favoured players, it is allowing the player to bet with its (the casinos) own money. There is no receipt by the casino contributing to its gross profits; on the contrary, in permitting the player to gamble with a Non Neg, what the casino is actually doing is incurring a contingent (non enforceable) liability to pay out, according to the relevant odds of the game, in respect of the face value of the Non Neg in the event that the chip is placed as a winning bet. It is, in my judgment, counter intuitive in such circumstances to characterise what is essentially an item of the casinos own expenditure as part of the bankers profits or as a stake having a value in money or moneys worth. In no sense could the face value of a Non Neg, or even the value to the player calculated by reference to the chances of winning, feature as a receipt in a casinos accounts or be said to contribute to its gross profits. 30. For that reason taken on its own, I would not regard a Non Neg as being a stake which was required to be taken into account in the calculation of gross gaming yield as defined under section 11(8) or of bankers profits as referred to or defined under section 11(8)(b) or section 11(10). In particular, I do not consider that the amplified definition of bankers profits in section 11(10) requires one artificially to include the Non Negs (which are clearly not items of receipt directly contributing to profit, but rather items of expenditure) in the statutory profit calculation. In other words, in construing the relevant provisions one has to have regard to the relevant context. Although the phrase in section 11(10)(a) the stakes staked with the banker could arguably be said, linguistically, to be broad enough to include a Non Neg (simply because a Non Neg chip is placed on the gaming table by a favoured recipient as a stake), in my judgment, the phrase, construed in its actual context ie the ascertainment of gross gaming yield and bankers profits does not permit the artificial inclusion, as an item of stake under section 11(10)(a), of an amount of the casinos promotional marketing expenditure given to the player by the casino. Only in the most general and indirect sense could such a stake be said to be contributing to profit; and it could not be said in any real sense to constitute part of the gross gaming yield of the casino. I do not agree with this analysis. This reasoning with respect confuses the stake staked with its value. A stake is an ordinary English word meaning: That which is placed at hazard; esp a sum of money or other valuable commodity deposited or guaranteed, to be taken by the winner of a game, race, contest, etc. (Oxford English Dictionary, 2nd ed (1989)) The word staked enables stakes which are not used in gaming to be left out of account and so Non Negs which are issued but never used may be excluded from the calculation of bankers profits. But a stake can on an assessment of its market value be worthless, as in the case of forged cheques (see Lydiashourne Ltd v Revenue and Customs Comrs (Decision E00092), 13 August 1998 explained by the UT at para 42). This is an important point in the statutory scheme. Stakes and prizes are not, moreover, the same as assets and liabilities in accounting generally. Parliament has required a specific account to be taken of stakes staked and prizes paid, and the fact that a stake might in some circumstances for accounting purposes be treated as a conditional liability or expenditure of the casino rather than as a receipt is not relevant. As stated above, a nil value is still a value. A stake does not cease to be a stake because it is of nil value. Does statute require the method of valuing Non Negs as stakes and Non Negs as prizes to be consistent? The valuation of Non Negs as prizes which can be deducted from the value of stakes staked is governed by section 11(10A) (para 6 above) which incorporates by reference subsections (2) to (6)(a) of section 20 of the BGDA (as amended by the Finance Act 2003) (the relevant parts of section 20 are set out in para 7 above). Section 11(10A) is not as such a deeming provision, but one which requires modifications to be made to the incorporated provisions. Where, as here, such a provision does not spell out the modifications which can be made, it may give rise to some exacting interpretation issues, and there should in my view be no expectation or anticipation that such a provision when carefully analysed should have rough edges or worse. It is, in my judgment, more important to approach those provisions in their application to gaming duty on the basis of the principle of statutory construction that it should be presumed that Parliament intended the statutes in pari materia (as here) to constitute a harmonious whole. On that basis, if I am right that the value of the Non Neg falls into the definition of the bankers profits I would as a matter of first impression expect the basic rules of debit and credit to apply and therefore, that if the value of stakes is credited on one basis, that, when Non Negs form part of a prize, they will be debited on the basis of a similar valuation method. On that last point, the views of the majority and my own coincide. On the other hand it is noticeable that subsections (3) and (4) of section 20 BGDA are expressly drafted so as to achieve HMRCs primary case on section 11(10) of the FA 1997 that the relevant value (in that case, a Non Neg) is the face value amount of the voucher, an argument which all members of the Court have rejected, and so some differences may in fact be unavoidable. HMRCs arguments of the parties are set out in paras 51 to 53 above. I approach the submissions on the hypothesis that it has been shown that the Non Negs have a market value as a stake. As to section 20(3)(a) I agree with Lord Sales. The majority do not explain what is meant by in place of money and in my judgment it must include instead of money. On that basis the prize of a Non Neg plainly satisfies section 20(3)(a). (No issue arises on section 20(3)(b) or (c)). As to section 20(4)(b), the UT held that the prize was not to be treated as valueless because of its restrictions under section 20(4) but in this the Upper Tribunal failed to give weight to the direction to find the value to the recipient. The recipient was a player, and the value of a free bet to someone who wants to gamble is not obviously significantly less than the face value of the voucher (and the majority accept the real world value of a free bet to the player: para 42 above). The question whether section 20(4)(b) is satisfied will depend on a consideration of the restriction in question. It is capable of being satisfied as where, for instance, the voucher contains some unreasonable condition as to the time of use of the voucher. I agree with Lord Sales that it must be a restriction on the use not of the prize but of the voucher in place of money as described in section 20(3)(a). The point is that, if the condition in section 20(4)(b) is met, it would be unreasonable to afford the casino the deduction of the face value of the prize to which it would otherwise be entitled to under section 20(3). This is consistent with the fact that, if section 20(4)(b) is met, it would be unlikely that the Non Neg would have any market value as a stake. If it is not met in any case, the banker would, on the face of it, be entitled to a deduction for the amount specified in the voucher. I do not propose to express a final view on this because the Court has heard no argument on whether, as authorised in principle by the terms of section 11(10A), in these circumstances section 20(3) must necessarily be modified to achieve parity between the credit to profits and the deduction of prizes where Non Negs are involved. That question must remain open. Conclusion On the facts of this case, but for reasons materially differing from the majority and the Court of Appeal, I would dismiss this appeal. LORD SALES: I agree with Lord Kitchins judgment in respect issues (i) and (ii), regarding the proper interpretation of section 11(10)(a) of the Finance Act 1997 (as amended). That is all that is necessary to dispose of the appeal. However, the UT and the Court of Appeal also expressed views in respect of issue (iii), regarding the proper interpretation of section 20 of the BGDA, as it applies by virtue of section 11(10A) of the FA 1997 in relation to the valuation of prizes for the purposes of section 11(10)(b), and we were invited to do the same. On that issue, I have come to a different conclusion from Lord Kitchin. As regards section 11(10)(a), I agree with Lord Kitchin that the subparagraph is concerned with the value to the banker of the stake staked. Although section 11(10) is focused just on the game (rather than the bankers income or profits in the wider sense), it imposes a tax on the banker. Accordingly, it is appropriate to construe it as applying in relation to real economic gains which the banker receives in the context of the game. This is borne out by the fact that what is taxed under section 11 is the gross gaming yield (section 11(2)(a)), which is calculated, according to section 11(8), by adding together gaming receipts and the bankers profits from the gaming. This language strongly suggests that what is in contemplation is receipts in the sense of real sums received by the banker (and section 11(9), which explains how they are to be calculated, reinforces this point) and profits in the sense of real profits realised by the banker from the gaming. In my view, this context informs the construction to be given to section 11(10), which explains how bankers profits are to be calculated. Further, as the UT emphasised (para 27), the reference in section 11(10)(a) to money or moneys worth indicates that the calculation is concerned with real world value. I would add that the context shows that it is real world value available to the banker which is significant. As Lord Kitchin points out, from the point of view of the gambler a Non Neg does have a real economic value (para 42); but from the point of view of the banker, as a contribution to its receipts and profits, it has none it simply represents a free bet (para 44). I agree with him that in the context of section 11(10)(a), the relevant concept of real economic worth is that given from the bankers perspective, not from that of the gambler. This view is supported by the points made in para 89 above. Therefore HMRCs submissions regarding the interpretation of section 11(10)(a), to say that under that provision either a Non Neg should be given its face value or should be given the notional market value it might have if it is assignable by the gambler, must be rejected. Moneys worth in section 11(10)(a) refers to real economic value to which the banker has access and which therefore can add to his profits. It does not include value to which only the gambler has access. Hence, it does not include the putative exchange value for the gambler of selling a Non Neg to a third party who wants to gamble. Even if the Non Neg is assignable, this is not value to which the banker has access in any real sense. If the banker wants to sell chips to another gambler, he will sell him regular chips. The application of section 11(10)(a) does not depend on the happenstance whether a Non Neg is assignable or not. Parliament intended that the application of the tax should be uniform as between different bankers and that it should not depend upon such matters, which are of no economic consequence from the bankers point of view. It should be emphasised that this is to give section 11(10)(a) a different construction from that arrived at by the UT, as endorsed by the Court of Appeal. Although the UT dismissed HMRCs contention that a Non Neg should be given a value under section 11(10)(a) equal to its face value, the UT considered (para 34) that this provision required a notional objective value to be given to a Non Neg in the gamblers hands, and it was only because HMRC had not introduced any evidence as to what that value might be that in this case the Non Negs should be treated as having nil value for the purposes of section 11(10)(a). By contrast, on Lord Kitchins interpretation of section 11(10)(a), with which I agree, the focus is firmly on the value of a stake for the banker in the context of the game. This means that issues which would affect the value of a Non Neg from the point of view of the gambler, but not the banker, such as whether it is assignable or not, are irrelevant. In my view, this approach to the proper interpretation of section 11(10), rooted in economic reality so far as concerns the bankers position and the calculation of his profits from the game, also means that the premise for the submissions made both by HMRC and LCM namely that Non Negs must be given the same value in subsection 11(10)(a) (the plus side of the calculation of the bankers profits) and in subsection 11(10)(b) (the minus side of that calculation, based on the prizes given in the game) breaks down. It is agreed that when a gambler plays a game with a Non Neg and wins, so that the Non Neg is returned to him with his winnings, the Non Neg so returned constitutes part of the prize given in the game. (Of course, one might have Non Negs the terms of which only allowed them to be played once and excluded them from being returned if the gambler wins a game using them, but that is not true of the Non Negs in issue on this appeal.) There is a real cost to the banker in providing a Non Neg as a prize, equal to the percentage chance the gambler has of winning real money from the banker when using the Non Neg to bet in the next game. Accordingly, the value of a Non Neg is different in the two elements of the calculation. The value of a Non Neg is nil from the point of view of the banker as regards section 11(10)(a), but when awarded as a prize it represents a real cost to the banker which ought in principle to be brought into account under section 11(10)(b), since section 11(10) is concerned with economic reality in relation to the bankers position. It is unfortunate that the submissions of the parties on issue (iii) were not entirely helpful or well directed, because they proceeded on the false premise that the approach to valuing a Non Neg should be the same for both sides of the equation. Before the amendment of section 11 of the FA 1997 by the addition of subsection (10A) in 2007, in calculating his profits from the gaming under section 11(10) the banker was entitled to bring the real cost of providing a Non Neg as a prize into account under subparagraph (b). Section 20 of the BGDA, to which section 11(10A) of the FA 1997 refers, deals with the valuation of non cash prizes in bingo gaming (see subsection (1): A persons expenditure on bingo winnings for an accounting period is the aggregate of the values of prizes provided by him in that period by way of winnings at bingo promoted by him). I do not consider that the amendment of the FA 1997 in 2007 to cross refer to section 20(2) (6)(a) of the BGDA to govern the calculation of the value of prizes given by the banker was intended to change the fundamental scheme of section 11(10) so as to disable the banker from bringing into account the value of Non Negs as prizes, even though they represent a real economic cost in the game for the banker. Yet this is the consequence which Lord Kitchins interpretation of section 20 produces. Rather, in my opinion, the cross reference to section 20 was intended to simplify and make uniform across the gambling industry and across different games of chance the calculation of the value of the cost to the banker or game organiser of vouchers (including Non Negs) given as prizes, for the purposes of calculating their income or profits from the game. In my view, on a straightforward reading of section 20(3) and (4) of the BGDA (set out at para 7 above), a Non Neg given as a prize satisfies the conditions in subsection (3) and does not fall within subsection (4), with the result that the Non Neg is treated for the purpose of section 11(10)(b) of the FA 1997 as having its face value. This is somewhat generous to the banker, as the true economic cost of the Non Neg will be less than this. But it only applies in relation to those Non Negs which are played and then returned to the gambler when he wins, which will be a very small subset of Non Negs. In relation to Non Negs which are played and lost, the banker cannot bring their cost to him into account at all. I consider that the interpretation of section 20 which I prefer respects the basic structure of section 11(10), in that it does give a value to what is a real cost to the banker in providing Non Negs as prizes. The application of deeming provisions in tax legislation, like section 20 of the BGDA, inevitably involves some rough edges, which may somewhat benefit the taxpayer or HMRC depending on the particular context. Such rough edges are the price paid for securing simplicity, uniformity and equality of treatment across a range of situations. In any event, it seems to me that the application of section 20(3) and (4), respectively, is clear in the present context. I do not think it is possible to depart from the clear wording of the provision as legislated by Parliament in order to address the sort of situation identified by Lord Kitchin at para 56 above. It is common ground that a Non Neg qualifies as a voucher for the purposes of section 20(3). Section 20 involves a degree of departure from the focus in section 11(10) of the FA 1997 on the economic position of the banker, in that section 20 focuses on the economic benefit of the voucher to the gambler: see section 20(3)(a), which focuses on how the gambler is able to make use of the voucher, and section 20(4)(b), which also focuses on the value of the voucher to the recipient. Therefore, in my opinion, one cannot say that just because a Non Neg does not qualify as a stake under section 11(10)(a) because it has no economic value for the banker, the same conclusion must follow when applying section 20. For present purposes, the starting point in applying section 20 is subsection (3). That provides that where the prize is a voucher which satisfies the conditions in subparagraphs (a) to (c), the specified amount is the value of the voucher for the purpose of the calculation of the cost to the banker of the provision of the voucher as a prize. In the present case, it is agreed that the condition in subparagraph (c) is satisfied. The application of section 20(3) therefore turns on subparagraphs (a) and (b). In my view, in respectful disagreement with Lord Kitchin, as regards subparagraph (a), a Non Neg given as a prize may be used in place of money as whole or partial payment for benefits of a specified kind obtained from a specified person. The gambler is entitled to use a Non Neg in place of an ordinary chip, representing money, as payment for a benefit of a specified kind, namely participation in a game of chance, obtained from a specified person, namely the banker. It seems to me that the condition in subparagraph (a) clearly is satisfied in relation to a Non Neg. I do not understand it to be in dispute that the condition in subparagraph (b) is satisfied: a Non Neg clearly specifies the amount of money which it represents in the game. Therefore, according to section 20(3) and subject to section 20(4), the relevant amount to be brought into account as the cost of the prize in section 11(10)(b) of the FA 1997, as amended, is the value which the Non Neg is specified to have. A Non Neg with a face value of, say, 5 for use in a game will have that value for the purposes of section 11(10)(b). I turn then to section 20(4), to see whether it has the effect that the Non Neg given as a prize should be treated as having no value for the purposes of section 11(10)(b) of the FA 1997. In my view, the precondition for the operation of section 20(4) set out in subparagraph (a) is not satisfied. For the reasons given above, a Non Neg given as a prize satisfies section 20(3)(a) and (b). That leaves the alternative precondition for the operation of section 20(4) set out in subparagraph (b). In my view, normally this precondition is not satisfied either. A paradigm case for application of section 20(4)(b) would be a prize in a bingo game or other game of chance in the form of a voucher redeemable for a weeks holiday worth a specified amount at a specified resort, but where the fine print stated that it could only be used in one specified and unattractive week of the year. In such a case, the value of the voucher to the recipient, who in practice might not be able or might not wish to use the voucher, might well be significantly less than its apparent face value. What is significant about such a case is that the use of the voucher as described in subsection (3)(a) (ie to obtain the benefits of a specified kind from the holiday resort) is subject to a relevant restriction, condition or limitation in relation to using it to obtain that benefit. However, assuming that one is concerned with a Non Neg in simple form, that is not the position in the present case. (I leave aside cases which might arise in theory, in which a Non Neg is subject to conditions which mean that the gambler cannot simply use it at will in a game, but, say, could only so use it at particular times of day which were inconvenient: such conditions would give rise to a potential issue regarding the application of section 20(4)(b) similar to that referred to in para 103 above). The use of a simple form Non Neg as described in subsection (3)(a) (ie to stand in place of money in payment for participation of a game of chance with the banker) is not limited in any way. When used for that purpose, the Non Neg is used in place of money at the full face value of the Non Neg. It is irrelevant that it cannot be used in place of money for any other purpose. For the reasons I have given, under issue (iii) I consider that section 20 of the BGDA as applied to section 11(10)(b) of the FA 1997, as amended, has the effect that a Non Neg given as a prize should be brought into account at the full face value of the Non Neg.
UK-Abs
Gaming duty is an excise duty that is charged in accordance with the provisions of the Finance Act 1997 (the FA) on any premises where dutiable gaming takes place. Non negotiable gaming chips and free bet vouchers (collectively referred to as Non Negs for the purposes of this appeal) are promotional tools provided free of charge by some casino operators to selected gamblers to encourage them to gamble in their casinos. Non Negs may typically only be used to place bets at the gaming tables for their face value and cannot be used to buy goods or services, nor encashed. This appeal is about whether Non Negs should be taken into account as part of the bankers profits for the purposes of computing gaming duty in accordance with section 11(8)(b) read with section 11(10) of the FA. Bankers profits are defined by section 11(10) as the value, in money or moneys worth, of the stakes staked with the banker in any such gaming (section 11(10)(a)) less the value of the prizes provided by the banker to those taking part in such gaming otherwise than on behalf of a provider of the premises (section 11(10)(b)). The valuation of prizes for the purposes of section 11(10)(b) is governed by section 11(10A) of the FA which incorporates by reference, with any necessary modifications, certain provisions of the Betting and Gaming Duties Act 1981 (the BGDA). From October 2008 until September 2012, London Clubs Management (LCM) included the face value of all the Non Negs played by gamblers and retained by its casinos in the calculation of its bankers profits for the purposes of computing its liability for gaming duty. It subsequently considered that this approach was incorrect and that it had overpaid gaming duty by over 1.97 million. Her Majestys Revenue and Customs (HMRC) rejected LCMs claim for repayment of the alleged overpayment and LCM appealed that decision. The First tier Tribunal dismissed LCMs appeal. The Upper Tribunal allowed LCMs appeal. The Court of Appeal dismissed HMRCs further appeal. HMRC appealed to the Supreme Court. The Supreme Court unanimously dismisses the appeal. The leading judgment is given by Lord Kitchin, with whom Lord Carnwath and Lady Black agree. Lady Arden gives a separate judgment, agreeing that the appeal should be dismissed but for materially different reasons. Lord Sales gives a separate judgment agreeing with the majority on the decisive issues in the appeal but reaching a different conclusion on a related issue. Lord Kitchin holds that Non Negs are neither stakes staked, nor have any value in money or moneys worth within the meaning of section 11(10)(a) of the FA [31 48]. First, the assessment of the gross gaming yield from any premises requires a focus on the activity of gaming and not the provision of other goods or services [36]. Second, the assessment required by section 11(10) must be carried out from the bankers perspective, for it is the bankers profits which must be brought into account in calculating the gross gaming yield [37]. Third, the reference to money or moneys worth in section 11(10)(a) emphasises that it is the real world value of the stakes in the hands of the banker which matters [38]. A gambler who plays with cash chips in a casino is not staking the chips as such but the money those chips represent, which the gambler has deposited with the casino [31 35]. That is not the case when a gambler places a bet using a Non Neg, which essentially amounts to a free bet. Therefore, a Non Neg holds no real world value to the casino when a gambler loses it in a bet, save that it eliminates the chance that the casino may have to pay out the winnings corresponding to that bet. However, that does not impart a value, in money or moneys worth to the Non Neg, nor mean that it is a stake staked within the meaning of section 11(10)(a) of the FA [44]. Lord Sales agrees with Lord Kitchins reasoning in this regard and provides further reasons in support of the conclusion [88 92]. Lady Arden adopts different reasoning for dismissing the appeal [61 78]. She holds that the value of a stake for the purposes of section 11(10)(a) is what a person would pay for it in the open market [62]. The objective valuation of the stake means that it can be taken into account at an appropriate value if it has generated gaming activity, which is what gaming duty is charged upon [70]. A Non Neg is a stake for the purposes of assessing the bankers profits under section 11(10)(a) of the FA [75]. However, the appeal fails on the facts of this case as no evidence was adduced to support any objective valuation [68]. The Supreme Court also considers the related issue of what value, if any, should be given to Non Negs for the purposes of section 11(10)(b) of the FA. Lord Kitchin expresses the view that, as with section 11(10)(a), it is the real world cost to the banker of providing the prizes that must be brought into account for the purposes of assessing the value of the prizes provided by the banker, subject to the relevant provisions of the BDGA [38]. Under the BGDA, the cost to the banker of awarding a voucher as a prize is taken to be its face value if, among other things, it may be used in place of money as whole or partial payment for benefits of a specified kind obtained from a specified person. Non Negs do not satisfy this condition and must therefore be treated as having no value for the purposes of section 11(10)(b) of the FA [54]. Lord Kitchin is confirmed in his views by the consideration that the result is a coherent scheme for the treatment of Non Negs, whether used by gamblers to place bets or when returned to gamblers as prizes [56]. Lord Sales reaches a different conclusion from the majority in this regard. When a Non Neg is awarded as a prize, it represents a real cost to the banker which ought to be brought into account [93]. A Non Neg given as a prize satisfies the relevant conditions under the BDGA 1981, such that it should normally be treated as having its face value for the purposes of section 11(10)(b) of the FA [95 104]. Lady Arden agrees with Lord Saless conclusion in this regard [82 84].
In December 2006, Mrs Staveley died. Shortly before her death, she had transferred funds from her existing pension scheme into a personal pension plan (PPP). She did not take any pension benefits at all during her life and, in those circumstances, a death benefit was payable under the PPP. Mrs Staveley nominated her two sons as beneficiaries of the death benefit, subject to the discretion of the pension scheme administrator and, after her death, the death benefit was paid to them. Her Majestys Revenue and Customs (HMRC) determined that inheritance tax (IHT) was due, on the basis that both the transfer of funds into the PPP, and Mrs Staveleys omission to draw any benefits from the plan before her death, were lifetime transfers of value within section 3 of the Inheritance Tax Act 1984 (IHTA). The issue in this appeal is whether they were right to take that view. The appellants are the three executors of Mrs Staveleys estate (her two sons, and a solicitor, Mr Parry). They appealed to the First tier Tribunal (Tax Chamber) (the FTT) against HMRCs determination. The appeal was partially successful in that the FTT held that the transfer of funds into the PPP (the transfer) was prevented from being a transfer of value by section 10(1) IHTA because, putting it shortly, it was not intended to confer any gratuitous benefit on anyone. However, the FTT dismissed the appeal in relation to Mrs Staveleys omission to draw benefits from the PPP (the omission), holding that the sons estates had been increased by the omission, and section 3(3) required that Mrs Staveley be treated as having made a disposition at the latest time when she could have drawn those benefits. Each side appealed to the Upper Tribunal (Tax and Chancery Chamber) (the Upper Tribunal). The FTTs decision that the transfer into the PPP fell within section 10(1) was affirmed. The FTTs decision in relation to the omission to draw benefits was reversed, on the basis that section 3(3) did not apply because it was not the omission that had increased the sons estates, but the discretionary decision of the pension scheme administrator to pay the death benefits to them. Accordingly, no tax was payable on either transaction. On HMRCs appeal to the Court of Appeal, the court held that both the transfer and the omission gave rise to a charge to tax. The executors now appeal against both of those decisions. The issues that require determination concern (1) (in relation to the transfer) the proper operation of section 10 of the IHTA, and its application to the facts of this case and (2) (in relation to the omission) the proper construction of section 3(3) of the IHTA, and whether, on the facts of this case, there was a material break in the chain of causation between Mrs Staveleys omission and the increase in value in her sons estates, by virtue of the fact that the payment to the sons resulted from the exercise of a discretion by the pension scheme administrator. The difficulty of the points at issue is underlined by the chequered fortunes of the parties arguments: the FTT found tax payable on the omission but not the transfer, the Upper Tribunal found no tax payable at all, and the Court of Appeal held that both the transfer and the omission gave rise to a charge to tax. Legislative provisions (section 1 IHTA). A chargeable transfer is a transfer of value made by an individual which is not an exempt transfer (section 2 IHTA). It is not necessary to go into the concept of an exempt transfer, as it has no relevance to the present appeal. Section 3 IHTA deals with transfers of value. It provides: Inheritance tax is charged on the value transferred by a chargeable transfer 3. Transfers of value (1) Subject to the following provisions of this Part of this Act, a transfer of value is a disposition made by a person (the transferor) as a result of which the value of his estate immediately after the disposition is less than it would be but for the disposition; and the amount by which it is less is the value transferred by the transfer. (2) For the purposes of subsection (1) above no account shall be taken of the value of excluded property which ceases to form part of a persons estate as a result of a disposition. (3) Where the value of a persons estate is diminished, and the value (a) of another persons estate, or (b) of any settled property, other than settled property treated by section 49(1) below as property to which a person is beneficially entitled, is increased by the first mentioned persons omission to exercise a right, he shall be treated for the purposes of this section as having made a disposition at the time (or latest time) when he could have exercised the right, unless it is shown that the omission was not deliberate. (4) Except as otherwise provided, references in this Act to a transfer of value made, or made by any person, include references to events on the happening of which tax is chargeable as if a transfer of value had been made, or, as the case may be, had been made by that person; and transferor shall be construed accordingly. It can be seen that the core provision is contained in section 3(1), which fixes upon dispositions which result in a reduction in the value of the transferors estate. Such a disposition constitutes a transfer of value and, by virtue of sections 1 and 2, potentially attracts inheritance tax on the value transferred, which is the amount of the reduction in value. Section 3(1) focuses on a person making a disposition ie on an action rather than an omission. However, section 3(3) extends the reach of section 3(1) to include an omission to exercise a right in certain circumstances. Unless it is shown that the omission was not deliberate, a person who omits to exercise a right is treated by section 3(3) as having made a disposition if (concentrating on the circumstance that is relevant for this case) the value of that persons estate is diminished and the value of another persons estate is increased by the omission. Section 10 IHTA provides that certain dispositions are not a transfer of value: 10. Dispositions not intended to confer gratuitous benefit (1) A disposition is not a transfer of value if it is shown that it was not intended, and was not made in a transaction intended, to confer any gratuitous benefit on any person and either (a) that it was made in a transaction at arms length between persons not connected with each other, or certain sales of (b) that it was such as might be expected to be made in a transaction at arms length between persons not connected with each other. concerns [not (2) relevant; shares/debentures] In this section (3) disposition includes anything treated as a disposition by virtue of section 3(3) above; transaction includes a series of transactions and any associated operations. As appears, the approach of section 10(1) is to stipulate conditions which, if satisfied, result in a disposition not being a transfer of value. By way of shorthand, it is perhaps convenient to speak in terms of whether the subsection applies (that is to say its conditions are satisfied, the disposition is therefore not a transfer of value, and no tax arises) or does not apply (conditions not satisfied and tax is payable). The present appeal requires particular focus on the condition that the disposition was not intended, and was not made in a transaction intended, to confer any gratuitous benefit on any person. Although section 10(1) is the principal subsection, section 10(3) is important too, because it provides an extended meaning for the concept of a transaction in section 10(1), so that it includes a series of transactions and any associated operations. Section 268 IHTA defines associated operations as follows: 268. Associated operations (1) In this Act associated operations means, subject to subsection (2) below, any two or more operations of any kind, being (a) operations which affect the same property, or one of which affects some property and the other or others of which affect property which represents, whether directly or indirectly, that property, or income arising from that property, or any property representing accumulations of any such income, or (b) any two operations of which one is effected with reference to the other, or with a view to enabling the other to be effected or facilitating its being effected, and any further operation having a like relation to any of those two, and so on. whether those operations are effected by the same person or different persons, and whether or not they are simultaneous; and operation includes an omission. HMRCs Notice of Determination The facts are set out below at para 21 and following. It is helpful to have in mind, when considering them, the terms in which HMRC identified the transfers of value which they said gave rise to charges to IHT. The Notice of Determination, issued in April 2012, recorded that HMRC had determined that there were two transfers of value. The first was the transfer into the PPP. Paragraph 1 of the Notice identified this in the following terms: 1. A Transfer In Application Form for the transfer of pension funds from an AXA Flexible Transfer Plan (a section 32 buyout policy) to an AXA Personal Pension Plan (the new pension scheme) signed by the deceased on 3 November 2006. Referring back to this paragraph, the operative part of the determination then said: A. The transfer at (1) above is a disposition which is a transfer of value having regard to section 3(1) Inheritance Tax Act 1984 (IHTA). The second transfer of value was Mrs Staveleys omission to draw lifetime benefits, which was dealt with as follows in the Notice: C. The deceased omitted to exercise her right to take any benefits from the new pension scheme between the date of commencement of the new pension scheme and the date of her death. The omission at C above is treated as a disposition by the deceased at the latest time when she could have exercised her rights and is a transfer of value having regard to section 3(3) and (1) IHTA. Broad outline of the parties arguments It is also helpful to approach the facts with the broad structure of the parties arguments in mind. It will be necessary to return to the detail of the arguments later, but the essentials are set out in the following four paragraphs. The starting point in relation to the transfer is that it is agreed to constitute a disposition which resulted in a reduction in the value of Mrs Staveleys estate, because she no longer had the right to determine the destination of the death benefits in relation to the pension. The question is whether the disposition is nevertheless not a transfer of value by virtue of section 10. This issue has to be broken down into two parts. First, does the transfer, as a disposition viewed on its own, amount to a transfer of value or does section 10(1) apply? This issue (Transfer Issue 1) turns on whether it has been shown by the appellants that the transfer was not intended to confer any gratuitous benefit on any person. The appellants say that this has been established, and HMRC say not. However, even if the appellants are right and the transfer into the PPP, viewed alone, would escape IHT, it has to be looked at in a wider context, and consideration given to whether section 10(1) still applies (Transfer Issue 2). It is not enough that the disposition itself was not intended to confer any gratuitous benefit; it has to be shown also that it was not made in a transaction intended to confer any gratuitous benefit. In support of their argument that the disposition here was made in such a transaction, HMRC seek to draw in the omission, with its accompanying intention to confer gratuitous benefit on the sons in the form of the resulting death benefit. They point to the definition of transaction in section 10(3) (transaction includes a series of transactions and any associated operations), and the definition in section 268 of associated operations, arguing that the transfer and the omission amount to associated operations, linked by common intent. On this argument, the intention to confer benefit on the sons by not taking lifetime benefits colours the transaction, so that it is not possible to bring the disposition within section 10(1). The appellants resist HMRCs case on Transfer Issue 2 on the basis that there is no relevant series of transactions and any associated operations here, so if the transfer to the PPP is not itself intended to confer gratuitous benefit, section 10(1) applies. On their argument, bundling together the transfer to the PPP and the omission is contrary to the findings of fact made by the FTT, and also a wrong application of the law, including the reasoning of the House of Lords in Inland Revenue Comrs v Macpherson [1989] AC 159 (Macpherson). They rely particularly upon the FTTs findings that the transfer to the PPP was not of itself intended to confer a gratuitous benefit, and that the transfer and the omission were not linked by motive. When it comes to the omission, the sole question is whether, as HMRC say, the terms of section 3(3) are satisfied. If the circumstances fall within the subsection, Mrs Staveley is treated as having made a disposition when she could last have exercised her right to take lifetime benefits under the PPP, and that disposition is conceded to be a transfer of value attracting IHT, the FTT having found that part of Mrs Staveleys motivation in not drawing benefits herself was to confer a benefit on her sons, and there no longer being any argument that section 10(1) applies to the omission. But the appellants say that section 3(3) is not satisfied. Their argument is that (putting it loosely) there is not the necessary connection between Mrs Staveleys omission and an increase in another persons estate, because the payment of the resulting death benefit to her sons depended upon the pension scheme administrator exercising its discretion in their favour, and did not follow the omission sufficiently closely in time. It cannot be said, in the appellants submission, that the value of another persons estate is increased by (my emphasis) the omission to draw lifetime benefits. The facts and the FTT judgment Mrs Staveley was divorced in 2000. The divorce was acrimonious, leaving her feeling bitter towards her ex husband. Whilst together, they had set up a company called Morayford Ltd. She was a director of the company, and employed by it, and she had a large pension fund with its occupational pension scheme. On divorce, her involvement with the company ceased. Putting it in the non technical terms used by the FTT, [t]he ancillary relief order ordered that her share of the company pension scheme be transferred to her. It was put into what was called a section 32 buyout policy (the terminology reflecting that it was a policy to which section 32 of the Finance Act 1981 applied). However, given the level of her salary with the company, the pension was over funded, and, as things stood then, any surplus in the fund on her death would be returned to the company, potentially benefitting her ex husband. This was not acceptable to her at the time of the transfer of her fund into the section 32 policy (FTT judgment, para 12), but she had no alternative option. Thereafter, the FTT found (ibid, para 14), she remained very concerned that her pension fund could in whole or part revert to the benefit of her ex husband and/or his new family. It was a term of the section 32 policy that if Mrs Staveley died without taking lifetime benefits, the trustees of the scheme would pay a lump sum by way of death benefit to her estate. Although she could have chosen to access her pension from its inception, she did not do so at any point during the currency of the policy. In 2004, Mrs Staveley was diagnosed with cancer, which was initially treated successfully. She made a will in 2005, appointing her two sons and Mr Parry as executors and trustees, and leaving her property to the trustees on trust to hold the assets for her sons in equal shares, the income to be paid to each son during his lifetime (and thereafter to his children), but with the trustees having power to advance capital. Mrs Staveleys pension fund was still, at that time, invested in the section 32 policy, and any death benefit payable under it would have gone into her estate and benefitted her sons by virtue of her will, subject to such IHT as would have been chargeable with regard to the sum. In 2006, Mrs Staveleys illness returned and she was treated again, but it became evident that she would not recover. The FTT found that for much of 2006, she refused to accept that her death was inevitable (FTT judgment, para 32). However, by mid October 2006, she had accepted intellectually that she was dying (ibid, para 34). On 30 October 2006, she set in train the transfer of her section 32 policy to the PPP, the new policy commencing on 9 November 2006. A death benefit was payable, under the PPP, to, or for the benefit of, one or more beneficiaries selected, at the discretion of the pension scheme administrator, from a number of specific categories, within which were included persons nominated by the scheme member, and also grandchildren, and legal personal representatives. The scheme member could nominate people for consideration by the pension scheme administrator by completing the Expression of Wish form which formed part of the Transfer in Application Form. Mrs Staveleys application form (dated 3 November 2006) nominated her two sons to be considered as equal recipients of the death benefit. In mid 2007, pursuant to the administrators exercise of discretion, the benefit was paid out in accordance with her wishes. The FTTs critical findings about Mrs Staveleys motivation for the transfer are contained in paras 48 to 55 of the FTT judgment, but para 16 is also important. There, it rejected the view of one of the sons that, although Mrs Staveley wanted the sons to benefit from her pension fund, she would rather they got nothing than that her ex husband benefit from it in any way. It made the general finding that preventing Morayford receiving benefit from her pension fund was very important to her; but it was also very important to her that her sons did benefit from her estate. At paras 48 to 55, the FTT was focusing expressly on whether the transfer from the section 32 policy into the PPP was intended to confer gratuitous benefit within the meaning of section 10(1). The appellants case was that Mrs Staveleys sole intention in transferring the funds was to eliminate any risk that any part of the fund might be returned to Morayford. HMRC put forward a number of arguments against this. They argued that, in the light of changes in the law in April 2006, it should have been obvious that there was no such risk, but that even if she did not know this, Mrs Staveley had at least a dual motive, the second motive being to ensure the death benefits passed to her sons free of IHT. The FTT found that Mrs Staveley was not motivated by IHT considerations and, indeed, that it was more likely than not that she was under the mistaken impression that the transfer would not affect the amount of IHT payable on her death (para 49). It found that her sole motive in making the transfer was to sever all ties with Morayford (para 48). Though the risk that funds would revert to Morayford may by then have been more perceived than real, she had been advised that there was such a risk, and the perceived risk was the reason why she acted as she did. At para 50, the FTT set out a further argument which HMRC advanced as to Mrs Staveleys intention and began to deal with it: 50. HMRC say that, even ignoring the IHT, she clearly had an intent that the death benefits would pass to her sons, and this was an intent to confer a gratuitous benefit. She signed the statement of wishes. However, we do not see how this could be properly described as an intention to confer a gratuitous benefit. Her sons were her beneficiaries named in her will and therefore the persons who had stood to benefit from the death benefits of the section 32 policy (which after April 2006 would have been the whole fund). They were the persons named in her expression of wishes for the PPP. Either way they were the intended beneficiaries so that the transfer did not confer a benefit that was new to them and cannot therefore have been part of the motivation for Mrs Staveley. (Emphasis in the original) As heralded here, and developed in para 52, the FTTs view was that the benefit contemplated by section 10 was a benefit which did not exist before, and was newly conferred. In this case, as the FTT saw it, the only difference between the sons being named in the Expression of Wish form in respect of the PPP, and being Mrs Staveleys residuary legatees in respect of the death benefit arising from the section 32 policy, was that the death benefit could be paid to them directly by the pension administrator under the PPP, rather than coming to them by way of Mrs Staveleys estate (para 53). This did, indeed, produce a very real advantage, in avoiding the IHT which would have been payable had the section 32 policy remained in place, but the FTT recalled that we have already concluded that this IHT advantage was not a benefit which Mrs Staveley intended to confer, even though that was the effect of what she did (para 54, emphasis in the original). It followed (para 55) that the transfer into the PPP was not intended to confer any gratuitous benefit on any person. Turning to what the FTT had to say about Transfer Issue 2 (the transfer taken together with the omission to draw lifetime benefits), it is necessary to look first at the findings that it made about the circumstances of the omission. It examined what Mrs Staveleys thinking was, during 2006, about drawing pension benefits herself. Whilst her funds were still invested in the section 32 policy, she had considered whether to take lifetime benefits. It was not possible to determine the precise date when she decided not to do so, but the Tribunal found that she must have communicated that decision to her financial advisor in about October 2006 (FTT judgment, para 28), having taken it sometime between June and October that year (ibid, para 124). There was no evidence of any change of view up to the date of her death (also para 124). The FTT found (paras 146 to 149) that a number of factors influenced Mrs Staveley in this approach, including that she would confer on her sons a greater financial benefit by not drawing lifetime benefits. That was part of her motivation in June 2006. There being no evidence of any change of mind subsequently (para 143), it must be treated as the position at the moment of her death as well (para 149). It was a continuing decision (para 61), an ongoing choice (para 87). The FTT set out its legal analysis of Transfer Issue 2 between paras 56 and 72 of its judgment, rejecting HMRCs case that the transfer of the funds into the PPP should be taken together with the omission to draw lifetime benefits as a series of transactions and/or associated operations. As it saw it, the transfer and the omission were not linked as a scheme intended to confer gratuitous benefit. It found at para 64 that [w]hatever the intent behind the omission, it was not linked with the transfer to the PPP in Mrs Staveleys mind, her intent with respect to the transfer having been solely to break the connection with Morayford. It reinforced this at para 69 where it said: the transfer to the PPP was not made with the intent of omitting to take lifetime benefits. In so far as Mrs Staveley made any positive decision not to take lifetime benefits, that decision had already been taken and taken independently of the decision to transfer the funds to the PPP. (Emphasis in the original) In relation to the omission to take lifetime benefits, which it found fell within section 3(3) and gave rise to tax, the FTT commented that it would ordinarily regard the voluntary exercise of discretion as breaking the chain of causation from an omission to exercise a right before death to the receipt of the resulting monies, but not so where, as it considered to be the case here, it was virtually inevitable that [the scheme administrator] would honour the deceaseds wishes and pay the money directly to her sons (paras 113 and 114). Section 10 could have no application to the omission because of the FTTs finding that part of Mrs Staveleys motivation was to confer a greater benefit upon her sons. The Upper Tribunal decision The Upper Tribunal agreed with the FTT that the transfer (whether on its own or taken with the omission) was, by virtue of section 10, not a transfer of value for the purposes of section 3 IHTA (para 60 Upper Tribunal judgment). Aspects of its reasoning differed from that of the FTT. In particular, it did not endorse the FTTs interpretation of section 10, agreeing with HMRC that as a matter of law, the mere fact of an existing putative benefit under a will of a person into whose estate certain assets will pass on death cannot prevent a disposition in lifetime from conferring a benefit, even if the benefit is to the same beneficiaries, and is substantially identical to that which would be conferred by the will (para 30 ibid). However, it considered the nature of any benefit and the surrounding circumstances relevant to the question of intention, so saw the fact that the sons would benefit under the will as a relevant factor in assessing Mrs Staveleys true motive in making the transfer (para 31). Normally, by the time an appeal reaches the Supreme Court, the facts are no longer a matter of argument. However, in this case, certain of the facts (particularly concerning Mrs Staveleys intention) have continued to excite debate. It is therefore relevant to note here that HMRC sought to persuade the Upper Tribunal that it had not been open to the FTT, properly interpreting section 10, to find that Mrs Staveleys sole motive in making the transfer was to prevent funds reverting to Morayford and her ex husband, and that it could only have found that Mrs Staveley made the disposition with the intention of doing several things, one of which was to confer a gratuitous benefit on her sons. The Upper Tribunal rejected that challenge. It said (para 32): To the extent that the FTT was in error in deciding that the replacement of the testamentary benefit to the sons by the benefit conferred as beneficial objects of the discretion of the scheme administrator of the AXA PPP could not in law amount to the conferring of a benefit, that was not the basis for the FTTs conclusion as to the sole motive of Mrs Staveley. That was a decision of the FTT on the facts, which properly included the nature of the benefit in question. The FTTs finding that the transfer and the omission were unconnected and not part of any scheme to confer benefit on the sons was also endorsed by the Upper Tribunal (para 55). The Upper Tribunal differed from the FTT on whether the omission was a transfer of value, taking the view that the sons estates were increased not by Mrs Staveleys omission to take lifetime benefits but by the exercise of pension scheme administrators discretion, which, in its view (summarised at paras 86 and 87), broke the chain of causation between the omission and the payment out to the sons. It followed that the omission was not caught by section 3(3) IHTA and did not attract tax. It is material to record that the FTTs finding that it was virtually inevitable that Mrs Staveleys wishes would be honoured by the pension administrator (see para 33 above) came in for criticism. HMRC did not seek to support it and the Upper Tribunal considered (para 72 Upper Tribunal judgment) that the FTT had not been entitled to make it, there being nothing to contradict the evidence that there was a discretion conferred on the administrator. The only finding open to the FTT, the Upper Tribunal said (para 74), was that there was a genuine exercise of discretion and that the most Mrs Staveley could have expected from her completion of the Expression of Wish form was that a diligent administrator would take those wishes into account as a relevant factor in the exercise of its discretion. The Court of Appeal decision: Transfer Issues 1 and 2 By a majority (Newey LJ and Birss J), the Court of Appeal upheld the decision of the lower courts that, standing alone, the transfer from the section 32 policy to the PPP was not a transfer of value, because section 10 applied. In the view of the majority, to ascertain whether the transferor intended to confer a gratuitous benefit, one has to compare the position of the recipient of the benefit before the disposition with his position in light of it, asking whether the overall effect of the disposition was intended to be favourable to, or advantageous to, the recipient of the benefit (paras 86 and 88 of Newey LJs judgment, with which Birss J agreed at para 114). Drawing assistance from the dictionary definitions of confer and benefit, Newey LJ said in para 88: Confer is defined in the Concise Oxford Dictionary as to grant or bestow, benefit as a favourable or helpful factor or circumstance; advantage, profit. In enacting section 10, parliament will, I think, have been concerned to exclude from the crucial exemption for which it provides a disposition which was itself intended to grant or bestow something advantageous gratuitously. Parliament considered that an arms length transaction should not generally give rise to an IHT charge even if it served to diminish the value of the transferors estate, but did not want the exemption to apply if to put matters broadly the disposition was being used to improve someones position on a gratuitous basis. As a matter of language, I do not think that it is appropriate to speak of a disposition having been intended to confer any gratuitous benefit if the recipient of the benefit was intended to receive no more than he would have had in any event. A disposition designed to give a person only what he was to receive anyway or its equivalent, let alone less, cannot fairly be described, in my view, as intended to confer a benefit. In contrast, Lady Arden considered (para 52) that the conferral of a benefit is to be ascertained by a legal analysis of the transaction whereby the beneficiary acquired his rights and without comparison with a prior gift (my emphasis). As HMRC rely upon her approach, I will need to deal with it in some detail in discussing the parties submissions, so will say no more about it at this stage. Applying the majoritys interpretation of section 10 to the facts, Newey LJ acknowledged that, as a matter of fact, the transfer of the pension fund from one scheme to the other would have been advantageous to Mrs Staveleys sons if it enabled them to receive sums free of IHT. However, as he said (para 83), the mere fact that a transaction confers a gratuitous benefit is not enough to remove the protection of section 10. That occurs only if the transferor intends such benefit to be conferred and, here, the FTTs finding was that IHT did not form part of her motivation (FTT, para 49). In contrast to Lady Arden (see below), he did not consider that it was open to the Court of Appeal to find that, IHT saving apart, the interest of the sons under the nomination was a favourable change from their previous position under Mrs Staveleys will. He observed (para 91): It is not apparent to me that HMRC have ever advanced a case to that effect, let alone that the FTT made findings supporting it, and (aside, again, from IHT) I do not regard it as in the least obvious that the sons were in practice any better placed as a result of the transfer. However, even if it were possible to conclude that there was a favourable change other than the saving of IHT, in his view this still would not oust the protection of section 10, because, on the findings of the FTT, Mrs Staveley did not make the transaction intending to improve the sons position in that way (ibid, at paras 89 and 91 in particular). As Newey LJ put it, [s]he did not see the transfer as giving her sons anything better than they would otherwise have received. As Lady Arden analysed the facts, there was a gift of newly created rights, the sons interest under the PPP being very different in law from their position as residuary beneficiaries under Mrs Staveleys will, and therefore the gift was newly conferred (para 45). In her view (para 46), the interest of the sons under the nomination was undoubtedly a favourable change from their previous position under Mrs Staveleys will if regard is had to the legal analysis. The application of section 10 therefore turned on whether Mrs Staveley intended to confer this benefit. As Lady Arden put it at para 52, in order to obtain the benefit of the purchase exemption, the donor, or his personal representatives, has to show that, although the donor intended to make a gift, he did not intend to make a gift of what was in law a newly created right. Lady Ardens view about Mrs Staveleys intention built on her analysis of the factual findings made by the FTT. Her interpretation of the FTT judgment was that, although the FTT had found that the transfer was not made with the intention to confer gratuitous benefit, the motivation being solely to sever all ties with Morayford, there was no equivalent finding in relation to the Expression of Wish form, as to which, she considered, there was a finding, by implication, that by executing the statement of wishes on the occasion of the transfer of funds Mrs Staveley made a disposition with the intention of giving a gratuitous benefit to her sons (see particularly paras 32, 36 and 40 of Lady Ardens judgment). At para 47, she said: it may be said that there was an absence of intention to confer a new benefit. Mrs Staveley was, after all, (it may be said) only giving her sons what she had previously intended to give them under her will. She was (it may be said) just making the same gift in a new way. But what the FTT found was that there was a gratuitous intention in signing the nomination. So, in my judgment, on the facts of this case, the respondents had to show that, even though it was a gratuitous intention to confer what in law was a newly created right, it was not Mrs Staveleys intention to confer such a benefit: see the words if it is shown that it was not intended appearing in section 10(1). An absence of evidence as to whether she intended to make a newly conferred gift is not enough. The respondents needed to show that she mistakenly thought that she was not conferring a newly created right, and the findings of the FTT do not go that far. It followed that, even standing alone, Lady Arden would have found that the transfer to the PPP was a transfer of value. For the majority, however, that position was only reached by taking the transfer together with Mrs Staveleys omission to draw lifetime benefits under the PPP. It will be recalled that section 10 requires that it be shown not only that the disposition itself was not intended to confer gratuitous benefit, but also that it was not made in a transaction intended to confer gratuitous benefit, and a transaction for this purpose includes a series of transactions and any associated operations. The court held that the transfer was, in fact, made in a transaction intended to confer gratuitous benefit, essentially for the reasons set out by Newey LJ in para 103, which I summarise in the rest of this paragraph. The transfer and the omission were operations affecting the same property, so were associated operations as defined in section 268. Attention therefore turned to the issue of whether this transaction was intended to confer gratuitous benefit. As found by the FTT, one of the factors in Mrs Staveleys decision not to access her pension fund was that it would confer a greater benefit on her sons, this being her intention both at the time of the transfer to the PPP and at the time of her death. The omission was therefore intended to confer any gratuitous benefit. On Newey LJs reading of Macpherson, it was immaterial that the transfer was not made with that intention, because a transaction could be intended to confer gratuitous benefit without each of the associated operations being itself made with that intention or actually conferring such benefit. If a scheme of which an operation forms part is intended to confer the benefit, that is enough. The FTT was mistaken in thinking there was no intent linking [the omission to take pension benefits and the transfer to the PPP]. Both were motivated by a desire on Mrs Staveleys part that her sons should have the death benefits that would be payable if she did not draw a lifetime pension. To that end, she named them in her Expression of Wish form. So, Newey LJ said at para 103(v): While, therefore, Mrs Staveley did not see the transfer to the PPP as improving her sons position and she made the transfer out of a desire to sever ties with Morayford, the only reasonable conclusion, as it seems to me, is that she also intended the PPP to be a means by which the death benefits could be passed to her sons. Thus the failure to take pension benefits and the transfer to the PPP were each properly seen as forming part of and contributing to a scheme intended to confer gratuitous benefits. It followed that the protection of section 10 was not available for the transfer to the PPP. Court of Appeal decision: section 3(3) and the omission The court held unanimously that the sons estates had been increased by Mrs Staveleys omission to draw lifetime benefits, notwithstanding the scheme administrators discretion. On this point, there was general agreement with the reasoning of Newey LJ, the core of which is perhaps best encapsulated in this passage from para 109: The sons estates would not, of course, have been increased but for the omission. Moreover, the exercise of discretion in the sons favour by the scheme administrator did not involve any break in the chain of causation. The administrator was, after all, doing no more than it was obliged and could be expected to do in the period immediately following Mrs Staveleys death. It may be that the increase in the sons estates could also be said to have been brought about by the exercise of the administrators discretion, but that by no means makes it inappropriate to see the estates as having been increased by the omission. The one does not preclude the other. In so finding, the court also rejected the argument that the diminution in value of one persons estate and the increase in value of someone elses must occur at the same time for section 3(3) to apply. Transfer Issue 1 (transfer on its own): discussion The appellants support the conclusion of the majority of the Court of Appeal that, standing alone, the transfer of funds to the PPP did not constitute a transfer of value because section 10 applied, and they rely upon the Court of Appeals reasoning on this issue. HMRC, however, contend that Lady Arden correctly concluded, for the reasons she gave at paras 42 to 54, that section 10 was not applicable. They argue that Mrs Staveleys intention in making the disposition was to exclude her ex husband and to confer a benefit on her sons by way of death benefits. On this analysis, in their submission, her intention was to confer a gratuitous benefit. To make this good, they make submissions both as to what is meant in law by intending to confer [a] gratuitous benefit on any person, and as to the factual findings that were/should have been made by the FTT. Miss Wilson, for HMRC, makes the general point that section 10 only comes into play when there has been a disposition which would normally be a transfer of value. She characterises it as a relatively narrow provision, with the taxpayer bearing the burden of justifying why IHT is not payable as it ordinarily would be. She emphasises that, whilst what someone intends is a question of fact, the treatment of that factual intention for the purposes of section 10 is a question of law. She submits that the proper approach, in a case such as this where there is a change in how a gift is made (or, as she also puts it, where rights have been substituted) is to ask three questions, always bearing in mind, of course, that it is the taxpayer who has to show that the disposition was not intended to confer gratuitous benefit. The three questions are: (1) What rights, if any, were created and extinguished? (2) On a detailed legal analysis, did the new rights confer a benefit within the statutory words? (3) Was that situation something that the disponor intended? Of these three questions, only the last is subjective. In HMRCs submission, the majority in the Court of Appeal was wrong to interpret section 10 as requiring an examination of whether the overall effect of the disposition was intended to be favourable to, or advantageous to, the recipient of the benefit (see paras 86 and 88 of Newey LJs judgment, referred to/quoted at para 40 above). This would be uncertain and difficult to adjudicate upon, HMRC say, and would give rise to arbitrary results. Lady Ardens formulation of the law is correct, in HMRCs submission, and leads to a section 10 test which is readily justiciable. Lady Ardens para 46 deals with statutory interpretation. There she observed that, in the absence of a relevant statutory definition of the words in question, resort had to be had to their ordinary meaning, and said: On its ordinary meaning, a benefit involves a net gain or favourable change in a persons position, but the comparison to be made is with his position immediately before the putative benefit was conferred. This is the most natural time to determine the question of benefit and in my judgment there would need to be some mandate in the 1984 Act to do what the FTT did, which was to look at the position in substance before the transfer took place and without reference to its legal analysis. I do not consider that there is any such mandate. The interest of the sons under the nomination was undoubtedly a favourable change from their previous position under Mrs Staveleys will if regard is had to the legal analysis. The interpretation of confers any gratuitous benefit which I prefer gives weight and appropriate meaning to the statutory words. At para 50, Lady Arden said that that the correct approach to section 10 was a technical approach, and not a substantive one. She considered it clear from the wording that the subsection is intended to be narrowly construed, and identified a number of features of the provision which she found influential, including that: There is no limitation on the type of benefit and there is no requirement for the gratuitous benefit to be conferred on the recipient of the property transferred by the disposition. It can be conferred on any person. It must be of some value, but that value need not be the same as the value of the property transferred. Summarising her interpretation at para 52, she said that the conferral of a benefit is to be ascertained by a legal analysis of the transaction whereby the beneficiary acquired his rights and without comparison with a prior gift. Even with the benefit of Lady Ardens analysis, I confess to some difficulty in understanding what, precisely, HMRC consider to be the correct interpretation of section 10. They accept that ordinarily an intent to confer benefit involves an element of intention to improve a persons position but, they say, the important question is Improve the recipients position in comparison to what? In identifying this as the important question, HMRC can be seen to acknowledge that a comparison of some sort is required in order to determine whether relevant benefit has been conferred for section 10 purposes (or putting it more exactly, whether the disposition was intended to confer any gratuitous benefit). However, they seek to confine the exercise to a comparison with the recipients position (i) as it is in law, and (ii) immediately before the disposition. A more generalised consideration of whether the overall effect of the disposition was intended to be favourable to, or advantageous to, the recipient of the benefit is not permitted, on their case. They also assert that a comparison with a prior gift is not permissible. In applying this formulation to the present case, HMRC seem to be adopting what I might call a return to zero approach. It is integral to their argument that there is a moment when rights under the section 32 policy have ended, but rights under the PPP have not yet begun. On their argument, at this point, immediately before rights are acquired under the PPP, the sons have nothing, having lost even the hope of benefitting that they had in relation to the section 32/will arrangement, and are totally reliant on Mrs Staveley making new arrangements to enable them to benefit from her pension fund. They necessarily benefit, therefore, from Mrs Staveley taking out the PPP rather than, for instance, simply divesting herself of the section 32 fund completely in some way, so as to ensure that nothing would find its way to Morayford/her ex husband. I am not sure whether HMRC would say that the return to zero approach applies in every case or whether it depends upon the particular facts of this case, for example upon the fact that, at the point of the transfer, the sons had no legally enforceable right to receive any death benefits via Mrs Staveleys will. There were features of Miss Wilsons submissions which suggested to me that the approach was a response to the particular facts of the case. The first of Miss Wilsons three generic questions draws in a consideration of pre existing rights in asking, What rights were created and extinguished? (my emphasis), and there were other elements in her submissions which also suggested that regard might be had to the prior position. For example she particularly noted that the sons were in no position to barter for their nomination in the Expression of Wish form, suggesting that the legal analysis might have been different if they had had pre existing rights, and that what was important was that they had no rights, only a hope of benefitting from the will. None of this is surprising, as it would surely be difficult to decide, in a complete vacuum, whether or not something is a benefit, and well nigh impossible to decide whether it is a gratuitous benefit. As some sort of comparison with a pre existing position is required in order to determine the gratuitous benefit question, even on HMRCs case, and given that HMRC accept that ordinarily an intent to confer benefit involves an element of intention to improve a persons position, the difference between the parties may not in fact be enormous. The most notable difference is that HMRC contend for a much narrower, and more technical, approach in carrying out the inevitable comparison than do the appellants, rejecting an examination of the position in substance. And of course their application of that approach to these facts produces a radically different result. In interpreting section 10, it is important to keep in mind that the question is not simply, Was a gratuitous benefit conferred on any person? The search is for what the disponor intended, and in particular for whether the disponor intended to confer any gratuitous benefit on any person. If, by the three questions that they say must be asked (see para 51 above), HMRC assert that the relevant intention is merely an intention on the part of the disponor to engage in a transaction which, as a matter of legal analysis, creates new rights which confer a benefit on a person, I cannot accept that that would be correct. It would be surprising if it were, as it would potentially prevent the application of section 10 in the sort of commercial arms length transactions where it would normally have a role. For instance, in a bad commercial bargain where the purchaser quite unknowingly pays more than an item is worth, the purchaser intends to make the purchase and, as a matter of legal analysis, the transaction confers on the vendor the right to keep the overpayment, which is a gratuitous benefit, for which he has not given value. Indeed, had this been all the intention required, it might have been argued by HMRC that there was no need to explore Mrs Staveleys thinking about the potential IHT advantages of the PPP, because the mere fact that she intended to make a disposition which, as a matter of law, carried those advantages took matters outside section 10 without more. The disponors actual intention in making the disposition is, therefore, in point. That militates against an over technical interpretation of what is meant by confer any gratuitous benefit. To my mind, the approach taken by the majority in the Court of Appeal is essentially the correct one. The words confer and benefit have to be given their ordinary meaning, and the dictionary definitions (see Newey LJs para 88, quoted at para 40 above) show that they import the idea of granting or bestowing some advantage on the recipient. Like Newey LJ, I do not think it is appropriate to speak of a disposition having been intended to confer any gratuitous benefit if the recipient of the benefit was intended to receive no more than he would have had in any event. It is necessary, therefore, to ask whether the disponor was intending, by the overall effect of the disposition, to put the recipient in a better position, or, to borrow from what Newey LJ said at para 88, putting things broadly, to ask whether the disposition was being used to improve someones position on a gratuitous basis. The exercise is not, however, simply a matter of asking the disponor whether or not he or she intended to confer benefit, as Miss Wilson submits would be all that was required under the appellants test. I go so far with HMRC as to accept that it is not possible to consider whether a disposition was intended to improve someones position without taking into account what rights the recipient had, in law, before and after the disposition. This legal context will permit a more rigorous evaluation of whether the requisite absence of intention has been shown. But this legal analysis of the rights is a factor in the evaluation, not the be all and end all of the consideration. I do not accept, for example, that the mere fact that the rights are to be enjoyed in a different legal form after the disposition means that they are necessarily a gratuitous benefit. Furthermore, I cannot accept the return to zero analysis, whereby the existing set of rights must necessarily be treated as ending immediately prior to the disposition, with a new set commencing which, in comparison to the void left by the ending of the pre existing rights, can then be described as beneficial. There must, as I see it, be more attention paid to the practical reality of the legal situation than that wholly artificial analysis permits. It would probably be unwise to attempt to define further what is meant by intended to confer any gratuitous benefit, particularly as it is unnecessary to do so to resolve the instant case. Instead, I hope that by turning to the facts of the case, I can demonstrate the way in which it seems to me the section should be interpreted. True it is that as a matter of legal analysis, the position of the sons differed as between the section 32/will arrangement and the PPP but, on its own, that takes matters nowhere. Newey LJ did not regard it as in the least obvious that (IHT apart) the sons were in practice any better placed as a result of the transfer than they had been under the section 32/will arrangement. I would endorse that view. I do not see their position as better under the PPP than previously. Just as they had no right to benefits under the section 32/will arrangement, so they had no right to benefits under the PPP. They had a hope of benefitting under the will from any death benefits, but Mrs Staveley could have changed her will at any time and they would have had no remedy if she had decided to bequeath her estate elsewhere. Similarly, if she had chosen to draw her pension during her lifetime with the result that death benefits ceased to be payable at all, they could have done nothing about it. Under the PPP, they were within the class of those in whose favour the scheme administrator could exercise its discretion, but they could not rely upon the death benefits being paid to them. Not only was there a genuine discretion (as the Upper Tribunal found), Mrs Staveley could have notified AXA of a change to her wishes, or even drawn a lifetime pension herself. The most that the sons could have required, assuming that Mrs Staveleys nomination remained as it was in the original Expression of Wish, was that the scheme administrator give proper consideration to paying the benefits to them. As Mr Rees QC for the appellants said in argument, the only material change was in the identity of the person upon whose decision receipt of the benefits depended, from Mrs Staveley in the case of the will, to the scheme administrator under the PPP. As for HMRCs submission that the sons position was improved because they were better off with the funds in the PPP, which gave them a chance of receiving the death benefits, than if Mrs Staveley had disposed of the funds elsewhere, that ignores the reality of the transfer of the pension funds from one provider to another. Mrs Staveley did not have a free hand with regard to this. There was no moment when, having drawn the funds from the section 32 policy, she was free to do what she wished with them. As Mr Rees put it in oral argument, she never had the right to take the money out of the pension wrapper, at least as the law stood at that time. Upon surrender of the section 32 policy, the policy monies were to be paid directly by the company to the receiving scheme. It is wholly artificial to introduce the return to zero approach in these circumstances. The disposition was, as the Notice of Determination identified, the transfer of funds from the section 32 policy to the PPP. What is crucial, of course, is what Mrs Staveley intended. Given that, even factoring in a legal analysis of the sons position at each stage, the disposition cannot be said to have conferred a gratuitous benefit on them, it would be surprising if it could nonetheless be concluded that there had been a failure to show the requisite absence of intention. The finding of the FTT was that Mrs Staveley did not intend to improve the sons position by transferring the funds. I would not criticise the Court of Appeals conclusion that the FTT impliedly found that, when she signed the Expression of Wish form nominating her sons, Mrs Staveley intended to benefit In the light of the above, the transfer of the funds on its own is not a transfer them (see para 44 above, and also para 103(vi) of Newey LJs judgment). However, this is not relevant to Transfer Issue 1, in my view. In the circumstances of this case, making the nomination does not amount to conferring a relevant benefit, and Mrs Staveleys benign intention in this regard cannot amount to an intention to confer gratuitous benefit. of value because section 10 applies. Transfer Issue 2 (transfer and omission as associated operations): discussion The parties rival arguments on this issue are summarised at paras 18 and 19 above. It is accepted that, as the FTT found (see para 31 above) in omitting to draw lifetime benefits under the PPP, part of Mrs Staveleys intention was to benefit her sons. The question is whether this intention colours the transfer with an intention to confer gratuitous benefit which it would not have on its own. The issue requires close consideration of the decision of the House of Lords in Macpherson, and an examination of the facts found by the FTT as to the lack of a relevant link between the transfer and the omission, the appellants arguing that the Court of Appeal went wrong in law and on the facts when holding that the benefit of section 10 was not available because the transfer and the omission formed a series of transactions and associated operations intended to confer a gratuitous benefit on the sons. In Macpherson, the House of Lords was concerned with section 20(4) of the Finance Act 1975 (FA 1975) which was in effectively identical terms to section 10, as was the FA 1975 definition, in section 44, of associated operations. Macpherson concerned property held in a discretionary settlement, the primary objects of the settlement being Mr Robarts and his family. Valuable pictures were included in the settled property. The trustees had an agreement with Mr Robarts, whereby he undertook the custody, care and insurance of the pictures and agreed to pay 100 a year for his enjoyment of them. The agreement was terminable on three months notice by either side. Some years later, in 1977, the agreement was varied, including by the right of termination on notice being removed and replaced with a fixed date in 1991 for the expiry of the agreement (subject only to the trustees being able to terminate sooner in the event of a serious breach of the agreement by Mr Robarts). The next day the trustees executed a deed of appointment appointing the pictures, subject to and with the benefit of the varied agreement, on trusts under which Mr Robarts son took a protected life interest in possession. The issue was whether capital transfer tax was payable in respect of the 1977 variation which, by deferring the date on which the pictures could be delivered to an open market purchaser, had diminished their value. The transaction would attract capital transfer tax unless it was such that, were the trustees beneficially entitled to the settled property, it would not be a transfer of value. That depended on section 20(4). The evidence was that the trustees had concluded that they ought not to exercise the power of appointment in favour of the son unless the original agreement was first varied, since Mr Robarts was not willing to continue to house the pictures on the original terms after such an appointment. Counsel for the trustees accepted that the variation and the appointment were associated operations but contended that the appointment was nevertheless not a relevant associated operation. Counsel for the Revenue contended that as a matter of law the transaction which had to be looked at in section 20(4) was one which included a series of transactions and associated operations and, as a matter of fact, based on the trustees reason for varying the original agreement, the 1977 agreement was made in such a transaction. Lord Jauncey of Tullichettle noted that the definition of associated operations was capable of covering a multitude of events affecting the same property which might have little or no apparent connection between them, but that counsel for the Revenue rightly accepted that some limitation must be imposed. As it is central to the argument before us, it is necessary to set out in full, the following passage in which Lord Jauncey considered the ambit of section 20(4) (p 175G): If the extended [section 44] meaning of transaction is read into the opening words of section 20(4) the wording becomes: A disposition is not a transfer of value if it is shown that it was not intended, and was not made in a transaction including a series of transactions and any associated operations intended, to confer any gratuitous benefit So read it is clear that the intention to confer gratuitous benefit qualifies both transactions and associated operations. If an associated operation is not intended to confer such a benefit it is not relevant for the purpose of the subsection. That is not to say that it must necessarily per se confer a benefit but it must form a part of and contribute to a scheme which does confer such a benefit. In this case it is common ground that the appointment conferred a gratuitous benefit on [the son]. It is clear that the appointment would not have been made if the 1970 agreement had not been varied by that of 1977. It follows that the 1977 agreement was not only effected with reference to the appointment but was a contributory part of the scheme to confer a benefit on [the son]. So viewed there can be no doubt that the 1977 agreement, being the disposition for the purposes of section 20(4), was made in a transaction, consisting of the agreement and the appointment, intended to confer a gratuitous benefit on [the son]. The trustees had thus failed to satisfy the test in section 20(4) and tax was payable on the variation agreement. It is not suggested that we should do other than adopt Lord Jaunceys interpretation of section 20(4) in our construction of section 10. However, there is a significant difference of opinion between the parties as to what Lord Jaunceys interpretation actually was, and how it should be applied to the present case. For the appellants, Mr Rees accepts that the omission falls within the wide definition of associated operations, but says that it is, nonetheless, not relevant in identifying a transaction in the wider sense for section 10 purposes. To be relevant, in his submission, a step (to adopt an inexact but useful shorthand covering transactions in the narrow sense and associated operations) must not only form part of and contribute to a scheme that confers a gratuitous benefit, but must also, itself, have been intended to confer a gratuitous benefit. That, he submits, is what Lord Jauncey was saying. Miss Wilson, on the other hand, says that there is no need for each individual step to be intended to confer gratuitous benefit. All that is required for a step to be relevant is that it forms part of and contributes to a scheme which confers a gratuitous benefit. Here, in her submission, the scheme is the gift of the death benefits to the sons, to which the investment in the PPP and the omission both contribute. Without the investment of the funds in the PPP, there would have been no death benefit to give to the sons. There might initially appear to be support for the appellants interpretation of Lord Jaunceys speech in the following passage (see para 70 above for the full quotation): the intention to confer gratuitous benefit qualifies both transactions and associated operations. If an associated operation is not intended to confer such a benefit it is not relevant for the purpose of the subsection. (My emphasis) Lord Jauncey might be taken to be saying, here, that each step in any scheme must be intended to confer benefit, otherwise it is irrelevant. However, I do not think that can be what he meant. I agree with Miss Wilson, who submits that to understand Macpherson correctly, one must appreciate that it was there conceded by the Revenue that the variation agreement was not intended to confer gratuitous benefit and was such as might be expected in a commercial transaction (see p 173G). The variation agreement was, of course, the focus of the dispute in that case. Unless it could be linked with the appointment in favour of the son the following day, it would have escaped tax by (putting it loosely) the application of section 20(4). The Revenue, however, satisfied their Lordships that the agreement could be bolted together with the next days appointment, notwithstanding that the variation agreement was not attended by an intention to confer gratuitous benefit. It was held to be part of a scheme which was intended to confer gratuitous benefit, and therefore to be a transfer of value and subject to capital transfer tax. That scheme was made up of one element which was not attended by gratuitous intent (the variation), and one element (the appointment) which was. If Lord Jauncey had intended to say that a scheme can only comprise elements which are, themselves, attended by a gratuitous intent, there would have been no scope for taking the variation and the appointment together in this way. Accordingly, I would reject the argument that a step can only be relevant if it is, itself, taken with an intention to confer gratuitous benefit. Nevertheless, it is clear that Lord Jauncey considered, in line with the Revenues concession, that not everything which could be described as an associated operation would be material for section 20(4) purposes. The fact that the operation did not itself confer a benefit did not rule it out, but, to be relevant, it must form a part of and contribute to a scheme which does confer such a benefit. Lord Jauncey expressed himself here in terms of the scheme conferring a benefit, rather than it also being intended to confer a benefit. However, reading his speech as a whole, I would be inclined to say that he meant that the scheme had to be one actually conferring, and intended to confer, such a benefit. Just before he said this, he had referred to the intention to confer gratuitous benefit qualifying both transactions and associated operations. And though referring here to a scheme which does confer such a benefit, in the next paragraph (quoted at para 70 above), he referred to the conceded fact that the appointment conferred a gratuitous benefit on the son and the fact that that appointment would not have been made without the variation, and then said that it followed that the agreement was not only effected with reference to the appointment but was a contributory part of the scheme to confer a benefit (my emphasis). In my view, this passage, and in particular the reference to a scheme to confer a benefit shows that Lord Jauncey saw it as a necessary feature that the scheme should be one intended to confer a gratuitous benefit. The alternative scenario with which Lord Jauncey dealt in the following paragraph (p 176D) perhaps provides a little further help as to what he had in mind as to the workings of the requirement that the step be a contributory part of the scheme. In the alternative scenario, the agreement took place after the appointment. On Lord Jaunceys analysis, whilst associated with the appointment in accordance with the definition in section 44, it would not have been a relevant associated operation. What he saw as important, in that situation, was that, as a matter of fact, the agreement would have contributed nothing to the conferment of the gratuitous benefit which had already been effected by the appointment. Alternatively, he would have ruled it out on the basis that the transaction which was intended to confer gratuitous benefit had been completed before the agreement had been entered into, so that although it was an associated operation, it could not be said to have been made in that transaction. What remains is to consider how the requirement that associated operations form a part of and contribute to a scheme applies in the present case. It may help to commence that consideration by recalling that the scheme in the Macpherson case involved the variation agreement, on commercial terms, (which might be likened to the transfer to the PPP in this case), and the appointment, which conferred, and was intended to confer, gratuitous benefit (which might be likened to the omission in this case). As in Macpherson, so in the present case, the two steps are potentially relevant associated operations. In Macpherson, they were linked as part of the scheme to benefit the son and therefore reliance could not be placed on the section 20(4) exemption. But do the two steps here form a part of and contribute to a scheme which is intended to confer gratuitous benefit? Before moving to consider this, it might be helpful to look in a bit more detail at the circumstances of the Macpherson case. Paragraph 17 of the affidavit of the trust solicitor played an important part in the resolution of the dispute. Lord Jauncey quoted from it, at p 170H, as follows: It further appears from paragraph 17 of the affidavit of the trust solicitor that for reasons which it is not necessary to consider, the trustees: came to the conclusion that they ought not to exercise their power of appointment so as to give Mr David Robarts eldest son Timothy an interest in possession in the settled pictures unless the terms of the 1970 custody agreement were first reviewed and varied, since Mr David Robarts was not willing to continue, after such an appointment, to house the pictures on the terms of the 1970 custody agreement in its original form. This evidence from the trust solicitor was an important part of the Revenues case, as can be seen from what Lord Jauncey said at p 175C: Counsel for the Crown contended that as a matter of law the transaction which had to be looked at in section 20(4) was one which included a series of transactions and associated operations and that as matter of fact the disposition, being the 1977 agreement, was made in such a transaction. Counsel accepted that the terms of paragraph 17 of the affidavit of the trust solicitor were essential to the factual part of this proposition. As I see it, the crux of paragraph 17 of the affidavit was that the power of appointment would not have been exercised unless the 1970 agreement was first varied. The Revenues contention, as set out by Lord Jauncey, was that as [a] matter of fact, the 1977 agreement (by which that desired variation was achieved) was made in a transaction of the series of transactions and associated operations variety. And the terms of paragraph 17 of the affidavit were accepted to be essential to a conclusion that there was, indeed, in fact, a series comprising the 1977 agreement and the appointment. On the facts of the Macpherson case, it can be seen that the two steps in the series were clearly linked by a common intention. The present case is not so straightforward. Here, the FTT found that whatever the intent behind the omission, it was not linked with the transfer to the PPP in Mrs Staveleys mind (see para 32 above). In part this was because her intent in making the transfer was solely to break the connection with Morayford, and in part it was because her decision not to take lifetime benefits predated, and was independent of, the decision to transfer. The Court of Appeal considered the FTT to be mistaken in so finding (see para 46 above). Its conclusion was that, although Mrs Staveley made the transfer out of a desire to sever ties with Morayford, the only reasonable conclusion was that she also intended it to be the means by which the death benefits could be passed to her sons. The appellants challenge to the Court of Appeals approach to Transfer Issue 2 is put, in significant part, upon the basis that it is necessary for each transaction/associated operation to be qualified by an intent to confer gratuitous benefit, a proposition which I would reject for the reasons I have given earlier. But it is also submitted that, in order to reach its conclusion, the Court of Appeal interfered impermissibly with the FTTs findings of fact, failing to abide by the limitations imposed by Edwards v Bairstow [1956] AC 14. Furthermore, the Court of Appeals reasoning is, the appellants say, impossible to reconcile with its acceptance that the FTT was entitled to conclude that the transfer to the PPP was not of itself intended to confer a gratuitous benefit. In the appellants submission, the FTTs finding that the omission was not linked with the transfer should be restored, and it follows that the transfer was not part of a relevant scheme. HMRC respond with two alternative arguments concerning the FTTs findings of fact. First, they say that the appellants miscast what the FTT found. They point to the FTTs finding at para 16 (see para 26 above) about the importance Mrs Staveley attached to her sons benefitting from her estate. They also point out that the FTT found that the decision not to take lifetime benefits was a continuing decision, intended to benefit the sons, made in June 2006 and unchanged until her death. Whilst Mrs Staveley chose a different mechanism for her gift of death benefit to the sons, moving the funds to the PPP, the PPP was nevertheless intended to be the mechanism for the intended gift and, in their submission, linked with the omission as part of a scheme intended to confer gratuitous benefit. Secondly, and in the alternative, HMRC submit that in so far as the FTT ruled out any relevant link between the transfer and the omission, its finding was wrong, as the only rational conclusion was that in making the transfer into the PPP, as well as seeking to exclude her husband, Mrs Staveley intended to facilitate the gift to her sons of the death benefits. I have not found it at all easy to determine how the law should be applied to the facts in relation to Transfer Issue 2. In part this is because, quite exceptionally, the matter has reached this court with the factual matrix still the subject of significant debate. However, it is also because both sides arguments have force. The result seems to me to depend upon the degree to which one isolates Mrs Staveleys investment in the PPP from its context. Let us suppose that Mrs Staveley was taking out the PPP as her first investment in a pension. The investment was made at a time when (as the FTT found) she held a settled intention that, in order to confer a greater financial benefit on her sons, she would not draw lifetime benefits. The nomination of her sons in the Expression of Wish form shows that this was actively in her mind at the time of the transfer to the PPP. The PPP was the vehicle which would generate death benefits to pass on. It could properly be described, in my view, as a means by which the death benefits could be passed to them (see Newey LJ para 103(v), quoted at para 46 above). The second element in achieving that objective was that Mrs Staveley would not draw lifetime benefits. So far, the analysis supports a finding that the investment in the PPP and the omission to draw lifetime benefits were part of a scheme to confer benefit. But the PPP was not a first investment in a pension scheme. The funds were already invested in the section 32 policy, and Mrs Staveleys essential scheme, of not drawing a lifetime pension in order to benefit her sons by leaving them her death benefits, could have been achieved without any change of pension policy. Leaving to one side inheritance tax saving, upon which HMRC have not sought to rely at this stage of the analysis, and also the vexed question of Morayford, there was no need to transfer the funds at all and no benefit in doing so. The circumstances differ materially, therefore, from those in Macpherson. In Macpherson, the two elements under consideration were linked in the scheme by a common intention the trustees would not have made the appointment if the variation had not taken place and the scheme was one intended to confer, and actually conferring, gratuitous benefit on the son by the appointment of the pictures. The variation agreement therefore satisfied Lord Jaunceys requirements that it form a part of and contribute to a scheme which does confer a [gratuitous] benefit (my emphasis) and is intended to confer a gratuitous benefit. In the present case, the transfer to the PPP and the omission to take lifetime benefits were not, in fact, relevantly linked in a scheme. The omission had already been decided upon whilst the funds were in the section 32 policy and the sons could have benefitted from it without any move to the PPP. Moving the funds from one policy to the other (the transfer, focused upon by the Notice) was not a contributory part of the scheme to confer gratuitous benefit on the sons; it was a step taken solely to ensure that Morayford could not benefit, as the FTT were entitled to find on the very unusual evidence in this case. The omission and the transfer were not therefore, in my view, relevantly associated. I would therefore allow the appeal in relation to Transfer Issue 2. Section 3(3) and the omission: discussion It is common ground that Mrs Staveleys estate was diminished by her omission to exercise her right to lifetime benefits under her pension and that her sons received the resulting death benefits some months after her death. The dispute is as to whether it can be said that the value of another persons estate is increased by her omission, within the meaning of section 3(3) (as amended by section 156 of, and paragraph 8 of Schedule 20 to, the Finance Act 2006). The appellants say that it cannot because there is not a sufficient connection between the omission and the increase in value in the sons estates. They argue that for matters to come within section 3(3) the omission has to be the immediate cause of the increase in the value of anothers estate, with there being immediacy both in terms of timing and in terms of cause and effect. They point to various linguistic features of the section, notably the words increased by, and the use of the present tense (the value of a persons estate is diminished, and the value of another persons estate is increased). On their submission, the section will only apply where the omission directly causes the increase, not where it is purely something but for which the increase would not have taken place. They bolster their argument by referring to potential practical problems if section 3(3) applies in circumstances such as the present, given that it was not until six months after Mrs Staveleys death that the scheme administrator exercised the discretion in the sons favour. This shows, they say, that those who have to deliver an IHT account will not know for an indefinite period whether or not the deceaseds omission is to be treated as a disposition for IHT purposes. Consideration of this issue must proceed upon the basis that there was a genuine discretion to be exercised by the scheme administrator here. It was, of course, a discretion which need not have been exercised in the sons favour, there being others included in the class provided by the scheme rules. Notwithstanding this, I would conclude that the provisions of section 3(3) are satisfied and the omission is therefore a deemed disposition. I do not consider there is any mandate to import a temporal requirement into the subsection, requiring an immediate temporal link between the reduction in one estate and the increase in the other. There is a correlation of substance between the reduction and the increase, in that one results from the other, but they need not occur at precisely the same time. The use of the present tense upon which the appellants rely, does not dictate such a requirement. The present tense is used to identify two separate states of affairs which have to exist (is diminished and is increased by) but it does not follow that they have to exist at the same time or, putting it more exactly, one immediately following the other. That is not to say that questions of timing will be irrelevant to a determination of whether the subsection is satisfied. I agree with HMRCs submission that, as with all questions of causation, the evaluation of whether another persons estate is increased by the omission to exercise a right requires consideration of all the facts and circumstances. I turn therefore to look at the wider causation argument, bringing in the scheme administrators discretion. In this case, the omission yielded the death benefits that, in fact, increased the sons estates and I do not see the limited discretion of the scheme administrator as breaking the chain connecting the two events. To say that it did would be to adopt a narrow and legalistic approach to section 3(3) which does not seem to me to be appropriate. Putting it another way, the omission was the operative cause of the increase. As Newey LJ observed (para 109, see para 47 above), it may be that the increase in the sons estates could also be said to be brought about by the exercise of the administrators discretion, but that does not preclude a finding that they were increased by the omission. My view is reinforced by the fact that section 3(3) requires only that another persons estate is increased. It is not concerned with the identity of the other person. The benefits that were generated by Mrs Staveleys omission to draw her lifetime pension were undoubtedly going to increase another persons estate, even if the scheme administrator had not exercised its discretion in favour of the sons, but I would therefore dismiss the appeal in relation to the omission. instead chosen others from the list within the scheme rules. To my mind, this adds weight to an interpretation of the subsection which results in the omission in this case being deemed to be a disposition, and it deals also with the practical problem which the appellants suggested arose. The persons liable for tax might not have been identifiable, but it would have been clear from the date of Mrs Staveleys death that a charge to tax would arise by virtue of the omission. Overall conclusion It follows from the above that, in my view, the Court of Appeal properly found that Mrs Staveleys omission to draw lifetime benefits under the PPP should be treated as a disposition by virtue of section 3(3) IHTA, but that the transfer of funds from the section 32 policy to the PPP, whether taken alone or in the context of the omission, was not a transfer of value because section 10 IHTA applies. LORD HODGE: (dissenting in part) (with whom Lord Sales agrees) I am very grateful to Lady Black for her clear judgment. I agree with her on Transfer Issue 1 and on the question of section 3(3) of the Inheritance Tax Act 1984 (IHTA) and the omission. I have come to a different conclusion on Transfer Issue 2 and set out briefly the reasons for my view. The parties agreed and I accept that the law had been correctly stated by the House of Lords in Inland Revenue Comrs v Macpherson [1989] AC 159 (Macpherson). The case involved the interpretation and application of sections 20(4) and 44 of the Finance Act 1975 (FA 1975), which were substantially identical to sections 10 and 268 of the IHTA. Like Lady Black, I consider that the decision of the House of Lords requires close consideration. Macpherson was concerned with a discretionary settlement which had as its primary objects Mr Robarts and his family. The settled property came to include valuable pictures which were kept in houses owned by Mr Robarts and his wife. In 1970 the trustees of the settlement entered into an agreement with Mr Robarts (the 1970 agreement) whereby he undertook the custody, care and insurance of the pictures and to pay 100 per year for the enjoyment of them. Either side could terminate the agreement on three months notice. On 29 March 1977 the trustees and Mr Robarts entered into a further agreement (the 1977 agreement) to vary the 1970 agreement by reducing his annual payment and limiting his liability in respect of the insurance and loss of the pictures. The right to terminate the agreement on three months notice was removed and replaced with a provision continuing the 1970 agreement (as so amended) in force until 1 April 1991, unless Mr Robarts committed a serious breach of the agreement. On the following day, the trustees executed a deed of appointment appointing the pictures, subject to the agreements, on trusts under which Mr Robarts son, Timothy, took a protected life interest in possession. The trust solicitor gave evidence by affidavit that the trustees had concluded that they ought not to exercise their power of appointment to give Mr Robarts son an interest in possession in the pictures unless the 1970 agreement was first varied, because Mr Robarts was not willing to continue to house the pictures after such an appointment on the terms set out in the 1970 agreement. The 1977 agreement diminished the value of the pictures because it deferred the date at which they could be delivered to the open market. The Inland Revenue Commissioners (IRC) therefore sought to charge capital transfer tax in respect of the 1977 agreement. The disputed question was whether the 1977 agreement was not a transfer of value because it was a disposition which was not made in a transaction intended, to confer any gratuitous benefit on any person. Section 20(4) of the FA 1975, now section 10(1) of the IHTA, therefore occupied centre stage. Counsel for the trustees accepted that the 1977 agreement and the appointment were associated operations within the wide definition in section 44 of the FA 1975 (section 268 of the IHTA) but submitted that the only transaction was the 1977 agreement itself. The appointment was therefore not a relevant associated operation. Counsel for the IRC contended that a disposition could be made in a transaction which (under section 44 of the FA 1975) included a series of transactions and associated operations. The 1977 agreement was made in such a transaction because of the intention of the trustees recorded in the affidavit of the trust solicitor. The House of Lords did not accept the trustees submission. Lord Jauncey of Tullichettle, who gave the leading judgment, rejected the narrow interpretation of section 20(4). He held that the 1977 agreement was a disposition for the purposes of section 20(2) (now section 3(1) of the IHTA 1984) and section 20(4). He stated (p 174D E) that section 20(4) envisaged: two types of situation in which a disposition may not be a transfer of value, namely: (1) where the disposition stood alone and was not intended to confer any gratuitous benefit, and (2) where the disposition was not made in a transaction intended to confer any gratuitous benefit. He continued (p 174F G): In the second case the disposition would form one of a number of events of which the sum constituted the transaction which was relevant to intent. There is nothing in section 20(4) to require that the event, to use a neutral word, which results in the devaluation of the settled property must be looked at in isolation from all other events for the purposes of the subsection. If an individual took steps which devalued his property on Monday with a view to making a gift thereof on Tuesday he would fail to satisfy the requirements of section 20(4) because the act of devaluation and the gift would be considered together. If trustees in the circumstances envisaged in paragraph 6(3) took steps which devalued the settled property with the object of making subsequent distributions thereof why should the two events be considered as independent of one another? Neither law nor logic would suggest that they should. Lord Jauncey acknowledged that, in order to determine whether the 1977 agreement was made in a transaction, within the extended meaning of section 20(4) (ie a series of transactions and any associated operations), it was necessary to consider what were associated operations in section 44. He noted that the definition in that section was extremely wide and was capable of covering a multitude of events affecting the same property which might have little or no apparent connection between them (p 175D). He then set out how a limitation should be imposed on the concept of associated operations for the purpose of determining what constituted a transaction for the purposes of section 20(4). He stated (p 175G 176C): If the extended meaning of transaction is read into the opening words of section 20(4) the wording becomes: A disposition is not a transfer of value if it is shown that it was not intended, and was not made in a transaction including a series of transactions and any associated operations intended, to confer any gratuitous benefit So read it is clear that the intention to confer gratuitous benefit qualifies both transactions and associated operations. If an associated operation is not intended to confer such a benefit it is not relevant for the purpose of the subsection. That is not to say that it must necessarily per se confer a benefit but it must form a part of and contribute to a scheme which does confer such a benefit. In this case it is common ground that the appointment conferred a gratuitous benefit on Timothy. It is clear that the appointment would not have been made if the 1970 agreement had not been varied by that of 1977. It follows that the 1977 agreement was not only effected with reference to the appointment but was a contributory part of the scheme to confer a benefit on Timothy. So viewed there can be no doubt that the 1977 agreement, being the disposition for the purposes of section 20(4), was made in a transaction, consisting of the agreement and the appointment, intended to confer a gratuitous benefit on Timothy. (Emphasis added) Lord Jauncey then dealt with a submission by counsel for the trustees that it would be anomalous if the 1977 agreement were a relevant associated operation because double taxation would occur if the appointment had preceded the 1977 agreement. He rejected that submission for two reasons (p 176D E): first because the 1977 agreement would have contributed nothing to the conferment of the gratuitous benefit which had already been effected by the appointment, and alternatively, because the transaction intended to confer the gratuitous benefit had already been completed before the agreement was in place. In my view, Lord Jauncey limited the type of transaction or series of transactions and associated operations which were relevant for the purpose of section 20(4) (now section 10(1) of the IHTA) by requiring that the disposition in question formed part of and contributed to the transaction (or in his words the scheme) which conferred a gratuitous benefit. In Macpherson the transaction intended to confer a gratuitous benefit was put into effect when the appointment was made on the day following the execution of the 1977 agreement. On the facts of that case (viz the evidence of the trust solicitor which IRCs counsel accepted was critical to their case and to which Lady Black refers in paras 80 and 81 above), that appointment would not have been made unless the 1970 agreement had been varied. In other words, the intended result of the scheme to benefit Timothy (which I will call B) was achieved by the appointment itself but that appointment would not have happened without the prior step (which I will call A) which was the 1977 agreement. But Lord Jauncey did not set up a requirement that the disposition (A) had to be a necessary component of the scheme to achieve the result (B) but merely that A was effected with reference to the appointment and was a contributory part of the scheme to achieve the result B. In Mrs Staveleys case, she had formed an intention, some time before she decided to instruct the transfer, to use her pension pot in the section 32 policy to confer a gratuitous benefit on her sons by omitting to take lifetime benefits. If she did not take such benefits, the trustees on her death would have paid a lump sum to her estate by way of death benefit. The holding of the section 32 policy and the continued omission to take lifetime benefits were thus a transaction (or scheme) to confer gratuitous benefit on her sons. That transaction (or scheme) would not have been completed until she died: until then, her sons had no benefit. In this context the result of the scheme to confer benefit on her sons (B) would be achieved if she retained the section 32 policy and took no benefits (A). Because she did not wish her ex husband to benefit from the return of any surplus in her pension fund to Morayford Ltd, she instructed the transfer of her pension fund to the PPP and nominated her two sons to be considered by the pension scheme administrator as equal recipients of the death benefit. Before and after the transfer, the pension fund was earmarked to confer benefit on her sons. By so acting she created an alternative mechanism by which to give effect to her intention to confer that gratuitous benefit. Mrs Staveley could have prevented Morayford Ltd from benefitting from the surplus in her fund by other means. But she did not do so. The transfer and the nomination in favour of her sons were, on the FTTs findings of fact, made when Mrs Staveley had a continuing intention to confer that benefit on her sons. In other words, by replacing step A (the combination of the holding of section 32 policy and the intention not to take life benefits) with step C (the combination of the transfer to the PPP, the nomination and the same intention) she created an alternative means of achieving the result B. These circumstances clearly differ from the factual circumstances in Macpherson, as the transfer to the PPP was not a necessary step to achieve the result B because of the pre existence of the section 32 policy. Where I find myself in respectful disagreement with Lady Black is that (in para 88 above) she sees as a critical distinction from Macpherson the fact that in this case the sons could have benefitted from [the section 32 policy] without any move to the PPP. That distinction rests on Mrs Staveleys ability to achieve the result B before the transfer, with the result that the transfer was not necessary. It excludes the possibility of the transfer to the PPP being part of a scheme to achieve result B because it was not needed to achieve that result. That is to impose a test of necessity in relation to step C, which Macpherson does not support. In my view, on the facts found by the FTT, the transfer itself was not motivated by the wish to give gratuitous benefit to her sons but it and the nomination were nonetheless referable to and a contributory part of a substituted scheme to enable them to receive the death benefit. That fails to meet the requirements of section 10(1) of the IHTA. I therefore agree with the reasoning of Newey LJ in para 103 of his judgment. I conclude that the Court of Appeal were correct to find an error of law in the FTTs determination on Transfer Issue 2. I would hold that the transfer and nomination taken with the omission were a transfer of value because they do not meet the requirements of section 10 of the IHTA. I would have dismissed the appeal on the section 10 ground also.
UK-Abs
During her marriage, Mrs Staveley and her husband set up a company. She had a pension fund with the companys occupational scheme, and this fund was transferred to another pension scheme (the pension scheme) for her when she and her husband divorced. In December 2006, Mrs Staveley died. Shortly before her death, she transferred funds from the pension scheme into a personal pension plan (PPP). The transfer was motivated by Mrs Staveleys desire to ensure that her ex husband did not benefit from the return to the company of any surplus in the fund. She did not take any pension benefits during her life and, in those circumstances, death benefit was payable under the PPP. Mrs Staveley nominated her two sons as beneficiaries of the death benefit, subject to the discretion of the pension scheme administrator. After her death, the death benefit was paid to them. Her Majestys Revenue and Customs (HMRC) determined that inheritance tax was due on the death benefit, on the basis that both the transfer of funds from the pension scheme into the PPP, and Mrs Staveleys omission to draw any benefits from the plan before her death, were lifetime transfers of value within section 3 of the Inheritance Tax Act 1984 (IHTA). The issue in this appeal is whether HMRC were right to take that view. The appellants are the three executors of Mrs Staveleys estate (her two sons and a solicitor, Mr Parry). They argue that inheritance tax is not payable, either on the transfer of funds into the PPP (the transfer) or on Mrs Staveleys omission to draw pension benefits from the PPP (the omission). The issue has divided the courts below. The First tier Tribunal (Tax Chamber) held that inheritance tax was due on the omission but not the transfer. The Upper Tribunal (Tax and Chancery Chamber) disagreed, finding that no inheritance tax was payable on either transaction. The Court of Appeal held that both the transfer and the omission gave rise to a charge to inheritance tax. By a majority, the Supreme Court partially allows the appeal, holding that the omission gave rise to a charge to inheritance tax, but the transfer did not. Lady Black gives the lead judgment, with which Lord Reed and Lord Kitchin agree. Lord Hodge gives a separate judgment, dissenting in part, with which Lord Sales agrees. Inheritance tax is chargeable on the value transferred by a disposition which is a transfer of value under the IHTA. Section 3(3) IHTA extends the meaning of disposition to include deliberate omissions by which the disponors estate is diminished and the value of another persons estate is increased. Section 10(1) IHTA provides that a disposition that was not intended, and was not made in a transaction intended, to confer any gratuitous benefit on any person is not a transfer of value and so does not give rise to a charge to inheritance tax. Section 10(3) IHTA provides that a transaction for section 10(1) purposes includes a series of transactions and any associated operations [6 13]. In the lead judgment, Lady Black sets out the three issues that arise on the appeal: (1) whether section 10 IHTA applies to the transfer as a disposition viewed on its own, i.e. whether the transfer was not intended to confer any gratuitous benefit on any person (Transfer Issue 1); (2) whether section 10 IHTA applies to the transfer looked at in its wider context, i.e. whether the transfer was not made in a transaction intended to confer any gratuitous benefit on any person (Transfer Issue 2); and (3) whether the terms of section 3(3) are satisfied in respect of the omission, i.e. whether, by her omission to draw pension benefits from the PPP, the value of Mrs Staveleys estate was diminished and the values of her sons estates were increased (Omission Issue) [17 20]. Transfer Issue 1 (transfer on its own) Section 10 IHTA applies where the overall effect of the disposition is not intended by the disponor to confer a gratuitous benefit. In the present case, the transfer had not been motivated by any intention to improve the sons position. Mrs Staveleys sole intention in transferring the funds was to eliminate any risk that any part of the funds might be returned to her ex husband. The mere fact that the sons inheritance was intended to be enjoyed in a different legal form after the transfer did not mean that Mrs Staveley intended to confer a gratuitous benefit her sons. When viewed on its own, section 10 IHTA applied to the transfer [65, 66]. Transfer Issue 2 (transfer and omission as associated operations) The parties accepted that, in omitting to draw lifetime benefits under the PPP, part of Mrs Staveleys intention was to benefit her sons. The question for the Supreme Court was whether this intention coloured the transfer with an intention to confer gratuitous benefit which the transfer would not have on its own. The majority of the Supreme Court did not accept, as the Court of Appeal had found, that the omission and the transfer together formed part of a scheme (a series of transactions and any associated operations) intended to confer a gratuitous benefit. The present case could be distinguished from Inland Revenue Comrs v Macpherson [1989] AC 159, where the House of Lords had found that a series of operations formed part of a such a scheme and so gave rise to tax. In Macpherson, the operations under consideration had been clearly linked by a common intention. In contrast, in the present case, Mrs Staveleys essential scheme had been her omission to draw a lifetime pension in order to benefit her sons by leaving them her death benefits. That could have been achieved without the transfer. Accordingly, the transfer and the omission were not linked by a common intention and did not form part of a single scheme intended confer a gratuitous benefit on any person. Section 10 IHTA therefore applied to the transfer, even when viewed in its wider context. It followed that the transfer did not give rise to a charge to inheritance tax [67, 88]. The Omission Issue The limited discretion of the pension scheme administrator did not break the chain connecting the omission and the payment of the death benefit. The omission was the operative cause of the increase in the sons estates and therefore gave rise to a charge to inheritance tax under section 3(3) IHTA [94]. Lord Hodge would have dismissed the appeal in relation to the transfer and the omission. He agrees with Lady Black on Transfer Issue 1 and the Omission Issue but reaches a different conclusion on Transfer Issue 2. The transfer, when taken with the omission and the nomination of the sons as beneficiaries of the death benefit, formed a contributory part of a scheme to confer a gratuitous benefit. Mrs Staveleys intention to benefit her sons pre dated the transfer and was reflected in her nomination in the PPP. Therefore, he concludes, section 10 does not apply and tax ought to be payable [104, 109].
The issue to which this appeal gives rise is whether the landlord of a block of flats is entitled, without breach of covenant, to grant a licence to a lessee to carry out work which, but for the licence, would breach a covenant in the lease of his or her flat, where the leases of the other flats require the landlord to enforce such covenants at the request and cost of any one of the other lessees. As the Court of Appeal observed, such covenants are common and so the issue is an important one. This particular dispute concerns the leases of the flats in 11 13 Randolph Crescent in Maida Vale. The leases are, in all relevant respects, in substantially the same form and each of them contains an absolute covenant, clause 2.7, which prevents the lessee from cutting into any roofs, walls, ceilings or service media. They also contain a landlords covenant, clause 3.19, requiring it to enforce, at the request and cost of any lessee, certain covenants in the leases held by the other lessees, including any covenant of a similar nature to clause 2.7. It is accepted that such clauses are commonly found in the leases of flats located in apartment blocks. The question is whether the grant by the landlord to a lessee of a licence to carry out an activity falling within clause 2.7 amounts to a breach of clause 3.19 of its agreements with all of the other lessees. The leases 11 13 Randolph Crescent comprises what were originally two mid terrace houses, but it is now a single block separated into nine flats. It formed part of the Church Commissioners Maida Vale estate. In the 1980s the Church Commissioners granted long leases to purchasers of the flats. The term of each of the leases was 125 years from 24 June 1981. Two of the leases (those of flats 11G and 11H) are now held by the respondent, Dr Julia Duval. A third lease (that of flat 13RC) is held by Mrs Martha Winfield. By a transfer dated 17 June 1986 the freehold of the building was transferred to the appellant landlord. The landlord is also the management company. All of the shares in the landlord are owned by the leaseholders of the flats, as the leases themselves require. The lease of each flat demises the internal parts of the flat including all internal non load bearing, non dividing walls; one half (severed vertically) of internal, non load bearing, dividing walls; the internal surfaces of external walls and of load bearing walls; the floor and horizontal structures underneath the floor; the ceiling of the flat, but not the horizontal structures immediately above it; and conduits exclusively serving the flat. But the lease expressly excludes, among other things, the outer and load bearing walls of the building; load bearing or structural columns and beams; the external surfaces of window frames; and any conduits not exclusively serving the flat. The lessees obligations are set out in clause 2. They include covenants to pay the reserved rents and service charges (clause 2.1 and the third schedule); covenants to repair, clean and decorate the demised premises (clauses 2.4 and 2.5); covenants to permit the landlords agents to enter the premises and, among other things, construct any building or erection on any land adjoining or neighbouring the building or the demised premises (clause 2.8); and covenants aimed at securing that the lessees of the flats, and they alone, hold shares in the management company, that is to say the landlord (clause 2.10.4). Clause 2.6 is concerned with alterations, improvements and additions and reads: Not without the previous written consent of the Landlord to erect any structure pipe partition wire or post upon the Demised Premises nor make or suffer to be made any alteration or improvement in or addition to the Demised Premises. This is therefore a covenant which is qualified by reference to the landlords consent. However, by operation of section 19(2) of the Landlord and Tenant Act 1927, such consent is not to be unreasonably withheld. Clause 2.7 is entitled waste and reads: Not to commit or permit or suffer any waste spoil or destruction in or upon the Demised Premises nor cut maim or injure or suffer to be cut maimed or injured any roof wall or ceiling within or enclosing the Demised Premises or any sewers drains pipes radiators ventilators wires and cables therein and not to obstruct but leave accessible at all times all casings or coverings of Conduits serving the Demised Premises and other parts of the Building. In contrast to clause 2.6, this is an absolute covenant. There are two further aspects of it that I must mention at this stage. First, there may be thought to be a degree of overlap between the activities to which it refers and those the subject of clause 2.6. For example, improvements and alterations, which are the subject of clause 2.6, may involve removing and replacing radiators, wiring, cabling and the like, and these are activities which are specifically mentioned in clause 2.7. The common approach of the parties was that clause 2.7 therefore sets boundaries to the activities that fall within clause 2.6. In other words, any activity which falls within the scope of clause 2.7 is necessarily outside the scope of clause 2.6. That is of course one possible interpretation of the relationship between them. But it is not the only one and for reasons to which I will come, it is not one which I favour. Secondly, although not qualified by reference to the landlords consent, it is common ground that, as between the landlord and the lessee, the landlord has the power to license what would otherwise be a breach of this covenant. But, as the Court of Appeal emphasised, it does not follow that by doing so the landlord will not be in breach of a collateral contract as between the landlord and another lessee. Here, and as will become clear, Dr Duval contends that there is such a collateral contract and that by granting such a licence the landlord will be acting in breach of its terms, and in particular clause 3.19. Clause 2.14.2 requires the lessee to pay to the landlord all costs, charges and expenses it incurs on any application by the lessee for any licence or consent in connection with the lease. The fifth schedule to each lease contains various rules and regulations about the use of the property with which the lessee must comply. These include prohibitions on allowing rubbish to accumulate in the flat, playing musical instruments at certain times of day, hanging clothes outside the flat, placing window boxes on external windowsills, and parking cars in any yard, garden or driveway of the building. The landlords covenants are set out in clause 3. They include a covenant that the lessee shall have quiet enjoyment of the demised premises (clause 3.1); a covenant to maintain and keep in good and substantial repair the main structure of the building and all of the conduits and ducts in the building (save for those which exclusively serve any of the demised premises) (clause 3.3); covenants to maintain, cleanse and keep in good and substantial repair the common parts of the building (clause 3.4); and covenants periodically to decorate the building and the common parts (clauses 3.5 and 3.6). Clause 3.19 is of particular importance and reads: every lease of a residential unit in the Building hereafter granted by the Landlord at a premium shall contain regulations to be observed by the tenant thereof in similar terms to those contained in the Fifth Schedule hereto and also covenants of a similar nature to those contained in clauses 2 and 3 of this Lease AND at the request of the Tenant and subject to payment by the Tenant of (and provision beforehand of security for) the costs of the Landlord on a complete indemnity basis to enforce any covenants entered into with the Landlord by a tenant of any residential unit in the Building of a similar nature to those contained in clause 2 of this Lease. The dispute and the judgments below In the spring of 2015, Mrs Winfield approached the landlords managing agents for a licence to carry out proposed works to flat 13RC. These works would involve, among other things, removing a substantial part of a load bearing wall at basement level. It was common ground that they would amount to a breach of clause 2.7 of Mrs Winfields lease if not specifically authorised by the landlord. Progress was made towards the agreement of a licence but, the proposed works having come to the attention of Dr Duval and her husband and they having objected, the licence was refused. However, following presentations by the engineers and architects acting for Mrs Winfield, the landlord reconsidered the matter and, having done so, decided it was minded to grant a licence, subject to Mrs Winfield securing adequate insurance. In December 2015 and then again in February 2016, Dr Duval asked the landlord to secure an undertaking from Mrs Winfield not to act in contravention of clause 2.7 of her lease by cutting or maiming any of the load bearing or structural walls within flat 13RC. On both occasions, Dr Duval said that the landlord would be indemnified if legal action became necessary. On 12 May 2016 Dr Duval began these proceedings by issuing a claim form against the landlord seeking, among other things, a declaration that the landlord did not possess the power to permit Mrs Winfield to act in breach of clause 2.7 of her lease. The proceedings came on for trial before Deputy District Judge Chambers who held that, on the proper interpretation of clause 3.19 of the lease, the landlord had no power to waive any of the covenants in clause 2 without the prior consent of all of the lessees of the flats in the building, and made declarations and orders to that effect. An appeal by the landlord was allowed by Judge Parfitt, sitting in the Central London County Court, by order dated 27 July 2017. In broad terms he held that the landlord had the power to license works that would otherwise amount to a breach of clause 2.7 of the lease; that if such works were licensed they would not amount to a breach of covenant; and that, once licensed, such works could not be the subject of enforcement action pursuant to clause 3.19. A further appeal by Dr Duval to the Court of Appeal was allowed for the reasons set out by that court in its judgment handed down on 18 October 2018 ([2018] EWCA Civ 2298; [2019] Ch 357). Lewison LJ, with whom Newey LJ and Sir Stephen Richards agreed, explained that the landlord had made two promises in clause 3.19. The first was a promise that every lease of a residential unit in the building granted at a premium would contain covenants similar to those in clauses 2 and 3, so including covenants similar to those in clauses 2.7 and 3.19. The second was a promise to enforce the covenants at the request and expense of a lessee. This was a contingent obligation, the relevant contingency being the lessees request and the provision of security. If the contingency arose then the landlords obligation was triggered. Lewison LJ proceeded on the assumption that the contingency had not arisen on the facts in the present case and we must do the same. Lewison LJ then answered the question of principle set out at para 1 above in the negative. He held that if the landlord were to grant to a lessee such as Mrs Winfield a licence to do something that would otherwise be a breach of any of the absolute covenants in clause 2.7 of her lease, it would be committing a breach of its agreement with the lessee of each other flat in the building who enjoyed the benefit of clause 3.19. This was, he thought, implicit in clause 3.19, and it would be the case not only where, at the date of the licence, the other lessee had already made the request and provided the necessary security called for by clause 3.19, but also where the obligation under that clause remained contingent. The Court of Appeal therefore made a declaration to the effect that the waiver by the landlord of a breach of the covenant in clause 2.7 by a lessee or the grant of a licence to commit what would otherwise be a breach of that covenant would amount to a breach of clause 3.19 of the leases held by all of the other lessees in the building. This appeal On this further appeal the landlord contends that, although the Court of Appeal identified the right question, it failed to answer it correctly. In particular, the Court of Appeal failed properly to construe the terms of the leases in their context; failed properly to analyse whether the term it implied satisfied the relevant test for the implication of terms; and ended up with a commercially unworkable scheme, which was not that which was contemplated by the parties to the leases when they were granted, and which is a recipe for chaos and conflict in multi tenanted buildings. Dr Duval responds that the Court of Appeal arrived at the right conclusion. Her primary case is that clause 3.19, on its proper construction, precludes the landlord from granting a licence to any lessee to do anything that would otherwise amount to a breach of an absolute covenant in that lessees lease, including clause 2.7. Her secondary case is that it is implicit in each lease that the landlord will not put it out of its power to comply with a request under clause 3.19. She submits that upon its proper interpretation or by way of implication clause 3.19 obliges the landlord to enforce all of the covenants to which it refers and provides a mechanism whereby a lessee can compel the landlord to take legal action if necessary. By contrast, she continues, the interpretation contended for by Mrs Winfield would remove any meaningful distinction between clauses 2.6 and 2.7 and would allow the landlord to put it out of its power to perform its obligations to other lessees under clause 3.19 of each of their leases. The parties therefore disagree fundamentally about the proper interpretation of the terms in the leases which Dr Duval and Mrs Winfield hold. Accordingly, the starting point must be to construe those terms in context, that is to say to ascertain the meaning which they would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties to each lease in the situation in which they were when the terms of those leases were agreed. Once the process of construing the express words is complete, the issue of an implied term falls to be considered. The rationale for this two stage approach was explained by Lord Neuberger of Abbotsbury in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742, paras 27 and 28: until one has worked out what the parties have expressly agreed, it is difficult to see how one can decide whether a term should be implied into a contract and, if so, what it is. The background There are in my view certain aspects of the background which are highly relevant to the exercise of interpretation which must be carried out. The first is that each lease is a long term contract, having a term of 125 years from 24 June 1981, and was acquired for a substantial premium. The parties to each lease would therefore have been well aware that, from the time of its grant, it was a readily marketable and extremely valuable asset. They would also have understood that it would be in the interests of each lessee to maintain his or her flat so as to retain and perhaps enhance that value. Secondly and importantly, the parties would have appreciated that over the lifetime of the lease it would inevitably be necessary for works to be carried out to each of the flats. Those works would include the routine repair and replacement of the plumbing, drainage, wiring and heating systems of each flat as necessary or thought desirable from time to time. They would also have been well aware that the lessees might at any time wish to modernise their flats or refurbish them to reflect changing tastes and fashions; or to incorporate technological developments and improvements relating to, for example, the supply of services such as water, gas and electricity, the provision of heating, or the transmission and reception of data for telecommunications, the internet or television. Thirdly, the parties would have understood that routine improvements and modifications of this kind would be unlikely to impinge on the other lessees or affect adversely the wider structure or fabric of the building and that it would be entirely sensible for the landlord to be in a position, where appropriate, to give permission to the lessees from time to time to allow such works to take place. Fourthly, the parties must have appreciated the desirability of the landlord retaining, in the interests of all of the lessees, not just the reversionary interest in the flats but also the rights in possession of the common parts of the building such as the stairwells, lobbies, corridors and the outer and load bearing walls; and similarly, the important and active role the landlord would play in managing the building and fulfilling its obligations under the covenants to which I have referred in para 14 above. Clauses 2.6 and 2.7 interpretation Against this background I come to clauses 2.6 and 2.7. As I have mentioned, it was the common approach of the parties (and the Court of Appeal apparently accepted) that clause 2.7 sets the boundaries of clause 2.6. To take an example, a routine rewiring of one room in a flat would necessarily involve cutting a wire and a wall. On the parties interpretation, an activity such as this would fall within the scope of clause 2.7 and so would necessarily be outside the scope of clause 2.6. Indeed, it is difficult to think of any alteration or improvement within the apparent scope of clause 2.6 which would not involve some cutting of a wall, pipe or wire. It seems to me to be most unlikely that the parties intended that routine works of this kind should fall within the scope of clause 2.7 and so outside the scope of clause 2.6 with the consequence that the landlord could, however unreasonably, withhold its consent. It is much more likely, in my opinion, that the parties intended the two provisions to be read together in the context of the lease and the leasehold scheme for the building as a whole. On that approach it becomes clear that the two clauses are directed at different kinds of activity. Clause 2.6 is concerned with routine improvements and alterations by a lessee to his or her flat, these being activities that all lessees would expect to be able to carry out, subject to the approval of the landlord. By contrast, clause 2.7 is directed at activities in the nature of waste, spoil or destruction which go beyond routine alterations and improvements and are intrinsically such that they may be damaging to or destructive of the building. It seems to me that this concept of waste, spoil or destruction should also be treated as qualifying the covenants not to cut, maim or injure referred to in the rest of the clause. In my opinion and in the context of this clause these words do not extend to cutting which is not itself destructive and is no more than incidental to works of normal alteration or improvement, such as are contemplated under clause 2.6. Support for this view may be found in F W Woolworth and Co Ltd v Lambert [1937] Ch 37. There the Court of Appeal considered the proper interpretation of two covenants in the lease of a shop, one being a covenant by the lessee not to make any alterations to the demised premises without the consent of the landlord and the other being an absolute covenant by the lessee not to commit any waste, spoil or destruction on the demised premises or any part of it. The court construed the absolute covenant in such a way as not to conflict with the qualified covenant. As Romer LJ explained at p 60, it was necessary to exclude from the operation of the absolute covenant anything which fell within the qualified covenant, not the other way around. It must also be remembered that the landlord is subject to other restrictions on its ability to license a lessee to make alterations to his or her flat and in my opinion this provides further support for the interpretation of clauses 2.6 and 2.7 which I would hold to be correct. First, each lessee enjoys the benefit of a covenant for quiet enjoyment, that is to say a covenant that the lessees possession of his or her own flat will not be substantially interfered with by the landlord or anyone claiming under the landlord. This protects the right of all of the lessees to use their flats in ordinary and lawful ways. So, for example, regular excessive noise generated by one lessee may constitute a substantial interference with the ordinary enjoyment of the premises of another lessee: Southwark London Borough Council v Mills [2001] 1 AC 1, per Lord Hoffmann at pp 10A 11C; per Lord Millett at p 23B D. Secondly, the landlord must not derogate from its grant. As Lord Millett explained in Southwark v Mills at p 23F, the principle underpinning this obligation and the covenant of quiet enjoyment is much the same: a man may not give with one hand and take away with the other. In order to determine whether a specific act or omission on the part of the landlord constitutes a derogation from grant, it is obviously necessary to establish the extent of the grant. Here the first schedule of Dr Duvals leases contain, for example, rights of way and passage to and from the demised premises (para 2); the free passage and running of water, soil, gas, electricity and other services in and through the conduits that pass through the building (para 4); and the right to adjacent and lateral support and to shelter and protection from adjoining premises (para 5). Were the landlord to permit a neighbouring lessee to cut into a load bearing wall in such a way as to remove or substantially interfere with the support it offered to either of Dr Duvals flats, it would, in my opinion, constitute a clear derogation from her grant. Thirdly, each of the lessees is entitled to be protected against nuisance, that is to say, in this context, the doing of something to or in a neighbouring or nearby flat which constitutes an unreasonable interference with the utility of his or her own flat. The primary defendant in such a case is the lessee who causes the nuisance by doing the act in question, but the landlord will be liable if it has authorised the lessee to commit that nuisance: Southwark v Mills at p 15D F per Lord Hoffmann, pp 21H 22B per Lord Millett. Finally, the landlord has covenanted with the lessee in the terms of clause 3 of the lease. I have referred to this clause earlier in this judgment. Of particular importance here are the covenants to maintain and keep in good and substantial repair the structure of the building including the foundations, main walls, roofs, doors and window frames and conduits (clause 3.3); to maintain, cleanse and keep in good and substantial repair the common parts of the building (clause 3.4); to decorate the outside of the building and inner common parts (clauses 3.5 and 3.6); and to keep the common parts clean and properly lit (clause 3.7). Clause 3.19 interpretation As the Court of Appeal observed, clause 3.19 has two parts. The first is a promise by the landlord that every lease of a flat in the building granted by the landlord at a premium from that point in time will contain covenants of a similar nature to those contained in clauses 2 and 3 of the lease. The Court of Appeal emphasised and I agree that a covenant is a legally binding obligation and so the landlord promised that each lease granted thereafter would contain similar legally binding obligations on the lessee. The landlord also promised that each lease would contain a covenant similar to clause 3.19; that is to say a promise by the landlord that it would enforce covenants of a similar nature to those contained in clause 2, provided the relevant conditions were satisfied. The second part of clause 3.19 is a promise by the landlord that it will, at the request of a lessee and subject to the provision of the required security and the promise to pay the landlords costs on an indemnity basis, enforce any covenant entered into by another lessee which is of a similar nature to any of the covenants contained in clause 2 of the lease of the complainant lessee. The landlord points out that clause 3.19 does not say that the covenants in each lease must be the same; it says they must be of a similar nature. This, says the landlord, accommodates the possibility that it has, on occasion and at the request of one of the lessees, agreed to a limited departure from the terms of clause 2.7. Turning to the second part of clause 3.19, the landlord emphasises that this is conditional. The objecting lessee must make a request and agree to pay the costs of the landlord on an indemnity basis and provide appropriate security. What the landlord has to do, once those conditions have been satisfied, is to enforce similar covenants in the lease of the lessee who proposes to carry out or is carrying out the work the subject of the objection. However, the landlord continues, clause 3.19 only allows a valid request for enforcement to be made so long as it remains legally possible for the landlord to take legal action. The parties cannot have contemplated the landlord could be obliged to take action against a lessee who would have a complete defence to that action, for example because the landlord had authorised the activity complained of in advance. The landlord also contends that, if a lessee applies for a licence to do what would, without the licence, be a breach of covenant, the lessee does not, simply by making that request, commit or threaten to commit a breach in respect of which the landlord can take enforcement action, and so there is no basis for another lessee to make a clause 3.19 request. If, on the other hand, there is a breach or threatened breach in relation to which a landlord can take legal action, and another lessee satisfies the various conditions to which I have referred, the landlord cannot then unilaterally waive the breach or authorise the threatened breach. At that stage the landlord is made subject to the control of the objecting lessee, who has accepted the risk of proceedings. Dr Duval responds and the Court of Appeal accepted that clause 3.19 provides a mechanism whereby every lessee knows that, if one lessee carries out or threatens to carry out an act in breach of a covenant by which it has agreed to be bound then any of the other lessees can require the landlord to take action to enforce that covenant. This, says Dr Duval, is important because, in contrast to a letting scheme where a buildings lessees are given rights inter se so that each may enforce the covenants in each of the leases against each other, enforcement of the covenants of the leases of the units in this block can only take place by the landlord. Further, Dr Duval continues, the inclusion of clause 3.19 in each lease provides a practical way of ensuring that all lessees know the principles and rules upon which the building will be operated and occupied. Dr Duval accepts that, absent clause 3.19, the landlord and lessee would be free to agree a waiver of an absolute covenant or a licence to carry out a piece of work that would otherwise amount to a breach of its terms, but contends that in this case and as a result of the inclusion of clause 3.19 in each of the leases, any such waiver is precluded unless all of the other lessees agree to waive their rights. Put another way, by undertaking to enforce the covenants of the lease, the landlord has undertaken not to do the opposite, namely to license breaches of covenant. She argues that, were it otherwise, clause 3.19 would be ineffective. In my opinion Dr Duval is right to say that, in the first part of clause 3.19, the landlord made a promise that every lease of a residential unit in the building granted by the landlord at a premium would contain covenants similar to those in clauses 2 and 3. In other words, each lessee knew that every other lessee would be bound by similar covenants to those contained in clauses 2.6 and 2.7, and further, that each lease would contain a covenant similar to clause 3.19, that is to say a covenant by the landlord to enforce the covenants in the lease of every other lessee upon request and the provision of security for the landlords costs. As Lewison LJ put it at para 16 of his judgment: From the perspective of a lessee who is paying a premium for the grant of a long lease, the combination of these two promises would be taken to mean that the lessee could be sure that upon request (and the provision of security) the landlord would enforce the covenants by which each lessee had agreed to be bound. Those covenants would be in the form in which they appear in the leases as granted; and would have the practical effect that their appearance in that form was designed to have. That brings me to the critical question, namely whether the landlord can license, at the request of a lessee, structural work which falls within the scope of clause 2.7 and which, absent a licence from the landlord, would amount to a breach of that clause. I agree that clause 3.19 does not say expressly that the landlord cannot give a lessee permission to carry out structural work falling within the scope of clause 2.7, so it must now be considered whether this is nevertheless implicit in clause 3.19. Implied term It is well established that a party who undertakes a contingent or conditional obligation may, depending upon the circumstances, be under a further obligation not to prevent the contingency from occurring; or from putting it out of his power to discharge the obligation if and when the contingency arises. The principle was explained in these terms by Lord Alverstone CJ in Ogdens v Nelson [1903] 2 KB 287, 296: It is, I think, clearly established as a general proposition that where two persons have entered into a contract, the performance of which on one or both sides is to extend over a period of time, each contracting party is bound to abstain from doing anything which will prevent him from fulfilling the obligations which he has undertaken to discharge; further, that, where a person has undertaken to carry on a business, out of the profits of which he has undertaken to pay certain moneys as a consideration for the contract to the other party to the contract, he must not by his own act or default disable and incapacitate himself from further carrying on such business. The principle is well illustrated by cases involving breaches of contracts to marry. In Short v Stone (1846) 8 QB 358 the defendant agreed to marry the claimant within a reasonable time after request. He broke that agreement by marrying somebody else before the request had been made, and in that way put it out of his power to comply with the request, if it were made. In Caines v Smith (1847) 15 M & W 189 the defendant acted in breach of his promise to marry the claimant by marrying another woman, and it was no answer that the claimant had not asked the defendant to fulfil his promise before issuing proceedings. characterised the principle as: In Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701, 717 Lord Atkin a positive rule of the law of contract that conduct of either promiser or promisee which can be said to amount to himself of his own motion bringing about the impossibility of performance is in itself a breach. If A promises to marry B and before performance of that contract marries C, A is not sued for breach of an implied contract not to marry anyone else, but for breach of his contract to marry B. Founding herself on these authorities, Dr Duval sought to characterise as a rule of law the proposition that, where two persons have entered into a contract, the performance of which on both sides is to extend over a period of time, each contracting party is bound to abstain from doing anything which will prevent him from fulfilling the obligations he has undertaken to discharge; and similarly, the proposition that, where one party has undertaken a contingent obligation, he will do nothing to prevent the contingency occurring, or from putting it out of his power to comply with the obligation when the contingency arises. In my view, however, propositions such as these are, at least in general, more properly regarded as implied terms because, where appropriate, they involve the interpolation of terms to deal with matters for which the parties themselves have made no express provision. Thus, for example, in Stirling v Maitland (1864) 5 B & S 840, 852, 122 ER 1043, 1047, Cockburn CJ said: I look on the law to be that, if a party enters into an arrangement which can only take effect by the continuance of a certain existing state of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances, under which alone the arrangement can be operative. As we have seen, in Southern Foundries v Shirlaw, Lord Atkin characterised this principle as a rule of law. But Viscount Maugham (at pp 712 713) adopted an implied term approach. He explained that it was not a rigid rule but one capable of qualification in any particular case; and, in the particular circumstances of that case, the implication should be taken to extend only to direct acts of a party and not to the indirect and unforeseen consequences which might follow from acts which, on the face of them, did not necessarily or even probably alter the state of circumstances under which alone the arrangement could be operative. So too Lord Romer (at pp 730 731), Lord Wright (at p 723) and Lord Porter (at pp 741 742) preferred an implied term analysis. Similarly, in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 the parties agreed that if a party introduced by the respondent should buy two cinemas for a sum in excess of a certain figure, the appellants would pay him a commission on the completion of the sale. The respondent alleged that he was entitled to his commission because he had introduced persons who were ready and willing to purchase the cinemas on the terms on which the appellants were willing to sell, even though no such sale took place. In the particular circumstances of that case the House of Lords held there was no room in the contract for an implied term that the appellants would not dispose of the cinemas themselves in a way which would prevent the respondent from earning his commission. The correct approach to the implication of terms was recently stated by Lord Neuberger, with whom Lord Sumption, Lord Hodge and Lord Clarke agreed, in Marks and Spencer plc v BNP Paribas, paras 14 32. It is sufficient for present purposes to note first, that the express terms of the contract must be construed before one can consider any question of implication; secondly, that the term to be implied must be necessary to give business efficacy to the contract or so obvious that it goes without saying; and thirdly, that the term to be implied must be capable of clear expression. A way of assessing whether a term is necessary to give business efficacy to a contract is to consider whether, without the term, the contract would lack commercial or practical coherence. In this case Lewison LJ identified, at para 27 of his judgment, the term that Dr Duval argues is implicit in her lease as a promise by the landlord not to put it out of its power to enforce clause 2.7 in the leases of other lessees by licensing what would otherwise be a breach of it. I agree with Lewison LJ that this is, in substance, the term that Dr Duval seeks to imply and, in my view and for the reasons I will now explain, he was also right to find that such a term must be implied in her lease. The purpose of the covenants in clauses 2 and 3.19 is primarily to provide protection to all of the lessees of the flats in the building. Each of those lessees would have known that every other lessee was and would continue to be subject to the same or similar obligations and, in particular, to the qualified covenant in clause 2.6 and the absolute covenant in clause 2.7. Each lessee would also have known that, under clause 3.19, the landlord would, upon satisfaction of the necessary conditions, enforce those obligations. Clause 3.19 would therefore have been understood by every lessee to perform an important protective function. What is more and as the landlord accepts, the first obligation in clause 3.19 is a continuing one with the consequence that the landlord is required to keep in place in every lease covenants of a similar nature to those in clause 2, including clauses 2.6 and 2.7. If a lessee threatens to carry out or has carried out an activity in breach of clauses 2.6 or 2.7 then, at the request of another lessee and on the provision of security, the landlord is obliged by the second part of clause 3.19 to take enforcement action. In my view it necessarily follows that the landlord will not put it out of its power to enforce clause 2.7 in the lease of the offending lessee by licensing the activity that would otherwise be a breach of that clause. The clause is an absolute covenant and, under clause 3.19, the complainant lessee is entitled, on provision of security, to require the landlord to enforce it as an absolute covenant. As Lewison LJ said at para 27 of his judgment, it would not give practical content to the obligation if the landlord had the right to vary or modify the absolute covenant or to authorise what would otherwise be a breach of it. As I have mentioned, the landlord has abandoned on this further appeal a submission it made to the Court of Appeal that it could authorise a breach by a lessee of clause 2.7 at any time. It now only argues that it can authorise such a breach up to the moment that an objecting lessee has asked it to take enforcement action and provided the necessary security. It also contends that clause 3.19 allows a valid request for enforcement to be made for so long as it remains legally possible for it to take legal action and not thereafter. The parties cannot have contemplated that the landlord would be obliged to take action against another lessee who would have a complete defence. I cannot accept these submissions. I recognise that if a landlord waives its right to complain of an activity by a lessee in breach of clause 2.7 it cannot subsequently bring a claim against that lessee for breach of the covenant. But that does not mean to say that the landlord has not acted in breach of its obligation under clause 3.19 to another lessee. In my view it would be uncommercial and incoherent to say, as the landlord does, that clause 3.19 can be deprived of practical effect if it manages to give a lessee consent to carry out work in breach of clause 2.7 before another lessee makes an enforcement request and provides the necessary security. The parties cannot have intended that a valuable right in the objecting lessees lease could be defeated depending upon who manages to act first, the landlord or that lessee. The landlord also argues that, over the lifetime of the leases, it was inevitable that each lessee would wish from time to time to carry out repairs, renovations or improvements falling within the scope of clause 2.7. Those works might not impinge in any way on neighbouring flats; or on the landlords retained interest in possession of the load bearing walls, the structural columns and beams, the external surfaces of the building and the common parts such as the stairwells, lobbies and corridors. The parties to the original leases must also have appreciated the obvious desirability of allowing the landlord, after proper consideration of the proposals, to grant a consent for works of that kind to be carried out. Yet, the landlord continues, on the interpretation contended for by Dr Duval, it would be precluded from licensing any such works unless each and every other lessee has expressly consented to them. It would also deprive the landlord of the opportunity to control the activities of a lessee which might impinge upon its own interests in possession in the building, and would place that power in the hands of all of the other lessees. Further and importantly, says the landlord, it would confer on each of those other lessees the power to veto repairs, renovations or improvements, however capricious or unreasonable his or her intentions in doing so might be. Moreover, in a large block of flats the landlord might struggle to obtain a response from all of the other lessees, so frustrating its ability to consent to the works without leaving itself open to a claim for breach of the terms of the other leases. The flaw in this submission, as it seems to me, is that it is founded upon a misapprehension of the scope of clauses 2.6 and 2.7. I do not accept that clause 2.7 extends to the kind of routine repairs, renovations and alterations which the landlord describes. Those alterations fall within the scope of clause 2.6 and so the landlord can give its permission for them to be carried out. By contrast, clause 2.7 is directed to more fundamental works which go beyond routine alterations and improvements and are intrinsically such that they may be damaging to or destructive of the building. These are the kinds of work which it is entirely reasonable to suppose should not be carried out without the consent of all of the other lessees. The present case provides a good example. The work that Mrs Winfield wished to carry out would have involved, among other things, cutting into and removing a substantial portion of a load bearing wall at basement level and excluded from the demise of her flat. In my view the parties were right to agree that this work would fall within the scope of clause 2.7 and it seems to me to be entirely appropriate that works of this kind should require the consent of the other lessees, including Dr Duval. Conclusion For all of these reasons, I would dismiss this appeal.
UK-Abs
11 13 Randolph Crescent is a block of nine flats in Maida Vale, London. Two of the leases are held by the respondent, Dr Julia Duval, and a third lease is held by Mrs Martha Winfield. The term of each lease is 125 years from 24 June 1981. The appellant landlord owns the freehold of the building and is also the management company. All of the shares in the landlord company are owned by the leaseholders of the flats. The leases are, in all relevant respects, in substantially the same form. Each of them contains a covenant, clause 2.6, which prevents the lessee from making any alteration or improvement in, or addition to, the premises demised by the lease without the prior written consent of the landlord. By the operation of a statutory provision, that consent cannot be unreasonably withheld. Each lease also contains an absolute covenant, clause 2.7, which prevents the lessee from cutting into any roofs, walls, ceilings or service media. In addition, clause 3.19 of each lease requires the landlord to enforce, at the request and cost of any lessee, certain covenants in the leases held by the other lessees, including any covenant of a similar nature to clause 2.7. In 2015, Mrs Winfield sought a licence from the landlord to carry out works to her flat. The proposed works involved removing a substantial part of a load bearing wall at basement level. The licence was refused after the proposal came to the attention of Dr Duval and her husband. However, following presentations by engineers and architects acting for Mrs Winfield, the landlord decided it was minded to grant a licence, subject to Mrs Winfield securing adequate insurance. Dr Duval then issued proceedings against the landlord, seeking a declaration that the landlord did not possess the power to permit Mrs Winfield to act in breach of clause 2.7 of her lease. Deputy District Judge Chambers held that, on the proper interpretation of clause 3.19, the landlord had no power to waive any of the covenants in clause 2 without the prior consent of all of the lessees of the flats in the building. An appeal by the landlord was allowed by the Central London County Court. Dr Duval then appealed, successfully, to the Court of Appeal. The landlord now appeals to the Supreme Court. The Supreme Court unanimously dismisses the appeal. Lord Kitchin gives the sole judgment, with which Lady Hale, Lord Carnwath, Lady Black and Lord Sales agree. The starting point is to construe the terms of the leases in context [25]. There are certain aspects of the background which are highly relevant. First, each lease is a long term contract and was acquired for a substantial premium [27]. Secondly and importantly, the parties would have appreciated that over the lifetime of the lease it would inevitably be necessary for works to be carried out to each flat [28]. Thirdly, the parties would have understood that routine improvements and modifications would be unlikely to impinge on the other lessees, or affect adversely the wider structure or fabric of the building, and that it would be entirely sensible for the landlord to be in a position to permit such works from time to time [29]. Fourthly, the parties must have appreciated the desirability of the landlord retaining not just the reversionary interest in the flats but also the rights in possession of the common parts of the building. Similarly, the parties must have appreciated the important and active role the landlord would play in managing the building and fulfilling its obligations under each lease [30]. Clauses 2.6 and 2.7 are directed at different kinds of activity. Clause 2.6 is concerned with routine improvements and alterations by a lessee to his or her flat, these being activities that all lessees would expect to be able to carry out, subject to the approval of the landlord. By contrast, clause 2.7 is directed at activities in the nature of waste, spoil or destruction which go beyond routine alterations and improvements and are intrinsically such that they may be damaging to or destructive of the building. This concept of waste, spoil or destruction should also be treated as qualifying the covenants not to cut, maim or injure referred to in the rest of the clause. In the context of this clause these words do not extend to cutting which is not itself destructive and is no more than incidental to works of normal alteration or improvement, such as are contemplated under clause 2.6. This interpretation is supported by F W Woolworth and Co Ltd v Lambert [1937] 1 Ch 37 [32]. It must also be remembered that the landlord is subject to other restrictions on its ability to license alterations to a lessees flat. First, each lessee enjoys the benefit of a covenant for quiet enjoyment [33]. Secondly, the landlord must not derogate from its grant [34]. Thirdly, each of the lessees is entitled to be protected against nuisance [35]. Finally, the landlord has covenanted with the lessee in the terms of clause 3 of the lease, which includes, for example, a covenant to maintain the structure of the building [36]. The critical question is whether the landlord can license structural work which falls within the scope of clause 2.7 and which would otherwise be a breach of that clause. Clause 3.19 does not say expressly that the landlord cannot give a lessee permission to carry out such work, so it must be considered whether this is nevertheless implicit in clause 3.19 [43]. It is well established that a party who undertakes a contingent or conditional obligation may, depending upon the circumstances, be under a further obligation not to prevent the contingency from occurring or from putting it out of his power to discharge the obligation if and when the contingency arises [44]. The principle is well illustrated by cases involving breaches of contracts to marry, and implied terms can arise from it [45 50]. There is an implied term in Dr Duvals lease: a promise by the landlord not to put it out of its power to enforce clause 2.7 in the leases of other lessees by licensing what would otherwise be a breach of it [52]. That necessarily follows from a consideration of the purpose of the covenants in clauses 2 and 3.19 and the content of the obligations in clause 3.19. Clause 2.7 is an absolute covenant and, under clause 3.19, the complainant lessee is entitled, on provision of security, to require the landlord to enforce it as an absolute covenant. It would not give practical content to the obligation if the landlord had the right to vary or modify the absolute covenant or to authorise what would otherwise be a breach of it [53 55]. Further, it would be uncommercial and incoherent to say that clause 3.19 can be deprived of practical effect if the landlord manages to give a lessee consent to carry out work in breach of clause 2.7 before another lessee makes an enforcement request and provides the necessary security. The parties cannot have intended that a valuable right in the objecting lessees lease could be defeated depending upon who manages to act first, the landlord or that lessee [57]. Clause 2.7 is directed at works which go beyond routine alterations and improvements and are intrinsically such that they may be damaging to or destructive of the building. It is entirely appropriate that works of the kind Mrs Winfield wished to carry out should require the consent of the other lessees, including Dr Duval [59].
This appeal is primarily concerned with the circumstances in which an employer is vicariously liable for the conduct of its employees, and provides the court with an opportunity to address the misunderstandings which have arisen since its decision in the case of Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11; [2016] AC 677. It also raises an important question about the Data Protection Act 1998 (the DPA). The facts The appellant, Morrisons, is a company which operates a chain of supermarkets. The respondents are 9,263 of its employees or former employees. I shall refer to them as the claimants. Personal information about them was published on the Internet by another of Morrisons employees, Mr Andrew Skelton. At the material time, Skelton was a senior auditor in Morrisons internal audit team. In July 2013 he was subject to disciplinary proceedings for minor misconduct and was given a verbal warning. Following those proceedings, he harboured an irrational grudge against Morrisons, which led him to make the disclosures in question. Morrisons accounts are subject to an annual external audit. In preparation for the audit, on 1 November 2013 the auditors, KPMG, requested payroll data from Morrisons in order to test their accuracy. The head of Morrisons internal audit team delegated the task of collating and transmitting the data to Skelton. He had also performed that task in 2012. To enable him to carry out the task, he was given access to the payroll data relating to the whole of Morrisons workforce: around 126,000 employees. These consisted of the name, address, gender, date of birth, phone numbers, national insurance number, bank sorting code, bank account number and salary of each member of staff. On 9 October 2013 Skelton had searched, using his work computer, for Tor, a software which is capable of disguising the identity of a computer which has accessed the Internet. On 7 November he made an internal request for the payroll data. On 14 November he obtained a pay as you go mobile phone, which could not be traced back to him. On 15 November 2013 the payroll data was provided to Skelton so that he could carry out his task. On a date between then and 21 November, he transmitted the data to KPMG as he had been instructed to do. On 18 November, he surreptitiously copied the data from his work laptop on to a personal USB stick. On 8 December he used the username and date of birth of a fellow employee, Mr Andrew Kenyon, to create a false email account, in a deliberate attempt to frame him. Mr Kenyon had been involved in the disciplinary proceedings earlier that year. The email account was linked to the pay as you go phone. He then deleted the data from his work laptop. On 12 January 2014 Skelton uploaded a file containing the data of 98,998 of the employees to a publicly accessible file sharing website, with links to the data posted on other websites (the disclosure). The file was created from the personal copy of the data which he had made on his USB stick on 18 November. He made the disclosure when he was at home, using the mobile phone, the false email account and Tor. Having made the disclosure, he deactivated the email account, and on 12 March deleted the data and the file from the USB stick. On 13 March 2014, the day on which Morrisons financial results were due to be announced, Skelton sent CDs containing the file anonymously to three UK newspapers. He purported to be a concerned member of the public who had found the file on the file sharing website. The newspapers did not publish the data. Instead, one of them alerted Morrisons. Within a few hours, Morrisons had taken steps to ensure that the data was removed from the Internet, instigated internal investigations, and informed the police. It also informed its employees and undertook measures to protect their identities. Skelton was arrested a few days later. He was subsequently convicted of a number of offences and sentenced to eight years imprisonment. It was noted that Morrisons had spent more than 2.26m in dealing with the immediate aftermath of the disclosure. A significant element of that sum was spent on identity protection measures for its employees. The proceedings below The claimants brought proceedings against Morrisons for its own alleged breach of the statutory duty created by section 4(4) of the DPA, misuse of private information, and breach of confidence. The claims are also brought on the basis that Morrisons is vicariously liable for Skeltons conduct. The particulars of claim do not specify the respects in which that conduct is alleged to have been wrongful on his part, but the claimants argument before the judge was that vicarious liability arose under the same three heads: breach of the DPA, misuse of private information and breach of confidence. The claims are for damages in respect of alleged distress, anxiety, upset and damage. The High Court made a group litigation order in connection with the claims. Ten lead claimants were selected, with the remainder of the claims being stayed pending judgment. The claimants solicitors have provided details of the circumstances of each of the lead claimants, so far as considered relevant to the quantification of damages. These describe how the disclosure caused the claimants to experience feelings of anxiety and anger. The trial of liability was separated from the trial of quantum, which has not yet taken place. The trial judge, Langstaff J, rejected the contention that Morrisons was under a primary liability in any of the respects alleged, but held that it was vicariously liable for Skeltons breach of statutory duty under the DPA, his misuse of private information, and his breach of his duty of confidence: [2017] EWHC 3113 (QB); [2019] QB 772. He rejected Morrisons argument that vicarious liability could not attach to a breach of the DPA by Skelton as the data controller of the data copied on to his USB stick and subsequently disclosed by him, holding that the object of Directive 95/46/EC of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (the Directive), transposed by the DPA, was the protection of data subjects, and that if vicarious liability did not apply, the purpose of the Directive would be defeated. He also rejected Morrisons argument that the DPA excluded vicarious liability for misuse of private information or breach of confidence, holding that since the purpose of the Directive, and therefore of the DPA, was the protection of data subjects, it should be treated as providing additional protection rather than as replacing such protection as already existed under domestic law. Finally, he rejected Morrisons argument that Skeltons wrongful conduct was not committed in the course of his employment, holding that Morrisons had provided him with the data in order for him to carry out the task assigned to him, and that what had happened thereafter was a seamless and continuous sequence of events an unbroken chain (para 184). That language was taken from the judgment of Lord Toulson in Mohamud ([2016] AC 677, para 47). He added that Morrisons trusted Skelton to deal with confidential information, and took the risk that it might be wrong in placing that trust in him. His role in respect of the payroll data was to receive and store it, and to disclose it to a third party. That in essence was his task: the fact that he disclosed it to others than KPMG was not authorised, but was nonetheless closely related to what he was tasked to do. The five factors listed by Lord Phillips in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56; [2013] 2 AC 1, para 35, were all present. The judge concluded ([2019] QB 772, para 195): Adopting the broad and evaluative approach encouraged by Lord Toulson JSC in Mohamuds case [2016] AC 677 I have therefore come to the conclusion that there is a sufficient connection between the position in which Skelton was employed and his wrongful conduct, put into the position of handling and disclosing the data as he was by Morrisons (albeit it was meant to be to KPMG alone), to make it right for Morrisons to be held liable under the principle of social justice which goes back to Holt CJ. The latter quotation was taken from Lord Toulsons judgment in Mohamud, para 45. Morrisons appeal to the Court of Appeal (Sir Terence Etherton MR, Bean and Flaux LJJ) was dismissed: [2018] EWCA Civ 2339; [2019] QB 772. The court stated at para 37 that there was no pleaded claim against Morrisons on the ground of vicarious liability for Skeltons breach of the DPA. It was conceded that the causes of action for misuse of private information and for breach of confidence were not excluded by the DPA. The court considered that there was nothing in the DPA which excluded vicarious liability for such conduct. In relation to the question whether, on the facts, Morrisons were vicariously liable for Skeltons wrongdoing, the court found at para 72 that [t]he tortious acts of Mr Skelton in sending the claimants data to third parties were in our view within the field of activities assigned to him by Morrisons. Like the judge, the court also emphasised at para 74 that the relevant facts constituted a seamless and continuous sequence or unbroken chain of events. Although it was an unusual feature of the case that Skeltons motive in committing the wrongdoing was to harm his employer, Lord Toulson had said in Mohamud that motive was irrelevant. The court therefore agreed with the judge that Morrisons was vicariously liable for Skeltons wrongdoing. Notwithstanding the pleading point raised by the Court of Appeal, the issues in the present appeal are agreed to be the following: (1) Whether Morrisons is vicariously liable for Skeltons conduct. (2) If the answer to (1) is in the affirmative: (a) Whether the DPA excludes the imposition of vicarious liability for statutory torts committed by an employee data controller under the DPA. (b) Whether the DPA excludes the imposition of vicarious liability for misuse of private information and breach of confidence. I shall consider the issues in that order. (1) Whether Morrisons is vicariously liable for Skeltons conduct The Mohamud decision The courts below applied what they understood to be the reasoning of Lord Toulson in Mohamud [2016] AC 677. They treated as critical, in particular, his reference in para 45 of his judgment to the principle of social justice which goes back to Holt CJ, his references in para 47 to the connection between the employees conduct in that case and his employment (an unbroken sequence of events, or a seamless episode), which they appear to have regarded as referring to an unbroken temporal or causal chain of events, and his statement in para 48 that Mr Khans motive is irrelevant, Mr Khan being the employee whose conduct was in question in that case. The resultant approach, if correct, would constitute a major change in the law. Lord Toulsons judgment was not intended to effect a change in the law of vicarious liability: quite the contrary. That becomes clear if the judgment is read as a whole, as I shall explain. The judgments below focused on the final paragraphs, in which Lord Toulson summarised long established principles in the simplest terms and applied them to the facts of the case then before the court. A few phrases in those paragraphs, taken out of context, were treated as establishing legal principles: principles which would represent a departure from the precedents which Lord Toulson was expressly following. The question which arose on the facts of Mohamud was whether the employer of a petrol station attendant was liable for an assault which the attendant had perpetrated on a motorist. The motorist went into the sales kiosk and asked if some documents could be printed. The attendant, Mr Khan, refused the request and ordered the motorist to leave, using racist and threatening language, then followed the motorist back to his car, opened the door and ordered him never to come back, again using threatening language. When the motorist told Mr Khan to close the door, Mr Khan assaulted him. The judge dismissed a claim against the employer on the ground that Mr Khans actions were beyond the scope of his employment. An appeal against that decision was dismissed by the Court of Appeal ([2014] EWCA Civ 116; [2014] 2 All ER 990). The argument in the appeal to this court was that the test of vicarious liability should be broadened so as to turn, in the case of a tort committed by an employee, on whether a reasonable observer would have considered the employee to be acting in the capacity of a representative of the employer at the time of committing the tort. The court rejected that argument, holding that the established test remained good without need of further refinement. Applying the established test, however, the court allowed the appeal on the facts of the case. In his judgment, with which the other members of the court agreed, Lord Toulson described the origins and development of vicarious liability, explaining, amongst other matters, the influential role which Sir John Holt CJ had played during the late 17th and early 18th centuries, when the doctrine was broadened in response to the expansion of commerce and industry. The Chief Justice had explained the doctrine as resting on the principle that, where an employer employed the wrongdoer, and the employee committed a wrongful act against the claimant within the area of the authority given to him, it was fairer that the employer should suffer for the wrongdoing than the person who was wronged. Lord Toulson went on to refer to the familiar formula introduced by Sir John Salmond in the first edition of Salmond on Torts (1907), pp 83 84, and repeated in later editions, which defined a wrongful act by a servant in the course of his employment as either (a) a wrongful act authorised by the master or (b) a wrongful and unauthorised mode of doing some act authorised by the master, with the amplification that a master is liable for acts which he has not authorised if they are so connected with acts which he has authorised, that they may rightly be regarded as modes although improper modes of doing them (Lord Toulsons emphasis: [2016] AC 677, para 25). Lord Toulson explained that, although Salmonds formula was applied in many cases over the course of the 20th century, it was not universally satisfactory, particularly in cases concerned with deliberate acts of misconduct. As Lord Toulson explained, the Salmond formulation was stretched to breaking point in Lister v Hesley Hall Ltd [2001] UKHL 22; [2002] 1 AC 215, which concerned the sexual abuse of children by the warden of a school boarding house. Even on its most elastic interpretation, the sexual abuse of children could not be described as a mode, albeit an improper mode, of caring for them. Lord Steyn (with whom Lord Hutton and Lord Hobhouse of Woodborough agreed) said that it was not necessary to ask whether the acts of sexual abuse were modes of doing authorised acts. He posed the broader question whether the warden's torts were so closely connected with his employment that it would be just to hold his employers liable. He concluded that they were, stating at para 28 that the sexual abuse was inextricably interwoven with the carrying out by the warden of his duties. Lord Millett, in a passage in his speech which proved to be influential in later cases, suggested at para 69 that the Salmond formulation could be adapted to impose vicarious liability where the unauthorised acts of the employee are so closely connected with acts which the employer has authorised that they may properly be regarded as being within the scope of his employment. The close connection approach to vicarious liability was considered again by the House of Lords in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48; [2003] 2 AC 366, a case of commercial fraud committed by one of the partners in a firm. In a passage which is of particular importance, and which Lord Toulson cited in Mohamud, at para 41, Lord Nicholls of Birkenhead (with whom Lord Slynn and Lord Hutton agreed) said: 22. it is a fact of life, and therefore to be expected by those who carry on businesses, that sometimes their agents may exceed the bounds of their authority or even defy express instructions. It is fair to allocate risk of losses thus arising to the businesses rather than leave those wronged with the sole remedy, of doubtful value, against the individual employee who committed the wrong. To this end, the law has given the concept of ordinary course of employment an extended scope. If, then, authority is not the touchstone, what is? Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firms business or the employees employment. Lord Millett said as much in Lister v Hesley Hall Ltd 25. This close connection test focuses attention in the right direction. But it affords no guidance on the type or degree of connection which will normally be regarded as sufficiently close to prompt the legal conclusion that the risk of the wrongful act occurring, and any loss flowing from the wrongful act, should fall on the firm or employer rather than the third party who was wronged 26. This lack of precision is inevitable, given the infinite range of circumstances where the issue arises. The crucial feature or features, either producing or negativing vicarious liability, vary widely from one case or type of case to the next. Essentially the court makes an evaluative judgment in each case, having regard to all the circumstances and, importantly, having regard also to the assistance provided by previous court decisions. In this field the latter form of assistance is particularly valuable. (Original emphasis) 23. In that passage, Lord Nicholls identified the general principle (the best general answer, as he said at para 23) applicable to vicarious liability arising out of a relationship of employment: the wrongful conduct must be so closely connected with acts the employee was authorised to do that, for the purposes of the liability of the employer to third parties, it may fairly and properly be regarded as done by the employee while acting in the ordinary course of his employment. That test was repeated in later cases such as Bernard v Attorney General of Jamaica [2004] UKPC 47; [2005] IRLR 398, Brown v Robinson [2004] UKPC 56, and Majrowski v Guys and St Thomass NHS Trust [2006] UKHL 34; [2007] 1 AC 224. As Lord Phillips noted in Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1, paras 83 and 85, the close connection test has been applied differently in cases concerned with the sexual abuse of children, which cannot be regarded as something done by the employee while acting in the ordinary course of his employment. Instead, the courts have emphasised the importance of criteria that are particularly relevant to that form of wrongdoing, such as the employers conferral of authority on the employee over the victims, which he has abused. The general principle set out by Lord Nicholls in Dubai Aluminium, like many other principles of the law of tort, has to be applied with regard to the circumstances of the case before the court and the assistance provided by previous court decisions. The words fairly and properly are not, therefore, intended as an invitation to judges to decide cases according to their personal sense of justice, but require them to consider how the guidance derived from decided cases furnishes a solution to the case before the court. Judges should therefore identify from the decided cases the factors or principles which point towards or away from vicarious liability in the case before the court, and which explain why it should or should not be imposed. Following that approach, cases can be decided on a basis which is principled and consistent. Having explained how the close connection case was expressed in Lister and elaborated in Dubai Aluminium, and having also explained that it had been applied in a number of subsequent cases at the highest level, Lord Toulson summarised the present law in paras 44 46 of his judgment ([2016] AC 677). In the simplest terms, he said, the court had to consider two matters. The first question was what functions or field of activities had been entrusted by the employer to the employee. In other words, as Lord Nicholls put it in Dubai Aluminium at para 23, it is necessary to identify the acts the employee was authorised to do. Secondly, Lord Toulson said at para 45, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice which goes back to Holt CJ. That statement, expressly put in the simplest terms, was more fully stated by Lord Nicholls in Dubai Aluminium [2003] 2 AC 366, para 23: in a case concerned with vicarious liability arising out of a relationship of employment, the court generally has to decide whether the wrongful conduct was so closely connected with acts the employee was authorised to do that, for the purposes of the liability of his employer, it may fairly and properly be regarded as done by the employee while acting in the ordinary course of his employment. That statement of the law, endorsed in Mohamud and in several other decisions at the highest level, is authoritative. Lord Toulson was not suggesting any departure from the approach adopted in Lister and Dubai Aluminium. His position was the exact opposite. Nor was he suggesting that all that was involved in determining whether an employer was vicariously liable was for the court to consider whether there was a temporal or causal connection between the employment and the wrongdoing, and whether it was right for the employer to be held liable as a matter of social justice. Plainly, the close connection test is not merely a question of timing or causation, and the passage which Lord Toulson cited from Dubai Aluminium makes it clear that vicarious liability for wrongdoing by an employee is not determined according to individual judges sense of social justice. It is decided by orthodox common law reasoning, generally based on the application to the case before the court of the principle set out by Lord Nicholls at para 23 of Dubai Aluminium, in the light of the guidance to be derived from decided cases. In some cases, the answer may be clear. In others, inevitably, a finer judgment will be called for. Finally, Lord Toulson considered how this approach applied to the facts of the case before the court. He began by identifying Mr Khans functions or field of activities ([2016] AC 677, para 47): In the present case it was Mr Khans job to attend to customers and to respond to their inquiries. His conduct in answering the claimants request in a foul mouthed way and ordering him to leave was inexcusable but within the field of activities assigned to him. Lord Toulson then rejected the argument that the assault on the customer was unconnected with Mr Khans field of activities; an argument which had emphasised in particular the fact that Mr Khan had left the sales kiosk and followed the customer to his vehicle. In that regard, he said (ibid): What happened thereafter was an unbroken sequence of events. It was argued by the respondent and accepted by the judge that there ceased to be any significant connection between Mr Khans employment and his behaviour towards the claimant when he came out from behind the counter and followed the claimant onto the forecourt. I disagree for two reasons. First, I do not consider that it is right to regard him as having metaphorically taken off his uniform the moment he stepped from behind the counter. He was following up on what he had said to the claimant. It was a seamless episode. Secondly, when Mr Khan followed the claimant back to his car and opened the front passenger door, he again told the claimant in threatening words that he was never to come back to the petrol station. This was not something personal between them; it was an order to keep away from his employers premises, which he reinforced by violence. In giving such an order he was purporting to act about his employers business. It was a gross abuse of his position, but it was in connection with the business in which he was employed to serve customers. Read in context, Lord Toulsons comments that there was an unbroken sequence of events, and that it was a seamless episode, were not directed towards the temporal or causal connection between the various events, but towards the capacity in which Mr Khan was acting when those events took place. Lord Toulson was explaining why, in his view, Mr Khan was acting throughout the entire episode in the course of his employment. When he followed the motorist out of the kiosk and on to the forecourt, he was following up on what he had said to the motorist in the kiosk. He ordered the motorist to keep away from his employers premises, and reinforced that order by committing the tort. In doing so, he was purporting to act about his employers business. As Lord Toulson said, this was not something personal. Lord Toulson concluded his analysis of the facts by stating, at para 48: Mr Khans motive is irrelevant. It looks obvious that he was motivated by personal racism rather than a desire to benefit his employers business, but that is neither here nor there. Read in isolation, the statement that motive is irrelevant would be misleading. Lord Toulson had just said, in the preceding paragraph, that one of his reasons for finding that there was a close connection was that Mr Khan was purporting to act about his employers business, and that his conduct towards the customer was not, therefore, something personal. So the question whether Mr Khan was acting, albeit wrongly, on his employers business, or was acting for personal reasons, was plainly important. When Lord Toulson said that Mr Khans motive was irrelevant, he was addressing a point which the judge had mentioned, namely that the reasons why Mr Khan had become violent were unclear. As just mentioned, Lord Toulson had already concluded that Mr Khan was going, albeit wrongly, about his employers business, rather than pursuing his private ends, and had treated that fact as supporting the existence of a close connection between his field of activities and the commission of the tort. Having reached that conclusion, the reason why Mr Khan had become so enraged as to assault the motorist could not make a material difference. That is all, I believe, that the remark that Mr Khans motive is irrelevant was intended to convey. Vicarious liability in the present case It follows from the foregoing that the judge and the Court of Appeal misunderstood the principles governing vicarious liability in a number of relevant respects, of which the following were particularly important. First, the disclosure of the data on the Internet did not form part of Skeltons functions or field of activities, in the sense in which those words were used by Lord Toulson: it was not an act which he was authorised to do, as Lord Nicholls put it. Secondly, the fact that the five factors listed by Lord Phillips in Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1, para 35, were all present was nothing to the point. Those factors were not concerned with the question whether the wrongdoing in question was so connected with the employment that vicarious liability ought to be imposed, but with the distinct question whether, in the case of wrongdoing committed by someone who was not an employee, the relationship between the wrongdoer and the defendant was sufficiently akin to employment as to be one to which the doctrine of vicarious liability should apply. Thirdly, although there was a close temporal link and an unbroken chain of causation linking the provision of the data to Skelton for the purpose of transmitting it to KPMG and his disclosing it on the Internet, a temporal or causal connection does not in itself satisfy the close connection test. Fourthly, the reason why Skelton acted wrongfully was not irrelevant: on the contrary, whether he was acting on his employers business or for purely personal reasons was highly material. The question whether Morrisons is vicariously liable for Skeltons wrongdoing must therefore be considered afresh. Applying the general test laid down by Lord Nicholls in para 23 of Dubai Aluminium [2003] 2 AC 366, the question is whether Skeltons disclosure of the data was so closely connected with acts he was authorised to do that, for the purposes of the liability of his employer to third parties, his wrongful disclosure may fairly and properly be regarded as done by him while acting in the ordinary course of his employment. Considering first the acts which Skelton was authorised to do, so far as relevant, he was given the task of collating and transmitting payroll data to KPMG. He performed that task on a date between 15 and 21 November 2013. The remaining question is whether Skeltons wrongful disclosure of the data was so closely connected with the collation and transmission of the data to KPMG that, for the purposes of the liability of his employer to third parties, the disclosure may fairly and properly be regarded as made by him while acting in the ordinary course of his employment. The connecting factor between what Skelton was authorised to do and the disclosure is that he could not have made the disclosure if he had not been given the task of collating the data and transmitting it to KPMG. It was the provision of the data to him, so that he could perform that task, that enabled him to make a private copy of the data on 18 November 2013, which he subsequently used to make the disclosure on 12 January 2014. Clearly, the mere fact that Skeltons employment gave him the opportunity to commit the wrongful act would not be sufficient to warrant the imposition of vicarious liability: see, for example, Morris v C W Martin & Sons Ltd [1966] 1 QB 716, 737, and Lister [2002] 1 AC 215, paras 25, 45, 50, 59, 65, 75, and 81 82. The courts below, however, treated it as important that Skeltons disclosure of the data on the Internet was, as the judge said closely related to what he was tasked to do ([2019] QB 772, para 186): a remark which the Court of Appeal described as plainly correct ([2019] QB 772, para 63). The fallacy in that approach was explained by Lord Wilberforce in Kooragang Investments Pty Ltd v Richardson & Wrench Ltd [1982] AC 462, which concerned an employee who was authorised to carry out valuations, and negligently carried out a valuation without authority from his employers and not on their behalf. Lord Wilberforce rejected the argument that so long as the employee is doing acts of the same kind as those which it is within his authority to do, the employer is liable, and is not entitled to show that the employee had no authority to do them. He said at p 473: the underlying principle remains that a servant, even while performing acts of the class which he was authorised, or employed, to do, may so clearly depart from the scope of his employment that his master will not be liable for his wrongful acts. As already explained, in applying the close connection test it is necessary to have regard to the assistance provided by previous court decisions. Perhaps unsurprisingly, there does not appear to be any previous case in which it has been argued that an employer might be vicariously liable for wrongdoing which was designed specifically to harm the employer. The decided cases which are most closely comparable to the present case are those which have concerned vicarious liability for deliberate wrongdoing intended to inflict harm on a third party for personal reasons of the employee (leaving aside sexual abuse cases, where, as explained in para 23 above, a more tailored version of the close connection test is applied). The basic principle normally applicable to cases where an employee is engaged in an independent personal venture was explained in Joel v Morison (1834) 6 C & P 501, which concerned a claim for personal injuries brought by a plaintiff who had been knocked down by a cart driven by the defendants employee. Parke B said at p 503: The master is only liable where the servant is acting in the course of his employment. If he was going out of his way, against his masters implied commands, when driving on his masters business, he will make his master liable; but if he was going on a frolic of his own, without being at all on his masters business, the master will not be liable. More recently, the issue of liability for acts performed by an employee in the course of an independent venture of his own was considered by Lord Nicholls in Dubai Aluminium [2003] 2 AC 366, para 32: A distinction is to be drawn between cases such as Hamlyn v John Houston & Co [1903] 1 KB 81, where the employee was engaged, however misguidedly, in furthering his employers business, and cases where the employee is engaged solely in pursuing his own interests: on a frolic of his own, in the language of the time honoured catch phrase The matter stands differently when the employee is engaged only in furthering his own interests, as distinct from those of his employer. Then he acts as to be in effect a stranger in relation to his employer with respect to the act he has committed: see Isaacs J in Bugge v Brown (1919) 26 CLR I10, 118. There are a number of relevant cases which have been decided since Lister and Dubai Aluminium. A particularly relevant example at the highest level is Attorney General of the British Virgin Islands v Hartwell [2004] UKPC 12; [2004] 1 WLR 1273, a decision of the Judicial Committee of the Privy Council. The case concerned a police officer who left his post and went into a bar where his partner worked as a waitress and, in a fit of jealous rage at finding her there with another man, fired a number of shots at one or other or both of them with a service revolver to which he had access in the course of his duties. A bystander was injured and claimed damages from the Government. The contention that the Government was vicariously liable was rejected on the ground that since, at the relevant time, the officer had abandoned his post and embarked on a vendetta of his own, his wrongful use of the gun was not something done in the course of his employment. Lord Nicholls, giving the judgment of the Board, applied the close connection test laid down in Dubai Aluminium at para 23. The connecting factors relied upon as satisfying the test were that the officer was a police officer on duty at the time of the shooting, that the place where the shooting occurred was within his jurisdiction, and that he had used a police revolver to which he was given access at the police station where he was posted and which he was permitted to use for police purposes: factors that created a connection between the wrongdoing and the acts which the officer was authorised to do which might be thought to bear a close analogy to those relied on in the present case (where Skelton committed the wrong using data to which he was given access at work and which he was permitted to use for an authorised purpose), and to be at least as strong. Those factors were held to be insufficient. Lord Nicholls explained at para 17: From first to last, from deciding to leave the island of Jost Van Dyke to his use of the firearm in the bar of the Bath & Turtle, Laurents activities had nothing whatever to do with any police duties, either actually or ostensibly. Laurent deliberately and consciously abandoned his post and his duties. He had no duties beyond the island of Jost Van Dyke. He put aside his role as a police constable and, armed with the police revolver he had improperly taken, he embarked elsewhere on a personal vendetta of his own. That conduct falls wholly within the classical phrase of a frolic of his own. That case might be contrasted with Bernard v Attorney General of Jamaica [2004] UKPC 47; [2005] IRLR 398, where a shooting was carried out by a police officer with his service revolver while purportedly acting in the execution of his duties, and vicarious liability was held to be established. There are numerous other cases decided at a lower level. It is unnecessary to consider them all, but it may be worth mentioning the two cases on which the Court of Appeal principally focused. The first is the case of Warren v Henlys Ltd [1948] 2 All ER 935, a ruling by a trial judge which was cited with approval in Mohamud [2016] AC 677, para 32. The case was one in which a customer at a petrol station had an angry confrontation with the petrol station attendant, who wrongly suspected him of trying to make off without payment. The customer became enraged at the manner in which he was spoken to by the attendant. After paying for the petrol, the customer saw a passing police car and drove off after it. He complained to the police officer about the attendants conduct and persuaded the officer to return with him to the petrol station. The officer listened to both men and indicated that he did not think that it was a police matter, whereupon the customer said that he would report the attendant to his employer. The officer was on the point of leaving, when the attendant punched the customer in the face, knocking him to the ground. Hilbery J held that the assault was not committed in the course of the attendants employment, applying the Salmond formula. He said at p 938: It seems to me that it was an act entirely of personal vengeance. He was personally inflicting punishment, and intentionally inflicting punishment, on the plaintiff because the plaintiff proposed to take a step which might affect Beaumont in his own personal affairs. It had no connection whatever with the discharge of any duty for the defendants. The act of assault by Beaumont was done by him in relation to a personal matter affecting his personal interests and there is no evidence that it was otherwise. It is unconvincing to say that the assault had no connection whatever with the discharge of the attendants duties. The attendants function was to deal with his employers customers. He committed the assault at his workplace, while at work, against a customer of his employer, as the culmination of a sequence of events which began when the attendant was acting for the benefit of his employer. The connection between the wrongdoing and the acts which the employee was authorised to do was appreciably stronger than in the present case. The judges reasoning is more convincing when he says that the assault was an act entirely of personal vengeance, and that the tort was committed by the attendant in relation to a personal matter affecting his personal interests. Like the police officer in the case of Hartwell, he was not acting on his employers business, but in pursuit of his own private ends. The other case which the Court of Appeal considered in detail was Bellman v Northampton Recruitment Ltd [2018] EWCA Civ 2214; [2019] 1 All ER 1133. The claimant in that case was an employee of a company run by its managing director. The managing director arranged for the company to pay for a staff Christmas party, and for accommodation and drinks for the staff at a hotel near the venue where the party was being held. At the hotel, the conversation turned to matters at work. The managing director became annoyed after being questioned about the appointment of a new employee. He summoned the employees who were at the hotel and began to lecture them on how he owned the company, that he was in charge and would do what he wanted to do, that the decisions were his to take and that he paid their wages. The claimant challenged a statement made by the managing director about the appointment. The managing director responded by telling him that he made the decisions in the company and assaulting him. The Court of Appeal held that there was a sufficiently close connection between the managing directors authorised activities and his commission of the assault to justify the imposition of vicarious liability. His remit included the maintenance of his authority over the staff. At the time when he committed the assault, he was purporting to act as managing director, and was asserting his authority in front of members of staff, over a subordinate employee who had challenged his managerial decision making. Although in some respects the judgment in Bellman adopted a similar approach to Mohamud to that adopted by the Court of Appeal in the present case, the conclusion reached was correct. Notwithstanding that the assault occurred outside working hours and away from the workplace, there was clearly a very close connection between the managing directors authorised activities as an employee and his commission of the assault: it was committed while he was purporting to act in the course of his employment as the managing director by asserting his authority over his subordinates in relation to a management decision which he had taken. Unlike the cases of Hartwell and Warren, this was not a case in which the employee was pursuing a personal vendetta of his own or an act entirely of personal vengeance. All these examples illustrate the distinction drawn by Lord Nicholls at para 32 of Dubai Aluminium [2003] 2 AC 366 between cases where the employee was engaged, however misguidedly, in furthering his employers business, and cases where the employee is engaged solely in pursuing his own interests: on a frolic of his own, in the language of the time honoured catch phrase. In the present case, it is abundantly clear that Skelton was not engaged in furthering his employers business when he committed the wrongdoing in question. On the contrary, he was pursuing a personal vendetta, seeking vengeance for the disciplinary proceedings some months earlier. In those circumstances, applying the test laid down by Lord Nicholls in Dubai Aluminium in the light of the circumstances of the case and the relevant precedents, Skeltons wrongful conduct was not so closely connected with acts which he was authorised to do that, for the purposes of Morrisons liability to third parties, it can fairly and properly be regarded as done by him while acting in the ordinary course of his employment. (2) Whether the DPA excludes the imposition of vicarious liability for (a) statutory torts committed by an employee data controller under the DPA and (b) misuse of private information and breach of confidence The remaining issue in the appeal is whether the DPA excludes vicarious liability for breaches of its own provisions, committed by an employee as a data controller, or for misuse of private information and breach of confidence. Having concluded that the necessary conditions for the imposition of vicarious liability do not exist in this case, it is not strictly necessary for the court to go on to consider those issues. They have however been fully argued, and it is therefore desirable that the court should express its view. As explained earlier, the judge considered that the DPA did not exclude vicarious liability either for a breach of the duties imposed by the DPA itself or for a breach of common law or equitable obligations, on the view that domestic principles of statutory interpretation did not lead to that conclusion, and the underlying EU legislation was intended to increase the protection of data subjects rather than to take away existing protections. The Court of Appeal did not decide the issue concerning breaches of the DPA but agreed with the judge in relation to vicarious liability for breaches of common law or equitable obligations. In their written case, Morrisons relied upon the fact that the DPA, now repealed and replaced by the Data Protection Act 2018, was intended to implement the Directive, now replaced by the General Data Protection Regulation, (EU) 2016/679. It argued that the Directive was intended to achieve a harmonisation of national laws governing the processing of personal data, and that the existence of vicarious liability under English law, in circumstances falling within the scope of the Directive, was therefore precluded. However, in their oral submissions to the court, counsel for Morrisons departed from that argument in the light of the judgment of the Court of Justice in Fashion ID GmbH & Co KG v Verbraucherzentrale NRW eV (Facebook Ireland Ltd intervening) (Case C 40/17) [2020] 1 WLR 969. In the circumstances, it is unnecessary to consider the Directive. Instead, counsel for Morrisons presented their submissions on the basis of domestic principles of statutory interpretation. The relevant principles were explained by Lord Nicholls in Majrowski [2007] 1 AC 224, para 10: The rationale [of the principle of vicarious liability] also holds good for a wrong comprising a breach of a statutory duty or prohibition which gives rise to civil liability, provided always the statute does not expressly or impliedly indicate otherwise. A precondition of vicarious liability is that the wrong must be committed by an employee in the course of his employment. A wrong is committed in the course of employment only if the conduct is so closely connected with acts the employee is authorised to do that, for the purposes of the liability of the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the employee while acting in the course of his employment: see Lister v Hesley Hall Ltd [2002] 1 AC 215, 245, para 69, per Lord Millett, and Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366, 377, para 23. If this prerequisite is satisfied the policy reasons underlying the common law principle are as much applicable to equitable wrongs and breaches of statutory obligations as they are to common law torts. Lord Nicholls summarised the resultant position at para 17: Unless the statute expressly or impliedly indicates otherwise, the principle of vicarious liability is applicable where an employee commits a breach of a statutory obligation sounding in damages while acting in the course of his employment. Counsel for Morrisons argued that the DPA impliedly excluded the vicarious liability of an employer. In that regard, counsel referred in particular to section 13 of the DPA. Subsection (1) provides that [an] individual who suffers damage by reason of any contravention by a data controller of any of the requirements of this Act is entitled to compensation from the data controller for that damage. Subsection (2) makes similar provision in relation to compensation for distress. Subsection (3) provides that [i]n proceedings brought against a person by virtue of this section it is a defence to prove that he had taken such care as in all the circumstances was reasonably required to comply with the requirement concerned. The seventh data protection principle (Schedule 1, paragraph 10) also provides: The data controller must take reasonable steps to ensure the reliability of any employees of his who have access to personal data. The DPA therefore made it clear, it was argued, that liability was to be imposed only on data controllers, and only where they had acted without reasonable care. That statutory scheme was inconsistent with the imposition of a strict liability on the employer of a data controller, whether for that persons breach of the DPA or for his breach of duties arising at common law or in equity. Since it was common ground that Morrisons performed the obligations incumbent upon them as data controllers, and that Skelton was a data controller in his own right in relation to the data which he copied and disclosed, it followed that Morrisons could not be under a vicarious liability for his breach of the duties incumbent upon him. Attractively though this argument was presented, it is not persuasive. The imposition of a statutory liability upon a data controller is not inconsistent with the imposition of a common law vicarious liability upon his employer, either for the breach of duties imposed by the DPA, or for breaches of duties arising under the common law or in equity. Since the DPA is silent about the position of a data controllers employer, there cannot be any inconsistency between the two regimes. That conclusion is not affected by the fact that the statutory liability of a data controller under the DPA, including his liability for the conduct of his employee, is based on a lack of reasonable care, whereas vicarious liability is not based on fault. There is nothing anomalous about the contrast between the fault based liability of the primary tortfeasor under the DPA and the strict vicarious liability of his employer. A similar contrast can often be drawn between the fault based liability of an employee under the common law (for example, for negligence) and the strict vicarious liability of his employer, and is no more anomalous where the employees liability arises under statute than where it arises at common law. It follows that, applying the orthodox principles of statutory interpretation explained by Lord Nicholls in Majrowski, since the DPA neither expressly nor impliedly indicates otherwise, the principle of vicarious liability applies to the breach of the obligations which it imposes, and to the breach of obligations arising at common law or in equity, committed by an employee who is a data controller in the course of his employment, as explained in Dubai Aluminium. Conclusion For the reasons explained above, the circumstances in which Skelton committed wrongs against the claimants were not such as to result in the imposition of vicarious liability upon his employer. Morrisons cannot therefore be held liable for Skeltons conduct. It follows that the appeal must be allowed.
UK-Abs
This appeal concerns the circumstances in which an employer is vicariously liable for wrongs committed by its employees, and also whether vicarious liability may arise for breaches by an employee of duties imposed by the Data Protection Act 1998 (DPA). The appellant operates a chain of supermarkets and employed Andrew Skelton on its internal audit team. In July 2013, Skelton received a verbal warning after disciplinary proceedings for minor misconduct and bore a grievance against the appellant thereafter. In November 2013, Skelton was tasked with transmitting payroll data for the appellants entire workforce to its external auditors, as he had done the previous year. Skelton did so, but also made and kept a personal copy of the data. In early 2014, he used this to upload a file containing the data to a publicly accessible filesharing website. Skelton later also sent the file anonymously to three UK newspapers, purporting to be a concerned member of the public who had found it online. The newspapers did not publish the information. Instead, one alerted the appellant, which took immediate steps to have the data removed from the internet and to protect its employees, including by alerting police. Skelton was soon arrested and has since been prosecuted and imprisoned. The respondents, some of the affected employees, brought proceedings against the appellant personally and on the basis of its vicarious liability for Skeltons acts. Their claims were for breach of statutory duty under the DPA, misuse of private information, and breach of confidence. At trial, the judge concluded that the appellant bore no primary responsibility but was vicariously liable on each basis claimed. The judge rejected the appellants argument that vicarious liability was inapplicable given the DPAs content and its foundation in an EU Directive. The judge also held that Skelton had acted in the course of his employment, on the basis of Lord Toulsons judgment in Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11 (Mohamud). The appellants subsequent appeal to the Court of Appeal was dismissed. The Supreme Court unanimously allows the appeal. Lord Reed gives the only judgment, with which Lady Hale, Lord Kerr, Lord Hodge and Lord Lloyd Jones agree. The primary issue before the Court is whether the appellant is vicariously liable for Skeltons conduct. The starting point is Lord Toulsons judgment in Mohamud, which was not intended to change the law of vicarious liability but rather to follow existing precedents [16 21]. One such authority was the House of Lords decision in Dubai Aluminium Co Ltd v Salaam [2003] 2 AC 366 (Dubai Aluminium), where Lord Nicholls explained the existing close connection test of whether the wrongful conduct was so closely connected with acts the employee was authorised to do that for the purposes of the liability of the employer to third parties, it may fairly and properly be regarded as done by the employee while acting in the ordinary course of his employment. The test had to be applied having regard to the circumstances of the case and previous court decisions, following Dubai Aluminium [22 23]. Having explained the close connection test, Lord Toulson summarised the law in the simplest terms. The first question was what functions or field of activities the employer had entrusted to the employee. Next, the court must decide whether there was sufficient connection between the position in which he was employed and his wrongful conduct to make it right for the employer to be held liable under the principle of social justice which goes back to Holt CJ. This had been more fully explained in Dubai Aluminium by Lord Nicholls as set out above [25]. Lord Toulson was not suggesting any departure from Lord Nicholls approach [26]. Further, read in context, Lord Toulsons comments that on the facts of Mohamud there was an unbroken sequence of events and a seamless episode referred to the capacity in which the employee had been purporting to act when the wrongful conduct took place, namely about his employers business [28]. Lord Toulsons comment, in relation to the facts of Mohamud, that motive is irrelevant should not be taken out of context: whether the employee was acting on his employers business or for personal reasons was important, but, on the facts of Mohamud, the reason why he had committed the tort could not make a material difference to the outcome [29 30]. The Court concludes that the judge and the Court of Appeal misunderstood the principles governing vicarious liability in a number of respects. First, the online disclosure of the data was not part of Skeltons field of activities, as it was not an act which he was authorised to do. Secondly, the satisfaction of the factors referred to by Lord Phillips in Various Claimants v Catholic Child Welfare Society [2012] UKSC 56 was not to the point: those factors were relevant to whether, where the wrongdoer was not an employee, the relationship between wrongdoer and defendant was sufficiently akin to employment for vicarious liability to subsist. They were not concerned with whether employees wrongdoing was so closely connected with their employment that vicarious liability ought to be imposed. Thirdly, a temporal or causal connection alone does not satisfy the close connection test. Finally, it was highly material whether Skelton was acting on his employers business or for purely personal reasons [31]. Considering the question afresh, no vicarious liability arises in the present case. Skelton was authorised to transmit the payroll data to the auditors. His wrongful disclosure of the data was not so closely connected with that task that it can fairly and properly be regarded as made by Skelton while acting in the ordinary course of his employment. On long established principles, the fact that his employment gave him the opportunity to commit the wrongful act is not sufficient to warrant the imposition of vicarious liability. An employer is not normally vicariously liable where the employee was not engaged in furthering his employers business, but rather was pursuing a personal vendetta. The close connection test elucidated by Lord Nicholls in Dubai Aluminium, in light of the cases that have applied it and on the particular facts of the present appeal, is not satisfied [32 47]. The second major issue before the Court is whether the DPA excludes imposition of vicarious liability for either statutory or common law wrongs. It is not strictly necessary to consider this in light of the above conclusion, but as full argument was heard, it is desirable that the Court expresses a view [48]. Ultimately the Court finds the appellants argument that liability is excluded unpersuasive. Imposing statutory liability on a data controller like Skelton is not inconsistent with the co existence of vicarious liability at common law, whether for breach of the DPA or for a common law or equitable wrong, as the DPA says nothing about a data controllers employer. It is irrelevant that a data controllers statutory liability under the DPA is based on a lack of reasonable care, while vicarious liability for an employees conduct requires no proof of fault. The same contrast exists at common law between, for example, an employees liability in negligence and an employers vicarious liability. It makes no difference that an employees liability may arise under statute instead [54 55]. The appeal is therefore allowed [56].